Lexington Realty Trust (“Lexington”) (NYSE:LXP), a real estate
investment trust focused on single-tenant real estate investments,
today announced results for the second quarter ended June 30,
2017.
Second Quarter 2017 Highlights
- Generated Net Income attributable to common
shareholders of $5.5 million, or $0.02 per diluted common
share.
- Generated Adjusted Company Funds From Operations
available to all equityholders and unitholders - diluted (“Adjusted
Company FFO”) of $57.0 million, or $0.23 per diluted common
share.
- Acquired three industrial properties for an aggregated
cost of $104.2 million and completed the Charlotte, NC
build-to-suit project for $61.3 million.
- Committed to acquire an industrial property in Romulus,
MI for $39.3 million.
- Invested $9.3 million in an on-going build-to-suit
project.
- Sold six properties for $59.1 million.
- Retired $19.8 million of secured debt.
- Completed 1.4 million square feet of new leases and
lease extensions with overall portfolio 98.1% leased at quarter
end.
Subsequent Events
- Disposed of a retail property in Lexington, NC and a
vacant office property in Rock Hill, SC for an aggregate $7.7
million.
- Acquired an industrial property in McDonough, GA for
$66.7 million, which is net leased for 10.5 years.
- Extended the 2018 lease maturities on an industrial
property in Columbus, OH and an industrial property in Marshall, MI
aggregating 1.0 million square feet.
- Borrowed $70.0 million under its unsecured revolving
credit facility.
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 second
quarter, we continued to execute on our business plan by addressing
lease rollover, selling under-performing and non-core properties,
completing build-to-suit projects and acquiring high-quality
industrial properties. Acquisition and build-to-suit
completions of $166 million exceeded sales volume of $59 million
for the quarter, and our industrial investment pipeline remains
promising. After strong leasing volume of 1.4 million square feet,
our portfolio was 98.1% leased at quarter end. In the second half
of the year, we will continue to focus on adding high quality
industrial properties to our portfolio while further simplifying
our holdings through asset sales, primarily in the office
area.”
FINANCIAL RESULTS
Revenues
For the quarter ended June 30, 2017, total
gross revenues were $95.7 million, compared with total gross
revenues of $116.9 million for the quarter ended June 30,
2016. The decrease was primarily attributable to 2017 and 2016
property sales, particularly the sale of the New York City land
investments in 2016, a lease termination payment received 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 June 30, 2017, net
income attributable to common shareholders was $5.5 million, or
$0.02 per diluted share, compared with net income attributable to
common shareholders for the quarter ended June 30, 2016 of
$53.9 million, or $0.23 per diluted share.
Adjusted Company FFO
For the quarter ended June 30, 2017,
Lexington generated Adjusted Company FFO of $57.0 million, or $0.23
per diluted share, compared to Adjusted Company FFO for the quarter
ended June 30, 2016 of $79.1 million, or $0.32 per diluted
share. The decrease was primarily attributable to the items
discussed above under "Revenues".
Dividends/Distributions
As previously announced, during the second
quarter of 2017, Lexington declared a regular quarterly common
share/unit dividend/distribution for the quarter ended
June 30, 2017 of $ 0.175 per common share/unit, which was paid
on July 17, 2017 to common shareholders/unitholders of record as of
June 30, 2017. Lexington also declared a dividend of $0.8125
per share on its Series C Cumulative Convertible Preferred Stock,
which is expected to be paid on August 15, 2017 to Series C
Preferred Shareholders of record as of July 31, 2017.
TRANSACTION ACTIVITY
|
ACQUISITIONS AND COMPLETED BUILD-TO-SUIT
TRANSACTIONS |
|
Tenant |
|
Location |
|
Sq. Ft. |
|
PropertyType |
|
Initial Basis ($000) |
|
ApproximateLeaseTerm
(Yrs) |
| AvidXchange, Inc. |
|
Charlotte, NC |
|
201,000 |
|
|
Office |
|
$ |
61,339 |
|
|
15 |
| General Electric
Company(1) |
|
Cleveland, TN |
|
851,000 |
|
|
Industrial |
|
34,400 |
|
|
7 |
| O'Neal Metals (Texas),
L.P. |
|
Grand Prairie, TX |
|
215,000 |
|
|
Industrial |
|
24,317 |
|
|
20 |
| Carrier
Corporation |
|
San Antonio, TX |
|
849,000 |
|
|
Industrial |
|
45,507 |
|
|
10 |
| |
|
|
|
2,116,000 |
|
|
|
|
$ |
165,563 |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1)
Initial Basis excludes an $850 thousand future tenant allowance,
which was credited at closing. |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
The above were acquired/completed at aggregate weighted-average
GAAP and cash capitalization rates of 8.1% and 7.2%,
respectively.
|
ON-GOING BUILD-TO-SUIT PROJECT |
|
|
|
|
|
|
|
Location |
|
Sq. Ft. |
|
Property Type |
|
Maximum Commitment/Estimated Completion
Cost($000) |
|
GAAP Investment Balance as
of6/30/2017 ($000) |
|
Estimated Acquisition/ Completion Date |
|
Estimated Initial GAAP Yield |
|
Estimated Initial Cash Yield |
|
Approximate Lease Term(Yrs) |
| Opelika, AL |
|
165,000 |
|
Industrial |
|
$ |
37,370 |
|
|
$ |
29,442 |
|
|
3Q
17 |
|
8.9 |
% |
|
7.0 |
% |
|
25 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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) |
| Warren, MI(1) |
|
260,000 |
|
|
Industrial |
|
$ |
47,000 |
|
|
3Q
17 |
|
8.3 |
% |
|
7.3 |
% |
|
15 |
| Romulus, MI |
|
500,000 |
|
|
Industrial |
|
39,330 |
|
|
3Q
17 |
|
6.5 |
% |
|
6.1 |
% |
|
15 |
| |
|
760,000 |
|
|
|
|
$ |
86,330 |
|
|
|
|
7.5 |
% |
|
6.7 |
% |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) A $4.6
million letter of credit secures the 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 |
|
% Leased |
| Silver Spring Foods,
Inc. |
|
Eau
Claire, WI |
|
Industrial |
|
$ |
13,647 |
|
|
$ |
1,002 |
|
|
$ |
1,070 |
|
|
April |
|
100 |
% |
| Vacant |
|
Southfield, MI |
|
Multi-Tenant - Office |
|
3,461 |
|
|
(3,323 |
) |
|
(956 |
) |
|
May |
|
0 |
% |
| BJC Health System |
|
Bridgeton, MO |
|
Multi-Tenant - Office |
|
1,100 |
|
|
(139 |
) |
|
(2 |
) |
|
May |
|
50 |
% |
| Marketlink, Inc. |
|
Des
Moines, IA |
|
Industrial |
|
15,592 |
|
|
381 |
|
|
2,676 |
|
|
May |
|
6 |
% |
| Kmart Corporation |
|
Lorain, OH |
|
Other |
|
6,300 |
|
|
407 |
|
|
71 |
|
|
May |
|
100 |
% |
| Hollingsworth Logistics
Group, L.L.C. |
|
Temperance, MI |
|
Multi-Tenant - Industrial |
|
19,000 |
|
|
(55 |
) |
|
258 |
|
|
May |
|
52 |
% |
| |
|
|
|
|
|
$ |
59,100 |
|
|
$ |
(1,727 |
) |
|
$ |
3,117 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1)
Quarterly period prior to sale annualized. |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
These sales resulted in aggregate gains of $10.2
million and aggregate impairment charges of $3.6 million.
