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January 13, 2025

A Major Bank Branch Sale-Leaseback Deal Signals Strategic Real Estate Moves

SouthState Bank has announced a significant sale-leaseback transaction involving approximately 170 bank branches across six southeastern states. This strategic move, valued at approximately $475 million, represents a notable trend in banking real estate optimization.

Key Transaction Details

The deal with Blue Owl Real Estate Capital LLC includes branches across Alabama, Florida, Georgia, North Carolina, South Carolina, and Virginia. The transaction features:

  • Purchase price of $475 million in cash

  • Initial 15-year lease terms with three 5-year renewal options

  • Annual rent payments of approximately $36 million

  • 2% annual rent escalations during both initial and renewal terms

Financial Impact

The transaction demonstrates attractive economics:

  • Expected pre-tax gain of $225 million after expenses

  • Initial cap rate of 7.58% based on first-year rent

  • Annual GAAP rent expense of $40 million

  • Depreciation expense reduction of $8 million

Branch Network

While the specific branches included in this transaction have not been publicly disclosed, Fresco Analytics has compiled a visualization of SouthState Bank's branch network based on FDIC deposit data. This map provides context for understanding the bank's footprint across the Southeast, though it may not precisely reflect the properties involved in this sale-leaseback transaction.

Click here to see the map.

SouthState Bank, N.A. branches with most deposits
SouthState Bank Large Branches

Strategic Implications

This deal represents a broader trend of financial institutions monetizing their real estate assets while maintaining operational control. SouthState Bank will continue operating all branches with no closures or market exits, preserving their customer service footprint while unlocking significant capital.The transaction, expected to close in Q1 2025, provides SouthState with substantial financial flexibility while maintaining their physical presence in key markets. This type of sale-leaseback arrangement has become increasingly popular among financial institutions as they seek to optimize their real estate holdings while maintaining strong market presence.

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