In April 2007, CapLease, Inc. (NYSE: LSE) acquired an approximately 346,000 square foot office building in Johnston, Rhode Island net leased to Factory Mutual Insurance Company as its corporate headquarters. As previously disclosed, the Factory Mutual property investment represents about 2.6% of CapLease’s current portfolio and the lease expires on July 31, 2009.
CapLease announced today that it has appealed the decision of the Town of Johnston, Rhode Island Planning Board, in approving an application submitted by Factory Mutual Insurance Company to construct a new corporate headquarters building in Johnston. The new headquarters is proposed to be built on land adjacent to the building owned by CapLease and currently leased to Factory Mutual. Under Rhode Island law, the filing of the appeal acts to automatically stay further proceeding and development of the proposed project.
CapLease appealed the decision primarily on the grounds that the Town of Johnston violated state and local law by circumventing the rights of CapLease and other neighboring property owners to review and comment on the proposed development, including by failing to provide proper notice of the public meeting to review the application and by failing to make Factory Mutual’s public application available for review on a timely basis.
CapLease is also carefully reviewing Factory Mutual’s application in order to ensure that the new project does not adversely affect CapLease’s property. CapLease believes there are a variety of substantive issues with the proposed development.
Factory Mutual has until May 31, 2008 to elect to renew its current lease with CapLease for its existing headquarters building. Factory Mutual has a unilateral option to renew the existing lease with CapLease for a series of five year terms at below market rates. The renewal rent is at about 40% of Factory Mutual’s current rent.
About the Company:
CapLease, Inc. is a real estate investment trust, or REIT, that invests primarily in single tenant commercial real estate assets subject to long-term leases to high credit quality tenants.