-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FDE3VZIUFn0zS1vp0W6WI14mtiDB7ZTdd/93+6gz/ethTpeRnAqKNSGWNTsc/f0b S9YsGADUPZFcad/f+IXhCw== /in/edgar/work/0000950123-00-010638/0000950123-00-010638.txt : 20001116 0000950123-00-010638.hdr.sgml : 20001116 ACCESSION NUMBER: 0000950123-00-010638 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LEXINGTON CORPORATE PROPERTIES TRUST CENTRAL INDEX KEY: 0000910108 STANDARD INDUSTRIAL CLASSIFICATION: [6798 ] IRS NUMBER: 133717318 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12386 FILM NUMBER: 768967 BUSINESS ADDRESS: STREET 1: 355 LEXINGTON AVE CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2126927260 MAIL ADDRESS: STREET 1: 355 LEXINGTON AVE STREET 2: 14TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10017 FORMER COMPANY: FORMER CONFORMED NAME: LEXINGTON CORPORATE PROPERTIES INC DATE OF NAME CHANGE: 19930816 10-Q 1 y42697e10-q.txt LEXINGTON CORPORATE PROPERTIES TRUST 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2000 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition period from _________________ to ________________ Commission File Number 1-12386 LEXINGTON CORPORATE PROPERTIES TRUST ------------------------------------------------ (Exact name of registrant as specified in its charter) Maryland 13-3717318 ------------------------------ ---------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 355 Lexington Avenue New York, NY 10017 ------------------------------ ----------- (Address of principal executive offices) (Zip code) (212) 692-7260 ----------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No --- --- Indicate the number of shares outstanding of each of the registrant's classes of common shares, as of the latest practicable date: 17,169,422 common shares, par value $.0001 per share on November 14, 2000. 2 PART 1. - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS LEXINGTON CORPORATE PROPERTIES TRUST AND CONSOLIDATED SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS September 30, 2000(Unaudited) and December 31, 1999 (in thousands, except share and per share data)
September 30, December 31, ASSETS: 2000 1999 --------- --------- Real estate, at cost $ 682,627 $ 688,926 Less: accumulated depreciation and amortization 94,071 82,334 --------- --------- 588,556 606,592 Cash and cash equivalents 1,024 8,837 Restricted cash 1,920 2,470 Investment in and advances to joint ventures 30,622 11,523 Other assets, net 37,053 27,059 --------- --------- $ 659,175 $ 656,481 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY: Mortgages and notes payable $ 310,290 $ 299,360 Credit facility 64,421 70,921 Subordinated notes payable, including accrued interest 1,936 1,973 Origination fees payable, including accrued interest 6,715 6,781 Accounts payable and other liabilities 6,731 6,168 --------- --------- 390,093 385,203 Minority interests 65,026 66,303 --------- --------- 455,119 451,506 --------- --------- Preferred shares, par value $0.0001 per share; authorized 10,000,000 shares. Class A Senior Cumulative Convertible Preferred, liquidation preference $25,000; 2,000,000 shares issued and outstanding 24,369 24,369 --------- --------- Common shares, par value $0.0001 per share; 287,888 shares issued and outstanding, liquidation preference $3,886 3,809 3,809 --------- --------- Shareholders' equity: Common shares, par value $0.0001 per share, authorized 40,000,000 shares, 16,875,032 and 16,905,285 shares issued and outstanding in 2000 and 1999, respectively 2 2 Additional paid-in-capital 240,274 240,339 Deferred compensation, net (1,103) (701) Accumulated distributions in excess of net income (61,309) (60,852) --------- --------- 177,864 178,788 Less: notes receivable from officers/shareholders (1,986) (1,991) --------- --------- Total shareholders' equity 175,878 176,797 --------- --------- $ 659,175 $ 656,481 ========= =========
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 LEXINGTON CORPORATE PROPERTIES TRUST AND CONSOLIDATED SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME Three and nine months ended September 30, 2000 and 1999 (Unaudited and in thousands, except per share data)
