Great Lakes REIT acquired a 458,150-sf medical office portfolio from Advocate Health Care for $59.6 million in 2002. With minimal vacancies, most of the buildings are on hospital campuses. LaSalle Investment Management is expected to close on the sale by the end of March, according to Great Lakes REIT.

The 320,848-sf Court International building at 2550 University Ave. West in St. Paul's Midway District was redeveloped and renovated in 1985. The 97,658-sf University Office Plaza at 2221 University Ave. Southeast shares one similarity to the coveted medical office portfolio--it is near the University of Minnesota's hospital.

However, combined occupancy at both properties was less than 80%, according to the company's most recent supplemental earnings report. With net operating income on track to come in just shy of $4 million, the deal with Fortis Asset Management, also expected to close by the end of March, is at a 9.3% capitalization rate.

The merger with Transwestern's Aslan Realty Partners II is scheduled to close in second quarter 2004. The three deals are not contingent on any of the others closing.

"We believe that these transactions are in the best interests of our shareholders, particularly given the difficult market conditions in which we have been operating for the past few years," says Great Lakes REIT chairman and CEO Richard A. May. Great Lakes REIT hired Cushman & Wakefield of Illinois Inc. in April as well as Houlihan Lokey Howard & Zukin Financial Advisors Inc.

"The transactions announced today are the culmination of an exhaustive process that we and our advisors have conducted over the past several months, and the amount to be received in cash by our shareholders in connection with these transactions represents a premium over the $14.50 per share closing price on the last trading day prior to our announcement that we were pursuing strategic alternatives," May adds. Great Lakes REIT shares opened at $15.98 but fell more than 1% during the first hour of trading Thursday morning.

May went on to say, "In addition, the merger agreement with Transwestern gives us an unusual level of flexibility to pursue the sales of some of the properties in our portfolio for values that exceed the values ascribed to these assets by Transwestern."

Instant Insights /

Great Lakes REIT Fetches Offers Worth $350M

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