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CHICAGO-Locally based Equity Residential continues to reduce its exposure in the multifamily rental market, but is hardly exiting the area. While selling 1,221 suburban units for $186.7 million in the first quarter, the multifamily REIT says it hopes to begin a 278-unit, $70-million project in the South Loop, with an opening expected in late 2007.

Equity Residential president and chief executive officer David J. Neithercut says the company paid $6 million for a site, and will build the South Loop project with a joint venture partner. The development is expected to yield a return in the "high 6%" range, Neithercut adds during the company's earnings conference call Wednesday.

Meanwhile, Equity Residential has sold the 403-unit City View at the Highlands in Lombard for $78.6 million, the 612-unit Bourbon Square complex in Palatine for $78 million and the 206-unit Landings of Lake Zurich for $30.1 million, according to Cushman & Wakefield. The properties were among 25 sold by Equity Residential during the first quarter, totaling $799.9 million for the 8,110 units. The average capitalization rate for the sales was 5.6%, Neithercut says, but indicates the price for the three-year-old City View at the Highlands was 4.23%.