Lexington Realty Trust (“Lexington”) (NYSE:LXP), a real estate
investment trust focused on single-tenant industrial real estate
investments, today announced results for the third quarter ended
September 30, 2018.
Third Quarter 2018 Highlights
- Generated Net Income attributable to common
shareholders of $216.2 million, or $0.90 per diluted common
share.
- Generated Adjusted Company Funds From Operations
available to all equityholders and unitholders - diluted (“Adjusted
Company FFO”) of $58.2 million, or $0.24 per diluted common
share.
- Disposed of 21 office assets to a newly-formed joint
venture for an aggregate gross disposition price of $725.8 million
and acquired a 20% interest in the joint venture for an aggregate
cost of $53.7 million.
- Sold seven additional non-industrial properties for an
aggregate gross sale price of $113.7 million.
- Acquired three industrial properties for an aggregate
cost of $71.1 million.
- Repurchased and retired 945,880 common shares at an
average price of $8.08 per share.
- Repaid $195 million, net under its unsecured revolving
credit facility and repaid $151 million of its 2020 term
loan.
- Completed 867,000 square feet of new leases and lease
extensions with portfolio 96.8% leased at quarter
end.
Subsequent Events
- Repaid $149 million of remaining balance of its 2020
term loan.
- Repurchased and retired 2,681,215 common shares at an
average price of $8.06 per share and increased repurchase
authorization by 10.0 million common shares.
- Sold an office property for a gross sale price of $16.0
million.
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. GAAP net income
is different than taxable income.
T. Wilson Eglin, Chief Executive Officer and
President of Lexington Realty Trust, commented, “Our repositioning
efforts during the third quarter led to the successful disposition
of $839 million of non-industrial assets, which included a $726
million office portfolio sold to a newly-formed joint venture.
Disposition and reinvestment initiatives this year have increased
industrial revenues to over 60% of our overall portfolio while
significantly reducing our office exposure. During the quarter, we
acquired $71 million of high-quality industrial assets, retired
$346 million of corporate debt and repurchased and retired 0.9
million common shares. We are extremely pleased with our third
quarter execution, and, as we look ahead, we remain committed to
disposing of non-industrial assets so our portfolio consists of
primarily single-tenant, net-leased industrial assets.”
FINANCIAL RESULTS
Revenues
For the quarter ended September 30, 2018,
total gross revenues were $100.0 million, compared with total gross
revenues of $97.7 million for the quarter ended September 30,
2017. The increase was primarily attributable to revenue generated
from 2018 and 2017 property acquisitions and new leases, partially
offset by property sales and lease expirations.
Net Income Attributable to Common
Shareholders
For the quarter ended September 30, 2018,
net income attributable to common shareholders was $216.2 million,
or $0.90 per diluted share, compared with net income attributable
to common shareholders for the quarter ended September 30,
2017 of $3.9 million, or $0.02 per diluted share. The change
between periods relates primarily to the timing of gains on sales
and impairments recognized on real estate, including the gains on
sales of 21 office assets during the quarter ended
September 30, 2018.
Adjusted Company FFO
For the quarter ended September 30, 2018,
Lexington generated Adjusted Company FFO of $58.2 million, or $0.24
per diluted share, compared to Adjusted Company FFO for the quarter
ended September 30, 2017 of $60.7 million, or $0.25 per
diluted share. The increase was primarily attributable to the items
discussed above under “Revenues”.
Dividends/Distributions
As previously announced, during the third
quarter of 2018, Lexington declared a regular quarterly common
share/unit dividend/distribution for the quarter ended
September 30, 2018 of $0.1775 per common share/unit, which was
paid on October 15, 2018 to common shareholders/unitholders of
record as of September 28, 2018. Lexington previously declared two
cash dividends of $0.812 per share on its Series C Cumulative
Convertible Preferred Stock (“Series C Preferred”) for the quarters
ended September 30, 2018 and December 31, 2018 which are expected
to be paid on November 15, 2018 and February 15, 2019,
respectively, to Series C Preferred Shareholders of record as of
October 31, 2018 and January 31, 2019, respectively.
