NEW YORK, Feb. 21, 2013 (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 fourth quarter ended December 31, 2012.
Fourth Quarter 2012 Highlights
- Generated Company Funds From Operations, as adjusted ("Company FFO, as adjusted"), of $48.2 million, or $0.25 per diluted common share.
- Executed 17 new and extended leases, totaling 2.4 million square feet. Overall portfolio occupancy of 97.3% at quarter end.
- Closed property acquisitions of $114.9 million, invested $27.1 million in on-going build-to-suit projects and agreed to fund up to $41.4 million for the construction of new build-to-suit projects.
- Raised $24.7 million of gross proceeds from dispositions.
- Raised net proceeds of approximately $156.3 million through a public offering of common shares.
- Satisfied $211.7 million of borrowings, including through the conversion of $31.1 million original principal amount of 6.00% Convertible Guaranteed Notes into common equity.
- Expanded seven-year term loan facility by $40.0 million and obtained a $59.5 million secured non-recourse mortgage.
Subsequent to Quarter End Transaction Activity
- Refinanced its secured credit facility with a new credit facility consisting of a four-year $300.0 million unsecured revolving loan and a five-year $250.0 million unsecured term loan.
- Obtained a $40.0 million 15-year secured non-recourse mortgage and a joint venture investment obtained a $15.3 million five-year secured non-recourse mortgage.
- Retired $21.0 million of secured debt and gave notice to prepay $137.9 million of secured debt at par in first quarter.
- Issued 3.4 million common shares and raised gross proceeds of $36.9 million through an At-The-Market offering program.
- Converted $35.0 million of original principal amount of 6.00% Convertible Guaranteed Notes into common equity.
T. Wilson Eglin, President and Chief Executive Officer of Lexington, stated, "We are very excited about our growth prospects for 2013. We have positioned Lexington to pursue growth opportunities in the coming year, having significantly reduced our debt levels both by accessing the capital markets and the timely and accretive disposition of non-core assets. After completing $247.0 million in new investments in 2012, we believe that investment volume this year will substantially increase. With just 3.0% of single-tenant revenue currently expiring this year and a strong pipeline of accretive investment opportunities, we expect to generate strong growth in our cash flow and funds from operations per share."
FINANCIAL RESULTS
Revenues
For the quarter ended December 31, 2012, total gross revenues were $95.5 million, compared with total gross revenues of $79.6 million for the quarter ended December 31, 2011. The increase is primarily due to property acquisitions and an increase in occupancy.
Company FFO, As Adjusted
For the quarter ended December 31, 2012, the Company generated Company FFO, as adjusted, of $48.2 million, or $0.25 per diluted share, compared to Company FFO, as adjusted, for the quarter ended December 31, 2011 of $45.6 million, or $0.25 per diluted share. For the year ended December 31, 2012, the Company generated Company FFO, as adjusted, of $180.6 million, or $0.98 per diluted share, compared to Company FFO, as adjusted, for the year ended December 31, 2011 of $170.0 million, or $0.97 per diluted share. The calculation of Company FFO, as adjusted, and a reconciliation to net income (loss) is included later in this press release.
Net Income (Loss) Attributable to Common Shareholders
For the quarter ended December 31, 2012, net loss attributable to common shareholders was $(7.0) million, or a loss of $(0.04) per diluted share, compared with net income attributable to common shareholders for the quarter ended December 31, 2011 of $7.5 million, or income of $0.05 per diluted share.
Capital Activities and Balance Sheet Update
Lexington financed its office property in Palo Alto, California with a $59.5 million non-recourse mortgage loan which bears interest at a fixed rate of 3.97%. The fully-amortizing loan matures at the end of the tenant lease in December 2023.
In addition, Lexington exercised an accordion feature within its seven-year term loan agreement increasing the term loan to $255.0 million, all of which is currently outstanding. Lexington swapped the LIBOR rate on such borrowings for a weighted-average fixed rate of 3.67% as of the date of this press release.
Lexington issued 17.25 million common shares in a public offering, raising net proceeds of approximately $156.3 million. The net proceeds were primarily used to satisfy $150.5 million of outstanding debt on Lexington's credit facilities. In addition, Lexington satisfied $30.1 million in non-recourse mortgage debt which had a weighted-average interest rate of 5.6%.
