"We were in the market with a lot of things early, and there wasn't demand for riskier assets," Kincaid explained Thursday during the company's earnings conference call. "The pricing actually got more aggressive as the year went on."
Office assets are trading at unleveraged internal rates of return around 7% or lower, down from 8%, Kincaid said. "The pricing in the market assumes there is no risk," he observed. The only comparison he is able to draw is to 1986-87.
Seeing a seller's market now, Kincaid would guess Equity Office Properties would be a net seller, but he hesitated to offer a figure. Already this year, five buildings totaling 569,600 sf have been sold for $130.5 million, while a single 92,941-sf asset has been added to the 125.7-million-sf office portfolio for $25 million.
The REIT will be testing the market, Kincaid said, especially with assets with large vacancy rates in distressed markets, but he notes marketing materials have not been prepared. "This year, we aren't far enough along," Kincaid said. "It's just pure speculation to say anything."
However, chief financial officer Marsha C. Williams noted the company has $1.8 billion in debt maturing this year, adding the REIT plans to use disposition proceeds to pay off some of those loans.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
