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March 21, 2019 Minimum 20 minute delay.
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Press Release

Lexington Realty Trust Reports Fourth Quarter 2018 Results

Company Release - 2/27/2019 6:00 AM ET

NEW YORK, Feb. 27, 2019 (GLOBE NEWSWIRE) -- Lexington Realty Trust (“Lexington”) (NYSE:LXP), a real estate investment trust focused on single-tenant industrial real estate investments, today announced results for the fourth quarter and year ended December 31, 2018.

Fourth Quarter 2018 Highlights

  • Generated Net Income attributable to common shareholders of $23.8 million, or $0.10 per diluted common share.
  • Generated Adjusted Company Funds From Operations available to all equityholders and unitholders - diluted (“Adjusted Company FFO”) of $53.7 million, or $0.22 per diluted common share.
  • Acquired two industrial properties for an aggregate cost of $107.7 million.
  • Disposed of nine non-industrial properties for an aggregate gross sale price of $93.3 million.
  • Repurchased and retired 4.0 million common shares at an average price of $8.07 per share and increased repurchase authorization by 10.0 million common shares.
  • Repaid remaining 2020 term loan balance of $149.0 million.
  • Completed 452,000 square feet of new leases and lease extensions.

Full Year 2018 Highlights

  • Generated Net Income attributable to common shareholders of $220.8 million, or $0.93 per diluted common share.
  • Generated Adjusted Company FFO of $236.3 million, or $0.96 per diluted common share.
  • Increased total gross book value and total rental revenue attributable to industrial assets from 49.3% and 44.3%, respectively, to 71.1% and 65.4%, respectively.
  • Acquired eight industrial properties for an aggregate cost of $315.6 million.
  • Disposed of 21 office assets to a newly-formed joint venture for an aggregate gross disposition price of $725.8 million and acquired a 20% interest in the joint venture for an aggregate cost of $53.7 million.
  • Disposed of 25 additional consolidated properties for an aggregate gross sale price of $335.3 million.
  • Repurchased and retired 5.9 million common shares at an average price of $8.05 per share.
  • Repaid $160.0 million, net under its unsecured revolving credit facility and fully repaid its $300 million 2020 term loan.
  • Retired an aggregate of $118.0 million in property non-recourse mortgage debt, including debt encumbering assets sold to the joint venture above.
  • Completed 1.9 million square feet of new leases and lease extensions.

Adjusted Company FFO is a non-GAAP financial measure. It and certain other non-GAAP financial measures are defined and reconciled later in this press release.

T. Wilson Eglin, Chief Executive Officer and President of Lexington Realty Trust, commented “Through our targeted disposition and investment efforts in 2018, we increased our industrial exposure to 71% of our total gross book value at year end compared to 49% at year-end 2017.  We were very active in our share buyback plan during the fourth quarter, bringing our total 2018 share repurchases to almost six million shares at an average price of $8.05 per share.

“We remain focused on transitioning to a single-tenant net-leased industrial REIT, and our disposition plan contemplates the sale of primarily office and other non-core assets with this objective in mind. Proceeds from sales, available cash, and low leverage will provide further capital to fund industrial purchases and build-to-suit opportunities.

“In connection with the repositioning of our portfolio and growth plans going forward, last year we announced that in 2019 we would revise our distribution policy in order to retain and reinvest as much of our cash flow as possible. We believe this is a prudent course which will enhance our earnings growth and net asset value per share over time. Accordingly, we announced today a new annualized dividend rate of $0.41 per common share.”

FINANCIAL RESULTS

Revenues

For the quarter ended December 31, 2018, total gross revenues were $87.3 million, compared with total gross revenues of $102.2 million for the quarter ended December 31, 2017. The decrease was primarily attributable to a decrease in revenue due to property sales, partially offset by 2018 and 2017 property acquisitions.

Net Income Attributable to Common Shareholders

For the quarter ended December 31, 2018, net income attributable to common shareholders was $23.8 million, or $0.10 per diluted share, compared with net income attributable to common shareholders for the quarter ended December 31, 2017 of $29.2 million, or $0.12 per diluted share.

Adjusted Company FFO

For the quarter ended December 31, 2018, Lexington generated Adjusted Company FFO of $53.7 million, or $0.22 per diluted share, compared to Adjusted Company FFO for the quarter ended December 31, 2017 of $63.1 million, or $0.26 per diluted share.

