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JENKINTOWN, PA-Continuing its push to be the main clearinghouse for banks' real estate, locally based American Financial Realty Trust has closed on the acquisition of three new office properties net leased for 15 years by an affiliate of Citigroup Inc. The properties, which total 531,000 sf, were acquired for about $89 million. AFR financed its acquisition of the portfolio with $67 million in unsecured debt at an all-in fixed interest rate of 6.45%. The balance was paid in cash.
The properties are in Louisville, KY; Greensboro, NC and Boise, ID. Planned and priced one year ago, the three transactions are the first acquisitions under AFRT's "landlord-of-choice" program, wherein its bank clients pre-select AFRT to own new facilities they are having built by a third party developer. In this case, the developer was Dallas-based Koll Development.
AFRT chief executive Nicholas Schorsch tells GlobeSt.com the program is a natural extension of its other offerings, which have grown the company from $250 million in assets in 2002 to today's total of $4 billion in 120 markets. The offerings include arrangements whereby AFRT will purchase every vacant branch in a bank's portfolio, execute multiple sale-leaseback transactions, and acquire larger bank portfolios that include offices, operations centers and bank branches. Approximately 90% of the company's revenue is derived from financial institutions through net leases or bond leases.
"We allow the banks relocation rights within our portfolio or substitution rights, giving them flexibility not usually allowed by other buyers," says Schorsch. "All of the programs are about being an efficient option for the disposition and re-utilization of bank properties, a clearinghouse that offers a fixed cap rate, no mark up and no middle man."
Schorsch says the current goal is to at least double the company's portfolio to $8 billion. This year, he says the company will acquire a minimum of $500 million of assets in 2005, not including this latest deal, and likely much more. Last year, the company made $2 billion in acquisitions "without a merger," adds Schorsch.
The company went public in mid-2003 via an $800-million IPO that was oversubscribed 18 times. The IPO price was $10 per share. Shares closed the first day of trading at $14.25 and rose steadily to a peak of $18.44 in January 2004. Shares hit a low of $13.30 in August 2004--due to profit taking when the REIT market got his last year, says Schorsch--and now is trading in the low $15 range.
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