Elimination of the debt is related to the locally based REIT's first-quarter disposition of 27 non-core properties with an aggregate of about 1.3 million sf. Among them were two largely vacant, or soon-to-be-vacant, buildings with a total of more than 918,000 sf. During a conference call, Dave Nettina, CFO, said the debt related to the dispositions had an average constant rate of 7.55%, "which is above the company's average debt constant of 6.76%."

During the call, Nicholas S. Schorsch, president and CEO, said the dispositions and elimination of high debt reflected "good progress as we were able to continue the repositioning of our balance sheet." Also on the positive side, he said, was the execution of nearly 450,000 sf of new leases and the acquisition of additional bank branches. "These factors were somewhat offset by higher seasonal operating expenses," which included higher utility costs and snow removal.

The financial-industry specialty REIT also reported a net loss of $23.4 million for the quarter, which compares with a net loss of $22.1 million for the same quarter of the previous year. AFR lowered its 2006 guidance to have adjusted FFO of between $136.8 million and $148.8 million, excluding gains from assets sold to Resnick Development Corp. The earlier guidance was for FFO of between $149 million and $164 million.

The company expects to dispose of additional non-core properties in second quarter. In addition, Nettina said it plans to reduce a cost of about $2.3 million by bringing its larger buildings under self-management. This will occur as its third-party management contracts for those properties expire.

The company's portfolio now has an average rent rate of $14.39 per sf and generates $6.4 million a year. Stabile occupancy in the portfolio at the end of first quarter was 87.4%, up 1.1% over the final quarter of 2005. Following release of the quarterly financials, AFR's stock slid to a 52-week low of $9.99 a share, and by mid-afternoon inched up to $10.03 a share, suffering a one-day loss in excess of 10%. The 52-week high of $16 a share occurred on June 17, 2005.