BRE Properties Boosts Portfolio

BRE Properties, Inc. (BRE), a real estate investment trust, recently acquired Lafayette Highlands, an 8.2-acre property in Lafayette, California for $48.75 million. The company funded the acquisition with proceeds from the company’s revolving credit facility. The acquired property is 95.0% occupied.

BRE Properties primarily engages in the development of the land parcels and new apartment communities. The properties of BRE are usually located near business, transportation, employment and other valued amenities of city life, which are essential for customers who value the service and flexibility of rental living.

This acquisition is a strategic move on the company’s part to allocate additional capital in the San Francisco Bay Area. The 150-market rate community is located in this bay area with high barriers to entry and has an attractive mix of two-three bedroom apartment homes appealing to residents. With this transaction BRE Properties expects to consolidate its position in the Californian market.

BRE Properties develops, acquires, and manages multi-family apartment communities primarily in major metropolitan markets of Southern and Northern California and Seattle. The company maintains healthy occupancy levels and high operating margins through operating efficiencies and cost controls, and by deploying new and recycled capital to supply-constrained markets of the Western US. This provides a compelling growth potential to the company.

BRE Properties currently retain a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, Equity Residential (EQR - Analyst Report) also holds a Zacks #3 Rank.

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