Lehman Brothers Chairman and CEO Richard Fuld is a partner in two Whitefish-area real estate protects. They’re not doing too well, either.
By Robert Struckman, 9-18-08
It’s a long way from Wall Street to Whitefish, but for better or worse the connections these days are closer than you might think. This week’s case in point: Richard Fuld, chairman and CEO of Lehman Brothers, the huge financial firm that went bankrupt this week, is a partner in two major Whitefish-area real estate projects.
While Fuld’s Montana ventures, which are part of a partnership with super-star venture capitalist Mark Kvamme, are in better shape than his investment bank, they are not exactly thriving amid the real estate slump.
Take the Homestead at Whitefish, one of the region’s seemingly countless “unique” developments, “nestled” into the mountains and offering buyers an “authentic Western lifestyle.” With lots priced from $500,000 to $1.5 million and spec homes in the $4 million range, the Homestead is, uh, not selling very well.
“I’d say it’s a reasonably active market, from the standpoint of people looking,” said development manager Paul Johanssen. “We’re still working hard to keep the pipeline full, even if we don’t get anything to drop out the other end,” Johanssen added.
The Homestead has sold seven lots all told, Johanssen said.
“I’d say that ‘08 is off from ‘07, which was off from ‘06,” he added.
Fuld and Kvamme’s other project, Block 46, is a new urbanism project within Whitefish with what seems like long-term potential.
So, how’s that one doing? It’s on ice.
“Well, following the trends in the local market, it’s slow,” said Johanssen. “We’re just not moving forward with it, because it doesn’t seem like a very good time to be developing that sort of project.”
The news Sunday that Fuld’s Lehman Brothers would liquidate because of huge losses in the mortgage market has rattled the financial world. This week, with several related bailouts and unprecedented turmoil on Wall Street, could mark a turning point in this year’s presidential election and in American financial history.
What’s it like to have a connection with such an important national news figure?
“It’s a relatively small connection in the overall scheme of things,” said Johanssen, who described Fuld as a “passive investor.” “Right now it’s not having any impact on how we manage these projects.”
As for Fuld himself?
“I would never consider Mr. Fuld any sort of liability,” Johanssen added. “No one could have possibly predicted this, and I don’t think anyone can predict what’s going to happen in the coming months.”
And that’s why Johanssen remains optimistic.
“The weekend before last, we had our homes featured in the Flathead Parade of Homes” he said. “Nearly 2,300 people come through our project in two days, and we’re a few miles out of town. We were extremely pleased. Between our two houses, we swept seven out of seven best-in-show awards…. We’ve had a lot of calls and inquiries since then.”