NEW YORK, Nov. 05, 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 third quarter ended September 30, 2015.
Third Quarter 2015 Highlights
- Generated Company Funds From Operations ("Company FFO") of $66.9 million, or $0.27 per diluted common share.
- Disposed of three properties for gross disposition proceeds of $135.7 million.
- Invested $25.5 million in on-going build-to-suit projects.
- Completed an industrial build-to-suit property for $22.1 million.
- Leased approximately 800,000 square feet with overall portfolio 96.5% leased.
- Retired $55.0 million of secured debt.
- Refinanced credit facility and term loans extending the maturities by two years and reducing interest rates by 15 to 65 basis points.
- Announced a 10.0 million common share repurchase authorization and repurchased 1.6 million common shares, at an average price of $8.34 per share, as of the date of this press release.
T. Wilson Eglin, President and Chief Executive Officer of Lexington, stated, "We are raising our Company FFO guidance for 2015 as a result of strong execution in all aspects of our business. During the third quarter, same-store rent increased 2.8%, reflecting that approximately 80% of our revenue now comes from leases with escalating rents. In the fourth quarter, we expect to close on two substantial build-to-suit projects that are estimated to contribute approximately $22.5 million to revenue next year."
FINANCIAL RESULTS
Revenues
For the quarter ended September 30, 2015, total gross revenues were $105.4 million, a 1.1% decrease compared with total gross revenues of $106.6 million for the quarter ended September 30, 2014. The decrease is primarily due to 2015 property sales and lease expirations, partially offset by revenue generated from property acquisitions and new leases signed.
Company FFO
For the quarter ended September 30, 2015, Lexington generated Company FFO of $66.9 million, or $0.27 per diluted share, compared to Company FFO for the quarter ended September 30, 2014 of $68.7 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 September 30, 2015 of $0.17 per common share/unit, which was paid on October 15, 2015 to common shareholders/unitholders of record as of September 30, 2015. Lexington also declared two dividends of $0.8125 per share each on its Series C Cumulative Convertible Preferred Stock ("Series C Preferred Shares"), which will be paid on November 16, 2015 and February 16, 2016 to Series C Preferred Shareholders of record as of October 30, 2015 and January 29, 2016, respectively.
Net Income (Loss) Attributable to Common Shareholders
For the quarter ended September 30, 2015, net loss attributable to common shareholders was $(7.6) million, or $(0.03) per diluted share, compared with net income attributable to common shareholders for the quarter ended September 30, 2014 of $38.7 million, or $0.17 per diluted share.
OPERATING ACTIVITIES
Investment Activity
During the quarter, Lexington completed the following build-to-suit project, which is subject to a lease having a term in excess of ten years (an "LTL").
| Acquisition | ||||||||||||||||||||||
| Tenant | Location | Property Type | Initial Basis ($000) | Initial Annualized Cash Rent ($000) | Initial Cash Yield | GAAP Yield | Lease Term (Yrs) | |||||||||||||||
| Stella & Chewy's LLC | Oak Creek, WI | LTL - Industrial | $ | 22,139 | $ | 1,865 | 8.4 | % | 9.5 | % | 20 | |||||||||||
In addition, Lexington acquired a consolidated joint venture partner's interest in an office property in Philadelphia, Pennsylvania for $4.0 million, raising Lexington's ownership in the office property from 87.5% to 100.0%.
Lexington also funded $25.5 million of the projected costs of the following projects:
| 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 9/30/2015 ($000) | Estimated Completion/ Acquisition Date | |||||||||||
| Richmond, VA | 330,000 | LTL - Office | 15 | $ | 110,137 | $ | 97,830 | 4Q 15 | |||||||||
| Anderson, SC | 1,325,000 | LTL - Industrial | 20 | 70,012 | 12,708 | 2Q 16 | |||||||||||
| Lake Jackson, TX | 664,000 | LTL - Office | 20 | 166,164 | 45,008 | 4Q 16 | |||||||||||
| Houston, TX(1) | 274,000 | LTL - Retail/Specialty | 20 | 86,491 | 28,602 | 3Q 16 | |||||||||||
| 2,593,000 | $ | 432,804 | $ | 184,148 | |||||||||||||
- Lexington has a 25% interest as of September 30, 2015. Lexington may provide construction financing up to $56.7 million to the joint venture.
