July 1, 2013
Buckhead Atlanta Project Secures $167 Million Construction Loan
Atlanta Business Chronicle
by Douglas Sams, Commercial Real Estate Editor Buckhead Atlanta, the mixed-use development that just landed the headquarters of Spanx Inc., has reached a significant milestone. The project�s developer OliverMcMillan recently secured a $167 million construction loan, led by PNC Capital Markets, LLC. The loan will cover the full construction of the six-block, 8-acre redevelopment of a former bar district at Peachtree and East Paces Ferry roads. Five lenders are providing the loan, including PNC Bank, N.A.; CIT Finance LLC; Compass Bank; Regions Bank; and SunTrust Banks Inc. Holiday Fenoglio Fowler LP arranged the financing. It allows the pace of construction at Buckhead Atlanta to continue increasing, with shops on target to begin opening by the middle of next year. Construction restarted on the project last August. Before that, Atlanta developer Ben Carter had controlled the project under his name for it, Streets of Buckhead. Carter had ambitions to make it a slice of Rodeo Drive here in the deep South. Then, the economy derailed its progress, Carter lost control of the development to the lenders and equity partners, and construction stalled. OliverMcMillan took over in 2011, boosted with $300 million from its own equity partner. Since the downturn, lenders have financed new apartment projects in Atlanta, but other property types weren�t as quick to bounce back. With OliverMcMillan securing construction financing for Buckhead Atlanta, it could signal confidence in a broader recovery of the region�s hard-hit banking and commercial real estate sectors. If true, that�s a big step. From the peak in 2007 to year-end 2012, construction and development loan volumes are down almost 70 percent nationally, according to the Federal Deposit Insurance Corp. In Georgia, whose banking sector was among the nation�s hardest hit, volumes are down even more � about 80 percent. Much of the decline stems from many community banks whose construction and development loans (C&D) went sour in the previous cycle. The availability of more financing would make developers happy, but it would also be a good thing for Atlanta�s construction and design firms. In the first three months of this year, construction picked up across the South. The region, which stretches from Texas eastward through Georgia and the Carolinas, had the longest backlog of any U.S. region � and the highest level in more than a year. Securing the construction loan was significant, but not as sexy as the other recent big news about Buckhead Atlanta. Spanx, the $1 billion underwear company based in Atlanta, announced it was relocating its headquarters there, along with a flagship store. Spanx will lease 84,000 square feet of office space initially, with an option to expand up to 110,000 square feet. Spanx plans to relocate from the 3344 Peachtree tower to Buckhead Atlanta in November 2014, only a few months after the project�s first shops are slated to open.