Lexington Realty Trust Reports First Quarter 2012 Results and Raises 2012 FFO Per Share Guidance

NEW YORK, May 3, 2012 (GLOBE NEWSWIRE) -- Lexington Realty Trust ("Lexington") (NYSE:LXP), a real estate investment trust focused on single-tenant real estate investments, today announced results for the first quarter ended March 31, 2012.

First Quarter 2012 Highlights

• Generated Company Funds From Operations ("Company FFO") of $42.6 million or $0.24 per diluted common share/unit, adjusted for certain items.
• Executed 21 new and extended leases, totaling 3.0 million square feet and ended the quarter with overall portfolio occupancy of 97.4%.
• Acquired a build-to-suit office property in Huntington, West Virginia for a capitalized cost of $12.6 million and completed a build-to-suit office property in Florence, South Carolina for a capitalized cost of $5.1 million.
• Entered into two build-to-suit transactions with an aggregate total project cost of $46.4 million and invested $18.8 million in on-going build-to-suit projects.
• Procured a $215.0 million secured term loan facility, refinanced its $300.0 million secured revolving credit facility and used a portion of the proceeds to repay $177.3 million of existing indebtedness.

T. Wilson Eglin, President and Chief Executive Officer of Lexington, stated, "During the first quarter, we continued to have success in all key areas of our business. We disposed of two non-core assets and signed 3.0 million square feet of leases, raising overall portfolio occupancy by 150 basis points. In addition, we completed $17.7 million of build-to-suit projects and now have seven others underway at a total cost of $162.5 million. Finally, we capitalized on the current low interest rate environment by refinancing $177.3 million of debt, which lowered our annual debt service payments by approximately $4.0 million."

FINANCIAL RESULTS

Revenues

For the quarter ended March 31, 2012, total gross revenues were $82.7 million, compared with total gross revenues of $80.5 million for the quarter ended March 31, 2011. The increase is primarily due to property acquisitions and an increase in occupancy.

Company FFO Attributable to Common Shareholders/Unitholders

The following presents, in tabular form, the items excluded from Reported Company FFO for the periods presented (in millions, except for per diluted share/unit data):

Net Loss Attributable to Common Shareholders

For the quarter ended March 31, 2012, net loss attributable to common shareholders was $(2.2) million, or a loss of $(0.01) per diluted share, compared with net loss attributable to common shareholders for the quarter ended March 31, 2011 of $(23.6) million, or a loss of $(0.21) per diluted share.

Capital Activities and Balance Sheet Update

During the first quarter of 2012, Lexington repurchased and retired 34,800 shares of its 6.50% Series C Cumulative Convertible Preferred Stock for $1.5 million, which was a $0.3 million discount to the liquidation preference.

As previously reported in January 2012, Lexington procured a $215.0 million secured seven-year term loan facility and refinanced its $300.0 million secured revolving credit facility with a new $300.0 million secured revolving credit facility which matures in January 2015, but can be extended for one year at Lexington's option. Lexington used proceeds from these loans primarily to satisfy indebtedness, including the remaining balance of the $60.6 million term loans scheduled to mature in 2013 and the remaining $62.2 million of 5.45% Exchangeable Guaranteed Notes, which were repurchased pursuant to a holder option. Currently, $161.0 million is outstanding on the term loan and $50.0 million is outstanding on the revolving credit facility. Lexington entered into interest-rate swap agreements to fix LIBOR at a weighted-average 1.578% on $161.0 million of borrowings outstanding on the term loan through maturity. Accordingly, the blended interest rate on the $161.0 million of borrowings is 3.83% as of the date of this press release.

During the first quarter of 2012, Lexington satisfied $54.6 million of non-recourse mortgage loans on four properties which had a weighted-average interest rate of 5.35%.

Subsequent to quarter end, Lexington entered into a loan application to finance the Transamerica Tower in Baltimore, Maryland with a $55.0 million non-recourse mortgage loan which is expected to have an 11-year term and bear interest at a fixed rate of 4.32%. Lexington can give no assurances that this financing will be consummated or these terms will be achieved.

In addition, on May 1, 2012, Lexington delivered a notice of redemption to the holders of its outstanding 8.05% Series B Cumulative Redeemable Preferred Stock to redeem all outstanding shares on May 31, 2012 for $25.00 per share plus $0.335417 per share for accrued and unpaid dividends through May 31, 2012, which aggregate $69.4 million.

In connection with the expected redemption of its 8.05% Series B Cumulative Redeemable Preferred Stock, Lexington also declared cash dividends of $0.8125 per share of its 6.50% Series C Cumulative Convertible Preferred Stock and $0.471875 per share of its 7.55% Series D Cumulative Redeemable Preferred Stock. The Series C Preferred Share dividend is payable on or about August 15, 2012, to shareholders of record of the Series C Preferred Shares as of July 31, 2012. The Series D Preferred Share dividend is payable on or about July 16, 2012, to shareholders of record of the Series D Preferred Shares as of June 29, 2012.

Concord Debt Holdings (Concord)

In May 2012, Lexington sold all of its interest in Concord and related entities for $7.0 million cash. This sale eliminated Lexington's only source of excess inclusion income, which is generally required to be treated as "unrelated business taxable income", or UBTI, by tax-exempt organizations.

Common Share Dividend/Distribution

Lexington declared a regular quarterly dividend/distribution for the quarter ended March 31, 2012 of $0.125 per common share/unit, which was paid on April 16, 2012 to common shareholders/unitholders of record as of March 30, 2012.

OPERATING ACTIVITIES

Leasing

During the first quarter of 2012, Lexington executed 21 new and extended leases for 3.0 million square feet and ended the quarter with overall portfolio occupancy of 97.4%.

