REI Global, the Lehman spin off, most likely have a portfolio that is mixed and includes the company’s equity position in the Archstone-Smith Trust apartment portfolio, which it purchased in partnership with Tishman Speyer Properties last year. Tishman Speyer and Lehman Brothers completed a $22 billion leveraged buyout of Archstone Smith a year ago last August.
Off course they overpaid for their buyout at the height of real estate valuation in 2007. At the time, Englewood, CO-based Archstone was one of the largest multifamily REITs with about 86,000 units worldwide. Barron's called the deal a "gigantic gamble" because Lehman and Tishman would be paying more than $1 billion in interest -- more than Archstone's $800 million projected NOI for 2007 -- on the $17 billion borrowed for the deal. based on these figures, they did this transaction at a blended cap rate of about 3.6%, a very high valuation.
One of their mortgage investment is in SunCal Cos. SunCal is a California land developer with 250,000 residential lots and 10 million square feet of commercial properties, the company has a huge development pipeline in California. Obviously this holding is troubling given the current environment for home builders. Serious questions must be attached to the ability to SunCal to refinance and sell its pipeline. Already SunCal debt has been downgraded to non performing by Moody's in march 2008 and there are several non payment on loans to lenders.
Here is the breakdown of their portfolio by dollar value:
Geographical break down:
- 57% of the holdings are in the Americas,
- 26% in Europe, and
- 17% in Asia.
- 58% are debt positions,
- 26% are equity positions,
- 16% are securities.
- multifamily properties represent 22%, and
- office properties represent 18%.