Lexington issued 4.5 million common shares upon conversion of an aggregate of $31.1 million original principal amount of 6.00% Convertible Guaranteed Notes due 2030 and made an aggregate cash payment of $2.4 million plus accrued and unpaid interest on the notes. In January 2013, Lexington converted an additional $35.0 million original principal amount of 6.00% Convertible Guaranteed Notes due 2030 for 5.0 million common shares and a cash payment of approximately $2.3 million plus accrued and unpaid interest.
In total, Lexington's consolidated debt declined by $118.6 million in the fourth quarter of 2012.
In February 2013, Lexington refinanced its secured credit facility with an unsecured credit facility consisting of a four-year $300.0 million unsecured revolving loan and a five-year $250.0 million unsecured term loan. Lexington expects to use a portion of the credit facility to retire $137.9 million of mortgage debt in March 2013. Lexington also amended its term loan due in 2019 to release the collateral as security for such loan. As a result, all of Lexington's corporate borrowings are now unsecured.
Subsequent to December 31, 2012, Lexington obtained a $40.0 million non-recourse mortgage secured by its property in Lenexa, Kansas. The loan bears interest at a blended fixed rate of 3.70% and matures in November 2027.
At-The-Market Offering Program
Subsequent to December 31, 2012, Lexington implemented an At-The-Market offering program under which Lexington may issue up to $100.0 million in common shares over the term of the program. Lexington issued 3.4 million common shares under the program as of the date of this press release, raising gross proceeds of $36.9 million.
Common Share/Unit Dividend/Distribution
Lexington declared a regular quarterly dividend/distribution for the quarter ended December 31, 2012 of $0.15 per common share/unit, which was paid on January 15, 2013 to common shareholders/unitholders of record as of December 31, 2012.
OPERATING ACTIVITIES
Leasing
During the fourth quarter of 2012, Lexington executed 17 new and extended leases for 2.4 million square feet. Overall in 2012, Lexington executed new and extended leases totaling approximately 7.4 million square feet and increased overall portfolio occupancy by 140 basis points to 97.3%.
Subsequent to quarter end, Lexington executed 325,000 square feet of new and extended leases.
Capital Recycling
Dispositions
During the fourth quarter of 2012, Lexington disposed of its interests in four properties to unrelated parties for an aggregate gross sales price of $24.7 million and conveyed one vacant property in foreclosure in satisfaction of the $5.3 million outstanding non-recourse mortgage.
Investment Activity
Property Acquisitions and Completed Build-to-Suit Transactions
A joint venture, in which Lexington has a minority position, acquired a120,000 square foot retail property in Palm Beach Gardens, Florida for $29.8 million (9.8% initial cap rate), which is net-leased for a 15-year term. Lexington provided a $12.0 million non-recourse mortgage loan at closing. In February 2013, this property was refinanced with a $15.3 million first mortgage and Lexington's loan was repaid.
Lexington acquired a 252,400 square foot office property in Phoenix, Arizona for $53.2 million (7.1% initial cap rate). The property is net-leased for a 17-year term.
Lexington acquired 6.2 acres of land in Palm Beach Gardens, Florida for approximately $6.0 million. Lexington previously had been leasing the land and owns the multi-tenant improvements on the property.
In the build-to-suit area, Lexington completed the 52,000 square foot build-to-suit retail property in Opelika, Alabama for approximately $8.3 million (9.4% initial cap rate). The property is net-leased for a 15-year term.
Lexington closed on its forward commitment to acquire the 80,000 square foot build-to-suit office property in Eugene, Oregon for approximately $17.6 million (9.0% initial cap rate). The property is net-leased for a 15-year term.
Overall in 2012, Lexington completed acquisitions/build-to-suit transactions for an aggregate capitalized cost of approximately $247.0 million. The properties have a weighted-average lease term of approximately 16 years and are expected to generate approximately $24.3 million of annual GAAP rent.
New and On-going Build-to-Suit Projects
Lexington entered into a new build-to-suit, an $8.8 million commitment (of which $3.2 million was funded as of December 31, 2012) to construct a 42,000 square foot retail property in Tuscaloosa, Alabama, which is net-leased for a 15-year term commencing upon completion (9.3% initial cap rate).
Lexington continues to fund the construction of the previously announced build-to-suit projects in (1) Denver, Colorado (8.6% initial rap rate), (2) Rantoul, Illinois (8.0% initial cap rate) and (3) Long Island City, New York (8.5% initial cap rate). The aggregate estimated cost of these four on-going build-to-suit projects is approximately $136.5 million, of which approximately $68.9 million was invested as of December 31, 2012. Lexington can give no assurance that any of the build-to-suit projects that are under contract or in process will be completed.
