Brookfield Properties is facing a foreclosure lawsuit involving its Downtown Brooklyn office building at 115 Myrtle Avenue. Rialto Capital Management, acting as special servicer, filed a pre-foreclosure complaint on August 21 in New York State Supreme Court in Brooklyn. The legal action alleges that Brookfield defaulted on a $132.7 million loan.
The original loan was issued in 2013 for $170 million and securitized into a Morgan Stanley Bank of America Merrill Lynch CMBS trust. It matured in September 2023. Forest City Myrtle Associates, controlled by Brookfield, allegedly failed to pay the remaining balance when it came due.
Rialto asserts that at least $132.7 million is still owed, covering principal, interest, and default interest but not including reserves. The loan is secured by the 692,000-square-foot office building formerly known as 15 MetroTech Center. This property is part of the Brooklyn Commons campus, which Brookfield rebranded in 2022 after acquiring Forest City Realty Trust in 2018.
Brookfield has invested in upgrades to the property since its acquisition, with renovations reported underway as recently as 2021. Records indicate that the building generated $25.9 million in revenue over the most recent year—approximately $37 per square foot—which aligns with its assessed market value of $132.7 million.
This foreclosure effort comes as Brookfield’s New York portfolio remains heavily weighted toward office assets—58 percent of its holdings—with total debt across city properties reaching $13.8 billion.
While Brookfield is not alone among landlords dealing with maturing commercial mortgage-backed securities (CMBS) debt and limited refinancing options, this case highlights increasing risks for property owners outside Manhattan’s central business districts.
Representatives for Brookfield did not respond to a request for comment from The Real Deal. Rialto also declined to comment.
In recent months, Rialto’s foreclosure actions have drawn attention citywide. According to property owners and court records, Rialto has initiated legal proceedings against Signature Bank borrowers by denying notices to exercise loan extensions and then moving to foreclose on deals considered to be performing.
Rialto has previously stated it is “following the rules and has only enforced its rights and remedies in ‘rare instances’ in which sponsors defaulted and failed to communicate.” The firm also told The Real Deal it remains committed to borrowers and finding the “best resolutions possible.”
