The agreement has been slightly altered since the earlier announcement. It contains 11 fewer properties, but about 200,000 additional sf, and raises the overall price by $24 million, which adds about $1.20 to the price-per-sf in the earlier agreement.

Under this agreement, BofA will lease back approximately 4.7 million sf, or about 61% of the portfolio for 15 years at an annual triple-net rental rate equal to approximately 8.6% of the purchase price for the leased space. In addition, the seller is entitled to occupy an additional approximately 1.5 million sf, or 20% of the portfolio, rent free for a weighted average term of six months.

A number of additional lease options are included in the deal. BofA can reduce its long-term leased premises by up to 200,000 sf after the end of the second lease-year for a termination fee of about $3 per sf and up to another 200,000 sf after the end of the third lease-year for a termination fee of about $4.50 per sf. Furthermore, BofA can reduce its long-term leased premises by up to 150,000 sf after three-and-a-half and eight-and-half lease-years without penalty. These rights are cumulative. If BofA doesn't exercise the termination rights in any year, they carry into future years.

Prior to closing of the deal, the locally based financial REIT also plans to negotiate an agreement giving BofA the right to lease space throughout the AFR portfolio at fair market value in exchange for BofA's termination of leased AFR space it already occupies, including the properties in this most recent transaction.

Approximately $315 million of AFR's financing for this acquisition will come from its Deutsche Bank warehouse line of credit, which has been raised to $400 million at an interest rate of Libor plus 1.75%. According to an 8-K filing with the SEC, in first quarter 2005, AFR plans to negotiate permanent secured financing of up to $350 million on the portfolio.

Acquisition of the BofA portfolio comes within a week of AFR's $512-million sale-leaseback agreement with Wachovia for a 140 properties. Wachovia is leasing back about 4.7 million sf of the portfolio's 7.6 million sf.

Instant Insights /

GlobeSt.com UPDATE: AFR Pays $570M for 252-Property BofA Portfolio

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