Source: Alan Farnham / ABC News
With the forced public auction yesterday of Bank of America’s signature 55-story office tower in Atlanta, the U.S. foreclosure crisis–commercial division–just got significantly worse.
Atlanta’s troubles and those of other cities, say experts, are the result both of overbuilding and of the issuance of commercial mortgage-backed securities (CMBS) that inflated office building prices. Nationwide, some $5.8 billion worth of five-year office loans, bundled into CMBS, must now be refinanced. With all that debt coming due, experts predict, more distressed properties will soon come to market, and the price per square foot of commercial office space will continue to fall.
“It’s a fine building, a beautiful building, and still very much a landmark,” Atlanta real estate expert Kirk Diamond, speaking to Bloomberg News, said of the former Bank of America Plaza. “It just needs to be recapitalized.”
The tallest tower in the U.S. Southeast went for $235 million at auction, after landlord BentleyForbes had missed mortgage payments. BentleyForbes bought the building from Bank of America Corp. in 2006 for $436 million.
More than 25 percent of loans on commercial buildings in Atlanta that were bundled into bonds are delinquent, the highest rate of the largest U.S. metro areas, according to data compiled by Bloomberg.
To read this article in its entirety visit ABC News.
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