Lexington Realty Trust Announces Fourth Quarter Activity

Jan 08, 2010, 07:30 ET from Lexington Realty Trust

NEW YORK, Jan. 8 /PRNewswire-FirstCall/ -- Lexington Realty Trust ("Lexington") (NYSE: LXP), a real estate investment trust (REIT) focused on single-tenant real estate investments, announced the following update on fourth quarter and recent transaction activity, some of which was previously announced:

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Leasing

During the fourth quarter of 2009, Lexington executed 19 new and extended leases for approximately 1.0 million square feet and ended the year with portfolio occupancy of approximately 92%.

Leasing activity for the quarter included the following new leases:


                                                                          New
                                                              New         GAAP
                                                             Cash         Rent
                                     Lease                   Rent Per      Per
    Tenants/                      Expiration                 Annum       Annum
    Guarantors        Location       Date       Sq. Ft.      ($000)     ($000)
    ----------------  ---------    ---------    -------      ------     ------
      Office
    1 Brown Mackie    Phoenix AZ    09/2019      4,747         $85         $85
       College-
       Phoenix(1)
    2 Leetex          Dallas TX     07/2012        554          $9          $9
       Construction(1)
    3 Neighborhood
       Assistance
       Corporation
       of America     Decatur GA    05/2017      6,994        $138        $138
    4 Patient         Hampton VA    12/2019     36,484        $602        $602
       Advocate
       Foundation
    5 STIA, LLC       Dallas TX     01/2013      1,288         $18         $18
    -----------------
    5 Total office
       new leases                               50,067        $852        $852
    -----------------                           ------        ----        ----

      Industrial
    1 Ozburn-     Statesville NC    05/2013    471,000      $1,313      $1,313
       Hessey
       Logistics
    2 Cardinal    Jacksonville FL   03/2010     58,589        $148        $148
       Unijax, LLC
       and Camelot
       Drive
       Holdings, LLC(2)
    ------------------                          ------        ----        ----
    2 Total
       industrial
       new leases                              529,589      $1,461      $1,461
    ------------------                         -------      ------      ------

    7 TOTAL NEW LEASES                         579,656      $2,313      $2,313
    ------------------                         =======      ======      ======

    Footnotes
    ---------
    (1) Represents expansion portion of existing lease.
    (2) Held as an investment in Net Lease Strategic Assets Fund.

Leasing activity for the quarter also included the following lease extensions:


                                                          Lease
     Tenants/                               Prior        Expiration
     Guarantors          Location           Term           Date       Sq. Ft.
    ----------
    Office
    1  Alice H. Vinton,  Honolulu HI       10/2009        02/2013        308
        d/b/a Vinton
        Realty
    2  Capital One       Glenn Allen VA    03/2010        03/2012     77,045
        Services, LLC
    3  City National     Philadelphia PA   12/2009        12/2010      5,315
        Bank of NJ (2)
    4  Cityspace Real    Dallas TX         11/2009        11/2012      1,161
        Estate, Inc.
    5  Dallas MTA,       Dallas TX         09/2009        09/2014        265
        L.P., d/b/a
        Verizon
        Wireless
    6  Entergy           Little Rock AR    10/2010        10/2015     36,311
        Arkansas, Inc.
    7  Entergy           Pine Bluff AR     10/2010        10/2015     27,189
        Services,
        Inc.(1)

    8  HSBC Card         Tulsa OK          01/2010        01/2011    101,100
        Services, Inc.
    9  John Michelli     Baltimore MD      09/2009        12/2015        543
    10 Money Management  Phoenix AZ        03/2016        07/2018     48,831
        International(4)
    11 United            San Antonio TX    11/2010        11/2017    142,500
        HealthCare
        Services, Inc.
    12 Windell           Irvine CA         02/2010        08/2015      6,725
        Investments,
        Inc. (3)
    ----------------- --                                             -------
    12 Total office
        lease extensions                                             447,293
    --------------------                                             =======
    19 TOTAL NEW AND
        EXTENDED LEASES                                            1,026,949
    --------------------                                           =========

                                      New       Prior       New       Prior
                                     Cash       Cash        GAAP       GAAP
                                      Rent      Rent        Rent       Rent
                                      Per       Per         Per         Per
    Tenants/Guarantors               Annum     Annum       Annum       Annum
    -------------------------       ($000)     ($000)      ($000)      ($000)

    Office
    1  Alice H. Vinton, d/b/a Vinton
        Realty                            $4         $7         $4          $7
    2  Capital One Services, LLC        $732     $1,019       $785      $1,010
    3  City National Bank of NJ (2)     $239       $213       $239        $213
    4  Cityspace Real Estate, Inc.       $16        $17        $16         $17
    5  Dallas MTA, L.P., d/b/a Verizon
        Wireless                         $25        $18        $25         $18
    6  Entergy Arkansas, Inc.           $237       $237       $237        $237
    7  Entergy Services, Inc. (1)       $192       $192       $192        $192
    8  HSBC Card Services, Inc.       $1,446     $1,307     $1,446      $1,307
    9  John Michelli                      $4         $3         $4          $3
    10 Money Management
        International(4)              $1,099       $646     $1,107        $627
    11 United HealthCare Services,
        Inc.                          $1,781     $1,640     $1,866      $1,621
    12 Windell Investments, Inc.(3)     $160       $129       $160        $129
    -----------------------------       ----       ----       ----        ----
    12 Total office lease extensions  $5,935     $5,428     $6,081      $5,381
    --------------------------------  ======     ======     ======      ======
    19 TOTAL NEW AND EXTENDED LEASES  $8,248     $5,428     $8,394      $5,381
    --------------------------------  ======     ======     ======      ======

    Footnotes
    ---------
    (1) Held as an investment in Net Lease Strategic Assets Fund.
    (2) Consolidated joint venture property, Lexington's ownership is
        80.50%.
    (3) Consolidated joint venture property, Lexington's ownership is
        64.35%.
    (4) New cash and GAAP rents represent full occupancy, prior cash and
        GAAP rents for 28,710 square feet.

