The Beaudry is a showpiece. At 695 feet, it's among the tallest apartment towers in California, with a golf simulator, a saltwater pool and a pet spa. It opened less than four years ago. This summer its owner, the real-estate giant Brookfield, said it's walking away. The building is about 95% full. The problem isn't the tenants. It's the loan.
Brookfield chose to exit rather than refinance the building's roughly $360 million loan. Doing so at today's rates would have required tens of millions in additional costs. So the firm is handing the property back to its lender instead of putting more money in. A broker put it plainly. This was expected to be a spectacular success. Unfortunately, the debt market got away.
Why this matters beyond one tower
The Beaudry is one case in a much bigger squeeze. Apartment landlords have about $1.8 trillion in debt coming due over the next decade, almost half of it between now and 2028. Many borrowed when rates were low and now have to refinance at more than double those rates. The strain is showing. The delinquency rate for multifamily loans in commercial mortgage-backed securities jumped from 1% in October 2023 to 7.1% this year, the biggest increase of any major property type. One large investor's loan on a group of Sunbelt apartments recently went into special servicing after a missed payment. Brookfield, for its part, expects to start buying again as rivals surrender their own troubled properties, the way it scooped up discounted San Francisco apartments in 2024.
The tower itself is fine. On a recent morning, vendors sold breakfast burritos on its plaza and a USC sophomore paid about $2,500 for a studio. The building works. The financing didn't.
Our read
This is an Investments and Risk story, module IN04, and the lesson is about debt coming due, not real estate. A good asset with a loan you can't refinance can still sink you. Brookfield owns a full building and is walking away because the math on the loan changed. That same math runs quietly through parts of a portfolio most people never look at, especially income funds that use borrowed money to boost their yield.
Here's where it touches you. Do you own a private or non-traded real-estate or credit fund, the kind sold for its high payout? Ask one question this week. How much does it borrow, and when does that debt come due? A fund that looked great while rates were low can cut its payout or its value when it has to refinance, exactly as this tower did. Read the fund's debt load and its maturity schedule, or ask whoever sold it to you to show you. The same goes for your own balance sheet. If you have an adjustable loan or a balloon payment coming, know the date now. In our model portfolios we've kept long-dated bonds and illiquid income products to a minimum for this reason. A nearly full tower just got handed back over a loan. Knowing when your debt, and your funds' debt, comes due is a conversation worth fifteen minutes.