Friday Letter Life after Lehman

Proof arrived this week that there is life after Lehman as Silverpeak picked up a $1.1bn management contract from Dubai. 

 It has often been observed that in private equity real estate, a certain amount of reincarnation goes on. A real estate professional can shrug off past ties or history with problematic deals or firms to take up a fresh position and make a good fist of it.

Mark Walsh, the American real estate man best known for mega deals while at Lehman Brothers, this week proved the point.

Walsh is now at Silverpeak Real Estate Partners, the spin-out from Lehman Brothers Real Estate Partners (LBREP), which just yesterday announced it had won an impressive mandate.

Silverpeak has been appointed by the Dubai Investment Group (DIG) to manage a $1.1 billion portfolio of some 30 assets in the US and Germany. High praise was given to the team, of which Walsh is a co-leader. Fadel Al Ali, acting chief executive officer of the Dubai Group, which owns DIG, said Silverpeak was selected based on its “best in class” experience as an investor, owner and operator of real estate in the US and Europe.

“We believe the Silverpeak team is best equipped for this engagement based on their direct experience in the portfolio's asset classes and submarkets as well as their experience over the course of ten years operating as a premier institutional fund manager,” he said.

And yet, not too far from where Walsh is located in New York, those people looking after the Lehman Brothers’ estate were this week busy filing a document with the SEC to stop Equity Residential buying a 26.5 percent stake in Lehman’s biggest remaining real estate headache: Archstone. Not only is Lehman trying to block the sale, but according to various media sources, it is also looking to raise $2.6 billion to buy a controlling stake itself as part of its ultimate goal to sell the whole company as a going concern.

The irony is that Mark Walsh played a big part in Lehman buying Archstone in the first place.

Documents requested by Lehman Brothers Holding show how in 2006 he initiated contact with Archstone to discuss the possibility of buying it. An auction followed, and in April 2007, he was at a breakfast with Tishman Speyer at which Lehman agreed in principal the structure of a joint ownership bid. Then on the final day of the auction on 24 May 2007, he led a team that negotiated the price and terms of the offer with Morgan Stanley’s Hoke Slaughter, who was then representing Archstone.

Since those days in which every major Wall Street bank was involved in mega real estate deals, Walsh has moved on to pastures new and the firm he now co-leads with Brett Bossung is enjoying both success and endorsement.

That is the beauty of private equity real estate. To those senior dealmakers and leaders currently out of work or strapped to vessels they know to be sinking, this week has shown that reincarnation is possible.