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Lexington Realty Trust Reports Third Quarter 2016 Results

NEW YORK, Nov. 03, 2016 (GLOBE NEWSWIRE) -- Lexington Realty Trust (“Lexington”) (NYSE:LXP), a real estate investment trust focused on single-tenant real estate investments, today announced results for the third quarter ended September 30, 2016.

Third Quarter 2016 Highlights

  • Generated Net Loss attributable to common shareholders of $26.7 million, or $0.11 per diluted common share.
  • Generated Adjusted Company Funds From Operations available to all equityholders and unitholders - diluted (“Adjusted Company FFO”) of $67.5 million, or $0.28 per diluted common share.
  • Disposed of 10 properties, including the three remaining land investments in New York City, for $409.1 million.
  • Acquired an industrial property for $43.1 million.
  • Invested $27.6 million in on-going build-to-suit projects and completed a build-to-suit property with a total cost of $80.0 million.
  • Executed 1.0 million square feet of new leases and lease extensions with overall portfolio 95.3% leased at quarter end.
  • 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.
  • Converted the remaining $11.9 million original principal amount of 6.00% Convertible Guaranteed Notes for 1.9 million common shares.
  • Retired $271.9 million of secured debt and all $123.0 million borrowings outstanding on the $400.0 million revolving credit facility.
  • Increased the quarterly common share/unit dividend/distribution to $0.175 per common share/unit from $0.17 per common share/unit.

Subsequent Events

  • Disposed of two properties for aggregate gross proceeds of $40.3 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.

T. Wilson Eglin, Chief Executive Officer and President of Lexington Realty Trust, commented, “We substantially completed our $600-$700 million sales program during the quarter and subsequently sold two properties, bringing our total consolidated sales for the year to $616.2 million at average cash and GAAP cap rates of 5.1% and 10.6%, respectively. The $338 million sale of our New York City land investments, which were purchased in late 2013 for $302 million, turned out to be a great success for our investors. These properties generated strong cash flow and capital appreciation and the sale allowed us to reduce leverage considerably while providing cash to retire debt and fund investments.”

“Furthermore, as a result of our accomplishments this year, we increased our annualized dividend from $0.68 to $0.70 per common share, we substantially reduced leverage to 5.3x net debt to Adjusted EBITDA compared with 6.2x at June 30, 2016, our cash position is strong, and our credit line is fully available. Given the overall execution of our business plan and better visibility on activity for the remainder of the year, we are increasing our 2016 Adjusted Company FFO guidance to a new range of $1.09-$1.11 from $1.07-$1.10.”

FINANCIAL RESULTS

Revenues

For the quarter ended September 30, 2016, total gross revenues were $106.3 million, a 0.9% increase compared with total gross revenues of $105.4 million for the quarter ended September 30, 2015. The increase was primarily attributable to revenue generated from property acquisitions and new leases signed, partially offset by 2015 and 2016 property sales and lease expirations.

Net Loss Attributable to Common Shareholders

For the quarter ended September 30, 2016, net loss attributable to common shareholders was $26.7 million, or $0.11 per diluted share, compared with net loss attributable to common shareholders for the quarter ended September 30, 2015 of $7.6 million, or $0.03 per diluted share. The Company recognized impairment charges of $72.9 million for the quarter ended September 30, 2016, primarily due to the write-off of the deferred rent receivable relating to the sale of the three remaining New York, New York land investments. The Company, which purchased these three land investments in 2013 for $302.0 million, sold them in the third quarter of 2016 for an aggregate gross sales price of $338.2 million.

Adjusted Company FFO

For the quarter ended September 30, 2016, Lexington generated Adjusted Company FFO of $67.5 million, or $0.28 per diluted share, compared to Adjusted Company FFO for the quarter ended September 30, 2015 of $66.9 million, or $0.27 per diluted share.

Dividends/Distributions

Lexington declared a regular quarterly common share/unit dividend/distribution for the quarter ended September 30, 2016 of $0.175 per common share/unit, which represented an increase of approximately 3% over the prior regular quarterly common share/unit dividend/distribution. This equates to an increase of $0.02 per common share/unit to an annual dividend/distribution of $0.70 per common share/unit. The common share/unit dividend/distribution was paid on October 17, 2016 to common shareholders/unitholders of record as of September 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 February 15, 2017 to Series C Preferred Shareholders of record as of January 31, 2017.

