South Africa: Lehman's Venture Likely to Go Ahead

JSE-listed property firm Redefine Income Fund and US investment bank Lehman Brothers' property joint venture in Cape Town is likely to continue despite the bank's bankruptcy woes.

Redefine and Lehman entered into a joint venture last year to construct a mixed-use development. The development site, called Annandale, consisted of 70ha in Richmond, about 3km from the mixed-use precinct Century City in Cape Town.

Mike Flax, an executive director of Madison Property Fund Managers, which is the asset management company of Redefine, said yesterday neither Lehman nor Redefine would suffer any material losses should Lehman pull out.

Redefine owned 25% and Lehman Brothers held 75% of the company that had been set up to own and develop the site, said Flax.

The development would cost Redefine about R1,2bn.

He said Redefine had not committed any finances as yet to purchasing the land, and a new partner would be brought on board in the event of Lehman pulling out.

He said Madison would be forfeiting only future development fees on the project should the project be discontinued.

Flax said it was "business as usual" at the Redefine offices and the project had not been halted. They were still communicating with Lehman , he said.

According to Reuters, Lehman is a major player in global real estate, with commercial property interests worth $32,6bn.

Lehman entered the South African property market for the first time last year through its tie-up with Redefine, SA's fourth-biggest listed property fund with a market capitalisation of R5,6bn.

Lehman, one of Wall Street's biggest investment banks, has filed for bankruptcy protection as the US subprime mortgage crisis continues.

Article from: