Creating dual strategies to achieve a single result, Paul Hastings helps its client with crucial positioning in a consolidating REIT market.

The Background

Lexington Corporate Properties Trust (Lexington)(LXP:NYSE), a real estate investment trust focused on net leases to single tenant properties, wanted to explore its strategic alternatives, including a potential merger. At a time when REITs are trending toward consolidation, Paul Hastings offered the security of both experience and deep resources to help guide Lexington on whatever path it ultimately chose to take.

Two Teams for Two Deals

In order to encourage a competitive bidding environment, Paul Hastings helped Lexington craft an auction process for both an all-cash transaction or a merger of equals. For this, Paul Hastings created two teams, each of which prepared for a particular kind of deal. Lawyers from offices in Washington, DC and New York participated, representing areas of focus spanning Paul Hastings’ corporate, real estate, employment, environmental, litigation, and tax practices. With the teams in place and led by Partner Mark Schonberger, Paul Hastings would be ready to simultaneously negotiate two separate agreements.

Partnering From the Start

From the beginning, Paul Hastings advised Lexington across a broad range of issues in connection with its exploration of strategic possibilities, helping with the hiring of outside financial advisor Wachovia, and working closely with Wachovia throughout sensitive discussions with potential buyers. The Paul Hastings teams analyzed bids and various alternatives, guiding Lexington in its decision between the more straightforward cash-out merger, where all of its stock would effectively be sold for cash, and the merger of equals, which would involve Lexington being both a “buyer” and “seller” and requiring extensive buy-side due diligence and the negotiation of ancillary agreements.

Closing

The two deal structures—along with the Paul Hastings teams leading them—came together when the right fit was found for Lexington’s merger. Soon, Paul Hastings was advising Lexington on negotiations with Newkirk Reality Trust, Inc., in a merger of equals. From the creation of the special committee, to the drafting of proxy materials, to addressing change of control questions and drafting employment agreements, the Paul Hastings team beat multiple deadlines to keep deal momentum on the upswing. If approved by the shareholders of both companies, the transaction will create Lexington Realty Trust, a REIT valued at $4.6 billion.

Learn more about our Corporate Practice.