After Scandal Blew Up A Sale, Atlanta Financial Center Owner Lands Extension
The owner of the Atlanta Financial Center has been given a lifeline on its $150M loan, which matured earlier this year.
Sumitomo Corporation of Americas is the registered owner of the three-tower, 915K SF office complex in Buckhead, which straddles Georgia 400, and tried to sell the property two years ago.
That deal was never consummated, and the building's ownership has secured a loan extension after making an equity payment, Sumitomo Senior Director Go Matsuura told Bisnow in an email.
Matsuura said Sumitomo advises the ownership of AFC, but he declined to identify its true owner or give more specifics about the loan extension. Crédit Agricole Corporate and Investment Bank, the banking arm of Crédit Agricole Group, drafted the original loan.
It is unclear if the bank remains the holder of the modified loan. Sumitomo paid $222.5M for the complex in 2016.
“We have a great relationship with our tenants, property management and leasing team as well as our lender,” Matsuura wrote in the email. “We just completed the South Tower roof replacement and several other capital projects are underway. AFC is a highly desired Class-A project, and ownership has capital for leasing activity.”
Matsuura declined to answer further questions.
The loan extension and capital improvement plans are the latest twists in the saga of AFC, which has been the focal point of a real estate crowdfunding embezzlement scandal.
In June 2022, Sumitomo agreed to sell Atlanta Financial Center to New York-based Nightingale Properties at a $78M loss. At the time, Nightingale had told investors that Sumitomo was compelled to sell the project because of maturing debt.
Nightingale raised more than $50M for the purchase from investors via CrowdStreet, but it failed to close on the deal despite assurances that it was close to a resolution.
The sale officially blew up last spring when the entity Nightingale formed to execute the transaction was taken over by an independent manager, who revealed to CrowdStreet investors that nearly every penny of their money had disappeared.
The fiduciary eventually determined that Nightingale CEO Elie Schwartz used the investor money for personal and business expenses, including diverting $12M to buy First Republic Bank stocks and options just weeks before the bank failed.
Under the pall of ongoing Department of Justice and Securities and Exchange Commission investigations, Schwartz entered into a settlement agreement with CrowdStreet investors to repay the money over a few years with quarterly payments. After making one $3M installment, Schwartz failed to make further payments by April, defaulting on his agreement.
That spurred the special fiduciary to push the bankruptcy court to seize all of Schwartz's assets. That process is still playing out in court, with the next hearing scheduled for July.
The loan extension comes as owners of older office buildings face an existential crisis, especially those saddled with maturing debt in a market where interest rates are as high as they have been in a generation.
Vacancy in Atlanta office buildings is at a record high, and more than a third of Class-A office space is available for lease. At AFC, there is more than 275K SF of office space available, according to the building's website, or roughly 30% of the property.
AFC was first constructed in 1982 as an 11-story office building occupied by the storied Atlanta bank Robinson-Humphrey. Robinson-Humphrey later became SunTrust Bank, which merged with BB&T in 2019, becoming Truist Bank.
Two years later, the bank began work on a 19-story expansion. But that land was also part of a then-planned expansion of Georgia 400, putting Robinson-Humphrey executives at loggerheads with Georgia Department of Transportation officials, who threatened to use eminent domain to take the property for the highway project, Rough Draft Atlanta previously reported.
The parties compromised. The bank built a third office tower that capped the eventual highway extension and a MARTA rail line.
