UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DCD.C. 20549
FORM 10-K
(Mark One)
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| x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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| For the fiscal year ended December 31, 2009 |
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| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| For the transition period from to
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For the Transition period from _________________ to ________________
Commission File Number 1-12386
LEXINGTON REALTY TRUST
(Exact name of Registrant as specified in its charter)
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| Maryland | 13-3717318 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| One Penn Plaza, Suite 4015 | (I.R.S. Employer
Identification No.)
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| New York, NY | 10119-4015 |
| (Address of principal executive offices) | (Zip Code) |
Registrant’sRegistrant's telephone number, including area code (212) 692-7200
Securities registered pursuant to Section 12(b) of the Act:
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| Title of Each Class | Name of Each Exchange on which Registered |
| Shares of beneficial interests, par value $0.0001, classified as Common Stock | New York Stock Exchange |
8.05% Series B Cumulative Redeemable Preferred Stock, par value $0.0001 | New York Stock Exchange |
6.50% Series C Cumulative Convertible Preferred Stock, par value $0.0001 | New York Stock Exchange |
7.55% Series D Cumulative Redeemable Preferred Stock, par value $0.0001 | New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrantRegistrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨x No þo.
Indicate by check mark if the registrantRegistrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þx.
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þx No o.
Indicate by check mark whether the registrantRegistrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o No o.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant’sregistrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 10-K o.
Indicate by check mark whether the registrantRegistrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitionthe definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ox Accelerated filer þo Non-accelerated filer o Smaller reporting company o
(Do (Do not check if a smaller reporting company)
Smaller reporting company o
Indicate by check mark whether the registrantRegistrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þx.
The aggregate market value of the votingcommon shares held by non-affiliates of the Registrant as of June 30, 2009,2011, which was the last business day of the Registrant’sRegistrant's most recently completed second fiscal quarter was $360,735,859$1,413,351,463 based on the closing price of the common shares on the New York Stock Exchange as of that date, which was $3.40$9.13 per share.
Number of common shares outstanding as of February 25, 201023, 2012 was 121,944,615.
155,397,555.
Certain information contained in the Definitive Proxy Statement for Registrant’sRegistrant's Annual Meeting of Shareholders, to be held on May 18, 2010,15, 2012, is incorporated by reference in this Annual Report on Form 10-K in response to Part III, ItemItems 10, 11, 12, 13 and 14.
TABLE OF CONTENTS
| Item of | | | | |
Form 10-K | | Description | | Page |
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| | | PART I | | |
| 1. | | Business | | 1 |
| 1A. | | Risk Factors | | 10 |
| 1B. | | Unresolved Staff Comments | | 18 |
| 2. | | Properties | | 18 |
| 3. | | Legal Proceedings | | 30 |
| 4. | | Submission of Matters to a Vote of Security Holders | | 31 |
| | | PART II | | |
| 5. | | Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities | | 33 |
| 6. | | Selected Financial Data | | 36 |
| 7. | | Management’s Discussion and Analysis of Financial Condition and Results of Operations | | 37 |
| 7A. | | Quantitative and Qualitative Disclosures about Market Risk | | 50 |
| 8. | | Financial Statements and Supplementary Data | | 52 |
| 9. | | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | | 98 |
| 9A. | | Controls and Procedures | | 98 |
| 9B. | | Other Information | | 98 |
| | | PART III | | |
| 10. | | Trustees and Executive Officers of the Registrant | | 98 |
| 11. | | Executive Compensation | | 98 |
| 12. | | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | | 98 |
| 13. | | Certain Relationships and Related Transactions | | 99 |
| 14. | | Principal Accountant Fees and Services | | 99 |
| | | PART IV | | |
| 15. | | Exhibits, Financial Statement Schedules | | 99 |
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| PART II | | |
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| PART III | | |
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| PART IV | | |
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PART I.
Introduction
When we use the terms “Lexington,” the “Company,” “we,” “us” and “our,” we mean Lexington Realty Trust and all entities owned by us, including non-consolidated entities, except where it is clear that the term means only the parent company. All interests in properties are held through special purpose entities, which we refer to as property owner subsidiaries or lender subsidiaries, which are separate and distinct legal entities, but in some instances are consolidated for financial statement purposes and/or disregarded for income tax purposes.
References herein to ourthis Annual Report are to ourthis Annual Report on Form 10-K for the fiscal year ended December 31, 2009.2011. When we use the term “REIT” we mean real estate investment trust.
All references to 2009, 20082011, 2010 and 20072009 refer to our fiscal years ended, or the dates, as the context requires, December 31, 2011, December 31, 2010 and December 31, 2009 December 31, 2008, and December 31, 2007,, respectively.
NewkirkManagement of our interests in properties is generally conducted through Lexington Realty Trust,Advisors, Inc., or Newkirk, was merged with and into us on December 31, 2006, which we refer to as the Newkirk Merger. Unless otherwise noted, (A) the information in this Annual Report regarding items in our Consolidated Statements of Operations as of December 31, 2006 and prior does not include the business and operations of Newkirk, and (B) the information in this Annual Report regarding items in our Consolidated Balance Sheet as of December 31, 2005 and prior does not include the assets, liabilities and noncontrolling interests of Newkirk.
Lexington Strategic Asset Corp., a former taxable REIT subsidiary, which we refer to as LSAC, was merged with and into us as of June 30, 2007. Lexington Contributions Inc.,LRA, or through a former taxable REIT subsidiary, which we refer to as LCI, was merged with and into us as of March 25, 2008.property management joint venture subsidiary.
Cautionary Statements Concerning Forward-Looking Statements
This Annual Report, together with other statements and information publicly disseminated by us contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended.amended, or the Exchange Act. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “believes,” “expects,” “intends,” “anticipates,” “estimates,” “projects” or similar expressions. Readers should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could materially affect actual results, performances or achievements. In particular, among the factors that could cause actual results, performances or achievements to differ materially from current expectations, strategies or plans include, among others, those risks discussed below and under “Risk Factors” in Part I, Item 1A of this Annual Report and “Management’s“Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of this Annual Report. WeExcept as required by law, we undertake no obligation to publicly release the results of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect occurrence of unanticipated events. Accordingly, there is no assurance that our expectations will be realized.
Item 1.Business
General
We are a self-managed and self-administered REIT formed under the laws of the State of Maryland. Our primary business is the acquisition, ownership and management of a geographically diverse portfolioportfolios of net-leasedsingle-tenanted office, industrial and retail properties. Substantially allOur core assets consist of general purpose, efficient, single-tenant net-leased office and industrial assets, in well-located and growing markets or critical to the tenant's business. A majority of these properties are subject to triple net or similar leases, where the tenant bears all or substantially all of the costs and/or cost increases for real estate taxes, utilities, insurance and ordinary repairs. In addition, we acquire, originate and hold investments in loan assets and debt securities related to real estate.
As of December 31, 2009,2011, we had ownership interests in approximately 210185 consolidated real estate properties, located in 4039 states and the Netherlands and containing an aggregate of approximately 38.336.0 million square feet of space, approximately 91.5%95.6% of which was subject to a lease.leased. In 2009, 20082011, 2010 and 2007,2009, no tenant/guarantor represented greater than 10% of our annual base rental revenue.
In addition to our shares of beneficial interests, par value $0.0001 per share, classified as “commoncommon stock,” which we refer to as common shares, we have three outstanding classes of beneficial interests classified as preferred stock, which we refer to as preferred shares: (1) 8.05% Series B Cumulative Redeemable Preferred Stock, which we refer to as our Series B Preferred Shares, (2) 6.50% Series C Cumulative Convertible Preferred Stock, which we refer to as our Series C Preferred Shares, and (3) 7.55% Series D Cumulative Redeemable Preferred Stock, which we refer to as our Series D Preferred Shares. Our common shares, Series B Preferred Shares, Series C Preferred Shares and Series D Preferred Shares are traded on the New York Stock Exchange, or NYSE, under the symbols “LXP”, “LXP pb”, “LXP pc” and “LXP pd”, respectively.
We elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, which we refer to as the Code, commencing with our taxable year ended December 31, 1993. We intend to continue to qualify as a REIT. If we qualify for taxation as a REIT, we generally will not be subject to federal corporate income taxes on our net taxable income that is currently distributed to our common shareholders.
History
Our predecessor was organized in Delaware in October 1993 upon the combination of two investment programs, Lepercq Corporate Income Fund L.P. and Lepercq Corporate Income Fund II L.P., which were formed to acquire net-lease real estate assets providing current income. Our predecessor was merged into Lexington Corporate Properties Trust, a Maryland statutory REIT, on December 31, 1997. On December 31, 2006, Lexington Corporate Properties Trust completedwas the successor in a merger with Newkirk Realty Trust, or Newkirk, which we refer to as the Newkirk Merger. Newkirk’s primary business was similar to our primary business. All of Newkirk’sNewkirk's operations were conducted, and all of its assets were held, through its master limited partnership, subsequently named The NewkirkLexington Master Limited Partnership, which we refer to as the MLP. Newkirk was the general partner and owned, at the time of completion of the Newkirk Merger, a 31.0% interest in the MLP. In connection with the Newkirk Merger, Lexington Corporate Properties Trust changed its name to Lexington Realty Trust, the MLP was renamed The Lexington Master Limited Partnership, and one of our wholly-owned subsidiaries became the sole general partner of the MLP and another one of our wholly-owned subsidiaries became the holder of a 31.0% limited partner interest in the MLP.
In the Newkirk Merger, each share of Newkirk’s common stock was exchanged for 0.80 of our common shares, and the MLP effected a 1.0 for 0.80 reverse unit-split. Each unit of limited partner interest in the MLP, which we refer to as an MLP unit, other than the MLP units held directly or indirectly by us, was redeemable at the option of the holder for cash based on a value of our common shares or, if we elected, for our common shares on a one-for-one basis. As of December 31, 2008, the MLP was merged with and into us, and we issued 6.4 million common shares for the MLP units we did not already own.us.
We are structured as an umbrella partnership REIT, or UPREIT, and a portion of our business is conducted through our threetwo operating partnership subsidiaries: (1) Lepercq Corporate Income Fund L.P.; and (2) Lepercq Corporate Income Fund II L.P.; and (3) On December 31, 2010, a third operating partnership subsidiary, Net 3 Acquisition L.P., was merged with and into us. We refer to these subsidiaries as our operating partnerships and to limited partner interests in these operating partnerships as OP units. We are party to a funding agreementagreements with our operating partnerships under which we may be required to fund distributions made on account of OP units. The UPREIT structure enables us to acquire properties through our operating partnerships by issuing OP units to a seller of property, owner, as a form of consideration in exchange for the property, OP units.property. The outstanding OP units are generally redeemable after certain dates, for our common shares on a one OP unit for approximately 1.13 common shares basis, or, cash, at our election in certain instances.instances, cash. We believe that this structure facilitates our ability to raise capital and to acquire portfolio and individual properties by enabling us to structure transactions which may defer tax gains for a contributor of property. As of December 31, 2009,2011, there were approximately 4.84.0 million OP units outstanding, other than OP units held directly or indirectly by us, that are currently redeemable for approximately 5.44.5 million common shares if we satisfy redemptions entirely with common shares.
Current Economic Uncertainty and Capital Market Volatility
Our business continues to be impacted in a number of ways by the continued uncertainty in the overall economy and volatility in the capital markets. We encourage you to read “Risk Factors” in Part I, Item 1A of this Annual Report for a discussion of certain risks we are facing as a result of the current economic uncertainty and capital market volatility and “Management’s“Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of this Annual Report for a detailed discussion of the trends we believe are impacting our business, including the impact of the current economic uncertainty and capital market volatility.business.
Objectives and Strategy
General. Our current business strategy is focusedWe focus on waysmaintaining a strong balance sheet and improving our long-term growth prospects. Since 2008, we believe we have strengthened our balance sheet primarily by (1) repurchasing and retiring our debt and senior securities or by extending their maturity date, (2) financing our properties with non-recourse mortgage debt or corporate credit facilities and term loans at what we believe are favorable rates and using the proceeds to reduce leverage, preserveretire higher rate or shorter term debt, (3) issuing equity and recycling capital generateby selling non-core properties, in order to create additional liquidity and revenue(4) when opportunities arise, investing in core properties with long-term leases and improve our overall financial flexibility. Some of these strategies have included the following:other real estate assets, which we believe will generate favorable returns.
| - | repurchasing our short-term debt and senior securities; |
| - | issuing longer-term debt to pay down shorter-term debt and thereby extend maturities; |
| - | aggressively managing our core portfolio of office and industrial properties to maintain and improve our net operating income from these assets; |
| - | generating liquidity through sales to third parties of non-core and vacant assets or controlling expenses by disposing of non-performing assets; |
| - | employing cost-saving measures to reduce our general and administrative expenses; |
| - | reducing our per common share dividend and, during 2009, paying a portion of the common share dividend in common shares; and |
| - | issuing shares under our direct share purchase plan. |
We viewgrow our “core” assets as general purpose, efficient, single-tenant net-leased assets,portfolio primarily by: (1) buying properties and leasing them back to the sellers under net leases, (2) acquiring properties already subject to net leases, (3) making mortgage and mezzanine loans secured by single tenant buildings and (4) engaging in, well-located and growing markets.or providing capital to developers who are engaged in, “build-to-suit” projects for corporate users.
As part of our ongoing business efforts, we expect to continue to (1) recycle capital in compliance with regulatory and contractual requirements;requirements, (2) refinance or repurchase outstanding indebtedness when advisable;advisable, (3) effect strategic transactions, portfolio and individual property acquisitions and dispositions;dispositions, (4) expand existing properties;properties, (5) execute new leases with tenants;tenants, (6) extend lease maturities in advance of expiration;or at expiration and (7) explore new business lines and operating platforms. Additionally, we may continue to enter into joint ventures and co-investment programs with third-party investors as a means of creating additional growth and expanding the revenue realized from advisory and asset management activities as situations warrant.
Portfolio diversification is central to our investment strategy as we seek to create and maintain an asset base that provides steady, predictable and growing cash flows while being insulated against rising property operating expenses, regional recessions, industry-specific downturns and fluctuations in property values and market rent levels. Regardless of capital market and economic conditions, we intend to stay focused on (1) enhancing operating results, (2) improving portfolio quality, (3) mitigating risks relating to interest rates and the real estate cycle and (4) implementing strategies where our management skills and real estate expertise can add value. We believe that our business strategy will continue to improve our liquidity and strengthen our overall balance sheet while creating meaningful shareholder value.
Capital Recycling. We began to dispose of our interests in non-core assets in 2007, and continued to dispose of non-core assets and core assets, subject to regulatory and contractual requirements, through 2009.requirements. During 2009 and 2008,2011, we used the proceeds from such dispositions to primarily tomake investments and retire senior debt and preferred securities at whatsecurities. During 2010 and 2009, we believe were favorable spreads. Currently, we areused the proceeds from dispositions to primarily retire debt. We continue to be focused on the disposition of our interests in non-core assets, including vacant or non-performingand under-performing assets.
Occasionally, we provide seller financing as a means of efficiently disposing of an asset. As a result, if a buyer defaults under the seller financing, we will once again be the owner of the underlying asset.
Acquisition Strategies. When market conditions warrant, we seek to enhance our net-leasesingle-tenant property portfolio through acquisitions of interests in core assets, including throughbuild-to-suit activities and the investment in loan assets and debt securities directly or indirectly secured by core assets. Prior to effecting any acquisitions, we analyzeacquisition, our underwriting includes analyzing the (1) property’sproperty's design, construction quality, efficiency, functionality and location with respect to the immediate sub-market, city and region;region, (2) lease integrity with respect to term, rental rate increases, corporate guarantees and property maintenance provisions;provisions, (3) present and anticipated conditions in the local real estate market;market and (4) prospects for selling or re-leasing the property on favorable terms in the event of a vacancy. We also evaluate each potential tenant’stenant's financial strength, growth prospects, competitive position within its respective industry and a property’sproperty's strategic location and function within a tenant’stenant's operations or distribution systems. We believe that our comprehensive underwriting process is critical to the assessment of long-term profitability of any investment by us.
In the Newkirk Merger, we succeeded Newkirk to an agreement with a third party pursuant to which we will pay the third party for properties acquired by us and identified by the third party in an amount equal to (1) 1.5% of the gross purchase price and (2) 25% of the net proceeds and net cash flow (as defined) after we receive all of our invested capital plus a 12% internal rate of return. As of December 31, 2009, only one property, which was acquired in 2006, has been acquired subject to these terms. We have no other sourcing agreements.
Strategic Transactions with Other Real Estate Investment Companies. We seek to capitalize on the unique investment experience of our executive management team as well as their network of relationships in the industry to achieve appropriate risk-adjusted yields through strategic transactions. Accordingly, we endeavor tooccasionally pursue the (1) acquisition of portfolios of assets and equity interests in companies with a significant number of single-tenant assets, including through mergers and acquisitions activity and (2) participation in strategic partnerships, co-investment programs and joint ventures.
In 1999, we established our first co-investment programconnection with the New York State Common Retirement Fund to acquire net-lease assets. Following a second co-investment program with the New York State Common Retirement Fund, we established co-investment programs with ING Clarion Lion Properties Fund and the Utah State Retirement Investment Fund, all with the purpose of acquiring net-leased assets. In addition, in the Newkirk Merger, we acquired what is now a 50%one-third interest in Lex-Win Concord LLC, which we refer to as Lex-Win Concord, a joint venture with Winthrop Realty Trust, which we refer to as Winthrop. Lex-Win Concord’s primary asset is its interest ineach of Concord Debt HoldingsHolding LLC, which we refer to as Concord, and Concord’sCDH CDO LLC, which we refer to as CDH CDO. The remaining two-thirds interests are held equally by WRT Realty L.P., which we refer to as Winthrop, and a wholly-owned subsidiary of Inland American Real Estate Trust, Inc., which we refer to as Inland Concord. Each of Concord's and CDH CDO's primary business is the ownership of real estate loan and bond assets.
In the second quarter of 2011, we formed an equally-owned joint venture, LW Sofi, LLC, with a subsidiary of Winthrop to acquire the economic interests in a mezzanine loan owned by Concord. In the fourth quarter, the mezzanine loan was satisfied and the joint venture was dissolved.
During 2007, we established Net Lease Strategic Assets Fund L.P., which we refer to as NLS, a co-investment program with a wholly-owned subsidiary of Inland American Real Estate Trust, Inc., which we refer to as Inland NLS, to invest in specialty net-leased real estate. In addition, we acquired the interests of the New York State Common Retirement Fund and the Utah State Retirement Investment Fund in our co-investment programs with them, and we distributed the properties in the co-investment program with ING Clarion Lion Properties Fund to us and ING Clarion Lion Properties Fund, and terminated all of our co-investment programs except for NLS and Lex-Win Concord.
We believe that entering into co-investment programs and joint ventures with institutional investors and other real estate investment companies may mitigate our risk in certain assets and increase our return on equity to the extent we earn management or other fees. However, investments in co-investment programs and joint ventures limit our ability to make unilateral investment decisions relating to the assets and limit our ability to deploy capital.
Acquisitions of Portfolios and Individual Net-lease Properties. We seek to acquire portfolios and individual properties from (1) creditworthy companies in sale/leaseback transactions for properties that are integral to the sellers’sellers'/tenants’tenants' ongoing operations;operations, (2) developers of newly constructed properties built to suit the needs of a corporate tenant generally after construction has been completed to avoidby financing the risks associated withproject during the construction phase and/or agreeing to purchase the property upon completion of a project;construction and occupancy by the tenant, (3) other real estate investment companies through strategic transactions;transactions and (4) sellers of properties subject to an existing lease. We believe that our geographical diversification and acquisition experience will allow us to continue to compete effectively for the acquisition of such properties.
Competition
Through our predecessor entities, wecertain members of our management have been in the net-lease real estate business for over 35 years.since 1973. Over this period, we haveour management established a broad network of contacts, including major corporate tenants, developers, brokers and lenders. In addition, our management is associated with and/or participates in many industry organizations. Notwithstanding these relationships, there are numerous commercial developers, real estate companies, financial institutions and other investors with greater financial or other resources that compete with us in seeking properties for acquisition and tenants who will lease space in these properties. Our competitors include other REITs, pension funds, banks, private companies and individuals.
Co-Investment Programs and Other Equity Method Investment Limited Partnerships
Net Lease Strategic Assets Fund L.P. NLS’sNLS's portfolio consists of 4342 specialty net-leased assets and a 40% tenant-in-common interest in a property. These specialty net-leased assets, which were either sold or contributed by us to NLS, include data centers, light manufacturing facilities, medical office facilities, a car dealershipdealerships and a golf course.
Since its formation, Inland NLS has contributed $217.3 million in cash to NLS, and we have contributed 19 primarily net-leased properties, having an agreed upon value of $318.1 million, and $15.3 million in cash to NLS, and we sold fee and leasehold interests in 24 primarily net-leased properties and a 40% tenant-in-common interest in a property, having an agreed upon value of $425.4 million, to NLS. The properties we contributed and sold were encumbered by $339.5 million of mortgage debt with stated interest rates ranging from 5.1% to 8.5%, a weighted-average interest rate of 6.1% and maturity dates ranging from 2009 to 2025. The mortgage debt was assumed by NLS.
At December 31, 2009,2011, Inland NLS owned 85%, and we owned 15% of NLS’sNLS's common equity, and we owned 100% of NLS’sNLS's preferred equity. LRA is the asset manager for NLS pursuant to a management agreement. The partnership agreement provides each partner with a right of first offer and a buy/sell right after February 20, 2012.
Lex-Win Concord Debt Holdings LLC and CDH CDO LLC. WeOn December 31, 2006, in connection with the Newkirk Merger, we acquired a 50% common interest in Concord, through the Newkirk Merger. Concord acquireswhich owns bonds and originates loans and debt securities secured, directly and indirectly, by real estate assets. The other 50% interest in Concord was held by Winthrop. In 2008, we and Winthrop contributed our respective interest in Concord to Lex-Win Concord LLC, which we refer to as Lex-Win Concord. Immediately following the contribution, Inland Concord was admitted to Concord as a preferred member upon making a capital commitment. During the third quarter of 2010, Concord was restructured upon the effectiveness of a settlement agreement with Inland Concord regarding Inland's capital commitment. As a result of December 31, 2009, the valuerestructuring (i) Lex-Win Concord was dissolved and (ii) Concord and a new entity, CDH CDO, are now owned equally by subsidiaries of ourus, Winthrop and Inland Concord. The new entity purchased Concord's interest in Concord Real Estate CDO 2006-1 LTD, which we refer to as CDO-1, from Concord with funds contributed by Inland Concord. The Company has made no additional contributions and it has not recognized any income or loss as a direct result of the restructuring, however, we recognize future income on the cash basis. The Company's investment in Lex-Win Concord has been reduced tothese ventures is valued at zero. Concord’sEach of Concord's and CDH CDO's obligations are non-recourse to us, and we have no obligation to fund the operations of Concord.Concord or CDH CDO unless we receive management fees, and then, only to the extent of such management fees.
