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