Chicago—Equity Residential recently announced it has entered into an agreement with the owners of Archstone, a privately-held owner, operator and developer of multifamily apartment properties, which will result in the company receiving $150 million after exercising its option to purchase a 26.5 percent interest in Archstone and Lehman Brothers Holdings Inc. thereafter acquiring that interest under its right of first offer.
Pursuant to the agreement:
- Equity Residential has entered into a binding purchase agreement with affiliates of Bank of America and Barclays Bank PLC to purchase their remaining 26.5 percent interest in Archstone for $1.58 billion in cash.
- Lehman, the other owner of Archstone, has exercised its ROFO right and executed a binding purchase agreement with the Sellers to acquire this Archstone interest for $1.58 billion. This transaction is expected to close in approximately 15 days.
- The parties have released each other from all claims relating to Archstone.
- Upon the closing of Lehman’s acquisition of this Archstone interest, the Sellers will pay Equity Residential a break-up fee of $80 million and Lehman will pay Equity Residential a termination fee of $70 million. If Lehman does not close, Equity Residential’s contract with the Sellers will remain in full force and effect.
- Should Equity Residential acquire all or substantially all of Archstone within 120 days of Lehman’s acquisition of the final 26.5 percent of Archstone discussed above, under certain circumstances Equity Residential could be required to return all or a portion of the $150 million in break-up and termination fees. While Equity Residential is not currently in negotiations with Lehman regarding the acquisition of Archstone, this agreement does not preclude the company from pursuing such negotiations in the future.