Equity Residential Announces Closing of $9 Billion Archstone Acquisition

  Equity Residential Announces Closing of $9 Billion Archstone Acquisition

Business Wire

CHICAGO -- February 27, 2013

Equity Residential (NYSE: EQR) today announced that the company and AvalonBay
Communities, Inc. (NYSE: AVB) have completed their previously announced
acquisition of the assets and liabilities of Archstone Enterprise LP
(“Archstone”) from Lehman Brothers Holdings Inc. (“Lehman”), 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 has acquired approximately 60% of Archstone’s assets and
liabilities and AvalonBay has acquired approximately 40% of Archstone’s assets
and liabilities.

“This is an exciting day for Equity Residential and its shareholders as we add
more than 21,000 high quality apartment units in our core markets to our
platform and welcome more than 700 of the industry’s best people to our
company,” said David J. Neithercut, Equity Residential’s President and CEO.
“By funding a significant portion of this acquisition with proceeds from the
sale of our non-core assets, we have nearly completed the total transformation
of our portfolio. Going forward, our future earnings and shareholder return
will be derived from the highest quality assets in the nation's high-barrier
coastal markets.”

Archstone Assets being acquired by Equity Residential

Equity Residential has acquired 71 wholly-owned stabilized operating
properties, consisting of 20,160 apartment units and two partially-owned and
unconsolidated stabilized operating properties consisting of 768 apartment
units with a budgeted average monthly rent of $2,681 per unit; three
master-leased properties containing 853 apartment units; and four projects in
various stages of construction for 964 apartment units.

Summary of Operating Properties Being Acquired by Equity Residential:

Market                   Properties   Units
Washington, D.C. Metro     25             7,922
San Francisco              13             4,384
Southern California        13             3,153
New York Metro             10             2,638
Boston                     8              1,984
Seattle                    4              904
South Florida              1              196
Atlanta                    1              336
Phoenix                    1            264
Total                      76             21,781
                                          

Since the announcement of the transaction on November 26, 2012, Archstone has
sold six properties that were allocated to Equity Residential as part of its
purchase. These properties, consisting of 2,316 apartment units, were sold at
an aggregate price of approximately $509.4 million and Equity Residential’s
purchase price was adjusted accordingly.

A full list of the names, locations, number of apartment units and average
rental rates of the properties being acquired will be available in the
company’s Form 8-K to be filed with the SEC.

Equity Residential also acquired fourteen land sites for the potential
development of approximately 4,318 apartment units. Six of these sites are
located in the company’s core markets and will be held for future development.
The remaining eight sites will likely be sold.

The following table depicts the company’s estimated investment in the
operating properties, development properties and joint ventures:

                                                          Estimated
                                                            Acquisition Value
                                                            (in millions)
Consolidated stabilized assets                              $8,473
Development properties under construction                   26
Land held for future development and development rights     240
Net equity in unconsolidated joint ventures                 222
Total                                                       $8,961
                                                            

Transaction Funding

Equity Residential has paid its portion of the transaction consideration with
$2.016 billion in cash and the issuance of 34,468,085 common shares to the
seller of the Archstone assets, which is an affiliate of Lehman. In addition,
a total of $2.0 billion of Archstone secured mortgage principal was paid off
in conjunction with the closing. The company’s cash purchase price was
financed through a combination of approximately $575.0 million of cash on
hand, approximately $1.6 billion of available borrowings under the company’s
revolving credit facility, approximately $1.1 billion of proceeds from the
disposition of non-core assets and approximately $750.0 million of bank term
debt.

In addition, the company has assumed approximately $2.8 billion of
consolidated secured debt, including $2.2 billion of Fannie Mae secured debt.
A detailed schedule of the debt being assumed will be available in the
company’s Form 8-K to be filed with the SEC.

Property Sale Update

Equity Residential has previously announced its intention to fund a
significant portion of the Archstone acquisition with the proceeds from the
sale of assets that are not part of the company’s long-term strategic plans
and expects to sell approximately $4.0 billion of its non-core assets in 2013.

