8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report Pursuant

to Section 13 OR 15(d) of The

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 6, 2019

LEXINGTON REALTY TRUST
(Exact name of registrant as specified in its charter)
Maryland	1-12386	13-3717318
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
One Penn Plaza, Suite 4015, New York, New York		10119-4015
(Address of principal executive offices)		(Zip Code)

	(212) 692-7200
(Registrant's telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):

¨    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act: 

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Shares of beneficial interest, par value $0.0001 per share, classified as Common Stock	LXP	New York Stock Exchange
6.50% Series C Cumulative Convertible Preferred Stock, par value $0.0001 per share	LXPPRC	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Item 2.02. Results of Operations and Financial Condition.

On November 6, 2019, we issued a press release announcing our financial results for the quarter ended September 30, 2019. A copy of the press release is furnished herewith as part of Exhibit 99.1.

The information furnished pursuant to this “Item 2.02 - Results of Operations and Financial Condition”, including Exhibit 99.1, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act, or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any filing made by us under the Exchange Act or Securities Act of 1933, as amended, which we refer to as the Securities Act, regardless of any general incorporation language in any such filing, except as shall be expressly set forth by specific reference in such a filing.

Item 7.01. Regulation FD Disclosure.

On November 6, 2019, we made available supplemental information, which we refer to as the “Quarterly Supplemental Information, Third Quarter 2019,” a copy of which is furnished herewith as Exhibit 99.1.

Also on November 6, 2019, our management discussed our financial results and certain aspects of our business plan on a conference call with analysts and investors. A transcript of the conference call is furnished herewith as Exhibit 99.2.

The information furnished pursuant to this “Item 7.01 - Regulation FD Disclosure”, including Exhibit 99.1 and Exhibit 99.2, shall not be deemed to be “filed” for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any filing made by us under the Exchange Act or the Securities Act, regardless of any general incorporation language in any such filing, except as shall be expressly set forth by specific reference in such a filing. Information contained on our web site is not incorporated by reference into this Current Report on Form 8-K.

Item 9.01. Financial Statements and Exhibits.

(d)       Exhibits

99.1	Quarterly Supplemental Information, Third Quarter 2019.
99.2	November 6, 2019 Conference Call Transcript.

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 hereunto duly authorized.

	Lexington Realty Trust
Date: November 7, 2019	By:	/s/ Beth Boulerice
		Beth Boulerice
		Chief Financial Officer

EX-99.1

Exhibit 99.1

 

LEXINGTON REALTY TRUST

QUARTERLY SUPPLEMENTAL INFORMATION

September 30, 2019

Table of Contents

Section	Page
Third Quarter 2019 Earnings Press Release	3
Portfolio Data
Investments / Capital Recycling Summary	14
Financing Summary	15
Leasing Summary	16
Other Revenue Data	18
Portfolio Detail by Asset Class	20
Portfolio Composition	21
Components of Net Asset Value	22
Portfolio Concentration	23
Tenant Industry Diversification	26
Top 15 Tenants	28
Lease Rollover Schedules	29
Property Leases and Vacancies	31
Select Credit Metrics Summary	40
Financial Covenants	41
Mortgages and Notes Payable	42
Debt Maturity Schedule	43
Selected Balance Sheet Account Data	44
Non-GAAP Measures – Definitions	45
Reconciliation of Non-GAAP Measures	47
Investor Information	51

This Quarterly Earnings Press Release and Quarterly Supplemental Information contains certain forward-looking statements which involve known and unknown risks, uncertainties or other factors not under the control of Lexington Realty Trust (“Lexington”), which may cause actual results, performance or achievements of Lexington and its subsidiaries to be materially different from the results, performance, or other expectations implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed under the headings “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” in Lexington’s periodic reports filed with the Securities and Exchange Commission, including, but not limited to, risks related to: (1) the authorization of Lexington’s Board of Trustees of future dividend declarations, (2) Lexington’s ability to achieve its estimates of net income attributable to common shareholders and Adjusted Company FFO available to all equityholders and unitholders – diluted for the year ending December 31, 2019, (3) the successful consummation of any lease, acquisition, build-to-suit, disposition, financing or other transaction on the terms described herein or at all, (4) the failure to continue to qualify as a real estate investment trust, (5) changes in general business and economic conditions, including the impact of any new 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 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,” may,” “plans,” “predicts,” “will,” “will likely result,” “is optimistic,” “goal,” “objective” or similar expressions. Except as required by law, Lexington undertakes no obligation to revise those forward-looking statements to reflect events or circumstances after the occurrence of unanticipated events. Accordingly, there is no assurance that Lexington’s expectations will be realized.

LEXINGTON REALTY TRUST

TRADED: NYSE: LXP

ONE PENN PLAZA, SUITE 4015

NEW YORK, NY 10119-4015

FOR IMMEDIATE RELEASE

LEXINGTON REALTY TRUST REPORTS THIRD QUARTER 2019 RESULTS AND

ANNOUNCES DIVIDEND INCREASE

New York, NY - November 6, 2019 - Lexington Realty Trust (“Lexington”) (NYSE:LXP), a real estate investment trust focused on single-tenant industrial real estate investments, today announced results for the third quarter ended September 30, 2019.

Third Quarter 2019 Highlights

• Recorded Net Income attributable to common shareholders of $141.6 million, or $0.59 per diluted common share.

• Generated Adjusted Company Funds From Operations available to all equityholders and unitholders - diluted (“Adjusted Company FFO”) of $48.7 million, or $0.20 per diluted common share.

• Acquired three industrial properties for an aggregate cost of $179.8 million.

• Disposed of six properties for an aggregate gross sales price of $328.6 million.

• Satisfied $161.8 million of secured debt at a weighted-average interest rate of 4.1%.

• Raised net proceeds of $131.8 million by issuing approximately 13.0 million common shares in an underwritten public offering and through the ATM program.

• Extended the maturity of the $300.0 million term loan to January 2025 and swapped the LIBOR portion of the interest rate to obtain a current fixed rate of 2.732% per annum.

• Completed 1.6 million square feet of new leases and lease extensions, raising industrial renewal rents by 5%.

• Increased industrial portfolio to 78% of gross real estate assets.

Subsequent Events

• Acquired three industrial assets for an aggregate cost of approximately $53.4 million.

• Sold three non-core properties for an aggregate gross sales price of $13.8 million.

• Declared a quarterly common share/unit dividend/distribution of $0.105 per share/unit, an increase of 2.4%.

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, Chairman and Chief Executive Officer of Lexington Realty Trust, commented, “Our third quarter results were strong as we continued to successfully execute on our business plan. The dividend increase announced today reflects the progress and sustained  momentum on both the acquisition and disposition front. Robust transaction volume during the quarter resulted in year-to-date investment activity of nearly $500 million and disposition activity of $463 million, including $244 million from our Richland, Washington property which we acquired in 2015 for $152 million. Our disposition program has been a huge success thus far and has provided well-priced capital to invest into industrial properties in support of our portfolio repositioning objectives. Industrial exposure represented 78% of gross book value at quarter-end, and we expect this to increase over the balance of the year.”

3

FINANCIAL RESULTS

Revenues

For the quarter ended September 30, 2019, total gross revenues were $81.6 million, compared with total gross revenues of $100.3 million for the quarter ended September 30, 2018. The decrease was primarily attributable to property sales and lease expirations, partially offset by revenue generated from property acquisitions and new leases.

Net Income Attributable to Common Shareholders

For the quarter ended September 30, 2019, net income attributable to common shareholders was $141.6 million, or $0.59 per diluted share, compared with a net income attributable to common shareholders for the quarter ended September 30, 2018 of $216.2 million, or $0.90 per diluted share.

Adjusted Company FFO

For the quarter ended September 30, 2019, Lexington generated Adjusted Company FFO of $48.7 million, or $0.20 per diluted share, compared to Adjusted Company FFO for the quarter ended September 30, 2018 of $58.2 million, or $0.24 per diluted share.

Dividends/Distributions

As previously announced, during the third quarter of 2019, Lexington declared a regular quarterly common share/unit dividend/distribution for the quarter ended September 30, 2019 of $0.1025 per common share/unit, which was paid on October 15, 2019 to common shareholders/unitholders of record as of September 30, 2019. Lexington also declared a cash dividend of $0.8125 per share on its Series C Cumulative Convertible Preferred Stock (“Series C Preferred”) for the quarter ended September 30, 2019, which is expected to be paid on November 15, 2019 to Series C Preferred Shareholders of record as of October 31, 2019.

Today, Lexington announced that it declared a regular quarterly common share/unit dividend/distribution for the quarter ending December 31, 2019 of $0.105 per common share/unit payable on January 15, 2020 to common shareholders/unitholders of record as of December 31, 2019. This represents an increase of 2.4% from the previous quarterly per common share/unit dividend/distribution and equates to an annualized increase of $0.01 per common share/unit and an annualized dividend/distribution of $0.42 per common share/unit, subject to and assuming future declarations.

Lexington also announced that it declared a cash dividend of $0.8125 per share of Series C Preferred for the quarter ending December 31, 2019, which is expected to be paid on February 18, 2020 to Series C Preferred Shareholders of record as of January 31, 2020.

4

TRANSACTION ACTIVITY

ACQUISITION TRANSACTIONS

Property Type	Market	Sq. Ft.		Initial Basis ($000)		Approximate Lease Term (Yrs)
Industrial	Cincinnati, OH		143,664	$	13,762	4
Industrial	Cincinnati, OH		1,299,492		100,288	11
Industrial	Cincinnati, OH		994,013		65,763	8
			2,437,169	$	179,813

The above properties were acquired at aggregate weighted-average GAAP and cash capitalization rates of 5.7% and 5.0%, respectively.

PROPERTY DISPOSITIONS⁽¹⁾    

Primary Tenant	Location	Property Type	Gross Disposition Price ($000)		Annualized Net Income(2) ($000)			Annualized NOI(2) ($000)			Month of Disposition	% Leased
T-Mobile USA	Meridian, ID	Office	$	16,322	$	531		$	1,507		August		100.0	%
Vacant	Albany, GA	Other		1,500		(114	)		(111	)	August		0.0	%
United States of America	Lenexa, KS	Office		53,300		2,010			3,341		August		100.0	%
Consumer Cellular	Redmond, OR	Office		12,100		37			(511	)	September		100.0	%
Kroger	Paris, TN	Other		1,350		135			156		September		100.0	%
Preferred Freezer	Richland, WA	Industrial		244,000		5,171			11,283		September		100.0	%
			$	328,572	$	7,770		$	15,665

(1)	In addition, a joint venture, in which Lexington has a 20% interest, disposed of three office properties for $108.4 million and satisfied $71.5 million of non-recourse debt.
(2)	Quarterly period prior to sale, annualized.

LEASING

	LEASE EXTENSIONS
	Location		Primary Tenant(1)	Prior Term	Lease Expiration Date	Sq. Ft.
	Industrial
1	Antioch	TN	Christie Lites	06/2020	06/2025		50,400
2	Laurens	SC	Michelin	01/2020	03/2020		1,164,000
2	Total industrial lease extensions						1,214,400
	Office
1	Philadelphia	PA	Morgan Lewis	01/2021	01/2024		289,432
2	Mission	TX	T-Mobile West	06/2020	06/2025		75,016
2	Total office lease extensions						364,448
4	Total lease extensions						1,578,848

	NEW LEASES
	Location			Lease Expiration Date	Sq. Ft.
	Office
1	Indianapolis	IN	Stanley Black & Decker	10/2020		15,032
1	Total office leases					15,032
5	TOTAL NEW AND EXTENDED LEASES					1,593,880

(1)       Leases greater than 10,000 square feet.

As of September 30, 2019, Lexington's portfolio was 97.4% leased.

5

BALANCE SHEET/CAPITAL MARKETS

During the third quarter of 2019, Lexington issued 10.0 million common shares through an underwritten equity offering raising net proceeds of approximately $100.7 million. In addition, Lexington issued approximately 3.0 million common shares under its ATM program raising net proceeds of $31.1 million.

In the third quarter of 2019, Lexington satisfied $161.8 million of consolidated non-recourse debt, including debt encumbering assets sold. Subsequent to September 30, 2019, Lexington satisfied an aggregate of $15.7 million of consolidated non-recourse debt.

In July 2019, Lexington extended the maturity of its $300.0 million term loan from January 2021 to January 2025. In addition, Lexington swapped the LIBOR portion of the interest rate to obtain a current fixed rate of 2.732% per annum.

During the third quarter of 2019, Lexington repaid all amounts outstanding under its unsecured revolving credit facility.

2019 EARNINGS GUIDANCE

Lexington now 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 $1.22 to $1.25.

Additionally, Lexington is tightening its Adjusted Company FFO guidance range for the year ended December 31, 2019 from $0.76 to $0.80 per diluted common share to $0.77 to $0.80 per diluted common share. This guidance is forward looking, excludes the impact of certain items and is based on current expectations.

THIRD QUARTER 2019 CONFERENCE CALL

Lexington will host a conference call today, November 6, 2019, at 8:30 a.m. Eastern Time, to discuss its results for the quarter ended September 30, 2019. 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 February 6, 2020, 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 10136168. A link to a live webcast of the conference call is available at www.lxp.com within the Investors section.

6

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, (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 real estate investment trust, (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 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”, “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 and 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.

7

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 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.

Company Funds Available for Distribution (“FAD”): FAD is calculated by making adjustments to Adjusted Company FFO (see below) for (1) straight-line 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 estimates 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), 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.

