The Bank of America tower in Atlanta has taken the U.S. foreclosure crisis to new heights. The 55-storey tower, situated in Atlanta, is set to be sold at an open outcry auction Tuesday after landlord Bentley Forbes missed mortgage payments.
A Bloomberg News report has stated that the 1.25 million-square-foot (116,000-square-meter) building has lost 54 percent of its value and should end up in foreclosure.
The $363 million Bank of America Plaza loan became delinquent in December after Bentley Forbes stopped making payments because of expected losses, pushing the overall delinquency rate on CMBS debt to 9.32 percent, according to Moody's Investors Service.
The bank occupied 30 percent of the building but uses just 15 percent of it and the landlord has to depend on other tenants for the rent, reported The Street.
Atlanta, which was booming just a few years ago, recently saw home prices hitting a 13-year low and getting the second lowest ranking among 20 cities in the Case-Shiller home price index.
Bentley Forbes bought the property for $436 million from the Bank of America in 2006. According to the Bloomberg News report, in 2007, a year after the sale, U.S. office property transactions peaked at more than $200 billion.
The demand for securities has climbed this year due to two major factors - U.S. jobless rate fell in January to 8.3 percent, which is the lowest level in three years, and Europe's sovereign debt crisis abated.
The Tower 'Gone with the Wind'
The Bank of America tower is situated between Atlanta's downtown and Midtown areas, and is a block down Peachtree Street from Atlanta's historic Fox Theatre, where Gone with the Wind began filming.
It's a fine building, a beautiful building, and still very much a landmark, Kirk Diamond, senior managing director at broker Cassidy Turley, was quoted as saying by the Bloomberg. It just needs to be recapitalized and written down to a market level to be able to compete effectively, Diamond added.
The exterior of the 1,023-foot building is elegantly covered in granite of red Georgia clay. The tower, with lighted steel frame pyramid on top, can be seen from miles away.