Lexington Realty Trust Reports Second Quarter 2013 Results

NEW YORK, Aug. 7, 2013 (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 second quarter ended June 30, 2013.

Second Quarter 2013 Highlights

• Generated Company Funds From Operations, as adjusted ("Company FFO, as adjusted"), of $56.4 million, or $0.25 per diluted common share.
• Executed 2.1 million square feet of new and extended leases, raising overall portfolio occupancy to 97.9%, and 2.5 million square feet of new and extended leases subsequent to quarter end.
• Issued $250.0 million of 4.25% 10-year Senior Notes, which are unsecured and rated investment-grade by Moody's Investors Service, Inc. and Standard & Poor's Rating Services.
• Swapped the LIBOR component on $64.0 million of five-year unsecured term loan borrowings at 0.73% for a current fixed interest rate of 2.08%.
• Increased revolving credit facility availability from $300.0 million to $400.0 million.
• Redeemed, at par, all $155.0 million of outstanding shares of 7.55% Series D Cumulative Redeemable Preferred Stock.
• Retired $219.4 million of secured debt, which had a weighted-average fixed interest rate of 6.1%.
• Closed property acquisitions of $47.1 million, invested $7.7 million in current build-to-suit projects and entered into two agreements to fund new build-to-suit projects for an aggregate commitment of $37.0 million.
• Produced $46.6 million of gross proceeds from dispositions.

T. Wilson Eglin, President and Chief Executive Officer of Lexington, stated, "We have made great progress addressing lease rollover, completing 4.6 million square feet of new and extended leases including 43% of our square footage subject to leases expiring in 2014 and 2015 since the beginning of the second quarter and through today. As a result, the weighted-average lease term of our portfolio is 7.7 years, an increase of 18% compared to June 30, 2012, with approximately 30% of our revenue coming from leases ten years or longer, providing the Company with a more stable base of long-term cash flow. In addition, we continued to lower our cost of capital with the completion of our first investment-grade rated notes offering, utilizing the proceeds primarily to retire expensive short-term secured debt."

FINANCIAL RESULTS

Revenues

For the quarter ended June 30, 2013, total gross revenues were $99.4 million, compared with total gross revenues of $80.8 million for the quarter ended June 30, 2012. The increase is primarily due to property acquisitions.

Company FFO, As Adjusted

For the quarter ended June 30, 2013, Lexington generated Company FFO, as adjusted, of $56.4 million, or $0.25 per diluted share, compared to Company FFO, as adjusted, for the quarter ended June 30, 2012 of $44.2 million, or $0.24 per diluted share. The calculation of Company FFO, as adjusted, and a reconciliation to net income attributable to Lexington Realty Trust shareholders is included later in this press release.

Net Loss Attributable to Common Shareholders

For the quarter ended June 30, 2013, net loss attributable to common shareholders was $(0.8) million, or a loss of $(0.00) per diluted share, compared with net loss attributable to common shareholders for the quarter ended June 30, 2012 of $(3.4) million, or a loss of $(0.02) per diluted share.

Common Share/Unit Dividend/Distribution

Lexington declared a regular quarterly common share/unit dividend/distribution for the quarter ended June 30, 2013 of $0.15 per common share/unit, which was paid on July 15, 2013 to common shareholders/unitholders of record as of June 28, 2013.

OPERATING ACTIVITIES

Leasing

During the second quarter of 2013, Lexington executed 24 new and extended leases for 2.1 million square feet and ended the quarter with overall portfolio occupancy of 97.9%.

Subsequent to quarter end, Lexington executed 2.5 million square feet of new and extended leases.

Capital Recycling

Dispositions

During the second quarter of 2013, Lexington disposed of its interests in (1) three properties, (2) the retail parcel and parking facility at a property and (3) a land parcel to unrelated third parties for a gross sales price of $46.6 million. Lexington also conveyed two properties in full satisfaction of the aggregate $26.2 million outstanding non-recourse mortgage loans.