Three months ended Nine months ended September 30, September 30, 2000 1999 2000 1999 ------- ------- ------- ------- Revenues: Rental $19,247 $18,796 $57,565 $56,331 Equity in earnings of joint ventures 475 -- 1,108 -- Interest and other 365 412 1,057 988 ------- ------- ------- ------- 20,087 19,208 59,730 57,319 ------- ------- ------- ------- Expenses: Interest 7,401 7,188 22,056 21,320 Depreciation and amortization of real estate 4,362 4,425 13,155 13,325 Amortization of deferred expenses 415 241 1,088 726 General and administrative 1,240 1,188 3,838 3,384 Property operating 338 436 1,106 1,351 ------- ------- ------- ------- 13,756 13,478 41,243 40,106 ------- ------- ------- ------- Income before gain on sale of properties and minority interests 6,331 5,730 18,487 17,213 Gain on sale of properties 297 2,351 2,959 3,049 ------- ------- ------- ------- Income before minority interests 6,628 8,081 21,446 20,262 Minority interests 1,508 1,731 4,509 4,680 ------- ------- ------- ------- Net income $ 5,120 $ 6,350 $16,937 $15,582 ======= ======= ======= ======= Net income per common share: Basic $ 0.26 $ 0.34 $ 0.89 $ 0.81 Diluted $ 0.26 $ 0.32 $ 0.85 $ 0.79
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 LEXINGTON CORPORATE PROPERTIES TRUST AND CONSOLIDATED SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Nine months ended September 30, 2000 and 1999 (Unaudited and in thousands, except share data)
2000 1999 -------- -------- Net cash provided by operating activities $ 27,587 $ 30,107 -------- -------- Cash flows from investing activities: Acquisitions of real estate, net (27,116) (26,741) Investment in and advances to joint ventures (16,182) (4,223) Real estate deposits (4,633) (17,481) Proceeds from sale of real estate, net 19,402 19,465 -------- -------- Net cash used in investing activities (28,529) (28,980) -------- -------- Cash flows from financing activities: Proceeds of mortgages and notes payable 45,300 30,775 Dividends to common and preferred shareholders (17,394) (17,249) Principal payments on debt, excluding normal amortization (13,093) (5,513) Principal amortization payments (7,819) (8,709) Change in credit facility borrowing, net (6,500) 6,300 Cash distributions to minority partners (4,702) (4,937) Proceeds from the issuance of common shares, net 818 615 Repurchase of common shares (3,211) (5,830) Other financing activities, net (270) (1,462) -------- -------- Net cash used in financing activities (6,871) (6,010) -------- -------- Change in cash and cash equivalents (7,813) (4,883) Cash and cash equivalents, at beginning of period 8,837 11,084 -------- -------- Cash and cash equivalents, at end of period $ 1,024 $ 6,201 ======== ========
Supplemental disclosure of non-cash investing and financing activities: During 2000 and 1999, the Company issued 73,800 and 69,850 common shares, respectively, to certain employees and trustees resulting in $664 and $877, respectively, of deferred compensation. These common shares vest ratably over a 2 to 5 year period. During 2000 and 1999, holders of an aggregate of 124,023 and 254,964 partnership units, respectively, redeemed such units for common shares of the Company. This redemption resulted in an increase in shareholders' equity and a corresponding decrease in minority interests of $1,668 and $3,486, respectively. During 2000, 83,400 partnership units were issued to acquire two real estate asset management contracts valued at $585 from an affiliate of a Co-Chief Executive Officer of the Company. During 2000, the Company purchased a property and issued a $3,488 promissory note to the seller. During 1999, the purchaser of two of the Company's properties assumed mortgage debt of $10,156. The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 LEXINGTON CORPORATE PROPERTIES TRUST AND CONSOLIDATED SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2000 (Unaudited and in thousands, except share and per share data) (1) The Company Lexington Corporate Properties Trust (the "Company") is a self-managed and self-administered real estate investment trust ("REIT") that acquires, owns and manages a geographically diversified portfolio of net leased office, industrial and retail properties. The real properties owned by the Company are subject to triple net leases to corporate tenants. The Company was organized in 1993 to combine and continue to expand the business of two affiliated limited partnerships. As of September 30, 2000 the Company had ownership interests in sixty-nine properties and managed an additional twenty-five properties. The Company has qualified as a REIT under the Internal Revenue Code of 1986, as amended. A REIT is generally not subject to Federal income tax on that portion of its real estate investment trust taxable income, which is distributed to its shareholders, provided that at least 95% of taxable income is distributed. Accordingly, no provision for Federal income taxes has been made. The unaudited financial statements reflect all adjustments, which are, in the opinion of management, necessary to present a fair statement of the results for the interim periods. For a more complete understanding of the Company's operations and financial position, reference is made to the financial statements previously filed with the Securities and Exchange Commission with the Company's Annual Report on Form 10-K for the year ended December 31, 1999. (2) Summary of Significant Accounting Policies Basis of Presentation and Consolidation. The Company's consolidated financial statements are prepared on the accrual basis of accounting. The financial statements reflect the accounts of the Company and its consolidated subsidiaries, including Lepercq Corporate Income Fund L.P. ("LCIF") and Lepercq Corporate Income Fund II L.P. ("LCIF II"). The Company is the sole general partner and majority limited partner of LCIF and LCIF II. Earnings Per Share. Basic net income per share is computed by dividing net income reduced by preferred dividends by the weighted average number of common shares outstanding during the period. Diluted net income per share amounts are similarly computed but include the effect, when dilutive, of in-the-money common share options and the Company's other dilutive securities. The Company's preferred shares are excluded from the three and nine months ended September 30, 2000 and the nine months ended September 30, 1999 computations since they are anti-dilutive. The exchangeable redeemable secured notes are excluded from the three months ended September 30, 2000 computation since they are anti-dilutive. 6 The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for the three and nine months ended September 30, 2000 and 1999:
Three months ended Nine months ended September 30, September 30, 2000 1999 2000 1999 ------------ ------------ ------------ ------------ BASIC Net income $ 5,120 $ 6,350 $ 16,937 $ 15,582 Less preferred dividends (651) (630) (1,911) (1,890) ------------ ------------ ------------ ------------ Net income attributed to common shareholders $ 4,469 $ 5,720 $ 15,026 $ 13,692 ============ ============ ============ ============ Weighted average number of common shares outstanding 16,906,036 16,923,101 16,889,606 16,976,508 ============ ============ ============ ============ Net income per common share - basic: $ 0.26 $ 0.34 $ 0.89 $ 0.81 ============ ============ ============ ============ DILUTED Net income attributed to common shareholders $ 4,469 $ 5,720 $ 15,026 $ 13,692 Add incremental income attributed to assumed conversion of dilutive securities 1,419 2,809 5,827 6,022 ------------ ------------ ------------ ------------ Net income attributed to common shareholders $ 5,888 $ 8,529 $ 20,853 $ 19,714 ============ ============ ============ ============ Weighted average number of common shares used in calculation of basic earnings per share 16,906,036 16,923,101 16,889,606 16,976,508 Add incremental shares representing: Shares issuable upon exercise of employee share options 131,716 20,829 87,035 19,346 Shares issuable upon conversion of dilutive securities 5,727,747 9,940,208 7,650,998 8,041,086 ------------ ------------ ------------ ------------ Weighted average number of shares used in calculation of diluted earnings per common share 22,765,499 26,884,138 24,627,639 25,036,940 ============ ============ ============ ============ Net income per common share - diluted: $ 0.26 $ 0.32 $ 0.85 $ 0.79 ============ ============ ============ ============
Use of Estimates. Management has made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. (3) Investments in Real Estate During the nine months ended September 30, 2000: (i) The Company purchased a property in Hampton, Virginia leased to Nextel Communications of the Mid-Atlantic, Inc. for $6,700. The lease, which expires January 2010, provides for annual revenues of $719. (ii) The Company purchased a property in Phoenix, Arizona leased to Avnet, Inc. for $23,250. The lease, which expires October 2007, provides for annual revenues of $2,470. The Company sold three properties which are located in Houston, Texas (leased to Toys R Us), Plymouth, Michigan (leased to Johnson Controls, Inc.) and Henderson, North Carolina (leased to Corporate Express Office Products, Inc.) for an aggregate selling price of $19,600. In addition, the Company contributed its property in Herndon, Virginia (leased to NEC America, Inc.) to its joint venture with an institutional partner. The Company realized $4,600 in proceeds for the contribution. The Plymouth and Henderson properties were sold to an affiliate of a Co-Chief Executive Officer of the Company. The Company received a $3,067, 10% note in connection with the Henderson sale. In July 2000, the note was repaid in full. 7 The following unaudited pro forma operating information for the nine months ended September 30, 2000 and 1999 has been prepared as if the 2000 and 1999 acquisitions and dispositions had been consummated as of January 1, 1999. The information does not purport to be indicative of what the operating results of the Company would have been had the acquisitions and dispositions been consummated on that date or to be indicative of operating results which can be expected for future periods. The unaudited pro forma amounts are as follows:
Pro forma Nine months ended September 30, 2000 1999 ---------- ---------- Revenues $ 60,082 $ 57,160 Net income $ 13,969 $ 12,256 Net income per common share: Basic $ 0.71 $ 0.61 Diluted $ 0.71 $ 0.61
(4) Investments in Joint Ventures The Company's joint venture with an institutional partner has acquired five properties in 2000, including one purchased from the Company, for $154,460, of which $100,326 was funded through non-recourse mortgages which mature in 2010 ($82,526) and 2012 ($17,800) and have a weighted average interest rate of 8.02%. The leases, which expire at various dates ranging from 2009 to 2011, provide for annual rental revenues of approximately $16,786. (5) Minority Interests In conjunction with several of the Company's acquisitions, sellers were given interests in LCIF or LCIF II as a form of consideration. All of such interests are redeemable at certain times for common shares on a one-for-one basis at various dates through May 2006. During 2000, LCIF issued 83,400 partnership units to an affiliate of a Co-Chief Executive Officer of the Company to acquire two property management contracts. This resulted in an increase to minority interest of $585. The total number of limited partnership units of LCIF and LCIF II outstanding is 5,719,337. These units, subject to certain adjustments through the date of redemption, require distributions per unit in varying amounts up to $1.24 per annum and have a current average distribution of $1.12 per annum. Minority interests in the accompanying consolidated financial statements include the interests in such partnerships held by parties other than the Company. (6) Mortgages and Notes Payable During the nine months ended September 30, 2000 the Company obtained the following non-recourse mortgages: (i) $17,000 mortgage bearing interest at 8.10% secured by its Richmond, Virginia property. The mortgage, which matures February 2010, provides for annual principal and interest payments of approximately $1,510 and a balloon payment at maturity of $15,237. (ii) $4,600 mortgage bearing interest at 8.26% secured by its Hampton, Virginia property. The mortgage, which matures April 2010, provides for annual principal and interest payments of approximately $415 and a balloon payment at maturity of $4,139. (iii) $15,200 mortgage bearing interest at 7.89% secured by its Phoenix, Arizona property. The mortgage, which matures June 2008, provides for annual principal and interest payments of approximately $1,434 and a balloon payment at maturity of $12,713. 8 (iv) $8,500 mortgage bearing interest at 190 basis points over 90 day LIBOR (currently 8.65%) secured by its Marlborough, Massachusetts property. The mortgage, which matures August 2005, currently provides for annual principal and interest payments of approximately $832 and a balloon payment at maturity of $7,912. In addition, the Company obtained seller financing of $3,488 relating to the purchase of the Phoenix, Arizona property. This financing, which matures May 2010, provides for interest only payments of 7.5% through May 2003 and 8% thereafter. Additionally, the Company is a guarantor of Lexington Realty Advisors, Inc.'s construction note payable in the amount of $5.7 million. (7) Subsequent Events The Company declared a $0.31 and $0.3255 dividend on its common and preferred shares, respectively, for shareholders of record on October 31, 2000, payable November 14, 2000. The Company borrowed $6,500 on its outstanding credit line. The Company repaid $1,936 in outstanding subordinated notes. On November 14, 2000 the Company and Net 1 L.P. and Net 2 L.P. announced that they entered into a merger agreement whereby Net 1 L.P. and Net 2 L.P. would merge into a subsidiary of the Company. The transaction is subject to customary closing conditions including the approval of the Company's shareholders and the limited partners of Net 1 L.P. and Net 2 L.P. The Co-Chief Executive Officer of the Company is the controlling shareholder of the general partners of Net 1 L.P. and Net 2 L.P. 