CapLease,Inc. (LSE), a real estate investment trust (:REIT), recently entered into an agreement to acquire a Class A office property in an unnamed city for $35.5 million. The acquisition is expected to close before the end of the year. The average capitalization rate for this deal is approximately 8%. Post this transaction, the 2012 acquisition volume for the company is expected to grow over $140 million.
CapLease expects to finance this transaction with a 55% loan-to-cost non-recourse mortgage of the property. The strategic move by the company aims to enhance the quality of its overall portfolio and is expected to be accretive in the coming quarters. The company has been very active on the acquisition front and the financial flexibility further enhances its capacity to support a pipeline of new investment opportunities.
CapLease reported third quarter 2012 adjusted FFO (funds from operations) of $11.5 million or 17 cents per share compared with $10.4 million or 15 cents per share in the year-earlier quarter.
CapLease is focused on finance and investment in commercial real estate that is net leased primarily to single tenants with investment grade or near investment grade credit ratings. It provides private and corporate owners of net lease real estate with equity, debt, and mezzanine financing option.
CapLease currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We have a long-term Neutral recommendation on the stock. One of its competitors, Lexington Realty Trust (LXP) also holds a Zacks #3 Rank.
Note: Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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