Arcapita Faces Foreclosure at Atlanta Assisted Living Complex

Foreclosure is looming over an assisted living facility north of Atlanta, adding to the wave of commercial distress in the region.

An affiliate of Bahrain-based investment firm Arcapita defaulted on a $19 million loan tied to the 90-unit Arbor Terrace East Cobb, at 886 Johnson Ferry Road, in the Cobb County town of Marietta, Bisnow reported.

CWCapital Asset Management, acting as special servicer for bondholders of a CMBS trust, has initiated foreclosure proceedings, with an auction scheduled for June 4. Arcapita failed to pay off the loan by its Oct. 1 maturity date, and it was transferred to special serving shortly after.

It’s possible that a resolution is reached before the auction, as the borrower and lender are engaged in “ongoing, productive discussions to remedy the situation,” a spokesperson representing the property told the outlet.

The property was 78 percent leased as of November, the outlet reported.

The Arcapita affiliate bought the facility for more than $29 million, or about $322,000 per unit, in 2016. The purchase was part of a $77 million portfolio deal brokered by CBRE, which included another senior living facility north of Atlanta, in Peachtree City.

CBRE also facilitated a $50 million loan for the properties, later securitized into a CMBS loan to Freddie Mac. The total collateralized debt, comprising 50 multifamily loans, exceeded $1.1 billion.

The impending foreclosure of Arbor Terrace East Cobb sheds light on the growing mountain of distressed commercial real estate loans in the Atlanta area. Spiked interest rates and tight lending standards have made it tough for landlords to pay off their debts and refinance their assets, as evidenced by several cases across the region.

In unrelated commercial distress, Arbor Realty Trust recently moved to foreclosure on 41 Marietta Street, a downtown Atlanta office building that was poised for residential conversion. The Dallas-based owners, Wolfe Investments and Bluelofts, defaulted on a $20 million loan.

In March, LoanCore Capital foreclosed on the Optimist apartment complex in Atlanta’s Piedmont Heights neighborhood.

Over 8 percent of KBRA-rated CMBS loans were in special servicing or delinquent as of April, according to Morningstar.

—Quinn Donoghue