Lehman' owns 73.5 per cent of Archstone and has sought to buy the remaining 26.5 per cent from BofA and Barclays.
"Lehman Brothers Holdings is buying the final 26.5 per cent stake in property company Archstone it does not already own from BofA and Barclays for USD 1.58 billion," the Financial Times said citing source.
The deal, expected to be announced soon, would give Lehman full control of Archstone, paving the way for a possible initial public offering, the report added.
Lehman bought Archstone with BofA and Barclays in a USD 22 billion leveraged buyout in 2007, a year before it declared bankruptcy.
The financial service entity collapsed in 2008 in one of the biggest corporate bankruptcy in the US history. It emerged from the bankruptcy earlier this year.
According to the report, last year BofA and Barclays agreed to sell a 26.5 per cent stake, or about half their holdings, to Archstone competitor, Equity Residential for USD 1.3 billion. That deal valued Archstone at about USD 16 billion including debt.
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Lehman exercised its right of first refusal on the stake and sought approval from the bankruptcy court to use the estate's cash to buy the stake, eventually purchasing it for USD 1.3 billion, the report noted.
As part of Equity's initial deal, it received exclusive rights to buy the final 26.5 per cent held by the banks. But Lehman exercised its right of first refusal on that stake as well, triggering the latest deal.