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Equity Commonwealth Continues To Build Stockpile of Cash

Chicago-based REIT in Various Stages of Selling 4.7 Million SF of Office Space
October 6, 2017
600 W. Chicago Ave. in Chicago is the largest of 7 properties Equity Commonwealth is negotiating to sell.
600 W. Chicago Ave. in Chicago is the largest of 7 properties Equity Commonwealth is negotiating to sell.
Chicago-based Equity Commonwealth (NYSE: EQC) is continuing a major sell-off of its portfolio while it builds a cash war chest.

The REIT currently has seven properties totaling 4.7 million square feet in various stages of the sale process. This includes the potential sales of 600 W. Chicago Ave., a 1.57 million-square-foot office building in Chicago, and 1600 Market St., an 857,000-square-foot office building in Philadelphia. The other properties were not identified.

The REIT purchased 600 W. Chicago six years ago for $390 million and 1600 Market for $135.9 million in 1998.

This past summer, Equity Commonwealth sold the Centre Square East and West Towers at 1500 Market St. in Philadelphia to Nightingale Properties for $328 million. It also sold a seven-property office portfolio to Farallon Capital Management for $84 million.

During the first six months of the year, it sold six properties for $211.6 million. And last year, it sold 30 properties with a combined 8 million square feet for $1.3 billion.

With all of the dispositions, the REIT has stockpiled significant proceeds, ending the second quarter with $2.2 billion of cash. But the REIT is being choosey in how it will invest that money.

When asked about the accumulating cash stockpile at its last earnings conference call, David Weinberg, the REIT’s COO, said the office building owner is really not a buyer in today’s market because “the price per pound” and yields don’t represent what he termed an attractive entry point.

Although it expects to complete all the pending sales, Equity Commonwealth said there is no assurance that any of the currently anticipated dispositions will reach closing.

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