Lexington Realty Trust (“Lexington”) (NYSE:LXP), a real estate
investment trust focused on single-tenant real estate investments,
today announced results for the fourth quarter and year ended
December 31, 2017.
Fourth Quarter 2017 Highlights
- Generated Net Income attributable to common
shareholders of $29.2 million, or $0.12 per diluted common
share.
- Generated Adjusted Company Funds From Operations
available to all equityholders and unitholders - diluted (“Adjusted
Company FFO”) of $63.1 million, or $0.26 per diluted common
share.
- Acquired four industrial properties for an aggregate
cost of $140.0 million.
- Formed a joint venture which acquired a 151-acre parcel
of developable land to pursue industrial build-to-suit
opportunities.
- Disposed of eight properties for an aggregate of $47.9
million.
- Completed one million square feet of new leases and
lease extensions with portfolio 98.9% leased at quarter
end.
- Collected $49.1 million in full satisfaction of a loan
to a joint venture.
- Financed an office property generating initial gross
proceeds of $45.4 million.
- Repaid $40.0 million on the revolving credit facility
and retired an aggregate of $18.4 million of secured
debt.
- Increased the quarterly common share/unit
dividend/distribution to $0.1775 per common
share/unit.
Full Year 2017 Highlights
- Generated Net Income attributable to common
shareholders of $79.1 million, or $0.33 diluted common
share.
- Generated Adjusted Company FFO of $238.6 million, or
$0.97 per diluted common share.
- Acquired/completed 15 consolidated properties and the
last building of the Lake Jackson, Texas build-to-suit project for
an aggregate initial basis of $727.6 million.
- Disposed of 34 consolidated properties for gross
proceeds of $241.7 million.
- Sold a non-consolidated interest in an office property
for $6.2 million.
- Completed 3.8 million square feet of new leases and
lease extensions.
- Retired an aggregate of $63.4 million of secured debt
with a weighted-average fixed interest rate of 6.0% and obtained
$45.4 million of secured debt with a weighted-average fixed
interest rate of 5.2%.
- Amended the revolving credit facility, together with
the related term loans, increasing the capacity by $200.0
million.
- Collected an aggregate of $138.0 million in full
satisfaction of three loan investments.
- 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 “We finished off the
year strong with fourth quarter Adjusted Company FFO of $0.26 per
diluted common share. During 2017, we raised $386 million by
monetizing our loan portfolio and disposing of 34 properties while
adding 15 properties to our portfolio for $728 million. As a
result, we have substantially upgraded the quality of our holdings,
shrunk our office footprint and simplified our operations which we
expect to lead to lower operating costs. Additionally, strong
leasing volume, along with non-core assets sales, brought our
overall portfolio to approximately 99% leased at year end.
The guidance we have initiated today in the
range of $0.95 to $0.98 per share suggests that our operating
results in 2018 will be comparable to 2017 even as we anticipate
lengthening our average debt maturity, providing concessions on
early lease extensions and continuing with our capital recycling
activities. We intend to use proceeds from financings and
dispositions to reinvest into industrial acquisitions and
build-to-suit opportunities and to pay down debt.”
FINANCIAL RESULTS
Revenues
For the quarter ended December 31, 2017,
total gross revenues were $102.2 million, compared with total gross
revenues of $95.3 million for the quarter ended December 31,
2016. The increase was primarily attributable to revenue generated
from property acquisitions and new leases, partially offset by 2017
property sales and lease expirations.
Net Income Attributable to Common
Shareholders
For the quarter ended December 31, 2017,
net income attributable to common shareholders was $29.2 million,
or $0.12 per diluted share, compared with net income attributable
to common shareholders for the quarter ended December 31, 2016
of $14.4 million, or $0.06 per diluted share.
Adjusted Company FFO
For the quarter ended December 31, 2017,
Lexington generated Adjusted Company FFO of $63.1 million, or $0.26
per diluted share, compared to Adjusted Company FFO for the quarter
ended December 31, 2016 of $59.7 million, or $0.24 per diluted
share.
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 was paid
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 was paid
February 15, 2018 to Series C Preferred Shareholders of record as
of January 31, 2018.
