Great Lakes Real Estate Investment Trust is selling its office properties to an affiliate of Transwestern Investment Co. LLC. Great Lakes also has agreed to sell its medical office building portfolio to LaSalle Investment Management for roughly $69 million.
"We believe that these transactions are in the best interests of our shareholders, particularly given the difficult market conditions in which we have been operating for the past few years," says Dick May, chairman and CEO of Great Lakes.
The various deals value Great Lakes at roughly $250 million, a sum that analysts pegged as impressive for what they view as a faltering company. Indeed, AG Edwards cited "poor market locations" and "average to below average quality of its properties" as two reasons why it’s unlikely that Great Lakes will find a higher price for their portfolio.
The Great Lakes office portfolio is scattered throughout many of the nation’s weakest suburban markets such as Chicago, Minneapolis, Detroit and Columbus, Ohio. Average vacancy among the properties is about 30%, which is likely to be compounded in the next few years as leases rollover.
Transwestern will pay around $15.53 per share of Great Lakes. Shares of Great Lakes closed at $15.98 on Jan. 21.