Landlord to the Banks

The rush to build bank branches is made to order for a real estate investment trust that plans to go public in May. Jenkintown (Pa.)-based American Financial Realty Trust hopes to cash in on the trend by buying branches and leasing them back to banks, allowing the banks to free up capital. It hopes investors will want to cash in, too -- it aims to raise $385 million, the largest initial public offering of a U.S. company so far this year.

Piquing interest in the deal is the chairman of American Financial's board of trustees, Lewis J. Ranieri. The ex-Salomon Brothers Inc. vice-chairman, credited with pioneering the secondary mortgage market, signed on in 2002. Neither Ranieri nor other company execs will comment during the pre-IPO quiet period.

American Financial is busy snapping up properties: As of Feb. 14, it had $1.1 billion of real-estate deals in the pipeline, including 145 office buildings and 202 bank branches. The REIT's prospectus argues that banks make good tenants because they're highly regulated and less likely to go belly-up than, say, a retailer. But right now, $1.1 billion of its $1.6 billion in assets are securities backed by home loans. The value of these securities can fluctuate quickly as interest rates change.

All told, American Financial has a well-known financier on its board and is focused on a promising niche. Next month, it hopes to take that to the bank.

By Heather Timmons in New York

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