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WILMINGTON, DE-American Financial Realty Trust has acquired Three Beaver Valley Road, a 263,000-sf class A office building here for $51.7 million, including the assumption of $44.8 million in debt. Also part of the deal is a two-story parking garage that is under construction.

Exercising an 18-month-old option, the Jenkintown, PA-based REIT that went public in June acquired the property from First States Wilmington JV LP, an entity controlled by AFR president/CEO Nicholas Schorsch. Shelley Schorsch, AFR’s senior vice president of corporate affairs, and Jeffrey C. Kahn, SVP of acquisitions and development, also owned partnership interests in FSW.

American Financial acquires corporate owned real estate, primarily bank branches and office buildings, from financial institutions. It owns and manages these assets primarily under long-term triple net and bond net leases with banks. Last month, AFR acquired 98 bank branch properties totaling 479,419 sf from Prefco III LP for $90 million, as well as another 31 bank branch properties totaling 153,950 sf from Prefco Quartre LLC for $36.8 million. The Three Beaver Valley Road office development is 100% leased on a triple net basis to American International Insurance Company (a wholly owned subsidiary of American Insurance Group) and Wachovia Bank, National Association. Estimated rental income for 2004 is $4.5 million. In January 2006, under the terms of the lease, Wachovia will vacate its space and American International Insurance Company will take over the entire property.

The property is leased on a triple net basis to American International Insurance Company (a wholly owned subsidiary of American Insurance Group) and Wachovia Bank, National Association. In January 2006, under the terms of the lease, Wachovia will vacate its space and American International Insurance Company will take over the entire property.

The company says it plans to refinance the debt portion of the acquisition in 2004, but did not reveal the interest rate on the debt. For the remaining consideration, AFR issued to the sellers 482,867 units of interest of its operating partnership, First States Group LP, and paid of approximately $130,000 in cash.

AFR says it opted to offer operating partnership units instead of cash for the non-debt portion of the acquisition “because it was a more efficient utilization of our capital and was accretive to our net tangible book value.” The value of the operating partnership units was based n the average closing price for AFR’s common shares for the five business days preceding the closing date, discounted by 7%.

The units are convertible into common shares of AFR on a one-for-one basis or, at the company’s option, into cash. Under terms of the purchase agreement, both Nicholas and Shelley Schorsch are prohibited from converting or transferring their operating partnership units for one year. The other partners of the selling entity are prohibited from converting or transferring their OP Units for six months following the closing date.

AFR began trading on the NYSE on June 25. More than 24 million shares traded hands that day and the company’s share price closed at $14.25. Since that time, shares have traded as high as $15.40 and as low as $13.40. In afternoon trading Thursday, the share price stood at $14.80, up $0.32 from Wednesday’s close.

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