Lehman Sells Archstone for $6.5 Billion

On Monday, defunct investment banker Lehman Brothers Holdings announced  that it is selling its Archstone Enterprise LP real estate business  to a pair of buyers. Residential real estate investment trusts Equity Residential (NYSE: EQR  ) and AvalonBay Communities (NYSE: AVB  ) will pay a combined $6.5 billion in cash and stock to acquire the business.

Earlier this year, Lehman purchased the 53.6% of Archstone shares that it didn't already own, in order to fully control the company and facilitate its later sale. Now, Lehman will be selling the company for $2.685 billion in cash, 34,468,085 shares of Equity Residential common stock, and 14,889,706 shares of AvalonBay common stock. When the transaction is consummated, as it is expected to be in the first quarter of 2013, Equity Residential will own 60%  of Archstone, with AvalonBay owning the remaining 40%.

Thus, in essence, Lehman is trading 100% of one company for a 9.8% ownership interest in Equity Residential, a 13.2% interest in AvalonBay, and, of course, the cash. Lehman says the sale "has generated immediate and considerable proceeds for our next distribution to creditors." 

In related news, Equity Residential announced  today that it is selling 19 million shares in a follow-on offering, in part to raise cash to pay its portion of the Archstone payment.

 
 
 
 

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2127674, ~/Articles/ArticleHandler.aspx, 9/23/2014 2:27:00 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement