Tishman's Zombie Woes

Another "biggest deal in history" is falling apart.

Back in 2007, when Tishman Speyer paid $1.7 billion for six office towers in Chicago's Loop, the local press proclaimed it the "biggest real estate deal in Chicago history." Now, a part of the $1.4 million package of loans on the properties is in default - and Tishman Speyer may be forced to pour more of its own money into the deal to keep the buildings running.

Tishman Speyer neatly illustrates the current troubles plaguing commercial real estate. At the height of the real estate bubble, the New York City-based developer and investor made a string of giant purchases. Back then, lenders offered easy real estate loans big enough to cover nearly the entire appraised value of a property - no matter how optimistic the appraisal. The interest rates were low and the underwriting was easy.