8-KMaterial Agreements

EQUITY RESIDENTIAL 8-K Report, Agreement Terminated (Jun 7, 2012)

Filed June 7, 2012For Securities:EQR

Summary

Equity Residential (EQR), through its operating subsidiary ERP Operating Limited Partnership, has officially terminated an interest purchase agreement to acquire the remaining 26.5% interest in various Archstone Entities. This termination was triggered by Lehman Brothers exercising its right of first offer to purchase these interests from the sellers for the same agreed-upon price of $1.58 billion. Despite the termination of the acquisition, ERP has received significant termination fees totaling $150 million: $80 million from the sellers and $70 million from Lehman. This provides a notable financial inflow for Equity Residential. However, the company may be required to repay all or a portion of these fees if it acquires substantially all of the Archstone Entities' assets within 120 days of Lehman's acquisition.

Key Highlights

  • 1Termination of the agreement to purchase the remaining 26.5% interest in Archstone Entities.
  • 2Lehman Brothers exercised its right of first offer to acquire the Archstone interests for $1.58 billion.
  • 3Equity Residential (via ERP) received $150 million in termination fees ($80 million from sellers, $70 million from Lehman).
  • 4The termination fees are subject to potential repayment if Equity Residential acquires Archstone assets within 120 days of Lehman's acquisition.
  • 5The filing confirms the closure of Lehman's acquisition of the Archstone interests on June 6, 2012.
  • 6This event effectively resolves the previously disclosed Archstone transaction from Equity Residential's direct acquisition perspective, while yielding a financial benefit through termination fees.

Frequently Asked Questions

The agreement was terminated because Lehman Brothers exercised its right of first offer to acquire the same interests in the Archstone Entities from the sellers for the agreed-upon price of $1.58 billion. This exercise preceded the closing of Equity Residential's intended purchase.

Yes, Equity Residential, through its operating partnership ERP, received aggregate termination fees of $150 million. This amount was comprised of $80 million paid by the sellers and $70 million paid by Lehman Brothers.

Yes, Equity Residential may be required to repay all or a portion of the termination fees if it acquires all or substantially all of the assets of the Archstone Entities within 120 days following Lehman Brothers' acquisition of the interests.

This filing provides clarity on the Archstone transaction, confirming its termination and highlighting a significant, immediate financial gain of $150 million in termination fees for Equity Residential. Investors should note the potential future obligation to repay these fees under specific conditions related to acquiring Archstone assets.