Lexington Realty Trust sold a 98.6%-leased, 21-office portfolio to an 80/20 joint venture between Davidson Kempner Capital Management LP affiliates and the company for $726 million.

The diversified real estate investment trust expects the deal, which reflects GAAP and cash capitalization rates of 8.6% and 8.1%, respectively, to boost its percentage of industrial assets based on consolidated revenue to 60% from 44% as at the end of 2017.

In early August, the REIT said it was mulling a large office portfolio sale as part of its transition to a pure-play single-tenant industrial landlord.

Lexington Realty received net cash proceeds of roughly $565 million at the closing of the transaction. The proceeds will be used to acquire high-quality industrial properties and repay the company's revolving credit facility and other debt, CEO Will Eglin said in a release.

The properties span a total of 3.8 million square feet, with a weighted average remaining lease term of roughly 9.5 years. They will be managed by Lexington Realty.

The joint venture assumed around $46 million of nonrecourse financing secured by the portfolio's Charlotte, N.C., property and is expected to assume roughly $57 million of non-recourse financing secured by its Richmond, Va., asset. It obtained a $363 million nonrecourse mortgage loan backed by the remaining 19 properties, providing for a further $10 million of borrowings for future leasing activity, according to the release.

Lexington Realty revised its full-year 2018 guidance for adjusted company funds from operations per share to 92 cents to 94 cents, down from its previous guidance range of 95 cents to 98 cents. It expects per-share net income attributable to shareholders of 94 cents to 96 cents for the year.

Year-to-date, the REIT has completed $966 million of sales at average GAAP and cash cap rates of 8.5% and 8.1%, respectively. It expects its full-year disposition total to reach up to $1 billion at average GAAP and cash cap rates of 8.7% and 8.3%, respectively.