Research Update: Lexington Realty Trust 'BBB-' Ratings Affirmed On Increasing Industrial Exposure; Outlook Stable

Despite economic uncertainty from the pandemic and recession in 2020, Lexington continued to execute its strategy to transition to a pure-play industrial-focused net-leased REIT, with industrial properties representing over 90% of gross assets following the sale of the Dow Chemical property in the fourth quarter of 2020 (among others). We view this transition favorably, given the resiliency of industrial assets, which benefitted from the acceleration of e-commerce and supply chain initiatives in 2020. We are affirming our 'BBB-' issuer credit and issue-level ratings on Lexington. The stable outlook reflects our expectation for improving operating performance over the next two years, supported by the continued transition to an exclusively industrial portfolio via dispositions of noncore office assets, healthy occupancy, and good

...- Despite economic uncertainty from the pandemic and recession in 2020, Lexington continued to execute its strategy to transition to a pure-play industrial-focused net-leased REIT, with industrial properties representing over 90% of gross assets following the sale of the Dow Chemical property in the fourth quarter of 2020 (among others). - We view this transition favorably, given the resiliency of industrial assets, which benefitted from the acceleration of e-commerce and supply chain initiatives in 2020. - We are affirming our '###-' issuer credit and issue-level ratings on Lexington. - The stable outlook reflects our expectation for improving operating performance over the next two years, supported by the continued transition to an exclusively industrial portfolio via dispositions of noncore office assets, healthy occupancy, and good potential for embedded growth among its industrial properties. We also expect Lexington to fund acquisitions and development in a largely leverage-neutral...

Research Update