Lexington Realty Trust (NYSE: LXP
) has acquired the leased-fee (ground lease) interest in a portfolio of three land parcels located in New York City totaling approximately 0.6 acres, for $302 million.
Magna Hospitality Group sold the three parcels, which are all net-leased to tenants under non-cancellable, 99-year ground leases. The improvements are owned by the tenants, and consist of three high-rise hotels with an aggregate 1,179 guest rooms, all built in 2010.
The sale included:
- 8 Stone St. - 0.20 acres zoned C5-5 in Manhattan's Financial District submarket. Home to the 42-story, 210,000-square-foot Double Tree Hotel.
- 370 Canal St. - 0.27 acres zoned M1-5 in Manhattan's Tribeca submarket. Home to the 22-story, 160,545-square-foot Sheraton Tribeca New York Hotel.
- 311 W. 39th St. - 0.17 acres zoned C6-4 in Manhattan's Penn Plaza / Garment District submarket. Home to the 39-story, 177,000-square-foot Element New York Times Square West Hotel.
Initial annual rents under the leases total approximately $14.9 million, representing nearly five percent of the purchase price. The leases carry annual increases of at least 2%, with additional increases not to exceed 3% per annum based on increases in the CPI (Consumer Price Index) at specific intervals. Aggregate total minimum rent, excluding additional CPI increases, is reported at $4.5 billion over the life of the three leases. Each lease comes with a purchase option at select intervals and under certain specific conditions.
The buyer funded the acquisition in part from cash balances and its unsecured revolving credit facility.
"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," said T. Wilson Eglin, Lexington's CEO, commenting on the company's announcement of a regular quarterly dividend of $0.165 per common share/unit, a 10% increase over the prior quarter dividend of $0.15.
Reportedly no brokers were involved in the direct sale of these three net-leased land parcels.
Please see CoStar COMPS #2859089 for additional information on this transaction.