Generation Atlanta Facing Foreclosure Over $104M Loan
An apartment tower that set sales price records in 2021 for Downtown Atlanta multifamily is now facing foreclosure.
Generations Property Owner LLC filed to foreclose on a $104M loan attached to Generation Atlanta, a 17-story, 336-unit luxury high-rise at 369 Centennial Olympic Park Drive, according to a notice filed with the South Fulton Neighbor newspaper.
The property is owned by Canadian real estate investment firm Frankforter Group, which purchased the property in 2021 from its developer, Kaplan Residential, for $126.9M. That set a new record for the most expensive apartment to trade hands within the Downtown Atlanta submarket. The original loan was granted by an LLC for Arbor Realty Trust, but it was transferred in May to Generations Property Owner, according to property record firm Databank.
Frankforter defaulted on the loan for failure to make its debt service payments in March, April and May and for failing to maintain at least $7.4M in liquidity, according to the notice.
Alston & Bird partner Eric Berardi, who is listed as representing the lender, declined to comment. Frankforter officials also declined to comment.
While a handful of multifamily properties have fallen into foreclosure in the past year, Generation Atlanta is one of the most prominent, said Ladson Haddow, who runs multifamily data firm Haddow & Co. It is also an example of buyers who came into Atlanta and spent heavily on multifamily, believing rents would continue to increase.
Earlier this year, LoanCore Capital foreclosed on its $48M loan to New Jersey-based Liquid Capital for The Optimist Lofts, a 212-unit mid-rise off Piedmont Road next to Interstate 85. LoanCore, under the 2115 Piedmont Road Holdings LLC, took back the property in March for $3.7M, according to the real estate database Reonomy.
After two years of inflating rent prices, a glut of new properties heading to market has forced prices down around Metro Atlanta. Generation Atlanta is 90% leased with monthly rents at $2 per SF, Haddow reported, below both the average rent for Downtown Atlanta of $2.09 per SF and the city as a whole of $2.24 per SF.
Rents at Generation Atlanta were around $2.10 per SF in 2021, when Frankforter purchased the property, and then jumped to around $2.60 per SF. But an occupancy drop since then forced the firm to push rents back down, Haddow said.
“Folks were overleveraging and anticipating that stronger rent growth was going to continue,” Haddow said. “The debt’s coming due and [those buyers are] more or less underwater on their investment.”
Frankforter Group was bullish on Metro Atlanta apartment investments, with plans to spend $2B on Sun Belt properties, the firm’s director of acquisitions, Staphane Benalal, told Multi-Housing News in December 2021. The Canadian firm entered the Atlanta market in 2018 by buying The Station at Richmond Hill, a 181-unit apartment complex, for $10.2M, and then The Preserve at Collier Ridge in Atlanta and Orchard Walk in Decatur, totaling 623 units, for nearly $40M a year later, according to Multi-Housing News.
