Shares of American residential real estate investment trusts rose, led by AvalonBay Communities, after Tishman Speyer Properties LP and Lehman Brothers Holdings Inc. agreed yesterday to buy American apartment owner Archstone-Smith Trust for $13.5 billion.

Deutsche Bank AG raised its rating to “buy” from “hold,” on AvalonBay, based in Alexandria, Virginia, and seven other REITs including Simon Property Group, the largest REIT in the country, which mainly owns retail properties. AvalonBay shares climbed $5.83 or 4.6%, to 132.93 in New York Stock Exchange composite trading.

The $39 billion purchase, including debt, of office landlord Equity Office Properties by the Blackstone Group LP in February demonstrated demand for American real estate companies, Deutsche Bank analyst Lou Taylor said in a note to clients Tuesday.

“With Equity Office Properties broken up and the Archstone-Smith announcement, we think any company could be subject to a bid at virtually any time,” Mr. Taylor wrote. “The deal suggests that any short position is vulnerable to a privatization announcement.”

Other firms whose ratings were raised by Mr. Taylor were Apartment Investment & Management Co., Boston Properties Inc., Developers Diversified Realty Corp., Kilroy Realty Corp., Kimco Realty Corp., and Macerich Co.

“These stocks have the most meaningful upside potential from current levels to our targets,” Mr. Taylor wrote. Deutsche Bank’s target prices are from 13% to as much as 25% higher than the shares’s prices at the time of the note.

The 19-member Bloomberg Apartment REIT Index rose 12% since the close of trading May 24, after reports first surfaced that Tishman Speyer and Lehman were planning to buy Archstone-Smith, the second-biggest American apartment REIT.

The Archstone-Smith transaction would recycle $6.5 billion of capital, equal to the inflows in REIT mutual funds last year, said Mr. Taylor. It should also stop the indiscriminate shorting of REIT stocks because of problems in the subprime market, he said.

AvalonBay and Apartment Investment are the only two REITs upgraded by Deutsche Bank that focus on residential properties. The others invest in a mix of assets including malls and offices. The Bloomberg REIT Index jumped 3.6% Tuesday.

Shares of Pennsylvania Real Estate Investment Trust, which owns shopping malls and industrial properties in the Mid-Atlantic and Southeastern America, rose $3.19 or 7.2% to 45.70 in New York Stock Exchange composite trading. That stock was not mentioned in Mr. Taylor’s note.

Simon Property shares rose $3.35 to $108.75, Apartment Investment rose $1.78 to $56.44, Boston Properties rose $3.84 to $115, Developers Diversified rose $1.96 to $62.19, Kilroy rose $1.91 to $74.25, Kimco rose $1.86 to $46.67, and Macerich rose $2.82 to $89.21, in New York Stock Exchange composite trading. Archstone fell 34 cents to $61.08.

Tishman and Lehman’s $13.5 billion offer — $22.2 billion including assumption of debt — values Archstone at $60.75 a share.

James Corl, investment manager at Cohen & Steers Capital Management Inc., Archstone’s sixth largest investment, yesterday called that price “a pretty good deal for the buyer,” and said higher bids were likely.