Wells Fargo Looks To Foreclose On $84M Loan Tied To 4 Westside Projects
The owners of four adaptive reuse projects in Atlanta’s Upper Westside — which count a brewery and a Michelin-starred restaurant among their tenants — are facing foreclosure after defaulting on an $84M loan.
Wells Fargo has scheduled a public foreclosure auction for seven buildings that make up four projects owned by Detroit-based Crestlight Capital and J.P. Morgan Global Alternatives, according to a public notice.
Crestlight and J.P. Morgan's portfolio spans 360K SF of creative office and retail projects: the 79K SF Inland Tract, the 110K SF Complex West Midtown building, the 83K SF brick-and-timber Puritan Mill, and the 91K SF Ellsworth Office Lofts adaptive reuse project.
The joint venture acquired the portfolio, called the Westside Collective, in October 2021 for $114M. Wells Fargo originated a three-year, $84.1M loan to finance the purchase when interest rates were near zero, but when the debt matured last fall, rates were at their highest point in a generation.
Officials with Crestlight and Wells Fargo didn't respond to messages seeking comment.
Cushman & Wakefield is marketing the Westside Collective for sale on behalf of Wells Fargo even as the bank pursues foreclosure. The listing says Wells Fargo could provide seller financing to sweeten the deal for potential buyers and would consider selling off pieces of the portfolio or all of the buildings at once.
“Westside Collective presents a generational opportunity to amass a foothold of rare proportion within the most supply-constrained and highly sought-after property segment in the marketplace,” the marketing site says.
It is unclear whether the brokerage team — Executive Director Samir Idris, Vice Chair David Meline, Director Molly Millard and senior associate Burch Mixon — is still seeking buyers.
Meline declined to comment.
At the time of its purchase, Crestlight Chief Investment Officer Brian McAlpine told Bisnow the firm was attracted to the mixed-use project as a magnet for companies looking for creative office space, including law firms, ad agencies and other media.
McAlpine also said the firm believed that Microsoft’s plans for a 90-acre corporate campus on the Westside would have a “snowball effect over time” with tenant demand. The tech giant halted plans to build the sprawling office and housing complex less than two years later.
The office market hasn't recovered. The vacancy rate for the 3M SF of Class-A office space in the Westside submarket topped 50% in the fourth quarter, according to Lincoln Property Co. Rental rates for prime Westside office space topped $48 per SF, according to LPC, $17 more than the Metro Atlanta average.
The creative spaces and hot restaurant scene that lured tech tenants coming out of the pandemic have lost some luster in recent months as companies began to focus on the bottom line and seek cheaper Midtown office spaces, T. Dallas Smith & Co. principal Cedric Matheny said.
“Some of our clients have been in severe cost-cutting mode over the past two years,” Matheny said.
As for the distress in the Westside Collective and other creative office projects nearby, Matheny said he doesn't think the projects themselves are to blame.
“The spaces are beautiful. There’s a place for them,” he said. “There will be tenants who will occupy them. It’s just slow.”
The entire Westside Collective portfolio is around 70% leased, according to CoStar information obtained by Bisnow, and includes retail and restaurant tenants like Bold Monk Brewing Co., Michelin-starred restaurant Bacchanalia, Star Provisions Market and event space The Foundry at Puritan Mill.
The Atlanta Business Chronicle, which first reported the pending foreclosure, reported that Wells Fargo had already taken control of the properties.
The foreclosure is scheduled for the Fulton County Courthouse steps on March 4.
