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Half-Price Sale: Boston's Hancock Tower
The Wall Street Journal ^ | APRIL 1, 2009 | LINGLING WEI

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 The debt was originally made by Greenwich Capital, which is part of Royal Bank of Scotland Group PLC, and Lehman Brothers Holdings Inc.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 ...


TOPICS: Business/Economy; Culture/Society; Government; News/Current Events; US: Massachusetts
KEYWORDS: boston; doomgloom; johnhancock; moneylist; realestate

More Cheerie News

Aditional articles on Commercial Real Estate at Seeking Alpha.

1 posted on 04/01/2009 7:46:29 PM PDT by An Old Man
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To: An Old Man

to be renamed the Saudi Abu Wei Fuch’d U Americano Hussein Mohammad Skyscraper


2 posted on 04/01/2009 7:47:55 PM PDT by GeronL (http://tyrannysentinel.blogspot.com)
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To: An Old Man

At least it’s still worth something, unlike the ones in Detroit.


3 posted on 04/01/2009 7:47:57 PM PDT by proxy_user
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To: An Old Man

Commercial bubble bursts.


4 posted on 04/01/2009 7:56:38 PM PDT by omega4179 (Government Motor Corpse)
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To: omega4179
Commercial bubble bursts.

If not, it sure has a large tear in it's fabric.

5 posted on 04/01/2009 8:03:09 PM PDT by An Old Man (Use it up, Wear it out, Make it do, or Do without.)
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To: An Old Man

Home offices are the future. Why pay to house employees in an office if it’s not absolutely necessary to their tasks?


6 posted on 04/01/2009 8:40:31 PM PDT by Trod Upon (Obama: Making the Carter malaise look good. Misery Index in 3...2...1)
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To: Trod Upon

I hope so, that would be the optimum for me


7 posted on 04/01/2009 8:46:39 PM PDT by MSF BU (++)
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To: An Old Man

Honestly, this should make it possible to run the building at a profit. The building is no longer mired in hopeless debt.


8 posted on 04/01/2009 8:46:51 PM PDT by MediaMole
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To: An Old Man
The Soft Financial Panic Of 2009 Has Just Begun (Commercial Real Estate Collapse)

"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.

9 posted on 04/01/2009 10:54:23 PM PDT by blam
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To: blam
From your link:

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.

10 posted on 04/02/2009 8:52:40 AM PDT by An Old Man (Use it up, Wear it out, Make it do, or Do without.)
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