NEW YORK, Nov. 5 /PRNewswire-FirstCall/ -- 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, 2009.
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Third Quarter 2009 Highlights
-- Generated Company Funds From Operations ("Company FFO") of $36.8 million
or $0.30 per diluted share/unit, excluding certain items.
-- Reduced overall debt by $68.9 million, including $29.2 million face
amount of Exchangeable Notes at a 15.0% discount.
-- Executed 23 new and renewal leases, totaling approximately 0.4 million
square feet.
-- Raised approximately $15.1 million through property and note sales.
-- Secured an $11.5 million, 6.375% non-recourse mortgage due in 2014.
-- Issued approximately 3.4 million common shares generating proceeds of
$16.0 million.
-- Recorded non-cash income of $7.0 million related to a forward equity
commitment to repurchase 3.5 million common shares, impairment charges
of $36.2 million on real estate and investments and $1.9 million from a
deferred maintenance payment.
-- Modified 2009 guidance to reflect 7.2 million common shares issued as
part of the quarterly dividend payment and under the direct share
purchase plan.
T. Wilson Eglin, President and Chief Executive Officer of Lexington stated, "Throughout the year we have stayed committed to reducing debt and strengthening our balance sheet. We have enhanced our capital position through accretive debt repurchases, asset sales from our investment portfolio and by issuing 20.6 million common shares this year. Furthermore, our diversified portfolio continues to perform well with overall occupancy of approximately 91.3% at quarter end."
FINANCIAL RESULTS
Revenues
For the quarter ended September 30, 2009, total gross revenues were $97.3 million, compared with total gross revenues of $100.7 million for the quarter ended September 30, 2008.
Company FFO Applicable to Common Shareholders/Unitholders
The following presents in tabular form items excluded from Company FFO for the periods presented:
Three Months Ended Nine Months Ended
Sept 30, Per Sept 30, Per Sept 30, Per Sept 30, Per
2009 Diluted 2008 Diluted 2009 Diluted 2008 Diluted
Millions Share/ Millions Share/ Millions Share/ Millions Share/
(1) Unit (1) Unit (1) Unit (1) Unit
Reported
Company
FFO(A) $18.4 $0.15 $42.7 $0.39 $(39.0) $(0.33) $158.8 $1.47
Severance
charges - - - 2.0
New
accounting
pronounce-
ments 0.3 0.8 1.1 2.8
Formation
costs -
joint
venture - - - 1.1
Debt
satisfaction,
net (9.2) (2.5) (21.5) (34.9)
Debt
satisfaction,
net -
Concord - (2.5) - (6.4)
Forward
equity
commitment (7.0) - (2.6) -
Impairment
losses -
real
estate 29.2 1.1 38.8 3.8
Impairment
losses -
investments 0.5 - 1.6 -
Impairment
losses/
reserves -
Concord - 3.6 71.4 32.6
Equity
impairment -
Concord - - 68.2 -
Impairment
loss -
JV 6.5 0.1 6.5 1.1
Lease
termination/
deferred
maintenance
payments (1.9) - (3.2) (34.9)
Land
transaction
income,
net - - (1.3) -
$36.8 $0.30 $43.3 $0.39 $120.0 $1.02 $126.0 $1.17
(A) See the last page of this press release for a reconciliation of GAAP
net income (loss) to Company FFO.
Net Loss Attributable to Common Shareholders
For the quarter ended September 30, 2009, net loss attributable to common shareholders was ($28.3) million, or a loss of ($0.25) per diluted share, compared with net loss attributable to common shareholders for the quarter ended September 30, 2008 of ($10.6) million, or a loss of ($0.17) per diluted share.
Financing Activities and Balance Sheet Update
During the third quarter, Lexington refinanced a $13.2 million, 8.19% mortgage loan due in April 2010 with an $11.5 million, 6.375% mortgage loan due in August 2014.
