NEW YORK, Feb. 27, 2019 (GLOBE NEWSWIRE) -- Lexington Realty Trust (“Lexington”) (NYSE:LXP), a real estate investment trust focused on single-tenant industrial real estate investments, today announced results for the fourth quarter and year ended December 31, 2018.
Fourth Quarter 2018 Highlights
- Generated Net Income attributable to common shareholders of $23.8 million, or $0.10 per diluted common share.
- Generated Adjusted Company Funds From Operations available to all equityholders and unitholders - diluted (“Adjusted Company FFO”) of $53.7 million, or $0.22 per diluted common share.
- Acquired two industrial properties for an aggregate cost of $107.7 million.
- Disposed of nine non-industrial properties for an aggregate gross sale price of $93.3 million.
- Repurchased and retired 4.0 million common shares at an average price of $8.07 per share and increased repurchase authorization by 10.0 million common shares.
- Repaid remaining 2020 term loan balance of $149.0 million.
- Completed 452,000 square feet of new leases and lease extensions.
Full Year 2018 Highlights
- Generated Net Income attributable to common shareholders of $220.8 million, or $0.93 per diluted common share.
- Generated Adjusted Company FFO of $236.3 million, or $0.96 per diluted common share.
- Increased total gross book value and total rental revenue attributable to industrial assets from 49.3% and 44.3%, respectively, to 71.1% and 65.4%, respectively.
- Acquired eight industrial properties for an aggregate cost of $315.6 million.
- Disposed of 21 office assets to a newly-formed joint venture for an aggregate gross disposition price of $725.8 million and acquired a 20% interest in the joint venture for an aggregate cost of $53.7 million.
- Disposed of 25 additional consolidated properties for an aggregate gross sale price of $335.3 million.
- Repurchased and retired 5.9 million common shares at an average price of $8.05 per share.
- Repaid $160.0 million, net under its unsecured revolving credit facility and fully repaid its $300 million 2020 term loan.
- Retired an aggregate of $118.0 million in property non-recourse mortgage debt, including debt encumbering assets sold to the joint venture above.
- Completed 1.9 million square feet of new leases and lease extensions.
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 “Through our targeted disposition and investment efforts in 2018, we increased our industrial exposure to 71% of our total gross book value at year end compared to 49% at year-end 2017. We were very active in our share buyback plan during the fourth quarter, bringing our total 2018 share repurchases to almost six million shares at an average price of $8.05 per share.
“We remain focused on transitioning to a single-tenant net-leased industrial REIT, and our disposition plan contemplates the sale of primarily office and other non-core assets with this objective in mind. Proceeds from sales, available cash, and low leverage will provide further capital to fund industrial purchases and build-to-suit opportunities.
“In connection with the repositioning of our portfolio and growth plans going forward, last year we announced that in 2019 we would revise our distribution policy in order to retain and reinvest as much of our cash flow as possible. We believe this is a prudent course which will enhance our earnings growth and net asset value per share over time. Accordingly, we announced today a new annualized dividend rate of $0.41 per common share.”
FINANCIAL RESULTS
Revenues
For the quarter ended December 31, 2018, total gross revenues were $87.3 million, compared with total gross revenues of $102.2 million for the quarter ended December 31, 2017. The decrease was primarily attributable to a decrease in revenue due to property sales, partially offset by 2018 and 2017 property acquisitions.
Net Income Attributable to Common Shareholders
For the quarter ended December 31, 2018, net income attributable to common shareholders was $23.8 million, or $0.10 per diluted share, compared with net income attributable to common shareholders for the quarter ended December 31, 2017 of $29.2 million, or $0.12 per diluted share.
Adjusted Company FFO
For the quarter ended December 31, 2018, Lexington generated Adjusted Company FFO of $53.7 million, or $0.22 per diluted share, compared to Adjusted Company FFO for the quarter ended December 31, 2017 of $63.1 million, or $0.26 per diluted share.