Transaction Activity
|
ACQUISITIONS |
| Primary Tenant (Guarantor) |
|
Location |
|
Sq. Ft.(Approx.) |
|
Property Type |
|
Initial
Basis($000) |
|
ApproximateLease
Term(Yrs) |
|
Caterpillar, Inc. |
|
Lafayette, IN |
|
309,000 |
|
|
Industrial |
|
$ |
17,450 |
|
|
7 |
|
Undisclosed(1) |
|
Romulus, MI |
|
500,000 |
|
|
Industrial |
|
38,893 |
|
|
15 |
| Lipari
Foods Operating Company, LLC |
|
Warren, MI |
|
260,000 |
|
|
Industrial |
|
46,955 |
|
|
15 |
|
Undisclosed(1) |
|
Winchester, VA |
|
400,000 |
|
|
Industrial |
|
36,700 |
|
|
14 |
|
|
|
|
|
1,469,000 |
|
|
|
|
$ |
139,998 |
|
|
|
- Tenant is a domestic subsidiary of an international
automaker.
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.
In December 2017, Lexington made an initial
contribution of $5.8 million for a 90% interest in a newly-formed
joint venture with a developer, which will pursue industrial
build-to-suit opportunities. The joint venture acquired a parcel of
developable land totaling 151 acres in a submarket of Columbus,
Ohio.
|
PROPERTY DISPOSITIONS |
|
|
| Primary Tenant |
|
Location |
|
Property Type |
|
Gross Disposition
Price($000) |
|
AnnualizedNet
Income(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 |
|
|
|
|
|
- Quarterly period prior to sale, excluding impairment charges,
annualized.
- Conveyed to lender in a foreclosure sale.
- Property was sold subject to a lease which expired October 31,
2017.
- 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.
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 non-recourse mortgage financing in the
original principal amount of $50.0 million, which bears interest at
an annual rate of 5.1% 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 |
|
Honolulu |
HI |
|
N/A |
|
MTM |
|
09/2018 |
|
1,900 |
|
|
1 |
|
Total office lease extensions |
|
|
|
|
|
|
|
|
1,900 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
Industrial |
|
|
|
|
|
|
|
|
| 1 |
|
Statesville |
NC |
|
Geodis
Logistics LLC |
|
12/2017 |
|
12/2020 |
|
639,800 |
|
|
2 |
|
Franklin |
TN |
|
Essex
Group, Inc. |
|
12/2018 |
|
12/2023 |
|
289,330 |
|
|
2 |
|
Total industrial lease extensions |
|
|
|
|
|
|
|
929,130 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
09/2025 |
|
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 |
|
- Leases greater than 10,000 square feet.
As of December 31, 2017, Lexington's portfolio
was 98.9% leased.
BALANCE SHEET/CAPITAL
MARKETS
In the fourth quarter, Lexington obtained an
aggregate of $45.4 million in non-recourse financing on an office
property in Charlotte, North Carolina, consisting of a first
mortgage loan and a mezzanine loan. The first mortgage loan in the
original principal amount of $37.4 million has a 15-year term,
bears interest at a fixed rate of 5.3% per annum and is interest
only for the first 10 years. The mezzanine financing in the initial
principal amount of $8.0 million has a five-year term, is interest
only at a fixed rate of 5.0% per annum and may be increased to
$12.0 million upon certain events.
Also, during the fourth quarter, Lexington
repaid $40.0 million on its revolving credit facility and satisfied
an aggregate of $18.4 million of non-recourse mortgage debt.
2018 EARNINGS GUIDANCE
Lexington estimates that its net income
attributable to common shareholders per diluted common share for
the year ended December 31, 2018 will be within an expected range
of $0.76 to $0.79. Lexington estimates that its Adjusted Company
FFO for the year ended December 31, 2018 will be within an expected
range of $0.95 to $0.98 per diluted common share. This guidance is
forward looking, excludes the impact of certain items and is based
on current expectations.
FOURTH QUARTER 2017 CONFERENCE
CALL
Lexington will host a conference call today,
Tuesday, February 27, 2018, at 8:30 a.m. Eastern Time, to discuss
its results for the quarter ended December 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 May 27, 2018, 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 10116720. 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.
Contact:Investor or Media Inquiries for Lexington Realty
Trust:Heather Gentry, Senior Vice President of Investor
RelationsLexington 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 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, 2018, (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 REIT, (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 has filed 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 or 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 Press 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 rent 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 estimated 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.
