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,
2016.
Second Quarter 2016 Highlights
- Generated Net Income attributable to common
shareholders of $46.8 million, or $0.20 per diluted common
share.
- Generated Adjusted Company Funds From Operations
available to all equityholders and unitholders - diluted (“Adjusted
Company FFO”) of $71.8 million, or $0.29 per diluted common
share.
- Disposed of six properties, including a land investment
in New York City, for aggregate gross disposition proceeds of
$107.2 million.
- Completed an industrial build-to-suit property with a
cost of $61.3 million.
- Invested $39.5 million in on-going build-to-suit
projects, including a recent commitment for a $37.0 million
industrial build-to-suit project in Opelika, Alabama.
- Completed 1.4 million square feet of new leases and
lease extensions with overall portfolio 96.2% leased at quarter
end.
- Retired $80.0 million of secured debt and $24.5 million
of unsecured borrowings.
Subsequent Events
- Obtained $197.2 million 20-year non-recourse financing,
which bears interest at a 4.04% fixed rate and is secured by the
build-to-suit project in Lake Jackson, Texas.
- Disposed of two properties for aggregate gross proceeds
of $4.4 million.
- Converted the remaining $11.9 million original
principal amount of 6.00% Convertible Guaranteed Notes for 1.9
million common shares.
Adjusted Company FFO is a non-GAAP financial
measure and in the first quarter 2016 earnings release was referred
to as Company FFO. It and certain other non-GAAP financial measures
are defined and reconciled later in this press release.
T. Wilson Eglin, President and Chief Executive
Officer of Lexington, commented “Our second quarter activity was
strong, particularly in sales and leasing, with Adjusted Company
FFO of $0.29 per share, representing a 7% increase year-over-year.
Strong progress has been made on our sales program and to date,
consolidated property dispositions total $171 million at a 5.9%
weighted-average cap rate.”
“As we enter the second half of the year, we
believe we are on target to complete our sales program of $600-$700
million at a better than expected cap rate range of 5.5%-6.25%, and
by year end, reduce our net debt to adjusted EBITDA ratio while
maintaining ample cash on the balance sheet. We expect that all of
these factors should position us to further grow our portfolio and
continue to improve the quality of our holdings and cash flow.”
FINANCIAL RESULTS
Revenues
For the quarter ended June 30, 2016, total
gross revenues were $109.6 million, a 0.7% decrease compared with
total gross revenues of $110.3 million for the quarter ended
June 30, 2015. The decrease is primarily attributable to 2015
and 2016 property sales and lease expirations, substantially offset
by revenue generated from property acquisitions and new leases
signed.
Net Income Attributable to Common
Shareholders
For the quarter ended June 30, 2016, net
income attributable to common shareholders was $46.8 million, or
$0.20 per diluted share, compared with net income attributable to
common shareholders for the quarter ended June 30, 2015 of
$47.7 million, or $0.20 per diluted share.
Adjusted Company FFO
For the quarter ended June 30, 2016,
Lexington generated Adjusted Company FFO of $71.8 million, or $0.29
per diluted share, compared to Adjusted Company FFO for the quarter
ended June 30, 2015 of $67.0 million, or $0.27 per diluted
share.
Dividends/Distributions
Lexington declared a regular quarterly common
share/unit dividend/distribution for the quarter ended
June 30, 2016 of $0.17 per common share/unit, which was paid
on July 15, 2016 to common shareholders/unitholders of record as of
June 30, 2016. Lexington also declared a dividend of $0.8125
per share on its Series C Cumulative Convertible Preferred Stock
(“Series C Preferred Shares”), which is payable on November 15,
2016 to Series C Preferred Shareholders of record as of October 31,
2016.
