NEW YORK, Oct. 9, 2013 (GLOBE NEWSWIRE) -- Lexington Realty Trust ("Lexington") (NYSE:LXP), a real estate investment trust focused on single-tenant real estate investments, announced today that it acquired a portfolio of three parcels of land in New York, New York consisting of an aggregate of 0.6 acres, which are net leased to tenants under non-cancellable 99-year leases. The aggregate purchase price was $302 million, which was funded from cash balances and Lexington's unsecured revolving credit facility.
The improvements on these parcels are owned by the tenants under Lexington's leases and currently consist of three high-rise hotels built in 2010, which contain an aggregate of approximately 480,000 square feet, 103 floors and 1,179 guest rooms. The hotels are known as the DoubleTree by Hilton Hotel New York City - Financial District, the Sheraton Tribeca New York Hotel and the Element New York Times Square West. The aggregate initial annual rent under the leases is approximately $14.9 million, which represents approximately 4.93% of the purchase price. The rent under each lease increases by a minimum of 2.0% each year with further annual increases, not to exceed 3.0% per annum in the aggregate, at specified intervals based on the increase in the Consumer Price Index ("CPI"). The total aggregate minimum rent (excluding any additional CPI increases) under the leases over the 99-year term is approximately $4.5 billion. Each tenant has a purchase option that can be exercised at the end of the 25th, 50th and 75th lease year at a price that is equal to the greater of (1) the original purchase price plus a 7.5% return (including rent payments) for the holding period (compounded monthly) and (2) a specified floor price, which in each case is in excess of the allocated purchase price and in the aggregate is $305 million.
Also today, Lexington declared a regular quarterly dividend/distribution for the quarter ended December 31, 2013, of $0.165 per common share/unit, a 10% increase from the prior quarterly dividend of $0.15 per common share/unit. This dividend/distribution is payable on January 15, 2014, to common shareholders/unitholders of record as of December 31, 2013. This dividend/distribution equates to an annualized dividend level of $0.66 per common share/unit. In addition, Lexington declared a dividend of $0.8125 per share on its 6.50% Series C Cumulative Convertible Preferred Stock ("Series C"). This Series C dividend is payable on or about February 18, 2014 to Series C shareholders of record as of January 31, 2014.
T. Wilson Eglin, Lexington's Chief Executive Officer, commented, "The acquisition of this high quality portfolio is highly accretive to Lexington. We are also pleased to announce a substantial increase in our quarterly common share dividend that reflects not only the accretion from our acquisition activities, but also the impact of refinancing secured indebtedness with unsecured indebtedness, including our investment-grade rated bonds, and great progress on addressing lease rollover. Taken together, we believe these factors have positioned us for strong earnings growth. We continue to believe our dividend payout ratio in relation to Company FFO, as adjusted, remains conservative, particularly compared to companies in the net-lease sector."
ABOUT LEXINGTON REALTY TRUST
Lexington Realty Trust is a real estate investment trust that owns a diversified portfolio of equity and debt interests in single-tenant commercial properties and land. Lexington seeks to expand its portfolio through acquisitions, sale-leaseback transactions, build-to-suit arrangements and other transactions. A majority of these properties and all land interests are subject to net or similar leases, where the tenant bears all or substantially all of the operating costs, including cost increases, for real estate taxes, utilities, insurance and ordinary repairs. Lexington also provides investment advisory and asset management services to investors in the single-tenant area. Lexington's common shares are traded on the New York Stock Exchange under the symbol "LXP". Additional information about Lexington is available on-line by contacting Lexington Realty Trust, Investor Relations, at www.lxp.com.
This release contains certain forward-looking statements which involve known and unknown risks, uncertainties and other factors not under Lexington's control which may cause actual results, performance or achievements of Lexington to be materially different from the results, performance, or other expectations implied by these forward-looking statements. These factors include, but are not limited to, (1) the failure to realize any expected returns on our investments, (2) the discretion of Lexington's Board of Trustees with respect to the declaration of future dividends and (3) those factors and risks detailed in Lexington's periodic filings with the Securities and Exchange Commission. Lexington undertakes no obligation to publicly release the results of any revisions to those forward-looking statements which may be made to reflect events or circumstances after the occurrence of unanticipated events. Accordingly, there is no assurance that Lexington's expectations will be realized.