WASHINGTON — The woes of the real estate market took their toll on investment banking giant Lehman Brothers Holdings today when the firm announced it would sell most of its commercial real estate holdings and 31% of its residential holdings.
Lehman Brothers, the nation's largest underwriter of mortgage-backed bonds and fourth-largest securities firm, projected that its third-quarter loss will be $3.9 billion. The company plans to drop its annual dividend from 68 cents per share to 5 cents. It is the 37th largest company on the Fortune 500.
The firm also plans to sell the majority of its investment management division. It also intends to sell $4 billion of its commercial real estate holdings and spin off another $25 billion to $30 billion worth of holdings into a separate publicly traded company early next year.
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"This is an extraordinary time for our industry, and one of the toughest periods in the firm's history," the firm's Chief Executive Richard Fuld said in a statement. "The strategic initiatives we have announced today reflect our determination to fundamentally reposition Lehman Brothers by dramatically reducing balance sheet risk, reinforcing our focus on our client-facing businesses and returning the firm to profitability."
The firm's health has been the subject of much concern on Wall Street and in Washington, especially after its previous quarter loss of $2.8 billion.
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