NEW YORK, Feb. 23, 2016 (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, 2015.
Fourth Quarter 2015 Highlights
- Generated Company Funds From Operations (“Company FFO”) of $69.6 million, or $0.29 per diluted common share.
- Acquired/completed two build-to-suit properties for an aggregate initial basis of $253.5 million.
- Invested $45.4 million in on-going build-to-suit projects and commenced funding an office build-to-suit project for $62.4 million.
- Completed 0.9 million square feet of new leases and lease extensions with overall portfolio 96.8% leased at quarter end.
- Obtained $110.0 million 10-year non-recourse financing, which bears interest at a 4.0% fixed interest rate and is secured by the Richland, Washington property.
- Repurchased 0.9 million common shares at an average price of $8.12 per share.
Full Year 2015 Highlights
- Generated Company FFO of $268.0 million, or $1.10 per diluted common share.
- Acquired/completed nine properties for an aggregate initial basis of $483.0 million.
- Disposed of nine properties for gross proceeds of $265.2 million.
- Completed 4.0 million square feet of new leases and lease extensions.
- Refinanced $616 million of debt, extended weighted-average maturity to 7.2 years and lowered average borrowing cost by 50 bps to 4.01%.
- Repurchased over 2.2 million common shares at an average price of $8.29 per share.
Subsequent Events
- Acquired one industrial property for $29.7 million.
- Renewed 0.7 million square feet of leases.
- Closed on $57.5 million, 15-year, 5.2% fixed rate mortgage on newly-constructed Gateway Plaza property in Richmond, Virginia.
- Repurchased approximately 1.0 million common shares at an average price of $7.48 per share.
T. Wilson Eglin, President and Chief Executive Officer of Lexington, stated "We finished off 2015 on a strong note with good execution in all aspects of our business. During the quarter we closed on two substantial build-to-suit transactions for $253 million and subsequently obtained favorable financing on both, bringing our total acquisitions for the year to $483 million at an average cap rate of 7.4%. At year end, our overall portfolio was 96.8% leased as leasing volume remained strong at nearly one million square feet during the fourth quarter of 2015. We continue to believe our own shares represent an uncommon value and continued to execute on our share repurchase plan in the fourth quarter and into 2016."
Mr. Eglin added, "In 2015, we executed a highly successful capital recycling program and disposed of $265 million of properties at an average cap rate of 6.3%. We expect our disposition volume in 2016 will be even more robust as we look to monetize our New York City land investments and certain other properties. The proceeds will be used primarily to fund new build-to-suit projects, retire short-term debt, and repurchase common shares. We have made good progress on leasing as we begin 2016, extending 700,000 square feet of leases to date. Elevated leasing velocity and investment volume have produced high levels of occupancy, balanced lease expirations and a longer weighted-average lease term with more secure cash flow. As a result, we expect underlying cash flows to remain strong in 2016."
FINANCIAL RESULTS
Revenues
For the quarter ended December 31, 2015, total gross revenues were $106.6 million, a 1.1% decrease compared with total gross revenues of $107.8 million for the quarter ended December 31, 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 December 31, 2015, Lexington generated Company FFO of $69.6 million, or $0.29 per diluted share, compared to Company FFO for the quarter ended December 31, 2014 of $66.3 million, or $0.27 per diluted share. The calculation of Company FFO and a reconciliation to net income 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, 2015 of $0.17 per common share/unit, which was paid on January 15, 2016 to common shareholders/unitholders of record as of December 31, 2015. Lexington also declared a dividend of $0.8125 per share on its Series C Cumulative Convertible Preferred Stock (“Series C Preferred Shares”), which is payable on May 16, 2016 to Series C Preferred Shareholders of record as of April 29, 2016.
Net Income Attributable to Common Shareholders
For the quarter ended December 31, 2015, net income attributable to common shareholders was $33.2 million, or $0.14 per diluted share, compared with net income attributable to common shareholders for the quarter ended December 31, 2014 of $35.7 million, or $0.15 per diluted share.