Dividends/Distributions
As previously announced, during the fourth quarter of 2018, Lexington declared its quarterly common share/unit dividend/distribution for the quarter ended December 31, 2018 of $0.1775 per common share/unit, which was paid on January 15, 2019 to common shareholders/unitholders of record as of December 31, 2018. Lexington previously declared a dividend of $0.8125 per share on its Series C Cumulative Convertible Preferred Stock (“Series C Preferred”) for the quarter ended December 31, 2018, which was paid February 15, 2019 to Series C Preferred shareholders of record as of January 31, 2019.
Today, Lexington declared its quarterly common share/unit dividend/distribution for the quarter ended March 31, 2019 in the amount of $0.1025 per common share/unit, which will be paid on April 15, 2019 to common shareholders/unitholders of record as of March 29, 2019. Lexington previously declared a dividend of $0.8125 per share on its Series C Preferred for the quarter ended March 31, 2019, which will be paid on May 15, 2019, to Series C Preferred shareholders of record as of April 30, 2019.
TRANSACTIONS
| ACQUISITION TRANSACTIONS | |||||||||||||||||||||||||||||
| Primary Tenant(1) | Location | Sq. Ft. (Approx.) | Property Type | Initial Basis ($000) | Approximate Lease Term (Yrs) | ||||||||||||||||||||||||
| Blue Buffalo | Goodyear, AZ | 540,349 | Industrial | $ | 41,372 | 7 | |||||||||||||||||||||||
| Philip Morris | Chester, VA | 1,034,470 | Industrial | 66,311 | 12 | ||||||||||||||||||||||||
| 1,574,819 | $ | 107,683 | |||||||||||||||||||||||||||
- In addition, Lexington acquired a 57-acre parcel of land from a non-consolidated joint venture and leased the parcel to a tenant to develop an industrial property.
Including fourth quarter acquisition activity, consolidated 2018 acquisition activity totaled $315.6 million at average GAAP and cash capitalization rates of 6.5% and 5.3%, respectively.
| PROPERTY DISPOSITIONS | |||||||||||||||||||||||||||||||||||||||||||||
| Primary Tenant | Location | Property Type | Gross Disposition Price ($000) | Annualized Net Income (Loss)(1) ($000) | Annualized NOI(1) ($000) | Month of Disposition | % Leased | ||||||||||||||||||||||||||||||||||||||
| Oregon Research Institute | Eugene, OR | Office | $ | 16,000 | $ | 2,098 | $ | 1,832 | October | 100 | % | ||||||||||||||||||||||||||||||||||
| Alstom Power | Knoxville, TN | Office | 16,000 | 1,262 | 1,249 | November | 100 | % | |||||||||||||||||||||||||||||||||||||
| Vacant | Manteca, CA | Other | 2,700 | 967 | 381 | November | 0 | % | |||||||||||||||||||||||||||||||||||||
| Delhaize | Jefferson, NC | Other | 1,550 | 156 | 160 | December | 100 | % | |||||||||||||||||||||||||||||||||||||
| Vacant | Wallingford, CT | Office | 1,050 | (222 | ) | (179 | ) | December | 0 | % | |||||||||||||||||||||||||||||||||||
| Vacant | Florence, SC | Office | 1,838 | (320 | ) | 325 | December | 0 | % | ||||||||||||||||||||||||||||||||||||
| Kingsport Power | Kingsport, TN | Office | 3,400 | 287 | 310 | December | 100 | % | |||||||||||||||||||||||||||||||||||||
| Federal Express | Memphis, TN | Office | 50,800 | 6,844 | 7,101 | December | 100 | % | |||||||||||||||||||||||||||||||||||||
| $ | 93,338 | $ | 11,072 | $ | 11,179 | ||||||||||||||||||||||||||||||||||||||||
- Quarterly period prior to sale, excluding impairment charges and accelerated below-market lease intangible accretion, annualized.
In addition, a vacant retail property in San Diego, California was transferred to its ground owner and Lexington received $4.3 million from the sale of a six-property non-consolidated office portfolio.
Including fourth quarter disposition activity, consolidated 2018 property disposition volume totaled $1.1 billion at average GAAP and cash capitalization rates of 8.9% and 8.4%, respectively.
