Lehman sells Archstone portfolio to Equity and Avalon Bay in $6.5 billion deal

November 27, 2012 08:30AM

Lehman Brothers has agreed to sell landlord Archstone’s apartment building portfolio to Samuel Zell’s Equity Residential and AvalonBay Communities for approximately $6.5 billion in cash and stock, the New York Times reported. Lehman’s $23 billion acquisition of Archstone with Tishman Speyer prior to the collapse of the housing market was one of the major contributors to the bank’s collapse. Ironically, it will now help Lehman to pay back its plethora of creditors.

Englewood, Colo.-based Archstone owns or has a stake in 181 developments with 57,948 apartment units, mostly in urban areas in the Northeast, California and southeast Florida, as of September 30. Archstone had been Leman’s single biggest remaining asset, and the financial firm was planning to take it public in a $3.45 billion initial public offering that is no longer on the table.

“Archstone is a highly sophisticated and very well thought-of manager of apartment assets,” Craig Leupold, the president of Green Street Advisors, a research firm, said. “If it’s not the highest-quality portfolio around, it’s certainly up there.”

Lehman has held on to Archstone even as it began liquidating its other real estate holdings, but had been looking for an opportunity to unload the company for some time. [NYT]Christopher Cameron