Michelle Napoli is editor of Net Leaseforum, from which this article is excerpted.

|

Oak Brook, ILInland American Real Estate TrustInc., based here, is buying 216 properties in a sale-leasebackwith SunTrust Banks Inc. According to a Securities andExchange Commission filing by the REIT, the 1.15 million sfportfolio consists of eight office buildings and 208 single-tenantretail banking facilities. Located in eight states and the Districtof Columbia, the properties are garnering an all-cash price of$374.9 million.

|

As part of the agreement, Atlanta-based SunTrust will net leaseback all of the retail facilities for 10 years, with the option torenew the leases for another 10 years and then six additionalfive-year periods. The biggest geographic concentration in theportfolio is in Florida, where there are 77 properties. Theportfolio's average base rental income to Inland American will beapproximately $27 million, with the lease terms including a 1.75%annual base rent increase. SunTrust announced in June that itplanned to pursue a sale-leaseback strategy for nearly 475properties in the Southeast and mid-Atlantic, including 48 officebuildings and the rest retail branches.

|

From small branch locations to larger office buildings, bankfacilities have become a staple in the net lease property market.Just recently, for example, affiliates of New York City-basedJPMorgan Chase & Co. sold a portfolio of 3.6 million-sfof commercial space to the opportunistic real estate investmentsgroup of Brookfield Asset Management. The $300-millionpurchase included 52 properties in 14 states, and the bank “signedlong-term leaseback agreements for significant portions of thespace,” according to an announcement from Toronto-basedBrookfield.

|

Last week, initial bids were due for a portfolio of 47 metro NewYork Citibank branch properties that are being marketed forsale by the bank's investment banking division, Citigroup GlobalMarkets Inc. and Newmark Knight Frank. The properties, whichtotal more than 157,000 sf in New York City's five boroughs as wellin Nassau, Suffolk and Westchester counties, are expected to bedouble-net leased back by the bank for 15-year terms plus renewaloptions with annual rent increases.

|

“The response is strong,” Newmark senior managing directorKenneth Zakin told NET LEASE forum prior to the biddeadline, putting the number of parties that have expressedinterest at about 100, including net lease players, a few REITs andlocal New York area investors. “What's attractive particularlyabout this portfolio is we are prepared to break it down tosub-portfolios,” Zakin says.

|

“It's a huge bank with great strength,” he adds. “The corebusiness for the retail business is the branch network.” Zakin, whoruns Newmark Knight Frank's 1031 exchange business and looks atnet-leased properties around the country, says bank properties arepopular with many investors.

|

“The perception is banks don't move. They put a lot of moneyinto a location, they establish a business at that location,” hecomments. “It's a relatively safe and attractive fit, as long asthe bank has decent credit. So I think it's a very attractiveproduct type.”

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.