OPERATING ACTIVITIES
During the quarter ended December 31, 2015, Lexington completed the following build-to-suit projects:
| COMPLETED BUILD-TO-SUIT PROJECTS | ||||||||||||||||||||||||
| Initial | Initial | Estimated | Lease | |||||||||||||||||||||
| Property | Initial | Annualized Cash | Cash | GAAP | Term | |||||||||||||||||||
| Primary Tenant | Location | Type | Basis ($ 000) | Rent ($000) | Yield | Yield | (Yrs) | |||||||||||||||||
| Preferred Freezer Services of Richland LLC(1) | Richland, WA | Industrial | $ | 152,000 | $ | 10,792 | 7.1 | % | 8.6 | % | 20 | |||||||||||||
| McGuireWoods LLP(2) | Richmond, VA | Office | 101,489 | 8,701 | 8.2 | % | 9.0 | % | 15 | |||||||||||||||
| $ | 253,489 | $ | 19,493 | 7.6 | % | 8.8 | % | |||||||||||||||||
| 1. ConAgra Foods, Inc. provides credit support. Guarantors are Preferred Freezer Services LLC and Preferred Freezer Services Operating LLC. | ||||||||||||||||||||||||
| 2. Property is 100% leased. McGuireWoods LLP is primary tenant with 68% of the space. Initial basis does not include $8.1 million for estimated earnout lease payments for developer leased space. Initial yields include $4.0 million of earnout lease payments earned but not yet paid as of December 31, 2015. | ||||||||||||||||||||||||
Lexington funded $45.4 million of the projected costs of the following projects:
| ON-GOING BUILD-TO-SUIT PROJECTS | |||||||||||||||||||||||||||||
| Maximum | GAAP | ||||||||||||||||||||||||||||
| Commitment/ | Investment | Estimated | Estimated | ||||||||||||||||||||||||||
| Lease | Estimated | Balance as | Acquisition/ | Initial | Estimated | ||||||||||||||||||||||||
| Property | Term | Completion | of | Completion | Cash | GAAP | |||||||||||||||||||||||
| Location | Sq. Ft. | Type | (Years) | Cost ($000) | 12/31/2015 ($000) | Date | Yield | Yield | |||||||||||||||||||||
| Anderson, SC | 1,325,000 | Industrial | 20 | $ | 70,012 | $ | 23,826 | 2Q 16 | 5.9 | % | 7.3 | % | |||||||||||||||||
| Lake Jackson, TX | 664,000 | Office | 20 | 166,164 | 62,353 | 4Q 16 | 7.3 | % | 8.9 | % | |||||||||||||||||||
| Charlotte, NC | 201,000 | Office | 15 | 62,445 | 9,223 | 1Q 17 | 8.3 | % | 9.5 | % | |||||||||||||||||||
| Houston, TX(1) | 274,000 | Retail/Specialty | 20 | 86,491 | 38,367 | 3Q 16 | 7.5 | % | 7.5 | % | |||||||||||||||||||
| 2,464,000 | $ | 385,112 | $ | 133,769 | |||||||||||||||||||||||||
| 1. Lexington has a 25% interest as of December 31, 2015. Lexington is providing construction financing up to $56.7 million to the joint venture of which $8.5 million has been funded as of December 31, 2015. Lease contains annual CPI increases. | |||||||||||||||||||||||||||||
In addition, Lexington was committed to acquire, and subsequently acquired in January 2016, the following property:
| FORWARD COMMITMENT | ||||||||||||||||||||||||||
| Estimated | Estimated | Estimated | Lease | |||||||||||||||||||||||
| Property | Acquisition | Acquisition | Initial | GAAP | Term | |||||||||||||||||||||
| Location | Type | Cost ($000) | Date | Cash Yield | Yield | (Years) | ||||||||||||||||||||
| Detroit, MI | Industrial | $ | 29,680 | 1Q 16 | 7.4 | % | 7.4 | % | 20 | |||||||||||||||||
| PROPERTY DISPOSITIONS | |||||||||||||||||||||||
| Property | Gross Disposition | Annualized | Month of | ||||||||||||||||||||
| Tenant | Location | Type | Price ($000) | NOI ($000) | Disposition | ||||||||||||||||||
| Vacant(1) | Rochester, NY | Office | $ | 17,234 | $ | — | December | ||||||||||||||||
| 1. Conveyed in foreclosure. | |||||||||||||||||||||||
LEASING
As of December 31, 2015, Lexington's portfolio was 96.8% leased, excluding a property subject to a mortgage in default.
