The Real Deal New York

Barclays and Lehman Brothers argue over Archstone REIT

June 16, 2011 09:37AM

Barclays and the estate of Lehman Brothers Holdings are in a dispute over how to unwind real estate investment trust Archstone, a $22 billion investment made at the peak of the commercial real estate boom that contributed to Lehman’s downfall.

According to the Wall Street Journal, Barclays is pushing to sell the company or its assets privately whereas Lehman favors a longer-term approach: taking the company public in what would be the largest real estate initial public offering ever. Meanwhile, Bank of America, the third and final partner, has yet to decide on a favored strategy. It has, however, voiced worry about how much value an IPO would create; Analysts predict between $4 billion and $6 billion in equity.

Archstone was made private in 2007, in a leveraged buyout led by Lehman, which now owns 47 percent of the company. Bank of America and Barclays, which provided more than $5 billion in financing and $4.8 billion in equity, own 28 percent and 25 percent, respectively.

Most analysts believe that Archstone is worth much less than the $22 billion Lehman paid. [WSJ]

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