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,
2017.
First Quarter 2017 Highlights
- Generated Net Income attributable to common
shareholders of $40.4 million, or $0.17 per diluted common
share.
- Generated Adjusted Company Funds From Operations
available to all equityholders and unitholders - diluted (“Adjusted
Company FFO”) of $57.8 million, or $0.23 per diluted common
share.
- Acquired two industrial properties for an aggregated
cost of $48.3 million and completed the last building of the Lake
Jackson, TX build-to-suit project for $70.4 million.
- Invested $17.8 million in on-going build-to-suit
projects.
- Sold seven properties for $92.8 million.
- Sold a non-consolidated interest for $6.2 million and
collected $8.5 million in full satisfaction of a loan
receivable.
- Sold the Kennewick, Washington loan receivable for
$80.4 million.
- Completed 207,000 square feet of new leases and lease
extensions with overall portfolio 96.2% leased at quarter
end.
- Issued 1.6 million common shares at an average gross
price of $10.89 per share under its ATM offering
program.
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, Chief Executive Officer and
President of Lexington Realty Trust, commented, “During the
quarter, property and loan disposition volume totaled $188
million. Consistent with our strategy, these transactions
further simplified our portfolio by addressing vacancy,
considerably reduced our loan portfolio and contributed to
increasing the weighted-average lease term of our office portfolio
by almost 6% to 7.6 years. Sale proceeds are expected to be used to
acquire industrial assets and to fund office and industrial
build-to-suit projects. We continue to be well-positioned to act on
investment opportunities as they arise over the balance of the year
and expect to be most active in the industrial sector."
FINANCIAL RESULTS
Revenues
For the quarter ended March 31, 2017, total
gross revenues were $96.1 million, compared with total gross
revenues of $111.3 million for the quarter ended March 31,
2016. The decrease was primarily attributable to 2017 and 2016
property sales, particularly the sale of the New York City land
investments in 2016, and lease expirations, partially offset by
revenue generated from property acquisitions and new leases.
Net Income Attributable to Common
Shareholders
For the quarter ended March 31, 2017, net
income attributable to common shareholders was $40.4 million, or
$0.17 per diluted share, compared with net income attributable to
common shareholders for the quarter ended March 31, 2016 of
$47.8 million, or $0.20 per diluted share.
Adjusted Company FFO
For the quarter ended March 31, 2017,
Lexington generated Adjusted Company FFO of $57.8 million, or $0.23
per diluted share, compared to Adjusted Company FFO for the quarter
ended March 31, 2016 of $71.8 million, or $0.29 per diluted
share. The decrease was primarily attributable to the items
discussed above under "Revenues".
Dividends/Distributions
As previously announced, during the first
quarter of 2017, Lexington declared a regular quarterly common
share/unit dividend/distribution for the quarter ended
March 31, 2017 of $ 0.175 per common share/unit, which was
paid on April 17, 2017 to common shareholders/unitholders of record
as of March 31, 2017. Lexington also declared a dividend of
$0.8125 per share on its Series C Cumulative Convertible Preferred
Stock, which will be paid on May 15, 2017 to Series C Preferred
Shareholders of record as of April 28, 2017.
TRANSACTION ACTIVITY
|
|
|
ACQUISITIONS AND COMPLETED BUILD-TO-SUIT
TRANSACTIONS |
|
Tenant |
|
Location |
|
Sq. Ft. |
|
PropertyType |
|
Initial Basis ($000) |
|
Estimated Annualized GAAP Rent
($000) |
|
Initial Annualized CashRent
($000) |
|
Estimated GAAP Yield |
|
Initial
CashYield |
|
ApproximateLeaseTerm
(Yrs) |
| The Dow Chemical
Company(1) |
|
Lake
Jackson, TX |
|
275,000 |
|
Office |
|
$ |
70,401 |
|
|
$ |
6,177 |
|
|
$ |
5,022 |
|
|
9.5 |
% |
|
7.7 |
% |
|
20 |
| Amazon.com.ksdc, LLC
(Amazon.com Inc.) (2) |
|
New
Century, KS |
|
447,000 |
|
Industrial |
|
12,056 |
|
|
1,240 |
|
|
1,049 |
|
|
7.1 |
% |
|
6.0 |
% |
|
10 |
| Continental Tire the
Americas, LLC(3) |
|
Lebanon, IN |
|
742,000 |
|
Industrial |
|
36,194 |
|
|
2,281 |
|
|
2,337 |
|
|
6.3 |
% |
|
6.5 |
% |
|
7 |
| |
|
|
|
1,464,000 |
|
|
|
$ |
118,651 |
|
|
$ |
9,698 |
|
|
$ |
8,408 |
|
|
8.1 |
% |
|
7.0 |
% |
|
|
|
|
|
(1) Final building completed. Estimated GAAP and cash
yields reflect estimated annualized GAAP and initial cash rents for
all four buildings of $14.9 million and $12.1 million,
respectively, estimated costs of completion of all four buildings
and estimated developer partner payout of approximately $8.0
million. |
|
(2) Initial basis excludes a $2.3 million future tenant
allowance, which was credited at closing. Property is subject
to a ground lease with an initial annual payment of $188 thousand
subject to CPI adjustments. |
|
(3) Initial estimated annualized cash rent excludes a year-one
partial rent abatement, which was credited at closing. |
|
ON-GOING BUILD-TO-SUIT PROJECTS |
|
|
|
|
|
|
|
Location |
|
Sq. Ft. |
|
Property Type |
|
Maximum Commitment/Estimated Completion
Cost($000) |
|
GAAP Investment Balance as
of3/31/2017 ($000) |
|
Estimated Acquisition/ Completion Date |
|
Estimated Initial GAAP Yield |
|
Estimated Initial Cash Yield |
|
Approximate Lease Term(Yrs) |
| Charlotte, NC |
|
201,000 |
|
Office |
|
$ |
62,445 |
|
|
$ |
49,210 |
|
|
2Q
17 |
|
9.5 |
% |
|
8.3 |
% |
|
15 |
| Opelika, AL |
|
165,000 |
|
Industrial |
|
37,000 |
|
|
19,918 |
|
|
2Q
17 |
|
9.0 |
% |
|
7.1 |
% |
|
25 |
| |
|
366,000 |
|
|
|
$ |
99,445 |
|
|
$ |
69,128 |
|
|
|
|
9.3 |
% |
|
7.8 |
% |
|
|
|
FORWARD PURCHASE COMMITMENTS |
|
|
|
|
|
|
|
Location |
|
Sq. Ft. |
|
Property Type |
|
Maximum Acquisition
Cost($000) |
|
Estimated Acquisition Date |
|
Estimated Initial GAAP Yield |
|
Estimated Initial Cash Yield |
|
Approximate Lease Term (Yrs) |
| Grand Prairie, TX |
|
215,000 |
|
|
Industrial |
|
$ |
24,725 |
|
|
2Q
17 |
|
7.6 |
% |
|
6.2 |
% |
|
20 |
| Warren, MI(1) |
|
260,000 |
|
|
Industrial |
|
47,000 |
|
|
3Q
17 |
|
8.3 |
% |
|
7.3 |
% |
|
15 |
| |
|
475,000 |
|
|
|
|
$ |
71,725 |
|
|
|
|
8.0 |
% |
|
6.9 |
% |
|
|
|
|
| (1)
Lexington provided a $4.6 million letter of credit to secure its
obligation to purchase this property. |
|
PROPERTY DISPOSITIONS |
|
|
|
Primary Tenant |
|
Location |
|
Property Type |
|
Gross
DispositionPrice($000) |
|
Annualized Net Income(1) ($000) |
|
AnnualizedNOI(1)($000) |
|
Month of Disposition |
| JPMorgan Chase Bank
National Association(2) |
|
Lake
Mary, FL |
|
Office |
|
$ |
38,000 |
|
|
$ |
2,490 |
|
|
$ |
3,245 |
|
|
January |
| Puget Consumers Co-op
d/b/a PCC Natural Markets |
|
Edmunds, WA |
|
Other |
|
2,900 |
|
|
143 |
|
|
292 |
