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
| Mar 21, 2012
Iowa’s Mercy Medical Center’s new Emergency Department constructed using Lean design
New Emergency Department features a "racetrack" design with a central nurses' station encircled by 19 private patient examination rooms and 2 trauma treatment rooms.
| Mar 21, 2012
Clary, Hendrickson named regional directors for HDR Architecture
New directors will be responsible for expanding and strengthening the firm throughout the central region.
| Mar 20, 2012
FMI releases 2012 first quarter construction outlook
The last time construction put in place was at this level was 2000-2001.
| Mar 20, 2012
Ceco Building Systems names Romans marketing director
Romans joins Ceco Building Systems with over 15 years in marketing and customer service.
| Mar 20, 2012
UT Arlington launches David Dillon Center for Texas Architecture
Symposium about Texas architecture planned for April.
| Mar 20, 2012
Stanford’s Knight Management Center Awarded LEED Platinum
The 360,000-sf facility underscores what is taught in many of the school’s electives such as Environmental Entrepreneurship and Environmental Science for Managers and Policy Makers, as well as in core classes covering sustainability across the functions of business.
| Mar 20, 2012
New office designs at San Diego’s Sunroad Corporate Center
Traditional office space being transformed into a modern work environment, complete with private offices, high-tech conference rooms, a break room, and an art gallery, as well as standard facilities and amenities.
| Mar 19, 2012
Obama’s positioned to out-regulate Bush in second term
Proposed ozone rule would cost $19 billion to $90 billion in 2020, according to the White House.
| Mar 19, 2012
Skanska promotes Saunders to VP/GM of Bayshore Concrete Products
During his more than 13 years with Bayshore, Saunders has provided products for Victory Bridge in New Jersey, Route 52 Causeway in Ocean City, N.J., and for numerous piers at Naval Station Norfolk and the Norfolk Naval Shipyard.
| Mar 19, 2012
Smith Carter joins forces with Genivar
Smith Carter has a workforce of some 190 employees and designs complex buildings in challenging environments.
