NEW YORK, Aug. 7, 2012 (GLOBE NEWSWIRE) -- Lexington Realty Trust ("Lexington") (NYSE:LXP), a real estate investment trust focused on single-tenant real estate investments, today announced results for the second quarter ended June 30, 2012.
Second Quarter 2012 Highlights
- Generated Company Funds From Operations, as adjusted, ("Company FFO, as adjusted") of $44.1 million or $0.24 per diluted common share.
- Executed 14 new and extended leases, totaling 0.7 million square feet and ended the quarter with overall portfolio occupancy of 97.6%.
- Closed property acquisitions of $63.7 million and invested $19.1 million in on-going build-to-suit projects.
- Raised $82.0 million of gross proceeds from dispositions.
- Borrowed $100.0 million at a weighted-average fixed interest rate of 3.95% and an average maturity of nine years.
- Redeemed, at par, all outstanding shares of 8.05% Series B Cumulative Redeemable Preferred Stock for $68.5 million and repaid $23.6 million of non-recourse mortgage debt which was scheduled to mature in 2012 and had a weighted-average fixed rate of 5.9%.
- Entered an agreement regarding the disposition of all assets in Net Lease Strategic Assets Fund by December 2012.
Subsequent to Quarter End Highlights
- Executed 0.4 million square feet of extended leases, raising annual cash rents from $6.2 million to $9.6 million.
- Retired $26.1 million of non-recourse mortgage debt which was scheduled to mature in 2012 and had a fixed rate of 6.1%.
T. Wilson Eglin, President and Chief Executive Officer of Lexington, stated, "Our operating results continue to be strong. We have successfully raised occupancy, refinanced our debts at substantially lower rates and capitalized on favorable disposition and acquisitions opportunities. Accordingly, we are pleased to raise the range of our Company funds from operations guidance for 2012 to an expected range of $0.93-$0.96 per share."
FINANCIAL RESULTS
Revenues
For the quarter ended June 30, 2012, total gross revenues were $83.9 million, compared with total gross revenues of $78.5 million for the quarter ended June 30, 2011. The increase is primarily due to property acquisitions and an increase in occupancy.
Company FFO, As Adjusted
For the quarter ended June 30, 2012, the Company generated Company FFO, as adjusted, of $44.1 million, or $0.24 per diluted share, compared to Company FFO, as adjusted, for the quarter ended June 30, 2011 of $41.1 million, or $0.24 per diluted share. The calculation of Company FFO, as adjusted, is included later in this press release.
Net Loss Attributable to Common Shareholders
For the quarter ended June 30, 2012, net loss attributable to common shareholders was $(3.4) million, or a loss of $(0.02) per diluted share, compared with net loss attributable to common shareholders for the quarter ended June 30, 2011 of $(50.5) million, or a loss of $(0.33) per diluted share.
Capital Activities and Balance Sheet Update
During the second quarter of 2012, Lexington financed the Transamerica Tower in Baltimore, Maryland with a $55.0 million non-recourse mortgage loan which has an 11-year term and bears interest at a fixed rate of 4.32%.
During the second quarter of 2012, Lexington (1) borrowed an additional $45.0 million on its 7-year term loan and swapped the LIBOR rate on such borrowings for a current fixed rate of 3.5% and (2) repaid $23.6 million in non-recourse mortgage debt which was scheduled to mature in 2012 and had a weighted-average interest rate of 5.9%. As of June 30, 2012, $206.0 million was outstanding on the term loan and $9.0 million was available to be borrowed prior to January 13, 2013. In July 2012, Lexington repaid a $26.1 million non-recourse mortgage debt, which was scheduled to mature in 2012 and had an interest rate of 6.1%.
During the second quarter of 2012, Lexington redeemed, at par, all outstanding shares of 8.05% Series B Cumulative Redeemable Preferred Stock for $68.5 million.
Concord Debt Holdings
In May 2012, Lexington sold all of its interest in Concord Debt Holdings and related entities for $7.0 million in cash, resulting in a $7.0 million gain on sale, which is included in equity in earnings of non-consolidated entities, however it is excluded from the calculation of Company FFO, as adjusted.
