Lexington Realty Trust
) have been on an uptrend since year-end 2011, aided by
strengthening market fundamentals and a diversified property
portfolio that mitigates operating risks. With an impressive
year-to-date return of 33.3%, the stock is currently trading close
to its 52-week high of $10.03. This diversified REIT (real estate
investment trust) currently retains a Zacks #1 Rank (Strong Buy).
On August 7, Lexington Realty reported second quarter total gross
revenues of $83.9 million, which was up 6.9% year over year. The
top-line growth was due primarily to acquisitions and a healthy
rise in occupancy levels. Overall portfolio occupancy at
quarter-end was fairly high at 97.6%.
Second quarter 2012 FFO (funds from operations) of 23 cents per
share were in line with the Zacks Consensus Estimate and compared
favorably with the previous year's 22 cents. Lexington Realty paid
a quarterly dividend of 12.5 cents, which marked an 8.7% increase
over the year-ago payout.
Based on strong second quarter results, management raised both the
lower- and upper-end of the adjusted FFO guidance for 2012 by 1
cent each. Currently, the FFO is expected between 93 cents and 96
cents per share, compared with the earlier range of 92 cents - 95
cents. The guidance, however, excludes any material impact from
future acquisitions, asset sales, secondary offerings or
repurchases, debt financings or repayments.
Surge in Earnings Estimates
Over the past 30 days, the Zacks Consensus Estimate for 2012
increased 2.1% to 96 cents as four estimates out of five were
revised upward. For 2013, the Zacks Consensus Estimate has
increased 6.3% to $1.02 over the same period (representing
year-over-year growth of 6.4%), as four of six estimates have
Lexington Realty's valuation looks fairly attractive on a
price-to-earnings (P/E) and price-to-sales (P/S) basis. Shares are
trading at a forward P/E of 10.30x, a 35.2% discount to the peer
group average of 15.89x. On a P/S basis, the stock is currently
trading at 4.62x versus the peer group average of 4.96x.
Chart Resonates Growth Potential
Since January 19, 2012, Lexington Realty shares have fared better
than the simple moving average for 200 days or SMA (200), barring a
few occasional pull backs. The uptrend in stock prices, as mirrored
in the following chart, offers an enticing upside potential going
forward. Volume is fairly strong, averaging 636K daily. The
year-to-date return for the stock is also noteworthy at 33.3%
compared with an S&P 500 tally of 12.6%.
Based in New York City, Lexington Realty primarily owns and manages
commercial properties throughout the U.S. The portfolio is
well-diversified by property type, geographic location, lease term,
and tenant industry concentration. The portfolio diversification
insulates the company against regional recession, industry-specific
downturns, and fluctuation in property values and market rent
levels. This in turn mitigates operating risks and provides a
steady revenue stream. Furthermore, the company usually offers its
properties under a net lease agreement, under which virtually all
property operating expenses such as insurance, real estate taxes,
utilities, maintenance and repairs are generally paid by its
tenants. The company currently has a market cap of $1.5 billion.
LEXINGTON PPTY (LXP): Free Stock Analysis
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