|
|
January |
| Carlson Restaurants,
Inc. |
|
Carrollton, TX |
|
Office |
|
29,406 |
|
|
1,790 |
|
|
2,161 |
|
|
February |
| James Hardie Building
Products, Inc. |
|
Waxahachie, TX |
|
Industrial |
|
16,420 |
|
|
1,850 |
|
|
3,400 |
|
|
February |
| Vacant |
|
Garland, TX |
|
Office |
|
1,900 |
|
|
(12 |
) |
|
(6 |
) |
|
February |
| Vacant |
|
Foxboro, MA |
|
Office |
|
4,130 |
|
|
(1,105 |
) |
|
(415 |
) |
|
March |
| |
|
|
|
|
|
$ |
92,756 |
|
|
$ |
5,156 |
|
|
$ |
8,677 |
|
|
|
|
|
| (1)
Quarterly period prior to sale annualized. |
| (2)
Includes two properties. |
|
|
These sales resulted in aggregate gains of $34.2
million and aggregate impairment charges of $2.7 million.
In addition, Lexington sold its 40%
tenant-in-common interest in the Oklahoma City, Oklahoma office
property for $6.2 million resulting in a gain of $1.5 million.
| LOAN INVESTMENT
DISPOSITIONS |
Lexington collected $8.5 million in full
satisfaction of the loan receivable owed from a tenant-in-common of
the Oklahoma City, Oklahoma office property. In addition,
Lexington sold the Kennewick, Washington loan receivable for $80.4
million, which resulted in a loan loss of $5.3 million.
LEASING
During the first quarter of 2017, Lexington
executed the following new and extended leases:
| |
|
LEASE EXTENSIONS |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
Location |
|
Primary Tenant(1) |
Prior Term |
|
LeaseExpiration Date |
|
Sq. Ft. |
| |
|
Office/Multi-Tenant |
|
|
|
|
|
|
|
|
| 1 |
|
Houston |
TX |
|
Ricoh USA, Inc |
|
01/2018 |
|
01/2019 |
|
78,895 |
|
| 2 |
|
Philadelphia |
PA |
|
N/A |
|
03/2020 |
|
03/2021 |
|
1,220 |
|
|
2 |
|
Total office lease extensions |
|
|
|
|
|
|
80,115 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
Industrial / Multi-Tenant |
|
|
|
|
|
|
|
|
|
1 |
|
Antioch |
TN |
|
N/A |
|
02/2017 |
|
02/2020 |
|
474 |
|
|
1 |
|
Total industrial lease extensions |
|
|
|
|
|
|
|
474 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
Other |
|
|
|
|
|
|
|
|
| 1 |
|
Staunton |
VA |
|
Food Lion, LLC/Delhaize
America, Inc |
|
02/2018 |
|
02/2023 |
|
23,000 |
|
| 2 |
|
Lexington |
NC |
|
Food Lion, LLC/Delhaize
America, Inc |
|
02/2018 |
|
02/2023 |
|
23,000 |
|
|
2 |
|
Total other lease extensions |
|
|
|
|
|
|
|
46,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
5 |
|
Total lease extensions |
|
|
|
|
|
|
|
126,589 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
NEW
LEASES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Location |
|
|
|
|
|
Lease Expiration Date |
|
Sq. Ft. |
|
|
|
Office/Multi-Tenant |
|
|
|
|
|
|
|
|
| 1 |
|
Houston |
TX |
|
Saipem America,
Inc. |
|
|
|
03/2028 |
|
54,426 |
|
| 2 |
|
Des Moines |
IA |
|
Marketlink, Inc. |
|
|
|
04/2018 |
|
24,385 |
|
|
3-6 |
|
Honolulu |
HI |
|
N/A |
|
|
|
2017-2020 |
|
1,403 |
|
|
6 |
|
Total new office leases |
|
|
|
|
|
|
|
80,214 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6 |
|
Total new leases |
|
|
|
|
|
|
|
80,214 |
|
|
11 |
|
TOTAL NEW AND EXTENDED LEASES |
|
|
|
|
|
|
|
206,803 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| (1)
Leases greater than 10,000 square feet. |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
As of March 31, 2017, Lexington's portfolio
was 96.2% leased, excluding any property subject to a mortgage loan
in default.