Net Lease Strategic Assets Fund (NLS)
During the second quarter of 2012, Lexington entered into an agreement with its joint venture partner, a subsidiary of Inland American Real Estate Trust, Inc. ("Inland"), to, on October 1, 2012, either (1) sell its interest in NLS to Inland for a $219.8 million non-recourse promissory note which will bear interest at 7.07% and mature on December 21, 2012, or (2) purchase Inland's interest in NLS for $14.4 million in cash. The amount of the sale and/or purchase consideration will be reduced by distributions received by each respective partner from April 27, 2012 through October 1, 2012. Inland must deliver a written response by September 17, 2012 of its intention to either buy Lexington's interest in NLS or sell its interest in NLS to Lexington. If no notice is delivered by September 17, 2012, Inland will be deemed to have irrevocably agreed to sell its interest in NLS to Lexington. As a result, Lexington expects to either receive the cash amount or all of the NLS properties by December 21, 2012.
As of June 30, 2012, NLS owned 26 office, 13 industrial and 2 specialty assets located in 23 states, which encompass 5.8 million square feet and were 98.7% leased. Lexington's Quarterly Supplemental Operating and Financial Data Report for the quarter ended June 30, 2012 contains detailed property and debt information, historical operating results and certain credit metrics relating to the NLS properties.
Common Share Dividend/Unit Distribution
Lexington declared a regular quarterly dividend/distribution for the quarter ended June 30, 2012 of $0.125 per common share/unit, which was paid on July 16, 2012 to common shareholders/unitholders of record as of June 29, 2012.
OPERATING ACTIVITIES
Leasing
During the second quarter of 2012, Lexington executed 14 new and extended leases for 0.7 million square feet and ended the quarter with overall portfolio occupancy of 97.6%.
Subsequent to quarter end, Lexington executed 0.4 million square feet of extended leases, raising annual cash rents from $6.2 million to $9.6 million.
Capital Recycling
Dispositions
During the second quarter of 2012, Lexington disposed of its interest in four properties and a 6.9-acre parcel to unrelated parties for an aggregate gross sales price of $72.3 million, including $69.0 million for the multi-tenant office property in Long Beach, California. Lexington had a 55% interest in the Long Beach property.
In addition, Net Lease Strategic Assets Fund sold its interest in one property for a gross sale price of $2.7 million.
Investment Activity
Build-to-Suit Projects
Lexington closed on the acquisition of the build-to-suit industrial property in Shreveport, Louisiana for a capitalized cost of $12.9 million (9.6% initial cap rate). The property is net-leased for a 10-year term.
Lexington continues to fund the construction of, or is under contract to acquire, the previously announced build-to-suit projects in (1) Saint Joseph, Missouri (9.5% initial cap rate), (2) Jessup, Pennsylvania (9.2% initial cap rate), (3) Denver, Colorado (8.6% initial cap rate), (4) Long Island City, New York (8.5% initial cap rate), (5) Valdosta, Georgia (9.25% initial cap rate) and (6) Eugene, Oregon (9.0% initial cap rate). The aggregate estimated cost of these six on-going projects is approximately $149.5 million of which $60.8 million was invested as of June 30, 2012.
Loan Investments
During the second quarter of 2012, Lexington contracted to lend up to $8.0 million to fund the construction of a 52,000 square foot net-leased charter school in Homestead, Florida. Lexington funded $5.8 million as of June 30, 2012. The interest-only loan accrues interest at a rate of 7.5% per annum and is scheduled to mature in August 2014.
Property Acquisitions
During the second quarter of 2012, Lexington acquired an industrial property for $23.0 million (7.6% initial cap rate). The property encompasses 152 acres abutting a Union Pacific Railroad Line in Missouri City, Texas and is net-leased for a 20-year term.
