A reference in the original story misrepresented the Brookfield-Tishman Speyer situation. It should have read: In February, Brookfield Properties acquired the debt associated with Tishman Speyer's DC portfolio. At the time, Brookfield was reported to have bought the debt in a loan-to-own structure. The point, it was speculated, was for Brookfield to gain leverage in the restructuring process. Last month Brookfield launched foreclosure proceedings, which Tishman has publicly indicated it will block.

WASHINGTON, DC-Last month Boston Properties bought a 30% stake in 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 Street Journal, entailed the Boston-Clark JV kicking in as little as $8.5 million and paying off a maturing mortgage with a new loan.

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

In many ways it is a unique transaction given the close relationship among the players. That said, brokers in the DC area expect to see more such structures come to market. Indeed this configuration is one of a handful of market-created solutions to the larger, looming debt refinancing problem that the industry has been fretting over for more than a year. With property valuations down significantly and few lenders willing to underwrite more than 65% to 75% LTVs, debt is in scarce supply. In short, need for more equity and less debt is driving some make-shift fixes.

"I think we will definitely see a lot more of this from other investors," says Bill Collins of Cassidy Turley. "In this situation it was a friendly transaction among the companies--but that doesn’t take away from the point, which is there are a number of situations in the market that fit this profile," he tells GlobeSt.com. "Or say the owner has a tax problem, which we are seeing more of," Collins says. "This structure can be used to bring in someone to recap the property, keep the ownership entities in place--making it a win-win."

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

None of this is to say such strategic stakes will be the primary or even main way to buy a building here. Gerry Trainor, executive managing 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 loan but you can’t say they are in the majority. Not at all."