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Bank of America Plaza Awaits Reimagination

5 min read
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<p>What is now the Bank of America Building was built in 1969 in downtown Little Rock.</p> ( Sydney Bryant)

Two years ago, the owners of the Bank of America Plaza in downtown Little Rock evaluated several offers for the 24-story office tower. But none of those potential deals, gathered during a national marketing effort, resulted in a sale.

The third-tallest building on Little Rock’s skyline remains an investment puzzle awaiting a solution before new ownership enters the picture.

Years of negotiations have yet to bridge the pricing gap between prospective buyers and the would-be seller: 200 West Capitol LLC. The California investment group acquired the building and its adjoining seven-story parking deck for $10.2 million in May 2006.

“My guess is at some point they or their lender will bring the value of the property to a point where someone can buy it,” said a Little Rock commercial realty veteran. “It’s not a pretty picture to make it work as an office building. It’s a good candidate for a conversion, but that involves a lot of money.”

Questions for the California ownership group were referred to its asset manager, Frank Sarabia, who declined comment.

On the Pulaski County property tax rolls, the 1.4-acre development at 200 W. Capitol Ave. carries an appraised value of nearly $11.4 million. That number is divided between the building and parking deck, more than $8.3 million; and the land, $3 million.

Depending on who’s doing the measuring, the square footage of the building totals 315,372 or 290,680. Since 2006, debt associated with the property has fluctuated between $7 million and $9.5 million.

The purchase 15 years ago was backed with a $7.5 million loan from Telesis Community Credit Union of Chatsworth, California. That mortgage was replaced by a $7 million loan from Telesis in November 2011.

Four months later, the California Department of Financial Institutions placed the $318 million-asset credit union into conservatorship. In June 2012, the insolvent lender was acquired by the $1.3 billion-asset Premier American Credit Union, also headquartered in Chatsworth.

The owners replaced their California financing in January 2016 with a $9.5 million funding agreement with First Security Bank of Searcy. The mortgage was split between a $7.5 million loan and a $2 million line of credit.

In November, the owners reworked the financial package again, obtaining a new mortgage with First Security that encompassed nearly $8.5 million, including a $150,000 line of credit.

At last report, occupancy stood at 44 percent.

“We are the largest tenant here,” said Stephen Lancaster, managing partner at the Wright Lindsey & Jennings law firm. “It has been that way for some time.”

The group of attorneys extended its six-floor lease at Bank of America Plaza that was set to expire in July 2020. The new five-year agreement, signed a week before the mid-March COVID impact last year, covers about 52,000 SF on floors 18 and 20-24.

Lancaster has no insight on the landlord’s vision for the property.

“I’m not sure what the status is,” he said. “We’re not in the loop on that. We hope that the building is sold soon and gets some stability that goes along with that.”

Maintaining the property in its historic office-only format presents a challenge amid a soft office market that hasn’t improved as more people work from home amid the pandemic.

William Callahan, senior vice president and principal broker at CBRE, considers Bank of America Plaza a repositioning opportunity for a redevelopment mix with a hotel, apartments, condominiums and restaurants among the options.

“I love the building and think it’s a great building,” said Callahan, who helped market the property during 2018-19. “Without the commitment of capital, it’s going to be a tough project that would require someone to hold onto the property for a long time and make it a destination mixed-use office tower.

“I think people would want to be there, but the building has to be positioned to capitalize on that. It’s been on and off the market for a number of years,” Callahan said. “It’s clearly off the market publicly, but it wouldn’t surprise me if there were private conversations.”

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Occupying six floors, the Wright Lindsey & Jennings law firm is the largest tenant in the Bank of America Plaza in downtown Little Rock. ( Sydney Bryant)

Shopping Space

A few weeks ago, a prospective buyer toured the property and explored the possibility of a purchase.

“We looked at it, but we’re not buying it,” said Tad Bohannon, CEO of Central Arkansas Water.

CAW officials examined the Bank of America Plaza as part of a relocation-investment scenario. The largest water utility in Arkansas looked at the 51-year-old structure through the lens of becoming an owner-occupant collecting rent from tenants.

Bohannon kicked the tires at the Bank of America Plaza while checking into potential destinations to move CAW from its downtown headquarters at 221 E. Capitol Ave. The 40,000-SF building, which could be renovated as an alternative to moving, is home to nearly 100 CAW staffers.

The multi-lane drive-through facilities on the ground floor of the parking deck, used by Bank of America, presented some interesting possibilities for CAW. Three blocks away at its downtown office, the drive-through capacity is constrained to a single lane.

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Central Arkansas Water headquarters at 221 E. Capitol Ave. ( Maggie McLemore)

Also under consideration is the sale of other nearby CAW properties. The real estate roster includes the former Paragon Printing building, now home to the 7,192-SF Fassler Hall at 311 E. Capitol Ave., and a 0.6-acre parking lot at the southeast corner of Cumberland and East Sixth streets.

“CAW continues to look for the best uses of its resources including office space and property we own in downtown Little Rock,” Bohannon said.

Utility officials also looked at the former 60,864-SF home of the Arkansas Insurance Department at 1200 W. Third St. The three-story office building is owned by Arkansas Teacher Retirement System, the state’s largest pension fund.

“We will continue to explore other opportunities because we want to do what’s best for our ratepayers and employees,” Bohannon said.

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