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Lexington Realty Trust Reports Fourth Quarter 2020 Results

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Lexington Realty Trust
·25 min read
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NEW YORK, Feb. 18, 2021 (GLOBE NEWSWIRE) -- Lexington Realty Trust (“Lexington”) (NYSE:LXP), a real estate investment trust focused on single-tenant industrial real estate investments, today announced results for the fourth quarter and year ended December 31, 2020.

Fourth Quarter 2020 Highlights

  • Generated Net Income attributable to common shareholders of $102.7 million, or $0.37 per diluted common share.

  • Generated Adjusted Company Funds From Operations available to all equityholders and unitholders - diluted (“Adjusted Company FFO”) of $55.0 million, or $0.19 per diluted common share.

  • Collected 99.8% of Cash Base Rents due during the fourth quarter.

  • Disposed of eight properties for an aggregate gross disposition price of $292.3 million.

  • Acquired four warehouse/distribution properties for an aggregate cost of $182.0 million.

  • Invested an aggregate of $33.8 million in development projects.

  • Increased industrial portfolio to 90.8% of gross real estate assets, excluding held for sale assets.

  • Completed 1.7 million square feet of lease extensions.

  • Fully leased the 320,190 square foot warehouse/distribution speculative development project located in Rickenbacker, Ohio.

  • Declared a quarterly common share/unit dividend/distribution of $0.1075 per share/unit, an increase of 2.4%.

  • Satisfied $197.1 million of secured debt with a weighted-average interest rate of 4.3%.

Full Year 2020 Highlights

  • Generated Net Income attributable to common shareholders of $176.8 million, or $0.66 per diluted common share.

  • Generated Adjusted Company FFO of $209.5 million, or $0.76 per diluted common share.

  • Collected 99.8% of Cash Base Rents.

  • Disposed of 16 properties for an aggregate gross disposition price of $432.8 million.

  • Acquired 16 warehouse/distribution properties for an aggregate cost of $611.8 million.

  • Invested an aggregate of $60.2 million in development projects.

  • Completed 5.2 million square feet of new leases and lease extensions, raising industrial renewal Cash Base Rents by 17.5%.

  • Raised net proceeds of approximately $225.0 million through an underwritten equity offering and the ATM program.

  • Repurchased 1.3 million common shares at an average price of $8.28 per share.

  • Issued $400.0 million aggregate principal amount of 2.70% Senior Notes due 2030 at an issuance price of 99.233% of the principal amount.

  • Satisfied $236.0 million of secured debt with a weighted-average interest rate of 4.5%.

  • Repurchased $61.2 million and $51.1 million aggregate principal amount of outstanding 4.25% Senior Notes due 2023 and 4.40% Senior Notes due 2024, respectively.

Subsequent Events

  • Acquired three warehouse/distribution properties for an aggregate gross cost of approximately $50.8 million.

  • Disposed of two office properties for an aggregate gross disposition price of $20.2 million.

Adjusted Company FFO is a non-GAAP financial measure. It and certain other non-GAAP financial measures are defined and reconciled later in this press release.

T. Wilson Eglin, Chairman, Chief Executive Officer and President of Lexington, commented “Our fourth quarter results were strong, and we are pleased with 2020 execution in all areas of our business. We remained active on both the acquisition and disposition front during the quarter and our industrial exposure reached 91% of our overall gross real estate assets at year-end. In 2020, we added 6.6 million square feet of high-quality warehouse/distribution product to our industrial portfolio and made progress adding to our development pipeline. Consistent rental collections of over 99% were achieved throughout the year, and industrial renewal rents grew over 3% in the fourth quarter and 17.5% overall in 2020. We are well-positioned heading into 2021 with leverage low at 4.8x Net Debt to Adjusted EBITDA, ample cash on the balance sheet, and a healthy investment pipeline.”

FINANCIAL RESULTS

Revenues

For the quarter ended December 31, 2020, total gross revenues were $83.3 million, compared with total gross revenues of $83.0 million for the quarter ended December 31, 2019. The increase was primarily attributable to an increase in rental revenue due to property acquisitions, partially offset by a decrease in rental revenue due to property sales.

Net Income Attributable to Common Shareholders

For the quarter ended December 31, 2020, net income attributable to common shareholders was $102.7 million, or $0.37 per diluted share, compared with net income attributable to common shareholders for the quarter ended December 31, 2019 of $83.6 million, or $0.33 per diluted share.

