One of the biggest emblems of Atlanta's real estate boom became the biggest emblem of its bust recently.
Bank of America Plaza, the South’s tallest skyscraper and an Atlanta skyline icon, was taken back by its lender at a foreclosure auction at the Fulton County Courthouse. The 55-story tower, bought for a record price in 2006 by a California real estate firm, is now metro Atlanta’s priciest repossession.
A lawyer for LNR Partners placed two "credit bids" totaling $250 million. That means it essentially bid not with cash but rather the lender's own interest in the building. LNR represents the lender, a commercial mortgage-backed security owned by investors. The lender is likely to seek a new buyer, who will likely spruce up the tower and try to attract new tenants.
The building's distress stemmed from its last sale at the very height of the real estate boom. The prior owner, BentleyForbes bought the trophy tower for $436 million from Cousins Properties and Bank of America in 2006. Soon after, office vacancies soared and property values and rents plummeted following the economic collapse.
Timeline of a tower
Late 1980s -- C&S Bank and Cousins Properties announce plans for a new C&S headquarters, to be Atlanta’s tallest building, at 600 Peachtree Street.
1991 -- C&S/Sovran is acquired by Charlotte-based NCNB and becomes NationsBank, a precursor to Bank of America.
1992 – The 55-story, more than 1,000-foot building opens as NationsBank Plaza.
1999 – The tower’s name officially changes to Bank of America Plaza after NationsBank acquires Bank of America and takes its name.
2006 – California real estate firm BentleyForbes buys Bank of America Plaza from Bank of America and Cousins Properties for an Atlanta-record $436 million.
2011 – Fitch Ratings issues a report stating Bank of America Plaza is in “imminent default” and a special servicer has been brought in to help work out the troubled debt.
2012 – Bank of America Plaza is foreclosed.
An executive with BentleyForbes said in a statement the firm worked with LNR “for more than a year to identify a viable way forward,” and that transferring control to LNR and the bond holders was the best way forward.
The 1,023-ft tower is a garnet-hued obelisk when the sunset plays off its Napoleon red granite façade. Its 50-ton spire is splashed with 23-karat gold leaf.
The building was planned as the headquarters of C&S Bank in the late 1980s. It was later renamed for successors NationsBank and ultimately Bank of America.
The tower may not be the last signature office or retail complex to change owners. Delinquency rates for commercial mortgage backed securities, or CMBS, just one type of loan for commercial properties, remains near all-time highs in metro Atlanta, according to real estate research firm Trepp.
Bank of America Plaza By the Numbers
23 – The 50-ton spire at the top of Bank of America Plaza is covered in 23-karat gold leaf
55—Floors in the building
1,023 – Bank of America Plaza is 1,023 feet tall.
1.28 million – The total square footage of Bank of America Plaza
Architect: Kevin Roche, John Dinkeloo and Associates
A total of $2.54 billion in CMBS loans, or 20% of the value of all such loans, were past-due in metro Atlanta in January, according to Trepp. The delinquency figure nationwide was 9.52%.
Borrowers have struggled to refinance given falling values and trouble filling vacancies. Major banks and institutional investors also lent on commercial property, but CMBS loans, which typically make higher leveraged loans at high interest rates, became popular last decade. Their use peaked in 2007. Many CMBS loans come due in five years, making 2012 a feared year.
“I think unfortunately we’re only in about the third or fourth inning," said Henry Lorber, an expert in distressed real estate and a managing director at Atlanta-based Hays Financial Consulting.
Big-name tenants filled Bank of America Plaza when BentleyForbes bought it. But the owners soon had to grapple with the Great Recession, corporate cutbacks in office space and a glut of competing new space in Midtown and Buckhead. Ernst & Young left a few years ago and law firm Troutman Sanders and Bank of America reduced their space. Law firm Paul Hastings also is leaving for another building. In metro Atlanta, vacancy remained near record highs in the third quarter 2011 at 16.9%, according to CoStar Group, with rents at $18.36 per square foot, down from $20.28 in 2008.
Gil Burstiner, commercial real estate partner at the law firm of Hartman Simons, said the ordeal will help reset market prices for real estate, and the eventual new owner will likely set rental rates at a new or near the bottom and improve the facilities to lure tenants. BD+C
Related Stories
Building Team | Jun 13, 2022
A mixed-used building to rise above Fort Lauderdale, with views of downtown and the ocean
ODA, a New York-based architecture and design studio, recently released renderings of Ombelle, a project including two residential towers in Fort Lauderdale, Fla.
Office Buildings | Jun 13, 2022
San Antonio’s electric utility HQ to transform into a modern office building
In San Antonio, Tex., the former headquarters of CPS Energy, the city’s electric utility, is slated to transform into 100,000 square feet of office and retail space on San Antonio’s famed River Walk.
Cultural Facilities | Jun 10, 2022
After 10 Years, Taiwan’s new Taipei Music Center Reaches the Finish Line
RUR Architecture has finished the Taipei Music Center (TMC), turning a 22-acre (9-hectare) site into a new urban arts district.
Building Technology | Jun 9, 2022
GSA Green Proving Ground program selects six innovative building technologies for evaluation
The U.S. General Services Administration’s (GSA) Green Proving Ground program, in collaboration with the U.S. Department of Energy, has selected six innovative building technologies for evaluation in GSA’s inventory.
University Buildings | Jun 9, 2022
IDEA Factory at U. of Maryland defies gravity
The E.A. Fernandez IDEA Factory at the University of Maryland’s A. James Clark School of Engineering has a gravity-defying form: The seven-story building’s solid upper floors emerge above the lighter, mostly glass base.
Multifamily Housing | Jun 9, 2022
Cityview's Adam Perry on multifamily housing innovation in the Western U.S.
Adam Perry, SVP of Development and Construction Management with developer Cityview, chats with Multifamily Design+Construction Editor Rob Cassidy about the latest design and construction innovations for multifamily housing in the West.
Libraries | Jun 8, 2022
Welcome to the hybrid library
Libraries have grown to become the intellectual and social hubs of campus, where, prior to March 2020, students, researchers, and faculty gathered to collaborate and connect.
Building Team | Jun 8, 2022
Alastair MacGregor to lead WSP USA Property and Buildings Business
Alastair (Aly) MacGregor has been named the executive business line leader for Property and Buildings at WSP USA, one of the nation’s largest engineering and professional services consultancies.
Codes and Standards | Jun 8, 2022
Florida Legislature passes bill requiring stricter condominium inspection
The Florida Legislature recently passed a bill to beef up building inspection requirements for many of the state’s condominiums.
Office Buildings | Jun 8, 2022
Former L.A. Times newsroom/printing plant remade into office campus
Phase 1 of The Press, an adaptive reuse project that is converting an old Los Angeles Times facility into a modern office campus, was recently completed in Costa Mesa, Calif.