During a conference call today, executives at both companies said it expects the deal to close by the fourth quarter. There is a $25-million breakup fee.

Under the agreement, each share of Newkirk common stock will be exchanged for 0.80 common shares of Lexington, which exchange ratio will not be subject to adjustment. Following the merger, Newkirk shareholders and unitholders will own approximately 46.8% and Lexington shareholders and unitholders will own approximately 53.2% of the combined company assuming no conversion of Lexington's Series C Cumulative Convertible Preferred Stock. Each company shall pay pro-rata dividends through the date of closing.

In addition, prior to the closing, Lexington anticipates making a one-time cash distribution of $0.17 per share to Lexington shareholders and unitholders. The transaction is structured to qualify as a tax-free merger.

Based on Friday's closing prices, the combined entity would have an enterprise value of approximately $4.6 billion. Upon closing, Lexington is expected to increase its annual dividend to $1.50 per share. Based upon financial results as of March 31 and Lexington's closing share price on July 21, the combined company will have a net debt to enterprise value of approximately 45% and a net cash balance of approximately $200 million. The combined company will be headquartered at Lexington's existing corporate headquarters in New York.

Michael L. Ashner, chief executive officer and chairman of Newkirk's board, will join Lexington as executive chairman. Richard Frary and Clifford Broser, each currently a director of Newkirk, will join the Lexington board of trustees. E. Robert Roskind, chairman of the Lexington board of trustees, and Richard J. Rouse, vice chairman of the Lexington board of trustees, have agreed to serve as co- vice chairmen of the new company's board. Rouse will also continue to serve as chief investment officer.

"This transaction will improve the quality of our portfolio and our tenant base and will significantly strengthen our balance sheet by adding cash and lowering our overall debt level to approximately 45% of our enterprise value," T. Wilson Eglin, chief executive officer of Lexington, said in a statement. "As a result of this transaction, a majority of Lexington's portfolio will be leased to investment grade tenants providing a strong foundation for long term earnings stability and growth."