LEASING
During the second 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 |
|
Centennial |
CO |
|
Arrow Electronics,
Inc. |
|
09/2017 |
|
03/2033 |
|
128,500 |
|
| 2 |
|
Herndon |
VA |
|
United States of
America |
|
05/2018 |
|
05/2022 |
|
159,644 |
|
| 3 |
|
Kingsport |
TN |
|
Kingsport Power
Company |
|
06/2018 |
|
06/2023 |
|
42,770 |
|
|
4-6 |
|
Honolulu/Indianapolis |
HI/IN |
|
N/A |
|
2017-2018 |
|
2018-2020 |
|
4,472 |
|
|
6 |
|
Total office lease extensions |
|
|
|
|
|
|
335,386 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
Industrial / Multi-Tenant |
|
|
|
|
|
|
|
|
| 1 |
|
Shelby |
NC |
|
Clearwater Paper
Corporation |
|
05/2031 |
|
05/2036 |
|
673,518 |
|
| 2 |
|
Antioch |
TN |
|
Evergreen Presbyterian
Ministries |
|
04/2017 |
|
04/2024 |
|
11,238 |
|
|
3 |
|
Henderson |
NC |
|
Staples, Inc. |
|
06/2018 |
|
12/2018 |
|
196,946 |
|
|
3 |
|
Total industrial lease extensions |
|
|
|
|
|
|
|
881,702 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
Other |
|
|
|
|
|
|
|
|
| 1 |
|
Paris |
TN |
|
The Kroger Co. |
|
07/2018 |
|
07/2023 |
|
31,170 |
|
|
1 |
|
Total other lease extensions |
|
|
|
|
|
|
|
31,170 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
10 |
|
Total lease extensions |
|
|
|
|
|
|
|
1,248,258 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
NEW
LEASES |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
Location |
|
|
|
Lease Expiration Date |
|
Sq. Ft. |
| |
|
Office/Multi-Tenant |
|
|
|
|
|
|
| 1 |
|
Houston |
TX |
|
Saipem America,
Inc. |
|
10/2017 |
|
27,213 |
|
|
1 |
|
Total new office leases |
|
|
|
|
|
27,213 |
|
| |
|
|
|
|
|
|
|
|
|
| |
|
Industrial/Multi-Tenant |
|
|
|
|
|
|
| 1 |
|
Temperance(2) |
MI |
|
Hollingsworth Logistics
Group L.L.C. |
|
11/2021 |
|
112,549 |
|
|
1 |
|
Total new industrial leases |
|
|
|
|
|
112,549 |
|
| |
|
|
|
|
|
|
|
|
|
|
2 |
|
Total new leases |
|
|
|
|
|
139,762 |
|
|
12 |
|
TOTAL NEW AND EXTENDED LEASES |
|
|
|
|
|
1,388,020 |
|
| |
|
|
|
|
|
|
|
|
|
| (1)
Leases greater than 10,000 square feet. |
| (2)
Property subsequently sold. |
| |
|
|
|
|
|
|
|
|
|
As of June 30, 2017, Lexington's portfolio was 98.1%
leased, excluding any property subject to a mortgage loan in
default.
BALANCE SHEET/CAPITAL MARKETS
In the second quarter of 2017, Lexington
satisfied an aggregate $19.8 million of nonrecourse mortgage
debt.
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 $0.65 to $0.69. 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.