During the fourth quarter of 2015, Lexington executed the following new and extended leases:
| LEASE EXTENSIONS | ||||||
| Prior | Lease | |||||
| Location | Primary Tenant(1) | Term | Expiration Date | Sq. Ft. | ||
| Office/Multi-Tenant | ||||||
| 1-3 | Various | HI | N/A | 2015 | 2016-2018 | 886 |
| 3 | Total office lease extensions | 886 | ||||
| Industrial | ||||||
| 1 | Rockford | IL | Jacobson Warehouse Company, Inc. | 12/2015 | 12/2018 | 150,000 |
| 2 | Olive Branch | MS | MAHLE Aftermarket Inc. | 02/2016 | 02/2023 | 268,104 |
| 2 | Total industrial lease extensions | 418,104 | ||||
| 5 | Total lease extensions | 418,990 | ||||
| NEW LEASES | ||||||
| Lease | ||||||
| Location | Expiration Date | Sq. Ft. | ||||
| Office/Multi-Tenant | ||||||
| 1 | Westlake | TX | Charles Schwab & Co., Inc. | 06/2021 | 130,199 | |
| 2 | Florence | SC | United States of America | 01/2016 | 12,851 | |
| 3 | Farmers Branch | TX | International Business Machines Corporation | 04/2021 | 66,018 | |
| 4 | Honolulu | HI | N/A | 12/2017 | 379 | |
| 4 | Total new office leases | 209,447 | ||||
| Industrial | ||||||
| 1 | McDonough | GA | United States Cold Storage, Inc. | 08/2028 | 296,972 | |
| 1 | Total new industrial leases | 296,972 | ||||
| 5 | Total new leases | 506,419 | ||||
| 10 | TOTAL NEW AND EXTENDED LEASES | 925,409 | ||||
| (1) Leases greater than 10,000 square feet. | ||||||
BALANCE SHEET/CAPITAL MARKETS
In December 2015, Lexington financed its industrial property in Richland, Washington with a $110.0 million non-recourse secured mortgage. The loan bears interest at a fixed rate of 4.0% and matures in 2026.
During 2015, Lexington announced a 10.0 million common share repurchase authorization. In the fourth quarter of 2015, Lexington repurchased 910,499 common shares at an average price of $8.12 per share, bringing the total common shares repurchased in 2015 to 2,216,799 common shares at an average price of $8.29 per share.
In 2016, Lexington acquired an additional 951,792 common shares at an average price of $7.48 per share. To date, we have repurchased a total of 3.2 million shares at an average share price of $8.05 per share
2016 EARNINGS GUIDANCE
Lexington is estimating that its Company FFO guidance for the year ended December 31, 2016 would be within the range of $1.00 to $1.10 per diluted share. This guidance is forward looking, excludes the impact of certain items and is based on current expectations.
FOURTH QUARTER 2015 CONFERENCE CALL
Lexington will host a conference call today, Tuesday, February 23, 2016, at 11:00 a.m. Eastern Time, to discuss its results for the quarter ended December 31, 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 March 8, 2016, at 877-870-5176 or 858-384-5517, pin: 13629156. 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, (2) Lexington's ability to achieve its estimate of Company FFO, as adjusted, for the year ending December 31, 2016, (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 December 31, | Twelve months ended December 31, | ||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||
| Gross revenues: | |||||||||||||||
| Rental | $ | 98,934 | $ | 99,610 | $ | 399,485 | $ | 392,480 | |||||||
| Tenant reimbursements | 7,692 | 8,173 | 31,354 | 31,338 | |||||||||||
| Total gross revenues | 106,626 | 107,783 | 430,839 | 423,818 | |||||||||||
| Expense applicable to revenues: | |||||||||||||||
| Depreciation and amortization | (41,403 | ) | (40,105 | ) | (163,198 | ) | (154,837 | ) | |||||||
| Property operating | (14,055 | ) | (17,039 | ) | (59,655 | ) | (63,673 | ) | |||||||
| General and administrative | (6,750 | ) | (7,221 | ) | (29,276 | ) | (28,255 | ) | |||||||
| Non-operating income | 3,216 | 4,136 | 11,429 | 14,505 | |||||||||||
| Interest and amortization expense | (21,466 | ) | (23,847 | ) | (89,739 | ) | (97,303 | ) | |||||||
| Gains on sales of financial assets, net | — | 855 | — | 855 | |||||||||||
