With just the Pennsylvania and California properties leased, the $5 million reserve is sufficient to cover expected shortfalls for the full term of the extension. CapLease also agreed to pay substantially all excess cash flows from the properties to reduce the principal amount of the debt. The company is permitted to prepay the loan at any time without payment of a penalty of premium to the lender.
CapLease previously extended the leases on two of the Nestlé properties where the leases were scheduled to mature in December. The extension of the approximately 1 million-square-foot Pennsylvania property is with the existing tenant Nestlé for five years commencing Jan. 1, 2013.
The extension of the approximately 750,000-square-foot California property is with the existing subtenant Del Monte and is also for five years also commencing Jan. 1, 2013. CapLease said it is continuing to actively market the Fort Wayne property for release at the end of Nestlé's
What Does CapLease Look Like Today?
CapLease owns 64 properties valued at $1.8 billion, which it leases on a triple net basis (lessee responsible for all operating costs) to creditworthy tenants across the country. CapLease also has a debt portfolio consisting of fully amortizing first position mortgages on single tenant properties valued at $30 million, and a CMBS portfolio valued at $63 million. In the past few years, the company has moved away from holding debt securities and shifted into the real property area.CapLease holds significantly more debt than its peers. Currently, the company holds $1.17 billion in long-term debt and $121 million in preferreds, giving it an 11.7 times net debt and preferred to EBITDA ratio, nearly double its peers, according to pages 56-57 in its 2011 10-K. CapLease has taken steps to mitigate the risk of this high debt load, by structuring 86% of its debt as non-recourse, long-term, fixed rate debt, secured by individual assets. Additionally, the debt amortizes, which gives the company additional advantages (as we will discuss a bit later). One attraction to CapLease is that the company has a book value of nearly $600 million but as of the writing of this article trades at only $340 million, a 53% discount. Most of its peers trade either at, or at a premium to book value, making CapLease much more attractive relative to its peers.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV