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OAK BROOK, IL-Great Lakes REIT expects its Midwest US suburban office occupancy rate to slip to 85% in 2002, down from its current 88.1% rate. As a result, funds from operations should remain fall compared to this year, company officials warn.

After posting funds from operations of $2.15 per share in 2000, the REIT recently said FFO this year should be between $2.23 and $2.25 per share.

“We anticipate FFO growth will be flat in 2002 because of the economic slowdown and a lower occupancy rate,” says Chairman and CEO Richard May. “However, we expect rent increases to offset much of the impact of occupancy declines and are comfortable with FFO estimates in a $2.18 to $2.22 per share range.”

Great Lakes has leases on 1.2 million sf – nearly 25% of its portfolio — expiring in 2002. Renewals have taken 274,000 sf off the market, and the company expects to renew another 490,000 sf. That leaves 482,000 sf. However, the REIT expects net rent increases of 10% because most of the expiring leases are at below-market rates.

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