LEXINGTON REALTY TRUST AND CONSOLIDATED
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited and in thousands, except share and
per share data)
| |
Three months ended December 31, |
|
Twelve months ended December 31, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
|
2016 |
|
| Gross revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental |
$ |
93,909 |
|
|
$ |
87,261 |
|
|
$ |
359,832 |
|
|
$ |
398,065 |
|
| Tenant
reimbursements |
8,260 |
|
|
8,065 |
|
|
31,809 |
|
|
31,431 |
|
| Total
gross revenues |
102,169 |
|
|
95,326 |
|
|
391,641 |
|
|
429,496 |
|
| Expense applicable to
revenues: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
(45,262 |
) |
|
(41,361 |
) |
|
(173,968 |
) |
|
(166,048 |
) |
| Property
operating |
(12,410 |
) |
|
(12,512 |
) |
|
(49,194 |
) |
|
(47,355 |
) |
| General and
administrative |
(8,597 |
) |
|
(8,072 |
) |
|
(34,158 |
) |
|
(31,104 |
) |
| Litigation
settlement |
— |
|
|
— |
|
|
(2,050 |
) |
|
— |
|
| Non-operating
income |
5,381 |
|
|
3,543 |
|
|
10,378 |
|
|
13,043 |
|
| Interest and
amortization expense |
(20,055 |
) |
|
(19,459 |
) |
|
(77,883 |
) |
|
(88,032 |
) |
| Debt satisfaction gains
(charges), net |
3,818 |
|
|
(157 |
) |
|
6,196 |
|
|
(975 |
) |
| Impairment charges and
loan losses |
(1,419 |
) |
|
(24,332 |
) |
|
(44,996 |
) |
|
(100,236 |
) |
| Gains on sales of
properties |
8,350 |
|
|
23,097 |
|
|
63,428 |
|
|
81,510 |
|
| Income before provision
for income taxes and equity in earnings (losses) of
non-consolidated entities |
31,975 |
|
|
16,073 |
|
|
89,394 |
|
|
90,299 |
|
| Provision for income
taxes |
(743 |
) |
|
(340 |
) |
|
(1,917 |
) |
|
(1,439 |
) |
| Equity in earnings
(losses) of non-consolidated entities |
216 |
|
|
1,196 |
|
|
(848 |
) |
|
7,590 |
|
| Net income |
31,448 |
|
|
16,929 |
|
|
86,629 |
|
|
96,450 |
|
| Less net
income attributable to noncontrolling interests |
(598 |
) |
|
(928 |
) |
|
(1,046 |
) |
|
(826 |
) |
| Net income attributable
to Lexington Realty Trust shareholders |
30,850 |
|
|
16,001 |
|
|
85,583 |
|
|
95,624 |
|
| Dividends attributable
to preferred shares – Series C |
(1,572 |
) |
|
(1,572 |
) |
|
(6,290 |
) |
|
(6,290 |
) |
| Allocation to
participating securities |
(43 |
) |
|
(38 |
) |
|
(226 |
) |
|
(225 |
) |
| Net income attributable
to common shareholders |
$ |
29,235 |
|
|
$ |
14,391 |
|
|
$ |
79,067 |
|
|
$ |
89,109 |
|
| Net
income attributable to common shareholders – per common share
basic |
$ |
0.12 |
|
|
$ |
0.06 |
|
|
$ |
0.33 |
|
|
$ |
0.38 |
|
| Weighted-average common
shares outstanding – basic |
|
238,131,814 |
|
|
|
235,066,967 |
|
|
|
237,758,408 |
|
|
|
233,633,058 |
|
| Net
income attributable to common shareholders – per common share
diluted |
$ |
0.12 |
|
|
$ |
0.06 |
|
|
$ |
0.33 |
|
|
$ |
0.37 |
|
| Weighted-average common
shares outstanding – diluted |
|
241,821,194 |
|
|
|
235,204,568 |
|
|
|
241,537,837 |
|
|
|
237,679,031 |
|
LEXINGTON REALTY TRUST AND CONSOLIDATED
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETSAs of December 31,(Unaudited and in
thousands, except share and per share data)
| |
2017 |
|
2016 |
|
Assets: |
|
|
| Real estate, at
