NEW YORK - Tishman Speyer Properties and Lehman Brothers Holdings completed the purchase of Archstone-Smith Trust, the biggest U.S. apartment real estate investment trust, for $13.6 billion. The Tishman partnership, which includes Barclays Capital and Banc of America Strategic Ventures, will pay shareholders $60.75 a share, Archstone, based near Denver, said Friday.
Tishman and Lehman said Fannie Mae bought a $7.1 billion credit facility secured by 105 Archstone multifamily properties. Freddie Mac also supplied $1.8 billion of financing, secured by at least 32 multifamily properties. The total price of the acquisition was about $22.2 billion, including Archstone debt, the companies said.
The transaction demonstrates that unlike securities backed by underperforming mortgages, commercial real estate debt is still viable, said Alexander Goldfarb, a UBS Securities REIT analyst who follows Archstone.
"It certainly looks like Fannie and Freddie played an integral role" in the transaction, Goldfarb said. "For Fannie and Freddie to step up in this environment, it shows other prospective borrowers that here are two entities that can provide financing in tough credit times and good credit times in the multifamily arena."
The deal was announced in May, before REIT stocks fell 20 percent through mid-August.
Irvine, a closely held housing developer based in California, has agreed to a joint venture with Tishman and Lehman to acquire 16 Archstone apartment properties in Orange and San Diego counties in California, a company spokesman said. He declined to disclose the purchase price.
The Wall Street Journal reported Wednesday that Irvine would pay Tishman and Lehman $1.4 billion for a 90 percent interest in the Southern Californian properties.
UBS, a Swiss investment bank, wrote in a June 6 analysis of the transaction that the Tishman partnership would have net operating income of $859 million in the first year and interest expenses of about $1.1 billion. A spokesman for Tishman declined to comment on the analysis.
Archstone owned more than 87,000 apartments in cities across the United States. Analysts including Goldfarb have said its assets were prized by investors because of their concentration in coastal markets including New York, Washington and San Francisco. The company also has about 6,400 residential units in Germany. The buyers plan to sell off a total of $6.3 billion of assets following the completion of the deal, according to a Sept. 11 regulatory filing.
They expect to sell Archstone's German properties and its development properties, according to an earlier regulatory filing.
Source: Herald Tribune