Lexington Realty Trust Reports First Quarter 2010 Results

NEW YORK, May 6 /PRNewswire-FirstCall/ -- Lexington Realty Trust ("Lexington") (NYSE: LXP), a real estate investment trust focused on single-tenant real estate investments, today announced results for the first quarter ended March 31, 2010.

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First Quarter 2010 Highlights

• Generated Company Funds From Operations ("Company FFO") of $34.4 million or $0.25 per diluted common share/unit, adjusted for certain items.
• Executed 22 new and renewal leases, totaling approximately 413,000 square feet; overall portfolio remains 92% leased.
• Sold three properties for an aggregate disposition price of $39.9 million.
• Increased the availability under the revolving loan portion of the secured credit facility from $125.0 million to $150.0 million, and no amounts are currently outstanding.
• Invested $31.8 million in new assets.
• Raised net proceeds of $111.3 million through issuance of $115.0 million principal amount of 6.00% Convertible Notes.
• Issued approximately 11.7 million common shares, raising net proceeds of $75.7 million.
• Reduced overall debt by $75.2 million.
• Recorded non-cash income of $2.1 million related to a previously disclosed forward equity commitment and impairment charges of $28.0 million on real estate.
• Formed a joint venture with an unaffiliated third party for property management at certain of our properties.

T. Wilson Eglin, President and Chief Executive Officer of Lexington, stated, "During the first quarter of 2010, we continued to make progress on Lexington's capital recycling effort with the disposal of $39.9 million of properties.  We also improved Lexington's financial flexibility by raising $193.2 million of debt and equity capital and retiring $175.7 million of debt. We continue to be pleased with the pace of Lexington's leasing activity and prospects, particularly at 100 Light Street in Baltimore.  Based on our leasing success over the past few quarters, Lexington has a minimal number of leases expiring over the balance of the year. We continue to be focused on creating additional liquidity by selling Lexington's non-core retail and multi-tenant properties to retire debt and to be prepared to capitalize on investment opportunities as they arise."

Revenues

For the quarter ended March 31, 2010, total gross revenues were $88.9 million, compared with total gross revenues of $93.5 million for the quarter ended March 31, 2009.

Company FFO Attributable to Common Shareholders/Unitholders

The following presents in tabular form the items excluded from Company FFO for the three months ended March 31, 2010 and 2009:

Net Loss Attributable to Common Shareholders

For the quarter ended March 31, 2010, net loss attributable to common shareholders was ($33.0) million, or a loss of ($0.27) per diluted share, compared with net loss attributable to common shareholders for the quarter ended March 31, 2009 of ($71.7) million, or a loss of ($0.72) per diluted share.

Capital Activities and Balance Sheet Update

During the first quarter of 2010, Lexington issued 11.7 million common shares, raising net proceeds of $75.7 million. In addition, Lexington issued $115.0 million principal amount of 6.00% Convertible Notes, raising net proceeds of $111.3 million.

Lexington reduced its overall consolidated debt during the first quarter of 2010 by approximately $75.2 million. Lexington retired $175.7 million of debt in the aggregate, including $25.5 million original principal amount of its 5.45% Exchangeable Notes, $81.3 million under its secured credit facility and $68.9 million of mortgage debt. Lexington currently has $62.2 million 5.45% Exchangeable Notes outstanding, $90.0 million outstanding on the term loan portion of the secured credit facility and no borrowings outstanding on the revolving loan portion of the $150.0 million secured credit facility.

Common Share Dividend/Distribution

During the quarter ended March 31, 2010, Lexington declared a regular quarterly dividend/distribution of $0.10 per common share/unit, which was paid in cash on April 15, 2010, to common shareholders/unitholders of record as of March 31, 2010.

Effective beginning with the dividend payable with respect to the quarter ending June 30, 2010, Lexington has increased the purchase price discount on shares acquired from it or in the open market from 2.5% to 5.0% under its dividend reinvestment plan. Investors interested in participating in the plan should visit www.bnymellon.com/shareowner/isd or call 1-800-850-3948.

Dispositions

During the quarter ended March 31, 2010, Lexington sold three properties to unrelated parties for an aggregate disposition price of approximately $39.9 million, including the assumption of $38.1 million in mortgage debt.

Investments

During the quarter ended March 31, 2010, Lexington:

• funded a 15%, $11.5 million mortgage loan on an office building in Schaumburg, Illinois, which matures January 15, 2012, but can be extended one additional year by the borrower. The property is net leased to Career Education Corporation from January 1, 2011 through December 31, 2022 for an average annual rent of $4.0 million. In addition, Lexington will be lending the borrower an additional $7.0 million for work being performed on the building;
• closed a $17.0 million loan principally secured by ownership pledges for and second mortgage liens against five medical facilities, which are primarily subject to single-tenant net leases. The loan is guaranteed by a parent entity and its principal, matures in December 2011 and requires payments of interest only at a rate of 14% for the first year and 16% thereafter; and
• purchased an adjacent land parcel and parking lot in a sale/leaseback transaction with an existing tenant, Nevada Power Company, which occupies a property owned by Lexington in Las Vegas, Nevada. The purchase price was $3.3 million, a portion of which was financed with a $2.5 million non-recourse mortgage note, which matures in September 2014 and bears interest at 7.5%. In connection with this transaction, the Nevada Power Company lease on the existing property was extended from January 2014 to January 2029.

