GlobeSt.com Update: American Financial Buys from Bentley Forbes

SIOUX FALLS, SD-American Financial Realty Trust acquired a 158,000-sf call center here recently for $23.9 million. AFR, a Jenkintown, PA-based REIT focused on acquiring and leasing properties occupied by financial institutions, announced the acquisition as pending in late June and closed on it last week, never naming the seller. This week, Bentley Forbes of Los Angeles revealed itself as the seller. The property, located at 2200 East Benson Rd., is 100% leased through November 2013 to an operating unit of Household Financial Corporation, a subsidiary of HSBC Holdings, plc. The purchase price equates to $155 per sf and included the assumption of $15.8 million in fixed rate debt. Bentley Forbes CEO-president David Cobb says the sale is part of a “strategic portfolio refinement” that includes increasing its portfolio of major market class A office buildings. “Selling assets in today’s market climate is a growth centric strategy, putting more capital in the company’s pipeline that can be reapplied into acquisitions,” says Cobb. “With the strong interest in today’s market for stabilized, single tenant properties, Bentley Forbes is capitalizing on a strong sellers’ position for select properties in its portfolio and preparing for future acquisitions more consistent with its current investment criteria.”While Bentley Forbes will continue to acquire single tenant properties when strategically appropriate, the company is currently focused on acquiring multi-tenanted, trophy-quality assets in major CBD markets.”Indeed, in late May it paid Equity Office Properties Trust $134.8 million for 721,584 sf of class A office space in Preston Commons and Sterling Plaza. Preston Commons is a three-building 418,604-sf campus with direct access to the Dallas North Tollway, Northwest Highway and Preston Road. Sterling Plaza is a 19-story 302,747-sf tower located midway between Dallas’ central business district and North Dallas.”The assets are top of class in the local submarket, possess strong residual value due to high barriers to entry for new, competing development and enjoy a healthy occupancy rate,” says Cobb. “Moving forward, Bentley Forbes will be more focused on the quality of the real estate and its position in the local market as a primary concern, then reviewing tenant occupancy and stability, which of course will always be a consideration when investing.”For AFR, the call center acquisition was the latest in a flurry of acquisition activity following its May sale of 16.7 million shares for net proceeds of $242.9 million. In late June, AFR paid Regions Financial Corp. and affiliates $109 million for 111 properties aggregating 3 million sf. The portfolio is 43% occupied and includes both office buildings and bank branches, located principally in the Southeastern United States. Regions Bank occupies about 1 million sf, or 33% of the portfolio, and has leased its space on a triple-net basis for 15 years. AFR intends to sell 37 non-core and substantially vacant properties in the portfolio “as expeditiously as possible following our purchase,” according to the SEC filing. In early June, it paid $27 million to One Bank NA, a subsidiary of Citizens Financial Group Inc., for 26 bank branches and small office buildings in the Northern US., which Charter One Bank and Citizens Bank will continue to lease. In May, it paid $20.3 million for the 234,115-sf Bank of Oklahoma in Oklahoma City. The 19-story property includes a five level on-site parking garage and is 87% leased, with Bank of Oklahoma representing approximately 40% of the property’s income and occupying 92,280 sf through December 2012. Earlier in the year, AFR acquired 22 properties aggregating just under 1.3 million sf for $237 million. Later this year, it will close on another $140 million in acquisitions, including one individual building, another office portfolio and at least 80 vacant bank branches, according to the company’s SEC filings. The planned purchases include a 532,000-sf office building in the Southeastern US that is 85% occupied for $38.5 million; a 70% interest in a 535,000-sf office building in the Midwest that is 92% leased for $20.3 million, and; through formulated price contracts, 80 or more vacant bank branches for between $60 million and $80 million.