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 and year ended
December 31, 2016.
Fourth Quarter 2016 Highlights
- Generated Net Income attributable to common
shareholders of $14.4 million, or $0.06 per diluted common
share.
- Generated Adjusted Company Funds From Operations
available to all equityholders and unitholders - diluted (“Adjusted
Company FFO”) of $59.7 million, or $0.24 per diluted common
share.
- Acquired two industrial properties for an aggregate
cost of $97.5 million and completed three of the four buildings of
the Lake Jackson, TX build-to-suit project at an estimated cost of
$78.5 million.
- Disposed of nine office properties for $87.1
million.
- Invested $25.4 million in on-going build-to-suit
projects.
- Committed to acquire two industrial properties in 2017
for an aggregate cost of $71.7 million.
- Completed 658,000 square feet of new leases and lease
extensions with overall portfolio 96.0% leased at quarter
end.
Full Year 2016 Highlights
- Generated Net Income attributable to common
shareholders of $89.1 million, or $0.37 per diluted common
share.
- Generated Adjusted Company FFO of $277.7 million, or
$1.14 per diluted common share, inclusive of $0.03 per diluted
common share related to the Westlake, Texas termination payment
received and fully included as income in the second quarter of
2016.
- Acquired/completed six consolidated properties and one
nonconsolidated property for an aggregate initial basis of $390.1
million.
- Disposed of 28 consolidated properties for gross
proceeds of $663.0 million.
- Completed 4.7 million square feet of new leases and
lease extensions.
- Retired $374.1 million of secured debt, which had a
weighted-average fixed interest rate of 5.0% and a weighted-average
term to maturity of 6.6 years and obtained $254.7 million of
secured debt with a weighted-average fixed interest rate of 4.3%
and a weighted-average term to maturity of 19.1
years.
- Repaid all $177.0 million of borrowings outstanding
under its $400.0 million unsecured revolving credit
facility.
- Repurchased 1.2 million common shares at an average
price of $7.56 per share and issued 1.0 million common shares at an
average price of $10.75 per share under its At-The-Market (“ATM”)
offering program.
Subsequent Events
- Disposed of six properties for aggregate gross proceeds
of $88.9 million.
- Acquired two industrial properties for an aggregate
purchase price of $50.6 million.
- Issued 1.6 million common shares at an average gross
price of $10.89 per share under its ATM offering
program.
- Completed the last building at the Lake Jackson, Texas
build-to-suit project.
- Sold the tenant-in-common interest in the Oklahoma
City, Oklahoma property for $6.3 million and collected $8.5 million
in full satisfaction of the loan receivable owed from the other
tenant-in-common.
- Sold the Kennewick, Washington loan receivable for
$80.4 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 “Positive fourth
quarter activity rounded out a highly successful year for
Lexington. Sales during the quarter brought total 2016 consolidated
disposition volume to $663 million at GAAP and cash cap rates of
10.2% and 5.1%, respectively. We used the proceeds to complete $390
million of new investment activity at favorable spreads and to
improve our balance sheet, which brought our leverage to 5.2x net
debt to Adjusted EBITDA, its lowest level in recent years. Our
investments were more focused in the industrial area during the
quarter, and this represents a trend that is expected to continue
in 2017.”
FINANCIAL RESULTS
Revenues
For the quarter ended December 31, 2016,
total gross revenues were $95.3 million, compared with total gross
revenues of $106.6 million for the quarter ended
December 31, 2015. The decrease was primarily attributable to
2016 property sales, particularly the sale of the New York City
land investments, and lease expirations, partially offset by
revenue generated from property acquisitions and new leases.
Net Income Attributable to Common
Shareholders
For the quarter ended December 31, 2016,
net income attributable to common shareholders was $14.4 million,
or $0.06 per diluted share, compared with net income attributable
to common shareholders for the quarter ended December 31, 2015
of $33.2 million, or $0.14 per diluted share.
Adjusted Company FFO
For the quarter ended December 31, 2016,
Lexington generated Adjusted Company FFO of $59.7 million, or $0.24
per diluted share, compared to Adjusted Company FFO for the quarter
ended December 31, 2015 of $69.6 million, or $0.29 per diluted
share.
