Lehman Sells Austin Office Portfolio Stake to Thomas, Calstrs

Lehman Brothers Holdings Inc. sold its stake in eight Austin, Texas-area office buildings to Thomas Properties Group Inc. and the California State Teachers’ Retirement System as part of an $859 million deal.

Thomas and Calstrs had held 25 percent of the venture owning the properties and bought out the entire portfolio, the companies said today in a statement. Lehman, the investment bank that filed for the largest bankruptcy in U.S. history four years ago, sold its 50 percent stake, while an unidentified sovereign-wealth fund had held 25 percent.

Thomas considers the buildings to be “crown jewels,” Chairman and Chief Executive Officer James Thomas said in the statement. “We are very encouraged by the continued strength in the Austin market and the prospects for future growth.”

Thomas, based in Los Angeles, and Calstrs formed a new venture, known as TPG/CalSTRS Austin LLC, to own the Austin portfolio, with each company holding a 50 percent interest. As part of the deal, Thomas sold a one-third stake in the entity that owns its interest to Madison International Realty.

The venture acquired the portfolio in a deal that values it at $859 million before prorations and adjustments, Thomas said in the statement. As part of the purchase price, Thomas and Calstrs assumed five existing first mortgage loans totaling $626 million. The transaction reduced the existing leverage on the portfolio by repaying about $200 million owed to Lehman Commercial Paper Inc., Thomas said.

Liquidating Property

Lehman is liquidating its real estate portfolio, seeking to recover as much as $12.9 billion from mortgages and assets around the globe. It has invested more than $5 billion in its real estate since its 2008 collapse, as it waits for opportune times to sell properties. The company was part of a restructuring of the Austin portfolio in March 2009, according to a separate statement.

“We have achieved an excellent result for the partnership and for Lehman creditors who will benefit from a significant return on our 2009 investment,” Ashish Gupta, a senior vice president in the Lehman Brothers real estate group, said in the statement.

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