# # #

8

LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited and in thousands, except share and per share data)

	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Gross revenues:
Rental revenue	$	80,325		$	99,958		$	239,058		$	308,088
Other revenue		1,225			337			3,875			701
Total gross revenues		81,550			100,295			242,933			308,789
Expense applicable to revenues:
Depreciation and amortization		(37,211	)		(37,716	)		(111,617	)		(129,693	)
Property operating		(10,611	)		(10,678	)		(30,966	)		(33,061	)
General and administrative		(7,791	)		(7,482	)		(23,652	)		(23,899	)
Non-operating income		532			429			1,927			965
Interest and amortization expense		(16,481	)		(21,159	)		(50,715	)		(63,224	)
Debt satisfaction charges, net		(4,424	)		(2,228	)		(4,527	)		(2,228	)
Impairment charges		(673	)		(2,542	)		(2,355	)		(90,860	)
Gains on sales of properties		140,461			202,371			176,662			239,577
Income before provision for income taxes and equity in earnings of non-consolidated entities		145,352			221,290			197,690			206,366
Provision for income taxes		(241	)		(444	)		(1,108	)		(1,326	)
Equity in earnings of non-consolidated entities		2,710			4			3,288			192
Net income		147,821			220,850			199,870			205,232
Less net income attributable to noncontrolling interests		(4,502	)		(2,834	)		(5,191	)		(3,225	)
Net income attributable to Lexington Realty Trust shareholders		143,319			218,016			194,679			202,007
Dividends attributable to preferred shares – Series C		(1,573	)		(1,573	)		(4,718	)		(4,718	)
Allocation to participating securities		(186	)		(253	)		(304	)		(279	)
Net income attributable to common shareholders	$	141,560		$	216,190		$	189,657		$	197,010
Net income attributable to common shareholders - per common share basic	$	0.60		$	0.91		$	0.81		$	0.83
Weighted-average common shares outstanding – basic		236,285,216			237,354,669			233,833,340			237,577,198
Net income attributable to common shareholders - per common share diluted	$	0.59		$	0.90		$	0.81		$	0.83
Weighted-average common shares outstanding – diluted		241,355,289			246,058,298			234,011,643			241,660,588

9

LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

	September 30, 2019			December 31, 2018
	(unaudited)
Assets:
Real estate, at cost	$	3,178,870		$	3,090,134
Real estate - intangible assets		401,609			419,612
Real estate, gross		3,580,479			3,509,746
Less: accumulated depreciation and amortization		928,886			954,087
Real estate, net		2,651,593			2,555,659
Assets held for sale		58,031			63,868
Operating lease right-of-use assets, net		39,056			—
Cash and cash equivalents		126,058			168,750
Restricted cash		7,692			8,497
Investment in non-consolidated entities		53,796			66,183
Deferred expenses, net		16,195			15,937
Rent receivable – current		2,336			3,475
Rent receivable – deferred		64,593			58,692
Other assets		15,238			12,779
Total assets	$	3,034,588		$	2,953,840
Liabilities and Equity:
Liabilities:
Mortgages and notes payable, net	$	374,543		$	570,420
Term loan payable, net		297,313			298,733
Senior notes payable, net		496,661			496,034
Trust preferred securities, net		127,371			127,296
Dividends payable		30,710			48,774
Liabilities held for sale		5,297			386
Operating lease liabilities		40,275			—
Accounts payable and other liabilities		26,504			30,790
Accrued interest payable		12,300			4,523
Deferred revenue - including below market leases, net		21,050			20,531
Prepaid rent		11,529			9,675
Total liabilities		1,443,553			1,607,162
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, 247,856,209 and 235,008,554 shares issued and outstanding in 2019 and 2018, respectively		25			24
Additional paid-in-capital		2,903,704			2,772,855
Accumulated distributions in excess of net income		(1,420,459	)		(1,537,100	)
Accumulated other comprehensive income (loss)		(5,549	)		76
Total shareholders’ equity		1,571,737			1,329,871
Noncontrolling interests		19,298			16,807
Total equity		1,591,035			1,346,678
Total liabilities and equity	$	3,034,588		$	2,953,840

10

LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES

EARNINGS PER SHARE

(Unaudited and in thousands, except share and per share data)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
EARNINGS PER SHARE:
Basic:
Net income attributable to common shareholders	$	141,560	$	216,190	$	189,657	$	197,010
Weighted-average number of common shares outstanding - basic		236,285,216		237,354,669		233,833,340		237,577,198
Net income  attributable to common shareholders - per common share basic	$	0.60	$	0.91	$	0.81	$	0.83
Diluted:
Net income attributable to common shareholders - basic	$	141,560	$	216,190	$	189,657	$	197,010
Impact of assumed conversions		1,573		4,159		—		2,505
Net income attributable to common shareholders	$	143,133	$	220,349	$	189,657	$	199,515
Weighted-average common shares outstanding - basic		236,285,216		237,354,669		233,833,340		237,577,198
Effect of dilutive securities:
Unvested share-based payment awards and options		359,503		382,956		178,303		463,922
Preferred shares - Series C		4,710,570		4,710,570		—		—
Operating partnership units		—		3,610,103		—		3,619,468
Weighted-average common shares outstanding - diluted		241,355,289		246,058,298		234,011,643		241,660,588
Net income attributable to common shareholders - per common share diluted	$	0.59	$	0.90	$	0.81	$	0.83

11

LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES

ADJUSTED COMPANY FUNDS FROM OPERATIONS & COMPANY FUNDS AVAILABLE FOR DISTRIBUTION

(Unaudited and in thousands, except share and per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
FUNDS FROM OPERATIONS:
Basic and Diluted:
Net income attributable to common shareholders	$	141,560		$	216,190		$	189,657		$	197,010
Adjustments:
Depreciation and amortization		36,537			37,063			109,469			126,442
Impairment charges - real estate		673			2,542			2,355			90,860
Noncontrolling interests - OP units		4,244			2,586			4,410			2,506
Amortization of leasing commissions		674			653			2,148			3,251
Joint venture and noncontrolling interest adjustment		2,267			980			7,200			1,496
Gains on sales of properties, including non-consolidated entities and net of tax		(143,719	)		(202,242	)		(180,837	)		(239,448	)
FFO available to common shareholders and unitholders - basic		42,236			57,772			134,402			182,117
Preferred dividends		1,573			1,573			4,718			4,718
Amount allocated to participating securities		186			253			304			279
FFO available to all equityholders and unitholders - diluted		43,995			59,598			139,424			187,114
Debt satisfaction charges, net, including non-consolidated entities		4,679			2,228			4,782			2,228
Other(1)		—			(3,613	)		—			(6,733	)
Adjusted Company FFO available to all equityholders and unitholders - diluted		48,674			58,213			144,206			182,609
FUNDS AVAILABLE FOR DISTRIBUTION:
Adjustments:
Straight-line adjustments		(4,161	)		(5,367	)		(10,846	)		(16,246	)
Lease incentives		318			404			898			1,459
Amortization of above/below market leases		(142	)		89			(174	)		313
Lease termination payments, net		(120	)		(308	)		(1,120	)		(925	)
Non-cash interest, net		567			1,031			2,146			3,355
Non-cash charges, net		1,554			1,635			4,833			5,199
Tenant improvements		(1,380	)		(69	)		(4,932	)		(6,663	)
Lease costs		(5,951	)		(1,273	)		(10,624	)		(3,074	)
Joint venture and noncontrolling interest adjustment		(3,095	)		—			(3,731	)		—
Company Funds Available for Distribution	$	36,264		$	54,355		$	120,656		$	166,027
Per Common Share and Unit Amounts
Basic:
FFO	$	0.18		$	0.24		$	0.57		$	0.76
Diluted:
FFO	$	0.18		$	0.24		$	0.58		$	0.76
Adjusted Company FFO	$	0.20		$	0.24		$	0.60		$	0.74
Basic:
Weighted-average common shares outstanding - basic EPS		236,285,216			237,354,669			233,833,340			237,577,198
Operating partnership units(2)		3,520,643			3,610,103			3,535,207			3,619,468
Weighted-average common shares outstanding - basic FFO		239,805,859			240,964,772			237,368,547			241,196,666
Diluted:
Weighted-average common shares outstanding - diluted EPS		241,355,289			246,058,298			234,011,643			241,660,588
Operating partnership units(2)		3,520,643			—			3,535,207			—
Unvested share-based payment awards and options		25,090			—			20,169			—
Preferred shares - Series C		—			—			4,710,570			4,710,570
Weighted-average common shares outstanding - diluted FFO		244,901,022			246,058,298			242,277,589			246,371,158

(1) "Other" primarily consisted of the acceleration of below-market lease intangible accretion in 2018.

(2) Includes OP units other than OP units held by Lexington.

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LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

2019 EARNINGS GUIDANCE      

	Twelve Months Ended December 31, 2019
	Range
Estimated:
Net income attributable to common shareholders per diluted common share(1)	$	1.22		$	1.25
Depreciation and amortization		0.62			0.62
Impact of capital transactions		(1.07	)		(1.07	)
Estimated Adjusted Company FFO per diluted common share	$	0.77		$	0.80

(1) Assumes all convertible securities are dilutive.

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LEXINGTON REALTY TRUST

2019 Third Quarter Investments / Capital Recycling Summary

PROPERTY INVESTMENTS

	Property Type	Market		Square Feet (Approx.)		Initial Basis ($000)		Month Closed	Primary Lease Expiration
1	Industrial	Cincinnati	OH		144,000	$	13,762	September		12/2023
2	Industrial	Cincinnati	OH		1,299,000		100,288	September		06/2030
3	Industrial	Cincinnati	OH		994,000		65,763	September		08/2027
3	TOTAL PROPERTY INVESTMENTS				2,437,000	$	179,813

CAPITAL RECYCLING

CONSOLIDATED PROPERTY DISPOSITIONS

	Primary Tenant	Location		Property Type	Gross Disposition Price ($000)		Annualized Net Income ($000) (1)			Annualized NOI ($000)(1)(2)			Month of Disposition	% Leased			Gross Disposition Price PSF
1	T-Mobile USA	Meridian	ID	Office	$	16,322	$	531		$	1,507		August		100	%	$	210.65
2	Vacant	Albany	GA	Other		1,500		(114	)		(111	)	August		0	%		32.93
3	United States of America	Lenexa	KS	Office		53,300		2,010			3,341		August		100	%		314.30
4	Consumer Cellular	Redmond	OR	Office		12,100		37			(511	)	September		100	%		156.62
5	Kroger	Paris	TN	Other		1,350		135			156		September		100	%		43.31
6	Preferred Freezer	Richland	WA	Industrial		244,000		5,171			11,283		September		100	%		534.60
6	TOTAL PROPERTY DISPOSITIONS				$	328,572	$	7,770		$	15,665

NON-CONSOLIDATED PROPERTY DISPOSITIONS ⁽³⁾

	Primary Tenant	Location		Property Type	Gross Disposition Price ($000)		Annualized Net Income ($000) (1)		Annualized NOI ($000)(1)(2)		Month of Disposition	% Leased			Gross Disposition Price PSF
1	TriZetto	Englewood	CO	Office	$	61,250	$	2,266	$	3,780	July		100	%	$	366.96
2	Atlantic Health	Rockaway	NJ	Office		25,900		1,964		1,310	August		100	%		280.53
3	GHX Ultimate Parent	Louisville	CO	Office		21,200		496		1,606	September		100	%		198.36
3	TOTAL PROPERTY DISPOSITIONS				$	108,350	$	4,726	$	6,696

Footnotes

(1)	Quarterly period prior to sale, annualized.
(2)	See definitions of non-GAAP measures and reconciliations to applicable GAAP measures in this document.
(3)	Lexington has a 20% interest in the joint venture that disposed of these properties.

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LEXINGTON REALTY TRUST

2019 Third Quarter Financing Summary

DEBT RETIRED

	Location	Primary Tenant	Property Type	Face / Satisfaction ($000)		Rate	Maturity Date
	Consolidated Mortgage Debt
1	Streetsboro, OH	L'Oreal	Industrial	$	16,415	5.749%	09/2019
2	Columbus, IN	Cummins	Office	4,993		2.210%	07/2019
3	Lenexa, KS	United States of America	Office	30,359		3.700%	11/2027
4	Richland, WA (1)	Preferred Freezer	Industrial	110,000		4.000%	01/2026
4	Total Consolidated Mortgage Debt			$	161,767
	Non-Consolidated Mortgage Debt (2)
1	Englewood, CO	TriZetto	Office	$	43,080	LIBOR+200 bps	09/2021
2	Rockaway, NJ	Atlantic Health	Office	14,280		LIBOR+200 bps	09/2021
3	Louisville, CO	GHX Ultimate Parent	Office	14,160		LIBOR+200 bps	09/2021
3	Total Non-Consolidated Mortgage Debt			$	71,520

CORPORATE LEVEL FINANCING ⁽³⁾

Type	Quarterly Activity, Net	Current Interest Rate	Maturity Date
Revolving Credit Facility	$55,000 satisfaction	LIBOR plus 90 bps	02/2023

Footnotes

(1) Buyer assumed the mortgage at sale.

(2) Lexington has a 20% interest in the joint venture that disposed of these properties. Satisfaction reflects release amount of the joint venture's cross-collateralized debt.

(3) Extended the maturity of the $300 million term loan to January 2025 and swapped the LIBOR portion of the interest rate to obtain a current fixed rate of 2.732% per annum.

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LEXINGTON REALTY TRUST

2019 Third Quarter Leasing Summary

LEASE EXTENSIONS

	Tenant (1)	Location		Prior Term	Lease Expiration Date	Sq. Ft.		New Base Rent Per Annum ($000)(2)(3)		Prior Base Rent Per Annum ($000)		New Cash Base Rent Per Annum ($000)(2)(3)		Prior Cash Base Rent Per Annum ($000)(3)
	Industrial
1	Christie Lites	Antioch	TN	06/2020	06/2025		50,400	$	244	$	115	$	252	$	110
2	Michelin	Laurens	SC	01/2020	03/2020		1,164,000		3,594		3,550		3,594		3,550
2	Total industrial lease extensions						1,214,400	$	3,838	$	3,665	$	3,846	$	3,660
	Office
1	Morgan Lewis	Philadelphia	PA	01/2021	01/2024		289,432	$	4,280	$	4,298	$	4,197	$	4,655
2	T-Mobile West	Mission	TX	06/2020	06/2025		75,016		1,029		989		1,035		1,035
2	Total office lease extensions						364,448	$	5,309	$	5,287	$	5,232	$	5,690
4	TOTAL EXTENDED LEASES						1,578,848	$	9,147	$	8,952	$	9,078	$	9,350

NEW LEASES

	Tenant (1)	Location		Lease Expiration Date	Sq. Ft.		New Base Rent Per Annum ($000)(2)(3)		New Cash Base Rent Per Annum ($000)(2)(3)
	Office
1	Stanley Black & Decker	Indianapolis	IN	10/2020		15,032	$	256	$	256
1	Total office new leases					15,032	$	256	$	256
5	TOTAL NEW AND EXTENDED LEASES					1,593,880	$	9,403	$	9,334

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LEXINGTON REALTY TRUST

 2019 Third Quarter Leasing Summary (Continued)

NEW VACANCY ⁽⁴⁾

Former Tenant	Location		Prior Lease Expiration Date	Sq. Ft.		2018 Base Rent ($000)(3)		2018 Cash Base Rent ($000)(3)
Industrial
Hollander (5)	Thomson	GA	05/2030		208,000	$	930	$	869

Footnotes

(1) Leases greater than 10,000 square feet.

(2) Assumes twelve months rent from the later of 10/1/19 or lease commencement/extension, excluding free rent periods as applicable.

(3) See definitions of non-GAAP measures and reconciliations to applicable GAAP measures in this document.

(4) Excludes multi-tenant properties, disposed properties and non-consolidated investments.

(5) Tenant declared bankruptcy and rejected the lease.

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LEXINGTON REALTY TRUST

Other Revenue Data

9/30/2019

($000)  

Other Revenue Data      

	Base Rent
Asset Class	Nine months ended
	9/30/19 (1)		9/30/19 Percentage			9/30/18 Percentage
Industrial	$	142,130		70.7	%		62.2	%
Office/Other		58,841		29.3	%		37.8	%
	$	200,971		100.0	%		100.0	%

	Base Rent
	Nine months ended
Credit Ratings (2)	9/30/19 (1)		9/30/19 Percentage			9/30/18 Percentage
Investment Grade	$	96,507		48.0	%		44.7	%
Non-Investment Grade		48,283		24.0	%		17.7	%
Unrated		56,181		28.0	%		37.6	%
	$	200,971		100.0	%		100.0	%

Weighted-Average Lease Term - Cash Basis	As of 9/30/19	As of 9/30/18
	8.0 years	8.5 years

Rent Estimates for Current Assets

Year	Base Rent  (3)		Cash Base Rent (3)		Difference
2019 - remaining	$	69,297	$	65,914	$	(3,383	)
2020		263,927		254,886		(9,041	)

Footnotes

(1) Nine months ended 9/30/2019 Base Rent recognized for consolidated properties owned as of 9/30/2019.

(2) Credit ratings are based upon either tenant, guarantor or parent/ultimate parent. Historical comparison was not adjusted for subsequent tenant entity changes and multi-tenant was generally reflected as unrated.

(3) Amounts assume (1) lease terms for non-cancellable periods only, (2) no new or renegotiated leases are entered into after 9/30/2019, and (3) no properties are sold or acquired after 9/30/2019.

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LEXINGTON REALTY TRUST  

Other Revenue Data (Continued)  

9/30/2019  

($000)  

Same-Store NOI ⁽¹⁾

	Nine months ended September 30,
	2019			2018
Total Cash Base Rent	$	169,892		$	172,032
Tenant Reimbursements		17,509			13,661
Property Operating Expenses		(24,292	)		(19,641	)
Same-Store NOI	$	163,109		$	166,052
Change in Same-Store NOI (2)		(1.8	%)

Same-Store Percent Leased (3)	As of 9/30/19		As of 9/30/18
	97.5	%	98.7	%

Lease Escalation Data ⁽⁴⁾

Footnotes

(1) NOI is on a consolidated cash basis excluding properties acquired and sold in 2019 and 2018 and properties subject to mortgage loans in default and a property in litigation at September 30, 2019.