Dividends/Distributions
As previously announced, during the fourth
quarter of 2016, Lexington declared a regular quarterly common
share dividend/distribution for the quarter ended December 31, 2016
of $0.175 per common share/unit, which was paid on January 17, 2017
to common shareholders/unitholders of record as of December 30,
2016. Lexington previously announced and declared a dividend of
$0.8125 per share on its Series C Cumulative Convertible Preferred
Stock (“Series C Preferred Shares”), which was paid on February 15,
2017 to Series C Preferred Shareholders of record as of January 31,
2017.
Transaction Activity
|
ACQUISITIONS AND COMPLETED BUILD-TO-SUIT
TRANSACTIONS |
|
Primary Tenant (Guarantor) |
|
Location |
|
Sq. Ft. |
|
PropertyType |
|
Initial Basis ($000) |
|
Estimated Annual GAAP Rent ($000) |
|
Initial Annualized Cash Rent
($000) |
|
EstimatedGAAPYield |
|
InitialCashYield |
|
Approximate
LeaseTerm(Yrs) |
| Aryzta, LLC (Aryzta
AG) |
|
Romeoville, IL |
|
188,000 |
|
|
Industrial |
|
$ |
52,700 |
|
|
$ |
3,544 |
|
|
$ |
3,301 |
|
|
6.7 |
% |
|
6.3 |
% |
|
15 |
| Amazon.com.dedc, LLC
(Amazon.com Inc.) |
|
Edwardsville, IL |
|
770,000 |
|
|
Industrial |
|
44,800 |
|
|
2,682 |
|
|
2,501 |
|
|
6.0 |
% |
|
5.6 |
% |
|
10 |
| The Dow Chemical
Company(1) |
|
Lake
Jackson, TX |
|
389,000 |
|
|
Office |
|
78,484 |
|
|
8,673 |
|
|
7,108 |
|
|
9.5 |
% |
|
7.7 |
% |
|
20 |
| |
|
|
|
1,347,000 |
|
|
|
|
$ |
175,984 |
|
|
$ |
14,899 |
|
|
$ |
12,910 |
|
|
7.8 |
% |
|
6.7 |
% |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1. Three
of four buildings completed in Q4 2016. Estimated GAAP and cash
yields reflect estimated costs of completion of final building and
developer partner payout of all four buildings, as set forth in the
table immediately below. |
|
ON-GOING BUILD-TO-SUIT PROJECTS |
|
|
|
Location |
|
Sq. Ft. |
|
Property Type |
|
Maximum Commitment/Estimated Completion Cost
($000) |
|
GAAP Investment Balance as
of 12/31/2016 ($000)(1) |
|
Estimated Completion Date |
|
Approximate Lease Term (Yrs) |
| Lake Jackson,
TX(2) |
|
275,000 |
|
|
Office |
|
$ |
78,447 |
|
|
$ |
55,960 |
|
|
1Q
17 |
|
20 |
| Charlotte, NC |
|
201,000 |
|
|
Office |
|
62,445 |
|
|
40,443 |
|
|
2Q
17 |
|
15 |
| Opelika, AL |
|
165,000 |
|
|
Industrial |
|
37,000 |
|
|
10,249 |
|
|
2Q
17 |
|
25 |
| |
|
641,000 |
|
|
|
|
$ |
177,892 |
|
|
$ |
106,652 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1. During
the quarter, Lexington funded $25.4 million of the projected costs
of the above projects, including the completed Lake Jackson
buildings. |
| 2. Total
project is 664,000 square feet. 389,000 square feet completed in Q4
2016 as set forth in the table above. |
|
FORWARD PURCHASE COMMITMENTS |
|
Location |
|
Sq. Ft. |
|
PropertyType |
|
MaximumAcquisition
Cost($000) |
|
Estimated Acquisition Date |
|
Estimated
GAAPYield |
|
Estimated Initial Cash Yield |
|
Approximate Lease Term (Yrs) |
| Grand Prairie, TX |
|
215,000 |
|
|
Industrial |
|
$ |
24,725 |
|
|
2Q
17 |
|
7.6 |
% |
|
6.2 |
% |
|
20 |
| Warren, MI(1) |
|
260,000 |
|
|
Industrial |
|
47,000 |
|
|
3Q
17 |
|
8.3 |
% |
|
7.3 |
% |
|
15 |
| |
|
475,000 |
|
|
|
|
$ |
71,725 |
|
|
|
|
8.0 |
% |
|
6.9 |
% |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. Lexington provided a $4.6 million letter of credit to
secure its obligation to purchase this property. |
|
PROPERTY DISPOSITIONS |
|
Primary Tenant |
|
Location |
|
Property Type |
|
Gross Disposition Price ($000) |
|
Annualized Net Income(1)(2)
($000) |
|
Annualized NOI(1) ($000) |