As a result of 2018 transactions, Lexington's total gross book value attributable to industrial assets accounts for 71.1% of total consolidated real estate gross book value at December 31, 2018 compared to 49.3% at December 31, 2017. Rental revenue attributable to industrial assets increased to 65.4% of total consolidated rental revenue as of December 31, 2018 from 44.3% as of December 31, 2017.
LEASING
During the fourth quarter of 2018, Lexington executed the following new and extended leases:
| LEASE EXTENSIONS | ||||||||||||||
| Location | Primary Tenant(1) | Prior Term | Lease Expiration Date | Sq. Ft. | ||||||||||
| Industrial | ||||||||||||||
| 1 | Carrollton | TX | Teasdale | 03/2025 | 12/2033 | 298,653 | ||||||||
| 1 | Total industrial lease extensions | 298,653 | ||||||||||||
| Office | ||||||||||||||
| 1 | Knoxville | TN | CaremarkPCS | 05/2020 | 05/2027 | 59,748 | ||||||||
| 2 | Indianapolis | IN | N/A | 02/2019 | 05/2019 | 3,764 | ||||||||
| 2 | Total office lease extensions | 63,512 | ||||||||||||
| 3 | Total lease extensions | 362,165 | ||||||||||||
| NEW LEASES | ||||||||||||||
| Location | Lease Expiration Date | Sq. Ft. | ||||||||||||
| Office/Multi-Tenant | ||||||||||||||
| 1 | Phoenix | AZ | Argosy Education | 05/2024 | 27,470 | |||||||||
| 2 | Farmers Branch | TX | N/A | 04/2024 | 2,937 | |||||||||
| 3 | Orlando | FL | CardWorks Servicing | 09/2029 | 59,927 | |||||||||
| 3 | Total new office leases | 90,334 | ||||||||||||
| 6 | TOTAL NEW AND EXTENDED LEASES | 452,499 | ||||||||||||
- Leases greater than 10,000 square feet.
As of December 31, 2018, Lexington's portfolio was 95.1% leased.
BALANCE SHEET/CAPITAL MARKETS
During the fourth quarter, Lexington fully repaid the remaining $149.0 million outstanding on its 2020 term loan and satisfied $7.9 million of non-recourse debt.
Also in the fourth quarter, Lexington's Board of Trustees increased the amount of common shares available for repurchase under its repurchase authorization initially announced on July 2, 2015 by 10.0 million common shares. Lexington repurchased and retired 3,979,597 common shares at an average price of $8.07 per share, bringing the total 2018 repurchases to 5,851,252 common shares at an average price of $8.05 per share. Subsequent to December 31, 2018, Lexington repurchased and retired 441,581 common shares at an average price of $8.13 per share. As of February 27, 2019, there were 10,306,255 common shares available for repurchase.
Subsequent to December 31, 2018, Lexington replaced its revolving credit facility and the 2021 term loan with a new revolving credit facility and the continuation of the 2021 term loan, which extended the maturity of the revolving credit facility to February 2023 and reduced the applicable margin rates on the revolving credit facility and 2021 term loan.
2019 EARNINGS GUIDANCE
Lexington estimates that its net income attributable to common shareholders per diluted common share for the year ended December 31, 2019 will be within an expected range of $1.36 to $1.40. Lexington estimates that its Adjusted Company FFO for the year ended December 31, 2019 will be within an expected range of $0.75 to $0.79 per diluted common share. This guidance is forward looking, excludes the impact of certain items and is based on current expectations.