Overall debt was reduced in the third quarter by $68.9 million, including $29.2 million original principal amount of 5.45% Exchangeable Notes repurchased at a 15% discount. Subsequent to September 30, 2009, Lexington repurchased an additional $17.6 million original principal amount of these notes, leaving $87.7 million outstanding as of the date of this release. At September 30, 2009, Lexington had approximately $3.7 billion in total assets, including $80.1 million of cash and restricted cash and $2.2 billion in debt outstanding. As of September 30, 2009, the weighted average interest rate on Lexington's debt was 5.6% with a weighted average maturity of 5.8 years. Approximately 91% of Lexington's debt is subject to fixed interest rates.
Lexington issued approximately 3.4 million common shares in the quarter and an additional 1.0 million shares subsequent to quarter end generating proceeds of approximately $20.9 million. These proceeds were used to reduce overall indebtedness.
Common Share Dividend/Distribution
On September 15, 2009, Lexington announced it declared a regular quarterly dividend/distribution of $0.18 per share/unit, which was paid in a combination of cash and common shares on October 16, 2009, to common shareholders/unitholders of record as of September 25, 2009, equivalent to an annualized dividend of $0.72 per share. Lexington issued approximately 3.9 million common shares on October 16, 2009 and retained approximately $18.9 million of liquidity by paying 90% of the common share dividend in common shares.
OPERATING ACTIVITIES
Sales
During the quarter ended September 30, 2009, Lexington sold one vacant property to a third party for a sales price of $0.8 million. In addition, Lexington sold its investments in two debt securities for an aggregate sales price of $9.5 million and received $4.8 million as a result of the maturity and payoff of a third debt security investment.
Leasing Activity
At September 30, 2009, Lexington's consolidated portfolio was approximately 91.3% leased. For the quarter ended September 30, 2009, Lexington executed 23 leases (new and renewal) for approximately 0.4 million square feet. During the quarter, Lexington recognized $1.9 million from a deferred maintenance payment.
2009 EARNINGS GUIDANCE
Lexington is reducing its estimated Company FFO guidance to a range of $1.26 to $1.28 per diluted share/unit from $1.29 to $1.34 per diluted share/unit for the year ended December 31, 2009 to reflect the issuance of approximately 7.2 million common shares in connection with the quarterly common share dividend, the issuance of shares under the direct share purchase plan and no longer recognizing FFO relating to our investment in Concord. This guidance excludes the impact of certain items, is based on current expectations and is forward-looking.
3RD( )QUARTER 2009 CONFERENCE CALL
Lexington will host a conference call today, Thursday, November 5, 2009, at 11:00 a.m. Eastern Time, to discuss its results for the quarter ended September 30, 2009. Interested parties may participate in this conference call by dialing (888) 213-3752 or (913) 312-0718. A replay of the call will be available through November 19, 2009, at (888) 203-1112 or (719) 457-0820, Replay Pin Number: 2520143.
A live web cast of the conference call will be available at www.lxp.com within the Investor Relations section. An online replay will also be available through November 5, 2010.
ABOUT LEXINGTON REALTY TRUST
Lexington Realty Trust is a real estate investment trust that owns, invests in, and manages office, industrial and retail properties net-leased to major corporations throughout the United States and provides investment advisory and asset management services to investors in the net lease area. Lexington 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 failure to continue to qualify as a real estate investment trust, (2) changes in general business and economic conditions, including the impact of the current global financial and credit crisis, (3) competition, (4) increases in real estate construction costs, (5) changes in interest rates, or (6) changes in accessibility of debt and equity capital markets. Copies of the periodic reports Lexington files with the Securities and Exchange Commission are available on Lexington's website 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", "is optimistic" or similar expressions. 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.
