Brookfield Corp. has handed over control of a second building this year in Los Angeles as the city’s downtown faces rising vacancies and falling office values.

EY Plaza, a 41-floor tower that opened in 1985, is now being managed by a receiver, according to a statement from brokerage Colliers, which is handling the building’s leasing and property management.

Brookfield stopped payments in April on the EY Plaza, which has US$305 million in total debt, including a US$275 million commercial mortgage-backed security. The Gas Company Tower, another Brookfield building in downtown LA, is also being managed by Colliers after it went into receivership. 

The office vacancy rate in downtown Los Angeles reached a record 30 per cent in the first quarter, according to Savills, one of the highest of major U.S. city centers. Office prices in LA are forecast to fall as much as 55 per cent by 2030 from their pre-pandemic peaks, Boston Consulting Group reported this month. 

A spokesperson for Toronto-based Brookfield, the largest office landlord in downtown Los Angeles, declined to comment Thursday and cited a previous company statement that “95 per cent of what we own are trophy and Class A buildings that continue to see strong demand globally.”

Rising interest rates are colliding with falling property values, pressuring office owners whose debt burdens exceed the market value of their buildings. That’s led more landlords to walk away from the real estate. Receivers are assigned by lenders to oversee stranded properties until a new owner takes over or new financing is in place.

“EY Plaza is one of the best office buildings in all of Los Angeles, and its value is worth protecting,” Sean Fulp, Colliers head of office capital markets for the U.S. Southwest, said in a statement.