NEW YORK, May 8 /PRNewswire-FirstCall/ -- Lexington Realty Trust ("Lexington") , a real estate investment trust focused on single-tenant real estate investments, today announced results for the first quarter ended March 31, 2008.
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First Quarter 2008 Highlights
-- Total gross revenues increased 33.2% to $107.6 million
-- Company Funds From Operations ("FFO") of $44.3 million or $0.42 per
diluted share/unit(1)
-- 24 new and renewal leases executed, totaling approximately 1.2 million
square feet
-- $124.1 million in real estate dispositions at a 6.5% cap rate
-- Generated cash of $72.5 million through co-investment program closing
-- Obtained $70.0 million in five year, 5.5% fixed rate term loans
-- Repurchased $100 million face amount of Exchangeable Notes at 12.6%
discount
(1) See the last page of this press release for a reconciliation of GAAP
net income to FFO.
T. Wilson Eglin, President and Chief Executive Officer of Lexington stated, "We are satisfied with our results for the quarter, as we continued our track record of producing stable cash flow, paying a well supported dividend and maintaining a solid balance sheet position. We continue to be pleased with our leasing results with 24 leases executed in the quarter totaling 1.2 million square feet, and our capital recycling activities continue to bear fruit even in a more challenging disposition environment. Sales activity totaled $124.1 million at an average cap rate of approximately 6.5%. During the quarter, we further strengthened our balance sheet by reducing debt by $320 million through exchangeable notes repurchases and repayment of mortgages. We believe that our balance sheet flexibility will enable us to take advantage of favorable investment opportunities that are expected to arise over the balance of the year. With our strategic restructuring plan substantially complete, we look forward to growing our portfolio and expect the majority of our investments to take place through existing and to-be-formed joint ventures and co-investment programs."
FINANCIAL RESULTS
Revenue
For the quarter ended March 31, 2008, total gross revenues increased 33.2% to $107.6 million, compared with total gross revenues of $80.8 million for the quarter ended March 31, 2007. The increase is primarily due to the acquisition of properties in our former co-investment programs during the second quarter of 2007.
Net Income (Loss) Allocable to Common Shareholders
For the quarter ended March 31, 2008, net income allocable to common shareholders was $0.8 million, or $0.01 per diluted share, compared with a net loss allocable to common shareholders for the quarter ended March 31, 2007 of ($3.4) million, or ($0.05) per diluted share.
Company FFO Applicable to Common Shareholders/Unitholders
For the quarter ended March 31, 2008, Company FFO was $44.3 million, or $0.42 per diluted share/unit, compared with Company FFO for the quarter ended March 31, 2007 of $48.7 million, or $0.42 per diluted share/unit. Company FFO for the quarter ended March 31, 2008 was impacted by several unusual items, including activity in co-investment programs, totaling a net benefit of approximately $0.04 per diluted share/unit. In the first quarter, the Company incurred severance charges totaling $2.0 million, formation costs of $0.9 million relating to a co-investment program, and impairment charges of $5.4 million, which were more than offset by debt satisfaction gains of $12.3 million. Adjusted for these items, Company FFO per diluted share/unit decreased primarily due to the disposition of properties during 2007 and the first quarter of 2008 and the $2.10 per share/unit special dividend/distribution paid in January, 2008.
Balance Sheet
The Company's balance sheet position continues to provide ample liquidity to deploy as investment opportunities become available. At March 31, 2008, Lexington had approximately $2.7 billion in debt outstanding, equating to a debt-to-total capitalization of approximately 59.6%. As of March 31, 2008, the weighted average interest rate on the Company's debt was 5.73% with a weighted average maturity of 7.2 years. Approximately 92% of the Company's debt is subject to fixed interest rates.
Common Share Dividend
On February 21, 2008, Lexington's Board of Trustees declared a regular quarterly cash dividend/distribution of $0.33 per share/unit, which was paid on April 15, 2008, to common shareholders/unitholders of record as of March 31, 2008, and which equated to an annualized dividend of $1.32 per share.
OPERATING ACTIVITIES
Dispositions
During the quarter ended March 31, 2008, Lexington sold its interest in three properties to third parties for an aggregate sales price of $124.1 million. In addition, Lexington sold/contributed 11 properties to its co-investment program with Inland American Real Estate Trust raising $72.5 million in proceeds.
