01/14/2022 | by Sarah Borchersen-Keto

With a footprint heavily weighted toward the Sunbelt, plus an expanding portfolio of necessity retail assets, Michael Weil, CEO of American Finance Trust, Inc. (Nasdaq: AFIN), says the REIT is well-positioned for 2022 and beyond.

Speaking on the REIT Report podcast Jan. 12, Weil said the company’s proposed $1.3 billion acquisition of shopping center assets from subsidiaries of CIM Real Estate Finance Trust, Inc., combined with its upcoming rebranding to The Necessity Retail REIT Where America Shops, spells out its clear focus on a particularly active corner of the retail sector.

Since the REIT’s listing on Nasdaq in 2018, it has focused on single tenant and multi-tenant retail, with the latter in the form of open-air shopping centers.

“We think it's an incredibly viable, strong asset class and it creates a portfolio that has terrific underlying strength,” Weil said. Over the last four or five years, as the REIT has continued focusing on necessity retail, it has grown from about $3.4 billion of assets to a projected $5.1 billion.

Weil says the pandemic has highlighted the relevance and value of brick and mortar retail. He noted that a recent International Council of Shopping Centers (ICSC) survey showed that 62% of online orders are fulfilled at brick and mortar stores. “We think that we've identified a sector of the retail market, necessity retail specifically, that's going to continue to do well in 2022 and beyond,” he said.

Weil also noted that:

  • The REIT’s top 10 tenants are primarily publicly traded companies with a market cap of over $500 billion.
  • Rental rates are stable, with successful renewals at market rents that are very much in line with expiring rents.
  • The CIM acquisition will result in grocery-anchored shopping centers comprising 22% of shopping center straight line rent.