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Lexington Realty Trust Reports Third Quarter 2020 Results and Announces Dividend Increase

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Lexington Realty Trust
·25 min read
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NEW YORK, Nov. 05, 2020 (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 third quarter ended September 30, 2020.

Third Quarter 2020 Highlights

  • Recorded Net Income attributable to common shareholders of $40.3 million, or $0.15 per diluted common share.

  • Generated Adjusted Company Funds From Operations available to all equityholders and unitholders - diluted (“Adjusted Company FFO”) of $53.8 million, or $0.19 per diluted common share.

  • Collected 99.9% of Cash Base Rents due during the third quarter.

  • Acquired two industrial properties for an aggregate cost of $70.1 million.

  • Disposed of three properties for an aggregate gross disposition price of $66.5 million.

  • Increased industrial portfolio to 88.5% of gross book value of real estate assets, excluding held for sale assets.

  • 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.

  • 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.

  • Repaid the full outstanding balance of $40.0 million on the revolving credit facility.

  • Raised net proceeds of approximately $6.7 million through the ATM program.

  • Entered into forward sales transactions through the ATM program for 3.9 million common shares at an initial weighted-average price of $11.23 per common share.

  • Completed 1.3 million square feet of new leases and lease extensions.

Subsequent Events

  • Disposed of three properties for an aggregate gross disposition price of $39.6 million.

  • Entered into an agreement to fund a build-to-suit industrial property in the Phoenix, Arizona market for an estimated cost of $72.0 million, which will be subject to a 15-year net lease.

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

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 and Chief Executive Officer of Lexington Realty Trust, commented, “Our operations continued to produce strong results in the third quarter. We collected nearly 100% of Cash Base Rent and increased our percentage leased to 98.9%. To-date, we have added $429.8 million of high-quality industrial assets to our portfolio. We have made significant progress toward our goal of transitioning to a 100% industrial REIT, with industrial exposure representing 88.5% of total gross real estate assets, excluding held-for-sale assets, at quarter end. Given our strong results and continued progress, we are increasing our annualized common share dividend by 2.4% to $0.43 per common share."

FINANCIAL RESULTS

Revenues

For the quarter ended September 30, 2020, total gross revenues were $84.5 million, compared with total gross revenues of $81.6 million for the quarter ended September 30, 2019. The increase is primarily attributable to acquisitions, partially offset by property sales and a decrease in fee income.

Net Income Attributable to Common Shareholders

For the quarter ended September 30, 2020, net income attributable to common shareholders was $40.3 million, or $0.15 per diluted share, compared with net income attributable to common shareholders for the quarter ended September 30, 2019 of $141.6 million, or $0.59 per diluted share.

Adjusted Company FFO

For the quarter ended September 30, 2020, Lexington generated Adjusted Company FFO of $53.8 million, or $0.19 per diluted share, compared to Adjusted Company FFO for the quarter ended September 30, 2019 of $48.7 million, or $0.20 per diluted share.

Dividends/Distributions

As previously announced, during the third quarter of 2020, Lexington declared a regular quarterly common share/unit dividend/distribution for the quarter ended September 30, 2020 of $0.1050 per common share/unit, which was paid on October 15, 2020 to common shareholders/unitholders of record as of September 30, 2020. Lexington also declared a cash dividend of $0.8125 per share on its Series C Cumulative Convertible Preferred Stock (“Series C Preferred”) for the quarter ended September 30, 2020, which is expected to be paid on November 16, 2020 to Series C Preferred Shareholders of record as of October 30, 2020.

Today, Lexington announced that it declared a regular quarterly common share/unit dividend/distribution for the quarter ending December 31, 2020 of $0.1075 per common share/unit payable on January 15, 2021 to common shareholders/unitholders of record as of December 31, 2020. This represents an increase of 2.4% from the previous quarterly per common share/unit dividend/distribution and equates to an annualized increase of $0.01 per common share/unit and an annualized dividend/distribution of $0.43 per common share/unit, subject to and assuming future declarations.

