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CHICAGO-Locally based Equity Residential has sold one of its trophy divisions, Lexford Housing to affiliates of privately held Empire Group Holdings of Montvale, NJ for an all-cash price of $1.086 billion. The buyer has put up a non-refundable earnest money cash deposit of $40 million. The deal is expected to close in the fourth quarter. The sale also includes Lexford's property management business, with a staff of about 800 employees, based in Columbus, OH.

Equity Residential president and CEO David J. Neithercut says the Lexford division "played an important part in the growth of Equity Residential and performed very well for us, generating an unlevered internal rate of return of 15%." At closing, Neithercut says the company will receive about $850 million of net sale proceeds, after closing expenses and repayment of about $210 million of secured debt. He says the company expects to record a total book gain of about $430 million.

"We will use the proceeds to continue transforming our portfolio by reducing the number of markets in which we operate and focusing on markets that we believe will provide better growth prospects and higher total returns," Neithercut says. JP Morgan advised Equity.