Hancock Tower Sold to Highest Only Bidder

Boston's John Hancock Tower, the tallest building in New England, was sold at auction today in New York, reports the Globe. Financial experts believe that the building will go for between $650 and $750 million, half of its 2006 price of $1.3 billion. (ETA: The building sold for $660 million.) Broadway Partners, the building's former owners, paid the $1.3 billion with labyrinth of funding, and the group defaulted on some of its loans earlier this year.

But forget your dreams of owning the building, even at bargain basement prices. The Hancock is likely to go to Normandy Real Estate Partners, a New Jersey group that holds one of the defaulted loans. (ETA: Normandy bought the building along with Five Mile Capital Partners.) So-called mezzanine loans, which investors use to supplement a first mortgage, are often the first to be foreclosed upon, which gives their lenders an enviable advantage at the auction block. Since they already own a portion of the debt, mezzanine lenders can usually buy commercial property at a fraction of what other buyers would pay.

It's a dramatic metonym for the real estate bubble and the collapsing market for office space that has left the landscape of Boston pocked with construction holes and building vacancies. We can only hope, that by way of recompense, that they got this guy to call the auction. [Globe, Bloomberg]