In addition, Lexington has committed to acquire the following properties upon completion of construction:
| Forward Commitments | ||||||||||||||||||
| Location | Property Type | Estimated Acquisition Cost ($000) | Lease Term (Years) | Estimated Initial Cash Yield | Estimated GAAP Yield | Estimated Acquisition Date | ||||||||||||
| Richland, WA | LTL - Industrial | $ | 152,000 | 20 | 7.1 | % | 8.6 | % | 4Q 15 | |||||||||
| Detroit, MI | LTL - Industrial | 29,680 | 20 | 7.4 | % | 7.4 | % | 1Q 16 | ||||||||||
| $ | 181,680 | 7.2 | % | 8.4 | % | |||||||||||||
Capital Recycling
| Property Dispositions | ||||||||||||||
| Tenant | Location | Property Type | Gross Disposition Price ($000) | Annualized NOI ($000) | Month of Disposition | |||||||||
| Wagner Industries, Inc. | Jacksonville, FL | Industrial | $ | 1,850 | $ | 313 | July | |||||||
| Lockheed Martin Corporation | Orlando, FL | Office | 12,800 | 955 | July | |||||||||
| Multi-tenant(1) | Baltimore, MD | Office | 121,000 | 8,318 | August | |||||||||
| $ | 135,650 | $ | 9,586 | |||||||||||
- $55.0 million non-recourse mortgage loan assumed at closing.
Balance Sheet
On September 1, 2015, Lexington entered into a new $905.0 million unsecured credit agreement, which replaced Lexington's existing revolving credit facility and term loans. With lender approval, Lexington can increase the size of the new facility to an aggregate $1.8 billion. A summary of the significant terms are as follows:
| Prior Maturity Date | New Maturity Date | Prior Interest Rate | Current Interest Rate | ||||
| $400.0 Million Revolving Credit Facility(1) | 02/2017 | 08/2019 | L + 1.15% | L + 1.00% | |||
| $250.0 Million Term Loan(2) | 02/2018 | 08/2020 | L + 1.35% | L + 1.10% | |||
| $255.0 Million Term Loan(3) | 01/2019 | 01/2021 | L + 1.75% | L + 1.10% |
1. Maturity date can be extended to 08/2020 at Lexington's option.
2. Lexington previously entered into aggregate interest rate swap agreements, which fix the LIBOR component of this loan at 1.09% through 02/2018.
3. Lexington previously entered into aggregate interest rate swap agreements, which fix the LIBOR component of this loan at 1.42% through 01/2019.
In July 2015, Lexington announced a new 10.0 million common share repurchase authorization (inclusive of all outstanding prior authorizations). As of the date of this earnings release, 1,594,644 common shares have been repurchased at an average price of $8.34 per share.
In August 2015, approximately $0.4 million original principal amount 6.00% Convertible Guaranteed Notes due 2030 ("6.00% Notes") were satisfied for cash, reducing the outstanding balance of this note issuance to $12.4 million. All common shares that are issuable upon conversion of the 6.00% Notes are treated as outstanding for diluted Company FFO calculations.
Leasing
During the third quarter of 2015, Lexington executed the following new and extended leases:
| LEASE EXTENSIONS | ||||||||||
| Location | Prior Term | Lease Expiration Date | Sq. Ft. | |||||||
| Office/Multi-Tenant Office | ||||||||||
| 1 | Rockaway, NJ | 06/2026 | 12/2027 | 60,258 | ||||||
| 2-4 | Various (AZ, HI) | 2015 | 2016-2021 | 34,758 | ||||||
| 4 | Total office lease extensions | 95,016 | ||||||||
| Industrial | ||||||||||
| 1 | Erwin, NY | 11/2016 | 11/2026 | 408,000 | ||||||
| 2 | Orlando, FL | 03/2016 | 03/2021 | 205,016 | ||||||
| 2 | Total industrial lease extensions | 613,016 | ||||||||
| Retail | ||||||||||
| 1 | Tulsa, OK | 05/2016 | 05/2026 | 43,123 | ||||||
| 1 | Total retail lease extensions | 43,123 | ||||||||
| 7 | Total lease extensions | 751,155 | ||||||||
| NEW LEASES | ||||||||||
| Location | Lease Expiration Date | Sq. Ft. | ||||||||
| Office/Multi-Tenant Office | ||||||||||
| 1 | Foxboro, MA | 02/2017 | 8,151 | |||||||
| 2 | Rockaway, NJ | 12/2027 | 32,068 | |||||||
| 2 | Total new office leases | 40,219 | ||||||||
| 2 | Total new leases | 40,219 | ||||||||
| 9 | TOTAL NEW AND EXTENDED LEASES | 791,374 | ||||||||
As of September 30, 2015, Lexington's portfolio was 96.5% leased, excluding properties owned subject to mortgages in default.
