Archstone deal leads to apartment stock growth

December 03, 2012 04:30PM

Last week’s revelation that Sam Zell’s Equity Residential and AvalonBay Communities were buying Archstone for $16 billion has helped multi-family stocks rally, Businessweek reported.

Before the sale, Lehman Brothers hand been planning to take Archstone public in a $3.45 billion initial public offering, but with the new acquisition,  apartment stocks ended their 13 percent slide since their July peak.

“The storm cloud has been lifted with the cancellation of the IPO,” Dean Frankel, senior portfolio manager at Urdang Capital Management in Plymouth Meeting, Pennsylvania, said.

The Bloomberg Apartment REIT Index, led by Equity Residential and AvalonBay, had almost quadrupled from its March 2009 low to its July peak this year. But since July it had declined enough to erase any gains in 2012.

The sale has led to a increased investment, with 19 million shares sold by Equity Residential at $54.75 each — still 17 percent less than its July 17 high of $65.72 — to fund the sale.

“There’s a nice opportunity for the stocks to rebound,” Kenneth Weinberg, senior portfolio manager at CBRE Clarion in Radnor, Pennsylvania, said. [Businessweek]Christopher Cameron