See definitions of non-GAAP measures and reconciliations to applicable GAAP measures in this document.

(2) Change in Same-Store NOI was 0.2 % excluding single-tenant property vacancies.

(3) Excludes properties acquired or sold in 2019 and 2018 and properties subject to mortgage loans in default and a property in litigation at September 30, 2019.

(4) Based on nine months consolidated Cash Base Rents for single-tenant leases (properties greater than 50% leased to a single tenant)  owned as of September 30, 2019. Excludes parking operations and rents from prior tenants.

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LEXINGTON REALTY TRUST

Portfolio Detail By Asset Class

9/30/2019

($000, except square footage)

Asset Class	YE 2016 (5)			YE 2017 (5)			YE 2018 (5)(6)			Q3 2019
Industrial
% of Cost (1)		42.2	%		49.3	%		71.2	%		77.7	%
% of ABR (2)		40.8	%		44.3	%		65.4	%		70.7	%
Leased		98.2	%		99.9	%		96.3	%		99.0	%
Wtd. Avg. Lease Term (3)		10.3			10.5			9.7			8.2
Mortgage Debt	$	240,790		$	193,529		$	206,006		$	75,528
% Investment Grade (2)		25.4	%		28.4	%		31.6	%		45.8	%
Square Feet		28,908,037			36,071,422			41,447,962			45,168,133
Office/Other
% of Cost (1)		57.8	%		50.7	%		28.8	%		22.3	%
% of ABR (2)(4)		59.2	%		55.7	%		34.6	%		29.3	%
Leased		91.3	%		96.0	%		87.1	%		84.0	%
Wtd. Avg. Lease Term (3)		7.4			7.9			7.2			7.7
Mortgage Debt	$	504,383		$	503,539		$	369,508		$	302,721
% Investment Grade (2)		45.0	%		49.4	%		53.2	%		53.4	%
Square Feet		14,416,260			12,542,640			6,111,588			5,332,637

Footnotes                

(1) Based on gross book value of real estate assets; excludes held for sale assets.

(2) Percentage of Base Rent, for consolidated properties owned as of each respective period.

(3) Cash basis.

(4) YE 2018 excludes the acceleration of below-market lease intangible accretion on one Kmart asset.

(5) Office and Other properties combined.

(6) Pataskala, Ohio property reclassed to Industrial from Office/Other.

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LEXINGTON REALTY TRUST

Portfolio Composition

9/30/2019

As a Percent of Gross Book Value ⁽¹⁾

Portfolio Composition ⁽²⁾ 

 

Footnotes

(1) Based on gross book value of real estate assets as of 9/30/2019; excludes held for sale assets.

(2) Based on gross book value of real estate assets as of 9/30/2019, 12/31/2018, 12/31/2017 and 12/31/2016, as applicable and excludes held for sale assets.

21

LEXINGTON REALTY TRUST

Components of Net Asset Value

9/30/2019

($000)

The purpose of providing the following information is to enable readers to derive their own estimates of net asset value. This information is not intended to be an asset-by-asset or enterprise valuation.  

Consolidated properties nine month net operating income (NOI) (1)
Industrial	$	127,313
Office/Other		48,186
Total Net Operating Income	$	175,499
Lexington's share of non-consolidated nine month NOI (1)
NNN OFFICE JV
Office	$	7,720
OTHER JV
Other	$	1,109
Other income
Advisory fees	$	2,909
In service assets not fairly valued by capitalized NOI method (1)
Wholly-owned assets acquired in 2019	$	433,189
Wholly-owned assets less than 70% leased	$	45,432
Add other assets:
Assets held for sale - consolidated	$	58,031
Construction in progress		5,405
Developable land		6,928
Cash and cash equivalents		126,058
Restricted cash		7,692
Accounts receivable		2,336
Other assets		15,238
Total other assets	$	221,688
Liabilities:
Corporate level debt (face amount)	$	929,120
Mortgages and notes payable (face amount)		378,249
Dividends payable		30,710
Liabilities held for sale - consolidated		5,297
Accounts payable, accrued expenses and other liabilities		50,333
Preferred stock, at liquidation value		96,770
Lexington's share of non-consolidated mortgages (face amount)		88,018
Total deductions	$	1,578,497
Common shares & OP units at 9/30/2019		251,291,507

Footnotes

(1) NOI for the existing property portfolio at September 30, 2019, excludes NOI related to assets undervalued by a capitalized NOI method and assets held for sale. Assets undervalued by a capitalized NOI method are identified generally by occupancies under 70% and assets acquired in 2019. For assets in this category an NOI capitalization approach is not appropriate, and accordingly, Lexington's net book value has been used. See definitions of non-GAAP measures and reconciliations to applicable GAAP measures in this document.

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LEXINGTON REALTY TRUST

Consolidated Portfolio Concentration

9/30/2019

	Markets (1)	Percent of Base Rent as of 9/30/19  (2)
1	Houston, TX		11.3	%
2	Memphis, TN		6.8	%
3	Detroit, MI		5.1	%
4	New York, NY		4.1	%
5	Dallas, TX		4.1	%
6	Atlanta, GA		3.7	%
7	Nashville, TN		3.6	%
8	Philadelphia, PA		2.8	%
9	San Jose, CA		2.5	%
10	Jackson, MS		2.3	%
11	St. Louis, MO		2.3	%
12	Indianapolis, IN		2.3	%
13	Richmond, VA		2.3	%
14	Columbus, OH		1.8	%
15	Phoenix, AZ		1.8	%
16	Kansas City, MO		1.6	%
17	Champaign, IL		1.6	%
18	Charlotte, NC		1.5	%
19	Jackson, TN		1.5	%
20	Winchester, VA		1.4	%
	Total Consolidated Portfolio Concentration (3)		64.5	%

Footnotes

(1) Markets are based on a Core Based Statistical Area, which is the official term for a functional region based around an urban center of at least 10,000 people, based on standards published by the Office of Management and Budget (OMB) in 2000.  These standards are used to replace the definitions of metropolitan areas that were defined in 1990.

(2) Nine months ended 9/30/2019 Base Rent recognized for consolidated properties owned as of 9/30/2019.

(3) Total shown may differ from detailed amounts due to rounding.

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LEXINGTON REALTY TRUST

Portfolio Concentration - Industrial

9/30/2019  

	Markets (1)	Percent of Base Rent as of 9/30/19  (2)
1	Memphis, TN		9.7	%
2	Houston, TX		7.6	%
3	Detroit, MI		5.4	%
4	Nashville, TN		5.1	%
5	Atlanta, GA		4.8	%
6	Jackson, MS		3.3	%
7	St. Louis, MO		3.2	%
8	New York, NY		2.7	%
9	Columbus, OH		2.6	%
10	Dallas, TX		2.5	%
11	Champaign, IL		2.2	%
12	Jackson, TN		2.1	%
13	Richmond, VA		2.0	%
14	Winchester, VA		2.0	%
15	Chicago, IL		1.9	%
16	Indianapolis, IN		1.9	%
17	Shreveport, LA		1.9	%
18	Greenville, SC		1.8	%
19	Elizabethtown, KY		1.8	%
20	Spartanburg, SC		1.7	%
	Total Industrial Portfolio Concentration (3)		66.2	%

Footnotes
(1)	Markets are based on a Core Based Statistical Area, which is the official term for a functional region based around an urban center of at least 10,000 people, based on standards published by the Office of Management and Budget (OMB) in 2000.  These standards are used to replace the definitions of metropolitan areas that were defined in 1990.
(2)	Nine months ended 9/30/2019 Base Rent recognized for consolidated properties owned as of 9/30/2019.
(3)	Total shown may differ from detailed amounts due to rounding.

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LEXINGTON REALTY TRUST

Portfolio Concentration - Office/Other

9/30/2019

	Markets (1)	Percent of Base Rent as of 9/30/19  (2)
1	Houston, TX		20.2	%
2	San Jose, CA		8.5	%
3	Philadelphia, PA		8.0	%
4	Dallas, TX		8.0	%
5	New York, NY		7.6	%
6	Charlotte, NC		5.2	%
7	Detroit, MI		4.5	%
8	Columbus, IN		4.3	%
9	Kansas City, MO		4.0	%
10	Washington, DC		4.0	%
11	Indianapolis, IN		3.3	%
12	Phoenix, AZ		3.1	%
13	Miami, FL		2.9	%
14	Richmond, VA		2.8	%
15	Sarasota, FL		2.4	%
16	Baton Rouge, LA		1.5	%
17	McAllen, TX		1.3	%
18	Augusta, ME		1.2	%
19	Orlando, FL		1.1	%
20	Knoxville, TN		1.1	%
	Total Office/Other Portfolio Concentration (3)		95.0	%

Footnotes
(1)	Markets are based on a Core Based Statistical Area, which is the official term for a functional region based around an urban center of at least 10,000 people, based on standards published by the Office of Management and Budget (OMB) in 2000.  These standards are used to replace the definitions of metropolitan areas that were defined in 1990.
(2)	Nine months ended 9/30/2019 Base Rent recognized for consolidated properties owned as of 9/30/2019.
(3)	Total shown may differ from detailed amounts due to rounding.

25

LEXINGTON REALTY TRUST

Tenant Industry Diversification - Industrial Assets ⁽¹⁾

9/30/2019

Footnotes

(1) Nine months ended 9/30/2019 Base Rent recognized for consolidated properties owned as of 9/30/2019.

26

LEXINGTON REALTY TRUST

Tenant Industry Diversification - Office/Other Assets ⁽¹⁾

9/30/2019

Footnotes

(1) Nine months ended 9/30/2019 Base Rent recognized for consolidated properties owned as of 9/30/2019.

27

LEXINGTON REALTY TRUST

Top 15 Tenants

9/30/2019

Top 15 Tenants

Tenants (1)	Property Type	Lease Expirations	Number of Leases	Sq. Ft. Leased		Sq. Ft. Leased as a Percent of Consolidated Portfolio (2)(3)			Base Rent as of 9/30/2019 ($000)		Percent of Base Rent as of 9/30/2019 ($000) (2)(4)
Dow	Office	2036	1		664,100		1.4	%	$	11,137		5.6	%
Nissan	Industrial	2027	2		2,971,000		6.0	%		9,570		4.8	%
Dana	Industrial	2021-2026	7		2,053,359		4.2	%		7,456		3.7	%
Undisclosed (5)	Industrial	2031-2035	3		1,090,383		2.2	%		5,355		2.7	%
Watco	Industrial	2038	1		132,449		0.3	%		5,080		2.5	%
Xerox	Office	2023	1		202,000		0.4	%		4,981		2.5	%
Morgan Lewis (6)	Office	2024	1		289,432		0.6	%		4,189		2.1	%
Undisclosed (7)	Industrial	2023-2027	3		2,132,290		4.3	%		4,145		2.1	%
FedEx	Industrial	2023 & 2028	2		292,021		0.6	%		4,048		2.0	%
Hamilton Beach	Industrial	2021 & 2026	2		1,645,436		3.3	%		3,711		1.9	%
Michelin	Industrial	2019 & 2020	2		1,759,346		3.6	%		3,642		1.8	%
General Electric (8)	Industrial / Office	2019 & 2024	2		950,427		1.9	%		3,631		1.8	%
Asics	Industrial	2030	1		855,878		1.7	%		3,291		1.6	%
Amazon.com	Industrial	2026-2030	3		2,515,492		5.1	%		3,275		1.6	%
Spitzer	Industrial	2035	2		449,895		0.9	%		3,259		1.6	%
			33		18,003,508		36.6	%	$	76,770		38.5	%

Footnotes

(1)	See Annual Report and other applicable disclosures for actual tenant names.  Includes tenant, guarantor or parent.
(2)	Total shown may differ from detailed amounts due to rounding.
(3)	Excludes vacant square feet.
(4)	Nine months ended 9/30/2019 Base Rent recognized for consolidated properties owned as of 9/30/2019, excluding rent from prior tenants.
(5)	Tenant is a domestic subsidiary of an international automaker.
(6)	Includes parking operations.
(7)	Lease restricts certain disclosures. Guarantor is investment grade.
(8)	Includes an office property held for sale at 9/30/2019.

28

LEXINGTON REALTY TRUST

 Lease Rollover Schedule - Consolidated Industrial Properties

9/30/2019

($000)

Year	Number of Leases Expiring		Base Rent as of 9/30/2019		Percent of Base Rent as of 9/30/2019			Percent of Base Rent as of 9/30/2018
2019 - remaining		2	$	1,218		0.9	%		3.1	%
2020		8		8,546		6.0	%		6.3	%
2021		11		10,629		7.5	%		6.1	%
2022		2		1,329		0.9	%		0.7	%
2023		7		4,407		3.1	%		1.0	%
2024		14		13,529		9.5	%		6.8	%
2025		11		10,357		7.3	%		6.8	%
2026		10		13,591		9.6	%		7.1	%
2027		9		18,689		13.2	%		13.4	%
2028		4		8,891		6.3	%		6.4	%
Thereafter		25		50,608		35.7	%		41.1	%
Total (1)		103	$	141,794		100.0	%

Footnotes        

(1) Total shown may differ from detailed amounts due to rounding.

29

LEXINGTON REALTY TRUST

 Lease Rollover Schedule - Consolidated Office/Other Properties

9/30/2019

($000)  

Year	Number of Leases Expiring		Base Rent as of 9/30/2019		Percent of Base Rent as of 9/30/2019			Percent of Base Rent as of 9/30/2018
2019 - remaining		28	$	4,471		7.8	%		5.1	%
2020		6		1,710		3.0	%		5.7	%
2021		10		5,996		10.4	%		13.7	%
2022		3		3,626		6.3	%		4.4	%
2023		3		5,399		9.4	%		7.2	%
2024		8		9,720		16.9	%		11.8	%
2025		6		3,133		5.4	%		3.2	%
2026		-		-		0.0	%		1.0	%
2027		4		1,453		2.5	%		6.4	%
2028		2		1,005		1.7	%		1.1	%
Thereafter		12		21,021		36.5	%		22.0	%
Total (1)		82	$	57,534		100.0	%

Footnotes

(1) Total shown may differ from detailed amounts due to rounding and does not include parking operations.