Other Equity Method Investment Limited Partnerships. We are a partner in five other partnerships with ownership percentages ranging between 27% and 35%, which own primarily net-leased properties. All profits, losses and cash flows are distributed in accordance with the respective partnership agreements. As of December 31, 2009,2011, the partnerships had $29.4$21.6 million in non-recourse mortgage debt (our proportionate share was $8.8$6.5 million) with interest rates ranging from 9.4% to 11.5%, a weighted-average interest rate of 9.9% and maturity dates ranging from 20112012 to 2016.
We have determined that as of December 31, 2009NLS and 2008, Lex-Win Concord and NLS have met the conditions of significant subsidiaries under Rule 1-02 (w)1-02(w) of Regulation S-X.S-X for certain years. The separate financial statements of NLS and Lex-Win Concord, as required pursuant to Rule 3-09 of Regulation S-X, are filed as Exhibits 99.1 and 99.2, respectively, to this Annual Report.
Internal Growth and Effectively Managing Assets
Tenant Relations and Lease Compliance. We endeavor to maintain close contact with ourthe tenants in the properties in which we have an interest in order to understand their financial status and future real estate needs. In addition to our headquarters in New York City, we have regional offices in Chicago and Dallas. We monitor the financial, property maintenance and other lease obligations of ourthe tenants in properties in which we have an interest, through a variety of means, including periodic reviews of financial statements that we have access to and physical inspections of the properties.
Extending Lease Maturities. We Our property owner subsidiaries seek to extend ourtenant leases in advance of theirthe lease expiration in order for us to maintain a balanced lease rollover schedule and high occupancy levels.
Revenue Enhancing Property Expansions. We Our property owner subsidiaries undertake expansions of our properties based on lease requirements, tenant requirements or marketing opportunities. We believe that selective property expansions can provide us with attractive rates of return and our property owner subsidiaries actively seek such opportunities.
Property Sales. Subject to regulatory requirements, we sell our interests in properties when we believe that the return realized from selling a property will exceed the expected return from continuing to hold such property and/or if there is a better use of capital such as repurchasing our debt and senior securities.
Conversion to Multi-Tenant. If we areone of our property subsidiaries is unable to renew a single-tenant net lease or if we areit is unable to find a replacement single tenant, we either attempt to sell our interest in the property or have the property owner subsidiary convert the property forto multi-tenant use and begin the process of leasing space. When appropriate, we seek to sell our interests in multi-tenant properties.
Property Management. From time to time, weour property owner subsidiaries use third-party property managers to manage certain of our properties. In 2010, we formed a property management joint venture with an unaffiliated third party to manage substantially all of these properties. We believe this new joint venture will primarily provideprovides us with (1) better management of our assets, and(2) better tenant relationships, and secondarily provide us with(3) revenue-enhancing opportunities and (4) cost efficiencies.
Financing Strategy
General. Since becoming a public company, our principal sources of financing have been the public and private equity and debt markets, property specific debt, our credit facility,revolving loans, corporate term loans, issuance of OP units and undistributed cash flows.
MortgageProperty Specific Debt. Generally, weOur property owners seek to finance ourcertain of their assets with non-recourse secured debt that has amortization, term and interest rate characteristics matched to the term and characteristics of the cash flows from the underlying investments.debt.
Corporate Level Borrowings. We also use corporate-level borrowings, such as revolving loans and term loans, as needed, and when other forms of financing are not available or appropriate. On February 13, 2009,In January 2012, we procured a $215.0 million secured term loan from Wells Fargo Bank, National Association, as agent. The term loan is secured by ownership interest pledges by certain subsidiaries that collectively own a borrowing base of properties. The secured term loan matures in January 2019. The secured term loan requires regular payments of interest only at an interest rate dependent on our leverage ratio, as defined, as follows: 2.00% plus LIBOR if our leverage ratio is less than 45%, 2.25% plus LIBOR if our leverage ratio is between 45% and 50%, 2.45% plus LIBOR if our leverage ratio is between 50% and 55%, and 2.85% plus LIBOR if our leverage ratio exceeds 55%. Upon the date when we obtain an investment grade debt rating from at least two of Standard & Poor's, Moody's and Fitch, the interest rate under the secured term loan will be dependent on our debt rating. We may not prepay any outstanding borrowings under the secured term loan through January 12, 2013, but may prepay outstanding borrowings anytime thereafter, however at a premium for the next three years.
Also in January 2012, we refinanced our (1) unsecured$300.0 million secured revolving credit facility with $25.0 million outstanding as of December 31, 2008,procured in January 2011, which was scheduled to expire in June 2009, and (2) secured term loan, with $174.3 million outstanding as of December 31, 2008, which was scheduled to mature in June 2009 (butJanuary 2014, but could have been extended to December 2009January 2015 at our option),option, with a new $300.0 million secured revolving credit facility consisting of a $165.0 million term loan and a $85.0 million revolving loan with KeyBank National Association, which we refer to as KeyBank, as agent. The new secured revolving credit facility has the same security as the new secured term loan. The new secured revolving credit facility bears interest at 2.85% over1.625% plus LIBOR if our leverage ratio, as defined, is less than 45%, 1.875% plus LIBOR if our leverage ratio is between 45% and 50%, 2.125% plus LIBOR if our leverage ratio is between 50% and 55% and 2.375% plus LIBOR if our leverage ratio exceeds 55%. Upon the date when we obtain an investment grade credit rating from at least two of Standard & Poor's, Moody's and Fitch, the interest rate under the secured revolving credit facility will be dependent on our debt rating. The new secured revolving credit facility matures in February 2011January 2015 but can be extended until February 2012January 2016 at our option. With the consent of the lenders, we can increase the size of (1) the term loansecured revolving credit facility by $135.0$225.0 million and (2) the revolving loan by $115.0 million (or $250.0 million in the aggregate, for a total secured revolving credit facility size of 500.0$525.0 million assuming no prepayments of the term loan are made) by adding properties to the borrowing base orand admitting additional lenders. During the second quarter of 2009, we increased the availability under the revolving loan by $40.0 million, by admitting an additional lender to the bank group, thus increasing the total facility to $290.0 million The secured credit facility is secured by ownership interest pledges and guarantees by certain of our subsidiaries that in the aggregate own interests in a borrowing base consisting of 75 properties as of December 31, 2009. The borrowing availability of the secured revolving credit facility is based upon the net operating income, as defined, of the properties comprising the borrowing base as definedbase.
We expect to use the new secured term loan to refinance certain indebtedness, the majority of which is maturing in 2012. We borrowed $108.0 million under the secured term loan and $28.0 million under the secured revolving credit facility to repay the term loans in the facility. Asoriginal principal amounts of December 31, 2009,$25.0 million and $45.0 million, which were procured from KeyBank in March 2008 and to satisfy $62.2 million outstanding principal amount of 5.45% Exchangeable Guaranteed Notes tendered pursuant to a holder repurchase option in January 2012. In addition, effective February 1, 2012, we entered into an interest-rate swap agreement to fix LIBOR at 1.512% for seven years on $108.0 million of secured term loan LIBOR-based debt. Accordingly, the available additional borrowing under the facility was $96.6 million. As of December 31, 2009, $164.3 million wasamount outstanding under the secured new term loan and $7.0 million was outstanding under the revolving loan. Subsequent to year end, we repaid $35.0 millionbears interest at a rate of 3.76% as of the term loan, alldate of the revolving loan borrowings and increased the availability under the revolving loan by $25.0 million by admitting an additional lender to the bank group.
filing this Annual Report.
During the first quarter of 2010, we issued $115.0 million aggregate principal amount of 6.00% Convertible Guaranteed Notes. The notes pay interest semi-annually in arrears and mature onin January 15, 2030. The holders of the notes may require us to repurchase their notes onin January 15, 2017, January 15, 2020 and January 15, 2025 for cash equal to 100% of the notes to be repurchased, plus any accrued and unpaid interest. We may not redeem any notes prior to January 15, 2017, except to preserve our REIT status. TheAs of the date of filing this Annual Report, the notes have an initiala conversion rate of 141.1383142.6917 common shares per $1,000 principal amount of the notes, representing a conversion price of $7.09$7.01 per share. The initial conversion rate is subject to adjustment under certain circumstances. The notes are convertible by the holders under certain circumstances for cash, common shares or a combination of cash and common shares at our election.
Deleveraging. Our primary focus for 2011, 2010 and 2009 was and our primary focus for 2010 is, to effectively use our capital to deleverage our balance sheet by refinancing, satisfying and repurchasing our indebtedness. During 2011, 2010 and 2009, we reduced our overall consolidated indebtedness by $119.3 million, $300.3 million and $305.6 million, respectively, including $25.5 million and $123.4 million in 2010 and 2009, respectively, original principal amount of our 5.45% Exchangeable Guaranteed Notes at an average 18.1% discount to the original principal amount.Notes.
Common Share DividendsIssuances
During 2009,2011, we raised approximately $90.5 million by issuing 10.0 million common shares through a public offering. The proceeds from the common share offering were primarily used to fund investments and retire indebtedness. During 2010, we raised approximately $157.8 million by issuing approximately 22.4 million common shares through two public offerings. The proceeds from these common share offerings were primarily used to retire indebtedness.
We also maintain a direct share purchase plan with a dividend reinvestment component. During 2011 and 2010, we issued approximately 13.31.1 million and 1.3 million common shares, in lieurespectively, under our direct share purchase plan raising net proceeds of cash payments of common share dividends in accordance with Internal Revenue Service Revenue Procedure 2008–68, which we refer$8.4 million and $8.6 million, respectively. The net proceeds were primarily used to as IRS Rev. Proc. 2008–68. IRS Rev. Proc. 2008–68, through a date certain, allows REITs to offer shareholders elective stock dividends, which are dividends paid in a mixture of stockfund investments and cash, of which at least 10% must be paid in cash. We retained approximately $52.9 million in cash by issuing partial common share dividends during 2009.retire indebtedness.
Common Share Repurchases
During 2008 and 2007, approximately 1.2 million and 9.8 million common shares/OP units, respectively, were repurchased under our Board of Trustees approved share repurchase program at an average cost of $14.28 and $19.83 per share/OP unit, respectively, in the open market and through private transactions with our employees and OP unit holders. During 2008, we entered into a forward equity commitment to purchase 3.5 million common shares at a price of $5.60 per share.share, or a total of $19.6 million. We have prepaidmade mandatory prepayments totaling $15.6 million in 2008 and 2009. Share dividends in 2009 were held as additional collateral. The commitment was settled in October 2011 for a cash payment of approximately $4.0 million and approximately 4.0 million common shares, constituting all of the $19.6 million purchase price. The contract is required to be settled no later than October 2011. Nounderlying common shares, were repurchased in 2009.retired. As of December 31, 2009,2011, 1.1 million common shares/OP units remained eligible for repurchase under theour previously announced share repurchase authorization.
DirectPreferred Share Purchase PlanRepurchases
During 2009,2011, we issuedrepurchased and retired approximately 4.30.4 million common shares under our direct shareSeries B Preferred Shares and 0.1 million Series C Preferred Shares. The aggregate purchase plan raising net proceedsprice of $20.9 million. The net proceeds were primarily used to retire short-term debt and senior securities$15.5 million was at a discount.$1.3 million discount to the liquidation preferences of the preferred shares.
Advisory Contracts
General. MembersCertain members of our management have been in the business of investing in single-tenant net-lease properties since 1973. This experience has enabled us to provide advisory services to various net-lease investors.
Third Party Investors. In 2001, Lexington Realty Advisors, Inc., a wholly-owned taxable REIT subsidiary, which we refer to as LRA entered into an advisory and asset management agreement to invest and manage an equity commitment of up to $50.0 million on behalf of a private third-party investment fund. The investment fund could, depending on leverage utilized, acquire up to $140.0 million in single-tenant, net-leased office, industrial and retail properties in the United States. Under the agreement, LRA earns (1) an acquisition feesfee (90 basis points of total acquisition costs), (2) an annual asset management feesfee (30 basis points of gross asset value) and (3) an incentive fee (16% of the return in excess of an internal rate of return of 10% earned by the investment fund). During 2007, the investment fund sold one of its two properties, and LRA recognized an incentive fee of $1.1 million, and an additional incentive fee $0.4 million was held back by the investment fund pursuant to the agreement. The investment fund made no purchases in 2011, 2010 or 2009 or 2008.and owned one property as of December 31, 2011.
Affiliated Investors. We provided advisory services to our former co-investment programs and alsoThrough LRA, we provide advisory services to NLS. In exchange for providing advisory services to NLS, LRA receives (1) a management fee of 0.375% of the equity capital, as defined, (2) a property management fee of up to 3.0% of actual gross revenues from certain assets for whichwhere the landlord is obligated to provide property management services (contingent upon the recoverability of such fees from the tenant under the applicable lease) and (3) an acquisition fee of 0.5% of the gross purchase price of each asset acquired by NLS.
Environmental Matters
Under various federal, state and local environmental laws, statutes, ordinances, rules and regulations, an owner of real property may be liable for the costs of removal or remediation of certain hazardous or toxic substances at, on, in or under such property as well as certain other potential costs relating to hazardous or toxic substances. These liabilities may include government fines and penalties and damages for injuries to persons and adjacent property. Such laws often impose liability without regard to whether the owner knew of, or was responsible for, the presence or disposal of such substances. Although generally ourthe tenants of the properties in which we have an interest are primarily responsible for any environmental damage and claims related to the leased premises, in the event of the bankruptcy or inability of a tenant of such premises to satisfy any obligations with respect to such environmental liability, wea property owner subsidiary may be required to satisfy such obligations. In addition, as the owner of such properties, wea property owner subsidiary may be held directly liable for any such damages or claims irrespective of the provisions of any lease.
From time to time, in connection with the conduct of our business and generally upon acquisition of a property and prior to surrender by a tenant, we authorizethe property owner subsidiary authorizes the preparation of a Phase I and, when necessary, a Phase II environmental reportsreport with respect to ourits properties. Based upon such environmental reports and our ongoing review of ourthe properties in which we have an interest, as of the date of this Annual Report, we are not aware of any environmental condition with respect to any of ourthe properties in which we have an interest which we believe would be reasonably likely to have a material adverse effect on our financial condition and/or results of operations. There can be no assurance, however, that (1) the discovery of environmental conditions, the existence or severity of which were previously unknown;unknown, (2) changes in law;law, (3) the conduct of tenants;tenants or (4) activities relating to properties in the vicinity of ourthe properties in which we have an interest, will not expose us to material liability in the future. Changes in laws increasing the potential liability for environmental conditions existing on properties or increasing the restrictions on discharges or other conditions may result in significant unanticipated expenditures or may otherwise adversely affect the operations of ourthe tenants of properties in which we have an interest, which would adversely affect our financial condition and/or results of operations.
Non-Cash Impairment Charges
During 2011, 2010 and 2009, we incurred $117.4 million, $56.9 million and $175.9 million, respectively, of non-cash impairment charges primarily related to (1) sales and other dispositions, or the possible sale or disposition, of assets at below book value, (2) vacancies of certain assets and (3) during 2009, $74.7 million of non-cash impairment charges related to (1) our investment in Lex-Win Concord and another non-consolidated investment, which are included in equity in earnings (losses) of non-consolidated entities in our Consolidated Statement of Operations, (2) sales and other dispositions of assets at below book value and (3) vacancies of certain assets.Operations. In addition, we may continue to take similar non-cash impairment charges, which could be material in amount, due to (1) the current economic environment and (2) the implementation of our current business strategy.strategy, which may include sales of properties acquired in the Newkirk Merger that have a high cost basis because of our common share price at the time of the Newkirk Merger.
Summary of 20092011 Transactions and Recent Developments
The following summarizes certain of our transactions during 2009.2011, including transactions disclosed above and in our other periodic reports.
Sales. With respect to sales activity, we:we monetized our interests in 17 properties to unaffiliated third parties for an aggregate gross price of $160.1 million.
Acquisitions/Investments.
Property Acquisitions. Through property owner subsidiaries, we acquired the following properties in separate transactions:
|
| | | | | | | | |
| Location | Property Type | Square Feet (000's) | Acquisition Date | Initial Cost Basis (million) | Lease Expiration |
Byhalia, MS(1) | Industrial | 514 |
| May 2011 | $ | 27.5 |
| 03/2026 |
| Rock Hill, SC | Office | 80 |
| May 2011 | $ | 7.4 |
| 08/2021 |
| Allen, TX | Office | 293 |
| May 2011 | $ | 36.3 |
| 03/2018 |
Shelby, NC(1) | Industrial | 674 |
| June 2011 | $ | 23.5 |
| 05/2031 |
| Columbus, OH | Office | 42 |
| July 2011 | $ | 6.1 |
| 07/2027 |
| Chillicothe, OH | Industrial | 475 |
| October 2011 | $ | 12.1 |
| 06/2026 |
| Aurora, IL | Office | 210 |
| October 2011 | $ | 15.3 |
| 09/2017 |
| | | 2,288 |
| | $ | 128.2 |
| |
| - | sold 15 properties(1) Completed build-to-suit transaction
In addition, property owner subsidiaries: - purchased 3.38 acres of land adjacent to unaffiliated third parties for an aggregate net proceeds of $108.5 million; |
| - | transferred two properties to lenders and disposed of one property through bankruptcy; |
| - | sold our entire interests in two joint ventures generating $12.6 million in net proceeds; |
| - | sold two notes receivable for an aggregate discounted payoff amount of $3.9 million; |
| - | raised gross proceeds of $4.8 million in a sale/leaseback land transaction; and |
| - | sold investments in debt securities for aggregate proceeds of $9.5 million. |
Acquisitions. We acquired a property in Greenville, South Carolinawhich we have an interest located in Lakewood, Colorado for $10.5 million. The tenant has an option to$0.2 million;
- deposited $1.7 million in cash and a $1.6 million letter of credit toward the purchase of a $17.6 million to-be-built, 80,000 square foot office property in Eugene, Oregon. Substantial completion of the property is estimated to be in the first quarter of 2013. We can provide no assurances that this purchase will be consumated; and
- received a deed-in-lieu of foreclosure on December 31, 2014 at fair market value, but not less than $10.7a vacant office property in Wilsonville, Oregon.
Built-to-Suit Transactions.Through property owner subsidiaries, we were engaged in the following build-to-suit transactions:
|
| | | | | | | | | | | | | | | |
| Location | Property Type | Square Feet (000's) | | Expected Maximum Commitment/Contribution (million) | | Estimated Purchase Price/Completion Cost (million) | | Lease Term (Years) | | Estimated Completion Date |
| Saint Joseph, MO | Office | 99 |
| | $ | 18.0 |
| | $ | 18.0 |
| | 15 | | 2Q 12 |
| Huntington, WV(1) | Office | 70 |
| | $ | 11.8 |
| | $ | 12.6 |
| | 15 | | 1Q 12 |
| Shreveport, LA | Industrial | 257 |
| | $ | 2.5 |
| | $ | 13.1 |
| | 10 | | 2Q 12 |
| Florence, SC | Office | 32 |
| | $ | 5.1 |
| | $ | 5.1 |
| | 12 | | 1Q 12 |
| Long Island City, NY(2) | Industrial | 143 |
| | $ | 46.7 |
| | $ | 55.5 |
| | 15 | | 1Q 13 |
| Jessup, PA | Office | 150 |
| | $ | 20.8 |
| | $ | 20.8 |
| | 15 | | 2Q 12 |
| | | 751 |
| | $ | 104.9 |
| | $ | 125.1 |
| | | | |
(1) Property acquired January 2012.
(2) Joint venture investment. Estimated completion cost includes joint venture partner's equity.
Loan Investments. Through lender subsidiaries, we:
- made a $10.0 million and not greater than $11.6 million. If the tenant fails to exercise its purchase option, we have the right to require the tenant to purchase the property for approximately $10.7 million. In addition, we acquired the remainder mezzanine loan secured by a 100% pledge of all equity interests in a parcelthe entities which owned two, to-be-constructed distribution facilities. The loan was scheduled to mature in June 2013 and had an interest rate of land15.0% for the first year and 18.5% for the second year. The loan was fully satisfied in Long Beach, CaliforniaDecember 2011 for an $11.5 million payment which included accrued interest and yield maintenance;
- loaned $3.0 million to the buyer in connection with a tenant’s lease surrender obligationsthe sale for an estimated fair value of $2.5 million.
$3.7 millionExpansions. We funded $9.9 million in 2009 for the completion of a parking garage adjacentvacant industrial property. The loan is secured by the property, bears interest at 7.8% and matures in January 2013;
- received $9.5 million, plus accrued interest, in full satisfaction of a mezzanine loan made in 2010, which was secured by interests in multiple properties; and
- contributed $5.8 million to our office buildinga newly formed joint venture to invest in Baltimore, Maryland, which had an aggregate construction cost of $23.3 million.
a mezzanine loan and received $7.9 million upon the joint venture liquidation.
Leasing. We Through our property owner subsidiaries, we entered into 8562 new leases and lease extensions and new leases encompassing an aggregate 3.84.9 million square feet, and wefeet. Our property owner subsidiaries received $3.2$22.4 million from five lease termination and deferred maintenance payments.
Co-Investment Programs. Lex-Win Concord recognized $230.2 million of other-than-temporary impairments, loan losses and reserves,terminations of which we recognized $66.6 million. In addition, we recorded $68.2$21.3 million is included in impairments on our investmentdeferred revenue in Lex-Win Concord, reducing our investment to zero.the Consolidated Balance Sheet at December 31, 2011.