In addition, during the second quarter of 2012, Lexington formed a joint venture with an 85% equity partner that acquired a 55,650 square foot inpatient rehabilitation hospital in Humble, Texas for $27.8 million. The hospital is net-leased for a remaining term of approximately 17 years. The acquisition was partially funded by a non-recourse mortgage in the original principal amount of $15.3 million, which bears interest at 4.7% and matures in May 2017.
2012 EARNINGS GUIDANCE
Lexington is increasing its estimate of Company FFO, as adjusted, by $0.01 per diluted share to a range of $0.93 to $0.96 per diluted share for the year ended December 31, 2012. This guidance is forward looking, excludes the impact of certain items and is based on current expectations.
SECOND QUARTER 2012 CONFERENCE CALL
Lexington will host a conference call today, Tuesday, August 7, 2012, at 11:00 a.m. Eastern Time, to discuss its results for the quarter ended June 30, 2012. Interested parties may participate in this conference call by dialing 888-437-9364 or 719-457-2715. A replay of the call will be available through August 21, 2012, at 877-870-5176 or 858-384-5517, pin: 4936726. A live webcast of the conference call will be available at www.lxp.com within the Investor Relations section.
ABOUT LEXINGTON REALTY TRUST
Lexington Realty Trust is a real estate investment trust that owns, invests in, and manages office, industrial and retail properties net-leased to major corporations throughout the United States and provides investment advisory and asset management services to investors in the net lease area. Lexington shares are traded on the New York Stock Exchange under the symbol "LXP". Additional information about Lexington is available on-line at www.lxp.com or by contacting Lexington Realty Trust, One Penn Plaza, Suite 4015, New York, New York 10119-4015, Attention: Investor Relations.
This release contains certain forward-looking statements which involve known and unknown risks, uncertainties or other factors not under Lexington's control which may cause actual results, performance or achievements of Lexington to be materially different from the results, performance, or other expectations implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed under the headings "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" in Lexington's periodic reports filed with the Securities and Exchange Commission, including risks related to: (1) the authorization by Lexington's Board of Trustees of future dividend declarations to achieve an expected annualized dividend paid in 2012 of $0.50 per common share, (2) Lexington's ability to achieve its estimate of Reported Company FFO or Company FFO, as adjusted, for the year ended December 31, 2012, (3) the consummation of the built-to-suit transactions, (4) the failure to continue to qualify as a real estate investment trust, (5) changes in general business and economic conditions, including the impact of the current global financial and credit crisis, (6) competition, (7) increases in real estate construction costs, (8) changes in interest rates, (9) changes in accessibility of debt and equity capital markets, including with respect to financings that Lexington is working on, or (10) future impairment charges. Copies of the periodic reports Lexington files with the Securities and Exchange Commission are available on Lexington's web site at www.lxp.com. Forward-looking statements, which are based on certain assumptions and describe Lexington's future plans, strategies and expectations, are generally identifiable by use of the words "believes," "expects," "intends," "anticipates," "estimates," "projects", "is optimistic" or similar expressions. Lexington undertakes no obligation to publicly release the results of any revisions to those forward-looking statements which may be made to reflect events or circumstances after the occurrence of unanticipated events. Accordingly, there is no assurance that Lexington's expectations will be realized.
References to Lexington refer to Lexington Realty Trust and its consolidated subsidiaries. All interests in properties and loans are held through special purpose entities, which are separate and distinct legal entities, but consolidated for financial statement purposes and/or disregarded for income tax purposes.
| LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (Unaudited and in thousands, except share and per share data) | ||||
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||
| 2012 | 2011 | 2012 | 2011 | |
| Gross revenues: | ||||
| Rental | $ 75,793 | $ 69,983 | $ 148,500 | $ 139,868 |
| Advisory and incentive fees | 765 | 1,151 | 1,088 | 1,447 |
| Tenant reimbursements | 7,372 | 7,334 | 14,936 | 15,456 |
| Total gross revenues | 83,930 | 78,468 | 164,524 | 156,771 |
| Expense applicable to revenues: | ||||
| Depreciation and amortization | (41,950) | (40,364) | (80,258) | (78,096) |
| Property operating | (14,718) | (14,313) | (28,958) | (29,371) |
| General and administrative | (6,201) | (5,535) | (11,588) | (10,979) |
| Non-operating income | 1,693 | 2,832 | 4,314 | 5,739 |
| Interest and amortization expense | (24,316) | (26,883) | (49,043) | (53,805) |
| Debt satisfaction gains (charges), net | (2) | (10) | (1,651) | 9 |
| Change in value of forward equity commitment | — | (445) | — | 5,548 |
| Litigation reserve | (2,800) | — | (2,800) | — |
| Impairment charges | (1,348) | (30,451) | (1,348) | (30,451) |
| Loss before benefit (provision) for income taxes, equity in earnings of non-consolidated entities and discontinued operations | (5,712) | (36,701) | (6,808) | (34,635) |
| Benefit (provision) for income taxes | (329) | (220) | (515) | 1,313 |
| Equity in earnings of non-consolidated entities | 10,277 | 7,600 | 17,670 | 11,599 |
| Income (loss) from continuing operations | 4,236 | (29,321) | 10,347 | (21,723) |
| Discontinued operations: | ||||
| Income from discontinued operations | 502 | 962 | 702 | 2,654 |
| Provision for income taxes | (2) | (17) | (2) | (29) |
| Debt satisfaction gains (charges), net | — | — | 1,728 | (603) |
| Gains on sales of properties | 2,671 | 170 | 2,671 | 5,069 |
| Impairment charges | (1,781) | (28,751) | (4,342) | (58,318) |
| Total discontinued operations | 1,390 | (27,636) | 757 | (51,227) |
| Net income (loss) | 5,626 | (56,957) | 11,104 | (72,950) |
| Less net (income) loss attributable to noncontrolling interests | (1,116) | 12,699 | (2,983) | 11,253 |
| Net income (loss) attributable to Lexington Realty Trust shareholders | 4,510 | (44,258) | 8,121 | (61,697) |
| Dividends attributable to preferred shares - Series B | (919) | (1,590) | (2,298) | (3,180) |
| Dividends attributable to preferred shares - Series C | (1,573) | (1,690) | (3,145) | (3,380) |
| Dividends attributable to preferred shares - Series D | (2,925) | (2,925) | (5,851) | (5,851) |
| Dividends attributable to non-vested common shares | (139) | (76) | (289) | (155) |
| Deemed dividend - Series B | (2,346) | — | (2,346) | — |
| Redemption discount - Series C | — | — | 229 | 86 |
| Net loss attributable to common shareholders | $ (3,392) | $ (50,539) | $ (5,579) | $ (74,177) |
| Income (loss) per common share - basic and diluted: | ||||
| Loss from continuing operations | $ (0.02) | $ (0.23) | $ (0.04) | $ (0.23) |
| Income (loss) from discontinued operations | — | (0.10) | — | (0.27) |
| Net loss attributable to common shareholders | $ (0.02) | $ (0.33) | $ (0.04) | $ (0.50) |
| Weighted-average common shares outstanding - basic and diluted: | 154,558,380 | 151,526,956 | 154,353,707 | 148,866,015 |
| Amounts attributable to common shareholders: | ||||
| Loss from continuing operations | $ (3,925) | $ (34,490) | $ (5,207) | $ (34,592) |
| Income (loss) from discontinued operations | 533 | (16,049) | (372) | (39,585) |
| Net loss attributable to common shareholders | $ (3,392) | $ (50,539) | $ (5,579) | $ (74,177) |
| LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| June 30, 2012 (unaudited) and December 31, 2011 | ||
| (In thousands, except share and per share data) | ||
