ATLANTA — Six office towers and an underground mall in downtown Atlanta are back in the hands of lenders after their owners defaulted on their loans. This is because much of the American workforce is working from home due to the pandemic.
The Atlanta Journal-Constitution reports that Miami-based Banyan Street Capital owes more than $125 million on parts of the Peachtree Center complex, a cornerstone of downtown Atlanta.
Banyan Street’s ability to repay loans may be undermined after Truist Financial Corp. moves from two towers as it consolidates offices in 2021. It accounted for over a fifth of the rent in Peachtree Center. According to the report, as of April, buildings were nearly 40% vacant, compared to an overall vacancy rate of 21% for office space in the Atlanta area.
A foreclosure auction was held Tuesday on the steps of the Fulton County Courthouse, with one investor bidding just $1.5 million in cash. But lenders, represented by Situs AMC, overwhelmed the measly cash bids by offering him $127.5 million as debt owed to Banyan Street. Investors bought commercial mortgage-backed securities to finance Banyan Street, but Tuesday’s auction leaves the building, not the cash.
“I hope this isn’t a harbinger of the future,” said AJ Robinson, president of Central Atlanta Progress and the Downtown Atlanta Improvement District.
Ownership changes may not affect current tenants as their leases have not expired. More tenants may move out when the lease period ends. The Peachtree Center also includes the Marriott Marquis and Hyatt Regency Convention Hotel, the Merchandise Mart now known as Americas Mart, and other buildings, none of which were part of Tuesday’s foreclosure.
Banyan Street has spent millions of dollars upgrading buildings and malls in a complex designed by Atlanta developer and architect John C. Portman Jr. and multiple parking lots.