Adjusted Company FFO

For the quarter ended December 31, 2020, Lexington generated Adjusted Company FFO of $55.0 million, or $0.19 per diluted share, compared to Adjusted Company FFO for the quarter ended December 31, 2019 of $52.4 million, or $0.20 per diluted share.

Dividends/Distributions

As previously announced, during the fourth quarter of 2020, Lexington declared its quarterly common share/unit dividend/distribution for the quarter ended December 31, 2020 of $0.1075 per common share/unit which was paid on January 15, 2021 to common shareholders/unitholders of record as of December 31, 2020. Lexington previously declared a dividend of $0.8125 per share on its Series C Cumulative Convertible Preferred Stock (“Series C Preferred”) for the quarter ended December 31, 2020, which was paid February 16, 2021 to Series C Preferred shareholders of record as of January 31, 2021.

TRANSACTION ACTIVITY

ACQUISITION TRANSACTIONS

Property Type

Market

Sq. Ft.

Initial Basis
($000)

Approximate
Lease Term
(Yrs)

Industrial - warehouse/distribution

Phoenix, AZ

201,784

$

87,820

12

Industrial - warehouse/distribution

Dallas, TX

500,556

44,030

4

Industrial - warehouse/distribution

Greenville/Spartanburg, SC

213,200

18,595

10

Industrial - warehouse/distribution

Dallas, TX

468,300

31,556

9

1,383,840

$

182,001

Including fourth quarter acquisition activity, consolidated 2020 acquisition activity totaled $611.8 million at aggregate weighted-average GAAP and Cash capitalization rates of 5.4% and 5.0%, respectively.

DEVELOPMENT PROJECTS

Project (% owned)

Market

Estimated
Sq. Ft.


Estimated
Project
Cost
($000)

GAAP
Investment
Balance
as of
12/31/2020
($000)(1)

Lexington
Amount
Funded
as of
12/31/2020
($000)

Estimated
Completion
Date

Approximate
Lease Term
(Yrs)

% Leased
as of
12/31/2020

Consolidated:

KeHE Distributors BTS (100%)

Phoenix, AZ

468,182

$

72,000

$

19,609

$

17,766

3Q 21

15

100%

Fairburn (90%)(2)

Atlanta, GA

910,000

53,812

39,824

33,195

1Q 21

TBD

0%

Rickenbacker (100%)

Columbus, OH

320,190

20,300

16,473

12,225

2Q 21

3

100%

$

146,112

$

75,906

$

63,186

Non-consolidated:

ETNA Park 70 (90%)(3)

Columbus, OH

TBD

TBD

$

12,514

$

12,909

TBD

TBD

0%

ETNA Park 70 East (90%)(3)

Columbus, OH

TBD

TBD

7,484

7,614

TBD

TBD

0%

$

19,998

$

20,523

  1. GAAP investment balance is in real estate under construction for consolidated projects and in investments in non-consolidated entities for non-consolidated projects.

  2. Estimated project cost excludes potential developer partner promote.

  3. Plans and specifications for completion have not been completed and the square footage, project cost and completion date cannot be estimated.

PROPERTY DISPOSITIONS

Primary Tenant

Location

Property
Type

Gross
Disposition
Price
($000)

Annualized
Net Income
(Loss)
(1)
($000)

Annualized
NOI
(1)
($000)

Month of
Disposition

%
Leased

Vacant

Thomson, GA

Industrial

$

6,971

$

$

(278

)

October

0%

Vacant (2)

Boca Raton, FL

Office

18,413

(3,160

)

(749

)

October

0%

CardWorks

Orlando, FL

Office

14,250

763

1,019

October

100%

Dow

Lake Jackson, TX

Office

191,992

3,544

12,858

November

100%

TI Automotive

Lavonia, GA

Industrial

13,000

789

870

November

100%

Versum

Tempe, AZ

Office

22,000

593

1,347

December

100%

Kohl's (3)

Pataskala, OH

Industrial

10,645

956

444

December

100%

MAHLE Industries

Olive Branch, MS

Industrial

15,000

650

914

December

100%

$

292,271

$

4,135

$

16,425

  1. Generally, quarterly period prior to sale annualized, excluding impairment charges.

  2. Sold in a foreclosure sale. Disposition price reflects non-recourse debt balance.

  3. Property acquired from ETNA Park 70 in 2018 for a cost basis of $3.6 million and ground leased to user. Tenant exercised purchase option in accordance with the lease.