30

LEXINGTON REALTY TRUST

Property Leases and Vacancies - Consolidated Portfolio - 9/30/2019

Year of Lease Expiration	Date of Lease   Expiration	Property Location	City	State	Note	Primary Tenant or Guarantor (19)	Sq. Ft. Leased or Available (1)		Base Rent as of 9/30/2019 ($000) (2)		Cash Base Rent as of 9/30/2019 ($000) (2)		9/30/2019 Debt Balance ($000)		Debt Maturity
INDUSTRIAL PROPERTIES
Single-tenant
2019	12/31/2019	2415 US Hwy. 78 East	Moody	AL	--	Michelin		595,346		1,056		1,087		-		-
2020	3/31/2020	101 Michelin Dr.	Laurens	SC	3	Michelin		1,164,000		2,586		2,586		-		-
	5/31/2020	7875 White Road SW	Austell	GA	--	Mars Wrigley		604,852		691		956		-		-
	6/30/2020	1650-1654 Williams Rd.	Columbus	OH	--	ODW Logistics		772,450		1,010		1,010		-		-
		3102 Queen Palm Dr.	Tampa	FL	--	Time		229,605		926		1,030		-		-
	9/30/2020	3350 Miac Cove Rd.	Memphis	TN	--	Mimeo.com		107,400		322		345		-		-
	12/19/2020	1901 Ragu Dr.	Owensboro	KY	6	Unilever		443,380		1,119		966		-		-
	12/31/2020	2203 Sherrill Dr.	Statesville	NC	--	Geodis America		639,800		1,870		1,903		-		-
2021	3/31/2021	2455 Premier Row	Orlando	FL	--	Walgreen Co.		205,016		589		381		-		-
	5/31/2021	291 Park Center Dr.	Winchester	VA	--	Kraft Heinz		344,700		1,066		1,085		-		-
	6/30/2021	11624 S. Distribution Cv.	Olive Branch	MS	--	Hamilton Beach		1,170,218		2,842		2,370		-		-
	9/30/2021	3820 Micro Dr.	Millington	TN	--	Ingram Micro		701,819		1,359		1,405		-		-
	10/25/2021	6938 Elm Valley Dr.	Kalamazoo	MI	--	Dana		150,945		1,310		1,520		-		-
	11/30/2021	2880 Kenny Biggs Rd.	Lumberton	NC	--	Quickie Manufacturing		423,280		1,017		1,093		-		-
	12/31/2021	191 Arrowhead Dr.	Hebron	OH	--	Owens Corning		250,410		429		429		-		-
		200 Arrowhead Dr.	Hebron	OH	--	Owens Corning		400,522		687		687		-		-
		3686 South Central Ave.	Rockford	IL	--	Pierce Packaging		93,000		241		241		-		-
2022	3/31/2022	5417 Campus Dr.	Shreveport	LA	--	Tire Rack		257,849		1,007		1,052		-		-
	8/31/2022	50 Tyger River Dr.	Duncan	SC	--	Plastic Omnium		221,833		322		84		-		-
2023	2/28/2023	7670 Hacks Cross Rd.	Olive Branch	MS	--	MAHLE Industries		268,104		679		676		-		-
	5/31/2023	6495 Polk Ln.	Olive Branch	MS	22	Undisclosed		151,691		197		190		-		-
	8/31/2023	10535 Red Bluff Rd.	Pasadena	TX	--	Unis		257,835		923		899		-		-
		3737 Duncanville Rd.	Dallas	TX	--	Owens Corning		510,440		747		718		-		-
	10/31/2023	493 Westridge Pkwy.	McDonough	GA	--	Carlstar		676,000		1,269		1,204		-		-
	12/31/2023	120 Southeast Pkwy. Dr.	Franklin	TN	--	United Technologies		289,330		551		551		-		-
		675 Gateway Blvd.	Monroe	OH	--	Blue Buffalo		143,664		41		39		-		-

31

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Property Leases and Vacancies - Consolidated Portfolio - 9/30/2019

Year of Lease Expiration	Date of Lease Expiration	Property Location	City	State	Note	Primary Tenant or Guarantor (19)	Sq. Ft. Leased or Available (1)		Base Rent as of 9/30/2019 ($000) (2)		Cash Base Rent as of 9/30/2019 ($000) (2)		9/30/2019 Debt Balance ($000)		Debt Maturity
INDUSTRIAL PROPERTIES
2024	1/31/2024	1285 W. State Road 32	Lebanon	IN	--	Continental Tire		741,880		1,716		1,788		-		-
	1/31/2024	6495 Polk Ln.	Olive Branch	MS	22	Undisclosed		118,211		168		158		-		-
		70 Tyger River Dr.	Duncan	SC	--	BMW		408,000		867		831		-		-
	3/31/2024	1520 Lauderdale Memorial Hwy.	Cleveland	TN	--	General Electric		851,370		1,993		1,984		-		-
	4/30/2024	113 Wells St.	North Berwick	ME	--	United Technologies		993,685		1,349		1,332		-		-
		11555 Silo Dr.	Olive Branch	MS	--	Olam Cotton		927,742		967		632		-		-
	5/31/2024	901 East Bingen Point Way	Bingen	WA	--	Boeing		124,539		1,977		1,975		-		-
		7225 Goodson Rd.	Union City	GA	--	Interface Americas		370,000		385		360		-		-
	7/31/2024	5795 North Blackstock Road	Spartanburg	SC	--	Wal-Mart		341,660		1,254		1,217		-		-
	9/30/2024	1621 Veterans Memorial Pkwy. E	Lafayette	IN	--	Caterpillar		309,400		911		903		-		-
	10/31/2024	43955 Plymouth Oaks Blvd.	Plymouth	MI	--	Tower Automotive		311,612		1,193		1,154		-		-
		2115 East Belt Line Rd.	Carrollton	TX	--	L.E. Klein		58,202		172		114		-		-
	12/31/2024	749 Southrock Dr.	Rockford	IL	--	Jacobson Warehouse		150,000		478		450		-		-
2025	6/30/2025	10000 Business Blvd.	Dry Ridge	KY	--	Dana		336,350		1,009		1,009		-		-
		4010 Airpark Dr.	Owensboro	KY	--	Metalsa / Dana		211,598		906		906		-		-
		730 North Black Branch Rd.	Elizabethtown	KY	--	Metalsa / Dana		167,770		403		403		-		-
		750 North Black Branch Rd.	Elizabethtown	KY	--	Metalsa / Dana		539,592		2,129		2,129		-		-
		301 Bill Bryan Blvd.	Hopkinsville	KY	--	Metalsa / Dana		424,904		1,266		1,266		-		-
	7/14/2025	590 Ecology Ln.	Chester	SC	--	Boral Limited		420,597		1,344		1,789		5,969		08/2025
	7/31/2025	7005 Cochran Rd.	Glenwillow	OH	--	Royal Appliance		458,000		1,546		1,576		-		-
		5352 Performance Way	Whitestown	IN	--	LaCrosse		380,000		931		782		-		-
	12/31/2025	1700 47th Ave North	Minneapolis	MN	--	Owens Corning		18,620		412		412		-		-
2026	3/30/2026	121 Technology Dr.	Durham	NH	15	Heidelberg		500,500		1,903		2,479		-		-
	3/31/2026	633 Garrett Pkwy.	Lewisburg	TN	--	Calsonic Kansei		310,000		966		956		-		-
	4/30/2026	16811 W. Commerce Dr.	Goodyear	AZ	--	Blue Buffalo		540,349		1,833		696		-		-
	6/30/2026	351 Chamber Dr.	Chillicothe	OH	--	Kitchen Collection		475,218		869		871		-		-
	9/30/2026	900 Industrial Blvd.	Crossville	TN	--	Dana		222,200		433		433		-		-
		3931 Lakeview Corporate Dr.	Edwardsville	IL	--	Amazon.com		769,500		2,022		1,934		-		-
	10/31/2026	10345 Philipp Pkwy.	Streetsboro	OH	--	L'Oreal USA		649,250		2,020		2,113		-		-
		5001 Greenwood Rd.	Shreveport	LA	--	Libbey		646,000		1,624		1,668		-		-
	11/30/2026	250 Rittenhouse Cir.	Bristol	PA	--	Estée Lauder		241,977		860		885		-		-
		736 Addison Rd.	Erwin	NY	--	Corning		408,000		1,061		1,067		-		-

32

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Property Leases and Vacancies - Consolidated Portfolio - 9/30/2019

Year of Lease Expiration	Date of Lease Expiration	Property Location	City	State	Note	Primary Tenant or Guarantor (19)	Sq. Ft. Leased or Available (1)		Base Rent as of 9/30/2019 ($000) (2)		Cash Base Rent as of 9/30/2019 ($000) (2)		9/30/2019 Debt Balance ($000)		Debt Maturity
INDUSTRIAL PROPERTIES
2027	1/31/2027	27200 West 157th St.	New Century	KS	--	Amazon.com		446,500		931		817		-		-
	2/28/2027	554 Nissan Pkwy.	Canton	MS	--	Nissan		1,466,000		4,650		4,524		-		-
	4/30/2027	16407 Applewhite Rd.	San Antonio	TX	18	Undisclosed / HVAC		849,275		2,245		2,112		-		-
		200 Sam Griffin Rd.	Smyrna	TN	--	Nissan		1,505,000		4,920		4,737		-		-
	6/30/2027	1501 Nolan Ryan Expy.	Arlington	TX	--	Arrow Electronics		74,739		305		303		-		-
	8/31/2027	600 Gateway Blvd.	Monroe	OH	--	Hayneedle		994,013		241		190		-		-
	9/30/2027	1550 Hwy 302	Byhalia	MS	--	McCormick		615,600		1,829		1,800		-		-
	10/31/2027	201 James Lawrence Rd.	Jackson	TN	--	Kellogg		1,062,055		2,958		2,808		-		-
	12/31/2027	10590 Hamilton Ave.	Cincinnati	OH	--	Hillman Group		264,598		610		610		-		-
2028	1/31/2028	490 Westridge Pkwy.	McDonough	GA	--	Georgia-Pacific		1,121,120		2,803		2,592		-		-
	3/31/2028	29-01-Borden Ave./29-10 Hunters Point Ave.	Long Island City	NY	--	FedEx		140,330		3,851		3,846		37,347		03/2028
	8/31/2028	1420 Greenwood Rd.	McDonough	GA	--	United States Cold Storage		296,972		1,627		1,617		-		-
	9/30/2028	904 Industrial Rd.	Marshall	MI	--	Tenneco		246,508		610		555		-		-
2029	7/31/2029	8500 Nail Rd.	Olive Branch	MS	--	Sephora		716,080		2,063		1,946		-		-
	11/24/2029	318 Pappy Dunn Blvd.	Anniston	AL	--	IAC Group		276,782		1,305		1,251		-		-
2030	3/31/2030	549 Wingo Rd.	Byhalia	MS	--	Asics		855,878		3,291		3,126		-		-
	5/31/2030	359 Gateway Dr.	Lavonia	GA	--	TI Automotive		133,221		626		784		6,362		12/2020
		4015 Lakeview Corporate Dr.	Edwardsville	IL	--	Spectrum		1,017,780		2,595		2,047		-		-
	6/30/2030	2601 Bermuda Hundred Rd.	Chester	VA	20	Phillip Morris		1,034,470		2,888		2,848		-		-
		700 Gateway Blvd.	Monroe	OH	--	Amazon.com		1,299,492		322		290		-		-
2031	10/31/2031	1020 W. Airport Rd.	Romeoville	IL	--	ARYZTA		188,166		2,722		2,585		-		-
	12/18/2031	80 Tyson Dr.	Winchester	VA	16	Undisclosed / Automaker		400,400		1,776		1,581		-		-
2032	4/30/2032	13930 Pike Rd.	Missouri City	TX	--	Vulcan		-		1,592		1,493		-		-
	8/24/2032	16950 Pine Dr.	Romulus	MI	16	Undisclosed / Automaker		500,023		1,926		1,814		-		-
	10/31/2032	27255 SW 95th Ave.	Wilsonville	OR	--	Pacific Natural Foods		508,277		2,340		2,015		-		-
		26700 Bunert Rd.	Warren	MI	--	Lipari		260,243		2,912		2,617		25,850		11/2032
2033	12/31/2033	2115 East Belt Line Rd.	Carrollton	TX	--	Teasdale		298,653		974		760		-		-
2034	9/30/2034	5625 North Sloan Ln.	North Las Vegas	NV	--	Nicholas		180,235		1,917		1,737		-		-
	10/31/2034	1001 Innovation Rd.	Rantoul	IL	--	Vista Outdoor		813,126		3,147		2,821		-		-

33

LEXINGTON REALTY TRUST

Property Leases and Vacancies - Consolidated Portfolio - 9/30/2019

Year of Lease Expiration	Date of Lease Expiration	Property Location	City	State	Note	Primary Tenant or Guarantor (19)	Sq. Ft. Leased or Available (1)		Base Rent as of 9/30/2019 ($000) (2)		Cash Base Rent as of 9/30/2019 ($000) (2)		9/30/2019 Debt Balance ($000)		Debt Maturity
INDUSTRIAL PROPERTIES
2035	3/31/2035	13863 Industrial Rd.	Houston	TX	--	Spitzer		187,800		1,826		1,616		-		-
		7007 F.M. 362 Rd.	Brookshire	TX	--	Spitzer		262,095		1,433		1,268		-		-
2035	6/30/2035	111 West Oakview Pkwy.	Oak Creek	WI	--	Stella & Chewy's		164,007		1,574		1,427		-		-
	10/22/2035	2860 Clark Street	Detroit	MI	16	Undisclosed / Automaker		189,960		1,653		1,653		-		-
2036	5/31/2036	671 Washburn Switch Rd.	Shelby	NC	--	Clearwater Paper		673,425		2,089		1,860		-		-
2037	3/31/2037	4005 E I-30	Grand Prairie	TX	--	O'Neal  Industries		215,000		1,404		1,192		-		-
2038	3/31/2038	13901/14035 Industrial Rd.	Houston	TX	--	Watco		132,449		5,080		4,436		-		-
2042	5/31/2042	4801 North Park Dr.	Opelika	AL	--	Golden State Enterprises		165,493		2,433		1,938		-		-
2067	12/31/2067	10201 Schuster Way	Pataskala	OH	--	Kohl's		-		720		325		-		-
N/A	Vacancy	3350 Miac Cove Rd.	Memphis	TN	--	(Available for Lease)		32,679		-		-		-		-
SINGLE TENANT INDUSTRIAL TOTAL								44,088,659	$	140,011	$	132,720	$	75,528
Multi-tenant / Vacancy (8)(14)
	Various	6050 Dana Way	Antioch	TN	4 (97%)	Multi-Tenant		674,528		1,783		1,753		-		-
	Vacancy	1133 Poplar Creek Rd.	Henderson	NC	--	(Available for Lease)		196,946		-		-		-		-
	Vacancy	3301 Stagecoach Rd. NE	Thomson	GA	11	(Available for Lease)		208,000		336		616		-		-
MULTI-TENANT/VACANCY INDUSTRIAL TOTAL								1,079,474	$	2,119	$	2,369	$	-
INDUSTRIAL TOTAL/WEIGHTED AVERAGE						99.0% Leased		45,168,133	$	142,130	$	135,089	$	75,528

