Hancock Tower Fetches $660M At Auction; Normandy and Five Mile Winners

The foreclosure sale of Hancock Tower took place today. According to the Boston Globe, Normandy Real Estate and Five Mile Capital Partners acquired the building for $660.6M ($376 psf) in an auction that lasted less than 10 minutes. In fact, the duo were the only bidders at the auction. The building is about 1.755 million square feet.

The price represents 50% off what the building last sold for in 2006, underscoring the reality that many sellers are having difficult grasping. This is the beginning of what is likely many more auctions of properties which were acquired at the peak of the market in 2006-2007, and significantly more losses to banks and lenders.

Auctions like this should scare lenders senseless, as so many of the deals were structured by financing that simply got out of hand. This auction shows just how much underwater much of the debt that fueled the madness now is. What should also scare them is the graph below which was published by the Wall Street Journal the other day showing outstanding CRE debt against Tier 1 Capital at banks.

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