Dividends/Distributions

As previously announced, during the fourth quarter of 2018, Lexington declared its quarterly common share/unit dividend/distribution for the quarter ended December 31, 2018 of $0.1775 per common share/unit, which was paid on January 15, 2019 to common shareholders/unitholders of record as of December 31, 2018. Lexington previously declared a dividend of $0.8125 per share on its Series C Cumulative Convertible Preferred Stock (“Series C Preferred”) for the quarter ended December 31, 2018, which was paid February 15, 2019 to Series C Preferred shareholders of record as of January 31, 2019.

Today, Lexington declared its quarterly common share/unit dividend/distribution for the quarter ended March 31, 2019 in the amount of $0.1025 per common share/unit, which will be paid on April 15, 2019 to common shareholders/unitholders of record as of March 29, 2019. Lexington previously declared a dividend of $0.8125 per share on its Series C Preferred for the quarter ended March 31, 2019, which will be paid on May 15, 2019, to Series C Preferred shareholders of record as of April 30, 2019.

TRANSACTIONS

ACQUISITION TRANSACTIONS
Primary Tenant(1) Location Sq. Ft.
(Approx.)
 Property Type Initial Basis
($000)
 Approximate
Lease Term
(Yrs)
Blue Buffalo Goodyear, AZ 540,349  Industrial $41,372  7
Philip Morris Chester, VA 1,034,470  Industrial 66,311  12
    1,574,819    $107,683   
              
  1. In addition, Lexington acquired a 57-acre parcel of land from a non-consolidated joint venture and leased the parcel to a tenant to develop an industrial property.

Including fourth quarter acquisition activity, consolidated 2018 acquisition activity totaled $315.6 million at average GAAP and cash capitalization rates of 6.5% and 5.3%, respectively.

PROPERTY DISPOSITIONS  
Primary Tenant Location Property
Type
 Gross Disposition Price
($000)
 Annualized
Net Income (Loss)(1)
($000)
 Annualized NOI(1) ($000) Month of Disposition %
Leased
Oregon Research Institute Eugene, OR Office $16,000  $2,098  $1,832  October 100%
Alstom Power Knoxville, TN Office 16,000  1,262  1,249  November 100%
Vacant Manteca, CA Other 2,700  967  381  November 0%
Delhaize Jefferson, NC Other 1,550  156  160  December 100%
Vacant Wallingford, CT Office 1,050  (222) (179) December 0%
Vacant Florence, SC Office 1,838  (320) 325  December 0%
Kingsport Power Kingsport, TN Office 3,400  287  310  December 100%
Federal Express Memphis, TN Office 50,800  6,844  7,101  December 100%
      $93,338  $11,072  $11,179     
                     
  1. Quarterly period prior to sale, excluding impairment charges and accelerated below-market lease intangible accretion, annualized.

In addition, a vacant retail property in San Diego, California was transferred to its ground owner and Lexington received $4.3 million from the sale of a six-property non-consolidated office portfolio.

Including fourth quarter disposition activity, consolidated 2018 property disposition volume totaled $1.1 billion at average GAAP and cash capitalization rates of 8.9% and 8.4%, respectively.

As a result of 2018 transactions, Lexington's total gross book value attributable to industrial assets accounts for 71.1% of total consolidated real estate gross book value at December 31, 2018 compared to 49.3% at December 31, 2017. Rental revenue attributable to industrial assets increased to 65.4% of total consolidated rental revenue as of December 31, 2018 from 44.3% as of December 31, 2017.

LEASING

During the fourth quarter of 2018, Lexington executed the following new and extended leases:

  LEASE EXTENSIONS    
            
  Location Primary Tenant(1)Prior Term Lease
Expiration Date
 Sq. Ft.
           
  Industrial        
1 CarrolltonTX Teasdale 03/2025 12/2033 298,653 
1 Total industrial lease extensions        298,653 
            
  Office        
1 KnoxvilleTN CaremarkPCS 05/2020 05/2027 59,748 
2 IndianapolisIN N/A 02/2019 05/2019 3,764 
2 Total office lease extensions       63,512 
            
3 Total lease extensions       362,165 
            
  NEW LEASES         
            
  Location     Lease Expiration Date Sq. Ft.
  Office/Multi-Tenant        
1 PhoenixAZ Argosy Education   05/2024 27,470 
2 Farmers BranchTX N/A   04/2024 2,937 
3 OrlandoFL CardWorks Servicing   09/2029 59,927 
3 Total new office leases       90,334 
            
6 TOTAL NEW AND EXTENDED LEASES       452,499 
            
  1. Leases greater than 10,000 square feet.

As of December 31, 2018, Lexington's portfolio was 95.1% leased.