OPERATING ACTIVITIES

During the quarter, Lexington acquired/completed the following properties:

ACQUISITIONS
Tenant Location Property
Type
Initial
Basis
($000)
Initial
Estimated
Annualized
GAAP
Rent ($000)
Initial
Estimated
Annualized
Cash

Rent ($000)
Initial
Estimated
GAAP
Yield
Initial
Estimated
Cash

Yield
Approximate
Lease
Term (Yrs)
Consolidated:
Pacific Foods of Oregon, Inc. Wilsonville, OR Industrial $43,100 $3,120 $2,567 7.2% 6.0% 16
Nonconsolidated:
British Schools of America, LLC(1) Houston, TX Private School $79,964 $6,248 $6,248 7.8% 7.8% 20
(1) Lexington had a 25% equity interest as of September 30, 2016. Lexington is providing construction financing up to $56.7 million to the joint venture, of which $43.1 million had been funded as of September 30, 2016. The related lease provides for annual CPI increases.

During the quarter, Lexington funded $27.6 million of the projected costs of the following projects:

ON-GOING BUILD-TO-SUIT PROJECTS
Location Sq. Ft. Property
Type
Lease
Term

(Years)
Maximum
Commitment/Estimated
Completion Cost

($000)
GAAP
Investment
Balance as of

9/30/2016 ($000)
Estimated
Acquisition/
Completion
Date
Estimated
Initial
GAAP Yield
Estimated
Initial Cash
Yield
Lake Jackson, TX 664,000 Office 20 $166,164 $101,203 4Q 16/1Q 17 8.9% 7.3%
Charlotte, NC 201,000 Office 15 62,445 32,613 1Q 17 9.5% 8.3%
Opelika, AL 165,000 Industrial 25 37,000 3,760 2Q 17 9.0% 7.1%
1,030,000 $265,609 $137,576

During the quarter, Lexington sold the following properties:

PROPERTY DISPOSITIONS
Primary Tenant Location Property Type Gross
Disposition

Price
($000)
Annualized Net
Income(1)(2)

($000)
Annualized
NOI(1)
($000)
Month of
Disposition
Multi-Tenant Foxboro, MA Office $4,100 $(268) $(267) July
Vacant Franklin, OH Retail 338 (76) (65) July
Vacant Bremerton, WA Office 6,100 (428) 1,198 August
American Golf Corporation Oklahoma City, OK Specialty 1,995 179 467 September
Vacant(3) Bridgewater, NJ Office 14,118 (2,203) (416) September
Addenbrooke Classical Academy Lakewood, CO Office 11,500 (227) 314 September
Siemens Corporation Milford, OH Office 32,750 2,130 2,466 September
SM Ascott LLC,
Tribeca Ascott LLC
& AL-Stone Ground Tenant LLC
New York, NY Land 338,200 34,773 15,484 September
$409,101 $33,880 $19,181
(1) Quarterly period prior to sale annualized.
(2) Excludes impairment charges recognized.
(3) Conveyed to lender in a foreclosure sale. Lender has made a claim under a related non-recourse carveout guaranty. See periodic filings with the Securities and Exchange Commission for more information.

LEASING

At September 30, 2016, Lexington's overall portfolio was 95.3% leased compared with 96.2% leased at June 30, 2016, excluding properties subject to secured mortgage loans currently in default. The decrease relates primarily to a reduction in occupancy at the Temperance, Michigan property.

During the third quarter of 2016, Lexington executed the following new and extended leases:

LEASE EXTENSIONS
Location Primary Tenant(1)Prior
Term
Lease
Expiration Date
Sq. Ft.
Office/Multi-Tenant
1-3 HonoluluHI N/A 2016 2017 5,323
3 Total office lease extensions 5,323
Industrial
1 HebronOH Owens Corning Insulating Systems, LLC 05/2017 12/2019 250,410
2 HebronOH Owens Corning Insulating Systems, LLC 05/2017 12/2019 400,522
2 Total industrial lease extensions 650,932
5 Total lease extensions 656,255


NEW LEASES
Location Lease
Expiration Date
Sq. Ft.
Office/Multi-Tenant
1 IndianapolisIN N/A 02/2018 3,764
2-4 HonoluluHI N/A 2016-2017 4,679
1 Total office lease extensions 8,443
Industrial
1 TemperanceMI Hollingsworth Logistics Group LLC 11/2021 290,000
1 Total new industrial leases 290,000
5 Total extended leases 298,443
10 TOTAL NEW AND EXTENDED LEASES 954,698
(1) Leases greater than 10,000 square feet.

