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Lexington Realty Trust Reports Fourth Quarter 2012 Results

 

LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
REPORTED COMPANY FUNDS FROM OPERATIONS & FUNDS AVAILABLE FOR DISTRIBUTION
(Unaudited and in thousands, except share and per share data)
         
  Three Months Ended December 31, Twelve Months Ended December 31,
  2012 2011 2012 2011
FUNDS FROM OPERATIONS: (1)        
Basic and Diluted:        
Net income (loss) attributable to Lexington Realty Trust shareholders $ (2,347) $ 13,027 $ 180,316 $ (79,584)
Adjustments:        
Depreciation and amortization 45,081 39,892 163,890 160,689
Impairment charges - real estate 17 2,614 9,969 117,443
Impairment charges - joint venture 4,811
Noncontrolling interests - OP units 279 893 1,192 578
Amortization of leasing commissions 1,329 1,070 4,838 3,918
Joint venture and noncontrolling interest adjustment 545 (3,039) 560 (23,309)
Preferred dividends – Series B & D (2,926) (4,305) (14,001) (17,852)
Gains on sales of properties (4,345) (1,306) (13,291) (6,557)
Gain on sale - joint venture investment (7,000)
Gain on acquisition of real estate (167,864)
Interest and amortization on 6.00% Convertible Guaranteed Notes 1,973 2,327 8,953 9,307
Reported Company FFO 39,606 51,173 167,562 169,444
Debt satisfaction charges (gains), net 8,558 (39) 9,658 561
Forward equity commitment (6,348) (2,030)
Litigation reserve 2,775
Gains on loan sales - joint venture (1,927)
Other 5 857 603 3,966
Company FFO, as adjusted 48,169 45,643 180,598 170,014
         
FUNDS AVAILABLE FOR DISTRIBUTION: (2)        
Adjustments:        
Straight-line rents (7,900) (4,437) (7,491) (1,763)
Lease incentives 323 570 1,466 2,138
Amortization of below/above market leases 57 (886) (3,551) (3,101)
Non-cash interest, net (132) 121 (1,300) 711
Non-cash general and administrative expenses 1,103 1,077 4,565 4,040
Tenant improvements (8,856) (2,732) (25,776) (12,266)
Lease costs (5,185) (4,871) (13,038) (15,870)
Reported Company Funds Available for Distribution $ 27,579 $ 34,485 $ 135,473 $ 143,903
         
Per Share Amounts        
Basic:        
Reported Company FFO $ 0.20 $ 0.28 $ 0.91 $ 0.95
Company FFO, as adjusted $ 0.25 $ 0.25 $ 0.98 $ 0.97
Company FAD $ 0.14 $ 0.19 $ 0.74 $ 0.82
         
Diluted:        
Reported Company FFO $ 0.20 $ 0.28 $ 0.91 $ 0.95
Company FFO, as adjusted $ 0.25 $ 0.25 $ 0.98 $ 0.97
Company FAD $ 0.14 $ 0.19 $ 0.73 $ 0.82
         
Basic:        
Weighted-average common shares outstanding - EPS basic 172,646,759 154,838,153 159,109,424 152,473,336
6.00% Convertible Guaranteed Notes 13,995,678 16,238,672 15,805,245 16,232,862
Non-vested share-based payment awards 308,854 131,234 244,366 130,684
Operating Partnership Units 4,317,367 4,565,269 4,438,708 4,725,798
Preferred Shares - Series C 4,710,570 4,976,034 4,712,421 5,043,521
Weighted-average common shares outstanding - Reported Company FFO basic 195,979,228 180,749,362 184,310,164 178,606,201
Adjustments:        
Forward equity commitment settlement (551,108) (2,760,608)
Weighted-average common shares outstanding - Company FFO, as adjusted & FAD 195,979,228 180,198,254 184,310,164 175,845,593
         
Diluted:        
Weighted-average common shares outstanding - Reported Company FFO basic 195,979,228 180,749,362 184,310,164 178,606,201
Options - Incremental shares 432,356 104,484 306,449 208,463
Weighted-average common shares outstanding - Reported Company FFO diluted 196,411,584 180,853,846 184,616,613 178,814,664
Adjustments:        
Forward equity commitment settlement (551,108) (2,760,608)
Weighted-average common shares outstanding - Company FFO, as adjusted & FAD 196,411,584 180,302,738 184,616,613 176,054,056
 
1 Lexington believes that Funds from Operations ("FFO"), which is not a measure under generally accepted accounting principles ("GAAP"), 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, Inc. ("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 unconsolidated 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 "Reported Company funds from operations" or "Reported Company FFO," which differs from FFO because it includes Lexington's operating partnership units, Lexington's 6.50% Series C Cumulative Convertible Preferred Shares, and Lexington's 6.00% Convertible Guaranteed Notes because these securities are convertible, at the holder's option, into Lexington's common shares. Management believes this is appropriate and relevant to securities analysts, investors and other interested parties because Lexington presents Reported Company FFO on a company-wide basis as if all securities that are convertible, at the holder's option, into Lexington's common shares, are converted. Lexington also presents "Company funds from operations, as adjusted" or "Company FFO, as adjusted," which adjusts Reported Company FFO for certain items which Management believes are non-recurring and not indicative of the operating results of its real estate portfolio. Management believes this is an appropriate presentation as it is frequently requested by security analysts, investors and other interested parties. Since others do not calculate funds from operations in a similar fashion, Reported Company FFO and Company FFO, as adjusted, may not be comparable to similarly titled measures as reported by others. Reported Company FFO and Company FFO, as adjusted, should not be considered as an alternative to net income as an indicator of our operating performance or as an alternative to cash flow as a measure of liquidity.
Reported Company Funds Available for Distribution ("FAD") is calculated by making adjustments to Company FFO, as adjusted, for (1) straight-line rent revenue, (2) lease incentive amortization, (3) amortization of above/below market leases, (4) cash paid for tenant improvements, (5) cash paid for lease costs, (6) non-cash general and administrative expenses, and (7) non-cash interest, net. Although FAD may not be comparable to that of other 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.
CONTACT: Investor or Media Inquiries, T. Wilson Eglin, CEO
         Lexington Realty Trust
         Phone: (212) 692-7200 E-mail: tweglin@lxp.com

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