TRANSACTION ACTIVITY
|
ACQUISITION TRANSACTIONS |
Primary Tenant |
|
Location |
|
Sq. Ft. |
|
Property Type |
|
Initial
Basis($000) |
|
ApproximateLease
Term(Yrs) |
Wal-Mart |
|
Spartanburg, SC |
|
341,660 |
|
|
Industrial |
|
$ |
27,632 |
|
|
6 |
UNIS |
|
Pasadena, TX |
|
257,835 |
|
|
Industrial |
|
23,868 |
|
|
5 |
Teasdale Foods |
|
Carrollton, TX |
|
356,855 |
|
|
Industrial |
|
19,564 |
|
|
7 |
|
|
|
|
956,350 |
|
|
|
|
$ |
71,064 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The above were acquired at aggregate
weighted-average GAAP and cash capitalization rates of 6.1% and
5.6%, respectively.
PROPERTY DISPOSITIONS |
|
|
Primary Tenant |
|
Location |
|
Property Type |
|
GrossDispositionPrice($000) |
|
AnnualizedNet
Income(1)($000) |
|
AnnualizedNOI(1)($000) |
|
Month of Disposition |
|
%Leased |
United HealthCare(2) |
|
San
Antonio, TX |
|
Office |
|
$ |
27,650 |
|
|
$ |
1,814 |
|
|
$ |
2,149 |
|
|
July |
|
100.0 |
% |
Kmart |
|
Galesburg, IL |
|
Other |
|
100 |
|
|
294 |
|
|
11 |
|
|
July |
|
100.0 |
% |
Encompass Health |
|
Vineland, NJ |
|
Other |
|
20,200 |
|
|
1,173 |
|
|
1,176 |
|
|
July |
|
100.0 |
% |
Gavilon Group |
|
Omaha, NE |
|
Office |
|
46,250 |
|
|
3,309 |
|
|
2,998 |
|
|
August |
|
100.0 |
% |
K-VA-T Food Stores |
|
Chattanooga, TN |
|
Other |
|
1,100 |
|
|
103 |
|
|
130 |
|
|
August |
|
100.0 |
% |
Nextel Communications |
|
Hampton, VA |
|
Office |
|
10,375 |
|
|
548 |
|
|
1,162 |
|
|
August |
|
100.0 |
% |
Orange Business Services |
|
Herndon, VA |
|
Office |
|
8,000 |
|
|
1,060 |
|
|
1,867 |
|
|
August |
|
100.0 |
% |
|
|
|
|
|
|
$ |
113,675 |
|
|
$ |
8,301 |
|
|
$ |
9,493 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JOINT VENTURE DISPOSITION - 21
PROPERTIES |
|
|
Primary Tenant |
|
Location |
|
Property Type |
|
GrossDispositionPrice
(1)($000) |
|
AnnualizedNet
Income(1)($000) |
|
AnnualizedNOI(1)($000) |
|
Month of Disposition |
|
%Leased |
Various(3) |
|
Various |
|
Office |
|
$ |
725,800 |
|
|
$ |
28,582 |
|
|
$ |
58,967 |
|
|
August |
|
98.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Quarterly period prior to sale; excluding impairment
charges, annualized.
(2) $3.2 million of the sale price placed into escrow to fund
future tenant allowances.
(3) Properties sold/contributed to newly-formed joint
venture. Lexington acquired a 20% interest in the joint venture for
$53.7 million.
These dispositions resulted in aggregate gains
on sales of $202.4 million.
|
LEASING |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LEASE EXTENSIONS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Location |
|
Primary Tenant(1) |
|
|
PriorTerm |
|
LeaseExpiration
Date |
|
Sq. Ft. |
|
|
Office |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
Meridian |
ID |
|
T-Mobile |
|
06/2019 |
|
06/2026 |
|
77,484 |
|
2 |
|
Rockaway(2) |
NJ |
|
Atlantic Health |
|
12/2029 |
|
12/2031 |
|
92,326 |
|
3 |
|
Glendale |
AZ |
|
Honeywell |
|
07/2019 |
|
07/2024 |
|
252,300 |
|
4 |
|
Columbus |
IN |
|
Cummins |
|
07/2019 |
|
07/2024 |
|
390,100 |
|
4 |
|
Total office lease extensions |
|
|
|
|
|
|
812,210 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEW LEASES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Location |
|
|
|
|
|
LeaseExpiration Date |
|
Sq. Ft. |
|
|
Office/Multi-Tenant |
|
|
|
|
|
|
|
|
1 |
|
Arlington |
TX |
|
N/A |
|
|
|
10/2021 |
|
4,979 |
|
2 |
|
Houston |
TX |
|
Pulte Homes |
|
|
|
09/2027 |
|
20,978 |
|
3 |
|
Phoenix |
AZ |
|
Valor IT |
|
|
|
07/2025 |
|
28,710 |
|
3 |
|
Total new office leases |
|
|
|
|
|
|
|
54,667 |
|
|
|
|
|
|
|
|
|
|
|
|
7 |
|
TOTAL NEW AND EXTENDED
LEASES |
|
|
|
|
|
|
|
866,877 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Leases greater than 10,000 square feet.
