Finance

AMERICAN FINANCE TRUST COMPLETES PREVIOUSLY ANNOUNCED $261 MILLION SALE OF OFFICE BUILDINGS, REDUCING OFFICE EXPOSURE TO 1%

New YorkAnd January 7 2022 /PRNewswire/ – Play January 6 2022, the American Finance Trust, Inc. (Nasdaq: AFIN) (“AFIN” or the “Company”) the previously announced disposition of its non-core portfolio of three office buildings leased to Sanofi SA in favor of $261 million (“Sanofi Sale”), which represents 6.38% cash capitalization rate1 and 10 million dollars In excess of the original purchase price. Based on Pro Forma as of September 30, 20212 The sale of Sanofi reduced the company’s exposure to office assets to 1% from 7%, on a Pro Forma annual straight-line lease (“SLR” basis).

Sanofi sales are a great way to start 2022 and an essential step in the transformation 1.3 billion dollars The deal, announced last month, will make AFIN the pre-eminent real estate investment fund focused on essential retail. Michael WillCEO of the company. “Proceeds from the sale of Sanofi will be cumulatively used to partially fund the portfolio’s previously announced acquisition of energy, fixed positions and grocery positions, which we expect to close by the end of the first quarter (the “Transaction”). September 30, 2021 Enforcing the deal on a Pro Forma basis, our portfolio of single-tenant and outdoor mall leases primarily to essential retail tenants has grown to nearly 5 billion dollars, increasing company ownership of well-established grocery shopping centers to 22% of the SLR in our outdoor mall portfolio, and reducing portfolio office exposure to just 1% of the SLR. We believe in the long-term power of retail in the United States and that traditional stores will continue to play a critical role in the industry.”

Strategic and financial rationale

  • Immediately accumulate to AFFO: The transaction is expected to be cumulative upon closing, adding significant scope and value with assets tested against pandemics.
  • amplifier scale: Strategic acquisition of 9.5 million square feet, 81 properties from the electric portfolio, and fixed grocery stores3 Under contract to be acquired 1.3 billion dollars
  • Office concentration reduced to 1% of SLR: opportunism and cumulative $261 million Disposal of Sanofi office assets and 1.3 billion dollars Pro Forma SLR Wallet Acquisition Reduction4 Derivative of office assets to 1% of 7%
  • Compression rate limit achieved on Sanofi ranking: The cap cash disposition rate of 6.38% is 15 basis points lower than the cap cash rate at the time of the acquisition in 2014, resulting in 10 million dollars In excess of the original purchase price
  • Add Grocery Stores: 22% of Pro Forma SLR’s multi-tenant company is derived from grocery stores, which we expect will boost the company’s property appetite and ability to command solid rental rates.
  • Rebranded focused on where America stores: The Retail Necessity REIT (NYSE: RTL) will be the preeminent real estate investment fund focused on retail imperative-based, with a portfolio, on a Pro Forma basis, as of September 30, 2021, 55% of existing retail tenants were leased on a service or necessity basis.

changing the name

As previously announced, in connection with the transaction, the company will change its name and rebrand to “The Necessity Retail REIT” Where are America’s stores?It expects to be Series A common stock (“common stock”), 7.50% of the cumulative redeemable Series A preferred stock (“Series A preferred stock”) and 7.375% of its cumulative Series C redeemable preferred stock. (“Series C Preferred Stock”) will then begin trading on the Nasdaq under the ticker symbols RTL, RTLPP, and RTLPO, respectively. The Company’s common stock, Series A Preferred Stock, and Series C Preferred Stock will continue to trade on the Nasdaq under the symbols AFIN and AFINP and AFINO, respectively, until the closing of the deal.

