EOP's Kincaid Sees Office Sales Game Changing in 2007

CHICAGO-While the tables already are turning in lease negotiations, the leader of the largest US office REIT foresees a swing of the pendulum in the sales arena. Rising interest rates, reasons Equity Office Properties Trust president and chief executive officer Richard D. Kincaid, could level a playing field that has generally been in the sellers’ favor.

“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.