Leasing Activity

For the quarter ended March 31, 2010, Lexington executed 22 new and renewal leases for approximately 413,000 square feet. Subsequent to quarter-end, Lexington executed a 16 year, 94,000 square foot lease at 100 Light Street in Baltimore, bringing the property to approximately 44% leased. At March 31, 2010, Lexington's overall portfolio was approximately 92% leased.

Lexington's estimate of Company FFO remains unchanged at $0.93 to $0.97 per diluted share for the year ended December 31, 2010. This guidance is forward looking, excludes the impact of certain items and is based on current expectations.

Lexington will host a conference call today, Thursday, May 6, 2010, at 11:00 a.m. Eastern Time, to discuss its results for the quarter ended March 31, 2010. Interested parties may participate in this conference call by dialing (888) 437-9481 or (719) 325-2230. A replay of the call will be available through May 20, 2010, at (888) 203-1112 or (719) 457-0820, Pin #:5651841. A live web cast of the conference call will be available at www.lxp.com within the Investor Relations section.

Lexington Realty Trust is a real estate investment trust that owns, invests in, and manages office, industrial and retail properties net-leased to major corporations throughout the United States and provides investment advisory and asset management services to investors in the net lease area.   Lexington shares are traded on the New York Stock Exchange under the symbol "LXP".  Additional information about Lexington is available on-line at www.lxp.com or by contacting Lexington Realty Trust, One Penn Plaza, Suite 4015, New York, New York 10119-4015, Attention: Investor Relations.

This release contains certain forward-looking statements which involve known and unknown risks, uncertainties or other factors not under Lexington's control which may cause actual results, performance or achievements of Lexington to be materially different from the results, performance, or other expectations implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed under the headings "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" in Lexington's periodic reports filed with the Securities and Exchange Commission, including risks related to: (1) the failure to continue to qualify as a real estate investment trust, (2) changes in general business and economic conditions, including the impact of the current global financial and credit crisis, (3) competition, (4) increases in real estate construction costs, (5) changes in interest rates, or (6) changes in accessibility of debt and equity capital markets. Copies of the periodic reports Lexington files with the Securities and Exchange Commission  are available on Lexington's web site at www.lxp.com. Forward-looking statements, which are based on certain assumptions and describe Lexington's future plans, strategies and expectations, are generally identifiable by use of the words "believes," "expects," "intends," "anticipates," "estimates," "projects", "is optimistic" or similar expressions. Lexington undertakes no obligation to publicly release the results of any revisions to those forward-looking statements which may be made to reflect events or circumstances after the occurrence of unanticipated events. Accordingly, there is no assurance that Lexington's expectations will be realized.

(1) Lexington believes that Funds from Operations ("FFO") is a widely recognized and appropriate measure of the performance of an equity REIT.  Lexington presents FFO because it considers FFO an important supplemental measure of Lexington's operating performance.  Lexington believes FFO is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results.  FFO is intended to exclude generally accepted accounting principles ("GAAP") historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate diminishes ratably over time.  Historically, however, real estate values have risen or fallen with market conditions.  As a result, FFO provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities, interest costs and other matters without the inclusion of depreciation and amortization, providing perspective that may not necessarily be apparent from net income.

Lexington computes FFO in accordance with standards established by the National Association of Real Estate Investment Trusts, Inc. ("NAREIT").   FFO is defined by NAREIT as "net income (or loss) computed in accordance with GAAP, excluding gains (or losses) from sales of property, plus real estate depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures."  FFO does not represent cash generated from operating activities in accordance with GAAP and is not indicative of cash available to fund cash needs.  FFO should not be considered as an alternative to net income as an indicator of our operating performance or as an alternative to cash flow as a measure of liquidity.

Lexington includes in its calculation of FFO, which Lexington refers to as the "Company's funds from operations" or "Company FFO," Lexington's operating partnership units, Lexington's Series C Cumulative Convertible Preferred Shares, and Lexington's 6.00% Convertible Notes because these securities are convertible, at the holder's option, into Lexington's common shares.  Management believes this is appropriate and relevant to securities analysts, investors and other interested parties because Lexington presents Company FFO on a company-wide basis as if all securities that are convertible, at the holder's option, into Lexington's common shares, are converted.  Since others do not calculate FFO in a similar fashion, Company FFO may not be comparable to similarly titled measures as reported by others.

SOURCE Lexington Realty Trust