34

LEXINGTON REALTY TRUST

Property Leases and Vacancies - Consolidated Portfolio - 9/30/2019

Year of Lease Expiration	Date of Lease Expiration	Property Location	City	State	Note	Primary Tenant or Guarantor (19)	Sq.Ft. Leased or Available (1)		Base Rent as of 9/30/2019 ($000) (2)		Cash Base Rent as of 9/30/2019 ($000) (2)		9/30/2019 Debt Balance ($000)		Debt Maturity
OFFICE PROPERTIES
Single-tenant
2019	10/31/2019	10475 Crosspoint Blvd.	Indianapolis	IN	10,23,24	John Wiley		123,047		1,701		1,782		-		-
		9601 Renner Blvd.	Lenexa	KS	17, 21	T-Mobile USA		77,484		857		1,160		7,847		12/2019
	12/31/2019	2800 Waterford Lake Dr.	Midlothian	VA	10	Alstom Power		99,057		1,638		1,808		-		-
2020	2/14/2020	5600 Broken Sound Blvd.	Boca Raton	FL	--	Oce - USA Holding		143,290		1,683		1,875		18,548		02/2020
2021	3/31/2021	1701 Market St.	Philadelphia	PA	--	Prime Communications		1,220		47		47		-		-
	6/30/2021	1415 Wyckoff Rd.	Wall	NJ	--	NJ Natural Gas		157,511		2,830		2,830		5,576		01/2021
		2050 Roanoke Rd.	Westlake	TX	--	Charles Schwab		130,199		1,552		1,641		-		-
	8/31/2021	3500 North Loop Rd.	McDonough	GA	--	Gobal Payments		62,218		632		632		-		-
	10/31/2021	1401 Nolan Ryan Expy.	Arlington	TX	--	Butler America Aerospace		4,979		63		63		-		-
2022	5/30/2022	13651 McLearen Rd.	Herndon	VA	--	United States of America		159,644		2,346		2,415		-		-
	7/31/2022	1440 E 15th St.	Tucson	AZ	--	CoxCom		28,591		406		406		-		-
	10/31/2022	4455 American Way	Baton Rouge	LA	--	New Cingular Wireless		70,100		874		858		-		-
2023	9/30/2023	1701 Market St.	Philadelphia	PA	--	CBC Restaurant		8,070		182		182		-		-
	12/14/2023	3333 Coyote Hill Rd.	Palo Alto	CA	--	Xerox		202,000		4,981		5,303		27,795		12/2023
2024	1/31/2024	1701 Market St.	Philadelphia	PA	--	Morgan Lewis		289,432		3,223		3,430		-		-
	2/14/2024	1362 Celebration Blvd.	Florence	SC	--	Change Healthcare		32,000		430		440		-		-
	5/31/2024	3476 Stateview Blvd.	Fort Mill	SC	--	Wells Fargo		169,083		1,511		1,465		-		-
		3480 Stateview Blvd.	Fort Mill	SC	--	Wells Fargo		169,218		1,565		1,466		-		-
	7/31/2024	500 Jackson St.	Columbus	IN	9	Cummins		390,100		2,551		2,778		-		-
	8/31/2024	10475 Crosspoint Blvd.	Indianapolis	IN	10, 24	HQ Global Workplaces		14,236		236		236		-		-
2025	1/31/2025	1401 Nolan Ryan Expy.	Arlington	TX	--	Triumph Group		111,409		1,214		1,332		-		-
	2/28/2025	1401 Nolan Ryan Expy.	Arlington	TX	--	Infotech Enterprise		13,590		157		163		-		-
	5/31/2025	1701 Market St.	Philadelphia	PA	--	TruMark Financial		2,641		194		194		-		-
	6/30/2025	3711 San Gabriel	Mission	TX	--	T-Mobile West		75,016		742		764		-		-

35

LEXINGTON REALTY TRUST

Property Leases and Vacancies - Consolidated Portfolio - 9/30/2019

Year of Lease Expiration	Date of Lease Expiration	Property Location	City	State	Note	Primary Tenant or Guarantor (19)	Sq.Ft. Leased or Available (1)		Base Rent as of 9/30/2019 ($000) (2)		Cash Base Rent as of 9/30/2019 ($000) (2)		9/30/2019 Debt Balance ($000)		Debt Maturity
OFFICE PROPERTIES
2027	1/31/2027	1701 Market St.	Philadelphia	PA	--	Drybar		1,975		108		82		-		-
2027	5/31/2027	2401 Cherahala Blvd.	Knoxville	TN	--	CaremarkPCS		59,748		634		599		-		-
	8/31/2027	133 First Park Dr.	Oakland	ME	17	T-Mobile USA		78,610		724		1,151		7,939		10/2020
2029	3/31/2029	2800 High Meadow Cir.	Auburn Hills	MI	--	Faurecia		278,000		2,660		2,510		-		-
	9/30/2029	9200 South Park Center Loop	Orlando	FL	--	CardWorks		59,927		661		-		-		-
2031	4/30/2031	9201 Stateline Rd.	Kansas City	MO	11	Burns & McDonnell Engineering		155,925		1,515		1,443		-		-
	11/30/2031	4 Apollo Drive	Whippany	NJ	--	CAE		123,734		1,630		1,462		11,722		11/2021
2033	12/31/2033	8555 South River Pkwy.	Tempe	AZ	--	Versum		95,133		1,109		971		-		-
2036	10/31/2036	270 Abner Jackson Pkwy.	Lake Jackson	TX	--	Dow		664,100		11,137		9,466		184,352		10/2036
N/A	N/A	1701 Market St.	Philadelphia	PA	--	Parking Operations		-		966		966		-		-
	Vacancy	1701 Market St.	Philadelphia	PA	--	(Available for Lease)		699		-		-		-		-
		10475 Crosspoint Blvd.	Indianapolis	IN	10,11, 24	(Available for Lease)		3,764		31		31		-		-
		1401 Nolan Ryan Expy.	Arlington	TX	--	(Available for Lease)		31,830		-		-		-		-
SINGLE TENANT OFFICE TOTAL								4,087,580	$	52,790	$	51,951	$	263,779
Multi-tenant / Vacancy (8)(14)
	Vacancy	5200 Metcalf Ave.	Overland Park	KS	--	(Available for Lease)		320,198		-		-		32,112		N/A
	Vacancy	820 Gears Rd.	Houston	TX	11	(Available for Lease)		78,895		99		99		-		-
	Various	11511 Luna Rd.	Farmers Branch	TX	4,10 (88%)	Multi-Tenant		181,072		1,696		1,636		-		-
	Various	1311 Broadfield Blvd.	Houston	TX	4,10 (66%)	Multi-Tenant		155,407		648		565		-		-
	Various	13430 North Black Canyon Fwy.	Phoenix	AZ	4 (65%)	Multi-Tenant		138,940		717		824		-		-
	Various	1460 Tobias Gadson Blvd.	Charleston	SC	4,11 (23%)	Multi-Tenant		50,246		436		428		6,830		02/2021
MULTI-TENANT/VACANCY OFFICE TOTAL								924,758	$	3,596	$	3,552	$	38,942
OFFICE SUBTOTAL/WEIGHTED AVERAGE						88.1% Leased		5,012,338	$	56,386	$	55,503	$	302,721

36

LEXINGTON REALTY TRUST

 Property Leases and Vacancies - Consolidated Portfolio - 9/30/2019

Year of Lease Expiration	Date of Lease Expiration	Property Location	City	State	Note	Primary Tenant or Guarantor (19)	Sq.Ft. Leased or Available (1)		Base Rent as of 9/30/2019 ($000) (2)		Cash Base Rent as of 9/30/2019 ($000) (2)		9/30/2019 Debt Balance ($000)		Debt Maturity
OTHER PROPERTIES
Single-tenant
Specialty
2029	1/31/2029	175 Holt Garrison Pkwy.	Danville	VA	10, 24	Home Depot		-		172		205		-		-
2048	12/31/2048	30 Light St.	Baltimore	MD	--	30 Charm City		-		224		224		-		-
2055	1/31/2055	499 Derbyshire Dr.	Venice	FL	--	Littlestone Brotherhood		31,180		1,431		1,024		-		-
2112	8/31/2112	201-215 N. Charles St.	Baltimore	MD	--	201 NC Leasehold		-		232		232		-		-
SINGLE TENANT OTHER TOTAL								31,180	$	2,059	$	1,685	$	-
Multi-tenant / Vacancy (8)(14)
	Vacancy	21082 Pioneer Plaza Dr.	Watertown	NY	10, 24	(Available for Lease)		120,727		-		-		-		-
	Vacancy	97 Seneca Trail	Fairlea	WV	10	(Available for Lease)		90,933		-		-		-		-
	Various	King St./1042 Fort St. Mall	Honolulu	HI	4 (43%)	Multi-Tenant		77,459		396		396		-		-
MULTI-TENANT/VACANCY OTHER TOTAL								289,119	$	396	$	396	$	-
OTHER SUBTOTAL/WEIGHTED AVERAGE						20.2% Leased		320,299	$	2,455	$	2,081	$	-
TOTAL OFFICE & OTHER/WEIGHTED AVERAGE						84.0% Leased		5,332,637	$	58,841	$	57,584	$	302,721
TOTAL CONSOLIDATED PORTFOLIO/WEIGHTED AVERAGE						97.4% Leased		50,500,770	$	200,971	$	192,673	$	378,249

37

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 Property Leases and Vacancies - Non-consolidated Portfolio - 9/30/2019

Year of Lease Expiration	Date of Lease  Expiration	Property Location	City	State	Note	Primary Tenant or Guarantor (19)	Sq.Ft. Leased or Available (1)		LXP % Ownership			Base Rent as of  9/30/2019 ($000) (2)		Cash Base Rent as of 9/30/2019 ($000) (2)		9/30/2019 Debt   Balance  ($000)		Debt Maturity (13)
NON-CONSOLIDATED PROPERTIES
NNN OFFICE JV PROPERTIES
2022	12/31/2022	231 N. Martingale Rd.	Schaumburg	IL	7	Career Education Corporation		317,198		20	%		3,449		3,499		271,280		09/2021
2023	3/31/2023	8900 Freeport Pkwy.	Irving	TX	7	Nissan		268,445		20	%		3,675		3,398		-		-
2025	2/28/2025	6555 Sierra Dr.	Irving	TX	7, 12	TXU		247,254		20	%		2,852		2,398		-		-
	3/14/2025	601 & 701 Experian Pkwy.	Allen	TX	7	Experian Holdings		292,700		20	%		2,430		2,305		-		-
	6/30/2025	2500 Patrick Henry Pkwy.	McDonough	GA	7	Georgia Power		111,911		20	%		1,221		1,056		-		-
	12/31/2025	4001 International Pkwy.	Carrollton	TX	7	Motel 6		138,443		20	%		1,901		1,745		-		-
2026	3/31/2026	500 Olde Worthington Rd.	Westerville	OH	7	Syneos		97,000		20	%		1,008		891		-		-
	4/30/2026	800 East Canal St.	Richmond	VA	5	Richmond Belly Ventures		2,568		20	%		61		61		-		-
	11/30/2026	500 Kinetic Dr.	Huntington	WV	7	Amazon.com		68,693		20	%		928		867		-		-
2027	2/28/2027	800 East Canal St.	Richmond	VA	5	Sumitomo		8,503		20	%		151		110		-		-
	6/30/2027	3902 Gene Field Rd.	St. Joseph	MO	7	Boehringer Ingelheim USA		98,849		20	%		1,588		1,465		-		-
	7/6/2027	2221 Schrock Rd.	Columbus	OH	7	MS Consultants		42,290		20	%		513		475		-		-
	8/7/2027	25 Lakeview Dr.	Jessup	PA	7	TMG Health		150,000		20	%		1,748		1,619		-		-
2029	1/31/2029	6226 West Sahara Ave.	Las Vegas	NV	7	Nevada Power		282,000		20	%		2,605		2,317		-		-
2030	8/31/2030	800 East Canal St.	Richmond	VA	--	McGuireWoods		224,537		20	%		5,246		5,247		57,500		02/2031
	9/30/2030	800 East Canal St.	Richmond	VA	5	The Riverstone Group		25,707		20	%		578		493		-		-
2031	1/10/2031	810 Gears Rd.	Houston	TX	7	United States of America		68,985		20	%		901		1,069		-		-
	3/1/2031	800 East Canal St.	Richmond	VA	5	Towne Bank		26,047		20	%		633		533		-		-
2032	4/30/2032	1210 AvidXchange Ln.	Charlotte	NC	--	AvidXchange		201,450		20	%		4,519		3,993		45,900		12/2022; 01/2033
	9/30/2032	10001 Richmond Ave.	Houston	TX	7	Schlumberger		554,385		20	%		4,714		4,316		-		-
	10/31/2032	143 Diamond Ave.	Parachute	CO	7	Alenco		49,024		20	%		831		884		-		-
2088	8/8/2088	800 East Canal St.	Richmond	VA	5	The City of Richmond, Virginia		-		20	%		267		314		-		-
N/A	Vacancy	810 Gears Rd.	Houston	TX	7	(Available for Lease)		9,910		20	%		-		-		-		-
		800 East Canal St.	Richmond	VA	5	(Available for Lease)		42,947		20	%		-		-		-		-
NNN OFFICE JV TOTAL/WEIGHTED AVERAGE						98.4% Leased		3,328,846				$	41,819	$	39,055	$	374,680

38

LEXINGTON REALTY TRUST

Property Leases and Vacancies - Non-consolidated Portfolio - 9/30/2019

Year of Lease Expiration	Date of Lease   Expiration	Property Location	City	State	Note	Primary Tenant or Guarantor (19)	Sq.Ft. Leased or Available (1)		LXP % Ownership			Base Rent as of 9/30/2019 ($000) (2)		Cash Base Rent as of 9/30/2019 ($000) (2)		9/30/2019 Debt  Balance  ($000)		Debt Maturity (13)
OTHER NON-CONSOLIDATED PROPERTIES
2036	8/31/2036	2203 North Westgreen Blvd.	Katy	TX	--	British Schools		274,000		25	%		4,927		4,927		52,329		12/2022
OTHER NON-CONSOLIDATED TOTAL/WEIGHTED AVERAGE						100% Leased		274,000				$	4,927	$	4,927	$	52,329
NON-CONSOLIDATED TOTAL/WEIGHTED AVERAGE						98.5% Leased		3,602,846				$	46,746	$	43,982	$	427,009

Footnotes

1 Square footage leased or available.

2 Nine months ended 9/30/2019 Base Rent and Cash Base Rent. See definitions of non-GAAP measures and reconciliations to applicable GAAP measures in this document.

3 Subsequent to 9/30/2019, lease extended to 9/30/2020.

4 Percent represents % leased as of 9/30/2019.

5 Part of Richmond, Virginia property, which is primarily leased to McGuireWoods LLP.

6 Lexington has a 71.1% interest in this property.

7 All debt is cross-collateralized and cross-defaulted.

8 Multi-tenant properties are properties less than 50% leased to a single tenant.

9 Property in litigation and rent payments are paid to a court administrated account as of 8/2019.  Rental revenue was recognized from 1/01/2019 to 7/31/2019.   Rental revenue will be recognized on a cash basis for periods subsequent to 7/31/ 2019.

10 Property held for sale at 9/30/2019.

11 Base Rent and Cash Base Rent amounts represent/include prior tenant.

12 Lease extended to 02/2035 upon completion of adjacent parking garage.

13 Interest rates range from 0.25% to 5.3% at 9/30/2019.

14 The multi-tenanted / vacant properties incurred approximately $3.9 million in operating expenses, net for the nine months ended 9/30/2019.

15 Heidelberg Americas, Inc. lease expires 3/30/2021; however, new tenant (manroland Goss Web Systems America, LLC) lease expires 3/30/2026.

16 Tenant is a domestic subsidiary of an international automaker.

17 Loan satisfied subsequent to 9/30/2019.

18 Lease restricts certain disclosures. Guarantor is investment grade.

19 See Annual Report and other applicable disclosures for actual tenant names.

20 Property includes four warehouses (252,351 square feet each) and one other property (25,066 square feet).

21 Subsequent to 9/30/2019, sub-lease tenant entered into a direct lease from 11/1/2019 to 6/30/2030.

22 Undisclosed.

23 John Wiley lease expires 10/31/2019; however, new tenant (Stanley Black & Decker) will lease 15,032 sq.ft. for one year effective 11/1/2019.

24 Property sold subsequent to 9/30/2019.

39

LEXINGTON REALTY TRUST

Select Credit Metrics Summary ⁽¹⁾

	9/30/2019
Adjusted Company FFO Payout Ratio		51.3	%
Unencumbered Assets		$3.3 billion
Unencumbered NOI		83.1	%
(Debt + Preferred) / Gross Assets		34.3	%
Debt/Gross Assets		31.9	%
Secured Debt / Gross Assets		9.2	%
Net Debt / Adjusted EBITDA		4.8	x
(Net Debt + Preferred) / Adjusted EBITDA		5.2	x
Credit Facilities Availability (2)		$600.0 million
Unsecured Debt / Unencumbered NOI		4.6	x

Footnotes

(1) See reconciliations of non-GAAP measures in this document. Lexington believes these credit metrics provide investors with additional information to evaluate its liquidity and performance.

(2) Subject to covenant compliance.

