Fallout from Blackstone/Equity Office Deal

The New York Times has offered up a piece looking back on the monumental Blackstone/Equity Office deal and the ongoing fallout for those who acquired the assets at the top of the market. This deal can be summed up as a case-study for the Greater Fool Theory.

Today, the wreckage of those purchases is strewn across the country, from Southern California to Austin, Tex., to Chicago to New York. Many of the 16 companies that bought Equity Office buildings are now stuck with punishing debt, properties whose values are plummeting and millions of feet of office space they cannot fill.

Few deals better exemplify the excesses of the commercial real estate boom than the dismemberment of the Equity Office empire, and fewer still better underscore their bitter consequences.

Drunk off cheap and plentiful debt, and promises of higher rents, some of the smartest names in the business just couldn’t help themselves from jumping on the bandwagon.

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