Atlanta’s tallest building scheduled for auction on the courthouse steps today

From Bank of America Plaza to be auctioned Tuesday in the AJC:

The 55-story, 1,023-foot building will be sold on the steps of the Fulton County Courthouse after landlord BentleyForbes missed mortgage payments.

The California-based commercial real estate investment firm bought the tower at the height of the real estate boom for an Atlanta-record $436 million. It has been working to avoid default.

From a much more thorough piece at the WSJ:

The tower’s troubles speak to broader woes faced by commercial real-estate investors who bought at the market’s peak, piling on debt as they expected rents to rise. Instead, rents and occupancies in most markets still are well below where they were in the boom years.

When BentleyForbes purchased the building for $436 million in 2006, it was 99.8% occupied, according to loan documents. This fall, a major tenant, Bank of America Corp., signed a new lease for less than half of its initial space, at a per-square-foot rent more than one-third lower, according to data from loan research service Trepp LLC.

Taken with other departures and a stressed Atlanta office market, the vacancy rate rose to 37%, and the property didn’t generate enough income to cover debt service, according to Trepp.

I’ve been posting quite a bit of good economic news of late, but this is just a reminder of the depth of the downturn and the bad investments made in both residential and commercial real estate.

If the tower sells for far less than it did a few years ago and if rents decline under the new ownership as seems likely, that will put major downward pressure on Atlanta’s premium office market, leading to more losses.

Of course, there are many benefits to lower prices for the renters themselves. Lower real estate prices are not entirely bad, unless you’re the property owner who paid too much in the first place.