Loan Investments
Lexington closed on a $32.6 million construction loan (of which $3.5 million was funded as of December 31, 2012) for a 168,000 square foot build-to-suit data center in Norwalk, Connecticut. The interest-only construction loan bears interest at 7.5% and matures in November 2014. The property is subject to a 21-year net-lease.
Lexington received approximately $2.5 million in full satisfaction of its loan investment in New Kingstown, Pennsylvania.
2013 EARNINGS GUIDANCE
Lexington estimates that its Company FFO, as adjusted, guidance will be an expected range of $1.01 to $1.04 per diluted share for the year ended December 31, 2013. This guidance is forward looking, excludes the impact of certain items and is based on current expectations.
FOURTH QUARTER 2012 CONFERENCE CALL
Lexington will host a conference call today, Thursday, February 21, 2013, at 11:00 a.m. Eastern Time, to discuss its results for the quarter ended December 31, 2012. Interested parties may participate in this conference call by dialing (888) 215-6917 or (913) 312-1383. A replay of the call will be available through March 7, 2013, at (877) 870-5176 or (858) 384-5517, pin: 5345505. 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 self-managed and self-administered real estate investment trust that invests in, owns, finances and manages predominantly single-tenant office, industrial and retail properties leased to major corporations throughout the United States and provides investment advisory and asset management services to investors in the single-tenant area. Lexington common 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, (2) Lexington's ability to achieve its estimate of Company FFO, as adjusted, for the year ended December 31, 2013, (3) the consummation of 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 any new legislation, (6) competition, (7) increases in real estate construction costs, (8) changes in interest rates, (9) changes in accessibility of debt and equity capital markets, and (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," "may," "plans," "predicts," "will," "will likely result," "is optimistic" or similar expressions. Except as required by law, 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 December 31, |
Twelve Months Ended December 31, |
||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||
| Gross revenues: | |||||||||
| Rental | $ 87,345 | $ 71,563 | $ 313,081 | $ 280,410 | |||||
| Advisory and incentive fees | 421 | 262 | 1,806 | 2,012 | |||||
| Tenant reimbursements | 7,767 | 7,745 | 29,992 | 31,404 | |||||
| Total gross revenues | 95,533 | 79,570 | 344,879 | 313,826 | |||||
| Expense applicable to revenues: | |||||||||
| Depreciation and amortization | (46,069) | (38,855) | (161,876) | (156,358) | |||||
| Property operating | (16,277) | (13,720) | (60,213) | (58,229) | |||||
| General and administrative | (6,576) | (6,146) | (23,956) | (22,200) | |||||
| Non-operating income | 1,225 | 3,912 | 6,888 | 13,020 | |||||
| Interest and amortization expense | (25,397) | (26,286) | (98,803) | (106,478) | |||||
| Debt satisfaction gains (charges), net | (7,841) | 42 | (9,480) | 45 | |||||
| Change in value of forward equity commitment | — | 6,348 | — | 2,030 | |||||
| Gain on acquisition | — | — | 167,864 | — | |||||
| Litigation reserve | — | — | (2,775) | — | |||||
| Impairment charges | — | — | (4,262) | (35,946) | |||||
| Income (loss) before benefit (provision) for income taxes, equity in earnings of non-consolidated entities and discontinued operations | (5,402) | 4,865 | 158,266 | (50,290) | |||||
| Benefit (provision) for income taxes | (141) | (215) | (941) | 845 | |||||
| Equity in earnings of non-consolidated entities | 62 | 9,688 | 21,531 | 30,334 | |||||
| Income (loss) from continuing operations | (5,481) | 14,338 | 178,856 | (19,111) | |||||
| Discontinued operations: | |||||||||
