Washington Real Estate Investment Trust WRE announced the completion of the second sale of suburban Maryland office portfolio for $128.5 million. The sale included 51 Monroe and One Central Plaza assets and comprises around 491,000 square feet of space in aggregate. On the other hand, the company has structured this sale in a reverse-1031 exchange in combination with the purchase of an apartment community – Riverside Apartments – in Alexandria, VA.
This disposition is part of the real estate investment trust’s (“REIT”) capital allocation strategy, aimed at lowering its exposure to the stressed suburban office market and focus more on value-added, urban in-fill, multi-family properties with robust growth potential.
In fact, the capital allocation into the apartment assets in Alexandria, which consists of 1,222 units with potential onsite density to develop additional units, is a strategic fit. This is because such investments enable the company to enjoy lower leasing capital requirements and better cash flow stability.
Notably, in June, the company declared the closure of the first sale of its suburban Maryland office portfolio for a total price of $111.5 million. This comprised 692,000 square feet of space and included 6110 Executive Boulevard, West Gude Drive, Wayne Plaza and 600 Jefferson Plaza.
With these strategic dispositions, Washington REIT’s office portfolio is now mainly concentrated in urban-infill, metro-centric localities in The District and Northern Virginia. This aids the company to leverage the progressing fundamentals in the Washington Metro Region. Also, investment in apartment communities is expected to assure stable cash flows going forward, which is encouraging.
Washington REIT currently has a Zacks Rank #3 (Hold). A better-ranked stock in the REIT industry is InfraREIT, Inc. HIFR, sporting a Zacks Rank #1 (Strong Buy). InfraREIT has a long-term expected growth rate of 10% against the industry average of 5.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Also, investors can consider stocks like Mack-Cali Realty Corp. CLI and HCP Inc. HCP, both carrying a Zacks Rank #2 (Buy). Both Mack-Cali and HCP have been experiencing solid revisions in their Q3 estimates, of late.
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