It's 2008, just two years after Broadway Partners bought Boston's Hancock Tower & Garage for $1.35 billion, and Normandy Real Estate Partners and Five Mile Capital Partners see an opportunity. With a frozen credit market, Broadway would find it almost impossible to refinance its mezzanine loan maturing in January 2009. Normandy and Five Mile form a venture to target weakness in the capital structure, aiming to pursue a "loan-to-own" strategy that will transform a distressed-debt investment into ownership of Boston's largest office building. In this case, students examine the building's capital structure, project its net operating income and analyze abstracts of participation and intercreditor agreements to recommend strategies for executing the plan.
Columbia Business School: