Lehman set to sell off biggest asset Archstone

Ben Southwood
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LEHMAN Holdings is set to sell apartment owner Archstone, it announced yesterday, in a cash and shares deal worth roughly $6.5bn (£4.05bn).

Lehman Brothers bought the company, which at the very peak of the housing boom was worth around $22bn. But it will now get just $2.7bn of cash and $3.8bn of shares from developer rivals AvalonBay and Equity Residential.

This will give the Lehman creditors 9.8 per cent of Equity Residential and 13.2 per cent of AvalonBay. The two buyers will split Archstone 60-40 in favour of Equity Residential.

The sale came after the firm’s initial plan to raise $3.45bn, in what would have been the biggest US real estate initial public offering ever. Lehman had acquired the entire firm, but the two buyers pre-empted the listing.

“The transaction delivers significant return on the investment we made earlier this year to fully control Archstone and has generated immediate and considerable proceeds for our next distribution to creditors,” said Lehman chairman Owen Thomas.

AvalonBay shares slid 1.7 per cent in after-hours trading while Equity Residental’s fell some 1.5 per cent.