Mark Walsh gets another crack at Lehman funds

By A. James Memmott

June 21, 2009 at 10:10am

The man some blame for the investments that brought Lehman Brothers Holdings down is getting a second chance to profit from those investments.

Mark A. Walsh is part of a team of ex-Lehman executives who will form a separate entity to manage the bankrupt firm’s distressed real-estate private funds.

Most of these funds were created in the once highly profitable deals Walsh, 49, helped arrange when he was Lehman’s global head of real estate. Walsh was also the co-head of Lehman Brothers Real Estate Partners, a separate unit of Lehman Brothers Holdings.

Lehman had billions of dollars in toxic mortgage assets at the time of its bankruptcy last September.

Barclays Capital, which acquired Lehman’s investment banking business, fired Walsh and most of his commercial real estate team last October.

According to The Wall Street Journal, Alvarez & Marsal, Lehman’s restructuring adviser, had been looking for a buyer for the real estate funds since the bankruptcy.

Ultimately, they sold the management of these funds to Walsh’s group for about $10 million, with Lehman keeping a 20 percent stake in the holdings.

Brett Bossung and Mark H. Newman, who worked with Walsh at Lehman, are part of the group that stands to profit if the real-estate funds go up in value.

As the Journal points out, Walsh has legal difficulties stemming from his time at Lehman. Federal prosecutors are trying to determine if he and his group inflated the value of Lehman’s real-estate holdings.

And the New Jersey attorney general has sued Walsh and other Lehman executives for defrauding the state’s pension fund by giving misleading information.

But even with this baggage, reports indicate that Walsh’s return is not a surprise because he continues to be seen as a master of the commercial real estate investing.

“Guys like this are rare,” a developer told The New York Times early last month. “Nobody can take that away from him.”

The Times wrote that Walsh led the way in creating a way of breaking up debt for commercial real estate projects, slicing it up into packages with different risk values. This created more transactions, with Lehman getting fees for each.

Walsh was behind several huge Manhattan real estate acquisitions in the 1990s including Tishman Speyer Property’s purchase of the Chrysler Building.

He generally put a significant amount of Lehman’s own money into deals, a move that helped the firm’s bottom line as real estate values rose but hurt it as they fell.

A graduate of Fordham University Law School, Walsh is the son of the late Albert A. Walsh, also a Fordham Law graduate.

The elder Walsh was a long-time advocate of public housing and served as the chairman of the New York City Housing Authority under Mayor John V. Lindsay.

Before that, Albert Walsh was the deputy commissioner of the New York State Division of Housing and Urban Renewal in the administration of Gov. Nelson A. Rockefeller.

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  • #1.   Patrick_McTinton 12.10.2013

    He was a very smart man who made an incredible amount of money for his firm for a long time who got hit by a very bad market. Just like everyone else. Hindsight is always a clear 20/20.

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