BALANCE SHEET/CAPITAL MARKETS
In the first quarter of 2017, Lexington issued
1,593,603 common shares at an average price of $10.89 per share
under its ATM offering program.
2017 EARNINGS GUIDANCE
Lexington now estimates that its net income
attributable to common shareholders per diluted common share for
the year ended December 31, 2017 will be within an expected range
of $0.57 to $0.61. Lexington is reaffirming that its Adjusted
Company FFO for the year ended December 31, 2017 will be within an
expected range of $0.94 to $0.98 per diluted common share. This
guidance is forward looking, excludes the impact of certain items
and is based on current expectations.
FIRST QUARTER 2017 CONFERENCE
CALL
Lexington will host a conference call today,
Tuesday, May 9, 2017, at 8:30 a.m. Eastern Time, to discuss its
results for the quarter ended March 31, 2017. 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 August 9, 2017, 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 10105943. A live webcast of the conference call will be
available at www.lxp.com within the Investors section.
ABOUT LEXINGTON REALTY TRUST
Lexington Realty Trust (NYSE:LXP) is a publicly
traded real estate investment trust (REIT) that owns a diversified
portfolio of real estate assets consisting primarily of equity
investments in single-tenant net-leased commercial properties
across the United States. Lexington seeks to expand its 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.
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, 2017, (3) the
successful consummation of any lease, acquisition, build-to-suit,
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.
Cash Rent: Cash Rent is calculated by making
adjustments to GAAP rent to remove the impact of GAAP required
adjustments to rental income such as adjustments for straight-line
rents relating to free rent periods and contractual rent increases.
Cash Rent excludes lease termination income. Lexington believes
Cash Rent provides a meaningful indication of an investment's
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 (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 non-consolidated 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 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 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), tenant reimbursements
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 March 31, |
| |
2017 |
|
2016 |
| Gross revenues: |
|
|
|
|
Rental |
$ |
88,654 |
|
|
$ |
103,220 |
|
| Tenant
reimbursements |
7,445 |
|
|
8,057 |
|
| Total
gross revenues |
96,099 |
|
|
111,277 |
|
| Expense applicable to
revenues: |
|
|
|
|
Depreciation and amortization |
(42,891 |
) |
|
(43,127 |
) |
| Property
operating |
(12,116 |
) |
|
(12,078 |
) |
| General and
administrative |
(9,457 |
) |
|
(7,775 |
) |
| Non-operating
income |
2,621 |
|
|
2,867 |
|
| Interest and
amortization expense |
(19,725 |
) |
|
(22,893 |
) |
| Debt satisfaction
charges, net |
