Tishman, Lehman pay $22.2bn for Archstone REIT

Tishman Speyer and Lehman Brothers have purchased Colorado-based REIT Archstone-Smith in one of the largest take-privates since Blackstone’s Equity Office acquisition in February.

New York-based Tishman Speyer Properties and financial partner Lehman Brothers have completed the acquisition of the Archstone-Smith Trust in a deal valued at $22.2 billion (€15.8 billion). The transaction, first announced in May, was made through Tishman Speyer Real Estate Venture VII along with debt and equity capital provided by Lehman and other financial institutions.

Shareholders of Archstone-Smith, a Colorado-based REIT with 359 residential properties, will receive $60.75 per share following the terms of the deal.

“Our partnership with Tishman Speyer brings together two firms with long track records of creating value in real estate,” Mark Walsh, managing director and global head of real estate for Lehman Brothers, said in a statement. “We are excited about the closing of this transaction and the opportunity to help Archstone-Smith manage its first-class collection of properties.”

The Colorado-based REIT currently owns 359 properties totaling 87,667 units, including units under construction. The properties are concentrated in Washington, DC, Southern California, San Francisco, New York, Seattle and Boston.

“This transaction with Tishman Speyer and Lehman Brothers is a powerful combination of real estate assets, management, and expertise that will greatly benefit all parties,” said Archstone chief executive Scot Sellers in the statement. “As the rental market continues to strengthen, the Archstone-Smith apartment portfolio is well-positioned to create tremendous long-term value.”

Sellers will remain in his position for the Tishman-Lehman partnership following the deal.

A spokesperson for Lehman Brothers declined to comment on where equity capital for the acquisition is coming from but did confirm that Lehman Brothers Real Estate Partners II is the firm’s latest private equity real estate fund. LBREP II closed in 2005 with $2.4 billion in equity. The firm’s private equity real estate team is headed by Raymond Mikulich and Mark Walsh.

Since early 2006, the majority of high-profile REIT privatizations have been in the office sector, including the acquisitions of Equity Office, Trizec and CarrAmerica by The Blackstone Group. The multi-family sector has also been generating interest among investors: Last year, Morgan Stanley acquired both Town & Country and AMLI Residential for $1.3 billion and $2.1 billion, respectively.