BentleyForbes once owned such renowned properties as the Watergate office complex in Washington and Bank of America Plaza, Atlanta’s tallest skyscraper. Now the company is on the verge of vanishing.
C. Frederick Wehba, who co-founded the Los Angeles-based real estate firm in 1993 and was chairman until 2012, said he will announce his official separation as an adviser and consultant this week. BentleyForbes now has just three employees and manages five properties -- mostly small office buildings in cities including Cleveland and Bloomington, Minnesota. It plans to sell the real estate within the next 12 months, then dissolve, Wehba said.
The rise and fall of BentleyForbes -- named after the luxury car and business magazine -- closely tracks last decade’s commercial real estate boom and bust. Until the early 2000s, the closely held company owned modest single-tenant office, industrial and retail properties. Its ambitions grew, and the firm began scooping up landmark buildings at what turned out to be top-of-the-market prices -- then lost most of them in the crash. While property values have since rebounded past the last peak, the landlord has lingered as a shadow of its prior self.
During the boom, “we were organizing to go public as a REIT,” Wehba, 69, said in an interview. That would have allowed BentleyForbes to refinance its loans and get tax benefits offered to real estate investment trusts. “We were going to go for $1 billion cash, and we were going to pay down our debt.”
Prices Plunge
Instead, the market collapsed. U.S. commercial-property prices reached a peak in October 2007 before plummeting 40 percent in just over two years, according to the Moody’s/Real Capital Analytics Inc. index.
“The office-transaction environment in ’05, ’06 and ’07 was red-hot, with significant financing available through many types of buyers, and all of that spurred a meteoric rise in asset values,” said Michael Knott, director of U.S. REIT research at Green Street Advisors in Newport Beach, California. “When the music finally stopped playing, there were several large and aggressive buyers who felt some pain from an environment that became much less hospitable.”
The crash took down major real estate companies including Maguire Properties Inc., and big landlords such as Harry Macklowe and Broadway Partners surrendered towers after missing debt payments. Maguire, after a name change, was taken over in 2013 by Brookfield Office Properties Inc., while Macklowe recovered to co-develop New York’s tallest residential tower, and Broadway’s Scott Lawlor made a comeback buying apartment complexes in smaller towns. BentleyForbes, in contrast, never rebounded yet never quite went away.
The company’s pain from the crash stretched from Chicago and Washington to Atlanta and Dallas. In Atlanta, it bought Bank of America Plaza in 2006 for $436 million, then the city’s biggest real estate deal ever. Less than six years later, the 55-story tower sold at auction for just $235 million after BentleyForbes missed mortgage payments.
The purchase was part of a series of expensive acquisitions. Also in 2006, BentleyForbes paid $470 million for Prudential Plaza, a Chicago complex with 41-story and 64-story towers that occupies a full city block. Later in the year, the company bought the Four Seasons resort in Irving, Texas, for $210 million, then spent $60 million on upgrades.