OPERATING ACTIVITIES
During the quarter, Lexington acquired the
following build-to-suit property:
ACQUISITIONS |
Tenant (Guarantor) |
|
Location |
|
PropertyType |
|
Initial Basis($000) |
|
Initial Estimated Annualized GAAP Rent
($000) |
|
Initial Estimated Annualized
CashRent ($000) |
|
EstimatedGAAP Yield |
|
Initial Estimated CashYield |
|
ApproximateLeaseTerm
(Yrs) |
One World Technologies,
Inc.(Techtronic Industries Co. Ltd.) |
|
Anderson, SC |
|
Industrial |
|
$ |
61,347 |
|
|
$ |
4,446 |
|
|
$ |
3,660 |
|
|
|
7.2 |
% |
|
6.0 |
% |
|
20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the quarter, Lexington funded $39.5
million of the projected costs of the following projects:
ON-GOING BUILD-TO-SUIT PROJECTS |
Location |
|
Sq. Ft. |
|
Property Type |
|
LeaseTerm(Years) |
|
Maximum Commitment/EstimatedCompletion
Cost($000) |
|
GAAP Investment Balance as
of6/30/2016 ($000) |
|
Estimated Acquisition/ Completion Date |
|
Estimated GAAP Yield |
|
Estimated Initial Cash Yield |
Lake Jackson, TX |
|
664,000 |
|
|
Office |
|
20 |
|
$ |
166,164 |
|
|
$ |
83,887 |
|
|
4Q
16 |
|
|
8.9 |
% |
|
|
7.3 |
% |
Charlotte, NC |
|
201,000 |
|
|
Office |
|
15 |
|
62,445 |
|
|
24,166 |
|
|
1Q
17 |
|
|
9.5 |
% |
|
|
8.3 |
% |
Opelika, AL |
|
165,000 |
|
|
Industrial |
|
25 |
|
37,000 |
|
|
710 |
|
|
2Q
17 |
|
|
9.0 |
% |
|
|
7.1 |
% |
Houston, TX(1) |
|
274,000 |
|
|
Retail/Specialty |
|
20 |
|
86,491 |
|
|
63,848 |
|
|
3Q
16 |
|
|
7.5 |
% |
|
|
7.5 |
% |
|
|
1,304,000 |
|
|
|
|
|
|
$ |
352,100 |
|
|
$ |
172,611 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Lexington had a 25% interest as of June 30, 2016. Lexington is
providing construction financing up to $56.7 million to the joint
venture of which $33.9 million had been funded as of June 30,
2016. The related lease provides for annual CPI increases. |
|
During the quarter, Lexington sold the following
properties:
PROPERTY DISPOSITIONS (4) |
Primary Tenant |
|
Location |
|
Property Type |
|
Gross
SalePrice($000) |
|
Annualized Net
Income(1)($000) |
|
AnnualizedNOI(1)($000) |
|
Month of Disposition |
ZE-45 Ground Tenant
LLC |
|
New
York, NY |
|
Land |
|
$ |
37,500 |
|
|
$ |
3,194 |
|
|
$ |
1,525 |
|
|
April |
Apria Healthcare,
Inc. |
|
Lake
Forest, CA |
|
Office |
|
19,000 |
|
|
(2 |
) |
775 |
|
|
1,366 |
|
|
May |
Federal Express
Corporation |
|
Collierville, TN |
|
Industrial |
|
7,740 |
|
|
294 |
|
|
817 |
|
|
June |
Atrius Health,
Inc. |
|
Boston, MA |
|
Office |
|
33,250 |
|
|
370 |
|
|
1,700 |
|
|
June |
The McGraw-Hill
Companies, Inc. |
|
Dubuque, IA |
|
Industrial |
|
8,575 |
|
|
(3 |
) |
326 |
|
|
1,260 |
|
|
June |
Vacant |
|
Franklin, NC |
|
Industrial |
|
1,100 |
|
|
(158 |
) |
|
(113 |
) |
|
June |
|
|
|
|
|
|
$ |
107,165 |
|
|
$ |
4,801 |
|
|
$ |
6,555 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Quarterly period prior to sale annualized. |
(2) A
future rent credit of $1.7 million was credited to the buyer at
closing. |
(3)
Excludes a $1.0 million lease termination payment from the
tenant. |
(4) In
addition, Lexington sold certain land parcels for $1.0 million,
which land parcels generated annualized net income and annualized
NOI of $45 thousand. |
|
LEASING
As of June 30, 2016, Lexington's overall
portfolio was 96.2% leased, excluding properties subject to secured
mortgage loans currently in default.