Lexington also announced that it declared a cash dividend of $0.8125 per share of Series C Preferred for the quarter ending December 31, 2020, which is expected to be paid on February 16, 2021 to shareholders of record as of January 29, 2021.

TRANSACTION ACTIVITY

ACQUISITION TRANSACTIONS

Property Type

Market

Sq. Ft.

Initial Basis
($000)

Approximate Lease Term (Yrs)

Industrial-Warehouse/distribution

DC/Baltimore, MD

324,535

$

29,143

4

Industrial-Warehouse/distribution

Savannah, GA

419,667

40,908

6

744,202

$

70,051

The above properties were acquired at aggregate weighted-average GAAP and Cash capitalization rates of 5.7% and 5.3%, respectively. Year to date total 2020 acquisition activity was $429.8 million at aggregate weighted-average GAAP and Cash capitalization rates of 5.5% and 5.1%, respectively.

DEVELOPMENT PROJECTS

Project (% owned)

Market

Property Type

Estimated Sq. Ft.

Estimated Project Cost ($000)

GAAP Investment Balance as of 9/30/2020 ($000)(1)

Lexington Amount Funded as of 9/30/2020 ($000)

Estimated Completion Date

Consolidated:

Fairburn (90%)

Atlanta, GA

Industrial

910,000

$

53,812

$

30,638

$

22,543

1Q 2021

Rickenbacker (100%)

Columbus, OH

Industrial

320,000

20,300

11,310

8,233

4Q 2020

$

74,112

$

41,948

$

30,776

Non-consolidated:

ETNA Park 70 (90%)(2)

Columbus, OH

Industrial

TBD

TBD

$

11,352

$

11,714

TBD

ETNA Park 70 East (90%)(2)

Columbus, OH

Industrial

TBD

TBD

7,391

7,431

TBD

$

18,743

$

19,145

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

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

PROPERTY DISPOSITIONS

Primary Tenant

Location

Property Type

Gross Disposition
Price
($000)

Annualized Net Income(1) ($000)

Annualized
NOI(1)
($000)

Month of Disposition

% Leased

Quest Diagnostics

Lenexa, KS

Office

$

14,351

$

883

$

(4

)

July

100

%

Wal-Mart

Moody, AL

Industrial

20,046

386

478

July

26

%

Vacant(2)

Overland Park, KS

Office

32,112

(3,269

)

(998

)

July

0

%

$

66,509

$

(2,000

)

$

(524

)

1. Generally, quarterly period prior to sale, annualized.

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

As of September 30, 2020, total consolidated property disposition volume was $140.6 million at weighted-average GAAP and Cash capitalization rates of 4.3% and 3.8%, respectively.

LEASING

LEASE EXTENSIONS

Location

Primary Tenant/Guarantor(1)

Prior
Term

Lease
Expiration Date

Sq. Ft.

Industrial

1

Hebron

OH

Owens Corning

12/2021

03/2022

250,410

2

Hebron

OH

Owens Corning

12/2021

03/2022

400,522

3

Orlando

FL

Walgreen Co.

03/2021

03/2026

205,016

3

Total industrial lease extensions

855,948


NEW LEASES

Location

Primary Tenant/Guarantor(1)

Lease Expiration Date

Sq. Ft.

Industrial/Multi-tenant

1

Chillicothe

OH

Ernie Green Industries

12/2021

42,264

2

Chillicothe

OH

Pegasus Industries

06/2026

276,112

3

Henderson

NC

Select Tissue

02/2034

147,448

3

Total industrial/multi-tenant leases

465,824

3

Total New Leases

465,824

6

TOTAL NEW AND EXTENDED LEASES

1,321,772

(1) Leases greater than 10,000 square feet.

As of September 30, 2020, Lexington's portfolio was 98.9% leased.

BALANCE SHEET/CAPITAL MARKETS

During the third quarter of 2020, Lexington issued $400.0 million aggregate principal amount of 2.70% Senior Notes due in 2030 at 99.233% of the principal amount. Lexington used a portion of the proceeds to repurchase $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.

