Cousins Recaps Struggling $177M Terminus 200 Office Building in Atlanta via New JV

May 10, 2010
By Barbra Murray, Contributing Editor

Courtesy Flickr Creative Commons user dsearls

Cousins Properties Inc. has traded one joint venture partner for another in the recapitalization of Terminus 200, its brand new $177.3 million Class A office tower in Atlanta’s Buckhead submarket. A fund managed by Morgan Stanley Real Estate Investing has stepped in, paving the way for the restructuring of Cousins’ construction loan–and reducing the REIT’s interest in the 564,000-square-foot property from 50 percent to 20 percent.

It was three years ago when Cousins joined forces in a 50-50 partnership with Prudential Real Estate Investors to build Terminus 200, a 25-story structure with approximately 16,000 square feet of retail at the REIT’s 10-acre Terminus mixed-use development. The $138 million loan the partners secured from a group of banks led by Wells Fargo Bank N.A. to build Terminus 200 had been scheduled to mature in 2011. However, with the restructuring of the loan, on which Wells Fargo continues to act as administrative agent, Cousins was given an extended maturity date, an adjusted interest rate, and the funds to pay its guarantee to the lender.

Plagued by weak demand and a glut of office space due to overdevelopment, Atlanta saw its office vacancy rate reach 22.6 percent in the first quarter, according to a report by real estate services firm Grubb & Ellis Co., a far cry from the average U.S. office vacancy rate of 17.9 percent. The news was worse for the Buckhead submarket, where the vacancy rate soared to 29 percent.

Given the grim fundamentals, Terminus 200’s occupancy level of just 9 percent at the end of the first quarter, about six months after its debut, came as no surprise. But good news has recently emerged on the occupancy front. International law firm Greenberg Traurig L.L.P. has just signed a lease to occupy approximately 100,000 square feet in the LEED Gold-certified building. The firm will relocate its home to Terminus 200’s top five floors beginning in July 2011.