(2) Property sold to newly-formed joint venture.
As of September 30, 2018, Lexington's
portfolio was 96.8% leased.
BALANCE SHEET/CAPITAL MARKETS
In the third quarter of 2018, Lexington
repurchased and retired 945,880 common shares at an average price
of $8.08 per share under its repurchase authorization announced on
July 2, 2015 in the amount of 10.0 million common shares. As of
September 30, 2018, there were approximately 4.7 million
common shares remaining to be repurchased under the authorization.
Subsequent to quarter end, Lexington repurchased and retired
2,681,215 common shares at an average price of $8.06 per share
bringing the total common shares repurchased in 2018 to 4,552,870
at an average price of $8.04 per share. In addition, subsequent to
quarter end, Lexington's Board of Trustees increased the amount of
common shares available for repurchase by 10.0 million common
shares. As a result, there are 12,046,218 common shares available
for repurchase as of November 6, 2018.
Also, in the third quarter, Lexington repaid
$195 million, net, under its unsecured revolving credit facility
and ended the quarter with no amounts outstanding. In addition,
Lexington repaid $151 million of the 2020 term loan and satisfied
an aggregate of $110.1 million of non-recourse mortgage debt,
including debt encumbering assets sold to the newly-formed joint
venture.
2018 EARNINGS GUIDANCE
Lexington now 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 $0.90 to $0.92.
Additionally, Lexington now estimates that its
Adjusted Company FFO for the year ended December 31, 2018 is
expected to be within a range of $0.93 to $0.95 per diluted common
share, which is an increase from its previous guidance of $0.92 to
$0.94 per diluted common share. This guidance is forward looking,
excludes the impact of certain items and is based on current
expectations.
THIRD QUARTER 2018 CONFERENCE CALL
Lexington will host a conference call today,
November 6, 2018, at 8:30 a.m. Eastern Time, to discuss its results
for the quarter ended September 30, 2018. 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 February 5, 2019, 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
10125219. A link to a live webcast of the conference call is
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 industrial
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 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 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.
|
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES |
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS |
(Unaudited and in thousands,
except share and per share data) |
|
|
Three months ended September
30, |
|
Nine months ended September 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Gross revenues: |
|
|
|
|
|
|
|
Rental |
$ |
91,815 |
|
|
$ |
89,704 |
|
|
$ |
283,986 |
|
|
$ |
265,923 |
|
Tenant reimbursements |
8,143 |
|
|
7,985 |
|
|
24,102 |
|
|
23,549 |
|
Total gross revenues |
99,958 |
|
|
97,689 |
|
|
308,088 |
|
|
289,472 |
|
Expense applicable to revenues: |
|
|
|
|
|
|
|
Depreciation and amortization |
(37,716 |
) |
|
(43,495 |
) |
|
(129,693 |
) |
|
(128,706 |
) |
Property operating |
(10,678 |
) |
|
(11,694 |
) |
|
(33,061 |
) |
|
(36,784 |
) |
General and administrative |
(7,482 |
) |
|
(7,963 |
) |
|
(23,899 |
) |
|
(25,561 |
) |
Litigation reserve |
— |
|
|
(2,050 |
) |
|
— |
|
|
(2,050 |
) |
Non-operating income |
766 |
|
|
1,005 |
|
|
1,666 |
|
|
4,997 |
|
Interest and amortization expense |
