Foreclosure Auction Scheduled for TerraCap’s Dunwoody Office Building

Foreclosure Auction Scheduled for TerraCap’s Dunwoody Office Building

Florida-based real estate investment firm, TerraCap Management, faces foreclosure on a suburban Atlanta office building it purchased five years ago.

The five-story, 159,000 square foot office building known as 200 Ashford Center North in Dunwoody is up for foreclosure. The building, which is owned by TerraCap Management affiliate Ashford Office Center LLC, is attached to a $20.3M loan. NXT Capital, the financier of the acquisition loan, has initiated the foreclosure proceeding and scheduled an auction for June 4, as indicated in a public notice filed in DeKalb County last week.

TerraCap bought 200 Ashford Center for $24.6M in 2019 when the building was sufficiently occupied by 85%. The selling points for the property at the time of purchase were its recently upgraded fitness center and high-end conference center. TerraCap’s partner and Acquisitions Director, Steve Good found it to be a “great property in a great location,” viewing it as a “value-add investment with a quality and diversified roster of tenants already in place.”

TerraCap’s Troubles in Atlanta

The building in Dunwoody is not the only Atlanta property that TerraCap is having difficulties with. TerraCap reportedly fell behind on debt payments for Deerfield Point and Windward Pointe 200 in Alpharetta. The firm surrendered the keys to these buildings last month to its lender, Synovus Bank. TerraCap had paid over $47M for these two buildings in 2017. However, the transfer value of the duo, which consists of 340,000 square foot of office space, fell to a mere $23.7M in the transaction.

Into the Hands of Phoenicia Real Estate Holdings VII

Kevin Semon, a director at SitusAMC, the special servicer, indicated that the loan was transferred in April to a new entity, Phoenicia Real Estate Holdings VII, to pursue the foreclosure. The debt, which was initially provided through NXT’s Global Investment Fund I TRE NXT Portfolio, has thus passed into the hands of Phoenicia for foreclosure proceedings. Specific details on the situation were not provided by Semon.

This upcoming auction and the recent turn of events highlight the challenging times faced by TerraCap in managing its Atlanta-based properties, revealing the harsh realities of the real estate industry.