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Equity Office Sales Could Hit $3B in '05

CHICAGO-The largest US office REIT, which had planned to shed assets in non-core assets over five years, now is shooting to do most of it this year, capitalizing on a hot sales market.

By Mark Ruda | Updated on April 28, 2005

CHICAGO-Hoping to strike while the office sales market is hot, Equity Office Properties Trust is accelerating plans to exit non-core markets, which could result in $3 billion in sales this year. The largest US office REIT already has shed 29 assets this year for $535 million, disposing of buildings generated a cash yield of only 3.5%, said president and chief executive officer Richard D. Kincaid. Sales this year have included buildings in suburban Minneapolis and suburban Philadelphia.

Assets on the market total more than 19 million sf and include some buildings in core markets. “The sales market has just strengthened, and it’s an excellent time to accelerate that process,” Kincaid said during the company’s earnings conference call. “It will be a challenge to do that much, but we’re going to try.”

Average occupancy on the properties sold this year have been in the 75% range, Kincaid said, but has been as low as 18%. “If we sell the assets we’re attempting to sell, we’ll be a much stronger company.” He said occupancy across the REIT’s portfolio, which now totals 124.5 million sf, would increase two percentage points as a result of the non-core market sales.

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