(21,159 |
) |
|
(18,887 |
) |
|
(63,224 |
) |
|
(57,828 |
) |
Debt satisfaction gains (charges), net |
(2,228 |
) |
|
2,424 |
|
|
(2,228 |
) |
|
2,378 |
|
Impairment charges and loan loss |
(2,542 |
) |
|
(21,986 |
) |
|
(90,860 |
) |
|
(43,577 |
) |
Gains on sales of properties |
202,371 |
|
|
10,645 |
|
|
239,577 |
|
|
55,078 |
|
Income before provision for income taxes and equity in earnings
(losses) of non-consolidated entities |
221,290 |
|
|
5,688 |
|
|
206,366 |
|
|
57,419 |
|
Provision for income taxes |
(444 |
) |
|
(375 |
) |
|
(1,326 |
) |
|
(1,174 |
) |
Equity in earnings (losses) of non-consolidated entities |
4 |
|
|
283 |
|
|
192 |
|
|
(1,064 |
) |
Net income |
220,850 |
|
|
5,596 |
|
|
205,232 |
|
|
55,181 |
|
Less net income attributable to noncontrolling
interests |
(2,834 |
) |
|
(55 |
) |
|
(3,225 |
) |
|
(448 |
) |
Net income attributable to Lexington Realty Trust shareholders |
218,016 |
|
|
5,541 |
|
|
202,007 |
|
|
54,733 |
|
Dividends attributable to preferred shares – Series C |
(1,573 |
) |
|
(1,573 |
) |
|
(4,718 |
) |
|
(4,718 |
) |
Allocation to participating securities |
(253 |
) |
|
(52 |
) |
|
(279 |
) |
|
(183 |
) |
Net income attributable to common shareholders |
$ |
216,190 |
|
|
$ |
3,916 |
|
|
$ |
197,010 |
|
|
$ |
49,832 |
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders - per common share
basic |
$ |
0.91 |
|
|
$ |
0.02 |
|
|
$ |
0.83 |
|
|
$ |
0.21 |
|
Weighted-average common shares outstanding – basic |
237,354,669 |
|
|
237,989,098 |
|
|
237,577,198 |
|
|
237,632,572 |
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders - per common share
diluted |
$ |
0.90 |
|
|
$ |
0.02 |
|
|
$ |
0.83 |
|
|
$ |
0.21 |
|
Weighted-average common shares outstanding – diluted |
246,058,298 |
|
|
241,702,715 |
|
|
241,660,588 |
|
|
241,442,227 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LEXINGTON REALTY TRUST AND
CONSOLIDATED SUBSIDIARIES |
CONDENSED CONSOLIDATED
BALANCE SHEETS |
(Unaudited and in thousands,
except share and per share data) |
|
|
September 30, 2018 |
|
December 31, 2017 |
Assets: |
|
|
|
Real estate, at cost |
$ |
3,005,959 |
|
|
$ |
3,936,459 |
|
Real estate - intangible assets |
418,268 |
|
|
599,091 |
|
|
3,424,227 |
|
|
4,535,550 |
|
Less: accumulated depreciation and amortization |
934,096 |
|
|
1,225,650 |
|
Real estate, net |
2,490,131 |
|
|
3,309,900 |
|
Assets held for sale |
134,744 |
|
|
2,827 |
|
Cash and cash equivalents |
128,444 |
|
|
107,762 |
|
Restricted cash |
263,543 |
|
|
4,394 |
|
Investment in and advances to non-consolidated entities |
70,879 |
|
|
17,476 |
|
Deferred expenses, net |
15,211 |
|
|
31,693 |
|
Rent receivable – current |
3,584 |
|
|
5,450 |
|
Rent receivable – deferred |
54,551 |
|
|
52,769 |
|
Other assets |
10,853 |
|
|
20,749 |
|
Total assets |
$ |
3,171,940 |
|
|
$ |
3,553,020 |
|
|
|
|
|
Liabilities and Equity: |
|
|
|
Liabilities: |
|
|
|
Mortgages and notes payable, net |
$ |
585,369 |
|
|
$ |
689,810 |
|
Revolving credit facility borrowings |
— |
|
|
160,000 |
|
Term loans payable, net |
447,099 |
|
|
596,663 |
|
Senior notes payable, net |
495,825 |
|
|
495,198 |
|
Trust preferred securities, net |
127,271 |
|
|
127,196 |
|
Dividends payable |
48,384 |
|
|
49,504 |
|
Liabilities held for sale |
1,446 |
|
|
— |
|
Accounts payable and other liabilities |
29,239 |
|
|
38,644 |
|
Accrued interest payable |
10,234 |
|
|
5,378 |
|
Deferred revenue - including below market leases, net |
19,163 |
|
|
33,182 |
|
Prepaid rent |
10,909 |
|
|
16,610 |