FOURTH QUARTER 2018 CONFERENCE CALL
Lexington will host a conference call today February 27, 2019, at 8:30 a.m. Eastern Time, to discuss its results for the quarter ended December 31, 2018. 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 May 27, 2019, 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 10128738. A link to a live webcast of the conference call is 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 industrial 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, including dividend declarations to achieve a $0.41 per share annualized dividend, (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, 2019, (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 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 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 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 (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 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 (calculated in accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from the sales of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in value of depreciable real estate held by the entity. The reconciling items include amounts to adjust earnings from consolidated partially-owned entities and equity in earnings of unconsolidated affiliates to FFO.” 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 estimated 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 December 31, | Twelve months ended December 31, | ||||||||||||||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||||||
| Gross revenues: | |||||||||||||||||||||||||||||||
| Rental | $ | 80,745 | $ | 93,909 | $ | 364,731 | $ | 359,832 | |||||||||||||||||||||||
| Tenant reimbursements | 6,506 | 8,260 | 30,608 | 31,809 | |||||||||||||||||||||||||||
| Total gross revenues | 87,251 | 102,169 | 395,339 | 391,641 | |||||||||||||||||||||||||||
| Expense applicable to revenues: | |||||||||||||||||||||||||||||||
| Depreciation and amortization | (38,498 | ) | (45,262 | ) | (168,191 | ) | (173,968 | ) | |||||||||||||||||||||||
| Property operating | (9,614 | ) | (12,410 | ) | (42,675 | ) | (49,194 | ) | |||||||||||||||||||||||
| General and administrative | (7,763 | ) | (8,597 | ) | (31,662 | ) | (34,158 | ) | |||||||||||||||||||||||
| Litigation settlement | — | — | — | (2,050 | ) | ||||||||||||||||||||||||||
| Non-operating income | 1,825 | 5,381 | 3,491 | 10,378 | |||||||||||||||||||||||||||
| Interest and amortization expense | (16,656 | ) | (20,055 | ) | (79,880 | ) | (77,883 | ) | |||||||||||||||||||||||
| Debt satisfaction gains (charges), net | (368 | ) | 3,818 | (2,596 | ) | 6,196 | |||||||||||||||||||||||||
| Impairment charges and loan losses | (4,953 | ) | (1,419 | ) | (95,813 | ) | (44,996 | ) | |||||||||||||||||||||||
| Gains on sales of properties | 13,336 | 8,350 | 252,913 | 63,428 | |||||||||||||||||||||||||||
| Income before provision for income taxes and equity in earnings (losses) of non-consolidated entities | 24,560 | 31,975 | 230,926 | 89,394 | |||||||||||||||||||||||||||
| Provision for income taxes | (402 | ) | (743 | ) | (1,728 | ) | (1,917 | ) | |||||||||||||||||||||||
| Equity in earnings (losses) of non-consolidated entities | 1,516 | 216 | 1,708 | (848 | ) | ||||||||||||||||||||||||||
| Net income | 25,674 | 31,448 | 230,906 | 86,629 | |||||||||||||||||||||||||||
| Less net income attributable to noncontrolling interests | (266 | ) | (598 | ) | (3,491 | ) | (1,046 | ) | |||||||||||||||||||||||
| Net income attributable to Lexington Realty Trust shareholders | 25,408 | 30,850 | 227,415 | 85,583 | |||||||||||||||||||||||||||