— |
|
|
(162 |
) |
| Impairment charges and
loan losses |
(7,992 |
) |
|
— |
|
| Gains on sales of
properties |
34,193 |
|
|
17,015 |
|
| Income before provision
for income taxes and equity in earnings of non-consolidated
entities |
40,732 |
|
|
45,124 |
|
| Provision for income
taxes |
(422 |
) |
|
(413 |
) |
| Equity in earnings of
non-consolidated entities |
1,910 |
|
|
5,742 |
|
| Net income |
42,220 |
|
|
50,453 |
|
| Less net
income attributable to noncontrolling interests |
(180 |
) |
|
(1,010 |
) |
| Net income attributable
to Lexington Realty Trust shareholders |
42,040 |
|
|
49,443 |
|
| Dividends attributable
to preferred shares – Series C |
(1,572 |
) |
|
(1,572 |
) |
| Allocation to
participating securities |
(71 |
) |
|
(90 |
) |
| Net income attributable
to common shareholders |
$ |
40,397 |
|
|
$ |
47,781 |
|
| |
|
|
|
| Net income attributable
to common shareholders - per common share basic |
$ |
0.17 |
|
|
$ |
0.21 |
|
|
Weighted-average common shares outstanding – basic |
|
237,179,526 |
|
|
|
232,642,803 |
|
| |
|
|
|
|
|
|
|
| Net income attributable
to common shareholders - per common share diluted |
$ |
0.17 |
|
|
$ |
0.20 |
|
|
Weighted-average common shares outstanding – diluted |
|
241,088,049 |
|
|
|
238,885,171 |
|
| LEXINGTON REALTY TRUST AND CONSOLIDATED
SUBSIDIARIES |
| CONDENSED CONSOLIDATED BALANCE
SHEETS |
| (Unaudited and in thousands, except share and per share
data) |
| |
| |
March 31, 2017 |
|
December 31, 2016 |
|
Assets: |
|
|
|
| Real estate, at
cost |
$ |
3,577,239 |
|
|
$ |
3,533,172 |
|
| Real estate -
intangible assets |
574,570 |
|
|
597,294 |
|
| Investments in real
estate under construction |
69,128 |
|
|
106,652 |
|
| |
4,220,937 |
|
|
4,237,118 |
|
| Less: accumulated
depreciation and amortization |
1,193,639 |
|
|
1,208,792 |
|
| Real
estate, net |
3,027,298 |
|
|
3,028,326 |
|
| Assets held for
sale |
10,080 |
|
|
23,808 |
|
| Cash and cash
equivalents |
177,301 |
|
|
86,637 |
|
| Restricted cash |
63,548 |
|
|
31,142 |
|
| Investment in and
advances to non-consolidated entities |
62,963 |
|
|
67,125 |
|
| Deferred expenses,
net |
32,431 |
|
|
33,360 |
|
| Loans receivable,
net |
— |
|
|
94,210 |
|
| Rent receivable –
current |
6,622 |
|
|
7,516 |
|
| Rent receivable –
deferred |
35,811 |
|
|
31,455 |
|
| Other assets |
30,651 |
|
|
37,888 |
|
| Total assets |
$ |
3,446,705 |
|
|
$ |
3,441,467 |
|
| |
|
|
|
| Liabilities and
Equity: |
|
|
|
| Liabilities: |
|
|
|
| Mortgages and notes
payable, net |
$ |
730,310 |
|
|
$ |
738,047 |
|
| Term loans payable,
net |
501,348 |
|
|
501,093 |
|
| Senior notes payable,
net |
494,571 |
|
|
494,362 |
|
| Trust preferred
securities, net |
127,121 |
|
|
127,096 |
|
| Dividends payable |
47,719 |
|
|
47,264 |
|
| Liabilities held for
sale |
48 |
|
|
191 |
|
| Accounts payable and
other liabilities |
44,326 |
|
|
59,601 |
|
| Accrued interest
payable |
11,870 |
|
|
6,704 |
|
| Deferred revenue -
including below market leases, net |