Since the Archstone transaction announcement on November 26, 2012, the company
has sold 43 properties, consisting of 11,588 apartment units for an aggregate
sale price of approximately $1.68 billion at a weighted average capitalization
rate of 6.1%. Equity Residential currently has 39 properties, consisting of
11,621 apartment units, under contract for sale and expected to close in the
next 75 days, for an aggregate sale price of approximately $1.9 billion. The
properties that were sold and are under contract are located in the following
markets:

                                                           
                              SOLD                               UNDER CONTRACT
                                       Sale Price                        Sale Price
Market           Properties   Units    (millions)   Properties   Units    (millions)
Phoenix          11           3,321    $427.1       6            1,430    $168.3
Washington,      8            2,264    $453.1       2            1,189    $390.8
D.C. Metro
Atlanta          2            338      $40.4        6            1,947    $232.1
Orlando          9            2,294    $254.0       1            280      $36.6
South Florida    4            1,001    $157.5       4            1,792    $248.5
Jacksonville     3            1,077    $114.9       3            1,040    $103.0
Southern         1            336      $90.0        2            720      $180.8
California
Denver           --           --       ---          5            1,211    $180.5
Seattle/Tacoma   3            542      $58.5        4            715      $72.1
Northern         1            252      $59.5        2            459      $129.0
California
New York Metro   --           --       ---          2            360      $99.2
Non-Boston New   1           163     $22.3        2           478     $56.1
England
Total            43           11,588   $1,677.3     39           11,621   $1,897.0
                                                                          

Equity Residential is an S&P 500 company focused on the acquisition,
development and management of high quality apartment properties in top U.S.
growth markets. Equity Residential owns or has investments in 446 properties
located in 13 states and the District of Columbia, consisting of 127,814
apartment units. For more information on Equity Residential, please visit our
website at www.equityapartments.com.

Forward-Looking Statements

Statements in this press release, and other statements that the company may
make, including statements about the benefits of the acquisition of the
Archstone portfolio, may contain forward-looking statements that involve
numerous risks and uncertainties. The statements contained in this press
release that are not purely historical are forward-looking statements within
the meaning of Section27A of the Securities Act of 1933, as amended, and
Section21E of the Exchange Act of 1934, as amended, including, without
limitation, statements regarding the management of the company’s expectations,
beliefs and intentions. All forward-looking statements included in this
communication are based on information available to the company on the date
hereof. In some cases, you can identify forward-looking statements by
terminology such as “may,” “can,” “will,” “should,” “could,” “expects,”
“plans,” “anticipates,” “intends,” “believes,” “estimates,” “predicts,”
“potential,” “targets,” “goals,” “projects,” “outlook,” “continue,”
“preliminary,” “guidance,” or variations of such words, similar expressions,
or the negative of these terms or other comparable terminology. No assurance
can be given that any of the events anticipated by the forward-looking
statements will transpire or occur, or if any of them do so, what impact they
will have on the company’s results of operations or financial condition.
Accordingly, actual results may differ materially and adversely from those
expressed in any forward-looking statements. Neither the company nor any other
person can assume responsibility for the accuracy and completeness of
forward-looking statements. There are various important factors that could
cause actual results to differ materially from those in any such
forward-looking statements, many of which are beyond the company’s control.
These factors include, at a minimum: changes in laws or regulations; failure
of the investment in the Archstone portfolio to perform as expected; inability
to influence the operations and control of any portions of the Archstone
portfolio held in a joint venture; and changes in general economic conditions.
The company does not undertake any obligation (and the company expressly
disclaims any such obligation) to publicly update or revise any
forward-looking statement, whether as a result of new information, future
events or otherwise. For additional information, please refer to the company’s
most recent Form10-K, 10-Q and 8-K reports filed with the SEC.

Contact:

Equity Residential
Marty McKenna, (312) 928-1901
 
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