Two weeks ago, As the World Turns – a CBS soap opera documenting the lives of the inhabitants of the fictional town of Oakdale, Illinois – ended a 54 year run on daytime television. A shorter-tenured, but nonetheless compelling, local epic aired this week as Boston Properties announced that it had emerged from a bidding war to secure the Bay Colony Corporate Center – perhaps the premier office campus in New England – for a price of approximately $185 million (inclusive of assumed debt). As a real estate finance attorney in Boston, it’s a property I have fielded a lot of calls about. And, although missing the ubiquitous case of amnesia, it’s a story that would have made the good people of Oakdale proud.

The story of Bay Colony, corporate center, begins with its construction (on the former site of a pig farm along the Cambridge reservoir) at the height of the tech bubble. Located along Boston’s Route 128 tech corridor, the site comprises almost a million square feet of space on 58 acres, with 3,000 parking spaces to accommodate a rent roll that has listed a who’s who of Hub-area tech, venture capital and telecomm tenants. In fact, the sheer number of resident venture firms over the years – Advanced Technology Ventures, Charles River Ventures, Cedar Fund, Ironside Ventures, JAFCO Ventures, Longworth Venture Partners, Matrix Partners, Northbridge Venture Partners and Polaris Ventures Partners, to name a few – contributed to the property’s legendary status among entrepreneurs looking for investment dollars. A single workday onsite could yield three pitches.

The story of Bay Colony, distressed-debt case study, begins with Beacon Capital Partners purchasing the property in 2005 for $272.5 million. (You’ll note this week’s price was a 33% discount to this figure and see where this is going.) Two years later, the property was acquired as part of Broadway’s buy-out of Beacon (a transaction that included the Hancock Tower, itself a distressed-debt story covered here). The deal was completed at the height of the market – the buyer leveraging upwards of $450 million on an increasing rental stream that never materialized. Just four months after losing Hancock, with maturity looming and hopelessly underwater, Broadway turned the keys over to its mortgage lender, Lehman Brothers, in July of 2009.

As we all know, and in a twist worthy of good soap opera writing, Lehman was bankrupt by the time it seized the property and was unable to bear the debt-load. Eastern Financial, which itself had obtained a portion of the Broadway mezz package at a discount, foreclosed and succeeded to ownership of Bay Colony. For Eastern, the deal looked like an opportunistic loan-to-own play; until the moribund, jobless recovery saw one 30,000 sq. ft. big-pharma tenant into bankruptcy and caused another (200,000 sq. ft.) to reduce its space by half. Unable to stabilize the property, Eastern turned the keys over the Prudential earlier this year, which took control subject to the $140 million securitized-first that Boston Properties agreed to assume this week.

A staple of American radio and, later, television programming for the better part of the 20th century, the midday serial was conceived by salesmen (soap salesmen – think Proctor & Gamble, Colgate-Palmolive) as a means of entry to the burgeoning post-war middle-class household. And it’s leaving us, the victim of myriad cultural phenomena (dual-income households, cable television, the internet, TiVo); and with it, a vaudevillian bridge to a small piece of our past. Absent a catalyst for (a lot) of new jobs and cars to fill the parking spaces at places like Bay Colony, however, the story of distressed real estate will continue to run for years to come.

By Matt Clark.