NEW YORK, Feb. 19, 2015 (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, 2014.
Fourth Quarter 2014 Highlights
- Generated Company Funds From Operations ("Company FFO") of $66.3 million, or $0.27 per diluted common share.
- Acquired three properties for $70.4 million.
- Invested $24.5 million in on-going build-to-suit projects and loan investments.
- Generated gross disposition proceeds of $167.2 million from the sale of four office buildings.
- Received $32.8 million from maturing loan investment.
- Retired $59.0 million of debt.
- Completed 1.9 million square feet of new leases and lease extensions, raising cash and GAAP renewal rents by 4.6%.
T. Wilson Eglin, President and Chief Executive Officer of Lexington, stated "The execution of our stated strategies in 2014 has resulted in a strong balance sheet with a large cash position, which we believe positions us to capitalize on growth opportunities in 2015. We are already committed to fund approximately $325 million in growth initiatives this year. We believe our pipeline remains strong with additional opportunities for growth as the year progresses. We also expect to continue to take advantage of refinancing opportunities in 2015, to reduce interest expense and extend our debt maturities."
FINANCIAL RESULTS
Revenues
For the quarter ended December 31, 2014, total gross revenues were $108.0 million, compared with total gross revenues of $100.5 million for the quarter ended December 31, 2013. The increase is primarily due to property acquisitions.
Company FFO
For the quarter ended December 31, 2014, Lexington generated Company FFO of $66.3 million, or $0.27 per diluted share, compared to Company FFO for the quarter ended December 31, 2013 of $65.7 million, or $0.28 per diluted share. The calculation of Company FFO and a reconciliation to net income (loss) attributable to common shareholders is included later in this press release.
Dividends/Distributions
Lexington declared a regular quarterly common share/unit dividend/distribution for the quarter ended December 31, 2014 of $0.17 per common share/unit, which was paid on January 15, 2015 to common shareholders/unitholders of record as of December 31, 2014, and a dividend of $0.8125 per share on its Series C Cumulative Convertible Preferred Stock ("Series C Preferred Shares"), which was paid on February 17, 2015 to Series C Preferred Shareholders of record as of January 30, 2015.
Net Income (Loss) Attributable to Common Shareholders
For the quarter ended December 31, 2014, net income attributable to common shareholders was $35.7 million, or $0.15 per diluted share, compared with net loss attributable to common shareholders for the quarter ended December 31, 2013 of $(8.9) million, or $(0.04) per diluted share.
OPERATING ACTIVITIES
| Investment Activity | |||||||
| Acquisitions | |||||||
| Tenant/Guarantor | Location |
Property Type |
Initial Basis ($000) |
Initial Annualized Cash Rent ($000) |
Initial Cash Yield |
Estimated GAAP Yield |
Lease Term (Yrs) |
| ZE-45 Ground Tenant LLC | New York, NY | Land | $ 30,426 | $ 1,500 | 4.9% | 15.2% | 99 |
| HealthSouth Corp. | Vineland, NJ | Rehab Hospital | 19,100 | 1,113 | 5.8% | 5.8%(1) | 28 |
| International Automotive Components Group North America | Anniston, AL | Industrial | 20,907 | 1,572 | 7.5% | 8.3% | 15 |
| $ 70,433 | $ 4,185 | 5.9% | 10.6% | ||||
| 1. Lease contains annual CPI increases. | |||||||
| On-going Build-to-Suit Projects | ||||||||||||
| Location | Sq. Ft. |
Property Type |
Lease Term (Years) |
Maximum Commitment/Estimated Completion Cost ($000) |
GAAP Investment Balance as of 12/31/2014 ($000) |
Estimated Completion Date |
||||||
| Oak Creek, WI | 164,000 | Industrial | 20 | $ 22,609 | $ 11,860 | 2Q 15 | ||||||
| Thomson, GA | 208,000 | Industrial | 15 | 10,245 | 3,428 | 2Q 15 | ||||||
| Richmond, VA | 330,000 | Office | 15 | 110,137 | 62,225 | 3Q 15 | ||||||
| Lake Jackson, TX | 664,000 | Office/R&D | 20 | 166,164 | 28,225 | 4Q 16 | ||||||
| Houston, TX(1) | 274,000 | Private School | 20 | 86,491 | 11,795 | 3Q 16 | ||||||
| 1,640,000 | $ 395,646 | $ 117,533 | ||||||||||
| 1. Lexington has a 25% interest as of December 31, 2014. Lexington may provide construction financing up to $56.7 million to the joint venture. | ||||||||||||
| Forward Commitments | ||||||
| Location |
Property Type |
Estimated Acquisition Cost ($000) |
Estimated Completion Date |
Estimated Initial Cash Yield |
Estimated GAAP Yield |
Lease Term (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 | 7.3% | 8.7% |
| Capital Recycling | |||||
| Property Dispositions | |||||
| Tenant | Location |
Property Type |
Gross Disposition Price ($000) |
Annualized NOI ($000) |
Month of Disposition |
| Bank of America, National Association | Brea, CA | Office | $ 110,000 | $ 8,096 | Nov-14 |
| Vacant(1) | Chicago, IL | Office | 34,150 | — | Nov-14 |
| Canal Insurance Company | Greenville, SC | Office | 11,550 | 991 | Dec-14 |
| Vacant(2) | Houston, TX | Office | 11,486 | — | Dec-14 |
| $ 167,186 | $ 9,087 | ||||
| 1. $29.9 million secured debt satisfied at closing. | |||||
| 2. Purchaser assumed an $11.5 million secured debt. | |||||
Loan Investments
Lexington collected $32.8 million in full satisfaction of the Norwalk, Connecticut loan investment.
Balance Sheet
During the fourth quarter of 2014, Lexington satisfied $50.5 million of secured debt, which had a weighted-average interest rate of 5.5%, including the $41.4 million of aggregate secured debt encumbering properties which were disposed.
In December 2014, holders converted approximately $8.6 million original principal amount 6.00% Convertible Guaranteed Notes due 2030 ("6.00% Notes") for 1,280,439 common shares and a cash payment of $171 thousand plus accrued interest, reducing the outstanding balance of this note issuance to $16.2 million at December 31, 2014. All common shares that are issuable upon conversion of the 6.00% Notes are treated as outstanding for diluted Company FFO calculations.
During the fourth quarter of 2014, Lexington locked rate on the following secured loans:
| Tenant/Guarantor | Location | Property Type |
Amount ($000) |
Fixed Rate |
Term (approx.) |
| ZE-45 Ground Tenant LLC(1) | New York, NY | Land | $ 29,193 | 4.1% | 10 years |
| Federal Express Corporation(2) | Long Island City, NY | Industrial | 51,650 | 3.5% | 13 years |
| $ 80,843 | 3.7% | ||||
| 1. Loan closed in first quarter of 2015. | |||||
| 2. No assurances can be given that the loan will be funded on these terms or at all. | |||||
| Leasing | |||||
| During the fourth quarter of 2014, Lexington executed the following new and extended leases: | |||||
| LEASE EXTENSIONS | |||||
| Location | Prior Term | Lease Expiration Date | Sq. Ft. | ||
| Office/Multi-Tenant | |||||
| 1 | Little Rock | AR | 10/2015 | 10/2020 | 36,311 |
| 2 | Pine Bluff | AR | 10/2015 | 10/2017 | 27,189 |
| 3 | Phoenix | AZ | 11/2016 | 11/2021 | 6,982 |
| 3 | Total office lease extensions | 70,482 | |||
| Industrial/Multi-Tenant | |||||
| 1 | Moody | AL | 12/2017 | 12/2019 | 595,346 |
| 2 | Laurens | SC | 01/2017 | 01/2020 | 1,164,000 |
| 3 | Antioch | TN | 12/2014 | 12/2015 | 60,000 |
| 3 | Total industrial lease extensions | 1,819,346 | |||
| 6 | Total lease extensions | 1,889,828 | |||
| NEW LEASES | |||||
| Location | Lease Expiration Date | Sq. Ft. | |||
| 2 | Palm Beach Gardens | FL | 2016-2022 | 20,067 | |
| 3 | Various | 2015-2025 | 5,067 | ||
| 5 | Total new leases | 25,134 | |||
| 11 | TOTAL NEW AND EXTENDED LEASES | 1,914,962 | |||
2015 EARNINGS GUIDANCE
Lexington estimates that its Company FFO guidance will be an expected range of $1.00 to $1.05 per diluted share for the year ended December 31, 2015. This guidance is forward looking, excludes the impact of certain items and is based on current expectations.
FOURTH QUARTER 2014 CONFERENCE CALL
Lexington will host a conference call today, Thursday, February 19, 2015, at 11:00 a.m. Eastern Time, to discuss its results for the quarter ended December 31, 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 March 5, 2015, at 877-870-5176 or 858-384-5517, pin: 13599968. 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 for the year ending December 31, 2015, (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 December 31, | Twelve months ended December 31, | |||
| 2014 | 2013 | 2014 | 2013 | |
| Gross revenues: | ||||
| Rental | $ 99,610 | $ 93,403 | $ 392,480 | $ 335,721 |
| Advisory and incentive fees | 171 | 429 | 554 | 855 |
| Tenant reimbursements | 8,173 | 6,626 | 31,338 | 25,334 |
| Total gross revenues | 107,954 | 100,458 | 424,372 | 361,910 |
| Expense applicable to revenues: | ||||
| Depreciation and amortization | (40,105) | (40,138) | (154,837) | (157,901) |
| Property operating | (17,039) | (14,409) | (63,673) | (54,757) |
| General and administrative | (7,221) | (8,696) | (28,255) | (28,426) |
| Non-operating income | 3,965 | 2,828 | 13,951 | 8,305 |
| Interest and amortization expense | (23,847) | (22,068) | (97,303) | (85,892) |
| Gain on sales of financial assets | 855 | — | 855 | — |
| Debt satisfaction charges, net | (1,505) | — | (9,452) | (25,347) |
| Impairment charges and loan loss | (18,469) | (33,166) | (37,333) | (35,579) |
| Income (loss) before provision for income taxes, equity in earnings (losses) of non-consolidated entities and discontinued operations | 4,588 | (15,191) | 48,325 | (17,687) |
| Provision for income taxes | (162) | (236) | (1,109) | (3,177) |
| Equity in earnings (losses) of non-consolidated entities | 380 | 240 | 626 | (157) |
| Income (loss) from continuing operations | 4,806 | (15,187) | 47,842 | (21,021) |
| Discontinued operations: | ||||
| Income from discontinued operations | 651 | 1,840 | 6,252 | 6,244 |
| Benefit (provision) for income taxes | (8) | 192 | (59) | (1,817) |
| Debt satisfaction gains (charges), net | (14) | — | (312) | 8,905 |
| Gains on sales of properties | 35,455 | 9,537 | 57,507 | 24,472 |
| Impairment charges | (2,705) | (3,383) | (13,767) | (12,920) |
| Total discontinued operations | 33,379 | 8,186 | 49,621 | 24,884 |
| Net income (loss) | 38,185 | (7,001) | 97,463 | 3,863 |
| Less net income attributable to noncontrolling interests | (822) | (176) | (4,359) | (2,233) |
| Net income (loss) attributable to Lexington Realty Trust shareholders | 37,363 | (7,177) | 93,104 | 1,630 |
| Dividends attributable to preferred shares – Series C | (1,572) | (1,572) | (6,290) | (6,290) |
| Dividends attributable to preferred shares – Series D | — | — | — | (3,543) |
| Allocation to participating securities | (91) | (174) | (490) | (656) |
| Deemed dividend – Series D | — | — | — | (5,230) |
| Net income (loss) attributable to common shareholders | $ 35,700 | $ (8,923) | $ 86,324 | $ (14,089) |
| Income (loss) per common share – basic: | ||||
| Income (loss) from continuing operations | $ 0.01 | $ (0.08) | $ 0.17 | $ (0.18) |
| Income from discontinued operations | 0.14 | 0.04 | 0.21 | 0.11 |
| Net income (loss) attributable to common shareholders | $ 0.15 | $ (0.04) | $ 0.38 | $ (0.07) |
| Weighted-average common shares outstanding – basic | 230,830,905 | 224,260,756 | 228,966,253 | 209,797,238 |
| Income (loss) per common share – diluted: | ||||
| Income (loss) from continuing operations | $ 0.01 | $ (0.08) | $ 0.17 | $ (0.18) |
| Income from discontinued operations | 0.14 | 0.04 | 0.21 | 0.11 |
| Net income (loss) attributable to common shareholders | $ 0.15 | $ (0.04) | $ 0.38 | $ (0.07) |
| Weighted-average common shares outstanding – diluted | 231,239,828 | 224,260,756 | 229,436,708 | 209,797,238 |
| Amounts attributable to common shareholders: | ||||
| Income (loss) from continuing operations | $ 2,322 | $ (17,198) | $ 37,652 | $ (38,506) |
| Income from discontinued operations | 33,378 | 8,275 | 48,672 | 24,417 |