BALANCE SHEET/CAPITAL MARKETS

During the fourth quarter, Lexington fully repaid the remaining $149.0 million outstanding on its 2020 term loan and satisfied $7.9 million of non-recourse debt.

Also in the fourth quarter, Lexington's Board of Trustees increased the amount of common shares available for repurchase under its repurchase authorization initially announced on July 2, 2015 by 10.0 million common shares. Lexington repurchased and retired 3,979,597 common shares at an average price of $8.07 per share, bringing the total 2018 repurchases to 5,851,252 common shares at an average price of $8.05 per share. Subsequent to December 31, 2018, Lexington repurchased and retired 441,581 common shares at an average price of $8.13 per share. As of February 27, 2019, there were 10,306,255 common shares available for repurchase.

Subsequent to December 31, 2018, Lexington replaced its revolving credit facility and the 2021 term loan with a new revolving credit facility and the continuation of the 2021 term loan, which extended the maturity of the revolving credit facility to February 2023 and reduced the applicable margin rates on the revolving credit facility and 2021 term loan.

2019 EARNINGS GUIDANCE

Lexington estimates that its net income attributable to common shareholders per diluted common share for the year ended December 31, 2019 will be within an expected range of $1.36 to $1.40. Lexington estimates that its Adjusted Company FFO for the year ended December 31, 2019 will be within an expected range of $0.75 to $0.79 per diluted common share. This guidance is forward looking, excludes the impact of certain items and is based on current expectations.

FOURTH QUARTER 2018 CONFERENCE CALL

Lexington will host a conference call today February 27, 2019, at 8:30 a.m. Eastern Time, to discuss its results for the quarter ended December 31, 2018. Interested parties may participate in this conference call by dialing 1-844-825-9783 (U.S.), 1-412-317-5163 (International) or 1-855-669-9657 (Canada). A replay of the call will be available through May 27, 2019, at 1-877-344-7529 (U.S.), 1-412-317-0088 (International) or 1-855-669-9658 (Canada); pin code for all replay numbers is 10128738. A link to a live webcast of the conference call is available at www.lxp.com within the Investors section.

ABOUT LEXINGTON REALTY TRUST

Lexington Realty Trust (NYSE: LXP) is a publicly traded real estate investment trust (REIT) that owns a diversified portfolio of real estate assets consisting primarily of equity investments in single-tenant net-leased commercial properties across the United States. Lexington seeks to expand its industrial portfolio through build-to-suit transactions, sale-leaseback transactions and other transactions, including acquisitions. For more information, including Lexington's Quarterly Supplemental Information package, or to follow Lexington on social media, visit www.lxp.com.

Contact:
Investor or Media Inquiries for Lexington Realty Trust:
Heather Gentry, Senior Vice President of Investor Relations
Lexington Realty Trust
Phone: (212) 692-7200 E-mail: hgentry@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 dividend declarations to achieve a $0.41 per share annualized dividend, (2) Lexington's ability to achieve its estimates of net income attributable to common shareholders and Adjusted Company FFO for the year ending December 31, 2019, (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 REIT, (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 has filed 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, and all property operating activities are conducted, through special purpose entities, which are separate and distinct legal entities that maintain separate books and records, but in some instances are consolidated for financial statement purposes and/or disregarded for income tax purposes. The assets and credit of each special purpose entity with a property subject to a mortgage loan are not available to creditors to satisfy the debt or other obligations of any other person, including any other special purpose entity or affiliate. Consolidated entities that are not property owner subsidiaries do not directly own any of the assets of a property owner subsidiary (or the general partner, member of managing member of such property owner subsidiary), but merely hold partnership, membership or beneficial interests therein which interests are subordinate to the claims of the property owner subsidiary's (or its general partner's, member's or managing member's) creditors.

Non-GAAP Financial Measures - Definitions

Lexington has used non-GAAP financial measures as defined by the Securities and Exchange Commission Regulation G in this Quarterly Earnings Press Release and in other public disclosures.

