Lexington Realty Trust
) gained 1.03% since the company announced its decision to offer
common shares on Oct 11. The company is issuing 10 million common
shares at $11.17 each to enhance its liquidity.
Moreover, Lexington Realty decided to grant the underwriters a
30-day option to purchase up to an additional 1.5 million shares.
The offering is expected to close on Oct 17, upon fulfillment of
customary closing conditions.
Lexington Realty expects to garner gross proceeds of $111.7
million (before underwriting discounts and commissions and
projected offering expenses) from this offering. This hybrid real
estate investment trust (REIT) intends to utilize the net
proceeds, in full, to repay debt outstanding on its unsecured
revolving credit facility.
As a matter of fact, the company used a fraction of this
unsecured revolving credit facility to finance the recent buyout
of New York-based portfolio of three land parcels. Notably, on
Oct 9, 2013, Lexington Realty acquired the three land parcels,
spanning 0.6 acres, for $302 million. The portfolio is net leased
to tenants under non-cancellable 99-year leases.
Wells Fargo Securities LLC - an operational arm of
Wells Fargo & Company
) - and
) are assisting Lexington Realty in this equity offering as
underwriters. Though this public offering will result in share
dilution for Lexington Realty, the payment of debt is encouraging
as it will reduce interest expenses. Moreover, strategic
acquisitions will help the company enhance its portfolio quality,
which will consequently be accretive to its earnings going
As of Jun 30, 2013, Lexington Realty's cash and cash
equivalents stood at $74.3 million. Moreover, the company,
exercising an accordion feature, increased the availability of
unsecured revolving credit facility from $300 million to $400
million. Notably, Lexington Realty had no outstanding amounts
under the facility as of Jun 30, 2013.
Currently, Lexington Realty carries a Zacks Rank #3 (Hold).
Parkway Properties Inc.
) is one of the better performing REITs with a Zacks Rank #1
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