| Net income (loss) attributable to common shareholders | $ 35,700 | $ (8,923) | $ 86,324 | $ (14,089) |
| LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| As of December 31, | ||
| (Unaudited and in thousands, except share and per share data) | ||
| 2014 | 2013 | |
| Assets: | ||
| Real estate, at cost | $ 3,671,560 | $ 3,812,294 |
| Real estate - intangible assets | 705,566 | 762,157 |
| Investments in real estate under construction | 106,238 | 74,350 |
| 4,483,364 | 4,648,801 | |
| Less: accumulated depreciation and amortization | 1,196,114 | 1,223,381 |
| Real estate, net | 3,287,250 | 3,425,420 |
| Assets held for sale | 3,379 | — |
| Cash and cash equivalents | 191,077 | 77,261 |
| Restricted cash | 17,379 | 19,953 |
| Investment in and advances to non-consolidated entities | 19,402 | 18,442 |
| Deferred expenses, net | 65,860 | 66,827 |
| Loans receivable, net | 105,635 | 99,443 |
| Rent receivable – current | 6,311 | 10,087 |
| Rent receivable – deferred | 61,372 | 19,473 |
| Other assets | 20,229 | 35,375 |
| Total assets | $ 3,777,894 | $ 3,772,281 |
| Liabilities and Equity: | ||
| Liabilities: | ||
| Mortgages and notes payable | $ 945,216 | $ 1,197,489 |
| Credit facility borrowings | — | 48,000 |
| Term loans payable | 505,000 | 406,000 |
| Senior notes payable | 497,675 | 247,707 |
| Convertible notes payable | 15,664 | 27,491 |
| Trust preferred securities | 129,120 | 129,120 |
| Dividends payable | 42,864 | 40,018 |
| Liabilities held for sale | 2,843 | — |
| Accounts payable and other liabilities | 37,740 | 39,642 |
| Accrued interest payable | 8,301 | 9,627 |
| Deferred revenue - including below market leases, net | 68,215 | 69,667 |
| Prepaid rent | 16,336 | 18,037 |
| Total liabilities | 2,268,974 | 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, 233,278,037 and 228,663,022 shares issued and outstanding in 2014 and 2013, respectively | 23 | 23 |
| Additional paid-in-capital | 2,763,374 | 2,717,787 |
| Accumulated distributions in excess of net income | (1,372,051) | (1,300,527) |
| Accumulated other comprehensive income | 404 | 4,439 |
| Total shareholders' equity | 1,485,766 | 1,515,738 |
| Noncontrolling interests | 23,154 | 23,745 |
| Total equity | 1,508,920 | 1,539,483 |
| Total liabilities and equity | $ 3,777,894 | $ 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 | Twelve Months Ended | |||
| December 31, | December 31, | |||
| 2014 | 2013 | 2014 | 2013 | |
| EARNINGS PER SHARE: | ||||
| Basic: | ||||
| Income (loss) from continuing operations attributable to common shareholders | $ 2,322 | $ (17,198) | $ 37,652 | $ (38,506) |
| Income from discontinued operations attributable to common shareholders | 33,378 | 8,275 | 48,672 | 24,417 |
| Net income (loss) attributable to common shareholders | $ 35,700 | $ (8,923) | $ 86,324 | $ (14,089) |
| Weighted-average number of common shares outstanding | 230,830,905 | 224,260,756 | 228,966,253 | 209,797,238 |
| Income (loss) per common share: | ||||
| Income (loss) from continuing operations | $ 0.01 | $ (0.08) | $ 0.17 | $ (0.18) |
| Income from discontinued operations | 0.14 | 0.04 | 0.21 | 0.11 |
| Net income (loss) attributable to common shareholders | $ 0.15 | $ (0.04) | $ 0.38 | $ (0.07) |
| Diluted: | ||||
| Income (loss) from continuing operations attributable to common shareholders - basic | $ 2,322 | $ (17,198) | $ 37,652 | $ (38,506) |
| Impact of assumed conversions: | ||||
| Share options | — | — | — | — |
| Income (loss) from continuing operations attributable to common shareholders | 2,322 | (17,198) | 37,652 | (38,506) |
| Income from discontinued operations attributable to common shareholders - basic | 33,378 | 8,275 | 48,672 | 24,417 |
| Impact of assumed conversions: | ||||
| Share options | — | — | — | — |
| Income from discontinued operations attributable to common shareholders | 33,378 | 8,275 | 48,672 | 24,417 |
| Net income (loss) attributable to common shareholders | $ 35,700 | $ (8,923) | $ 86,324 | $ (14,089) |
| Weighted-average common shares outstanding - basic | 230,830,905 | 224,260,756 | 228,966,253 | 209,797,238 |
