Lehman Still Trying to Spin Off Assets

The now-bankrupt investment bank originally pitched the idea of splitting off its real estate assets into a separate company to “extract value” a couple of days before it spiraled out of business. It didn’t go over very well then, maybe it’ll work better this time around. The idea involves spinning off a hodge podge of Miami condos, New York apartment complexes, private equity investments and risky mortgages that internal Lehman calculations have pegged the value at around $45 billion, down about half from its value in September. At non-distressed prices, the assets are valued at around $400 billion, including $300 billion in servicing of assets. The best part is that people inside Lehman have been referring to the unit as Lamco, short for Legacy Asset Management Company. Perhaps they have yet to figure out that the name is only one letter short of the moniker LAMEco?

Apparently executives now running Lamco don’t want to miss out on the big rebound in asset values that is sure to be right around the corner. They wish to legally separate the company from the bankruptcy estate by the beginning of 2010 and then sell shares to the public. After that, they plan to make it all back. Good luck to them. With the way the market has rallied in the past couple of months, I’m sure they’ll find lots of folks who are dying to buy into an IPO of a bunch of highly illiquid assets with questionable ability to generate cash flows.