Notes / Definitions

1

For acquisitions, the cash cap rate is the rate of return on a real estate investment property based on the expected annual cash rental income during the first year of ownership that the property will generate under the current lease or lease. For dispositions, the cash cap rate is the rate of return based on the annual cash rental income of the property to be sold. For acquisitions, the cash cap rate is calculated by dividing the annual cash rental income that the property will generate (before debt service, depreciation and after fixed and variable costs) by the property’s purchase price, excluding purchase costs. For dispositions, the cap rate for cash is calculated by dividing the annual cash rental income by the contract sale price of the property, excluding purchase costs, and cap rates for cash are based on square feet unless otherwise noted.



2

All provisional figures as of September 30, 2021, assume closing of the transaction and exclusion of the sold Sanofi office assets.



3

The portfolio to be acquired includes 79 Energy Centers, Anchored, Grocery and two single rental properties.



4

Pro Forma represents, as of September 30, 2021, the properties owned by AFIN and the annual fixed rent or “SLR” generated by those properties plus 81 groups of multi-tenant properties, and the annual SLR generated by those properties including two single-tenant assets that include 86,810 square feet and $1.2 million in annual straight-line rent, under contract with certain subsidiaries of CIM Real Estate Finance Trust, Inc, but excluding AFIN’s Sanofi office assets which were also under contract to be sold as of date.

About American Finance Trust, Inc. Soon to be rebranded to The Necessity Retail REIT as America Trades
American Finance Trust, Inc. (Nasdaq: AFIN) is a publicly traded real estate investment trust listed on the Nasdaq stock exchange, focused on acquiring and managing a diversified portfolio of commercial real estate related to services, traditional retail, and distribution in the United States. Additional information Information about AFIN can be found on its website at www.americanfinancetrust.com.

Important note
Statements in this press release that are not historical facts may be forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results or events to differ materially. The words “expect,” “believe,” “expect,” “estimate,” “project,” “plan,” “intend,” “may,” “will,” “seek,” “will,” and similar expressions are intended to identify forward-looking statements. Not all forward-looking statements contain such identifying words. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside the Company’s control, which could cause actual results to differ materially from the results contemplated by the forward-looking statements. These risks and uncertainties include the potential adverse effects of the ongoing global COVID-19 pandemic, including actions taken to contain or treat COVID-19, on the Company, the Company’s tenants and the assets under contract to be acquired including the respective tenants and tenants. the global economy and financial markets and that any potential future acquisition of the property is subject to market conditions and the availability of capital and may not be determined or completed on favorable terms, or at all, in addition to those risks and uncertainties described in the Risk Factors section of the Company’s annual report on Form 10-K for the year ended December 31, 2020 foot in February 25 2021 and all other filings with the Securities and Exchange Commission after that date, as such risks, uncertainties and other significant factors may be updated from time to time in the Company’s subsequent reports including in particular the Company’s current report on Form 8-K dated December 20 2021 and describe the additional facts and risk factors related to the transaction described in this statement. In particular, the transaction described in this release is subject to closing terms, including those outside the Company’s control, and the transaction described in this release may not complete on the terms contemplated, or may be delayed at all. The company may not be able to obtain financing to complete the transaction on favorable terms or at all. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise any forward-looking statement to reflect changing assumptions or the occurrence of unexpected events or changes in future operating results, unless required to do so by law. This press release also includes statements regarding the initial impact of the transaction and the sale of leased office assets to Sanofi. For more information on the initial effect of the transaction, see the Company’s current report filed on Form 8-K on January 5 2022.

The rating of securities is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time. Each rating agency has its own methodology for assigning ratings, and accordingly, each rating must be evaluated independently of any other rating.

Non-GAAP Financial Actions

This release discussed the non-GAAP financial procedure “Adjusted Funds from Operations” (“AFFO”). A description of non-GAAP metrics and adjustments to the most directly comparable GAAP measure, net income, is provided in our press release filed as Exhibit 99.1 with our current report on Form 8-K at November 3, 2021. In addition, please see the press release for data on why the Company believes this procedure is beneficial to investors and for additional purposes for the Company’s use of this procedure.

Contacts:
Investor Relations
[email protected]
(866) 902-0063

SOURCE American Finance Trust, Inc.

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