News Details

NEW YORK, Nov. 6, 2012 (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, 2012.

Third Quarter 2012 Highlights

• Generated Company Funds From Operations, as adjusted ("Company FFO, as adjusted"), of $45.5 million or $0.25 per diluted common share.
• Increased quarterly common share dividend by 20%.
• Executed 17 new and extended leases, totaling 1.4 million square feet and ended the quarter with overall portfolio occupancy of 97.6%.
• Raised $68.1 million of gross proceeds from dispositions.
• Closed property acquisitions of $51.2 million and invested $20.2 million in on-going build-to-suit projects.
• Acquired remaining interest in Net Lease Strategic Assets Fund ("NLS").
• Entered into agreements to fund the construction of two build-to-suit projects for approximately $51.0 million.
• Retired $75.1 million of secured debt which had a weighted-average fixed rate of 6.4%.

Subsequent to Quarter End Highlights

• Issued 17.25 million common shares in a public offering, raising net proceeds of approximately $156.3 million.
• Satisfied $93.0 million of credit facility borrowings and repaid $57.5 million of indebtedness assumed in the acquisition of NLS.
• Retired $15.9 million of secured debt, which had a weighted-average fixed rate of 5.8%.
• Converted approximately $20.4 million original principal amount of 6.00% Convertible Guaranteed Notes to approximately 2.9 million common shares.
• Expanded seven-year term loan facility by $40.0 million.
• Executed 0.4 million square feet of new and extended leases.

T. Wilson Eglin, President and Chief Executive Officer of Lexington, stated, "We reported another quarter of strong operating results supported by successful leasing activity, favorable asset recycling, attractive external growth opportunities and refinancing maturing debts on advantageous terms. The execution of our business plan in each of these areas allowed us to increase our quarterly common share dividend by 20% ahead of schedule and tighten our guidance for Company FFO, as adjusted, for 2012 to an expected range of $0.96 - $0.98 per share. Subsequent to quarter end, we reduced our leverage by approximately $147.0 million, further strengthening our balance sheet and positioning the Company to continue to grow into next year."

FINANCIAL RESULTS

Revenues

For the quarter ended September 30, 2012, total gross revenues were $87.7 million, compared with total gross revenues of $79.8 million for the quarter ended September 30, 2011. The increase is primarily due to property acquisitions and an increase in occupancy.

Company FFO, As Adjusted

For the quarter ended September 30, 2012, the Company generated Company FFO, as adjusted, of $45.5 million, or $0.25 per diluted share, compared to Company FFO, as adjusted, for the quarter ended September 30, 2011 of $41.4 million, or $0.23 per diluted share. The calculation of Company FFO, as adjusted, and a reconciliation to net income (loss) is included later in this press release.

Net Income (Loss) Attributable to Common Shareholders

For the quarter ended September 30, 2012, net income attributable to common shareholders was $169.0 million, or income of $0.96 per diluted share, compared with net loss attributable to common shareholders for the quarter ended September 30, 2011 of $(37.0) million, or a loss of $(0.24) per diluted share. The increase in net income is primarily due to a $167.9 million gain recognized in the acquisition of the remaining interest in NLS.

Net Lease Strategic Assets Fund

During the third quarter of 2012, Lexington acquired Inland American (Net Lease) Sub, LLC's interest in NLS. As a result, Lexington now controls 100% of NLS. At September 30, 2012, NLS had 40 properties totaling 5.5 million square feet in 23 states, plus a 40% tenant-in-common interest in an office property.

Capital Activities and Balance Sheet Update

During the third quarter of 2012, Lexington (1) borrowed an additional $9.0 million on its seven-year term loan and swapped the LIBOR rate on such borrowings for a current fixed rate of 3.4% and (2) repaid $75.1 million in secured debt, with a weighted-average interest rate of 6.4%, scheduled to mature through 2015.

Subsequent to September 30, 2012, Lexington issued 17.25 million common shares in a public offering, raising net proceeds of approximately $156.3 million. The net proceeds were primarily used to satisfy $93.0 million of outstanding debt on Lexington's secured credit facility and $57.5 million to satisfy a portion of the debt assumed in the NLS acquisition. In addition, Lexington exercised an accordion feature within its seven-year term loan facility increasing the total facility under the term loan to $255.0 million, all of which is currently outstanding.

Also, subsequent to September 30, 2012, Lexington issued 2.9 million common shares upon conversion of $20.4 million original principal amount of 6.00% Convertible Guaranteed Notes due 2030. In connection with the conversion, Lexington made a cash payment of approximately $1.7 million plus accrued and unpaid interest on the notes.

Common Share/Unit Dividend/Distribution

Lexington declared a regular quarterly dividend/distribution for the quarter ended September 30, 2012 of $0.15 per common share/unit, which was paid on October 15, 2012 to common shareholders/unitholders of record as of September 28, 2012. This represents a 20% increase over the previous dividend/distribution.

