RE trusts combine to form new single-tenant REIT

FWR Staff

26 July 2006

Participants say Lexington Corporate will focus on coastal retirement mkts. Lexington Corporate Properties and Newkirk Realty Trust have agreed to merge, creating a new real-estate investment trust called Lexington Realty Trust. With an enterprise value of about $4.6-billion, the combined company will own interests in more than 350 properties in 44 states including some of the highest growth markets in the U.S., making it one of the largest publicly traded single-tenant REITs out there.

Terms of the deal weren't disclosed.

Coastal markets

"This merger creates the predominant public single tenant focused REIT with significant growth potential for our shareholders and employees," says Michael Asner, chairman and CEO of Newkirk Realty and soon-to-be executive chairman of Lexington Realty.

Lexington Corporate CEO Wilson Eglin, who is in line to become CEO, president and COO of Lexington Realty, says the merger will result in "an unmatched diversified single tenant investment platform with core assets in attractive markets with good growth prospects."

In particular, parties to the deal say the new company attempt to exploit opportunities in high-growth coastal markets such as California, New Jersey, Florida and Maryland. The new company will operate from Lexington's corporate headquarters in New York, and it will be governed by a new board of 11 trustees - eight nominated by Lexington and three by Newkirk.

"The combination of our management backgrounds provides shareholders with superior growth potential by broadening the combined company's investment reach in both the traditional and opportunistic marketplaces," says Ashner.

Wachovia Capital Markets acted as financial advisor to Lexington Corporate Properties Trust; Bear Stearns was financial advisor to Newkirk Realty Trust.