Chicago-based Equity Residential has emerged as the lead bidder to buy Bank of America's and Barclay's ownership stakes in Archstone. An agreement would position the Sam Zell-run REIT as owner of just more than half of the troubled Denver-based apartment owner.
According to various media reports, Equity Residential has offered more than $2.5 billion in cash and stock to buy the 53 percent ownership stake in Archstone that Bank of America and Barclays are looking to sell. The remainder of Archstone is owned by the estate of Lehman Brothers Holdings, which currently is under bankruptcy protection. Barclays and Bank of America also received bids from AvalonBay Communities, The Blackstone Group and Brookfield Asset Management.
In October, it was revealed that Bank of America and Barclays were looking to sell their stakes in the troubled apartment REIT after failing to come to an agreement with Lehman as to how to exit their collective investment. Officials at Bank of America, Barclays, Lehman Brothers, Archstone and Equity Residential declined to comment.
In one of the largest real estate investments in history, Archstone was acquired for $22 billion in 2007 through a Lehman-led buyout. 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. Archstone remains the single largest real estate investment still on Lehman’s books.
With ownership stakes in roughly 78,000 apartments, Archstone is one of the biggest property owners of its kind in the US. Citing sources familiar with the matter, Dow Jones reported that the entire platform could be valued as high as $18 billion currently.