| Debt satisfaction gains (charges), net | 11,397 | (1,505 | ) | 25,150 | (9,452 | ) | |||||||||
| Impairment charges and loan loss | (2,762 | ) | (18,469 | ) | (36,832 | ) | (37,333 | ) | |||||||
| Gains on sales of properties | — | — | 23,307 | — | |||||||||||
| Income before provision for income taxes, equity in earnings of non-consolidated entities and discontinued operations | 34,803 | 4,588 | 112,025 | 48,325 | |||||||||||
| Provision for income taxes | (104 | ) | (162 | ) | (568 | ) | (1,109 | ) | |||||||
| Equity in earnings of non-consolidated entities | 814 | 380 | 1,752 | 626 | |||||||||||
| Income from continuing operations | 35,513 | 4,806 | 113,209 | 47,842 | |||||||||||
| Discontinued operations: | |||||||||||||||
| Income from discontinued operations | — | 651 | 109 | 6,252 | |||||||||||
| Provision for income taxes | — | (8 | ) | (4 | ) | (59 | ) | ||||||||
| Debt satisfaction charges, net | — | (14 | ) | — | (312 | ) | |||||||||
| Gains on sales of properties | — | 35,455 | 1,577 | 57,507 | |||||||||||
| Impairment charges | — | (2,705 | ) | — | (13,767 | ) | |||||||||
| Total discontinued operations | — | 33,379 | 1,682 | 49,621 | |||||||||||
| Net income | 35,513 | 38,185 | 114,891 | 97,463 | |||||||||||
| Less net income attributable to noncontrolling interests | (663 | ) | (822 | ) | (3,188 | ) | (4,359 | ) | |||||||
| Net income attributable to Lexington Realty Trust shareholders | 34,850 | 37,363 | 111,703 | 93,104 | |||||||||||
| Dividends attributable to preferred shares – Series C | (1,572 | ) | (1,572 | ) | (6,290 | ) | (6,290 | ) | |||||||
| Allocation to participating securities | (49 | ) | (91 | ) | (313 | ) | (490 | ) | |||||||
| Net income attributable to common shareholders | $ | 33,229 | $ | 35,700 | $ | 105,100 | $ | 86,324 | |||||||
| Income per common share – basic: | |||||||||||||||
| Income from continuing operations | $ | 0.14 | $ | 0.01 | $ | 0.44 | $ | 0.17 | |||||||
| Income from discontinued operations | — | 0.14 | 0.01 | 0.21 | |||||||||||
| Net income attributable to common shareholders | $ | 0.14 | $ | 0.15 | $ | 0.45 | $ | 0.38 | |||||||
| Weighted-average common shares outstanding – basic | 233,448,100 | 230,830,905 | 233,455,056 | 228,966,253 | |||||||||||
| Income per common share – diluted: | |||||||||||||||
| Income from continuing operations | $ | 0.14 | $ | 0.01 | $ | 0.44 | $ | 0.17 | |||||||
| Income from discontinued operations | — | 0.14 | 0.01 | 0.21 | |||||||||||
| Net income attributable to common shareholders | $ | 0.14 | $ | 0.15 | $ | 0.45 | $ | 0.38 | |||||||
| Weighted-average common shares outstanding – diluted | 239,411,055 | 231,239,828 | 233,751,775 | 229,436,708 | |||||||||||
| Amounts attributable to common shareholders: | |||||||||||||||
| Income from continuing operations | $ | 33,229 | $ | 2,322 | $ | 103,418 | $ | 37,652 | |||||||
| Income from discontinued operations | — | 33,378 | 1,682 | 48,672 | |||||||||||
| Net income attributable to common shareholders | $ | 33,229 | $ | 35,700 | $ | 105,100 | $ | 86,324 | |||||||
| LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES | |||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
| As of December 31, | |||||||
| (Unaudited and in thousands, except share and per share data) | |||||||
| 2015 | 2014 | ||||||
| Assets: | |||||||
| Real estate, at cost | $ | 3,789,711 | $ | 3,671,560 | |||
| Real estate - intangible assets | 692,778 | 705,566 | |||||
| Investments in real estate under construction | 95,402 | 106,238 | |||||
| 4,577,891 | 4,483,364 | ||||||
| Less: accumulated depreciation and amortization | 1,179,969 | 1,196,114 | |||||
| Real estate, net | 3,397,922 | 3,287,250 | |||||
| Assets held for sale | 24,425 | 3,379 | |||||
| Cash and cash equivalents | 93,249 | 191,077 | |||||
| Restricted cash | 10,637 | 17,379 | |||||