During the second quarter of 2016, Lexington
executed the following new and extended leases:
|
|
LEASE EXTENSIONS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior |
|
Lease |
|
|
|
|
|
Location |
|
|
Primary Tenant(1) |
|
Term |
Expiration Date |
Sq. Ft. |
|
|
|
Office/Multi-Tenant |
|
|
|
|
|
|
|
|
1-8 |
|
Honolulu |
HI |
|
N/A |
|
2016 |
|
2018 |
|
13,863 |
|
9 |
|
Tampa |
FL |
|
Time Customer Service,
Inc. / Time, Inc. |
|
06/2017 |
|
06/2026 |
|
132,981 |
|
9 |
|
Total office lease extensions |
|
|
|
|
|
|
|
|
146,844 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial/Multi-Tenant |
|
|
|
|
|
|
|
|
1 |
|
Plymouth |
MI |
|
Tower Automotive
Operations USA I, LLC |
|
10/2017 |
|
10/2024 |
|
290,133 |
|
2 |
|
Rantoul |
IL |
|
Bell Sports, Inc. |
|
10/2033 |
|
10/2034 |
|
813,126 |
|
3 |
|
Antioch |
TN |
|
Cimetra, LLC |
|
07/2016 |
|
08/2021 |
|
67,200 |
|
3 |
|
Total industrial lease extensions |
|
|
|
|
|
|
|
1,170,459 |
|
|
|
|
|
|
|
|
|
|
|
|
|
12 |
|
Total lease extensions |
|
|
|
|
|
|
|
1,317,303 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEW
LEASES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Location |
|
|
|
|
|
|
Lease Expiration Date |
|
Sq. Ft. |
|
|
Industrial |
|
|
|
|
|
|
|
|
|
1 |
|
Arlington |
TX |
|
Arrow Electronics,
Inc. |
|
|
|
02/2027 |
|
74,739 |
|
1 |
|
Total new industrial leases |
|
|
|
|
|
|
|
74,739 |
|
|
|
|
|
|
|
|
|
|
|
|
13 |
TOTAL NEW AND EXTENDED LEASES |
|
|
|
|
|
|
|
1,392,042 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Leases greater than 10,000
square feet. |
|
BALANCE SHEET/CAPITAL MARKETS
During the second quarter of 2016, Lexington
satisfied $80.0 million of secured debt with a weighted-average
interest rate of 4.9%.
In April 2016, $0.5 million original principal
amount of Lexington's 6.00% Convertible Guaranteed Notes due 2030
were satisfied for cash of $0.7 million, which reduced the
aggregate outstanding balance of this note issuance to $11.9
million. Subsequent to June 30, 2016, the remaining $11.9 million
outstanding was converted for 1,892,269 common shares.
Subsequent to June 30, 2016, Lexington
obtained a $197.2 million 20-year non-recourse financing on its
build-to-suit project in Lake Jackson, Texas. The loan bears
interest at a fixed rate of 4.04% and matures in October 2036.
2016 EARNINGS GUIDANCE
Lexington estimates that its net income
attributable to common shareholders per diluted common share for
the year ended December 31, 2016 will be within an expected range
of $0.52 to $0.61. Lexington is increasing its Adjusted Company FFO
guidance for the year ended December 31, 2016 to an expected range
of $1.07 to $1.10 per diluted common share from a range of $1.03 to
$1.08 per diluted common share. This guidance is forward looking,
excludes the impact of certain items and is based on current
expectations.
SECOND QUARTER 2016 CONFERENCE
CALL
Lexington will host a conference call today,
Tuesday, August 9, 2016, at 8:30 a.m. Eastern Time, to discuss its
results for the quarter ended June 30, 2016. Interested
parties may participate in this conference call by dialing
888-317-6016 (U.S.), 412-317-6016 (International) or 855-669-9657
(Canada). A replay of the call will be available through November
9, 2016, at 877-344-7529 (U.S.), 412-317-0088 (International) or
855-669-9658 (Canada), pin code for all replay numbers is 10090297.
