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Lexington Realty Trust Reports Third Quarter 2017 Results and Announces Dividend Increase

NEW YORK, Nov. 07, 2017 (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, 2017.

Third Quarter 2017 Highlights

  • Generated Net Income attributable to common shareholders of $3.9 million, or $0.02 per diluted common share.
  • Generated Adjusted Company Funds From Operations available to all equityholders and unitholders - diluted (“Adjusted Company FFO”) of $60.7 million, or $0.25 per diluted common share.
  • Acquired four industrial properties for an aggregated cost of $266.1 million and completed the Opelika, AL industrial build-to-suit project for $37.3 million.
  • Disposed of 12 properties for $42.0 million.
  • Amended the revolving credit facility, together with the related term loans, increasing the capacity by $200.0 million.
  • Retired $25.2 million of secured debt.
  • Completed 1.2 million square feet of new leases and lease extensions with portfolio 97.9% leased at quarter end.

Subsequent Events

  • Increased the quarterly common share/unit dividend/distribution to $0.1775 per common share/unit.
  • Acquired an industrial property in Lafayette, IN for $17.5 million.
  • Disposed of four properties for $28.2 million.
  • Completed 700,000 square feet of new and extended leases.

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 are very pleased with our third quarter results, the continued success of our business plan execution, and today’s announcement on the dividend increase. During the quarter and subsequently, we acquired or completed over $320 million of industrial properties, sold approximately $70 million of non-core assets, and leased over 1.9 million square feet. The quality of our portfolio has significantly improved through our sustained efforts. Our portfolio has an increasing percentage of rents from industrial properties, is younger, has a longer weighted-average lease term, and has less near-term lease rollover.”

FINANCIAL RESULTS

Revenues

For the quarter ended September 30, 2017, total gross revenues were $97.7 million, compared with total gross revenues of $106.0 million for the quarter ended September 30, 2016. The decrease was primarily attributable to 2017 and 2016 property sales, particularly the sale of the New York City land investments in 2016, and lease expirations, partially offset by revenue generated from property acquisitions and new leases.

Net Income Attributable to Common Shareholders

For the quarter ended September 30, 2017, net income attributable to common shareholders was $3.9 million, or $0.02 per diluted share, compared with net loss attributable to common shareholders for the quarter ended September 30, 2016 of $27.0 million, or $0.12 per diluted share.

Adjusted Company FFO

For the quarter ended September 30, 2017, Lexington generated Adjusted Company FFO of $60.7 million, or $0.25 per diluted share, compared to Adjusted Company FFO for the quarter ended September 30, 2016 of $67.2 million, or $0.28 per diluted share. The decrease was primarily attributable to the items discussed above under “Revenues”.

Dividends/Distributions

As previously announced, during the third quarter of 2017, Lexington declared a regular quarterly common share/unit dividend/distribution for the quarter ended September 30, 2017 of $ 0.175 per common share/unit, which was paid on October 16, 2017 to common shareholders/unitholders of record as of September 29, 2017. Lexington also declared a dividend of $0.8125 per share on its Series C Cumulative Convertible Preferred Stock (“Series C Preferred”), which is expected to be paid on November 15, 2017 to Series C Preferred Shareholders of record as of October 31, 2017.

Subsequent to quarter end, Lexington increased its quarterly common share/unit dividend/distribution to $0.1775 per common share/unit, which equates to an annualized dividend of $0.71 per common share/unit. The declared quarterly dividend/distribution will be payable on January 16, 2018 to common shareholders/unitholders of record as of December 29, 2017. In addition, Lexington declared a dividend of $0.8125 per share on its Series C Preferred, which is expected to be paid February 15, 2018 to Series C Preferred Shareholders of record as of January 31, 2018.

