Avalon and Equity Residential Snatch Up Archstone, Creating Super-REITs

Equity Residential (NYSE: EQR) and Avalonbay Communities Inc. (NYSE: AVB) are acquiring Archstone Enterprises LP. This deal is for the portfolio of apartment properties under Lehman Brothers Holdings Inc.

Today's deal values Archstone at roughly $6.5 billion in cash and stock. Equity Residential will take roughly 60% of the assets and liabilities in the acquisition and Avalonbay is set to take the other 40%.

The combined equity price for the combined price includes $2.7 billion in cash as well as shares with a value of $3.8 billion. It is currently expected by the parties involved that the buyout should close in the first quarter of 2013, subject to regulatory approvals.

As far as how the total $6.5 billion size measures up, Avalonbay Communities Inc. has a market cap of $12.6 billion and Equity Residential has a market value of about $16.5 billion. It does need to be noted that this includes the assumption of $9.5 billion of debt and another $330 million in preferred shares.

JON C. OGG

Filed under: 24/7 Wall St. Wire, Bankruptcy, Dividends & Buybacks, Housing, Mergers & Acquisitions, Mergers and Buy Outs, REIT Tagged: AVB, EQR, featured