American Financial had 583 properties at an aggregate of 18.2 million sf in its portfolio at the end of this year's first quarter. In one fell swoop, this BofA acquisition would increase the number of properties in the portfolio by 45% and the total sf by 41%.

The BofA portfolio contains 84 office buildings and 179 branch locations. Under the proposed transaction, BofA will lease back 63.5% of the space for a term of 15 or 20 years (at the seller's option) at an annual triple-net rental rate equal to between approximately 8.4% and 8.6% of the purchase price for the leased space. In addition, BofA is expected to occupy about 7% of the portfolio for up to 18 months at an annual rent equal to operating expenses plus $1 per sf.

An additional approximately 11% of the portfolio is currently leased to third-party tenants, leaving about 15% of the portfolio vacant at the time of the acquisition. American Financial expects to complete a definitive agreement for this purchase within 15 days, and, according to the letter of understanding, complete the sale on or before July 31. The location of the BofA properties is not yet disclosed.

During the first-quarter conference call report, American Financial said financing of the two anticipated acquisitions would utilize fixed-rate debt leveraged by the properties' payback, a vehicle the REIT has used in the past.