AFRT completes sale of State St. Financial Center for $889m.

American Financial Realty Trust, a real estate investment trust focused on acquiring and leasing properties occupied by financial institutions, announced it has closed the sale of the State Street Financial Center, a one million square foot Class "A" office building located in the Boston, Massachusetts Financial District.

The property, of which AFR is a 70% owner along with IPC US Income REIT, was sold for a purchase price of $889 million. The buyer is an affiliate of Fortis Property Group, a Northeast-based private real estate investment firm.

Net proceeds to the company from the sale--after transaction related expenses, debt repayment and loan defeasance costs--are approximately $200 million, which will be used primarily to repay Company debt.

As part of the company's repositioning plan, the debt repaid will include a floating rate acquisition facility used to finance acquisitions during the quarter, approximately 24 individual property mortgages which bear interest rate coupons and/or constants above the Company's average cost of funds and approximately a $150 million repayment of the Company's primary acquisition facility. This repayment will provide availability under that facility of approximately $190 million.

"The completion of the State Street sale is a cornerstone event in our repositioning plan," said Harold W. Pote, chief executive officer for American Financial Realty Trust. "This sale unlocks significant shareholder value, improves our operating metrics and enhances our financial strength."

Eastdil Secured represented AFR in this transaction.

Carlton Advisory Services arranged $775 million of senior financing on behalf of Fortis Property Group for its acquisition.

In order to maximize proceeds and the lowest possible pricing, Carlton joined together two major investment banks who had bid separately on the financing.

State Street Corporation's investment grade credit rating (S&P rated AA-) and long-term lease resulted in an extremely attractive interest rate for Fortis. "Multiple banks bid to win this financing. Certainly State Street's excellent financial standing and reputation had a significant effect on where the loan was finally priced," said Carlton chairman Howard Michaels, who was assisted in completing the transaction by Michael J. Campbell, partner, and Chad E. Buchanan, vice president.

RCG Longview II, LP contributed $50,000,000 in the form of Preferred Equity to help finance the acquisition by Fortis. RCG Longview is jointly controlled by Ramius Capital Group, LLC, and The Feil Organization, a private owner/manager of real estate located throughout the United States.