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three and Nine Months ended September 30, 2009 and 2008
(Unaudited and in thousands, except share and per share data)
Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
Gross Revenues:
Rental $86,394 $90,226 $261,645 $296,971
Advisory and incentive fees 388 396 1,434 1,072
Tenant reimbursements 10,512 10,105 30,866 29,269
Total gross revenues 97,294 100,727 293,945 327,312
Expense applicable to
revenues:
Depreciation and
amortization (45,401) (49,346) (136,985) (186,221)
Property operating (22,470) (20,379) (65,132) (56,771)
General and administrative (5,057) (7,105) (17,904) (25,453)
Non-operating income 1,339 1,781 6,955 22,577
Interest and amortization
expense (33,017) (36,326) (100,655) (118,233)
Debt satisfaction gains, net 3,152 2,590 16,868 35,364
Change in value of forward
equity commitment 7,031 - 2,596 -
Impairment charges and loan
losses (23,668) - (24,753) -
Gains on sale-affiliates - - - 31,806
Income (loss) before provision
for income taxes, equity
in losses of non-
consolidated entities
and discontinued operations (20,797) (8,058) (25,065) 30,381
Provision for income taxes (663) (651) (1,665) (2,582)
Equity in losses of non-
consolidated entities (525) (1,525) (130,813) (23,171)
Income (loss) from continuing
operations (21,985) (10,234) (157,543) 4,628
Discontinued operations:
Income (loss) from
discontinued operations (97) (205) (24) 488
Provision for income taxes (2) (191) (54) (384)
Debt satisfaction gains
(charges), net 6,006 (120) 4,607 (433)
Gains on sales of
properties - 7,374 6,280 11,986
Impairment charges (6,053) (1,063) (15,610) (3,757)
Total discontinued
operations (146) 5,795 (4,801) 7,900
Net income (loss) (22,131) (4,439) (162,344) 12,528
Less net (income) loss
attributable to
noncontrolling interests 2 436 (1,841) 4,016
Net income (loss) attributable
to Lexington Realty Trust (22,129) (4,003) (164,185) 16,544
Dividends attributable to
preferred shares- Series B (1,590) (1,590) (4,770) (4,770)
Dividends attributable to
preferred shares- Series C (1,702) (2,110) (5,516) (6,740)
Dividends attributable to
preferred shares- Series D (2,926) (2,926) (8,777) (8,777)
Redemption discount - Series C - - - 5,678
Conversion dividend - Series C - - (6,994) -
Net income (loss)
attributable to common
shareholders $(28,347) $(10,629) $(190,242) $1,935
Income (loss) per common
share-basic:
Loss from continuing
operations $(0.25) $(0.22) $(1.76) $(0.04)
Income (loss) from
discontinued operations - 0.05 (0.05) 0.07
Net income (loss)
attributable to common
shareholders $(0.25) $(0.17) $(1.81) $0.03
Weighted average common
shares outstanding
- basic 112,217,415 64,433,457 105,490,039 61,485,277
Income (loss) per common
share-diluted:
Loss from continuing
operations $(0.25) $(0.22) $(1.76) $(0.04)
Income (loss) from
discontinued operations - 0.05 (0.05) 0.07
Net income (loss)
attributable to common
shareholders $(0.25) $(0.17) $(1.81) $0.03
Weighted average common
shares outstanding
-diluted 112,217,415 64,433,457 105,490,039 61,485,277
Amounts attributable to
common shareholders:
Loss from continuing
operations $(28,201) $(13,969) $(185,083) $(2,111)
Income (loss) from
discontinued operations (146) 3,340 (5,159) 4,046
Net income (loss)
attributable to common
shareholders $(28,347) $(10,629) $(190,242) $1,935
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
CONDENSED BALANCE SHEETS
September 30, 2009 and December 31, 2008
(Unaudited and in thousands, except share and per share data)
September 30, December 31,
2009 2008
Assets:
Real estate, at cost $3,651,751 $3,756,188
Less: accumulated depreciation and
amortization 530,522 461,661
3,121,229 3,294,527
Properties held for sale-discontinued
operations 697 8,150
Intangible assets, net 282,721 343,192
Cash and cash equivalents 56,465 67,798
Restricted cash 23,657 31,369
Investment in and advances to non-
consolidated entities 61,772 179,133
Deferred expenses, net 39,728 35,741
Notes receivable, net 61,364 68,812
Rent receivable-current 11,011 19,829
Rent receivable- deferred 12,784 16,499
Other assets 30,413 40,675
Total assets $3,701,841 $4,105,725
Liabilities and Equity:
Liabilities:
Mortgages and notes payable $1,912,743 $2,033,854
Exchangeable notes payable 102,590 204,074