Lexington believes that the measures defined below are helpful to investors in measuring our performance or that of an individual investment. Since these measures exclude certain items which are included in their respective most comparable measures under generally accepted accounting principles (“GAAP”), reliance on the measures has limitations; management compensates for these limitations by using the measures simply as supplemental measures that are weighed in balance with other GAAP measures. These measures are not necessarily indications of our cash flow available to fund cash needs. Additionally, they should not be used as an alternative to the respective most comparable GAAP measures when evaluating Lexington's financial performance or cash flow from operating, investing or financing activities or liquidity.

Cash Rent: Cash Rent is calculated by making adjustments to GAAP rent to remove the impact of GAAP required adjustments to rental income such as adjustments for straight-line rents relating to free rent periods and contractual rent increases. Cash Rent excludes lease termination income. Lexington believes Cash Rent provides a meaningful indication of an investment's ability to fund cash needs.

Company Funds Available for Distribution (“FAD”): FAD is calculated by making adjustments to Adjusted Company FFO (see below) for (1) straight-line rent adjustments, (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 real estate investment trusts (“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.

Funds from Operations (“FFO”) and Adjusted Company FFO: Lexington believes that Funds from Operations, or FFO, which is a non-GAAP measure, 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, or NAREIT, defines FFO as “net income (calculated in accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from the sales of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in value of depreciable real estate held by the entity. The reconciling items include amounts to adjust earnings from consolidated partially-owned entities and equity in earnings of unconsolidated affiliates to FFO.” 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 and also presents FFO available to all equityholders 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 Adjusted Company FFO available to all equityholders and unitholders - diluted which adjusts FFO available to all equityholders and unitholders - diluted for certain items which we believe are not indicative of the operating results of Lexington's real estate portfolio. Lexington believes this is an appropriate presentation as it is frequently requested by security analysts, investors and other interested parties. Since others do not calculate these measures in a similar fashion, these measures may not be comparable to similarly titled measures as reported by others. These measures should not be considered as an alternative to net income as an indicator of Lexington’s operating performance or as an alternative to cash flow as a measure of liquidity.

GAAP and Cash Yield or Capitalization Rate: GAAP and cash yields or capitalization rates are measures of operating performance used to evaluate the individual performance of an investment. These measures are estimated and are not presented or intended to be viewed as a liquidity or performance measure that present a numerical measure of Lexington's historical or future financial performance, financial position or cash flows. The yield or capitalization rate is calculated by dividing the annualized NOI (as defined below, except GAAP rent adjustments are added back to rental income to calculate GAAP yield or capitalization rate) the investment is expected to generate (or has generated) divided by the acquisition/completion cost (or sale) price.

Net Operating Income (“NOI”): NOI is a measure of operating performance used to evaluate the individual performance of an investment. This measure is not presented or intended to be viewed as a liquidity or performance measure that presents a numerical measure of Lexington's historical or future financial performance, financial position or cash flows. Lexington defines NOI as operating revenues (rental income (less GAAP rent adjustments and lease termination income), tenant reimbursements and other property income) less property operating expenses. Other REITs may use different methodologies for calculating NOI, and accordingly, Lexington's NOI may not be comparable to other companies. Because NOI excludes general and administrative expenses, interest expense, depreciation and amortization, acquisition-related expenses, other nonproperty income and losses, and gains and losses from property dispositions, it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate and the impact to operations from trends in occupancy rates, rental rates, and operating costs, providing a perspective on operations not immediately apparent from net income. Lexington believes that net income is the most directly comparable GAAP measure to NOI.

