The building's distress stemmed from its last sale at the very height of the real estate boom. The prior owner, BentleyForbes bought the trophy tower for $436 million from Cousins Properties and Bank of America in 2006. Soon after, office vacancies soared and property values and rents plummeted following the economic collapse.
An executive with BentleyForbes said in a statement the firm worked with LNR “for more than a year to identify a viable way forward,” and that transferring control to LNR and the bond holders was the best way forward.
The 1,023-foot tower at 600 Peachtree Street, straddling the gateway between Midtown and Downtown, is a garnet-hued obelisk when the sunset plays off its Napoleon red granite façade. Its 50-ton spire is splashed with 23-karat gold leaf.
The building was planned as the headquarters of C&S Bank in the late 1980s. It was later renamed for successors NationsBank and ultimately Bank of America.
The tower may not be the last signature office or retail complex to change owners. Delinquency rates for commercial mortgage backed securities, or CMBS, just one type of loan for commercial properties, remains near all-time highs in metro Atlanta, according to real estate research firm Trepp.
A total of $2.54 billion in CMBS loans, or 20 percent of the value of all such loans, were past-due in metro Atlanta in January, according to Trepp. The delinquency figure nationwide was 9.52 percent.
Borrowers have struggled to refinance given falling values and trouble filling vacancies.
Major banks and institutional investors also lent on commercial property, but CMBS loans, which typically make higher leveraged loans at high interest rates, became popular last decade.
Their use peaked in 2007. Many CMBS loans come due in five years, making 2012 a feared year.
“I think unfortunately we’re only in about the third or fourth inning," said Henry Lorber, an expert in distressed real estate and a managing director at Atlanta-based Hays Financial Consulting.
Big-name tenants filled Bank of America Plaza when BentleyForbes bought it. But the owners soon had to grapple with the Great Recession, corporate cutbacks in office space and a glut of competing new space in Midtown and Buckhead.
Ernst & Young left a few years ago and law firm Troutman Sanders and Bank of America reduced their space. Law firm Paul Hastings also is leaving for another building.
In metro Atlanta, vacancy remained near record highs in the third quarter 2011 at 16.9 percent, according to CoStar Group, with rents at $18.36 per square foot, down from $20.28 in 2008.
Gil Burstiner, commercial real estate partner at the law firm of Hartman Simons, said the ordeal will help reset market prices for real estate, and the eventual new owner will likely set rental rates at a new or near the bottom and improve the facilities to lure tenants.
At the courthouse, lawyers bid out scores of other properties from Fairburn to Alpharetta. A protestor held a sign outside the courthouse demanding Bank of America stop residential foreclosures.
“How much are they selling it for?” the protester asked a reporter. " I’ll open the bidding at $2.”
Timeline of a tower
Late 1980s -- C&S Bank and Cousins Properties announce plans for a new C&S headquarters, to be Atlanta’s tallest building, at 600 Peachtree Street.
1991 -- C&S/Sovran is acquired by Charlotte-based NCNB and becomes NationsBank, a precursor to Bank of America.
1992 – The 55-story, more than 1,000-foot building opens as NationsBank Plaza.
1999 – The tower’s name officially changes to Bank of America Plaza after NationsBank acquires Bank of America and takes its name.
2006 – California real estate firm BentleyForbes buys Bank of America Plaza from Bank of America and Cousins Properties for an Atlanta-record $436 million.
February 2011 – Fitch Ratings issues a report stating Bank of America Plaza is in “imminent default” and a special servicer has been brought in to help work out the troubled debt.
Tuesday – Bank of America Plaza is foreclosed.
Bank of America Plaza By the Numbers
23 – The 50-ton spire at the top of Bank of America Plaza is covered in 23-karat gold leaf
55—Floors in the building
1,023 – Bank of America Plaza is 1,023 feet tall.
1.28 million – The total square footage of Bank of America Plaza
Architect: Kevin Roche, John Dinkeloo and Associates
Sources: AJC archives, BentleyForbes