Investors Real Estate Trust IRET, better known as IRET, recently announced the sell-of 10 apartment communities for a total of $78 million. Comprising 969 apartment homes, the communities are located in Sioux Falls, South Dakota, South Sioux City, Nebraska, and Sioux City, Iowa.
The move, which comes as part of the company’s portfolio-transformation efforts, marks the company’s exit of Sioux Falls and Sioux City Markets. IRET plans to end the year with aggregate multi-family dispositions of approximately $188 million.
Meanwhile, IRET completed $169.3 million of acquisitions so far in the year, in an effort to boost presence in its strategic markets. These include SouthFork Townhomes and FreightYard Townhomes and Flats in Minnesota and Lugano at Cherry Creek in Denver, CO.
Located centrally in the Denver metro area, Lugano at Cherry Creek, a 328-home apartment community, offers easy access to a wide range of employment localities. Therefore, the property is likely to command much attention and witness high occupancy.
Moreover, with superior amenities, FreightYard Townhomes & Flats, a 96-home apartment community in the North Loop area of Minneapolis, has an advantageous location that is likely to help win tenants’ attention. In fact, it is one block away from the Mississippi riverfront and is also close to Target Field, First Avenue, Target Center, Minneapolis Farmers Market, and the Minneapolis skyway system.
Notably, the Denver market has grabbed the attention of well-educated workers in knowledge-based industries. Its economy is healthy and diverse. In fact, together with Minneapolis-St. Paul, Denver is a crucial market where IRET intends to enhance its portfolio and achieve operating efficiencies.
The move is a strategic fit as the company plans to use the proceeds to pay down borrowings on its revolving line of credit and for retirement of $12.3 million of mortgage debt. Also, it builds scope for the company to redeploy proceeds for assets with better growth potential in its strategic growth markets.
IRET has made concerted efforts in the past to transmute into a focused multi-family company. It has disposed senior housing, commercial, medical office and other non-core properties, and through disciplined capital recycling, has increased exposure to target markets in Minneapolis and Denver, which augurs well for long-term profitability. The company owned interests in 84 apartment communities, comprising 13,336 apartment homes as of Sep 30, 2019.
IRET currently carries a Zacks Rank #2 (Buy). In the past six months, shares of the company have outperformed the broader industry. While the stock has appreciated 19.1%, the Zacks Real Estate Market has inched up 0.1% during this period.
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Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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