Last week, stories circulated that Lehman was looking to sell $14 billion out of its portfolio of real estate and commercial mortgages. However, new reports say that now Lehman is looking to sell it all. (Incidentally, last year Lehman estimated its commercial real estate holdings as $52 billion. So that $40 billion figure represents a healthy writedown in estimated value.)
Lehman Brothers, the Wall Street investment bank, is understood to be in talks to sell its entire $40 billion (£21.5 billion) real estate portfolio in a move to stem losses incurred during one of the worst property slumps since the Great Depression.The bank – whose stock has fallen 69 per cent since the credit crisis erupted just over a year ago – is believed to be prepared to take a $5 billion hit on the sale of the assets and securities.
Lehman is believed to have begun sale negotiations with firms such as Blackstone, the private equity group, and BlackRock, the fund manager.
However, it is thought that Lehman is optimistic about the price it might secure for the portfolio even though both residential and commercial real estate assets have collapsed in value. Some mortgage-backed securities – which are collateralised by residential real estate – are so untradeable, they are effectively worthless.