Lexington Realty Trust Reports Fourth Quarter 2011 Results

NEW YORK, Feb. 23, 2012 (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 fourth quarter ended December 31, 2011.

Fourth Quarter 2011Highlights

• Generated Company Funds From Operations ("Company FFO") of $45.5 million or $0.25 per diluted common share/unit, adjusted for certain items.
• Exceeded Company FFO guidance for 2011 by $0.03 per diluted common share/unit.
• Reduced overall consolidated debt by $39.3 million, bringing debt reduction for the year to $119.3 million.
• Generated $51.6 million from capital recycling efforts.
• Executed 18 new and extended leases, totaling 0.5 million square feet.
• Acquired an industrial property in Chillicothe, Ohio for $12.1 million and invested $11.0 million in build-to-suit projects.
• Agreed to acquire for $17.6 million a to-be-built 80,000 square foot office facility upon completion of construction and commencement of a 15-year net lease at an initial cap rate of 9.0%.

Subsequent to Quarter End Highlights

• Procured a $215.0 million secured term loan facility and refinanced $300.0 million secured revolving credit facility.
• Executed 11 new and extended leases, totaling approximately 2.7 million square feet.
• Acquired a build-to-suit office facility in Huntington, West Virginia for a capitalized cost of $12.6 million.

T. Wilson Eglin, President and Chief Executive Officer of Lexington, stated, "2011 was a very successful year for Lexington. We raised overall portfolio occupancy 250 basis points to 95.9%, completed non-core asset sales of $160.1 million at a weighted-average capitalization rate of 7.4% and invested $175.7 million in growth opportunities which have a weighted-average yield of 9.9%. We continue to meet or exceed our deleveraging objectives while deploying capital into accretive property investments and refinancing our maturing debts at substantially lower interest rates. We believe Lexington provides investors with a compelling total return potential based on its dividend yield, conservative payout ratio, refinancing opportunities and attractive acquisition pipeline."

FINANCIAL RESULTS

Revenues

For the quarter ended December 31, 2011, total gross revenues were $82.9 million, compared with total gross revenues of $80.2 million for the quarter ended December 31, 2010. The increase is primarily due to property acquisitions and an increase in occupancy.

Company FFO Attributable to Common Shareholders/Unitholders

The following presents, in tabular form, the items excluded from Reported Company FFO for the periods presented (in millions, except for per diluted share/unit data):

Net Income Attributable to Common Shareholders

For the quarter ended December 31, 2011, net income attributable to common shareholders was $7.5 million, or income of $0.05 per diluted share, compared with net income attributable to common shareholders for the quarter ended December 31, 2010 of $5.3 million, or income of $0.04 per diluted share.

Common Share Dividend/Distribution

On November 1, 2011, Lexington declared a regular quarterly dividend/distribution for the quarter ended December 31, 2011 of $0.125 per common share/unit, which was paid on January 17, 2012 to common shareholders/unitholders of record as of December 30, 2011. This quarterly dividend of $0.125 per common share/unit represents an 8.7% increase and, subject to authorization by the Board of Trustees, an expected annualized dividend of $0.50 per common share/unit.

OPERATING ACTIVITIES

Leasing

During the fourth quarter of 2011, Lexington executed 18 new and extended leases for 0.5 million square feet and ended the year with overall portfolio occupancy of 95.9%. Overall, Lexington executed new and extended leases totaling 4.9 million square feet in 2011.

Capital Recycling

Sales

During the fourth quarter of 2011, Lexington disposed of its interests in three properties to unrelated parties for an aggregate gross sales price of $22.7 million. Total disposition activity for 2011 was $160.1 million at a weighted-average cap rate of 7.4%.

Loan Investments

On November 18, 2011, Lexington received $11.5 million, in full satisfaction of a $10.0 million original principal amount mezzanine loan made in June 2011, which included $1.5 million in accrued interest and a yield maintenance premium. This investment generated an annualized yield of 36.5%.

On December 30, 2011, Lexington received $9.5 million, plus accrued interest, in full satisfaction of a mezzanine loan made in the first quarter of 2010. This investment generated an annualized yield of 23.0%.

Joint Venture Investments

During the fourth quarter of 2011, Lexington received $7.9 million as a distribution from a joint venture upon the satisfaction of the joint venture's sole asset, an interest in a mezzanine loan. Lexington invested $5.8 million in the joint venture in June 2011. This investment generated an annualized yield of 79.5%.

Investment Activity

Property Acquisitions

On October 5, 2011, Lexington acquired a 475,000 square foot distribution facility in Chillicothe, Ohio for $12.1 million (8.2% initial cap rate). The facility is net-leased to a single tenant for approximately 15 years.

On December 27, 2011, Lexington entered into a contract to acquire upon completion an 80,000 square foot office facility in Eugene, Oregon, which will be net-leased for 15 years. The anticipated purchase price is $17.6 million (9.0% initial cap rate). Lexington is expected to close on the acquisition in the first quarter of 2013; however, no assurance can be provided that the acquisition will be consummated.

