CHICAGO-New York City-based Fitch Ratings has affirmed the BBB+ credit rating for Equity Residential and its subsidiary ERP Operating Ltd. Partnership, following its announcement that it has pledged $1.3 billion to purchase a 26.5% interest in multifamily giant Archstone, based in Denver.
However, the New York City-based Lehman Brothers Holdings Inc., which owns a 47% share of Archstone, has filed its own report with the SEC denying that Equity’s offer is valid. Lehman has a right of first refusal to buy any Archstone interest.
Lehman, which this afternoon received court approval to exit chapter 11 bankruptcy early next year, will reportedly keep its Archstone shares in the bankruptcy, and is trying to come up with its own offer for the interest.
Lehman said in its filing that it considers the Equity offer void for numerous reasons, because the company “believes better alternatives exist for maximizing value.” Lehman also said it has not been provided with the information shared between Equity and the interest sellers, Bank of America and Barclays Bank. The banks and Equity have been talking about the interest sale since Lehman opted out of an earlier negotiation this past summer, according to the Lehman filing.
Archstone has been quiet about the fight over the interest. A company spokesman could not be reached for comment. The firm has 48,922 apartment units, including 14,000 in Germany.
Equity, owned by Sam Zell, owns or has investments in 417 properties in 15 states and Washington, DC. The company has said it would fund the purchase through cash, debt, sales and its $1.2 billion revolving credit facility. A company spokesman could not be reached for comment.
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