During the third quarter of 2020, Lexington issued 0.6 million common shares through its ATM program raising net proceeds of approximately $6.7 million. Also, the Company entered into forward sales transactions for 3.9 million common shares at an initial weighted-average price of $11.23 per common share, which is subject to adjustment in accordance to the forward sales contract.

During the third quarter, Lexington repaid $40.0 million on its unsecured revolving credit facility. As of the date of this earnings release, Lexington has $600 million of availability under its unsecured revolving credit facility, subject to covenant compliance.

2020 EARNINGS GUIDANCE

Lexington now estimates that its net income attributable to common shareholders for the year ended December 31, 2020 will be within an expected range of $0.62 to $0.64 per diluted common share.

Additionally, Lexington affirms its Adjusted Company FFO guidance for the year ended December 31, 2020 to be within a range of $0.74 to $0.76 per diluted common share. This guidance is forward looking, excludes the impact of certain items and is based on current expectations.

THIRD QUARTER 2020 CONFERENCE CALL

Lexington will host a conference call today, November 5, 2020, at 8:30 a.m. Eastern Time, to discuss its results for the quarter ended September 30, 2020. Interested parties may participate in this conference call by dialing1-844-825-9783 (U.S.), 1-412-317-5163 (International) or 1-855-669-9657 (Canada). A replay of the call will be available through February 5, 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 10148898. 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) that owns a portfolio of real estate assets consisting primarily of equity investments in single-tenant net-leased industrial properties across the United States. Lexington seeks to expand its industrial portfolio through build-to-suit transactions, sale-leaseback transactions and other transactions, including acquisitions. 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 potential adverse impact on Lexington or its tenants from the novel coronavirus (COVID-19); (2) the authorization by Lexington's Board of Trustees of future dividend declarations, (3) Lexington's ability to achieve its estimates of net income attributable to common shareholders and Adjusted Company FFO for the year ending December 31, 2020, (4) the successful consummation of any lease, acquisition, build-to-suit, disposition, financing or other transaction, (5) the failure to continue to qualify as a real estate investment trust, (6) changes in general business and economic conditions, including the impact of any legislation, (7) competition, (8) increases in real estate construction costs, (9) changes in interest rates, (10) changes in accessibility of debt and equity capital markets, and (11) 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

Cash Base Rent: Cash Base Rent is calculated by making adjustments to GAAP rental revenue to remove the impact of GAAP required adjustments to rental income such as adjustments for straight-line rents related to free rent periods and contractual rent increases. Cash Base Rent excludes billed tenant reimbursements and lease termination income and includes ancillary income. Lexington believes Cash Base Rent provides a meaningful indication of an investments ability to fund cash needs.

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 CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited and in thousands, except share and per share data)

Three months ended September 30,

Nine months ended September 30,

2020

2019

2020

2019

Gross revenues:

Rental revenue

$

83,592

$

80,325

$

243,421

$

239,058

Other revenue

922

1,225

3,712

3,875

Total gross revenues

84,514

81,550

247,133

242,933

Expense applicable to revenues:

Depreciation and amortization

(40,555

)

(37,211

)

(120,869

)

(111,617

)

Property operating

(11,343

)

(10,611

)

(31,895

)

(30,966

)

General and administrative

(7,232

)

(7,791

)

(22,612

)

(23,652

)

Non-operating income

40

532

314

1,927

Interest and amortization expense

(13,649

)

(16,481

)

(42,610

)

(50,715

)

Debt satisfaction gains (charges), net

17,557

(4,424

)

18,950

(4,527

)

Impairment charges

(6,175

)

(673

)

(7,792

)

(2,355

)

Gains on sales of properties

20,878

140,461

41,876

176,662

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

44,035

145,352

82,495

197,690

Provision for income taxes

(286

)

(241

)

(1,361

)

(1,108

)

Equity in earnings (losses) of non-consolidated entities

(131

)

