WASHINGTON, DC-Last month, DiamondRock Hospitality acquired $69million in debt from Wells Fargo, backed by the landmark Chicagohotel Allerton. The Maryland hotel firm bought the senior mortgageloan on the 443-room hotel after its owner, Chartres Lodging Group,was unable to repay it. DiamondRock said in a news release that itexpected to own the fee title of the hotel upon completion of theforeclosure. That plan hit a bump in the road shortly afterwards,though; according to the Wall Street Journal, a tusslebroke out between it and mezzanine lender, New York-based PetraCapital Management, with both firms vying for control.

Welcome to the new face of real estate distress: after a deeprecession, with the pain particularly acute in commercial realestate, there are still few viable distressed properties or notesavailable for sale. In short, the deals that are being done nowentail investors, such as DiamondRock, chasing after defaultedborrowers to offer capital solutions.

The pickings are so slim that many investors who had originallythought they would pursue distressed opportunities are beginning tobow out, says Gary Eisenberg, a partner with Herrick, Feinstein.“Potential bidders would underwrite conservative offers and thenfind themselves losing by an order of magnitude,” he tellsGlobeSt.com. ”There is always someone willing to pay more, itseems.”