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollars in thousands, except per share amounts) Forward-Looking Statements When used in this Form 10-Q Report, the words "believes," "expects," "estimates" and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially. In particular, among the factors that could cause actual results to differ materially are failure to continue to qualify as a real estate investment trust, general business and economic conditions, competition, increases in real estate construction costs, change in interest rates, accessibility of debt and equity capital markets and other risks inherent in the real estate business including tenant defaults, potential liability relating to environmental matters and illiquidity of real estate investments. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. General The Company, which has elected to qualify as a real estate investment trust under the Internal Revenue Code of 1986, acquires and manages net-leased commercial properties. As of September 30, 2000, the Company owned sixty-nine real estate properties or interests therein (the "Properties") and managed an additional twenty-five properties. Liquidity and Capital Resources Real Estate Assets. As of September 30, 2000, the Company's real estate assets were located in twenty-nine states and contained an aggregate of approximately 12.1 million square feet of net rentable space. The Properties are subject to tenant triple net leases, which are generally characterized as leases in which the tenant pays all or substantially all of the cost and cost increases for real estate taxes, capital expenditures, insurance and ordinary maintenance of the Property. All of the Company's Properties are currently leased. During the nine months ended September 30, 2000, the Company acquired two properties for $29,950 at an unleveraged average annual yield of 10.65% and sold three properties for $19,600. The Company's principal sources of liquidity are revenue generated from the Properties, asset and acquisition fees generated from joint venture investments and third party management contracts, interest on cash balances, amounts available under its credit facility and amounts that may be raised through the sale of securities in private or public offerings. For the nine months ended September 30, 2000, the leases on the Properties generated approximately $57,565 in revenue compared to $56,331 during the same period in 1999. Dividends. The Company has made quarterly distributions since October 1986 without interruption. The Company paid a dividend of $.27 per share to common shareholders in respect of each of the calendar quarters of 1995 and the first quarter of 1996; $.28 per share in respect of the second and third quarters of 1996; $.29 per share in respect of the fourth quarter of 1996, each of the calendar quarters of 1997 and the first and second quarters of 1998; $0.30 per share in respect of the third and fourth quarters of 1998, each of the calendar quarters of 1999 and the first quarter of 2000; $0.31 per share in respect of the second quarter of 2000. The Company declared a dividend in respect of the third quarter of 2000, in the amount of $.31 per share to shareholders of record as of October 31, 2000 to be paid on November 14, 2000. The Company's annualized dividend rate is currently $1.24 per share. UPREIT Structure. The Company's UPREIT structure permits the Company to effect acquisitions by issuing to a seller, as a form of consideration, interests in partnerships controlled by the Company. All of such interests are redeemable at certain times for common shares of the Company on a one-for-one basis and all of such interests require the Company to pay certain distributions to the holders of such interests. The Company accounts for these interests in a manner similar to a minority interest holder. The number of common shares that will be outstanding in the future should be expected to increase, and minority interest expense should be expected to decrease, from time to time, as such partnership interests are redeemed for common shares. The table set forth below provides certain information with respect to such partnership interests as of September 30, 2000: 10
Current Total Redeemable Annualized Annualized for Shares of Number Per Unit Distribution Common Shares as of: of Units Distribution ($000) - ------------------- --------- ------------ ------------ At any time 3,857,088 $ 1.24 $ 4,783 At any time 1,271,073 1.08 1,373 At any time 133,050 1.12 149 June 2002 83,400 1.24 103 January 2003 17,901 -- -- March 2004 43,734 0.27 12 March 2004 27,314 -- -- November 2004 29,976 -- -- March 2005 29,384 -- -- January 2006 187,163 -- -- February 2006 29,886 -- -- May 2006 9,368 0.29 3 --------- -------- --------- Total 5,719,337 $ 1.12 $ 6,423 ========= ======== =========