Financing. With respect to financing activities, we:in January 2011 we refinanced our $220.0 million secured revolving credit facility, which was scheduled to expire in February 2011 but could have been extended to February 2012, with a $300.0 million secured revolving credit facility with a maturity date of January 2014 but could have been extended at our option to January 2015, which was refinanced subsequent to year end as described elsewhere in this Annual Report.
| - | repurchased $123.4 million original principal amount of our 5.45% Exchangeable Guaranteed Notes at an average discount of 18.1% to the original principal amount;
|
| - | refinanced our (1) unsecured revolving credit facility, with $25.0 million outstanding as of December 31, 2008, which was scheduled to expire in June 2009, and (2) secured term loan, with $174.3 million outstanding as of December 31, 2008, which was scheduled to mature in June 2009 (or December 2009 at our option), with a secured credit facility consisting of a $165.0 million term loan and a $125.0 million revolving loan with KeyBank, as agent, and $27.9 million was repaid under our credit facilites in 2009; |
| - | made balloon payments of $11.6 million on property specific, non-recourse mortgage debt; |
Through our property owner subsidiaries, we:
- retired $134.3 million in property non-recourse mortgage debt; and | - | retired $95.2 million in property non-recourse mortgage debt due to sale/transfer of properties to unrelated third parties or lenders; and
|
- obtained $15.0 million non-recourse mortgage financing on an industrial property.
| - | refinanced a $13.2 million, 8.19% non-recourse mortgage loan due in April 2010 with an $11.5 million, 6.375% non-recourse mortgage loan that matures in August 2014. |
Capital. With respect to capital activities, we:
| - | issued approximately 13.3 million common shares in connection with our quarterly common share dividends; |
- issued 10.0 million common shares in a public offering, raising net proceeds of approximately $90.5 million;
- issued approximately 1.1 million common shares under our direct share purchase plan raising net proceeds of approximately $8.4 million;
| - | prepaid $2.8 million in cash on our forward equity commitment to purchase 3.5 million of our common shares at a price of $5.60 per share, leaving approximately $4.0 million remaining of the original $19.6 million purchase price; |
- settled our common share forward purchase equity commitment for approximately $4.0 million and retired approximately 4.0 million common shares; and
| - | converted 0.5 million of our Series C Preferred Shares by issuing 3.0 million common shares; and |
- repurchased and retired approximately 0.4 million Series B Preferred Shares and approximately 0.1 million Series C Preferred Shares for an aggregate purchase price of approximately $15.5 million.
| - | issued approximately 4.3 million common shares under our direct share purchase plan, raising net proceeds of approximately $20.9 million. |
Subsequent to December 31, 2009,2011, we:
- procured a $215.0 million seven-year secured term loan and refinanced our existing $300.0 million secured revolving credit facility; | - | issued $115.0 million aggregate principal amount of 6.00% Convertible Guaranteed Notes, the terms of which are described above under “Financing Strategy – Corporate Level Borrowings”; |
- satisfied term loans obtained in 2008 that had an aggregate outstanding principal amount of $60.6 million;
| - | sold three properties for gross cash proceeds of $1.8 million, and the purchasers of two of these properties assumed the corresponding mortgage notes ($40.2 million at December 31, 2009); |
- satisfied a swap liability of $3.5 million;
| - | repurchased $23.0 million original principal amount of 5.45% Exchangeable Guaranteed Notes at par; |
- repurchased $62.2 million outstanding principal amount of 5.45% Exchangeable Guaranteed Notes tendered pursuant to a holder repurchase option in January 2012;
- through a property owner subsidiary, acquired the build-to-suit office property located in Huntington, West Virginia; and 8
- delivered a notice exercising the buy/sell right in the NLS partnership agreement and received notification from our partner exercising the right of first offer in the NLS partnership agreement. | - | made a 15%, $11.0 million mortgage loan on an office building in Schaumburg, Illinois, which matures January 15, 2012, but can be extended one additional year by the borrower for a 50 basis point fee. The property is leased to Career Education Corporation from January 1, 2011 through December 31, 2022 for an average annual rent of $4.0 million. In addition to the initial $11.0 million investment, we are obligated to lend an additional $7.6 million over the two-year term of the mortgage upon the occurrence of certain events. If the borrower exercises the one-year extension option and certain other events occur, we will become obligated to lend an additional $12.2 million for tenant improvement costs; |
| - | made a $17.0 million mezzanine loan secured by a combination of limited partner interests in entities that own, and second mortgage liens against, five medical facilities. The mezzanine loan is guaranteed by a parent entity and principal and matures in January 2012 and requires payments of interest only at a rate of 14% for the first year and 16% thereafter; |
| - | repaid $35.0 million on the term loan under our secured credit facility, repaid all outstanding borrowings on the revolving loan under our secured credit facility and increased the availability under the revolving loan by $25.0 million; |
| - | formed a joint venture with an unaffiliated third party to manage certain of our properties that require such property management services; and |
| - | purchased a parking lot in a sale/leaseback transaction with an existing tenant, Nevada Power Company, for $3.3 million and financed the purchase with a $2.5 million non-recourse mortgage note, which matures in September 2014, bears interest at 7.5% and has a 25 year amortization schedule. The parking lot is adjacent to our existing property in Las Vegas, Nevada, leased to Nevada Power Company. In connection with this transaction, the Nevada Power Company lease on our existing property has been extended from January 2014 to January 2029, the same expiration date as the parking lot lease. |
Other
Employees. As of December 31, 2009,2011, we had 5954 full-time employees. Lexington Realty Trust is a master employer and employee costs are allocated to subsidiaries as applicable.
Industry Segments. We operate in primarily one industry segment, investment in net-leased real estate assets.
Web Site. Our Internet address is www.lxp.com and the investor relations section of our web site is located at http://www.snl.com/irweblinkx/corporateprofile.aspx?iid=103128. We make available, free of charge, on or through the investor relations section of our web site or by contacting our Investor Relations Department, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act, of 1934, as well as proxy statements, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the U.S. Securities and Exchange Commission, which we refer to as the SEC. Also posted on our web site, and available in print upon request of any shareholder to our Investor Relations Department, are our amended and restated declaration of trust and amended and restated by-laws, charters for our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee, our Corporate Governance Guidelines, and our Code of Business Conduct and Ethics governing our trustees, officers and employees and(which contains our Complaint Procedures Regarding Accounting and Auditing Matters.whistle blower procedures). Within the time period required by the SEC and the NYSE, we will post on our web site any amendment to the Code of Business Conduct and Ethics and any waiver applicable to any of our trustees or executive officers. In addition, our web site includes information concerning purchases and sales of our equity securities by our executive officers and trustees as well as disclosure relating to certain non-GAAP financial measures (as defined in the SEC’sSEC's Regulation G) that we may make public orally, telephonically, by webcast, by broadcast or by similar means from time to time. Information contained on our web site or the web site of any other person is not incorporated by reference into this Annual Report.Report or any of our other filings with the SEC.
Our Investor Relations Department can be contacted at Lexington Realty Trust, One Penn Plaza, Suite 4015, New York, NY 10119-4015, Attn: Investor Relations, telephone: (212) 692-7200, e-mail: ir@lxp.com.
Principal Executive Offices. Our principal executive offices are located at One Penn Plaza, Suite 4015, New York, NY 10119-4015; our telephone number is (212) 692-7200.
NYSE CEO Certification. Our Chief Executive Officer made an unqualified certification to the NYSE with respect to our compliance with the NYSE corporate governance listing standards in June 2009.2011.
Item 1A. Risk Factors
Item 1A. Risk Factors
Set forth below are material factors that may adversely affect our business andoperations.
We are subject to risks involved in single- tenantsingle-tenant leases.
We focus our acquisition activities on real properties that are net leased to single tenants. Therefore, the financial failure of, or other default by, a single tenant under its lease is likely to cause a significant reduction in the operating cash flow generated by the property leased to that tenant and might decrease the value of that property. In addition, weour property owner subsidiary will be responsible for 100% of the operating costs following a vacancy at a single-tenant building.
We rely on revenues derived from major tenants.
Revenues from several of our tenants and/or their guarantors constitute a significant percentage of our base rental revenues. The default, financial distress or bankruptcy of any of the tenants and/or guarantors of these properties could cause interruptions in the receipt of lease revenues and/or result in vacancies, which would reduce ourthe property owner subsidiary's revenues and increase operating costs until the affected property is re-let, and could decrease the ultimate salessale value of that property. Upon the expiration or other termination of the leases that are currently in place with respect to these properties, wethe property owner subsidiary may not be able to re-lease the vacant property at a comparable lease rate, or at all, or without incurring additional expenditures in connection with the re-leasing. See “Management’s“Management's Discussion and Analysis of Financial Conditions and Results of Operations –- Overview –- Leasing Trends” in Part II, Item 7 of this Annual Report for further discussion.
Our assets may be subject to impairment charges, which could materially adversely affect our business, financial condition and results of operations.charges.
We periodically evaluate our real estate investments and other assets for impairment indicators. The judgment regarding the existence of impairment indicators is based on generally accepted accounting principles, which include a variety of factors such as market conditions, the status of significant leases, the financial condition of major tenants and other factors that could affect the cash flow or value of our investments.an investment. During 2011, 2010 and 2009, we incurred $117.4 million, $56.9 million and $175.9 million, respectively, of non-cash impairment charges, primarilycharges. A substantial portion of these impairments related to (1)assets acquired in the Newkirk Merger that have a high cost basis because of our investment in Lex-Win Concord and another non-consolidated investment, which are included in equity in earnings (losses)common share price at the time of non-consolidated entities in our Consolidated Statement of Operations, (2) sales and other dispositions of assets at below book value and (3) vacancies of certain assets.the Newkirk Merger. In addition, we may continue to take similar non-cash impairment charges, due to the current economic environment andwhich could affect the implementation of our current business strategy. These impairments could have a material adverse effect on our financial condition and results of operations.
Our notesinterests in loans receivable are subject to delinquency, foreclosure and loss.
Our notesinterests in loans receivable are generally non-recourse and secured by income-producing properties.real estate properties owned by borrowers that were unable to obtain similar financing from a commercial bank. These notesloans are subject to risks of delinquency as well as risk associated with the capital markets. The ability of a borrower to repay a noteloan secured by an income-producinga real estate property is typically and primarily dependent upon the successful operation of such property rather than upon the existence of independent income or assets of the borrower. If a borrower were to default on a note,loan, it is possible that wethe lender subsidiary would not recover the full value of the noteloan and the collateral may be non-performing. In 2011, one of our lender subsidiaries received a deed-in-lieu of foreclosure on an office property in Wilsonville, Oregon, which the tenant vacated in 2010. The loan had an outstanding principal balance of $10.6 million, which we believe was above the fair value of the property, and accordingly we incurred an impairment charge in 2010 of $3.8 million relating to this loan.
We face uncertainties relating to lease renewals and re-letting of space.
Upon the expiration of current leases for space located in properties in which we have an interest, our properties, weproperty owner subsidiary may not be able to re-let all or a portion of that space, or the terms of re-letting (including the cost of concessions to tenants)tenants and leasing commissions) may be less favorable to usour property owner subsidiary than current lease terms or market rates. If weour property owner subsidiaries are unable to promptly re-let promptly all or a substantial portion of the space located in ourtheir respective properties, or if the rental rates we receivea property owner subsidiary receives upon re-letting are significantly lower than current rates, our earnings and ability to make expected distributions to our shareholders willmay be adversely affected due to the resulting reduction in rent receipts and increase in our property owner subsidiary's property operating costs. There can be no assurance that weour property owner subsidiaries will be able to retain tenants in any of our properties upon the expiration of their leases.
We are highly leveraged, which increases risk of default on our obligations and debt service requirements.
We are highly leveraged compared to certain of our competitors. We have incurred, and may continue to incur, indebtedness in furtherance of our activities. Neither our amended and restated declaration of trust nor any policy statement formally adopted by our Board of Trustees limits either the total amount of indebtedness or the specified percentage of indebtedness that we may incur, and accordingly, we could become even more highly leveraged. High levels of leverage may result in an increased risk of default on our obligations and in an increase in debt service requirements, which could adversely affect our financial condition and results of operations and our ability to pay distributions.
Market interest rates could have an adverse effect on our borrowing costs, profitability and our share price.
We have exposure to market risks relating to increases in interest rates due to our variable-rate debt. An increase in interest rates may increase our costs of borrowing on existing variable-rate indebtedness, leading to a reduction in our earnings. As of December 31, 2009, we had outstanding $171.3 million in consolidated variable-rate indebtedness, not subject to an interest-rate swap agreement. The level of our variable-rate indebtedness, along with the interest rate associated with such variable-rate indebtedness, may change in the future and materially affect our interest costs and earnings. In addition, our interest costs on our fixed-rate indebtedness can increase if we are required to refinance our fixed-rate indebtedness at maturity at higher interest rates.
Furthermore, the public valuation of our common shares is related primarily to the earnings that we derive from rental income with respect to our properties and not from the underlying appraised value of the properties themselves. As a result, interest rate fluctuations and capital market conditions can affect the market value of our common shares. For instance, if interest rates rise, the market price of our common shares may decrease because potential investors seeking a higher dividend yield than they would receive from our common shares may sell our common shares in favor of higher rate interest-bearing securities.
Continued disruptions in the financial markets could affect our ability to obtain debt financing on reasonable terms and have other adverse effects on us.
The United States credit markets have experienced significant dislocations and liquidity disruptions which have caused the spreads on prospective debt financings to widen considerably. These circumstances have materially impacted liquidity in the debt markets, making financing terms for borrowers less attractive, and in certain cases have resulted in the unavailability of certain types of debt financing. Continued uncertainty in the credit markets may negatively impact our ability to access additional debt financing at reasonable terms, which may negatively affect our ability to make acquisitions. A prolonged downturn in the credit markets may cause us to seek alternative sources of potentially less attractive financing and may require us to adjust our business plan accordingly. In addition, these factors may make it more difficult for us to sell properties or may adversely affect the price we receive for properties that we do sell, as prospective buyers may experience increased costs of capital or difficulties in obtaining capital. These events in the credit markets have also had an adverse effect on other financial markets in the United States, which may make it more difficult or costly for us to raise capital through the issuance of our common shares or preferred shares. These disruptions in the financial markets may have other adverse effects on us or the economy in general.
We also have interest rate swap agreements directly and through our investment in Lex-Win Concord and have a direct forward equity commitment. The counterparties of these arrangements are major financial institutions; however, we are exposed to credit risk in the event of non-performance by the counterparties. In addition, we may be required to make additional prepayments pursuant to our forward equity commitment.
We have engaged and may engage in hedging transactions that may limit gains or result in losses.
We have used derivatives to hedge certain of our liabilities and this has certain risks, including losses on a hedge position, which have in the past and may in the future reduce the return on our investments and such losses may exceed the amount invested in such instruments. In addition, counterparties to a hedging arrangement could default on their obligations. We may have to pay certain costs, such as transaction fees or breakage costs, related to hedging transactions.
We face risks associated with refinancings.
A significant number of our properties, as well as corporate-level borrowings, are subject to mortgage or other secured notes with balloon payments due at maturity. As of December 31, 2009, the consolidated scheduled balloon payments, for the next five calendar years, are as follows:
Year | | Non-Recourse
Property-Specific
Balloon Payments
| | | Corporate Recourse
Balloon Payments
| |
2010 | | $ | 106.0 million | | | $ | — | |
2011 | | $ | 85.2 million | | | $ | 171.3 million | |
2012 | | $ | 191.0 million | | | $ | 87.7 million | |
2013 | | $ | 234.9 million | | | $ | 60.7 million | |
2014 | | $ | 233.6 million | | | $ | — | |
Our ability to make the scheduled balloon payments will depend upon our cash balances, the amount available under our secured credit facility and our ability either to refinance the related mortgage debt or to sell the related property. If we are unable to refinance or sell the related property, we may convey the property to the lender through foreclosure or the special purpose entity that owns title to the property may declare bankruptcy. However, the failure to pay the balloon payment may strain relationships with our lenders.
Certain of our properties are cross-collateralized, and certain of our indebtedness is cross-defaulted.
As of December 31, 2009, the mortgages on two sets of two properties, one set of four properties and one set of three properties are cross-collateralized. In addition, (1) our credit facility is secured by a borrowing base of interests in 75 properties as of December 31, 2009, (2) our $45.0 million original principal amount secured term loan (of which $35.7 million was outstanding at December 31, 2009) is secured by a borrowing base of interests in certain properties and (3) our $25.0 million secured term loan is secured by interests in three properties. To the extent that any of our properties are cross-collateralized, any default by us under the mortgage note relating to one property will result in a default under the financing arrangements relating to any other property that also provides security for that mortgage note or is cross-collateralized with such mortgage note.
In addition, our secured credit facility, secured term loans, 5.45% Exchangeable Guaranteed Notes and 6.00% Convertible Guaranteed Notes (only with respect to recourse indebtedness) contain cross-default provisions, which may be triggered if we default on indebtedness in excess of certain thresholds.
We face possible liability relating to environmental matters.
Under various federal, state and local environmental laws, statutes, ordinances, rules and regulations, as an owner of real property, we may be liable for the costs of removal or remediation of certain hazardous or toxic substances at, on, in or under our properties as well as certain other potential costs relating to hazardous or toxic substances. These liabilities may include government fines and penalties and damages for injuries to persons and adjacent property. These laws may impose liability without regard to whether we knew of, or were responsible for, the presence or disposal of those substances. This liability may be imposed on us in connection with the activities of an operator of, or tenant at, the property. The cost of any required remediation, removal, fines or personal or property damages and our liability therefore could exceed the value of the property and/or our aggregate assets. In addition, the presence of those substances, or the failure to properly dispose of or remove those substances, may adversely affect our ability to sell or rent that property or to borrow using that property as collateral, which, in turn, would reduce our revenues and ability to make distributions.
A property can also be adversely affected either through physical contamination or by virtue of an adverse effect upon value attributable to the migration of hazardous or toxic substances, or other contaminants that have or may have emanated from other properties. Although our tenants are primarily responsible for any environmental damages and claims related to the leased premises, in the event of the bankruptcy or inability of any of our tenants to satisfy any obligations with respect to the property leased to that tenant, we may be required to satisfy such obligations. In addition, we may be held directly liable for any such damages or claims irrespective of the provisions of any lease.
From time to time, in connection with the conduct of our business, we authorize the preparation of Phase I environmental reports and, when necessary, Phase II environmental reports, with respect to our properties. Based upon these environmental reports and our ongoing review of our properties, as of the date of this Annual Report, we are not aware of any environmental condition with respect to any of our properties that we believe would be reasonably likely to have a material adverse effect on us.
There can be no assurance, however, that the environmental reports will reveal all environmental conditions at our properties or that the following will not expose us to material liability in the future:
· the discovery of previously unknown environmental conditions;
· changes in law;
· activities of tenants; or
·activities relating to properties in the vicinity of our properties.
Changes in laws increasing the potential liability for environmental conditions existing on properties or increasing the restrictions on discharges or other conditions may result in significant unanticipated expenditures or may otherwise adversely affect the operations of our tenants, which could adversely affect our financial condition or results of operations.
Uninsured losses or a loss in excess of insured limits could adversely affect our financial condition.
We carry comprehensive liability, fire, extended coverage and rent loss insurance on most of our properties, with policy specifications and insured limits that we believe are customary for similar properties. However, with respect to those properties where the leases do not provide for abatement of rent under any circumstances, we generally do not maintain rent loss insurance. In addition, there are certain types of losses, such as losses resulting from wars, terrorism or certain acts of God, that generally are not insured because they are either uninsurable or not economically insurable. Should an uninsured loss or a loss in excess of insured limits occur, we could lose capital invested in a property as well as the anticipated future revenues from a property, while remaining obligated for any mortgage indebtedness or other financial obligations related to the property. Any loss of these types would adversely affect our financial condition.
Future terrorist attacks and the on-going military conflicts could have a material adverse effect on general economic conditions, consumer confidence and market liquidity.
The types of recent terrorist attacks and on-going military conflicts may affect interest rates, among other things. An increase in interest rates may increase our costs of borrowing, leading to a reduction in our earnings. These types of terrorist acts could also result in significant damages to, or loss of, our properties.
We and our tenants may be unable to obtain adequate insurance coverage on acceptable economic terms for losses resulting from acts of terrorism. Our lenders may require that we carry terrorism insurance even if we do not believe this insurance is necessary or cost effective. We may also be prohibited under the applicable lease from passing all or a portion of the cost of such insurance through to the tenant. Should an act of terrorism result in an uninsured loss or a loss in excess of insured limits, we could lose capital invested in a property as well as the anticipated future revenues from a property, while remaining obligated for any mortgage indebtedness or other financial obligations related to the property. Any loss of these types would adversely affect our financial condition.
Competition may adversely affect our ability to purchase properties.
There are numerous commercial developers, real estate companies, financial institutions and other investors with greater financial resources than we have that compete with us in seeking properties for acquisition and tenants who will lease space in our properties. Due to our focus on net-lease properties located throughout the United States, and because most competitors are locally and/or regionally focused, we do not encounter the same competitors in each market. Our competitors include other REITs, financial institutions, insurance companies, pension funds, private companies and individuals. This competition may result in a higher cost for properties that we wish to purchase or impact our ability to grow.
Our failure to maintain effective internal controls could have a material adverse effect on our business, operating results and share price.
Section 404 of the Sarbanes-Oxley Act of 2002 requires annual management assessments of the effectiveness of our internal controls over financial reporting. If we fail to maintain the adequacy of our internal controls, as such standards may be modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and to maintain our qualification as a REIT and are important to helping prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, our REIT qualification could be jeopardized, investors could lose confidence in our reported financial information and the trading price of our shares could drop significantly.
We may have limited control over our co-investment programs and joint venture investments.
Our co-investment programs and joint venture investments may involve risks not otherwise present for investments made solely by us, including the possibility that our partner might, at any time, become bankrupt, have different interests or goals than we do, or take action contrary to our instructions, requests, policies or objectives, including our policy with respect to maintaining our qualification as a REIT. Other risks of co-investment programs and joint venture investments include impasse on decisions, such as a sale, because neither we nor our partner has full control over the co-investment programs or joint venture. Also, there is no limitation under our organizational documents as to the amount of funds that may be invested in co-investment programs and joint ventures.
One of our co-investment programs, Lex-Win Concord, is owned equally by us and Winthrop. This co-investment program is managed by the members. Material actions taken by Lex-Win Concord require the consent of each of us and Winthrop. Accordingly, Lex-Win Concord may not take certain actions or invest in certain assets even if we believe it to be in its best interest. Michael L. Ashner, our former Executive Chairman and Director of Strategic Acquisitions is also the Chairman and Chief Executive Officer of each of Winthrop and WRP Sub-Management LLC, the administrative manager of Lex-Win Concord.
Another co-investment program, NLS, is managed by an Executive Committee comprised of three persons appointed by us and two persons appointed by our partner. With few exceptions, the vote of four members of the Executive Committee is required to conduct business. Accordingly, we do not control the business decisions of this co-investment.
Certain of our trustees and officers may face conflicts of interest with respect to sales and refinancings.
E. Robert Roskind, our Chairman, beneficially owns a significant number of OP units of our operating partnerships, and as a result, may face different and more adverse tax consequences than our other shareholders will if we sell certain properties or reduce mortgage indebtedness on certain properties. Our Chairman may, therefore, have different objectives than our other shareholders regarding the appropriate pricing and timing of any sale of such properties or reduction of mortgage debt.
Accordingly, there may be instances in which we may not sell a property or pay down the debt on a property even though doing so would be advantageous to our other shareholders. In the event of an appearance of a conflict of interest, the conflicted trustee or officer must recuse himself or herself from any decision making or seek a waiver of our Code of Business Conduct and Ethics.
Our ability to change our portfolio is limited because real estate investments are illiquid.
Equity investments in real estate are relatively illiquid and, therefore, our ability to change our portfolio promptly in response to changed conditions will be limited. Our Board of Trustees may establish investment criteria or limitations as it deems appropriate, but currently does not limit the number of properties in which we may seek to invest or on the concentration of investments in any one geographic region. We could change our investment, disposition and financing policies without a vote of our shareholders.
There can be no assurance that we will remain qualified as a REIT for federal income tax purposes.
We believe that we have met the requirements for qualification as a REIT for federal income tax purposes beginning with our taxable year ended December 31, 1993, and we intend to continue to meet these requirements in the future. However, qualification as a REIT involves the application of highly technical and complex provisions of the Code, for which there are only limited judicial or administrative interpretations. No assurance can be given that we have qualified or will remain qualified as a REIT. The Code provisions and income tax regulations applicable to REITs are more complex than those applicable to corporations. The determination of various factual matters and circumstances not entirely within our control may affect our ability to continue to qualify as a REIT. In addition, no assurance can be given that legislation, regulations, administrative interpretations or court decisions will not significantly change the requirements for qualification as a REIT or the federal income tax consequences of such qualification. If we do not qualify as a REIT, we would not be allowed a deduction for distributions to shareholders in computing our net taxable income. In addition, our income would be subject to tax at the regular corporate rates. We also could be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost. Cash available for distribution to our shareholders would be significantly reduced for each year in which we do not qualify as a REIT. In that event, we would not be required to continue to make distributions. Although we currently intend to continue to qualify as a REIT, it is possible that future economic, market, legal, tax or other considerations may cause us, without the consent of the shareholders, to revoke the REIT election or to otherwise take action that would result in disqualification.
