CHICAGO-Equity Residential, based here, said late Wednesday that it has received the $150 million in termination fees from Bank of America, Barclays Bank PLC and Lehman Bros. Holdings Inc. to finalize the full sale of Archstone to Lehman. Equity had tried to buy at least a portion of the Denver-based multifamily ownership firm, but, being blocked by Lehman, at least got a sizable consolation prize.
Also late Wednesday, Lehman confirmed it has completed the purchase of the entire remaining stake in Archstone. Lehman has exercised its right of first refusal, acquiring the final 26.5% interest in Archstone for $1.5 billion. Lehman had also purchased another 26.5% interest from the banks in January for $1.3 billion.
The New York City-based firm, finally emerging from bankruptcy, had said it didn’t want competitor Equity to gain a piece of Archstone. “Both acquisitions were made to protect and preserve the value of the Archstone enterprise,” Lehman said in the statement last night.
Not only did Sam Zell’s Equity firm force Lehman to pay another $200 million for the second share tranche, he also gained a hefty profit. The firm said in its fourth quarter earnings conference call that it only spent a little more than $5 million to gain a piece of Archstone. Equity would have to give some or all of the $150 million back if it turns around and buys a majority of Archstone before Oct. 4, but Equity said in its statement that it is “not currently engaged” with Lehman in any further negotiations.
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