Landmark Equitable building in foreclosure

Downtown Atlanta’s Equitable building, an iconic 33-story office tower that once dominated the city’s skyline, has fallen into foreclosure.

A foreclosure notice published Wednesday said the 40-year-old skyscraper is scheduled to be auctioned on the Fulton County courthouse steps on May 5.

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The dark Equitable Building in downtown Atlanta has helped define the city’s skyline since 1968.

• Photos: Equitable Building through the years



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The building’s owner, Equastone 100 Peachtree LLC, owes $52 million on the mortgage to Capmark Bank, a division of Horsham, Pa.-based Capmark Financial Group.

San Diego-based Equastone paid $56.8 million for the building in May 2007 at the height of the commercial real estate boom. According to Fulton County property tax records, the building has fallen in value and is now worth about $44.8 million, including the land.

The Equitable building sits across from Woodruff Park on the site of the old Piedmont Hotel, once one of the city’s poshest hotels. The building does not have a true anchor; instead, it’s home to midsize and small businesses and is about half leased. Current tenants include the district offices of U.S. Rep. John Lewis (D-Atlanta.). A Starbucks popular with office workers and Georgia State students is on the ground floor.

Atlanta’s commercial real estate market has been hard hit by the recession, which has caused vacancy rates to rise and rentals to fall. Deals struck earlier this decade are particularly vulnerable, said Alan Wexler, president of Databank.

“I would say at least 25 percent of deals made in the last five years or so are probably having issues,” he said.

Before the economy collapsed, Equastone had big plans for the office tower. The company planned to expand the first two floors to bring them closer to the sidewalk and hoped to land a major tenant whose name might replace the “Equitable” at the top of the building. Equitable is no longer in the building.

The tower was one of several buildings that was hard hit when a tornado struck downtown in March 2008.

A.J. Robinson, president of Central Atlanta Progress, said the foreclosure “is not surprising.”

“I don’t think this is indicative of the downtown office market in general,” Robinson said. “I don’t think it’s location or even tornado. I just think they got stuck in the vise of lower-than-expected occupancy and too much debt.”

He added, “It’s a blow for the owners but it’s not a blow for downtown. It’s a great building. The location is good and getting better.”

The Equitable building is not Equastone’s only troubled property. The One Riverwalk Place office building in San Antonio defaulted on its mortgage and faces foreclosure, the Wall Street Journal reported last month.

The lender, Capmark, is having problems of its own. Capmark, a huge commercial lender with offices in North America, Europe and Asia, lost $800 million in the fourth quarter. This week, the company announced it would delay its annual report by two weeks as it scrambles to pay off looming debts.

Capmark is the former GMAC Commercial Holding Corp., the commercial real estate division of General Motors’ finance arm. GMAC Commercial Holding was purchased in 2006 for $1.5 billion by a team of investors including Kohlberg Kravis Roberts and Goldman Sachs.

— Staff writer Rachel Tobin Ramos contributed to this article.