UPDATE: J.P. Morgan Raises PT on Lexington Realty Trust on Updated Model

In a report published Tuesday, J.P. Morgan analyst Anthony Paolone reiterated a Neutral rating on Lexington Realty Trust LXP, and slightly raised the price target from $11.00 to $12.00. In the report, Paolone noted, “We have updated our model on LXP and incorporated recent capital markets transaction. We are reducing our 2013 FFO estimate by $0.01, to $1.02, which sits within management's $1.01-1.04 guidance range and a penny above Bloomberg consensus. The reduction in our estimate comes primarily from near-term dilution from the company's recent equity offering. We are increasing our 2014 FFO estimate by $0.03, to $1.08, which is $0.02 above Bloomberg consensus. The increase stems mostly from a higher level of deal volume we assume at LXP in addition to slightly lower capital costs than we previously estimated. LXP continues to present a good yield story; the current dividend yield is ~5% which should continue to be attractive for income and value investors. Portfolio quality is also improving as it ramps up on build-to-suit projects and acquisitions. In addition, leverage continues to decline as the company pays down secured debt to increase its unencumbered asset pool and advance its agenda to become investment grade. Our key model assumptions follow.” Lexington Realty Trust closed on Monday at $11.92.