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JENKINTOWN, PA-American Financial Realty Trust signed a contract to acquire a portfolio of 112 properties aggregating approximately 3.2 million sf from Birmingham, AL-based Regions Financial Corp. It is the "Southeastern US portfolio," one of six proposed acquisitions the locally based financial REIT identified by region during its first-quarter earnings conference call on May 3, when this portfolio's owner was an unnamed "major commercial bank."

AFR's director of public relations confirms the price at $114 million, which represents a cost of approximately $35.63 per sf, and tells GlobeSt.com it consists of 34 branches with the balance in "small office buildings." Regions currently occupies 43% of the portfolio and is leasing back that space for 15 years. The portfolio includes 37 properties that are substantially vacant and deemed "non-core." AFR intends to sell them.

"The goal of the sale-leaseback project is to reduce long-term occupancy operating expenses," said Charlie Rasor, Regions' SVP and corporate services director, in a statement. "We are selling properties where Regions has significant unused or underutilized space and consolidating our operations into the appropriate size configurations," he added calling real estate efficiencies an important part of achieving the Regions-Union Planters' merger cost save objectives.

A merger between Regions and Memphis-based Union Planters Corp. was finalized in June 2004. As a consequence, at the end of March 2005, Regions had $84.3 billion in assets and ranked among the country's top 15 financial providers. Together, Regions and Union Planters operate approximately 1,400 offices across 15 states in the South, Midwest and Texas. Morgan Keegan Co., its investment and securities brokerage, trust and asset management division, operates from approximately 250 offices.

"This transaction runs to the core of our acquisition strategy, as it includes both bank branches and office buildings and expands American Financial's presence in the Southern part of the US," says Nicholas S. Schorsch, president and CEO, in a statement. The other five acquisitions in AFR's pipeline include a 53-property portfolio totaling 598,000 sf, primarily in the Northern US; three office buildings aggregating 924,000 sf in the Southeast, Southwest and Central US; and a 70% interest in a 535,000-sf building in the Midwest. The aggregate price for these acquisitions is estimated at $164 million. All are expected to close this quarter.

In an unrelated matter, James T. Ratner, AFR's EVP for finance and corporate strategy, resigned. "Having contributed to AFR's growth to over $4 billion in assets, I believe that now is the time to pursue other challenges, both personal and professional," he says in a statement, adding, "I…feel privileged to have been part of its growth."

Instant Insights /

GlobeSt.com UPDATE: AFR Will Pay $114M for Regions Financial Portfolio

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