Lehman Loses $2.8B, Cuts Commercial RE Exposure

Lehman Bros. announced today a net loss of $2.8 billion for the second quarter, ended May 31, 2008, compared to net income of $489 million for the first fiscal quarter of this year, and $1.8 billion for the second quarter of fiscal 2007. The firm also said it reduced exposure to residential mortgages, commercial mortgages and real estate investments by 20 percent in each asset class. Lehman made major news in an attempt to shore up investor confidence last week, as it replaced CFO Erin Callan and president & CEO Joseph Gregory. Bart McDade will serve as new president & COO, while the firm’s co-chief administrative officer, Ian Lowitt, will become CFO. Lehman was a huge player in both commercial mortgage securitization, as well as a direct real estate investor. Lehman and Tishman Speyer took apartment REIT Archstone Smith private in a $22 billion transaction last October. Overall, Barron’s reports that Lehman has from $65 billion to $70 billion in real estate exposure. That has fallen from $87 billion on Feb. 29.