| Income (loss) from discontinued operations | 212 | 1,011 | (1,463) | 4,955 | |||||
| Provision for income taxes | (97) | (22) | (161) | (76) | |||||
| Debt satisfaction charges, net | (717) | (3) | (178) | (606) | |||||
| Gains on sales of properties | 4,345 | 1,306 | 13,291 | 6,557 | |||||
| Impairment charges | (17) | (2,614) | (5,707) | (81,497) | |||||
| Total discontinued operations | 3,726 | (322) | 5,782 | (70,667) | |||||
| Net income (loss) | (1,755) | 14,016 | 184,638 | (89,778) | |||||
| Less net (income) loss attributable to noncontrolling interests | (592) | (989) | (4,322) | 10,194 | |||||
| Net income (loss) attributable to Lexington Realty Trust shareholders | (2,347) | 13,027 | 180,316 | (79,584) | |||||
| Dividends attributable to preferred shares - Series B | — | (1,379) | (2,298) | (6,149) | |||||
| Dividends attributable to preferred shares - Series C | (1,572) | (1,600) | (6,290) | (6,655) | |||||
| Dividends attributable to preferred shares - Series D | (2,926) | (2,926) | (11,703) | (11,703) | |||||
| Allocation to participating securities | (194) | (141) | (1,059) | (368) | |||||
| Deemed dividend - Series B | — | (95) | (2,346) | (95) | |||||
| Redemption discount - Series C | — | 618 | 229 | 833 | |||||
| Net income (loss) attributable to common shareholders | $ (7,039) | $ 7,504 | $ 156,849 | $ (103,721) | |||||
| Income (loss) per common share - basic: | |||||||||
| Income (loss) from continuing operations | $ (0.06) | $ 0.05 | $ 0.96 | $ (0.29) | |||||
| Income (loss) from discontinued operations | 0.02 | — | 0.03 | (0.39) | |||||
| Net income (loss) attributable to common shareholders | $ (0.04) | $ 0.05 | $ 0.99 | $ (0.68) | |||||
| Weighted-average common shares outstanding - basic: | 172,646,759 | 154,838,153 | 159,109,424 | 152,473,336 | |||||
| Income (loss) per common share - diluted: | |||||||||
| Income (loss) from continuing operations | $ (0.06) | $ 0.05 | $ 0.91 | $ (0.29) | |||||
| Income (loss) from discontinued operations | 0.02 | — | 0.02 | (0.39) | |||||
| Net income (loss) attributable to common shareholders | $ (0.04) | $ 0.05 | $ 0.93 | $ (0.68) | |||||
| Weighted-average common shares outstanding - diluted | 172,646,759 | 154,942,637 | 179,659,826 | 152,473,336 | |||||
| Amounts attributable to common shareholders: | |||||||||
| Income (loss) from continuing operations | $ (10,750) | $ 7,697 | $ 152,808 | $ (44,703) | |||||
| Income (loss) from discontinued operations | 3,711 | (193) | 4,041 | (59,018) | |||||
| Net income (loss) attributable to common shareholders | $ (7,039) | $ 7,504 | $ 156,849 | $ (103,721) | |||||
| LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| (Unaudited and in thousands, except share and per share data) | ||
| As of December 31, | ||
| 2012 | 2011 | |
| Assets: | ||
| Real estate, at cost | $ 3,564,466 | $ 3,172,246 |
| Real estate - intangible assets | 685,914 | 546,918 |
| Investments in real estate under construction | 65,122 | 34,529 |
| Less: accumulated depreciation and amortization | 1,150,417 | 1,006,717 |
| Real estate, net | 3,165,085 | 2,746,976 |
| Cash and cash equivalents | 34,024 | 63,711 |
| Restricted cash | 26,741 | 30,657 |
| Investment in and advances to non-consolidated entities | 27,129 | 39,330 |
| Deferred expenses, net | 57,549 | 43,966 |
| Loans receivable, net | 72,540 | 66,619 |
| Rent receivable | 7,355 | 7,271 |
| Other assets | 27,780 | 28,290 |
| Total assets | $ 3,418,203 | $ 3,026,820 |
| Liabilities and Equity: | ||
| Liabilities: | ||
| Mortgages and notes payable | $ 1,415,961 | $ 1,366,004 |
| Term loan payable | 255,000 | — |
| Exchangeable notes payable | — | 62,102 |
| Convertible notes payable | 78,127 | 105,149 |
| Trust preferred securities | 129,120 | 129,120 |
| Dividends payable | 31,351 | 25,273 |
| Accounts payable and other liabilities | 70,367 | 53,058 |
| Accrued interest payable | 11,980 | 13,019 |
