Commercial Real Estate Blog

Lehman Brothers (LEH: 13.07 -13.04%), in a move to raise capital and reduce its real estate exposure, is said to be in talks to liquidate about $14B in commercial real estate assets. Lehman is said to be in talks with BlackRock for the assets. Lehamn currently owns about $10B worth of real estate, and an additional $29.4B in commercial mortgages.

Last month, Shorenstein acquired a piece of mezzanine debt on McCandless Towers from Lehman Brothers. For the past few years, Lehman Brothers had been extremely prolific in mortgage backed securities, and in 2007 had underwrote more than any other firm. In addition, Lehman Brothers is selling apartments it acquired through the Archstone-Smith acquisition (which it partnered with Tishman Speyer on). In the past few months it has sold Archstone assets in Santa Clara and Dublin, and will be looking to liquidate others through the end of the year.

I’m not quite sure how the $14B number surfaced, but it seems that Lehman’s financial condition might just have it bailing out of nearly everything, stabilizing itself, and then when the bond issuance market returns, Lehman gets slowly back on the horse.

Shorenstein has acquired a $51.1M mezzanine loan collateralized by McCandless Towers in Santa Clara. Globe St. is reporting that the the debt was acquired at a discount.

McCandless Towers was purchased by Tishman Speyer last July at a cost of $500 PSF ($213M), representing a 4.5% cap rate. McCandless Towers features two 11-story, 210,000 square foot, Class A office buildings anchored by McAfee. The project was completed between 1986 and 1988 and features a 1,400 stall parking garage. The project was built by Swinerton and designed by Hoover Associates.

Shorenstein has been an active buyer of junior debt in primary markets, picking up debt in Washington D.C., New York, LA, and more locally, a $40 mezzanine loan on the Moffett Towers project in Sunnyvale which we wrote about back in October of 2007.