Including fourth quarter disposition activity, consolidated 2020 property disposition volume totaled $432.8 million at aggregate weighted-average GAAP and Cash capitalization rates of 5.8% and 5.0%, respectively.

LEASING

During the fourth quarter of 2020, Lexington executed the following extensions:

LEASE EXTENSIONS

Location

Primary Tenant(1)

Prior Term

Lease
Expiration Date

Sq. Ft.

Industrial

1

Laurens

SC

Michelin

05/2021

11/2021

1,164,000

2

Dry Ridge

KY

Dana

06/2025

06/2031

336,350

2

Total industrial lease extensions

1,500,350

Office / Multi-tenant Office

1

Phoenix

AZ

ATOS IT Solutions

03/2021

03/2026

28,576

2

Herndon

VA

United States of America

05/2022

05/2027

159,644

2

Total office lease extensions

188,220

4

TOTAL EXTENDED LEASES

1,688,570

  1. Leases greater than 10,000 square feet.

As of December 31, 2020, Lexington's portfolio was 98.3% leased.

BALANCE SHEET/CAPITAL MARKETS

In the fourth quarter of 2020, Lexington satisfied an aggregate of $197.1 million of non-recourse debt with a weighted-average interest rate of 4.3%.

In the fourth quarter of 2020, Lexington entered into forward sales contracts for 1.1 million common shares under its At-the-Market offering program. As of December 31, 2020, the Company had forward sales contracts for 5.0 million common shares with a then settlement price of $55.1 million.

Lexington ended 2020 at 4.8x Net Debt to Adjusted EBITDA. Lexington's $600.0 million unsecured revolving credit facility remains fully available.

2021 EARNINGS GUIDANCE

Lexington estimates that its net income attributable to common shareholders per diluted common share for the year ended December 31, 2021 will be within a range of $0.58 to $0.62. Lexington estimates that its Adjusted Company FFO for the year ended December 31, 2021 will be within an expected range of $0.72 to $0.76 per diluted common share. This guidance is forward looking, excludes the impact of certain items and is based on current expectations.

FOURTH QUARTER 2020 CONFERENCE CALL

Lexington will host a conference call today February 18, 2021, at 8:30 a.m. Eastern Time, to discuss its results for the quarter ended December 31, 2020. Interested parties may participate in this conference call by dialing 1-844-825-9783 (U.S.), 1-412-317-5163 (International) or 1-855-669-9657 (Canada). A replay of the call will be available through May 18, 2021, at 1-877-344-7529 (U.S.), 1-412-317-0088 (International) or 1-855-669-9658 (Canada); pin code for all replay numbers is 10151943. A link to a live webcast of the conference call is available at www.lxp.com within the Investors section.

Lexington Realty Trust (NYSE: LXP) is a publicly traded real estate investment trust (REIT) focused on single-tenant industrial real estate investments across the United States. Lexington seeks to expand its industrial portfolio through acquisitions, build-to-suit transactions, sale-leaseback transactions, development projects and other transactions. For more information, including Lexington's Quarterly Supplemental Information package, or to follow Lexington on social media, visit www.lxp.com.

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

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 estimates of net income attributable to common shareholders and Adjusted Company FFO for the year ending December 31, 2021, (3) the successful consummation of any lease, acquisition, build-to-suit, development project, 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, and all property operating activities are conducted, through special purpose entities, which are separate and distinct legal entities that maintain separate books and records, but in some instances are consolidated for financial statement purposes and/or disregarded for income tax purposes. The assets and credit of each special purpose entity with a property subject to a mortgage loan are not available to creditors to satisfy the debt and other obligations of any other person, including any other special purpose entity or affiliate. Consolidated entities that are not property owner subsidiaries do not directly own any of the assets of a property owner subsidiary (or the general partner, member of managing member of such property owner subsidiary), but merely hold partnership, membership or beneficial interests therein which interests are subordinate to the claims of the property owner subsidiary's (or its general partner's, member's or managing member's) creditors.

Non-GAAP Financial Measures - Definitions

Lexington has used non-GAAP financial measures as defined by the Securities and Exchange Commission Regulation G in this Quarterly Earnings Release and in other public disclosures.

