The Bundesbank has taken full control of the €2.9bn Lehman Brothers “Excalibur” vehicle, paving the way for an expedited sale of distressed real estate debt.
The German central bank has taken ownership of €722m of junior debt from the collapsed bank’s estate.
It already held the €2.2bn senior tranche in the vehicle, which includes senior real estate loans, mezzanine loans and securitised debt originally provided by Lehman.
It took the position as collateral for a loan to the German subsidiary of the US bank, Lehman Brothers Bankhaus, at the onset of the credit crunch before Lehman’s collapse in 2008.
Without full ownership of the Lehman-created SPV Excalibur Funding No 1, the Bundesbank would have had to work in partnership with the estate of the bank, which is now in chapter 11 bankruptcy.
One source said: “Now that the Bundesbank has control of the entire structure, it can more or less dictate what should be done, including a sale of the underlying loans without needing Lehman’s approval.”
The Bundesbank would not provide any information on the change of control “exceeding the confirmation of the Bloomberg news of 26 October”.
This report covered a wider Bundesbank claim, which was settled this month.
Germany’s central bank had filed a $12.2bn claim on Lehman, based on a guarantee of debt of its German affiliate, Lehman Brothers Bankhaus, according to claims records.
The two parties agreed on a €3.5bn settlement, according to a Lehman court filing, Bloomberg said.
The Bundesbank, which is advised by debt specialist AgFe, is talking to investors about a sale of the property loans secured against a range of European assets, including London’s Devonshire House.
Private equity firms keen to buy debt, such as Blackstone, Lone Star, Apollo Capital Management and Texas Pacific Group, are all expected to be interested.
