"Over time, when we start to see negative leverage, it will change things," Kincaid said during this week's Citigroup 2006 REIT CEO Conference. "You could be borrowing money at 6% in the next 12 months. That could have a big impact."
For now, though, Kincaid says the office market sees buildings selling at internal rates of return of 6.5% to 7%. "We're out of the market," he says.
Equity Office Properties Trust managed to buy four million sf of office space last year for $1.4 billion, more than it had anticipated, at an average capitalization rate of 7.2%.
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