Lehman raises $1.6 billion for real estate buying fund

Stable-income alternative for stock market victims

Dollars & Sense

January 13, 2002|By BLOOMBERG NEWS

NEW YORK - Lehman Brothers Holdings Inc. has raised $1.6 billion for a fund to buy real estate in the United States and Europe, tapping investor appetite for the stable income from properties after the stock market's lengthy decline.

The fourth-largest U.S. securities firm started raising money for the fund in May 2000 and attracted $600 million more than originally planned.

The fund, called Lehman Brothers Real Estate Partners, is to be managed by Raymond Mikulich and Mark Walsh, both managing directors.

Wall Street firms, including Morgan Stanley, Dean Witter & Co. and Goldman Sachs Group Inc., and such investors as billionaire George Soros started such funds last year. A record $17 billion of equity for real estate funds was raised, mainly for investment in Europe and Asia, according to Ernst & Young LLP.

The Lehman fund will invest in property, real estate companies and service businesses related to real estate "to achieve strong risk-adjusted returns," Walsh said in a statement.

The National Council of Real Estate Investment Fiduciaries Index, which measures property values, rose 6.5 percent in the first nine months of 2001, compared with a decline of about 20 percent by the Standard & Poor's 500 index and a 40 percent drop by the Nasdaq composite index over the same period.

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