Boston's Hancock Tower sells at nearly half price

(Reuters) - The John Hancock Tower, New England's tallest office building, sold in a foreclosure auction on Tuesday for $660 million, about half what the sellers paid three years ago, underscoring the crumbling state of the U.S. commercial real estate market.

The building, a distinctive presence on the Boston skyline, was bought by Normandy Real Estate Partners and Five Mile Capital Partners, investors that had previously snapped up distressed loans on the property.

The building, designed by renowned architect I.M. Pei and officially named Hancock Place, went into foreclosure in January after its owner, Broadway Partners, defaulted on the mezzanine loans it used to finance the $1.3 billion sale in late 2006.

"This is exactly what is happening with many other buildings across the country," Chris Stanley, an analyst at real estate research firm Reis Inc in New York. "Now that things have started to deteriorate, they will deteriorate at a much faster rate because of all the leverage in the system."