LXP LXP Industrial Trust

Lexington Realty Trust (“Lexington”) (NYSE:LXP), a real estate investment trust (REIT) focused on single-tenant real estate investments, announced the following update on its fourth quarter 2017 transaction activity.

Highlights

• Acquired four industrial properties for an aggregate cost of $140 million.
• Disposed of eight properties for an aggregate of $48 million.
• Formed a joint venture which acquired a 151-acre parcel of land to pursue industrial build-to-suit opportunities.
• Collected $49 million in full satisfaction of a loan to a joint venture.
• Financed an office property generating initial gross proceeds of $45 million.
• Repaid $40 million on the revolving credit facility and retired $9 million of secured debt.
• Completed one million square feet of new leases and lease extensions with portfolio 98.9% leased at quarter end.
• Increased the quarterly common share/unit dividend/distribution to $0.1775 per common share/unit.

Transaction Activity

ACQUISITIONS
Primary Tenant		Location		Sq. Ft. (Approx.)			Property Type		Estimated Initial Basis($000)				ApproximateLease Term(Yrs)
Caterpillar Inc.		Lafayette, IN		309,000			Industrial		$	17,450			7
FCA US LLC		Romulus, MI		500,000			Industrial		38,893				15
Lipari Foods Operating Company, LLC		Warren, MI		260,000			Industrial		46,955				15
FCA US LLC		Winchester, VA		400,000			Industrial		36,700				14
				1,469,000					$	139,998

Including fourth quarter acquisition activity, consolidated 2017 acquisition activity totaled $727.6 million at average GAAP and cash capitalization rates of 7.3% and 6.4%, respectively.

Additionally, in December 2017, Lexington formed a joint venture with a developer to pursue industrial build-to-suit opportunities. The joint venture acquired a parcel of land totaling 151 acres in a submarket of Columbus, Ohio. Lexington's initial contribution to the joint venture was $5.8 million.

PROPERTY DISPOSITIONS
Primary Tenant		Location		Property Type		Gross Disposition Price($000)				Annualized Net Income (Loss)(1)($000)				Annualized NOI(1) ($000)				Month of Disposition		%Leased
National-Louis University(2)		Lisle, IL		Office		$	9,120			$	222			$	1,813			October		100	%
Vacant		High Point, NC		Multi-Tenant - Industrial		10,000				508				1,134				October		0	%
Vacant		Fisher, IN		Multi-Tenant -Office		9,000				(371		)		(371		)		October		0	%
Vacant(3)		Pine Bluff, AR		Office		43				311				386				October		0	%
Food Lion, LLC/Delhaize America, Inc.		Staunton, VA		Other		1,688				158				166				November		100	%
Entergy Arkansas, Inc.		Little Rock, AR		Office		3,100				182				237				December		100	%
Time Customer Service, Inc.		Tampa, FL		Office		13,700				722				1,128				December		100	%
Toys "R" Us, Inc./Toys "R" Us-Delaware, Inc.(4)		Tulsa, OK		Other		1,233				3				106				December		100	%
						$	47,884			$	1,735			$	4,599

1. Quarterly period prior to sale, excluding impairment charges, annualized.
2. Conveyed to lender in a foreclosure sale.
3. Property was sold subject to a lease which expired October 31, 2017.
4. Tenant has declared bankruptcy.

Including fourth quarter disposition activity, consolidated 2017 property disposition volume totaled $241.7 million at average GAAP and cash capitalization rates of 7.5% and 7.7%, respectively.

LOAN INVESTMENTS

Lexington collected $49.1 million in full satisfaction of a loan made to a joint venture that owns a property in Katy, Texas. The joint venture satisfied the loan with proceeds from a new third-party mortgage financing in the original principal amount of $50 million, which bears interest at an annual rate of 5.13% and matures in December 2022.

Leasing Activity

During the fourth 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

Statesville

NC

Geodis Logistics LLC

12/2017

12/2020

639,800

2

Honolulu

HI

N/A

2017

2018

1,900

2

Total office lease extensions

641,700

Industrial

1

Franklin

TN

Essex Group, Inc.

