The object of desire is International Place, a two-building complex completed by the Chiofaro Company in 1992. At 1.8 million square feet, it is the largest in the Financial District, which has the most sought-after office addresses in this city.
Early this spring, the New York-based Tishman Speyer Properties paid $596 million in an auction to purchase the $620 million mortgage loan and $26 million in other debts from the lender, Teachers Insurance and Annuity Association, also based in New York. In May, affiliates of the Chiofaro Company, which owns the complex in a joint venture with Hillman Properties of Pittsburgh, filed for bankruptcy in United States District Court here, contending that in the weeks after Tishman obtained the mortgage it had been rejecting sound lease deals in a “hostile” attempt to assume ownership.
“The New York crowd is a bunch of pirates,” the president and founder of the Chiofaro Company, Donald J. Chiofaro, said in a statement. While his business is not insolvent, Mr. Chiofaro said, he hopes through the bankruptcy process to reduce its mortgage interest rate from more than 7 percent to 6 percent or less. Then, he said, “we’ll send the interlopers back to Gotham.”
The dispute has attracted special attention here – and not only because of the New York-Boston rivalry. International Place, with towers 46 and 35 stories tall, has long set the standard for luxury offices here. “It’s a trophy property of tremendous stature with a good location that’s getting better,” said George J. Fantini Jr., chairman of Fantini & Gorga, Boston-based mortgage bankers.
On Monday, the parties agreed in bankruptcy court that Mr. Chiofaro would file a plan of reorganization on Sept. 7 without requesting extensions and that Tishman could discuss with creditors how it would repay them before they vote on Chiofaro’s reorganization plan.
Even if the bankruptcy court ultimately decides that Mr. Chiofaro can retain the property, which he has been developing and managing since 1980, Tishman says it will not retreat to New York. “We like Boston and plan to expand here,” said its chief executive, Jerry I. Speyer. In 1997, the company made its first purchase in the city: a 1.5-million-square-foot complex at 125 High Street. “Someday,” Mr. Speyer said, “we’d like to build a new building.”
A lawyer representing Tishman Speyer, R. Robert Popeo, said the company was not rejecting sound leases, just prudently watching its investment. At the auction of the International Place mortgage, “Tishman didn’t just bid to take over debt,” he explained. “The building had cash flow troubles,” in part because an important tenant had left the building.
Without bankruptcy protection, Mr. Chiofaro’s “budget shows eventual default because he has no equity,” Mr. Popeo added. “Then Tishman would resolve issues with the owner or foreclose and become the owner.”