TRANSACTION ACTIVITY

ACQUISITIONS AND COMPLETED BUILD-TO-SUIT TRANSACTIONS
Tenant (Guarantor)   Location   Sq. Ft.   Property
Type
  Initial Basis ($000)   Approximate
Lease
Term (Yrs)
Golden State Foods Corp. (Golden State Enterprises, Inc.)   Opelika, AL   165,000     Industrial   $ 37,269     25
Georgia Pacific Consumer Products LP (Georgia-Pacific LLC)(1)   McDonough, GA   1,121,000     Industrial   66,700     10
McCormick & Company, Inc.(2)   Byhalia, MS   616,000     Industrial   36,590     10
Kellogg Sales Company (Kellogg Company)   Jackson, TN   1,062,000     Industrial   57,920     10
Nissan North America, Inc.   Smyrna, TN   1,505,000     Industrial   104,890     10
        4,469,000         $ 303,369      
                           
(1) Square footage includes a 220,000 square foot expansion that is expected to be completed in 2018.
(2) Initial Basis excludes a $133 thousand future tenant improvement allowance and $767 thousand of rent abatements, which were credited at closing.
 

The above properties were acquired/completed at aggregate weighted-average estimated GAAP and cash capitalization rates of 6.6% and 5.7%, respectively.

FORWARD PURCHASE COMMITMENTS            
Location   Sq. Ft.   Property
Type
  Maximum
Acquisition Cost

($000)
  Estimated
Acquisition
Date
  Estimated
Initial GAAP
Yield
  Estimated
Initial Cash
Yield
  Approximate
Lease Term
(Yrs)
Warren, MI(1)   260,000     Industrial   $ 47,000     4Q 17   8.3 %   7.3 %   15
Romulus, MI   500,000     Industrial   39,330     4Q 17   6.5 %   6.1 %   15
Lafayette, IN   309,000     Industrial   17,450     4Q 17   7.0 %   6.9 %   7
    1,069,000         $ 103,780         7.4 %   6.8 %    
 
(1)   A $4.6 million letter of credit secures the obligation to purchase this property.
 


PROPERTY DISPOSITIONS(1)    
Primary Tenant (Guarantor)   Location   Property Type   Gross
Disposition

Price
($000)
  Annualized
Net Income(2)
($000)
  Annualized
NOI(2)
($000)
  Month of
Disposition
  %
Leased
Food Lion, LLC/Delhaize America, Inc.   Lexington, NC   Other   $ 1,412     $ 102     $ 138     July   100 %
Vacant   Rock Hill, SC   Multi-Tenant - Office   6,250     (407 )   (388 )   July   0 %
Bank of America, N.A. (Bank of America Corporation)(3)   Various, GA   Other   7,050     593     841     August   100 %
Vacant(4)   Memphis, TN   Multi-Tenant - Office
  3,496     (533 )   (60 )   August   0 %
3D Systems Corporation   Rock Hill, SC   Office   8,600     286     703     September   100 %
Wipro Data Center and Cloud Services, Inc. (Infocrossing, Inc.)   Tempe, AZ   Office   15,200     553     981     September   100 %
            $ 42,008     $ 594     $ 2,215          
                                         
(1)  In addition to the dispositions in the table, Lexington disposed of its Port Chester, NY property by its property owner subsidiary abandoning its leasehold interest in September 2017.
(2)  Quarterly period prior to sale, excluding impairment charges, annualized.
(3)  Seven properties.
(4)  Conveyed to lender in a foreclosure sale.
 


These dispositions resulted in aggregate gains on sales of $10.6 million and aggregate impairment charges of $5.2 million.


LEASING

During the third quarter of 2017, 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   Rockaway NJ   Atlantic Health System, Inc.   12/2027   12/2029   92,326  
2   Baton Rouge LA   New Cingular Wireless PCS, LLC   10/2017   10/2022   70,100  
3-7   Honolulu HI   N/A   2017   2018-2021   6,196  
7   Total office lease extensions             168,622  
                       
    Industrial                
1   Columbus OH   ODW Logistics, Inc.   06/2018   06/2020   772,450  
2   Marshall MI   Tenneco Automotive Operating Company, Inc.   09/2018   09/2028   246,508  
2   Total industrial lease extensions               1,018,958  
                       
9   Total lease extensions               1,187,580  
                       


    NEW LEASES                  
                       
    Location           Lease Expiration Date   Sq. Ft.
    Office/Multi-Tenant                
1-3   Honolulu HI   N/A       2018-2020   952  
3   Total new office leases               952  
                       
3   Total new leases               952  
                       
 12    TOTAL NEW AND EXTENDED LEASES                1,188,532  
                         
(1)  Leases greater than 10,000 square feet.
 