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,
  2018   2017    2018   2017 
Gross revenues:               
Rental$80,745  $93,909  $364,731  $359,832 
Tenant reimbursements6,506  8,260  30,608  31,809 
Total gross revenues87,251  102,169  395,339  391,641 
Expense applicable to revenues:       
Depreciation and amortization(38,498) (45,262) (168,191) (173,968)
Property operating(9,614) (12,410) (42,675) (49,194)
General and administrative(7,763) (8,597) (31,662) (34,158)
Litigation settlement      (2,050)
Non-operating income1,825  5,381  3,491  10,378 
Interest and amortization expense(16,656) (20,055) (79,880) (77,883)
Debt satisfaction gains (charges), net(368) 3,818  (2,596) 6,196 
Impairment charges and loan losses(4,953) (1,419) (95,813) (44,996)
Gains on sales of properties13,336  8,350  252,913  63,428 
Income before provision for income taxes and  equity in earnings (losses) of non-consolidated entities24,560  31,975  230,926  89,394 
Provision for income taxes(402) (743) (1,728) (1,917)
Equity in earnings (losses) of non-consolidated entities1,516  216  1,708  (848)
Net income25,674  31,448  230,906  86,629 
Less net income attributable to noncontrolling interests(266) (598) (3,491) (1,046)
Net income attributable to Lexington Realty Trust shareholders25,408  30,850  227,415  85,583 
Dividends attributable to preferred shares – Series C(1,572) (1,572) (6,290) (6,290)
Allocation to participating securities(40) (43) (287) (226)
Net income attributable to common shareholders$23,796  $29,235  $220,838  $79,067 
Net income attributable to common shareholders – per common share basic$0.10  $0.12  $0.93  $0.33 
Weighted-average common shares outstanding – basic233,963,608  238,131,814  236,666,375  237,758,408 
Net income attributable to common shareholders – per common share diluted$0.10  $0.12  $0.93  $0.33 
Weighted-average common shares outstanding – diluted238,292,912  241,821,194  240,810,990  241,537,837 
            


LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
As of December 31,
(Unaudited and in thousands, except share and per share data)
        
  2018   2017 
Assets:       
Real estate, at cost$3,090,134  $3,936,459 
Real estate - intangible assets419,612  599,091 
 3,509,746  4,535,550 
Less: accumulated depreciation and amortization954,087  1,225,650 
Real estate, net2,555,659  3,309,900 
Assets held for sale63,868  2,827 
Cash and cash equivalents168,750  107,762 
Restricted cash8,497  4,394 
Investment in and advances to non-consolidated entities66,183  17,476 
Deferred expenses, net15,937  31,693 
Rent receivable – current3,475  5,450 
Rent receivable – deferred58,692  52,769 
Other assets12,779  20,749 
Total assets$2,953,840  $3,553,020 
    
Liabilities and Equity:   
Liabilities:   
Mortgages and notes payable, net$570,420  $689,810 
Revolving credit facility borrowings  160,000 
Term loans payable, net298,733  596,663 
Senior notes payable, net496,034  495,198 
Trust preferred securities, net127,296  127,196 
Dividends payable48,774  49,504 
Liabilities held for sale386   
Accounts payable and other liabilities30,790  38,644 
Accrued interest payable4,523  5,378 
Deferred revenue - including below market leases, net20,531  33,182 
Prepaid rent9,675  16,610 
Total liabilities1,607,162  2,212,185 
    
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 outstanding94,016  94,016 
Common shares, par value $0.0001 per share; authorized 400,000,000 shares, 235,008,554 and 240,689,081 shares issued and outstanding in 2018 and 2017, respectively24  24 
Additional paid-in-capital2,772,855  2,818,520 
Accumulated distributions in excess of net income(1,537,100) (1,589,724)
Accumulated other comprehensive income76  1,065 
Total shareholders’ equity1,329,871  1,323,901 
Noncontrolling interests16,807  16,934 
Total equity1,346,678  1,340,835 
Total liabilities and equity$2,953,840  $3,553,020 
        


LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
EARNINGS PER SHARE
(Unaudited and in thousands, except share and per share data)
        
 Three Months Ended
December 31,
 Twelve Months Ended
December 31,
 2018 2017 2018 2017
EARNINGS PER SHARE:       
        
Basic:       
Net income attributable to common shareholders$23,796  $29,235  $220,838  $79,067 
        
Weighted-average common shares outstanding - basic233,963,608  238,131,814  236,666,375  237,758,408 
        
Net income attributable to common shareholders - per common share basic$0.10  $0.12  $0.93  $0.33 
        
Diluted:       
Net income attributable to common shareholders - basic$23,796  $29,235  $220,838  $79,067 
Impact of assumed conversions21  338  2,528  147 
Income from continuing operations attributable to common shareholders$23,817  $29,573  $223,366  $79,214 
        
Weighted-average common shares outstanding - basic233,963,608  238,131,814  236,666,375  237,758,408 
Effect of dilutive securities:       
Unvested share-based payment awards and options723,120  57,731  528,495  86,285 
Operating Partnership Units3,606,184  3,631,649  3,616,120  3,693,144 
Weighted-average common shares outstanding - diluted238,292,912  241,821,194  240,810,990  241,537,837 
        