| 2012 | 2011 | |
| Assets: | ||
| Real estate, at cost | $ 3,160,236 | $ 3,172,246 |
| Investments in real estate under construction | 57,250 | 34,529 |
| Less: accumulated depreciation and amortization | 693,627 | 638,368 |
| 2,523,859 | 2,568,407 | |
| Intangible assets, net | 163,718 | 178,569 |
| Cash and cash equivalents | 50,189 | 63,711 |
| Restricted cash | 30,497 | 30,657 |
| Investment in and advances to non-consolidated entities | 96,826 | 90,558 |
| Deferred expenses, net | 47,454 | 43,966 |
| Loans receivable, net | 71,439 | 66,619 |
| Rent receivable | 6,972 | 7,271 |
| Other assets | 26,992 | 28,290 |
| Total assets | $ 3,017,946 | $ 3,078,048 |
| Liabilities and Equity: | ||
| Liabilities: | ||
| Mortgages and notes payable | $ 1,263,228 | $ 1,366,004 |
| Credit facility borrowings | 35,000 | — |
| Term loan payable | 206,000 | — |
| Exchangeable notes payable | — | 62,102 |
| Convertible notes payable | 106,118 | 105,149 |
| Trust preferred securities | 129,120 | 129,120 |
| Dividends payable | 23,987 | 25,273 |
| Accounts payable and other liabilities | 59,592 | 53,058 |
| Accrued interest payable | 11,941 | 13,019 |
| Deferred revenue - including below market leases, net | 85,645 | 90,349 |
| Prepaid rent | 16,787 | 12,543 |
| Total liabilities | 1,937,418 | 1,856,617 |
| Commitments and contingencies | ||
| Equity: | ||
| Preferred shares, par value $0.0001 per share; authorized 100,000,000 shares, | ||
| Series B Cumulative Redeemable Preferred, liquidation preference $68,522; 2,740,874 shares issued and outstanding in 2011 | — | 66,193 |
| Series C Cumulative Convertible Preferred, liquidation preference $96,770 and $98,510; 1,935,400 and 1,970,200 shares issued and outstanding in 2012 and 2011, respectively | 94,016 | 95,706 |
| Series D Cumulative Redeemable Preferred, liquidation preference $155,000; 6,200,000 shares issued and outstanding | 149,774 | 149,774 |
| Common shares, par value $0.0001 per share; authorized 400,000,000 shares, 155,760,185 and 154,938,351 shares issued and outstanding in 2012 and 2011, respectively | 16 | 15 |
| Additional paid-in-capital | 2,017,563 | 2,010,850 |
| Accumulated distributions in excess of net income | (1,205,562) | (1,161,402) |
| Accumulated other comprehensive income (loss) | (3,621) | 1,938 |
| Total shareholders' equity | 1,052,186 | 1,163,074 |
| Noncontrolling interests | 28,342 | 58,357 |
| Total equity | 1,080,528 | 1,221,431 |
| Total liabilities and equity | $ 3,017,946 | $ 3,078,048 |
| LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES | ||||
| EARNINGS PER SHARE | ||||
| (Unaudited and in thousands, except share and per share data) | ||||
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
||
| 2012 | 2011 | 2012 | 2011 | |
| EARNINGS PER SHARE: | ||||
| Basic and Diluted: | ||||
| Loss from continuing operations attributable to common shareholders | $ (3,925) | $ (34,490) | $ (5,207) | $ (34,592) |
| Income (loss) from discontinued operations attributable to common shareholders | 533 | (16,049) | (372) | (39,585) |
| Net loss attributable to common shareholders | $ (3,392) | $ (50,539) | $ (5,579) | $ (74,177) |
| Weighted-average number of common shares outstanding | 154,558,380 | 151,526,956 | 154,353,707 | 148,866,015 |
| Income (loss) per common share: | ||||
| Loss from continuing operations | $ (0.02) | $ (0.23) | $ (0.04) | $ (0.23) |
| Income (loss) from discontinued operations | — | (0.10) | — | (0.27) |
| Net loss attributable to common shareholders | $ (0.02) | $ (0.33) | $ (0.04) | $ (0.50) |
| LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES | ||||
| REPORTED COMPANY FUNDS FROM OPERATIONS & FUNDS AVAILABLE FOR DISTRIBUTION | ||||
| (Unaudited and in thousands, except share and per share data) | ||||
