LONDON (Reuters) – Blackstone Group LP (BX.N: Quote, Profile, Research, Stock Buzz) and Kohlberg Kravis Roberts & Co KKR.UL are each looking to buy parts of Lehman’s real estate and asset management units, sources familiar with the situation said on Friday.
The real estate unit, which includes property and some asset-backed securities, could be worth around $5 billion, the sources said. Blackstone and KKR declined to comment.
Lehman Brothers Holdings Inc (LEH.N: Quote, Profile, Research, Stock Buzz) — which has racked up crippling losses and still bears more than $60 billion of mortgage and commercial real estate exposure — is under pressure to raise capital ahead of its earnings announcement this month.
The fourth-biggest U.S. investment bank has explored shedding assets, spinning off its money management arm and selling a significant stake to outside investors.
Blackstone, owner of the Hilton hotels chain, has invested in real estate in the past, making the unit contribute about a third of its income, about the same as its private equity unit.
Lehman is expected to post another big quarterly loss later this month. The bank has already taken $7 billion in credit-related writedowns and losses since the start of the global credit crisis.
The bank has also raised about $12 billion in capital this year through common equity, preferred stock and convertible securities offerings — but analysts and fund managers say this may not be enough.
By Elena Moya
(Additional reporting by Paritosh Bansal in New York; Editing by David Holmes)