Lehman Brothers

Richard Fuld Jr., who recently sold off 16 works of art at Christie's, is not the only former Lehman Brothers executive selling off his assets. The financial firm's former president, Joseph Gregory--who has already sold his apartment at 610 Park Avenue for $4.4 million and the private helicopter that he used to commute to work every day from Huntington, N.Y.--has had no luck getting rid of the eight-bedroom Bridgehampton mansion he placed on the market in September for $32.5 million (half a million dollars less than his 2007 salary), reports Page Six Magazine. And now, desperate to make a profit off the property, Mr.  read more »

With the announcement last week that its top seven executives would forgo annual bonuses for 2008, Goldman Sachs continues to demonstrate why it has always stood out from the rest of Wall Street as a leader that represents the best in capitalism. By giving up tens of millions of dollars in compensation, Goldman’s chief executive, Lloyd Blankfein, its co-presidents, Gary Cohn and Jon Winkelried, and their colleagues understand that in tough times, leadership by example matters. Indeed, their willingness to give up money that they rightly deserve—these are the executives, after all, who deftly steered Goldman through the storm as peers such as Bear Stearns, Lehman Brothers and Merrill Lynch crashed and foundered on the rocks—proves why brilliant managers deserve big bucks when their companies have a good year.  read more »

Barclays Capital has fired Mark Walsh, the man in charge of Lehman Brothers' commercial real estate investments, along with nearly all the rest of Lehman's commercial-mortgage-backed securities team, according to the trade mag Commercial Mortgage Alert.

Mr. Walsh has often been described as the "man behind the curtain" who made Lehman Brothers loads of money during the heyday of the CMBS market, but also as a man who took far too many risks and ultimately played a significant role in Lehman's demise. Indeed, Mr. Walsh financed Tishman-Speyer's ill-conceived $22.2 billion acquisition of Archstone-Smith, a luxury apartment building portfolio that has since been devalued; and financed SunCal's $110.2 million purchase of a 2.25-acre plot of land in Southern California.  read more »

"I hope he chokes on the payments and winds up on the street!" ["Congrats! Lehman's Ex-Mortgage Banking Chief Nabs 10-Room Condo for $5.25 M."]

Capitalism is a cruel, cruel thing. According to city records filed today, Kurt A. Locher, formerly a Lehman Brothers managing director and the head of its mortgage banking, bought a $5.25 million apartment at 500 West End Avenue.

According to a listing, the five-bedroom apartment was "one of the largest and grandest homes on the market on the Upper West Side," with a formal dining room, a maid's room, a living room, a library, and a windowed, eat-in chef's kitchen "large enough to serve a growing family or entertain like a professional!"  read more »

The investigations of at least three U.S. Attorneys into whether Lehman Brothers misled investors before its fall could include parsing the former investment bank's vast commercial real estate investing operation. From the Wall Street Journal this morning:

The U.S. attorney's office for New York's Southern District, in Manhattan, is investigating whether Lehman valued its assets at artificially high levels, say two people familiar with the matter. That office has issued subpoenas to individuals that focus on what the firm told investors and other parties about its valuations for approximately $32.6 billion in commercial-real-estate holdings, according to a person familiar with the matter.

Lehman's commercial real-estate portfolio came under review by a number of firms, including

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"And the Bush administration and Hank Paulson are asking for taxpayers' money to keep these very same guys filthy rich? I vote NO! for the bailout plan. Have Buffett and the billionaires of the world inlcuding the Arab sheiks invest in America, but please please do not use taxpayers' money! If America falls apart, then ask these guys to return the millions of money they did not deserve!" ["Park Places! Lehman COO Sells His for $4.4 M., Ex-Bear Asking $12 M. Farther Up"]

Dana Rubinstein has the backstory on Mark Walsh, the star Lehman executive who orchestrated the bank's myriad commercial real estate investments. To some, Mr. Walsh is the hidden wizard behind Wall Street's demise. To others, the 48-year-old Fordham Law graduate just had really bad timing.

Mark Walsh entered 2008 as a Svengali of numbers. He headed Lehman Brothers’ commercial real estate investments, which put him at the helm of a chugging ship that spouted billions in liquid cash for deals locally and nationwide.

It was the pinnacle of a career that began 20 years before, just as Wall Street was recovering from the crash of late 1987, when Mr. Walsh, a young Fordham law school graduate scored a job at Lehman.

Mr. Walsh had worked a few years as a lawyer before finding his way to the investment bank with pre-Civil War roots. But, once arrived, he rose quickly.  read more »

Artist Geoffrey Raymond did not have much luck soliciting signatures on his portrait of ousted AIG Chairman Hank Greenberg when he displayed it outside the firm's Wall Street headquarters last week.

