Lehman Brothers to Sell Archstone to Equity Residential and Avalon Bay for $6.5 Billion in Cash and Stock

  Lehman Brothers to Sell Archstone to Equity Residential and Avalon Bay for
  $6.5 Billion in Cash and Stock

Business Wire

NEW YORK -- November 26, 2012

Lehman Brothers Holdings Inc. (“LBHI” or “Lehman”) announced today that it has
entered into a definitive agreement to sell full ownership of Archstone
Enterprise LP (“Archstone”), its single largest asset, to Equity Residential
(“EQR”, NYSE: EQR) and AvalonBay Communities, Inc. (“AVB”, NYSE: AVB) for cash
and stock with an aggregate value of approximately $6.5 billion. LBHI and its
affiliates including Lehman Commercial Paper Inc. will receive $2.685 billion
in cash as well as 34,468,085 shares of EQR common stock and 14,889,706 shares
of AVB common stock which, on a combined basis and using last Friday’s closing
prices, have a value of approximately $3.8 billion. As a result, LBHI and its
affiliates will own 9.8% of EQR and 13.2% of AVB based on the shares of each
issued as consideration. The purchasers have up to 120 days to close the
transaction; the transaction is not subject to a vote of the shareholders of
either EQR or AVB and does not have any financing contingencies.

This transaction follows Lehman’s purchase earlier this year of the remaining
53.6% stake in Archstone it did not own, which was made to protect the value
of its investment in Archstone and enable Lehman to fully control the
monetization alternatives for its investment. During the six months since the
completion of the purchase transaction, Lehman has actively evaluated a broad
range of monetization alternatives for the company, including filing in August
for an initial public offering.

The $6.5 billion transaction price represents a significant return on Lehman’s
purchase (for an implied value of $5.55 billion) of the remaining 53.6%
interest it did not own. Further, the $2.7 billion cash component of the sale
consideration substantially returns the $3.0 billion investment made by Lehman
in the purchase transaction.

“The sale of Archstone to Equity Residential and AvalonBay is a very positive
outcome for our creditors,” said Owen Thomas, Chairman of Lehman’s Board of
Directors. “The transaction delivers significant return on the investment we
made earlier this year to fully control Archstone and has generated immediate
and considerable proceeds for our next distribution to creditors. Further, we
believe our shareholdings in EQR and AVB, both industry leading companies with
significant market capitalization and trading below their respective consensus
net asset values, provide us with the potential for further appreciation and
substantial liquidity for our remaining investment.”

Jeff Fitts, Lehman’s head of real estate, and Doug Sesler, advisor to Lehman
for Archstone, added, “The unwavering focus of Archstone’s management, led by
Scot Sellers, on driving excellent performance has been a key factor in the
value creation that we have been able to achieve. We are very appreciative of
the professionalism the entire Archstone team has exhibited throughout the
term of Lehman’s ownership.”

Gleacher & Company, who acted as lead advisor, along with Citigroup and J.P.
Morgan Securities LLC., served as Lehman’s financial advisors, and Weil,
Gotshal & Manges LLP served as its legal advisor in connection with this
transaction. Morgan Stanley & Co. LLC served as exclusive financial advisor,
and Hogan Lovells US LLP and Morrison & Foerster LLP served as legal advisors
to Equity Residential on the transaction. Greenhill & Co., LLC acted as
financial advisor and Goodwin Procter LLP served as legal advisor to AvalonBay
on the transaction.

Contact:

Lehman Brothers Holdings Inc.
Kimberly Macleod, 646-285-9215
kmacleod@lehmanholdings.com
 
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