Archstone Assets being acquired by Equity Residential – EQR
NYSE: EQR) announced that it intends to offer approximately 19 million of its common shares. Morgan Stanley will act as bookrunning manager for the offering. The Company intends to grant the underwriters an option to purchase up to an additional 2.85 million common shares to cover over-allotments, if any.
The Company plans to use the net proceeds from the offering to fund a portion of the cash purchase price for the acquisition of assets of Archstone Enterprise LP, which was also announced. The closing of the offering is not conditioned upon the consummation of the acquisition. If the acquisition is not consummated, the Company plans to use the net proceeds from the offering for working capital and general company purposes.
Equity Residential (EQR) to Acquire 60% of Archstone
Equity Residential (NYSE: EQR) announced that the company and AvalonBay Communities, Inc. (NYSE: AVB) have entered into an agreement with Lehman Brothers Holdings Inc. to acquire, for approximately $16 billion, the assets and liabilities of Archstone Enterprise LP, which consists principally of a portfolio of high-quality apartment properties in major markets in the United States. Under the terms of the agreement, Equity Residential will acquire approximately 60% of Archstone’s assets and liabilities and AvalonBay will acquire approximately 40% of Archstone’s assets and liabilities. The transaction is expected to close during the first quarter of 2013.
Equity Residential will acquire 78 wholly-owned stabilized operating properties, consisting of 23,110 apartment units with an average monthly rent of $2,492 per unit. The transaction values the residential portion of these stabilized operating properties at $367,003 per apartment unit. The capitalization (cap) rate is approximately 5.0%. When adjusted for transaction costs and the debt mark-to-market, the cap rate would be approximately 4.7%.
In addition, Equity Residential will acquire four properties currently under development, one each in the Washington D.C. metro area, San Francisco, Phoenix and South Florida, and 15 land sites primarily in its core markets to be held for future development. The company will also acquire a 60% interest in a joint venture with AvalonBay described below.
About Equity Residential – EQR
Equity Residential (EQR) is an S&P 500 company focused on the acquisition, development and management of high quality apartment properties in top U.S. growth markets. EQR owns or has investments in 418 properties located in 13 states and the District of Columbia, consisting of 118,986 apartment units.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
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