We may be subject to the REIT prohibited transactions tax, which could result in significant U.S. federal income tax liability to us.
We previously announced a restructuring of our investment strategy, focusing on core and core plus assets. A REIT will incur a 100% tax on the net income from a prohibited transaction. Generally, a prohibited transaction includes a sale or disposition of property held primarily for sale to customers in the ordinary course of a trade or business. While we believe that the dispositions of our assets pursuant to the restructuring of our investment strategy should not be treated as prohibited transactions, whether a particular sale will be treated as a prohibited transaction depends on the underlying facts and circumstances. We have not sought and do not intend to seek a ruling from the Internal Revenue Service regarding any dispositions. Accordingly, there can be no assurance that our dispositions of such assets will not be subject to the prohibited transactions tax. If all or a significant portion of those dispositions were treated as prohibited transactions, we would incur a significant U.S. federal income tax liability, which could have a material adverse effect on our results of operations.
Distribution requirements imposed by law limit our flexibility.
To maintain our status as a REIT for federal income tax purposes, we are generally required to distribute to our shareholders at least 90% of our taxable income for that calendar year. Our taxable income is determined without regard to any deduction for dividends paid and by excluding net capital gains. To the extent that we satisfy the distribution requirement but distribute less than 100% of our taxable income, we will be subject to federal corporate income tax on our undistributed income. In addition, we will incur a 4% nondeductible excise tax on the amount, if any, by which our distributions in any year are less than the sum of (i) 85% of our ordinary income for that year, (ii) 95% of our capital gain net income for that year and (iii) 100% of our undistributed taxable income from prior years. We intend to continue to make distributions to our shareholders to comply with the distribution requirements of the Code and to reduce exposure to federal income and nondeductible excise taxes. Differences in timing between the receipt of income and the payment of expenses in determining our taxable income and the effect of required debt amortization payments could require us to borrow funds on a short-term basis in order to meet the distribution requirements that are necessary to achieve the tax benefits associated with qualifying as a REIT.
Certain limitations limit a third party’s ability to acquire us or effectuate a change in our control.
Limitations imposed to protect our REIT status. In order to protect us against the loss of our REIT status, among other restrictions, our declaration of trust limits any shareholder from owning more than 9.8% in value of our outstanding equity shares, defined as common shares or preferred shares, subject to certain exceptions. The ownership limit may have the effect of precluding acquisition of control of us.
Severance payments under employment agreements. Substantial termination payments may be required to be paid under the provisions of employment agreements with certain of our executives upon a change of control. We have entered into employment agreements with four of our executive officers which provide that, upon the occurrence of a change in control of us (including a change in ownership of more than 50% of the total combined voting power of our outstanding securities, the sale of all or substantially all of our assets, dissolution, the acquisition, except from us, of 20% or more of our voting shares or a change in the majority of our Board of Trustees), those executive officers may be entitled to severance benefits based on their current annual base salaries and trailing average of recent annual cash bonuses as defined in the employment agreements. Accordingly, these payments may discourage a third party from acquiring us.
Our ability to issue additional shares. Our amended and restated declaration of trust authorizes our Board of Trustees to cause us to issue shares of any class, including preferred shares, without shareholder approval. Our Board of Trustees is able to establish the preferences and rights of any such class or series of additional shares, which could have the effect of delaying or preventing someone from taking control of us, even if a change in control were in shareholders’ best interests. At December 31, 2009, in addition to common shares, we had outstanding 3,160,000 Series B Preferred Shares that we issued in June 2003, 2,095,200 Series C Preferred Shares, that we issued in December 2004 and January 2005, and 6,200,000 Series D Preferred Shares, that we issued in February 2007. Our Series B, Series C and Series D Preferred Shares include provisions that may deter a change of control. The establishment and issuance of shares of our existing series of preferred shares or a future class or series of shares could make a change of control of us more difficult.
Maryland Business Combination Act. The Maryland General Corporation Law, as applicable to Maryland REITs, establishes special restrictions against “business combinations” between a Maryland REIT and “interested shareholders” or their affiliates unless an exemption is applicable. An interested shareholder includes a person who beneficially owns, and an affiliate or associate of the trust who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of our then-outstanding voting shares, but a person is not an interested shareholder if the Board of Trustees approved in advance the transaction by which he otherwise would have become an interested shareholder. Among other things, Maryland law prohibits (for a period of five years) a merger and certain other transactions between a Maryland REIT and an interested shareholder, or an affiliate of an interested shareholder. The five-year period runs from the most recent date on which the interested shareholder became an interested shareholder. Thereafter, any such business combination must be recommended by the Board of Trustees and approved by two super-majority shareholder votes unless, among other conditions, the common shareholders receive a minimum price for their shares and the consideration is received in cash or in the same form as previously paid by the interested shareholder for its shares. The statute permits various exemptions from its provisions, including business combinations that are exempted by the Board of Trustees prior to the time that the interested shareholder becomes an interested shareholder. The business combination statute could have the effect of discouraging offers to acquire us and of increasing the difficulty of consummating any such offers, even if such acquisition would be in shareholders’ best interests. In connection with the Newkirk Merger, Vornado Realty Trust, which we refer to as Vornado, was granted a limited exemption from the definition of “interested shareholder.”
Maryland Control Share Acquisition Act. Maryland law provides that “control shares” of a Maryland REIT acquired in a “control share acquisition” shall have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter under the Maryland Control Share Acquisition Act. Shares owned by the acquiror, by our officers or by employees who are our trustees are excluded from shares entitled to vote on the matter. “Control Shares” means shares that, if aggregated with all other shares previously acquired by the acquiror or in respect of which the acquiror is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquiror to exercise voting power in electing trustees within one of the following ranges of voting power: one-tenth or more but less than one-third, one-third or more but less than a majority or a majority or more of all voting power. Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained shareholder approval. A “control share acquisition” means the acquisition of control shares, subject to certain exceptions. If voting rights of control shares acquired in a control share acquisition are not approved at a shareholders’ meeting or if the acquiring person does not deliver an acquiring person statement as required under the statute, then, subject to certain conditions and limitations, the issuer may redeem any or all of the control shares for fair value. If voting rights of such control shares are approved at a shareholders’ meeting and the acquiror becomes entitled to vote a majority of the shares entitled to vote, all other shareholders may exercise appraisal rights. Any control shares acquired in a control share acquisition which are not exempt under our by-laws will be subject to the Maryland Control Share Acquisition Act. Our amended and restated by-laws contain a provision exempting from the Maryland Control Share Acquisition Act any and all acquisitions by any person of our shares. We cannot assure you that this provision will not be amended or eliminated at any time in the future.
Limits on ownership of our capital shares may have the effect of delaying, deferring or preventing someone from taking control of us.
For us to qualify as a REIT for federal income tax purposes, among other requirements, not more than 50% of the value of our outstanding capital shares may be owned, directly or indirectly, by five or fewer individuals (as defined for federal income tax purposes to include certain entities) during the last half of each taxable year, and these capital shares must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable year (in each case, other than the first such year for which a REIT election is made). Our amended and restated declaration of trust includes certain restrictions regarding transfers of our capital shares and ownership limits.
Actual or constructive ownership of our capital shares in excess of the share ownership limits contained in our amended and restated declaration of trust would cause the violative transfer or ownership to be void or cause the shares to be transferred to a charitable trust and then sold to a person or entity who can own the shares without violating these limits. As a result, if a violative transfer were made, the recipient of the shares would not acquire any economic or voting rights attributable to the transferred shares. Additionally, the constructive ownership rules for these limits are complex, and groups of related individuals or entities may be deemed a single owner and consequently in violation of the share ownership limits.
However, these restrictions and limits may not be adequate in all cases to prevent the transfer of our capital shares in violation of the ownership limitations. The ownership limits discussed above may have the effect of delaying, deferring or preventing someone from taking control of us, even though a change of control could involve a premium price for the common shares or otherwise be in shareholders’ best interests.
Legislative or regulatory tax changes could have an adverse effect on us.
At any time, the federal income tax laws governing REITs or the administrative interpretations of those laws may be amended. Any of those new laws or interpretations may take effect retroactively and could adversely affect us or you as a shareholder. REIT dividends generally are not eligible for the reduced rates currently applicable to certain corporate dividends (unless attributable to dividends from taxable REIT subsidiaries and otherwise eligible for such rates). As a result, investment in non-REIT corporations may be relatively more attractive than investment in REITs. This could adversely affect the market price of our shares.
Our Board of Trustees may change our investment policy without shareholders’ approval.
Subject to our fundamental investment policy to maintain our qualification as a REIT, our Board of Trustees will determine its investment and financing policies, growth strategy and its debt, capitalization, distribution, acquisition, disposition and operating policies.
Our Board of Trustees may revise or amend these strategies and policies at any time without a vote by shareholders. Accordingly, shareholders’ control over changes in our strategies and policies is limited to the election of trustees, and changes made by our Board of Trustees may not serve the interests of shareholders and could adversely affect our financial condition or results of operations, including our ability to distribute cash to shareholders or qualify as a REIT.
Our inability to carry out our growth strategy could adversely affect our financial condition and results of operations.
Our growth strategy is based on the acquisition and development of additional properties and related assets, including acquisitions of large portfolios and real estate companies and acquisitions through co-investment programs and joint ventures. In the context of our business plan, “development” generally means an expansion or renovation of an existing property or the financing and/or acquisition of a newly constructed build-to-suit property. We may provide a developer with either a combination of (1) financing for construction of a build-to-suit property, or (2) a commitment to acquire a property upon completion of construction of a build-to-suit property and commencement of rent from the tenant or withtenant. In addition, we may acquire a first mortgage which is satisfied upon conveyanceproperty subject to a lease and engage a developer to complete construction of a fully constructed and leased facility.build-to-suit property as required by the lease. Our plan to grow through the acquisition and development of new properties could be adversely affected by trends in the real estate and financing businesses. The consummation of any future acquisitions will be subject to satisfactory completion of an extensive valuation analysis and due diligence review and to the negotiation of definitive documentation. Our ability to implement our strategy may be impeded because we may have difficulty finding new properties and investments at attractive prices that meet our investment criteria, negotiating with new or existing tenants or securing acceptable financing. If we are unable to carry out our strategy, our financial condition and results of operations could be adversely affected. Acquisitions of additional properties entail the risk that investments will fail to perform in accordance with expectations, including operating and leasing expectations. Redevelopment and new project development are subject to numerous risks, including risks of construction delays, cost overruns or force majeure events that may increase project costs, new project commencement risks such as the receipt of zoning, occupancy and other required governmental approvals and permits, and the incurrence of development costs in connection with projects that are not pursued to completion.
Some of our acquisitions and developments may be financed using the proceeds of periodic equity or debt offerings, lines of credit or other forms of secured or unsecured financing that may result in a risk that permanent financing for newly acquired projects might not be available or would be available only on disadvantageous terms. If permanent debt or equity financing is not available on acceptable terms to refinance acquisitions undertaken without permanent financing, further acquisitions may be curtailed, or cash available for distribution to shareholders may be adversely affected.
Acquisition activities may not produce expected results and may be affected by outside factors.
We intend to continue to acquire core properties. Acquisitions of commercial properties entail certain risks, such as (1) occupancy, rental rates and expenses may differ from estimates, (2) the properties may become subject to environmental liabilities that we were unaware of at the time we acquired the property despite any environmental testing, (3) we may have difficulty obtaining financing on acceptable terms or paying the operating expenses and debt service associated with acquired properties prior to sufficient occupancy and (4) projected exit strategies may not come to fruition due to a variety of factors such as market conditions at time of dispositions.
We may not be successful in identifying suitable real estate properties or other assets that meet our acquisition criteria, or we may fail to complete acquisitions or investments on satisfactory terms. Failure to identify or complete acquisitions could slow our growth, which could, in turn, have a material adverse effect on our financial condition and results of operations.
We face certain risks associated with our build-to-suit activities.
From time to time, we engage in, or provide capital to developers who are engaged in, build-to-suit activities. We face uncertainties, associated with a developer's performance and timely completion of a project. If a developer fails to perform, we may resort to legal action to compel performance, remove the developer or rescind the purchase or construction contract. A developer's performance may also be affected or delayed by conditions beyond the developer's control. We may incur additional risks when we make periodic progress payments or other advances to developers before completion of construction. These and other factors can result in increased costs of a project or loss of our investment. We also rely on third-party construction managers and/or engineers to monitor the construction activities.
We rely on rental income and expense projections and estimates of the fair market value of a property upon completion of construction when agreeing upon a purchase price at the time we acquire the property, which may be up to two years prior to the estimated date of completion. If our projections are inaccurate, we may pay more than the fair value of a property.
Our multi-tenant properties expose us to additional risks.
Our multi-tenant properties involve risks not typically encountered in real estate properties which are operated by a single tenant. The ownership of multi-tenant properties could expose us to the risk that a sufficient number of suitable tenants may not be found to enable the property to operate profitably and provide a return to us. This risk may be compounded by the failure of existing tenants to satisfy their obligations due to various factors, including the current economic crisis. These risks, in turn, could cause a material adverse impact to our results of operations and business.
Multi-tenant properties are also subject to tenant turnover and fluctuation in occupancy rates, which could affect our operating results. Multi-tenant properties also expose us to the risk of potential "CAM slippage," which may occur when the actual cost of taxes, insurance and maintenance at the property exceeds the operating expenses paid by tenants.
We are highly leveraged, which increases risk of default on our obligations and debt service requirements.
We are more leveraged than certain of our competitors. We have incurred, and may continue to incur, direct and indirect indebtedness in furtherance of our activities. Neither our amended and restated declaration of trust nor any policy statement formally adopted by our Board of Trustees limits either the total amount of indebtedness or the specified percentage of indebtedness that we may incur, and accordingly, we could become even more highly leveraged. High levels of leverage may result in an increased risk of default on our obligations and in an increase in debt service requirements, which could adversely affect our financial condition, results of operations and our ability to pay distributions.
Market interest rates could have an adverse effect on our borrowing costs, profitability and our share price.
We have exposure to market risks relating to increases in interest rates due to our variable-rate debt. An increase in interest rates may increase our costs of borrowing on existing variable-rate indebtedness, leading to a reduction in our earnings. As of December 31, 2011, we had no amounts outstanding in consolidated variable-rate indebtedness that were not subject to an interest-rate swap agreement. However, borrowings under our new secured revolving credit facility and new secured term loan are subject to variable rates. Effective February 1, 2012, we entered into an interest-rate swap agreement to fix LIBOR at 1.512% on $108.0 million of borrowings under the new secured term loan. The level of our variable-rate indebtedness, along with the interest rate associated with such variable-rate indebtedness, may change in the future and materially affect our interest costs and earnings. In addition, our interest costs on our fixed-rate indebtedness may increase if we are required to refinance our fixed-rate indebtedness upon maturity at higher interest rates.
Furthermore, the public valuation of our common shares is related primarily to the earnings that we derive from rental income with respect to the properties in which we have an interest and not from the underlying appraised value of the properties themselves. As a result, interest rate fluctuations and capital market conditions can affect the market value of our common shares. For instance, if interest rates rise, the market price of our common shares may decrease because potential investors seeking a higher dividend yield than they would receive from our common shares may sell our common shares in favor of higher rate interest-bearing securities.
Continued disruptions in the financial markets could affect our ability to obtain debt financing on reasonable terms and have other adverse effects on us.
Since 2008, the United States credit markets have experienced significant dislocations and liquidity disruptions which have caused the spreads on prospective debt financings to widen considerably. These circumstances have materially impacted liquidity in the debt markets, making financing terms for borrowers less attractive, and in certain cases have resulted in the unavailability of certain types of debt financing. Continued uncertainty in the credit markets may negatively impact our ability to access additional debt financing on reasonable terms, which may negatively affect our ability to make acquisitions. A prolonged downturn in the credit markets may cause us to seek alternative sources of potentially less attractive financing and may require us to adjust our business plan accordingly. In addition, these factors may make it more difficult for us to sell properties or may adversely affect the price we receive for properties that we do sell, as prospective buyers may experience increased costs of capital or difficulties in obtaining capital. These events in the credit markets have also had an adverse effect on other financial markets in the United States, which may make it more difficult or costly for us to raise capital through the issuance of our common shares or preferred shares. These disruptions in the financial markets may have other adverse effects on us or the economy in general.
In addition to the interest rate swap agreement on $108.0 million of borrowing under our new secured term loan, we have interest rate swap agreements through our investment in CDH CDO. The counterparties of these arrangements are major financial institutions; however, we are exposed to credit risk in the event of non-performance by the counterparties.
The trading price of our common shares has been, and may continue to be, subject to significant fluctuations.
Since January 1, 2008, the closing sale price of our common shares on the New York Stock Exchange (composite) has ranged from $17.22 to $2.01 per share. The market price of our common shares may fluctuate in response to company-specific and securities market events and developments including those described in this Annual Report. In addition, the amount of our indebtedness may impact investor demand for our common shares, which could have a material effect on the market price of our common shares.
We have engaged and may engage in hedging transactions that may limit gains or result in losses.
We have used derivatives to hedge certain of our liabilities. This has certain risks, including losses on a hedge position, which have in the past and may in the future reduce the return on our investments. Such losses may exceed the amount invested in such instruments. In addition, counterparties to a hedging arrangement could default on their obligations. We may have to pay certain costs, such as transaction fees or breakage costs, related to hedging transactions.
We face risks associated with refinancings.
A significant number of the properties in which we have an interest, as well as corporate-level borrowings, are subject to mortgage or other secured notes with balloon payments due at maturity.
As of December 31, 2011, the consolidated scheduled balloon payments, for the next five calendar years, are as follows:
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| | | | | | | | |
| Year | | Non-Recourse Property-Specific Balloon Payments | | Corporate Recourse Balloon Payments(3) |
| 2012 (1) | | $ | 147.9 | million | | $ | 62.2 | million |
| 2013 (2) | | $ | 234.9 | million | | $ | 60.6 | million |
| 2014 | | $ | 229.1 | million | | $ | — |
|
| 2015 | | $ | 268.8 | million | | $ | — |
|
| 2016 | | $ | 121.9 | million | | $ | — |
|
(1) Includes 5.45% Exchangeable Guaranteed Notes due in January 2027 which were repurchased and retired in January 2012 pursuant to a holder repurchase option.
(2) Includes corporate recourse balloon payments satisfied subsequent to December 31, 2011.
(3) Balances were retired with borrowings from our secured term loan and secured revolving credit facility obtained in 2012.
The ability to make the scheduled balloon payment on a non-recourse mortgage note will depend upon (1) in the event we determine to contribute capital, our cash balances and the amount available under our secured term loan and secured revolving credit facility and (2) the property owner subsidiary's ability either to refinance the related mortgage debt or to sell the related property. If the property owner subsidiary is unable to refinance or sell the related property, the property may be conveyed to the lender through foreclosure or the property owner subsidiary may declare bankruptcy. The failure to pay the balloon payment may strain relationships with lenders.
We face risks associated with returning properties to lenders.
A significant number of the properties in which we have an interest are subject to non-recourse mortgages, which generally provide that a lender can only look to the property in the event of a default. During January 2012, a lender foreclosed on a vacant property in Tulsa, Oklahoma, in which we had an interest and during 2009, lenders foreclosed on vacant properties located in Richmond, Virginia and Plymouth, Michigan, in which we had an interest, because the property owner subsidiaries were unable to pay the required debt service. In 2009, a vacant property in Houston, Texas was disposed of in the bankruptcy of the property owner subsidiary because the property owner subsidiary was unable to pay the required debt service. As a result, we lost all of our interest in these properties and any future opportunities to re-tenant these properties. The loss of a significant number of properties to foreclosure or bankruptcy could adversely affect our (1) financial condition and results of operations, (2) relationships with lenders and (3) ability to obtain additional financing in the future.
In addition, in instances not involving us, there are at least two cases in Michigan where a lender has been successful (at the trial court level in one case and at the trial court and appeals court level in the other case) in triggering a carve out to the non-recourse nature of a mortgage loan because the value of the property declined below the balance of the mortgage. While we believe this goes against the express intention of a non-recourse mortgage loan, to the extent these cases are not overturned or superseded by legislation, the ability of our property owner subsidiaries to return properties to lenders may be inhibited and we may be liable for all or a portion of such losses.
Certain of our properties are cross-collateralized, and certain of our indebtedness is cross-defaulted.
As of December 31, 2011, the mortgages on three sets of two properties, one set of three properties and one set of four properties are cross-collateralized. In addition, (1) our new secured revolving credit facility and our new secured term loan are secured by ownership interest pledges in a borrowing base of properties, (2) our $45.0 million original principal amount secured term loan (of which $35.6 million was outstanding at December 31, 2011 and all of which was satisfied in January 2012) was secured by pledges of interests in a borrowing base of interests in certain properties and (3) our $25.0 million secured term loan (all of which was satisfied in January 2012) was secured by pledges of interests in three properties. To the extent that any of the properties in which we have an interest are cross-collateralized, any default by the property owner subsidiary under the mortgage note relating to one property will result in a default under the financing arrangements relating to any other property that also provides security for that mortgage note or is cross-collateralized with such mortgage note.
In addition, our new secured revolving credit facility, new secured term loan, and 6.00% Convertible Guaranteed Notes contain cross-default provisions, which may be triggered if we default on indebtedness in excess of certain thresholds.
We face possible liability relating to environmental matters.
Under various federal, state and local environmental laws, statutes, ordinances, rules and regulations, as an owner of real property, our property owner subsidiaries may be liable for the costs of removal or remediation of certain hazardous or toxic substances at, on, in or under the properties in which we have an interest as well as certain other potential costs relating to hazardous or toxic substances. These liabilities may include government fines and penalties and damages for injuries to persons and adjacent property. These laws may impose liability without regard to whether we knew of, or were responsible for, the presence or disposal of those substances. This liability may be imposed on our property owner subsidiaries in connection with the activities of an operator of, or tenant at, the property. The cost of any required remediation, removal, fines or personal or property damages and our liability therefore could be significant and could exceed the value of the property and/or our aggregate assets. In addition, the presence of those substances, or the failure to properly dispose of or remove those substances, may adversely affect a property owner subsidiary's ability to sell or rent that property or to borrow using that property as collateral, which, in turn, would reduce our revenues and ability to make distributions.
A property can also be adversely affected either through physical contamination or by virtue of an adverse effect upon value attributable to the migration of hazardous or toxic substances, or other contaminants that have or may have emanated from other properties. Although the tenants of the properties in which we have an interest are primarily responsible for any environmental damages and claims related to the leased premises, in the event of the bankruptcy or inability of any of the tenants of the properties in which we have an interest to satisfy any obligations with respect to the property leased to that tenant, our property owner subsidiary may be required to satisfy such obligations. In addition, we may be held directly liable for any such damages or claims irrespective of the provisions of any lease.
