McCandless Towers sits within Silicon Valley's "Golden Triangle" between Highway 101, Route 237 and Interstate 880. The building is 89% leased. Anchor tenants include security software developer McAfee Inc. and Amkor Technologies, a supplier of outsourced semiconductor interconnect services.

The cost to acquire the mezzanine loan was not disclosed by the parties involved and not immediately available. An industry source with knowledge of the transaction tells GlobeSt.com that the debt was purchased at a discount but couldn't say exactly how much. Similar deals by Shorenstein and others have traded at anywhere from a 5% discount to a 25% discount, he says.

Shorenstein chairman Douglas Shorenstein says the opportunity to acquire these types of debt interests—ones with "attractive risk-adjusted yields in prominent and well located Class A assets in key markets"—is due to the ongoing dislocation of the credit markets. The company has acquired eight such loans in the last nine months, bringing its subordinated debt total for the ninth fund to $435 million.