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 and
debt investments in single-tenant net-leased commercial properties
and land 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 Earnings and
Supplemental Operating and Financial Data 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, 2016, (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 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 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: GAAP and cash yields 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
is calculated by dividing the annualized NOI (as defined below,
except GAAP rent adjustments are added back to rental income to
calculate GAAP yield) 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, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Gross revenues: |
|
|
|
|
|
|
|
Rental |
$ |
101,647 |
|
|
$ |
102,440 |
|
|
$ |
205,206 |
|
|
$ |
202,456 |
|
Tenant
reimbursements |
7,930 |
|
|
7,893 |
|
|
15,987 |
|
|
16,319 |
|
Total
gross revenues |
109,577 |
|
|
110,333 |
|
|
221,193 |
|
|
218,775 |
|
Expense applicable to
revenues: |
|
|
|
|
|
|
|
Depreciation and amortization |
(41,272 |
) |
|
(41,808 |
) |
|
(84,399 |
) |
|
(82,083 |
) |
Property
operating |
(11,293 |
) |
|
(15,534 |
) |
|
(23,371 |
) |
|
(32,116 |
) |
General and
administrative |
(7,747 |
) |
|
(7,971 |
) |
|
(15,522 |
) |
|
(15,792 |
) |
Non-operating
income |
3,553 |
|
|
3,084 |
|
|
6,420 |
|
|
5,698 |
|
Interest and
amortization expense |
(22,679 |
) |
|
(23,339 |
) |
|
(45,572 |
) |
|
(46,342 |
) |
Debt satisfaction gains
(charges), net |
(3,194 |
) |
|
3,776 |
|
|
(3,356 |
) |
|
14,151 |
|
Impairment charges |
(3,014 |
) |
|
(113 |
) |
|
(3,014 |
) |
|
(1,252 |
) |
Gains on sales of
properties |
25,326 |
|
|
21,426 |
|
|
42,341 |
|
|
21,574 |
|
Income before benefit
(provision) for income taxes, equity in earnings of
non-consolidated entities and discontinued operations |
49,257 |
|
|
49,854 |
|
|
94,720 |
|
|
82,613 |
|
Benefit (provision) for
income taxes |
(224 |
) |
|
52 |
|
|
(637 |
) |
|
(389 |
) |
Equity in earnings of
non-consolidated entities |
312 |
|
|
306 |
|
|
6,054 |
|
|
672 |
|
Income
from continuing operations |
49,345 |
|
|
50,212 |
|
|
100,137 |
|
|
82,896 |
|
Discontinued
operations: |
|
|
|
|
|
|
|
Income
(loss) from discontinued operations |
— |
|
|
(1 |
) |
|
— |
|
|
109 |
|
Provision
for income taxes |
— |
|
|
(4 |
) |
|
— |
|
|
(4 |
) |
Gain on
sale of property |
— |
|
|
— |
|
|
— |
|
|
1,577 |
|
Total
discontinued operations |
— |
|
|
(5 |
) |
|
— |
|
|
1,682 |
|
Net income |
49,345 |
|
|
50,207 |
|
|
100,137 |
|
|
84,578 |
|
Less net
income attributable to noncontrolling interests |
(869 |
) |
|
(875 |
) |
|
(1,892 |
) |
|
(1,741 |
) |
Net income attributable
to Lexington Realty Trust shareholders |
48,476 |
|
|
49,332 |
|
|
98,245 |
|
|
82,837 |
|
Dividends attributable
to preferred shares – Series C |
(1,573 |