| Effect of dilutive securities: | ||||
| Share options | 408,923 | — | 470,455 | — |
| Weighted-average common shares outstanding | 231,239,828 | 224,260,756 | 229,436,708 | 209,797,238 |
| Income (loss) per common share: | ||||
| Income (loss) from continuing operations | $ 0.01 | $ (0.08) | $ 0.17 | $ (0.18) |
| Income from discontinued operations | 0.14 | 0.04 | 0.21 | 0.11 |
| Net income (loss) attributable to common shareholders | $ 0.15 | $ (0.04) | $ 0.38 | $ (0.07) |
| LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES | ||||
| COMPANY FUNDS FROM OPERATIONS & FUNDS AVAILABLE FOR DISTRIBUTION | ||||
| (Unaudited and in thousands, except share and per share data) | ||||
| Three Months Ended | Twelve Months Ended | |||
| December 31, | December 31, | |||
| 2014 | 2013 | 2014 | 2013 | |
| FUNDS FROM OPERATIONS: (1) | ||||
| Basic and Diluted: | ||||
| Net income (loss) attributable to common shareholders | $ 35,700 | $ (8,923) | $ 86,324 | $ (14,089) |
| Adjustments: | ||||
| Depreciation and amortization | 39,546 | 43,680 | 157,537 | 175,023 |
| Impairment charges - real estate, including nonconsolidated joint venture real estate | 18,673 | 22,610 | 49,529 | 35,485 |
| Noncontrolling interests - OP units | 434 | (129) | 2,990 | 1,157 |
| Amortization of leasing commissions | 1,426 | 1,438 | 5,932 | 5,562 |
| Joint venture and noncontrolling interest adjustment | 335 | 589 | 2,068 | 2,264 |
| Gains on sales of properties, net of tax, including nonconsolidated joint venture real estate | (36,374) | (10,430) | (58,426) | (21,755) |
| FFO available to common shareholders and unitholders - basic | 59,740 | 48,835 | 245,954 | 183,647 |
| Preferred dividends | 1,572 | 1,572 | 6,290 | 11,520 |
| Interest and amortization on 6.00% Convertible Notes | 472 | 579 | 2,090 | 3,113 |
| Amount allocated to participating securities | 91 | 174 | 490 | 656 |
| FFO available to common shareholders and unitholders - diluted | 61,875 | 51,160 | 254,824 | 198,936 |
| Debt satisfaction charges, net | 1,519 | — | 9,764 | 16,442 |
| Impairment loss - loan receivable | 2,500 | 13,939 | 2,500 | 13,939 |
| Other / Transaction costs | 368 | 565 | 1,882 | 795 |
| Company FFO available to common shareholders and unitholders - diluted | 66,262 | 65,664 | 268,970 | 230,112 |
| FUNDS AVAILABLE FOR DISTRIBUTION: (2) | ||||
| Adjustments: | ||||
| Straight-line rents | (16,170) | (14,795) | (47,227) | (24,076) |
| Lease incentives | 386 | 313 | 1,490 | 1,345 |
| Amortization of below/above market leases | 233 | 73 | 1,136 | (63) |
| Non-cash interest, net | 1,294 | (1,019) | (2,892) | (1,551) |
| Non-cash charges, net | 2,141 | 1,973 | 8,704 | 7,574 |
| Tenant improvements | (5,435) | (8,654) | (11,395) | (39,244) |
| Lease costs | (2,070) | (2,103) | (10,484) | (12,060) |
| Company Funds Available for Distribution | $ 46,641 | $ 41,452 | $ 208,302 | $ 162,037 |
| Per Common Share and Unit Amounts | ||||
| Basic: | ||||
| FFO | $ 0.25 | $ 0.21 | $ 1.06 | $ 0.86 |
| Diluted: | ||||
| FFO | $ 0.25 | $ 0.21 | $ 1.05 | $ 0.88 |
| Company FFO | $ 0.27 | $ 0.28 | $ 1.11 | $ 1.02 |
| Company FAD | $ 0.19 | $ 0.17 | $ 0.86 | $ 0.72 |
| Weighted-Average Common Shares: | ||||
| Basic(1) | 234,688,921 | 228,352,995 | 232,838,280 | 213,944,169 |
| Diluted | 243,398,807 | 238,064,088 | 241,967,017 | 225,444,512 |
| (1) Includes OP Units. | ||||
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 FFO available to common shareholders and unitholders - basic. Lexington also presents FFO available to common shareholders and unitholders - diluted 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 FFO which adjusts 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, Company FFO may not be comparable to similarly titled measures as reported by others. Company FFO 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 Company Funds Available for Distribution ("FAD") is calculated by making adjustments to Company FFO 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.