cost |
$ |
3,936,459 |
|
|
$ |
3,533,172 |
|
| Real estate -
intangible assets |
599,091 |
|
|
597,294 |
|
| Investments in real
estate under construction |
— |
|
|
106,652 |
|
| |
4,535,550 |
|
|
4,237,118 |
|
| Less: accumulated
depreciation and amortization |
1,225,650 |
|
|
1,208,792 |
|
| Real
estate, net |
3,309,900 |
|
|
3,028,326 |
|
| Assets held for
sale |
2,827 |
|
|
23,808 |
|
| Cash and cash
equivalents |
107,762 |
|
|
86,637 |
|
| Restricted cash |
4,394 |
|
|
31,142 |
|
| Investment in and
advances to non-consolidated entities |
17,476 |
|
|
67,125 |
|
| Deferred expenses,
net |
31,693 |
|
|
33,360 |
|
| Loans receivable,
net |
— |
|
|
94,210 |
|
| Rent receivable –
current |
5,450 |
|
|
7,516 |
|
| Rent receivable –
deferred |
52,769 |
|
|
31,455 |
|
| Other assets |
20,749 |
|
|
37,888 |
|
| Total assets |
$ |
3,553,020 |
|
|
$ |
3,441,467 |
|
| |
|
|
|
| Liabilities and
Equity: |
|
|
|
| Liabilities: |
|
|
|
| Mortgages and notes
payable, net |
$ |
689,810 |
|
|
$ |
738,047 |
|
| Revolving credit
facility borrowings |
160,000 |
|
|
— |
|
| Term loans payable,
net |
596,663 |
|
|
501,093 |
|
| Senior notes payable,
net |
495,198 |
|
|
494,362 |
|
| Trust preferred
securities, net |
127,196 |
|
|
127,096 |
|
| Dividends payable |
49,504 |
|
|
47,264 |
|
| Liabilities held for
sale |
— |
|
|
191 |
|
| Accounts payable and
other liabilities |
38,644 |
|
|
59,601 |
|
| Accrued interest
payable |
5,378 |
|
|
6,704 |
|
| Deferred revenue -
including below market leases, net |
33,182 |
|
|
39,895 |
|
| Prepaid rent |
16,610 |
|
|
14,723 |
|
| Total liabilities |
2,212,185 |
|
|
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, 240,689,081
and 238,037,177 shares issued and outstanding in 2017 and 2016,
respectively |
24 |
|
|
24 |
|
| Additional
paid-in-capital |
2,818,520 |
|
|
2,800,736 |
|
| Accumulated
distributions in excess of net income |
(1,589,724 |
) |
|
(1,500,966 |
) |
| Accumulated other
comprehensive income (loss) |
1,065 |
|
|
(1,033 |
) |
| Total
shareholders’ equity |
1,323,901 |
|
|
1,392,777 |
|
| Noncontrolling
interests |
16,934 |
|
|
19,714 |
|
| Total
equity |
1,340,835 |
|
|
1,412,491 |
|
| Total liabilities and
equity |
$ |
3,553,020 |
|
|
$ |
3,441,467 |
|
|
LEXINGTON REALTY TRUST AND CONSOLIDATED
SUBSIDIARIES |
|
EARNINGS PER SHARE |
|
(Unaudited and in thousands, except share and per share data) |
| |
|
Three Months EndedDecember 31, |
|
Twelve Months Ended December 31, |
| |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
EARNINGS PER SHARE: |
|
|
|
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
|
|
| Net income
attributable to common shareholders |
|
$ |
29,235 |
|
|
$ |
14,391 |
|
|
$ |
79,067 |
|
|
$ |
89,109 |
|
| |
|
|
|
|
|
|
|
|
|
|
Weighted-average number of common shares outstanding - basic |
|
238,131,814 |
|
|
235,066,967 |
|
|
237,758,408 |
|
|
233,633,058 |
|
| |
|
|
|
|
|
|
|
|
| Net income attributable to common shareholders - per common
share basic |
|
$ |
0.12 |
|
|
$ |
0.06 |
|
|
$ |
0.33 |
|
|
$ |
0.38 |
|
| |
|
|
|
|
|
|
|
|
|
|
Diluted: |
|
|
|
|
|
|
|
|
|
| Net income
attributable to common shareholders - basic |
