Bank of America Plaza: From a $436M Purchase to a $235M Foreclosure
- Feb 13, 2012
In 2006, the purchase of the iconic Bank of America Plaza for $436 million, or $348 per square foot, set a new high for the local commercial market, standing as a symbol of the booming Atlanta market. At that time, buyer BentleyForbes was confident in the stability of the market; steady demand along with very little new construction predicted a continuous climb of rents.
At the time of the purchase, Bank of America Plaza—Atlanta’s tallest skyscraper and the tallest U.S. building outside of New York or Chicago—was nearly 99 percent leased. Yet by 2008, the building’s occupancy fell to 86 percent, along with the overall Midtown leasing activity, which decreased about 15 percent. The Atlanta Business Chronicle reports that, in danger of losing the building’s anchor tenant, BentleyForbes asked for $567 million in development authority bonds in order to refinance the acquisition, finance the renovation of the office space and add amenities, restaurants, stores and even a hotel (the hotel idea being dropped the following year). With Boston Consulting leaving the building for the new 1075 Peachtree and Bank of America renewing its lease for less than half of its initial 400,000 square feet, the building’s rental rates dropped from 2006’s $30 per square foot to approximately $25.
For the past weeks, BentleyForbes has tried to find a capital partner to help restructure the $363 million mortgage, but has run out of time. Working with LNR Partners for over a year in order to find a way of stabilizing the skyscraper’s capital structure, the only viable solution was that of transferring the ownership of the Bank of America Plaza to LNR as special servicer for the CMBS bond holders they represent.
During a foreclosure auction held Tuesday, February 7, Bank of America Plaza was sold for $235 million—46 percent less than in 2006. According to the Business Chronicle, JPM CC 2006 CIBC17 Office Limited Partnership, an affiliate of the bondholders, took title of the property after placing the $235 million credit bid. The bondholders are advised by special servicer Miami-based LNR Partners LLC.
Photo Credits: BentleyForbes Official Website