Peachtree Group has originated a $42 million first mortgage loan to finance Banyan Street Capital’s acquisition and repositioning of the Atlanta Financial Center, a 914,774-square-foot, three-building Class A office campus in Atlanta’s Buckhead submarket.
The 13.05-acre property had been acquired in 2016 by a Sumitomo Corp. affiliate for $222.5 million, but reportedly faced tenant departures, softening fundamentals and shifting capital priorities. The property features structured parking for 2,335 vehicles.
The floating-rate loan carries a 36-month initial term with a 12-month extension option and is backed by completion, interest and carry guarantees from Banyan, according to Peachtree Group.
Peachtree reported that comparable transactions in the office market reflect a 98 percent premium to this loan basis, indicating the strength of the collateral and business plan.
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Banyan stated that it plans to reposition the property, starting with the lease-up of the North Tower, supported by capital expenditure reserves and funds for tenant improvements and leasing. The new owner reportedly will also explore larger tenant opportunities and future redevelopment options.
The property’s three towers, at 3333, 3343 and 3353 Peachtree Road NE, were completed between 1982 and 1989, according to Yardi Research Data.
Daniel Siegel, president & principal CRE of Peachtree, opined that the office sector is at an inflection point and that negative market sentiment is concealing true opportunities. He contends that most vacancy is connected to troubled assets, and once those are accounted for, market fundamentals look much better.
Another bifurcation
Peachtree cited limited new supply, a declining inventory of sublease space and stable tenant demand as reasons to expect a market recovery in Buckhead.
Atlanta’s office market showed “modest signs of increased demand” in the second quarter, although—as in so many markets—there was a striking bifurcation between Class A and Class B properties, according to a report from Partners Real Estate. Class A net absorption was a positive 359,653 square feet, versus a negative 345,092 square feet in Class B properties, in the second quarter.
Last December, Banyan Street Capital picked up an apparent bargain when it acquired 1250 H St., in Washington, D.C., for $27.5 million, versus an assessed value of $76.2 million. The 196,490-square-foot Class A office building was sold by Equity Commonwealth and was 90 percent occupied.