Lexington Realty Trust: This 8.1%-Yielding Commercial Property REIT Remains A Buy

Jul. 22, 2018 1:49 PM ETLXP Industrial Trust (LXP)21 Comments
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Achilles Research
34.7K Followers

Summary

  • Lexington Realty Trust is a high-yield commercial property yield REIT.
  • Lexington Realty Trust has solid portfolio and dividend coverage stats.
  • The dividend is not at risk over the short haul, in my opinion.
  • Shares continue to sell for a competitive AFFO multiple.
  • An investment in LXP yields 8.1 percent.

Lexington Realty Trust's (NYSE:LXP) shares have an attractive risk-reward at today's price point. The real estate investment trust has solid portfolio stats and it derives a large percentage of revenues from long-term lease contracts. Shares sell for a very affordable AFFO multiple, and Lexington Realty Trust has a comfortable margin of dividend safety. The dividend has room to grow, too. An investment in Lexington Realty Trust yields 8.1 percent.

Lexington Realty Trust - Portfolio Overview

Lexington Realty Trust is a commercial property REIT with a national presence. At the end of the March quarter, Lexington Realty Trust's property portfolio consisted of 168 assets consisting of 48.1 million square feet. The portfolio lease rate was 97.2 percent.

Here is a location map.

Source: Lexington Realty Trust Investor Presentation

Lexington Realty Trust primarily invests in industrial and office properties. Both property types made up about half of the REIT's portfolio in terms of revenue contributions.

Source: Lexington Realty Trust

Lexington Realty Trust's properties can be found in 37 U.S. states. Texas is the REIT's largest market.

Here's a breakdown of Lexington Realty Trust's top 10 markets.

Source: Lexington Realty Trust

In terms of tenants, Lexington Realty Trust is highly diversified. The ten largest tenants account for less than 30 percent of the REIT's base rent.

Source: Lexington Realty Trust

Portfolio Stats

Lexington Realty Trust's lease portfolio had a weighted-average lease term (WALT) of 8.9 years, which is about in line with the REIT's WALT in the previous five years.

Source: Lexington Realty Trust

A large chunk of revenues comes from long-term lease contracts, defined as leases with a remaining term of 10 years or more.

Source: Lexington Realty Trust

The majority of leases in Lexington Realty Trust's portfolio include annual rent increase provisions, setting the REIT up for organic cash flow

This article was written by

Achilles Research profile picture
34.7K Followers
I am a dividend investor and look for undervalued investments in the stock market. I identify misunderstood and undervalued equity investments and hold those securities until their price approximates my estimate of intrinsic value. I am a long-term investor only. I am building a $100,000 high-yield income portfolio. I am running this portfolio as an experiment to see if long-term sustainable income can be generated from a diversified pool of high-risk, high-yield securities. I am willing to accept high risk in order to meet my performance goals.

Disclosure: I am/we are long LXP. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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