Financing Revolving Credit Facility. As of September 30, 2000, the amount outstanding on the Company's credit facility was $64,421, bore interest at 8.03% per annum and had $11,282 available for additional borrowings. Debt Service Requirements. The Company's principal liquidity needs are the payment of interest and principal on outstanding mortgage debt. As of September 30, 2000, a total of forty-nine properties were subject to outstanding mortgages, which had an aggregate principal amount of $310,290. The weighted average interest rate on the Company's mortgages and notes payable, including line of credit borrowings, on such date was approximately 7.84%. Lease Obligations. Since the Company's tenants bear all or substantially all of the cost of property maintenance and capital improvements, the Company does not anticipate significant needs for cash for property maintenance or repairs. The Company generally funds property expansions with additional secured borrowings, the repayment of which is funded out of rental increases under the leases covering the expanded properties. Results of Operations ($000)
Three months ended Nine months ended September 30, September 30, Increase Increase Selected Income Statement Data 2000 1999 (Decrease) 2000 1999 (Decrease) ------- ------- ---------- ------- ------- ---------- Total revenues $20,087 $19,208 $ 879 $59,730 $57,319 $ 2,411 Rental 19,247 18,796 451 57,565 56,331 1,234 Equity in earnings from joint ventures 475 -- 475 1,108 -- 1,108 Interest and other 365 412 (47) 1,057 988 69 Total expenses 13,756 13,478 278 41,243 40,106 1,137 Interest 7,401 7,188 213 22,056 21,320 736 Depreciation & amortization of real estate 4,362 4,425 (63) 13,155 13,325 (170) General & administrative 1,240 1,188 52 3,838 3,384 454 Property operating 338 436 (98) 1,106 1,351 (245) Net Income 5,120 6,350 (1,230) 16,937 15,582 1,355
The increase in rental revenues were primarily due to the growth of the portfolio. The formation of real estate joint ventures in the third and fourth quarter of 1999 is responsible for the increase in the equity in earnings from joint ventures. The increase in interest and other income for the nine months ended September 30, 2000 relates primarily to interest income earned on notes receivable from 11 two property sales coupled with increased rates on overnight investments of available cash. The increase in interest expense is due to the growth of the Company's portfolio which is partially funded through increased leverage along with an increase in the average borrowing rate. The increase in general and administrative expenses is primarily due to the addition of personnel in the second half of 1999 to support the growth of the Company's advisory business, coupled with the commencement of the amortization of the Company's accounting software systems and increased professional fees. The reduction in property operating expense is the result of the portfolio being 100% occupied in 2000 compared with one vacancy in 1999. Funds From Operations Management believes that Funds From Operations enhances an investor's understanding of the Company's financial condition, results of operations and cash flows and believes it is an appropriate performance measure for an equity REIT which provides an indication of a REIT's ability to make cash distributions. Funds From Operations is defined by the National Association of Real Estate Investment Trusts, Inc. (NAREIT) as "net income (or loss) (computed in accordance with generally accepted accounting principles ("GAAP")), excluding gains (or losses) from sales of property, plus real estate depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures." The Company's method of calculating Funds From Operations excludes other non-recurring revenue and expense items and may be different from methods used by other REITs and, accordingly, is not comparable to such other REITs. Funds From Operations should not be considered an alternative to net income as an indicator of operating performance or to cash flows from operating activities as determined in accordance with GAAP, or as a measure of liquidity to other consolidated income or cash flow statement data as determined in accordance with GAAP. The following table reflects the calculation of the Company's Funds From Operations and cash flow activities for the three and nine months ended September 30, 2000 and 1999 ($000).