Investment Activity

Build-to-Suit Projects

Lexington completed the 167,000 square foot build-to-suit office property in Denver, Colorado for a capitalized cost of $38.4 million (8.8% initial cap rate). The property is net leased for a 15-year term. In addition, Lexington completed the 42,000 square foot build-to-suit retail property in Tuscaloosa, Alabama for a capitalized cost of $8.7 million (9.4% initial cap rate). The property is net leased for a 15-year term.

Lexington entered into a $29.6 million (7.3% initial cap rate) build-to-suit lease commitment to construct an 180,000 square foot industrial property in Las Vegas, Nevada. Upon completion of construction, a net lease for a 20-year term will commence.

In June 2013, Lexington acquired a 4.42 acre-site in Albany, Georgia and entered into a 15-year net-lease. Lexington will fund the construction of a 46,000 square foot retail property for a maximum price of $7.5 million (9.0% initial cap rate) and the lease will commence upon its completion.

In addition, Lexington continues to fund the construction of, and/or is under contract to acquire, the previously announced build-to-suit projects in (1) Rantoul, Illinois (8.0% initial cap rate) and (2) Bingen, Washington (10.7% initial cap rate). The aggregate estimated cost of these four build-to-suit projects is approximately $98.5 million of which $25.2 million was invested as of June 30, 2013. In addition, Lexington is committed to acquire upon its completion a property in Omaha, Nebraska for $39.1 million (7.1% initial cap rate). Lexington can give no assurance that any of the build-to-suit projects or other potential investments that are under commitment or contract or in process will be completed.

Subsequent to June 30, 2013, Lexington acquired the remaining interest in its Long Island City, New York property that it did not already own for $8.7 million.

CAPITAL MARKETS

Capital Activities and Balance Sheet Update

During the second quarter of 2013, Lexington repaid $193.2 million of secured debt which had a weighted-average interest rate of 6.0% and was scheduled to mature through 2014. In connection with the repayments, Lexington incurred $11.8 million in yield maintenance costs.

In addition, Lexington redeemed, at par, all $155.0 million of outstanding shares of its 7.55% Series D Cumulative Redeemable Preferred Stock.

Lexington issued $250.0 million aggregate principal amount of 4.25% Senior Notes due in 2023 at 99.026% of the principal amount. The notes are unsecured and rated Baa2 and BBB- by Moody's Investors Service, Inc. and Standard & Poor's Rating Services, respectively. In addition, the spreads to LIBOR on Lexington's unsecured revolving credit facility and unsecured term loans were reduced as a result of obtaining the ratings.

Lexington borrowed $64.0 million on its five-year unsecured term loan and swapped the LIBOR component of the term loan for a current fixed interest rate of 2.08%.

Lexington exercised an accordion feature within the unsecured revolving credit facility to increase the availability from $300.0 million to $400.0 million. No amounts were outstanding as of June 30, 2013.

Subsequent to quarter end, Lexington converted approximately $12.2 million original principal amount of 6.00% Convertible Guaranteed Notes due 2030 for 1,777,562 common shares and a cash payment of $0.6 million.

2013 EARNINGS GUIDANCE

Lexington confirms its estimate of Company FFO, as adjusted, within an expected range of $1.01 to $1.04 per diluted share for the year ended December 31, 2013. This guidance is forward looking, excludes the impact of certain items and is based on current expectations.

SECOND QUARTER 2013 CONFERENCE CALL

Lexington will host a conference call today, Wednesday, August 7, 2013, at 11:00 a.m. Eastern Time, to discuss its results for the quarter ended June 30, 2013. Interested parties may participate in this conference call by dialing (888) 740-6142 or (913) 312-1503. A replay of the call will be available through August 21, 2013, at (877) 870-5176 or (858) 384-5517, pin: 1128163. 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 self-managed and self-administered real estate investment trust that invests in, owns, finances and manages predominantly single-tenant office, industrial and retail properties leased to major corporations throughout the United States and 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, 2013, (3) the successful consummation of any lease, acquisition, build-to-suit 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" 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.

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 "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 due 2030 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 interest, net and (7) non-cash charges, 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