CS First Boston downgraded Archstone Communities Trust (ASN) to hold from buy.
Analyst Lawrence Raiman says the acquisition of Charles E. Smith Residential Realty (SRW) creates a preeminent apartment real estate investment trust. However, he thinks the deal is good in the long term but dilutive over the short term. He says pricing is dilutive to Archstone's 2002
funds from operations (FFO) by $0.03.
Raiman says the company is paying up for Smith in a deal priced at a 10%-15% premium to his
net asset value estimate for Smith. Raiman also says investors can create Archstone stock at a discount through Smith. He sees $2.33 2001 FFO and cut the $2.53 2002 FFO to $2.50. He has a $27 12-month target.