| Dividends attributable to preferred shares – Series C | (1,572 | ) | (1,572 | ) | (6,290 | ) | (6,290 | ) | |||||||||||||||||||||||
| Allocation to participating securities | (40 | ) | (43 | ) | (287 | ) | (226 | ) | |||||||||||||||||||||||
| Net income attributable to common shareholders | $ | 23,796 | $ | 29,235 | $ | 220,838 | $ | 79,067 | |||||||||||||||||||||||
| Net income attributable to common shareholders – per common share basic | $ | 0.10 | $ | 0.12 | $ | 0.93 | $ | 0.33 | |||||||||||||||||||||||
| Weighted-average common shares outstanding – basic | 233,963,608 | 238,131,814 | 236,666,375 | 237,758,408 | |||||||||||||||||||||||||||
| Net income attributable to common shareholders – per common share diluted | $ | 0.10 | $ | 0.12 | $ | 0.93 | $ | 0.33 | |||||||||||||||||||||||
| Weighted-average common shares outstanding – diluted | 238,292,912 | 241,821,194 | 240,810,990 | 241,537,837 | |||||||||||||||||||||||||||
| LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS As of December 31, (Unaudited and in thousands, except share and per share data) | |||||||||||
| 2018 | 2017 | ||||||||||
| Assets: | |||||||||||
| Real estate, at cost | $ | 3,090,134 | $ | 3,936,459 | |||||||
| Real estate - intangible assets | 419,612 | 599,091 | |||||||||
| 3,509,746 | 4,535,550 | ||||||||||
| Less: accumulated depreciation and amortization | 954,087 | 1,225,650 | |||||||||
| Real estate, net | 2,555,659 | 3,309,900 | |||||||||
| Assets held for sale | 63,868 | 2,827 | |||||||||
| Cash and cash equivalents | 168,750 | 107,762 | |||||||||
| Restricted cash | 8,497 | 4,394 | |||||||||
| Investment in and advances to non-consolidated entities | 66,183 | 17,476 | |||||||||
| Deferred expenses, net | 15,937 | 31,693 | |||||||||
| Rent receivable – current | 3,475 | 5,450 | |||||||||
| Rent receivable – deferred | 58,692 | 52,769 | |||||||||
| Other assets | 12,779 | 20,749 | |||||||||
| Total assets | $ | 2,953,840 | $ | 3,553,020 | |||||||
| Liabilities and Equity: | |||||||||||
| Liabilities: | |||||||||||
| Mortgages and notes payable, net | $ | 570,420 | $ | 689,810 | |||||||
| Revolving credit facility borrowings | — | 160,000 | |||||||||
| Term loans payable, net | 298,733 | 596,663 | |||||||||
| Senior notes payable, net | 496,034 | 495,198 | |||||||||
| Trust preferred securities, net | 127,296 | 127,196 | |||||||||
| Dividends payable | 48,774 | 49,504 | |||||||||
| Liabilities held for sale | 386 | — | |||||||||
| Accounts payable and other liabilities | 30,790 | 38,644 | |||||||||
| Accrued interest payable | 4,523 | 5,378 | |||||||||
| Deferred revenue - including below market leases, net | 20,531 | 33,182 | |||||||||
| Prepaid rent | 9,675 | 16,610 | |||||||||
| Total liabilities | 1,607,162 | 2,212,185 | |||||||||
| 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, 235,008,554 and 240,689,081 shares issued and outstanding in 2018 and 2017, respectively | 24 | 24 | |||||||||
| Additional paid-in-capital | 2,772,855 | 2,818,520 | |||||||||
| Accumulated distributions in excess of net income | (1,537,100 | ) | (1,589,724 | ) | |||||||
| Accumulated other comprehensive income | 76 | 1,065 | |||||||||
| Total shareholders’ equity | 1,329,871 | 1,323,901 | |||||||||
| Noncontrolling interests | 16,807 | 16,934 | |||||||||
| Total equity | 1,346,678 | 1,340,835 | |||||||||
| Total liabilities and equity | $ | 2,953,840 | $ | 3,553,020 | |||||||
| LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES EARNINGS PER SHARE (Unaudited and in thousands, except share and per share data) | ||||||||||||||||||||||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||||||
| EARNINGS PER SHARE: | ||||||||||||||||||||||||||||||||
| Basic: | ||||||||||||||||||||||||||||||||
