Weil, Gotshal & Manges LP represented Lehman Brothers Holdings Inc. in two major real estate transactions, both of which were announced last week.
Weil represented Lehman in its acquisition of the remaining 26.5 percent of Archstone Enterprise LP for approximately $1.6 billion. Lehman is exercising its right of first offer to purchase the Archstone stake from banks Barclays Capital and Bank of America. The transaction will give Lehman full ownership of the Colorado-based residential real estate investment trust (REIT) when it closes, which is expected to be around the end of the second quarter 2012.
Last week’s transaction follows Lehman’s January 2012 purchase of a 26.5 percent interest previously held by the two banks. Both acquisitions were made to prevent Equity Residential from acquiring the same interests in order to protect and preserve the value of the Archstone enterprise for the benefit of Lehman’s creditors and all other Archstone stakeholders.
Lehman will pay $1.58 billion to Bank of America and Barclays, of which $80 million is payable by the two banks to Equity Residential as a break-up fee. Lehman will also pay $70 million to Equity Residential as a termination fee. The terms of the transaction call for each party to exchange mutual releases.
Previously known as the Archstone-Smith Trust, Archstone was taken private by Lehman, Tishman Speyer Properties LP, Barclays, and Bank of America for more than $22 billion in 2007, then the largest REIT LBO in history, just prior to the onset of the financial crisis. Tishman Speyer’s stake in Archstone was deeply subordinated shortly thereafter, leaving Lehman with a 47 interest in the REIT.
In a separate transaction also announced last week, Weil represented Lehman in its sale of its majority interest in LCOR, a real estate investment and development company, together with 15 multifamily properties owned by Lehman, to the California State Teachers’ Retirement System (CalSTRS) for approximately $830 million. LCOR specializes in complex urban development, including large-scale multifamily residential, commercial and mixed-use properties that often integrate housing, office, retail and transit components. CalSTRS is the largest teacher pension fund and second largest public pension find in the US.
Weil’s team on the Archstone deal was led by Corporate partners by W. Michael Bond and David Herman and included Corporate partners Elaine Stangland, Raymond Gietz and Kyle Krpata, and associates Sacha Jamal, Bernard Lam, Sam Limmer, John Maselli, and Vaughan Petherbridge; and Tax partner Scott Sontag and associate Mark Schwed.
The team on the LCOR sale transaction was also led by David Herman and included Corporate associates John Butenas, Anne Podolsky and Robert Shmalo; Tax partner Scott Sontag and associates Sarah Gordon and Farbod Solaimani; and Environmental Transactions partner Annemargaret Connolly and associate Thomas Goslin.