From time to time, in connection with the conduct of our business, our property owner subsidiaries authorize the preparation of Phase I environmental reports and, when necessary, Phase II environmental reports, with respect to their properties.
There can be no assurance that these environmental reports will reveal all environmental conditions at the properties in which we have an interest or that the following will not expose us to material liability in the future:
•the discovery of previously unknown environmental conditions;
•changes in law;
•activities of tenants; or
•activities relating to properties in the vicinity of the properties in which we have an interest.
Changes in laws increasing the potential liability for environmental conditions existing on properties or increasing the restrictions on discharges or other conditions may result in significant unanticipated expenditures or may otherwise adversely affect the operations of the tenants of the properties in which we have an interest, which could adversely affect our financial condition or results of operations.
From time to time we are involved in legal proceedings arising in the ordinary course of our business.
Legal proceedings arising in the ordinary course of our business require time and effort. The outcomes of legal proceedings are subject to significant uncertainty. Certain legal proceedings that we are currently involved in are described in note 19 to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report. In the event that we are unsuccessful defending or prosecuting these proceedings, as applicable, we may incur a judgment or fail to realize an award of damages that could have an adverse effect on our financial condition.
Uninsured losses or a loss in excess of insured limits could adversely affect our financial condition.
We carry comprehensive liability, fire, extended coverage and rent loss insurance on most of the properties in which we have an interest, with policy specifications and insured limits that we believe are customary for similar properties. However, with respect to those properties where the leases do not provide for abatement of rent under any circumstances, we generally do not maintain rent loss insurance. In addition, certain of our leases require the tenant to maintain all insurance on the property, and the failure of the tenant to maintain the proper insurance could adversely impact our investment in a property in the event of a loss. Furthermore, there are certain types of losses, such as losses resulting from wars, terrorism or certain acts of God, that generally are not insured because they are either uninsurable or not economically insurable. Should an uninsured loss or a loss in excess of insured limits occur, we could lose capital invested in a property as well as the anticipated future revenues from a property, while remaining obligated for any mortgage indebtedness or other financial obligations related to the property. Any loss of these types could adversely affect our financial condition and results of operations.
Future terrorist attacks, military conflicts and unrest in the Middle East could have a material adverse effect on general economic conditions, consumer confidence and market liquidity.
The types of terrorist attacks since 2001, on-going and future military conflicts and the continued unrest in the Middle East may affect commodity prices and interest rates, among other things. An increase in interest rates may increase our costs of borrowing, leading to a reduction in our earnings. The increase in the price of oil will cause an increase in our operating costs, which may not be reimbursed by our tenants. Also, terrorist acts could also result in significant damages to, or loss of, our properties or the value thereof.
We and the tenants of the properties in which we have an interest may be unable to obtain adequate insurance coverage on acceptable economic terms for losses resulting from acts of terrorism. Our lenders may require that we carry terrorism insurance even if we do not believe this insurance is necessary or cost effective. We may also be prohibited under the applicable lease from passing all or a portion of the cost of such insurance through to the tenant. Should an act of terrorism result in an uninsured loss or a loss in excess of insured limits, we could lose capital invested in a property as well as the anticipated future revenues from a property, while remaining obligated for any mortgage indebtedness or other financial obligations related to the property. Any loss of these types could adversely affect our financial condition.
Competition may adversely affect our ability to purchase properties.
There are numerous commercial developers, real estate companies, financial institutions and other investors with greater financial and other resources than we have that compete with us in seeking investments and tenants. Due to our focus on net-lease properties located throughout the United States, and because most competitors are often locally and/or regionally focused, we do not always encounter the same competitors in each market. Our competitors include other REITs, financial institutions, insurance companies, pension funds, private companies and individuals. This competition may result in a higher cost for properties and lower returns and impact our ability to grow.
Our failure to maintain effective internal control could have a material adverse effect on our business, operating results and share price.
Section 404 of the Sarbanes-Oxley Act of 2002 requires annual management assessments of the effectiveness of our internal control over financial reporting. If we fail to maintain the adequacy of our internal control, as such standards may be modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. Moreover, effective internal control, particularly related to revenue recognition, is necessary for us to produce reliable financial reports and to maintain our qualification as a REIT and is important in helping prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, our REIT qualification could be jeopardized, investors could lose confidence in our reported financial information and the trading price of our shares could drop significantly.
We may have limited control over our co-investment programs and joint venture investments.
Our co-investment programs and joint venture investments involve risks not otherwise present for investments made solely by us, including the possibility that our partner might, at any time, become bankrupt, have different interests or goals than we do, or take action contrary to our expectations, its previous instructions or our instructions, requests, policies or objectives, including our policy with respect to maintaining our qualification as a REIT. Other risks of co-investment program and joint venture investments include impasse on decisions, such as a sale, because neither we nor our partner has full control over the co-investment program or joint venture. Also, there is no limitation under our organizational documents as to the amount of funds that may be invested in co-investment programs and joint ventures.
Two of our co-investment programs, Concord and CDH CDO, are owned equally by our subsidiaries, Winthrop and Inland Concord. Material actions taken by Concord and CDH CDO require the consent of each of co-investment partner. Accordingly, Concord and CDH CDO may not take certain actions or invest in certain assets even if we believe it to be in its best interest.
Another co-investment program, NLS, is managed by an Executive Committee comprised of three persons appointed by us and two persons appointed by our partner. With few exceptions, the affirmative vote of four members of the Executive Committee is required to conduct business. Accordingly, we do not control the business decisions of this co-investment program.
Certain of our trustees and officers may face conflicts of interest with respect to sales and refinancings.
E. Robert Roskind, our Chairman, beneficially owns a significant number of OP units, and as a result, may face different and more adverse tax consequences than our other shareholders will if we sell our interests in certain properties or reduce mortgage indebtedness on certain properties. Our Chairman may, therefore, have different objectives than our other shareholders regarding the appropriate pricing and timing of any sale of such properties or reduction of mortgage debt.
Accordingly, there may be instances in which we may not sell a property or pay down the debt on a property even though doing so would be advantageous to our other shareholders. In the event of an appearance of a conflict of interest, the conflicted trustee or officer is required to recuse himself or herself from any decision making or seek a waiver of our Code of Business Conduct and Ethics.
Our ability to change our portfolio is limited because real estate investments are illiquid.
Equity investments in real estate are relatively illiquid and, therefore, our ability to change our portfolio promptly in response to changed conditions is limited. Our Board of Trustees may establish investment criteria or limitations as it deems appropriate, but currently does not limit the number or type of properties in which we may seek to invest or on the concentration of investments in any one geographic region.
There can be no assurance that we will remain qualified as a REIT for federal income tax purposes.
We believe that we have met the requirements for qualification as a REIT for federal income tax purposes beginning with our taxable year ended December 31, 1993, and we intend to continue to meet these requirements in the future. However, qualification as a REIT involves the application of highly technical and complex provisions of the Code, for which there are only limited judicial or administrative interpretations. No assurance can be given that we have qualified or will remain qualified as a REIT. The Code provisions and income tax regulations applicable to REITs are more complex than those applicable to corporations. The determination of various factual matters and circumstances not entirely within our control may affect our ability to continue to qualify as a REIT. In addition, no assurance can be given that legislation, regulations, administrative interpretations or court decisions will not significantly change the requirements for qualification as a REIT or the federal income tax consequences of such qualification. If we do not qualify as a REIT, we would not be allowed a deduction for distributions to shareholders in computing our net taxable income. In addition, our income would be subject to tax at the regular corporate rates. We also could be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost. Cash available for distribution to our shareholders would be significantly reduced or suspended for each year in which we do not qualify as a REIT. In that event, we would not be required to continue to make distributions. Although we currently intend to continue to qualify as a REIT, it is possible that future economic, market, legal, tax or other considerations may cause us, without the consent of the shareholders, to revoke the REIT election or to otherwise take action that would result in disqualification.
We may be subject to the REIT prohibited transactions tax, which could result in significant U.S. federal income tax liability to us.
In 2007 we announced a restructuring of our investment strategy, focusing on core assets. A REIT will incur a 100% tax on the net income from a prohibited transaction. Generally, a prohibited transaction includes a sale or disposition of property held primarily for sale to customers in the ordinary course of a trade or business. While we believe that the dispositions of our assets pursuant to the restructuring of our investment strategy should not be treated as prohibited transactions, whether a particular sale will be treated as a prohibited transaction depends on the underlying facts and circumstances. We have not sought and do not intend to seek a ruling from the Internal Revenue Service regarding any dispositions. Accordingly, there can be no assurance that our dispositions of such assets will not be subject to the prohibited transactions tax. If all or a significant portion of those dispositions were treated as prohibited transactions, we would incur a significant U.S. federal income tax liability, which could have a material adverse effect on our financial position, results of operations and cash flows.
Distribution requirements imposed by law limit our flexibility.
To maintain our status as a REIT for federal income tax purposes, we are generally required to distribute to our shareholders at least 90% of our taxable income for that calendar year. Our taxable income is determined without regard to any deduction for dividends paid and by excluding net capital gains. To the extent that we satisfy the distribution requirement but distribute less than 100% of our taxable income, we will be subject to federal corporate income tax on our undistributed income. In addition, we will incur a 4% nondeductible excise tax on the amount, if any, by which our distributions in any year are less than the sum of (i) 85% of our ordinary income for that year, (ii) 95% of our capital gain net income for that year and (iii) 100% of our undistributed taxable income from prior years. We intend to continue to make distributions to our shareholders to comply with the distribution requirements of the Code and to reduce exposure to federal income and nondeductible excise taxes. Differences in timing between the receipt of income and the payment of expenses in determining our taxable income and the effect of required debt amortization payments could require us to borrow funds on a short-term basis in order to meet the distribution requirements that are necessary to achieve the tax benefits associated with qualifying as a REIT.
Certain limitations limit a third party's ability to acquire us or effectuate a change in our control.
Limitations imposed to protect our REIT status. In order to protect us against the loss of our REIT status, among other restrictions, our declaration of trust limits any shareholder from owning more than 9.8% in value of our outstanding equity shares, defined as common shares or preferred shares, subject to certain exceptions. These ownership limits may have the effect of precluding acquisition of control of us. Our Board of Trustees has granted limited waivers of the ownership limits to Vornado Realty, L.P., BlackRock, Inc. and Cohen & Steers Capital Management, Inc.
Severance payments under employment agreements. Substantial termination payments may be required to be paid under the provisions of employment agreements with certain of our executives upon a change of control. We have entered into employment agreements with four of our executive officers which provide that, upon the occurrence of a change in control of us (including a change in ownership of more than 50% of the total combined voting power of our outstanding securities, the sale of all or substantially all of our assets, dissolution, the acquisition, except from us, of 20% or more of our voting shares or a change in the majority of our Board of Trustees), if those executive officers are terminated without cause, as defined, those executive officers may be entitled to severance benefits based on their current annual base salaries and trailing average of recent annual cash bonuses as defined in the employment agreements. Accordingly, these payments may discourage a third party from acquiring us.
Our ability to issue additional shares. Our amended and restated declaration of trust (1) authorizes 400,000,000 common shares, 100,000,000 preferred shares and 500,000,000 excess shares and (2) authorizes our Board of Trustees to cause us to issue these shares without shareholder approval. Our Board of Trustees is able to establish the preferences and rights of any such class or series of additional shares, which could have the effect of delaying or preventing someone from taking control of us, even if a change in control were in shareholders' best interests. At December 31, 2011, in addition to common shares, we had outstanding 2,740,874 Series B Preferred Shares, 1,970,200 Series C Preferred Shares, and 6,200,000 Series D Preferred Shares. Our Series B, Series C and Series D Preferred Shares include provisions, such as increases in dividend rates or adjustments to conversion rates, that may deter a change of control. The establishment and issuance of shares of our existing series of preferred shares or a future class or series of shares could make a change of control of us more difficult.
Maryland Business Combination Act. The Maryland General Corporation Law, as applicable to Maryland REITs, establishes special restrictions against “business combinations” between a Maryland REIT and “interested shareholders” or their affiliates unless an exemption is applicable. An interested shareholder includes a person who beneficially owns, and an affiliate or associate of the trust who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of our then-outstanding voting shares, but a person is not an interested shareholder if the Board of Trustees approved in advance the transaction by which he otherwise would have become an interested shareholder, which approval may be conditioned by the Board of Trustees. Among other things, Maryland law prohibits (for a period of five years) a merger and certain other transactions between a Maryland REIT and an interested shareholder, or an affiliate of an interested shareholder. The five-year period runs from the most recent date on which the interested shareholder became an interested shareholder. Thereafter, any such business combination must be recommended by the Board of Trustees and approved by two super-majority shareholder votes unless, among other conditions, the common shareholders receive a minimum price for their shares and the consideration is received in cash or in the same form as previously paid by the interested shareholder for its shares. The statute permits various exemptions from its provisions, including business combinations that are exempted by the Board of Trustees prior to the time that the interested shareholder becomes an interested shareholder. The business combination statute could have the effect of discouraging offers to acquire us and of increasing the difficulty of consummating any such offers, even if such acquisition would be in shareholders' best interests. In connection with the Newkirk Merger, Vornado Realty Trust, which we refer to as Vornado, was granted a limited exemption from the definition of “interested shareholder.”
Maryland Control Share Acquisition Act. Maryland law provides that “control shares” of a Maryland REIT acquired in a “control share acquisition” shall have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter under the Maryland Control Share Acquisition Act. Shares owned by the acquirer, by our officers or by employees who are our trustees are excluded from shares entitled to vote on the matter. “Control Shares” means shares that, if aggregated with all other shares previously acquired by the acquirer or in respect of which the acquirer is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise voting power in electing trustees within one of the following ranges of voting power: one-tenth or more but less than one-third, one-third or more but less than a majority or a majority or more of all voting power. Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained shareholder approval. A “control share acquisition” means the acquisition of issued and outstanding control shares, subject to certain exceptions. If voting rights of control shares acquired in a control share acquisition are not approved at a shareholders' meeting or if the acquiring person does not deliver an acquiring person statement as required under the statute, then, subject to certain conditions and limitations, the issuer may redeem any or all of the control shares for fair value. If voting rights of such control shares are approved at a shareholders' meeting and the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other shareholders may exercise appraisal rights. Any control shares acquired in a control share acquisition which are not exempt under our by-laws will be subject to the Maryland Control Share Acquisition Act. Our amended and restated by-laws contain a provision exempting from the Maryland Control Share Acquisition Act any and all acquisitions by any person of our shares. We cannot assure you that this provision will not be amended or eliminated at any time in the future.
Limits on ownership of our capital shares may have the effect of delaying, deferring or preventing someone from taking control of us.
For us to qualify as a REIT for federal income tax purposes, among other requirements, not more than 50% of the value of our outstanding capital shares may be owned, directly or indirectly, by five or fewer individuals (as defined for federal income tax purposes to include certain entities) during the last half of each taxable year, and these capital shares must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable year (in each case, other than the first such year for which a REIT election is made). Our amended and restated declaration of trust includes certain restrictions regarding transfers of our capital shares and ownership limits.
Actual or constructive ownership of our capital shares in violation of the restrictions or in excess of the share ownership limits contained in our amended and restated declaration of trust would cause the violative transfer or ownership to be void or cause the shares to be transferred to a charitable trust and then sold to a person or entity who can own the shares without violating these limits. As a result, if a violative transfer were made, the recipient of the shares would not acquire any economic or voting rights attributable to the transferred shares. Additionally, the constructive ownership rules for these limits are complex, and groups of related individuals or entities may be deemed a single owner and consequently in violation of the share ownership limits.
However, these restrictions and limits may not be adequate in all cases to prevent the transfer of our capital shares in violation of the ownership limitations. The ownership limits discussed above may have the effect of delaying, deferring or preventing someone from taking control of us, even though a change of control could involve a premium price for the common shares or otherwise be in shareholders' best interests.
Legislative or regulatory tax changes could have an adverse effect on us.
At any time, the federal income tax laws governing REITs or the administrative interpretations of those laws may be amended. Any of those new laws or interpretations may take effect retroactively and could adversely affect us or you as a shareholder. REIT dividends generally are not eligible for the reduced rates currently applicable to certain corporate dividends (unless attributable to dividends from taxable REIT subsidiaries and otherwise eligible for such rates). As a result, investment in non-REIT corporations may be relatively more attractive than investment in REITs. This could adversely affect the market price of our shares.
Our reported financial results may be adversely affected by changes in accounting principles applicable to us and the tenants of properties in which we have an interest.
Generally accepted accounting principles in the United States, which we refer to as GAAP, are subject to interpretation by various bodies formed to promulgate and interpret appropriate accounting principles such as the Financial Accounting Standards Board, which we refer to as the FASB. A change in these principles or interpretations could have a significant effect on our reported financial results, could affect the reporting of transactions completed before the announcement of a change and could affect the business practices and decisions of the tenants of properties in which we have an interest.
We may change the dividend policy for our common shares in the future.
We currently expect to pay an aggregate annual dividend of $0.50 per common share with respect to the 2012 taxable year. However, the decision to declare and pay dividends on our common shares in the future, as well as the timing, amount and composition of any such future dividends, will be at the sole discretion of our Board of Trustees in light of conditions then existing, including our earnings, financial condition, capital requirements, debt maturities, the availability of debt and equity capital, applicable REIT and legal restrictions and the general overall economic conditions and other factors. The actual dividend payable will be determined by our Board of Trustees based upon the circumstances at the time of declaration and the actual dividend payable may vary from such expected amount. Any change in our dividend policy could have a material adverse effect on the market price of our common shares.
Our Board of Trustees may change our investment policy without shareholders' approval.
Subject to our fundamental investment policy to maintain our qualification as a REIT, our Board of Trustees will determine our investment and financing policies, growth strategy and our debt, capitalization, distribution, acquisition, disposition and operating policies.
Our Board of Trustees may revise or amend these strategies and policies at any time without a vote by shareholders. Accordingly, shareholders' control over changes in our strategies and policies is limited to the election of trustees and changes made by our Board of Trustees may not serve the interests of shareholders and could adversely affect our financial condition or results of operations, including our ability to distribute cash to shareholders or qualify as a REIT.
The concentration of ownership by certain investors may limit other shareholders from influencing significant corporate decisions.
At December 31, 2009,2011, Vornado beneficially owned approximately 18.5 million common shares, and E. Robert Roskind, our Chairman, beneficially owned approximately 0.81.1 million of our common shares and approximately 1.5 million OP units, which are currently redeemable for approximately 1.7 million common shares, or with respect to a portion of the OP units, at our election, cash. Mr. Roskind and an employee of Vornado sit on our Board of Trustees as of the date of filing this Annual Report. Each of Vornado and Mr. Roskind may have substantial influence over us and on the outcome of any matters submitted to our shareholders for approval. In addition, certain decisions concerning our operations or financial structure may present conflicts of interest between each of Vornado and Mr. Roskind and our other equity or debt holders. In addition, Vornado engages in a wide variety of activities in the real estate business and may engage in activities that result in conflicts of interest with respect to matters affecting us, such as competition for properties and tenants.
Securities eligible for future sale may have adverse effects on our share price.
AnWe have an unallocated universal shelf registration statement and a direct share purchase plan, pursuant to which we may issue additional common shares. In addition, as of December 31, 2011, an aggregate of approximately 7.68.4 million of our common shares are issuable upon the exercise of employee share options and onupon the exchange of OP units. There are also 16.4 million common shares underlying our 6.00% Convertible Guaranteed Notes as of December 31, 2011, which is subject to increase upon certain events, including if we pay a quarterly common share dividend in excess of $0.10 per common share. Depending upon the number of such securities issued, exercised or exchanged at one time, an issuance, exercise or exchange of such securities could be dilutive to or otherwise adversely affect the interests of holders of our common shares.
We are dependent upon our key personnel.
We are dependent upon key personnel whose continued service is not guaranteed. We are dependent on certain of our executive officers for business direction. We haveIn January 2012, we entered into two-yearthree-year employment agreements with each of T. Wilson Eglin, our Chief Executive Officer and President, E. Robert Roskind, our Chairman, Richard J. Rouse, our Vice Chairman and Chief Investment Officer, T. Wilson Eglin, our Chief Executive Officer, President and Chief Operating Officer and Patrick Carroll, our Executive Vice President, Chief Financial Officer and Treasurer. However, an employment agreement does not itself prevent an employee from resigning.
Our inability to retain the services of any of our key personnel or our loss of any of their services could adversely impact our operations. We do not have key man life insurance coverage on our executive officers.
Item 1B. Unresolved Staff Comments
There are no unresolved written comments that were received from the SEC staff 180 days or more before the end of our fiscal year relating to our periodic or current reports under the Securities Exchange Act of 1934.
Item 2. Properties
Real Estate Portfolio
General. As of December 31, 2009,2011, we had ownership interests in approximately 38.336.0 million square feet of rentable space in approximately 210185 consolidated office, industrial and retail properties. As of December 31, 2009,properties and these properties were approximately 91.5%95.6% leased based upon net rentable square feet. All properties in which we have an interest are held through at least one property owner subsidiary.
OurThe properties in which we have an interest are generally subject to net leases; however, in certain leases wethe property owner subsidiaries are responsible for roof, structural and other repairs. In addition, certain of ourthe properties in which we have an interest (including those held through non-consolidated entities) are subject to leases in which the landlord is responsible for a portion of the real estate taxes, utilities and general maintenance. WeFurthermore, the property owner subsidiaries are responsible for all operating expenses of any vacant properties, and wethe property owner subsidiaries may be responsible for a significant amount of operating expenses of multi-tenant properties.
Ground Leases. Certain of ourthe properties in which we have an interest are subject to long-term ground leases where either the tenant of the building on the property or a third party owns and leases the underlying land to us.the property owner subsidiary. Certain of these properties are economically owned through the holding of industrial revenue bonds primarily for real estate tax abatement purposes and as such, neither ground lease payments nor bond interest payments are made or received, respectively. For certain of the properties held under a ground lease, we havethe ground lessee has a purchase option. At the end of these long-term ground leases, unless extended or the purchase option exercised, the land together with all improvements thereon reverts to the landowner. In addition, we have an interest in one property in which a portion of the land, on which a portion of the parking lot is located, is subject to a ground lease. At expiration of the ground lease, only that portion of the parking lot reverts to the landowner.
Leverage. As of December 31, 2009,2011, we had interests in properties subject to outstanding mortgages and notes payable and corporate level debt of approximately $2.1$1.7 billion with a weighted-average interest rate of approximately 5.7%5.8%.
LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
OFFICE
| Property Location | | City | | State | | Primary Tenant (Guarantor) | | Net Rentable Square Feet | | Current Lease Term Expiration | | Percent Leased |
| 12209 W. Markham St. | | Little Rock | | AR | | Entergy Arkansas, Inc. | | 36,311 | | 10/31/2015 | | 100 | % |
| 13430 N. Black Canyon Fwy | | Phoenix | | AZ | | Multi-tenanted | | 138,940 | | Various | | 100 | % |
| 2211 S. 47th St. | | Phoenix | | AZ | | Avnet, Inc. | | 176,402 | | 11/14/2012 | | 100 | % |
| 2005 E. Technology Circle | | Tempe | | AZ | | (i) Structure, LLC (Infocrossing, Inc.) | | 60,000 | | 12/31/2025 | | 100 | % |
| 275 S. Valencia Ave | | Brea | | CA | | Bank of America NT & SA | | 637,503 | | 6/30/2012 | | 100 | % |
| 17770 Cartwright Rd | | Irvine | | CA | | Multi-tenanted | | 143,165 | | Various | | 81 | % |
| 26210 & 26220 Enterprise Court | | Lake Forest | | CA | | Apria Healthcare, Inc. (Apria Healthcare Group, Inc.) | | 100,012 | | 1/31/2012 | | 100 | % |
| 1500 Hughes Way | | Long Beach | | CA | | Multi-tenanted | | 490,054 | | Various | | 67 | % |
| 2706 Media Center Dr. | | Los Angeles | | CA | | Playboy Enterprises, Inc. | | 83,252 | | 11/7/2012 | | 100 | % |
| 3333 Coyote Hill Rd. | | Palo Alto | | CA | | Xerox Corporation | | 202,000 | | 12/13/2013 | | 100 | % |
| 5724 W. Las Positas Blvd. | | Pleasanton | | CA | | NK Leasehold LLC | | 40,914 | | 11/30/2010 | | 100 | % |
| 255 California St. | | San Francisco | | CA | | Multi-tenanted | | 173,455 | | Various | | 67 | % |
| 9201 E. Dry Creek Rd | | Centennial | | CO | | The Shaw Group, Inc. | | 128,500 | | 9/30/2017 | | 100 | % |
| 1110 Bayfield Dr. | | Colorado Springs | | CO | | Honeywell International, Inc. | | 166,575 | | 11/30/2013 | | 100 | % |
| 5550 Tech Center Dr. | | Colorado Springs | | CO | | Vacant | | 61,690 | | None | | 0 | % |
| 3940 S. Teller St. | | Lakewood | | CO | | MoneyGram Payment Systems, Inc. | | 68,165 | | 3/31/2012 | | 100 | % |
| 1315 W. Century Dr. | | Louisville | | CO | | Global Healthcare Exchange, Inc. (Global Healthcare Exchange, LLC) | | 106,877 | | 4/30/2017 | | 100 | % |
| 10 John St. | | Clinton | | CT | | Vacant | | 41,188 | | None | | 0 | % |
| 200 Executive Blvd. S. | | Southington | | CT | | Hartford Fire Insurance Company | | 153,364 | | 12/31/2012 | | 100 | % |
| 100 Barnes Rd | | Wallingford | | CT | | 3M Company | | 44,400 | | 12/31/2010 | | 100 | % |
| 5600 Broken Sound Blvd. | | Boca Raton | | FL | | Océ Printing Systems USA, Inc. (Océ -USA Holding, Inc.) | | 136,789 | | 2/14/2020 | | 100 | % |
| 12600 Gateway Blvd. | | Fort Meyers | | FL | | Gartner, Inc. | | 62,400 | | 1/31/2013 | | 100 | % |
| 550 Business Center Dr. | | Lake Mary | | FL | | JPMorgan Chase Bank, NA | | 125,920 | | 9/30/2015 | | 100 | % |
| 600 Business Center Dr. | | Lake Mary | | FL | | JPMorgan Chase Bank, NA | | 125,155 | | 9/30/2015 | | 100 | % |
| 6277 Sea Harbor Dr. | | Orlando | | FL | | Vacant | | 355,840 | | None | | 0 | % |
| 9200 S. Park Center Loop | | Orlando | | FL | | Corinthian Colleges, Inc. | | 59,927 | | 9/30/2013 | | 100 | % |
| Sandlake Rd./Kirkman Rd | | Orlando | | FL | | Lockheed Martin Corporation | | 184,000 | | 4/30/2013 | | 100 | % |
| 4200 RCA Blvd. | | Palm Beach Gardens | | FL | | The Wackenhut Corporation | | 114,518 | | 2/28/2011 | | 100 | % |
| 2223 N. Druid Hills Rd | | Atlanta | | GA | | Bank of America, N.A. (Bank of America Corporation) | | 6,260 | | 12/31/2014 | | 100 | % |
| 6303 Barfield Rd | | Atlanta | | GA | | International Business Machines Corporation (Internet Security Systems, Inc.) | | 238,600 | | 5/31/2013 | | 100 | % |
| 859 Mount Vernon Hwy | | Atlanta | | GA | | International Business Machines Corporation (Internet Security Systems, Inc.) | | 50,400 | | 5/31/2013 | | 100 | % |
| 956 Ponce de Leon Ave | | Atlanta | | GA | | Bank of America, N.A. (Bank of America Corporation) | | 3,900 | | 12/31/2014 | | 100 | % |
| 4545 Chamblee-Dunwoody Rd | | Chamblee | | GA | | Bank of America, N.A. (Bank of America Corporation) | | 4,565 | | 12/31/2014 | | 100 | % |
|
| | | | | | | | |
LEXINGTON CONSOLIDATED PORTFOLIO PROPERTY CHART OFFICE |
| As of December 31, 2011 |
| Property Location | City | State | Primary Tenant (Guarantor) | Net Rentable Square Feet | Current Lease Term Expiration | Percent Leased |
| 12209 W. Markham St. | Little Rock | AR | Entergy Arkansas, Inc. | 36,311 |
| 10/31/2015 | 100 | % |
| 275 S. Valencia Ave | Brea | CA | Bank of America, National Association | 637,503 |
| 6/30/2019 | 100 | % |
| 2706 Media Center Dr. | Los Angeles | CA | Playboy Enterprises, Inc. | 83,252 |
| 11/7/2012 | 100 | % |
| 3333 Coyote Hill Rd. | Palo Alto | CA | Xerox Corporation | 202,000 |
| 12/13/2013 | 100 | % |
| 9201 E. Dry Creek Rd | Centennial | CO | The Shaw Group, Inc. | 128,500 |
| 9/30/2017 | 100 | % |
| 1110 Bayfield Dr. | Colorado Springs | CO | Honeywell International Inc. | 166,575 |
| 11/30/2013 | 100 | % |
| 3940 South Teller St. | Lakewood | CO | MoneyGram Payment Systems, Inc. | 68,165 |
| 3/31/2015 | 100 | % |
| 1315 W. Century Dr. | Louisville | CO | Global Healthcare Exchange, Inc. (Global Healthcare Exchange, LLC) | 106,877 |
| 4/30/2017 | 100 | % |
| 200 Executive Blvd. S. | Southington | CT | Hartford Fire Insurance Company | 153,364 |
| 12/31/2012 | 100 | % |
| 100 Barnes Rd | Wallingford | CT | 3M Company | 44,400 |
| 6/30/2018 | 100 | % |
| 5600 Broken Sound Blvd. | Boca Raton | FL | Océ Printing Systems USA, Inc. (Océ -USA Holding, Inc.) | 143,290 |
| 2/14/2020 | 100 | % |
| 12600 Gateway Blvd. | Fort Meyers | FL | Gartner, Inc. | 62,400 |
| 1/31/2013 | 100 | % |
| 550 Business Center Dr. | Lake Mary | FL | JPMorgan Chase Bank, National Association | 125,920 |
| 9/30/2015 | 100 | % |
| 600 Business Center Dr. | Lake Mary | FL | JPMorgan Chase Bank, National Association | 125,155 |
| 9/30/2015 | 100 | % |
| 9200 South Park Center Loop | Orlando | FL | Corinthian Colleges, Inc. | 59,927 |
| 9/30/2013 | 100 | % |
| Sandlake Rd./Kirkman Rd | Orlando | FL | Lockheed Martin Corporation | 184,000 |
| 4/30/2013 | 100 | % |
| 4400 Northcorp Parkway | Palm Beach Gardens | FL | Office Suites Plus Properties, Inc. | 18,400 |
| 5/3/2019 | 100 | % |
| 2223 N. Druid Hills Rd | Atlanta | GA | Bank of America, N.A. (Bank of America Corporation) | 6,260 |
| 12/31/2014 | 100 | % |
| 6303 Barfield Rd | Atlanta | GA | International Business Machines Corporation / Internet Security Systems, Inc. (ISS Group, Inc.) | 238,600 |
| 5/31/2013 | 100 | % |
| 859 Mount Vernon Hwy | Atlanta | GA | International Business Machines Corporation / Internet Security Systems, Inc. (ISS Group, Inc.) | 50,400 |
| 5/31/2013 | 100 | % |
| 956 Ponce de Leon Ave | Atlanta | GA | Bank of America, N.A. (Bank of America Corporation) | 3,900 |
| 12/31/2014 | 100 | % |
| 4545 Chamblee-Dunwoody Rd | Chamblee | GA | Bank of America, N.A. (Bank of America Corporation) | 4,565 |
| 12/31/2014 | 100 | % |
| 201 W. Main St. | Cumming | GA | Bank of America, N.A. (Bank of America Corporation) | 14,208 |
| 12/31/2014 | 100 | % |
| 1066 Main St. | Forest Park | GA | Bank of America, N.A. (Bank of America Corporation) | 14,859 |
| 12/31/2014 | 100 | % |
| 825 Southway Dr. | Jonesboro | GA | Bank of America, N.A. (Bank of America Corporation) | 4,894 |
| 12/31/2014 | 100 | % |
| 1698 Mountain Industrial Blvd. | Stone Mountain | GA | Bank of America, N.A. (Bank of America Corporation) | 5,704 |
| 12/31/2014 | 100 | % |
| 4000 Johns Creek Pkwy | Suwanee | GA | Kraft Foods Global, Inc. | 87,219 |
| 9/30/2012 | 84 | % |
19
24
LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
OFFICE
Property Location | | City | | State | | Primary Tenant (Guarantor) | | Net Rentable Square Feet | | Current Lease Term Expiration | | Percent Leased |
| 201 W. Main St. | | Cumming | | GA | | Bank of America, N.A. (Bank of America Corporation) | | 14,208 | | 12/31/2014 | | 100 | % |
| 160 Clairemont Ave | | Decatur | | GA | | Multi-tenanted | | 121,686 | | Various | | 71 | % |
| 3468 Georgia Hwy 120 | | Duluth | | GA | | Vacant | | 10,341 | | None | | 0 | % |
| 1066 Main St. | | Forest Park | | GA | | Bank of America, N.A. (Bank of America Corporation) | | 14,859 | | 12/31/2014 | | 100 | % |
| 825 Southway Dr. Blvd. | | Jonesboro | | GA | | Bank of America, N.A. (Bank of America Corporation) | | 4,894 | | 12/31/2014 | | 100 | % |
| 1698 Mountain Industrial | | Stone Mountain | | GA | | Bank of America, N.A. (Bank of America Corporation) | | 5,704 | | 12/31/2014 | | 100 | % |
| 4000 Johns Creek Pkwy | | Suwanee | | GA | | Kraft Foods North America, Inc. | | 87,219 | | 1/31/2012 | | 100 | % |
| King St. | | Honolulu | | HI | | Multi-tenanted | | 239,291 | | Various | | 96 | % |
| 1275 N.W. 128th St. | | Clive | | IA | | Principal Life Insurance Company | | 61,180 | | 1/31/2012 | | 100 | % |
| 101 E. Erie St. | | Chicago | | IL | | Draftfcb, Inc. (Interpublic Group of Companies, Inc.) | | 230,684 | | 3/15/2014 | | 100 | % |
| 850 & 950 Warrenville Rd | | Lisle | | IL | | National Louis University | | 99,414 | | 12/31/2019 | | 100 | % |
| 500 Jackson St. | | Columbus | | IN | | Cummins, Inc. | | 390,100 | | 7/31/2019 | | 100 | % |
| 10300 Kincaid Dr. | | Fishers | | IN | | Roche Diagnostics Operations, Inc. | | 193,000 | | 1/31/2020 | | 100 | % |
| 10475 Crosspoint Blvd. | | Fishers | | IN | | John Wiley & Sons, Inc. | | 141,047 | | 10/31/2019 | | 88 | % |
| 5757 Decatur Blvd. | | Indianapolis | | IN | | Allstate Insurance Company | | 89,956 | | 8/31/2012 | | 100 | % |
| 11201 Renner Blvd. | | Lenexa | | KS | | Applebee’s Services, Inc. (DineEquity, Inc.) | | 178,000 | | 7/31/2023 | | 100 | % |
| 5200 Metcalf Ave | | Overland Park | | KS | | Swiss Re American Holding Corporation | | 320,198 | | 12/22/2018 | | 100 | % |
| 2300 Litton Lane | | Hebron | | KY | | Multi-tenanted | | 80,440 | | Various | | 100 | % |
| 4455 American Way | | Baton Rouge | | LA | | Bell South Mobility, Inc. | | 70,100 | | 10/31/2012 | | 100 | % |
| 147 Milk St. | | Boston | | MA | | Harvard Vanguard Medical Association | | 52,337 | | 12/31/2022 | | 100 | % |
| 33 Commercial St. | | Foxboro | | MA | | Invensys Systems, Inc. (Siebe, Inc.) | | 164,689 | | 7/1/2015 | | 100 | % |
| 100 Light St. | | Baltimore | | MD | | Multi-tenanted | | 523,240 | | Various | | 27 | % |
| 37101 Corporate Dr. | | Farmington Hills | | MI | | TEMIC Automotive of North America, Inc. | | 119,829 | | 12/31/2016 | | 100 | % |
| 26555 Northwestern Hwy | | Southfield | | MI | | Federal-Mogul Corporation | | 187,163 | | 1/31/2015 | | 100 | % |
| 3165 McKelvey Rd | | Bridgeton | | MO | | BJC Health System | | 52,994 | | 3/31/2013 | | 100 | % |
| 9201 Stateline Rd | | Kansas City | | MO | | Swiss Re American Holding Corporation | | 155,925 | | 4/1/2019 | | 100 | % |
| 200 Lucent Lane | | Cary | | NC | | Alcatel-Lucent USA, Inc. | | 124,944 | | 9/30/2011 | | 100 | % |
| 11707 Miracle Hills Dr. | | Omaha | | NE | | Infocrossing, LLC (Infocrossing, Inc.) | | 85,200 | | 11/30/2025 | | 100 | % |
| 700 US Hwy. Route 202-206 | | Bridgewater | | NJ | | Biovail Pharmaceuticals, Inc. (Biovail Corporation) | | 115,558 | | 10/31/2014 | | 100 | % |
| 389 & 399 Interpace Hwy | | Parsippany | | NJ | | Sanofi-aventis U.S., Inc. (Aventis, Inc. & Aventis Pharma Holding GmbH) | | 340,240 | | 1/31/2010 | | 100 | % |
| 333 Mount Hope Ave | | Rockaway | | NJ | | BASF Corporation | | 95,500 | | 9/30/2014 | | 100 | % |
| 1415 Wyckoff Rd | | Wall | | NJ | | New Jersey Natural Gas Company | | 157,511 | | 6/30/2021 | | 100 | % |
| 29 S. Jefferson Rd | | Whippany | | NJ | | CAE SimuFlite, Inc. | | 123,734 | | 11/30/2021 | | 100 | % |
|
| | | | | | | | |
LEXINGTON CONSOLIDATED PORTFOLIO PROPERTY CHART OFFICE |
| As of December 31, 2011 |
| Property Location | City | State | Primary Tenant (Guarantor) | Net Rentable Square Feet | Current Lease Term Expiration | Percent Leased |
| 1275 Northwest 128th St. | Clive | IA | Principal Life Insurance Company | 61,180 |
| 1/31/2012 | 100 | % |
| 750 North Commons Dr. | Aurora | IL | Westell, Inc. (Westell Technologies, Inc.) | 210,230 |
| 9/30/2017 | 100 | % |
| 101 E. Erie St. | Chicago | IL | Draftfcb, Inc. (Interpublic Group of Companies, Inc.) | 230,704 |
| 3/15/2014 | 92 | % |
| 850 & 950 Warrenville Rd | Lisle | IL | National Louis University | 99,414 |
| 12/31/2019 | 100 | % |
| 500 Jackson St. | Columbus | IN | Cummins, Inc. | 390,100 |
| 7/31/2019 | 100 | % |
| 10300 Kincaid Dr. | Fishers | IN | Roche Diagnostics Operations, Inc. | 193,000 |
| 1/31/2020 | 100 | % |
| 10475 Crosspoint Blvd. | Indianapolis | IN | John Wiley & Sons, Inc. | 141,047 |
| 10/31/2019 | 90 | % |
| 5757 Decatur Blvd. | Indianapolis | IN | Allstate Insurance Company
| 89,956 |
| 8/31/2012 | 100 | % |
| 5200 Metcalf Ave. | Overland Park | KS | Swiss Re American Holding Corporation / Westport Insurance Corporation | 320,198 |
| 12/22/2018 | 100 | % |
| 4455 American Way | Baton Rouge | LA | Bell South Mobility Inc. | 70,100 |
| 10/31/2012 | 100 | % |
| 33 Commercial St. | Foxboro | MA | Invensys Systems, Inc. (Siebe, Inc.) | 164,689 |
| 7/1/2015 | 100 | % |
| 26555 Northwestern Hwy | Southfield | MI | Federal-Mogul Corporation | 187,163 |
| 1/31/2015 | 100 | % |
| 3165 McKelvey Rd. | Bridgeton | MO | BJC Health System | 52,994 |
| 3/31/2013 | 100 | % |
| 9201 Stateline Rd. | Kansas City | MO | Swiss Re American Holding Corporation / Westport Insurance Corporation | 155,925 |
| 4/1/2019 | 100 | % |
| 200 Lucent Lane | Cary | NC | Progress Energy Service Company, LLC | 124,944 |
| 11/30/2014 | 100 | % |
| 700 US Hwy. Route 202-206 | Bridgewater | NJ | Biovail Pharmaceuticals, Inc. (Valeant Pharmaceuticals International, Inc.) | 115,558 |
| 10/31/2014 | 100 | % |
| 333 Mount Hope Ave. | Rockaway | NJ | BASF Corporation | 95,500 |
| 9/30/2014 | 100 | % |
| 1415 Wyckoff Rd. | Wall | NJ | New Jersey Natural Gas Company | 157,511 |
| 6/30/2021 | 100 | % |
| 29 S. Jefferson Rd. | Whippany | NJ | CAE SimuFlite, Inc. (CAE Inc.) | 123,734 |
| 11/30/2021 | 100 | % |
| 180 S. Clinton St. | Rochester | NY | Frontier Corporation | 226,000 |
| 12/31/2014 | 100 | % |
| 2000 Eastman Dr. | Milford | OH | Siemens Corporation | 221,215 |
| 4/30/2016 | 100 | % |
| 500 Olde Worthington Rd. | Westerville | OH | InVentiv Communications, Inc. | 97,000 |
| 9/30/2015 | 100 | % |
| 275 Technology Dr. | Canonsburg | PA | ANSYS, Inc. | 107,872 |
| 12/31/2014 | 100 | % |
| 2550 Interstate Dr. | Harrisburg | PA | New Cingular Wireless PCS, LLC | 81,859 |
| 12/31/2013 | 100 | % |
| 1701 Market St. | Philadelphia | PA | Morgan, Lewis & Bockius LLP | 305,170 |
| 1/31/2014 | 98 | % |
| 1460 Tobias Gadsen Blvd. | Charleston | SC | Hagemeyer North America, Inc. | 50,076 |
| 7/8/2020 | 100 | % |
| 2210 Enterprise Dr. | Florence | SC | JPMorgan Chase Bank, National Association | 179,300 |
| 6/30/2013 | 100 | % |
| 3476 Stateview Blvd. | Fort Mill | SC | Wells Fargo Bank, N.A. | 169,083 |
| 5/31/2014 | 100 | % |
25
20 |
| | | | | | | | |
LEXINGTON CONSOLIDATED PORTFOLIO PROPERTY CHART OFFICE |
| As of December 31, 2011 |
| Property Location | City | State | Primary Tenant (Guarantor) | Net Rentable Square Feet | Current Lease Term Expiration | Percent Leased |
| 3480 Stateview Blvd. | Fort Mill | SC | Wells Fargo Bank, N.A. | 169,218 |
| 5/31/2014 | 100 | % |
| 333 Three D Systems Circle | Rock Hill | SC | 3D Systems Corporation | 80,028 |
| 8/31/2021 | 100 | % |
| 1409 Centerpoint Blvd. | Knoxville | TN | Alstom Power, Inc. | 84,404 |
| 10/31/2014 | 100 | % |
| 104 & 110 S. Front St. | Memphis | TN | Hnedak Bobo Group, Inc. | 37,229 |
| 10/31/2016 | 100 | % |
| 3965 Airways Blvd. | Memphis | TN | Federal Express Corporation | 521,286 |
| 6/19/2019 | 100 | % |
| 601 & 701 Experian Pkwy. | Allen | TX | Experian Information Solutions, Inc. / TRW, Inc. (Experian Holdings, Inc.) | 292,700 |
| 3/14/2018 | 100 | % |
| 4001 International Pkwy. | Carrollton | TX | Motel 6 Operating, LP (Accor S.A.) | 138,443 |
| 7/31/2015 | 100 | % |
| 11511 Luna Rd. | Farmers Branch | TX | Haggar Clothing Co. (Texas Holding Clothing Corporation & Haggar Corp.) | 180,507 |
| 4/30/2016 | 100 | % |
| 10001 Richmond Ave. | Houston | TX | Baker Hughes Incorporated | 554,385 |
| 9/27/2015 | 100 | % |
| 1311 Broadfield Blvd. | Houston | TX | Transocean Offshore Deepwater Drilling, Inc. (Transocean Sedco Forex, Inc.) | 155,040 |
| 3/31/2021 | 100 | % |
| 16676 Northchase Dr. | Houston | TX | Kerr-McGee Oil & Gas Corporation (Kerr-McGee Corporation) | 101,111 |
| 7/31/2014 | 100 | % |
| 810 & 820 Gears Rd. | Houston | TX | IKON Office Solutions, Inc. | 157,790 |
| 1/31/2013 | 100 | % |
| 6200 Northwest Pkwy. | San Antonio | TX | United HealthCare Services, Inc. / PacifiCare Healthsystems, LLC | 142,500 |
| 11/30/2017 | 100 | % |
| 12645 West Airport Rd. | Sugar Land | TX | Baker Hughes Incorporated | 165,836 |
| 9/27/2015 | 100 | % |
| 2050 Roanoke Rd. | Westlake | TX | TD Auto Finance LLC | 130,290 |
| 12/31/2016 | 100 | % |
| 120 E. Shore Dr. | Glen Allen | VA | Capital One Services, LLC | 77,045 |
| 5/31/2017 | 100 | % |
| 400 Butler Farm Rd. | Hampton | VA | Nextel Communications of the Mid-Atlantic, Inc. (Nextel Finance Company) | 100,632 |
| 12/31/2014 | 100 | % |
| 421 Butler Farm Rd. | Hampton | VA | Patient Advocate Foundation | 56,564 |
| 12/31/2019 | 65 | % |
| 13651 McLearen Rd. | Herndon | VA | United States of America | 159,644 |
| 5/30/2018 | 100 | % |
| 13775 McLearen Rd. | Herndon | VA | Equant, Inc. (Equant N.V.) | 125,293 |
| 4/30/2015 | 100 | % |
| 2800 Waterford Lake Dr. | Midlothian | VA | Alstom Power, Inc. | 99,057 |
| 10/31/2014 | 100 | % |
| 22011 Southeast 51st St. | Issaquah | WA | Spacelabs Medical, Inc. / OSI Systems, Inc. (Instrumentarium Corporation) | 95,600 |
| 12/14/2014 | 100 | % |
| 5150 220th Ave. | Issaquah | WA | Spacelabs Medical, Inc. / OSI Systems, Inc. (Instrumentarium Corporation) | 106,944 |
| 12/14/2014 | 100 | % |
| | | | Office Total | 10,929,716 |
| | |
|
| | | | | | | | |
LEXINGTON CONSOLIDATED PORTFOLIO PROPERTY CHART INDUSTRIAL |
| As of December 31, 2011 |
| Property Location | City | State | Primary Tenant (Guarantor) | Net Rentable Square Feet | Current Lease Term Expiration | Percent Leased |
| 2415 U.S. Hwy 78 East | Moody | AL | CEVA Logistics U.S., Inc. (TNT Logistics Holdings, B.V.) | 595,346 |
| 1/1/2014 | 100 | % |
| 2455 Premier Dr. | Orlando | FL | Walgreen Co. / Walgreen Eastern Co. | 205,016 |
| 3/31/2016 | 100 | % |
| 3102 Queen Palm Dr. | Tampa | FL | Time Customer Service, Inc. (Time Incorporated) | 229,605 |
| 6/30/2020 | 100 | % |
| 1420 Greenwood Rd. | McDonough | GA | Versacold USA, Inc. | 296,972 |
| 10/31/2017 | 100 | % |
| 7500 Chavenelle Rd. | Dubuque | IA | The McGraw-Hill Companies, Inc. | 330,988 |
| 6/30/2017 | 100 | % |
| 3686 S. Central Ave. | Rockford | IL | Jacobson Warehouse Company, Inc. (Jacobson Distribution Company, Inc. and Jacobson Transportation Company, Inc.) | 90,000 |
| 12/31/2014 | 100 | % |
| 749 Southrock Dr. | Rockford | IL | Jacobson Warehouse Company, Inc. (Jacobson Distribution Company, Inc. and Jacobson Transportation Company, Inc.) | 150,000 |
| 12/31/2015 | 100 | % |
| 1901 Ragu Dr. | Owensboro | KY | Unilever Supply Chain, Inc. (Unilever United States, Inc.) | 443,380 |
