Colony Square office owners late on $116M debt
Two 22-story high-rises at Colony Square, located in the heart of Midtown’s thriving business district, are among three properties in danger of going back to lenders, a ratings agency says, confirming Atlanta commercial real estate is still working through its troubles.
Last week, Fitch Ratings first announced three commercial loans are in default in Atlanta.
At risk is the real estate firm Tishman Speyer of New York, which bought the two office towers at Colony Square in 2006. The firm entered the Atlanta market that year by buying five properties, including two Midtown Plaza office buildings on West Peachtree Street.
Fitch further reported Wednesday that Tishman owes $116 million to Wells Fargo for Colony Square and $65 million to Wells Fargo for Midtown Plaza and that both loans have gone into default. Default occurs when debtors are late paying back loans; if the issues are not worked out, it could lead to foreclosure or other action by lenders.
A Tishman spokesman said the firm has been in unsuccessful discussions with lenders for several months to try to restructure the debt.
“We will continue to look for a solution and in the meantime, tenants and operations will be unaffected," the company said in a statement.
Ken Ashley, senior director of tenant services at Cushman & Wakefield in Atlanta, said it’s a difficult time to be renegotiating loans.
“It’s hard to make the debt numbers work in properties purchased at high tide as we approach a low tide environment,” he said. “I don’t envy those trying to renegotiate large loans, given the huge decline in property values. This may be a historically bad time for ownership in commercial real estate.”
