NEW YORK — Lehman Brothers Holdings Inc agreed to sell property group Archstone to two real estate investment trusts for about $6,5 billion, taking advantage of a strong market for apartments and marking an end to a 2007 gamble that helped push the investment bank into bankruptcy.
Report by Reuters
The buyers, Equity Residential and AvalonBay Communities Inc, will split the assets 60-40 and will also take on Archstone’s debt, for a total transaction value of $16 billion.
Lehman collapsed at the height of the financial crisis in 2008, in part because of soured real estate bets, including the $23,7 billion leveraged buyout of Archstone.
The firm filed for bankruptcy and has been liquidating assets to pay back creditors, who are still owed more than $30 billion.
Archstone, one of the largest owners of United States apartments, has a large portfolio of properties in metropolitan areas, where apartment buildings have been pricey and difficult to come by.
The acquisition would help real estate mogul Sam Zell’s Equity Residential expand its presence in mid-Atlantic and Northeastern states, while AvalonBay would expand its base in Southern California. Both buyers said they would issue stock to help finance the deal.
“In the long term, it was a very good outcome for the REIT industry at large,” said Len Rittberg, vice-president of Adelante Capital Management. “They’re both skilled operators. It gives them scale.”