Trust preferred securities 129,120 129,120
Contract rights payable 14,900 14,776
Dividends payable 8,328 24,681
Liabilities-discontinued operations 55 6,142
Accounts payable and other liabilities 43,643 33,814
Accrued interest payable 8,480 16,345
Deferred revenue-below market leases, net 108,861 121,722
Prepaid rent 14,784 20,126
2,343,504 2,604,654
Commitments and contingencies
Equity:
Preferred shares, par value $0.0001 per share;
authorized 100,000,000 shares,
Series B Cumulative Redeemable Preferred,
liquidation preference $79,000, 3,160,000
shares issued and outstanding 76,315 76,315
Series C Cumulative Convertible Preferred,
liquidation preference $104,760 and
$129,915 respectively, and 2,095,200 and
2,598,300 shares issued and outstanding
in 2009 and 2008, respectively 101,778 126,217
Series D Cumulative Redeemable Preferred,
liquidation preference $155,000,
6,200,000 shares issued and
outstanding 149,774 149,774
Common shares, par value $0.0001 per share;
authorized 400,000,000 shares,
116,703,832 and 100,300,238 shares
issued and outstanding in 2009 and 2008,
respectively 12 10
Additional paid-in-capital 1,723,798 1,638,540
Accumulated distributions in excess
of net income (787,587) (569,131)
Accumulated other comprehensive
income (loss) 160 (15,650)
Total shareholders' equity 1,264,250 1,406,075
Noncontrolling interests 94,087 94,996
Total equity 1,358,337 1,501,071
Total liabilities and equity $3,701,841 $4,105,725
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
EARNINGS PER SHARE AND COMPANY FUNDS FROM OPERATIONS PER SHARE
(Unaudited and in thousands, except share and per share data)
Three Months ended Nine Months ended
September 30, September 30,
2009 2008 2009 2008
EARNINGS PER SHARE:(1)
Basic:
Loss from continuing
operations attributable
to common shareholders $(28,201) $(13,969) $(185,083) $(2,111)
Less : Unvested common
share dividends (127) (134) (385) (421)
Loss attributable to common
shareholders from
continuing operations
for earnings per share (28,328) (14,103) (185,468) (2,532)
Income (loss) from
discontinued operations
attributable to
common shareholders (146) 3,340 (5,159) 4,046
Net income (loss)
attributable to common
shareholders for
earnings per share -
basic $(28,474) $(10,763) $(190,627) $1,514
Weighted average
number of common
shares outstanding
- basic 112,217,415 64,433,457 105,490,039 61,485,277
Income (loss) per common
share-basic:
Loss from continuing
operations $(0.25) $(0.22) $(1.76) $(0.04)
Income (loss) from
discontinued operations - 0.05 (0.05) 0.07
Net income (loss)
attributable to common
shareholders $(0.25) $(0.17) $(1.81) $0.03
Diluted:
Loss attributable
to common shareholders
from continuing
operations for earnings
per share-basic $(28,328) $(14,103) $(185,468) $(2,532)
Incremental loss
attributed to assumed
conversion of
dilutive securities - - - -
Loss attributable
to common shareholders
from continuing
operations for earnings
per share (28,328) (14,103) (185,468) (2,532)
Income (loss) from
discontinued operations
attributable to common
shareholders (146) 3,340 (5,159) 4,046
Net income (loss)
attributable to common
shareholders for earnings
per share - diluted $(28,474) $(10,763) $(190,627) $1,514
Weighted average
number of common
shares used in
calculation of basic
earnings per share 112,217,415 64,433,457 105,490,039 61,485,277
Add incremental
shares representing:
Shares issuable
upon conversion
of dilutive
securities - - - -
Weighted average
number of shares used
in calculation of
diluted earnings per
share 112,217,415 64,433,457 105,490,039 61,485,277
Income (loss) per common
share-diluted:
Loss from continuing
operations $(0.25) $(0.22) $(1.76) $(0.04)
Income (loss) from
discontinued
operations - 0.05 (0.05) 0.07
Net income (loss)
attributable to common
shareholders $(0.25) $(0.17) $(1.81) $0.03
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
EARNINGS PER SHARE AND COMPANY FUNDS FROM OPERATIONS PER SHARE (Continued)
(Unaudited and in thousands, except share and per share data)
Three Months ended Nine Months ended
September 30, September 30,
2009 2008 2009 2008
COMPANY FUNDS FROM
OPERATIONS:(1)(2)
Basic and Diluted:
Net income (loss)
attributable to common
shareholders $(28,347) $(10,629) $(190,242) $1,935
Adjustments:
Depreciation and
amortization 44,994 50,895 136,404 191,636
