A recent article said that we should, in 2012, be on the lookout for a wave of foreclosures on commercial real estate projects that were financed (or re-financed) in 2007. Evidently, 5-year notes were a popular way to finance commercial real estate projects. Don’t know if this project had a 5-year note, but someone just took a big hit on what was owed.
Resurgens Plaza back to lender for $53 million
From Atlanta Business Chronicle, by Doug Sams, Staff Writer
Date: Monday, December 19, 2011, 2:04pm EST
CW Capital Asset Management has foreclosed on Resurgens Plaza, the opulent 27-story Buckhead tower, for $53 million, after negotiations to restructure the building’s loan ended between the special servicer and owner Behringer Harvard.
The foreclosure sale took place Dec. 6 and marked a 35 percent decline from the $82 million value of the loan, according to Fulton County records. The debt had been transferred to special servicing this year, a move that often signals negotiations with a building’s ownership to restructure the loan.
Behringer Harvard acquired the Resurgens Plaza in 2006, the height of the market and prior to the Buckhead and Midtown building boom that added towers on Peachtree Road and at Lenox Road and Georgia 400. It was built in the 80s, a period that included the construction of other notable towers including One Atlanta Plaza and the Atlanta Financial Center. Resurgens Plaza was known for its ornate lobby, outfitted with wood and marble, “Ritz-Carlton-like” in its day, and the building’s office space was marketed to wealth management firms and law firms.
The latest building spree, however, coupled with the downturn, created an ultra-competitive landscape in which owners of Atlanta’s older towers, some purchased at peak prices, had to compete with the ownership of new towers and the huge concessions they were able to offer, including free rent and tenant improvement packages.
The same competition is being played out in many commercial real estate markets, though Atlanta’s office tower boom between 2006 and 2009 has made it worse and allowed it to stand out.
Behringer Harvard, and others, often lacked the flexibility to adjust rates and concessions, until their loans were restructured, real estate observers said.
Behringer Harvard, for example, lost the law firm Fisher & Phillips LLP to Midtown’s 1075 Peachtree, developed by Daniel Corp. and Selig Enterprises in the past few years. It vacated three floors, while another tenant downsized by more than a floor.
Behringer Harvard and CW Capital had been in negotiations to restructure the loan for months.