Leasing Activity
At March 31, 2008, Lexington's total portfolio was approximately 95.2% leased. For the quarter ended March 31, 2008, Lexington executed 24 leases (new and renewal) for approximately 1.2 million square feet.
2008 EARNINGS GUIDANCE
Lexington reaffirmed its previously disclosed Company FFO guidance range of $1.56 to $1.64 per diluted share/unit for the full year ended December 31, 2008. This guidance excludes the impact of the 100 Light Street lease termination transaction and other non-recurring items. This guidance is based on current expectations and is forward-looking.
1ST QUARTER 2008 CONFERENCE CALL
The Company will host a conference call, today, Thursday, May 8, 2008, at 11:00 a.m. Eastern Time, to discuss its results for the quarter ended March 31, 2008. Interested parties may participate in this conference call by dialing (877) 407-0778 or (201) 689-8565. A replay of the call will be available through June 8, 2008, at (877) 660-6853, Account #: 286, Conference ID #: 281551.
A live web cast of the conference call will be available at http://www.lxp.com/ within the Investor Relations section. An online replay will also be available through May 8, 2009.
ABOUT LEXINGTON REALTY TRUST
Lexington Realty Trust is a real estate investment trust that owns, invests in, and manages office, industrial and retail properties net-leased to major corporations throughout the United States and provides investment advisory and asset management services to investors in the net lease area. Lexington shares are traded on the New York Stock Exchange under the symbol "LXP". Additional information about Lexington is available on-line at http://www.lxp.com/ or by contacting Lexington Realty Trust, One Penn Plaza, Suite 4015, New York, New York 10119-4015, Attention: Investor Relations.
This release contains certain forward-looking statements which involve known and unknown risks, uncertainties or other factors not under Lexington's control which may cause actual results, performance or achievements of Lexington to be materially different from the results, performance, or other expectations implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed under the headings "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" in Lexington's most recent annual report on Form 10-K filed with the Securities and Exchange Commission (" SEC") on February 29, 2008 (the "Form 10-K") and other periodic reports filed with the SEC, including risks related to: (1) the failure to continue to qualify as a real estate investment trust, (2) changes in general business and economic conditions, (3) competition, (4) increases in real estate construction costs, (5) changes in interest rates, or (6) changes in accessibility of debt and equity capital markets. Copies of the Form 10-K and the other periodic reports Lexington files with the SEC are available on Lexington's website at http://www.lxp.com/. Forward-looking statements, which are based on certain assumptions and describe the Company's future plans, strategies and expectations, are generally identifiable by use of the words "believes," "expects," "intends," "anticipates," "estimates," "projects", "is optimistic" or similar expressions. Lexington undertakes no obligation to publicly release the results of any revisions to those forward-looking statements which may be made to reflect events or circumstances after the occurrence of unanticipated events. Accordingly, there is no assurance that Lexington's expectations will be realized.
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended March 31, 2008 and 2007
(Unaudited and in thousands, except share and per share data)
2008 2007
Gross revenues:
Rental $ 97,235 $ 74,605
Advisory and incentive fees 311 719
Tenant reimbursements 10,042 5,440
Total gross revenues 107,588 80,764
Expense applicable to revenues:
Depreciation and amortization (56,301) (48,066)
Property operating (19,460) (11,167)
General and administrative (11,067) (8,817)
Non-operating income 2,106 2,390
Interest and amortization expense (43,357) (30,072)
Debt satisfaction gains, net 9,706 -
Loss before provision for income taxes,
minority interests, equity in earnings of
non-consolidated entities, gains on
sales of properties-affiliates and
discontinued operations (10,785) (14,968)
Provision for income taxes (1,344) (542)
Minority interests share of (income) loss (8,493) 9,879
Equity in earnings of non-consolidated
entities 5,548 3,504
Gains on sales of properties-affiliates 23,169 -
