On Tuesday, Atlanta’s Bank of America Plaza, the tallest building in Atlanta at 55 stories, was sold at a foreclosure auction to the outstanding lender for $250 million. The building had been owned by BentleyForbes Group LLC, a California based real estate investment firm that bought the property at the market peak for $436 million.
BentleyForbes had worked with loan-servicer LNR Partners for over a year to restructure the loan, but was unsuccessful. Part of the problem was that BentleyForbes purchased the trophy tower in 2006 at the very height of the real estate boom. The tower then was virtually fully leased, with a 0.2% vacancy rate, spearheaded by name tenant Bank of America and several prominent Atlanta law firms. Today, partially due to the consolidation of space by tenants such as Bank of America and Troutman Sanders, and the impending departure from the building of law firm Paul Hastings, the tower has a 39% vacancy rate, and rents in the Atlanta market are significantly down from the 2006 peak.
The impressive downtown tower, visible for miles and soaring above the Atlanta skyline, stands 1,023 feet tall and has a red granite façade topped by a 50-ton spire covered in 23-karat gold leaf. The fact that such a significant building could experience such a loss of rents so as to force it into foreclosure is just another example that consolidations and depressed rents affect the trophy properties as well as the smaller ones. According to Trepp, a total of $2.54 billion in CMBS loans were past-due in metro Atlanta in January.
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