|
Month of Disposition |
| Vacant |
|
Canonsburg, PA |
|
Office |
|
$ |
8,250 |
|
|
$ |
(330 |
) |
|
$ |
(330 |
) |
|
October |
| Avnet, Inc. |
|
Phoenix, AZ |
|
Office |
|
32,000 |
|
|
1,276 |
|
|
1,949 |
|
|
October |
| Bank of America,
National Association |
|
Los
Angeles, CA |
|
Office |
|
19,200 |
|
|
1,014 |
|
|
1,107 |
|
|
November |
| BluePearl Holdings,
LLC(3) |
|
Tampa,
FL/Houston TX |
|
Office |
|
15,177 |
|
|
566 |
|
|
946 |
|
|
November |
| Nextel of Texas,
Inc.(4) |
|
Temple, TX |
|
Office |
|
7,463 |
|
|
(366 |
) |
|
800 |
|
|
December |
| Vacant |
|
Westmont, IL |
|
Office |
|
5,000 |
|
|
(682 |
) |
|
(635 |
) |
|
December |
| |
|
|
|
|
|
$ |
87,090 |
|
|
$ |
1,478 |
|
|
$ |
3,837 |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1.
Quarterly period prior to sale annualized. |
| 2.
Excludes impairment charges recognized. |
| 3.
Includes four properties. |
| 4.
Conveyed to lender in a foreclosure sale. |
|
|
LOAN INVESTMENTS
Lexington collected an aggregate $1.6 million in
full satisfaction of three loan investments secured by portfolios
of single-tenant retail properties.
Leasing Activity
During the fourth quarter of 2016, Lexington
executed the following new and extended leases:
| |
|
LEASE EXTENSIONS |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
Location |
|
Primary Tenant(1) |
Prior Term |
|
LeaseExpiration Date |
|
Sq. Ft. |
| |
|
Office/Multi-Tenant |
|
|
|
|
|
|
|
|
| 1 |
|
San Antonio |
TX |
|
United Healthcare
Services, Inc. |
|
11/2017 |
|
11/2024 |
|
142,500 |
|
|
2-3 |
|
Various |
HI/PA |
|
N/A |
|
2016-2017 |
|
2019-2020 |
|
1,521 |
|
|
3 |
|
Total office lease extensions |
|
|
|
|
|
|
144,021 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
Industrial/Multi-Tenant |
|
|
|
|
|
|
|
|
| 1 |
|
Plymouth |
IN |
|
Bay Valley Foods,
LLC |
|
12/2016 |
|
12/2018 |
|
300,500 |
|
|
2 |
|
Antioch |
TN |
|
Wirtgen America,
Inc. |
|
12/2016 |
|
12/2019 |
|
73,500 |
|
|
2 |
|
Total industrial/multi-tenant lease
extensions |
|
|
|
|
|
|
|
374,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
Other |
|
|
|
|
|
|
|
|
| 1 |
|
Chattanooga |
TN |
|
BI-LO LLC/K-VA-T Food
Stores, Inc. |
|
06/2017 |
|
06/2019 |
|
42,130 |
|
|
1 |
|
Total other lease extensions |
|
|
|
|
|
|
|
42,130 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
6 |
|
Total lease extensions |
|
|
|
|
|
|
|
560,151 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
NEW
LEASES |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
Location |
|
|
|
|
|
Lease Expiration Date |
|
Sq. Ft. |
| |
|
Office/Multi-Tenant |
|
|
|
|
|
|
|
|
| 1 |
|
Farmers Branch |
TX |
|
Brain Synergy
Institute, LLC d/b/a Cerebrum Health Centers |
|
|
|
09/2024 |
|
12,707 |
|
| 2 |
|
Richmond |
VA |
|
N/A |
|
|
|
02/2027 |
|
8,503 |
|
| 3 |
|
Hampton |
VA |
|
Wisconsin Physicians
Service Insurance Corporation(2) |
|
|
|
08/2023 |
|
71,073 |
|
|
4-9 |
|
Honolulu/Farmers Branch |
HI/TX |
|
N/A |
|
|
|
2017-2022 |
|
5,436 |
|
|
9 |
|
Total new office leases |
|
|
|
|
|
|
|
97,719 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
9 |
|
Total new leases |
|
|
|
|
|
|
|
97,719 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
15 |
|
TOTAL NEW AND EXTENDED LEASES |
|
|
|
|
|
|
|
657,870 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
1. Leases greater than 10,000 square feet. |
|
|
2. Lease commences January 1, 2020 following expiration of
existing tenant's lease. |
|
As of December 31, 2016, Lexington's portfolio was 96.0% leased,
excluding any property subject to a mortgage in default.
