NEW YORK CITY — Lexington Realty Trust (NYSE: LXP) has sold a 21-office asset portfolio for $726 million to a joint venture between affiliates of Davidson Kempner Capital Management LP and Lexington.
The office properties are spread across the U.S., with properties in the eastern and western regions, the South and the Midwest. The 3.8 million-square-foot portfolio is currently 98.6 percent leased to a tenant roster that includes Amazon, Experian Holdings, Motel 6 and Nissan.
“This transaction marks a major step forward as we execute on our strategy to efficiently recycle capital out of suburban office properties and concentrate our portfolio on single-tenant, net leased industrial properties,” says T. Wilson Eglin, CEO of New York City-based Lexington Realty Trust. We intend to use transaction proceeds to continue to acquire high-quality industrial properties and repay our revolving credit facility and other debt, which we believe is the best path to create meaningful long-term shareholder value.”
Following the transaction, Lexington’s percentage of industrial assets based on consolidated revenue is expected to increase to 60 percent from 44 percent at year-end 2017.
Lexington received net cash proceeds of approximately $565 million at closing. The joint venture is expected to assume approximately $57 million of non-recourse financing secured by an office asset in Richmond, Virginia. The joint venture also assumed approximately $46 million of non-recourse financing secured by an asset in Charlotte, North Carolina. The entity obtained a $363 million non-recourse mortgage loan secured by the remaining 19 assets, which provides for an additional $10 million for future leasing activity.
Lexington has now closed a total of approximately $966 million in sales in 2018. Recent sales have included CopperPoint Tower, a 252,400-square-foot office property in Phoenix that sold to Oak Street Real Estate Capital for $64.6 million, and a 132,981-square-foot office building in Tampa, Florida for $14 million.
Lexington’s stock price closed on Tuesday at $8.88 per share, down from $9.82 a year ago.
— David Cohen