When asked about the latest trends in distressed real estateinvestment, Wayne B. Heicklen tells about the back-and-forthnegotiations between a troubled bank and an eager private-equityinvestor over a few distressed assets.

The firm had its eye on certain assets in a portfolio ofnon-peforming loans held by a financial institution on Long Island,recounts Heicklen, co-chair of the real estate group of New YorkCity-based law firm Pryor Cashman. It quickly found, though, thatthe bank's price expectations were too stringent, so it gaveup.

Then the bank merged with another, so Heicklen's client triedagain and found the new ownerships more amendable to a sale. Butthe private equity company's original idea of acquiring just thegroup's best assets? Nice try, but no cigar. And no sale. "Theprivate-equity company started out bidding on the particular assetsit wanted but was quickly pushed into the direction of buying thewhole portfolio," Heicklen says.