You don’t need to be a poet to find a metaphor in the foreclosure of Bank of America (BAC) Plaza in Atlanta.Bank of America has come to represent the U.S. property bust more than any other institution, so it is only fitting that a 55-story tower that bears its name–the tallest in the Southeast, according to a Bloomberg News report, should end up in foreclosure. The 1.25 million square foot building is to be sold in an open outcry auction on Tuesday.
Or perhaps to BentleyForbes, which bought the property for $436 million from Bank of America in 2006. The tower was appraised at $202 million in March, according to the Bloomberg report.What may also be seen as fitting is that Bank of America is not be the biggest loser in this story. That misfortune may go to the city of Atlanta, which was booming just a few years ago and is now one of the cities hardest hit by the crisis.
A big reason the tower is worth so much less is the diminishing fortunes of Bank of America. The bank — which had occupied 30% of the building — will now use just 15% of it and starve the landlord of needed tenants.
To add insult to injury, the bank will pay half as much rent per square foot as it had previously, according to the report, which cites a December report from Fitch Ratings.
Bank of America has been laying off employees and selling and shrinking businesses in an effort to shore up its balance sheet. In the past year, the bank sold its Canadian credit card operations, said it would exit the correspondent mortgage business and sold its remaining stake in China Construction Bank. Bank CEO Brian Moynihan said late last year the bank would lay off 30,000 employees “over the next few years.”
Meanwhile, Bank of America is busy foreclosing on many of the home loans made by Countrywide Financial, which it acquired in 2008. Countrywide was one of the most aggressive lenders leading up to the crisis, and its recklessness has saddled Bank of America with what analysts estimate could easily be $50 billion in costs to clean up the mess.
But, even while Bank of America shares have lost 85% of their value in the past five years, the bank is not the biggest loser in this crisis. Nonetheless, one wonders if its name will ever recover. It may be time to rename that tower.