The finale has added a 278,759-sf office/warehouse leased to Raytheon Co. at 1200 Jupiter Rd. in Garland and a 275,750-sf building at 9220 Grogans Mill Rd. in the Woodlands leased to Houston-based Baker Hughes Inc. "We've completed the initial seeding of the portfolio," says Brendan P. Mullinix, executive vice president of the New York City-based Lexington Realty Trust. Raytheon's building is a mix of research and development and warehouse while Baker Hughes' building blends office, R&D, laboratory and manufacturing space.
Mullinix tells GlobeSt.com that the JV partners "have committed to investing an additional $150 million into single-tenant, net-leased assets." The plan, he adds, is to acquire properties through sale-leasebacks, one-offs, portfolios and build-to-suits.
The co-investment fund has amassed 43 properties in three closings since December 2007. The fund launched in August 2007, with Lexington banking $940 million by selling 53 single-tenant, net-leased assets in 28 states, but the number was decreased in the Feb. 21 filing to 43 properties in 24 states for a total acquisition cost of $743 million. The JV partners picked 30 assets in December 2007 for $408.5 million and designated another 23 for the fund. Eleven buildings rolled into the fund in late March for $270.8 million. Lexington has acknowledged the closing was $278.2 million instead of the amount reported by GlobeSt.com in March.
Mullinix says Lexington inherited the Waltham, MA-based Raytheon's building in the 2006 takeover of New York City-headquartered Newkirk Realty Trust Inc. But, Lexington only owned 59.4% of the asset so a buyout was needed to consummate the fund's plan. "We went out and had an offering with the remaining partners," Mullinix explains. "Once we owned 100% of the Raytheon building, we were ready to close on both buildings."
According to Lexington's Feb. 21 filing with the SEC, the Woodlands deed could only pass into the fund's portfolio if the partnership acquired 100% interest in the Garland property. Mullinix says the contingency was needed although they are unrelated assets and transactions. To fuel the last closing, the partners formed Nlsaf Garland GP LLC and Nlsaf Garland LP to get 100% interest for a free-and-clear roll from Lexington into the fund's portfolio.
The SEC filing shows Raytheon's lease runs through May 2011 and Baker Hughes' pact expires Sept. 27, 2015. According to the SEC filing, Raytheon's base rent is $1.5 million; Baker Hughes, $2.9 million.
The JV assumed a $21.5-million loan when it bought Baker Hughes' Woodlands building from Texan Training LP. The fund also owns a 65,000-sf building at 2529 W. Thorne Dr. in Houston, which is leased to Baker Hughes until Sept. 27, 2015.
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