Barclays, BoA plan Archstone exit

Two of Archstone's co-owners are understood to be looking to sell their stakes in the Denver-based apartment REIT after failing to come to a consensus on an exit strategy for the platform.

According to various media reports, Barclays and Bank of America may sell their shares in the troubled apartment landlord, which with ownership stakes in roughly 78,000 apartments, is one of the biggest of its kind in the US.

This comes after they failed to come to an agreement with Archstone's third owner, Lehman Brothers Holdings, as to how to exit their collective investment. Together, Barclays and Bank of America own 53 percent of Archstone and their combined stakes are valued at between $2 billion and $3 billion.

Archstone, Bank of America and Lehman Brothers declined to comment. At press time, representatives from Barclays could not be reached for comment. 

Archstone was acquired in 2007 in a Lehman-led buyout for $22 billion in one of the largest real estate investments in history. Given the high leverage used to finance the investment, it subsequently turned out to be a big contributor to the Wall Street bank’s bankruptcy the following year. It remains the single largest real estate investment still on its books.

It was reported in The Wall Street Journal in September that The Blackstone Group, Brookfield Asset Management, Equity Residential and AvalonBay Communities had submitted bids for all or part of Archstone although sources familiar with the situation said the bids were not high enough to enable the three owners to make a final decision on what to do with the REIT. 

This comes on the heels of a debate among the owners in June about whether to sell their stakes via an IPO, to sell the company outright or to infuse some fresh capital into the platform.

Also citing sources familiar with the mater, Dow Jones reported that the platform could be valued at between $16 billion and $18 billion currently.