The law firm Preston Gates & Ellis vacated 167,000 sf in thebuilding in January and relocated to 240,000 sf in the new IDXTower developed by Hines Interests LP. Making matters worse, theratings agency is reporting that since that time several othertenants with lease expirations in 2003 either have announced theywill vacate or have signed new leases at current market rents,which are significantly below their previous rents.

As a result, the Equity Office Properties skyscraper is 24%vacant in a market that's averaging 16% vacancy. Moreover, Fitchsays vacancy will rise to 27% at year end if no new leases aresigned and an additional 13% of the building's leases expire in2004, long before the market is expected to recover.

"The lower market rents, increased vacancy and limited newleasing activity, may affect the borrower's ability to refinancethe loan at maturity in December 2004," says the ratingsagency.

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