40

LEXINGTON REALTY TRUST

FINANCIAL COVENANTS ⁽¹⁾

Corporate Level Debt  

	Must be:		9/30/2019
Bank Loans:
Maximum Leverage		<60%		36.3	%
Fixed Charge Coverage		>1.5x		2.5	x
Recourse Secured Indebtedness Ratio		<10% cap value		0.0	%
Secured Indebtedness Ratio		<40%		13.0	%
Unsecured Debt Service Coverage		>2.0x		5.2	x
Unencumbered Leverage		<60%		26.9	%
Bonds:
Debt to Total Assets		<60%		32.6	%
Secured Debt to Total Assets		<40%		9.4	%
Debt Service Coverage		>1.5x		4.0	x
Unencumbered Assets to Unsecured Debt		>150%		372.2	%

Footnotes

(1) The following is a summary of the key financial covenants for Lexington's credit facility and term loan and senior notes, as of September 30, 2019 and as defined and calculated per the terms of the credit facility and term loan and senior notes, as of such date and applicable. These calculations are presented to show Lexington's compliance with such covenants only and are not measures of Lexington's liquidity or performance.

41

LEXINGTON REALTY TRUST

Consolidated Properties: Mortgages and Notes Payable

9/30/2019

Property	Footnotes		Debt Balance ($000)		Interest Rate (%)			Maturity (a)		Current Estimated Annual Debt Service ($000)  (b)		Balloon Payment ($000)
INDUSTRIAL
Lavonia, GA			$	6,362		5.460	%		12/2020	$	741	$	5,895
Chester, SC				5,969		5.380	%		08/2025		1,144		362
Long Island City, NY				37,347		3.500	%		03/2028		4,879		-
Warren, MI				25,850		5.380	%		11/2032		1,391		22,037
Industrial Subtotal/Wtg. Avg./Years Remaining (e)			$	75,528		4.457	%		9.2	$	8,155	$	28,294
OFFICE
Overland Park, KS		(f)	$	32,112		5.891	%		N/A	$	-	$	32,112
Lenexa, KS		(c)		7,847		6.270	%		12/2019		154		7,770
Boca Raton, FL				18,548		6.470	%		02/2020		679		18,414
Oakland, ME		(c)		7,939		5.930	%		10/2020		750		7,660
Wall, NJ				5,576		6.250	%		01/2021		4,004		-
Charleston, SC		(f)		6,830		5.850	%		02/2021		520		6,632
Whippany, NJ				11,722		6.298	%		11/2021		1,344		10,400
Palo Alto, CA				27,795		3.970	%		12/2023		7,059		-
Lake Jackson, TX				184,352		4.040	%		10/2036		12,594		11,305
Office Subtotal/Wtg. Avg./Years Remaining (e)			$	302,721		4.655	%		10.9	$	27,104	$	94,293
Subtotal/Wtg. Avg./Years Remaining (e)			$	378,249		4.616	%		10.6	$	35,259	$	122,587
CORPORATE (g)
Revolving Credit Facility		(h)	$	-		-			02/2023	$	-	$	-
Senior Notes				250,000		4.250	%		06/2023		10,625		250,000
Senior Notes				250,000		4.400	%		06/2024		11,000		250,000
Term Loan		(i)		300,000		2.732	%		01/2025		8,310		300,000
Trust Preferred Notes		(j)		129,120		3.966	%		04/2037		5,192		129,120
Subtotal/Wtg. Avg./Years Remaining (e)			$	929,120		3.761	%		6.4	$	35,127	$	929,120
Total/Wtg. Avg./Years Remaining (e)		(d)	$	1,307,369		4.008	%		7.6	$	70,386	$	1,051,707

Footnotes  

(a) Subtotal and total based on weighted-average term to maturity shown in years based on debt balance.

(b) Remaining payments for debt with less than 12 months to maturity, all others are debt service for next 12 months.

(c) Loan satisfied subsequent to 9/30/2019.

(d) See reconciliations of non-GAAP measures in this document.

(e) Total shown may differ from detailed amounts due to rounding.

(f) Loan is in default.

(g) Unsecured.

(h) Rate ranges from LIBOR plus 0.775% to 1.45%

(i) Rate ranges from LIBOR plus 0.85% to 1.65%. LIBOR rate was fixed at 1.732% through January 2025 via interest rate swap agreements.

(j) Rate is three month LIBOR plus 170 bps.

42

LEXINGTON REALTY TRUST

Debt Maturity Schedule

9/30/2019

($000)

Consolidated Properties
Year		Mortgage Scheduled  Amortization		Mortgage Balloon Payments		Corporate Debt
	2019 - remaining	$	4,416	$	39,882	$	-
	2020		21,085		31,969		-
	2021		19,335		17,032		-
	2022		17,853		-		-
	2023		19,394		-		250,000
		$	82,083	$	88,883	$	250,000

 

Footnotes

(1)   Percentage denotes weighted-average interest rate.

43

LEXINGTON REALTY TRUST

Selected Balance Sheet Account Data

9/30/2019

($000)

Balance Sheet
Other assets	$	15,238
The components of other assets are:
Deposits	$	5,859
Equipment		463
Prepaids		2,121
Other receivables		414
Deferred lease incentives		6,381
Accounts payable and other liabilities
The components of accounts payable and other liabilities are:	$	26,504
Accounts payable and accrued expenses	$	14,676
CIP accruals and other		3,263
Taxes		226
Deferred lease costs		997
Deposits		1,326
Escrows		407
Transcation costs		60
Derivative liability		5,549

44

LEXINGTON REALTY TRUST

NON-GAAP MEASURES

DEFINITIONS

Lexington has used non-GAAP financial measures as defined by the Securities and Exchange Commission Regulation G in the Quarterly Earnings Press Release, in this Quarterly Supplemental Information 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 Generally Accepted Accounting Principles (“GAAP”) measures, 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.

Definitions:

Adjusted EBITDA: Adjusted EBITDA represents EBITDA (earnings before interest, taxes, depreciation and amortization) modified to include other adjustments to GAAP net income for gains on sales of properties, impairment charges, debt satisfaction gains (charges), net, non-cash charges, net, straight-line adjustments, non-recurring charges and adjustments for pro-rata share of non-wholly owned entities. Lexington’s calculation of Adjusted EBITDA may not be comparable to similarly titled measures used by other companies. Lexington believes that net income is the most directly comparable GAAP measure to Adjusted EBITDA.

Base Rent: Base Rent is calculated by making adjustments to GAAP rental revenue to exclude billed tenant reimbursements, and lease termination income and to include ancillary income. Lexington believes Base Rent provides a meaningful measure due to the net lease structure of leases in the portfolio.

Cash Base Rent: Cash Base Rent is calculated by making adjustments to GAAP rental revenue to remove the impact of GAAP required adjustments to rental income such as adjustments for straight-line rents related to free rent periods and contractual rent increases. Cash Base Rent excludes billed tenant reimbursements and lease termination income and includes ancillary income. Lexington believes Cash Base Rent provides a meaningful indication of an investments ability to fund cash needs.

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 real estate investment trust (“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 estimates 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) by the acquisition/completion cost (or sale) price.

45

LEXINGTON REALTY TRUST

NON-GAAP MEASURES

DEFINITIONS (CONTINUED)

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) and other property income) less property operating expenses. Other REITs may use different methodologies for calculating NOI, and accordingly, Lexington's NOI may not be comparable to that of other companies. Because NOI excludes general and administrative expenses, interest expense, depreciation and amortization, acquisition-related expenses, other nonproperty income and losses, and gains and losses from property dispositions, it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate and the impact to operations from trends in occupancy rates, rental rates, and operating costs, providing a perspective on operations not immediately apparent from net income. Lexington believes that net income is the most directly comparable GAAP measure to NOI.

Same-Store NOI: Same-Store NOI represents the NOI for consolidated properties that were owned and included in our portfolio for two comparable reporting periods excluding properties encumbered by mortgage loans in default and the revenue associated with the expansion of properties, as applicable. As Same-Store NOI excludes the change in NOI from acquired and disposed of properties, it highlights operating trends such as occupancy levels, rental rates and operating costs on properties. Other REITs may use different methodologies for calculating Same-Store NOI, and accordingly, Lexington's Same-Store NOI may not be comparable to other REITs. Management believes that Same-Store NOI is a useful supplemental measure of Lexington's operating performance. However, Same-Store NOI should not be viewed as an alternative measure of Lexington 's financial performance since it does not reflect the operations of Lexington's entire portfolio, nor does it reflect the impact of general and administrative expenses, acquisition-related expenses, interest expense, depreciation and amortization costs, other nonproperty income and losses, the level of capital expenditures and leasing costs necessary to maintain the operating performance of Lexington's properties, or trends in development and construction activities which are significant economic costs and activities that could materially impact Lexington's results from operations. Lexington believes that net income is the most directly comparable GAAP measure to Same-Store NOI.

46

LEXINGTON REALTY TRUST

RECONCILIATION OF NON-GAAP MEASURES

($000)

	Nine months ended  September 30, 2019
Rent Reconciliation:
Rental revenue as reported	$	239,058
Rental revenue from sold properties		(16,782	)
Lease termination income		(762	)
Ancillary revenue		966
Reimbursements		(21,509	)
Base Rent per supplement	$	200,971
Adjustments: (1)
Straight-line adjustments	$	(8,841	)
Lease incentives		898
Amortization of above/below market leases		(355	)
Cash Base Rent per supplement	$	192,673

Consolidated debt reconciliation September 30, 2019:        

	GAAP Balance		Deferred Loan Costs, net		Discounts		Gross Balance
Mortgages and notes payable (2)	$	374,543	$	3,706	$	-	$	378,249
Term loans payable (3)		297,313		2,687		-		300,000
Senior notes payable(3)		496,661		2,308		1,031		500,000
Trust preferred securities (3)		127,371		1,749		-		129,120
Consolidated debt	$	1,295,888	$	10,450	$	1,031	$	1,307,369

Footnotes

(1) Individual items are adjusted for sold properties, which were previously reflected in the reconciliation.

(2) Secured.

(3) Unsecured.

47

LEXINGTON REALTY TRUST

  RECONCILIATION OF NON-GAAP MEASURES (CONTINUED)

($000)

Same-Store NOI Reconciliation:

	Nine months ended September 30,
	2019			2018
Net income	$	199,870		$	205,232
Interest and amortization expense		50,715			63,224
Provision for income taxes		1,108			1,326
Depreciation and amortization		111,617			129,693
General and administrative		23,652			23,899
Pursuit / transaction costs		-			205
Non-operating/advisory income		(4,836	)		(1,666	)
Gains on sales of properties		(176,662	)		(239,577	)
Impairment charges		2,355			90,860
Debt satisfaction charges, net		4,527			2,228
Equity in (earnings) of non-consolidated entities		(3,288	)		(192	)
Lease termination income		(1,551	)		(925	)
Straight-line adjustments		(10,846	)		(16,246	)
Lease incentives		898			1,459
Amortization of above/below market leases		(174	)		(6,632	)
Net Operating Income - ("NOI")		197,385			252,888
Less NOI:
Acquisitions and dispositions		(32,158	)		(78,944	)
Properties in default/other		(2,118	)		(7,892	)
Same-Store NOI	$	163,109		$	166,052

NOI for NAV:  

		Nine months ended
		September 30, 2019
NOI per above	$	197,385
Less NOI:
Disposed of properties		(12,493	)
Assets held for sale		(4,076	)
Assets acquired in 2019		(6,324	)
Assets less than 70% leased / Other		1,007
NOI for NAV	$	175,499

48

LEXINGTON REALTY TRUST

RECONCILIATION OF NON-GAAP MEASURES (CONTINUED)

($000)

Reconciliation to Adjusted EBITDA:  

	Three months ended
	9/30/2019			6/30/2019			3/31/2019			12/31/2018			Trailing 12 Months
Net income attributable to Lexington Realty Trust shareholders	$	143,319		$	23,333		$	28,027		$	25,408		$	220,087
Interest and amortization expense		16,481			17,026			17,208			16,656			67,371
Provision for income taxes		241			430			437			402			1,510
Depreciation and amortization		37,211			36,811			37,595			38,498			150,115
Straight-line adjustments		(4,161	)		(4,355	)		(2,330	)		(4,722	)		(15,568	)
Lease incentives		318			307			273			227			1,125
Amortization of above/below market leases		(142	)		(26	)		(6	)		(3,500	)		(3,674	)
Gains on sales of properties		(140,461	)		(15,244	)		(20,957	)		(13,336	)		(189,998	)
Impairment charges		673			1,094			588			4,953			7,308
Debt satisfaction charges, net		4,424			-			103			368			4,895
Non-cash charges, net		1,554			1,552			1,727			1,611			6,444
Pro-rata share adjustments:
Non-consolidated entities adjustment		232			3,223			2,692			1,877			8,024
Noncontrolling interests adjustment		4,235			160			(5	)		15			4,405
Adjusted EBITDA	$	63,924		$	64,311		$	65,352		$	68,457		$	262,044

49

LEXINGTON REALTY TRUST

RECONCILIATION OF NON-GAAP MEASURES (CONTINUED)

($000)

Reconciliation of Select Credit Metrics:

Adjusted Company FFO Payout:	Nine months ended September 30, 2019			(Debt + Preferred) / Gross Assets:	Nine months ended September 30, 2019
Common share dividends per share	$	0.3075		Consolidated debt	$	1,295,888
Adjusted Company FFO per diluted share		0.60		Preferred shares liquidation preference		96,770
Adjusted Company FFO payout ratio		51.3	%	Debt and preferred	$	1,392,658
Unencumbered Assets:				Total assets	$	3,034,588
Real estate, at cost	$	3,580,479		Plus depreciation and amortization:
held for sale real estate, at cost		125,404		Real estate		928,886
less encumbered real estate, at cost		(441,874	)	Deferred lease costs		15,584
Unencumbered assets	$	3,264,009		Held for sale assets		81,387
Unencumbered NOI:				Gross assets	$	4,060,445
NOI	$	197,385
Disposed of properties NOI		(12,493	)	(Debt + Preferred) / Gross Assets		34.3	%
Adjusted NOI		184,892
less encumbered adjusted NOI		(31,325	)	Debt  / Gross Assets:
Unencumbered adjusted NOI (Quarters)	$	153,567		Consolidated debt	$	1,295,888
Unencumbered NOI %		83.1	%
				Gross assets	$	4,060,445
Net Debt  / Adjusted EBITDA:
Adjusted EBITDA	$	262,044		Debt / Gross assets		31.9	%
Consolidated debt	$	1,295,888		Secured Debt  / Gross Assets:
less consolidated cash and cash equivalents		(126,058	)	Mortgages and notes payable	$	374,543
Non-consolidated debt, net		85,112
Net debt	$	1,254,942		Gross assets	$	4,060,445
Net debt / Adjusted EBITDA		4.8	x	Secured Debt / Gross Assets		9.2	%
(Net Debt + Preferred)  / Adjusted EBITDA:				Unsecured Debt / Unencumbered NOI:
Adjusted EBITDA	$	262,044		Consolidated debt	$	1,295,888
				less mortgages and notes payable		(374,543	)
Net debt	$	1,254,942		Unsecured Debt	$	921,345
Preferred shares liquidation preference		96,770
Net debt + preferred	$	1,351,712		Unencumbered adjusted NOI (Annual)	$	201,323
(Net Debt + Preferred) / Adjusted EBITDA		5.2	x	Unsecured Debt / Unencumbered NOI		4.6	x

50

Investor Information

Transfer Agent

Computershare	Overnight Correspondence:
PO Box 505000	462 South 4th Street, Suite 1600
Louisville, KY 40233	Louisville, KY 40202
(800) 850-3948
www-us.computershare.com/investor

Investor Relations

Heather Gentry
Senior Vice President, Investor Relations
Telephone (direct)	(212) 692-7219
Facsimile (main)	(212) 594-6600
E-mail	hgentry@lxp.com

Research Coverage

Bank of America/Merrill Lynch		KeyBanc Capital Markets Inc.
James Feldman	(646) 855-5808	Craig Mailman	(917) 368-2316
Evercore Partners		Ladenburg Thalmann & Co., Inc.
Sheila K. McGrath	(212) 497-0882	John Massocca	(212) 409-2543
J.P. Morgan Chase		Stifel Nicolaus
Anthony Paolone	(212) 622-6682	John W. Guinee	(443) 224-1307
Jeffries & Company, Inc.		Wells Fargo Securities, LLC
Jon Peterson	(212) 284-1705	Todd J. Stender	(562) 637-1371

51

 

EX-99.2

Exhibit 99.2

Lexington Realty Trust – UNEDITED TRANSCRIPT

Q3 2019 Earnings Call

Company Participants:

T. Wilson Eglin, Chairman and Chief Executive Officer 


Beth Boulerice, Executive Vice President, Chief Financial Officer and Treasurer


Brendan Mullinix, Executive Vice President

Lara Johnson, Executive Vice President

James Dudley, Executive Vice President and Director of Asset Management

Heather Gentry, Senior Vice President of Investor Relations

Operator:

Good day, and welcome to the Lexington Realty Trust Third Quarter 2019 Conference Call and Webcast. (Operator Instructions) Please note, this event is being recorded. I would now like to turn the call over to Heather Gentry of Investor Relations. Please go ahead.

