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Investors Prepare for Better Buying Times

The focus remains on strengthening balance sheets by managing debt maturities, repurchasing debt and selectively disposing of properties.

By Michelle Napoli | Updated on May 14, 2009

New York City—The first quarter of 2009 continued to be relatively quiet times for publicly traded single-tenant property investors. With one fairly large exception – W.P. Carey & Co’s $225 million purchase of the leasehold condominium interest in The New York Times Co.’s 750,000-square-foot midtown Manhattan headquarters, for a 10.75% cap rate—little property acquisition activity was reported in the space during the recent round of Q1 earnings calls.

Rather, much focus remains on strengthening balance sheets by managing debt maturities, repurchasing debt at significant discounts and selectively disposing of properties, all in preparation for what continues to be a positive outlook for better buying opportunities in the future.

As they have for several quarters now, CapLease Inc. and Lexington Realty Trust, both based in New York City, further reduced their leverage during the early part of this year. Since the end of 2008 CapLease has repurchased $20 million of convertible notes, notes chairman and CEO Paul McDowell, for a purchase price of $9.1 million. LXP repurchased $22.5 million of exchangeable notes during the first quarter at a 34.1% discount, and president and chief executive officer noted the REIT has repurchased additional debt since the end of Q1. And Orlando-based National Retail Properties repurchased about $17 million of its debt, at what CEO Craig Macnab, like his peers, describes as a “deep discount.”

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