NEW YORK, Nov. 7, 2014 (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 third quarter ended September 30, 2014.
Third Quarter 2014 Highlights
- Generated Company Funds From Operations, as adjusted ("Company FFO, as adjusted"), of $68.7 million, or $0.28 per diluted common share.
- Invested $51.0 million in on-going build-to-suit projects and loan investments and commenced funding a new $10.2 million industrial build-to-suit project.
- Committed to acquire a to-be-built industrial property for $155.0 million.
- Disposed of five properties for an aggregate disposition price of $52.6 million.
- Executed 0.5 million square feet of new and extended leases with overall portfolio 97.6% leased.
- Received $10.3 million for the payoff of the Homestead, Florida loan investment.
- Revenue from leases of ten years or longer increased to 40.9% from 28.5% of revenue.
Subsequent to Quarter End Highlights
- Acquired two properties for $49.5 million.
T. Wilson Eglin, President and Chief Executive Officer of Lexington, stated "We are pleased to report strong operating results for our third quarter, with active leasing throughout our portfolio. We continue to make progress with respect to executing our capital recycling strategy, by selling five non-core properties for $52.6 million, and building our investment pipeline, by committing to acquire a property for $155.0 million upon completion of construction next year. The addition of long-term net-leased properties to our portfolio continues to lengthen our weighted-average lease term and improve our prospects for growth in net operating income going forward."
FINANCIAL RESULTS
Revenues
For the quarter ended September 30, 2014, total gross revenues were $109.5 million, compared with total gross revenues of $93.1 million for the quarter ended September 30, 2013. The increase is primarily due to property acquisitions.
Company FFO, As Adjusted
For the quarter ended September 30, 2014, Lexington generated Company FFO, as adjusted, of $68.7 million, or $0.28 per diluted share, compared to Company FFO, as adjusted, for the quarter ended September 30, 2013 of $56.1 million, or $0.25 per diluted share. The calculation of Company FFO, as adjusted, and a reconciliation to net income attributable to Lexington Realty Trust shareholders is included later in this press release.
Dividends/Distributions
Lexington declared a regular quarterly common share/unit dividend/distribution for the quarter ended September 30, 2014 of $0.17 per common share/unit, which was paid on October 15, 2014 to common shareholders/unitholders of record as of September 30, 2014, and a dividend of $0.8125 per share on its Series C Cumulative Convertible Preferred Stock ("Series C Preferred Shares"), which will be paid on November 17, 2014 to Series C Preferred Shareholders of record as of October 31, 2014.
Net Income Attributable to Common Shareholders
For the quarter ended September 30, 2014, net income attributable to common shareholders was $38.7 million, or $0.17 per diluted share, compared with net income attributable to common shareholders for the quarter ended September 30, 2013 of $3.0 million, or $0.01 per diluted share.
