A few months after the $3-billion first mortgage on the PeterCooper Village/ Stuyvesant Town apartment complex in New York Cityfirst went into special servicing and then into foreclosureproceedings, another high watermark deal of the current market hasstarted down a similar route. The Blackstone Group in late Maytransferred to a special servicer the $4.9 billion of CMBS debtremaining from its $39.2-billion purchase of Equity OfficeProperties Trust. It's reportedly now the largest loan in specialservicing.

In reporting the transfer, Fitch Ratings cited "imminentdefault" as the reason. Peter Rose, a spokesman for Blackstone,told Bloomberg that his company had begun talks with the lender,Bank of America, on extending the debt. "Special servicing issimply a routine administrative step in order to start thesediscussions." Rose said in May. Calls by Distressed Assets Investorfor additional comment were not returned by deadline.

The Blackstone/EOP debt, which stems from a single non recourse,interest-only, floating-rate loan securitized in 2007, is bothindicative of trends in distress and a special case. On the onehand, "It's the exception, rather than the rule." says Jon Barry,the Atlanta-based national managing director of ColliersInternational's asset resolutions team, who was not involved in anyof the deals. "This is a very large portfolio and is not at allindicative of the vast majority of CMBS loans in their presentcondition."