NEW YORK, Jan. 7, 2022 /PRNewswire/ -- On January 6, 2022, American Finance Trust, Inc.
(Nasdaq: AFIN) ("AFIN" or the "Company") completed the previously
announced disposition of its non-core portfolio of three office
buildings leased to Sanofi S.A. for $261
million (the "Sanofi Sale"), representing a 6.38% cash
capitalization rate1 and a $10
million increase from its original purchase price. On a Pro
Forma basis as of September 30,
20212 the Sanofi Sale reduced the Company's
exposure to office assets to 1% from 7%, based on Pro Forma
annualized straight-line rent ("SLR").
"The Sanofi Sale is a great way to start 2022 and is an integral
step in the transformative $1.3
billion transaction, announced last month, that will make
AFIN the preeminent REIT focused on necessity retail," said
Michael Weil, CEO of the Company.
"The proceeds from the Sanofi Sale will be accretively used to
partially fund the previously announced portfolio acquisition of
power, anchored and grocery centers, which we expect to close by
the end of the first quarter (the "Transaction"). As of
September 30, 2021 and giving effect
to the Transaction on a Pro Forma basis, our portfolio of single
tenant and open-air shopping centers that are primarily leased to
necessity-retail tenants would have grown to approximately
$5 billion, increasing the Company's
ownership of grocery-anchored shopping centers to 22% of SLR in our
open-air shopping center portfolio, and reducing portfolio office
exposure to just 1% of SLR. We believe in the long-term strength of
retail in the US and that brick-and-mortar stores will continue to
play a critical role in the industry."
Strategic and Financial Rationale
- Immediately Accretive to AFFO: The Transaction is
expected to be accretive immediately upon closing, adding
significant scale and value with pandemic-tested assets
- Amplified Scale: Strategic acquisition of a 9.5 million
square foot, 81-property portfolio of power, anchored, and grocery
centers3 under contract to be acquired for $1.3 billion
- Office Concentration Reduced to 1% of SLR: Opportunistic
and accretive $261 million
disposition of the Company's Sanofi office asset and $1.3 billion portfolio acquisition reduced Pro
Forma SLR4 derived from office assets to 1% from 7%
- Realized Cap Rate Compression on Sanofi Disposition:
Disposition Cash Cap Rate of 6.38% is 15bps lower than the Cash Cap
Rate at time of acquisition in 2014, generating a $10 million increase on its original purchase
price
- Addition of Grocery Centers: 22% of Pro Forma
multi-tenant SLR derived from grocery centers, which we expect to
enhance the desirability of the Company's properties and ability to
command strong rental rates
- Rebranded Company focused on Where America Shops: The
Necessity Retail REIT (NYSE: RTL) will be the preeminent REIT
focused on Necessity-Based retail, with a portfolio that, on a Pro
Forma basis, as of September 30,
2021, was 55% leased to Service-Oriented or Necessity-Based
retail tenants.
Name Change
As previously announced, in connection with the Transaction, the
Company will change its name and be rebranded as "The Necessity
Retail REIT Where America Shops" and expects that its Class
A common stock ("Common Stock"), 7.50% Series A Cumulative
Redeemable Perpetual Preferred Stock ("Series A Preferred Stock")
and 7.375% Series C Cumulative Redeemable Perpetual Preferred Stock
("Series C Preferred Stock") will begin trading on Nasdaq
thereafter 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 Nasdaq under
the symbols AFIN, AFINP, and AFINO, respectively, until the closing
of the Transaction.
Footnotes/Definitions
1
|
For acquisitions,
cash cap rate is a rate of return on a real estate investment
property based on the expected, annualized cash rental income
during the first year of ownership that the property will generate
under its existing lease or leases. For dispositions, cash cap rate
is a rate of return based on the annualized cash rental income of
the property to be sold. For acquisitions, cash cap rate is
calculated by dividing this annualized cash rental income the
property will generate (before debt service and depreciation and
after fixed costs and variable costs) by the purchase price of the
property, excluding acquisition costs. For dispositions, cash cap
rate is calculated by dividing the annualized cash rental income by
the contract sales price for the property, excluding acquisition
costs Weighted average cash cap rates are based on square feet
unless otherwise indicated.
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2
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All pro forma numbers
are as of September 30, 2021, assume closing of the Transaction and
exclude the Sanofi office asset which has been sold.
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3
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Portfolio to be
acquired includes 79 Power, Anchored and Grocery Centers and two
single tenant properties.
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4
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Pro Forma represents,
as of September 30, 2021, the properties owned by AFIN and the
annualized straight-line rent or "SLR" generated by those
properties plus the 81 property multi-tenant portfolio, and the
annualized SLR generated by those properties including two single
tenant assets that encompass 86,810 square feet and $1.2 million of
annualized straight-line rent, under the contract with certain
subsidiaries of CIM Real Estate Finance Trust, Inc, but excluding
AFIN's Sanofi office asset which was also under a contract to be
sold as of the date.
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About American Finance Trust, Inc. soon to be rebranded The
Necessity Retail REIT Where America Shops
American Finance
Trust, Inc. (Nasdaq: AFIN) is a publicly traded real estate
investment trust listed on Nasdaq focused on acquiring and managing
a diversified portfolio of primarily service-oriented and
traditional retail and distribution related commercial real estate
properties in the U.S. Additional information about AFIN can be
found on its website at www.americanfinancetrust.com.
Important Notice
The 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 be materially
different. The words "anticipates," "believes," "expects,"
"estimates," "projects," "plans," "intends," "may," "will," "seek,"
"would" and similar expressions are intended to identify
forward-looking statements, although not all forward-looking
statements contain these identifying words. These forward-looking
statements are subject to risks, uncertainties and other factors,
many of which are outside of 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, the assets
under contract to be acquired including their respective tenants
and the global economy and financial markets and that any potential
future acquisition of property is subject to market conditions and
capital availability and may not be identified or completed on
favorable terms, or at all, as well as those risks and
uncertainties set forth in the Risk Factors section of the
Company's Annual Report on Form 10-K for the year ended
December 31, 2020 filed on
February 25, 2021 and all other
filings with the SEC after that date as such risks, uncertainties
and other important 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 describing additional facts and risk factors
relating to the Transaction described in this release. In
particular, the Transaction described in this release is subject to
closing conditions, including conditions that are outside of the
Company's control, and the Transaction described in this release
may not be completed on the contemplates terms, or at all, or may
be delayed. 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 changed assumptions, the
occurrence of unanticipated events or changes to future operating
results, unless required to do so by law. This press release
also includes statements regarding the pro forma effect of the
Transaction and the sale of office assets leased to Sanofi. For
more information about the pro forma impact of the Transaction, see
the Company's Current Report filed on Form 8-K on January 5, 2022.
A securities rating 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 should be evaluated
independently of any other rating.
Non-GAAP Financial Measures
This release discussed the non-GAAP financial measure Adjusted
Funds From Operations ("AFFO"). A description of this non-GAAP
measures and reconciliations to the most directly comparable GAAP
measure, which is net income, is provided on our press release
furnished as Exhibit 99.1 with our Current Report on Form 8-K on
November 3, 2021. In addition, please
see the press release for statements as to why the Company believes
that this measure is useful to investors and additional purposes
for the Company's use of this measure.
Contacts:
Investor Relations
investorrelations@americanfinancetrust.com
(866) 902-0063
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SOURCE American Finance Trust, Inc.