Katrina Costs Force REIT to Rethink Insurance

CHICAGO-Hurricane Katrina cost Equity Office Properties Trust nearly $36 million, and the largest US office REIT is reconsidering its insurance strategy beyond New Orleans. Crews continue to renovate most of the 1.2-million-sf three-building Lakeway complex in Metairie, LA even though tenants were able to move back by the end of 2005.

Repair costs total $31.5 million, including replacing 2,700 windows, a job expected to start in April. The REIT lost another $4.3 million in rent. However, the company’s deductible is $50 million per occurrence, said chief financial officer Marsha C. Williams during the company’s earnings conference call Thursday morning. “We may take some steps to make sure we don’t have another event like this again,” she says, indicating the company is looking at coverage on properties in coastal areas.