Zell Wants Archstone, Lehman Doesn't Want Him to Have It

The wind-down of Lehman's assets, including Archstone's 70,000 apartment units, is a fight that's still brewing. The NAR is going to revise downward the number of homes sold from 2007 through October 2011. And ratings agencies aren't too keen on the euro zone's prospects.

December 13, 2011
By Dees Stribling, Contributing Editor

Sam Zell

Lehman Brothers Holdings Inc. might have gone bust more than three years ago, but like the worldwide panic its failure inspired, the unwinding of the bankruptcy itself continues. More specifically, now that the bankruptcy court has approved a wind-down plan, a quarrel over ownership of the estate’s largest real estate asset, apartment giant Archstone — owner of about 70,000 units — is brewing.

The players are the Lehman estate, which owns 47 percent of Archstone; the company’s former partners in acquiring Archstone, Bank of America Corp. and Barclays PLC, which owns 53 percent of Archstone; and Sam Zell’s Equity Residential, which wants to buy half of the banks’ stake (26.5 percent) in Archstone, as a first step to becoming the boss of the whole shooting match. Equity Residential has made a bid that values Archstone at $16 billion, but the Lehman estate doesn’t want the apartment company sold, but rather to be fodder for an IPO.

The Lehman estate has the right to match Equity Residential’s bid for the share of Archstone, which it reportedly will do soon, but Zell also has the right to bid for the other 26.5 percent of the apartment landlord that the banks own. Even if Equity Residential can’t get any part of Archstone, it would receive a breakup fee in the neighborhood of $40 million, or as Zell might call it, a spot of walking-around money.

Realtors to Revise Existing Homes Sales Down

The National Association of Realtors said on Monday that it’s going to revise downward the number of existing homes sales it reported from 2007 — when the credit freeze got ahold of the mortgage market — to the last 10 months of 2011, when an all-purpose malaise still gripped the housing sector. In other words, however bad the housing market seemed during those awful years, it was actually worse.

The organization, which releases existing home sales numbers toward the end of each month (and which are reported by Economy Watch, among other places), said that it will release its new data on Dec. 21, along with November sales, which will be calculated using the revised method. The move comes after other observers — such as CoreLogic Inc. — questioned the NAR’s data and methodologies earlier this year. CoreLogic, for one, stated that it believed that the sales were overstated in 2010 by the NAR by 15 percent, which would make last year’s sales crummy indeed, since it’s already the worst in many years.

The Realtors explained that a number of factors led to an overcount, especially an “an up-drift in sales projections,” beginning in 2007. That is, the model that the NAR used to calculate home sales rates was off that year and never corrected, with the model becoming more inaccurate each passing year. The organization also blamed alterations in how the Census Bureau collects data, some sales being counting twice, and other factors. Curiously, the NAR has been through this before — in 2000, when it revised upward by 13 percent the number of homes sold in the 1990s.

Rating Agencies Talk Trash About Brussels

About a week after Standard & Poor’s threatened to downgrade the euro-using countries en masse, Moody’s Investors Service let it be known on Monday that it’s thinking about the same course of action, never mind what happened in Brussels over the weekend. In fact, the ratings agency said that it was unimpressed by all the hubbub: “The [summit’s] communiqué offers few new measures, and does not change our view that risks to the cohesion of the euro area continue to rise.”

Fitch Ratings also chimed in after the summit was over, saying that it hadn’t produced anything “comprehensive.” So it looks like a new nervousness about the fate of the euro is gaining a toehold in investors’ minds. Could be time for another mini-panic soon (and the euro is already down against the dollar and the yen).

Wall Street was not amused at all the nervousness about Europe, with the Dow Jones Industrial Average losing 162.87 points, or 1.34 percent. The S&P 500 was down 1.49 percent and the Nasdaq declined 1.31 percent.