Lehman Preferred Series "J" Preferred (fka LEHJQ)

[DJN]

http://online.wsj.com/article/SB10001424052748704193004574588251432823122.html?mod=WSJ_hpp_LEFTWhatsNewsCollection

Lehman Brothers Holdings Inc. is expected to announce the sale of two real estate private-equity funds, according to people familiar with the situation, the latest move by the collapsed New York investment bank to shed assets and wind down the firm.

PCCP, a Los Angeles-based real estate investment firm, will acquire the two funds, which have roughly $2 billion in assets under management.

Lehman, which is being run by turnaround firm Alvarez & Marsal, has now struck deals to divest all six of its so-called "platform" private-equity businesses, including its flagship buyout unit, now called Trilantic Capital Partners. Those businesses represent roughly $22 billion in investment commitments.

PCCP was founded in 1998 by William Lindsay, a former lawyer at Gibson Dunn & Crutcher, and three executives from Wells Fargo. The firm, which counts Lehman and the California State Teachers' Retirement System as investors, has $4.1 billion under management, with stakes in properties including the Fairmont Dallas hotel and Culver Studios movie-production facility in Culver City, Calif.

In taking over the Lehman mezzanine funds, PCCP will acquire about $1.7 billion in largely mezzanine loans, or the debt that fills the gap between a borrower's equity and the first mortgage. Investments include L.A. Live, a sprawling entertainment complex across from the Staples Center, and Troon North golf course in Scottsdale, Ariz.

Because most of the Lehman fund investments were made since 2006, many of these loans are distressed.

"We think this is a huge opportunity to show what we can do with troubled portfolios," Mr. Lindsay said.

PCCP will bring on 10 Lehman professionals based in New York and establish an office there. It will also re-brand the vehicles as PCCP funds, dropping the Lehman name.

Write to Peter Lattman at [e-mail]