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WashREIT to Expand Multifamily Portfolio With $461M Purchase

Zacks Equity Research

Washington Real Estate Investment Trust WRE, also known as WashREIT, recently entered into a definitive agreement to acquire a multi-family portfolio of 2,113 units located in the Washington metro region,for nearly $461 million.

The portfolio consisting of seven suburban Class B apartment communities is situated in northern Virginia and Montgomery County, MD. The purchase will expand the company’s multi-family unit count by 50% to nearly 6,400 units, making it a preeminent leader of value-add multi-family properties in the Washington Metro region.

With easy access to prime employment hubs and close proximity to major highways, the portfolio enjoys high occupancy of 95%. Furthermore, through redevelopment efforts, the buyout offers value accretion opportunities. In fact, the company expects to execute appropriate value-add unit renovations across the portfolio. Upgrading these strategically-located and easy accessible communities will likely enable the company to command more rent.

The company will likely acquire the properties through multiple deals in the current quarter. Further, it intends to dispose selective commercial assets to fund the acquisition. These dispositions are expected to close in third-quarter 2019. Prior to completion of the asset disposals, WashREIT has access to secured loan commitments for interim funding purposes.

Amid favorable demographic trends, the company’s focus to strengthen its multi-family portfolio bodes well. In fact, demographic growth continues to be upbeat in the young-adult age cohort, who cannot afford home ownership or steep rents at urban infill locations and hence, are highly inclined to rent.

Hence, these Class B suburban multi-family units offering convenient transit access and larger living spaces will likely meet the needs of the targeted renter cohort. In fact, management believes fundamentals of this real estate asset class will likely remain strong, backed by growth in the renter bracket over the next five years and moderate supply.

Over the past three months, shares of this Zacks Rank #3 (Hold) company has gained 23.1% outperforming the industry’s growth of 16.2%.


 

Stocks to Consider

Investors can consider better-ranked stocks from the same space like Terreno Realty Corporation TRNO, Cousins Properties Incorporated CUZ and Boston Properties, Inc. BXP, carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Terreno Realty’s funds from operations (FFO) per share estimates for 2019 remained unchanged at $1.42, in the past month. In addition, it has a long-term growth rate of 8.40%.

Cousins Properties’ Zacks Consensus Estimate for first-quarter 2019 FFO per share has been revised marginally upward to 20 cents in the past month. Also, it has a long-term growth rate of 3.50%.

Boston Properties’ FFO per share estimate for the ongoing year has been revised marginally north to $6.93 in seven days’ time. Additionally, it has a long-term growth rate of 6.30%.

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