| OPERATING ACTIVITIES | |||||||
| Investment Activity | |||||||
| On-going Build-to-Suit Projects | |||||||
| GAAP | |||||||
| Maximum | Investment | ||||||
| Lease | Commitment/Estimated | Balance as of | Estimated | ||||
| Property | Term | Completion Cost | 9/30/2014 | Completion | |||
| Location | Sq. Ft. | Type | (Years) | ($000) | ($000) | Date | |
| Oak Creek, WI | 164,000 | Industrial | 20 | $ 22,609 | $ 5,263 | 2Q 15 | |
| Richmond, VA | 330,000 | Office | 15 | 110,137 | 52,792 | 3Q 15 | |
| Lake Jackson, TX | 664,000 | Office/R&D | 20 | 166,164 | 27,498 | 4Q 16 | |
| Thomson, GA | 208,000 | Industrial | 15 | 10,245 | 830 | 2Q 15 | |
| 1,366,000 | $ 309,155 | $ 86,383 | |||||
| Forward Commitments | |||||||
| Estimated | Estimated | Estimated | Estimated | Lease | |||
| Property | Acquisition Cost | Completion | Initial | GAAP | Term | ||
| Location | Type | ($000) | Date | Cash Yield | Yield | (Years) | |
| Auburn Hills, MI | Office | $ 40,025 | 1Q 15 | 7.9% | 9.0% | 14 | |
| Richland, WA | Industrial | $ 155,000 | 4Q 15 | 7.1% | 8.6% | 20 | |
| $ 195,025 | |||||||
| Loan Investments | |||||||
| Lexington collected $10.3 million in full satisfaction of the Homestead, Florida loan investment. | |||||||
| Subsequent to September 30, 2014 Acquisitions | |||||||
| Initial | |||||||
| Initial | Annualized | Initial | Estimated | ||||
| Basis | Cash Rent | Cash | GAAP | Lease | |||
| Tenant/Guarantor | Location | Property Type | ($000) | ($000) | Yield | Yield | Term |
| ZE-45 Ground Tenant LLC | New York, NY | Land | $ 30,426 | $ 1,500 | 4.9% | 15.2% | 99 yrs |
| HealthSouth Corp. | Vineland, NJ | Rehab Hospital | 19,100 | 1,113 | 5.8% | 5.8%(1) | 28 yrs |
| $ 49,526 | $ 2,613 | ||||||
| (1) Lease contains annual CPI increases. | |||||||
| Capital Recycling | |||||||
| Dispositions | |||||||
| Gross Disposition | Annualized | ||||||
| Price | NOI | Month of | |||||
| Tenant | Location | Property Type | ($000) | ($000) | Disposition | ||
| Multi-tenant | Johnson City, TN | Office | $ 4,000 | $ 174 | 14-Jul | ||
| Elsevier STM Inc. | San Antonio, TX | Industrial | 41,000 | 3,652 | 14-Jul | ||
| Malone's Food Stores, LTD | Dallas, TX | Retail | 3,300 | 358 | 14-Aug | ||
| Safeway, Inc. | Billings, MT | Retail | 1,475 | 185 | 14-Sep | ||
| Vacant | Allentown, PA | Office | 2,800 | — | 14-Sep | ||
| $ 52,575 | $ 4,369 | ||||||
| Leasing | |||||||
| During the third quarter of 2014, Lexington executed 10 new and extended leases for 0.5 million square feet and ended the quarter with its overall portfolio 97.6% leased. | |||||||
| Lease Extensions | |||||
| Prior | Lease | ||||
| Location | Term | Expiration Date | Sq. Ft. | ||
| Office | |||||
| 1 | Lake Mary | FL | 09/2015 | 09/2020 | 125,155 |
| 2 | Lake Mary | FL | 09/2015 | 09/2020 | 125,920 |
| 3 | Louisville | CO | 04/2017 | 04/2027 | 86,877 |
| 3 | Total office lease extensions | 337,952 | |||
| Industrial | |||||
| 1 | Franklin | NC | 12/2014 | 06/2015 | 72,868 |
| 2 | Minneapolis | MN | 06/2015 | 12/2025 | 18,620 |
| 2 | Total industrial lease extensions | 91,488 | |||
| 5 | Total lease extensions | 429,440 | |||
| New Leases | Lease | ||||
| Location | Expiration Date | Sq. Ft. | |||
| Office | |||||
| 1-3 | Various | 2015-2025 | 2,504 | ||
| 4 | Orlando | FL | 10/2025 | 44,752 | |
| 5 | Houston | TX | 10/2014 | 33,456 | |
| 5 | Total new leases | 80,712 | |||
| 10 | TOTAL NEW AND EXTENDED LEASES | 510,152 | |||
2014 EARNINGS GUIDANCE
Lexington is revising its expectations for Company FFO, as adjusted, to an expected range of $1.09 to $1.11 per diluted share for the year ended December 31, 2014, as compared to prior guidance of $1.08 to $1.11 per diluted share. This guidance is forward looking, excludes the impact of certain items and is based on current expectations.
