Lexington Realty Trust Reports Second Quarter 2010 Results
NEW YORK, Aug. 3 /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 second quarter ended June 30, 2010.
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Second Quarter 2010 Highlights
- Generated Company Funds From Operations ("Company FFO") of $35.9 million or $0.23 per diluted common share/unit, adjusted for certain items.
- Executed 17 new and renewal leases, totaling approximately 1.0 million square feet; overall portfolio approximately 92% leased.
- Raised $48.4 million from dispositions and financing activities.
- Amended secured credit facility, which increased the availability under the revolving loan portion from $150.0 million to $175.0 million.
- Agreed to acquire a to-be-built, 514,000 square foot industrial facility upon completion of construction and commencement of a 15-year net lease at an initial cap rate of 9.25%.
- Recorded a non-cash charge of $1.6 million related to a previously disclosed forward equity commitment and impairment charges of $26.0 million on real estate and debt investments.
Subsequent to Quarter End Highlights
- Sold three unencumbered multi-tenant office properties for $69.7 million at an annualized cap rate of 0.6%.
- Satisfied $29.8 million in non-recourse mortgage debt on three properties scheduled to mature in 2010.
- Agreed to (1) lend up to $23.4 million to fund the construction of a 672,000 square foot industrial facility and (2) purchase the facility upon completion of construction and commencement of a 20-year net lease at an initial cap rate of 8.9%.
T. Wilson Eglin, President and Chief Executive Officer of Lexington, stated, "During the second quarter of 2010, we continued to monetize assets, strengthen our balance sheet and improve liquidity, which allowed us to end the quarter with cash in excess of $130 million. We have continued to execute on non-core property sales in the third quarter by selling $69.7 million of multi-tenant properties, bringing our total volume for 2010 to $149.0 million at a cap rate of 4.7%. Overall, leasing activity has continued to be good with over one million square feet of leases executed in the quarter."
FINANCIAL RESULTS
Revenues
For the quarter ended June 30, 2010, total gross revenues were $86.1 million, compared with total gross revenues of $93.7 million for the quarter ended June 30, 2009.
Company FFO Attributable to Common Shareholders/Unitholders
The following presents in tabular form the items excluded from Company FFO for the periods presented:
Three Months Ended |
Six Months Ended |
||||||||||||||||
June 30, 2010 Millions |
Per Diluted Share/Unit |
June 30, 2009 |
Per Diluted Share/Unit |
June 30, 2010 Millions |
Per Diluted Share/Unit |
June 30, 2009 Millions |
Per Diluted Share/Unit |
||||||||||
Reported Company FFO(A) |
$ |
14.6 |
$ |
0.09 |
$ |
(38.9) |
$ |
(0.34) |
$ |
28.6 |
$ |
0.19 |
$ |
(57.7) |
$ |
(0.51) |
|
New accounting pronounce- |
0.1 |
0.4 |
0.3 |
0.9 |
|||||||||||||
Debt satisfaction, net |
-- |
(5.9) |
(2.6) |
(12.3) |
|||||||||||||
Forward equity commitment |
1.6 |
(4.2) |
(0.5) |
4.4 |
|||||||||||||
Impairment losses – real estate |
22.1 |
-- |
50.1 |
9.5 |
|||||||||||||
Impairment loss – real estate noncontrolling interest |
(6.4) |
-- |
(9.5) |
-- |
|||||||||||||
Impairment losses – consolidated debt investments |
3.9 |
-- |
3.9 |
1.1 |
|||||||||||||
Impairment losses – Concord debt investments |
-- |
51.3 |
-- |
71.4 |
|||||||||||||
Impairment loss – Concord equity investment |
-- |
39.1 |
-- |
68.2 |
|||||||||||||
Lease termination/ |
-- |
(1.3) |
-- |
(1.3) |
|||||||||||||
Land transaction income, net |
-- |
-- |
-- |
(1.3) |
|||||||||||||
$ |
35.9 |
$ |
0.23(B) |
$ |
40.5 |
$ |
0.36(B) |
$ |
70.3 |
$ |
0.47(B) |
$ |
82.9 |
$ |
0.75(B) |
||
(A) A reconciliation of GAAP net income (loss) to Company FFO is provided later (B) Per diluted share/unit reflects the impact of estimated net shares retired upon the assumed |
|||||||||||||||||
Net Loss Attributable to Common Shareholders
For the quarter ended June 30, 2010, net loss attributable to common shareholders was ($30.4) million, or a loss of ($0.23) per diluted share, compared with net loss attributable to common shareholders for the quarter ended June 30, 2009 of ($90.5) million, or a loss of ($0.87) per diluted share.
