CapLease Inc, (LSE), a real estate investment trust (REIT), recently purchased a Class A office building in the energy corridor of Houston, Texas for $35.5 million. The average capitalization rate for the property is approximately 8.2%. CapLease expects to finance this transaction with a 55% loan-to-cost non-recourse mortgage of the property before the expiry of the current year. Post-acquisition, the company’s acquisition tally is expected to surge to over $165 million.
Spanning 145,000 square feet, the acquired building is currently 90% leased to an Australian listed energy and resource service engineering company titled Worley Parsons Limited. Additionally, Cap Lease also entered into agreements to acquire two adjacent office buildings in a major market in Southwestern United States for $26.1 million.
The company has been very active on the acquisition front with adequate liquidity and enough capacity to support a pipeline of new investment opportunities. Through this strategic initiative, Cap Lease expects to enhance its portfolio quality, which in turn could be accretive to earnings going forward. The company continues to add premium quality, well-located properties at better than average returns to its portfolio.
CapLease is focused on financing and investing 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.
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