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CHICAGO-Inland American Real Estate Trust Inc., through Inland Institutional Capital Partners Corp., has signed an agreement for a joint venture with New York City-based Lexington Realty Trust to purchase and manage net-leased properties. The venture, Net Lease Strategic Assets Fund LP, will include 53 properties contributed by Lexington, about 8.4 million sf and valued at $940 million. The venture was announced last week, but Inland was not named in the venture until Friday.

George Pandaleon, president of Inland Institutional, tells GlobeSt.com that the portfolio is somewhat different than what the REIT is used to buying. “This is a very well-diversified portfolio. The properties are more specialized than downtown office buildings, and don’t trade at low cap rates, i.e. high prices, but offer higher returns and come with a little more risk. The portfolio includes all property types, in many geographic areas, with very little rollover,” he says.

The venture also anticipates buying up to $500 million more in assets during the next two years. Under the terms of the agreement, Inland American will contribute up to $385 million, including an initial investment of $257 million.

Both companies were careful to throw in a disclaimer that the Lexington portfolio is subject to certain conditions. The requirements include the assumption of non-recourse, first-mortgage financing, obtaining certain consents and waivers, the continuing financial solvency of the tenants and certain other customary conditions. T. Wilson Eglin, president and CEO of the Lexington REIT, says that the sale of its properties will help the trust to redeploy capital to other investment opportunities.

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GlobeSt. NET LEASE Spring 2021Event

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GlobeSt. NET LEASE Spring 2021Event

This conference brings together the industry's most influential & knowledgeable real estate executives from the net lease sector.

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