Lehman closes $1.6bn real estate fund

Oversubscribed by $600m, the fund will be investing in North American and European real estate.

US investment bank Lehman Brothers has closed its Lehman Brothers Real Estate Partners fund at $1.6bn, $600m above target.

It is the latest private equity vehicle Lehman Brothers has raised since it sharpened its focus on alternative asset management four years ago, said Michael Odrich, head of private equity at the group.

The aim of the fund is to invest in real estate properties, operating companies and service businesses ancillary to the real estate industry, primarily in North America but also Western and Central Europe.

According to Raymond Mikulich and Mark Walsh, co-heads of Lehman Brothers Real Estate Partners, the group’s track record in providing banking services to the real estate industry stands it in good stead for making private equity investments in the sector.

Mikulich said, “The firm’s significant deal flow from its real estate banking franchise enables us to identify and make opportunistic investments in real estate properties, portfolios and companies across the US and Europe.”

Walsh added that Lehman Brothers had advised on, underwrote or invested in more than $100bn in real estate transactions over the last two years.

The fund, for which Lehman began soliciting investors mid 2000, comprises more than $1.1bn from corporate and government pension funds, foundations, and other institutional and high net-worth investors and more than $500m from Lehman Brothers and its employees.

While exact details are not yet available, Mikulich said 15 commitments worth around $400m had already been made across the US and Europe.