The investment bank Lehman Brothers, which declared bankruptcy in 2008, is working to sell its commercial property holdings in the Detroit area.
Among the real estate holdings that Lehman is looking to sell is an officer tower that overlooks Detroit’s riverfront and the border with Canada. The company will also be selling a large office property in suburban Farmington Hills.
Experts estimate that the properties will be selling for as little as ten cents on the dollar, undervaluing them about 90 percent. While the residential real estate market has improved, the metro office real estate market has not seen significant growth. A real estate economist told reporters that since this sector isn’t showing signs of sustained improvement, it makes sense that Lehman wants to move on.
The declining values aren’t deterring investors in commercial property in Michigan. During the second quarter of this year, office properties sold for $89 per square foot, on average. This is more than double the rate that office properties were selling for during the second half of 2011.
The bank is attempting to recover up to $12.9 billion owed to creditors through selling real estate holdings like the ones in Detroit. The company is holding on to properties in other markets in the hopes that values will increase. In addition to commercial properties, Lehman also has a stake in residential real estate, including condos and apartments in different parts of the country.
More information about Detroit investment and commercial property acquisitions can be found on our real estate law page.
Source: Bloomberg, “Lehman’s Detroit Escape Means 90% Loss on Properties: Mortgages,” Oshrat Carmiel, September 5, 2012.