(Read more on the net lease market.)
NEW YORK CITY-Lexington Realty Trust revealed that its co-investment program with Inland American Real Estate Trust Inc. closed on the acquisition of 30 primarily single-tenant net leased assets from Lexington and its subsidiaries for an aggregate purchase price of $408.5 million, including the assumption of non-recourse first mortgage financing secured by certain of the assets. The 30 properties contain an aggregate of more than 3.5 million net rentable sf and are located in 23 states.
The co-investment program is under contract to acquire up to an additional 23 properties from Lexington, a locally based REIT focused on single-tenant real estate investments, and its subsidiaries. Closing on a majority of the additional properties is expected to occur during the first quarter of 2008. When the JV was first announced, a spokesperson told GlobeSt.com that "in early June, the Lexington Realty Trust board put together a strategic restructuring plan and this was one of the steps."
Lexington created the co-investment program in August, as GlobeSt.com reported, at which time the company released a statement saying that the program was "under contract to acquire 53 primarily single-tenant net leased assets from Lexington and its subsidiaries for an aggregate purchase price of $940 million--including the assumption of non- recourse first mortgage financing secured by certain of the assets." The statement noted that the properties contain an aggregate of more than eight million net rentable sf, and are located in 28 states. T. Wilson Eglin, president and CEO of the company previously noted that "we believe that the capital committed to this co-investment program will allow us to pursue additional growth opportunities that will benefit our shareholders in the near and far term while generating attractive returns. In addition, the transaction is expected to generate significant capital to redeploy into other investment opportunities."
At the time the partnership was announced, George Pandaleon, president of Inland Institutional told GlobeSt.com that the portfolio was somewhat different than what the REIT was used to buying. "This is a very well-diversified portfolio. The properties are more specialized than downtown office buildings, and don't trade at low cap rates, i.e. high prices, but offer higher returns and come with a little more risk. The portfolio includes all property types, in many geographic areas, with very little rollover," he said.
Information regarding the 30 primarily single-tenant net lease assets won't be available until Lexington's Current Report on Form 8-K is filed with the SEC, which the company says will be before Dec. 28, 2007. The sale of each of the additional 23 assets by Lexington and its subsidiaries and the purchase by the co-investment program is subject to satisfaction of conditions precedent to closing, including obtaining lender consent, obtaining certain consents and waivers, the continuing financial solvency of the tenants and certain other customary conditions. Lexington was unable to provide any assurance that the sales by it and its subsidiaries and the acquisition by the co-investment program will be completed as of now.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