| Investment in and advances to non-consolidated entities | 31,054 | 19,402 | |||||
| Deferred expenses, net | 63,832 | 65,860 | |||||
| Loans receivable, net | 95,871 | 105,635 | |||||
| Rent receivable – current | 7,193 | 6,311 | |||||
| Rent receivable – deferred | 87,547 | 61,372 | |||||
| Other assets | 18,505 | 20,229 | |||||
| Total assets | $ | 3,830,235 | $ | 3,777,894 | |||
| Liabilities and Equity: | |||||||
| Liabilities: | |||||||
| Mortgages and notes payable | $ | 882,952 | $ | 945,216 | |||
| Credit facility borrowings | 177,000 | — | |||||
| Term loans payable | 505,000 | 505,000 | |||||
| Senior notes payable | 497,947 | 497,675 | |||||
| Convertible notes payable | 12,180 | 15,664 | |||||
| Trust preferred securities | 129,120 | 129,120 | |||||
| Dividends payable | 45,440 | 42,864 | |||||
| Liabilities held for sale | 8,405 | 2,843 | |||||
| Accounts payable and other liabilities | 41,479 | 37,740 | |||||
| Accrued interest payable | 8,851 | 8,301 | |||||
| Deferred revenue - including below market leases, net | 42,524 | 68,215 | |||||
| Prepaid rent | 16,806 | 16,336 | |||||
| Total liabilities | 2,367,704 | 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, 234,575,225 and 233,278,037 shares issued and outstanding in 2015 and 2014, respectively | 23 | 23 | |||||
| Additional paid-in-capital | 2,776,837 | 2,763,374 | |||||
| Accumulated distributions in excess of net income (loss) | (1,428,908 | ) | (1,372,051 | ) | |||
| Accumulated other comprehensive income (loss) | (1,939 | ) | 404 | ||||
| Total shareholders’ equity | 1,440,029 | 1,485,766 | |||||
| Noncontrolling interests | 22,502 | 23,154 | |||||
| Total equity | 1,462,531 | 1,508,920 | |||||
| Total liabilities and equity | $ | 3,830,235 | $ | 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 | Twelve Months Ended | ||||||||||||
| December 31, | December 31, | ||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||
| EARNINGS PER SHARE: | |||||||||||||
| Basic: | |||||||||||||
| Income from continuing operations attributable to common shareholders | $ | 33,229 | $ | 2,322 | $ | 103,418 | $ | 37,652 | |||||
| Income from discontinued operations attributable to common shareholders | — | 33,378 | 1,682 | 48,672 | |||||||||
| Net income attributable to common shareholders | $ | 33,229 | $ | 35,700 | $ | 105,100 | $ | 86,324 | |||||
| Weighted-average number of common shares outstanding | 233,448,100 | 230,830,905 | 233,455,056 | 228,966,253 | |||||||||
| Income per common share: | |||||||||||||
| Income from continuing operations | $ | 0.14 | $ | 0.01 | $ | 0.44 | $ | 0.17 | |||||
| Income from discontinued operations | — | 0.14 | 0.01 | 0.21 | |||||||||
| Net income attributable to common shareholders | $ | 0.14 | $ | 0.15 | $ | 0.45 | $ | 0.38 | |||||
| Diluted: | |||||||||||||
| Income from continuing operations attributable to common shareholders - basic | $ | 33,229 | $ | 2,322 | $ | 103,418 | $ | 37,652 | |||||
| Impact of assumed conversions | 711 | — | — | — | |||||||||
| Income from continuing operations attributable to common shareholders | 33,940 | 2,322 | 103,418 | 37,652 | |||||||||
| Income from discontinued operations attributable to common shareholders - basic | — | 33,378 | 1,682 | 48,672 | |||||||||
| Impact of assumed conversions | — | — | — | — | |||||||||
| Income from discontinued operations attributable to common shareholders | — | 33,378 | 1,682 | 48,672 | |||||||||
| Net income attributable to common shareholders | $ | 33,940 | $ | 35,700 | $ | 105,100 | $ | 86,324 | |||||
| Weighted-average common shares outstanding - basic | 233,448,100 | 230,830,905 | 233,455,056 | 228,966,253 | |||||||||
| Effect of dilutive securities: | |||||||||||||
| Share options | 220,125 | 408,923 | 296,719 | 470,455 | |||||||||
| Operating Partnership Units | 3,834,962 | — | — | — | |||||||||
| 6.00% Convertible Guaranteed Notes | 1,907,868 | — | — | — | |||||||||
