CHANHASSEN, MINN. AND NEW YORK — Life Time Fitness Inc., a fitness center chain headquartered in the Minneapolis suburb of Chanhassen, Minn., has entered into a sale-leaseback transaction with Gramercy Property Trust Inc. (NYSE: GPT), a real estate investment trust (REIT) based in New York City.
As per the sale-leaseback agreement, Gramercy will acquire a portfolio of 10 high-end fitness centers from Life Time Fitness for an aggregate purchase price of approximately $300.5 million. The REIT will then lease the portfolio back to Life Time Fitness for a 20-year term.
For the combined portfolio, net operating income is anticipated to be approximately $19.5 million in the first year of the agreement. The portfolio totals approximately 1.3 million square feet located in major markets across the United States.
The $300.5 million sale-leaseback transaction comes on the heels of an investor group’s acquisition of Life Time Fitness Inc., which is valued at more than $4 billion. The investor group is led by affiliates of Leonard Green & Partners and TPG. Other key investors include LNK Partners and Bahram Akradi, Life Time Fitness’ chairman, president and CEO.
Up until yesterday, Life Time Fitness traded on the New York Stock Exchange under the stock symbol LTM.
Gramercy specializes in acquiring and managing single-tenant, net-leased industrial and office properties purchased through sale-leaseback transactions or directly from property developers and owners. The REIT’s outlook for the remainder of 2015 features acquisitions totaling roughly $250 million for a year-end total of $1.2 billion in acquisitions. Gramercy also plans to sell $150 million worth of assets by year’s end.
Gramercy’s stock price closed Wednesday, June 10 at $25.74 per share. Earlier this year in March, the REIT’s board of directors approved a reverse stock split of the company’s common stock and its outstanding units of GPT Property Trust LP at a ratio of 1:4, where every four issued and outstanding shares of common stock were converted into one share of common stock. The company’s stock price was $5.91 per share prior to the reverse stock split, according to a Gramercy Property Trust spokeswoman.
Life Time Fitness operates 115 large-scale fitness centers under the Life Time Fitness and Life Time Athletic brands in the United States and Canada. Many of the company’s centers operate 24 hours a day, seven days a week.
— John Nelson