When Mr. Raymond first unfurled "The Annotated Spitzer" outside of the New York Stock Exchange 15 minutes after the governor resigned on March 12, over 100 passersby reveled in the schadenfreude, scrawling messages like "Spitzer or Swallow" around the head of Wall Street's disgraced nemesis. Mr. Raymond went on to collect 350 comments on the Spitzer portrait, less than a dozen of which were encouraging, setting the still-unsurpassed record in his nine-piece "Annotated" series.  read more »

"Study for Agony I" is one of four Arshile Gorkys, three William de Koonings, five Barnett Newmans and four Agnes Martins that Kathy Fuld, wife of Lehman chief executive Dick Fuld, has hired Christie's to auction off, according to reports by Bloomberg news and The New York Times.

While the timing would seem to indicate that the auction was an effort to counteract the hit the Fuld family's fortunes have taken on Wall Street -- Bloomberg reports that Mr. Fuld "sold Lehman shares that were worth $247 million a year and a half ago for less than $500,000 last week after the stock price collapsed" -- Ms.  read more »

"For every buyer there is a seller, so the amounts lost would zero out and no party would gain an advantage. We would just get to reset the clock. This is as fair as things can be made, given where we are. What is causing the panic in the markets right now is the realization that the losers have insufficient money to pay the winners. The domino effect of multiple collapses cannot be stemmed by any government, even by running the printing press overtime. The only solution is to wipe the underlying derivatives off the books and ensure these bets are never made again by creating laws to send those who make them in the future to jail." ["Bob Knakal Will Not BS You About the Wall Street Crisis"]

Dealbreaker has photos of the Barclays moniker slapped on 745 Seventh Avenue in Midtown. Note the top right of the above photo. Barclays got the tower as part of a $1.5 billion deal to acquire Lehman assets.

From the New York Stock Exchange just now:

NEW YORK, September 17, 2008 – NYSE Regulation, Inc. (“NYSE Regulation”) announced today that it determined that the common stock of Lehman Brothers Holdings, Inc. (the “Company”), ticker symbol LEH, as well as the 13 related NYSE and NYSE Arca listed securities listed below, should be suspended immediately.

NYSE Regulation has determined that the Company is no longer suitable for listing. This decision was reached in view of the Company’s September 15, 2008, filing of a petition under Chapter 11 of the U.S Bankruptcy Code with the United States Bankruptcy Court for the Southern District of New York.

Barclays, as part of its acquisition of some Lehman Brothers assets, will take Lehman's headquarters at 745 Seventh Avenue, according to a release issued today:

Barclays has also agreed to acquire Lehman Brothers New York Head Office at 745 Seventh Avenue and two data centres in New Jersey for close to their current market value, estimated at £0.8bn (US$1.5bn). The combined consideration totals some £1.0bn (US$1.75bn).

Greg Hughes, SL Green's chief financial officer, who is, as we write, giving a presentation at the Merrill Lynch Global Real Estate Conference, said the news was a good sign:

Now as we take stock of what happened over the weekend, between Lehman, between Merill, and between AIG, there’s between 5 and 6 million square feet of space that they occupy in midtown, another 6 million downtown, so we’re watching and trying to take stock of what’s going to happen there.

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The Times' Terry Pristin this morning covers how risky real estate deals helped topple Lehman Brothers. These deals included the investment bank's involvement with Tishman Speyer in last year's $22.2 billion acquisition of apartment landlord Archstone-Smith:

[T]he deal ... was not the only high-risk commercial deal that Lehman sealed weeks, and even months, after ratings agencies warned the real estate industry that underwriting standards had become too lax and rental growth projections too robust.

Lehman didn't slow down. In fact, the bank developed a reputation as one of the more prolific lenders in commercial real estate deals. One investor described Lehman as "the real estate A.T.M."

Looks like CNN got taken by two of Howard Stern's employees this morning. Rather than the usual call-in taunt of "Baba-booey!" two Stern Show regulars, Richard Christy and Sal "The Stockbroker" Governale, went down to Lehman Brothers headquarters and pretended to make out with each other behind a CNN standup report by Allan Chernoff.

So far, the clip has made its way around the blogosphere: VH1's Best Week Ever started it; then Videogum picked it up, as did Dealbreaker and New York magazine's Daily Intel.

Only Towleroad seemed to know it was a Howard Stern-related prank.

It's Governor Paterson's turn for a statement. He chose to lay out the scope of this weekend's events:

These three firms – Bear Stearns, Lehman Brothers, and Merrill Lynch – had nearly 30,000 employees in New York, paid roughly 10 percent of Wall Street wages, and approximately 15 percent of all Wall Street bonuses.

20 percent of State revenue is derived from Wall Street. While the full impact of these events may not be known for months or even years, the fact that financial services firms that were able to survive the Great Depression, world wars, and the September 11th attacks collapsed under the weight of the current financial crisis is cause for grave concern.

