Harleysville National Bank Agrees to $38.8 Million Sale Leaseback of 16 Retail Bank Branches in PA

SEC Edgar Database - November 19, 2007

On November 19, 2007, Harleysville National Bank, a wholly owned banking subsidiary of Harleysville National Corporation, entered into a definitive agreement (the “Agreement”) to sell sixteen properties to American Realty Capital, LLC (“ARC”) in a sale-leaseback transaction. The properties are located throughout Berks, Bucks, Lehigh, Montgomery, Northampton, and Carbon counties. The total sale price is expected to be approximately $38.8 million.

In the Agreement, the parties each make customary representations and warranties to each other. The finalization of the transaction is also contingent upon the completion of a 30 day due diligence period.

The agreement provides that the leases will be institution-quality, triple net leases with initial annual aggregate base rent of $3,003,838 (a 7.75% cap rate) with annual rent escalations equal to the lower of CPI-U (Consumer Price Index for all Urban Consumers) or 2.0 percent commencing in the second year of the lease term. As tenant, the Bank will be fully responsible for all costs associated with the operation, repair and maintenance of the properties during the lease terms.

The agreement provides that each lease will have an initial term ranging from 5 – 15 years, commencing on the closing date for the Agreement, with options to renew on various terms for periods aggregating up to 45 years. The Agreement is expected to close on or before year-end 2007. Sphere: Related Content