Financing Activities and Balance Sheet Update
During the second quarter of 2010, Lexington entered into an amendment to its secured credit agreement, which provides for the addition of a commitment from a new lender in the amount of $25.0 million for the revolving loan portion, increasing the revolving loan's current capacity to $175.0 million. No additional borrowings were made by Lexington in connection with the amendment, and, as of June 30, 2010, no borrowings were outstanding under the revolving loan portion.
Lexington obtained a $9.0 million non-recourse mortgage loan on its Greenville, South Carolina property leased to Canal Insurance Company. The 5.50% fixed rate loan is interest only and matures in January 2015. Subsequent to quarter end, Lexington satisfied $29.8 million of non-recourse mortgage debt encumbering three properties scheduled to mature in 2010.
Common Share Dividend/Distribution
During the quarter ended June 30, 2010, Lexington declared a regular quarterly dividend/distribution of $0.10 per common share/unit, which was paid in cash on July 15, 2010 to common shareholders/unitholders of record as of June 30, 2010.
OPERATING ACTIVITIES
Capital Recycling
During the quarter ended June 30, 2010, Lexington raised $39.4 million from two retail property sales and the 100% loan-to-value, non-recourse, match-term financing of its leasehold interest in Salt Lake City, Utah. Subsequent to quarter end, Lexington sold three unencumbered multi-tenant office properties for $69.7 million ($136 psf). The properties were 67.2% leased and generated annualized net operating income of $0.4 million.
Investments
Lexington agreed to acquire a 514,000 square foot industrial facility being built in Byhalia, Mississippi for $27.5 million. The facility will be leased to ASICS America Corporation, with ASICS Corporation as guarantor, for a term of 15 years upon completion of construction, which is expected to occur in the second quarter of 2011. No assurance can be provided that construction will be completed or the acquisition will be consummated.
Subsequent to quarter end, Lexington agreed (1) to lend up to $23.4 million to fund the construction of a 672,000 square foot industrial facility in Shelby, North Carolina and (2) to acquire the property for approximately $300,000 in excess of the construction loan commitment. The facility will be leased to Clearwater Paper Corporation for a term of 20 years upon completion of construction, which is expected to occur in the second quarter of 2011. No assurance can be provided that construction will be completed or the acquisition will be consummated.
Leasing Activity
For the quarter ended June 30, 2010, Lexington executed 17 new and renewal leases for one million square feet. At June 30, 2010, Lexington's overall portfolio was approximately 92% leased.
2010 EARNINGS GUIDANCE
Lexington reaffirms its estimated Company FFO guidance of a range of $0.93 to $0.97 per diluted share for the year ended December 31, 2010. This guidance is forward looking, excludes the impact of certain items and is based on current expectations.
SECOND QUARTER 2010 CONFERENCE CALL
Lexington will host a conference call today, Tuesday, August 3, 2010, at 11:00 a.m. Eastern Time, to discuss its results for the quarter ended June 30, 2010. Interested parties may participate in this conference call by dialing (877) 795-3649 or (719) 325-4904. A replay of the call will be available through August 17, 2010, at (888) 203-1112 or (719) 457-0820, pin: 1013843. 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 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 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.