2015 EARNINGS GUIDANCE
Lexington raised its Company FFO guidance to an expected range of $1.05 to $1.07 from $1.02 to $1.06 to 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.
THIRD QUARTER 2015 CONFERENCE CALL
Lexington will host a conference call today, Thursday, November 5, 2015, at 11:00 a.m. Eastern Time, to discuss its results for the quarter ended September 30, 2015. 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 19, 2015, at 877-870-5176 or 858-384-5517, pin: 13622695. 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.
Contact:
Investor or Media Inquiries, T. Wilson Eglin, CEO
Lexington Realty Trust
Phone: (212) 692-7200 E-mail: tweglin@lxp.com
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, disposition, 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, | ||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||
| Gross revenues: | |||||||||||||||
| Rental | $ | 98,095 | $ | 98,941 | $ | 300,551 | $ | 292,870 | |||||||
| Tenant reimbursements | 7,343 | 7,631 | 23,662 | 23,165 | |||||||||||
| Total gross revenues | 105,438 | 106,572 | 324,213 | 316,035 | |||||||||||
| Expense applicable to revenues: | |||||||||||||||
| Depreciation and amortization | (39,712 | ) | (39,022 | ) | (121,795 | ) | (114,732 | ) | |||||||
| Property operating | (13,484 | ) | (15,504 | ) | (45,600 | ) | (46,634 | ) | |||||||
| General and administrative | (6,734 | ) | (6,426 | ) | (22,526 | ) | (21,035 | ) | |||||||
| Non-operating income | 2,515 | 4,217 | 8,213 | 10,369 | |||||||||||
| Interest and amortization expense | (21,931 | ) | (24,321 | ) | (68,273 | ) | (73,456 | ) | |||||||
| Debt satisfaction gains (charges), net | (398 | ) | (455 | ) | 13,753 | (7,946 | ) | ||||||||
| Impairment charges | (32,818 | ) | (2,464 | ) | (34,070 | ) | (18,864 | ) | |||||||
| Gains on sales of properties | 1,733 | - | 23,307 | - | |||||||||||
| Income (loss) before provision for income taxes, equity in earnings of non-consolidated entities and discontinued operations | (5,391 | ) | 22,597 | 77,222 | 43,737 | ||||||||||
| Provision for income taxes | (75 | ) | (72 | ) | (464 | ) | (947 | ) | |||||||
| Equity in earnings of non-consolidated entities | 266 | 173 | 938 | 246 | |||||||||||
| Income (loss) from continuing operations | (5,200 | ) | 22,698 | 77,696 | 43,036 | ||||||||||
| Discontinued operations: | |||||||||||||||
| Income from discontinued operations | - | 1,322 | 109 | 5,601 | |||||||||||
| Provision for income taxes | - | (14 | ) | (4 | ) | (50 | ) | ||||||||
| Debt satisfaction charges, net | - | - | - | (299 | ) | ||||||||||
| Gains on sales of properties | - | 18,542 | 1,577 | 22,052 | |||||||||||
| Impairment charges | - | (371 | ) | - | (11,062 | ) | |||||||||
| Total discontinued operations | - | 19,479 | 1,682 | 16,242 | |||||||||||
| Net income (loss) | (5,200 | ) | 42,177 | 79,378 | 59,278 | ||||||||||
| Less net income attributable to noncontrolling interests | (784 | ) | (1,772 | ) | (2,525 | ) | (3,537 | ) | |||||||
| Net income (loss) attributable to Lexington Realty Trust shareholders | (5,984 | ) | 40,405 | 76,853 | 55,741 | ||||||||||
| Dividends attributable to preferred shares - Series C | (1,573 | ) | (1,573 | ) | (4,718 | ) | (4,718 | ) | |||||||
| Allocation to participating securities | (72 | ) | (112 | ) | (264 | ) | (399 | ) | |||||||