OPERATING ACTIVITIES

Leasing

During the third quarter of 2012, Lexington executed 17 new and extended leases for 1.4 million square feet and ended the quarter with overall portfolio occupancy of 97.6%. The extended leases increased annual cash rents from $11.0 million to $14.4 million.

Subsequent to quarter end, Lexington executed 0.4 million square feet of new and extended leases.

Capital Recycling

Dispositions

During the third quarter of 2012, Lexington disposed of its interests in four properties to unrelated parties for an aggregate gross sales price of $68.1 million.

Investment Activity

Build-to-Suit Projects

Lexington closed on the acquisition of the 99,000 square foot build-to-suit office property in Saint Joseph, Missouri for a capitalized cost of $17.6 million (9.8% initial cap rate). The property is net-leased for a 15-year term.

Lexington completed the 150,000 square foot build-to-suit office property in Jessup, Pennsylvania for a capitalized cost of $24.9 million (9.4% initial cap rate). The property is net-leased for a 15-year term.

Lexington completed the 52,000 square foot build-to-suit retail property in Valdosta, Georgia for a project cost of approximately $8.7 million (9.3% initial cap rate). The property is net-leased for a 15-year term.

Lexington entered into an $8.4 million build-to-suit commitment to construct a 52,000 square foot retail property in Opelika, Alabama, which will be net-leased upon completion for a 15-year term (9.3% initial cap rate).

Lexington entered into a $42.6 million build-to-suit commitment to construct a 813,000 square foot industrial property in Rantoul, Illinois, which will be net-leased upon completion for a 20-year term (8.0% initial cap rate).

In addition, Lexington continues to fund the construction of, or is under contract to acquire, the previously announced build-to-suit projects in (1) Denver, Colorado (8.6% initial cap rate), (2) Long Island City, New York (8.5% initial cap rate) and (3) Eugene, Oregon (9.0% initial cap rate).

The aggregate estimated cost of these five on-going build-to-suit projects is approximately $152.9 million of which $45.0 million was invested as of September 30, 2012. Lexington can give no assurance that any of the build-to-suit projects that are under contract or in process will be completed.

Joint Venture Investments

During the quarter ended September 30, 2012, Lexington formed a joint venture in which it has a minority ownership interest. The joint venture entered into a contract to acquire a 120,000 square foot retail property in Palm Beach Gardens, Florida for $29.8 million, which will be net-leased at closing for an approximately 15-year term (9.6% cap rate). Lexington can give no assurances that this acquisition will be consummated.

2012 EARNINGS GUIDANCE

Lexington tightened its estimate of Company FFO, as adjusted, to an expected range of $0.96 to $0.98 per diluted share for the year ended December 31, 2012 from a range of $0.95 to $0.98 per diluted share. This guidance is forward looking, excludes the impact of certain items and is based on current expectations.

THIRD QUARTER 2012 CONFERENCE CALL

Lexington will host a conference call today, Tuesday, November 6, 2012, at 11:00 a.m. Eastern Time, to discuss its results for the quarter ended September 30, 2012. Interested parties may participate in this conference call by dialing 888-296-4174 or 719-325-2302. A replay of the call will be available through November 20, 2012, at 877-870-5176 or 858-384-5517, pin: 6614681. A live webcast of the conference call will be available at www.lxp.com within the Investor Relations section.

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 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 ended December 31, 2012, (3) the consummation of the built-to-suit transactions, (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 the current global financial and credit crisis, (6) competition, (7) increases in real estate construction costs, (8) changes in interest rates, (9) changes in accessibility of debt and equity capital markets, including with respect to financings that Lexington is working on, or (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", "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.

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, but consolidated for financial statement purposes and/or disregarded for income tax purposes.

¹ Lexington believes that Funds from Operations ("FFO") 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 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.

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 recently 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 "Reported Company funds from operations" or "Reported Company FFO," which differs from FFO because it includes Lexington's operating partnership units, Lexington's 6.50% Series C Cumulative Convertible Preferred Shares, and Lexington's 6.00% Convertible Guaranteed Notes 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 Reported 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. Lexington also presents "Company funds from operations, as adjusted" or "Company FFO, as adjusted," which adjusts Reported Company 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, Reported Company FFO and Company FFO, as adjusted, may not be comparable to similarly titled measures as reported by others. Reported Company FFO and Company FFO, as adjusted, 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 Reported Company Funds Available for Distribution ("FAD") is calculated by making adjustments to Company FFO, as adjusted, 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 general and administrative expenses, and (7) non-cash interest, 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.

CONTACT: Investor or Media Inquiries, T. Wilson Eglin, CEO
         Lexington Realty Trust
         Phone: (212) 692-7200 E-mail: tweglin@lxp.com