NEW YORK CITY-Lehman Brothers Holdings Inc. is selling about half its stakes in both Equity Residential and AvalonBay Communities, about one month after the 150-day lockup period on the stock ended. The offering by Jupiter Enterprise LP, an indirect subsidiary of LBHI, entails 15,068,000 common shares of EQR stock and 7,870,000 common shares in AVB, according to SEC filings, and represents about 9.8% of EQR and 13.2% of AVB.
In a release, AVB says Jupiter Enterprise is pricing the common stock at $137 per share. LBHI had received a total of 14,889,706 shares of AVB stock as part of its $6.5-billion sale of Archstone to the two REITs this past November. EQR issued a release on Thursday morning announcing that the shares—a little less than half the 34,468,085 EQR shares that were issued to LBHI as part of the Archstone deal—were priced, but did not provide pricing information. A spokesman for EQR did not respond to GlobeSt.com’s requests for clarification.
The combined value of the stock has been estimated at about $3.8 billion. Goldman, Sachs & Co. is acting as the sole book-running manager for both offerings.
Earlier this month, the Wall Street Journal reported that the lack of movement on selling off the stock following the end of the lockup period was making industry members antsy. “We recognize the Street would like Lehman out of our stock, and believe me we would like Lehman out of our stock,” said EQR CEO David Neithercut during the REIT’s earnings call earlier in May.
Further, Bloomberg reported Thursday that the sale of 23 million shares announced Wednesday afternoon would help lift a pall on multifamily stock, which had lagged that of other CRE sectors due to concerns that LBHI would liquidate its stakes. A Bloomberg analysis found that apartment REIT stocks gained 3.1% over the prior 12 months, compared to 23% for the entire REIT sector.
“The smoother the shares are released into the market, the smoother the runway will be for the sector to make up lost ground,” according to a report from BMO Capital Markets analyst Richard Anderson that was quoted by Bloomberg. “We can envision a positive reaction in multifamily stocks—on the view that the end would then be in sight.”