The Southeast's Tallest Building To Be Sold On The Courthouse Steps

[desertpunk]

Bloomberg

Atlanta BofA Tower Auction Highlights Foreclosures
By Brian Louis and Mary Jane Credeur - Feb 5, 2012



The U.S. foreclosure crisis has risen to new heights.

Atlanta’s 55-story Bank of America Plaza, the tallest tower in the Southeast, is set to be sold at an open outcry auction on the steps of the Fulton County Courthouse tomorrow after landlord BentleyForbes missed mortgage payments. It bought the skyscraper in 2006 for $436 million from Bank of America Corp. (BAC) and Cousins Properties Inc. (CUZ) in the city’s biggest property deal.

Since the property market peaked a year later, the 1.25 million-square-foot (116,000-square-meter) building has lost 54 percent of its value, Bank of America, its largest tenant, has reduced space and bond investors who helped finance the purchase are on the hook for losses, according to data compiled by Bloomberg.

“It’s a fine building, a beautiful building, and still very much a landmark,” said Kirk Diamond, senior managing director at broker Cassidy Turley, in Atlanta. “It just needs to be recapitalized and written down to a market level to be able to compete effectively.”

Atlanta’s office market is a victim of overbuilding and inflated real-estate prices fueled by issuance of commercial mortgage backed securities that peaked in the U.S. at $232 billion in 2007. While investor demand for property debt surged last month by the most since March 2010 as the economy strengthened, borrowers in cities such as Atlanta outside the prime U.S. office markets of New York, Los Angeles, Washington and Boston are struggling to refinance as about $5.8 billion of five-year office loans bundled inside CMBS matures.


[...]

[GunnerJacket]

I've got about $32.50 in my wallet right now. Anyone want to go in with me?

One catch - Even if I'm just partial owner we HAVE to redo the crown. The Pyramid and the spire have nothing in common with the actual column of the tower, which is an architectural no-no in my book.

[desertpunk]

Originally Posted by GunnerJacket

I've got about $32.50 in my wallet right now. Anyone want to go in with me?

One catch - Even if I'm just partial owner we HAVE to redo the crown. The Pyramid and the spire have nothing in common with the actual column of the tower, which is an architectural no-no in my book.

Don't like the birdcage?


I'm just wondering what kind of deposit or letter of bank credit one would need to bid on a supertall on the courthouse steps. It's gotta be a little bit more than for a foreclosed 3 br home.

[Dale]

Atlanta may be THE riches-to-rags story in the Southeast.

[desertpunk]

Originally Posted by Dale

Atlanta may be THE riches-to-rags story in the Southeast.

I actually see this as a good sign for Atlanta. Only after all the bodies wash ashore can a full recovery of property values take root. Having endured some of the worst effects of the real estate bust, maybe Atlanta is finally bottoming out and will no doubt recover fast. Already the rental market is doing well and new apartments are going up. Other sectors shouldn't be far behind...

[gwiATLeman]

Originally Posted by Dale

Atlanta may be THE riches-to-rags story in the Southeast.

Actually, for the Atlanta end of it, this is a riches to riches story. It was sold by Cousins, the local real estate company, to Bentley Forbes an LA-based company at the height of the market. This is nothing more than an out of towner paying too much for a property in an up market, immediately followed by a historic real estate crash. After the BofA downsizing, they simply could not offer competitive rates due to the gold-plated price they paid for the building. Its no different from people that find themselves upside down in a mortgage and determine the best financial option is to simply walk away despite having high incomes.

It wouldn't surprise me if Cousins ends up with the building again at a fraction of what they sold it for which they will promptly fill up with tenants and sell for a profit....AGAIN.

[simms3]

Bentley Forbes also arguably paid too much for a very similar building in Chicago - 2PP. Ironically, the Atlanta and Chicago office markets are virtually identical...musical chairs markets and constantly overbuilt, which puts downward pressure on pricing. While both markets are more expensive than their TX counterparts (or were), the lack of barriers to entry for new buildings pits downward pressure against the upward drive of CMBS markets and competitive bidding for "2nd tier" office markets by institutions. Another similarity between the two markets is a lack of job growth, which hurts office and industrial properties.