THIRD QUARTER 2014 CONFERENCE CALL
Lexington will host a conference call today, Friday, November 7, 2014, at 11:00 a.m. Eastern Time, to discuss its results for the quarter ended September 30, 2014. Interested parties may participate in this conference call by dialing 877-407-0789 or 201-689-8562. A replay of the call will be available through November 21, 2014, at 877-870-5176 or 858-384-5517, pin: 13593658. A live webcast of the conference call will be available at www.lxp.com within the Investors section.
ABOUT LEXINGTON REALTY TRUST
Lexington Realty Trust is a real estate investment trust that owns a diversified portfolio of equity and debt interests in single-tenant commercial properties and land. Lexington seeks to expand its portfolio through acquisitions, sale-leaseback transactions, build-to-suit arrangements and other transactions. A majority of these properties and all land interests are subject to net or similar leases, where the tenant bears all or substantially all of the operating costs, including cost increases, for real estate taxes, utilities, insurance and ordinary repairs. Lexington also 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, including those necessary to achieve an annualized dividend level of $0.68 per common share/unit, (2) Lexington's ability to achieve its estimate of Company FFO, as adjusted, for the year ending December 31, 2014, (3) the successful consummation of any lease, acquisition, build-to-suit, financing or other transaction, (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 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," "goal," "objective" 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, some of which are 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 September 30, | Nine months ended September 30, | |||
| 2014 | 2013 | 2014 | 2013 | |
| Gross revenues: | ||||
| Rental | $ 101,680 | $ 85,643 | $ 302,314 | $ 254,317 |
| Advisory and incentive fees | 135 | 98 | 383 | 426 |
| Tenant reimbursements | 7,698 | 7,311 | 24,535 | 22,315 |
| Total gross revenues | 109,513 | 93,052 | 327,232 | 277,058 |
| Expense applicable to revenues: | ||||
| Depreciation and amortization | (40,387) | (41,136) | (119,538) | (123,407) |
| Property operating | (16,383) | (14,629) | (49,651) | (43,609) |
| General and administrative | (6,394) | (6,355) | (21,043) | (20,105) |
| Non-operating income | 5,438 | 2,147 | 11,692 | 5,478 |
| Interest and amortization expense | (24,967) | (22,055) | (75,382) | (66,455) |
| Debt satisfaction charges, net | (455) | (2,967) | (7,946) | (25,396) |
| Impairment charges | (2,464) | — | (18,864) | (2,413) |
| Income before provision for income taxes, equity in earnings (losses) of non-consolidated entities and discontinued operations | 23,901 | 8,057 | 46,500 | 1,151 |
| Provision for income taxes | (80) | (2,433) | (964) | (2,963) |
| Equity in earnings (losses) of non-consolidated entities | 173 | (737) | 246 | (397) |
| Income (loss) from continuing operations | 23,994 | 4,887 | 45,782 | (2,209) |
| Discontinued operations: | ||||
| Income (loss) from discontinued operations | 19 | (264) | 2,839 | 708 |
| Provision for income taxes | (7) | (792) | (34) | (1,987) |
| Debt satisfaction gains (charges), net | — | (3) | (299) | 8,954 |
| Gains on sales of properties | 18,542 | 2,129 | 22,052 | 14,935 |
| Impairment charges | (371) | (802) | (11,062) | (9,537) |
| Total discontinued operations | 18,183 | 268 | 13,496 | 13,073 |
| Net income | 42,177 | 5,155 | 59,278 | 10,864 |
| Less net income attributable to noncontrolling interests | (1,772) | (460) | (3,537) | (2,057) |
| Net income attributable to Lexington Realty Trust shareholders | 40,405 | 4,695 | 55,741 | 8,807 |
| Dividends attributable to preferred shares – Series C | (1,573) | (1,573) | (4,718) | (4,718) |
| Dividends attributable to preferred shares – Series D | — | — | — | (3,543) |
| Allocation to participating securities | (112) | (144) | (399) | (482) |
| Deemed dividend – Series D | — | — | — | (5,230) |
| Net income (loss) attributable to common shareholders | $ 38,720 | $ 2,978 | $ 50,624 | (5,166) |
| Income (loss) per common share – basic: | ||||
| Income (loss) from continuing operations | $ 0.09 | $ 0.01 | $ 0.17 | $ (0.09) |
| Income from discontinued operations | 0.08 | — | 0.05 | 0.06 |
| Net income (loss) attributable to common shareholders | $ 0.17 | $ 0.01 | $ 0.22 | $ (0.03) |
| Weighted-average common shares outstanding – basic | 229,463,522 | 213,649,374 | 228,337,871 | 204,923,085 |
| Income (loss) per common share – diluted: | ||||
| Income (loss) from continuing operations | $ 0.09 | $ 0.01 | $ 0.17 | $ (0.09) |
| Income from discontinued operations | 0.08 | — | 0.05 | 0.06 |
| Net income (loss) attributable to common shareholders | $ 0.17 | $ 0.01 | $ 0.22 | $ (0.03) |
| Weighted-average common shares outstanding – diluted | 229,922,110 | 214,406,065 | 228,830,020 | 204,923,085 |
| Amounts attributable to common shareholders: | ||||
| Income (loss) from continuing operations | $ 21,448 | $ 2,691 | $ 38,076 | $ (17,682) |
| Income from discontinued operations | 17,272 | 287 | 12,548 | 12,516 |
| Net income (loss) attributable to common shareholders | $ 38,720 | $ 2,978 | $ 50,624 | $ (5,166) |
| LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| (Unaudited and in thousands, except share and per share data) | ||
| September 30, 2014 | December 31, 2013 | |
| Assets: | ||
| Real estate, at cost | $ 3,786,106 | $ 3,812,294 |
| Real estate - intangible assets | 755,784 | 762,157 |
| Investments in real estate under construction | 86,883 | 74,350 |
| 4,628,773 | 4,648,801 | |
| Less: accumulated depreciation and amortization | 1,271,228 | 1,223,381 |
| Real estate, net | 3,357,545 | 3,425,420 |
| Cash and cash equivalents | 109,337 | 77,261 |
| Restricted cash | 61,732 | 19,953 |
| Investment in and advances to non-consolidated entities | 16,619 | 18,442 |
| Deferred expenses, net | 67,820 | 66,827 |
| Loans receivable, net | 133,077 | 99,443 |
| Rent receivable – current | 7,301 | 10,087 |
| Rent receivable – deferred | 47,240 | 19,473 |
| Other assets | 38,955 | 35,375 |
| Total assets | $ 3,839,626 | $ 3,772,281 |
| Liabilities and Equity: | ||
| Liabilities: | ||
| Mortgages and notes payable | 1,005,205 | 1,197,489 |
| Credit facility borrowings | — | 48,000 |
| Term loans payable | 505,000 | 406,000 |
| Senior notes payable | 497,607 | 247,707 |
| Convertible notes payable | 23,820 | 27,491 |
| Trust preferred securities | 129,120 | 129,120 |
| Dividends payable | 42,315 | 40,018 |
| Accounts payable and other liabilities | 34,233 | 39,642 |
| Accrued interest payable | 14,431 | 9,627 |
| Deferred revenue - including below market leases, net | 71,719 | 69,667 |
| Prepaid rent | 16,201 | 18,037 |
