The $1.2-billion loan on 666 Fifth Ave. in Manhattan, which inearly 2007 set a sales record for a single office property, wastransferred to a special servicer in early March. According to astatement, the transfer was made to allow the trophy tower'sowners, the Kushner Cos., "to engage more easily in productivediscussions with the lender. The loan is not currently indefault."

Shortly after 666 Fifth was transferred into special servicing,the $325-million balance on another Manhattan property purchased atthe market's peak, 575 Lexington Ave., went the same route. Thestatement issued on behalf of the owners, a joint venture of theCalifornia State Teachers Retirement System and SilversteinProperties, was similar: the loan wasn't in default and thetransfer was intended to facilitate discussions about modifying theloan.

For office landlords across the US, rising joblessness and theresulting uptick in vacancy led to a decline in NOI and hamperedowners in servicing the debt. The office sector has been slower tofeel these effects than other property types, but it is starting tocatch up.