BofA, Barclays Sell Archstone Stake To Lehman

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Bank of America (NYSE:BAC) and Barclays (NYSE:BCS) will sell their remaining 26.5% stake in Archstone to Lehman Brother Holdings for $1.58 billion. [1] The deal which would likely be completed in this quarter is the second round of stake sale by the banks to the bankrupt Lehman this year, with the first round in January bringing in $1.325 billion. [2]

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Archstone is a privately-held owner, operator and developer of multifamily apartment properties with a concentrated presence in the Washington DC, Los Angeles, San Diego, San Francisco, New York, Seattle and Boston metropolitan areas. Bank of America and Barclays got their stake in exchange for their capital in Lehman’s $22.7 billion acquisition of the Archstone.

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Lehman held 47% stake in Archstone till the beginning of the year, and was forced to raise its stake to 100% over two phases to thwart an attempt by Equity Residential to buy a piece of Archstone. The apartment operator’s ownership structure requires all major decisions to be unanimously passed by owners unless one of them holds at least a 76%-stake. Equity Residential was in talks with Bank of America and Barclays for a 26.5% stake – something which would have made it more difficult for Lehman to determine Archstone’s future.

Both banks report their stake in Archstone as a part of their minority interests. The completion of the deal will result in a one-time income for the banks this quarter.

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Notes:
  1. Bank of America Enters Into Agreement to Sell Remaining Interest in Archstone, Bank of America Press Releases, May 25 2012 []
  2. Lehman to buy rest of Archstone for $1.58 billion, Reuters, May 25 2012 []