Real Estate Principal Investment Area (REPIA), the private equity real estate arm of Goldman Sachs, has agreed to the purchase of the majority share of a 10-strong office portfolio in Rosslyn, Virginia, from entities of its collapsed Wall Street rival Lehman Brothers.
According to US court documents, Lehman Brothers Holdings and Lehman Commercial Paper, the debtor entities responsible the 3 million-square-foot portfolio, requested authority to sell the 78.5 percent stake to US Real Estate Opportunities (USREO) I. PERE understands that USREO I is a partnership between Goldman Sachs’ REPIA, which has approximately $34 billion in assets under management, and several sovereign wealth clients of the investment bank.
The sale is expected to complete in October, subject to various conditions and no objections being lodged with the US Bankruptcy Court. According to the documents, it will release proceeds of “no less than $385 million”, subject to various payments, to the Lehman Brothers estate, which will be used to meet its loan obligations.
The sale is part of the wind-down of the Lehman Brothers estate by restructuring firm Alvarez & Marsel. According to a report by the Wall Street Journal, the sale is expected to be a forerunner to further sales as values of US commercial real estate rebound. “The debtors believe, in its reasoned business judgement, that the sale of its interests in the Rosslyn Portfolio, in the current commercial real estate market, presents the debtors with the best opportunity to realise maximum value on account of its interests,” the court document read.
Minority stakes of 10.8 percent remain held by other entities including affiliates of Monday Properties, a New York real estate investment firm, and Lehman Brothers Real Estate Partners II, a global opportunity fund which closed on $2.4 billion in 2005 and is now under the management of Silverpeak Real Estate Partners.
Goldman Sachs REPIA would not comment on the deal, but according to sources familiar with platform, it reflects its continued ambition to make large opportunistic investments. The firm is understood to be currently investing capital from vehicles including USREO, its GS Real Estate Mezzanine Partners, a debt fund which both buys and originate loans, and Whitehall International 2008 Fund, the latest of its well known Whitehall Street real estate opportunity fund series which closed in May 2008 on $2.3 billion of which it still has more than $1 billion in dry powder.
Goldman Sachs REPIA is going through something of a leadership change. It emerged last month that Edward Siskind, its head and chairman is to retire at the end of the year to be replaced by Alan Kava and James Garman as global co-heads.