June 2007 VOL. 2

Investment Notes

Private equity's thirst for commercial real estate companies has been temporarily slaked by two more blockbuster deals: Tishman Speyer Properties and Lehman Brothers' $22.2 billion bid for apartment REIT Archstone-Smith and Morgan Stanley Real Estate's $6.5 billion offer for Fort Worth, Texas-based Crescent Real Estate Equities Co.

Tishman Speyer and Lehman Brothers will pay $60.75 per share for Englewood, Colo.-based Archstone-Smith, a 19 percent premium to the stock's closing price of $51.13 on May 24. The deal, which has already been approved by Archstone Smith's board, is expected to close in the third quarter.

Meanwhile, Morgan Stanley's offer of $22.80 per share for Crescent represents a 12 percent premium over the REIT's prior 30-day average closing share price. Completion of the transaction, which is expected to occur by the end of the third quarter 2007, is subject to approval by the Company's common shareholders.

These deals come as no surprise to most industry experts. In fact, a recent survey found that nine out of 10 of commercial real estate executives expect the public-to-private M&A trend will continue in the coming year. The survey, conducted by global law firm DLA Piper US LLP, also found that most executives feel that private equity funds are willing to pay a premium for real estate assets. Cheap rates in the debt market and the public markets undervaluing REITs also are contributing to private equity activity.