Colonial Properties selling part of portfolio

Birmingham-based Colonial Properties Trust Inc., which owns the AmSouth Center and several other properties in Huntsville, plans to sell most of its office and retail holdings to focus on its apartment rentals.

The real estate investment trust owns a mix of multifamily, office and retail properties. In a news release Wednesday, the company said it is stepping up its plan to focus on multifamily housing and, over the next six to 12 months, plans to sell most of its wholly owned office and retail assets into a series of joint ventures. Other office and retail assets will be sold outright.

The company didn't identify specific assets to be sold.

Colonial's Huntsville holdings include Colonial Promenade Madison shopping center and office buildings such as the DRS Building, Colonial Center at Lakeside, Colonial Center at Research Park, Perimeter Corporate Park, Progress Center, Research Park Office Center, Research Park and the AmSouth Center downtown.

Parkway Place mall is a partnership between Colonial and CBL & Associates Properties Inc. of Chattanooga.

Colonial plans to retain the development, leasing and management expertise, the company said in the release.

Colonial's apartment complexes in Huntsville are Colonial Grand at Edgewater, Colonial Grand at Madison and Colonial Village at Research Park.

The company also owns Colonial Mall in Decatur.

Colonial, through its subsidiaries, owns a portfolio of multifamily, office and retail properties in the Southeast. The company performs development, acquisition, management, leasing and brokerage services for its portfolio and properties owned by third parties.

Last week, the company said it bought five multifamily communities in Arizona, Georgia, Texas and North Carolina for $171.7 million.

Once the sale of its nonresidential holdings are complete, the company estimates that annualized net operating income from multifamily operations will be about 80 percent of the company's total net operating income, compared with about 50 percent today.

"The successful execution of this plan will accelerate our strategic objective of becoming a multifamily focused REIT," Colonial CEO Reynolds Thompson said in the release. "Given the current cap rate environment and availability of capital, we feel that now is an optimal time to maximize the value of our commercial assets and complete the realignment of our portfolio.

The company expects gross proceeds of $1.5 billion to $1.7 billion from the sale of its commercial assets to various joint ventures and the outright sale of its additional office and retail assets. The company intends to retain a 10 to 20 percent interest in each of the joint ventures and receive market-based management fees.

"Proceeds from the sale will primarily be used to reduce the company's leverage and pay a special dividend," said Weston Andress, Colonial president and chief financial officer. He said the company would not provide annual earnings guidance until the shift is complete.

Colonial shares, traded on the New York Stock Exchange, closed up a penny at $47.57 on Wednesday.