WASHINGTON — Lehman Brothers’ do-or-die decision Wednesday to spin off up to $30 billion in commercial real-estate loans and buildings highlights how jittery worldwide investors are about all things real estate.
The last-ditch plan was part of sweeping measures the investment bank is taking to survive.
Lehman has been a major player in financial deals for office buildings, hotels and retail centers. It invests in real-estate properties and loans in the United States, Europe and Asia. Lehman, for example, was a key player in Tishman Speyer Properties’ $22.2 billion acquisition last year of Archstone-Smith Trust, an Arapahoe County-based apartment building operator.
But over the past year, the credit crunch has spread to commercial-real-estate financing, stalling or killing plans for some major developments in cities around the world.
That deterioration forced Leh man’s plan, announced Wednesday, to spin off $25 billion to $30 billion of commercial-real-estate investments into a separate publicly traded company. The new company, called Real Estate Investments Global, is expected to be launched in the first quarter of 2009.
“These are difficult times, there’s no way to sugarcoat that,” said Dan Fasulo, managing director of research firm Real Capital Analytics, which estimates that total U.S. commercial-property sales were down 70 percent in July from last year’s levels.
Fasulo, however, noted that the U.S. commercial-real-estate market is in far better shape than the battered housing market, which has seen a tremendous surge in defaults and foreclosures.