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three and six months ended June 30, 2010 and 2009 (Unaudited and in thousands, except share and per share data) |
|||||||||||||
Three months ended |
Six months ended |
||||||||||||
2010 |
2009 |
2010 |
2009 |
||||||||||
Gross revenues: |
|||||||||||||
Rental |
$ |
77,891 |
$ |
83,207 |
$ |
155,252 |
$ |
164,720 |
|||||
Advisory and incentive fees |
201 |
583 |
615 |
1,046 |
|||||||||
Tenant reimbursements |
8,002 |
9,877 |
17,625 |
19,581 |
|||||||||
Total gross revenues |
86,094 |
93,667 |
173,492 |
185,347 |
|||||||||
Expense applicable to revenues: |
|||||||||||||
Depreciation and amortization |
(40,976) |
(42,182) |
(83,584) |
(85,206) |
|||||||||
Property operating |
(18,256) |
(19,627) |
(37,639) |
(38,567) |
|||||||||
General and administrative |
(4,937) |
(6,214) |
(10,924) |
(12,781) |
|||||||||
Non-operating income |
2,872 |
1,475 |
5,099 |
5,573 |
|||||||||
Interest and amortization expense |
(31,892) |
(32,575) |
(63,494) |
(65,162) |
|||||||||
Debt satisfaction gains (charges), net |
-- |
7,305 |
(762) |
13,716 |
|||||||||
Change in value of forward equity commitment |
(1,617) |
4,198 |
460 |
(4,435) |
|||||||||
Impairment charges and loan losses |
(7,974) |
-- |
(28,542) |
(1,085) |
|||||||||
Income (loss) before provision for income taxes, equity in earnings (losses) of non-consolidated entities and discontinued operations |
(16,686) |
6,047 |
(45,894) |
(2,600) |
|||||||||
Provision for income taxes |
(611) |
(321) |
(1,252) |
(991) |
|||||||||
Equity in earnings (losses) of non-consolidated entities |
5,368 |
(83,164) |
10,606 |
(130,288) |
|||||||||
Loss from continuing operations |
(11,929) |
(77,438) |
(36,540) |
(133,879) |
|||||||||
Discontinued operations: |
|||||||||||||
Income (loss) from discontinued operations |
189 |
(685) |
(930) |
(1,594) |
|||||||||
Provision for income taxes |
(7) |
(11) |
(7) |
(64) |
|||||||||
Debt satisfaction gains (charges), net |
-- |
(1,399) |
3,385 |
(1,399) |
|||||||||
Gains on sales of properties |
52 |
3,186 |
498 |
6,280 |
|||||||||
Impairment charges |
(18,006) |
(46) |
(25,433) |
(9,557) |
|||||||||
Total discontinued operations |
(17,772) |
1,045 |
(22,487) |
(6,334) |
|||||||||
Net loss |
(29,701) |
(76,393) |
(59,027) |
(140,213) |
|||||||||
Less net loss (income) attributable to noncontrolling interests |
5,600 |
(715) |
8,159 |
(1,843) |
|||||||||
Net loss attributable to Lexington Realty Trust shareholders |
(24,101) |
(77,108) |
(50,868) |
(142,056) |
|||||||||
Dividends attributable to preferred shares – Series B |
(1,590) |
(1,590) |
(3,180) |
(3,180) |
|||||||||
Dividends attributable to preferred shares – Series C |
(1,703) |
(1,703) |
(3,405) |
(3,814) |
|||||||||
Dividends attributable to preferred shares – Series D |
(2,925) |
(2,925) |
(5,851) |
(5,851) |
|||||||||
Dividends attributable to non-vested common shares |
(60) |
(130) |
(123) |
(258) |
|||||||||
Conversion dividend – Series C |
-- |
(6,994) |
-- |
(6,994) |
|||||||||
Net loss attributable to common shareholders |
$ |
(30,379) |
$ |
(90,450) |
$ |
(63,427) |
$ |
(162,153) |
|||||
Income (loss) per common share – basic and diluted: |
|||||||||||||
Loss from continuing operations |
$ |
(0.14) |
$ |
(0.88) |
$ |
(0.37) |
$ |
(1.52) |
|||||
Income (loss) from discontinued operations |
(0.09) |
0.01 |
(0.13) |
(0.07) |
|||||||||
Net loss attributable to common shareholders |
