Lehman Brothers Holdings Inc. filed to take Archstone Inc. public after battling billionaire Sam Zell to get full control of the apartment landlord amid the strongest demand for rentals in a decade.
Englewood, Colorado-based Archstone, Lehman’s biggest property holding, filed to raise $100 million in an initial public offering. The amount is a placeholder that may change and is used to calculate fees. Besides reducing debt, proceeds from the IPO may be used to finance acquisitions and development, according to yesterday’s filing.
This is setting the stage for a multibillion-dollar IPO later this year or very early next,” Andrew McCulloch, a managing director at research firm Green Street Advisors Inc. in Newport Beach, California, said in a telephone interview. “Lehman’s likely goal is to eventually liquidate its position in order to pay creditors.”
Lehman, which exited bankruptcy in March, took over all of Archstone in May following a fight with former shareholders Bank of America Corp. and Barclays Plc’s investment-banking unit, which in December tried to sell their joint stake to Zell’s Equity Residential. The lenders had helped finance the $22.2 billion acquisition of Archstone by Lehman and Tishman Speyer Properties LP in October 2007, close to the peak for property prices.
The debt taken on for the acquisition contributed to Lehman’s collapse in 2008 as credit markets seized up, ultimately leaving Archstone controlled by Lehman’s bankrupt estate and the two banks. Bank of America and Barclays Capital had sought to sell their joint 53 percent stake last year, while Lehman favored waiting for an IPO, saying Archstone was worth about $6 billion in equity value, or $1 billion more than the banks estimated.