Lehman invests $175m in Indian office JV

The investment bank’s private equity real estate arm makes its largest investment in India in a joint venture with development company Unitech to build one million square feet of office space. Unitech says it is the first of many.

Lehman Brothers Real Estate Partners has invested Rs7.4 billion ($175 million; €113 million) in a joint venture with India’s second largest development company, Unitech, to build more than one million square feet of office space in Mumbai.

The investment, which gives Lehman Brothers a 50 percent stake in the JV, is expected to be the first in a series of deals with Unitech, according to a statement from the development company to the Bombay Stock Exchange today.

The joint venture, known as the Western Expressway, will initially develop one million square feet of office space on a 100-acre plot of land running alongside the Western Expressway of Mumbai. The land has a total developable area of 18 million square feet, according to Unitech, and once complete would hope to rival the likes of Tokyo’s Roppongi Hills, London’s Canary Wharf and New York’s Battery Park.

The JV will be funded 50 percent by Lehman Brothers Real Estate Partners and 50 percent by Unitech and their “Mumbai partners.” Unitech added in the statement that land availability was one of the “biggest challenges for developers and investors in Mumbai.”

Unitech went on to say the investment by Lehman would be the first of many, saying the duo intended to “expand the relationship in the future by considering future investments in subsequent phases of this master project as well as in additional projects in Unitech’s Mumbai and national portfolio.”

The announcement came as Lehman Brothers Holdings slashed its exposure to residential mortgages, commercial mortgages and real estate investments by 20 percent in each asset class after posting $2.8 billion of net losses for the second quarter of 2008. It is the first time Lehman has reported a loss since 1994. The firm shed $147 billion of assets during the quarter with real estate holdings sliding 19 percent to $10.4 billion.