UPDATE 1-Lehman's Archstone files for IPO of up to $100 mln

Fri Aug 10, 2012 8:15pm EDT

* Expects to qualify as REIT

* Will list on NYSE under symbol "ASN"

* Citigroup and JP Morgan to underwrite IPO

By Ilaina Jonas and Avik Das

Aug 10 (Reuters) - Archstone Inc, the apartment owner and developer owned by Lehman Brothers Holdings Inc, filed with U.S. regulators on Friday to raise up to $100 million in an initial public offering.

The company owns or has an interest in 181 U.S. apartment communities with 59,419 units, according to the filing with the U.S. Securities and Exchange Commission.

Archstone's core holdings are in Washington, D.C., Southern California, the San Francisco Bay Area, New York City, Boston, Seattle and Southeast Florida. The company also owns apartments in Germany.

Archstone has been cited as one as the primary causes behind Lehman's historic failure. Lehman and Tishman Speyer acquired publicly traded Archstone Smith, one of the largest owners of U.S. apartments, through a $23.7 billion leveraged buyout in 2007. Lehman, Bank of America Corp and Barclays Plc provided $6.4 billion in secured financing with Lehman contributing 47 percent, or more than $3 billion.

As real estate values fell and credit began to dry up, Archstone could not repay some of its loans. Its lenders ended up with the company in 2010, with Lehman owning 47.3 percent and the banks a combined 53 percent.

As apartment values rebounded, Lehman had wanted to spin-off Archstone in an IPO, but the banks balked. Instead, the two banks wanted to sell there stakes to Equity Residential. The fight ended after Lehman bought out the banks' ownership in two separate transactions for about $2.98 billion. The entire two-step deal was completed in June.

"Now that Lehman has control of things, that has been their preference all along," Luis Sanchez, vice president of Adelante Capital Management said. "Obviously, the big question is pricing. The market is going to tend to look for a bit of a discount for all the history there."

The amount of money Archstone says it plans to raise in its first IPO filings is used to calculate registration fees. The final size of the IPO could be different.

Real estate investors have been anticipating Archstone's IPO as well as a possible IPO of Blackstone Group's office holdings, which sources have valued between $20 billion and $25 billion. But Jonathan Gray, Blackstone's senior managing director and global head of real estate, last month said any mass sale of the portfolio or an IPO would not happen soon.

At the end of March, Archstone's U.S. portfolio was 94.1 percent occupied, the filing said. The average monthly revenue per apartment, which includes rent, parking and other income, was $2,030. Some analysts have estimated that Archstone to be worth about $16 billion.

The company intends to qualify as a real estate investment trust or REIT. Citigroup and JP Morgan are underwriting the IPO, the company said in the filing with U.S. regulators.

The filing did not reveal how many shares the company planned to sell or their expected price.

The Englewood Colorado-based company intends to list its common stock on the New York Stock Exchange under the symbol "ASN".

Archstone intends to use the IPO proceeds for repayment of debt and general working capital expenses.

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