Fund Offers to Buy 1M Shares of Wells

In a SEC filing, Sutter Opportunity Fund 3 LLC and Robert E. Dixon are offering to buy up to one million shares in Wells Real Estate Investment Trust for $7 million cash or $7 per share. The offer's deadline is Jan. 14.

Sutter and Dixon say they are making the share purchase offering "for investment purposes only and have no present intention to seek control of the company, management or operations of the company."

In addition, Wells is negotiating to sell about 20% of the company's 30 million sf of office and industrial space initially acquired for $5 billion, according to an 8-K filing with the SEC. Based on the company's numbers filed with the SEC, the potential sale could amount to six million sf valued for at roughly $1 billion. It would be the largest office and industrial portfolio sale in the Southeast in the last decade and the biggest deal the Wells fund has completed in 20 years, area brokers tell GlobeSt.com. In a letter to shareholders, filed with the SEC, Wells president Leo F. Wells says the negotiations deadline is March 31.

At that time, Wells tells shareholders "we anticipate to be able to tell you the terms, sales price and the specific properties involved in this potential transaction." He says "the potential sales prices under discussion are significantly greater than the amount originally paid for these properties, and therefore would generate substantial cash proceeds to the Wells REIT."

Area brokers familiar with the Wells portfolio tell GlobeSt.com the company's estimated 110 properties, initially purchased for an average $100 per sf, could be sold for an estimated $200 to $300 per sf.

"I realize that you probably have questions and would like more information [but] unfortunately, we are unable to provide any more details at this time due to the highly sensitive nature of the transaction," Wells tells shareholders.

At the same time, the Wells chief says the REIT is suspending its share redemption program until the negotiations are completed at the end of March. That means investors can't redeem their stock even for reasons of "death, hardship or other financial reasons."

Wells tells shareholders "the board felt that adhering to the current SRP timetable for redemptions beginning in January 2005 would not provide adequate time for you to make a fully informed decision about all of your potential options."