SECOND QUARTER 2017 CONFERENCE CALL
Lexington will host a conference call today,
August 8, 2017, at 8:30 a.m. Eastern Time, to discuss its results
for the quarter ended June 30, 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 November 8, 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
10110777. 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 June 30, |
|
Six months ended June 30, |
| |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
| Gross revenues: |
|
|
|
|
|
|
|
|
|
Rental |
|
$ |
87,565 |
|
|
$ |
108,982 |
|
|
$ |
176,219 |
|
|
$ |
212,202 |
|
| Tenant
reimbursements |
|
8,119 |
|
|
7,930 |
|
|
15,564 |
|
|
15,987 |
|
| Total
gross revenues |
|
95,684 |
|
|
116,912 |
|
|
191,783 |
|
|
228,189 |
|
| Expense applicable to
revenues: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
(42,320 |
) |
|
(41,272 |
) |
|
(85,211 |
) |
|
(84,399 |
) |
| Property
operating |
|
(12,974 |
) |
|
(11,293 |
) |
|
(25,090 |
) |
|
(23,371 |
) |
| General and
administrative |
|
(8,141 |
) |
|
(7,747 |
) |
|
(17,598 |
) |
|
(15,522 |
) |
| Non-operating
income |
|
1,371 |
|
|
3,553 |
|
|
3,992 |
|
|
6,420 |
|
| Interest and
amortization expense |
|
(19,216 |
) |
|
(22,679 |
) |
|
(38,941 |
) |
|
(45,572 |
) |
| Debt satisfaction
charges, net |
|
(46 |
) |
|
(3,194 |
) |
|
(46 |
) |
|
(3,356 |
) |
| Impairment charges and
loan loss |
|
(13,599 |
) |
|
(3,014 |
) |
|
(21,591 |
) |
|
(3,014 |
) |
| Gains on sales of
properties |
|
10,240 |
|
|
25,326 |
|
|
44,433 |
|
|
42,341 |
|
| Income before provision
for income taxes and equity in earnings (losses) of
non-consolidated entities |
|
10,999 |
|
|
56,592 |
|
|
51,731 |
|
|
101,716 |
|
| Provision for income
taxes |
|
(377 |
) |
|
(224 |
) |
|
(799 |
) |
|
(637 |
) |
| Equity in earnings
(losses) of non-consolidated entities |
|
(3,257 |
) |
|
312 |
|
|
(1,347 |
) |
|
6,054 |
|
| Net income |
|
7,365 |
|
|
56,680 |
|
|
49,585 |
|
|
107,133 |
|
| Less net
income attributable to noncontrolling interests |
|
(213 |
) |
|
(1,148 |
) |
|
(393 |
) |
|
(2,158 |
) |
| Net income attributable
to Lexington Realty Trust shareholders |
|
7,152 |
|
|
55,532 |
|
|
49,192 |
|
|
104,975 |
|
| Dividends attributable
to preferred shares – Series C |
|
(1,573 |
) |
|
(1,573 |
) |
|
(3,145 |
) |
|
(3,145 |
) |
| Allocation to
participating securities |
|
(60 |
) |
|
(84 |
) |
|
(131 |
) |
|
(175 |
) |
| Net income attributable
to common shareholders |
|
$ |
5,519 |
|
|
$ |
53,875 |
|
|
$ |
45,916 |
|
|
$ |
101,655 |
|
| |
|
|
|
|
|
|
|
|
| Net income attributable
to common shareholders - per common share basic |
|
$ |
0.02 |
|
|
$ |
0.23 |
|
|
$ |
0.19 |
|
|
$ |
0.44 |
|
| Weighted-average common
shares outstanding – basic |
|
237,720,198 |
|
|
232,592,998 |
|
|
237,451,355 |
|
|
232,617,901 |
|
| |
|
|
|
|
|
|
|
|
| Net income attributable
to common shareholders - per common share diluted |
|
$ |
0.02 |
|
|
$ |
0.23 |
|
|
$ |
0.19 |
|
|
$ |
0.43 |
|
| Weighted-average common
shares outstanding – diluted |
|
241,531,313 |
|
|
235,227,199 |
