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Lexington’s Refinancing

On a day when the Dow is down over 250 points and worry about the banking sector is increasing, Lexington Realty Trust (NYSE: LXP) announced today that they have secured financing for close to $200 million in debt maturing in 2009. As of last quarter, Lexington reported that they had $267 million in maturities for 2009.


The terms appear favorable, priced at 285 basis points over LIBOR, with capacity up to $250 million on the two facilities combined, plus the option to increase the facilities up to $500 million by adding additional properties to the borrowing base. The lines mature in 2011, but Lexington has the option to extend the loans to February 2012.

The financing is very good news for Lexington as this was one of the major risks to the company that I noted in a recent article. The company still faces risks due to exposure to certain tenants including Dana Corp, Chrysler, and the now defunct Circuit City. Look for occupancy rates to continue to decline, but debt coverage to remain healthy.

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    This entry was posted on Tuesday, February 17th, 2009 at 11:04 am and is filed under Lexington Realty Trust. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

    2 Responses to “Lexington’s Refinancing”

    1. j_remington Says:
      February 27th, 2009 at 8:36 am

      Is $3.05 for LXP a good entry?

    2. investorpoet Says:
      March 3rd, 2009 at 8:41 pm

      j_remington,

      My thought is that $3.05 looks great. The company is guiding to $1.56-$1.64 per share in Funds from Operations in 2009. Your basically getting the company for 2x cash flow. The dividend is still set at $0.72 per share. Pretty good payback.

      In my mind, the financing risk has largely been removed, barring some complete collapse of their Lenders. The remaining risk is just the declining real estate and occupancy rates. Lexington had some exposure to Circuit City, though relatively small. The have exposure to other unrated and below investment grade tenants. I projected that even at 80% occupancy (they are currently 93% or so), they would have over $1.00 per share in funds from operations.