The building’s owners, Equastone 100 Peachtree LLC, owes $52 million on the mortgage to Capmark Bank, a Utah lender. San Diego-based Equastone bought the building in May 2007 for $56.8 million.I find this quite telling - the building was bought with only $4.8 million down, or a 91.5% LTV. I don't think the building was fully leased when it was bought, for that matter. A 91.5% LTV would make the break-even point pretty narrow for a property already struggling with slightly high vacancies.
I am afraid that this sort of thing isn't really that surprising. Underwriting standards for commercial lending got pretty lax at the height of the boom - it wasn't just subprime residential mortgages. I've been working on a post illustrating this fact with a mini case study, I'll try and have that up by the end of the week. In any event, I wouldn't be surprised if we see more stories about commercial building foreclosures.
On a personal note, this news is disappointing because the Equitable is one of my favorite buildings downtown in terms of architecture. It is the building where I was first able to "get" modernism.
h/t: rustytanton via fb; photo courtesy mikehipp, on flickr