Lehman makes risky property investment

TRD MIAMI /
Aug.August 04, 2010 06:30 PM

237 Park Avenue

Lehman Brothers Holdings, brought down in part by its huge property investments, is reinvesting in some of its existing deals on a bet that commercial property markets are bottoming out, the Wall Street Journal reported. Since the investment bank’s collapse in September 2008, Alvarez & Marsal — the firm overseeing Lehman’s bankruptcy — has reinvested more than $1 billion in apartments, office buildings and other commercial property around the country already owned or financed by Lehman and facing varying levels of distress. One of those properties is a 21-story office building at 237 Park Avenue. In 2007, Lehman originated $1.23 billion in loans to finance the purchase of the tower by Broadway Partners, retaining $437 million of the debt on its own books. Lehman also has spent nearly $1 billion to pay off partners and creditors and reach other settlements that resulted in the return of real estate assets to the firm. By investing more money into these deals, Alvarez & Marsal is hoping to salvage the maximum amount from the $14.4 billion of commercial real estate on the bank’s books. However, the success of this strategy depends in many cases on property values rising, something that is far from certain, given the tumultuous real estate market and the country’s weak economic recovery. [WSJ]


Related Articles

arrow_forward_ios
Lehman subsidiary sells Miami Beach land

Lehman subsidiary sells Miami Beach land

Lehman subsidiary sells Miami Beach land
Placeholder image

Ex-Lehman execs buy Canyon Ranch, report claims

Ex-Lehman execs buy Canyon Ranch, report claims
Miami’s Canyon Ranch condo-resort on the block

Miami’s Canyon Ranch condo-resort on the block

Miami’s Canyon Ranch condo-resort on the block
Placeholder image

Zuckerman to step down as Boston Properties CEO

Zuckerman to step down as Boston Properties CEO
Placeholder image

Lehman ramps up liquidation

Lehman ramps up liquidation
Placeholder image

Equity sells 27-property portfolio for $1.5 billion

Equity sells 27-property portfolio for $1.5 billion
Lehman bets on real estate to repay $300B debt

Lehman bets on real estate to repay $300B debt

Lehman bets on real estate to repay $300B debt
Placeholder image

Zell increases bid on Archstone, triggering automatic $80M payout

Zell increases bid on Archstone, triggering automatic $80M payout
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...