Wednesday, April 8, 2009

Disappointing, but indicative

The Equitable building downtown is in foreclosure. It will be auctioned on the Courthouse steps May 5:
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

3 comments:

  1. This is such a kick-ass building. I hope whomever buys it loves it.

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  2. Yes the Equitable is way above average for downtown. It feels good at street level. It was even better before the fountain of horror came along across the street. The cafeteria that used to occupy nearly all of the 2nd floor was one of the great locations to eat in downtown.

    Ride the escalator up to see how nice it is. Kinko's is in a great feeling place.

    There used to be a controversy about the brightness of the "Equitable" signs on top of the building. Some claimed that it killed birds. They used to be very, very bright.

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  3. I have used that Kinkos many, many times. It is a great use of space. I wish the lunch place there had been able to stay in business - in my memory it has always been empty.

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