Battle Brewing

The battle between the remnants of Lehman Brothers and Sam Zell's Equity Residential for Archstone apartments has been simmering for a few weeks but broke open over the past few days.  Both Lehman and Equity Residential are trying to buy lenders' ownership position in Archstone, one of largest multifamily owners in the county.  The deal is complicated because of multiple lenders and that bankrupt Lehman already owns a portion of Archstone, which it purchased in 2007.   If you don't remember:

Archstone was acquired by Lehman in a $22 billion leveraged buyout with Tishman Speyer Properties LP in October 2007 as commercial real estate prices peaked. Lehman, saddled with debt, filed for the biggest bankruptcy in U.S. history in September 2008, as credit markets froze worldwide.

As you can tell by the transaction date, Lehman's acquisition was very late in the real estate / credit  boom, which sealed this deal's fate.

Lehman is trying to buy the portion of Archstone it does not own so it can turnaround and sell it.  Lehman is doing the transaction as part of its bankruptcy and wind-down.  The bids for Archstone represent an $800 million (13%) discount to Archstone's estimated $6 billion value, or at least that's what I could figure out from this Bloomberg article.  (Why does an $800 million discount sound so much bigger than a 13% discount?)