BALANCE SHEET/CAPITAL
MARKETS
In the fourth quarter of 2016, Lexington issued
976,109 common shares at an average price of $10.75 per share under
its ATM offering program.
During the fourth quarter of 2016, Lexington
satisfied $14.0 million of secured debt with a weighted-average
interest rate of 5.2%.
2017 EARNINGS GUIDANCE
Lexington 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 $0.64 to $0.67. Lexington estimates that its Adjusted Company
FFO for the year ended December 31, 2017 will be within an expected
range of $0.94 to $0.98 per diluted common share. This guidance is
forward looking, excludes the impact of certain items and is based
on current expectations.
FOURTH QUARTER 2016 CONFERENCE
CALL
Lexington will host a conference call today,
Wednesday, March 1, 2017, at 8:30 a.m. Eastern Time, to discuss its
results for the quarter ended December 31, 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 June 1, 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
10100256. 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 Supplemental 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 and its
subsidiaries 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, but not limited to, 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 on the terms described
herein or at all, (4) the failure to continue to qualify as a REIT,
(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 has filed 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 revise those forward-looking
statements 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 or 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 Press 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 rent 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) 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 that of 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 December 31, |
|
Twelve months ended December 31, |
| |
2016 |
|
2015 |
|
2016 |
|
2015 |
| Gross revenues: |
|
|
|
|
|
|
|
|
Rental |
$ |
87,261 |
|
|
$ |
98,934 |
|
|
$ |
398,065 |
|
|
$ |
399,485 |
|
| Tenant
reimbursements |
8,065 |
|
|
7,692 |
|
|
31,431 |
|
|
31,354 |
|
| Total
gross revenues |
95,326 |
|
|
106,626 |
|
|
429,496 |
|
|
430,839 |
|
| Expense applicable to
revenues: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
(41,361 |
) |
|
(41,403 |
) |
|
(166,048 |
) |
|
(163,198 |
) |
| Property
operating |
(12,512 |
) |
|
(14,055 |
) |
|
(47,355 |
) |
|
(59,655 |
) |
| General and
administrative |
(8,072 |
) |
|
(6,750 |
) |
|
(31,104 |
) |
|
(29,276 |
) |
| Non-operating
income |
3,543 |
|
|
3,216 |
|
|
13,043 |
|
|
11,429 |
|
| Interest and
amortization expense |
(19,459 |
) |
|
(21,466 |
) |
|
(88,032 |
) |
|
(89,739 |
) |
| Debt satisfaction gains
(charges), net |
(157 |
) |
|
11,397 |
|
|
(975 |
) |
|
25,150 |
|
| Impairment charges |
(24,332 |
) |
|
(2,762 |
) |
|
(100,236 |
) |
|
(36,832 |
) |
| Gains on sales of
properties |
23,097 |
|
|
— |
|
|
81,510 |
|
|
23,307 |
|
| Income before provision
for income taxes, equity in earnings of non-consolidated entities
and discontinued operations |
16,073 |
|
|
34,803 |
|
|
90,299 |
|
|
112,025 |
|
| Provision for income
taxes |
(340 |
) |
|
(104 |
) |
|
(1,439 |
) |
|
(568 |
) |
| Equity in earnings of