$ |
(0.23) |
$ |
(0.87) |
$ |
(0.50) |
$ |
(1.59) |
|||||
Weighted average common shares outstanding – basic and diluted |
133,141,084 |
104,163,378 |
127,339,144 |
102,070,600 |
|||||||||
Amounts attributable to common shareholders: |
|||||||||||||
Loss from continued operations |
$ |
(18,951) |
$ |
(91,052) |
$ |
(47,299) |
$ |
(155,391) |
|||||
Income (loss) from discontinued operations |
(11,428) |
602 |
(16,128) |
(6,762) |
|||||||||
Net loss attributable to common shareholders |
$ |
(30,379) |
$ |
(90,450) |
$ |
(63,427) |
$ |
(162,153) |
|||||
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS June 30, 2010 and December 31, 2009 (Unaudited and in thousands, except share and per share data) |
||||||
2010 |
2009 |
|||||
Assets: |
||||||
Real estate, at cost |
$ |
3,419,589 |
$ |
3,552,806 |
||
Less: accumulated depreciation and amortization |
577,161 |
537,406 |
||||
2,842,428 |
3,015,400 |
|||||
Properties held for sale – discontinued operations |
61,003 |
-- |
||||
Intangible assets, net |
225,763 |
267,161 |
||||
Cash and cash equivalents |
102,030 |
53,865 |
||||
Restricted cash |
28,604 |
21,519 |
||||
Investment in and advances to non-consolidated entities |
63,348 |
55,985 |
||||
Deferred expenses, net |
39,160 |
38,245 |
||||
Notes receivable, net |
85,097 |
60,567 |
||||
Rent receivable – current |
9,421 |
11,463 |
||||
Rent receivable – deferred |
13,058 |
12,529 |
||||
Other assets |
42,913 |
43,111 |
||||
Total assets |
$ |
3,512,825 |
$ |
3,579,845 |
||
Liabilities and Equity: |
||||||
Liabilities: |
||||||
Mortgages and notes payable |
$ |
1,724,258 |
$ |
1,857,909 |
||
Exchangeable notes payable |
61,106 |
85,709 |
||||
Convertible notes payable |
102,242 |
- |
||||
Trust preferred securities |
129,120 |
129,120 |
||||
Contract right payable |
15,001 |
15,252 |
||||
Dividends payable |
19,606 |
18,412 |
||||
Liabilities – discontinued operations |
4,536 |
-- |
||||
Accounts payable and other liabilities |
36,851 |
43,629 |
||||
Accrued interest payable |
13,679 |
11,068 |
||||
Deferred revenue - below market leases, net |
100,948 |
107,535 |
||||
Prepaid rent |
17,035 |
13,975 |
||||
2,224,382 |
2,282,609 |
|||||
Commitments and contingencies |
||||||
Equity: |
||||||
Preferred shares, par value $0.0001 per share; authorized 100,000,000 shares, |
76,315 |
76,315 |
||||
Series C Cumulative Convertible Preferred, liquidation preference $104,760, 2,095,200 |
101,778 |
101,778 |
||||
Series D Cumulative Redeemable Preferred, liquidation preference $155,000, 6,200,000 |
149,774 |
149,774 |
||||
Common shares, par value $0.0001 per share; authorized 400,000,000 shares, |
13 |
12 |
||||
Additional paid-in-capital |
1,843,389 |
1,750,979 |
||||
Accumulated distributions in excess of net income |
(960,919) |
(870,862) |
||||
Accumulated other comprehensive income (loss) |
(789) |
673 |
||||
Total shareholders' equity |
1,209,561 |
1,208,669 |
||||
Noncontrolling interests |
78,882 |
88,567 |
||||
Total equity |
1,288,443 |
1,297,236 |
||||
Total liabilities and equity |
$ |
3,512,825 |
$ |
3,579,845 |
||
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES COMPANY FUNDS FROM OPERATIONS PER SHARE (Unaudited and in thousands, except share and per share data) |
|||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||
2010 |
2009 |
2010 |
2009 |
||||||||
COMPANY FUNDS FROM OPERATIONS: (1) |
|||||||||||
Basic and Diluted: |
|||||||||||
