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March 2010

The Liquidators of Lehman Brothers Commercial Corporation Asia Limited (LBCCA) have recovered another significant real estate loan, used to finance an A-Grade commercial property in Shanghai, China.

The transaction represents a recovery of 100 percent of Outstanding Principal Balance (OPB) and Outstanding Interest Balances (OIB).

Doug Ferguson, Partner, KPMG China, said: "This is a very good result for this particular position. It has involved engaging with the borrower in a co-operative, bi-lateral and constructive manner, which is the Liquidators' preferred approach. It also reflects the quality of the Chinese assets in which Lehman invested, as well as the conducive market environment in China."

To date, the realisation of some US$270 million from the China real estate portfolio represents a recovery of 94% of the China assets (by value), generating significant value for LBCCA's creditors.

This success has been achieved within 12 months from the Liquidators' formal appointment by the Hong Kong Court, with an average realisation rate of 83% of outstanding principal balance.

Most of these China real estate transactions have involved a sale of the loan to the original borrower or co-lender, often with third-party refinancing involved, following extensive negotiations.

LBCCA's real estate portfolio consists of senior and mezzanine loans, debentures, convertible and equity positions to 44 counterparties. These were mainly secured against hotel, residential, retail and commercial properties and developments, with the largest country and currency risk exposures being in China, Thailand and Malaysia.

© KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and KPMG Huazhen, a Sino-foreign joint venture in China, are member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

© KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

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