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Lone Star buys $10bn of Lehman Bros loans

The Dallas-based firm is acquiring $10bn of performing and non-performing loans in Japan for just less than $300m.

Lone Star Funds is poised to complete the purchase of $10 billion of non-performing and performing loans from the Japanese business of collapsed Wall Street bank Lehman Brothers for less than $300 million.

PERE understands the loans were purchased by Lone Star Japan, part of the Dallas-based private equity and real estate fund manager, on behalf of the group’s Lone Star Fund VI, which closed in December 2007 on $7.5 billion.

Lone Star Japan, which is led by president Takehisa Takamatsu, purchased the loans from Lehman’s Japanese loan units Lehman Brothers Commercial Mortgage KK and Sunrise Finance Company, which were placed on the market approximately eight months ago.

While the units themselves have not attracted much in the way of bids, since they filed for bankruptcy protection on 16 September 2008, the same day Lehman Brothers Japan filed for protection in the wake of its parent company Lehman Brothers Group, the loans they managed have.

In addition to Lone Star’s acquisition, which has been orchestrated in three pools sold in April and July with the third and final tranche to sold by the end of the year, other firms including Fortress and Carval have also purchased loans from the vehicles.

The loans purchased by Lone Star have all been made to commercial properties and comprise non-performing loans bought by Lehman Brothers from third parties and performing loans originated by Lehman Brothers with a view to securitizing.

Lone Star Fund VI was raised to invest in secured and unsecured debt, mortgage related securities, financially-oriented operating companies and operating companies with “significant tangible assets”, according to the firm’s website.

Lone Star declined to comment.

To learn more about the purchase of the loans, see this month’s issue of PERE.