Bentley Forbes paid about $350/SF, which to put things in perspective is nearly twice as much as investors typically pay for Willis, Aon, and JHC (office) in Chicago. BofA had about 375,000 SF at I believe $36psf at one point, and now they have half the space and pay half the rent. One of the top law firms in the building is also relocating to Midtown.

An unspoken problem with the building is not the building itself (it is a gorgeous, beautifully built out class A trophy with top security), but its location. Tenants have long complained about the Peachtree Pine shelter nearby. A good restaurant nearby also closed for good because people did not want to risk going there despite the good food. Thankfully that issue is being resolved right now, and there are redevelopment plans. If the SoNo (South of North) dead zone can be redeveloped, then the new owners should really be able to capitalize off of a fresh basis. It could be another Cousins story (I would look at investing with the next owner depending on what they pay...which will be public knowledge though you won't know what the $ amount means without the rent roll and due diligence).

[GarfieldPark]

The top of the building has always reminded me of the rafters in an old barn. I've always thought it was a great looking building - except for the top.

[GunnerJacket]

Originally Posted by Dale

Atlanta may be THE riches-to-rags story in the Southeast.

To compliment what others have said, Atlanta's overbuilt office market is coupled with a now actively recovering (quite well, actually) housing and rental market. This means a short-term slow down in new office development but is expected to produce more refined products and office spaces going forward. The owners of two downtown buildings have been thankful for the opportunity to fully redress their properties during the lull. Should the metro region's transportation sales tax measure pass then I expect the rebound to occur much more quickly.

Originally Posted by simms3

If the SoNo (South of North) dead zone can be redeveloped, then the new owners should really be able to capitalize off of a fresh basis.

Agreed. I find it amazing that in all the City and Central Atlanta Progress have done they've yet to advance a more aggressive proposal for this area. I wish they could take a cue from Boston's BigDig and cover over more of the connector and make more greenspace to heal the wound between downtown's two halves. Maybe then it could be more appealing for businesses moving into the Crawford Long area.

Originally Posted by GarfieldPark

The top of the building has always reminded me of the rafters in an old barn. I've always thought it was a great looking building - except for the top.

I really think they need to find a way to introduce some steel and gold plating to the exterior of the tower to help connect the elements. (Probably need some at the base, as well) Then redress the pyramid with more gold plating, as well, so that the entire crown looks harmonious. Were I more talented with photoshop I'd love to fool with this. Perhaps my middle schooler can do this...

[desertpunk]

Breaking:

ajc.com

Bank of America Plaza becomes Atlanta's priciest repo



By J. Scott Trubey
The Atlanta Journal-Constitution


One of the biggest emblems of Atlanta's real estate boom became the biggest emblem of its bust on Tuesday.

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.

Ringed by scrum of cameramen, reporters and curious members of metro Atlanta’s real estate community, 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 ownership shift probably won't affect current tenants -- who still include Bank of America and prominent law firms -- or the building's name for now. But it won't help already depressed commercial real estate values and rents in the broader market, experts say.

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.

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-foot tower at 600 Peachtree Street, straddling the gateway between Midtown and Downtown, 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.

A total of $2.54 billion in CMBS loans, or 20 percent 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 percent.

---

[diskojoe]

Originally Posted by GunnerJacket

I've got about $32.50 in my wallet right now. Anyone want to go in with me?

One catch - Even if I'm just partial owner we HAVE to redo the crown. The Pyramid and the spire have nothing in common with the actual column of the tower, which is an architectural no-no in my book.

I got $5 on it! Definitely lose the pyramid and spire and replace it with a spotlight Transco style.

Cant believe they got the building for 250 mil. Thats quite a swoop.

[desertpunk]

ajc.com

Sunday, February 12, 2012
Tower casts shadow over Atlanta real estate

Fate of Bank of America Plaza could say a lot about investors' confidence in city.



By J. Scott Trubey

The Atlanta Journal-Constitution

For sale: the tallest skyscraper in North America outside of New York and Chicago. Price: make an offer.

Atlanta’s 55-story Bank of America Plaza went back to the lender last week, reputedly the tallest building in the nation to be foreclosed since the economic collapse.

LNR Partners, the firm managing the building on behalf of investor-owners, is expected to try to find a new buyer. That effort will be one of the most-watched events in Atlanta’s recent real estate history.