Net loss attributable to common shareholders |
$ |
(30,379) |
$ |
(90,450) |
$ |
(63,427) |
$ |
(162,153) |
|||
Adjustments: |
|||||||||||
Depreciation and amortization |
40,358 |
44,724 |
83,480 |
91,410 |
|||||||
Noncontrolling interests - OP units |
447 |
624 |
756 |
712 |
|||||||
Amortization of leasing commissions |
695 |
713 |
1,767 |
1,482 |
|||||||
Joint venture and noncontrolling interest adjustment |
(526) |
(4) |
(846) |
6,291 |
|||||||
Preferred dividends - Series C |
1,703 |
8,697 |
3,405 |
10,808 |
|||||||
Gains on sale of properties |
(52) |
(3,186) |
(498) |
(6,280) |
|||||||
Interest and amortization on 6.00% Convertible Notes |
2,325 |
-- |
3,958 |
-- |
|||||||
Company FFO |
$ |
14,571 |
$ |
(38,882) |
$ |
28,595 |
$ |
(57,730) |
|||
Basic: |
|||||||||||
Weighted average shares outstanding –basic EPS |
133,141,084 |
104,163,378 |
127,339,144 |
102,070,600 |
|||||||
6.00% Convertible Notes |
16,230,905 |
-- |
13,918,888 |
-- |
|||||||
Non-vested share-based payment awards |
58,512 |
-- |
51,664 |
-- |
|||||||
Operating Partnership Units |
5,379,186 |
5,437,194 |
5,384,193 |
5,373,650 |
|||||||
Preferred Shares – Series C |
5,099,507 |
5,791,818 |
5,099,507 |
5,720,779 |
|||||||
Weighted average common shares outstanding–basic Company FFO |
159,909,194 |
115,392,390 |
151,793,396 |
113,165,029 |
|||||||
Company FFO per common share—basic |
$ |
0.09 |
$ |
(0.34) |
$ |
0.19 |
$ |
(0.51) |
|||
Diluted: |
|||||||||||
Weighted average shares outstanding –basic EPS |
133,141,084 |
104,163,378 |
127,339,144 |
102,070,600 |
|||||||
6.00% Convertible Notes |
16,230,905 |
-- |
13,918,888 |
-- |
|||||||
Non-vested share-based payment awards |
58,512 |
-- |
51,664 |
-- |
|||||||
Operating Partnership Units |
5,379,186 |
5,437,194 |
5,384,193 |
5,373,650 |
|||||||
Preferred Shares – Series C |
5,099,507 |
5,791,818 |
5,099,507 |
5,720,779 |
|||||||
Options – incremental shares |
37,755 |
-- |
2,145 |
-- |
|||||||
Weighted average common shares outstanding–diluted Company FFO |
159,946,949 |
115,392,390 |
151,795,541 |
113,165,029 |
|||||||
Company FFO per common share—diluted |
$ |
0.09 |
$ |
(0.34) |
$ |
0.19 |
$ |
(0.51) |
|||
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES EARNINGS PER SHARE (Unaudited and in thousands, except share and per share data) |
||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||
2010 |
2009 |
2010 |
2009 |
|||||||
EARNINGS PER SHARE: |
||||||||||
Basic and Diluted: |
||||||||||
Loss from continuing operations attributable to common shareholders |
$ |
(18,951) |
$ |
(91,052) |
$ |
(47,299) |
$ |
(155,391) |
||
Income (loss) from discontinued operations attributable to common shareholders |
(11,428) |
602 |
(16,128) |
(6,762) |
||||||
Net loss attributable to common shareholders |
$ |
(30,379) |
$ |
(90,450) |
$ |
(63,427) |
$ |
(162,153) |
||
Weighted average number of common shares outstanding |
133,141,084 |
104,163,378 |
127,339,144 |
102,070,600 |
||||||
Income (loss) per common share: |
||||||||||
Loss from continuing operations |
$ |
(0.14) |
$ |
(0.88) |
$ |
(0.37) |
$ |
(1.52) |
||
Income (loss) from discontinued operations |
(0.09) |
0.01 |
(0.13) |
(0.07) |
||||||
Net loss attributable to common shareholders |
$ |
(0.23) |
$ |
(0.87) |
$ |
(0.50) |
$ |
(1.59) |
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(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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