From a small northwestern observatory…

This is really an update to my recent post about BofA and Sam Zell’s acquisition of Archstone (http://wp.me/pqerO-7k).  As it turns out, the remnants of Lehman had HOPED to do an IPO on Archstone, something that BofA and Barclays had opposed.  Now, with Zell’s acquisition of BofA’s share, he has both put a stake in the heart of that hope, but also set a value for the assets at about $16 Billion.  Given the convoluted ownership structure of Archstone, Zell has a veto over any of Lehman’s restructuring plans.

Elliott Brown and Robbie Whelan have a great piece on this in tomorrow’s Wall Street Journal.  (http://tinyurl.com/749ffa4).  Zell wants all of Archstone, and with Equity Residential would be America’s largest apartment landlord, with stakes in more than 190,000 units.  Technically, Lehman could block Zell’s offer by coming up with the cash, and they’ve been talking with both Blackstone and Brookfield.   However, part of Lehman’s accounting was a valuation of Archstone’s management and “brand” at around $1 Billion.  With Zell already owning Equity Residential, that brand value is negligible to him.  In short, Zell is in a fairly strong bargaining position to get what he wants.