First Midwest Bancorp in Itasca, Ill., has entered a sale-leaseback agreement with Oak Street Real Estate Capital in Chicago.
The $10.8 billion-asset company disclosed in a regulatory filing Monday that its bank will sell 55 branches in Illinois and Indiana to the private equity real estate firm for about $150 million. Under terms of the lease agreement, the bank will rent each of the branches for an initial 14-year term. The agreement provides First Midwest with five consecutive renewal options, of five years each, along with a pretax gain of about $90 million over the lease's initial term.
First Midwest said it expects the deal to be mostly accretive to its earnings during the agreement's initial term.
The transaction is expected to close Sept. 30. First Midwest said it plans to keep all the branches open.
Rebalancing its branch network from predominantly owned to primarily leased "is responsive to the company's growth" and better positions it "to fulfill its service commitment through capital and operational flexibility," the filing said.
First Midwest announced in June that it had agreed to buy the $2.5 billion-asset Standard Bancshares in Hickory Hills, Ill., including 35 branches, for $365 million. After the deal closes, possibly in early 2017, First Midwest expects to operate 130 branches.