Build-to-Suit Projects

Lexington continues to fund the construction of the previously announced build-to-suit projects in (1) Saint Joseph, Missouri (9.5% initial cap rate), (2) Florence, South Carolina (10.0% initial cap rate), (3) Shreveport, Louisiana (9.5% initial cap rate), (4) Long Island City, New York (8.5% initial cap rate), and (5) Jessup, Pennsylvania (9.2% initial cap rate). The aggregate estimated cost of these five projects is $103.7 million of which $24.9 million was invested as of December 31, 2011. Subsequent to December 31, 2011, Lexington closed on the acquisition of the build-to-suit office property in Huntington, West Virginia for a capitalized cost of $12.6 million (9.4% initial cap rate).

Balance Sheet

Lexington reduced its consolidated debt during the fourth quarter of 2011 by $39.3 million. This includes four mortgages that were to mature in 2012 totaling $34.4 million. Overall indebtedness was reduced by $119.3 million in 2011.

On October 28, 2011, Lexington settled its common share forward purchase obligation with a cash payment of $4.0 million ($15.6 million was paid prior to 2011), which resulted in the retirement of all 4.0 million common shares underlying the obligation.

During the fourth quarter of 2011, Lexington repurchased and retired an aggregate of 419,126 Series B Cumulative Redeemable Preferred Shares and 91,104 Series C Cumulative Convertible Preferred Shares for an aggregate of $14.0 million, at a $1.0 million discount to liquidation preference. Overall, Lexington repurchased $15.5 million of the Series B and Series C shares at a $1.3 million discount to liquidation preference in 2011.

Subsequent to quarter end, Lexington procured a $215.0 million secured term loan facility with a seven-year term and refinanced its $300.0 million secured revolving credit facility with a new $300.0 million secured revolving credit facility. Lexington used proceeds from these loans to satisfy the remaining balance of the $60.6 million term loans scheduled to mature in 2013 and the remaining $62.2 million of 5.45% Exchangeable Guaranteed Notes, which were repurchased pursuant to a holder option. Currently, $108.0 million is outstanding on the term loan and $28.0 million is outstanding under the revolving credit facility. In addition, Lexington entered into an interest-rate swap agreement to fix LIBOR at 1.512% on $108.0 million of borrowings under the term loan for seven years. Accordingly, the interest rate on the $108.0 million of borrowings is 3.76% as of the date of this press release.

2012 EARNINGS GUIDANCE

Lexington estimates that Company FFO guidance will be $0.90 to $0.93 per diluted share for the year ended December 31, 2012. This guidance is forward looking, excludes the impact of certain items and is based on current expectations.

FOURTH QUARTER 2011 CONFERENCE CALL

Lexington will host a conference call today, Thursday, February 23, 2012, at 11:00 a.m. Eastern Time, to discuss its results for the quarter ended December 31, 2011. Interested parties may participate in this conference call by dialing (888) 857-6930 or (719) 457-2630. A replay of the call will be available through March 8, 2012, at (877) 870-5176 or (858) 384-5517, pin: 5865542. A live webcast of the conference call will be available at https://www.lxp.com within the Investor Relations section.

ABOUT LEXINGTON REALTY TRUST

Lexington Realty Trust is a real estate investment trust that owns, invests in, and manages office, industrial and retail properties net-leased to major corporations throughout the United States and provides investment advisory and asset management services to investors in the net lease area. Lexington shares are traded on the New York Stock Exchange under the symbol "LXP". Additional information about Lexington is available on-line at https://www.lxp.com or by contacting Lexington Realty Trust, One Penn Plaza, Suite 4015, New York, New York 10119-4015, Attention: Investor Relations.

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 to achieve an expected annualized dividend paid in 2012 of $0.50 per common share, (2) Lexington's ability to achieve its estimate of Company FFO for the year ended December 31, 2012, (3) the consummation of the built-to-suit construction loans and subsequent acquisition of such properties, (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 the current global financial and credit crisis, (6) competition, (7) increases in real estate construction costs, (8) changes in interest rates, (9) changes in accessibility of debt and equity capital markets, including with respect to financings that Lexington is working on, or (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", "is optimistic" or similar expressions. 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, but consolidated for financial statement purposes and/or disregarded for income tax purposes.

¹ Lexington believes that Funds from Operations ("FFO") is a widely recognized and appropriate measure of the performance of an equity REIT. Lexington presents FFO because it considers FFO an important supplemental measure of Lexington's operating performance. 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 generally accepted accounting principles ("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.

FFO is determined in accordance with standards established by the National Association of Real Estate Investment Trusts, Inc. ("NAREIT"). FFO is defined by NAREIT 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 recently 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. FFO 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.

Lexington includes in its calculation of FFO, which Lexington refers to as the "Company's funds from operations" or "Company FFO," Lexington's operating partnership units, Lexington's Series C Cumulative Convertible Preferred Shares, and Lexington's 6.00% Convertible 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 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. Since others do not calculate FFO in a similar fashion, Company FFO may not be comparable to similarly titled measures as reported by others.

CONTACT: Investor or Media Inquiries, T. Wilson Eglin, CEO
         Lexington Realty Trust
         Phone: (212) 692-7200 E-mail: [email protected]