|
Total liabilities |
1,774,939 |
|
|
2,212,185 |
|
|
|
|
|
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, 238,946,145 and 240,689,081 shares issued and outstanding
in 2018 and 2017, respectively |
24 |
|
|
24 |
|
Additional paid-in-capital |
2,803,581 |
|
|
2,818,520 |
|
Accumulated distributions in excess of net income |
(1,518,669 |
) |
|
(1,589,724 |
) |
Accumulated other comprehensive income |
652 |
|
|
1,065 |
|
Total shareholders’ equity |
1,379,604 |
|
|
1,323,901 |
|
Noncontrolling interests |
17,397 |
|
|
16,934 |
|
Total equity |
1,397,001 |
|
|
1,340,835 |
|
Total liabilities and equity |
$ |
3,171,940 |
|
|
$ |
3,553,020 |
|
|
|
|
|
|
|
|
|
|
LEXINGTON REALTY TRUST AND
CONSOLIDATED SUBSIDIARIES |
EARNINGS PER
SHARE |
(Unaudited and in thousands,
except share and per share data) |
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
EARNINGS PER SHARE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
|
Net income attributable to common shareholders |
$ |
216,190 |
|
|
$ |
3,916 |
|
|
$ |
197,010 |
|
|
$ |
49,832 |
|
|
|
|
|
|
|
|
|
Weighted-average number of common shares outstanding - basic |
237,354,669 |
|
|
237,989,098 |
|
|
237,577,198 |
|
|
237,632,572 |
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders - per
common share basic |
$ |
0.91 |
|
|
$ |
0.02 |
|
|
$ |
0.83 |
|
|
$ |
0.21 |
|
|
|
|
|
|
|
|
|
Diluted: |
|
|
|
|
|
|
|
Net income attributable to common shareholders - basic |
$ |
216,190 |
|
|
$ |
3,916 |
|
|
$ |
197,010 |
|
|
$ |
49,832 |
|
Impact of assumed conversions |
4,159 |
|
|
(173 |
) |
|
2,505 |
|
|
(192 |
) |
Net income attributable to common shareholders |
$ |
220,349 |
|
|
$ |
3,743 |
|
|
$ |
199,515 |
|
|
$ |
49,640 |
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding - basic |
237,354,669 |
|
|
237,989,098 |
|
|
237,577,198 |
|
|
237,632,572 |
|
Effect of dilutive securities: |
|
|
|
|
|
|
|
Unvested share-based payment awards and options |
382,956 |
|
|
66,748 |
|
|
463,922 |
|
|
95,788 |
|
Preferred shares - Series C |
4,710,570 |
|
|
— |
|
|
— |
|
|
— |
|
Operating partnership units |
3,610,103 |
|
|
3,646,869 |
|
|
3,619,468 |
|
|
3,713,867 |
|
Weighted-average common shares outstanding - diluted |
246,058,298 |
|
|
241,702,715 |
|
|
241,660,588 |
|
|
241,442,227 |
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders - per
common share diluted |
$ |
0.90 |
|
|
$ |
0.02 |
|
|
$ |
0.83 |
|
|
$ |
0.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
FUNDS FROM OPERATIONS: |
|
|
|
|
|
|
Basic and Diluted: |
|
|
|
|
|
|
|
Net income attributable to common shareholders |
$ |
216,190 |
|
|
$ |
3,916 |
|
|
$ |
197,010 |
|
|
$ |
49,832 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
37,063 |
|
|
42,015 |
|
|
126,442 |
|
|
124,633 |
|
|
Impairment charges - real estate, including non-consolidated
entities |
2,542 |
|
|
21,986 |
|
|
90,860 |
|
|
41,795 |
|
|
Noncontrolling interests - OP units |
2,586 |
|
|
(173 |
) |
|
2,506 |
|
|
(192 |
) |
|
Amortization of leasing commissions |
653 |
|
|
1,480 |
|
|
3,251 |
|
|
4,073 |
|
|
Joint venture and noncontrolling interest adjustment |
980 |
|
|
259 |
|
|
1,496 |
|
|
864 |
|
|
Gains on sales of properties, including non-consolidated entities
and net of tax |
(202,242 |
) |
|
(10,645 |
) |
|
(239,448 |
) |
|
(56,530 |
) |
FFO available to common shareholders and
unitholders - basic |
57,772 |
|
|
58,838 |
|
|
182,117 |
|
|
164,475 |
|
|
Preferred dividends |
1,573 |
|
|
1,573 |
|
|
4,718 |
|
|
4,718 |
|
|
