ARC, Sandler O’Neill Target Bank Sale-Leasebacks

American Realty Capital L.L.C. and an affiliate of Sandler O’Neill + Partners L.P. have inked an agreement to partner on sale-leaseback deals with middle-market banks, the two firms disclosed this morning.  Specifically, Sandler O’Neill, an investment bank, will collaborate with real estate finance and investment company ARC to identify banks with assets valued at $500 million and $50 billion. The two firms recently closed the $41 million sale-leaseback acquisition of 15 properties owned by Pennsylvania-based Harleysville National Bank.  During the next 12 months, the ARC-Sandler O’Neill partnership could handle transactions valued at between $250 million and $300 million, estimated Nicholas Schorsch, CEO of ARC. The firm has also been active in deals without Sandler O’Neill. In March ARC struck an exclusive deal with Wachovia Corp. to buy surplus bank branches nationwide. “This is a wonderful climate for mid-market banks,” Schorsch told CPN this afternoon. “These banks are healthy and they want to lend.” Many mid-market banks are enjoying the advantages of being balance-sheet lenders in today’s difficult credit market, he noted. Moreover, small and mid-sized banks often find that moving assets off their balance sheets can be a successful strategy for boosting shareholder value, Schorsch added.  ARC’s collaboration with Sandler O’Neill expands a relationship that started while Schorsch led American Financial Realty Trust. AFRT acquired more than 1,500 properties valued at $5 billion. Since Schorsch’s departure in 2006, AFRT has been acquired by Gramercy Capital Corp. in a $3.3 billion deal that closed in March.