Leo Wells is one busy man. Last week, Wells—president and CEO of Atlanta-based Wells Real Estate Funds—officially sold off $786 million of the Wells REIT I office portfolio. The 27-property disposition marks a clearly defined strategy shift for one of the nation’s largest office syndicators, who has earned a reputation over the past few years as one of the nation's most acquisitive unlisted REIT chiefs. Wells-sponsored programs own roughly $6 billion worth of office properties nationwide.

“When you buy a great real estate portfolio piece by piece, you have to look at the whole thing together and ask ‘does it fit’?” said Wells during a phone interview last Friday morning.

With that in mind, he assigned a team of senior Wells executives to analyze the REIT I portfolio late last year. The process, says Wells, took into account market location, lease expirations, tenant mix and economic projections for each market. As a result, the team singled out roughly 30 office properties that could ideally be sold—assuming the demand was there.

“That wasn’t a problem,” notes Wells. “There were plenty of folks out there interested in these properties, and this wasn’t a strategy to just sell off some dogs.”

So will Leo Wells become a net seller for 2005? Not quite, says Wells, adding that he plans to buy roughly $1.5 billion worth of office properties this year alone. The $188.9 million gain from this most recent sale will help finance those deals, but Wells says that the bulk of that sum won’t just be plowed into acquisitions. Instead, he says that his recommendation to the Wells board is to pay out a special distribution to investors.

In the past, Wells has focused on stabilized office assets leased to a handful of credit tenants. But the national office market is recovering, and that's turning vacancy into a commodity in some markets. Wells, however, isn’t convinced.

“We don’t plan to buy vacancy now,” says Wells. “What you might see from us is maybe buying a property with 40% vacancy on enough three- to five-year leases that will get me out far enough to where the market is really improved.”

If Wells’ existing rent rolls are any indication, extremely early renewals might come in handy if the market continues to firm up fast: the average remaining lease terms for both REIT I and REIT II are relatively long. REIT I averages 7.5 years while REIT II averages 9.5 years, according to Wells.