Lexington Realty Trust (NYSE:LXP) has entered into an agreement to acquire Inland American (Net Lease) Sub, LLC's interest in the Net Lease Strategic Assets Fund L.P. (NLS), an existing joint venture between Inland and Lexington formed in 2007.

The transaction is valued at approximately $480.0 million. It expands Lexington's asset base and consolidates Lexington's ownership of a 98.7% leased portfolio, which Lexington owned and/or managed since before NLS was formed.

The portfolio includes 41 office, industrial and specialty assets in 23 states leased to tenants that include Northrop Grumman, Siemens, Owens Corning and Honeywell.

"These are assets we have owned and/or managed since before NLS was formed," said T. Wilson Eglin, Lexington's Chief Executive Officer in a statement. "We believe we can create significant value for our shareholders by extending lease terms, recycling capital through asset sales and refinancing the underlying debt over time." 

NLS was a joint venture between Lexington and Inland. In 2007 and 2008, Lexington contributed or sold 43 properties, a 40% tenant-in-common interest in a property, plus $15.0 million in cash to NLS and Inland contributed $216.0 million in cash to NLS, which was paid to Lexington. Inland had an 85% common equity interest and Lexington had a 15% common equity interest and a 100% preferred equity interest in NLS.

NLS currently owns 26 office properties, 13 industrial properties and two specialty properties totaling 5.8 million square feet in 23 states, plus a 40% tenant-in-common interest in an office property. The NLS properties are 98.7% leased and had annual net operating income of approximately $49.6 million as of June 30, 2012, representing a 10.3% capitalization rate on the transaction value.

As of June 30, 2012, the NLS consolidated portfolio was encumbered by $259.0 million of consolidated debt which bore interest at a weighted-average interest rate of 5.2%.

The closing is expected to occur on September 7, 2012, but will be effective as of September 1, 2012.

The cash component of Lexington's purchase price is approximately $1.3 million, net of NLS cash balances of $8.1 million at August 31, 2012. In addition, at August 31, 2012, NLS had approximately $258.0 million of consolidated debt.

In conjunction with the transaction, Lexington is raising its 2012 Company FFO, as adjusted, guidance to a range of $0.95 to $0.98 per common share from a range of $0.93 to $0.96 per common share.