Liberty Property Trust (LPT - Free Report) recently announced the sale of a high-rise office building in Washington, D.C. — 1100 17th Street NW — for $61.75 million. At closing, the 146,979 square foot property was 65.7% leased.
Liberty Property has been aiming at divesting its non-core properties and using the dry powder for gaining the preferred properties across the United States. Specifically, the company is aiming for growth of its industrial platform in top-tier markets and financing that through the disposition of office assets.
In sync with these efforts, during the Dec-end quarter, the company sold nine operating properties, totaling around 905,000 square feet and development rights to a 500-acre mixed-use site in the U.K. for $284.2 million. Meanwhile, Liberty Property acquired nine industrial properties, aggregating 1.6 million square feet of area, for $204.8 million.
Moreover, in 2019, the company projects asset sales of $600-$650 million and acquisitions of $300-$350 million. The company is likely to complete the disposition of its entire wholly-owned office assets within the next 18 months. Further, it expects to commence development of $475-$550 million in wholly-owned properties. These measures are likely to help the company achieve a favorable portfolio mix.
Obviously, the expansion of industrial real estate portfolio is a strategic fit for Liberty Property. This is because fundamentals of the industrial market remain solid, backed by growing demand for such properties amid economic recovery, job-market improvements, high-consumer spending and e-commerce boom, which has led to strong rent growth, high occupancy and development opportunities. Therefore, given its premium quality industrial portfolio located in upscale locations, pro-business environment and continued e-commerce demand, Liberty Property is poised to gain.
In addition to Liberty Property, other REITs, including Prologis Inc. (PLD - Free Report) and Duke Realty (DRE - Free Report) , are expected to benefit from the same. In fact, per a study by the commercial real estate services firm — CBRE Group (CBRE - Free Report) — availability fell for 34 straight quarters to 7% for the U.S. industrial market in fourth-quarter 2018, denoting the lowest point since 2000.
Nevertheless, there is rising supply of industrial real estate space and this might partly dampen the robust growth momentum in rents. Also, trade tensions and any rate hike add to REITs’ woes.
Liberty Property currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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