|
|
241,310,529 |
|
|
235,151,256 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| LEXINGTON REALTY TRUST AND CONSOLIDATED
SUBSIDIARIES |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| (Unaudited and in thousands, except share and per share
data) |
| |
|
|
|
| |
June 30, 2017 |
|
December 31, 2016 |
|
Assets: |
|
|
|
| Real estate, at
cost |
$ |
3,638,123 |
|
|
$ |
3,533,172 |
|
| Real estate -
intangible assets |
575,172 |
|
|
597,294 |
|
| Investments in real
estate under construction |
29,442 |
|
|
106,652 |
|
| |
4,242,737 |
|
|
4,237,118 |
|
| Less: accumulated
depreciation and amortization |
1,185,911 |
|
|
1,208,792 |
|
| Real
estate, net |
3,056,826 |
|
|
3,028,326 |
|
| Assets held for
sale |
5,984 |
|
|
23,808 |
|
| Cash and cash
equivalents |
93,279 |
|
|
86,637 |
|
| Restricted cash |
35,939 |
|
|
31,142 |
|
| Investment in and
advances to non-consolidated entities |
61,771 |
|
|
67,125 |
|
| Deferred expenses,
net |
32,873 |
|
|
33,360 |
|
| Loans receivable,
net |
— |
|
|
94,210 |
|
| Rent receivable –
current |
5,407 |
|
|
7,516 |
|
| Rent receivable –
deferred |
41,789 |
|
|
31,455 |
|
| Other assets |
32,935 |
|
|
37,888 |
|
| Total assets |
$ |
3,366,803 |
|
|
$ |
3,441,467 |
|
| |
|
|
|
| Liabilities and
Equity: |
|
|
|
| Liabilities: |
|
|
|
| Mortgages and notes
payable, net |
$ |
703,845 |
|
|
$ |
738,047 |
|
| Term loans payable,
net |
501,602 |
|
|
501,093 |
|
| Senior notes payable,
net |
494,780 |
|
|
494,362 |
|
| Trust preferred
securities, net |
127,146 |
|
|
127,096 |
|
| Dividends payable |
48,037 |
|
|
47,264 |
|
| Liabilities held for
sale |
324 |
|
|
191 |
|
| Accounts payable and
other liabilities |
33,901 |
|
|
59,601 |
|
| Accrued interest
payable |
5,953 |
|
|
6,704 |
|
| Deferred revenue -
including below market leases, net |
39,116 |
|
|
39,895 |
|
| Prepaid rent |
15,974 |
|
|
14,723 |
|
| Total liabilities |
1,970,678 |
|
|
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, 240,612,821
and 238,037,177 shares issued and outstanding in 2017 and 2016,
respectively |
24 |
|
|
24 |
|
| Additional
paid-in-capital |
2,822,217 |
|
|
2,800,736 |
|
| Accumulated
distributions in excess of net income |
(1,538,442 |
) |
|
(1,500,966 |
) |
| Accumulated other
comprehensive income (loss) |
443 |
|
|
(1,033 |
) |
| Total
shareholders’ equity |
1,378,258 |
|
|
1,392,777 |
|
| Noncontrolling
interests |
17,867 |
|
|
19,714 |
|
| Total
equity |
1,396,125 |
|
|
1,412,491 |
|
| Total liabilities and
equity |
$ |
3,366,803 |
|
|
$ |
3,441,467 |
|
| |
|
|
|
|
|
|
|
| LEXINGTON REALTY TRUST AND CONSOLIDATED
SUBSIDIARIES |
| EARNINGS PER SHARE |
| (Unaudited and in thousands, except share and per share
data) |
| |
|
|
|
|
| |
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
| |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
| EARNINGS PER
SHARE: |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
|
|
| Net income attributable
to common shareholders |
|
$ |
5,519 |
|
|
$ |
53,875 |
|
|
$ |
45,916 |
|
|
$ |
101,655 |
|
| |
|
|
|
|