Income (loss) from continuing operations 8,095 (2,127)
Discontinued operations:
Income from discontinued operations 1,697 7,538
Provision for income taxes (13) (1)
Gains on sales of properties 687 -
Impairment charge (2,694) -
Minority interests share of (income) loss 40 (3,195)
Total discontinued operations (283) 4,342
Net income 7,812 2,215
Dividends attributable to preferred shares -
Series B (1,590) (1,590)
Dividends attributable to preferred shares -
Series C (2,519) (2,519)
Dividends attributable to preferred shares -
Series D (2,926) (1,522)
Net income (loss) allocable to common
shareholders $ 777 $ (3,416)
Income (loss) per common share - basic:
Income (loss) from continuing operations,
after preferred dividends $ 0.01 $ (0.11)
Income (loss) from discontinued operations - 0.06
Net income (loss) allocable to common
shareholders $ 0.01 $ (0.05)
Weighted average common shares outstanding -
basic 59,826,579 68,538,404
Income (loss) per common share - diluted:
Income (loss) from continuing operations,
after preferred dividends $ 0.01 $ (0.11)
Income (loss) from discontinued operations - 0.06
Net income (loss) allocable to common
shareholders $ 0.01 $ (0.05)
Weighted average common shares outstanding -
diluted 59,837,094 68,538,404
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 2008 (Unaudited) and December 31, 2007
(In thousands, except share and per share data)
March 31, December 31,
2008 2007
Assets:
Real estate, at cost $ 3,840,613 $ 4,095,278
Less: accumulated depreciation and
amortization 368,628 379,831
3,471,985 3,715,447
Properties held for sale - discontinued
operations 63,411 150,907
Intangible assets, net 460,226 516,698
Cash and cash equivalents 108,450 412,106
Restricted cash 56,294 4,185
Investment in and advances to
non-consolidated entities 229,825 226,476
Deferred expenses, net 38,854 42,040
Notes receivable 68,677 69,775
Rent receivable - current 21,070 25,289
Rent receivable - deferred 17,090 15,303
Other assets 71,686 86,937
$ 4,607,568 $ 5,265,163
Liabilities and Shareholders' Equity:
Liabilities:
Mortgages and notes payable $ 2,128,167 $ 2,312,422
Exchangeable notes payable 350,000 450,000
Trust notes payable 200,000 200,000
Contract rights payable 13,801 13,444
Dividends payable 26,912 158,168
Liabilities - discontinued operations 38,436 119,093
Accounts payable and other liabilities 49,045 49,442
Accrued interest payable 13,044 23,507
Deferred revenue - below market leases, net 191,326 217,389
Prepaid rent 27,686 16,764
3,038,417 3,560,229
Minority interests 667,395 765,863
3,705,812 4,326,092
Commitments and contingencies
Shareholders' equity:
Preferred shares, par value $0.0001 per
share; authorized 100,000,000 shares,
Series B Cumulative Redeemable Preferred,
liquidation preference $79,000, 3,160,000
shares issued and outstanding 76,315 76,315
Series C Cumulative Convertible Preferred,
liquidation preference $155,000, 3,100,000
shares issued and outstanding 150,589 150,589
Series D Cumulative Redeemable Preferred,
liquidation preference $155,000, 6,200,000
shares issued and outstanding 149,774 149,774
Special Voting Preferred Share, par value
$0.0001 per share; authorized, issued and
outstanding 1 share - -
Common shares, par value $0.0001 per share;
authorized 400,000,000 shares, 60,236,849
and 61,064,334 shares issued and outstanding
in 2008 and 2007, respectively 6 6
Additional paid-in-capital 1,019,469 1,033,332
Accumulated distributions in excess of net
income (487,253) (468,167)
Accumulated other comprehensive loss (7,144) (2,778)
901,756 939,071
Total shareholders' equity $ 4,607,568 $ 5,265,163
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
EARNINGS PER SHARE AND COMPANY FUNDS FROM OPERATIONS PER SHARE
(in thousands, except share data)
Three Months Ended March 31,
2008 2007
EARNINGS PER SHARE:
Basic
Income (loss) from continuing
operations $8,095 $(2,127)
Less preferred dividends (7,035) (5,631)
Income (loss) allocable to common
shareholders from continuing
operations - basic 1,060 (7,758)
Total income (loss) from discontinued
operations - basic (283) 4,342
Net income (loss) allocable to common
shareholders - basic $777 $(3,416)
Weighted average number of common
shares outstanding 59,826,579 68,538,404
Per share data:
Income (loss) from continuing
operations, after preferred dividends $0.01 $(0.11)
Income (loss) from discontinued
operations - 0.06
Net income (loss) allocable to common
shareholders $0.01 $(0.05)
Diluted
Income (loss) allocable to common
shareholders from continuing
operations - basic $1,060 $(7,758)