) |
|
(1,573 |
) |
|
(3,145 |
) |
|
(3,145 |
) |
Allocation to
participating securities |
(73 |
) |
|
(105 |
) |
|
(163 |
) |
|
(192 |
) |
Net income attributable
to common shareholders |
$ |
46,830 |
|
|
$ |
47,654 |
|
|
$ |
94,937 |
|
|
$ |
79,500 |
|
Income per common share
– basic: |
|
|
|
|
|
|
|
Income
from continuing operations |
$ |
0.20 |
|
|
$ |
0.20 |
|
|
$ |
0.41 |
|
|
$ |
0.33 |
|
Income
(loss) from discontinued operations |
— |
|
|
— |
|
|
— |
|
|
0.01 |
|
Net
income attributable to common shareholders |
$ |
0.20 |
|
|
$ |
0.20 |
|
|
$ |
0.41 |
|
|
$ |
0.34 |
|
Weighted-average common
shares outstanding – basic |
232,592,998 |
|
|
233,812,062 |
|
|
232,617,901 |
|
|
233,172,422 |
|
Income per common share
– diluted: |
|
|
|
|
|
|
|
Income
from continuing operations |
$ |
0.20 |
|
|
$ |
0.20 |
|
|
$ |
0.41 |
|
|
$ |
0.33 |
|
Income
(loss) from discontinued operations |
— |
|
|
— |
|
|
— |
|
|
0.01 |
|
Net
income attributable to common shareholders |
$ |
0.20 |
|
|
$ |
0.20 |
|
|
$ |
0.41 |
|
|
$ |
0.34 |
|
Weighted-average common
shares outstanding – diluted |
239,046,004 |
|
|
239,903,370 |
|
|
238,970,754 |
|
|
239,559,842 |
|
Amounts attributable to
common shareholders: |
|
|
|
|
|
|
|
Income
from continuing operations |
$ |
46,830 |
|
|
$ |
47,659 |
|
|
$ |
94,937 |
|
|
$ |
77,818 |
|
Income
(loss) from discontinued operations |
— |
|
|
(5 |
) |
|
— |
|
|
1,682 |
|
Net
income attributable to common shareholders |
$ |
46,830 |
|
|
$ |
47,654 |
|
|
$ |
94,937 |
|
|
$ |
79,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LEXINGTON REALTY TRUST AND CONSOLIDATED
SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(Unaudited and in thousands, except share and per share
data) |
|
|
|
|
|
June 30, 2016 |
|
December 31, 2015 |
Assets: |
|
|
|
Real estate, at
cost |
$ |
3,721,461 |
|
|
$ |
3,789,711 |
|
Real estate -
intangible assets |
688,749 |
|
|
692,778 |
|
Investments in real
estate under construction |
108,763 |
|
|
95,402 |
|
|
4,518,973 |
|
|
4,577,891 |
|
Less: accumulated
depreciation and amortization |
1,207,434 |
|
|
1,179,969 |
|
Real
estate, net |
3,311,539 |
|
|
3,397,922 |
|
Assets held for
sale |
21,045 |
|
|
24,425 |
|
Cash and cash
equivalents |
59,776 |
|
|
93,249 |
|
Restricted cash |
12,767 |
|
|
10,637 |
|
Investment in and
advances to non-consolidated entities |
55,245 |
|
|
31,054 |
|
Deferred expenses,
net |
39,656 |
|
|
42,000 |
|
Loans receivable,
net |
95,829 |
|
|
95,871 |
|
Rent receivable –
current |
9,146 |
|
|
7,193 |
|
Rent receivable –
deferred |
102,195 |
|
|
87,547 |
|
Other assets |
17,535 |
|
|
18,505 |
|
Total assets |
$ |
3,724,733 |
|
|
$ |
3,808,403 |
|
|
|
|
|
Liabilities and
Equity: |
|
|
|
Liabilities: |
|
|
|
Mortgages and notes
payable, net |
$ |
838,385 |
|
|
$ |
872,643 |
|
Revolving credit
facility borrowings |
123,000 |
|
|
177,000 |
|
Term loans payable,
net |
500,584 |
|
|
500,076 |