12/2018

12/2023

289,330

1

Total industrial lease extensions

289,330

3

Total lease extensions

931,030

NEW LEASES

Location

Lease Expiration Date

Sq. Ft.

Office/Multi-Tenant

1

Farmers Branch

TX

Home Point Financial Corporation

11/2025

64,788

2

Farmers Branch

TX

BBVA Dallas Creation Center, Inc.

07/2028

33,028

2

Total new office leases

97,816

2

Total new leases

97,816

5

TOTAL NEW AND EXTENDED LEASES

1,028,846

1. Leases greater than 10,000 square feet.

As of December 31, 2017, Lexington's portfolio was 98.9% leased.

Dividends/Distributions

As previously announced, during the fourth quarter of 2017, Lexington increased its quarterly common share/ unit dividend/distribution to $0.1775 per common share/unit, which equates to an annualized dividend of $0.71 per common share/unit. The declared quarterly dividend/distribution will be payable on January 16, 2018 to common shareholders/unitholders of record as of December 29, 2017. In addition, Lexington declared a dividend of $0.8125 per share on its Series C Preferred, which is expected to be paid February 15, 2018 to Series C Preferred Shareholders of record as of January 31, 2018.

Balance Sheet/Capital Markets

In the fourth quarter, Lexington obtained an aggregate $45.4 million in nonrecourse financing on an office property in Charlotte, North Carolina, consisting of a first mortgage loan and a mezzanine loan. The first mortgage in the original principal amount of $37.4 million has a 15-year term, bears interest at a fixed rate of 5.3% and is interest-only for the first 10 years. The mezzanine financing in an initial principal amount of $8.0 million has a five-year term, is interest only at a fixed rate of 5.0% and may be increased to $12 million upon certain events.

Also, during the fourth quarter, Lexington repaid $40.0 million on its revolving credit facility and retired the $9.3 million mortgage encumbering its Orlando, Florida property.

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 or to follow Lexington on social media, visit www.lxp.com.

Contact:Investor or Media Inquiries, Heather GentryLexington Realty TrustPhone: (212) 692-7200 E-mail: HGentry@lxp.com

This release contains certain forward-looking statements which involve known and unknown risks, uncertainties or other factors not under Lexington's control which may cause actual results, performance or achievements of Lexington to be materially different from the results, performance, or other expectations implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed under the headings “Management's Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” in Lexington's periodic reports filed with the Securities and Exchange Commission, including risks related to: (1) the successful consummation of any lease, acquisition, build-to-suit, financing or other transaction, (2) the failure to continue to qualify as a real estate investment trust, (3) changes in general business and economic conditions, including the impact of any legislation, (4) competition, (5) increases in real estate construction costs, (6) changes in interest rates, (7) changes in accessibility of debt and equity capital markets, and (8) 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 and include initial projected leveraged returns. 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 through special purpose entities, which are separate and distinct legal entities, some of which 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 (a “property owner subsidiary”) 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 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 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.

GAAP and Cash Yield or Capitalization Rate: GAAP and cash yields or capitalization rates are measures of operating performance used to evaluate the individual performance of an investment. These measures are estimates and are not presented or intended to be viewed as a liquidity or performance measure that present a numerical measure of Lexington's historical or future financial performance, financial position or cash flows. The yield or capitalization rate is calculated by dividing the annualized NOI (as defined below, except GAAP rent adjustments are added back to rental income to calculate GAAP yield or capitalization rate) the investment is expected to generate (or has generated) divided by the acquisition/completion cost (or sale) price.

Net Operating Income (“NOI”): NOI is a measure of operating performance used to evaluate the individual performance of an investment. This measure is not presented or intended to be viewed as a liquidity or performance measure that presents a numerical measure of Lexington's historical or future financial performance, financial position or cash flows. Lexington defines NOI as operating revenues (rental income (less GAAP rent adjustments and lease termination income), 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.