Lexington believes that the measures defined below are helpful to investors in measuring our performance or that of an individual investment. Since these measures exclude certain items which are included in their respective most comparable measures under generally accepted accounting principles (“GAAP”), reliance on the measures has limitations; management compensates for these limitations by using the measures simply as supplemental measures that are weighed in balance with other GAAP measures. These measures are not necessarily indications of our cash flow available to fund cash needs. Additionally, they should not be used as an alternative to the respective most comparable GAAP measures when evaluating Lexington's financial performance or cash flow from operating, investing or financing activities or liquidity.

Company Funds Available for Distribution (“FAD”): FAD is calculated by making adjustments to Adjusted Company FFO (see below) for (1) straight-line adjustments, (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 real estate investment trusts (“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.

Funds from Operations (“FFO”) and Adjusted Company FFO: Lexington believes that Funds from Operations, or FFO, which is a non-GAAP measure, 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, or NAREIT, defines FFO as “net income (calculated in accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from the sales of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in value of depreciable real estate held by the entity. The reconciling items include amounts to adjust earnings from consolidated partially-owned entities and equity in earnings of unconsolidated affiliates to FFO.” 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 and also presents FFO available to all equityholders 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 Adjusted Company FFO available to all equityholders and unitholders - diluted which adjusts FFO available to all equityholders and unitholders - diluted for certain items which we believe are not indicative of the operating results of Lexington's real estate portfolio. Lexington believes this is an appropriate presentation as it is frequently requested by security analysts, investors and other interested parties. Since others do not calculate these measures in a similar fashion, these measures may not be comparable to similarly titled measures as reported by others. These measures should not be considered as an alternative to net income as an indicator of Lexington’s operating performance or as an alternative to cash flow as a measure of liquidity.

GAAP and Cash Yield or Capitalization Rate: GAAP and cash yields or capitalization rates are measures of operating performance used to evaluate the individual performance of an investment. These measures are estimates and are not presented or intended to be viewed as a liquidity or performance measure that present a numerical measure of Lexington's historical or future financial performance, financial position or cash flows. The yield or capitalization rate is calculated by dividing the annualized NOI (as defined below, except GAAP rent adjustments are added back to rental income to calculate GAAP yield or capitalization rate) the investment is expected to generate (or has generated) divided by the acquisition/completion cost (or sale) price.

Net Operating Income (“NOI”): NOI is a measure of operating performance used to evaluate the individual performance of an investment. This measure is not presented or intended to be viewed as a liquidity or performance measure that presents a numerical measure of Lexington's historical or future financial performance, financial position or cash flows. Lexington defines NOI as operating revenues (rental income (less GAAP rent adjustments and lease termination income), and other property income) less property operating expenses. Other REITs may use different methodologies for calculating NOI, and accordingly, Lexington's NOI may not be comparable to other companies. Because NOI excludes general and administrative expenses, interest expense, depreciation and amortization, acquisition-related expenses, other nonproperty income and losses, and gains and losses from property dispositions, it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate and the impact to operations from trends in occupancy rates, rental rates, and operating costs, providing a perspective on operations not immediately apparent from net income. Lexington believes that net income is the most directly comparable GAAP measure to NOI.

LEXINGTON REALTY TRUST AND 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,

2020

2019

2020

2019

Gross revenues:

Rental revenue

$

82,390

$

81,564

$

325,811

$

320,622

Other revenue

925

1,472

4,637

5,347

Total gross revenues

83,315

83,036

330,448

325,969

Expense applicable to revenues:

Depreciation and amortization

(40,723

)

(35,977

)

(161,592

)

(147,594

)

Property operating

(10,019

)

(11,052

)

(41,914

)

(42,018

)

General and administrative

(7,759

)

(7,133

)

(30,371

)

(30,785

)

Non-operating income

429

335

743

2,262

Interest and amortization expense

(12,591

)

(14,380

)

(55,201

)

(65,095

)

Debt satisfaction gains (charges), net

2,502

10

21,452

(4,517

)

Impairment charges

(6,668

)

(2,974

)

(14,460

)

(5,329

)

Gains on sales of properties

97,163

74,227

139,039

250,889

Income before provision for income taxes and equity in earnings (losses) of non-consolidated entities

105,649

86,092

188,144

283,782

Provision for income taxes

(223

)