| Total liabilities | 2,339,651 | 2,232,798 |
| Commitments and contingencies | ||
| Equity: | ||
| Preferred shares, par value $0.0001 per share; authorized 100,000,000 shares: | ||
| Series C Cumulative Convertible Preferred, liquidation preference $96,770; 1,935,400 shares issued and outstanding | 94,016 | 94,016 |
| Common shares, par value $0.0001 per share; authorized 400,000,000 shares, 231,461,102 and 228,663,022 shares issued and outstanding in 2014 and 2013, respectively | 23 | 23 |
| Additional paid-in-capital | 2,747,265 | 2,717,787 |
| Accumulated distributions in excess of net income | (1,368,185) | (1,300,527) |
| Accumulated other comprehensive income | 3,305 | 4,439 |
| Total shareholders' equity | 1,476,424 | 1,515,738 |
| Noncontrolling interests | 23,551 | 23,745 |
| Total equity | 1,499,975 | 1,539,483 |
| Total liabilities and equity | $ 3,839,626 | $ 3,772,281 |
| LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES | ||||
| EARNINGS PER SHARE | ||||
| (Unaudited and in thousands, except share and per share data) | ||||
| Three Months Ended | Nine Months Ended | |||
| September 30, | September 30, | |||
| 2014 | 2013 | 2014 | 2013 | |
| EARNINGS PER SHARE: | ||||
| Basic: | ||||
| Income (loss) from continuing operations attributable to common shareholders | $ 21,448 | $ 2,691 | $ 38,076 | $ (17,682) |
| Income from discontinued operations attributable to common shareholders | 17,272 | 287 | 12,548 | 12,516 |
| Net income (loss) attributable to common shareholders | $ 38,720 | $ 2,978 | $ 50,624 | $ (5,166) |
| Weighted-average number of common shares outstanding | 229,463,522 | 213,649,374 | 228,337,871 | 204,923,085 |
| Income (loss) per common share: | ||||
| Income (loss) from continuing operations | $ 0.09 | $ 0.01 | $ 0.17 | $ (0.09) |
| Income from discontinued operations | 0.08 | — | 0.05 | 0.06 |
| Net income (loss) attributable to common shareholders | $ 0.17 | $ 0.01 | $ 0.22 | (0.03) |
| Diluted: | ||||
| Income (loss) from continuing operations attributable to common shareholders - basic | $ 21,448 | $ 2,691 | $ 38,076 | $ (17,682) |
| Impact of assumed conversions: | ||||
| Share options | — | — | — | — |
| Income (loss) from continuing operations attributable to common shareholders | 21,448 | 2,691 | 38,076 | (17,682) |
| Income from discontinued operations attributable to common shareholders - basic | 17,272 | 287 | 12,548 | 12,516 |
| Impact of assumed conversions: | ||||
| Share options | — | — | — | — |
| Income from discontinued operations attributable to common shareholders | 17,272 | 287 | 12,548 | 12,516 |
| Net income (loss) attributable to common shareholders | $ 38,720 | $ 2,978 | $ 50,624 | $ (5,166) |
| Weighted-average common shares outstanding - basic | 229,463,522 | 213,649,374 | 228,337,871 | 204,923,085 |
| Effect of dilutive securities: | ||||
| Share options | 458,588 | 756,691 | 492,149 | — |
| Weighted-average common shares outstanding | 229,922,110 | 214,406,065 | 228,830,020 | 204,923,085 |
| Income (loss) per common share: | ||||
| Income (loss) from continuing operations | $ 0.09 | $ 0.01 | $ 0.17 | $ (0.09) |
| Income from discontinued operations | 0.08 | — | 0.05 | 0.06 |
| Net income (loss) attributable to common shareholders | $ 0.17 | $ 0.01 | $ 0.22 | $ (0.03) |
| 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 | Nine Months Ended | |||
| September 30, | September 30, | |||
