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COVINGTON, KY-A partnership by Alex. Brown Realty Inc. and Bald Eagle Partners has purchased a $10 million “B” note from Morgan Stanley that is secured by a first lien on the 553,000-sf RiverCenter Towers I and II office complex here. The 77%-occupied property, owned and managed by Corporex, was appraised last year at $90 million.

Peter Bancroft, ABR’s SVP and acquisition officer, tells GlobeSt.com that this transaction was different than the company’s current policy of direct investment in real estate. “I would expect, in this (credit) environment, that you’re going to see more of these kinds of opportunities. A note is not our common vehicle, but the obviously the world has changed a bit.”

The note, purchased at a discount to par value, matures in June 2014 and carries a 6.6% pay rate, Bancroft says. He says the property is doing well and has good tenants, but that no capital improvements are planned. “As holders of the note, we’re not directly responsible for the operations. We just feel it’s a stable asset, and it’s a viable competitor with the office buildings on the other side of the river in Cincinnati, since we have commuting, lower lease costs and tax advantages on this side,” Bancroft says.

The complex is anchored by three tenants: Omnicare, Ashland and Corporex itself. The property is part of the larger riverfront development that includes two hotels, another office building and a 22-story condo tower.

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