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 | May 31, 2016
JLG Architects acquires Minneapolis-based Studio Five Architects
Led by Linda McCracken-Hunt, SFA is one of Minnesota’s oldest woman-owned architecture firms.
Building Team Awards | May 31, 2016
Gonzaga's new student center is a bustling social hub
Retail mall features, comfortable furniture, and floor-to-ceiling glass add vibrancy to the new John J. Hemmingson Center.
Building Team Awards | May 27, 2016
Big police academy trains thousands of New York's finest
The Police Training Academy in Queens, N.Y., consists of a 480,000-sf academic/administration building and a 240,000-sf physical training facility, linked by an aerial pedestrian bridge.
Building Team Awards | May 26, 2016
Cimpress office complex built during historically brutal Massachusetts winter
Lean construction techniques were used to build 275 Wyman Street during a winter that brought more than 100 inches of snow to suburban Boston.
Building Team Awards | May 25, 2016
New health center campus provides affordable care for thousands of Northern Californians
The 38,000-sf, two-level John & Susan Sobrato Campus in Palo Alto is expected to serve 25,000 patients a year by the end of the decade.
Architects | May 24, 2016
Lissoni Architettura’s NYC Aquatrium takes first place in New York City Waterfront Design competition
NYC Aquatrium was selected from among 178 proposals from 40 countries as the winner of Arch Out Loud’s NYC Aquarium & Public Waterfront design competition
Building Team Awards | May 24, 2016
Los Angeles bus depot squeezes the most from a tight site
The Building Team for the MTA Division 13 Bus Operations and Maintenance Facility fit 12 acres’ worth of programming in a multi-level structure on a 4.8-acre site.
Building Team Awards | May 23, 2016
'Greenest ballpark' proves a winner for St. Paul Saints
Solar arrays, a public art courtyard, and a picnic-friendly “park within a park" make the 7,210-seat CHS Field the first ballpark to meet Minnesota sustainable building standards.
Architects | May 20, 2016
NCARB survey indicates continued growth of U.S. architects
The number of U.S. architects surpassed 110,000 in 2015, a 2% increase from the previous year.
Multifamily Housing | May 19, 2016
Architect Jean Nouvel designs flood-resilient Monad Terrace in Miami Beach
A man-made lagoon with lush vegetation at the base of the complex is expected to adapt to climate change and rising sea levels.