All different ways of making money these days

There's nothing like recapitalizing a loan to put a whole new perspective on things - and L.A.-based private lender Mesa West Capital is becoming a specialist in such workouts. "Lenders are agreeing to take a hit," Mesa co-CEO Jeff Friedman tells the WSJ. Case in point is a West Los Angeles office property known as Playa Business Campus. Here's how it started:

In early 2008, a fund managed by Lionstone Group, a Houston-based pension-fund advisor, paid about $65 million for the 150,000-square-foot property with two buildings. Playa was a converted 1970s-era industrial property, and Lionstone was hoping it would attract the advertising and tech companies that were populating nearby Santa Monica. But then the global financial hurricane hit. Rents in the area fell by almost half, to $33 a square foot annually, although they have since rebounded to about $46. The occupancy of Playa Business also plummeted. Fully occupied when Lionstone purchased the two-building complex, it now stands in the mid-60% occupancy range.

Lionstone wasn't bringing in enough money, and it still had to deal with a $41 million mortgage it took on to finance its acquisition of the property. The loan was held by GE Capital Real Estate, which was prepared to begin foreclosure proceedings.

Into this breach stepped Mesa, which helped engineer a solution. General Electric agreed to take a payoff of $35 million on its $41 million loan, according to people familiar with the property. Lionstone put in fresh equity of about $9 million. And Playa made a loan of $26 million to Lionstone, the people said.

The deal will allow Lionstone to upgrade the space for high-end tenants who will be willing to pay for indoor trees and outdoor volleyball courts. Simple.