non-consolidated entities |
1,196 |
|
|
814 |
|
|
7,590 |
|
|
1,752 |
|
| Income
from continuing operations |
16,929 |
|
|
35,513 |
|
|
96,450 |
|
|
113,209 |
|
| Discontinued
operations: |
|
|
|
|
|
|
|
| Income
from discontinued operations |
— |
|
|
— |
|
|
— |
|
|
109 |
|
| Provision
for income taxes |
— |
|
|
— |
|
|
— |
|
|
(4 |
) |
| Gains on
sales of properties |
— |
|
|
— |
|
|
— |
|
|
1,577 |
|
| Total
discontinued operations |
— |
|
|
— |
|
|
— |
|
|
1,682 |
|
| Net income |
16,929 |
|
|
35,513 |
|
|
96,450 |
|
|
114,891 |
|
| Less net
income attributable to noncontrolling interests |
(928 |
) |
|
(663 |
) |
|
(826 |
) |
|
(3,188 |
) |
| Net income attributable
to Lexington Realty Trust shareholders |
16,001 |
|
|
34,850 |
|
|
95,624 |
|
|
111,703 |
|
| Dividends attributable
to preferred shares – Series C |
(1,572 |
) |
|
(1,572 |
) |
|
(6,290 |
) |
|
(6,290 |
) |
| Allocation to
participating securities |
(38 |
) |
|
(49 |
) |
|
(225 |
) |
|
(313 |
) |
| Net income attributable
to common shareholders |
$ |
14,391 |
|
|
$ |
33,229 |
|
|
$ |
89,109 |
|
|
$ |
105,100 |
|
| Income per common share
– basic: |
|
|
|
|
|
|
|
| Income
from continuing operations |
$ |
0.06 |
|
|
$ |
0.14 |
|
|
$ |
0.38 |
|
|
$ |
0.44 |
|
| Income
from discontinued operations |
— |
|
|
— |
|
|
— |
|
|
0.01 |
|
| Net
income attributable to common shareholders |
$ |
0.06 |
|
|
$ |
0.14 |
|
|
$ |
0.38 |
|
|
$ |
0.45 |
|
| Weighted-average common
shares outstanding – basic |
235,066,967 |
|
|
233,448,100 |
|
|
233,633,058 |
|
|
233,455,056 |
|
| Income per common share
– diluted: |
|
|
|
|
|
|
|
| Income
from continuing operations |
$ |
0.06 |
|
|
$ |
0.14 |
|
|
$ |
0.37 |
|
|
$ |
0.44 |
|
| Income
from discontinued operations |
— |
|
|
— |
|
|
— |
|
|
0.01 |
|
| Net
income attributable to common shareholders |
$ |
0.06 |
|
|
$ |
0.14 |
|
|
$ |
0.37 |
|
|
$ |
0.45 |
|
| Weighted-average common
shares outstanding – diluted |
235,204,568 |
|
|
239,411,055 |
|
|
237,679,031 |
|
|
233,751,775 |
|
| Amounts attributable to
common shareholders: |
|
|
|
|
|
|
|
| Income
from continuing operations |
$ |
14,391 |
|
|
$ |
33,229 |
|
|
$ |
89,109 |
|
|
$ |
103,418 |
|
| Income
from discontinued operations |
— |
|
|
— |
|
|
— |
|
|
1,682 |
|
| Net
income attributable to common shareholders |
$ |
14,391 |
|
|
$ |
33,229 |
|
|
$ |
89,109 |
|
|
$ |
105,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| LEXINGTON REALTY TRUST AND CONSOLIDATED
SUBSIDIARIES |
| CONDENSED CONSOLIDATED BALANCE
SHEETS |
| As of December 31, |
| (Unaudited and in thousands, except share and per share
data) |
| |
| |
2016 |
|
2015 |
|
Assets: |
|
|
|
| Real estate, at
cost |
$ |
3,533,172 |
|
|
$ |
3,789,711 |
|
| Real estate -
intangible assets |
597,294 |
|
|
692,778 |
|
| Investments in real
estate under construction |
106,652 |
|
|
95,402 |
|
| |
4,237,118 |
|
|
4,577,891 |
|
| Less: accumulated
depreciation and amortization |
1,208,792 |
|
|
1,179,969 |
|
| Real
estate, net |
3,028,326 |
|
|
3,397,922 |
|
| Assets held for
sale |
23,808 |
|
|
24,425 |
|
| Cash and cash
equivalents |
86,637 |
|
|
93,249 |
|
| Restricted cash |
31,142 |
|
|
10,637 |
|
| Investment in and
advances to non-consolidated entities |
67,125 |
|
|
31,054 |
|
