The liquidators of Lehman Brother’s Chinese real estate portfolio have sold seven out of nine property-related loans and bonds for more than $200 million, in a bid to avoid deteriorating commercial rental and capital values.
KPMG said it had achieved a recovery rate of 80 cents in the dollar through the sales, according to a report by the Financial Times.
Michael Lindsay, the KPMG partner in charge of the sales said that six out of seven of the loans were tied to deals in Shanghai and that the majority of the loans had been sold to the original borrowers.
The seven loans, related to assets in the hotel development, retail and commercial sectors, were managed by a Hong Kong registered entity and had an “aggregate exposure of $1.25 billion” as of last September.”
Lindsay said: “Our market intelligence in early 2009 indicated a risk of deterioration in commercial rental and capital values, especially in Shanghai offices.”
“We therefore felt it important to act swiftly,” he added.
KPMG is currently liquidating eight Lehman Hong Kong entities, which accounted for the bulk of the bank’s Asian operations excluding Japan. The firm said last November that the book value of the aggregate assets is about $20bn.