by David Bodamer September 22nd, 2008
Lehman Brothers Holdings Inc.’s bankruptcy filing may delay the sale of about $30 billion of commercial real estate assets at a time when property values are eroding, leaving less on the table for creditors.
Lehman has “$30 billion worth of real estate, which probably isn’t worth $30 billion,” said Jeffrey Baker, executive managing director of real estate broker Savills LLC in New York. “Going through a bankruptcy process, the assets are going to be liquidated, and they will be liquidated at market pricing.”
Lehman was scrambling until just before it sought bankruptcy protection on Sept. 15 to sell the real estate assets, ranging from a loan to California land developer SunCal Cos. to a golf course overlooking St. Tropez and the Coeur Defense office complex in Paris, which the New York-based firm bought for $3 billion last year, the second-biggest real estate purchase of 2007.
“There’s value in there,” said Stephen Coyle, a fund manager at New York-based Cohen & Steers, about Lehman’s commercial real estate before the firm filed for bankruptcy protection. “It’s a question of at what price?” Cohen & Steers manages about $29 billion in real estate investments.
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by David Bodamer September 22nd, 2008
Apparently tired of what it believes to be a too-low valuation in the stock market, General Growth put out a release this morning saying it “pursuing a comprehensive evaluation of its alternatives, both financial and strategic, in an effort to align the market value of the Company’s common stock more closely with the intrinsic value of the Company’s stable, high quality portfolio of real estate assets.”
The company added, it will be in a position to offer “long-term fixed-rate portfolio mortgage financing to lenders in mid to late November, and in the interim will actively pursue several sources of financing for the Company’s near term maturing obligations. The Company and its advisors are also developing a comprehensive, strategic plan to generate capital from a variety of potential sources including, but not limited to, both core and non-core asset sales, the sale of joint venture or preferred equity in selected pools of its assets, a corporate level capital infusion, and/or strategic business combinations.”
Update 7:00 PM: General Growth did not do well in trading on Monday. It seems the market didn’t like this announcement. Most stocks were down, but General Growth was done more than most.
Related Topics: Finance, Management & Leasing, News, REITs, Retail Real Estate |
CNBC on CRE Implications
by David Bodamer September 22nd, 2008
Banking mergers and bankruptcies could be bad news for commercial real estate. Bill Rudin, CEO of Rudin Management, shares his insight at CNBC.
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