Lehman to Sell $4B UK Mortgage Portfolio

Lehman Brothers Holdings Inc., which suffered an estimated $7.8 billion in gross writedowns largely related to residential mortgages and commercial real estate in the third quarter, has made plans to sell approximately $4 billion of its United Kingdom mortgage portfolio and spin off its CRE-related exposures into a new company. The Wall Street firm, which has estimated that it will take a $3.9 billion net loss in reporting preliminary third-quarter results, said it also plans to sell a majority interest in its investment management division. The company said it has retained BlackRock Financial Management Inc. to sell the United Kingdom portfolio and expects to complete the sale within a few weeks. DBRS has downgraded the company's long-term ratings in response and placed all ratings under review with negative implications. Earlier, Standard & Poor's and Fitch had warned that some of Lehman's ratings might be downgraded due to large percentage declines in its stock price resulting from intensifying concerns about its capitalization.