Lexington Realty Trust (NYSE:LXP) Q1 2018 Earnings Conference Call - Preliminary Transcript

May 08, 2018 • 08:30 am ET

Previous

Lexington Realty Trust (NYSE:LXP) Q1 2018 Earnings Conference Call - Preliminary Transcript

Share
Close

Loading Event

Loading Transcript

Q & A
Operator
Operator

(Operator Instructions) The first question comes from Sheila McGrath of Evercore. Please go ahead.

Analyst
Sheila McGrath

Yes, good morning. Will, I was wondering if you could give us your thoughts on accelerating the dispositions in office to more quickly moving the portfolio shift to industrial, and how should we think about disposition volumes and cap rates for the year?

Executive
T. Wilson Eglin

Sure. I think when we started the year we gave guidance to that $250 million to $300 million of dispositions in mainly in office. So with what we transacted in first quarter we were sort of right on schedule. And second quarter would be I think about the same. With that said, we have good visibility on finishing our guidance earlier than we thought and in the context of the whole year. And as we said, we do have an interest in going above and beyond that, and speeding up the transition towards becoming more of a pure-play on industrial.

We don't have anything to say in terms of what dollar volume that may be as the year progresses, but we are working very hard on some transactions that could very well allow us to exceed guidance, and hopefully next quarter we'll have some clarification on that.

And in terms of overall cap rate, since we are moving beyond just trying to sell some of our shorter lease office assets and considering longer lease assets, I think the cap rate range will probably tighten as the year progresses. We'd indicated that on a cash basis we'd be in sort of the 7.5 to 8.25 area, and for sure some of our office buildings can be transacted at sub 7.5.

Analyst
Sheila McGrath

Okay, thank you. And as a follow-up, on the industrials that you purchased after the end of the quarter, I was wondering if you could give us a little bit more detail who was the seller, describe the expansion opportunity in a little more detail and the cap rates on that?

Executive
Pat Carroll

One of the terms of the sale was that we agreed with the seller that we would not disclose the identity of the seller or the cap rates. So unfortunately we can't respond directly to those questions. The Sephora property does have the expansion that was noted in my prepared remarks which would include an extension of the lease potentially depending on the remaining term of the lease, and also an opportunity to enhance the yield.

Analyst
Sheila McGrath

Brendan, maybe you could describe what the competition was, was it a little bit more limited because they wanted to sell the buildings together, and so it's a higher purchase price or just how was the competition for that purchase?

Executive
Brendan P. Mullinix

Yes, that would be fair to say, it was not broadly marketed.

Analyst
Sheila McGrath

Okay. Thank you.

Operator
Operator

The next question is from Craig Mailman of KeyBanc. Please go ahead.

Analyst
Laura Dickson

Hi, everyone. This is Laura Dickson here with Craig. So follow-up on Sheila's question, can you give us the pro forma, like, percent of industrial annualized based rents following the acquisition