| 2014 | 2013 | 2014 | 2013 | |
| FUNDS FROM OPERATIONS: (1) | ||||
| Basic and Diluted: | ||||
| Net income attributable to Lexington Realty Trust shareholders | $ 40,405 | $ 4,695 | $ 55,741 | $ 8,807 |
| Adjustments: | ||||
| Depreciation and amortization | 39,030 | 43,227 | 117,991 | 131,343 |
| Impairment charges - real estate, including nonconsolidated joint venture real estate | 3,115 | 1,727 | 30,856 | 12,875 |
| Noncontrolling interests - OP units | 1,442 | 202 | 2,556 | 1,286 |
| Amortization of leasing commissions | 1,580 | 1,445 | 4,506 | 4,124 |
| Joint venture and noncontrolling interest adjustment | 495 | 554 | 1,733 | 1,675 |
| Preferred dividends - Series D | — | — | — | (3,543) |
| Gains on sales of properties, net of tax | (18,542) | 556 | (22,052) | (11,325) |
| Interest and amortization on 6.00% Convertible Guaranteed Notes | 508 | 642 | 1,618 | 2,534 |
| Reported Company FFO | 68,033 | 53,048 | 192,949 | 147,776 |
| Debt satisfaction charges, net | 455 | 2,970 | 8,245 | 16,442 |
| Other / Transaction costs | 257 | 59 | 1,514 | 603 |
| Company FFO, as adjusted | 68,745 | 56,077 | 202,708 | 164,821 |
| FUNDS AVAILABLE FOR DISTRIBUTION: (2) | ||||
| Adjustments: | ||||
| Straight-line rents | (13,478) | (6,361) | (31,057) | (9,281) |
| Lease incentives | 250 | 402 | 1,104 | 1,032 |
| Amortization of below/above market leases | 184 | 34 | 903 | (136) |
| Non-cash interest, net | (1,824) | (185) | (4,186) | (532) |
| Non-cash charges, net | 2,114 | 2,009 | 6,563 | 5,601 |
| Tenant improvements | (1,961) | (2,441) | (5,960) | (30,590) |
| Lease costs | (1,895) | (5,038) | (8,414) | (9,957) |
| Reported Company Funds Available for Distribution | $ 52,135 | $ 44,497 | $ 161,661 | $ 120,958 |
| Per Share Amounts | ||||
| Basic: | ||||
| Reported Company FFO | $ 0.28 | $ 0.23 | $ 0.80 | $ 0.67 |
| Company FFO, as adjusted | $ 0.28 | $ 0.25 | $ 0.84 | $ 0.75 |
| Company FAD | $ 0.22 | $ 0.20 | $ 0.67 | $ 0.55 |
| Diluted: | ||||
| Reported Company FFO | $ 0.28 | $ 0.23 | $ 0.80 | $ 0.67 |
| Company FFO, as adjusted | $ 0.28 | $ 0.25 | $ 0.84 | $ 0.75 |
| Company FAD | $ 0.22 | $ 0.19 | $ 0.67 | $ 0.55 |
| 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 | Nine Months Ended | |||
| September 30, | September 30, | |||
| Basic: | 2014 | 2013 | 2014 | 2013 |
| Weighted-average common shares outstanding - EPS basic | 229,463,522 | 213,649,374 | 228,337,871 | 204,923,085 |
| 6.00% Convertible Guaranteed Notes | 3,758,546 | 4,684,069 | 3,946,334 | 6,029,067 |
| Non-vested share-based payment awards | 111,448 | 487,237 | 123,446 | 494,937 |
| Operating Partnership Units | 3,871,038 | 4,110,748 | 3,876,749 | 4,165,362 |
| Preferred Shares - Series C | 4,710,570 | 4,710,570 | 4,710,570 | 4,710,570 |
| Weighted-average common shares outstanding - basic | 241,915,124 | 227,641,998 | 240,994,970 | 220,323,021 |
| Diluted: | ||||
| Weighted-average common shares outstanding - basic | 241,915,124 | 227,641,998 | 240,994,970 | 220,323,021 |
| Options - Incremental shares | 458,588 | 756,691 | 492,149 | 876,738 |
| Weighted-average common shares outstanding - diluted | 242,373,712 | 228,398,689 | 241,487,119 | 221,199,759 |
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 due 2030 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 interest, net and (7) non-cash charges, 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.