|
Senior notes payable,
net |
493,944 |
|
|
493,526 |
|
Convertible guaranteed
notes payable, net |
11,763 |
|
|
12,126 |
|
Trust preferred
securities, net |
127,046 |
|
|
126,996 |
|
Dividends payable |
46,052 |
|
|
45,440 |
|
Liabilities held for
sale |
515 |
|
|
8,405 |
|
Accounts payable and
other liabilities |
43,054 |
|
|
41,479 |
|
Accrued interest
payable |
9,857 |
|
|
8,851 |
|
Deferred revenue -
including below market leases, net |
43,021 |
|
|
42,524 |
|
Prepaid rent |
16,395 |
|
|
16,806 |
|
Total liabilities |
2,253,616 |
|
|
2,345,872 |
|
|
|
|
|
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, 235,075,048
and 234,575,225 shares issued and outstanding in 2016 and 2015,
respectively |
24 |
|
|
23 |
|
Additional
paid-in-capital |
2,775,468 |
|
|
2,776,837 |
|
Accumulated
distributions in excess of net income |
(1,413,504 |
) |
|
(1,428,908 |
) |
Accumulated other
comprehensive loss |
(7,520 |
) |
|
(1,939 |
) |
Total
shareholders’ equity |
1,448,484 |
|
|
1,440,029 |
|
Noncontrolling
interests |
22,633 |
|
|
22,502 |
|
Total
equity |
1,471,117 |
|
|
1,462,531 |
|
Total liabilities and
equity |
$ |
3,724,733 |
|
|
$ |
3,808,403 |
|
|
|
|
|
|
|
|
|
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, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
EARNINGS PER
SHARE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
|
|
Income from continuing
operations attributable to common shareholders |
|
$ |
46,830 |
|
|
$ |
47,659 |
|
|
$ |
94,937 |
|
|
$ |
77,818 |
|
Income (loss) from
discontinued operations attributable to common shareholders |
|
— |
|
|
(5 |
) |
|
— |
|
|
1,682 |
|
Net income attributable
to common shareholders |
|
$ |
46,830 |
|
|
$ |
47,654 |
|
|
$ |
94,937 |
|
|
$ |
79,500 |
|
|
|
|
|
|
|
|
|
|
Weighted-average number
of common shares outstanding - basic |
|
232,592,998 |
|
|
233,812,062 |
|
|
232,617,901 |
|
|
233,172,422 |
|
|
|
|
|
|
|
|
|
|
Income per common
share: |
|
|
|
|
|
|
|
|
Income
from continuing operations |
|
$ |
0.20 |
|
|
$ |
0.20 |
|
|
$ |
0.41 |
|
|
$ |
0.33 |
|
Income
(loss) from discontinued operations |
|
— |
|
|
— |
|
|
— |
|
|
0.01 |
|
Net
income attributable to common shareholders |
|
$ |
0.20 |
|
|
$ |
0.20 |
|
|
$ |
0.41 |
|
|
$ |
0.34 |
|
|
|
|
|
|
|
|
|
|
Diluted: |
|
|
|
|
|
|
|
|
Income from continuing
operations attributable to common shareholders - basic |
|
$ |
46,830 |
|
|
$ |
47,659 |
|
|
$ |
94,937 |
|
|
$ |
77,818 |
|
Impact of assumed
conversions |
|
963 |
|
|
764 |
|
|
2,023 |
|
|
1,633 |
|
Income from continuing
operations attributable to common shareholders |
|
47,793 |
|
|
$ |
48,423 |
|
|
96,960 |
|
|
79,451 |
|
Income (loss) from
discontinued operations attributable to common shareholders -
basic |
|
— |
|
|
(5 |
) |
|
— |
|
|
1,682 |
|
Impact of assumed
conversions |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Income (loss) from
discontinued operations attributable to common shareholders |
