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Great Lakes REIT May be Up for Sale

Chicago- Office REITs board is looking at possible sale or acquisitions, analysts say. CFO says trust in midst of capital recycling.

By Ted Jackson | Updated on August 31, 2000

Reacting to a perception in the marketplace that small real-estate investment trusts will not be able to survive in the future, analysts say that Great Lakes REIT’s board is examining ways to increase shareholder value. “I believe the board is currently examining all options,” says Chris Haley, a REIT analyst at First Union Securities in Baltimore. “These would likely include a sale, merger or even an acquisition of another office REIT.”

Great Lakes CFO James Hicks would not comment on the speculation surrounding Great Lakes, but he did say that the trust is in the midst of a “capital recycling” process. “We are realizing profits on deals that we did three or four years ago and reinvesting the proceeds,” said Hicks. Great Lakes’ latest purchase is the Woodfield Green office complex in booming Schaumburg, IL, for which Hicks said Great Lakes paid $10 million.

If the Great Lakes Board is looking for ways to maximize shareholder value, it isn’t because management isn’t doing a good job running the trust’s assets. “Great Lakes is in the top half of all REITs in terms of performance over the last one year, three year and five year periods,” says Haley. Indeed, the trust just reported its ninth straight double-digit quarterly increase in funds from operations. Great Lakes is the top performing REIT in the nation in terms of increasing its same-property cash flows, according to Haley. Reflecting this, Great Lakes shares have outperformed office REIT indexes by 10 percentage points so far this year.

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