UBS Maintains a 'Neutral' on Equity Residential (EQR); Knocking on Archstone’s Door

UBS maintains a 'Neutral' on Equity Residential (NYSE: EQR) price target lowered from $63 to $57.

UBS analyst says, "EQR has entered into a contract to purchase a 26.5% equity interest in Archstone for $1.325 billion from BofA and Barclays. We believe EQR’s goal is to own all of Archstone – not just a passive stake in the $16+ billion entity...We see long-term benefits of an Equity Residential / Archstone combination, particularly the potential to create a brand name presence in several major cities as well as some level of expense synergies...What We Don’t Like: EQR would initially be a minority partner in Archstone with no operational control. There is no guarantee EQR will end up owning all of Archstone – or at what price as Lehman was apparently not a seller at this price."

"We would recommend watching from the sidelines for now. We are reducing our to $57 (in-line with our NAV estimate). Given the issues highlighted above, we believe shares of Equity Residential will have a tough time appreciating until more questions are answered."

For an analyst ratings summary and ratings history on Equity Residential click here. For more ratings news on Equity Residential click here.

Shares of Equity Residential closed at $54.25 yesterday.

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