Manulife Pays $17M For Brief Extension On Proscenium Loan. A Sale Could Be Next
A Canadian investment giant that has been beset by troubles in its office investments has paid down a third of its maturing loan backed by a prominent Atlanta tower as it has looked for a buyer to take it off its hands.
A Manulife Financial Corp. affiliate paid lender JPMorgan Chase more than $17M last month to reduce the balance of its $64.8M loan tied to the Proscenium to $47.5M, according to Atlanta property research firm Databank.
The loan was set to mature June 21, but JPMorgan extended the maturity date to Aug. 20 with an option to stretch it to September, according to Databank.
Manulife purchased Proscenium, at the corner of 14th and Peachtree streets, in 2004 for $118M from a development partnership led by Trammell Crow Co. In 2017, records indicate that John Hancock Life Insurance Co., Manulife's American affiliate, transferred the property to Hancock REIT Proscenium for $146M. Fulton County pegged Proscenium’s value at $139.6M this year.
Manulife tapped CBRE earlier this year to market the 520K SF tower in the heart of Midtown for sale, according to an offering memorandum obtained by Bisnow.
“The only thing I can think of why a landlord would extend one month only is to allow the deal to close,” Luis Baez, a debt broker with Colliers, told Bisnow in a text message. “Could be already under contract, and the lender sees the probability of closing [as] high, so granted an extra month. I had this happen on a deal I worked on a couple of years ago.”
Manulife officials didn't respond to messages seeking comment.
The Proscenium is 76.5% leased to tenants including Acuity Brands, which has 33K SF, BakerHostetler with 32K SF and architectural firm Nelson Worldwide, which occupies 25K SF, according to a CoStar report obtained by Bisnow.
But Nelson inked a 7K SF lease at the Star Metals District, Spencer Morris, president of the project’s developer, Allen Morris Co., told Bisnow. It was unclear if Nelson plans to move from the Proscenium to Star Metals or if the deal is an expansion.
BakerHostetler’s lease expires in 2026, and two other leases totaling more than 17K SF expire this year, according to CoStar.
With mounting vacancies and increased competition from a new generation of amenity-rich office towers in Midtown, Manulife announced last summer that it planned to renovate Proscenium, including adding a new lobby, to make it more competitive, the Atlanta Business Chronicle reported. Manulife tapped JLL to lease the office space.
According to the CBRE offering memorandum, Manulife hasn't yet started renovations but will give the plans to the buyer.
Manulife isn’t the only Atlanta office landlord facing a debt maturity on an underperforming tower to get a lender lifeline.
Sumitomo Corporation of Americas received an extension and a capital infusion for improvements tied to its Atlanta Financial Center in Buckhead earlier this year. The firm failed to sell the 915K SF office complex that straddles Georgia Highway 400 after the CEO of the prospective buyer, Nightingale Properties, allegedly absconded with more than $50M in crowdfunding investor capital that was supposed to be used to purchase it last year.