41,464 |
|
|
39,895 |
|
| Prepaid rent |
17,934 |
|
|
14,723 |
|
| Total liabilities |
2,016,711 |
|
|
2,028,976 |
|
| |
|
|
|
| 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, 240,394,082
and 238,037,177 shares issued and outstanding in 2017 and 2016,
respectively |
24 |
|
|
24 |
|
| Additional
paid-in-capital |
2,819,058 |
|
|
2,800,736 |
|
| Accumulated
distributions in excess of net income |
(1,502,217 |
) |
|
(1,500,966 |
) |
| Accumulated other
comprehensive income (loss) |
259 |
|
|
(1,033 |
) |
| Total
shareholders’ equity |
1,411,140 |
|
|
1,392,777 |
|
| Noncontrolling
interests |
18,854 |
|
|
19,714 |
|
| Total
equity |
1,429,994 |
|
|
1,412,491 |
|
| Total liabilities and
equity |
$ |
3,446,705 |
|
|
$ |
3,441,467 |
|
| LEXINGTON REALTY TRUST AND CONSOLIDATED
SUBSIDIARIES |
| EARNINGS PER SHARE |
| (Unaudited and in thousands, except share and per
share data) |
|
|
| |
|
|
Three Months EndedMarch 31, |
| |
|
|
2017 |
|
2016 |
|
EARNINGS PER SHARE: |
|
|
|
|
| |
|
|
|
|
|
Basic: |
|
|
|
|
| Net income
attributable to common shareholders |
|
$ |
40,397 |
|
|
$ |
47,781 |
|
| |
|
|
|
|
|
|
Weighted-average number of common shares outstanding - basic |
|
237,179,526 |
|
|
232,642,803 |
|
| |
|
|
|
|
| Net income attributable to common shareholders - per common
share basic |
|
$ |
0.17 |
|
|
$ |
0.21 |
|
| |
|
|
|
|
|
|
Diluted: |
|
|
|
|
|
| Net income
attributable to common shareholders - basic |
|
$ |
40,397 |
|
|
$ |
47,781 |
|
| Impact of
assumed conversions |
|
(19 |
) |
|
1,046 |
|
| Net income
attributable to common shareholders |
|
$ |
40,378 |
|
|
$ |
48,827 |
|
| |
|
|
|
|
|
|
Weighted-average common shares outstanding - basic |
|
237,179,526 |
|
|
232,642,803 |
|
| Effect of
dilutive securities: |
|
|
|
|
| Share options |
|
136,881 |
|
|
132,191 |
|
| 6.00% Convertible Guaranteed Notes |
|
— |
|
|
1,941,237 |
|
| Operating Partnership Units |
|
3,771,642 |
|
|
3,820,192 |
|
| Non-vested shares |
|
— |
|
|
348,748 |
|
|
Weighted-average common shares outstanding - diluted |
|
241,088,049 |
|
|
238,885,171 |
|
| |
|
|
|
|
|
| Net income attributable to common shareholders - per common
share diluted |
|
$ |
0.17 |
|
|
$ |
0.20 |
|
| 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 March 31, |
| |
|
|
2017 |
|
2016 |
|
FUNDS FROM OPERATIONS: |
|
|
|
|
|
|
|
Basic and Diluted: |
|
|
|
|
| Net income
attributable to common shareholders |
|
$ |
40,397 |
|
|
$ |
47,781 |
|
|
Adjustments: |
|
|
|
|
| |
Depreciation and amortization |
|
41,542 |
|
|
41,193 |
|
| |
Impairment
charges - real estate |
|
2,698 |
|
|
— |
|
| |
Noncontrolling interests - OP units |
|
(19 |
) |
|
735 |
|
| |
Amortization of leasing commissions |
|
1,349 |
|
|
1,934 |
|
| |
Joint
venture and noncontrolling interest adjustment |
|
340 |
|
|
236 |
|
| |
Gains on
sales of properties, including non-consolidated entities |
|
(35,645 |
) |
|
(22,343 |
) |
| FFO
available to common shareholders and unitholders -
