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Lender Takes Over 2.5M SF Peachtree Center Complex At Auction

Atlanta Office

Atlanta's iconic Peachtree Center has been taken over by its lender, throwing the future of the 2.5M SF downtown office and retail complex into question.

Part of the Peachtree Center complex in Downtown Atlanta.

Banyan Street Capital acquired the center, which consists of six office towers at 225, 229, 233 and 235 Peachtree St. and the shopping mall called The Hub, in pieces between 2006 and 2017, but on Tuesday it lost it all in a foreclosure auction, The Atlanta Journal-Constitution reported.

Commercial real estate financing firm SitusAMC, representing the investors that control a $115.3M commercial mortgage-backed security on the property, won the auction with a credit bid of $127.5M. Banyan Street failed to make a balloon payment on the debt in April, pushing it into default. Banyan Street found that the loan was “difficult to finance,” a spokesperson told the Atlanta Business Chronicle in a statement last month.

The only outside bid was a $1.5M cash offer from a local investor.

“It’s just disappointing to see because Banyan has been a very good steward of this asset in recent history,” Central Atlanta Progress President A.J. Robinson told the AJC. "They invested a lot of money in the buildings, and I think it’s just kind of sad to understand that whatever relationship between their lenders and them doesn’t seem to have worked out."

According to loan documents reviewed by both the AJC and the ABC, Peachtree Center's occupancy and revenues have been on the decline for some time. Net operating income declined from $18.9M in 2019 to $10.4M in the first nine months of 2021, the ABC reported. Occupancy fell from 72% in 2019 to 55% by December 2021, with Truist Financial Corp. vacating its offices last April.

Part of the Peachtree Center complex, the Marriott Marquis and Hyatt Regency convention center hotels and AmericasMart were not part of the foreclosure this week, the AJC reported.

This isn't the first time Banyan Street faced financial hardships with the property. In 2014, it refinanced Peachtree Center with $182M in long-term CMBS debt and $35M in mezzanine financing after the property had been in special servicing, Bisnow previously reported.

The complex was developed in phases by the late developer John Portman from the 1960s to the 1980s, but it has now succumbed to the fate of many older office and retail properties in the last two years — being taken over by lenders

Banyan Street told the AJC that the firm remains committed to its ownership of the 191 Peachtree office tower near Peachtree Center, as well as Ascent Peachtree, the multifamily tower built atop a parking garage at 161 Peachtree Center Ave.