Lehman Brothers prepares Archstone IPO

August 13, 2012 05:30PM

Just three months after it wrestled away complete control of the Archstone portfolio from its former partner banks and Equity Residential Chairman Sam Zell, Lehman has filed to take the Colorado-based apartment landlord public. Bloomberg News reported the IPO filed to raise $100 million, but that is likely just a placeholder number being used to calculate fees.

The debt taken on by Lehman Brothers to finance the purchase of the apartment portfolio — with Tishman Speyer — for $22.2 billion in 2007 was one of causes for its 2008 collapse. After having emerged from bankruptcy in March, Lehman is banking that the IPO will finally make Archstone pay off.

“This is setting the stage for a multibillion-dollar IPO later this year or very early next,” Andrew McCulloch, a Green Street Advisors managing director, said. “Lehman’s likely goal is to eventually liquidate its position in order to pay creditors.”

Lehman plans to reorganize Archstone – the 11th-largest apartment landlord in the U.S., with holdings mostly in New York City, Washington, D.C., Boston, Seattle, San Francisco, Southern California and South Florida — as a real estate investment trust; U.S. apartment REITs have made gains of 246 percent since March 2009.  However, the company is still carrying approximately $10 billion of debt, which may give some wary Wall Streeters pause. [Bloomberg News] — Christopher Cameron