Kennesaw Office Complex's $37M Loan Moved To Special Servicing
The Miami-based owner of a three-building mid-rise office park in Cobb County didn't pay off the $37M loan on the complex when it matured in August, throwing the future of the property into question.
America’s Capital Partners took out a $41M loan from GE Capital Corp. in 2014 to acquire Town Park Ravine, which spans 367K SF and sits close to the Town Center at Cobb.
The loan, which was packaged into a $1.2B CMBS trust, has a balance of $37.6M and matured in August, but ACP didn't make the scheduled balloon payment, according to Morningstar Credit.
The loan was transferred to special servicing last month following the default, according to Morningstar. ACP CEO Sergio Socolsky, who is the guarantor of the loan, didn't respond to messages seeking comment. The three buildings are the only Georgia properties listed on ACP's website.
When ACP took out the loan, Town Park Ravine was more than 92% leased with annual revenues of $5.7M, according to a prospectus filed with the Securities and Exchange Commission. The property was highlighted as having prime access to Interstate 75 and proximity to the mall and Kennesaw State University.
But occupancy has plummeted, falling to an average of 60% at the end of 2023, according to loan servicer commentary. Some of the property's largest tenants have expirations approaching.
Accelerated Claims' lease, the complex's largest at 23K SF, expires in November 2026, and Hapag-Lloyd's 14K SF deal expires in February, according to Morningstar Credit.
Town Park Ravine is the latest property to be swept up in a wave of distress in CMBS loans in the area. Metro Atlanta had the fifth-highest delinquency rate of CMBS loans in the 25 most populous metros in the U.S., with almost 19% of all office properties backed by CMBS loans either delinquent or in default, The Atlanta Journal-Constitution reported in August, citing Trepp data.
Metro Atlanta also has the most office loans set to mature by the end of 2025 in the U.S., with roughly 44% of its office loans having already matured or set to expire by the end of next year, CommercialEdge reported in July.
Older offices with significant vacancies are expected to have a harder time landing financing or buyers at appetizing prices, and many owners have had a hard time hanging on to their investments.
This summer, TerraCap Management lost its office building at 200 Ashford Center North to its lender, New York-based Phoenicia Real Estate Holdings, in a $13M foreclosure sale, Appen Media reported. It paid $25M to buy the building in 2019.
