Lehman Brothers bankruptcy is putting pressure on financial institutions to divest their holdings of commercial property debt, driving down prices in an already troubled market.
Lehman's failure is the biggest indicator yet that the financial crisis that started in the housing market now is affecting shopping centers, office buildings, hotels, and other commercial real estate.
Approximately $4.3 billion of Lehman's $30 billion portfolio is comprised of securities, and the prospect of those holdings getting liquidated was the catalyst for the latest selloff in the commercial mortgage-backed securities market.
Apartment-building investors are now expected to feel added pressure to sell as Lehman unloads its debt and equity pieces of the $22 billion purchase of Archstone, which manages apartment communities in such major markets as California, New York City, and the nation's capital.
Source: Wall Street Journal, Michael Corkery, Lingling Wei (09/17/08)
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