Lehman Brothers’ Real-Estate Carcass battle.
Lehman Brothers Holdings Inc.’s bankruptcy has turned the real-estate industry into a world of haves and have-nots. When the investment bank collapsed in September, its property assets alone were valued at a staggering $43 billion, making it one of the largest real-estate bankruptcies ever.
Since then, Lehman’s partners, creditors and vendors in hundreds of property deals have been fighting for what is left of the investment bank’s real-estate carcass. Typically, partners of a company in bankruptcy can squeeze more funding for a project by convincing the judge that the investment will increase the value of the estate in the long run.
But that is a difficult argument to make in the worst commercial real-estate market in decades. Lehman plans to tap some of its $6 billion cash hoard to prop up selected real estate plays. For instance, Lehman received the court’s permission to allocate $230 million to apartment giant Archstone to keep it afloat.
Lehman, with Tishman Speyer Properties, Barclays PLC and Bank of America Corp., took the apartment company private in 2007 for $22 billion. Archstone has struggled to sell assets to pay down the massive debt used to make the purchase. Read the full report here.
