Boston, MA 10/14/2013 (wallstreetpr) – Lexington Realty Trust (NYSE:LXP) is one of the leading investors in tenant commercial properties across the nation, which are then net-leased to major corporations for a longer period of time. Net-leasing is where the tenant is required to pay the rent, plus the expenses on the property that he requires while occupying. LXP has marked its presence across the industry and is currently operating in more than 20 countries.
LXP is always on the lookout for more land acquisition (tenant properties), and owns 100% of the land it acquired through owner subsidiaries or joint ventures with various high net worth individuals and institutional partners who are keen to invest in the real estate market.
LXP recently added Manhattan Land Portfolio to its product basket. The amount paid for the acquisition of Manhattan land portfolio in New York is approximately $302 million, which was funded from company internal accruals and unsecured credit facilities (by raising debt). The said acquisition includes three parcels of land consisting of a total area of 0.6 acres. In line with the company business model, the parcels would be leased backed to tenants under a clause for a period of 99 years. It states that once the land or property is leased out it cannot be canceled prior to the expiry of the lease period, which in this case, is 99 years.
The property, which has been leased out, currently consists of hotels (high rise) developed in 2010, spread out on an area of 480,000 sq. ft. having 103 floors which consists of 1,179 guest rooms. The hotels that are operating on the acquired land are the Sheraton Tribeca, the Element New York Times Square West, and the Double Tree. The company focuses on a business model in which the tenants pay almost all their operating expenses during the period of the lease. The approximate amount LXP would gain by leasing these properties would be around $14.9 million per year, or almost 4.93% of the cost paid for acquiring land. Since, the tenure of the lease stands at 99 years, company is targeting a revenue of $4.5 billion from the rent. We believe that by focusing on a leased-based business model, it would help the company to have a stable cash flow over the year of operations.