Press Release December 04, 2012

Goodwin Procter Represents AvalonBay in $16 Billion Archstone Purchase

In a highly structured real estate M&A transaction announced Nov.  26, Goodwin Procter advised long-time client AvalonBay Communities in connection with entering into an agreement to partner with Equity Residential to acquire Archstone, Inc., a market-leading apartment complex company and a subsidiary of Lehman Brothers. The purchase price was approximately $16 billion including the assumption of debt.

In conjunction with the acquisition, Goodwin advised AvalonBay on a secondary public stock offering of 16.675 million shares, also announced on Nov.  26.  The company expects to use the net proceeds of the offering, approximately $2.2 billion, to fund the Archstone acquisition and repay secured debt.

The Goodwin legal team was led by John Haggerty with partners Neal Sandford and Ettore Santucci.

The acquisition is reportedly the biggest real estate deal since Blackstone’s purchase of Hilton in 2007, while the public offering is among the largest secondary offerings ever by a REIT.

“AvalonBay is a long-standing client of the firm and we are extremely pleased to have represented them on such a significant acquisition,” said Haggerty, a partner in the firm’s M&A and REIT practices. “This was a complex transaction that required extensive coordination with our client, counsel to Equity Residential and seller’s counsel from start to finish.”

Under the terms of the deal, AvalonBay and Equity Residential will pay $2.7 billion in cash and approximately $3.8 billion in stock for Englewood, Colorado-based Archstone, which owns or has a stake in more than 180 properties and 58,000 apartments in coastal metropolitan markets across the United States. The companies, the two biggest U.S. apartment landlords by market value, will also assume Archstone’s $9.5 billion debt obligations. Following the transaction, AvalonBay will own approximately 40% of Archstone’s assets and Equity Residential will own approximately 60%. The deal is expected to close in the first quarter of 2013.

The AvalonBay acquisition team included partners Christopher Barker, James Barri, Jennifer Bralower, James Broderick, Daniel Glosband, Robert Hale, Kelsey Lemaster, and Scott Webster, and counsel John Newell.

The deal attracted significant attention in the media, including coverage in Bloomberg, The New York Times, Reuters and Law360.