The downtown office market in major cities continues to struggle after changes brought on by the pandemic, as another major investor has defaulted on loans for a pair of Downtown Los Angeles skyscrapers. According to an SEC filing, Brookfield DTLA Fund Office Trust Investor said that subsidiaries that owned the 52-story Gas Company Tower at 555 W. 5th St were in default on $465 million in loans related to the building. 

In addition, Brookfield DTLA has defaulted on $319 million in loans related to its 52-story building on S. Figueroa Street, the 777 Tower. In both cases, lenders for both properties have not yet exercised their foreclosure option.

The Brookfield DTLA fund owns six office properties and a retail center in Downtown Los Angeles. In November, the REIT warned investors and lenders it wasn’t able to meet loan demands due to declining cash flows and property values. At the end of September, the fund had $2.3 billion of total consolidated debt.

The defaults are the latest sign of a continuing weak office market demand in Downtown LA. A Colliers fourth quarter report showed a vacancy rate of 25.1% in DTLA with a negative net absorption of -407,000 square feet.