| Deferred expenses,
net |
33,360 |
|
|
42,000 |
|
| Loans receivable,
net |
94,210 |
|
|
95,871 |
|
| Rent receivable –
current |
7,516 |
|
|
7,193 |
|
| Rent receivable –
deferred |
31,455 |
|
|
87,547 |
|
| Other assets |
37,888 |
|
|
18,505 |
|
| Total assets |
$ |
3,441,467 |
|
|
$ |
3,808,403 |
|
| |
|
|
|
| Liabilities and
Equity: |
|
|
|
| Liabilities: |
|
|
|
| Mortgages and notes
payable, net |
$ |
738,047 |
|
|
$ |
872,643 |
|
| Revolving credit
facility borrowings |
— |
|
|
177,000 |
|
| Term loans payable,
net |
501,093 |
|
|
500,076 |
|
| Senior notes payable,
net |
494,362 |
|
|
493,526 |
|
| Convertible notes
payable, net |
— |
|
|
12,126 |
|
| Trust preferred
securities, net |
127,096 |
|
|
126,996 |
|
| Dividends payable |
47,264 |
|
|
45,440 |
|
| Liabilities held for
sale |
191 |
|
|
8,405 |
|
| Accounts payable and
other liabilities |
59,601 |
|
|
41,479 |
|
| Accrued interest
payable |
6,704 |
|
|
8,851 |
|
| Deferred revenue -
including below market leases, net |
39,895 |
|
|
42,524 |
|
| Prepaid rent |
14,723 |
|
|
16,806 |
|
| Total liabilities |
2,028,976 |
|
|
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, 238,037,177
and 234,575,225 shares issued and outstanding in 2016 and 2015,
respectively |
24 |
|
|
23 |
|
| Additional
paid-in-capital |
2,800,736 |
|
|
2,776,837 |
|
| Accumulated
distributions in excess of net income |
(1,500,966 |
) |
|
(1,428,908 |
) |
| Accumulated other
comprehensive loss |
(1,033 |
) |
|
(1,939 |
) |
| Total
shareholders’ equity |
1,392,777 |
|
|
1,440,029 |
|
| Noncontrolling
interests |
19,714 |
|
|
22,502 |
|
| Total
equity |
1,412,491 |
|
|
1,462,531 |
|
| Total liabilities and
equity |
$ |
3,441,467 |
|
|
$ |
3,808,403 |
|
| |
|
|
|
|
|
|
|
| LEXINGTON REALTY TRUST AND CONSOLIDATED
SUBSIDIARIES |
| EARNINGS PER SHARE |
| (Unaudited and in thousands, except share and per
share data) |
|
|
| |
|
|
Three Months EndedDecember 31, |
|
Twelve Months Ended December 31, |
| |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
EARNINGS PER SHARE: |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
|
|
| Income from
continuing operations attributable to common shareholders |
$ |
14,391 |
|
$ |
33,229 |
|
$ |
89,109 |
|
$ |
103,418 |
|
| Income from
discontinued operations attributable to common shareholders |
|
— |
|
|
— |
|
|
— |
|
|
1,682 |
|
| Net income
attributable to common shareholders |
$ |
14,391 |
|
$ |
33,229 |
|
$ |
89,109 |
|
$ |
105,100 |
|
| |
|
|
|
|
|
|
|
|
|
|
Weighted-average number of common shares outstanding |
|
235,066,967 |
|
|
233,448,100 |
|
|
233,633,058 |
|
|
233,455,056 |
|
| |
|
|
|
|
|
|
|
|
| Income per
common share: |
|
|
|
|
|
|
|
|
| Income from continuing operations |
$ |
0.06 |
|
$ |
0.14 |
|
$ |
0.38 |
|
$ |
0.44 |
|
| Income from discontinued operations |
|
— |
|
|
— |
|
|
— |
|
|
0.01 |
|
| Net income attributable to common shareholders |
$ |
0.06 |
|
$ |
0.14 |
|
$ |
0.38 |
|
$ |
0.45 |
|
| |
|
|
|
|
|
|
|
|
|
|
Diluted: |
|
|
|
|
|
|
|
|
|
| Income from
continuing operations attributable to common shareholders -
basic |
$ |
14,391 |
|
$ |
33,229 |
|
$ |
89,109 |
|
$ |
103,418 |
|
| Impact of
assumed conversions |
|
— |
|
|
711 |
|
|
(159 |
) |
|
— |
|
| Income from
continuing operations attributable to common shareholders |