| Net income attributable to common shareholders | $ | 23,796 | $ | 29,235 | $ | 220,838 | $ | 79,067 | ||||||||||||||||||||||||
| Weighted-average common shares outstanding - basic | 233,963,608 | 238,131,814 | 236,666,375 | 237,758,408 | ||||||||||||||||||||||||||||
| Net income attributable to common shareholders - per common share basic | $ | 0.10 | $ | 0.12 | $ | 0.93 | $ | 0.33 | ||||||||||||||||||||||||
| Diluted: | ||||||||||||||||||||||||||||||||
| Net income attributable to common shareholders - basic | $ | 23,796 | $ | 29,235 | $ | 220,838 | $ | 79,067 | ||||||||||||||||||||||||
| Impact of assumed conversions | 21 | 338 | 2,528 | 147 | ||||||||||||||||||||||||||||
| Income from continuing operations attributable to common shareholders | $ | 23,817 | $ | 29,573 | $ | 223,366 | $ | 79,214 | ||||||||||||||||||||||||
| Weighted-average common shares outstanding - basic | 233,963,608 | 238,131,814 | 236,666,375 | 237,758,408 | ||||||||||||||||||||||||||||
| Effect of dilutive securities: | ||||||||||||||||||||||||||||||||
| Unvested share-based payment awards and options | 723,120 | 57,731 | 528,495 | 86,285 | ||||||||||||||||||||||||||||
| Operating Partnership Units | 3,606,184 | 3,631,649 | 3,616,120 | 3,693,144 | ||||||||||||||||||||||||||||
| Weighted-average common shares outstanding - diluted | 238,292,912 | 241,821,194 | 240,810,990 | 241,537,837 | ||||||||||||||||||||||||||||
| Net income attributable to common shareholders - per common share diluted | $ | 0.10 | $ | 0.12 | $ | 0.93 | $ | 0.33 | ||||||||||||||||||||||||
| 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, | |||||||||||||||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||||||
| FUNDS FROM OPERATIONS: | ||||||||||||||||||||||||||||||||
| Basic and Diluted: | ||||||||||||||||||||||||||||||||
| Net income attributable to common shareholders | $ | 23,796 | $ | 29,235 | $ | 220,838 | $ | 79,067 | ||||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||
| Depreciation and amortization | 37,819 | 44,050 | 164,261 | 168,683 | ||||||||||||||||||||||||||||
| Impairment charges - real estate, including non-consolidated entities | 4,953 | 1,419 | 95,813 | 43,214 | ||||||||||||||||||||||||||||
| Noncontrolling interests - OP units | 22 | 339 | 2,528 | 147 | ||||||||||||||||||||||||||||
| Amortization of leasing commissions | 679 | 1,212 | 3,930 | 5,285 | ||||||||||||||||||||||||||||
| Joint venture and noncontrolling interest adjustment | 2,567 | 257 | 4,063 | 1,121 | ||||||||||||||||||||||||||||
| Gains on sales of properties, including non-consolidated entities and net of tax | (14,821 | ) | (8,350 | ) | (254,269 | ) | (64,880 | ) | ||||||||||||||||||||||||
| FFO available to common shareholders and unitholders - basic | 55,015 | 68,162 | 237,164 | 232,637 | ||||||||||||||||||||||||||||
| Preferred dividends | 1,572 | 1,572 | 6,290 | 6,290 | ||||||||||||||||||||||||||||
| Amount allocated to participating securities | 40 | 43 | 287 | 226 | ||||||||||||||||||||||||||||
| FFO available to all equityholders and unitholders - diluted | 56,627 | 69,777 | 243,741 | 239,153 | ||||||||||||||||||||||||||||
| Litigation reserve | — | — | — | 2,050 | ||||||||||||||||||||||||||||
| Debt satisfaction (gains) charges, net, including non-consolidated entities | 368 | (3,796 | ) | 2,596 | (6,174 | ) | ||||||||||||||||||||||||||
| Impairment loss - loan receivable | — | — | — | 5,294 | ||||||||||||||||||||||||||||
| Unearned contingent acquisition consideration | — | (3,922 | ) | — | (3,922 | ) | ||||||||||||||||||||||||||
| Other(1) | (3,305 | ) | 1,071 | (10,038 | ) | 2,171 | ||||||||||||||||||||||||||