Three months ended Nine months ended September 30, September 30, 2000 1999 2000 1999 -------- -------- -------- -------- Net income $ 5,120 $ 6,350 $ 16,937 $ 15,582 Adjustments: Depreciation and amortization of real estate 4,362 4,425 13,155 13,325 Gain on sale of properties (297) (2,351) (2,959) (3,049) Minority interest's share of net income 1,419 1,679 4,327 4,522 Amortization of lease costs 165 -- 332 -- Deemed conversion of notes payable 500 -- 1,082 -- Joint venture adjustment 477 29 1,322 29 -------- -------- -------- -------- Funds From Operations $ 11,746 $ 10,132 $ 34,196 $ 30,409 ======== ======== ======== ======== Cash flows from operating activities $ 7,718 $ 11,582 $ 27,587 $ 30,107 Cash flows from investing activities (6,235) (26,740) (28,529) (28,980) Cash flows from financing activities (3,587) 13,044 (6,871) (6,010)
The Company's aggregate dividends paid to shareholders and distributions paid to unit holders amounted to 70.2% and 74.4% of the Company's Funds From Operations for the nine months ended September 30, 2000 and 1999, respectively. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company's exposure to market risk relates to its variable rate indebtedness. As of September 30, 2000 and 1999, the Company's variable rate indebtedness represented 17.2% and 15.5%, respectively, of total long-term indebtedness. During the three and nine months ended September 30, 2000 and 1999, this variable rate indebtedness had a weighted average interest rate of 7.94% and 7.74% and 6.61% and 6.61%, respectively. Had the weighted average interest rate been 100 basis points higher the Company's net income would have been reduced by $153 and $501 and $124 and $390 for the three and nine months ended September 30, 2000 and 1999, respectively. 12 PART II - OTHER INFORMATION ITEM 1. Legal Proceedings - not applicable. ITEM 2. Changes in Securities - not applicable. ITEM 3. Defaults under the Senior Securities - not applicable. ITEM 4. Submission of Matters to a Vote of Security Holders - not applicable ITEM 5. Other Information - not applicable. ITEM 6. Exhibits and Reports on Form 8-K. (a) Exhibits -
Exhibit No. Exhibit ----------- ------- 27 Financial Data Schedule as of and for the nine months ended September 30, 2000
(b) Reports on Form 8-K filed during the quarter ended September 30, 2000. None. 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Lexington Corporate Properties Trust Date: November 14, 2000 By:/s/ E. Robert Roskind --------------------- ---------------------------------------- E. Robert Roskind Chairman and Co-Chief Executive Officer Date: November 14, 2000 By:/s/ Patrick Carroll --------------------- ---------------------------------------- Patrick Carroll Chief Financial Officer and Treasurer EX-27 2 y42697ex27.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED BALANCE SHEET AND THE CONDENSED CONSOLIDATED STATEMENT OF INCOME AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AS CONTAINED IN THE COMPANY'S FORM 10Q FOR SUCH PERIOD AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10Q, DOLLARS ARE IN THOUSANDS, EXCEPT PER SHARE DATA. 1,000 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 2,944 0 0 0 0 0 682,627 94,071 659,175 0 383,362 2 24,369 0 175,876 659,175 0 59,730 0 14,261 1,088 0 22,056 21,446 0 16,937 0 0 0 16,937 0.89 0.85
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