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American Finance Trust Inc. will spend $1.3B to bolster its portfolio of shopping centers, adding 9.5M SF of assets, including coronavirus pandemic-resistant grocery-anchored centers.
The REIT will close on the acquisition from subsidiaries of CIM Real Estate Finance Trust in the first quarter of 2022, it said Monday. American Finance Trust, publicly traded as AFIN, will also sell a New Jersey office complex leased to international life sciences giant Sanofi for $261M to fund the portfolio purchase and reduce its commitment to the asset type that has proven vulnerable to shutdowns in the past two years.
“We are adding significant scale while further enhancing our best-in-class portfolio with pandemic-tested assets on accretive terms," AFIN CEO Michael Weil said in a statement.
AFIN’s acquisition will bring its portfolio to 28.8M SF across 1,048 properties, with a combined annualized straight-line rent of $381.6M, it detailed in a Securities and Exchange Commission filing. The REIT’s assets will have a combined 92.3% occupancy.
The acquisition is the latest billion-dollar deal chasing the hot retail sector, which has had among the strongest pandemic rebounds of any asset type in commercial real estate. Nationwide retail sales are 30.6% above levels seen at the onset of the pandemic, according to a December JLL report.
Demand for grocery-anchored assets is at its highest peak in nearly two decades, JLL Senior Managing Director Jim Hamilton told Chain Store Age last week. The past year saw major consolidation between retail real estate giants, including Kimco Realty Corp. and Weingarten Realty Investors’ massive merger in April and Kite Realty Group and Retail Properties of America’s $7.5B merger in July.
AFIN will sell three office buildings spanning 736K SF in Bridgewater, New Jersey, for $261M to an undisclosed buyer, a $10M increase from its $251M purchase price in 2014, according to the REIT. Sanofi is exiting the property, which served as its U.S. headquarters, and will market it for sublease. The sale will reduce AFIN’s office exposure within its portfolio from 7.4% to 1.1%, a distancing from the struggling asset type thrown into more disarray with the latest variant of the coronavirus.
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