| 12/19/2020 | 100 | % |
| 113 Wells St. | North Berwick | ME | United Technologies Corporation | 972,625 |
| 4/30/2019 | 100 | % |
| 1601 Pratt Ave. | Marshall | MI | Enbridge Energy, Limited Partnership | 58,300 |
| 2/15/2012 | 100 | % |
| 43955 Plymouth Oaks Blvd. | Plymouth | MI | Tower Automotive Operations USA I, LLC / Tower Automotive Products Inc. (Tower Automotive, Inc.) | 290,133 |
| 10/31/2017 | 100 | % |
| 7111 Crabb Rd. | Temperance | MI | CEVA Logistics U.S., Inc. (TNT Logistics Holdings, B.V.) | 744,570 |
| 8/4/2012 | 100 | % |
| 7670 Hacks Cross Rd. | Olive Branch | MS | MAHLE Clevite, Inc. (MAHLE Industries, Incorporated) | 268,104 |
| 2/28/2016 | 100 | % |
| 1133 Poplar Creek Rd. | Henderson | NC | Staples, Inc. / Corporate Express, Inc. | 196,946 |
| 12/31/2013 | 100 | % |
| 250 Swathmore Ave. | High Point | NC | Steelcase Inc. | 244,851 |
| 9/30/2017 | 100 | % |
| 2880 Kenny Biggs Rd. | Lumberton | NC | Quickie Manufacturing Corporation | 423,280 |
| 11/30/2021 | 100 | % |
| 2203 Sherrill Dr. | Statesville | NC | Ozburn-Hessey Logistics, LLC (OHH Acquisition Corporation) | 639,800 |
| 5/31/2013 | 100 | % |
| 10590 Hamilton Ave. | Cincinnati | OH | The Hillman Group, Inc. | 248,200 |
| 8/31/2016 | 100 | % |
| 1650 - 1654 Williams Rd. | Columbus | OH | ODW Logistics, Inc. | 772,450 |
| 6/30/2018 | 100 | % |
| 191 Arrowhead Dr. | Hebron | OH | Owens Corning Insulating Systems, LLC | 250,410 |
| MTM | 59 | % |
| 200 Arrowhead Dr. | Hebron | OH | Owens Corning Sales, LLC / Owens Corning Insulating Systems, LLC | 400,522 |
| 5/30/2011 | 100 | % |
| 10345 Philipp Pkwy. | Streetsboro | OH | L'Oreal USA S/D, Inc. (L'Oreal USA, Inc.) | 649,250 |
| 10/17/2019 | 100 | % |
| 50 Tyger River Dr. | Duncan | SC | Plastic Omnium Auto Exteriors, LLC | 221,833 |
| 9/30/2018 | 100 | % |
| 101 Michelin Dr. | Laurens | SC | CEVA Logistics U.S., Inc. (TNT Logistics Holdings, B.V.) | 1,164,000 |
| 8/4/2012 | 100 | % |
| 477 Distribution Pkwy. | Collierville | TN | Federal Express Corporation / FedEx Techconnect, Inc. | 120,000 |
| 5/31/2021 | 100 | % |
| 900 Industrial Blvd. | Crossville | TN | Dana Commercial Vehicle Products, LLC | 222,200 |
| 9/30/2016 | 100 | % |
| 3350 Miac Cove Rd. | Memphis | TN | Mimeo.com, Inc. | 140,079 |
| 9/30/2020 | 77 | % |
| 3456 Meyers Ave. | Memphis | TN | Sears, Roebuck and Co. / Sears Logistics Services | 780,000 |
| 2/28/2017 | 100 | % |
| 3820 Micro Dr. | Millington | TN | Ingram Micro L.P. (Ingram Micro Inc.) | 701,819 |
| 9/30/2021 | 100 | % |
|
| | | | | | | | |
LEXINGTON CONSOLIDATED PORTFOLIO PROPERTY CHART INDUSTRIAL |
| As of December 31, 2011 |
| Property Location | City | State | Primary Tenant (Guarantor) | Net Rentable Square Feet | Current Lease Term Expiration | Percent Leased |
| 19500 Bulverde Rd. | San Antonio | TX | Harcourt Inc. (Harcourt General, Inc.) | 559,258 |
| 3/31/2016 | 100 | % |
| 2425 Hwy. 77 North | Waxahachie | TX | James Hardie Building Products, Inc. (James Hardie NV & James Hardie Industries NV) | 335,610 |
| 3/31/2020 | 100 | % |
| 291 Park Center Dr. | Winchester | VA | Kraft Foods Global, Inc. | 344,700 |
| 5/31/2016 | 100 | % |
| | | | Industrial Total | 13,090,247 |
| | |
|
| | | | | | | | |
LEXINGTON CONSOLIDATED PORTFOLIO PROPERTY CHART RETAIL |
| As of December 31, 2011 |
| Property Location | City | State | Primary Tenant (Guarantor) | Net Rentable Square Feet | Current Lease Term Expiration | Percent Leased |
| 10415 Grande Ave | Sun City | AZ | Cafeteria Operators, LP (Furrs Restaurant Group, Inc.) | 10,000 |
| 4/30/2012 | 100 | % |
| 255 Northgate Dr. | Manteca | CA | Kmart Corporation | 107,489 |
| 12/31/2018 | 100 | % |
| 12080 Carmel Mountain Rd | San Diego | CA | Kmart Corporation | 107,210 |
| 12/31/2018 | 100 | % |
| 10340 U.S. 19 | Port Richey | FL | Kingswere Furniture, LLC | 53, 820 |
| 10/31/2018 | 100 | % |
| 1150 W. Carl Sandburg Dr. | Galesburg | IL | Kmart Corporation | 94,970 |
| 12/31/2018 | 100 | % |
| 5104 N. Franklin Rd | Lawrence | IN | Marsh Supermarkets, Inc. / Marsh Supermarkets, LLC | 28,721 |
| 10/31/2013 | 100 | % |
| 205 Homer Rd | Minden | LA | Brookshire Grocery Company / Safeway Stores, Inc. | 35,000 |
| 11/30/2012 | 100 | % |
| 24th St. W. & St. John's Ave | Billings | MT | Safeway, Inc. | 40,800 |
| 5/31/2015 | 100 | % |
| US 221 & Hospital Rd | Jefferson | NC | Food Lion, LLC / Delhaize America, Inc. | 23,000 |
| 2/28/2013 | 100 | % |
| 291 Talbert Blvd. | Lexington | NC | Food Lion, LLC / Delhaize America, Inc. | 23,000 |
| 2/28/2013 | 100 | % |
| 835 Julian Ave | Thomasville | NC | Mighty Dollar, LLC | 23,767 |
| 9/30/2018 | 100 | % |
| 900 S. Canal St. | Carlsbad | NM | Cafeteria Operators, LP (Furrs Restaurant Group, Inc.) | 10,000 |
| 4/30/2012 | 100 | % |
| 130 Midland Ave | Port Chester | NY | Pathmark Stores, Inc. | 59,000 |
| 10/31/2023 | 100 | % |
| 21082 Pioneer Plaza Dr. | Watertown | NY | Kmart Corporation | 120,727 |
| 12/31/2018 | 100 | % |
| 4831 Whipple Avenue N.W. | Canton | OH | Best Buy Co., Inc. | 46,350 |
| 2/26/2018 | 100 | % |
| 1084 E. Second St. | Franklin | OH | Marsh Supermarkets, Inc. / Crystal Food Services, LLC | 29,119 |
| 10/31/2013 | 100 | % |
| 5350 Leavitt Rd | Lorain | OH | Kmart Corporation | 193,193 |
| 12/31/2018 | 100 | % |
| N.E.C. 45th Street & Lee Blvd. | Lawton | OK | Associated Wholesale Grocers, Inc. / Safeway, Inc. | 30,757 |
| 3/31/2014 | 100 | % |
| 6910 S. Memorial Hwy | Tulsa | OK | Toys "R" Us, Inc. / Toys “R” Us-Delaware, Inc. | 43,123 |
| 5/31/2016 | 100 | % |
12535 S.E. 82nd Ave | Clackamas | OR | Toys "R" Us-Delaware, Inc. / Toys "R" Us, Inc. / TRU 2005 RE I, LLC | 42,842 |
| 5/31/2016 | 100 | % |
| S. Carolina 52/52 Bypass | Moncks Corner | SC | Food Lion, LLC / Delhaize America, Inc. | 23,000 |
| 2/28/2013 | 100 | % |
| 399 Peach Wood Centre Dr. | Spartanburg | SC | Best Buy Co., Inc. | 45,800 |
| 2/26/2018 | 100 | % |
| 1600 E. 23rd St. | Chattanooga | TN | BI- LO, LLC | 42,130 |
| 6/30/2014 | 100 | % |
| 1053 Mineral Springs Rd | Paris | TN | The Kroger Co. | 31,170 |
| 7/1/2013 | 100 | % |
| 4121 S. Port Ave | Corpus Christi | TX | Cafeteria Operators, LP (Furr's Restaurant Group, Inc.) | 10,000 |
| 4/30/2012 | 100 | % |
| 1610 S. Westmoreland Ave | Dallas | TX | Malone's Food Stores, Ltd. | 70,910 |
| 3/31/2017 | 100 | % |
| 3451 Alta Mesa Blvd. | Fort Worth | TX | AVT Grocery, Inc. / Safeway, Inc. | 44,000 |
| 5/31/2012 | 100 | % |
| 101 W. Buckingham Rd | Garland | TX | AVT Grocery, Inc. | 40,000 |
| 11/30/2012 | 100 | % |
| 4811 Wesley St. | Greenville | TX | Brookshire Grocery Company / Safeway, Inc. | 48,492 |
| 5/31/2016 | 100 | % |
|
| | | | | | | | |
LEXINGTON CONSOLIDATED PORTFOLIO PROPERTY CHART RETAIL |
| As of December 31, 2011 |
| Property Location | City | State | Primary Tenant (Guarantor) | Net Rentable Square Feet | Current Lease Term Expiration | Percent Leased |
| 402 E. Crestwood Dr. | Victoria | TX | Cafeteria Operators, LP (Furrs Restaurant Group, Inc.) | 10,000 |
| 4/30/2012 | 100 | % |
| 3211 W. Beverly St. | Staunton | VA | Food Lion, LLC / Delhaize America, Inc. | 23,000 |
| 2/28/2018 | 100 | % |
| 18601 Alderwood Mall Blvd. | Lynnwood | WA | Toys "R" Us-Delaware, Inc. / Toys "R" Us, Inc. /TRU 2005 RE I, LLC | 43,105 |
| 5/31/2016 | 100 | % |
| 1700 State Route 160 | Port Orchard | WA | Moran Foods, Inc. d/b/a Save-A-Lot, Ltd. | 27,968 |
| 1/31/2015 | 57 | % |
| 97 Seneca Trail | Fairlea | WV | Kmart Corporation | 90,933 |
| 12/31/2018 | 100 | % |
| | | | Retail Total | 1,673,396 |
| | |
|
| | | | | | | | |
LEXINGTON CONSOLIDATED PORTFOLIO PROPERTY CHART LONG-TERM LEASES |
| As of December 31, 2011 |
| Property Location | City | State | Primary Tenant (Guarantor) | Net Rentable Square Feet | Current Lease Term Expiration | Percent Leased |
| 2211 South 47th St. | Phoenix | AZ | Avnet, Inc. | 176,402 |
| 2/28/2023 | 100 | % |
| 2005 E. Technology Cir. | Tempe | AZ | Infocrossing, Inc. | 60,000 |
| 12/31/2025 | 100 | % |
| 26210 & 26220 Enterprise Court | Lake Forest | CA | Apria Healthcare, Inc. (Apria Healthcare Group, Inc.) | 100,012 |
| 1/31/2022 | 100 | % |
| 11201 Renner Blvd. | Lenexa | KS | United States of America | 178,000 |
| 3/31/2022 | 100 | % |
| 10000 Business Blvd. | Dry Ridge | KY | Dana Light Axle Products, LLC (Dana Holding Corporation and Dana Limited) | 336,350 |
| 6/30/2025 | 100 | % |
| 730 North Black Branch Rd. | Elizabethtown | KY | Metalsa Structural Products, Inc. / Dana Structural Products, LLC (Dana Holding Corporation and Dana Limited) | 167,770 |
| 6/30/2025 | 100 | % |
| 750 North Black Branch Rd. | Elizabethtown | KY | Metalsa Structural Products, Inc. / Dana Structural Products, LLC (Dana Holding Corporation and Dana Limited) | 539,592 |
| 6/30/2025 | 100 | % |
| 301 Bill Bryan Rd | Hopkinsville | KY | Metalsa Structural Products, Inc. / Dana Structural Products, LLC (Dana Holding Corporation and Dana Limited) | 424,904 |
| 6/30/2025 | 100 | % |
| 4010 Airpark Dr. | Owensboro | KY | Metalsa Structural Products, Inc. / Dana Structural Products, LLC (Dana Holding Corporation and Dana Limited) | 211,598 |
| 6/30/2025 | 100 | % |
| 5001 Greenwood Rd. | Shreveport | LA | Libbey Glass Inc. (Libbey Inc.) | 646,000 |
| 10/31/2026 | 100 | % |
| 147 Milk St. | Boston | MA | Harvard Vanguard Medical Associates, Inc. | 52,337 |
| 12/31/2022 | 100 | % |
| 459 Wingo Rd. | Byhalia | MS | Asics America Corporation (Asics Corporation) | 513,734 |
| 3/31/2026 | 100 | % |
| 671 Washburn Switch Rd. | Shelby | NC | Clearwater Paper Corporation | 673,518 |
| 5/31/2031 | 100 | % |
| 11707 Miracle Hills Dr. | Omaha | NE | Infocrossing, Inc. | 85,200 |
| 11/30/2025 | 100 | % |
| 121 Technology Dr. | Durham | NH | Heidelberg Americas, Inc. (Heidelberg Drackmaschinen AG) | 500,500 |
| 3/30/2021 | 100 | % |
| 6226 West Sahara Ave. | Las Vegas | NV | Nevada Power Company | 282,000 |
| 1/31/2029 | 100 | % |
| 351 Chamber Drive | Chillicothe | OH | The Kitchen Collection, Inc. | 475,218 |
| 6/30/2026 | 100 | % |
| 5500 New Albany Rd. | Columbus | OH | Evans, Mechwart, Hambleton & Tilton, Inc. | 104,807 |
| 12/29/2026 | 100 | % |
| 2221 Schrock Rd. | Columbus | OH | MS Consultants, Inc. | 42,290 |
| 7/15/2027 | 100 | % |
| 7005 Cochran Rd | Glenwillow | OH | Royal Appliance Mfg. Co. | 458,000 |
| 7/31/2025 | 100 | % |
| 250 Rittenhouse Circle | Bristol | PA | Northtec LLC (The Estée Lauder Companies Inc.) | 241,977 |
| 11/30/2026 | 100 | % |
| 400 E. Stone Ave | Greenville | SC | Canal Insurance Company | 128,041 |
| 12/31/2029 | 100 | % |
| 4201 Marsh Ln. | Carrollton | TX | Carlson Restaurants Inc. (Carlson, Inc.) | 130,000 |
| 11/30/2022 | 100 | % |
| 6555 Sierra Dr. | Irving | TX | TXU Energy Retail Company, LLC (Texas Competitive Electric Holdings Company, LLC) | 247,254 |
| 3/31/2023 | 100 | % |
| 8900 Freeport Pkwy | Irving | TX | Nissan Motor Acceptance Corporation (Nissan North America, Inc.) | 268,445 |
| 3/31/2023 | 84 | % |
| 9803 Edmonds Way | Edmonds | WA | Pudget Consumers Co-op d/b/a PCC Natural Markets | 35,459 |
| 8/31/2028 | 100 | % |
| | | | Long-Term Leases Total | 7,079,408 |
| | |
|
| | | | | | | | |
LEXINGTON CONSOLIDATED PORTFOLIO PROPERTY CHART MULTI-TENANTED |
| As of December 31, 2011 |
| Property Location | City | State | Primary Tenant (Guarantor) | Net Rentable Square Feet | Current Lease Term Expiration | Percent Leased |
| 13430 N. Black Canyon Fwy | Phoenix | AZ | Multi-tenanted | 138,940 |
| Various | 100 | % |
| 1500 Hughes Way | Long Beach | CA | Multi-tenanted | 490,055 |
| Various | 74 | % |
| 10 John St. | Clinton | CT | Vacant | 41,188 |
| N/A | 0 | % |
| 6277 Sea Harbor Dr. | Orlando | FL | Vacant | 360,307 |
| N/A | 0 | % |
| 4200 Northcorp Parkway | Palm Beach Gardens | FL | Multi-tenanted | 95,065 |
| Various | 20 | % |
| 1032 Fort St. Mall/King St. | Honolulu | HI | Multi-tenanted | 318,451 |
| Various | 94 | % |
| 2300 Litton Lane | Hebron | KY | Multi-tenanted | 80,441 |
| Various | 100 | % |
| 100 Light St. | Baltimore | MD | Multi-tenanted | 476,459 |
| Various | 95 | % |
| 37101 Corporate Dr. | Farmington Hills | MI | Vacant | 119,829 |
| N/A | 0 | % |
| 4848 129th East Ave. | Tulsa | OK | Vacant | 101,100 |
| N/A | 0 | % |
| 9275 SW Peyton Lane | Wilsonville | OR | Vacant | 122,857 |
| N/A | 0 | % |
| 6050 Dana Way | Antioch | TN | W.M. Wright Company | 672,629 |
| 3/31/2021 | 62 | % |
| 207 Mockingbird Lane | Johnson City | TN | Multi-tenanted | 60,684 |
| Various | 48 | % |
| 100 E. Shore Dr. | Glen Allen | VA | Multi-tenanted | 68,003 |
| Various | 85 | % |
| 140 E. Shore Dr. | Glen Allen | VA | Multi-tenanted | 79,675 |
| Various | 72 | % |
| | | | Multi-Tenanted Total | 3,225,683 |
| | |
| | | | Consolidated Portfolio Grand Total | 35,998,450 |
| | |
|
| | | | | | | | |
LEXINGTON NON-CONSOLIDATED PORTFOLIO PROPERTY CHART |
| As of December 31, 2011 |
| Property Location | City | State | Primary Tenant (Guarantor) | Net Rentable Square Feet | Current Lease Term Expiration | Percent Leased |
| OFFICE | | | | | | |
| 5201 West Barraque St. | Pine Bluff | AR | Entergy Arkansas Inc. | 27,189 |
| 10/31/2015 | 100 | % |
| Route 64 W. & Junction 333 | Russellville | AR | Entergy Arkansas Inc. / Entergy Services, Inc. | 191,950 |
| 5/9/2016 | 100 | % |
| 19019 North 59th Ave. | Glendale | AZ | Honeywell International Inc. | 252,300 |
| 7/15/2019 | 100 | % |
| 8555 South River Pkwy. | Tempe | AZ | ASM Lithography, Inc. (ASM Lithography Holding N.V.) (2013) / DuPont Airproducts Nanomaterials L.L.C. (2022) | 95,133 |
| 6/30/2022 | 100 | % |
| 1440 East 15th St. | Tucson | AZ | CoxCom, LLC | 28,591 |
| 7/31/2022 | 100 | % |
| 10419 North 30th St. | Tampa | FL | Time Customer Service, Inc. (Time Incorporated) | 132,981 |
| 6/30/2020 | 100 | % |
| 2500 Patrick Henry Pkwy | McDonough | GA | Georgia Power Company | 111,911 |
| 6/30/2015 | 100 | % |
| 3500 N. Loop Court | McDonough | GA | Litton Loan Servicing LP | 62,218 |
| 8/31/2018 | 100 | % |
| 3265 E. Goldstone Dr. | Meridian | ID | T-Mobile PCS Holdings, LLC (T-Mobile USA, Inc.) | 77,484 |
| 6/28/2019 | 100 | % |
| 101 E. Washington Blvd. | Fort Wayne | IN | Indiana Michigan Power Company | 348,452 |
| 10/31/2016 | 100 | % |
| 9601 Renner Blvd. | Lenexa | KS | VoiceStream PCS II Corporation (T-Mobile USA, Inc.) | 77,484 |
| 10/31/2019 | 100 | % |
| 70 Mechanic St. | Foxboro | MA | Invensys Systems, Inc. (Siebe, Inc.) | 251,914 |
| 7/1/2014 | 100 | % |
| First Park Dr. | Oakland | ME | Omnipoint Holdings, Inc. (T-Mobile USA, Inc.) | 78,610 |
| 8/31/2020 | 100 | % |
| 12000 & 12025 Tech Center Dr. | Livonia | MI | Kelsey-Hayes Company (TRW Automotive, Inc.) | 180,230 |
| 4/30/2014 | 100 | % |
| 3943 Denny Ave. | Pascagoula | MS | Northrop Grumman Systems Corporation | 94,841 |
| 10/31/2013 | 100 | % |
| 3201 Quail Springs Pkwy. | Oklahoma City | OK | AT&T Corp. / AT& T Services, Inc. / New Cingular Wireless Services, Inc. | 128,500 |
| 11/30/2015 | 81 | % |
| 2999 Southwest 6th St. | Redmond | OR | VoiceStream PCS I LLC (T-Mobile USA, Inc.) | 77,484 |
| 1/31/2019 | 100 | % |
| 265 Lehigh St. | Allentown | PA | Pennsylvania School of Business, Inc. | 71,230 |
| 9/30/2021 | 31 | % |
| 420 Riverport Rd. | Kingport | TN | Kingsport Power Company | 42,770 |
| 6/30/2013 | 100 | % |
| 2401 Cherahala Blvd. | Knoxville | TN | AdvancePCS, Inc. / CaremarkPCS, L.L.C. | 59,748 |
| 5/31/2013 | 100 | % |
| 1401 & 1501 Nolan Ryan Pkwy. | Arlington | TX | Siemens Dematic Postal Automation L.P. / Siemens Energy & Automation, Inc. / Siemens Shared Services, LLC | 236,547 |
| 1/31/2014 | 100 | % |
| 1200 Jupiter Rd. | Garland | TX | Raytheon Company | 278,759 |
| 5/31/2016 | 100 | % |
| 2529 West Thorne Dr. | Houston | TX | Baker Hughes, Incorporated | 65,500 |
| 9/27/2015 | 100 | % |
| 17191 St. Luke's Way | The Woodlands | TX | Montgomery County Management Company, LLC | 41,000 |
| 10/31/2019 | 100 | % |
| 3711 San Gabriel | Mission | TX | VoiceStream PCS II Corporation / T-Mobile USA, Inc. / T-Mobile West Corporation | 75,016 |
| 6/30/2015 | 100 | % |
| 11555 University Blvd. | Sugar Land | TX | KS Management Services, LLP (St. Luke's Episcopal Health System Corporation) | 72,683 |
| 11/30/2020 | 100 | % |
| 1600 Eberhardt Rd. | Temple | TX | Nextel of Texas, Inc. (Nextel Finance Company) | 108,800 |
| 1/31/2016 | 100 | % |
| 1400 Northeast McWilliams Rd. | Bremerton | WA | Nextel West Corp. (Nextel Finance Company) | 60,200 |
| 7/14/2016 | 100 | % |
| | | | Office Total | 3,329,525 |
| | |
|
| | | | | | | | |
LEXINGTON NON-CONSOLIDATED PORTFOLIO PROPERTY CHART |
| As of December 31, 2011 |
| Property Location | City | State | Primary Tenant (Guarantor) | Net Rentable Square Feet | Current Lease Term Expiration | Percent Leased |
| INDUSTRIAL | | | | | | |
| 109 Stevens St. | Jacksonville | FL | Wagner Industries, Inc. | 168,800 |
| 1/31/2014 | 100 | % |
| 359 Gateway Dr. | Lavonia | GA | TI Group Automotive Systems, LLC (TI Automotive Ltd.) | 133,221 |
| 5/31/2020 | 100 | % |
| 3600 Army Post Rd. | Des Moines | IA | HP Enterprises Services, LLC | 405,000 |
| 4/30/2012 | 100 | % |
| 2935 Van Vactor Way | Plymouth | IN | Bay Valley Foods, LLC | 300,500 |
| 6/30/2015 | 100 | % |
| 6938 Elm Valley Dr. | Kalamazoo | MI | Dana Commercial Vehicle Products, LLC (Dana Holding Corporation and Dana Limited) | 150,945 |
| 10/25/2021 | 100 | % |
| 904 Industrial Rd. | Marshall | MI | Tenneco Automotive Operating Company, Inc. (Tenneco, Inc.) | 246,508 |
| 9/30/2018 | 100 | % |
| 1700 47th Ave N. | Minneapolis | MN | Owens Corning Sales LLC / Owens Corning Roofing and Asphalt, LLC | 18,620 |
| 6/30/2015 | 100 | % |
| 324 Industrial Park Rd. | Franklin | NC | SKF USA Inc. | 72,868 |
| 12/31/2014 | 100 | % |
| 736 Addison Rd. | Erwin | NY | Corning, Incorporated | 408,000 |
| 11/30/2016 | 100 | % |
| 590 Ecology Lane | Chester | SC | Owens Corning Sales, LLC | 420,597 |
| 7/14/2025 | 100 | % |
| 120 South East Pkwy Dr. | Franklin | TN | Essex Group, Inc. (United Technologies Corporation) | 289,330 |
| 12/31/2013 | 100 | % |
| 9110 Grogans Mill Rd. | The Woodlands | TX | Baker Hughes, Incorporated | 275,750 |
| 9/27/2015 | 100 | % |
| 2424 Alpine Rd. | Eau Claire | WI | Silver Spring Foods, Inc. (Huntsinger Farms, Inc.) | 159,000 |
| 4/30/2027 | 100 | % |
| | | | Industrial Total | 3,049,139 |
| | |
LEXINGTON CONSOLIDATED PORTFOLIO |
| | | | | | | | |
LEXINGTON NON-CONSOLIDATED PORTFOLIO PROPERTY CHART |
| As of December 31, 2011 |
| Property Location | City | State | Primary Tenant (Guarantor) | Net Rentable Square Feet | Current Lease Term Expiration | Percent Leased |
| RETAIL/OTHER | | | | | | |
| 101 Creger Dr. | Ft. Collins | CO | Lithia Real Estate, Inc. / D&M Automotive, Inc. (Lithia Motors, Inc.) | 10,000 |
| 5/31/2012 | 100 | % |
| 11411 N. Kelly Ave | Oklahoma City | OK | American Golf Corporation | 13,924 |
| 12/31/2017 | 100 | % |
| 25500 State Hwy 249 | Tomball | TX | Parkway Chevrolet, Inc. (Raymond Durdin & Jean W. Durdin) | 77,076 |
| 8/31/2026 | 100 | % |
| | | | Retail/Other Total | 101,000 |
| | |
| | | | Non-Consolidated Portfolio Grand Total | 6,479,664 |
| | |
PROPERTY CHARTThe average effective annual rent per square foot for the consolidated portfolio for the year ended December 31, 2011 was $8.13.