Noncontrolling
interests- OP units 221 (1,919) 933 (10,197)
Amortization of
leasing commissions 787 481 2,269 1,493
Joint venture and
noncontrolling interest
adjustment (910) 9,177 5,381 16,699
Preferred dividends-
Series C 1,702 2,110 12,510 1,062
Gains on sale of properties - (7,374) (6,280) (43,792)
Gain on sale of marketable
securities (19) - (19) -
Company FFO $18,428 $42,741 $(39,044) $158,836
Basic:
Weighted average shares
outstanding-basic
EPS 112,217,415 64,433,457 105,490,039 61,485,277
Unvested share-based
payment awards 703,088 406,174 706,099 425,642
Operating partnership
units 5,599,397 39,435,581 5,449,726 39,532,762
Preferred Shares-
Series C 4,950,907 5,633,894 5,461,335 6,249,276
Weighted average shares
outstanding-basic
Company FFO 123,470,807 109,909,106 117,107,199 107,692,957
Company FFO per share $0.15 $0.39 $(0.33) $1.47
Diluted:
Weighted average shares
outstanding -
diluted EPS 112,217,415 64,433,457 105,490,039 61,485,277
Unvested share-based
payment awards 703,088 406,174 706,099 425,642
Operating partnership
units 5,599,397 39,435,581 5,449,726 39,532,762
Preferred Shares-
Series C 4,950,907 5,633,894 5,461,335 6,249,276
Weighted average shares
outstanding - diluted
Company FFO 123,470,807 109,909,106 117,107,199 107,692,957
Company FFO per share $0.15 $0.39 $(0.33) $1.47
(1)( )Effective January 1, 2009 the Company adopted new guidance issued by the FASB relating to the accounting for convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) and new guidance on determining whether instruments granted in share-based payment transactions are participating securities, both of which required retrospective application to prior periods. In accordance with the new FASB guidance, net income attributable to common shareholders and earnings per common share and accordingly FFO and FFO per common share are adjusted for an allocation of net income to unvested share awards. However, net losses will not be allocated to unvested share awards. The Company's FFO per common share (diluted) and earnings per common share (diluted) were reduced by the Company's implementation of this new guidance. FFO per common share (diluted) was reduced by $0.01 for the three months ended September 30, 2008, and $0.07 for the nine months ended September 30, 2008 respectively. Loss per common share (diluted) was increased by $0.01 for the three months ended September 30, 2008, and loss per common share (diluted) was decreased by $0.10 for the nine months ended September 30, 2008.
(2) Lexington believes that Funds from Operations ("FFO") is a widely recognized and appropriate measure of the performance of an equity REIT. Lexington presents FFO because it considers FFO an important supplemental measure of Lexington's operating performance. 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 generally accepted accounting principles ("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.
Lexington computes FFO in accordance with standards established by the National Association of Real Estate Investment Trusts, Inc. ("NAREIT"). FFO is defined by NAREIT 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." FFO does not represent cash generated from operating activities in accordance with GAAP and is not indicative of cash available to fund cash needs. 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.
Lexington includes in its calculation of FFO, which Lexington refers to as the "Company's funds from operations" or "Company FFO," Lexington's operating partnership units and Lexington's Series C Cumulative Convertible Preferred Shares because these securities are convertible, at the holder's option, into Lexington's common shares. Management believes this is appropriate and relevant to securities analysts, investors and other interested parties because Lexington presents Company FFO on a company-wide basis as if all securities that are convertible, at the holder's option, into Lexington's common shares, are converted. Since others do not calculate FFO in a similar fashion, Company FFO may not be comparable to similarly titled measures as reported by others.
SOURCE Lexington Realty Trust
Contact: Investor or Media Inquiries, T. Wilson Eglin, CEO of Lexington Realty Trust, +1-212-692-7200, tweglin@lxp.com