Lehman Bros. Bankruptcy Offers Prime Example of How Not to Grow a CRE Portfolio

Doubling Down Proved Fatal at a Time When a Crisis was Brewing

By Mark Heschmeyer

As corporate post mortems go, the report compiled by the bankruptcy examiner of Lehman Brothers Holdings Inc., may go down as the standard in bankruptcy documents. And what it tells us about the collapse of the once-venerable investment house will stand as a clear warning of what commercial real estate strategy not to follow in a brewing economic crisis.

The examiner’s nine-volume, multi-thousand page document covers Lehman’s collapse from 2007 when it racked up record revenues of nearly $60 billion and record earnings in excess of $4 billion to Sept. 15, 2008, after it lost 95% of its value and was forced to seek Chapter 11 protection in the largest bankruptcy proceeding ever filed.

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