Dividend Capital Buys iStar Commercial Real Estate Portfolio for $1.4bn

Denver based real estate investment trust (REIT) Dividend Capital Total Realty Trust signed an agreement this week to buy a 33-property portfolio from iStar Financial (SFI). The aggregate purchase price for the office and industrial properties, located across 18 different American cities, is approximately $1.4bn. The net rentable square feet available is 11.8m. The properties are primarily leased, with large corporate tenant subject to triple net leases, according to a statement on the transaction. The deal is expect to close next quarter. In the last decade, operations at iStar increased substantially, especially after the firm received investment grade ratings from all three major rating agencies in 2004. Soon thereafter, revenues grew by 168%, total assets increased by approximately 90% and iStar returned total cumulative shareholder returns, including dividends, of 308%. However, during last week’s earnings report for Q110, the situation was markedly different. Adjusted earnings losses to common shareholders are $24.2m, or $0.26 per diluted common share, compared with $141.7m, or $1.47 per share for the Q409. The net income loss was $25.4m in Q110, or $0.27 per share, compared with $159.2m, or $1.65 per diluted common share for Q409. iStar reported a $89.5m of loan loss provisions during the quarter versus $216.4m during the fourth quarter 2009. Calls to Dividend Capital were not immediately returned. Write to Jacob Gaffney. Disclosure: the author holds no relevant investments.