(271

)

(1,584

)

(1,379

)

Equity in earnings (losses) of non-consolidated entities

(204

)

(398

)

(169

)

2,890

Net income

105,222

85,423

186,391

285,293

Less net income attributable to noncontrolling interests

(844

)

(192

)

(3,089

)

(5,383

)

Net income attributable to Lexington Realty Trust shareholders

104,378

85,231

183,302

279,910

Dividends attributable to preferred shares – Series C

(1,572

)

(1,572

)

(6,290

)

(6,290

)

Allocation to participating securities

(94

)

(85

)

(224

)

(395

)

Net income attributable to common shareholders

$

102,712

$

83,574

$

176,788

$

273,225

Net income attributable to common shareholders – per common share basic

$

0.37

$

0.34

$

0.66

$

1.15

Weighted-average common shares outstanding – basic

274,965,603

248,943,975

266,914,843

237,642,048

Net income attributable to common shareholders – per common share diluted

$

0.37

$

0.33

$

0.66

$

1.15

Weighted-average common shares outstanding – diluted

284,076,532

252,939,590

268,182,552

237,934,515

LEXINGTON REALTY TRUST AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
As of December 31,
(In thousands, except share and per share data)

2020

2019

Assets:

(unaudited)

Real estate, at cost

$

3,514,564

$

3,320,574

Real estate - intangible assets

409,293

409,756

Investments in real estate under construction

75,906

13,313

Real estate, gross

3,999,763

3,743,643

Less: accumulated depreciation and amortization

884,465

887,629

Real estate, net

3,115,298

2,856,014

Assets held for sale

16,530

Right-of-use assets, net

31,423

38,133

Cash and cash equivalents

178,795

122,666

Restricted cash

626

6,644

Investments in non-consolidated entities

56,464

57,168

Deferred expenses, net

15,901

18,404

Rent receivable - current

2,899

3,229

Rent receivable - deferred

66,959

66,294

Other assets

8,331

11,708

Total assets

$

3,493,226

$

3,180,260

Liabilities and Equity:

Liabilities:

Mortgages and notes payable, net

$

136,529

$

390,272

Term loan payable, net

297,943

297,439

Senior notes payable, net

779,275

496,870

Trust preferred securities, net

127,495

127,396

Dividends payable

35,401

32,432

Liabilities held for sale

790

Operating lease liabilities

32,515

39,442

Accounts payable and other liabilities

55,208

29,925

Accrued interest payable

6,334

7,897

Deferred revenue - including below market leases, net

17,264

20,350

Prepaid rent

13,335

13,518

Total liabilities

1,502,089

1,455,541

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 and 1,935,400 shares issued and outstanding

94,016

94,016

Common shares, par value $0.0001 per share; authorized 400,000,000 shares, 277,152,450 and 254,770,719 shares issued and outstanding in 2020 and 2019, respectively

28

25

Additional paid-in-capital

3,196,315

2,976,670

Accumulated distributions in excess of net income

(1,301,726

)

(1,363,676

)

Accumulated other comprehensive loss

(17,963

)

(1,928

)

Total shareholders’ equity

1,970,670

1,705,107

Noncontrolling interests

20,467

19,612

Total equity

1,991,137

1,724,719

Total liabilities and equity

$

3,493,226

$

3,180,260

LEXINGTON REALTY TRUST AND SUBSIDIARIES
EARNINGS PER SHARE
(Unaudited and in thousands, except share and per share data)

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2020

2019

2020

2019

EARNINGS PER SHARE:

Basic:

Net income attributable to common shareholders

$

102,712

$

83,574

$

176,788

$

273,225

Weighted-average common shares outstanding - basic

274,965,603

248,943,975

266,914,843

237,642,048

Net income attributable to common shareholders - per common share basic

$

0.37

$

0.34

$

0.66

$

1.15

Diluted:

Net income attributable to common shareholders - basic

$

102,712

$

83,574

$

176,788

$

273,225

Impact of assumed conversions

2,218

(34

)

Net income attributable to common shareholders

$

104,930

$

83,540

$

176,788

$

273,225

Weighted-average common shares outstanding - basic

274,965,603

248,943,975

266,914,843

237,642,048

Effect of dilutive securities:

Unvested share-based payment awards and options

1,367,634

639,178

1,267,709

292,467

Operating Partnership Units

3,032,725

3,356,437

Preferred shares - Series C

4,710,570

Weighted-average common shares outstanding - diluted

284,076,532

252,939,590

268,182,552

237,934,515

Net income attributable to common shareholders - per common share diluted

$

0.37

$

0.33

$

0.66

$

1.15


LEXINGTON REALTY TRUST AND SUBSIDIARIES

ADJUSTED COMPANY FUNDS FROM OPERATIONS & FUNDS AVAILABLE FOR DISTRIBUTION

(Unaudited and in thousands, except share and per share data)

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2020

2019

2020

2019

FUNDS FROM OPERATIONS:

Basic and Diluted:

Net income attributable to common shareholders

$

102,712

$

83,574

$

176,788

$

273,225

Adjustments:

Depreciation and amortization

40,050

35,323

158,655

144,792

Impairment charges - real estate

6,668

2,974

14,460

5,329

Noncontrolling interests - OP units

645

(34

)

2,347

4,376

Amortization of leasing commissions

673

654

2,937

2,802

Joint venture and noncontrolling interest adjustment

2,115

2,249

8,578

9,449

Gains on sales of properties, including non-consolidated entities and net of tax

(97,163

)

(74,211

)

(139,596

)

(255,048

)

FFO available to common shareholders and unitholders - basic

55,700

50,529

224,169

184,925

Preferred dividends

1,572

1,572

6,290

6,290

Amount allocated to participating securities

94

85

224

395

FFO available to all equityholders and unitholders - diluted

57,366

52,186

230,683

191,610

Debt satisfaction (gains) charges, net, including non-consolidated entities

(2,502

)

(9

)

(21,396

)

4,773

Transaction costs

174

202

255

202

Adjusted Company FFO available to all equityholders and unitholders - diluted

55,038

52,379

209,542

196,585

FUNDS AVAILABLE FOR DISTRIBUTION:

Adjustments:

Straight-line adjustments

(3,430

)

(3,656

)

(13,654

)

(14,502

)

Lease incentives

189

293

921

1,191

Amortization of above/below market leases

(470

)

(269

)

(1,580

)

(443

)

Lease termination payments, net

(70

)

25

(1,095

)

Non-cash interest, net

195

563

1,276

2,709

Non-cash charges, net

1,690

1,577

6,674

6,410

Tenant improvements

(291

)

(2,885

)

(9,744

)

(7,817

)

Lease costs

(50

)

(3,743

)

(5,019

)

(14,367

)

Joint venture and non-controlling interest adjustment

11

(63

)

(319

)

(3,794

)

Company Funds Available for Distribution

$

52,812

$

44,221

$

188,097

$

164,877

Per Common Share and Unit Amounts

Basic:

FFO

$

0.20

$

0.20

$

0.83

$

0.77

Diluted:

FFO

$

0.20

$

0.20

$

0.84

$

0.78

Adjusted Company FFO

$

0.19

$

0.20

$

0.76

$

0.80

Weighted-Average Common Shares

Basic:

Weighted-average common shares outstanding - basic EPS

274,965,603

248,943,975

266,914,843

237,642,048

Operating partnership units(1)

3,032,725

3,356,437

3,083,320

3,490,147

Weighted-average common shares outstanding - basic FFO

277,998,328

252,300,412

269,998,163

241,132,195

Diluted:

Weighted-average common shares outstanding - diluted EPS

284,076,532

252,939,590

268,182,552

237,934,515

Unvested share-based payment awards

9,384

36,516

17,180

22,813

Operating partnership units(1)

3,083,320

3,490,147

Preferred shares - Series C

4,710,570

4,710,570

4,710,570

Weighted-average common shares outstanding - diluted FFO

284,085,916

257,686,676

275,993,622

246,158,045

(1) Includes OP units other than OP units held by Lexington.

LEXINGTON REALTY TRUST AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

(UNAUDITED)

2021 EARNINGS GUIDANCE

Twelve Months Ended
December 31, 2021

Range

Estimated:

Net income attributable to common shareholders per diluted common share(1)

$

0.58

$

0.62

Depreciation and amortization

0.60

0.60

Impact of capital transactions

(0.46

)

(0.46

)

Estimated Adjusted Company FFO per diluted common share

$

0.72

$

0.76

(1) Assumes all convertible securities are dilutive.