Loan Payment Due, Sumitomo Takes Loss on Atlanta Financial Center Sale

Sumitomo Corp. of America has agreed to sell the 915K SF Atlanta Financial Center complex to Nightingale Properties for $182M in an off-market transaction at a loss.

Sumitomo bought the property from Hines in 2016 for $222.5M and invested $15M in upgrades.

Nightingale is trying to raise $76M in equity for the deal through the crowdfunding platform CrowdStreet. In its investment offering, Nightingale said the property is a bargain because Sumitomo must unload as its loan is about to come due.

“The investment offering presents a rare opportunity to acquire a trophy office at a steep discount because the seller is ‘forced’ and ‘pressured’ and needs to transact regardless of market conditions due to investor redemptions and upcoming loan maturity in Q2 2022,” Nightingale’s offering summary stated on CrowdStreet.

According to the offering, the crowdfunding investors who fund the acquisition will be part of a larger $330m capital package that includes $185M in senior debt, $60M in mezzanine debt and $8.5M in capital from Nightingale.

The offering said the Atlanta Financial Center’s five largest tenants—including Truist, with a 265K SF footprint; Morris Manning & Martin, with 134K SF; Starr Indemnity, with 62K SF; North American Electric & Reliability, with 59K SF; and Foy & Associates, with 49K SF—have been at the property for several decades.

Current rents are below market. Nightingale is underwriting a projected 23.5% rent increase, to $42 per SF.

Nightingale said in its offering that it expects to be able to get rents of up to $60 per SF at the AFC after the completion of Hub404, a capped park adjacent to the financial center in Buckhead, a suburb of Atlanta. The nonprofit Hub404 Conservancy is building the project.

The company compared the Hub404 project to NYC’s High Line development, a mixed-use complex with green space that was built over an old rail line on New York’s West Side.

In a webinar on CrowdStreet, Will Hutton, Nightingale’s director of acquisitions, said the current landlord has 50K SF in letters of intent or offers to lease out with tenants. Hutton said 196K SF is vacant at the AFC.

According to CrowdStreet, investment funds for the deal are due by July 8.

Truist recently announced that it will be moving its securities division, including 1,000 employees to a new development at Truist Park, next to the Atlanta Braves’ baseball stadium in Cobb County. According to a report in the Atlanta-Journal Constitution, Truist will be the anchor tenant of a new office building at the development, known as The Battery.