The REIT recently reported 2000 funds from operations of $3.36 per diluted share, 3.4% higher than 1999. However, fourth-quarter FFO was up 14.1% over the same period in 1999 to $0.89.

"Despite the nation's economic downturn, the metropolitan Chicago industrial property market remains surprisingly active. This is perhaps due to its sheer 1.25-billion-sf size and the incredible diversity of its customer base," says chief investment officer Paul Ahern. "Nonetheless, we have budgeted and operate under the assumption that the market will slow down and rents will flatten until the economy picks up. On the other hand, we fully expect to see some very attractive re-development opportunities ascompanies are forced to shed capacity."CenterPoint recently announced a three-part capital plan by raising $65 million by issuing 1.5 million shares of common stock, monetizing its Burlington Northern ground lease at the Joliet Arsenal and selling participation in tax increment financing revenues from the intermodal distribution park.

"I think it's been three or four years or more since we've seen the redevelopment opportunities," Ahern commented during a recent conference call. However, the market still sees a low volume of investment packages, and competition for them is high, he adds. The REIT did acquire $102.9 million in properties in 2000, buying at an initial yield of 11.3%.

Mass grading has begun at the Joliet Arsenal, and the REIT still expects to begin delivering buildings in the summer of 2002, Ahern says. The REIT is encouraged by news the Joliet-Plainfield residential housing market not only is one of the fastest growing in the region, but one of the most affordable at $110,000 sales prices, which bodes well for a deeper labor pool for Joliet Arsenal employers.

The REIT sold 50 buildings for $162.9 million in 2000, and the breakdown of buyers was 40% to pension funds, 34% to users, 16% to participations in 1031 exchanges, 6% to developers and 4% to cash-flow investors. "I think you'll see this rise a bit," Ahern says of the smallest category.

Meanwhile, tenants are seeking longer leases because of their investment in technology needed to run their businesses, president and CEO John S. Gates Jr. observes.

The capitalization rate was around 9% for the REIT's fourth-quarter property sales, Ahern says. The REIT's portfolio of 31 million sf was 95.9% leased and occupied at the end of the year.