Today’s Journal has a great piece on the skeleton of now-defunct Lehman Bros., chronicling how Lehman Brothers Holdings Inc. is trying to dig its way out of the failed real estate investments that the failed bank got into.
The holding company (being run by the head of Alvarez & Marsal), has put more than $1 billion back into its real estate investments, according to the piece, in part to replenish cash reserves on troubled properties that have run dry with lower than expected rents.
From the piece:
By piling more cash into these deals, executives at Alvarez & Marsal, the advisory firm overseeing Lehman’s bankruptcy proceedings, are hoping to salvage the maximum amount from the $14.4 billion of commercial real estate on the bank’s books.
But there is a risk: 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 weakening economic recovery. U.S. commercial-real-estate values remain 41% below their October 2007 peak and only slightly above the low hit in October 2009, according to Moody’s Investors Service.
Read more here.