NEW YORK (AP) — Lehman Brothers Holdings Inc.'s bankruptcy estate plans to ask the judge overseeing the company's reorganization for permission to spend $1.33 billion to buy an increased share of apartment building owner Archstone, according to the Wall Street Journal.
Lehman's estate owns 47 percent of Englewood, Colo.-based Archstone and wants to buy another 26.5 percent of the company, according to a story published in Saturday's edition of the Journal.
Archstone owns nearly 49,000 apartment units and has more than 1,000 under construction.
The move would block plans by Chicago-based Equity Residential to buy the stake in the company.
Equity Residential, whose chairman is real estate magnate Sam Zell, said Friday it had agreed to acquire a 26.5 percent equity interest in the privately held Archstone from Bank of America and Barclays Bank PLC.
Equity Residential would have funded the deal through a combination of cash, funds borrowed under its $1.25 billion revolving credit line, proceeds from the sale of non-core assets, bank term debt and other means.
Moody's Investors Service, Standard & Poor's Ratings Services and Fitch Ratings each affirmed their credit ratings on the Chicago-based real estate investment trust and certain of its subsidiaries.
However, Moody's revised its rating outlook to "developing" from "stable," reflecting uncertainty that Equity Residential will be able to close the transaction. That's because the deal was contingent on the Estate of Lehman not exercising its right to acquire the stake at the same price.
Even if the deal closes, Moody's said it is concerned that the investment could require a disproportionate share of attention from Equity Residential's management.
Moody's noted that the transaction offers Equity Residential a high-quality, complimentary apartment portfolio and additional development opportunities.
Lehman plans to file a bankruptcy-court motion as soon as next week asking a judge for permission to use the estate's cash to do the deal.
Archstone did not immediately respond to a message seeking comment.
Equity Residential owns or has investments in 16 states and the District of Columbia. Privately held Archstone has apartment communities in major metropolitan areas; including New York, Washington, Boston, Los Angeles, San Francisco, San Diego and Seattle.