|
14,391 |
|
|
33,940 |
|
|
88,950 |
|
|
103,418 |
|
| 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
attributable to common shareholders |
$ |
14,391 |
|
$ |
33,940 |
|
$ |
88,950 |
|
$ |
105,100 |
|
| |
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding - basic |
|
235,066,967 |
|
|
233,448,100 |
|
|
233,633,058 |
|
|
233,455,056 |
|
| Effect of
dilutive securities: |
|
|
|
|
|
|
|
|
| Share options |
|
137,601 |
|
|
220,125 |
|
|
230,352 |
|
|
296,719 |
|
| Operating Partnership Units |
|
— |
|
|
3,834,962 |
|
|
3,815,621 |
|
|
— |
|
| 6.00% Convertible Guaranteed Notes |
|
— |
|
|
1,907,868 |
|
|
— |
|
|
— |
|
|
Weighted-average common shares outstanding - diluted |
|
235,204,568 |
|
|
239,411,055 |
|
|
237,679,031 |
|
|
233,751,775 |
|
| |
|
|
|
|
|
|
|
|
|
| Income per
common share: |
|
|
|
|
|
|
|
|
| Income from continuing operations |
$ |
0.06 |
|
$ |
0.14 |
|
$ |
0.37 |
|
$ |
0.44 |
|
| Income from discontinued operations |
|
— |
|
|
— |
|
|
— |
|
|
0.01 |
|
| Net income attributable to common shareholders |
$ |
0.06 |
|
$ |
0.14 |
|
$ |
0.37 |
|
$ |
0.45 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| LEXINGTON REALTY TRUST AND CONSOLIDATED
SUBSIDIARIES |
| ADJUSTED COMPANY FUNDS FROM OPERATIONS &
FUNDS AVAILABLE FOR DISTRIBUTION |
| (Unaudited and in thousands, except share and per
share data) |
| |
|
|
|
|
|
|
|
| |
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
| |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
FUNDS FROM OPERATIONS: |
|
|
|
|
|
|
|
Basic and Diluted: |
|
|
|
|
|
|
|
|
| Net income
attributable to common shareholders |
|
$ |
14,391 |
|
|
$ |
33,229 |
|
|
$ |
89,109 |
|
|
$ |
105,100 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
| |
Depreciation and amortization |
|
39,840 |
|
|
39,708 |
|
|
159,363 |
|
|
157,644 |
|
| |
Impairment charges - real estate |
|
24,332 |
|
|
2,762 |
|
|
100,236 |
|
|
36,832 |
|
| |
Noncontrolling interests - OP units |
|
686 |
|
|
457 |
|
|
(159 |
) |
|
1,999 |
|
| |
Amortization of leasing commissions |
|
1,520 |
|
|
1,695 |
|
|
6,684 |
|
|
5,554 |
|
| |
Joint venture and noncontrolling interest adjustment |
|
369 |
|
|
453 |
|
|
1,111 |
|
|
1,788 |
|
| |
Gains on sales of properties, including non-consolidated
entities |
|
(23,729 |
) |
|
(487 |
) |
|
(87,520 |
) |
|
(25,371 |
) |
| |
Tax on sales of properties |
|
2 |
|
|
— |
|
|
52 |
|
|
— |
|
| FFO
available to common shareholders and unitholders -
basic |
|
57,411 |
|
|
77,817 |
|
|
268,876 |
|
|
283,546 |
|
| |
Preferred dividends |
|
1,572 |
|
|
1,572 |
|
|
6,290 |
|
|
6,290 |
|
| |
Interest and amortization on 6.00% Convertible Notes |
|
— |
|
|
253 |
|
|
532 |
|
|
1,048 |
|
| |
Amount allocated to participating securities |
|
38 |
|
|
49 |
|
|
225 |
|
|
313 |
|
| FFO
available to all equityholders and unitholders -
diluted |
|
59,021 |
|
|
79,691 |
|
|
275,923 |
|
|
291,197 |
|
| |
Debt satisfaction (gains) charges, net, including
non-consolidated entities |
|
157 |
|
|
(11,397 |
) |
|
975 |
|
|
(25,086 |
) |
| |
Transaction costs/Other |
|
508 |
|
|
1,285 |
|
|
837 |
|
|
1,864 |
|
|
Adjusted Company FFO available to all equityholders and
unitholders - diluted |
|
59,686 |
|
|
69,579 |
|
|
277,735 |
|
|
267,975 |
