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.

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

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