American Finance Trust to Acquire a $1.3 Billion Portfolio of Power, Anchored and Grocery Centers
December 20, 2021 | American Finance Trust
American Finance Trust, Inc. (Nasdaq: AFIN) (“AFIN” or the “Company”) announced today that the Company, through its Operating Partnership, entered into a definitive agreement to acquire a portfolio of 81 Multi-tenant Power, Anchored and Grocery Centers2 (the “Transaction”) from certain subsidiaries of CIM Real Estate Finance Trust, Inc. for $1.3 billion, representing a 7.19% cash capitalization rate3. The Company also announced that it entered into a definitive agreement to dispose of a non-core portfolio of three office buildings leased to Sanofi S.A. for $261 million, representing a 6.38% cash capitalization rate and a $10 million increase from its original purchase price. Both transactions are expected to close during the first quarter of 2022 and the Company expects the net financial impact of the transactions will be immediately accretive to AFFO per share.
The acquisition is expected to be funded through a combination, to be determined at closing, of cash, including the anticipated $261 million of proceeds from the sale of its Sanofi office asset, borrowings under the Company’s credit facility, property level debt the Company will seek to assume and $53 million of equity issuance to the sellers. The acquisition is expected to result in a near term increase in leverage and AFIN plans to resume its previously announced and successful deleveraging initiative and expects to return to leverage levels consistent with recent quarters over time. Upon closing, the Company will be the preeminent REIT focused on Necessity-Based retail with a best-in-class portfolio that will comprise over 1,000 properties, 29 million square feet and $382 million in annualized straight-line rent. In connection with the Transaction, the Company will be rebranded to “The Necessity Retail REIT | Where America Shops and trade under the new ticker “RTL”.
“This immediately accretive off-market transaction represents a unique value creation opportunity. We are adding significant scale while further enhancing our best-in-class portfolio with pandemic-tested assets on accretive terms,” said Michael Weil, CEO of AFIN. “On a pro forma basis, with these additional properties our portfolio will comprise approximately $5 billion in real estate investments, at cost, increase multi-tenant occupancy to 91%, which includes executed4 and pipeline leases5, reduce our top 10 tenant concentration from 39% to 30% of SLR and reduce our office exposure to just 1% from 7%. The Company’s unique and complementary necessity-based asset mix of long-term single tenant net leases and necessity-based multi-tenant portfolio with significant leasing upside that positions us for sustained growth, supported by a dedicated asset management and leasing platform with decades of experience. Our best-in-class portfolio that will be rebranded as the preeminent Necessity-Based retail REIT, will focus on tenants and locations where America shops and partner with leading brands such as Wal-Mart and Publix.”
