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Archstone-Smith to Buy Oakwood Units

March 02, 2005|From Times Wire Services

Archstone-Smith Trust on Tuesday agreed to purchase 30 apartment complexes for about $1.4 billion, adding significantly to the company's presence in California.

The deal is the real estate investment trust's seventh acquisition in a year.

The purchase from closely held Oakwood Worldwide, which is based in Los Angeles, involves more than 10,000 apartments, according to Archstone-Smith, with 40% of the portfolio based in Southern California.

The apartments being acquired are in and around 29 cities in all, including Archstone-Smith's core markets of Los Angeles, San Francisco, Washington, Chicago, Boston and Seattle.

Archstone-Smith, based in Englewood, Colo., will manage 15 of the complexes under its own name and lease the others back to Oakwood, which currently manages 30,000 apartments in the U.S., Britain and Asia to provide furnished accommodations for companies.

The 15 properties, representing 6,097 units, include Oakwood Worldwide's flagship properties in Toluca Hills, Marina del Rey and San Jose.

Archstone-Smith focuses on owning properties in markets where there is little land left to build new housing. Chief Executive Scot Sellers said in August that he planned to spend as much as an additional $600 million on buying apartment communities.

Archstone-Smith said that the acquisition would add 1.5 cents a share to its 2005 funds from operations and would contribute 3 cents on an annualized basis.

The company said it would finance the latest purchase in cash and debt. It already has spent about $600 million on the previous six acquisitions, according to data compiled by Bloomberg.

The transaction is expected to close late in the second quarter, the companies said.

Shares of Archstone-Smith rose 47 cents to $34.30 on the New York Stock Exchange. The stock has risen 19% in the last year.

Bloomberg News was used in compiling this report.

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