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BOSTON-American Financial Realty Trust has sold a 30% minority ownership interest in One Lincoln St., also known as State Street Financial Center, to an affiliate of IPC US Real Estate Investment Trust, a publicly held Canadian REIT, at a property valuation of $763.5 million. IPC will acquire the 30% interest for a gross purchase price of approximately $201.1 million.

“This transaction allows AFR to monetize a significant portion of its equity investment in the property, while maintaining majority control of a core, bank-occupied asset,” says Nicholas S. Schorsch, president and chief executive officer of AFR, in a statement. “At the same time we have an opportunity to begin a relationship with IPC, which we hope will lead to other joint venture transactions in the future.”

The property is encumbered by approximately $562.4 million in debt, including approximately $512.4 million of amortizing senior debt at a fixed interest rate of 5.79% for a 20-year term. This results in an overall property valuation–based on IPC’s purchase price–of $763.5 million.

Holiday Fenoglio Fowler LP represented AFR; IPC’s representation was not available at deadline. The property is expected to generate approximately $50.8 million in cash flow for 2005, implying an unlevered capitalization rate of approximately 6.7% for the transaction.

The Jenkintown, PA-based American Financial purchased the recently built, 1.1 million-sf, 36-story office tower from Kingston Bedford JV LLC in February of this year for $705.4 million. Kingston is a partnership comprised of the State Teachers Retirement System of Ohio, Morgan Stanley Real Estate Funds, the Gale Co. and Columbia Plaza Associates.

The office tower is 100% leased by State Street Corp., which uses approximately 750,000 sf for its own purposes and subleases the rest through Richards Barry Joyce and Partners. State Street holds a 20-year lease on the building and the parking garage. American Financial estimates a net operating income of $1.1 billion from the property over the life of State Street’s leases.

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