Listen to this article 4 min
The former headquarters tower of Wells Fargo & Co. (NYSE: WFC) in uptown Charlotte is a step closer to foreclosure with the bank’s looming exit expected to leave the building more than half empty.
One Wells Fargo went into receivership on Oct. 15, according to filings related to the debt tied to commercial mortgage-backed securities. This means a third party has taken over control of the property as the lender continues to pursue foreclosure actions.
Tampa, Florida-based Vision Properties’ loan on the 42-story tower at 301 S. College St. matured in May and became delinquent in July. Currently, about $157 million is owed on the building. Vision expressed interest in sending the building back to the borrower, according to the October notes of the special servicer monitoring the debt in CMBS filings. The servicer began pursing foreclosure action on the 35-year-old property in August, according to CMBS loan data.
Vision Properties officials couldn’t be reached for comment today.
Real estate attorney Arren Goldman told CBJ that foreclosure is not necessarily inevitable at this point, but putting a property in receivership is an indication that’s where its headed. Goldman, a partner at Seyfarth Shaw, said there are a number of things a borrower can do to avoid foreclosure, even at this stage. That could include an agreement to bring more equity into the project or restructure the debt that could include a pay down of the loan, said Goldman, who is not involved in the One Wells Fargo deal. “It’s also possible they could sell the property or the receiver may be given the power to sell the property.”
The 994,033-square-foot building is currently about 48% vacant. That will rise to about 66% when Wells Fargo moves its employees from the building. Its current tenants include the Childress Klein YMCA, transatlantic law firm Womble Bond Dickinson and The Nail Lounge.
The current asking rents there range between $38.50 per square foot and $42 per square foot, according to CoStar Data. The average asking lease rate for the entire Charlotte MSA is $34.97. In uptown, the average asking rate is $37.43, according to a recent report from JLL.
Earlier this year, the financial institution outlined its plans to reposition and consolidate its office footprint in uptown. The bank plans to move all workers from offices at One Wells Fargo and Two Wells Fargo by the end of this year into Three Wells Fargo Center and 550 South Tryon, formerly known as the Duke Energy Center.
Katie Schwarting, a real estate finance partner at Seyfarth, said there’s no script to follow when it comes to these situations, and a resolution could take six months to a year.
“It’s really property-specific,” she said. “The receiver will be intentional in wanting to get their arms around the property and find out what’s working and what’s not working, then start making decisions. It could be longer than you think because the receiver will try to make the best decision for the property.”
With the building nearly half empty, Schwarting said, what happens to the property will likely depend on how willing and able the borrower is to make capital upgrades.
“These older buildings may need an upfit or substantial work to keep up with general wear and tear,” she said. “Lenders may need to see they’re invested in the property, and that may include more financial investment. Unfortunately, sometimes the borrowers simply can’t afford or doesn’t want to invest more in the property.”
Vision Properties said in 2022 that it was spending $10 million on upgrades to the building.
2024 Women in Business Awards
We're looking for 25 women from every industry and profession — women who have made a difference in their workplace and are blazing trails for other women. Nominate today!
© 2023 American City Business Journals. All rights reserved. Use of and/or registration on any portion of this site constitutes acceptance of our User Agreement (updated January 24, 2023) and Privacy Policy (updated June 27, 2023). The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of American CityBusiness Journals.
Uptown's One Wells Fargo goes into receivership after default on … – The Business Journals
Leave a comment