Collapsed investment bank Lehman Brothers Holdings Inc has agreed to restructure the debt on 10 properties owned by a Broadway Partners-managed fund in exchange for an ownership stake, the companies said on Wednesday. Under the deal, approved by a US bankruptcy court, Broadway will pay down $20 million of one loan and invest up to $17 million to cover leasing costs and upgrades and will retain a stake in a majority of the portfolio, which includes buildings in Los Angeles, San Francisco, Boston, and two Virginia properties.
New York-based Broadway said the deal takes care of all of the portfolio's near-term debt obligations. In 2007, Lehman loaned more than $459 million to the Broadway Partners Fund for the acquisition of indirect ownership interests of the properties. The bridge mezzanine loans were secured by interests in the ownership entities of the properties and matured on May 11, 2009, according to court papers. Earlier this year, Broadway Partners lost its stake in the John Hancock Tower, New England's tallest office building. It was sold for $660 million, about half of what Broadway paid for it three years ago. The new buyers were the mezzanine lender, Normandy Real Estate Partners and Five Mile Capital Partners.