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||
| 2012 | 2011 | 2012 | 2011 | |
| FUNDS FROM OPERATIONS: (1) | ||||
| Basic and Diluted: | ||||
| Net loss attributable to common shareholders | $ (3,392) | $ (50,539) | $ (5,579) | $ (74,177) |
| Adjustments: | ||||
| Depreciation and amortization | 41,318 | 40,922 | 79,619 | 79,518 |
| Impairment losses - real estate | 3,129 | 59,202 | 5,690 | 88,769 |
| Impairment loss - joint venture | — | — | — | 1,559 |
| Noncontrolling interests - OP units | 78 | (1,398) | 438 | (958) |
| Amortization of leasing commissions | 1,211 | 966 | 2,298 | 1,873 |
| Joint venture and noncontrolling interest adjustment | 2,047 | (13,686) | 926 | (13,981) |
| Preferred dividends | 3,919 | 1,690 | 5,262 | 3,294 |
| Gains on sales of properties | (2,671) | (170) | (2,671) | (5,069) |
| Gain on sale - joint venture investment | (7,000) | — | (7,000) | — |
| Interest and amortization on 6.00% Convertible Notes | 2,326 | 2,326 | 4,653 | 4,653 |
| Reported Company FFO | 40,965 | 39,313 | 83,636 | 85,481 |
| Debt satisfaction charges (gains), net | 2 | 10 | (77) | 594 |
| Forward equity commitment | — | 445 | — | (5,548) |
| Litigation reserve | 2,800 | — | 2,800 | — |
| Other | 332 | 1,305 | 322 | 2,250 |
| Company FFO, as adjusted | 44,099 | 41,073 | 86,681 | 82,777 |
| FUNDS AVAILABLE FOR DISTRIBUTION: (2) | ||||
| Adjustments: | ||||
| Straight-line rents | (5,408) | (3,927) | 4,069 | 2,993 |
| Lease incentives | 293 | 525 | 830 | 1,047 |
| Amortization of below/above market leases | (1,394) | (667) | (2,695) | (1,278) |
| Non-cash interest, net | (182) | 127 | (856) | 351 |
| Non-cash general and administrative expenses | 1,177 | 1,014 | 2,358 | 1,951 |
| Tenant improvements | (3,690) | (2,031) | (5,800) | (4,755) |
| Lease costs | (987) | (5,419) | (3,631) | (9,246) |
| Reported Company Funds Available for Distribution | $ 33,908 | $ 30,695 | $ 80,956 | $ 73,840 |
| Per Share Amounts | ||||
| Basic: | ||||
| Reported Company FFO | $ 0.23 | $ 0.22 | $ 0.46 | $ 0.49 |
| Company FFO, as adjusted | $ 0.24 | $ 0.24 | $ 0.48 | $ 0.48 |
| Company FAD | $ 0.19 | $ 0.18 | $ 0.45 | $ 0.43 |
| Diluted: | ||||
| Reported Company FFO | $ 0.23 | $ 0.22 | $ 0.46 | $ 0.49 |
| Company FFO, as adjusted | $ 0.24 | $ 0.24 | $ 0.48 | $ 0.48 |
| Company FAD | $ 0.19 | $ 0.18 | $ 0.45 | $ 0.43 |
| LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES | ||||
| REPORTED COMPANY FUNDS FROM OPERATIONS & FUNDS AVAILABLE FOR DISTRIBUTION (CONTINUED) | ||||
| (Unaudited and in thousands, except share and per share data) | ||||
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||
| Basic: | 2012 | 2011 | 2012 | 2011 |
| Weighted-average common shares outstanding - EPS basic | 154,558,380 | 151,526,956 | 154,353,707 | 148,866,015 |
| 6.00% Convertible Notes | 16,409,546 | 16,230,905 | 16,409,546 | 16,230,905 |
| Non-vested share-based payment awards | 199,202 | 138,457 | 201,099 | 130,662 |
| Operating Partnership Units | 4,505,457 | 4,824,501 | 4,519,416 | 4,861,704 |
| Preferred Shares - Series C | 4,710,570 | 5,062,278 | 4,714,293 | 5,077,293 |
| Weighted-average common shares outstanding - Reported Company FFO basic | 180,383,155 | 177,783,097 | 180,198,061 | 175,166,579 |
| Adjustments: | ||||
| Forward equity commitment settlement | — | (3,544,219) | — | (3,468,421) |
| Weighted-average common shares outstanding - Company FFO, as adjusted & FAD | 180,383,155 | 174,238,878 | 180,198,061 | 171,698,158 |
| Diluted: | ||||
| Weighted-average common shares outstanding - Reported Company FFO basic | 180,383,155 | 177,783,097 | 180,198,061 | 175,166,579 |
| Options - Incremental shares | 239,105 | 328,985 | 243,659 | 361,866 |
