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DEALS of the YEAR
Tishman, Lehman Pay $22B
To Take Archstone Private
There have been several mergers and
acquisitions in the apartment REIT industry in the past few years, but none as big as
the October privatization of Archstone-Smith. The Denver-based firm, the second
largest apartment REIT after Equity
Residential, was taken down for $22.2 billion by a joint venture of Tishman Speyer
Properties and Lehman Brothers
Holdings Inc. Roughly 98.9% of
Archstone share-
holders who
voted on the
merger gave it
the green-light.
The purchase
price, which
includes the
assumption of
debt, factors out
to about $60.75
per share in
cash, which rep-
R. Scot Sellers, Archstone resents a 22.7%
premium over
the firm’s share price on May 24, the day
before the deal was made public.
The deal was financed using equity
contributions of $250 million from
Tishman Speyer and $4.9 billion from
Lehman Brothers and Banc of America
Strategic Ventures Inc. The balance will
be met through $17.1 billion of debt from
Lehman and BofA. Lehman secured the
participation of Fannie Mae and Freddie
Mac in the acquisition. Fannie Mae
bought a $7.1-billion credit facility
The
DEALMAKERS
Buyers: Tishman Speyer Properties (Rob
Speyer, president) and Lehman Brothers
Holdings Inc. (Mark Walsh, managing
director and global head of real estate)
Acquired Firm: Archstone-Smith (R.
Scot Sellers, chairman and CEO)
Buyers’ Advisors: Financial Advisors:
Lehman Brothers and Banc of America.
Legal Advisors: DLA Piper, led by Mark
secured by 105 properties that were part
of the deal, while Freddie Mac put
together a $1.8-billion structured transaction that provided new financing for 32
assets and approved assumption of
another 15 properties.
The purchase gave the Tishman-Lehman JV ownership of or interests in
359 communities with 87,667 units primarily in the Washington, DC metro area,
Southern California, the San Francisco
Bay Area, Metro New York, Seattle and
Boston, as well as Germany. But the real
estate wasn’t the only thing the firms
gained; Archstone’s business and management team were also attractive. The REIT
had 2,500 employees at the time the deal
closed and its 2006 revenues were $1.3 billion. Further, its chairman and CEO, R.
Scot Sellers, agreed to stay on to lead the
business, which will operate as a separate
platform out of Denver.
DLA Piper served as lead real estate
counsel for Tishman, which was also
advised by Wachtell, Lipton, Rosen &
Katz and Schulte Roth and Zabel LLP.
Weil Gotshal & Manges LLP and
Cadwalader, Wickersham & Taft LLP
provided legal advice to Lehman
Brothers Inc. Kirkland & Ellis LLP provided legal advice to Banc of America.
Hogan & Hartson LLP advised
Archstone. Morgan Stanley was the
REIT’s financial advisor, and Lehman
Brothers Inc. and Banc of America provided those services to the partnership.
Cadwalader, Wickersham & Taft LLP
represented Lehman Brothers and Bank
of America as joint lead arrangers of the
credit facilities. ◆
Hamilton, Wachtell, Lipton, Rosen & Katz
and Schulte Roth and Zabel LLP (Tishman).
Weil Gotshal & Manges LLP and
Cadwalader, Wickersham & Taft LLP
(Lehman). Kirkland & Ellis LLP (BofA).
Acquired Firm’s Advisors: Morgan
Stanley (financial advisor) and Hogan &
Hartson LLP (legal counsel)
Lenders: Lehman and BofA, advised by
Cadwalader, Wickersham & Taft LLP
provided legal counsel. In the Crescent deal,
Morgan Stanley Real Estate acquired the Ft.
Worth-based REIT for $6.5 billion, gaining a
53-building office portfolio totaling 23 million
sf. Crescent’s financial advisor was Greenhill
& Co. while Pillsbury Winthrop Shaw Pittman
served as legal counsel. Morgan Stanley
served as the financial advisor to its real estate
unit. Goodwin Proctor and Jones Day provided legal counsel.
SL Green Realty Corp. bolstered its New
York City office presence with its $6-billion
acquisition of Reckson Associates Realty
Corp. in January. SL Green had faced some
stiff competition, with financier Carl Icahn’s
American Real Estate Partners submitting a
rival $4.3-billion bid for Reckson. SL Green
bought interests in six trophy buildings in
Manhattan totaling 5. 6 million sf, as well as
3. 6 million sf of prime office space in
Westchester County, NY and Connecticut.
Citigroup, Goldman, Sachs & Co. and
Greenhill & Co. were financial advisors to
Reckson while Wachtell Lipton Rosen and
Katz served as legal counsel. SL Green’s
financial advisor was Merrill Lynch. Clifford
Chance US LLP and Solomon Weinberg LLP
provided legal counsel.
Melbourne, Australia-based retail company
Centro Properties Group increased its US
holdings in April when it bought New Plan
Excel Realty Trust for $6.2 billion, including
the assumption of debt and preferred stock. In
the deal, Centro gained New Plan’s portfolio of
467 properties totaling 67.6 million sf and valued at about $3.5 billion.
Shortly before the end of the year, NNN
Realty Advisors Inc. closed its merger with
Grubb & Ellis Co., resulting in a full-service
asset management and services firm with a
capitalization of $725 million. Though Grubb
retained its name and stock symbol, it moved
its headquarters from Chicago to Santa Ana,
CA. The deal took pace through the issuance
of 0.88 shares of Grubb common stock for
each share of NNN outstanding common
stock. As a result of the merger, TIC sponsor
Triple Net Properties and broker-dealer NNN
Capital Corp. became indirect, wholly owned
subsidiaries of Grubb. Grubb also assumed
sponsorship of NNN’s two public non-traded
REITs focused on the apartment and health-care/office sectors.