|
$ |
29,235 |
|
|
$ |
14,391 |
|
|
$ |
79,067 |
|
|
$ |
89,109 |
|
| Impact of
assumed conversions |
|
338 |
|
|
— |
|
|
147 |
|
|
(159 |
) |
| Income from
continuing operations attributable to common shareholders |
|
$ |
29,573 |
|
|
$ |
14,391 |
|
|
$ |
79,214 |
|
|
$ |
88,950 |
|
| |
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding - basic |
|
238,131,814 |
|
|
235,066,967 |
|
|
237,758,408 |
|
|
233,633,058 |
|
| Effect of
dilutive securities: |
|
|
|
|
|
|
|
|
| Share options |
|
57,731 |
|
|
137,601 |
|
|
86,285 |
|
|
230,352 |
|
| Operating Partnership Units |
|
3,631,649 |
|
|
— |
|
|
3,693,144 |
|
|
3,815,621 |
|
|
Weighted-average common shares outstanding - diluted |
|
241,821,194 |
|
|
235,204,568 |
|
|
241,537,837 |
|
|
237,679,031 |
|
| |
|
|
|
|
|
|
|
|
|
| Net income attributable to common shareholders - per common
share diluted |
|
$ |
0.12 |
|
|
$ |
0.06 |
|
|
$ |
0.33 |
|
|
$ |
0.37 |
|
| LEXINGTON REALTY TRUST AND CONSOLIDATED
SUBSIDIARIES |
| ADJUSTED COMPANY FUNDS FROM OPERATIONS &
FUNDS AVAILABLE FOR DISTRIBUTION |
| (Unaudited and in thousands, except share and per
share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
FUNDS FROM OPERATIONS: |
|
|
|
|
|
|
|
|
|
Basic and Diluted: |
|
|
|
|
|
|
|
|
| Net income
attributable to common shareholders |
|
$ |
29,235 |
|
|
$ |
14,391 |
|
|
$ |
79,067 |
|
|
$ |
89,109 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
44,050 |
|
|
39,840 |
|
|
168,683 |
|
|
159,363 |
|
|
|
Impairment
charges - real estate, including non-consolidated entities |
|
1,419 |
|
|
24,332 |
|
|
43,214 |
|
|
100,236 |
|
|
|
Noncontrolling interests - OP units |
|
339 |
|
|
686 |
|
|
147 |
|
|
(159 |
) |
|
|
Amortization of leasing commissions |
|
1,212 |
|
|
1,520 |
|
|
5,285 |
|
|
6,684 |
|
|
|
Joint
venture and noncontrolling interest adjustment |
|
257 |
|
|
369 |
|
|
1,121 |
|
|
1,111 |
|
|
|
Gains on
sales of properties, including non-consolidated entities |
|
(8,350 |
) |
|
(23,729 |
) |
|
(64,880 |
) |
|
(87,520 |
) |
|
|
Tax on
sales of properties |
|
— |
|
|
2 |
|
|
— |
|
|
52 |
|
|
FFO available to common shareholders and unitholders -
basic |
|
68,162 |
|
|
57,411 |
|
|
232,637 |
|
|
268,876 |
|
|
|
Preferred
dividends |
|
1,572 |
|
|
1,572 |
|
|
6,290 |
|
|
6,290 |
|
|
|
Interest
and amortization on 6.00% Convertible Notes |
|
— |
|
|
— |
|
|
— |
|
|
532 |
|
|
|
Amount
allocated to participating securities |
|
43 |
|
|
38 |
|
|
226 |
|
|
225 |
|
|
FFO available to all equityholders and unitholders -
diluted |
|
69,777 |
|
|
59,021 |
|
|
239,153 |
|
|
275,923 |
|
|
|
Litigation
reserve |
|
— |
|
|
— |
|
|
2,050 |
|
|
— |
|
|
|
Debt
satisfaction (gains) charges, net, including non-consolidated
entities |
|
(3,796 |
) |
|
157 |
|
|
(6,174 |
) |
|
975 |
|
|
|
Impairment
loss - loan receivable |
|
— |
|
|
— |
|
|
5,294 |
|
|
— |
|
|
|
Unearned
contingent acquisition consideration |
|
(3,922 |
) |
|
— |
|
|
(3,922 |
) |
|
— |
|
|
|
Transaction
costs |
|
1,071 |
|
|
508 |
|
|
2,171 |
|
|
837 |
|
|
Adjusted Company FFO available to all equityholders and
unitholders - diluted |
|
63,130 |
|
|
59,686 |
|
|
238,572 |
|
|
277,735 |