| Net income (loss) attributable to common shareholders | $ | (7,629 | ) | $ | 38,720 | $ | 71,871 | $ | 50,624 | ||||||
| Income (loss) per common share - basic: | |||||||||||||||
| Income (loss) from continuing operations | $ | (0.03 | ) | $ | 0.09 | $ | 0.30 | $ | 0.15 | ||||||
| Income from discontinued operations | - | 0.08 | 0.01 | 0.07 | |||||||||||
| Net income (loss) attributable to common shareholders | $ | (0.03 | ) | $ | 0.17 | $ | 0.31 | $ | 0.22 | ||||||
| Weighted-average common shares outstanding - basic | 234,018,062 | 229,463,522 | 233,457,400 | 228,337,871 | |||||||||||
| Income (loss) per common share - diluted: | |||||||||||||||
| Income (loss) from continuing operations | $ | (0.03 | ) | $ | 0.09 | $ | 0.30 | $ | 0.15 | ||||||
| Income from discontinued operations | - | 0.08 | 0.01 | 0.07 | |||||||||||
| Net income (loss) attributable to common shareholders | $ | (0.03 | ) | $ | 0.17 | $ | 0.31 | $ | 0.22 | ||||||
| Weighted-average common shares outstanding - diluted | 234,018,062 | 229,922,110 | 233,776,838 | 228,830,020 | |||||||||||
| Amounts attributable to common shareholders: | |||||||||||||||
| Income (loss) from continuing operations | $ | (7,629 | ) | $ | 20,151 | $ | 70,189 | $ | 35,330 | ||||||
| Income from discontinued operations | - | 18,569 | 1,682 | 15,294 | |||||||||||
| Net income (loss) attributable to common shareholders | $ | (7,629 | ) | $ | 38,720 | $ | 71,871 | $ | 50,624 | ||||||
| LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES | |||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
| (Unaudited and in thousands, except share and per share data) | |||||||
| September 30, 2015 | December 31, 2014 | ||||||
| Assets: | |||||||
| Real estate, at cost | $ | 3,586,435 | $ | 3,671,560 | |||
| Real estate - intangible assets | 669,341 | 705,566 | |||||
| Investments in real estate under construction | 155,546 | 106,238 | |||||
| 4,411,322 | 4,483,364 | ||||||
| Less: accumulated depreciation and amortization | 1,153,841 | 1,196,114 | |||||
| Real estate, net | 3,257,481 | 3,287,250 | |||||
| Assets held for sale | - | 3,379 | |||||
| Cash and cash equivalents | 86,269 | 191,077 | |||||
| Restricted cash | 12,327 | 17,379 | |||||
| Investment in and advances to non-consolidated entities | 28,050 | 19,402 | |||||
| Deferred expenses, net | 62,225 | 65,860 | |||||
| Loans receivable, net | 95,806 | 105,635 | |||||
| Rent receivable - current | 9,896 | 6,311 | |||||
| Rent receivable - deferred | 78,957 | 61,372 | |||||
| Other assets | 21,614 | 20,229 | |||||
| Total assets | $ | 3,652,625 | $ | 3,777,894 | |||
| Liabilities and Equity: | |||||||
| Liabilities: | |||||||
| Mortgages and notes payable | $ | 804,238 | $ | 945,216 | |||
| Credit facility borrowings | 73,000 | - | |||||
| Term loans payable | 505,000 | 505,000 | |||||
| Senior notes payable | 497,879 | 497,675 | |||||
| Convertible notes payable | 12,128 | 15,664 | |||||
| Trust preferred securities | 129,120 | 129,120 | |||||
| Dividends payable | 45,307 | 42,864 | |||||
| Liabilities held for sale | - | 2,843 | |||||
| Accounts payable and other liabilities | 42,692 | 37,740 | |||||
| Accrued interest payable | 14,679 | 8,301 | |||||
| Deferred revenue - including below market leases, net | 43,521 | 68,215 | |||||