2,710

35

3,288

Net income

43,618

147,821

81,169

199,870

Less net income attributable to noncontrolling interests

(1,714

)

(4,502

)

(2,245

)

(5,191

)

Net income attributable to Lexington Realty Trust shareholders

41,904

143,319

78,924

194,679

Dividends attributable to preferred shares – Series C

(1,573

)

(1,573

)

(4,718

)

(4,718

)

Allocation to participating securities

(46

)

(186

)

(118

)

(304

)

Net income attributable to common shareholders

$

40,285

$

141,560

$

74,088

$

189,657

Net income attributable to common shareholders - per common share basic

$

0.15

$

0.60

$

0.28

$

0.81

Weighted-average common shares outstanding – basic

274,696,046

236,285,216

264,211,668

233,833,340

Net income attributable to common shareholders - per common share diluted

$

0.15

$

0.59

$

0.28

$

0.81

Weighted-average common shares outstanding – diluted

276,022,762

241,355,289

265,446,221

234,011,643


LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)

September 30, 2020

December 31, 2019

(unaudited)

Assets:

Real estate, at cost

$

3,439,314

$

3,320,574

Real estate - intangible assets

413,208

409,756

Investments in real estate under construction

41,948

13,313

Real estate, gross

3,894,470

3,743,643

Less: accumulated depreciation and amortization

906,789

887,629

Real estate, net

2,987,681

2,856,014

Assets held for sale

159,210

Operating lease right-of-use assets, net

36,034

38,133

Cash and cash equivalents

287,920

122,666

Restricted cash

1,697

6,644

Investments in non-consolidated entities

56,489

57,168

Deferred expenses, net

16,428

18,404

Rent receivable – current

2,310

3,229

Rent receivable – deferred

66,383

66,294

Other assets

7,699

11,708

Total assets

$

3,621,851

$

3,180,260

Liabilities and Equity:

Liabilities:

Mortgages and notes payable, net

$

157,723

$

390,272

Term loan payable, net

297,817

297,439

Senior notes payable, net

778,943

496,870

Trust preferred securities, net

127,470

127,396

Dividends payable

34,463

32,432

Liabilities held for sale

179,052

Operating lease liabilities

37,338

39,442

Accounts payable and other liabilities

52,819

29,925

Accrued interest payable

9,083

7,897

Deferred revenue - including below market leases, net

18,054

20,350

Prepaid rent

14,740

13,518

Total liabilities

1,707,502

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; 1,935,400 shares issued and outstanding

94,016

94,016

Common shares, par value $0.0001 per share; authorized 400,000,000 shares,

276,941,239 and 254,770,719 shares issued and outstanding in 2020 and 2019, respectively

28

25

Additional paid-in-capital

3,193,751

2,976,670

Accumulated distributions in excess of net income

(1,374,748

)

(1,363,676

)

Accumulated other comprehensive loss

(19,687

)

(1,928

)

Total shareholders’ equity

1,893,360

1,705,107

Noncontrolling interests

20,989

19,612

Total equity

1,914,349

1,724,719

Total liabilities and equity

$

3,621,851

$

3,180,260


LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES

EARNINGS PER SHARE

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


Three Months Ended
September 30,

Nine Months Ended
September 30,

2020

2019

2020

2019

EARNINGS PER SHARE:

Basic:

Net income attributable to common shareholders

$

40,285

$

141,560

$

74,088

$

189,657

Weighted-average number of common shares outstanding - basic

274,696,046

236,285,216

264,211,668

233,833,340

Net income attributable to common shareholders - per common share basic

$

0.15

$

0.60

$

0.28

$

0.81

Diluted:

Net income attributable to common shareholders - basic

$

40,285

$

141,560

$

74,088

$

189,657

Impact of assumed conversions

1,573

Net income attributable to common shareholders

$

40,285

$

143,133

$

74,088

$

189,657

Weighted-average common shares outstanding - basic

274,696,046

236,285,216

264,211,668

233,833,340

Effect of dilutive securities:

