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Investment bank sells to competitors to pay off debt

When Lehman Brothers, an investment bank based out of New York, announced the liquidation of many of their assets, the global financial market was sent into a panic. People across the nation were aware that mortgage rates were dropping to record lows, but many had no idea how this was affecting banks in the long run.

It's something many of our Florida readers can relate to as they watched as construction and business deals faltered all around them. Now in New York, in an effort to pay off some of the failed investment bank's creditors, Lehman's has agreed to sell Archstone, a sprawling apartment complex company, to two of its biggest real estate competitors.

The decision to sell was not an easy choice to make considering Archstone was expected to raise $3.45 billion in an offering on the New York Stock Exchange this year. Lehman's decision to sell had attracted many interested investors but the main concern was "fetching the highest possible value for Archstone."

Recently though, Lehman finally decided to cut a deal with Equity Residential, an apartment investor, and AvalongBay, an apartment company that is known for developing properties rather than buying them.

Under the terms of the deal, both of the new companies will pay $2.685 billion in cash and an additional $3.8 billion in stock. In exchange, Lehman will become the single biggest shareholder in each company, holding a 9.8 percent stake in Equity Residential and a 13.2 percent stake in AvalonBay.

Now that Lehman has settled the sale of Archstone, they can now focus on selling several other commercial properties that they own in New York City and on the West Coast in hopes of paying off their creditors as much as possible.

Source: The New York Times, "Lehman Sells Property Firm in a Deal Worth $6.5 Billion," Michael J. De La Merced, Nov. 26, 2012

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