| Deferred revenue - including below market leases, net | 79,908 | 90,349 |
| Prepaid rent | 13,224 | 12,543 |
| Total liabilities | 2,085,038 | 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, 178,616,664 and 154,938,351 shares issued and outstanding in 2012 and 2011, respectively | 18 | 15 |
| Additional paid-in-capital | 2,212,949 | 2,010,850 |
| Accumulated distributions in excess of net income | (1,143,803) | (1,212,630) |
| Accumulated other comprehensive income (loss) | (6,224) | 1,938 |
| Total shareholders' equity | 1,306,730 | 1,111,846 |
| Noncontrolling interests | 26,435 | 58,357 |
| Total equity | 1,333,165 | 1,170,203 |
| Total liabilities and equity | $ 3,418,203 | $ 3,026,820 |
| LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES | ||||
| EARNINGS PER SHARE | ||||
| (Unaudited and in thousands, except share and per share data) | ||||
|
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||
| 2012 | 2011 | 2012 | 2011 | |
| EARNINGS PER SHARE: | ||||
| Basic: | ||||
| Income (loss) from continuing operations attributable to common shareholders | $ (10,750) | $ 7,697 | $ 152,808 | $ (44,703) |
| Income (loss) from discontinued operations attributable to common shareholders | 3,711 | (193) | 4,041 | (59,018) |
| Net income (loss) attributable to common shareholders | $ (7,039) | $ 7,504 | $ 156,849 | $ (103,721) |
| Weighted-average number of common shares outstanding | 172,646,759 | 154,838,153 | 159,109,424 | 152,473,336 |
| Income (loss) per common share: | ||||
| Income (loss) from continuing operations | $ (0.06) | $ 0.05 | $ 0.96 | $ (0.29) |
| Income (loss) from discontinued operations | 0.02 | — | 0.03 | (0.39) |
| Net income (loss) attributable to common shareholders | $ (0.04) | $ 0.05 | $ 0.99 | $ (0.68) |
| Diluted: | ||||
| Income (loss) from continuing operations attributable to common shareholders | $ (10,750) | $ 7,697 | $ 152,808 | $ (44,703) |
| Impact of assumed conversions: | ||||
| Share options | — | — | — | — |
| Operating Partnership Units | — | — | 1,371 | — |
| 6.00% Convertible Guaranteed Notes | — | — | 8,953 | — |
| Income (loss) from continuing operations attributable to common shareholders | (10,750) | 7,697 | 163,132 | (44,703) |
| Income (loss) from discontinued operations attributable to common shareholders | 3,711 | (193) | 4,041 | (59,018) |
| Impact of assumed conversions: | ||||
| Operating Partnership Units | — | — | (179) | — |
| Income (loss) from discontinued operations attributable to common shareholders | 3,711 | (193) | 3,862 | (59,018) |
| Net income (loss) attributable to common shareholders | $ (7,039) | $ 7,504 | $ 166,994 | $ (103,721) |
| Weighted-average common shares outstanding - basic | 172,646,759 | 154,838,153 | 159,109,424 | 152,473,336 |
| Effect of dilutive securities: | ||||
| Share options | — | 104,484 | 306,449 | — |
| Operating Partnership Units | — | — | 4,438,708 | — |
| 6.00% Convertible Guaranteed Notes | — | — | 15,805,245 | — |
| Weighted-average common shares outstanding | 172,646,759 | 154,942,637 | 179,659,826 | 152,473,336 |
| Income (loss) per common share: | ||||
| Income (loss) from continuing operations | $ (0.06) | $ 0.05 | $ 0.91 | $ (0.29) |
| Income (loss) from discontinued operations | 0.02 | — | 0.02 | (0.39) |
| Net income (loss) attributable to common shareholders | $ (0.04) | $ 0.05 | $ 0.93 | $ (0.68) |
| 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 December 31, |
Twelve Months Ended December 31, |
|||
| 2012 | 2011 | 2012 | 2011 | |
| FUNDS FROM OPERATIONS: (1) | ||||
| Basic and Diluted: | ||||
| Net income (loss) attributable to Lexington Realty Trust shareholders | $ (2,347) | $ 13,027 | $ 180,316 | $ (79,584) |
| Adjustments: | ||||
| Depreciation and amortization | 45,081 | 39,892 | 163,890 | 160,689 |
| Impairment charges - real estate | 17 | 2,614 | 9,969 | 117,443 |
| Impairment charges - joint venture | — | — | — | 4,811 |