Capital Recycling

Dispositions

During the first quarter of 2012, Lexington disposed of its interest in a vacant office property in Wilsonville, Oregon to an unrelated party for a gross sales price of $2.5 million. In addition, Lexington's vacant office property in Tulsa, Oklahoma was transferred to the lender in full satisfaction of the outstanding $7.1 million non-recourse mortgage loan.

Investment Activity

Build-to-Suit Projects

Lexington closed on the acquisition of the build-to-suit office property in Huntington, West Virginia for a capitalized cost of $12.6 million (9.5% initial cap rate). The property is net-leased through November 2026.

Lexington completed the 32,000 square foot build-to-suit office property in Florence, South Carolina for a capitalized cost of $5.1 million (10.1% initial cap rate). The facility is net-leased through February 2024.

During the first quarter of 2012, Lexington entered into two additional build-to-suit projects consisting of (1) a 163,000 square foot office property in Denver, Colorado for a total project cost of $37.6 million (8.6% initial cap rate) and (2) a 52,000 square foot retail property in Valdosta, Georgia for a total project cost of $8.8 million (9.25% initial cap rate). Both properties are subject to 15-year net-leases. Completion is expected to occur in the second quarter of 2013 for the Denver property and the third quarter of 2012 for the Valdosta property.

In addition to the two new build-to-suit projects, Lexington continues to fund the construction of, or is under contract to acquire, the previously announced build-to-suit projects in (1) Saint Joseph, Missouri (9.5% initial cap rate), (2) Shreveport, Louisiana (9.5% initial cap rate), (3) Long Island City, New York (8.5% initial cap rate), (4) Jessup, Pennsylvania (9.2% initial cap rate) and (5) Eugene, Oregon (9.0% initial cap rate). The aggregate estimated cost of these seven on-going projects is $162.5 million of which $43.6 million was invested as of March 31, 2012.

Loan Investments

Subsequent to quarter end, Lexington contracted to lend up to $8.0 million to fund the construction of a 52,000 square foot charter school in Homestead, Florida. The interest-only loan accrues interest at a rate of 7.5% per annum and is scheduled to mature in August 2014. Lexington has the right to cause the borrower to refinance the construction loan with five-year financing meeting certain terms funded by foreign investors pursuant to the Employment-Based Immigration Fifth Preference visa program, also known as EB-5.

Leaseback Investments

Subsequent to quarter end, Lexington acquired an industrial property for $23.0 million (7.6% initial cap rate). The property encompasses 152 acres abutting a Union Pacific Railroad Line in Missouri City, Texas (Houston-Sugarland-Baytown, TX-CBSA) and is net-leased for a 20-year term.

2012 EARNINGS GUIDANCE

Lexington increased its estimate of Company FFO by $0.02 per diluted share to a range of $0.92 to $0.95 per diluted share for the year ended December 31, 2012. This guidance is forward looking, excludes the impact of certain items and is based on current expectations.

FIRST QUARTER 2012 CONFERENCE CALL

Lexington will host a conference call today, Thursday, May 3, 2012, at 11:00 a.m. Eastern Time, to discuss its results for the quarter ended March 31, 2012. Interested parties may participate in this conference call by dialing (877) 795-3635 or (719) 325-4834. A replay of the call will be available through May 17, 2012, at (877) 870-5176 or (858) 384-5517, pin: 6441745. A live webcast of the conference call will be available at https://www.lxp.com within the Investor Relations section.

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 https://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 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 to achieve an expected annualized dividend paid in 2012 of $0.50 per common share, (2) Lexington's ability to achieve its estimate of Company FFO for the year ended December 31, 2012, (3) the consummation of the built-to-suit construction loans and subsequent acquisition of such properties, (4) the consummation of the financing of the Transamerica Tower in Baltimore, MD or the achievement of the terms described above, (5) the consummation of the redemption of the outstanding shares of Lexington's 8.05% Series B Cumulative Redeemable Preferred Stock, (6) the failure to continue to qualify as a real estate investment trust, (7) changes in general business and economic conditions, including the impact of the current global financial and credit crisis, (8) competition, (9) increases in real estate construction costs, (10) changes in interest rates, (11) changes in accessibility of debt and equity capital markets, including with respect to financings that Lexington is working on, or (12) future impairment charges. Copies of the periodic reports Lexington files with the Securities and Exchange Commission are available on Lexington's web site at www.lxp.com. Forward-looking statements, which are based on certain assumptions and describe Lexington's future plans, strategies and expectations, are generally identifiable by use of the words "believes," "expects," "intends," "anticipates," "estimates," "projects", "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.

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, but consolidated for financial statement purposes and/or disregarded for income tax purposes.

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.

FFO is determined 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." NAREIT recently 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. 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, Lexington's Series C Cumulative Convertible Preferred Shares, and Lexington's 6.00% Convertible Notes 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.

² Reported Company Funds Available for Distribution ("FAD") is calculated by making adjustments to Company FFO, as adjusted for (1) straight-line rent revenue, (2) lease incentive amortization, (3) amortization of above/below market leases, (4) cash paid for tenant improvements, (5) cash paid for lease costs, (6) non-cash general and administrative expenses, and (7) non-cash interest, net. Although FAD may not be comparable to that of other REITs, Lexington believes it provides a meaningful indication of its ability to fund cash needs. FAD is a non-GAAP financial measure and should not be viewed as an alternative measurement of operating performance to net income, as an alternative to net cash flows from operating activities or as a measure of liquidity.

CONTACT: Investor or Media Inquiries, T. Wilson Eglin, CEO
         Lexington Realty Trust
         Phone: (212) 692-7200 E-mail: [email protected]