Lexington Realty Trust Reports First Quarter 2011 Results

NEW YORK, May 5, 2011 /PRNewswire/ -- Lexington Realty Trust ("Lexington") (NYSE: LXP), a real estate investment trust focused on single-tenant real estate investments, today announced results for the first quarter ended March 31, 2011.

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First Quarter 2011 Highlights

• Generated Company Funds From Operations ("Company FFO") of $41.7 million or $0.25 per diluted common share/unit, adjusted for certain items.
• Increased portfolio occupancy 190 basis points to 95.3%, highest level since 2007.
• Executed 14 new and renewal leases, totaling approximately 1.7 million square feet.
• Reduced consolidated debt by $71.1 million.
• Disposed of interests in six properties for an aggregate gross sales price of $108.9 million at a weighted-average cap rate of 7.0%.
• Refinanced existing credit facility with a $300.0 million secured revolving credit facility increasing the availability by $80.0 million and extending the maturity for three years.
• Agreed to (1) lend up to approximately $18.0 million to fund the construction of a 99,000 square foot office property and (2) purchase the property upon completion of construction and commencement of a 15-year net lease at an initial cap rate of 9.5%.

Subsequent to Quarter End Highlights

• Made a $14.2 million preferred equity investment in a joint venture formed to acquire a 210,000 square foot office property.
• Contracted to (1) lend up to approximately $11.8 million to fund the construction of a 70,000 square foot office property and (2) purchase the property upon completion of construction and commencement of a 15-year net lease at an initial cap rate of 9.4%.
• Acquired a property for $27.5 million.
• Executed six new and renewal leases, totaling approximately 1.0 million square feet.

T. Wilson Eglin, President and Chief Executive Officer of Lexington, stated, "Our strong operating results represent evidence of the ongoing progress we are making in executing our business plan. In the first quarter, we disposed of six non-core properties for $108.9 million, reduced our consolidated debt by $71.1 million, executed new and renewal leases for 1.7 million square feet and raised overall portfolio occupancy 190 basis points to 95.3%. Since the end of the quarter, we closed an additional $41.7 million of accretive external growth opportunities. We will continue to pursue our strategy of monetizing non-core assets, reducing our debt and selectively redeploying our capital into assets with long-term leases, as we seek to increase value for shareholders."

FINANCIAL RESULTS

Revenues

For the quarter ended March 31, 2011, total gross revenues were $83.3 million, compared with total gross revenues of $82.2 million for the quarter ended March 31, 2010.

Company FFO Attributable to Common Shareholders/Unitholders

The following presents in tabular form the items excluded from Company FFO for the periods presented (in millions, except for per diluted share/unit data):

Net Loss Attributable to Common Shareholders

For the quarter ended March 31, 2011, net loss attributable to common shareholders was $(23.6) million, or a loss of $(0.21) per diluted share, compared with net loss attributable to common shareholders for the quarter ended March 31, 2010 of $(33.0) million, or a loss of $(0.27) per diluted share.

Capital Activities and Balance Sheet Update

Consolidated indebtedness was reduced in the first quarter by $71.1 million, including $56.0 million of non-recourse mortgage debt on five properties.

During the quarter, Lexington refinanced its existing $220.0 million secured revolving credit facility which was scheduled to mature in February 2011, with a $300.0 million secured revolving credit facility, which matures in January 2014 but can be extended to January 2015 at Lexington's option. The new credit facility is secured by ownership interest pledges and guarantees by certain of Lexington's subsidiaries. With the consent of the lenders, Lexington can increase the size of the secured revolving credit facility by $225.0 million, for a total facility size of $525.0 million. As of quarter end, no borrowings were outstanding under the facility.

Common Share Dividend/Distribution

During the quarter ended March 31, 2011, Lexington declared a regular quarterly dividend/distribution of $0.115 per common share/unit, which was paid in cash on April 15, 2011 to common shareholders/unitholders of record as of March 31, 2011.

OPERATING ACTIVITIES

Capital Recycling

During the first quarter of 2011, Lexington disposed of six properties to unrelated parties for an aggregate gross sales price of $108.9 million, representing a weighted-average cap rate of 7.0%.

Investments

During the first quarter of 2011, Lexington agreed (1) to lend up to approximately $18.0 million to fund the construction of a 99,000 square foot office property in Saint Joseph, Missouri and (2) to acquire the property upon completion of construction and commencement of the tenant lease, which is expected to occur in the second quarter of 2012. The property will be net-leased for a term of 15 years. No assurance can be provided that construction will be completed or the acquisition will be consummated.

Subsequent to quarter end, Lexington:

• Made a preferred equity investment in a joint venture formed to acquire a 210,000 square foot office property in Aurora, Illinois (Chicago, IL-CBSA). Lexington contributed $14.2 million to the joint venture for an 87% preferred equity interest in the property. The property was purchased by a subsidiary of the joint venture for a gross purchase price of $15.9 million. The property is net-leased through September 2017. Lexington is entitled to a 15% internal rate of return, including a 9.6% current annual preferred return on its investment.
• Agreed to (1) lend up to approximately $11.8 million to fund the construction of a 70,000 square foot office property in Huntington, West Virginia and (2) acquire the property for a maximum price of $13.0 million (9.4% initial cap rate) upon completion of construction and commencement of the tenant lease, which is expected to occur in the fourth quarter of 2011. The property will be net-leased for a term of 15 years. No assurance can be provided that construction will be completed or the acquisition will be consummated.
• Acquired a 514,000 square foot industrial facility in Byhalia, Mississippi (Memphis, TN-CBSA) for $27.5 million (9.3% initial cap rate). The facility is net-leased for a 15-year term. Lexington has locked rate on a $15.0 million, 4.71% interest only non-recourse mortgage loan, which matures in 2016.

In addition to funding the construction of the build-to-suit properties in Saint Joseph, Missouri and Huntington, West Virginia, we continue to fund the construction of the previously announced build-to-suit property in Shelby, North Carolina. The total take-out acquisition price for these three build-to-suit properties is expected to be $55.0 million.

Leasing Activity

For the quarter ended March 31, 2011, 14 new and renewal leases for 1.7 million square feet were executed in Lexington's portfolio. At March 31, 2011, Lexington's overall portfolio was 95.3% leased.

2011 EARNINGS GUIDANCE

Lexington's estimate of Company FFO remains unchanged at $0.90 to $0.93 per diluted share for the year ended December 31, 2011. This guidance is forward looking, excludes the impact of certain items and is based on current expectations.

FIRST QUARTER 2011 CONFERENCE CALL

Lexington will host a conference call today, Thursday, May 5, 2011, at 11:00 a.m. Eastern Time, to discuss its results for the quarter ended March 31, 2011. Interested parties may participate in this conference call by dialing (888) 438-5525 or (719) 457-2683. A replay of the call will be available through May 19, 2011, at (877) 870-5176 or (858) 384-5517, pin: 5936868. 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 to achieve an annualized dividend paid in 2011 of $0.46 per common share, (2) Lexington's ability to achieve its estimate of Company FFO for the year ended December 31, 2011, (3) the failure to continue to qualify as a real estate investment trust, (4) changes in general business and economic conditions, including the impact of the current global financial and credit crisis, (5) competition, (6) increases in real estate construction costs, (7) changes in interest rates, or (8) 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 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 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 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.

FFO is determined 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, Lexington's Series C Cumulative Convertible Preferred Shares, and Lexington's 6.00% Convertible 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 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

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