| Adjusted Company FFO available to all equityholders and unitholders - diluted | 53,690 | 63,130 | 236,299 | 238,572 | ||||||||||||||||||||||||||||
| FUNDS AVAILABLE FOR DISTRIBUTION: | ||||||||||||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||
| Straight-line rents | (4,722 | ) | (7,232 | ) | (20,968 | ) | (19,784 | ) | ||||||||||||||||||||||||
| Lease incentives | 227 | 513 | 1,686 | 1,969 | ||||||||||||||||||||||||||||
| Amortization of above/below market leases | (28 | ) | 364 | 285 | 1,544 | |||||||||||||||||||||||||||
| Lease termination payments, net | (309 | ) | (253 | ) | (1,234 | ) | (690 | ) | ||||||||||||||||||||||||
| Non-cash interest, net | 854 | 1,018 | 4,209 | 2,465 | ||||||||||||||||||||||||||||
| Non-cash charges, net | 1,611 | 2,119 | 6,810 | 8,318 | ||||||||||||||||||||||||||||
| Tenant improvements | (1,608 | ) | (1,136 | ) | (8,271 | ) | (11,203 | ) | ||||||||||||||||||||||||
| Lease costs | (1,448 | ) | (1,242 | ) | (4,522 | ) | (6,526 | ) | ||||||||||||||||||||||||
| Joint venture and non-controlling interest adjustment | (449 | ) | — | (505 | ) | — | ||||||||||||||||||||||||||
| Company Funds Available for Distribution | $ | 47,818 | $ | 57,281 | $ | 213,789 | $ | 214,665 | ||||||||||||||||||||||||
| Per Common Share and Unit Amounts | ||||||||||||||||||||||||||||||||
| Basic: | ||||||||||||||||||||||||||||||||
| FFO | $ | 0.23 | $ | 0.28 | $ | 0.99 | $ | 0.96 | ||||||||||||||||||||||||
| Diluted: | ||||||||||||||||||||||||||||||||
| FFO | $ | 0.23 | $ | 0.28 | $ | 0.99 | $ | 0.97 | ||||||||||||||||||||||||
| Adjusted Company FFO | $ | 0.22 | $ | 0.26 | $ | 0.96 | $ | 0.97 | ||||||||||||||||||||||||
| Weighted-Average Common Shares | ||||||||||||||||||||||||||||||||
| Basic: | ||||||||||||||||||||||||||||||||
| Weighted-average common shares outstanding - basic EPS | 233,963,608 | 238,131,814 | 236,666,375 | 237,758,408 | ||||||||||||||||||||||||||||
| Operating partnership units(2) | 3,606,184 | 3,631,649 | 3,616,120 | 3,693,144 | ||||||||||||||||||||||||||||
| Weighted-average common shares outstanding - basic FFO | 237,569,792 | 241,763,463 | 240,282,495 | 241,451,552 | ||||||||||||||||||||||||||||
| Diluted: | ||||||||||||||||||||||||||||||||
| Weighted-average common shares outstanding - diluted EPS | 238,292,912 | 241,821,194 | 240,810,990 | 241,537,837 | ||||||||||||||||||||||||||||
| Unvested share-based payment awards | — | 713,351 | — | 666,127 | ||||||||||||||||||||||||||||
| Preferred shares - Series C | 4,710,570 | 4,710,570 | 4,710,570 | 4,710,570 | ||||||||||||||||||||||||||||
| Weighted-average common shares outstanding - diluted FFO | 243,003,482 | 247,245,115 | 245,521,560 | 246,914,534 | ||||||||||||||||||||||||||||
| (1) "Other" primarily consisted of the acceleration of below-market lease intangible accretion in 2018 and transaction related costs in 2017 and 2016. (2) Includes OP units other than OP units held by Lexington. | ||||||||||||||||||||||||||||||||
| LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED) | ||||||||||||||||||||||
| 2019 EARNINGS GUIDANCE | ||||||||||||||||||||||
| Twelve Months Ended December 31, 2019 | ||||||||||||||||||||||
| Range | ||||||||||||||||||||||
| Estimated: | ||||||||||||||||||||||
| Net income attributable to common shareholders per diluted common share(1) | $ | 1.36 | $ | 1.40 | ||||||||||||||||||
| Depreciation and amortization | 0.56 | 0.56 | ||||||||||||||||||||
| Impact of capital transactions | (1.17 | ) | (1.17 | ) | ||||||||||||||||||
| Estimated Adjusted Company FFO per diluted common share | $ | 0.75 | $ | 0.79 | ||||||||||||||||||
| (1) Assumes all convertible securities are dilutive. | ||||||||||||||||||||||