"We're either going to get it into development or get it into somebody else's hands," said president and chief executive officer Richard D. Kincaid Thursday morning during Equity Office Properties' earnings conference call. "We're going to sell a lot of land that we don't intend to develop in the near future."

Meanwhile, Equity Office Properties Trust still has six buildings totaling 2.2 million sf in its development pipeline, and has spent less than half the estimated $1.3 billion costs to complete. Kincaid added the company plans to spend about $300 million this year, drawing money from its credit lines, to pay development costs.

Kincaid says the four million sf of office properties the company acquired for $1.4 billion in 2005 was more than he anticipated. "We've kept our discipline, being opportunistic investors," he said.

Chief financial officer Marsha C. Williams added the company looked over $18 billion worth of deals in 2005. The few selected produced yields of 7.2%, she said, while the yields on the 17.8 million sf of space it sold was 6.5%. Average occupancy was 80% in the assets sold, Williams says, while Equity Office Properties inherited an 85% occupancy rate in the buildings it bought.

While the company did not specify its expected 2006 acquisition and disposition targets, Kincaid said the goal for this year is more tax-efficient sales, which could involve Section 1031 exchanges. The 2005 sales were part of a strategy to consolidate its position in core markets. "We condensed a three- to five-year disposition program into one year," said Kincaid, adding the REIT now generates 85% of its net operating income from its top 10 markets.

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