Amount allocated to participating securities |
253 |
|
|
52 |
|
|
279 |
|
|
183 |
|
FFO available to all equityholders and
unitholders - diluted |
59,598 |
|
|
60,463 |
|
|
187,114 |
|
|
169,376 |
|
|
Litigation reserve |
— |
|
|
2,050 |
|
|
— |
|
|
2,050 |
|
|
Debt satisfaction charges, net |
2,228 |
|
|
(2,424 |
) |
|
2,228 |
|
|
(2,378 |
) |
|
Loan loss |
— |
|
|
— |
|
|
— |
|
|
5,294 |
|
|
Other(1) |
(3,613 |
) |
|
612 |
|
|
(6,733 |
) |
|
1,100 |
|
Adjusted Company FFO available to all
equityholders and unitholders - diluted |
58,213 |
|
|
60,701 |
|
|
182,609 |
|
|
175,442 |
|
|
|
|
|
|
|
|
|
FUNDS AVAILABLE FOR
DISTRIBUTION: |
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
Straight-line adjustments |
(5,367 |
) |
|
(4,002 |
) |
|
(16,246 |
) |
|
(12,552 |
) |
|
Lease incentives |
404 |
|
|
515 |
|
|
1,459 |
|
|
1,456 |
|
|
Amortization of above/below market leases |
89 |
|
|
320 |
|
|
313 |
|
|
1,180 |
|
|
Lease termination payments, net |
(308 |
) |
|
(142 |
) |
|
(925 |
) |
|
(437 |
) |
|
Non-cash interest, net |
1,031 |
|
|
795 |
|
|
3,355 |
|
|
1,447 |
|
|
Non-cash charges, net |
1,635 |
|
|
2,066 |
|
|
5,199 |
|
|
6,199 |
|
|
Tenant improvements |
(69 |
) |
|
(4,072 |
) |
|
(6,663 |
) |
|
(10,067 |
) |
|
Lease costs |
(1,273 |
) |
|
(2,228 |
) |
|
(3,074 |
) |
|
(5,284 |
) |
Company Funds Available for
Distribution |
$ |
54,355 |
|
|
$ |
53,953 |
|
|
$ |
166,027 |
|
|
$ |
157,384 |
|
|
|
|
|
|
|
|
|
|
Per Common Share and Unit
Amounts |
|
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
|
|
FFO |
$ |
0.24 |
|
|
$ |
0.24 |
|
|
$ |
0.76 |
|
|
$ |
0.68 |
|
|
|
|
|
|
|
|
|
|
Diluted: |
|
|
|
|
|
|
|
|
FFO |
$ |
0.24 |
|
|
$ |
0.24 |
|
|
$ |
0.76 |
|
|
$ |
0.69 |
|
|
Adjusted Company FFO |
$ |
0.24 |
|
|
$ |
0.25 |
|
|
$ |
0.74 |
|
|
$ |
0.71 |
|
|
|
|
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding - basic EPS |
237,354,669 |
|
|
237,989,098 |
|
|
237,577,198 |
|
|
237,632,572 |
|
|
Operating partnership units(2) |
3,610,103 |
|
|
3,646,869 |
|
|
3,619,468 |
|
|
3,713,867 |
|
|
Weighted-average common shares outstanding - basic FFO |
240,964,772 |
|
|
241,635,967 |
|
|
241,196,666 |
|
|
241,346,439 |
|
|
|
|
|
|
|
|
|
|
Diluted: |
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding - diluted EPS |
246,058,298 |
|
|
241,702,715 |
|
|
241,660,588 |
|
|
241,442,227 |
|
|
Unvested share-based payment awards and options |
— |
|
|
655,228 |
|
|
— |
|
|
650,348 |
|
|
Preferred shares - Series C |
— |
|
|
4,710,570 |
|
|
4,710,570 |
|
|
4,710,570 |
|
|
Weighted-average common shares outstanding - diluted FFO |
246,058,298 |
|
|
247,068,513 |
|
|
246,371,158 |
|
|
246,803,145 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) "Other" primarily consisted of the acceleration of
below-market lease intangible accretion in 2018 and transaction
related costs in 2017.
(2) Includes OP units other than OP units held by
Lexington.
|
LEXINGTON REALTY TRUST AND
CONSOLIDATED SUBSIDIARIES |
RECONCILIATION OF NON-GAAP
MEASURES |
|
|
|
|
2018 EARNINGS GUIDANCE |
|
|
|
|
Twelve Months EndedDecember 31,
2018 |
|
Range |
Estimated: |
|
|
|
Net income attributable to common shareholders per diluted common
share(1) |
$ |
0.90 |
|
|
$ |
0.92 |
|
Depreciation and amortization |
0.69 |
|
|
0.69 |
|
Impact of capital transactions |
(0.66 |
) |
|
(0.66 |
) |
Estimated Adjusted Company FFO per diluted common share |
$ |
0.93 |
|
|
$ |
0.95 |
|
|
|
|
|
|
|
|
|
(1) Assumes all convertible securities are dilutive.
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