| Prepaid rent | 16,991 | 16,336 | |||||
| Total liabilities | 2,184,555 | 2,268,974 | |||||
| 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, 235,179,131 and 233,278,037 shares issued and outstanding in 2015 and 2014, respectively | 24 | 23 | |||||
| Additional paid-in-capital | 2,779,836 | 2,763,374 | |||||
| Accumulated distributions in excess of net income | (1,422,417 | ) | (1,372,051 | ) | |||
| Accumulated other comprehensive income (loss) | (6,216 | ) | 404 | ||||
| Total shareholders' equity | 1,445,243 | 1,485,766 | |||||
| Noncontrolling interests | 22,827 | 23,154 | |||||
| Total equity | 1,468,070 | 1,508,920 | |||||
| Total liabilities and equity | $ | 3,652,625 | $ | 3,777,894 | |||
| LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES | |||||||||||||||
| EARNINGS PER SHARE | |||||||||||||||
| (Unaudited and in thousands, except share and per share data) | |||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||
| EARNINGS PER SHARE: | |||||||||||||||
| Basic: | |||||||||||||||
| Income (loss) from continuing operations attributable to common shareholders | $ | (7,629 | ) | $ | 20,151 | $ | 70,189 | $ | 35,330 | ||||||
| Income from discontinued operations attributable to common shareholders | - | 18,569 | 1,682 | 15,294 | |||||||||||
| Net income (loss) attributable to common shareholders | $ | (7,629 | ) | $ | 38,720 | $ | 71,871 | $ | 50,624 | ||||||
| Weighted-average number of common shares outstanding | 234,018,062 | 229,463,522 | 233,457,400 | 228,337,871 | |||||||||||
| Income (loss) per common share: | |||||||||||||||
| Income (loss) from continuing operations | $ | (0.03 | ) | $ | 0.09 | $ | 0.30 | $ | 0.15 | ||||||
| Income from discontinued operations | - | 0.08 | 0.01 | 0.07 | |||||||||||
| Net income (loss) attributable to common shareholders | $ | (0.03 | ) | $ | 0.17 | $ | 0.31 | $ | 0.22 | ||||||
| Diluted: | |||||||||||||||
| Income (loss) from continuing operations attributable to common shareholders - basic | $ | (7,629 | ) | $ | 20,151 | $ | 70,189 | $ | 35,330 | ||||||
| Impact of assumed conversions | - | - | - | - | |||||||||||
| Income (loss) from continuing operations attributable to common shareholders | (7,629 | ) | 20,151 | 70,189 | 35,330 | ||||||||||
| Income from discontinued operations attributable to common shareholders - basic | - | 18,569 | 1,682 | 15,294 | |||||||||||
| Impact of assumed conversions | - | - | - | - | |||||||||||
| Income from discontinued operations attributable to common shareholders | - | 18,569 | 1,682 | 15,294 | |||||||||||
| Net income (loss) attributable to common shareholders | $ | (7,629 | ) | $ | 38,720 | $ | 71,871 | $ | 50,624 | ||||||
| Weighted-average common shares outstanding - basic | 234,018,062 | 229,463,522 | 233,457,400 | 228,337,871 | |||||||||||
| Effect of dilutive securities: | |||||||||||||||
| Share options | - | 458,588 | 319,438 | 492,149 | |||||||||||
| Weighted-average common shares outstanding | 234,018,062 | 229,922,110 | 233,776,838 | 228,830,020 | |||||||||||
| Income (loss) per common share: | |||||||||||||||
| Income (loss) from continuing operations | $ | (0.03 | ) | $ | 0.09 | $ | 0.30 | $ | 0.15 | ||||||
| Income from discontinued operations | - | 0.08 | 0.01 | 0.07 | |||||||||||
| Net income (loss) attributable to common shareholders | $ | (0.03 | ) | $ | 0.17 | $ | 0.31 | $ | 0.22 | ||||||