Heather Gentry:

Thank you, operator. Welcome to Lexington Realty Trust’s Third Quarter 2019 conference call and webcast. The earnings release was distributed this morning, and both the release and quarterly supplemental are available on our website at www.lxp.com in the Investors section and will be furnished to the SEC on a Form 8-K.

Certain statements made during this conference call regarding future events and expected results may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Lexington believes that these statements are based on reasonable assumptions; however, certain factors and risks, including those included in today’s earnings press release and those described in reports that Lexington files with the SEC from time to time could cause Lexington’s actual results to differ materially from those expressed or implied by such statements. Except as required by law, Lexington does not undertake a duty to update any forward-looking statements.

In the earnings press release and quarterly supplemental disclosure package, Lexington has reconciled all non-GAAP financial measures to the most directly comparable GAAP measure. Any references in these documents to Adjusted Company FFO refer to Adjusted Company Funds from Operations available to all equityholders and unitholders on a fully diluted basis. Operating performance measures of an individual investment are not intended to be viewed as presenting a numerical measure of Lexington's historical or future financial performance, financial position or cash flows.

On today’s call Will Eglin, Chairman and CEO, Beth Boulerice, CFO, and Executive Vice Presidents Brendan Mullinix, Lara Johnson, and James Dudley will provide commentary focused on third-quarter results. I will now turn the call over to Will.

1 

T. Wilson Eglin:

Thanks, Heather. Good morning everyone. Third quarter results were strong and we had solid execution in all areas of our business, with investments, dispositions, and leasing contributing to a successful quarter. I would like to highlight four key themes that are not only important to our current business plan, but also to the future growth of Lexington.

First, we remain committed to becoming a single-tenant, net-leased industrial REIT focused primarily on high-quality, warehouse and distribution centers. Substantial progress has been made over the last few years on improving our investment profile, and at quarter end, our industrial portfolio exposure represented 78% of our gross book value. We expect this number to increase to a range of 80-85% by year-end, with the swing factor being the timing of the potential sale of our Dow Chemical office property and fourth quarter acquisitions. I’d also like to highlight that effective October 31^st, MSCI reclassified Lexington within their suite of indices from a diversified REIT to an industrial REIT as the majority of our revenue is being derived from industrial assets.

Second, robust investment and disposition activity has been and will continue to be a primary focus as we execute on our business plan. Investment activity to date, including closings subsequent to the quarter, totals nearly $500 million dollars, with approximately another $165 million under contract to close by year-end. During the quarter, we issued approximately 13 million common shares through an equity offering and our ATM program for net proceeds of $132 million dollars. The proceeds of these capital transactions were primarily used to fund new investments, including the $180 million dollar three-property e-commerce industrial portfolio we closed on in mid-September.

We have exceeded the initial low-end range of our 2019 disposition plan with sales of $463 million dollars to date, which includes the successful closing of our Preferred Freezer facility at the very end of the quarter. As a refresher, we acquired the property in 2015 for $152 million dollars and sold it for $244 million dollars. This sale provided us with substantial, well-priced capital for reinvestment into warehouse and distribution facilities at modestly higher cap rates. We are in discussions with a potential purchaser for our Dow Chemical facility, although we cannot be certain if or when this sale will close. If Dow does end up closing this year, we may approach or exceed the high-end of our 2019 disposition plan range of $750 million dollars. Over the next few years, we will continue to dispose of our remaining office and other non-core assets. Inclusive of Dow, we are targeting approximately $400 to $550 million dollars of sales for the remainder of 2019 through year-end 2020. We believe next year’s sales, along with acquisitions, will likely increase our industrial exposure to over 90% of gross book value by year end 2020.

Third, we intend to maintain a strong balance sheet with low to moderate leverage. Net debt to Adjusted EBITDA at quarter end was 4.8 times. While leverage will fluctuate quarterly due to timing of sales and purchases, we have an on-going interest in maintaining balance sheet flexibility. We still expect the majority of acquisitions to be funded by disposition proceeds through 2020. That said, our capital markets activities are evidence that we will take the opportunity to raise modest amounts of equity for industrial property investments from time to time, depending on our share price.

2 

Finally, we are building our industrial portfolio to provide for both capital appreciation and income growth, supported by consistent cash flows and lower operating costs. With these objectives in mind, we continue to make significant improvements each quarter that we believe are beginning to be reflected in our overall financial and operational performance, as well as an improved share valuation. These initiatives as a whole have positioned the company to begin to grow the dividend as evidenced by this morning’s announcement that we are increasing our annualized dividend to $0.42, up a penny from $0.41, commencing with the fourth quarter 2019 dividend paid in January 2020. Subject to board approval, shareholders should expect annual modest dividend growth going forward consistent with today’s announcement. We also announced this morning that we are increasing the low-end of our 2019 guidance range by a penny to a revised range of $0.77 to $0.80 cents per share.

With that, I’ll turn the call over to Brendan to talk more specifically about investments.

Brendan Mullinix:

Thanks, Will. We continued to have strong momentum on the acquisition front during the third quarter, closing on another $180 million dollars of new warehouse product at average GAAP and cash cap rates of 5.7% and 5.0%, respectively. This activity consisted of a 2.4 million square foot three-property e-commerce portfolio located within an established logistics submarket of Cincinnati. This is a new market for us, but Cincinnati is a market we have considered for some time because it works so well for e-commerce users.

All three Class A properties were recently constructed and feature modern specs typical of newer generation warehouse and distribution facilities. The tenants and guarantors represent recognized brands, including Amazon, Hayneedle-a Walmart subsidiary, and Blue Buffalo - a division of General Mills. The portfolio has a weighted-average lease term of 9.3 years. Annual escalations for all three properties range from 2% to 2.3%. As we have added more general purpose Class A warehouse/distribution assets with good credit tenants to our portfolio, our industrial portfolio investment grade tenancy has reached nearly 46%.

Subsequent to quarter end, we closed on three additional Class A industrial warehouse facilities for an aggregate of $53 million dollars. Two of the properties were acquired as a portfolio and are both located within an established industrial park in a Greenville/Spartanburg submarket close to I-85 and the Greer Inland Port. Annual rental escalations on these properties are very attractive at approximately 2. 6%.

The third facility, which is located in Phoenix’s most active submarket, is part of a two-property portfolio, with the second property to close during first quarter 2020. This is a market we continue to be excited about due to its growth prospects, the strong labor pool, and its position as a lower cost alternative to some of the higher priced West Coast markets. This property has annual rental escalations of 2.5%.

To date, 2019 investment volume totals $493 million dollars at weighted-average estimated GAAP and cash cap rates of 5.7% and 5.4%, respectively. We have accepted offers on approximately $219 million dollars of industrial properties, of which approximately $165 million dollars is expected to close this year, with the remaining scheduled to close in the first or second quarter of 2020. We are also reviewing over $400 million dollars of other industrial investments in the market, and as discussed last quarter, we continue to selectively explore some speculative development opportunities.

3 

I’ll now turn the call over to Lara to discuss dispositions.

Lara Johnson:

Thanks, Brendan. Strong disposition activity during the quarter contributed to the substantial progress we have made in disposing of assets included in our 2019 disposition plan. During the quarter, we sold approximately $329 million dollars of consolidated properties, of which $244 million dollars was attributable to the Preferred Freezer cold storage facility. The remaining five non-core asset sales included three office properties and two retail properties. Pricing on these sales was extremely attractive at weighted average GAAP and cash cap rates of 6.0% and 4.8%, respectively. Annualized NOI on the assets sold during the quarter was $15.7 million dollars.

During the quarter we also sold three non-consolidated office properties for gross proceeds of $108 million dollars and satisfied approximately $72 million dollars of non-recourse debt.

To-date, we have disposed of $463 million dollars of consolidated properties at weighted-average GAAP and cash cap rates of 6.0% and 5.0%, respectively and approximately $177 million of joint venture properties. We currently have approximately $120 million dollars of consolidated assets either under contract or with an accepted offer, although not all of these sales are expected to close this year. In addition, we continue to actively market several other assets for sale.

Our 2019 disposition plan currently contemplates the sale of our Dow Chemical office building. We have received an off-market expression of interest that we are considering, however, should a sale pursuant to this interest not materialize, we intend to market the property later this year, more likely, early in the first quarter of 2020.

Looking ahead, we will remain active on the disposition front in 2020, although we expect activity and pricing to moderate in comparison to this year. As Will indicated, based on what is left to sell in our office portfolio, we expect to dispose of approximately $400 and $550 million dollars of non-core properties between now and year-end 2020. These sales will move us even closer to our target of being a 100% single-tenant, net-lease industrial REIT.

With that I will turn the call over to James who will provide an update on leasing.

James Dudley:

Thanks Lara. We executed several lease extensions during the quarter, which made up the majority of the 1.6 million square feet leased. Our overall leased portfolio stayed fairly consistent at 97.4% when compared to last quarter at 97.7%. This slight decrease is primarily due to the small industrial vacancy we have in Thomson, Georgia. Our industrial leased portfolio is very healthy at 99%, while our office portfolio is 84% leased. Total leasing volume year-to-date is 4.3 million square feet and we have done a great deal of work around the remaining lease expirations we have coming due over the next couple of years.

4 

Same-store NOI was down 1.8% for the nine months ended September 30, 2019, and when stripping out vacancy, it was a positive 0.2%. As indicated on our last earnings call, continued negative same-store NOI is largely a function of marking office rental rates to market following lease extensions or vacancy. Our same-store NOI growth profile should improve as we continue to reduce our office exposure. As of September 30, 2019, 82% of our cash base rent in our industrial portfolio is generated from leases with rent escalations.

On the industrial side, we executed two lease renewals during the quarter. In our 1.2 million square foot Michelin facility in Laurens, South Carolina, the lease was extended for two months, and then extended subsequent to the quarter for another six months, to now expire at the end of September 2020. This resulted in a 3% increase to the current base rental rate. We view this as a very positive development as we had anticipated Michelin would be moving out in January 2020. We are currently pursuing a number of prospects to back fill the space. We also executed a two year extension with a tenant that is occupying 73,500 square feet in our multi-tenant facility in Antioch, Tennessee.

On the office side, we extended T-Mobile in Mission, Texas for five years at the same rental rate with no TI costs and we will now prepare to market the property for sale. Additionally, we extended our lease with Morgan Lewis through January 2024. If you recall, Morgan Lewis announced that it is building a new office property, and will be moving out of our office building after their three-year extended lease term. The rent will increase next year, and then decrease modestly during the extended lease term, which was achieved without any TI allowances or abatements. The extended lease term provides us time to explore all potential options to maximize the value of this central business district property.

Our three remaining 2019 office expirations have or are being addressed through an expected sale or lease. We closed on the sale of our Indianapolis, Indiana property, formerly occupied by John Wiley, and our Midlothian, Virginia property, currently occupied by Alstom Power is anticipated to close later this year. We also executed a direct lease with the former sub-tenant in our Lenexa, Kansas property for just under 11 years subsequent to quarter end, and will now look to market the property for sale as the extended term supports a value over the non-recourse debt balance.

Looking ahead to 2020, we have one remaining office lease expiration. Oce-USA Holdings in Boca Raton, Florida will be moving out at the end of their lease term in February 2020, and in the worst case scenario, this property would be conveyed to the lender unless we can achieve value over the debt balance in a sale.

On the industrial side, we have one remaining 2019 lease expiration in our Moody, Alabama facility, which is currently being marketed for sale or lease. We currently have a prospective buyer, but we are also pursuing several leasing prospects. Moving onto 2020 industrial expirations, lease renewal discussions are active in many cases, although warehouse/distribution tenants tend to renew their leases much closer to the actual lease expiration compared to office users. On a positive note, we are not in a defensive mode as we often are with office renewals, and have in many cases been able to push rents higher as leases are extended. As evidenced in the third quarter, industrial leasing spreads on the 1.2 million square feet of leases extended increased approximately 5% on both base and cash base rents.

5 

Looking at the seven remaining 2020 expirations a little more specifically, we have good visibility on some, while others it is a bit too early to tell. We are currently negotiating with Mars in Atlanta for a five-year renewal, and we expect rent will go up in this case. Preliminary discussions for a renewal have begun with ODW Logistics in Columbus, Ohio. In our Tampa, Florida facility, Time will not be renewing post their June 2020 lease expiration, but this is a high demand market and we anticipate re-leasing the facility fairly quickly.

We are negotiating a sale to Mimeo, who currently occupies our Memphis, Tennessee facility through September 2020. For both Unilever in Owensboro, Kentucky and Geodis in Statesville, North Carolina, whose leases don’t expire until December 2020, we don’t have clear visibility quite yet, but we believe both are likely renewals.

Quickly touching on vacancies, we believe we have a very promising user buyer prospect at our 197,000 square foot industrial facility in Henderson, North Carolina. We are also currently marketing our recently vacated Thomson, Georgia industrial facility for sale or lease. Initial market feedback has been positive and we are hopeful that this vacancy will be resolved quickly.

With that, I will now turn the call over to Beth who will discuss financial results.

Beth Boulerice:

Thanks, James. For the third quarter, net income attributable to common shareholders was $142 million dollars, or $0.59 cents per diluted common share and Adjusted Company FFO was $49 million dollars, or $0.20 cents per diluted common share. Our Adjusted Company FFO payout ratio was 51.3% at quarter end, allowing us to retain ample capital to reinvest in growth opportunities.

Gross revenues in the third quarter were $82 million dollars compared to gross revenues of $100 million dollars in the third quarter of 2018. This reduction is primarily a result of changes to our portfolio and balance sheet from our transition to becoming a 100% single-tenant, net-lease industrial REIT. Property operating expenses were $10.6 million dollars for the quarter.

In the third quarter, tenant reimbursements were $7.7 million dollars and represented approximately 73% of our property operating expenses. G&A expenses were $7.8 million dollars in the quarter. We expect overall 2019 G&A to be within a range of $31 to 32 million dollars.

Leasing costs and tenant improvements were approximately $7 million dollars in the third quarter, and we anticipate additional costs within a range of $4 and $6 million dollars for the remainder of the year. This is always subject to change due to a variety of factors, including the timing of the completion of the improvements.

