Tishman Speyer and Lehman to buy Archstone-Smith

By Ilaina Jonas and Mark McSherry

NEW YORK (Reuters) - Real estate investment trust Archstone-Smith ASN.N on Tuesday said it agreed to be acquired by Tishman Speyer and investment bank Lehman Brothers Holdings Inc. (LEH.N: Quote, Profile, Research, Stock Buzz) in a deal valued at $13.5 billion, reflecting the strong demand for high-end real estate by private investors.

Archstone, the No. 2 U.S. apartment REIT behind Equity Residential (EQR.N: Quote, Profile, Research, Stock Buzz), is considered to have one of the top portfolios of apartments and projects under development, concentrated in the Washington D.C., New York, Boston, Southern California, Seattle and San Francisco Bay areas.

As of May 1, Archstone-Smith had 222.9 million shares outstanding, according to filings with the U.S. Securities and Exchange Commission. Based on that total, the deal would be valued at $13.5 billion, or $60.75 per share.

The companies have said the total value, including the assumption and refinancing of Archstone-Smith's outstanding debt and excluding transaction costs, was $22.2 billion.

Archstone declined to provide additional details.

The per-share price represents a 22.7-percent premium over the share price on May 24, when The REIT Newshound, an industry newsletter, published a note concerning a possible deal.

"That's a really decent price," Richard Imperiale, portfolio manager of the Forward Progressive Real Estate Fund, which owns Archstone shares, adding that it was unclear whether the deal included the company's fairly sizable development pipeline.

"Add that to the mix, you can probably squeeze out another $3 or $4 per share, potentially," he said.