The price the tower fetches and the buyer’s plan for it could say a lot about the confidence of investors in a so-far anemic comeback for metro Atlanta’s economy and commercial real estate market.

“You are making not just an asset bet, but a market bet on Atlanta,” said Bert J. Crouch, a director and investment officer at Invesco Real Estate in Dallas.

[...]

[GunnerJacket]

Originally Posted by diskojoe

I got $5 on it! Definitely lose the pyramid and spire and replace it with a spotlight Transco style.

Cant believe they got the building for 250 mil. Thats quite a swoop.

Got three other friends who want in, as well. We're over the $100 mark!! I'll call LNR and see what I can swing! Stay tuned.

[WeimieLvr]

I love the crown...as do many other people, including architects and others in the business. It's popular on this site to criticize it, but it's a different story in the real world. Some people just love to complain.

[GunnerJacket]

Every architect I've dealt with, including several @ TVS, Portman and with Heery has pretty much panned it, most notably the topping spire that seemingly has nothing in common with the rest of the structure. I was at Tech for undergrad when it went up, and the collective among the staff there was "Why the change?" Is it hideous? No, but it's far from graceful and harmoneous, IMO. If there were more elements of exposed structure throughout then maybe.

C'est la vie.

[RaiderATO]

Originally Posted by GunnerJacket

Every architect I've dealt with, including several @ TVS, Portman and with Heery has pretty much panned it.

Well, Portman himself can be credited with killing street life on what now connects the Centennial Park area with the downtown core with America'sMart, Peachtree Center, etc. and his elaborate gerbil chutes funneling people from food court to food court without ever having to interact with the brutalist automobile valleys below.... An expert of the interior, sure, but he largely ignored the outdoor looks and affects of a building (Westin and RenCen exteriors were just convenient/blind squirrel IMO).

I think we can live with something that "non-experts" all seem to love.

Personally? I'm indifferent about it's crown.

[GunnerJacket]

Originally Posted by RaiderATO

Well, Portman himself can be credited with killing street life on what now connects the Centennial Park area with the downtown core with America'sMart, Peachtree Center, etc. and his elaborate gerbil chutes funneling people from food court to food court without ever having to interact with the brutalist automobile valleys below.... An expert of the interior, sure, but he largely ignored the outdoor looks and affects of a building (Westin and RenCen exteriors were just convenient/blind squirrel IMO).

I think we can live with something that "non-experts" all seem to love.

Personally? I'm indifferent about it's crown.

Well I wasn't speaking about Mr. Portman, Sr., but other staff at the firm. But to be sure most of John's work is decidedly unfriendly to the sidewalk and the civic space. While his contributions to the evolution of interior lobbies is comendable, his work both individually and as a collective has neutered much of the street life in Atlanta, Detroit, SF...

I'd be just as happy redoing the base of those as I would recap the BoA and Equitable buildings.

[RaiderATO]

Originally Posted by GunnerJacket

I'd be just as happy redoing the base of those as I would recap the BoA and Equitable buildings.

Lop off a couple Atlanta icons, eh? I'm not one of the crazy urban-ites campaigning against cars and freeways and for walkable space at all costs, but BOA's street interaction needs to be addressed WAY before the crown if you ask me.

But I guess you can't pick the building up and add a new ground floor...

[GunnerJacket]

Originally Posted by RaiderATO

Lop off a couple Atlanta icons, eh? I'm not one of the crazy urban-ites campaigning against cars and freeways and for walkable space at all costs, but BOA's street interaction needs to be addressed WAY before the crown if you ask me.

I can agree with this, and especially driving along Peachtree it's a shame to go by and have this large void at the intersection with North Ave. There's nothing else on the site that truly relates to the building and give passers by cause to relate to the building other than "Oh, there it is."

It's not a bad building, it's just that given the location and size it was guaranteed to become an icon for the city, and because of that it seems they should've done so much more. If Atlanta kept seeing more skyscrapers maybe this wouldn't be as critical, but when this remains the tallest in the southeast after so many years and there's nothing else around it then it's going to draw all that much more attention. Like on message boards and stuff!

[3Ironhead3]

I'll put $20 in with ya!