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Archstone LBO could hurt Wall Street firms: report
January 20, 2008 / 8:52 PM / in 10 years

Archstone LBO could hurt Wall Street firms: report

NEW YORK (Reuters) - A leveraged buyout of apartment landlord Archstone-Smith may leave Wall Street firms hurt as they could be left holding some equity in the deal, Barron’s said on Sunday.

A fund run by Tishman Speyer and Lehman Brothers Holdings Inc LEH.N closed the purchase of Archstone-Smith in October. The deal had a total value, including assumed debt, of about $22.2 billion.

Funds operated by Tishman Speyer and Lehman each put up $250 million for control of the company, Barron’s said.

Lehman, Banc of America Strategic Ventures, an affiliate of Bank of America Corp (BAC.N), and Barclays Capital, an affiliate of Barclays Plc (BARC.L), provided a $4.6 billion bridge-equity loan to get the deal done, the magazine said.

Lehman and Tishman Speyer had said only $500 million of the bridge-equity loan was likely to be sold at closing, the magazine said. They looked to sell all the equity within a year, it said.

Prices of apartment real estate investment trusts fell soon after the deal was done, the financial weekly said in its January 21 edition.

It may have proven difficult for Lehman and Tishman Speyer to sell the equity, leaving Lehman, Banc of America Strategic Ventures and Barclays holding much of the loan, Barron’s said.

It was unclear how much of the bridge-equity loan had been sold to institutional investors, Barron’s said, adding that based on current REIT prices, the value of the Archstone equity could be zero.

Tishman Speyer, Lehman, Bank of America and Barclays could not be reached immediately for comment.

Reporting by Paritosh Bansal

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