Finance REITs
May 6, 2008
By: Gail Kalinoski, Contributing Editor
HRPT Properties Trust, a REIT that primarily owns office buildings in the United States, said today it would sell 48 medical offices, clinic and biotech laboratory buildings to Senior Housing Properties Trust for $565 million.
The properties have a total of 2.2 million square feet of space and will be sold in phases over the next year, according to the Newton, Mass.-based REIT. HRPT has owned the buildings for an average of nine years, the company stated in a press release. The REIT did not break down the locations or square footage of each property to be sold. HRPT officials could not be reached for further comment by press time today. The company release noted that the REIT’s managing trustee, Adam Portnoy, & CFO John Popeo would discuss the transactions Thursday during a conference call on the REIT’s first quarter 2008 results.
Senior Housing Properties Trust, a former HRPT subsidiary that was spun off in 1999, will pay approximately $554 million in cash at the closings and assume three mortgages on two properties totaling about $11 million. HRPT said it expects to realize capital gains of approximately $215 million from the sales. The REIT plans to use proceeds of the sales to pay down outstanding debt while it looks for acquisitions. In the news release, HRPT noted that it “expects to use the proceeds from the sales to take advantage of current favorable investment market conditions to purchase properties with more potential for rent growth and at higher capitalization rates than the properties being sold.”
In 2007, HRPT acquired 37 properties with a total of 4.7 million square feet for about $307.4 million, including 11 office properties with 806,000 square feet for $108.2 million, according to its 2007 year-end filing with the U.S. Securities and Exchange Commission. As of Dec. 31, 2007, it also had an agreement to buy a three-building office property with a total of 877,000 square feet for $123.7 million, which later closed in February 2008. During a Feb. 14 conference call to discuss the year-end results, Portnoy would only say the Class A asset was in Cleveland and that it was purchased with a cap rate of over 9 percent, according to a transcript of the call. He said further details would be released during the first quarter 2008 conference call.
Portnoy did say on the February call that prices for office properties were beginning to come down in certain U.S. markets and HRPT planned to take advantage of the falling prices this year because of its access to capital.
In today’s release, HRPT noted that after the 48 sales are completed, the REIT would still own 45 properties with approximately 4.6 million square feet that are principally leased to tenants in medical-related fields but are not generally used for medical office, clinical or biotech laboratory purposes. Overall, when the sales are completed HRPT expects to have a $6 billion portfolio of 487 properties with 62.3 million square feet of space located in 36 states and Washington, D.C. HRPT’s main geographical locations are metro Philadelphia, Boston, Washington, D.C., Austin, Southern California and Oahu, Hawaii. The average occupancy of the portfolio will be almost 93 percent. Of the properties remaining in the portfolio, 78 percent will be office buildings.
By: Gail Kalinoski, Contributing Editor
HRPT Properties Trust, a REIT that primarily owns office buildings in the United States, said today it would sell 48 medical offices, clinic and biotech laboratory buildings to Senior Housing Properties Trust for $565 million.
The properties have a total of 2.2 million square feet of space and will be sold in phases over the next year, according to the Newton, Mass.-based REIT. HRPT has owned the buildings for an average of nine years, the company stated in a press release. The REIT did not break down the locations or square footage of each property to be sold. HRPT officials could not be reached for further comment by press time today. The company release noted that the REIT’s managing trustee, Adam Portnoy, & CFO John Popeo would discuss the transactions Thursday during a conference call on the REIT’s first quarter 2008 results.
Senior Housing Properties Trust, a former HRPT subsidiary that was spun off in 1999, will pay approximately $554 million in cash at the closings and assume three mortgages on two properties totaling about $11 million. HRPT said it expects to realize capital gains of approximately $215 million from the sales. The REIT plans to use proceeds of the sales to pay down outstanding debt while it looks for acquisitions. In the news release, HRPT noted that it “expects to use the proceeds from the sales to take advantage of current favorable investment market conditions to purchase properties with more potential for rent growth and at higher capitalization rates than the properties being sold.”
In 2007, HRPT acquired 37 properties with a total of 4.7 million square feet for about $307.4 million, including 11 office properties with 806,000 square feet for $108.2 million, according to its 2007 year-end filing with the U.S. Securities and Exchange Commission. As of Dec. 31, 2007, it also had an agreement to buy a three-building office property with a total of 877,000 square feet for $123.7 million, which later closed in February 2008. During a Feb. 14 conference call to discuss the year-end results, Portnoy would only say the Class A asset was in Cleveland and that it was purchased with a cap rate of over 9 percent, according to a transcript of the call. He said further details would be released during the first quarter 2008 conference call.
Portnoy did say on the February call that prices for office properties were beginning to come down in certain U.S. markets and HRPT planned to take advantage of the falling prices this year because of its access to capital.
In today’s release, HRPT noted that after the 48 sales are completed, the REIT would still own 45 properties with approximately 4.6 million square feet that are principally leased to tenants in medical-related fields but are not generally used for medical office, clinical or biotech laboratory purposes. Overall, when the sales are completed HRPT expects to have a $6 billion portfolio of 487 properties with 62.3 million square feet of space located in 36 states and Washington, D.C. HRPT’s main geographical locations are metro Philadelphia, Boston, Washington, D.C., Austin, Southern California and Oahu, Hawaii. The average occupancy of the portfolio will be almost 93 percent. Of the properties remaining in the portfolio, 78 percent will be office buildings.
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