|
|
|
|
| Weighted-average number
of common shares outstanding - basic |
|
237,720,198 |
|
|
232,592,998 |
|
|
237,451,355 |
|
|
232,617,901 |
|
| |
|
|
|
|
|
|
|
|
| Net
income attributable to common shareholders - per common share
basic |
|
$ |
0.02 |
|
|
$ |
0.23 |
|
|
$ |
0.19 |
|
|
$ |
0.44 |
|
| |
|
|
|
|
|
|
|
|
|
Diluted: |
|
|
|
|
|
|
|
|
| Net income attributable
to common shareholders - basic |
|
$ |
5,519 |
|
|
$ |
53,875 |
|
|
$ |
45,916 |
|
|
$ |
101,655 |
|
| Impact of assumed
conversions |
|
— |
|
|
315 |
|
|
(19 |
) |
|
628 |
|
| Net income attributable
to common shareholders |
|
$ |
5,519 |
|
|
$ |
54,190 |
|
|
$ |
45,897 |
|
|
$ |
102,283 |
|
| |
|
|
|
|
|
|
|
|
| Weighted-average common
shares outstanding - basic |
|
237,720,198 |
|
|
232,592,998 |
|
|
237,451,355 |
|
|
232,617,901 |
|
| Effect of dilutive
securities: |
|
|
|
|
|
|
|
|
| Share
options |
|
86,653 |
|
|
273,920 |
|
|
111,252 |
|
|
204,783 |
|
| 6.00%
Convertible Guaranteed Notes |
|
— |
|
|
1,878,445 |
|
|
— |
|
|
1,909,841 |
|
| Operating
Partnership Units |
|
3,724,462 |
|
|
— |
|
|
3,747,922 |
|
|
— |
|
|
Non-vested common shares |
|
— |
|
|
481,836 |
|
|
— |
|
|
418,731 |
|
| Weighted-average common
shares outstanding - diluted |
|
241,531,313 |
|
|
235,227,199 |
|
|
241,310,529 |
|
|
235,151,256 |
|
| |
|
|
|
|
|
|
|
|
| Net
income attributable to common shareholders - per common share
diluted |
|
$ |
0.02 |
|
|
$ |
0.23 |
|
|
0.19 |
|
|
$ |
0.43 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 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 June 30, |
|
Six Months Ended June 30, |
| |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
FUNDS FROM OPERATIONS: |
|
|
|
|
|
|
|
Basic and Diluted: |
|
|
|
|
|
|
|
|
| Net income
attributable to common shareholders |
|
$ |
5,519 |
|
|
$ |
53,875 |
|
|
$ |
45,916 |
|
|
$ |
101,655 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
| |
Depreciation and amortization |
|
41,076 |
|
|
39,688 |
|
|
82,618 |
|
|
80,881 |
|
| |
Impairment charges - real estate, including non-consolidated
entities |
|
17,111 |
|
|
3,014 |
|
|
19,809 |
|
|
3,014 |
|
| |
Noncontrolling interests - OP units |
|
— |
|
|
927 |
|
|
(19 |
) |
|
1,662 |
|
| |
Amortization of leasing commissions |
|
1,244 |
|
|
1,584 |
|
|
2,593 |
|
|
3,518 |
|
| |
Joint
venture and noncontrolling interest adjustment |
|
265 |
|
|
222 |
|
|
605 |
|
|
458 |
|
| |
Gains on
sales of properties, including non-consolidated entities |
|
(10,240 |
) |
|
(25,326 |
) |
|
(45,885 |
) |
|
(47,719 |
) |
| |
Tax on
sales of properties |
|
— |
|
|
— |
|
|
— |
|
|
50 |
|
| FFO
available to common shareholders and unitholders -
basic |
|
54,975 |
|
|
73,984 |
|
|
105,637 |
|
|
143,519 |
|
| |
Preferred
dividends |
|
1,573 |
|
|
1,573 |
|
|
3,145 |
|
|
3,145 |
|
| |
Interest
and amortization on 6.00% Convertible Guaranteed Notes |
|
— |
|
|
233 |
|
|
— |
|
|
485 |
|
| |
Amount
allocated to participating securities |
|
60 |
|
|
84 |
|
|
131 |
|
|
175 |
|
| FFO
available to all equityholders and unitholders -