As of September 30, 2017, Lexington's portfolio was 97.9% leased, excluding any property subject to a mortgage loan in default.

BALANCE SHEET/CAPITAL MARKETS

In the third quarter of 2017, Lexington satisfied an aggregate $25.2 million of nonrecourse mortgage debt.

Additionally, in September 2017, Lexington amended its credit facility. The amendment, among other things, (a) increased the amount of the revolving credit line capacity by an aggregate of $105 million for an aggregate capacity of $505 million; (b) obligated the term loan lenders to make additional term loans in the aggregate amount of $95 million, consisting of a $50 million increase in the term loan due in 2020, for an aggregate outstanding amount of $300 million, and a $45 million increase in the term loan due in 2021, for an aggregate outstanding amount of $300 million; and (c) with lender approval, increases the maximum overall capacity of the facility to an aggregate of $2.01 billion.

2017 EARNINGS GUIDANCE

Lexington now estimates that its net income attributable to common shareholders per diluted common share for the year ended December 31, 2017 will be within an expected range of $0.35 to $0.37. Lexington is narrowing its Adjusted Company FFO for the year ended December 31, 2017 to be within an expected range of $0.95 to $0.97 per diluted common share. This guidance is forward looking, excludes the impact of certain items and is based on current expectations.

THIRD QUARTER 2017 CONFERENCE CALL

Lexington will host a conference call today, November 7, 2017, at 8:30 a.m. Eastern Time, to discuss its results for the quarter ended September 30, 2017. 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 7, 2018, 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 10113450. 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 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 Supplemental Information package, or to follow Lexington on social media, visit www.lxp.com.

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 

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, 2017, (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, and all property operating activities are conducted, through special purpose entities, which are separate and distinct legal entities that maintain separate books and records, but in some instances 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 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 (or its 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 estimates and 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,
  2017   2016   2017   2016
Gross revenues:              
Rental $ 89,704     $ 98,602     $ 265,923     $ 310,804  
Tenant reimbursements 7,985     7,379     23,549     23,366  
Total gross revenues 97,689     105,981     289,472     334,170  
Expense applicable to revenues:              
Depreciation and amortization (43,495 )   (40,288 )   (128,706 )   (124,687 )
Property operating (11,694 )   (11,472 )   (36,784 )   (34,843 )
General and administrative (7,963 )   (7,510 )   (25,561 )   (23,032 )
Litigation reserve (2,050 )       (2,050 )    
Non-operating income 1,005     3,080     4,997     9,500  
Interest and amortization expense (18,887 )   (23,001 )   (57,828 )   (68,573 )
Debt satisfaction gains (charges), net 2,424     2,538     2,378     (818 )
Impairment charges and loan loss (21,986 )   (72,890 )   (43,577 )   (75,904 )
Gains on sales of properties 10,645     16,072     55,078     58,413  
Income (loss) before provision for income taxes and equity in earnings (losses) of non-consolidated entities 5,688     (27,490 )   57,419     74,226  
Provision for income taxes (375 )   (462 )   (1,174 )   (1,099 )
Equity in earnings (losses) of non-consolidated entities 283     340     (1,064 )   6,394  
Net income (loss) 5,596     (27,612 )   55,181     79,521  
Less net (income) loss attributable to noncontrolling interests (55 )   2,260     (448 )   102  
Net income (loss) attributable to Lexington Realty Trust shareholders 5,541     (25,352 )   54,733     79,623  
Dividends attributable to preferred shares – Series C (1,573 )   (1,573 )   (4,718 )   (4,718 )
Allocation to participating securities (52 )   (50 )   (183 )   (187 )
Net income (loss) attributable to common shareholders $ 3,916     $ (26,975 )   $ 49,832     $ 74,718  
               
