LXP LXP Industrial Trust

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, 2015.

Third Quarter 2015 Highlights

• Generated Company Funds From Operations ("Company FFO") of $66.9 million, or $0.27 per diluted common share.
• Disposed of three properties for gross disposition proceeds of $135.7 million.
• Invested $25.5 million in on-going build-to-suit projects.
• Completed an industrial build-to-suit property for $22.1 million.
• Leased approximately 800,000 square feet with overall portfolio 96.5% leased.
• Retired $55.0 million of secured debt.
• Refinanced credit facility and term loans extending the maturities by two years and reducing interest rates by 15 to 65 basis points.
• Announced a 10.0 million common share repurchase authorization and repurchased 1.6 million common shares, at an average price of $8.34 per share, as of the date of this press release.

T. Wilson Eglin, President and Chief Executive Officer of Lexington, stated, "We are raising our Company FFO guidance for 2015 as a result of strong execution in all aspects of our business. During the third quarter, same-store rent increased 2.8%, reflecting that approximately 80% of our revenue now comes from leases with escalating rents. In the fourth quarter, we expect to close on two substantial build-to-suit projects that are estimated to contribute approximately $22.5 million to revenue next year."

FINANCIAL RESULTS

Revenues

For the quarter ended September 30, 2015, total gross revenues were $105.4 million, a 1.1% decrease compared with total gross revenues of $106.6 million for the quarter ended September 30, 2014. The decrease is primarily due to 2015 property sales and lease expirations, partially offset by revenue generated from property acquisitions and new leases signed.

Company FFO

For the quarter ended September 30, 2015, Lexington generated Company FFO of $66.9 million, or $0.27 per diluted share, compared to Company FFO for the quarter ended September 30, 2014 of $68.7 million, or $0.28 per diluted share. The calculation of Company FFO and a reconciliation to net income (loss) attributable to common shareholders is included later in this press release.

Dividends/Distributions

Lexington declared a regular quarterly common share/unit dividend/distribution for the quarter ended September 30, 2015 of $0.17 per common share/unit, which was paid on October 15, 2015 to common shareholders/unitholders of record as of September 30, 2015. Lexington also declared two dividends of $0.8125 per share each on its Series C Cumulative Convertible Preferred Stock ("Series C Preferred Shares"), which will be paid on November 16, 2015 and February 16, 2016 to Series C Preferred Shareholders of record as of October 30, 2015 and January 29, 2016, respectively.

Net Income (Loss) Attributable to Common Shareholders

For the quarter ended September 30, 2015, net loss attributable to common shareholders was $(7.6) million, or $(0.03) per diluted share, compared with net income attributable to common shareholders for the quarter ended September 30, 2014 of $38.7 million, or $0.17 per diluted share.

OPERATING ACTIVITIES

Investment Activity

During the quarter, Lexington completed the following build-to-suit project, which is subject to a lease having a term in excess of ten years (an "LTL").

Acquisition
Tenant		Location		PropertyType		InitialBasis($000)				InitialAnnualizedCash Rent($000)				InitialCashYield				GAAPYield				LeaseTerm (Yrs)
Stella & Chewy's LLC		Oak Creek, WI		LTL - Industrial		$	22,139			$	1,865				8.4	%			9.5	%		20

In addition, Lexington acquired a consolidated joint venture partner's interest in an office property in Philadelphia, Pennsylvania for $4.0 million, raising Lexington's ownership in the office property from 87.5% to 100.0%.

Lexington also funded $25.5 million of the projected costs of the following projects:

On-going Build-to-Suit Projects
Location		Sq. Ft.			Property Type		Lease Term(Years)		MaximumCommitment/EstimatedCompletion Cost($000)				GAAP InvestmentBalance as of9/30/2015($000)				Estimated Completion/Acquisition Date
Richmond, VA		330,000			LTL - Office		15		$	110,137			$	97,830			4Q 15
Anderson, SC		1,325,000			LTL - Industrial		20		70,012				12,708				2Q 16
Lake Jackson, TX		664,000			LTL - Office		20		166,164				45,008				4Q 16
Houston, TX(1)		274,000			LTL - Retail/Specialty		20		86,491				28,602				3Q 16
		2,593,000							$	432,804			$	184,148

   

1. Lexington has a 25% interest as of September 30, 2015. Lexington may provide construction financing up to $56.7 million to the joint venture.

