Take Lexington Realty Trust, the New York City-based owner of net-leased office, industrial and retail properties, for example. The company announced this month that during the fourth quarter of 2008 it repurchased exchangeable guaranteed notes with a principal amount of $88.5 million for about $60.5 million, representing a 31.6% discount. That was on top of the $278.5 million of senior securities retired for $219.5 million, a 21.2% discount, during the first three quarters of last year. And in the early days of January, LXP repurchased even more, this time at a 34% discount. In contrast, it hasn't announced any property purchases since the third quarter of last year.

Lexington isn't alone. Also this month, CapLease Inc. announced it had repurchased $8.74 million of its convertible senior notes for about $3.27 million in cash plus accrued interest--representing an average discount of 62.6%--and said it expects more to come.

"The repurchase transactions are consistent with CapLease's stated objective to utilize excess cash flow to fund debt repurchases that are highly accretive to income and book value, while reducing leverage," Paul McDowell, chairman and chief executive officer of the New York City-based single-tenant property REIT, says in an announcement. "We expect to continue to opportunistically strengthen our balance sheet and enhance shareholder value throughout 2009."

The latest debt repurchases followed announcements from both LXP and CapLease in November that their 2009 dividends would allow them to retain cash for leverage reduction. CapLease is not paying a fourth quarter 2008 dividend and says that decision, along with a reduced dividend in 2009, will create additional free cash flow for reducing its debt. LXP, meanwhile, says its "targeted dividend level will allow Lexington to retain approximately $63 million of capital in 2009, which it expects to use to accelerate its deleveraging strategy and further strengthen its balance sheet."

Moody's Investors Service vice president and senior credit officer Merrie Frankel says debt repurchases and dividend cuts aren't surprising these days and in fact are prudent business practices in times like these. "Cash is king, and everyone's trying to hold onto cash," she says. Specific to the debt repurchases she adds: "They're using some cash and buying it back and saving themselves some money."

Two other Manhattan-based REITs that invest in net lease assets as part of their investment strategy--Gramercy Capital Corp. and NorthRealty Realty Finance Corp.—have made more recent moves with regard to their dividends. On New Year's Eve, Gramercy announced it would not pay a Q4 2008 dividend, opting to "retain capital for working capital purposes."

And NorthStar's Q4 dividend, announced last week, will take advantage of a recent Internal Revenue Service ruling by paying out in a combination of cash and common stock. On an annualized basis, NorthStar says, the "dividend policy this quarter would enable the company to retain approximately $43 million of additional liquidity in 2009 to further enhance its balance sheet and protect against uncertainties in the capital markets."

Shareholders and analysts are taking note of these strategies, but net lease market players outside the realm of public companies are paying attention, too. As one investment and brokerage veteran recently noted, the public company players are seen by some as a "proxy" for the broader net lease property market on such issues as the lending and equity raising environment as well as the appetite and mood of property buyers and sellers. No doubt some are anticipating the comments and market color that will be provided by executives during the fourth-quarter and year-end earnings calls coming up in February.