Net income attributable to common shareholders - per common share diluted$0.10  $0.12  $0.93  $0.33 
                


LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
ADJUSTED COMPANY FUNDS FROM OPERATIONS & FUNDS AVAILABLE FOR DISTRIBUTION
(Unaudited and in thousands, except share and per share data)
    
 Three Months Ended
December 31,
 Twelve Months Ended
December 31,
  2018   2017   2018   2017 
FUNDS FROM OPERATIONS:               
Basic and Diluted:               
Net income attributable to common shareholders$23,796  $29,235  $220,838  $79,067 
Adjustments:       
Depreciation and amortization37,819  44,050  164,261  168,683 
Impairment charges - real estate, including non-consolidated entities4,953  1,419  95,813  43,214 
Noncontrolling interests - OP units22  339  2,528  147 
Amortization of leasing commissions679  1,212  3,930  5,285 
Joint venture and noncontrolling interest adjustment2,567  257  4,063  1,121 
Gains on sales of properties, including non-consolidated entities and net of tax(14,821) (8,350) (254,269) (64,880)
FFO available to common shareholders and unitholders - basic55,015  68,162  237,164  232,637 
Preferred dividends1,572  1,572  6,290  6,290 
Amount allocated to participating securities40  43  287  226 
FFO available to all equityholders and unitholders - diluted56,627  69,777  243,741  239,153 
Litigation reserve      2,050 
Debt satisfaction (gains) charges, net, including non-consolidated entities
368  (3,796) 2,596  (6,174)
Impairment loss - loan receivable      5,294 
Unearned contingent acquisition consideration  (3,922)   (3,922)
Other(1)(3,305) 1,071  (10,038) 2,171 
Adjusted Company FFO available to all equityholders and unitholders - diluted53,690  63,130  236,299  238,572 
        
FUNDS AVAILABLE FOR DISTRIBUTION:       
Adjustments:       
Straight-line rents(4,722) (7,232) (20,968) (19,784)
Lease incentives227  513  1,686  1,969 
Amortization of above/below market leases(28) 364  285  1,544 
Lease termination payments, net(309) (253) (1,234) (690)
Non-cash interest, net854  1,018  4,209  2,465 
Non-cash charges, net1,611  2,119  6,810  8,318 
Tenant improvements(1,608) (1,136) (8,271) (11,203)
Lease costs(1,448) (1,242) (4,522) (6,526)
Joint venture and non-controlling interest adjustment(449)   (505)  
Company Funds Available for Distribution$47,818  $57,281  $213,789  $214,665 
        
Per Common Share and Unit Amounts       
Basic:       
FFO$0.23  $0.28  $0.99  $0.96 
Diluted:       
FFO$0.23  $0.28  $0.99  $0.97 
Adjusted Company FFO$0.22  $0.26  $0.96  $0.97 
        
Weighted-Average Common Shares       
Basic:       
Weighted-average common shares outstanding - basic EPS233,963,608  238,131,814  236,666,375  237,758,408 
Operating partnership units(2)3,606,184  3,631,649  3,616,120  3,693,144 
Weighted-average common shares outstanding - basic FFO237,569,792  241,763,463  240,282,495  241,451,552 
        
Diluted:       
Weighted-average common shares outstanding - diluted EPS238,292,912  241,821,194  240,810,990  241,537,837 
Unvested share-based payment awards  713,351    666,127 
Preferred shares - Series C4,710,570  4,710,570  4,710,570  4,710,570 
Weighted-average common shares outstanding - diluted FFO243,003,482  247,245,115  245,521,560  246,914,534 
 
(1)  "Other" primarily consisted of the acceleration of below-market lease intangible accretion in 2018 and transaction related costs in 2017 and 2016.
(2)  Includes OP units other than OP units held by Lexington.
 


LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
  
2019 EARNINGS GUIDANCE 
 Twelve Months Ended
December 31, 2019
 Range
Estimated:       
Net income attributable to common shareholders per diluted common share(1)$1.36  $1.40 
Depreciation and amortization0.56  0.56 
Impact of capital transactions(1.17) (1.17)
Estimated Adjusted Company FFO per diluted common share$0.75  $0.79 
 
(1)  Assumes all convertible securities are dilutive.
 

Source: Lexington Realty Trust