Unvested share-based payment awards and options

1,326,716

359,503

1,234,553

178,303

Preferred shares - Series C

4,710,570

Weighted-average common shares outstanding - diluted

276,022,762

241,355,289

265,446,221

234,011,643

Net income attributable to common shareholders - per common share diluted

$

0.15

$

0.59

$

0.28

$

0.81


LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES

ADJUSTED COMPANY FUNDS FROM OPERATIONS & COMPANY FUNDS AVAILABLE FOR DISTRIBUTION

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

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

FUNDS FROM OPERATIONS:

Basic and Diluted:

Net income attributable to common shareholders

$

40,285

$

141,560

$

74,088

$

189,657

Adjustments:

Depreciation and amortization

39,858

36,537

118,605

109,469

Impairment charges - real estate

6,175

673

7,792

2,355

Noncontrolling interests - OP units

1,518

4,244

1,702

4,410

Amortization of leasing commissions

697

674

2,264

2,148

Joint venture and noncontrolling interest adjustment

2,094

2,267

6,463

7,200

Gains on sales of properties, including non-consolidated entities

(20,886

)

(143,719

)

(42,433

)

(180,837

)

FFO available to common shareholders and unitholders - basic

69,741

42,236

168,481

134,402

Preferred dividends

1,573

1,573

4,718

4,718

Amount allocated to participating securities

46

186

118

304

FFO available to all equityholders and unitholders - diluted

71,360

43,995

173,317

139,424

Transaction costs

1

81

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

(17,522

)

4,679

(18,894

)

4,782

Adjusted Company FFO available to all equityholders and unitholders - diluted

53,839

48,674

154,504

144,206

FUNDS AVAILABLE FOR DISTRIBUTION:

Adjustments:

Straight-line adjustments

(3,995

)

(4,161

)

(10,224

)

(10,846

)

Lease incentives

214

318

732

898

Amortization of above/below market leases

(435

)

(142

)

(1,110

)

(174

)

Lease termination payments, net

(211

)

(120

)

70

(1,120

)

Non-cash interest, net

293

567

1,081

2,146

Non-cash charges, net

1,663

1,554

4,984

4,833

Tenant improvements

(2,332

)

(1,380

)

(9,453

)

(4,932

)

Lease costs

(550

)

(5,951

)

(4,969

)

(10,624

)

Joint venture and noncontrolling interest adjustment

(146

)

(3,095

)

(330

)

(3,731

)

Company Funds Available for Distribution

$

48,340

$

36,264

$

135,285

$

120,656

Per Common Share and Unit Amounts

Basic:

FFO

$

0.25

$

0.18

$

0.63

$

0.57

Diluted:

FFO

$

0.25

$

0.18

$

0.63

$

0.58

Adjusted Company FFO

$

0.19

$

0.20

$

0.57

$

0.60

Basic:

Weighted-average common shares outstanding - basic EPS

274,696,046

236,285,216

264,211,668

233,833,340

Operating partnership units(1)

3,060,436

3,520,643

3,100,309

3,535,207

Weighted-average common shares outstanding - basic FFO

277,756,482

239,805,859

267,311,977

237,368,547

Diluted:

Weighted-average common shares outstanding - diluted EPS

276,022,762

241,355,289

265,446,221

234,011,643

Operating partnership units(1)

3,060,436

3,520,643

3,100,309

3,535,207

Unvested share-based payment awards

19,261

25,090

19,813

20,169

Preferred shares - Series C

4,710,570

4,710,570

4,710,570

Weighted-average common shares outstanding - diluted FFO

283,813,029

244,901,022

273,276,913

242,277,589

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

LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

2020 EARNINGS GUIDANCE

Twelve Months Ended
December 31, 2020

Range

Estimated:

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

$

0.62

$

0.64

Depreciation and amortization

0.62

0.62

Impact of capital transactions

(0.50

)

(0.50

)

Estimated Adjusted Company FFO per diluted common share

$

0.74

$

0.76

(1) Assumes all convertible securities are dilutive.