diluted |
|
56,608 |
|
|
75,874 |
|
|
108,913 |
|
|
147,324 |
|
| |
Debt
satisfaction charges, net |
|
46 |
|
|
3,194 |
|
|
46 |
|
|
3,356 |
|
| |
Loan
loss |
|
— |
|
|
— |
|
|
5,294 |
|
|
— |
|
| |
Transaction costs |
|
302 |
|
|
68 |
|
|
488 |
|
|
214 |
|
|
Adjusted Company FFO available to all equityholders and
unitholders - diluted |
|
56,956 |
|
|
79,136 |
|
|
114,741 |
|
|
150,894 |
|
| |
|
|
|
|
|
|
|
|
|
FUNDS AVAILABLE FOR DISTRIBUTION: |
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
| |
Straight-line adjustments |
|
(5,641 |
) |
|
(13,241 |
) |
|
(8,550 |
) |
|
(24,380 |
) |
| |
Lease
incentives |
|
510 |
|
|
419 |
|
|
941 |
|
|
842 |
|
| |
Amortization of above/below market leases |
|
346 |
|
|
499 |
|
|
860 |
|
|
955 |
|
| |
Lease
termination payments, net |
|
(530 |
) |
|
(2,152 |
) |
|
(295 |
) |
|
(4,563 |
) |
| |
Non-cash
interest, net |
|
497 |
|
|
(632 |
) |
|
652 |
|
|
(1,014 |
) |
| |
Non-cash
charges, net |
|
1,987 |
|
|
2,403 |
|
|
4,133 |
|
|
4,610 |
|
| |
Tenant
improvements |
|
(4,233 |
) |
|
601 |
|
|
(5,995 |
) |
|
(119 |
) |
| |
Lease
costs |
|
(1,385 |
) |
|
(3,477 |
) |
|
(3,056 |
) |
|
(4,707 |
) |
|
Company Funds Available for Distribution |
|
$ |
48,507 |
|
|
$ |
63,556 |
|
|
$ |
103,431 |
|
|
$ |
122,518 |
|
| |
|
|
|
|
|
|
|
|
|
| Per
Common Share and Unit Amounts |
|
|
|
|
|
|
|
|
| Basic: |
|
|
|
|
|
|
|
|
| |
FFO |
|
$ |
0.23 |
|
|
$ |
0.31 |
|
|
$ |
0.44 |
|
|
$ |
0.61 |
|
| |
|
|
|
|
|
|
|
|
|
|
Diluted: |
|
|
|
|
|
|
|
|
| |
FFO |
|
$ |
0.23 |
|
|
$ |
0.31 |
|
|
$ |
0.44 |
|
|
$ |
0.60 |
|
| |
Adjusted
Company FFO |
|
$ |
0.23 |
|
|
$ |
0.32 |
|
|
$ |
0.47 |
|
|
$ |
0.62 |
|
| |
|
|
|
|
|
|
|
|
|
| Basic: |
|
|
|
|
|
|
|
|
| |
Weighted-average common shares outstanding - basic EPS |
|
237,720,198 |
|
|
232,592,998 |
|
|
237,451,355 |
|
|
232,617,901 |
|
| |
Operating
partnership units(1) |
|
3,724,462 |
|
|
3,818,805 |
|
|
3,747,922 |
|
|
3,819,498 |
|
| |
Weighted-average common shares outstanding - basic FFO |
|
241,444,660 |
|
|
236,411,803 |
|
|
241,199,277 |
|
|
236,437,399 |
|
| |
|
|
|
|
|
|
|
|
|
|
Diluted: |
|
|
|
|
|
|
|
|
| |
Weighted-average common shares outstanding - diluted EPS |
|
241,531,313 |
|
|
235,227,199 |
|
|
241,310,529 |
|
|
235,151,256 |
|
| |
Operating
partnership units(1) |
|
— |
|
|
3,818,805 |
|
|
— |
|
|
3,819,498 |
|
| |
Unvested
share-based payment awards |
|
606,934 |
|
|
— |
|
|
648,810 |
|
|
— |
|
| |
Preferred
shares - Series C |
|
4,710,570 |
|
|
4,710,570 |
|
|
4,710,570 |
|
|
4,710,570 |
|
| |
Weighted-average common shares outstanding - diluted FFO |
|
246,848,817 |
|
|
243,756,574 |
|
|
246,669,909 |
|
|
243,681,324 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (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) |
|
$ |
0.65 |
|
|
$ |
0.69 |
|
|
Depreciation and amortization |
|
0.70 |
|
|
0.70 |
|
| Impact of
capital transactions |
|
(0.41 |
) |
|
(0.41 |
) |
| 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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