Balance Sheet

Lexington reduced its consolidated debt (exclusive of normal amortization) during the fourth quarter by approximately $66.4 million, including approximately $17.6 million original principal amount of Exchangeable Notes. During 2009, Lexington reduced the amount of Exchangeable Notes outstanding from $211.0 million to approximately $87.7 million. At year-end, Lexington had $7.0 million outstanding on the $125.0 million revolving loan portion of its secured credit facility.

Common Share Dividend

Lexington returned to paying its quarterly common share dividend in cash. On November 18, 2009, Lexington announced that it declared a regular common share dividend for the quarter ending December 31, 2009 of $0.10 per common share payable in cash on January 15, 2010 to common shareholders of record on December 31, 2009.

Dispositions

During the fourth quarter of 2009, Lexington sold or disposed of its interests in eight properties to unrelated parties for an aggregate disposition price of approximately $45.7 million. Prior to disposition, the properties generated annualized net operating income of approximately $1.7 million or 3.7% of the aggregate disposition price. In addition, Lexington sold its interest in two joint venture investments generating approximately $12.6 million in net proceeds.

Lexington's disposition activity for the quarter included the following dispositions(1):


                                                              Gross
                                                               Sale   Month of
                                                   Property    Price   Dispos-
     Tenants/Guarantors            Location           Type    ($000)    ition
                                   --------        --------    ------   ------
    1 Compass Bank                Beaumont TX        Office   $3,200      Nov
    2 Kohl's Department           Eau Claire WI      Retail   $5,000      Dec
       Stores, Inc.
    3 Multi-tenant                Dallas TX          Office   $7,750      Dec
    4 Rock Falls Country Market,  Rock Falls IL      Retail     $650      Nov
       LLC (Rock Island Country
       Market, LLC)
    5 Staples, Inc.               Baton Rouge LA   Industrial  $5,000     Dec
    6 Vacant (2)                  Plymouth MI      Industrial  $4,335     Dec
    7 Vacant (2)                  Houston TX         Office   $18,229     Dec
    8 Vacant                      Grand Prairie TX   Retail    $1,525     Nov
    --------------------                                       ------
    8 TOTAL DISPOSITIONS                                      $45,689
    --------------------                                      =======

    Footnotes
    ---------
    (1) Lexington also sold its investment in two joint ventures for an
        aggregate gross sales price of $36,560.  Lexington's share of gross
        sales price was $14,660 and net proceeds were $12,573.
    (2) Gross sale price represents mortgage debt balance at foreclosure or
        other disposition.

Acquisitions

On December 31, 2009, Lexington acquired a property in Greenville, South Carolina for $10.5 million, consisting of a three-story 106,306 square foot office building and a one-story 21,735 square foot annex building on an approximately 8.0 acre parcel. At closing, the property was net-leased to Canal Insurance Company for 20 years at an initial capitalization rate of 8.60%, with 2.35% rent increases annually during the first ten years and CPI rent increases subject to a floor of 2.0% and a ceiling of 4.0% during the remainder of the term. Canal Insurance Company has an option to purchase the property on the fifth anniversary of the lease commencement at fair market value, but not less than $10.7 million and no greater than $11.6 million. If Canal Insurance Company fails to exercise its purchase option, Lexington has the right to require Canal Insurance Company to purchase the property for approximately $10.7 million.

Canal Insurance Company is an underwriter and provider of property/casualty insurance, primarily for the commercial trucking industry. Canal Insurance Company is rated A(PI) by Standard & Poor's and A+ by A.M. Best.

Comments from Management

T. Wilson Eglin, Chief Executive Officer of Lexington Realty Trust, commented, "Our fourth quarter leasing activity was robust and we are pleased to have finished 2009 with portfolio occupancy of approximately 92%. We believe our disposition efforts continue to strengthen our balance sheet and liquidity and fourth quarter dispositions volume brought our total for 2009 to approximately $190.0 million, or approximately $40.0 million above our objectives. We have used the majority of proceeds to reduce our indebtedness. Our strategy for 2010 will be to continue selling our non-core holdings, specifically our multi-tenant and retail properties with the objective of reducing our recourse leverage, while selectively taking advantage of growth opportunities in single-tenant office and industrial properties."

ABOUT LEXINGTON REALTY TRUST

Lexington Realty Trust is a real estate investment trust that owns, invests in and manages office, industrial and retail properties primarily 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, Investor Relations, One Penn Plaza, Suite 4015, New York, New York 10119-4015.

SOURCE Lexington Realty Trust



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