(By Balaseshan) CapLease Inc. (NYSE: LSE), a real estate investment trust (REIT), said it has entered into a contract to buy a class A office building in a major Southern city for $35.5 million.
The average capitalization rate for the transaction is in excess of 8%. The company said the addition of this property will be accretive to earnings and cash flow, and will lengthen the average remaining lease term across the owned property portfolio.
CapLease expects to finance its investment with a 55% loan-to-cost non-recourse mortgage of the property. Given the continued favorable financing environment for high quality properties like this one, the company expects the asset to produce among the widest spreads in the entire portfolio.
The acquisition continues the company's strong growth momentum, bringing total expected acquisition volume for 2012 to over $140 million.
"Our pipeline remains robust with numerous transactions at various stages of review. We look forward to continuing to add accretive, high quality properties for the remainder of 2012 and beyond," said Paul McDowell, Chairman and Chief Executive Officer of CapLease.
CapLease expects to close and finance the acquisition prior to December 31, 2012.
However, closing is subject to completion of due diligence and customary closing conditions and, therefore, no assurance can be given that CapLease will complete the acquisition or related financing, or that the timing or terms of such transactions will not differ materially from CapLease's expectations.
The company primarily owns and manages single tenant commercial real estate properties subject to long-term leases to high credit quality tenants.
LSE is trading down 0.41% at $4.89 on Monday. The stock has been trading between $3.58 and $5.57 for the past 52 weeks.