| Weighted-average common shares outstanding - Reported Company FFO diluted | 180,622,260 | 178,112,082 | 180,441,720 | 175,528,445 |
| Adjustments: | ||||
| Forward equity commitment settlement | — | (3,544,219) | — | (3,468,421) |
| Weighted-average common shares outstanding - Company FFO, as adjusted & FAD | 180,622,260 | 174,567,863 | 180,441,720 | 172,060,024 |
1 Lexington believes that Funds from Operations ("FFO") is a widely recognized and appropriate measure of the performance of an equity REIT. Lexington believes FFO is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. FFO is intended to exclude generally accepted accounting principles ("GAAP") historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. As a result, FFO provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities, interest costs and other matters without the inclusion of depreciation and amortization, providing perspective that may not necessarily be apparent from net income.
The National Association of Real Estate Investment Trusts, Inc. ("NAREIT") defines FFO as "net income (or loss) computed in accordance with GAAP, excluding gains (or losses) from sales of property, plus real estate depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures." NAREIT recently clarified its computation of FFO to exclude impairment charges on depreciable real estate owned directly or indirectly. FFO does not represent cash generated from operating activities in accordance with GAAP and is not indicative of cash available to fund cash needs.
Lexington presents "Reported Company funds from operations" or "Reported Company FFO," which differs from FFO because it includes Lexington's operating partnership units, Lexington's 6.50% Series C Cumulative Convertible Preferred Shares, and Lexington's 6.00% Convertible Notes because these securities are convertible, at the holder's option, into Lexington's common shares. Management believes this is appropriate and relevant to securities analysts, investors and other interested parties because Lexington presents Reported Company FFO on a company-wide basis as if all securities that are convertible, at the holder's option, into Lexington's common shares, are converted. Lexington also presents "Company funds from operations, as adjusted" or "Company FFO, as adjusted," which adjusts Reported Company FFO for certain items which Management believes are not indicative of the operating results of its real estate portfolio. Management believes this is an appropriate presentation as it is frequently requested by security analysts, investors and other interested parties. Since others do not calculate funds from operations in a similar fashion, Reported Company FFO and Company FFO, as adjusted, may not be comparable to similarly titled measures as reported by others. Reported Company FFO and Company FFO, as adjusted, should not be considered as an alternative to net income as an indicator of our operating performance or as an alternative to cash flow as a measure of liquidity.
2 Reported Company Funds Available for Distribution ("FAD") is calculated by making adjustments to Company FFO, as adjusted, for (1) straight-line rent revenue, (2) lease incentive amortization, (3) amortization of above/below market leases, (4) cash paid for tenant improvements, (5) cash paid for lease costs, (6) non-cash general and administrative expenses, and (7) non-cash interest, net. Although FAD may not be comparable to that of other REITs, Lexington believes it provides a meaningful indication of its ability to fund cash needs. FAD is a non-GAAP financial measure and should not be viewed as an alternative measurement of operating performance to net income, as an alternative to net cash flows from operating activities or as a measure of liquidity.