Lexington Offers $250 Million of Senior Notes - Analyst Blog

On Tuesday, Lexington Realty Trust LXP, a NY-based diversified real estate investment trust (REIT), declared the pricing of a public offering of senior notes worth $250 million. Net proceeds accrued through this offering will be utilized for general and corporate purposes as well as for repayment of certain debts. Though the offering is subject to certain routine closing conditions, it is expected to conclude by May 20, 2014.

Lexington is engaged in the ownership, operation and management of a diversified portfolio of equity and debt interests in single-tenant commercial properties and land. It intends to grow through acquisitions, sale-leaseback transactions and other deals. During the first quarter of 2014, Lexington borrowed $99.0 million under its five-year unsecured loan facility and was engaged in repayment of secured debts as well. The company also converted guaranteed notes into common shares in the quarter. The current offering is not at all an extraneous idea. In fact, the aim to use the proceeds to lower down the debt levels is perfectly in line with the recent company strategy.
 
As per the announcement, Lepercq Corporate Income Fund L.P., an operating partnership subsidiary of Lexington, will act as the guarantor of this offering. J.P. Morgan Securities LLC and Wells Fargo Securities will be the joint book-running managers. The offering will be made under Lexington's existing automatic shelf registration statement filed with the Securities and Exchange Commission.

Currently, Lexington carries a Zacks Rank #3 (Hold). Some better-ranked equity REITs include The GEO Group, Inc. GEO, Rexford Industrial Realty, Inc. REXR and Aviv REIT, Inc. AVIV. While GEO Group and Rexford Industrial Realty sport a Zacks Rank #1 (Strong Buy), Aviv holds a Zacks Rank #2 (Buy).