Lenders Seize Uptown Charlotte Office Tower After Foreclosure

Two lenders have seized a major uptown tower at a steep discount after foreclosing on the property, the latest red flag for Charlotte’s struggling office market.

Citizens Bank and Synovus Bank officially took ownership of the 32-story, 587,000-square-foot office building at 400 South Tryon Street with a $36 million credit bid, the Charlotte Business Journal reported.

The bid amounts to roughly one-third of the property’s $115.3 million assessed value, and about 40 percent of the $93.5 million balance on the loan former owners Oaktree Capital Group and Trinity Capital Advisors defaulted on.

The foreclosure deal comes after months of delays and legal maneuvering.

Oaktree and Trinity purchased the tower built in 1975 for $133.5 million in 2018 but fell behind on loan payments in July 2023. Citizens and Synovus foreclosed in December, and after three postponed auction dates, no one bid during the 10-day upset window following the banks’ offer.

The new owner has not disclosed plans for the aging tower. No deed has yet been filed transferring ownership, but the foreclosure is final, according to court records. The tower is currently just 23 percent leased, according to CoStar, with major tenants including LaBella Associates and Olly Olly.

The sale marks a sharp retreat for Oaktree, a global private equity firm known for distressed real estate bets — and could signal further trouble for Charlotte’s older office properties.

Demand for premium office space remains high, but aging office properties are struggling in the wake of rising rates, remote work shifts and flight to quality trends pushing companies to newer buildings. More than 80 percent of the vacancy in Charlotte’s office market is concentrated in buildings constructed before 2015, a recent JLL report said.

Lenders and investors are watching closely to see whether 400 South Tryon becomes a one-off discount or an ominous benchmark for future distressed sales in one of the Southeast’s hottest office markets pre-pandemic.

Meanwhile, efforts are underway to revitalize the uptown area, including a proposed tax increase to fund marketing and beautification initiatives aimed at reducing office vacancies.

— Judah Duke