|
|
|
|
|
|
|
|
|
|
|
|
FUNDS AVAILABLE FOR DISTRIBUTION: |
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
Straight-line rents |
|
(7,232 |
) |
|
(2,051 |
) |
|
(19,784 |
) |
|
(37,748 |
) |
|
|
Lease
incentives |
|
513 |
|
|
417 |
|
|
1,969 |
|
|
1,673 |
|
|
|
Amortization of above/below market leases |
|
364 |
|
|
530 |
|
|
1,544 |
|
|
2,057 |
|
|
|
Lease
termination payments, net |
|
(253 |
) |
|
(1,814 |
) |
|
(690 |
) |
|
(8,216 |
) |
|
|
Non-cash
interest, net |
|
1,018 |
|
|
(387 |
) |
|
2,465 |
|
|
(1,913 |
) |
|
|
Non-cash
charges, net |
|
2,119 |
|
|
2,092 |
|
|
8,318 |
|
|
8,998 |
|
|
|
Tenant
improvements |
|
(1,136 |
) |
|
(665 |
) |
|
(11,203 |
) |
|
(1,957 |
) |
|
|
Lease
costs |
|
(1,242 |
) |
|
(393 |
) |
|
(6,526 |
) |
|
(6,558 |
) |
|
Company Funds Available for Distribution |
|
$ |
57,281 |
|
|
$ |
57,415 |
|
|
$ |
214,665 |
|
|
$ |
234,071 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Common Share and Unit Amounts |
|
|
|
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
|
|
|
|
FFO |
|
$ |
0.28 |
|
|
$ |
0.24 |
|
|
$ |
0.96 |
|
|
$ |
1.13 |
|
|
Diluted: |
|
|
|
|
|
|
|
|
|
|
FFO |
|
$ |
0.28 |
|
|
$ |
0.24 |
|
|
$ |
0.97 |
|
|
$ |
1.13 |
|
|
|
Adjusted
Company FFO |
|
$ |
0.26 |
|
|
$ |
0.24 |
|
|
$ |
0.97 |
|
|
$ |
1.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average Common Shares |
|
|
|
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding - basic EPS |
|
238,131,814 |
|
|
235,066,967 |
|
|
237,758,408 |
|
|
233,633,058 |
|
|
|
Operating
partnership units(1) |
|
3,631,649 |
|
|
3,808,185 |
|
|
3,693,144 |
|
|
3,815,621 |
|
|
|
Weighted-average common shares outstanding - basic FFO |
|
241,763,463 |
|
|
238,875,152 |
|
|
241,451,552 |
|
|
237,448,679 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted: |
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding - diluted EPS |
|
241,821,194 |
|
|
235,204,568 |
|
|
241,537,837 |
|
|
237,679,031 |
|
|
|
Unvested
share-based payment awards |
|
713,351 |
|
|
674,053 |
|
|
666,127 |
|
|
549,049 |
|
|
|
6.00%
Convertible Guaranteed Notes |
|
— |
|
|
— |
|
|
— |
|
|
1,077,626 |
|
|
|
Operating
partnership units(1) |
|
— |
|
|
3,808,185 |
|
|
— |
|
|
— |
|
|
|
Preferred
shares - Series C |
|
4,710,570 |
|
|
4,710,570 |
|
|
4,710,570 |
|
|
4,710,570 |
|
|
|
Weighted-average common shares outstanding - diluted FFO |
|
247,245,115 |
|
|
244,397,376 |
|
|
246,914,534 |
|
|
244,016,276 |
|
(1) Includes OP units other than OP units held by
Lexington.
| LEXINGTON REALTY TRUST AND CONSOLIDATED
SUBSIDIARIES |
| RECONCILIATION OF NON-GAAP
MEASURES |
| (UNAUDITED) |
|
2018 EARNINGS GUIDANCE |
|
|
|
| |
Twelve Months EndedDecember 31, 2018 |
|
Estimated: |
Range |
| Net income
attributable to common shareholders per diluted common
share(1) |
$ |
0.76 |
|
|
$ |
0.79 |
|
| Depreciation and amortization |
0.68 |
|
|
0.68 |
|
| Impact of capital transactions |
(0.49 |
) |
|
(0.49 |
) |
| Estimated
Adjusted Company FFO per diluted common share |
$ |
0.95 |
|
|
$ |
0.98 |
|
(1) Assumes all convertible
securities are dilutive.
LXP Industrial (NYSE:LXP)
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