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
Engineers | Jun 5, 2023
How to properly assess structural wind damage
Properly assessing wind damage can identify vulnerabilities in a building's design or construction, which could lead to future damage or loss, writes Matt Wagner, SE, Principal and Managing Director with Walter P Moore.
Cladding and Facade Systems | Jun 5, 2023
27 important questions about façade leakage
Walter P Moore’s Darek Brandt discusses the key questions building owners and property managers should be asking to determine the health of their building's façade.
Retail Centers | Jun 2, 2023
David Adjaye-designed mass timber structure will be a business incubator for D.C.-area entrepreneurs
Construction was recently completed on The Retail Village at Sycamore & Oak, a 22,000-sf building that will serve as a business incubator for entrepreneurs, including emerging black businesses, in Washington, D.C. The facility, designed by Sir David Adjaye, the architect of the National Museum of African American History and Culture, is expected to attract retail and food concepts that originated in the community.
Mixed-Use | Jun 1, 2023
The Moore Building, a 16-story office and retail development, opens in Nashville’s Music Row district
Named after Elvis Presley’s onetime guitarist, The Moore Building, a 16-story office building with ground-floor retail space, has opened in Nashville’s Music Row district. Developed by Portman and Creed Investment Company and designed by Gresham Smith, The Moore Building offers 236,000 sf of office space and 8,500 sf of ground-floor retail.
Healthcare Facilities | Jun 1, 2023
High-rise cancer center delivers new model for oncology care
Atlanta’s 17-story Winship Cancer Institute at Emory Midtown features two-story communities that organize cancer care into one-stop destinations. Designed by Skidmore, Owings & Merrill (SOM) and May Architecture, the facility includes comprehensive oncology facilities—including inpatient beds, surgical capacity, infusion treatment, outpatient clinics, diagnostic imaging, linear accelerators, and areas for wellness, rehabilitation, and clinical research.
K-12 Schools | May 30, 2023
K-12 school sector trends for 2023
Budgeting and political pressures aside, the K-12 school building sector continues to evolve. Security remains a primary objective, as does offering students more varied career options.
Multifamily Housing | May 30, 2023
Boston’s new stretch code requires new multifamily structures to meet Passive House building requirements
Phius certifications are expected to become more common as states and cities boost green building standards. The City of Boston recently adopted Massachusetts’s so-called opt-in building code, a set of sustainability standards that goes beyond the standard state code.
Architects | May 30, 2023
LRK opens office in Orlando to grow its presence in Florida
LRK, a nationally recognized architectural, planning, and interior design firm, has opened its new office in downtown Orlando, Fla.
Urban Planning | May 25, 2023
4 considerations for increasing biodiversity in construction projects
As climate change is linked with biodiversity depletion, fostering biodiverse landscapes during construction can create benefits beyond the immediate surroundings of the project.
K-12 Schools | May 25, 2023
From net zero to net positive in K-12 schools
Perkins Eastman’s pursuit of healthy, net positive schools goes beyond environmental health; it targets all who work, teach, and learn inside them.