Our balance sheet remains in excellent shape. At quarter end, we had approximately $134 million dollars of cash, including restricted cash. During the quarter, we fully repaid our revolver balance and currently have $600 million dollars under our revolver available for use. As discussed on last quarter’s call, we also recently extended our $300 million dollar term loan to 2025, so we have no meaningful debt due until 2023.

6 

Leverage at quarter end was 4.8 times net debt to Adjusted EBITDA, quite a bit lower compared to the previous quarter at 5.7 times. Attractive sales proceeds and our capital markets transactions contributed to this lower figure and our conservative balance sheet posture. We anticipate fluctuations in leverage depending on borrowings needed to fund acquisitions given the timing of asset sales.

Our consolidated debt outstanding at quarter-end was approximately $1.3 billion with a weighted-average interest rate of approximately 4% and a weighted-average term of 7.6 years. Unencumbered NOI represented more than 83% of our overall portfolio at quarter end.

As Will mentioned previously, during the quarter, we executed on two capital markets transactions. This included a 10 million common share equity offering, which generated net proceeds of $100.7 million dollars. We also issued 3 million common shares under our ATM program, which raised net proceeds of $31.1 million dollars. As a result of these transactions, our current diluted weighted-average share count is now estimated to be 254 million common shares.

With that, I’ll turn the call back over to Will.

T. Wilson Eglin:

Thanks Beth. I will now turn the call over to the operator who will conduct Q&A.

Operator:

Thank you. We will now begin the question and answer session. (Operator Instructions) Today’s first question comes from Shelia McGrath of EvercoreISI. Please go ahead.

Shiela McGrath:

The acquisitions in the quarter were all in Cincinnati. I was wondering if that was a portfolio that was negotiated together. And if you could talk about your confidence in the 1 tenant which expires in 2023 of the remaining in the asset?

Brendan Mullinix:

Sure, Sheila, it's Brendan. That is correct. It was a single transaction, a portfolio transaction that was marketed fully. In terms of the shorter lease term, we do feel good about the likelihood of renewal in that case. The Blue Buffalo building services, the distribution requirements. In part, Blue Buffalo occupies a couple of other buildings in the market, but they service a manufacturing facility for Blue Buffalo that's about 50 miles away in Indiana.

Sheila McGrath:

Okay, great. And then on the office dispositions on the sales out of the JV, the yield was -- seemed very strong at 6.1%, and Atlantic Health look like a 5% cap rate. Did you extend leases on those assets? And how should we think about asset sales out of that venture going forward?

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Lara Johnson:

Okay. It's Lara Johnson. You're absolutely right that those were sold at very attractive cap rates. By design, we selected the properties that we thought had the strongest market power for sale immediately after the formation of the venture. So those assets are among the strongest in the joint venture portfolio, three Denver assets as well as the sale of Atlantic Health to the tenant. So going forward, we are managing to achieve some lease extensions on joint venture assets, which will enhance the salability and pricing on those. But as I said, those that have been sold thus far were primed for the market.

Sheila McGrath:

Okay, great. And then just on capital expenditures. Beth, you gave us your outlook for fourth quarter at $4 million to $6 million, can you just remind us where does that put the total for the year at? And how should we think about that same line item in 2020 just in magnitude of just to show us how shifting to industrial will improve the CapEx profile of the company?

Beth Boulerice:

Sure, Sheila. For the year, that -- the tenant improvement and lease costs will come in somewhere to $20 million to $22 million for 2019. But as we look ahead, you're right, as we get out of the office and into the industrial, the figure will come down. As of now, we're projecting somewhere between $10 million and $15 million per TIs and lease costs for 2020. And then in the future, that number should even come down further.

Operator:

The next question is from John Guinee of Stifel.

John Guinee:

Can you hear me?

T. Wilson Eglin:

We can

Beth Boulerice:

Yes.

John Guinee:

Sheila did a great job answer -- or offer of all my questions. So just a curiosity, two curiosity questions. One is 30 Light. I'm surprised I didn't notice before, why is that still on your books, what is 30 Light in Baltimore?

Brendan Mullinix:

We own an interest in a ground lease below the parking structure across the street from 100 Light Street.

John Guinee:

Okay. And is that -- there a reason you would continue to own a ground lease position?

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Brendan Mullinix:

It's -- we view it as a very secure investment. In that case, it's actually a joint venture. We don't own 100% of the asset.

John Guinee:

Okay. Okay. And then the second, Morgan Lewis, a slight rent roll down, even though you know they're going to move out in three years. Why would there be a rent roll down, just out of curiosity, as opposed to really squeezing them and doubling their rent because they really can't go anywhere?

James Dudley:

Yes, it was the language in the renewal option. So there's an arbitration clause in the renewal option that, frankly, confined it to a very small portion of the downtown market. And as we ran the comps, it's kind of a scary situation to potentially have it go down even further. So there were some comps that also worked against Morgan Lewis, so it was kind of they thought there was risk. We thought there was risk, and we kind of settled on a number that didn't expose the risk to either party as opposed to going through the arbitration process.

John Guinee:

Great. Okay. And then just based on some of your CapEx guidance for 2020, it looks like your dividend should be fairly well covered. One, correct me if I'm wrong. And then two, why a 2.4% dividend increase versus maybe more like a 4% or 5% annual dividend increase.

T. Wilson Eglin:

Well, you're right, John, the dividend is extremely well covered. And when we resized it earlier this year, we did that with a bias toward having extremely strong coverage. And a lot of retained cash flow going forward to reinvest in the business and improve the growth profile going forward. So $0.01 at 2.4% is above the rate of inflation. We think that's certainly sustainable in perpetuity. And there may be a point in the future where we revisit that. With a view toward faster growth. But for now, I think the twin objectives of having, right, sustainable dividend growth, combined with very strong coverage and lots of retained cash flow, are -- I think that's a desirable characteristic.

Operator:

The next question is from Jon Petersen of Jefferies.

Jonathan Petersen:

Great. Maybe just to kind of stick on the dividend. I'm curious if you could kind of talk about maybe how much capital gains will be in this year's dividend or maybe more specifically, there's obviously a lot of gains on the Preferred Freezer sale, were you able to offset all of that with -- with some of the other acquisitions or losses from the other dispositions, I guess.

T. Wilson Eglin:

Yes, we've been fully able to defer our gains via 1031 exchange, so not expecting that there's any capital gain distribution in this year's payout.

9 

Jonathan Petersen:

And then acquisitions this quarter, despite a decent amount of dispositions, seemed to be pretty self-funded through the equity that you issued through the offering plus the additional ATM issuance. I guess, how -- as we think into next year and think about maybe where your stock prices at, I think our NAV and consensus is somewhere around $10 a share. So you get a premium to that. If that holds, do you think about funding your business going forward, the acquisitions with incremental equity because you can? Or should we still expect acquisitions to be mostly funded with -- from proceeds from dispositions?

T. Wilson Eglin:

Well, we'll have to see what the opportunity set is next year, right? I mean, having a higher share price in relation to NAV makes growth easier. So -- but as we said, it's been a competitive marketplace, Jon, where if anything, the trend has been cap rate compression. So we'll have to wait and see, but we're not averse to utilizing the equity when -- now that it's trading better than it has. There's certainly an argument, if you look at some of the premiums that other net lease companies trade at. There's certainly an argument that we could trade at a bigger premium, and we're sympathetic to that point of view and have the balance sheet capacity to let that proposition play out if we want to.

Jonathan Petersen:

Okay. All right. That's helpful. And then maybe just one more. You talked about the competitive market. I was curious, maybe just for Brendan, if you could talk about the gap between seller and buyer expectations today versus what it's been in recent years in terms of cap rate expectations.

Brendan Mullinix:

I don't know that there is a gap. I mean, it's a very competitive market, and it's a good market to be a seller in. And so in a competitive process, that's really what ticks pricing so...

Jonathan Petersen:

Do you have the same view on the GAAP? Because you guys are obviously a seller and an acquirer in the market, do you find that people tend to pretty much agree on valuations?

Lara Johnson:

Yes. On the disposition front, we're obviously selling a different type of asset than we're acquiring. So I think it is a different set of circumstances on the disposition side, and I think it really is dependent on the nature of the asset, the market, the duration of lease, credit quality of the tenancy. So it's not easily generalized on the disposition side, given the nature of the assets we're selling. There is a strong demand for longer-term leases even in the office space, with reasonably good credit. There seems to be more and more capital available for those assets. But when you get into the shorter terms or more remote markets, it's tougher, needless to say, as a seller.

Operator:

The next question is from Todd Stender of Wells Fargo.

10 

Todd Stender:

And then maybe coming back to Brendan. Did I get the cash cap rate right for the industrial buildings in Cincinnati? Was that a blended -- really was a portfolio, about 5.4%.

Brendan Mullinix:

The cash cap rate was approximately 5%.

Todd Stender:

Five percent, got it. Okay. In those assets, so you've got three different leases, are they all triple net?

Brendan Mullinix:

They're all net. Correct.

Todd Stender:

Okay. And then just looking at the Michelin building, I heard your comments. So there's a lease extension now well into 2020. But your comments from last quarter, it sounds like they were going to consolidate into a new facility. Any color of what Michelin's going to do? And then how does the current rent do you think compare to maybe what the market is.

Brendan Mullinix:

Yes, sure. So I think the plan is still to consolidate it in Greer. I think it's just been delayed. The logistics of getting that many tires out of the facility and moving them into a new facility, it's just taking some time. We are hopeful that maybe it takes some more time, and they need to stay in the facility longer, but we're planning for them to ultimately move out now in September. The rate is pretty comparable to what we should see with a replacement tenant. If it were a single tenant, if we end up multi tenanting the building, we may be able to push rate there into the 3s.

Todd Stender:

All right. That's helpful. And then when you look at where industrial is going to be, I guess, that by year- end 2020, we had been kind of tracking you guys on a revenue basis, but I think your comments were on a gross book value basis where do you think you'll be on a revenue basis by the end of 2020?

Brendan Mullinix

There's plus or minus 85%. It trails book value a little bit, and we'll continue to do so.

Todd Stender:

Okay. Just finally, there's been a natural deleveraging with your disposition proceeds, certainly you're meeting your secured debt paying off that piece, and then you're getting away from office. So these are all good things according to a rating agency. Where do you -- where would you like to be? Are you planning on maybe lobbying for a better rating next year where -- where does your cost of debt ultimately shake out?

11 

T. Wilson Eglin:

I think we're happy overall with the ratings. I would think that getting further -- further out of office and more into industrial will help from an asset quality standpoint. Size will be an important consideration if we're going to lobby for better ratings. That said, I would think there's an opportunity to revisit the rating with S&P first, and we'll work on that in 2020.

Operator:

Next question is from John Massocca of Ladenburg Thalmann.

John Massocca:

So outside of the Dow Chemical office, which kind of sounds like a fairly opportunistic disposition, given the kind of remaining lease term, what kind of cap rate are you expecting on the remaining, let's say, around $300 million of dispositions that you kind of are planning for between now and the end of 2020, especially given a good chunk of that NOI is coming due, let's say, in the last 5 years?

Lara Johnson:

Right. John, this is Lara Johnson. It obviously will depend on the timing and composition of the ultimate set of dispositions, but we're hoping to be at an 8 cap.

John Massocca:

Okay, very helpful. And then understanding that you might be somewhat limited in what you can say on this, given the litigation around the Cummins lease, what kind of range of outcomes can we expect there? Will there be any impact from that if it's kind of resolved?

Beth Boulerice:

This is Beth. As we are in litigation, we are limited to what we can say regarding it. We are not recording rent on the asset. Currently, the court is collecting rent on behalf into a court administrated account. And given the inherent uncertainty in litigation and the fact that it's in the early stage of the litigation, we're not going to record any revenue at this time.

Operator:

Okay. The next question is from Jamie Feldman of Bank of America Merrill Lynch.

Jamie Feldman:

I know you had talked about kind of staying within certain leverage levels, but can you remind us what your -- the high end of your leverage target would be as you go through this plan?

T. Wilson Eglin:

Yes, we sort of thought that the upper end of the band would be around 6x. And obviously, we're quite low in relation to that.

Jamie Feldman:

Okay. And then as you think about the assets and target to sell next year, I think you said somewhere between $450 million and $550 million, any thoughts on what the target yield might be or cap rate might be on those assets?

12 

Lara Johnson:

Yes. This is Lara. As I mentioned before, it will ultimately depend on the timing and composition of that pool, but we're hoping to be at an eight cap.

Jamie Feldman:

Could be below an a cap?

Lara Johnson:

Yes.

Operator:

[Operator Instructions]. The next question is a follow-up from Sheila McGrath of Evercore ISI.

Sheila McGrath:

I guess, on the Morgan Lewis building, do you plan to reposition that, even though it's an office asset to add -- invest more capital? Or what's the long-term plan there?

Lara Johnson:

Sheila, it's Lara again. So James and I are working together on this, and we're in the early stages of exploring strategy for the asset. Obviously, we have some time with the Morgan Lewis extension. We have invested a substantial amount of capital. As you know, in the asset. So we're really exploring all the different possibilities, including an investor sale, user sale, even leasing possibilities. So there's thus far a significant amount of inbound interest on the asset as we expected. So we'll be spending the next quarter or so, formulating a strategy for the asset to implement.

Sheila McGrath:

Okay. And then on Dow Chemical, can you remind us the loan-to-value on that disposition, by selling that that also will be a deleveraging event. Am I correct on that?

T. Wilson Eglin:

Yes. The debt is around $184 million or so. And recall that the construction cost in that facility was $165 million, and we leveraged it out with $197 million in proceeds before construction was finished. So that essentially monetized almost all of the cash flow from the lease. So we -- as we've mentioned, we do have an inbound expression of interest, but that asset is probably roughly 90% leveraged. So to the extent the sale gets done, a lot of debt would come off the balance sheet. And honestly, the after debt service cash flow is only about $250,000 a year to us. So it would be a very good outcome.

Sheila McGrath:

Okay. And last question, I apologize if you already touched on this. On the Thomson, Georgia asset, that's a new vacancy. What are your plans there and tenant prospects?

T. Wilson Eglin:

Yes, sure. We're open for all options there. It's a very functional building. In between Augusta and Atlanta, and we've just gotten started marketing it because of the Chapter 11 bankruptcy kind of tied things up for a bit. But the initial reception has been positive, and we're hopeful to lease it. We'd also be open to a potential user sale if a user comes along first that wants to purchase it, but we're very hopeful.

13 

Sheila McGrath:

Were the -- in-place cash rents that you disclosed in the supplemental, were they about market? Or what do you think?

T. Wilson Eglin:

So I guess, market rent there is a little bit of a mixed bag because it depends on if we land a manufacturing tenant or if we land a warehouse tenant, so it can fluctuate by several dollars per square foot, depending on what the ultimate use is.

Operator:

Next, a follow-up from John Massocca of Ladenburg Salmon.

John Massocca:

Just a quick balance sheet question. Because there's been a lot of refinancing of kind of debt with some of your peers. I mean, how do you look at maybe the trust preferred as a potential to kind of take out with some long-term fixed debt? I mean, is that something you're thinking about on the balance sheet side?

T. Wilson Eglin:

No, at LIBOR plus 170. We think that the trust preferred given its duration is a pretty attractive piece of paper for us, and we would be unlikely to take it out.

Operator:

This concludes our question-and-answer session, I'd like to turn the conference back over to Will Eglin for the final remarks.

T. Wilson Eglin:

Thanks to all of you for joining us this morning. Please visit our website or contact Heather Gentry if you would like to receive our quarterly materials. And in addition, as always, you may contact me or the other members of our senior management team with any questions. Thanks again and have a great day.

Operator

Thank you, sir. We thank you all for attending today's presentation. You may now disconnect your lines.

14 

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