Mayor Bloomberg addressed the Wall Street crisis this afternoon, recounting conversations he's had with executives at Bank of America and Merrill Lynch over possible layoffs: "Greg Fleming, the President and COO of Merrill, and Ken Lewis, the President and CEO of Bank of America, have informed me that they believe jobs losses in the New York area will be relatively minimal."

As for Lehman's 12,000 New York area employees?

Like everyone else, I had hoped Lehman Brothers could be saved, along with the jobs that employ more than 12,000 people who live in the New York area. Lehman Brothers had provided countless New Yorkers with an opportunity to pursue the American Dream, and it’s a sad day for our city to see it close its doors.

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GRAND JUNCTION, Colo.—Barack Obama seized on the Wall Street crisis this morning to make the argument that the  country can't afford another four years of Republican rule.

With an arid bluff behind him, Obama called the bankruptcy of Lehman Brothers and the problems with other major financial institutions on Wall Street “a serious, serious situation. As bad as anything we have seen.”

Later in his speech he said, “We just woke up to news of financial disaster and this morning he said the fundamentals of our economy are still strong. Senator McCain, what economy are you talking about?”

He launched into a Clintonesque discussion of "fundamentals.  read more »

The weekend Wall Street crisis will affect New York real estate. Here's how:

Apartment sales ~ Manhattan recorded over 10,000 home sales in 2007, but sales numbers have been off throughout the city in 2008. In Manhattan in the second quarter, home sales were down 21.8 percent annually, according to a Miller Samuel-Douglas Elliman report. In Queens, 23.7 percent; and, in Brooklyn, over 43 percent. The Wall Street crisis, due to the inordinate influence of the Street on local apartment and townhouse sales, will likely drive the number of deals further downward as the year ends. This could give a hefty advantage to buyers.  read more »

What do Lehman Brothers' epic troubles mean for New York City real estate? Two recent articles surmise that, should the bank's troubles continue to worsen, it might just consider selling its world headquarters at 745 Seventh Avenue, which Lehman bought in 2001 for $700 million, and which brokers estimate could now be worth upwards of $1 billion.

The Financial Times speculates that:

The value of Lehman's tower at 745 Seventh Avenue and 49th Street could also be an important factor in any possible takeover - as was proved with the fire sale of Bear Stearns in March.

Bear offered a guarantee that

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Lehman Brothers, if it does go under, will likely fail on a Friday, maybe this Friday. Slate's Nina Shen Rastogi explains why every bank failure in 2008 has been on a Friday (hat tip Matrix):

Why do banks always go bust on Fridays?So the government has a full weekend to reopen them under new management. If the banking business didn't return to normal at the earliest opportunity, the specter of agitated customers might erode public confidence in the banking system, triggering a wider panic. So regulators close banks at the end of the day on Friday to take advantage of the regularly scheduled days off.

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As investment bank giant (and major New York employer) Lehman Brothers teeters on the brink of joining Bear Stearns in that great trading floor in the sky, the announcement comes that the bank will spin off its commercial real estate holdings into a public company.

From a new Lehman Brothers' release:  read more »

As we speak, New York Times company stock is at $13.72, its lowest level since October 1998.

Times stock fell 7 percent yesterday, and it's down another 2 percent today after Lehman Brothers analyst Craig Huber wrote in a note to clients yesterday predicting that Times stock would only continue to fall. He cut his price target for the stock to $8 from $11 and wrote, "New York Times shares should follow its weakening fundamentals over time." That's because everything in the world of newspapers is tanking:

Ad revenue at the flagship New York Times likely will drop 9.1 percent this year, more than the 7.  read more »

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With Lehman Brothers bruised and staggered from its $2.8 billion loss in the second quarter, analysts and financial pundits have been writing rough-draft predictions that the bank may soon be joining Merrill Lynch, Citigroup and Bear Stearns as an institution in free fall, an institution that, despite its best efforts, simply could not overcome the unforgiving gravity exerted by the mortgage-backed securities meltdown. And while Lehman’s posting of its first quarterly deficit since going public 14 years ago is cause for concern, the bank’s shareholders, and Wall Street at large, began to breathe a bit easier this week as the firm’s chief executive officer, Richard Fuld, stepped up to take sole responsibility for his firm’s troubles.  read more »

The first and only woman to gain entry into the 15-member boys club that is the Lehman Brothers’ executive board has now penetrated one of the city’s most exclusive buildings. Erin M. Callan, the recently appointed Lehman CFO, paid $6.5 million for a 31st-floor condo at 15 Central Park West, city records show.  read more »

It’s been a sleepy year so far in the Manhattan office-leasing world, which is to be expected. Vacancy rates are at a huge low and average rents are at an all-time high.

But brokers are quietly saying it’s going to be a very busy summer and, indeed, things are picking up. Take midtown recently: In April, leasing activity there nearly tripled what it was in March, according to stats from brokerage CB Richard Ellis; companies leased 1.84 million square feet of office space versus 660,000 square feet in March.  read more »