CommonWealth REIT (NYSE: CWH) today announced an update regarding its business plan to reposition its portfolio towards high quality office buildings located in central business districts, or CBDs, and away from suburban office and industrial properties.
In early 2013, CWH announced that it would offer for sale 94 primarily suburban office and industrial properties with approximately 6.7 million square feet. As of and for the three months ended December 31, 2012, these properties were approximately 26.5% leased and produced an annualized property level net operating loss of approximately $1.5 million before general & administrative and depreciation & amortization expenses. As of today, 27 of these properties have been sold for combined gross sales prices of approximately $44.9 million and the remaining 67 properties are under agreements to be sold for gross sales prices totaling approximately $113.5 million. The sales of these 67 properties are expected to be completed by year end 2013.
The CWH Board of Trustees recently approved a plan to sell an additional 110 non-core properties with approximately 8.4 million square feet. As of and for the three months ended June 30, 2013, these 110 properties had a net book value of approximately $771 million, were approximately 70.7% leased and produced annualized property level net operating income of approximately $45.8 million before general & administrative and depreciation & amortization expenses. CWH is currently in the process of engaging listing brokers for the sale of these 110 properties and expects that applicable accounting rules will require CWH to record a non-cash impairment charge as of September 30, 2013 relating to the possible sale of these properties. The amount of the impairment charge has not yet been determined.
CWH currently expects the sale of the 110 non-core properties to be substantially completed by June 30, 2014, but some of these properties might be sold after that date.
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