Adjustments:
Incremental income attributed to
assumed conversion of dilutive
securities - -
Income (loss) allocable to common
shareholders from continuing
operations - diluted 1,060 (7,758)
Total income (loss) from discontinued
operations - diluted (283) 4,342
Net income (loss) allocable to common
shareholders - diluted $777 $(3,416)
Weighted average number of shares used
in calculation of basic earnings
per share 59,826,579 68,538,404
Add incremental shares representing:
Shares issuable upon exercise of
employee share options/ non-vested
shares 10,515 -
Shares issuable upon conversion of
dilutive interests - -
Weighted average number of shares used
in calculation of diluted
earnings per common share 59,837,094 68,538,404
Per share data:
Income (loss) from continuing
operations, after preferred dividends
- diluted $0.01 $(0.11)
Income (loss) from discontinued
operations - diluted - 0.06
Net income (loss) allocable to common
shareholders - diluted $0.01 $(0.05)
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
EARNINGS PER SHARE AND COMPANY FUNDS FROM OPERATIONS PER SHARE
(Continued)
(in thousands, except share data)
Three Months Ended March 31,
2008 2007
COMPANY FUNDS FROM OPERATIONS: (1)
Basic and Diluted:
Net income (loss) allocable to common
shareholders $777 $(3,416)
Adjustments:
Depreciation and amortization 55,956 54,632
Minority interests - OP units 7,534 (7,419)
Amortization of leasing commissions 592 253
Joint venture and minority interest
adjustment 705 2,114
Preferred dividends - Series C 2,519 2,519
Gains on sale of properties (23,856) -
Minority interest-sale of property 84 -
Company FFO $44,311 $48,683
Basic:
Weighted average shares outstanding -
basic EPS 59,826,579 68,538,404
Operating Partnership Units 39,644,176 40,548,922
Preferred Shares - Series C 6,721,730 5,779,330
Weighted average shares outstanding -
basic Company FFO 106,192,485 114,866,656
Company FFO per share $0.42 $0.42
Diluted:
Weighted average shares outstanding -
diluted EPS 59,837,094 68,538,404
Common shares options - 630
Operating Partnership Units 39,644,176 40,548,922
Preferred Shares - Series C 6,721,730 5,779,330
Weighted average shares outstanding -
diluted Company FFO 106,203,000 114,867,286
Company FFO per share $0.42 $0.42
(1) Lexington believes that Funds from Operations ("FFO") is a widely recognized and appropriate measure of the performance of an equity REIT. Lexington presents FFO because it considers FFO an important supplemental measure of Lexington's operating performance. Lexington believes FFO is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. FFO is intended to exclude generally accepted accounting principles ("GAAP"), historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. As a result, FFO provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities, interest costs and other matters without the inclusion of depreciation and amortization, providing perspective that may not necessarily be apparent from net income.
Lexington computes FFO in accordance with standards established by the National Association of Real Estate Investment Trusts, Inc. ("NAREIT"). FFO is defined by NAREIT as "net income (or loss) computed in accordance with GAAP, excluding gains (or losses) from sales of property, plus real estate depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures." FFO does not represent cash generated from operating activities in accordance with GAAP and is not indicative of cash available to fund cash needs. FFO should not be considered as an alternative to net income as an indicator of our operating performance or as an alternative to cash flow as a measure of liquidity.
Lexington includes in its calculation of FFO, which Lexington refers to as the "Company's funds from operations" or "Company FFO," Lexington's operating partnership units and Lexington's Series C Cumulative Convertible Preferred Shares because these securities are convertible, at the holder's option, into Lexington's common shares. Management believes this is appropriate and relevant to securities analysts, investors and other interested parties because Lexington presents Company FFO on a company-wide basis as if all securities that are convertible, at the holder's option, into Lexington's common shares, are converted. Since others do not calculate FFO in a similar fashion, Company FFO may not be comparable to similarly titled measures as reported by others.
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Lexington Realty Trust
