Gullstedt's empire in midtown starts to change hands
Atlanta Business Chronicle - by Tony Wilbert Staff Writer
Some of the largest pieces of bankrupt Swedish developer G. Lars Gullstedt's midtown holdings are being sold, and likely will be redeveloped into residential properties.
A national residential developer has contracted to buy the land and buildings bounded by Peachtree, Fifth, Cypress and Sixth streets, including the office building at 800 Peachtree and Peachtree Manor Hotel. The transaction is expected to close by year end.
The buyer is planning to redevelop the 800 Peachtree building and adjacent property into about 150 apartments, said George Smeltzer, vice president/office properties at Richard Bowers & Co. The hotel also will be redeveloped into residential space; an easement prohibits it from being torn down. The 800 Peachtree building is a 175,000-square-foot building sitting on a 1.5-acre site. It likely will sell for close to $50 a square foot. The Peachtree Manor Hotel is a 60-room hotel at the southwest corner of Peachtree and Sixth streets. Another national group has contracted to buy the tract at the southwest corner of Fifth and Spring streets, Smeltzer said, adding that confidentiality agreements forbid Bowers & Co. from identifying the likely buyers of either property. The tract, known as the "Freeway Tract" is 2.85 acres.
Smeltzer and his partner, Vice President Gene Walker III, represent the properties' owner, Diligentia AB, one of Sweden's largest real estate institutions.
Diligentia bought the properties from the lending institution that claimed the properties after Gullstedt filed bankruptcy in 1993. Gullstedt had hoped to use the properties to change the face of midtown himself, but the real estate recession of the early 1990s forced him into bankruptcy.
In May, Bowers & Co. listed 60 percent of the assemblage for sale, including 27 parcels, 10 buildings, 16 vacant lots and the Peachtree Manor.
Other former Gullstedt properties -- the Biltmore Hotel and First Baptist Church -- are not included in the package Bowers & Co. is marketing. Phil Barry of Grubb & Ellis, who has the listings on the hotel and church, has said he, too, is seeing activity, although neither property is under contract.
Smeltzer and Walker said the assemblage they're marketing attracted immediate attention from residential, com- mercial and retail developers. Besides the two tracts under contract, other sites -- including one at on Seventh Street between Peachtree and Juniper Street -- are likely to be under contract soon, probably by retail developers.
"We had approximately four city blocks of property to sell, and we have two of them pretty well sold," Smeltzer said. "It is significant that we were able to get these under contract so quickly to two separate groups."
The pair also is hopeful that the Sun Coast Center at 795 and 805 Peachtree, a class C office property, will be bought and upgraded to solid class B office space.
With all that's happening in midtown, from the construction of the new Juniper Parke apartment tower and other residential projects to the pending relocation of the Federal Reserve Bank of Atlanta to 10th and Peachtree, the Gullstedt holdings were bound to attract potential buyers, Walker and Smeltzer said.
"The real catalyst for the momentum was the fact that we were able to convince the bank that it was the right time to bring it to the market," Walker said.
Smeltzer agreed. "There was tremendous pent-up demand because the property had been off the market so long," he said.
Walker said "the thrust" of interest in the Gullstedt properties is coming from residential developers. "From a residential standpoint, it makes a lot of sense," he said, adding that the 10,000 or so students at Georgia Tech and Georgia State University offer a natural renter base for any new projects in the area.
"The area is under-housed," he said. "We need to bring middle-class housing back into the area."
As far as safety concerns in the almost-forgotten areas, Walker said the solution might be at hand.
"As these properties are sold and built, we certainly hope it takes care of itself," he said. "We need to get more people out on the streets with good purposes."
Walker and Smeltzer are confident they can sell all of Gullstedt's former properties in the next couple of quarters.
"It's been a lot of work because there's so much interest in the property," Smeltzer said.
"But it's great," added Walker. "It's rare that you take this kind of assignment."
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