Posted on 04/01/2009 7:46:29 PM PDT by An Old Man
Boston's John Hancock Tower, New England's tallest building, was sold Tuesday in a foreclosure auction held by an investor group for $660.6 million, half the price paid by real-estate private-equity firm Broadway Partners three years ago.
The winning bidder was a partnership between Normandy Real Estate Partners and Five Mile Capital Partners, which holds the senior portion of $700 million in so-called mezzanine debt, or the part that fills the gap between the first mortgage and a borrower's equity. The partnership agreed to pay $20.1 million for the mezzanine debt and assume the first mortgage of $640.5 million. The Normandy-Five Mile team has bought pieces of the mezzanine debt at discounted prices since June 2008. The debt was originally made by Greenwich Capital, which is part of Royal Bank of Scotland Group PLC, and Lehman Brothers Holdings Inc.
The auction, which some participants described as a "non-event" and lasted only a few minutes, reflects a steep decline in commercial-property values as the economic distress sweeps through office buildings, shopping malls, hotels and the like. The investor group moved to conduct the foreclosure auction after Broadway defaulted on the mezzanine loan, which came due in early January.
Unless other creditors or Broadway Partners go to court to try to block the foreclosure, the Normandy-Five Mile partnership will take over the building immediately. People familiar with the matter said a court fight is "highly unlikely
(Excerpt) Read more at online.wsj.com ...
to be renamed the Saudi Abu Wei Fuch’d U Americano Hussein Mohammad Skyscraper
At least it’s still worth something, unlike the ones in Detroit.
Commercial bubble bursts.
If not, it sure has a large tear in it's fabric.
Home offices are the future. Why pay to house employees in an office if it’s not absolutely necessary to their tasks?
I hope so, that would be the optimum for me
Honestly, this should make it possible to run the building at a profit. The building is no longer mired in hopeless debt.
"CRE (Commercial Real Estate) has its own vicious cycle. Unemployment increases, demand for office space decreases, rents fall, and then commercial property prices fall. CRE prices have already fallen and the next leg down could make the subprime crisis look like a cakewalk.
As unemployment rises, consumers spend less, retail sales fall some more, more shops close down and walk away from their leases, and overleveraged mall owners collect less revenue eventually defaulting on their loans and forcing the banks to take the losses. Throughout it all, unemployment rises even more from the retail stores closing up, manufacturers cutting back production because the retail outlets buy less from them, banks cut back staff, and start the cycle all over again".
I look for news like this to become frontpage news soon. The worker bees that voted for the one still haven't taken notice.
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