American Financial nets bank branches.

American Financial Realty Trust has announced that a newly formed joint venture between it and Dillon Read Capital Management LLC completed the acquisition of 236 fully occupied bank branches from Citizens Bank, N.A. and Charter One Bank, N.A., two bank subsidiaries of Citizens Financial Group, Inc., a wholly owned subsidiary of The Royal Bank of Scotland Group plc.

The properties were acquired for an aggregate purchase price of approximately $317 million before acquisition costs. The portfolio assets, aggregating approximately 969,000 rentable s/f feet, are located in eleven northeastern and midwestern states. Closing was delayed on five of the 241 properties announced in the Company's June 23rd press release pending receipt of various third party consents. Closing on some or all of the delayed properties is anticipated within the next 90 days.

Citizens and Charter One will continue to operate in the acquired properties under triple net leases with initial terms of five or fifteen years. The Company anticipates an average capitalization rate (average revenues over the remaining term of the leases less operating expenses divided by the gross purchase price) of approximately 7% before transaction expenses based on the projected cash flows. The net rentals under both the five-year and fifteen-year leases will be subject to periodic increases. Citizens Bank is rated "AA-" by Standard & Poor's.

American Financial Realty created a joint venture with Dillon Read Capital Management LLC to acquire the portfolio. AFR contributed approximately $18.5 million in equity funding to the venture for which it will receive approximately 25.4% of the venture's net cash flow. The balance of the venture's funding was obtained through a combination of debt and Dillon Read equity.

The Company's property management affiliate, First States Management Corp, L.P. will provide oversight management of the portfolio. The venture will pay AFR an annual management fee and AFR may receive incentive payments based on the performance of the portfolio.

Commenting on the acquisition, president and chief executive officer Nicholas Schorsch said, "This is another significant transaction that we have executed with Citizens. We value the strong relationship that we have established with Citizens and look forward to serving them well for years to come. We are also pleased that the joint venture provides AFR with an alternative source of funding and combines our competitive advantage in bank real estate with the broad financing capabilities of Dillon Read."