Wells Fargo Seizes Autotrader's Headquarters In Foreclosure
For more than a decade, 3003 Perimeter Summit in Atlanta's Central Perimeter has served as the headquarters for online car marketplace Autotrader. But the company has vacated the 18-story building, which was taken over by its lender this summer, Bisnow has learned.
Wells Fargo, which lent $75M to the owners of 3003 Perimeter Summit in 2016, was the winning bidder in a foreclosure auction held for the building's ownership on the DeKalb County Courthouse steps on Aug. 1, according to the Atlanta property research firm Databank. The deed to the 391K SF tower was valued at $38M.
The building had been owned by an entity tied to General Electric Pension Trust and State Street Global Advisors, according to Databank. Representatives for State Street and Wells Fargo didn't immediately respond to requests for comment.
GE and State Street failed to pay the loan at its due date, Wells Fargo said in the foreclosure notice. The original loan was set to mature on Sept. 15, 2021, but it was modified to extend the maturity date to Aug. 31, 2022, according to DeKalb County deed records.
The 18-story, 391K SF tower, one of four buildings in the Perimeter Summit office park that overlooks Interstate 285, was developed by Hines and financed by GE Asset Management in 2002.
Autotrader moved its headquarters to the building in 2011, signing a 15-year lease for the entire property. The company, owned by Cox Enterprises, has fully vacated and put all of its space up for sublease, a Cox spokesperson confirmed to Bisnow.
"Cox Automotive has exited the building at 3003 Summit Parkway, which is now up for sub-lease," the spokesperson wrote in a statement. "All those employees are now housed at the Cox main campus on Peachtree-Dunwoody Road. No jobs were impacted or lost."
The fate of 3003 Perimeter Summit stands in stark contrast to the other four office buildings on the 83-acre, Hines-developed mixed-use campus.
In January, Spear Street Capital acquired 1001, 2002 and 4004 Perimeter Summit Blvd., which total 1.25M SF, from State Street and GE for $278M. That portfolio’s tenants included Beazer Homes, Rooms To Go, Aprio and Zurich North America.
The foreclosure closes a two-decade era of GE's ownership of the office park on the other side of I-285 from Perimeter Mall. It is also one of the largest foreclosures in Atlanta this year as distress grows in the city's commercial real estate market, with owners pushed to the brink by elevated interest rates.
Another large office building, the 29-story Tower Place in Buckhead, is at risk of foreclosure after owner Starwood Capital Group defaulted on its $213M loan in July. The special servicer on that property has filed a motion to put the property in receivership, according to commentary posted this month in the Morningstar Credit database.
In September 2022, six office towers and a mall in Peachtree Center were taken over by a lender in a foreclosure motion.
Lenders are also pursuing foreclosures on a prime Midtown parcel once slated for the condominium tower No2 Opus Place, the South Downtown portfolio owned by Newport RE, and an apartment complex in Sandy Springs.
"Unfortunately, we're going to see a lot of this," said Steve Langford, a veteran investment sales adviser with Ackerman & Co. "Especially if [the Fed] has another rate increase or two."
There are 22 office buildings in Metro Atlanta that are troubled or potentially troubled backing a total of $390M in loans coming due that, in some cases, the landlords have ceased making payments on, according to data compiled by Avison Young. Those buildings span 4M SF.
Langford said the cementing of hybrid work during the pandemic is a root cause of the distress. Companies like Autotrader are consolidating their office footprints, leaving landlords with big swaths of empty space and few prospects willing to refill it.
Greenwood Commercial Real Estate Group principal James Pitts, a prominent Atlanta office tenant representative, said buildings with huge blocks of sublease space are facing even more trouble in a world where few single companies are willing or able to reoccupy them, instead forcing landlords to market and lease to smaller tenants.
“[Landlords] are going to have to break it up floor by floor, and now that’s a different credit profile,” Pitts said.
“These owners bought these buildings under a different occupancy model, a pre-Covid occupancy model,” he added. “We’re seeing a lot of clients downsize. They’re shedding costs. It’s just not going to be pretty for a while.”
