Bank of America Plaza, the tallest tower and the most identifiable building in the U.S. Southeast, was sold at a public auction Tuesday on the steps of the Fulton County, Georgia Courthouse. The $363 million Bank of America Plaza loan became delinquent in December after BentleyForbes stopped making payments.The noteholder had a winning bid of $235 million, according to attorney Howard Walker who ran the auction. The holders of the commercial mortgage bonds took ownership through a “credit bid” placed by LNR Partners, the tower’s special servicer.
BentleyForbes, based in Los Angeles, paid $436 million to
acquire the 55-story Atlanta skyscraper in 2006 from Bank of America and Cousins Properties Inc. in the city’s biggest
property deal. The 55-story Bank of America
Plaza building is a first-rate address in Atlanta for many top law firms
and corporations. Since the property market peaked a year after the
purchase, the 1.25 million-square-foot (116,000-square-meter)
building’s value has tumbled with tenants, including namesake
Bank of America, reducing space.
Atlanta has the highest rate of late payments for loans on
offices bundled into bonds among the largest U.S. metropolitan
areas, at over 25 percent, according to data compiled by Bloomberg.
That’s an increase from 10.4 percent a year ago and is more than
triple the national rate. The building's owners are just another victim to the real
estate bust that is sweeping over Atlanta. The area has been hit hard by over-building, lots of empty office space and inflated prices, Atlanta recently saw home prices fall to a thirteen year low and received the second-lowest ranking among 20 cities tracked in the Case-Shiller home price index, only Detroit did worse.
The tower was appraised at
$202 million in March, according to Bloomberg, a big reason the tower is worth so much less is the diminishing
fortunes of Bank of America. The bank which had occupied 30% of the
building will now use just 15% of it and starve the landlord of
needed tenants. To add insult to injury, the bank will pay half as much rent per
square foot as it had previously, according to a
December report from Fitch Ratings.
Bank of America has been laying off employees and selling and
shrinking businesses in an effort to shore up its balance sheet. In the
past year, the bank sold its Canadian credit card operations, said it
would exit the correspondent mortgage business and sold its remaining a
stake in China Construction Bank. Bank CEO Brian Moynihan said late last
year the bank would lay off 30,000 employees "over the next few years."This event and many like it reflects reality in America far better then the soaring stock market.