Sumitomo aims to ditch loan on ailing Atlanta Financial Center

A loan backed by the Atlanta Financial Center is hitting the market and expected to sell at a discount, an ominous sign for the struggling office sector. 

The 915,000-square-foot office complex, owned by Sumitomo Corporation of Americas, is being marketed by Cushman & Wakefield, the Atlanta Business Chronicle reported.

Sumitomo bought the property, at 3353 Peachtree Road Northeast, for $222.5 million in 2016 and now faces a challenge with the loan balance of $122.5 million. The sale price was $243 per square foot, and the remaining balance comes to $134 per square foot.

Marketing materials for the loan, distributed widely to potential buyers, didn’t initially name the property, but real estate professionals identified it as the Atlanta Financial Center, the outlet reported. 

The lenders behind the loan haven’t been disclosed, though the loan is expected to sell for well below its balance, market insiders said.

This potential sale aligns with the broader trend of declining office property values across the United States. They have plummeted approximately 35 percent from their peak, according to Green Street Advisors. 

In Atlanta, the Proscenium building in Midtown recently sold for $83 million, a 30 percent drop from its sale price two decades ago, illustrating the pressures on office real estate.

Further complicating matters, long-term tenant Morris, Manning & Martin recently made plans to leave the Atlanta Financial Center after nearly 40 years. Another major tenant, Truist Securities, is also planning to relocate. The property is over 85 percent leased, but the departures of these anchor tenants raise concerns about the building’s future viability.

Cushman & Wakefield’s Southeast office investment team, led by Samir Idris and David Meline, is spearheading the loan sale alongside the firm’s national loan sale team. Preliminary bids are expected in the coming weeks. Potential buyers could choose to foreclose on the property or extend the loan hoping for market conditions to improve.

—Rachel Stone

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