Net income (loss) attributable to common shareholders - per common share basic $ 0.02     $ (0.12 )   $ 0.21     $ 0.32  
Weighted-average common shares outstanding – basic 237,989,098     234,207,396     237,632,572     233,151,600  
               
Net income (loss) attributable to common shareholders - per common share diluted $ 0.02     $ (0.12 )   $ 0.21     $ 0.31  
Weighted-average common shares outstanding – diluted 241,702,715     234,207,396     241,442,227     237,215,883  
                       


 
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands, except share and per share data)
       
  September 30, 2017   December 31, 2016
Assets:      
Real estate, at cost $ 3,837,705     $ 3,533,172  
Real estate - intangible assets 595,904     597,294  
Investments in real estate under construction     106,652  
  4,433,609     4,237,118  
Less: accumulated depreciation and amortization 1,200,814     1,208,792  
Real estate, net 3,232,795     3,028,326  
Assets held for sale 8,638     23,808  
Cash and cash equivalents 140,545     86,637  
Restricted cash 34,946     31,142  
Investment in and advances to non-consolidated entities 60,683     67,125  
Deferred expenses, net 32,426     33,360  
Loans receivable, net     94,210  
Rent receivable – current 6,388     7,516  
Rent receivable – deferred 46,611     31,455  
Other assets 32,124     37,888  
Total assets $ 3,595,156     $ 3,441,467  
       
Liabilities and Equity:      
Liabilities:      
Mortgages and notes payable, net $ 670,345     $ 738,047  
Revolving credit facility borrowings 200,000      
Term loans payable, net 596,369     501,093  
Senior notes payable, net 494,989     494,362  
Trust preferred securities, net 127,171     127,096  
Dividends payable 48,494     47,264  
Liabilities held for sale 442     191  
Accounts payable and other liabilities 36,728     59,601  
Accrued interest payable 11,683     6,704  
Deferred revenue - including below market leases, net 34,069     39,895  
Prepaid rent 15,371     14,723  
Total liabilities 2,235,661     2,028,976  
       
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, 240,643,775 and 238,037,177 shares issued and outstanding in 2017 and 2016, respectively 24     24  
Additional paid-in-capital 2,824,379     2,800,736  
Accumulated distributions in excess of net income (1,576,459 )   (1,500,966 )
Accumulated other comprehensive income (loss) 510     (1,033 )
Total shareholders’ equity 1,342,470     1,392,777  
Noncontrolling interests 17,025     19,714  
Total equity 1,359,495     1,412,491  
Total liabilities and equity $ 3,595,156     $ 3,441,467  
               


 
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES 
EARNINGS PER SHARE 
(Unaudited and in thousands, except share and per share data)
 
      Three Months Ended   Nine Months Ended
 

 
    September 30,   September 30,
      2017   2016   2017   2016
EARNINGS PER SHARE:                
                 
Basic:                
Net income (loss) attributable to common shareholders   $ 3,916     $ (26,975 )   $ 49,832     $ 74,718  
                   
Weighted-average number of common shares outstanding - basic   237,989,098     234,207,396     237,632,572     233,151,600  
                 
Net income (loss) attributable to common shareholders - per common share basic   $ 0.02     $ (0.12 )   $ 0.21     $ 0.32  
                   
Diluted:                  
Net income (loss) attributable to common shareholders - basic   $ 3,916     $ (26,975 )   $ 49,832     $ 74,718  
Impact of assumed conversions   (173 )       (192 )   (845 )
Net income (loss) attributable to common shareholders   $ 3,743     $ (26,975 )   $ 49,640     $ 73,873  
                   
Weighted-average common shares outstanding - basic   237,989,098     234,207,396     237,632,572     233,151,600  
Effect of dilutive securities:                
Share options   66,748         95,788     246,166  
Operating Partnership Units   3,646,869         3,713,867     3,818,117  
Weighted-average common shares outstanding - diluted   241,702,715     234,207,396     241,442,227     237,215,883  
                   