|
| |
|
|
|
|
|
|
|
|
|
FUNDS AVAILABLE FOR DISTRIBUTION: |
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
| |
Straight-line rents |
|
(2,051 |
) |
|
(12,460 |
) |
|
(37,748 |
) |
|
(47,702 |
) |
| |
Lease incentives |
|
417 |
|
|
387 |
|
|
1,673 |
|
|
1,544 |
|
| |
Amortization of above/below market leases |
|
530 |
|
|
418 |
|
|
2,057 |
|
|
261 |
|
| |
Lease termination payments, net |
|
(1,814 |
) |
|
2,420 |
|
|
(8,216 |
) |
|
3,086 |
|
| |
Non-cash interest, net |
|
(387 |
) |
|
(638 |
) |
|
(1,913 |
) |
|
(118 |
) |
| |
Non-cash charges, net |
|
2,092 |
|
|
2,213 |
|
|
8,998 |
|
|
8,821 |
|
| |
Tenant improvements |
|
(665 |
) |
|
(7,242 |
) |
|
(1,957 |
) |
|
(20,426 |
) |
| |
Lease costs |
|
(393 |
) |
|
(2,439 |
) |
|
(6,558 |
) |
|
(6,681 |
) |
|
Company Funds Available for Distribution |
|
$ |
57,415 |
|
|
$ |
52,238 |
|
|
$ |
234,071 |
|
|
$ |
206,760 |
|
| |
|
|
|
|
|
|
|
|
|
| Per
Common Share and Unit Amounts |
|
|
|
|
|
|
|
|
| Basic: |
|
|
|
|
|
|
|
|
| |
FFO |
|
$ |
0.24 |
|
|
$ |
0.33 |
|
|
$ |
1.13 |
|
|
$ |
1.19 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
Diluted: |
|
|
|
|
|
|
|
|
| |
FFO |
|
$ |
0.24 |
|
|
$ |
0.33 |
|
|
$ |
1.13 |
|
|
$ |
1.19 |
|
| |
Adjusted Company FFO |
|
$ |
0.24 |
|
|
$ |
0.29 |
|
|
$ |
1.14 |
|
|
$ |
1.10 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average Common Shares |
|
|
|
|
|
|
|
|
| Basic: |
|
|
|
|
|
|
|
|
| |
Weighted-average common shares outstanding - basic EPS |
|
235,066,967 |
|
|
233,448,100 |
|
|
233,633,058 |
|
|
233,455,056 |
|
| |
Operating partnership units(1) |
|
3,808,185 |
|
|
3,834,962 |
|
|
3,815,621 |
|
|
3,848,434 |
|
| |
Weighted-average common shares outstanding - basic FFO |
|
238,875,152 |
|
|
237,283,062 |
|
|
237,448,679 |
|
|
237,303,490 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
Diluted: |
|
|
|
|
|
|
|
|
| |
Weighted-average common shares outstanding - diluted EPS |
|
235,204,568 |
|
|
239,411,055 |
|
|
237,679,031 |
|
|
233,751,775 |
|
| |
Unvested share-based payment awards |
|
674,053 |
|
|
— |
|
|
549,049 |
|
|
3,326 |
|
| |
6.00% Convertible Guaranteed Notes |
|
— |
|
|
— |
|
|
1,077,626 |
|
|
2,041,629 |
|
| |
Operating partnership units(1) |
|
3,808,185 |
|
|
— |
|
|
— |
|
|
3,848,434 |
|
| |
Preferred shares - Series C |
|
4,710,570 |
|
|
4,710,570 |
|
|
4,710,570 |
|
|
4,710,570 |
|
| |
Weighted-average common shares outstanding - diluted FFO |
|
244,397,376 |
|
|
244,121,625 |
|
|
244,016,276 |
|
|
244,355,734 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1)
Includes OP units other than OP units held by Lexington. |
|
| |
| RECONCILIATION OF NON-GAAP
MEASURES |
| |
|
|
|
| 2017 EARNINGS
GUIDANCE |
|
|
|
| |
Twelve Months EndedDecember 31, 2017 |
| |
Range |
| Estimated: |
|
|
|
| Net income attributable
to common shareholders per diluted common share(1) |
$ |
0.64 |
|
|
$ |
0.67 |
|
|
Depreciation and amortization |
0.67 |
|
|
0.68 |
|
| Impact of
capital transactions |
(0.37 |
) |
|
(0.37 |
) |
| Estimated Adjusted
Company FFO per diluted common share |
$ |
0.94 |
|
|
$ |
0.98 |
|
| |
|
|
|
|
|
|
|
| (1) Assumes
all convertible securities are dilutive. |
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
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