Bear Stearns: Real Estate — Its Own — Holds Key to Sale

With Bear Stearns in high-pressure talks this weekend with JPMorgan in an effort to close a buyout deal before markets open tomorrow, there are some ironies afoot. Chief among them? That Bear Stearns, which has been ravaged by over-exposure to the real estate mortgage market, may find that the biggest source of remaining value in the company is … real estate, albeit it’s own.

With Bear’s shares sharply lower and its liabilities unknown, JPMorgan could end up paying very little to acquire the firm. Bear’s market value has plunged to just $3.5bn from a peak close to $20bn in January last year, largely because of frenzied selling of its shares in the past week.

The value of Bear’s head office in a prime location on Madison Avenue, near JPMorgan’s offices, may account for a big portion of the eventual sale price. [Emphasis mine]

[via FT]

Related posts:

  1. Out All Day. Sorry About the Bear Stearns Thing.
  2. More Fun with Bear Stearns Anagrams
  3. Bear Stearns and Credit Markets
  4. Bear Stearns: Spector’s Exit Press Release
  5. The Right Real Estate Offer

Comments

  1. dave says:

    I want my two dollars…

  2. sheriff says:

    Only in America!! Who will be next.

  3. Sebastien says:

    Stated book value of BS shares: $80
    Value of BS’s midtown Manhattan skyscraper: $1b
    Per share price paid by JPM: $2
    Look on BS shareholders’ faces: Priceless.

  4. May 17, 2007
    The subprime mess is grave but largely contained, said Federal Reserve Chairman Ben Bernanke Thursday, in a speech before the Federal Reserve Bank of Chicago. While rising delinquencies and foreclosures will continue to weigh heavily on the housing market this year, it will not cripple the U.S. economy, he said. The speech was the Chairman’s most comprehensive on the subprime mortgage issue to date.
    “Given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited,” Bernanke said.
    March 16, 2008
    “I continue to believe the troubles in the subprime sector on the broader housing market will likely be limited to every bank and neighborhood in the country. So, unless you have a savings account or you own a home, you should be just fine.”
    Regards,
    George

  5. Lord says:

    It was a sale-leaseback that didn’t even own the land, but that might be the value of the lease.