BRE Properties, Inc.
) - an apartment real estate investment trust (REIT) - announced
the divestiture of 2 communities - Summerwind Townhomes and
Arcadia Cove - in Los Angeles and Phoenix, respectively. The
properties that were sold last month reflect the company's
strategy of offloading non-core assets and using the proceeds to
fund its core development pipeline.
The vending of these unencumbered properties helped the
company generate a net profit of about $22 million. Specifically,
the sale of Summerwind Townhomes- which was fully owned by BRE
Properties - generated total proceeds of $46.8 million. On the
other hand, the Arcadia Cove communities - where BRE properties
had 15% interest - lead to total proceed of $6.0 million.
Notably, the sales price of Summerwind Townhomes depicts 5.9%
seller's capitalization rate based on trailing 3-month NOI of the
BRE properties will utilize the proceeds to pay-off
outstanding amount under the $750 million unsecured revolving
credit facility. In addition, the company will use the amount to
finance its proposed development projects over the coming months
and for other corporate needs.
Including the aforementioned as well as first-quarter
divestitures, BRE Properties generated sales proceeds of about
$100 million in 2013. Moreover, the company is aiming to
sell additional communities in the $75-$125 million range in the
second half of 2013.
We believe the divestiture is a strategic fit as the fund
generated would help reduce the company's debt as well as finance
its growth plans in supply-constrained premium markets. This, in
turn, would help the company outperform competitive pressure.
BRE Properties currently carries a Zacks Rank #3 (Hold). Some
better performing REITs include
Sun Communities Inc.
Essex Property Trust Inc.
Camden Property Trust
) - all of which have a Zacks Rank #2 (Buy).
BRE PROPERTIES (BRE): Free Stock Analysis
CAMDEN PPTY TR (CPT): Free Stock Analysis
ESSEX PPTY TR (ESS): Free Stock Analysis
SUN CMNTYS INC (SUI): Free Stock Analysis
To read this article on Zacks.com click here.