Despite a 16% overall vacancy for the REIT's holdings, Banyan Strategic Realty Trust vice president and general counsel Robert G. Higgins said the sale was not a result of underperforming assets. "It was a question of enhancing shareholder value," Higgins told GlobeSt.com.

The REIT's new board of directors hired an affiliate of Cohen Financial in early 2000 to study Banyan's holdings, which total nearly 3.6 million sf and house approximately 480 tenants. In July, it gave Cohen the green light to market the portfolio. Cohen told the board the best course of action was to sell the entire portfolio to one buyer rather than piecemeal to multiple buyers. In October, a buyer was found.

Banyan's acquisitions since 1993 grew to 27 properties totaling 72 office and industrial buildings as well as one retail power center in Tucker, GA. The REIT also had multifamily properties in its portfolio until it sold a package of four complexes in Oklahoma totaling 864 units in 1999 for $24.1 million.

In addition to a 16% vacancy rate, Denholtz Associates would inherit a portfolio that could see 14% of its square footage open up this year. According to its most recent quarterly report, the portfolio's most problematic properties included the 322,100-sf 6901 Riverport Dr. in Louisville, KY, with a 45% vacancy rate; and 308,800-sf Lexington Business Center in Lexington, KY, with a 31% vacancy rate. Meanwhile, the 321,600 sf Northlake Tower Shopping Center in Atlanta was 97% occupied, with only about 3,000 sf becoming available in 2001.

Locally, Banyan's portfolio includes five suburban office and industrial properties totaling nearly 600,000 sf: the 200,772-sf Butterfield Office Plaza in Oak Brook; the seven-building, 40,776-sf Elmhurst Metro Court in Elmhurst; the two-building, 5,893-sf Tower Lane Business Park in Bensenville; the three-building 83,330-sf Willowbrook Industrial Court in Willowbrook and the 76,749-sf Midwest Office Center in Oakbrook Terrace. It also owns six industrial buildings in the Milwaukee suburbs of Menomonee Falls and New Berlin totaling 235,806 sf.

However, the majority of space owned by Banyan is in the southeast, particularly the Atlanta market. Besides the 304,082-sf power center in Tucker, GA, Banyan owns four properties in Norcross, GA totaling 10 buildings consisting of 327,275 sf. In addition, the REIT owns three buildings in Atlanta totaling 110,639 sf and two in Suwanee totaling 119,343 sf. Banyan's Florida holdings in Orlando, Winter Park, Sarasota, Tampa and Tallahassee total 734,332 sf.

Higgins said no decision has been made on the REIT's 15 remaining employees, but six have contracts to stay on, according to the most recent quarterly report. In addition, Banyan is in Cook County Circuit Court with its president, Leonard Levine, whom they suspended in August 2000. Levine sued the REIT after his suspension and Banyan subsequently sued him, seeking to reclaim salary and benefits it has paid him and continues to pay him while he is on leave.

Instant Insights /

Banyan Strategic Realty Trust's Assets Under Contract for $226 Mil

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