WASHINGTON, DC-Washington Real Estate Investment Trust (NYSE: WRE) is selling its entire industrial portfolio, plus two office buildings, to a single, unidentified buyer for $350 million. The sale is part of WRIT’s decision to reposition its holdings to focus more on Inside-the-Beltway assets, George F. "Skip" McKenzie, president and CEO of WRIT says in a prepared statement. "We’re delighted to be moving forward with our strategic plan at this current pace," he said. WRIT did not return a call to GlobeSt.com in time for publication.
The 3.1 million-square foot portfolio is located throughout the DC area, in such submarkets as Alexandria, Chantilly, Lorton and Springfield, VA and, in the Maryland region, in the Capitol Heights, Lanham, Landover, Laurel and Frederick submarkets. All together 16 industrial assets are trading, along with the Crescent and Albemarle office buildings. The deal is structured as five separate purchase and sale agreements, three of which are expected to close at the start of September. Those are worth an aggregate of $235.7 million. An additional contract representing $44.6 million in properties is expected to close on or about October 3, 2011. The final contract, for $69.7 million of assets is expected to close on or about November 1, 2011.
The sale comes at an interesting time for the DC area industrial market. For starters, nearby Baltimore is rapidly outperforming the closer-in DC area suburbs, CB Richard Ellis’ chief economist Kevin Thorpe told GlobeSt.com last month when CBRE released its national industrial statistics for Q2. "Baltimore industrial is one of the fastest recovering markets in the country, ranking 8th in terms of net demand halfway through 2011," Thorpe said. Momentum in that city’s industrial market, he added, is certain to continue. "In the DC region, though, the industrial market is a little more bumpy. Growth is more uneven and less clear about where it is headed."
The reason, not surprisingly, is the government’s fiscal issues. "Government contractors are in a holding patterns as they wait for more clarity from what the federal agencies will do," he said, adding that warehouse activity based on consumer-related products, by contrast, is still strong.
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