ATLANTA-The next steps. That’s what BentleyForbes is working with special servicer LNR to determine in the wake of an imminent default. Two days after Fitch Ratings issued a report chronicling the woes of Atlanta’s tallest building, the 55-story Bank of America Plaza, the owner is looking for a way of escape.
“BentleyForbes requested the loan for Bank of America Plaza in Atlanta to be moved to special servicing to begin the process of reviewing options on the underlying capital structure,” says Tony Manos, COO of BentleyForbes. BentleyForbes is one of the nation’s largest privately-held commercial real estate investment companies.
Payments on the building’s $363-million loan are up to date, Manos says, but when Bank of America gave back half its space and cut its lease rate in half the tower’s owners reached a troubling tipping point. BentleyForbes purchased the tower at the height of the market for $438 million.
Located at Peachtree Street NE and North Avenue, Bank of America Plaza has struggled to compete against newer buildings. The building’s vacancy rate sits at about 21%. The vacancy rate in downtown Atlanta was 21.3% in the fourth quarter, Grubb & Ellis reports.
According to Warren Weiser, chair and co-founder of Florida workout specialist Continental Real Estate Companies, the special servicer has two options: put the asset on the market now or work to add value to the building and sell it later. Market signs might point to the former outcome.
“The Atlanta market is very tough right now on the leasing front,” Weiser tells GlobeSt.com. “But there is a tremendous amount of interest in buying assets right now because the capital markets are so flush with money. This property would appeal to many suitors.”
If BentleyForbes and LNR decide to take Bank of America Plaza to market, Weiser expects national and international interest in the asset, even though the Atlanta market is saturated with office space. Competition would be fierce, he says.
“If they want to go the leasing route, they can create value but they would need an aggressive lease up strategy,” Weiser says. “I’m sure they would all love the market to be stronger from an occupancy standpoint, but given what’s going on in the world at least the capital markets are in their favor.”
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