But it doesn't sound like it was an open auction since it says "given that they buyer LNR Partners effectively auctioned it to themselves, it's not certain that low $6.5 million price would have been available to other buyers."
I don't think they were definitive or detailed enough to draw that conclusion.
The article insinuates it, but uses weasel words like "essentially" and claims they simply don't know if it was an open auction.
Articles generally hype things up, and claim anything they can get away with. Therefore, if they won't make a clear statement, why would I ever assume more than they will.
They already owned $45M of the building through being the lender. When you add the $6.5M, they paid about $52M total. The middleman then took a $10M loss (16%).
That's a significant loss, but the valuation of the building is nowhere near $6.5M, and the tax assessor knows that (i.e. from comparables), so the new title holder won't be able to claim that as a property tax basis.
I don't know if they usually do that, but I could see it as some kind of deal that preserves good will for future business they might do together.
My guess is that there's quite a fuzzy distinction between commercial real estate lenders and investors, and that the roles are often reversed depending on the situation.
That is in contrast with home mortgage lending, where the borrowers are very unlikely to be lenders.
