sharesgained around 4% in early trading April 28 after the company before markets opened that it hadinked a 30-year, triple-net lease for its 25-story class A office tower at 222 E.41st St. in Manhattan, N.Y.
The NewYork University Langone Medical Center will take over all 389,522 square feet, includingthe lobby, common areas and parking garage. The medical center is expected to takeover the building around year-end 2016, after Columbia's lease with law firm JonesDay for 353,541 square feet expires in October. NYU plans to convert the space intoa combination of medical offices, ambulatory care facilities and other ancillaryuses.
Financialterms were not disclosed.
In aflash note, Evercore ISI's Sheila McGrath and Nathan Crossett applauded the full-buildinglease deal, about which they noted there had been some speculation, as "bignews" and a "significant positive" as a de-risking event.
"Webelieve that the general expectation was that securing a single user would be apositive event, however, not highly probable," the analysts said. The building was the company's single-largestupcoming lease expiration.
The leasedeal also effectively eliminates uncertainty around the company's dividend, theysaid.
"Lastconference call, CXPhighlighted that if 2018 AFFO was expected to cover the dividend, given the strengthof the balance sheet, the company expected that the board would likely maintainthe dividend," McGrath and Crossett said. "We believe this announcementclarifies the leasing picture for CXP enough that concerns for a dividend cut shouldbe eliminated (although 2017 AFFO will be below the dividend). Securing this leasegives visibility that 2018 AFFO should cover the dividend."
The marketawaits detail on the rent rate and tenant improvement allowance. Columbia will holdits earnings call after market hours April 28. McGrath and Crossett said they would"not be surprised" if the deal reflects a modest roll-down in rent fromits present level. No decline in rent would be viewed as a positive, they said.
The analystshave a "hold" rating and a $23.50-per-share price target on the stock.