Archstone reportedly has drawn up a list of potential buyers for its assets and has begun reaching out to some of them. Among the potential bidders that the Denver-based apartment REIT has reached out to are The Blackstone Group, TPG Capital and Vornado Realty Trust.
According to a report by Reuters, Vornado chief executive Michael Fascitelli said Archstone had reached out to his firm and others. Other companies that might have an interest in buying the REIT's assets include Equity Residential, AvalonBay Communities and Apollo Global Management, as well as sovereign wealth funds. The list of potential buyers, however, is likely to grow.
Archstone, which is owned by its lenders – Lehman Brothers, Bank of America and Barclays, is considering a sale of assets, an initial public offering or a combination of both. With that last option, the REIT is contemplating selling a chunk of its assets and then possibly trying for an IPO of the remaining company. The process, however, is still in the early stages.
The current move to sell part or all of Archstone would enable the lending banks to recover some of their losses on loans backing Lehman and Tishman Speyer’s purchase of Archstone-Smith Trust for $22 billion in 2007. The buyout contributed to the bankruptcy of Lehman the following year, and Tishman lost almost all of its investment in the REIT in the wake of the ensuing global financial crisis.
Last month, Archstone's owners started to consider alternatives for the REIT. The decision to sell its assets comes at a time when values for apartment buildings have recovered and rents are trending higher.
Archstone is one of the largest owners of US apartments, with many of its holdings in metropolitan areas such as New York, Washington DC, San Francisco, Boston, southern California and Seattle. At the end of last year, the company owned or had stakes in 436 apartment properties comprising about 78,207 units in the US and Europe.