AvalonBay Sells DC Area Properties

AvalonBay Communities, Inc. announced this week that it had completed the sale of two Washington, DC-area properties this month for $332 million. The Arlington-based company sold Avalon Decoverly in Rockville, Maryland for $135 and Crystal House in Arlington, Virginia for $262.5 million. Both properties were sold at a weighted average initial year market capitalization rate of 5.2%. Mack-Cali Realty Corp., a real estate investment trust, purchased Crystal House in a joint venture with a fund advised by UBS Global Asset Management. Walker & Dunlop LLC provided a $165 million mortgage loan to the JV through a Fannie Mae program, according to a CoStar report.

"The Mack Cali/Roseland team is thrilled to be entering the Metro DC market, one that offers enormous potential. When we've completed the renovation project, we are confident that we'll be able to command rents at the highest end of the market," said Mitchell Hersh, president and chief executive officer of Mack-Cali.

AvalonBay completed its acquisition of Archstone Enterprise with partner Equity Residential last month; Crystal House was acquired as part of its Archstone Enterprise deal, according to a Washington Business Journal article. AvalonBay and Equity Residential formed the joint venture partnership to buy Archstone's assets. AvalonBay got 40% of the portfolio, or 60 apartment communities, including thousands of apartments in the Washington area, while Equity Residential got the remaining 60%, or 78 properties.

For more news and information visit Blumberg Capital Partners.

Lehman Estate Selling Archstone Property Firm for $6.5B

Lehman Brothers Holdings Inc.'s estate agreed on Monday to sell apartment-building owner Archstone Enterprise LP to Equity Residential, a company run by the investor Samuel Zell, and AvalonBay Communities for about $6.5 billion in cash and stock. According to a New York Times article, the sale will dispose of the Lehman estate's single biggest asset as it continues efforts to wind itself down and pay off the firm's legions of creditors; it will also end the estate's plans to take Archstone public, which had been expected to raise $3.45 billion in an offering on the New York Stock Exchange.

Englewood, CO-based Archstone operates apartment communities across the country with a stake in 181 developments covering 57,948 apartment units, as of Sept. 30. Equity Residential will acquire about 60% of Archstone's assets and liabilities while AvalonBay will acquire about 40%. In return, the Lehman estate will become the single biggest shareholder in each company, holding a 9.8% stake in Equity Residential and a 13.2% stake in AvalonBay.

"Archstone is a highly sophisticated and very well thought-of manager of apartment assets," said Craig Leupold, the president of Green Street Advisors, a research firm. "If it's not the highest-quality portfolio around, it's certainly up there."

"The sale of Archstone to Equity Residential and Avalon Bay is a very positive outcome for our creditors," Owen Thomas, the chairman of Lehman's board of directors, said in a statement.

For more news and information visit Blumberg Capital Partners.