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Retailers banking on mergers to land high-profile locations
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Retailers banking on mergers From bucks to Starbucks and from dough to doughnuts, the trend of bank mergers is giving some of the hottest retailers in the nation the chance to cash in on prime locations for new stores. The coffee giant, Starbucks, and companies like Chipotle and many fast food restaurants have jumped quickly on the growing trend of leasing vacant brank branch sites. In the past, many empty banks were simply leased by other banks. But now retailers are seeing the numerous positives of landing such locations. “These sites are very appealing to retailers,” said Jarrett Wells, managing director of branch sales and leasing for American Financial Realty Trust, a real estate investment trust that focuses on acquiring, managing and operating properties leased primarily to regulated financial instituitions. “It could take 12 to 18 months for a ground up development, but with these sites the retailer can be in a prime location in 90 to 180 days.” There are also many other positives, according to Wells. The cost to retrofit former bank buildings is 50% to 100% less than developing a new building and the properties also may already have the facilities and permits for special services such as drive-thrus. Wells said that what attracts so much interest is not simply the location and the economics and logistic efficiencies, but also access to stable markets and local amenities. Building features such as the high ceilings and or a vault are also big selling points. These “extras” provide added value for retailers wanting to create ambiance, needing security or wanting rooms for meetings or catering. So, there must be numerous retailers just waiting to pounce on these sites? “It’s not that they’re looking for them proactively,” said Wells, whose company has exclusive rights to buy the properties of many banks, including giants such as Wachovia, Bank of America and AmSouth. “When a merger is announced, the retailer will identify the site as an opportunity and they’ll come to us because of our market leader status.” While banks are consolidating through mergers and acquisitions, the number of bank branches has actually been increasing. From 2002 through 2005, the number of bank branches grew from roughly 86,000 to 92,000, according to FDIC statistics. According to Wells, many of these branches are becoming redundant following mergers because of overlapping locations. And, in order, to focus on the core business, banks are selling excess properties to real estate investors who are repositioning these assets for traditional retail use. “A lot of times in the past, these properties would be going from bank to bank and were just not available,” said Wells. “There hadn’t been much of an opportunity, but now we have a pool of well-located prime corner properties coming to the market.” Besides a Starbucks, many of these sites have been leased by companies such as Quiznos, fast-food restaurants and even a FedEx Kinko’s. “Pretty much any retailer looking for 2,000 sq.ft. to 5,000 sq.ft. is a good fit,” said Wells. “But it’s fairly uniform. Good sites are good sites.” While this leasing option may be unfamiliar terrain for some retailers, they may assume that there will be tough hurdles, said Wells. But, in reality, most of the difficult obstacles have already been removed. Zoning and land use issues were settled long ago during the initial planning process, construction issues are limited and traffic, as well as access problems, have been resolved. Wells came from a retail background, working for 5˝ years with Colliers International’s affiliate in Philadelphia, PA, and one year with Federal Realty in Rockville, MD doing leasing for its Northeast portfolio before moving over to American Financial Realty Trust’s predecessor, Strategic Alliance Realty Group. American Financial Realty Trust is a self-managed, self-administered real estate investment trust focused on acquiring, managing and operating properties leased primarily to regulated financial institutions. As banks continue to divest their corporate real estate, the company believes that its contractual relationships, and growing visibility within the banking industry and flexible acquisition and lease structures position it for continued growth. American Financial seeks to lease properties to banks and other financial institutions, which are typically high credit quality tenants, using long-term net leases with terms ranging from 10 to 20 years. American Financial’s business approach is designed to provide banks and other financial institutions with operational flexibility and the benefits of reduced real estate exposure. The company seeks to become the preferred landlord of leading banks and other financial institutions through the development of mutually beneficial relationships and by offering flexible acquisition structures and lease terms. The company has completed recent transactions with Bank of America, N.A., Wachovia Bank, N.A., Citizens Bank of Pennsylvania and Wells Fargo Bank, N.A. American Financial Realty Trust is headquartered in Jenkintown, PA and maintains offices in Philadelphia, PA and Charlotte, NC. The company currently has 1,100 properties throughout 39 states and Washington, DC. The bulk of the square footage is in office buildings, while the company’s retail is in single-tenant bank branches. For more information, contact Jarrett Wells, American Financial Realty Trust , 610 Old York Road, Suite 300, Jenkintown, PA 19046; 215-887-2280; Web site: www.afrt.com . For investor relations, contact Muriel Lange, Director of Investor Relations, at 215-887-2280, Fax 215-884-9681; Email: ir@afrt.com . |