For Gramercy Property Trust GPT, 2016 has been a year of transformation, with the company executing nearly $3 billion in transactions throughout the year. This included $1.4 billion in acquisitions and over $1.5 billion in dispositions.
With these efforts, the company has effectively accomplished majority of the planned portfolio repositioning plan, in half of its projected time span, which looks promising.
Specifically, 34 separate acquisitions were completed by Gramercy in 2016, including one $521-million portfolio acquisition, totaling around 20.1 million square feet of space. This $521-million portfolio acquisition involved the purchase of a 17-property core logistics portfolio. The move came as part of its initiative to enhance its industrial portfolio. The company’s 2016 asset purchases also exceeded its earlier target of $1 billion of acquisitions.
On the other hand, more than $1.5 billion of single and multi-tenant assets, which the company sold, involved 21 separate deals. This reflected its pro rata share of joint-venture assets sold. The dispositions came as part of the company’s previously declared plan of disposing select non-core assets, subsequent to the merger with Chambers Street Properties.
Amidst an e-commerce boom, growth in industries and supply chain strategy transformations; demand for logistics infrastructure and efficient distribution networks has been rising. This, in turn, is creating scope for industrial REITs, including Prologis, Inc. PLD, Duke Realty Corp. DRE and Liberty Property Trust LPT, to flourish.
Gramercy, too, remains well poised to capitalize on this favorable trend. The company has significantly reinforced its industrial portfolio, which now comprises a greater part of the total portfolio (around 70% of its total portfolio is industrial, up from 47% a year ago, per an earlier press release of the company). In addition, as part of its portfolio recycling plan, it has strategically reduced its exposure to office assets. However, asset sales are likely to have a dilutive impact on earnings in the near term, while the rate hike can add to its woes.
Gramercy currently has a Zacks Rank #3 (Hold). Over the past one year, shares of Gramercy ascended 26.8% against the Zacks categorized REIT and Equity Trust – Other industry’s gain of 8.8%.
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