$2.8B Loss Causes Reduced Real Estate Exposure

NEW YORK CITY-Lehman Brothers Holdings Inc. said that it reduced exposure to residential mortgages, commercial mortgages and real estate investments by approximately 20% in each asset class, when it revealed second quarter results Monday morning. The locally based firm reported a net loss of $2.8 billion for Q2, which ended May 31, 2008, compared to net income of $489 million for the Q1 ’08 and $1.3 billion for Q2 ’07.

According to the report, during the Q2 ’08, along with reducing real estate exposure to mortgages, the firm further strengthened its liquidity and capital position by the following. The firm grew the Holding Co. liquidity pool to $45 billion from $34 billion at the end of the prior quarter. The Firm reported gross assets and net assets of approximately $639 billion and $327 billion, respectively, which decreased approximately $147 billion and $70 billion, respectively, from the first quarter of fiscal 2008. It reduced acquisition finance exposures by approximately 35%. It also reduced aggregate non-investment grade inventory–including funded acquisition finance assets–by approximately 20%. Lehman also completed the budgeted full year fiscal 2008 unsecured funding plan and increased its long-term capital through the issuance of $4 billion of convertible preferred stock in April and approximately $5.5 billion of public benchmark long-term debt.