BGE Sells Real Estate Arm to Focus on Core Business

Article excerpt

Baltimore Gas and Electric Co. announced yesterday that it is getting out of the real estate business with the $203 million sale of a development unit that owns a string of office buildings and shopping centers throughout the region.

Corporate Office Properties Trust, a Philadelphia-based real estate investment trust, said it will buy BGE's Constellation Real Estate Group Inc., establishing the company as a major player in the Baltimore-Washington real estate market.

The deal marks an end to a rocky BGE experiment in diversification as it focuses on its core energy business.

Constellation has developed and leased more than 3.3 million square feet of office and retail space. It is building Annapolis Exchange, a 10-story, 200,000-square-foot office tower outside Annapolis. But the company struggled through the post-1980s real estate slump and lately has been a drag on BGE's earnings.

Last year, Constellation took a $31.9 million write-down on one of its biggest projects, the 2,000-acre Piney Orchard planned community in Odenton. But the development, which BGE will keep, is still carried on the company's books as a $130 million asset, said Constellation President Randall M. Griffin, who will continue to work out of his office in Columbia after becoming Corporate Office's president and chief operating officer.

"That project is doing very well," he said. "It's 40 percent of the Anne Arundel market."

Constellation also took a $12 million write-down on an entertainment complex in Orlando, Fla. BGE will keep that project and expects to conclude a sale soon. …