Boston’s Incredible Shrinking Skyscraper

For most of its 34-year life, the Hancock Tower, which looms above its brick neighbors in Boston's Back Bay, has been the sort of place where money comes to be managed and protected. Its tenants include Ernst & Young and the investment firm Highfields Capital. The I. M. Pei–designed sliver of glass doesn't seem like a place where several hundred million dollars can vanish in a few months.

But that's exactly what happened at the 62-story building, now under its fourth owner in six years. In January, an aggressive young wheeler-dealer defaulted on a portion of the building's $1.3 billion mortgage just 24 months after buying it. In March, two firms that had purchased chunks of the tower's second mortgage for pennies on the dollar assumed control, essentially rendering up to $400 million of debt worthless. The Hancock's market value is now about $700 million—half what it appraised for less than two years ago.