Denholtz Management Corp. continues its due diligence involved in a proposed sale of the REIT's assets for $226 million, says Interim president and chief executive officer L.G. Schafran. Denholtz Management Corp. must pay an additional $1.5 million on March 31 in order for the proposed sale to continue to proceed toward closing.

Meanwhile, former president Leonard G. Levine is scheduled to give a deposition March 21, Schafran says, in a court case involving his August 2000 suspension as well as an attempt to stop the asset sale to Denholtz.

The net income drop is due largely to the REIT's sale of five properties in 1999 for $4.1 million. Otherwise, net income is up 4.2% when compared "store-to-store" from 1999 to 2000, says chief financial officer Joel L. Teglia. Also, a drop in revenue from $10.3 million to $9.7 million is attributable largely to the sale of the five properties, Teglia adds.

Although the REIT's occupancy rate fell from 88% in the fourth quarter of 1999 to 85% at the end of 2000, same-store revenue was up 4%, Teglia says. "The nature of our vacancies changed," Teglia says, explaining the REIT had 150,000 sf of vacant, but less costly, warehouse space in 2000. In the fourth quarter of 1999, the vacancies included more expensive office space, he adds.

Occupancy is up to 87% in the first quarter of 2001, says Charles V. George, vice president of asset management. Significant improvements were seen at six properties:* About 33,000 sf recently became available at 145,700-sf Technology Park in Norcross, GA but was re-leased with no downtime.

* The namesake tenant at the 79,200-sf Colonial Penn Building in Tampa, FL decided to reduce its space, putting 21,000 sf on the market. That space has been re-leased and the building is 100% occupied.

* Three new leases at 127,800-sf University Corporate Center in Winter Park, FL have increased occupancy from 76% to 93%.

* Federal Express left the 87,800-sf Airways Plaza Office Center in Memphis, TN for a two-million-sf facility, but leasing efforts have increased occupancy from 19% to 36%.

* Banyan has leased 42,000 sf to two tenants in the 87,100-sf Newtown Business Center in Lexington, KY.

* The 140,800-sf Elmhurst Metro Court in that western suburb is now 92% occupied after vacancy hit 35%.

Meanwhile, George conceded the REIT remains concerned with the 322,100-sf 6901 Riverport Drive in Louisville, KY, which is 45% vacant. The market there has softened, George says, and the REIT is adjusting its marketing strategy.