Bank of America Plaza, the tallest building in Atlanta, will be sold in a foreclosure auction Tuesday, reflecting continued turmoil in the local real estate market, Bloomberg reported.
Owner BentleyForbes defaulted on a mortgage after buying the building from Bank of America Corp. (NYSE:BAC) and Cousins Properties Inc. for $436 million in 2006. Since then, the building's value has plunged by 54 percent, following the recession.
BentleyForbes struggled to refinance the tower at a lower rate, as banks have shied away from lending in non-core markets. Bank of America still occupies the building, but has cut its leased space in half. Rents in Atlanta have fallen around 10 percent from 2008 to $18.27 per square foot and the vacancy rate is 16.7 percent, according to CoStar.
A potential buyer could be a real estate investment trust. The major office landlords have posted strong results in the fourth quarter, on the strength of rental growth, and some are targeting distressed properties.
Bank of America is seeking to shed the rest of its real estate portfolio as part of a broader effort to cut costs and downsize the bank. The bank is seeking to sell and leaseback Fifth Third Center and the Heart Tower in Charlotte, N.C., and 222 Broadway in New York.
It is reviewing all its properties, which totaled around 120 million square feet and 26,910 locations at the end of 2010, with the exception of its headquarters in Charlotte and One Bryant Park, the gleaming skyscraper in Manhattan co-developed with the Durst Organization.