In addition, Lexington has committed to acquire the following properties upon completion of construction:

Forward Commitments
Location		PropertyType		Estimated Acquisition Cost($000)				Lease Term (Years)		Estimated InitialCash Yield				Estimated GAAPYield				Estimated Acquisition Date
Richland, WA		LTL - Industrial		$	152,000			20			7.1	%			8.6	%		4Q 15
Detroit, MI		LTL - Industrial		29,680				20			7.4	%			7.4	%		1Q 16
				$	181,680						7.2	%			8.4	%

Capital Recycling

Property Dispositions

Tenant

Location

Property Type

Gross DispositionPrice ($000)

AnnualizedNOI ($000)

Month of Disposition

Wagner Industries, Inc.

Jacksonville, FL

Industrial

$

1,850

$

313

July

Lockheed Martin Corporation

Orlando, FL

Office

12,800

955

July

Multi-tenant(1)

Baltimore, MD

Office

121,000

8,318

August

$

135,650

$

9,586

   

1. $55.0 million non-recourse mortgage loan assumed at closing.

Balance Sheet

On September 1, 2015, Lexington entered into a new $905.0 million unsecured credit agreement, which replaced Lexington's existing revolving credit facility and term loans. With lender approval, Lexington can increase the size of the new facility to an aggregate $1.8 billion. A summary of the significant terms are as follows:

	PriorMaturity Date		NewMaturity Date		PriorInterest Rate		CurrentInterest Rate
$400.0 Million Revolving Credit Facility(1)	02/2017		08/2019		L + 1.15%		L + 1.00%
$250.0 Million Term Loan(2)	02/2018		08/2020		L + 1.35%		L + 1.10%
$255.0 Million Term Loan(3)	01/2019		01/2021		L + 1.75%		L + 1.10%

1.     Maturity date can be extended to 08/2020 at Lexington's option.2.     Lexington previously entered into aggregate interest rate swap agreements, which fix the LIBOR component of this loan at 1.09% through 02/2018.3.     Lexington previously entered into aggregate interest rate swap agreements, which fix the LIBOR component of this loan at 1.42% through 01/2019.

In July 2015, Lexington announced a new 10.0 million common share repurchase authorization (inclusive of all outstanding prior authorizations). As of the date of this earnings release, 1,594,644 common shares have been repurchased at an average price of $8.34 per share.

In August 2015, approximately $0.4 million original principal amount 6.00% Convertible Guaranteed Notes due 2030 ("6.00% Notes") were satisfied for cash, reducing the outstanding balance of this note issuance to $12.4 million. All common shares that are issuable upon conversion of the 6.00% Notes are treated as outstanding for diluted Company FFO calculations.

Leasing

During the third quarter of 2015, Lexington executed the following new and extended leases:

		LEASE EXTENSIONS
		Location			Prior Term		Lease Expiration Date		Sq. Ft.
		Office/Multi-Tenant Office
1		Rockaway, NJ			06/2026		12/2027		60,258
2-4		Various (AZ, HI)			2015		2016-2021		34,758
4		Total office lease extensions							95,016
		Industrial
1		Erwin, NY			11/2016		11/2026		408,000
2		Orlando, FL			03/2016		03/2021		205,016
2		Total industrial lease extensions							613,016
		Retail
1		Tulsa, OK			05/2016		05/2026		43,123
1		Total retail lease extensions							43,123
7		Total lease extensions							751,155
		NEW LEASES
		Location					Lease Expiration Date		Sq. Ft.
		Office/Multi-Tenant Office
1		Foxboro, MA					02/2017		8,151
2		Rockaway, NJ					12/2027		32,068
2		Total new office leases							40,219
2		Total new leases							40,219
9		TOTAL NEW AND EXTENDED LEASES							791,374

As of September 30, 2015, Lexington's portfolio was 96.5% leased, excluding properties owned subject to mortgages in default.

