Streets of Buckhead development needs $200M

Streets of Buckhead developer Ben Carter said Wednesday he is in talks with private investors to raise $200 million to resume work on the stalled luxury retail project.

Carter told The Atlanta Journal-Constitution he conferred last week with investors about how to get the massive development completed.

Unable to get a traditional bank loan amid the credit crunch, Carter said he has been seeking private investment money instead -- a position many developers are in.

“I think that in the next 30 days we will have selected the investor and have completed an agreement with all existing lenders,” Carter said. “The goal is to start construction shortly after that.”

John Leonard, vice president and regional manager in Atlanta for real estate investment firm Marcus & Millichap, said Carter will have to pay higher interest rates on new investment money, at a time when there's a downward pressures on retail rents, especially in Buckhead.

“There is a lot of money out there, but they are looking for higher returns than they have in the past,” Leonard said.

Carter used two large loans to buy the land and to start construction of a parking deck, two apartment towers and lay the foundation for the retail shops before halting construction last year.

Bank of America gave Carter a traditionally-structured land loan for $170 million, and CBRE Investors lent him $150 million. Carter and three partners also invested $20 million of their own money, Carter said. He would not name the partners.

His Bank of America loan has been extended three times, he said, and he thinks it will be extended again later this year when it comes due. The bank and CBRE have are involved in discussions with potential new investors.

“The Bank of America message was they want to see this project get completed with their loan intact,” said Carter. “Their loan is more valuable if the project is completed. They understand that.”

Bank of America and CBRE Investors, whose loan comes due in 2012, declined to comment.

Banks can take a loss on their books for loans they believe will never be paid off, or “write down” a loan to reduce the amount that must be repaid.

“Carter has been a great developer on a lot of projects. If I were Bank of America, I’d be trying to make sure he stays alive,” said Henry Lorber, director of Hays Financial Consulting in Buckhead.

Carter said Bank of America had not discussed any of these options with him.

Carter assembled the eight-acre parcel, in part, by paying record prices -- up to $500 per square foot -- at the height of the commercial real estate boom. That helped him persuade long-time land owners to sell restaurant and club buildings that once comprised one of Atlanta’s most famous entertainment districts.

Carter’s vision is to replace it with a “Rodeo Drive” of the South. He has signed leases with several gold-plated retailers, including Hermes (which already opened in a temporary location on the site) and jeweler Van Cleef & Arpels. But leasing came to a halt after the economic crisis in late 2008, Carter has said.

Carter said he now hopes to open the project in spring 2011, with 375,000 square feet of retail, restaurant and entertainment space -- a smaller footprint than originally planned.

He said he has leased 60 percent of that, calling that a crucial threshold to help convince new investors to buy into the project. He said he signed 100,000 square feet since the fall, including two entertainment concepts, six restaurants, two retailers and a spa, he said, but wouldn’t disclose their names.

Staff reporter Paul Donsky contributed to this report.