A reference in the original story misrepresented theBrookfield-Tishman Speyer situation. It should have read: InFebruary, Brookfield Properties acquired the debt associated withTishman Speyer's DC portfolio. At the time, Brookfield was reportedto have bought the debt in a loan-to-own structure. The point, itwas speculated, was for Brookfield to gain leverage in therestructuring process. Last month Brookfield launched foreclosureproceedings, which Tishman has publicly indicated it willblock.

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WASHINGTON, DC-Last month Boston Properties bought a 30% stakein 500 North Capitol St., an 180,000-square-foot office building,through a JV with Bethesda, MD-based Clark Enterprises. The deal,described in the Wall StreetJournal, entailed the Boston-Clark JV kicking inas little as $8.5 million and paying off a maturing mortgage with anew loan.

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The seller, JBG Cos., was also issued about $450,000 worth ofBoston Properties' stock. Fully occupied by the Internal RevenueService, whose lease is set to expire next year, Boston Propertiesis planning a $40-million to $50-million upgrade of the property,the Journal reports. Boston Property was unable to returna call to GlobeSt.com in time for publication.

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In many ways it is a unique transaction given the closerelationship among the players. That said, brokers in the DC areaexpect to see more such structures come to market. Indeed thisconfiguration is one of a handful of market-created solutions tothe larger, looming debt refinancing problem that the industry hasbeen fretting over for more than a year. With property valuationsdown significantly and few lenders willing to underwrite more than65% to 75% LTVs, debt is in scarce supply. In short, need for moreequity and less debt is driving some make-shift fixes.

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"I think we will definitely see a lot more of this from otherinvestors," says Bill Collins of Cassidy Turley. "In this situationit was a friendly transaction among the companies--but that doesn’ttake away from the point, which is there are a number of situationsin the market that fit this profile," he tells GlobeSt.com. "Or saythe owner has a tax problem, which we are seeing more of," Collinssays. "This structure can be used to bring in someone to recap theproperty, keep the ownership entities in place--making it awin-win."

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Greg Leisch of Delta Associates tells GlobeSt.com that this typeof structure will be the driving force for a lot of distressedacquisitions. This strategy was also reported recently in theFebruary issue of Distressed Assets Investor.

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None of this is to say such strategic stakes will be the primaryor even main way to buy a building here. Gerry Trainor, executivemanaging director of Transwestern’s Investment Services Group,attributes this particular structure’s success to the players’relationship. "Most sales right now are just clean acquisitions.There are some people shopping for preferred equity or a mezz loanbut you can’t say they are in the majority. Not at all."

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