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Equity Offices Hopes to Cash In On Seller's Market

CHICAGO-A net buyer last year by nearly $268 million, Equity Office Properties Trust hopes it can take advantage of a market willing to accept returns in the 7% range for office assets.

By Mark Ruda | Updated on February 03, 2005

CHICAGO-A year ago, Equity Office Properties Trust president and chief executive officer Richard D. Kincaid thought his company would be a net seller in 2004, disposing of $1.5 billion in assets. However, the largest US office REIT bought $952 million in properties while selling off assets worth $684.2 million, much of it in a 75-building industrial portfolio sale.

“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.

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