DEALTALK-Archstone loans appear priced at pre-crunch level

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By Jonathan Keehner

NEW YORK, Sept 26 (Reuters) - Investment firms who agreed in May to buy apartment landlord Archstone-Smith Trust ASN.N are now arranging financing and are pricing the deal as if the last six months never happened, some investors contend.

Number-four U.S. brokerage Lehman Brothers Holdings Inc (LEH.N: Quote, Profile, Research, Stock Buzz) and property developer Tishman Speyer, which plan to buy the real estate investment trust for about $22 billion including assumed debt, are trying to entice investors to buy $3.15 billion of loans linked to the buyout.

But the deal is drawing closer scrutiny as other blockbuster leveraged buyouts are on the rocks. In recent days, takeover deals for audio equipment company Harmon International Industries Inc (HAR.N: Quote, Profile, Research, Stock Buzz) and student loan provider SLM Corp (SLM.N: Quote, Profile, Research, Stock Buzz), or Sallie Mae, have collapsed.

If Archstone hits a snag, other buyouts awaiting financing may suffer. The deal is one of the first to come to market after the Labor Day holiday and the U.S. interest rate cut this month, which had raised hopes that credit markets tripped up by the subprime mortgage crisis would regain equilibrium.

Lehman and Tishman are putting just $500 million of their own cash into the deal, according to sources familiar with the deal, giving them minimal downside if the business struggles.

Tishman and Lehman were not immediately available to comment on the deal.

The firms are offering a portion of the loans at 99 cents on the dollar, above where other recent buyout financings have closed or been discussed, according to Reuters Loan Pricing Corp (RLPC).