basic |
|
50,662 |
|
|
69,536 |
|
| |
Preferred
dividends |
|
1,572 |
|
|
1,572 |
|
| |
Interest
and amortization on 6.00% Convertible Guaranteed Notes |
|
— |
|
|
252 |
|
| |
Amount
allocated to participating securities |
|
71 |
|
|
90 |
|
| FFO
available to all equityholders and unitholders -
diluted |
|
52,305 |
|
|
71,450 |
|
| |
Debt
satisfaction charges, net |
|
— |
|
|
162 |
|
| |
Loan
loss |
|
5,294 |
|
|
— |
|
| |
Transaction
costs |
|
186 |
|
|
146 |
|
|
Adjusted Company FFO available to all equityholders and
unitholders - diluted |
|
57,785 |
|
|
71,758 |
|
| |
|
|
|
|
|
FUNDS AVAILABLE FOR DISTRIBUTION: |
|
|
|
|
|
Adjustments: |
|
|
|
|
| |
Straight-line adjustments |
|
(2,909 |
) |
|
(11,139 |
) |
| |
Lease
incentives |
|
431 |
|
|
423 |
|
| |
Amortization of above/below market leases |
|
514 |
|
|
456 |
|
| |
Lease
termination payments, net |
|
235 |
|
|
(2,411 |
) |
| |
Non-cash
interest, net |
|
155 |
|
|
(382 |
) |
| |
Non-cash
charges, net |
|
2,146 |
|
|
2,207 |
|
| |
Tenant
improvements |
|
(1,762 |
) |
|
(720 |
) |
| |
Lease
costs |
|
(1,671 |
) |
|
(1,230 |
) |
|
Company Funds Available for Distribution |
|
$ |
54,924 |
|
|
$ |
58,962 |
|
| |
|
|
|
|
|
| Per
Common Share and Unit Amounts |
|
|
|
|
| Basic: |
|
|
|
|
| |
FFO |
|
$ |
0.21 |
|
|
$ |
0.29 |
|
| |
|
|
|
|
|
|
|
Diluted: |
|
|
|
|
| |
FFO |
|
$ |
0.21 |
|
|
$ |
0.29 |
|
| |
Adjusted
Company FFO |
|
$ |
0.23 |
|
|
$ |
0.29 |
|
| |
|
|
|
|
|
|
| Basic: |
|
|
|
|
| |
Weighted-average common shares outstanding - basic EPS |
|
237,179,526 |
|
|
232,642,803 |
|
| |
Operating
partnership units(1) |
|
3,771,642 |
|
|
3,820,192 |
|
| |
Weighted-average common shares outstanding - basic FFO |
|
240,951,168 |
|
|
236,462,995 |
|
| |
|
|
|
|
|
|
|
Diluted: |
|
|
|
|
| |
Weighted-average common shares outstanding - diluted EPS |
|
241,088,049 |
|
|
238,885,171 |
|
| |
Unvested
share-based payment awards |
|
691,936 |
|
|
— |
|
| |
Preferred
shares - Series C |
|
4,710,570 |
|
|
4,710,570 |
|
| |
Weighted-average common shares outstanding - diluted FFO |
|
246,490,555 |
|
|
243,595,741 |
|
| |
|
|
|
|
|
|
|
|
|
|
| (1) |
Includes OP
units other than OP units held by Lexington. |
|
|
|
|
|
|
|
|
| LEXINGTON REALTY TRUST AND CONSOLIDATED
SUBSIDIARIES |
| RECONCILIATION OF NON-GAAP
MEASURES |
| |
|
|
|
| 2017 EARNINGS
GUIDANCE |
|
|
|
| |
Twelve Months EndedDecember 31, 2017 |
| |
Range |
| Estimated: |
|
|
|
| Net income attributable
to common shareholders per diluted common share(1) |
$ |
0.57 |
|
|
$ |
0.61 |
|
|
Depreciation and amortization |
0.68 |
|
|
0.68 |
|
| Impact of
capital transactions |
(0.31 |
) |
|
(0.31 |
) |
| Estimated Adjusted
Company FFO per diluted common share |
$ |
0.94 |
|
|
$ |
0.98 |
|
| |
|
|
|
|
|
|
|
| (1) Assumes all
convertible securities are dilutive. |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
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
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