Archstone-Smith Trust
Encyclopedia
Archstone is one of the largest investors, developers and operators of apartment communities in the United States. As of June 30, 2011, the company owned or had an ownership position in 434 communities located in the United States and Europe, representing 77,084 units, including units under construction. Nearly all of Archstone's portfolio is concentrated in large coastal cities, including Washington, D.C., Los Angeles, San Diego, San Francisco, New York, Seattle, and Boston.
On October 5, 2007, the firm was taken private in a US$
22.2 billion acquisition by the private real estate builder-operator firm Tishman Speyer and Lehman Brothers Holdings Inc., in alliance with several major United States investment banks
.
.
In 1967, the company formed its division Smith Management Construction (SMCI) to build office interiors within the commercial office buildings owned by the Charles E. Smith Companies. The construction division later expanded outside of the Smith portfolio of properties.
In 1994, The Charles E. Smith Companies formed a publicly-traded REIT named Charles E. Smith Residential Realty (formerly ). The new REIT owned 11,000 apartments in the Washington, D.C.
area. It also acquired the Smith Management Construction division from the former parent company.
In 1993, Smith Residential Realty had earned about $10 million.
While going public during the 1994 economic soft landing, the new REIT paid about 8.4% in dividend yield during its first year, while the stock stayed in a narrow trading range. Earnings that year came in at about $13 million.
However, in 1995, with negative stockholder equity
, and long term debt of almost $400 million, the Smith Residential Realty stock turned down about 20% to a new low early that year, as earnings plunged by a third to $8 million. But by year-end the stock price recovered to its earlier 1994 higher trading range. By then the company was showing positive shareholder equity on its balance sheet
, although its long-term debt had continued to grow as well, up to $465 million.
By the late 1990s, the young REIT company had grown exponentially from its rough start of the mid 1990s.
In 2001, Charles E. Smith Residential Realty merged with Archstone Communities of Denver, forming the $9.6 billion Archstone-Smith Trust.
In the mid 2000s, five senior managers in Archstone-Smith's SMCI division, Rick Wrieden, Ann Kerns Bowley, Bill Kirten, Bob Pronier, and Frank Talbot, bought out the SMCI division, and took it independently private.
In May 2007, Archstone-Smith Trust announced that it would be taken over by Tishman Speyer and Lehman Brothers Holdings Inc. for $15.5 billion. Tishman Speyer, which lead the takeover, also owns Rockefeller Center
and the Chrysler building
in New York City
. Lehman Brothers provided capital for the deal in alliance with Bank of America
, Strategic Ventures Inc. and Barclays Capital
.
Archstone-Smith shareholders received a 22.7% premium over the pre-announcement closing price of the stock.
On October 5, 2007, the firm was taken private in a US$
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
22.2 billion acquisition by the private real estate builder-operator firm Tishman Speyer and Lehman Brothers Holdings Inc., in alliance with several major United States investment banks
Investment banking
An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities...
.
History
In 1946 Charles E. Smith founded The Charles E. Smith Companies, which then grew to become the largest real estate company in the Baltimore-Washington Metropolitan AreaBaltimore-Washington Metropolitan Area
The Baltimore-Washington Metropolitan Area is a combined statistical area consisting of the overlapping labor market region of the cities of Baltimore, Maryland and Washington, D.C.. The region includes Central Maryland, Northern Virginia, and Jefferson County in the Eastern Panhandle of West...
.
In 1967, the company formed its division Smith Management Construction (SMCI) to build office interiors within the commercial office buildings owned by the Charles E. Smith Companies. The construction division later expanded outside of the Smith portfolio of properties.
In 1994, The Charles E. Smith Companies formed a publicly-traded REIT named Charles E. Smith Residential Realty (formerly ). The new REIT owned 11,000 apartments in the Washington, D.C.
Washington, D.C.
Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....
area. It also acquired the Smith Management Construction division from the former parent company.
In 1993, Smith Residential Realty had earned about $10 million.
While going public during the 1994 economic soft landing, the new REIT paid about 8.4% in dividend yield during its first year, while the stock stayed in a narrow trading range. Earnings that year came in at about $13 million.
However, in 1995, with negative stockholder equity
Ownership equity
In accounting and finance, equity is the residual claim or interest of the most junior class of investors in assets, after all liabilities are paid. If liability exceeds assets, negative equity exists...
, and long term debt of almost $400 million, the Smith Residential Realty stock turned down about 20% to a new low early that year, as earnings plunged by a third to $8 million. But by year-end the stock price recovered to its earlier 1994 higher trading range. By then the company was showing positive shareholder equity on its balance sheet
Balance sheet
In financial accounting, a balance sheet or statement of financial position is a summary of the financial balances of a sole proprietorship, a business partnership or a company. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A...
, although its long-term debt had continued to grow as well, up to $465 million.
By the late 1990s, the young REIT company had grown exponentially from its rough start of the mid 1990s.
In 2001, Charles E. Smith Residential Realty merged with Archstone Communities of Denver, forming the $9.6 billion Archstone-Smith Trust.
In the mid 2000s, five senior managers in Archstone-Smith's SMCI division, Rick Wrieden, Ann Kerns Bowley, Bill Kirten, Bob Pronier, and Frank Talbot, bought out the SMCI division, and took it independently private.
In May 2007, Archstone-Smith Trust announced that it would be taken over by Tishman Speyer and Lehman Brothers Holdings Inc. for $15.5 billion. Tishman Speyer, which lead the takeover, also owns Rockefeller Center
Rockefeller Center
Rockefeller Center is a complex of 19 commercial buildings covering between 48th and 51st streets in New York City, United States. Built by the Rockefeller family, it is located in the center of Midtown Manhattan, spanning the area between Fifth Avenue and Sixth Avenue. It was declared a National...
and the Chrysler building
Chrysler Building
The Chrysler Building is an Art Deco style skyscraper in New York City, located on the east side of Manhattan in the Turtle Bay area at the intersection of 42nd Street and Lexington Avenue. Standing at , it was the world's tallest building for 11 months before it was surpassed by the Empire State...
in New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
. Lehman Brothers provided capital for the deal in alliance with Bank of America
Bank of America
Bank of America Corporation, an American multinational banking and financial services corporation, is the second largest bank holding company in the United States by assets, and the fourth largest bank in the U.S. by market capitalization. The bank is headquartered in Charlotte, North Carolina...
, Strategic Ventures Inc. and Barclays Capital
Barclays Capital
Barclays Capital is a global British investment bank. It is the investment banking division of Barclays plc which has a balance sheet of over £1.2 trillion . Barclays Capital provides financing and risk management services to large companies, institutions and government clients. It is a primary...
.
Archstone-Smith shareholders received a 22.7% premium over the pre-announcement closing price of the stock.