BALANCE SHEET/CAPITAL MARKETS

During the third quarter of 2016, Lexington satisfied $271.9 million of secured debt with a weighted-average interest rate of 4.9%.

In July 2016, the remaining $11.9 million original principal amount of Lexington's 6.00% Convertible Guaranteed Notes due 2030 were converted for 1,892,269 common shares.

In July 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 now 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 $0.40 to $0.44. Lexington is increasing its Adjusted Company FFO guidance for the year ended December 31, 2016 to an expected range of $1.09 to $1.11 per diluted common share from a range of $1.07 to $1.10 per diluted common share. This guidance is forward looking, excludes the impact of certain items and is based on current expectations.

THIRD QUARTER 2016 CONFERENCE CALL

Lexington will host a conference call today, Thursday, November 3, 2016, at 8:30 a.m. Eastern Time, to discuss its results for the quarter ended September 30, 2016. 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 3, 2017, at 1-877-344-7529 (U.S.), 1-412-317-0088 (International) or 1-855-669-9658 (Canada), pin code for all replay numbers is 10094638. 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 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 or Capitalization Rate: GAAP and cash yields or capitalization rates are measures of operating performance used to evaluate the individual performance of an investment. These measures are not presented or intended to be viewed as a liquidity or performance measure that present a numerical measure of Lexington's historical or future financial performance, financial position or cash flows. The yield or capitalization rate is calculated by dividing the annualized NOI (as defined below, except GAAP rent adjustments are added back to rental income to calculate GAAP yield or capitalization rate) the investment is expected to generate (or has generated) divided by the acquisition/completion cost (or sale) price.

Net Operating Income (“NOI”): NOI is a measure of operating performance used to evaluate the individual performance of an investment. This measure is not presented or intended to be viewed as a liquidity or performance measure that presents a numerical measure of Lexington's historical or future financial performance, financial position or cash flows. Lexington defines NOI as operating revenues (rental income (less GAAP rent adjustments and lease termination income), tenant reimbursements and other property income) less property operating expenses. Other REITs may use different methodologies for calculating NOI, and accordingly, Lexington's NOI may not be comparable to other companies. Because NOI excludes general and administrative expenses, interest expense, depreciation and amortization, acquisition-related expenses, other nonproperty income and losses, and gains and losses from property dispositions, it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate and the impact to operations from trends in occupancy rates, rental rates, and operating costs, providing a perspective on operations not immediately apparent from net income. Lexington believes that net income is the most directly comparable GAAP measure to NOI.

LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited and in thousands, except share and per share data)
Three months ended September 30, Nine months ended September 30,
2016 2015 2016 2015
Gross revenues:
Rental$98,952 $98,095 $304,158 $300,551
Tenant reimbursements7,379 7,343 23,366 23,662
Total gross revenues106,331 105,438 327,524 324,213
Expense applicable to revenues:
Depreciation and amortization(40,288) (39,712) (124,687) (121,795)
Property operating(11,472) (13,484) (34,843) (45,600)
General and administrative(7,510) (6,734) (23,032) (22,526)
Non-operating income3,080 2,515 9,500 8,213
Interest and amortization expense(23,001) (21,931) (68,573) (68,273)
Debt satisfaction gains (charges), net2,538 (398) (818) 13,753
Impairment charges(72,890) (32,818) (75,904) (34,070)
Gains on sales of properties16,072 1,733 58,413 23,307
Income (loss) before provision for income taxes, equity in earnings of non-consolidated entities and discontinued operations(27,140) (5,391) 67,580 77,222
Provision for income taxes(462) (75) (1,099) (464)
Equity in earnings of non-consolidated entities340 266 6,394 938
Income (loss) from continuing operations(27,262) (5,200) 72,875 77,696
Discontinued operations:
Income from discontinued operations 109
Provision for income taxes (4)
Gain on sale of property 1,577
Total discontinued operations 1,682
Net income (loss)(27,262) (5,200) 72,875 79,378
Less net (income) loss attributable to noncontrolling interests2,232 (784) 340 (2,525)
Net income (loss) attributable to Lexington Realty Trust shareholders(25,030) (5,984) 73,215 76,853
Dividends attributable to preferred shares – Series C(1,573) (1,573) (4,718) (4,718)
Allocation to participating securities(50) (72) (187) (264)
Net income (loss) attributable to common shareholders$(26,653) $(7,629) $68,310 $71,871
Income (loss) per common share – basic:
Income (loss) from continuing operations$(0.11) $(0.03) $0.29 $0.30
Income from discontinued operations 0.01
Net income (loss) attributable to common shareholders$(0.11) $(0.03) $0.29 $0.31
Weighted-average common shares outstanding – basic234,207,396 234,018,062 233,151,600 233,457,400
Income (loss) per common share – diluted:
Income (loss) from continuing operations$(0.11) $(0.03) $0.28 $0.30
Income from discontinued operations 0.01
Net income (loss) attributable to common shareholders$(0.11) $(0.03) $0.28 $0.31
Weighted-average common shares outstanding – diluted234,207,396 234,018,062 237,215,883 233,776,838
Amounts attributable to common shareholders:
Income (loss) from continuing operations$(26,653) $(7,629) $68,310 $70,189
Income from discontinued operations 1,682
Net income (loss) attributable to common shareholders$(26,653) $(7,629) $68,310 $71,871


LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands, except share and per share data)
September 30, 2016 December 31, 2015
Assets:
Real estate, at cost$3,459,784 $3,789,711
Real estate - intangible assets598,359 692,778
Investments in real estate under construction137,576 95,402
4,195,719 4,577,891
Less: accumulated depreciation and amortization1,201,043 1,179,969
Real estate, net2,994,676 3,397,922
Assets held for sale29,819 24,425
Cash and cash equivalents117,791 93,249
Restricted cash42,387 10,637
Investment in and advances to non-consolidated entities63,963 31,054
Deferred expenses, net34,697 42,000
Loans receivable, net95,808 95,871
Rent receivable – current8,875 7,193
Rent receivable – deferred22,843 87,547
Other assets39,092 18,505
Total assets$3,449,951 $3,808,403
Liabilities and Equity:
Liabilities:
Mortgages and notes payable, net$757,718 $872,643
Revolving credit facility borrowings 177,000
Term loans payable, net500,839 500,076
Senior notes payable, net494,153 493,526
Convertible guaranteed notes payable, net 12,126
Trust preferred securities, net127,071 126,996
Dividends payable47,944 45,440
Liabilities held for sale2,220 8,405
Accounts payable and other liabilities30,796 41,479
Accrued interest payable11,632 8,851
Deferred revenue - including below market leases, net43,904 42,524
Prepaid rent17,432 16,806
Total liabilities2,033,709 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 outstanding94,016 94,016
Common shares, par value $0.0001 per share; authorized 400,000,000 shares, 237,083,452 and 234,575,225 shares issued and outstanding in 2016 and 2015, respectively24 23
Additional paid-in-capital2,788,966 2,776,837
Accumulated distributions in excess of net income(1,481,484) (1,428,908)
Accumulated other comprehensive loss(4,883) (1,939)
Total shareholders’ equity1,396,639 1,440,029
Noncontrolling interests19,603 22,502
Total equity1,416,242 1,462,531
Total liabilities and equity$3,449,951 $3,808,403


LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
EARNINGS PER SHARE
(Unaudited and in thousands, except share and per share data)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2016 2015 2016 2015
EARNINGS PER SHARE:
Basic:
Income (loss) from continuing operations attributable to common shareholders $(26,653) $(7,629) $68,310 $70,189
Income from discontinued operations attributable to common shareholders 1,682
Net income (loss) attributable to common shareholders $(26,653) $(7,629) $68,310 $71,871
Weighted-average number of common shares outstanding - basic 234,207,396 234,018,062 233,151,600 233,457,400
Income (loss) per common share:
Income (loss) from continuing operations $(0.11) $(0.03) $0.29 $0.30
Income from discontinued operations 0.01
Net income (loss) attributable to common shareholders $(0.11) $(0.03) $0.29 $0.31
Diluted:
Income (loss) from continuing operations attributable to common shareholders - basic $(26,653) $(7,629) $68,310 $70,189
Impact of assumed conversions (1,083)
Income (loss) from continuing operations attributable to common shareholders (26,653) (7,629) 67,227 70,189
Income from discontinued operations attributable to common shareholders - basic 1,682
Impact of assumed conversions
Income from discontinued operations attributable to common shareholders 1,682
Net income (loss) attributable to common shareholders $(26,653) $(7,629) $67,227 $71,871
Weighted-average common shares outstanding - basic 234,207,396 234,018,062 233,151,600 233,457,400
Effect of dilutive securities:
Share options 246,166 319,438
Operating Partnership Units 3,818,117
Weighted-average common shares outstanding - diluted 234,207,396 234,018,062 237,215,883 233,776,838
Income (loss) per common share:
Income (loss) from continuing operations $(0.11) $(0.03) $0.28 $0.30
Income from discontinued operations 0.01
Net income (loss) attributable to common shareholders $(0.11) $(0.03) $0.28 $0.31