|
— |
|
|
(5 |
) |
|
— |
|
|
1,682 |
|
Net income attributable
to common shareholders |
|
$ |
47,793 |
|
|
$ |
48,418 |
|
|
$ |
96,960 |
|
|
$ |
81,133 |
|
|
|
|
|
|
|
|
|
|
Weighted-average common
shares outstanding - basic |
|
232,592,998 |
|
|
233,812,062 |
|
|
232,617,901 |
|
|
233,172,422 |
|
Effect of dilutive
securities: |
|
|
|
|
|
|
|
|
Share
options |
|
273,920 |
|
|
296,501 |
|
|
204,783 |
|
|
369,079 |
|
6.00%
Convertible Guaranteed Notes |
|
1,878,445 |
|
|
1,941,833 |
|
|
1,909,841 |
|
|
2,165,367 |
|
Operating
Partnership Units |
|
3,818,805 |
|
|
3,852,974 |
|
|
3,819,498 |
|
|
3,852,974 |
|
Non-vested shares |
|
481,836 |
|
|
— |
|
|
418,731 |
|
|
— |
|
Weighted-average common
shares outstanding - diluted |
|
239,046,004 |
|
|
239,903,370 |
|
|
238,970,754 |
|
|
239,559,842 |
|
|
|
|
|
|
|
|
|
|
Income per common
share: |
|
|
|
|
|
|
|
|
Income
from continuing operations |
|
$ |
0.20 |
|
|
$ |
0.20 |
|
|
$ |
0.41 |
|
|
$ |
0.33 |
|
Income
(loss) from discontinued operations |
|
— |
|
|
— |
|
|
— |
|
|
0.01 |
|
Net
income attributable to common shareholders |
|
$ |
0.20 |
|
|
$ |
0.20 |
|
|
$ |
0.41 |
|
|
$ |
0.34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
FUNDS FROM OPERATIONS: |
|
|
|
|
|
|
Basic and Diluted: |
|
|
|
|
|
|
|
|
Net income
attributable to common shareholders |
|
$ |
46,830 |
|
|
$ |
47,654 |
|
|
$ |
94,937 |
|
|
$ |
79,500 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
39,688 |
|
|
40,467 |
|
|
80,881 |
|
|
79,389 |
|
|
Impairment charges -
real estate |
|
3,014 |
|
|
113 |
|
|
3,014 |
|
|
1,252 |
|
|
Noncontrolling
interests - OP units |
|
648 |
|
|
540 |
|
|
1,395 |
|
|
1,090 |
|
|
Amortization of leasing
commissions |
|
1,584 |
|
|
1,341 |
|
|
3,518 |
|
|
2,693 |
|
|
Joint venture and
noncontrolling interest adjustment |
|
222 |
|
|
437 |
|
|
458 |
|
|
758 |
|
|
Gains on sales of
properties, including non-consolidated entities |
|
(25,326 |
) |
|
(21,426 |
) |
|
(47,719 |
) |
|
(23,151 |
) |
|
Tax on sales of
properties |
|
— |
|
|
— |
|
|
50 |
|
|
— |
|
FFO
available to common shareholders and unitholders -
basic |
|
66,660 |
|
|
69,126 |
|
|
136,534 |
|
|
141,531 |
|
|
Preferred
dividends |
|
1,573 |
|
|
1,573 |
|
|
3,145 |
|
|
3,145 |
|
|
Interest and
amortization on 6.00% Convertible Notes |
|
233 |
|
|
224 |
|
|
485 |
|
|
543 |
|
|
Amount allocated to
participating securities |
|
73 |
|
|
105 |
|
|
163 |
|
|
192 |
|
FFO
available to all equityholders and unitholders -
diluted |
|
68,539 |
|
|
71,028 |
|
|
140,327 |
|
|
145,411 |
|
|
Debt satisfaction
(gains) charges, net, including non-consolidated entities |
|
3,194 |
|
|
(3,712 |
) |
|
3,356 |
|
|
(14,087 |
) |
|
Transaction
costs/other |
|
68 |
|
|
(294 |
) |
|
214 |
|
|
174 |
|
Adjusted Company FFO available to all equityholders and
unitholders - diluted |
|
71,801 |
|
|
67,022 |
|
|
143,897 |
|
|
131,498 |
|
|
