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JENKINTOWN, PA-American Financial Realty Trust has formed an alliance with Chicago-based Bank Property Advisors LLC to identify new bank properties that locally based AFR can acquire from, and lease back to, community banks through a newly formed Community Banking Program. This expansion to community banks is designed to extend the financial specialty REIT’s bank branch holdings and also broaden leasing opportunities within its existing branch network.

BPA, formerly Financial Institution Realty and headed by Alex Sheshunoff, John R. Madden and Martin P. Madden, is a specialist in community bank real estate advisory services and the development of sale-leaseback agreements for medium- and small-size banks and thrifts. The alliance will initially focus on approximately 650 community banks and thrifts throughout the US.

According to Nicholas S. Schorsch, AFR’s president and CEO, Community Banking Program complements the REIT’s Formulated Price Contract Program, which allows banks to sell unoccupied branch facilities at a pre-negotiated price as their needs change. The new program, he says, “represents the natural evolution of our core bank branch business model.” According to the sale-leaseback model, financial institutions re-deploy “capital that otherwise would be tied up in real estate.”

The BPA alliance, Schorsch says, “provides us with an efficient way to access hundreds of community banks…and forge mutually beneficial landlord-tenant relationships.” AFR currently owns and manages 1,068 properties in 39 states and Washington, DC aggregating 37.3 million sf and $4.4 billion in assets.

“Small and community-based banks recognize that ownership, rather than sale-leaseback of bank buildings, is an impediment to maximizing shareholder value,” says BPA’s Sheshunoff, who is also president of Alex Sheshunoff and Partners, in a statement. According to AFR, Sheshunoff, as head of his firm, has advised more than 3,000 banking institutions in the areas of competition and profitability. BPA’s name change from Financial Institution Realty has been submitted to the Illinois office of banks and real estate and is pending approval. The BPA-AFR alliance is expected formally begin this fall.

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