BRE Properties, Inc. (
- a real estate investment trust (REIT) - recently sold 6 joint
venture (JV) interests for a total price of $47.5 million. The
transaction is in line with the company's strategy of divesting
non-core assets and utilizing the proceeds for its current
development pipeline to expand its reach in high-barrier-to-entry
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BRE Properties had 15% ownership interests in each of these JV
communities, which it sold entirely. The company generated net
profit of around $15 million from the transaction.
The 6 communities include The Bluffs at Highland Ranch, The
Fairways at Raccoon Creek, Pinnacle at DTC and Pinnacle at
Mountain Gate (all in Denver), and Pinnacle Terrace and Pinnacle
at Union Hills (both in Phoenix). All of these assets were
Particularly, with the selling of interests in these assets, BRE
properties left the Denver market. Currently, it has 2 remaining
JV communities, which represents below 0.5% of the company's
expected 2013 annual NOI (net operating income).
We expect the divesture to improve BRE Properties' portfolio in
supply-constrained premium markets of the country and enable it
to outperform competitive pressure. Notably, the company
experiences strong occupancy levels and high operating margins
through operating efficiencies and by deploying new and recycled
capital to supply-constrained markets of Western U.S. This
provides compelling growth potential to the company.
Last month, BRE Properties reported fourth quarter 2012 results
with core fund from operations (FFO) of 61 cents per share,
beating the Zacks Consensus Estimate by a penny and the year-ago
figure by 4 cents.
BRE Properties currently retains a Zacks Rank #4 (Sell). REITs
that are performing much better than the company includes
Taubman Centers Inc. (
Federal Realty Investment Trust (
Agree Realty Corp. (
. All these stocks carry a Zacks Rank #2 (Buy).
Note: FFO, a widely accepted and reported measure of the
performance of REITs, is derived by adding depreciation,
amortization and other non-cash expenses to net income