After rumblings in the media for the past couple months that it was running out of cash, with little warning BroadBand Office filed for Chapter 11 protection on May 9 in US District Bankruptcy Court in Delaware. The same day, the REITs received notice that BroadBand's current customers would receive service only through June 11. BroadBand officials didn't return phone calls or respond to email messages seeking comment.

"We did not know [in advance] about them filing bankruptcy. We received notice last week," says Crescent Real Estate Equities Company spokeswoman Sandra Porter. "Given the state of the public and private capital markets, telecommunications and some of the other issues that have been out there, it's not a huge surprise … We had a minimal investment in BroadBand Office, so it's not something that's going to impact us on our bottom line. We of course are concerned that our customer's needs are attended to immediately."

Only a small fraction of Fort Worth-based Crescent's tenants--between 50 and 60, in markets scattered across the country--were BroadBand clients. Likewise, Carr America spokeswoman Karen Widemayer says only about 5% of her company's tenants were BroadBand clients. "We did not have any prior knowledge of what they were going to file or when they were going to file it," says Widemayer.

She says Carr America's property managers are working with tenants to ensure they have uninterrupted service, the same process that's being followed by Crescent. Officials at the real estate companies are reportedly still mulling their options against the broadband provider.

"We are still assessing the situation," says Terry Holt, spokeswoman for Equity Office Properties Trust. "Almost all of our buildings have multiple providers, and BroadBand was one just one of our for strategic [broadband] providers."

BroadBand Office, founded in 1999 with the backing of venture capital firm Kleiner Perkins Caufield & Byers, counted several REITs as corporate partners: in addition to Crescent and Carr America, other REITS included Duke-Weeks Realty Corp., Equity Office Properties Trust, Highwoods Properties Inc., Hines, Mack-Cali Realty Corp. and Spieker Properties Inc. Microsoft and Sun Microsystems also backed the company with a reported $50 million.

Then last week--a month after reports surfaced that the company couldn't raise another round of financing--the company laid off an estimated 350 employees. Phones in its Northern Virginia offices are now disconnected, and inquiries being directed to San Mateo, CA.

"For us, our main priority is helping our customers that are affected by this--a very small percentage of Carr America customers--explore their choices," says Widemayer. She says fortunately, 86% of her company's multi-tenant properties had multiple choices of broadband providers so they won't be left in a lurch.

For Crescent, the situation is similar. The company had granted BroadBand Office "preferred access" status--which meant the REIT let BroadBand officials know who its tenants were, according to Porter, "but it was up to them to sell their services to the individual tenants." Crescent also more than one broadband provider in nearly all of its properties, she said.

Porter doesn't think the apparent death of BroadBand Office means drastic changes for the industry. "Our customers do have a significant and increasing need for communications services. They are going to have to be provided by someone," she says. "Our focus is to meet those demands. We are continually out there trying to determine who we can give access to our buildings to help provide our customers what they need … Right now we're just trying to take care our customers and that their business is not interrupted at all."