| Weighted-average common shares outstanding | 239,411,055 | 231,239,828 | 233,751,775 | 229,436,708 | |||||||||
| Income per common share: | |||||||||||||
| Income from continuing operations | $ | 0.14 | $ | 0.01 | $ | 0.44 | $ | 0.17 | |||||
| Income from discontinued operations | — | 0.14 | 0.01 | 0.21 | |||||||||
| Net income attributable to common shareholders | $ | 0.14 | $ | 0.15 | $ | 0.45 | $ | 0.38 | |||||
| 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, | |||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||
| FUNDS FROM OPERATIONS: (1) | ||||||||||||||
| Basic and Diluted: | ||||||||||||||
| Net income attributable to common shareholders | $ | 33,229 | $ | 35,700 | $ | 105,100 | $ | 86,324 | ||||||
| Adjustments: | ||||||||||||||
| Depreciation and amortization | 39,708 | 39,546 | 157,644 | 157,537 | ||||||||||
| Impairment charges - real estate, including non-consolidated entities | 2,762 | 18,673 | 36,832 | 49,529 | ||||||||||
| Noncontrolling interests - OP units | 457 | 434 | 1,999 | 2,990 | ||||||||||
| Amortization of leasing commissions | 1,695 | 1,426 | 5,554 | 5,932 | ||||||||||
| Joint venture and noncontrolling interest adjustment | 453 | 335 | 1,788 | 2,068 | ||||||||||
| Gains on sales of properties, including non-consolidated entities | (487 | ) | (36,374 | ) | (25,371 | ) | (58,426 | ) | ||||||
| FFO available to common shareholders and unitholders - basic | 77,817 | 59,740 | 283,546 | 245,954 | ||||||||||
| Preferred dividends | 1,572 | 1,572 | 6,290 | 6,290 | ||||||||||
| Interest and amortization on 6.00% Convertible Notes | 253 | 472 | 1,048 | 2,090 | ||||||||||
| Amount allocated to participating securities | 49 | 91 | 313 | 490 | ||||||||||
| FFO available to common shareholders and unitholders - diluted | 79,691 | 61,875 | 291,197 | 254,824 | ||||||||||
| Debt satisfaction (gains) charges, net, including non-consolidated entities | (11,397 | ) | 1,519 | (25,086 | ) | 9,764 | ||||||||
| Impairment loss - loan receivable | — | 2,500 | — | 2,500 | ||||||||||
| Transaction costs/Other | 1,285 | 368 | 1,864 | 1,882 | ||||||||||
| Company FFO available to common shareholders and unitholders - diluted | 69,579 | 66,262 | 267,975 | 268,970 | ||||||||||
| FUNDS AVAILABLE FOR DISTRIBUTION: (2) | ||||||||||||||
| Adjustments: | ||||||||||||||
| Straight-line rents | (12,460 | ) | (16,170 | ) | (47,702 | ) | (47,227 | ) | ||||||
| Lease incentives | 387 | 386 | 1,544 | 1,490 | ||||||||||
| Amortization of below/above market leases | 418 | 233 | 261 | 1,136 | ||||||||||
| Lease termination payments, net | 2,420 | (1,227 | ) | 3,086 | 1,571 | |||||||||
| Non-cash interest, net | (638 | ) | 1,294 | (118 | ) | (2,892 | ) | |||||||
| Non-cash charges, net | 2,213 | 2,141 | 8,821 | 8,704 | ||||||||||
| Tenant improvements | (7,242 | ) | (5,435 | ) | (20,426 | ) | (11,395 | ) | ||||||
| Lease costs | (2,439 | ) | (2,070 | ) | (6,681 | ) | (10,484 | ) | ||||||
| Company Funds Available for Distribution | $ | 52,238 | $ | 45,414 | $ | 206,760 | $ | 209,873 | ||||||
| Per Common Share and Unit Amounts | ||||||||||||||
| Basic: | ||||||||||||||
| FFO | $ | 0.33 | $ | 0.25 | $ | 1.19 | $ | 1.06 | ||||||
| Diluted: | ||||||||||||||
| FFO | $ | 0.33 | $ | 0.25 | $ | 1.19 | $ | 1.05 | ||||||
| Company FFO | $ | 0.29 | $ | 0.27 | $ | 1.10 | $ | 1.11 | ||||||
| Company FAD | $ | 0.21 | $ | 0.19 | $ | 0.85 | $ | 0.87 | ||||||
| Weighted-Average Common Shares: | ||||||||||||||
| Basic(3) | 237,283,062 | 234,688,921 | 237,303,490 | 232,838,280 | ||||||||||
| Diluted | 244,121,625 | 243,398,807 | 244,355,734 | 241,967,017 | ||||||||||
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) lease termination payments, net, (5) non-cash interest, net, (6) non-cash charges, net, (7) cash paid for tenant improvements, and (8) cash paid for lease costs. 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.