LXP Industrial Trust announced that it recapitalized a 22-property special purpose industrial portfolio consisting primarily of manufacturing assets through a sale to a new joint venture with an affiliate of Davidson Kempner Capital Management LP. The portfolio's total gross valuation of $550 million represents GAAP and Cash capitalization rates of 7.4% and 7.2%, respectively. LXP will retain a 20% interest in the new joint venture.

The recapitalization reflects LXP's single-tenant warehouse and distribution focus, with 93% of gross book value (pro forma at September 30, 2021) invested in warehouse and distribution facilities, up from approximately 16% at year-end 2015. The transaction positions LXP to further advance its strategy by: Providing LXP with approximately $487 million of estimated net proceeds to satisfy credit line borrowings and fund warehouse/distribution investments; Generating recurring fee income to enhance return on equity; and Adding a committed capital source to provide specialized industrial real estate financing options to existing LXP tenants and merchant builder relationships. The new joint venture obtained a $381 million non-recourse mortgage loan secured by 21 assets, with a term of two years and three one-year extension options, at one-month Term Secured Overnight Financing Rate (SOFR) plus 245 basis points.

In addition, the new joint venture assumed approximately $26 million of non-recourse financing secured by the Warren, Michigan asset. The new joint venture includes a $250 million additional equity commitment on a pro rata basis for future acquisitions of single-tenant special purpose industrial properties outside of LXP's core warehouse/distribution focus. LXP is entitled to earn acquisition, asset management and leasing and fees and a promoted-interest incentive.