2015 EARNINGS GUIDANCE

Lexington raised its Company FFO guidance to an expected range of $1.05 to $1.07 from $1.02 to $1.06 to  per diluted share for the year ended December 31, 2015. This guidance is forward looking, excludes the impact of certain items and is based on current expectations.

THIRD QUARTER 2015 CONFERENCE CALL

Lexington will host a conference call today, Thursday, November 5, 2015, at 11:00 a.m. Eastern Time, to discuss its results for the quarter ended September 30, 2015. Interested parties may participate in this conference call by dialing 877-407-0789 or 201-689-8562. A replay of the call will be available through November 19, 2015, at 877-870-5176 or 858-384-5517, pin: 13622695. 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 is a real estate investment trust that owns a diversified portfolio of equity and debt interests in single-tenant commercial properties and land. Lexington seeks to expand its portfolio through acquisitions, sale-leaseback transactions, build-to-suit arrangements and other transactions. A majority of these properties and all land interests are subject to net or similar leases, where the tenant bears all or substantially all of the operating costs, including cost increases, for real estate taxes, utilities, insurance and ordinary repairs. Lexington also provides investment advisory and asset management services to investors in the single-tenant area. Lexington common shares are traded on the New York Stock Exchange under the symbol "LXP".  Additional information about Lexington is available on-line at www.lxp.com or by contacting Lexington Realty Trust, One Penn Plaza, Suite 4015, New York, New York 10119-4015, Attention: Investor Relations.

Contact:Investor or Media Inquiries, T. Wilson Eglin, CEOLexington Realty TrustPhone: (212) 692-7200 E-mail: tweglin@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, including those necessary to achieve an annualized dividend level of $0.68 per common share/unit, (2) Lexington's ability to achieve its estimate of Company FFO for the year ending December 31, 2015, (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.

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,
	2015				2014				2015				2014
Gross revenues:
Rental	$	98,095			$	98,941			$	300,551			$	292,870
Tenant reimbursements	7,343				7,631				23,662				23,165
Total gross revenues	105,438				106,572				324,213				316,035
Expense applicable to revenues:
Depreciation and amortization	(39,712		)		(39,022		)		(121,795		)		(114,732		)
Property operating	(13,484		)		(15,504		)		(45,600		)		(46,634		)
General and administrative	(6,734		)		(6,426		)		(22,526		)		(21,035		)
Non-operating income	2,515				4,217				8,213				10,369
Interest and amortization expense	(21,931		)		(24,321		)		(68,273		)		(73,456		)
Debt satisfaction gains (charges), net	(398		)		(455		)		13,753				(7,946		)
Impairment charges	(32,818		)		(2,464		)		(34,070		)		(18,864		)
Gains on sales of properties	1,733				-				23,307				-
Income (loss) before provision for income taxes, equity in earnings of non-consolidated entities and discontinued operations	(5,391		)		22,597				77,222				43,737
Provision for income taxes	(75		)		(72		)		(464		)		(947		)
Equity in earnings of non-consolidated entities	266				173				938				246
Income (loss) from continuing operations	(5,200		)		22,698				77,696				43,036
Discontinued operations:
Income from discontinued operations	-				1,322				109				5,601
Provision for income taxes	-				(14		)		(4		)		(50		)
Debt satisfaction charges, net	-				-				-				(299		)
Gains on sales of properties	-				18,542				1,577				22,052
Impairment charges	-				(371		)		-				(11,062		)
Total discontinued operations	-				19,479				1,682				16,242
Net income (loss)	(5,200		)		42,177				79,378				59,278
Less net income attributable to noncontrolling interests	(784		)		(1,772		)		(2,525		)		(3,537		)
Net income (loss) attributable to Lexington Realty Trust shareholders	(5,984		)		40,405				76,853				55,741
Dividends attributable to preferred shares - Series C	(1,573		)		(1,573		)		(4,718		)		(4,718		)
Allocation to participating securities	(72		)		(112		)		(264		)		(399		)
Net income (loss) attributable to common shareholders	$	(7,629	)		$	38,720			$	71,871			$	50,624
Income (loss) per common share - basic:
Income (loss) from continuing operations	$	(0.03	)		$	0.09			$	0.30			$	0.15
Income from discontinued operations	-				0.08				0.01				0.07
Net income (loss) attributable to common shareholders	$	(0.03	)		$	0.17			$	0.31			$	0.22
Weighted-average common shares outstanding - basic	234,018,062				229,463,522				233,457,400				228,337,871
Income (loss) per common share - diluted:
Income (loss) from continuing operations	$	(0.03	)		$	0.09			$	0.30			$	0.15
Income from discontinued operations	-				0.08				0.01				0.07
Net income (loss) attributable to common shareholders	$	(0.03	)		$	0.17			$	0.31			$	0.22
Weighted-average common shares outstanding - diluted	234,018,062				229,922,110				233,776,838				228,830,020
Amounts attributable to common shareholders:
Income (loss) from continuing operations	$	(7,629	)		$	20,151			$	70,189			$	35,330
Income from discontinued operations	-				18,569				1,682				15,294
Net income (loss) attributable to common shareholders	$	(7,629	)		$	38,720			$	71,871			$	50,624

LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands, except share and per share data)
	September 30, 2015				December 31, 2014
Assets:
Real estate, at cost	$	3,586,435			$	3,671,560
Real estate - intangible assets	669,341				705,566
Investments in real estate under construction	155,546				106,238
	4,411,322				4,483,364
Less: accumulated depreciation and amortization	1,153,841				1,196,114
Real estate, net	3,257,481				3,287,250
Assets held for sale	-				3,379
Cash and cash equivalents	86,269				191,077
Restricted cash	12,327				17,379
Investment in and advances to non-consolidated entities	28,050				19,402
Deferred expenses, net	62,225				65,860
Loans receivable, net	95,806				105,635
Rent receivable - current	9,896				6,311
Rent receivable - deferred	78,957				61,372
Other assets	21,614				20,229
Total assets	$	3,652,625			$	3,777,894
Liabilities and Equity:
Liabilities:
Mortgages and notes payable	$	804,238			$	945,216
Credit facility borrowings	73,000				-
Term loans payable	505,000				505,000
Senior notes payable	497,879				497,675
Convertible notes payable	12,128				15,664
Trust preferred securities	129,120				129,120
Dividends payable	45,307				42,864
Liabilities held for sale	-				2,843
Accounts payable and other liabilities	42,692				37,740
Accrued interest payable	14,679				8,301
Deferred revenue - including below market leases, net	43,521				68,215
Prepaid rent	16,991				16,336
Total liabilities	2,184,555				2,268,974
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, 235,179,131 and 233,278,037 shares issued and outstanding in 2015 and 2014, respectively	24				23
Additional paid-in-capital	2,779,836				2,763,374
Accumulated distributions in excess of net income	(1,422,417		)		(1,372,051		)
Accumulated other comprehensive income (loss)	(6,216		)		404
Total shareholders' equity	1,445,243				1,485,766
Noncontrolling interests	22,827				23,154
Total equity	1,468,070				1,508,920
Total liabilities and equity	$	3,652,625			$	3,777,894

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,
	2015				2014				2015				2014
EARNINGS PER SHARE:
Basic:
Income (loss) from continuing operations attributable to common shareholders	$	(7,629	)		$	20,151			$	70,189			$	35,330
Income from discontinued operations attributable to common shareholders	-				18,569				1,682				15,294
Net income (loss) attributable to common shareholders	$	(7,629	)		$	38,720			$	71,871			$	50,624
Weighted-average number of common shares outstanding	234,018,062				229,463,522				233,457,400				228,337,871
Income (loss) per common share:
Income (loss) from continuing operations	$	(0.03	)		$	0.09			$	0.30			$	0.15
Income from discontinued operations	-				0.08				0.01				0.07
Net income (loss) attributable to common shareholders	$	(0.03	)		$	0.17			$	0.31			$	0.22
Diluted:
Income (loss) from continuing operations attributable to common shareholders - basic	$	(7,629	)		$	20,151			$	70,189			$	35,330
Impact of assumed conversions	-				-				-				-
Income (loss) from continuing operations attributable to common shareholders	(7,629		)		20,151				70,189				35,330
Income from discontinued operations attributable to common shareholders - basic	-				18,569				1,682				15,294
Impact of assumed conversions	-				-				-				-
Income from discontinued operations attributable to common shareholders	-				18,569				1,682				15,294
Net income (loss) attributable to common shareholders	$	(7,629	)		$	38,720			$	71,871			$	50,624
Weighted-average common shares outstanding - basic	234,018,062				229,463,522				233,457,400				228,337,871
Effect of dilutive securities:
Share options	-				458,588				319,438				492,149
Weighted-average common shares outstanding	234,018,062				229,922,110				233,776,838				228,830,020
Income (loss) per common share:
Income (loss) from continuing operations	$	(0.03	)		$	0.09			$	0.30			$	0.15
Income from discontinued operations	-				0.08				0.01				0.07
Net income (loss) attributable to common shareholders	$	(0.03	)		$	0.17			$	0.31			$	0.22

LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
COMPANY FUNDS FROM OPERATIONS & FUNDS AVAILABLE FOR DISTRIBUTION
(Unaudited and in thousands, except share and per share data)
		Three Months Ended September 30,								Nine Months Ended September 30,
		2015				2014				2015				2014
FUNDS FROM OPERATIONS: (1)
Basic and Diluted:
Net income (loss) attributable to common shareholders		$	(7,629	)		$	38,720			$	71,871			$	50,624
Adjustments:
	Depreciation and amortization	38,547				39,030				117,936				117,991
	Impairment charges - real estate, including non-consolidated entities	32,818				3,115				34,070				30,856
	Noncontrolling interests - OP units	452				1,442				1,542				2,556
	Amortization of leasing commissions	1,166				1,580				3,859				4,506
	Joint venture and noncontrolling interest adjustment	577				495				1,335				1,733
	Gains on sales of properties	(1,733		)		(18,542		)		(24,884		)		(22,052		)
FFO available to common shareholders and unitholders - basic		64,198				65,840				205,729				186,214
	Preferred dividends	1,573				1,573				4,718				4,718
	Interest and amortization on 6.00% Convertible Guaranteed Notes	252				508				795				1,618
	Amount allocated to participating securities	72				112				264				399
FFO available to common shareholders and unitholders - diluted		66,095				68,033				211,506				192,949
	Debt satisfaction (gains) charges, net, including non-consolidated entities	398				455				(13,689		)		8,245
	Other / Transaction costs	405				257				579				1,514
Company FFO available to common shareholders and unitholders - diluted		66,898				68,745				198,396				202,708
FUNDS AVAILABLE FOR DISTRIBUTION: (2)
Adjustments:
	Straight-line rents	(12,899		)		(13,478		)		(35,242		)		(31,057		)
	Lease incentives	212				250				1,157				1,104
	Amortization of below/above market leases	287				184				(157		)		903
	Non-cash interest, net	(598		)		(1,824		)		520				(4,186		)
	Non-cash charges, net	2,205				2,114				6,608				6,563
	Tenant improvements	(10,562		)		(1,961		)		(13,184		)		(5,960		)
	Lease costs	(1,066		)		(1,895		)		(4,242	)		(8,414		)
Company Funds Available for Distribution		$	44,477			$	52,135			$	153,856			$	161,661
Per Common Share and Unit Amounts
Basic:
	FFO	$	0.27			$	0.28			$	0.87			$	0.80
Diluted:
	FFO	$	0.27			$	0.28			$	0.87			$	0.80
	Company FFO	$	0.27			$	0.28			$	0.81			$	0.84
	Company FAD	$	0.18			$	0.22			$	0.63			$	0.67
Weighted-Average Common Shares:
	Basic(3)	237,871,036				233,334,560				237,310,374				232,214,620
	Diluted	244,714,549				242,373,712				244,432,218				241,487,119

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 FFO available to common shareholders and unitholders - basic. Lexington also presents FFO available to common shareholders 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 Company FFO which adjusts FFO for certain items which Management believes are 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, Company FFO may not be comparable to similarly titled measures as reported by others. Company 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.

2 Company Funds Available for Distribution ("FAD") is calculated by making adjustments to Company FFO 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 interest, net and (7) non-cash charges, 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.

3 Includes OP units other than OP units held by us.