| Noncontrolling interests - OP units | 279 | 893 | 1,192 | 578 |
| Amortization of leasing commissions | 1,329 | 1,070 | 4,838 | 3,918 |
| Joint venture and noncontrolling interest adjustment | 545 | (3,039) | 560 | (23,309) |
| Preferred dividends – Series B & D | (2,926) | (4,305) | (14,001) | (17,852) |
| Gains on sales of properties | (4,345) | (1,306) | (13,291) | (6,557) |
| Gain on sale - joint venture investment | — | — | (7,000) | — |
| Gain on acquisition of real estate | — | — | (167,864) | — |
| Interest and amortization on 6.00% Convertible Guaranteed Notes | 1,973 | 2,327 | 8,953 | 9,307 |
| Reported Company FFO | 39,606 | 51,173 | 167,562 | 169,444 |
| Debt satisfaction charges (gains), net | 8,558 | (39) | 9,658 | 561 |
| Forward equity commitment | — | (6,348) | — | (2,030) |
| Litigation reserve | — | — | 2,775 | — |
| Gains on loan sales - joint venture | — | — | — | (1,927) |
| Other | 5 | 857 | 603 | 3,966 |
| Company FFO, as adjusted | 48,169 | 45,643 | 180,598 | 170,014 |
| FUNDS AVAILABLE FOR DISTRIBUTION: (2) | ||||
| Adjustments: | ||||
| Straight-line rents | (7,900) | (4,437) | (7,491) | (1,763) |
| Lease incentives | 323 | 570 | 1,466 | 2,138 |
| Amortization of below/above market leases | 57 | (886) | (3,551) | (3,101) |
| Non-cash interest, net | (132) | 121 | (1,300) | 711 |
| Non-cash general and administrative expenses | 1,103 | 1,077 | 4,565 | 4,040 |
| Tenant improvements | (8,856) | (2,732) | (25,776) | (12,266) |
| Lease costs | (5,185) | (4,871) | (13,038) | (15,870) |
| Reported Company Funds Available for Distribution | $ 27,579 | $ 34,485 | $ 135,473 | $ 143,903 |
| Per Share Amounts | ||||
| Basic: | ||||
| Reported Company FFO | $ 0.20 | $ 0.28 | $ 0.91 | $ 0.95 |
| Company FFO, as adjusted | $ 0.25 | $ 0.25 | $ 0.98 | $ 0.97 |
| Company FAD | $ 0.14 | $ 0.19 | $ 0.74 | $ 0.82 |
| Diluted: | ||||
| Reported Company FFO | $ 0.20 | $ 0.28 | $ 0.91 | $ 0.95 |
| Company FFO, as adjusted | $ 0.25 | $ 0.25 | $ 0.98 | $ 0.97 |
| Company FAD | $ 0.14 | $ 0.19 | $ 0.73 | $ 0.82 |
| Basic: | ||||
| Weighted-average common shares outstanding - EPS basic | 172,646,759 | 154,838,153 | 159,109,424 | 152,473,336 |
| 6.00% Convertible Guaranteed Notes | 13,995,678 | 16,238,672 | 15,805,245 | 16,232,862 |
| Non-vested share-based payment awards | 308,854 | 131,234 | 244,366 | 130,684 |
| Operating Partnership Units | 4,317,367 | 4,565,269 | 4,438,708 | 4,725,798 |
| Preferred Shares - Series C | 4,710,570 | 4,976,034 | 4,712,421 | 5,043,521 |
| Weighted-average common shares outstanding - Reported Company FFO basic | 195,979,228 | 180,749,362 | 184,310,164 | 178,606,201 |
| Adjustments: | ||||
| Forward equity commitment settlement | — | (551,108) | — | (2,760,608) |
| Weighted-average common shares outstanding - Company FFO, as adjusted & FAD | 195,979,228 | 180,198,254 | 184,310,164 | 175,845,593 |
| Diluted: | ||||
| Weighted-average common shares outstanding - Reported Company FFO basic | 195,979,228 | 180,749,362 | 184,310,164 | 178,606,201 |
| Options - Incremental shares | 432,356 | 104,484 | 306,449 | 208,463 |
| Weighted-average common shares outstanding - Reported Company FFO diluted | 196,411,584 | 180,853,846 | 184,616,613 | 178,814,664 |
| Adjustments: | ||||
| Forward equity commitment settlement | — | (551,108) | — | (2,760,608) |
| Weighted-average common shares outstanding - Company FFO, as adjusted & FAD | 196,411,584 | 180,302,738 | 184,616,613 | 176,054,056 |
| 1 Lexington believes that Funds from Operations ("FFO"), which is not a measure under generally accepted accounting principles ("GAAP"), 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 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 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 Guaranteed 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 non-recurring and 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. |