Tishman Speyer and San Francisco-based Shorentstein, whichacquired the mezzanine debt on the Santa Clara Towers project twoyears ago, consented to have Shorenstein take ownership of thebuildings as the best solution in light of falling values.


"Tishman Speyer and its lenders explored various ways torestructure the debt, and ultimately decided that the best courseof action would be for the mezzanine debt holder to assumeownership of the property," Tishman Speyer said in a preparedstatement. The statement cited the "recent deteriorationof commercial real estate markets across the US," saying thatthe plunge in values "has created many situations where the valuesof properties have fallen well below the debt that encumbers them,"as is the case with the Santa Clara Towers.


Shorenstein bought the $51.1 million mezzanine loan on thetowers at adiscount, according to a GlobeSt.com report at the time.The loan was a junior tranche of an approximately $168-millionfinancing package for Tishman's $225-million acquisition of thetowers in June 2007, when the property was known as McCandlessTowers. The towers are situated within Silicon Valley's "GoldenTriangle" between Highway 101, Route 237 and Interstate 880.


Tishman Speyer said that the debt on this property was notcross-collateralized with any other Tishman Speyer loan."Therefore, this action has no financial impact on other propertiesin the firm's portfolio," the company's statement said.

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