Atlantic Union has 109 branches in Virginia, Maryland and North Carolina.
Richmond’s biggest bank has lightened its load as a landlord and brought in some extra capital as a result.
Atlantic Union Bank last week sold 25 of its 109 branches to a real estate investment group for $45.8 million.
As part of the deal, Atlantic Union will lease back the branches and continue to operate the locations as usual.
The buyer, according to an SEC filing, was an affiliate of New York-based Blue Owl Capital. AUB agreed to lease the branches from Blue Owl for an initial term of 17 years with specified renewal options.
“We will not close any branches or exit any markets as part of the sale-leaseback transaction,” the bank said in the filing.
It said the affected branches are in Virginia but would not disclose specific locations.
The bank said the deal was driven in part by its need to grapple with rising interest rates.
“The sale-leaseback of these properties was driven by our ongoing assessment of our balance sheet and enables us to turn a fixed asset into an earning asset,” the bank said in an emailed response to questions on Friday. “The gains for the transaction are being used to help reposition our balance sheet for a higher for longer rate environment.”
AUB said the deal is unrelated to its pending acquisition of Danville-based American National Bank. That deal includes American National’s two dozen branches in Southwest and Southside Virginia, as well as in North Carolina in Greensboro, Winston-Salem, High Point and Raleigh.
“We have devoted a considerable effort to this project, and the timing of its execution was based on the ability to complete the required process,” it said of the branch sale. “We would have completed it earlier in the year if it was a possibility.”
The bank did not respond to additional questions as to whether it considered selling other branches in its footprint. It did say it has no intention of vacating the sold branches anytime soon.
“We chose to enter into 17-year leases for these properties, with the option for renewal, to demonstrate our long-term commitment to the communities and customers we serve. We like these locations and have no plans to close,” it said.
The bank said its after-tax gain of the sale was $22 million, after also accounting for transaction related expenses.
It said it will pay approximately $3.7 million in rent on the properties in the first year. That would be partially offset by the elimination of $969,000 in annual pre-tax depreciation expenses on the buildings and an estimated $2.2 million in income it expects from investing the proceeds of the sale.
The branch sale is at least the second time this year AUB looked to its real estate holdings as a way to juggle its balance sheet.
In June the bank said it would vacate two of the three floors it leases for its downtown headquarters in James Center and would look to consolidate its office space in Innsbrook.
The AUB deal is also at least the second transaction in Richmond for Blue Owl Capital in recent years. The firm was to be the owner of the ill-fated VCU Health-anchored mixed-use project on the site of the city’s old Public Safety Building downtown.
After VCU Health backed out of the deal, Blue Owl walked away with at least $73 million paid as an exit fee by the health system. The structure of that deal is still being scrutinized.
Atlantic Union has 109 branches in Virginia, Maryland and North Carolina.
Richmond’s biggest bank has lightened its load as a landlord and brought in some extra capital as a result.
Atlantic Union Bank last week sold 25 of its 109 branches to a real estate investment group for $45.8 million.
As part of the deal, Atlantic Union will lease back the branches and continue to operate the locations as usual.
The buyer, according to an SEC filing, was an affiliate of New York-based Blue Owl Capital. AUB agreed to lease the branches from Blue Owl for an initial term of 17 years with specified renewal options.
“We will not close any branches or exit any markets as part of the sale-leaseback transaction,” the bank said in the filing.
It said the affected branches are in Virginia but would not disclose specific locations.
The bank said the deal was driven in part by its need to grapple with rising interest rates.
“The sale-leaseback of these properties was driven by our ongoing assessment of our balance sheet and enables us to turn a fixed asset into an earning asset,” the bank said in an emailed response to questions on Friday. “The gains for the transaction are being used to help reposition our balance sheet for a higher for longer rate environment.”
AUB said the deal is unrelated to its pending acquisition of Danville-based American National Bank. That deal includes American National’s two dozen branches in Southwest and Southside Virginia, as well as in North Carolina in Greensboro, Winston-Salem, High Point and Raleigh.
“We have devoted a considerable effort to this project, and the timing of its execution was based on the ability to complete the required process,” it said of the branch sale. “We would have completed it earlier in the year if it was a possibility.”
The bank did not respond to additional questions as to whether it considered selling other branches in its footprint. It did say it has no intention of vacating the sold branches anytime soon.
“We chose to enter into 17-year leases for these properties, with the option for renewal, to demonstrate our long-term commitment to the communities and customers we serve. We like these locations and have no plans to close,” it said.
The bank said its after-tax gain of the sale was $22 million, after also accounting for transaction related expenses.
It said it will pay approximately $3.7 million in rent on the properties in the first year. That would be partially offset by the elimination of $969,000 in annual pre-tax depreciation expenses on the buildings and an estimated $2.2 million in income it expects from investing the proceeds of the sale.
The branch sale is at least the second time this year AUB looked to its real estate holdings as a way to juggle its balance sheet.
In June the bank said it would vacate two of the three floors it leases for its downtown headquarters in James Center and would look to consolidate its office space in Innsbrook.
The AUB deal is also at least the second transaction in Richmond for Blue Owl Capital in recent years. The firm was to be the owner of the ill-fated VCU Health-anchored mixed-use project on the site of the city’s old Public Safety Building downtown.
After VCU Health backed out of the deal, Blue Owl walked away with at least $73 million paid as an exit fee by the health system. The structure of that deal is still being scrutinized.