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
Architects | Jun 15, 2021
Sandy Hook Permanent Memorial set to break ground
SWA Group designed the project.
Architects | Jun 15, 2021
Chicago Architecture Center and Chicago Architectural Club announce competition calling for new visions for State of Illinois “Thompson Center”
Competition seeks to give State of Illinois Center new life while preserving its architecture and public character.
Wood | Jun 10, 2021
Three AEC firms launch a mass timber product for quicker school construction
TimberQuest brand seeks to avoid overinvestment in production that has plagued other CLT providers.
Office Buildings | Jun 10, 2021
The future of the workplace is social clubs
Office design experts from NELSON Worldwide propose a new concept for the workplace, one that resembles the social clubs of the past.Â
Multifamily Housing | Jun 3, 2021
Student Housing Trends 2021-2022
In this exclusive video interview for HorizonTV, Fred Pierce, CEO of Pierce Education Properties, developer and manager of off-campus student residences, chats with Rob Cassidy, Editor, MULTIFAMILY Design + Construction about student housing during the pandemic and what to expect for on-campus and off-campus housing in Fall 2021 and into 2022.
Architects | Jun 2, 2021
Two new practice leaders appointed at FGM Architects
FGM Architects appoints Jan Behounek to lead Higher Education and Scott Nall to lead Federal Practice.
Building Technology | Jun 1, 2021
Orro Announces Google Nest Integration for the Orro Switch
Orro, creators of the professional-grade top-of-the-line Orro Smart Living System, today announced the integration of Nest products to Orro. As a certified partner in Google’s Device Access program, this latest Orro integration allows homeowners to have seamless control and access to Nest thermostats and doorbells from any Orro Switch throughout the home – creating a single unified smart home system with advanced, intelligent ambient control.
High-rise Construction | May 27, 2021
The anti-high rise: Seattle's The Net by NBBJ
In this exclusive video interview for HorizonTV, Ryan Mullenix, Design Partner with NBBJ, talks with BD+C's John Caulfield about a new building in Seattle called The Net that promotes wellness and connectivity.Â
Digital Twin | May 24, 2021
Digital twin’s value propositions for the built environment, explained
Ernst & Young’s white paper makes its cases for the technology’s myriad benefits.
Senior Living Design | May 19, 2021
Senior living design: Post-COVID trends and innovations
Two senior living design experts discuss the latest trends and innovations in the senior living building sector.Â