Westinghouse to unload $1 billion in real estate

April 09, 1993|By Timothy J. Mullaney | Timothy J. Mullaney,Staff Writer

Westinghouse Electric Corp. said yesterday that it was selling $1 billion of troubled real estate assets to a newly formed partnership between Westinghouse and a New York investment bank. The company said the move would not have a major effect on Westinghouse's Linthicum operations.

"It's in keeping with a plan we had already announced in November, just ahead of schedule," Westinghouse spokesman Jim Schmitt said.

As part of the plan, Westinghouse would sell 250 to 300 real estate projects, located across the country, to LW Real Estate Investments L.P., a partnership between Westinghouse and an affiliate of the investment banking firm Lehman Bros.

Lehman Bros. will own 51 percent and be managing partner of LW Real Estate, with Westinghouse keeping 49 percent so it can share in any future appreciation in the value of the real estate. Mr. Schmitt said each company would contribute $150 million to capitalize the partnership.

"We now have a $150 million investment in something that we think will be worth more than $150 million," said Robert Watson, chairman of Westinghouse Financial Services Inc., a Westinghouse subsidiary.

Westinghouse, based in Pittsburgh, said the transaction would not affect first-quarter earnings. The $1 billion sale price is well below the $1.7 billion estimated book value of the real estate, but Westinghouse has already written off the difference in previous quarters.

"The partnership intends to [sell] assets as quickly as possible through securitizations and other accelerated sales and disposition techniques," said Mr. Watson.

Wall Street cheered the conglomerate's move to clean up its troubled business, sending Westinghouse's stock up $1.625, to close at $15.875, on the New York Stock Exchange.

Mr. Schmitt said Westinghouse, which owns several major properties in the Baltimore area, would not release any information on specific assets being sold to the partnership.

But Jim Peterson, executive vice president of Kennedy-Wilson Inc., a Santa Monica, Calif. firm managing the auction, said the auction of the Omni Inner Harbor Hotel was still on. Bids in that auction are due next week.

Westinghouse said it would keep about $450 million in real estate assets, about $350 million worth of houses and $100 million of commercial properties. The company plans to have sold substantially all of its real estate assets by midyear.

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