Charles Schwab Selling 823,500 SF in Property, Leaseholds

SAN FRANCISCO-American Financial Realty Trust of Jenkintown, PA, says it is acquiring 823,500 sf of property and leasehold interests in San Francisco from locally headquartered Charles Schwab. Scheduled to close late this month or next, the transaction will include the purchase of a 373,500-sf class A office building from Schwab, which will lease back the building, and the purchase of Schwab’s leasehold interests in three other buildings in Northern California totaling 450,000 sf. American Financial says Schwab does not occupy the leasehold properties, but has subleased approximately half of the leased space to third party tenants. Regarding the office building purchase, American Financial says the purchase price will be determined by an appraisal process and Schwab’s annual rental payments will be calculated as a percentage of American Financial’s purchase price, including all transaction-related expenses. Neither party is releasing detail yet on the buildings involved in the transaction or the purchase price. According to Charles Schwab’s March 2003 10-K filing with the SEC, the company’s corporate headquarters and its principal executive offices are located in leased office space, totaling 433,000 sf, at 120 Kearny Street in San Francisco. The leases have expiration dates that range from 2009 to 2011, and include two five-year extension options at the then current market rates. Schwab also leases a 28-story building at 101 Montgomery Street in San Francisco, according to the filing. The building contains 296,000 sf and is leased by Schwab under a term expiring in the year 2010. Schwab has three successive five-year options to renew this lease at the then current market rates.Schwab also has a lease for 412,000 sf of office space located at 211 Main Street in San Francisco that serves as the corporate technology support center. A portion of this lease expires in 2010 and has one five-year extension option at the then current market rates, while the remaining portion of this lease expires in 2018 and has two seven-year extension options at the then current market rates. A subsidiary of Schwab leases a building, totaling approximately 372,000 sf, located at 215 Fremont Street in San Francisco. Upon the expiration of this lease in June 2005, the company may renew the lease for an additional five years subject to certain approvals and conditions, or arrange a sale of the office building to a third party. The company also has an option to purchase the office building for $245 million at any time after June 18, 2003.In addition to these locations, Schwab leases space in other buildings for its San Francisco and Pleasanton operations aggregating an additional 831,000 sf.