Lehman's Archstone IPO to raise $3.5 bn
The IPO will also be closely watched as a barometer of how well other real estate companies, such as Blackstone Group LP's Hilton Hotels, could do in a public offering.
Archstone owned or had an interest in 169 U.S. apartment communities, or 54,442 units as of Sept. 30, nearly all of which are located in coastal areas that command higher rents. Most are in Southern California, the San Francisco Bay Area, Southeast Florida, and the metropolitan areas of Washington, D.C., New York, Boston and Seattle.
The average monthly rent for Archstone's apartments in those areas was $2,408 in the third quarter, while for the whole portfolio, average monthly revenue for an apartment was $2,168 and the occupancy rate was 94.2 percent.
It's good quality stuff, Adelante Capital Management Vice President Len Rittberg said. It will definitely be a relevant name for anyone that's invested in REITs.
Archstone, based in Englewood, Colorado, also has another dozen communities, or 3,506 apartment units, under construction. It owns land for 28 more developments and has an interest in 10 apartment properties in Germany.
Archstone, however has a higher debt load relative to its earnings than most other apartment REITS and its past debt woes were partly behind Lehman's collapse.
Lehman and Tishman Speyer acquired Archstone Smith, one of the largest owners of U.S. apartments, through a $23.7 billion leveraged buyout in 2007.
As real estate values fell and credit began to dry up, Archstone could not sell buildings to repay some of its loans. Its
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