McCandless Towers sits within Silicon Valley's "Golden Triangle"between Highway 101, Route 237 and Interstate 880. The building is89% leased. Anchor tenants include security software developerMcAfee Inc. and Amkor Technologies, a supplier of outsourcedsemiconductor interconnect services.

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The cost to acquire the mezzanine loan was not disclosed by theparties involved and not immediately available. An industry sourcewith knowledge of the transaction tells GlobeSt.com that the debtwas purchased at a discount but couldn't say exactly how much.Similar deals by Shorenstein and others have traded at anywherefrom a 5% discount to a 25% discount, he says.

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Shorenstein chairman Douglas Shorenstein says the opportunity toacquire these types of debt interests—ones with "attractiverisk-adjusted yields in prominent and well located Class A assetsin key markets"—is due to the ongoing dislocation of the creditmarkets. The company has acquired eight such loans in the last ninemonths, bringing its subordinated debt total for the ninth fund to$435 million.

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Among its subordinated debt holdings is part of the constructionloan for part of a construction loan for the development of MoffettTowers, a 900,000-sf office campus now being built in Sunnyvale,CA; mezzanine loans on the MTV Building in Santa Monica, CA; twooffice properties in Washington, DC; and four office buildings inNew York, including 650 Madison Ave. and its neighbor, 660 MadisonAve.

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Back on the Peninsula, Shorenstein owns under various fundsseveral other properties on a fee simple basis. Those include thenearby WebEx Tower in Santa Clara, 1400/1500 Seaport Boulevard inRedwood City, and 601 California Avenue, located within theStanford Research Park in Palo Alto.

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