|
|
|
|
|
|
|
|
FUNDS AVAILABLE FOR DISTRIBUTION: |
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
Straight-line
adjustments |
|
(13,241 |
) |
|
(17,034 |
) |
|
(24,380 |
) |
|
(22,343 |
) |
|
Lease incentives |
|
419 |
|
|
488 |
|
|
842 |
|
|
945 |
|
|
Amortization of
above/below market leases |
|
499 |
|
|
177 |
|
|
955 |
|
|
(444 |
) |
|
Lease termination
payments, net |
|
5,183 |
|
|
(595 |
) |
|
2,434 |
|
|
(1,401 |
) |
|
Non-cash interest,
net |
|
(632 |
) |
|
1,753 |
|
|
(1,014 |
) |
|
1,118 |
|
|
Non-cash charges,
net |
|
2,403 |
|
|
2,147 |
|
|
4,610 |
|
|
4,403 |
|
|
Tenant
improvements |
|
601 |
|
|
(1,541 |
) |
|
(119 |
) |
|
(2,622 |
) |
|
Lease costs |
|
(3,477 |
) |
|
(1,756 |
) |
|
(4,707 |
) |
|
(3,176 |
) |
Company Funds Available for Distribution |
|
$ |
63,556 |
|
|
$ |
50,661 |
|
|
$ |
122,518 |
|
|
$ |
107,978 |
|
|
|
|
|
|
|
|
|
|
|
Per
Common Share and Unit Amounts |
|
|
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
|
|
|
FFO |
|
$ |
0.28 |
|
|
$ |
0.29 |
|
|
$ |
0.58 |
|
|
$ |
0.60 |
|
|
|
|
|
|
|
|
|
|
|
Diluted: |
|
|
|
|
|
|
|
|
|
FFO |
|
$ |
0.28 |
|
|
$ |
0.29 |
|
|
$ |
0.58 |
|
|
$ |
0.60 |
|
|
Adjusted Company
FFO |
|
$ |
0.29 |
|
|
$ |
0.27 |
|
|
$ |
0.59 |
|
|
$ |
0.54 |
|
|
|
|
|
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
|
|
|
Weighted-average common
shares outstanding - basic EPS |
|
232,592,998 |
|
|
233,812,062 |
|
|
232,617,901 |
|
|
233,172,422 |
|
|
Operating partnership
units(1) |
|
3,818,805 |
|
|
3,852,974 |
|
|
3,819,498 |
|
|
3,852,974 |
|
|
Weighted-average common
shares outstanding - basic FFO |
|
236,411,803 |
|
|
237,665,036 |
|
|
236,437,399 |
|
|
237,025,396 |
|
|
|
|
|
|
|
|
|
|
|
Diluted: |
|
|
|
|
|
|
|
|
|
Weighted-average common
shares outstanding - diluted EPS |
|
239,046,004 |
|
|
239,903,370 |
|
|
238,970,754 |
|
|
239,559,842 |
|
|
Unvested share-based
payment awards |
|
— |
|
|
83,635 |
|
|
— |
|
|
109,194 |
|
|
Preferred shares -
Series C |
|
4,710,570 |
|
|
4,710,570 |
|
|
4,710,570 |
|
|
4,710,570 |
|
|
Weighted-average common
shares outstanding - diluted FFO |
|
243,756,574 |
|
|
244,697,575 |
|
|
243,681,324 |
|
|
244,379,606 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Includes OP units other than OP units held by Lexington. |
|
LEXINGTON REALTY TRUST AND CONSOLIDATED
SUBSIDIARIES |
RECONCILIATION OF NON-GAAP
MEASURES |
|
|
|
|
2016 EARNINGS
GUIDANCE |
|
|
|
|
Twelve Months EndedDecember 31, 2016 |
|
Low |
|
High |
Estimated: |
|
|
|
Net income attributable
to common shareholders per diluted common share(1) |
$ |
0.52 |
|
|
$ |
0.61 |
|
Depreciation and amortization |
0.67 |
|
|
0.68 |
|
Impact of
capital transactions |
(0.12 |
) |
|
(0.19 |
) |
Estimated Adjusted
Company FFO per diluted common share |
$ |
1.07 |
|
|
$ |
1.10 |
|
|
|
|
|
|
|
|
|
(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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