Net income (loss) attributable to common shareholders - per common share diluted   $ 0.02     $ (0.12 )   0.21     $ 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,
      2017   2016   2017   2016
FUNDS FROM OPERATIONS:            
Basic and Diluted:                
Net income (loss) attributable to common shareholders   $ 3,916     $ (26,975 )   $ 49,832     $ 74,718  
Adjustments:                
  Depreciation and amortization   42,015     38,642     124,633     119,523  
  Impairment charges - real estate, including non-consolidated entities   21,986     72,890     41,795     75,904  
  Noncontrolling interests - OP units   (173 )   (2,507 )   (192 )   (845 )
  Amortization of leasing commissions   1,480     1,646     4,073     5,164  
  Joint venture and noncontrolling interest adjustment   259     284     864     742  
  Gains on sales of properties, including non-consolidated entities   (10,645 )   (16,072 )   (56,530 )   (63,791 )
  Tax on sales of properties               50  
FFO available to common shareholders and unitholders - basic   58,838     67,908     164,475     211,465  
  Preferred dividends   1,573     1,573     4,718     4,718  
  Interest and amortization on 6.00% Convertible Guaranteed Notes       47         532  
  Amount allocated to participating securities   52     50     183     187  
FFO available to all equityholders and unitholders - diluted   60,463     69,578     169,376     216,902  
  Litigation reserve   2,050         2,050      
  Debt satisfaction (gains) charges, net   (2,424 )   (2,538 )   (2,378 )   818  
  Loan loss           5,294      
  Transaction costs   612     115     1,100     329  
Adjusted Company FFO available to all equityholders and unitholders - diluted   60,701     67,155     175,442     218,049  
                 
FUNDS AVAILABLE FOR DISTRIBUTION:                
Adjustments:                
  Straight-line adjustments   (4,002 )   (11,317 )   (12,552 )   (35,697 )
  Lease incentives   515     414     1,456     1,256  
  Amortization of above/below market leases   320     572     1,180     1,527  
  Lease termination payments, net   (142 )   (1,839 )   (437 )   (6,402 )
  Non-cash interest, net   795     (512 )   1,447     (1,526 )
  Non-cash charges, net   2,066     2,296     6,199     6,906  
  Tenant improvements   (4,072 )   (1,173 )   (10,067 )   (1,292 )
  Lease costs   (2,228 )   (1,458 )   (5,284 )   (6,165 )
Company Funds Available for Distribution   $ 53,953     $ 54,138     $ 157,384     $ 176,656  
                   
Per Common Share and Unit Amounts                
Basic:                
  FFO   $ 0.24     $ 0.29     $ 0.68     $ 0.89  
                     
Diluted:                
  FFO   $ 0.24     $ 0.29     $ 0.69     $ 0.89  
  Adjusted Company FFO   $ 0.25     $ 0.28     $ 0.71     $ 0.89  
                     
Basic:                
  Weighted-average common shares outstanding - basic EPS   237,989,098     234,207,396     237,632,572     233,151,600  
  Operating partnership units(1)   3,646,869     3,815,386     3,713,867     3,818,117  
  Weighted-average common shares outstanding - basic FFO   241,635,967     238,022,782     241,346,439     236,969,717  
                     
Diluted:                
  Weighted-average common shares outstanding - diluted EPS   241,702,715     234,207,396     241,442,227     237,215,883  
  Operating partnership units(1)       3,815,386          
  6% Convertible Guaranteed Notes       508,912         1,439,456  
  Unvested share-based payment awards   655,228     570,260     650,348     478,329  
  Share Options       238,395          
  Preferred shares - Series C   4,710,570     4,710,570     4,710,570     4,710,570  
  Weighted-average common shares outstanding - diluted FFO   247,068,513     244,050,919     246,803,145     243,844,238  
                           
  (1)  Includes OP units other than OP units held by Lexington.  
     


LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
       
2017 EARNINGS GUIDANCE      
  Twelve Months Ended
December 31, 2017
  Range
Estimated:      
Net income attributable to common shareholders per diluted common share(1) $ 0.35     $ 0.37  
Depreciation and amortization 0.70     0.70  
Impact of capital transactions (0.10 )   (0.10 )
Estimated Adjusted Company FFO per diluted common share $ 0.95     $ 0.97  
   
(1)  Assumes all convertible securities are dilutive.  
   


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