Archstone-Smith Take-Private and Collapse (2007-2013)
Tishman Speyer and Lehman Brothers took Archstone-Smith Trust, one of America's largest apartment REITs with over 40,000 units, private for $22.2 billion in a leveraged deal at the peak of the pre-crisis real estate boom. When Lehman Brothers filed for bankruptcy in September 2008, Archstone became one of the largest distressed real estate assets in the world.
Archstone spent years in limbo as a Lehman Brothers estate asset, unable to grow or recapitalize while its properties aged.
Equity Residential and AvalonBay Communities ultimately purchased Archstone's portfolio for $6.5 billion in 2013—less than a third of the original take-private price—in one of the largest apartment transactions in U.S. history.
The Archstone deal illustrates the risk of leveraged apartment REIT take-privates: timing and financing structure matter enormously. The Veris deal's $2.08 billion bridge loan and relatively modest leverage compared to the 2007 era offer a counterpoint, but the cautionary tale remains relevant for shareholders evaluating whether to accept $19 per share now versus holding out for more.