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CHICAGO-Two billion down, another one billion to go. Equity Office Properties Trust has hit the lower end of its 2005 property sales goal, shedding 99 assets for $2.1 billion, but could exceed the $3-billion top end of its target.

“We have a strong pipeline in the market,” said president and chief executive officer Richard D. Kincard during his company’s second-quarter earnings conference call. So far, the largest US office REIT has exited the Cleveland and Philadelphia markets, as well as the New Orleans Central Business District, he reported.

Sales this year have been at 3% cash yields, Kincaid added, and included assets totaling 11.1 million sf that were 78% occupied. In addition, the unleveraged internal rate of return of 5% compares to 8.4% for all of the REIT’s 2004 sales, he said. “That’s not a level we find acceptable, but we’re selling our most challenging assets this year,” Kincaid explained. “The pension fund advisors are definitely getting more aggressive than what they used to be.”

While the market favors Equity Office Properties’ efforts to reposition its portfolio, the REIT’s acquisition team has looked at $6 billion in potential deals, Kincaid said, but has been outbid, on average, by 14%. So far, Equity Office Properties has paid $484 million for 25 assets totaling 2.1 million sf. That buying volume will increase to at least $989 million in the third quarter, when the REIT expects to complete its purchase of 1095 Avenue of the Americas in New York City. “It’s very challenging,” Kincaid said. “What we do is pick our spots, but we look at everything…We’ve bought more than we thought we would.”

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