Lehman Bros 7.25% Pref'd Series P (fka LEHPQ)

[DJN]

Lehman appears to be working hard on restoring confidence in their company.

http://www.bizjournals.com/sanfrancisco/stories/2009/07/20/daily48.html

Real estate investment firm Broadway Partners and Lehman Brothers Holdings have restructured and resolved all near-term debt obligations on a 10-property Broadway-owned portfolio that includes 100 California St., One Sansome St., and 50 Beale St., the companies said Wednesday in a statement.

Under the agreement, Broadway, in a joint venture relationship with Lehman, will contribute capital and retain an ownership interest in a majority of the portfolio, that includes 1000 Wilshire Blvd. in Los Angeles, 116 Huntington St. in Boston, as well as two properties in Virginia. The capital investment is critical to “maintain the Class A nature of the properties” and will ensure a “stable and positive experience for current and future tenants,” according to a statement from the two companies. Funds will be used for anticipated leasing costs as well as capital upgrades.

The deed on a fourth Broadway San Francisco property, 120 Howard St., will be transferred in lieu of foreclosure to Prudential Real Estate Investors, according to brokerage sources familiar with the situation.

“This settlement takes care of all of Broadway’s near-term debt obligations in this portfolio for the next three years, insulating us from continuing credit market problems while we concentrate on portfolio strategy and maintaining superior service to our tenants,” said Broadway Partners founder and CEO Scott Lawlor, “We’re very pleased that we were able to reach a solution with Lehman that met our respective objectives.”

Purchased at the height of the market in 2007 at an average of $500 a square foot, the Broadway portfolio was considered distressed and many observers expected the investor would give all four San Francisco San Francisco buildings back to its lender. Since the New York-based Broadway jumped into the San Francisco market, values have dropped significantly. A building at 250 Montgomery that sold for $400 a square foot in 2006 recently changed hands for $173 a square foot.

A spokesperson for Lehman said “we are pleased to have successfully negotiated this restructuring, as it ensures the stability and viability of these significant assets within their markets.”

“Maintaining and, ultimately, increasing the value of the properties is our primary concern, and one that is shared by all of the participants in the capital structure,” said the Lehman spokesperson. “ Supporting the assets and enhancing the tenant experience are critical to accomplishing that. The outcome demonstrates how lenders and borrowers can come together in good faith and work out difficult debt-maturity situations caused by an illiquid market.”