MINOT, N.D. — Investors Real Estate Trust (NYSE: IRET) has closed on the sale of 34 commercial office properties for $250 million, netting the company $129 million in cash.
The closing was the first of several portfolio sales the company anticipates will occur in its fiscal 2016 second quarter, which began Aug. 1. IRET previously announced it is divesting of its office and retail portfolios with the objective of focusing its portfolio strategy.
Proceeds from the first sale will be reinvested in several projects including acquiring a $56 million multifamily property, commencing construction on a $31.5 million multifamily development and paying down $66 million on the company’s line of credit.
“We are excited to be able to fully deploy our energy and focus on growing our multifamily segment,” says Tim Mihalick, CEO of IRET. “We see an excellent opportunity to be a best-in-class owner operator in this property segment.”
Acquisitions/Developments: IRET has signed a purchase agreement for a 276-unit multifamily community in Rochester, Minn., for $56 million. The Class A townhome-style property will add to the company’s portfolio in the market. The company also will commence construction on a 202-unit Class A apartment community in a suburban market in Minneapolis.
Share Repurchase Authorization: IRET’s board of trustees has authorized a share repurchase program of up to $50 million of its common shares.
“Our board of trustees and executive management strongly believe that the value of our strategy to focus the portfolio, deliver on our development plan and grow earnings with a stronger balance sheet are not reflected by the company’s current stock price,” says Mihalick. “This authorization demonstrates our confidence in the strength of our business and commitment to delivering shareholder value.”
IRET’s stock price closed at $7.14 on Tuesday, Aug. 4, down from $8.54, a drop of 16.4 percent, one year ago.
Investors Real Estate Trust is a self-advised equity real estate investment trust. Its business consists of owning and operating income-producing multifamily residential, healthcare, and commercial properties located primarily in the upper Midwest states of Minnesota and North Dakota. Investors Real Estate Trust is based in Minot, and has additional offices in Minneapolis and St. Cloud, Minn.
— Haisten Willis