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
September 30,
Nine Months Ended
September 30,
2016 2015 2016 2015
FUNDS FROM OPERATIONS:
Basic and Diluted:
Net income (loss) attributable to common shareholders $(26,653) $(7,629) $68,310 $71,871
Adjustments:
Depreciation and amortization 38,642 38,547 119,523 117,936
Impairment charges - real estate 72,890 32,818 75,904 34,070
Noncontrolling interests - OP units (2,478) 452 (1,083) 1,542
Amortization of leasing commissions 1,646 1,166 5,164 3,859
Joint venture and noncontrolling interest adjustment 284 577 742 1,335
Gains on sales of properties, including non-consolidated entities (16,072) (1,733) (63,791) (24,884)
Tax on sales of properties 50
FFO available to common shareholders and unitholders - basic 68,259 64,198 204,819 205,729
Preferred dividends 1,573 1,573 4,718 4,718
Interest and amortization on 6.00% Convertible Guaranteed Notes 47 252 532 795
Amount allocated to participating securities 50 72 187 264
FFO available to all equityholders and unitholders - diluted 69,929 66,095 210,256 211,506
Debt satisfaction (gains) charges, net, including non-consolidated entities (2,538) 398 818 (13,689)
Transaction costs/other 115 405 329 579
Adjusted Company FFO available to all equityholders and unitholders - diluted 67,506 66,898 211,403 198,396
FUNDS AVAILABLE FOR DISTRIBUTION:
Adjustments:
Straight-line adjustments (11,317) (12,899) (35,697) (35,242)
Lease incentives 414 212 1,256 1,157
Amortization of above/below market leases 572 287 1,527 (157)
Lease termination payments, net (2,190) 2,067 244 666
Non-cash interest, net (512) (598) (1,526) 520
Non-cash charges, net 2,296 2,205 6,906 6,608
Tenant improvements (1,173) (10,562) (1,292) (13,184)
Lease costs (1,458) (1,066) (6,165) (4,242)
Company Funds Available for Distribution $54,138 $46,544 $176,656 $154,522
Per Common Share and Unit Amounts
Basic:
FFO $0.29 $0.27 $0.86 $0.87
Diluted:
FFO $0.29 $0.27 $0.86 $0.87
Adjusted Company FFO $0.28 $0.27 $0.87 $0.81
Basic:
Weighted-average common shares outstanding - basic EPS 234,207,396 234,018,062 233,151,600 233,457,400
Operating partnership units(1) 3,815,386 3,852,974 3,818,117 3,852,974
Weighted-average common shares outstanding - basic FFO 238,022,782 237,871,036 236,969,717 237,310,374
Diluted:
Weighted-average common shares outstanding - diluted EPS 234,207,396 234,018,062 237,215,883 233,776,838
Unvested share-based payment awards 570,260 478,329 5,130
6.00% Convertible Guaranteed Notes 508,912 1,931,950 1,439,456 2,086,706
Operating partnership units(1) 3,815,386 3,852,974 3,852,974
Share Options 238,395 200,993
Preferred shares - Series C 4,710,570 4,710,570 4,710,570 4,710,570
Weighted-average common shares outstanding - diluted FFO 244,050,919 244,714,549 243,844,238 244,432,218
(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 Ended
December 31, 2016
Range
Estimated:
Net income attributable to common shareholders per diluted common share(1)$0.40 $0.44
Depreciation and amortization0.68 0.68
Impact of capital transactions0.01 (0.01)
Estimated Adjusted Company FFO per diluted common share$1.09 $1.11
(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

Source:Lexington Realty Trust