ATLANTA (AP) — Six office towers and an underground mall in downtown Atlanta are back in the hands of their lenders after the owner defaulted on a loan, a foreclosure that points to continuing uncertainty in the market for office space since the pandemic prompted much of America’s workforce to work from home.
The Atlanta Journal-Constitution reports that Miami-based Banyan Street Capital owed more than $125 million on parts of the Peachtree Center complex, a cornerstone of Atlanta’s downtown.
Banyan Street’s ability to repay its loans may have been harmed after Truist Financial Corp. moved out of two the towers in 2021 while consolidating offices. The bank represented more than a fifth of Peachtree Center’s rent, according to a report from investment firm Morningstar. The report said that as of April, the buildings were nearly 40% vacant, compared to an overall vacancy rate of 21% in Atlanta-area office space.
The foreclosure auction was held Tuesday on the steps of the Fulton County Courthouse, where one investor bid just $1.5 million cash. But lenders represented by Situs AMC put up $127.5 million representing the debt Banyan Street owed them, and this overwhelmed the paltry cash bid. Investors bought a commercial mortgage-backed security to loan the money to Banyan Street, and Tuesday’s bid leaves them with the buildings rather than the cash.
“I’m hopeful that this is not some kind of a bellwether of things to come,” AJ Robinson, president of Central Atlanta Progress and the Atlanta Downtown Improvement District, told the newspaper.
The change in ownership likely won’t affect current tenants, since their leases have not expired. More tenants could move out as their leases end. Peachtree Center also includes the Marriott Marquis and Hyatt Regency convention hotels, the merchandise mart now known as AmericasMart, and other buildings, none of which were part of Tuesday’s foreclosure.
Banyan Street spent millions to upgrade the buildings and mall at the complex designed by Atlanta developer and architect John C. Portman Jr., and has said it remains fully committed to other downtown Atlanta properties it still owns, including another office tower, a residential project and multiple parking garages.