| 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 September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| FUNDS FROM OPERATIONS: (1) | ||||||||||||||||
| Basic and Diluted: | ||||||||||||||||
| Net income (loss) attributable to common shareholders | $ | (7,629 | ) | $ | 38,720 | $ | 71,871 | $ | 50,624 | |||||||
| Adjustments: | ||||||||||||||||
| Depreciation and amortization | 38,547 | 39,030 | 117,936 | 117,991 | ||||||||||||
| Impairment charges - real estate, including non-consolidated entities | 32,818 | 3,115 | 34,070 | 30,856 | ||||||||||||
| Noncontrolling interests - OP units | 452 | 1,442 | 1,542 | 2,556 | ||||||||||||
| Amortization of leasing commissions | 1,166 | 1,580 | 3,859 | 4,506 | ||||||||||||
| Joint venture and noncontrolling interest adjustment | 577 | 495 | 1,335 | 1,733 | ||||||||||||
| Gains on sales of properties | (1,733 | ) | (18,542 | ) | (24,884 | ) | (22,052 | ) | ||||||||
| FFO available to common shareholders and unitholders - basic | 64,198 | 65,840 | 205,729 | 186,214 | ||||||||||||
| Preferred dividends | 1,573 | 1,573 | 4,718 | 4,718 | ||||||||||||
| Interest and amortization on 6.00% Convertible Guaranteed Notes | 252 | 508 | 795 | 1,618 | ||||||||||||
| Amount allocated to participating securities | 72 | 112 | 264 | 399 | ||||||||||||
| FFO available to common shareholders and unitholders - diluted | 66,095 | 68,033 | 211,506 | 192,949 | ||||||||||||
| Debt satisfaction (gains) charges, net, including non-consolidated entities | 398 | 455 | (13,689 | ) | 8,245 | |||||||||||
| Other / Transaction costs | 405 | 257 | 579 | 1,514 | ||||||||||||
| Company FFO available to common shareholders and unitholders - diluted | 66,898 | 68,745 | 198,396 | 202,708 | ||||||||||||
| FUNDS AVAILABLE FOR DISTRIBUTION: (2) | ||||||||||||||||
| Adjustments: | ||||||||||||||||
| Straight-line rents | (12,899 | ) | (13,478 | ) | (35,242 | ) | (31,057 | ) | ||||||||
| Lease incentives | 212 | 250 | 1,157 | 1,104 | ||||||||||||
| Amortization of below/above market leases | 287 | 184 | (157 | ) | 903 | |||||||||||
| Non-cash interest, net | (598 | ) | (1,824 | ) | 520 | (4,186 | ) | |||||||||
| Non-cash charges, net | 2,205 | 2,114 | 6,608 | 6,563 | ||||||||||||
| Tenant improvements | (10,562 | ) | (1,961 | ) | (13,184 | ) | (5,960 | ) | ||||||||
| Lease costs | (1,066 | ) | (1,895 | ) | (4,242 | ) | (8,414 | ) | ||||||||
| Company Funds Available for Distribution | $ | 44,477 | $ | 52,135 | $ | 153,856 | $ | 161,661 | ||||||||
| Per Common Share and Unit Amounts | ||||||||||||||||
| Basic: | ||||||||||||||||
| FFO | $ | 0.27 | $ | 0.28 | $ | 0.87 | $ | 0.80 | ||||||||
| Diluted: | ||||||||||||||||
| FFO | $ | 0.27 | $ | 0.28 | $ | 0.87 | $ | 0.80 | ||||||||
| Company FFO | $ | 0.27 | $ | 0.28 | $ | 0.81 | $ | 0.84 | ||||||||
| Company FAD | $ | 0.18 | $ | 0.22 | $ | 0.63 | $ | 0.67 | ||||||||
| Weighted-Average Common Shares: | ||||||||||||||||
| Basic(3) | 237,871,036 | 233,334,560 | 237,310,374 | 232,214,620 | ||||||||||||
| Diluted | 244,714,549 | 242,373,712 | 244,432,218 | 241,487,119 | ||||||||||||
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 at the beginning of the period. 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.
3 Includes OP units other than OP units held by us.