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   InitialBasis($000)   InitialEstimatedAnnualizedGAAPRent ($000)   InitialEstimatedAnnualizedCash Rent ($000)   InitialEstimated GAAP Yield   InitialEstimatedCash 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.   PropertyType   LeaseTerm (Years)   MaximumCommitment/EstimatedCompletion Cost ($000)   GAAPInvestmentBalance as of 9/30/2016 ($000)   EstimatedAcquisition/CompletionDate   EstimatedInitialGAAP Yield   EstimatedInitial CashYield
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   GrossDisposition Price ($000)   Annualized NetIncome (1)(2) ($000)   Annualized NOI (1) ($000)   Month ofDisposition
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) PriorTerm   Lease Expiration Date   Sq. Ft.
    Office/Multi-Tenant                
1-3   Honolulu HI   N/A   2016   2017   5,323  
3   Total office lease extensions             5,323  
                       
    Industrial                
1   Hebron OH   Owens Corning Insulating Systems, LLC   05/2017   12/2019   250,410  
2   Hebron OH   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           LeaseExpiration Date   Sq. Ft.
    Office/Multi-Tenant                
1   Indianapolis IN   N/A       02/2018   3,764  
2-4   Honolulu HI   N/A       2016-2017   4,679  
1   Total office lease extensions               8,443  
                       
    Industrial                  
1   Temperance MI   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 reimbursements 7,379     7,343     23,366     23,662  
Total gross revenues 106,331     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 income 3,080     2,515     9,500     8,213  
Interest and amortization expense (23,001 )   (21,931 )   (68,573 )   (68,273 )
Debt satisfaction gains (charges), net 2,538     (398 )   (818 )   13,753  
Impairment charges (72,890 )   (32,818 )   (75,904 )   (34,070 )
Gains on sales of properties 16,072     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 entities 340     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 interests 2,232     (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 - basic 234,207,396     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 - diluted 234,207,396     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 assets 598,359     692,778  
Investments in real estate under construction 137,576     95,402  
  4,195,719     4,577,891  
Less: accumulated depreciation and amortization 1,201,043     1,179,969  
Real estate, net 2,994,676     3,397,922  
Assets held for sale 29,819     24,425  
Cash and cash equivalents 117,791     93,249  
Restricted cash 42,387     10,637  
Investment in and advances to non-consolidated entities 63,963     31,054  
Deferred expenses, net 34,697     42,000  
Loans receivable, net 95,808     95,871  
Rent receivable - current 8,875     7,193  
Rent receivable - deferred 22,843     87,547  
Other assets 39,092     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, net 500,839     500,076  
Senior notes payable, net 494,153     493,526  
Convertible guaranteed notes payable, net     12,126  
Trust preferred securities, net 127,071     126,996  
Dividends payable 47,944     45,440  
Liabilities held for sale 2,220     8,405  
Accounts payable and other liabilities 30,796     41,479  
Accrued interest payable 11,632     8,851  
Deferred revenue - including below market leases, net 43,904     42,524  
Prepaid rent 17,432     16,806  
Total liabilities 2,033,709     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 outstanding 94,016     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, respectively 24     23  
Additional paid-in-capital 2,788,966     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' equity 1,396,639     1,440,029  
Noncontrolling interests 19,603     22,502  
Total equity 1,416,242     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 EndedSeptember 30,   Nine Months EndedSeptember 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 EndedDecember 31, 2016
  Range
Estimated:      
Net income attributable to common shareholders per diluted common share (1) $ 0.40     $ 0.44  
Depreciation and amortization 0.68     0.68  
Impact of capital transactions 0.01     (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 RelationsLexington Realty TrustPhone: (212) 692-7200 E-mail: hgentry@lxp.com

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