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Fully Leased Alpharetta Office Building Faces Foreclosure

The lender on a fully occupied Alpharetta office building has moved to foreclose on its owner, a move that shows just how aggressively some banks are trying to remove office debt from their books.

3750 Brookside Parkway, the 105K SF office building in Brookside Business Park in Alpharetta.

Renasant Bank has filed a notice of mortgage foreclosure in Fulton County for an $11.9M loan attached to 3750 Brookside Parkway, a two-story, 105K SF office building owned by OA Management within Brookside Business Park, according to public notices listed in the Fulton County Daily Report.

While the building is now completely full, its anchor tenant, Hi-Rez Studios, is downsizing from 60K SF to 25K SF later this year and two other tenants have approaching lease expirations, said Brian Granath, a partner at OA Management's parent company, OA Development.

“There is some upcoming vacancy later this year, but the bank does not appear to be interested in office loans anymore,” Granath said in an interview. “They asked us to pay off the note when it came due and obviously at this time, it’s difficult to find office debt.”

OA took out the mortgage in 2015 with Brand Bank, which merged with Renasant in 2018. It originally matured in August 2020, the Atlanta Business Chronicle reported, which was first to report the foreclosure action.

The loan was modified and extended by 12 months, but OA was required to pay it out by August 2021, along with accrued and unpaid interest, the ABC reported. Renasant declared OA in default, and Granath said the bank's unwillingness to extend the debt left the landlord in a lurch on how to stave off foreclosure.  


OA Development Partner Brian Granath and CBRE First Vice President Sabrina Gibson at Bisnow's Atlanta Office Outlook in 2022.

"Had they elected to work with us, they would have come out much better," Granath said. "Instead, they want out of office loans. This is a time in the market where lenders and borrowers need to be working together to get through the unprecedentedly rapid rise in interest rates."

The foreclosure sale is scheduled for April 6. If OA were to lose the building, it would serve as an example of many in the industry's fears that the record level of debt maturities this year will kick off a wave of distress in property markets.

Borrowers are having a difficult time lining up debt to refinance their buildings after the series of aggressive interest rate hikes by the Federal Reserve has made borrowing more expensive and is placing downward pressure on real estate valuations.

On top of that, the recent failures of Silicon Valley Bank and Signature Bank are expected to make regional banks — the lifeblood of commercial real estate lending — hesitant to risk further loans for refinancing, acquisitions and construction, Bisnow recently reported.

Granath said typical commercial loans expire every five years, which means for many investors, around 20% of their portfolios are set to mature in any given year. Granath said he expects the financial turbulence to last the next 18 months.

“Competitors are in our shoes and facing the same thing,” he said. “All of these 4.5% interest rate loans are rolling at 6.5% to 7%. And now with the banking crisis, banks are unwilling to lend cash.”