Lehman, Goldman settle tiff over real estate deal

* Goldman to buy 10-building portfolio in Rosslyn, Va.

* Settles lawsuit after Goldman previously canceled deal

By Nick Brown

Oct 31 (Reuters) - A nonbankrupt unit of Lehman Brothers Holdings Inc LEHMQ.PK has closed on a deal to sell its interest in a 10-office real estate portfolio to a Goldman Sachs Group Inc (GS.N) unit, ending litigation after Goldman initially canceled the deal.

Lehman's Rosslyn LB Syndication Partner LLC unit said in a statement on Monday that the deal with Goldman's Usreo/Rosslyn Investors LLC was official.

Separately, Lehman filed court papers on Monday announcing it had settled a lawsuit accusing Goldman of using pretextual excuses to avoid closing on the deal earlier in October.

Neither the court papers nor Lehman's statement revealed how the settlement was reached or whether the purchase price changed after Goldman reneged. The initial deal had been expected to bring in at least $385 million to the Lehman estate.

"This transaction is another example of our executing the sale strategy we laid out at the beginning of the year and has enabled us to achieve a strong result for our creditors," Jeff Fitts, who heads Lehman's real estate group, said in the statement.

A spokesman for Lehman declined to comment on specifics of the deal, including purchase price. An attorney for Goldman could not immediately be reached.

Lehman has said in court papers that the 3-million-square-foot office portfolio, located in Rosslyn, Virginia, is valued at nearly $1.26 billion.

According to Lehman's lawsuit, Goldman canceled the purchase two days before its closing date, saying Lehman had failed to disclose certain leasing agreements and had submitted tenant documents that were inconsistent with terms of the deal.

Lehman rejected those grounds as "pretextual," saying Goldman was looking for an excuse to "avoid its contractual obligations."

Lehman is in the process of offloading its real estate assets to pay back its creditors. Real estate sales are expected to bring in $13.2 billion by the end of 2014, according to other Lehman court filings.

The case is Rosslyn LB Syndication Partner LLC v. Usreo/Rosslyn Investors LLC, U.S. Bankruptcy Court, Southern District of New York, No. 11-2764.

The Lehman bankruptcy is In re Lehman Brothers Holdings Inc, in the same court, No. 08-13555. (Reporting by Nick Brown; Editing by Gary Hill)