OFFICE
The following chart sets forth certain information regarding lease expirations for the next ten years in our consolidated portfolio:
| Property Location | | City | | State | | Primary Tenant (Guarantor) | | Net Rentable Square Feet | | Current Lease Term Expiration | | Percent Leased |
| 6226 W. Sahara Ave | | Las Vegas | | NV | | Nevada Power Company | | 282,000 | | 1/31/2014 | | 100 | % |
| 180 S. Clinton St. | | Rochester | | NY | | Frontier Corporation | | 226,000 | | 12/31/2014 | | 100 | % |
| 2000 Eastman Dr. | | Milford | | OH | | Siemens Shared Services, LLC | | 221,215 | | 4/30/2016 | | 100 | % |
| 500 Olde Worthington Rd | | Westerville | | OH | | InVentiv Communications, Inc. | | 97,000 | | 9/30/2015 | | 100 | % |
| 4848 129th E. Ave | | Tulsa | | OK | | HSBC Card Services, Inc. (HSBC Finance Corporation) | | 101,100 | | 1/31/2011 | | 100 | % |
| 275 Technology Dr. | | Canonsburg | | PA | | ANSYS, Inc. | | 107,872 | | 12/31/2014 | | 100 | % |
| 2550 Interstate Dr. | | Harrisburg | | PA | | New Cingular Wireless PCS, LLC | | 81,859 | | 12/31/2013 | | 100 | % |
| 1701 Market St. | | Philadelphia | | PA | | Morgan, Lewis & Bockius, LLC | | 307,775 | | 1/31/2014 | | 100 | % |
| 1460 Tobias Gadsen Blvd. | | Charleston | | SC | | Hagemeyer North America, Inc. | | 50,076 | | 7/8/2020 | | 100 | % |
| 2210 Enterprise Dr. | | Florence | | SC | | JPMorgan Chase Bank, NA | | 179,300 | | 6/30/2013 | | 100 | % |
| 3476 Stateview Blvd. | | Fort Mill | | SC | | Wells Fargo Bank, N.A. | | 169,083 | | 5/31/2014 | | 100 | % |
| 3480 Stateview Blvd. | | Fort Mill | | SC | | Wells Fargo Bank, N.A. | | 169,218 | | 5/31/2014 | | 100 | % |
| 400 E. Stone Ave | | Greenville | | SC | | Canal Insurance Company | | 128,041 | | 12/31/2029 | | 100 | % |
| 15 Nijborg | | 3927 DA Renswoude | | The Netherlands | | AS Watson (Health & Beauty Continental Europe, BV) | | 17,610 | | 12/20/2011 | | 100 | % |
| 17 Nijborg | | 3927 DA Renswoude | | The Netherlands | | AS Watson (Health & Beauty Continental Europe, BV) | | 114,195 | | 6/14/2018 | | 100 | % |
| 207 Mockingbird Lane | | Johnson City | | TN | | SunTrust Bank | | 63,800 | | 11/30/2011 | | 100 | % |
| 1409 Centerpoint Blvd. | | Knoxville | | TN | | Alstom Power, Inc. | | 84,404 | | 10/31/2014 | | 100 | % |
| 104 & 110 S. Front St. | | Memphis | | TN | | Hnedak Bobo Group, Inc. | | 37,229 | | 10/31/2016 | | 100 | % |
| 3965 Airways Blvd. | | Memphis | | TN | | Federal Express Corporation | | 521,286 | | 6/19/2019 | | 100 | % |
| 350 Pine St. | | Beaumont | | TX | | Multi-tenanted | | 425,198 | | Various | | 82 | % |
| 4001 International Pkwy | | Carrollton | | TX | | Motel 6 Operating, LP (Accor S.A.) | | 138,443 | | 7/31/2015 | | 100 | % |
| 4201 Marsh Ln | | Carrollton | | TX | | Carlson Restaurants Worldwide, Inc. (Carlson Companies, Inc.) | | 130,000 | | 11/30/2018 | | 100 | % |
| 6301 Gaston Ave | | Dallas | | TX | | Multi-tenanted | | 173,855 | | Various | | 63 | % |
| 11511 Luna Rd | | Farmers Branch | | TX | | Haggar Clothing Company (Texas Holding Clothing Corporation & Haggar Corporation) | | 180,507 | | 4/30/2016 | | 100 | % |
| 10001 Richmond Ave | | Houston | | TX | | Baker Hughes, Inc. | | 554,385 | | 9/27/2015 | | 100 | % |
| 1311 Broadfield Blvd. | | Houston | | TX | | Transocean Offshore Deepwater Drilling, Inc. (Transocean Sedco Forex, Inc.) | | 155,040 | | 3/31/2021 | | 100 | % |
|
| | | | | | | | |
| Year | Number of Lease Expirations | Square Feet | Annual Rent ($000) | Percentage of Annual Rent |
| 2012 | 44 | 2,980,657 | $ | 16,132 | | 5.5 | % | |
| 2013 | 38 | 2,941,861 | | 26,886 | | 9.2 | % | |
| 2014 | 40 | 3,026,023 | | 42,290 | | 14.5 | % | |
| 2015 | 22 | 2,089,526 | | 28,309 | | 9.7 | % | |
| 2016 | 23 | 2,719,892 | | 19,212 | | 6.6 | % | |
| 2017 | 13 | 2,707,814 | | 15,738 | | 5.4 | % | |
| 2018 | 22 | 2,964,284 | | 22,228 | | 7.6 | % | |
| 2019 | 17 | 3,720,001 | | 33,657 | | 11.5 | % | |
| 2020 | 8 | 1,521,436 | | 13,395 | | 4.6 | % | |
| 2021 | 11 | 2,203,366 | | 16,199 | | 5.5 | % | |
LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
OFFICE
|
| Property Location | | City | | State | | Primary Tenant (Guarantor) | | Net Rentable Square Feet | | Current Lease Term Expiration | | Percent Leased |
| 16676 Northchase Dr. | | Houston | | TX | | Anadarko Petroleum Corporation | | 101,111 | | 7/31/2014 | | 100 | % |
| 810 & 820 Gears Rd | | Houston | | TX | | IKON Office Solutions, Inc. | | 157,790 | | 1/31/2013 | | 100 | % |
| 6555 Sierra Dr. | | Irving | | TX | | TXU Energy Retail Company, LLC (Texas Competitive Electric Holdings Company, LLC) | | 247,254 | | 3/31/2023 | | 100 | % |
| 8900 Freeport Pkwy | | Irving | | TX | | Nissan Motor Acceptance Corporation (Nissan North America, Inc.) | | 268,445 | | 3/31/2013 | | 100 | % |
| 6200 Northwest Pkwy | | San Antonio | | TX | | United HealthCare Services, Inc. | | 142,500 | | 11/30/2017 | | 100 | % |
| 12645 W. Airport Rd | | Sugar Land | | TX | | Baker Hughes, Inc. | | 165,836 | | 9/27/2015 | | 100 | % |
| 2050 Roanoke Rd | | Westlake | | TX | | Chrysler Financial Services Americas, LLC | | 130,290 | | 12/31/2011 | | 100 | % |
| 295 Chipeta Way | | Salt Lake City | | UT | | University of Utah | | 295,000 | | 9/15/2018 | | 100 | % |
| 100 E. Shore Dr. | | Glen Allen | | VA | | Multi-tenanted | | 67,508 | | Various | | 95 | % |
| 120 E. Shore Dr. | | Glen Allen | | VA | | Capital One Services, LLC | | 77,045 | | 3/31/2012 | | 100 | % |
| 130 E. Shore Dr. | | Glen Allen | | VA | | Multi-tenanted | | 79,675 | | Various | | 100 | % |
| 400 Butler Farm Rd | | Hampton | | VA | | Nextel Communications of the Mid-Atlantic, Inc. (Nextel Finance Company) | | 100,632 | | 12/31/2014 | | 100 | % |
| 421 Butler Farm Rd | | Hampton | | VA | | Nextel Communications of the Mid-Atlantic, Inc. (Nextel Finance Company) | | 56,515 | | 1/14/2010 | | 100 | % |
| 13651 McLearen Rd | | Herndon | | VA | | US Government | | 159,664 | | 5/30/2018 | | 100 | % |
| 13775 McLearen Rd | | Herndon | | VA | | Equant, Inc. (Equant N.V.) | | 125,293 | | 4/30/2015 | | 100 | % |
| 2800 Waterford Lake Dr. | | Richmond | | VA | | Alstom Power, Inc. | | 99,057 | | 10/31/2014 | | 100 | % |
| 22011 S.E. 51st St. | | Issaquah | | WA | | OSI Systems, Inc. (Instrumentarium Corporation) | | 95,600 | | 12/14/2014 | | 100 | % |
| 5150 220th Ave | | Issaquah | | WA | | OSI Systems, Inc. (Instrumentarium Corporation) | | 106,944 | | 12/14/2014 | | 100 | % |
| | | | | | | Office Total | | 16,364,876 | | | | | |
LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
INDUSTRIAL
|
Property Location | | City | | State | | Primary Tenant (Guarantor) | | Net Rentable Square Feet | | Current Lease Term Expiration | | Percent Leased |
| 2415 U.S. Hwy 78 E. | | Moody | | AL | | CEVA Logistics U.S., Inc. (TNT Holdings B.V.) | | 595,346 | | 1/2/2014 | | 100 | % |
| 1665 Hughes Way | | Long Beach | | CA | | Vacant | | 200,541 | | None | | 0 | % |
| 2455 Premier Dr. | | Orlando | | FL | | Walgreen Company | | 205,016 | | 3/31/2011 | | 100 | % |
| 3102 Queen Palm Dr. | | Tampa | | FL | | Time Customer Service, Inc. (Time, Inc.) | | 229,605 | | 6/30/2020 | | 100 | % |
| 1420 Greenwood Rd | | McDonough | | GA | | Versacold USA, Inc. | | 296,972 | | 10/31/2017 | | 100 | % |
| 7500 Chavenelle Rd | | Dubuque | | IA | | The McGraw-Hill Companies, Inc. | | 330,988 | | 6/30/2017 | | 100 | % |
| 3686 S. Central Ave | | Rockford | | IL | | Jacobson Warehouse Company, Inc. (Jacobson Distribution Company, Inc. and Jacobson Transportation Company, Inc.) | | 90,000 | | 12/31/2014 | | 100 | % |
| 749 Southrock Dr. | | Rockford | | IL | | Jacobson Warehouse Company, Inc. (Jacobson Distribution Company, Inc. and Jacobson Transportation Company, Inc.) | | 150,000 | | 12/31/2015 | | 100 | % |
| 10000 Business Blvd. | | Dry Ridge | | KY | | Dana Light Axle Products, LLC (Dana Holding Corporation and Dana Limited) | | 336,350 | | 6/30/2025 | | 100 | % |
| 730 N. Black Branch Rd | | Elizabethtown | | KY | | Dana Structural Products, LLC (Dana Holding Corporation and Dana Limited) | | 167,770 | | 6/30/2025 | | 100 | % |
| 750 N. Black Branch Rd | | Elizabethtown | | KY | | Dana Structural Products, LLC (Dana Holding Corporation and Dana Limited) | | 539,592 | | 6/30/2025 | | 100 | % |
| 301 Bill Bryan Rd | | Hopkinsville | | KY | | Dana Structural Products, LLC (Dana Holding Corporation and Dana Limited) | | 424,904 | | 6/30/2025 | | 100 | % |
| 1901 Ragu Dr. | | Owensboro | | KY | | Unilever Supply Chain, Inc. (Unilever United States, Inc.) | | 443,380 | | 12/19/2020 | | 100 | % |
| 4010 Airpark Dr. | | Owensboro | | KY | | Dana Structural Products, LLC (Dana Holding Corporation and Dana Limited) | | 211,598 | | 6/30/2025 | | 100 | % |
| 5001 Greenwood Rd | | Shreveport | | LA | | Libbey Glass, Inc. (Libbey, Inc.) | | 646,000 | | 10/31/2026 | | 100 | % |
| 113 Wells St. | | North Berwick | | ME | | United Technologies Corporation | | 972,625 | | 4/30/2019 | | 100 | % |
| 1601 Pratt Ave | | Marshall | | MI | | Joseph Campbell Company | | 58,300 | | 3/31/2010 | | 100 | % |
| 43955 Plymouth Oaks Blvd. | | Plymouth | | MI | | Tower Automotive Operations USA I, LLC (Tower Automotive Holdings I, LLC) | | 290,133 | | 10/31/2012 | | 100 | % |
| 7111 Crabb Rd | | Temperance | | MI | | CEVA Logistics U.S., Inc. (TNT Holdings B.V.) | | 744,570 | | 8/4/2012 | | 100 | % |
| 7670 Hacks Cross Rd | | Olive Branch | | MS | | MAHLE Clevite, Inc. (MAHLE Industries, Inc.) | | 268,104 | | 2/28/2016 | | 100 | % |
| 1133 Poplar Creek Rd | | Henderson | | NC | | Staples, Inc. | | 196,946 | | 1/31/2014 | | 100 | % |
| 250 Swathmore Ave | | High Point | | NC | | Steelcase, Inc. | | 244,851 | | 9/30/2017 | | 100 | % |
| 2880 Kenny Biggs Rd | | Lumberton | | NC | | Quickie Manufacturing Corporation | | 423,280 | | 11/30/2021 | | 100 | % |
| 2203 Sherrill Dr. | | Statesville | | NC | | LA-Z-Boy Greensboro, Inc. (LA-Z-Boy, Inc.) | | 639,600 | | 4/30/2010 | | 100 | % |
| 121 Technology Dr. | | Durham | | NH | | Heidelberg Web Systems, Inc. | | 500,500 | | 3/30/2021 | | 100 | % |
| 1109 Commerce Blvd. | | Swedesboro | | NJ | | Vacant | | 262,644 | | None | | 0 | % |
| 75 N. St. | | Saugerties | | NY | | Rotron, Inc. (EG&G) | | 52,000 | | 12/31/2014 | | 100 | % |
| 10590 Hamilton Ave | | Cincinnati | | OH | | The Hillman Group, Inc. | | 248,200 | | 8/31/2016 | | 100 | % |
| 1650 - 1654 Williams Rd | | Columbus | | OH | | ODW Logistics, Inc. | | 772,450 | | 6/30/2018 | | 100 | % |
| 7005 Cochran Rd | | Glenwillow | | OH | | Royal Appliance Manufacturing Company | | 458,000 | | 7/31/2025 | | 100 | % |
LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
INDUSTRIAL
|
Property Location | | City | | State | | Primary Tenant (Guarantor) | | Net Rentable Square Feet | | Current Lease Term Expiration | | Percent Leased |
| 191 Arrowhead Dr. | | Hebron | | OH | | Owens Corning Insulating Systems, LLC | | 250,410 | | Month to Month | | 41 | % |
| 200 Arrowhead Dr. | | Hebron | | OH | | Owens Corning Insulating Systems, LLC | | 400,522 | | 5/31/2010 | | 100 | % |
| 10345 Philipp Pkwy | | Streetsboro | | OH | | L'Oreal USA S/D, Inc. (L’Oreal USA, Inc.) | | 649,250 | | 10/17/2019 | | 100 | % |
| 250 Rittenhouse Circle | | Bristol | | PA | | Vacant | | 255,019 | | None | | 0 | % |
| 245 Salem Church Rd | | Mechanicsburg | | PA | | Exel Logistics, Inc. (NFC plc) | | 252,000 | | 12/31/2012 | | 100 | % |
| 34 E. Main St. | | New Kingston | | PA | | Vacant | | 179,200 | | None | | 0 | % |
| 6 Doughten Rd | | New Kingston | | PA | | Vacant | | 330,000 | | None | | 0 | % |
| 224 Harbor Freight Rd | | Dillon | | SC | | Harbor Freight Tools USA, Inc. (Central Purchasing, Inc.) | | 1,010,859 | | 12/31/2021 | | 100 | % |
| 50 Tyger River Dr. | | Duncan | | SC | | Plastic Omnium Exteriors, LLC | | 221,833 | | 9/30/2018 | | 100 | % |
| 101 Michelin Dr. | | Laurens | | SC | | CEVA Logistics U.S., Inc. (TNT Holdings B.V.) | | 1,164,000 | | 8/4/2012 | | 100 | % |
| 6050 Dana Way | | Antioch | | TN | | W.M. Wright Company | | 674,528 | | 3/31/2021 | | 52 | % |
| 477 Distribution Pkwy | | Collierville | | TN | | Federal Express Corporation | | 120,000 | | 5/31/2021 | | 100 | % |
| 900 Industrial Blvd. | | Crossville | | TN | | Dana Commercial Vehicle Products, LLC | | 222,200 | | 9/30/2016 | | 100 | % |
| 3350 Miac Cove Rd | | Memphis | | TN | | Mimeo.com, Inc. | | 141,359 | | 9/30/2020 | | 84 | % |
| 3456 Meyers Ave | | Memphis | | TN | | Sears, Roebuck & Company | | 780,000 | | 2/28/2017 | | 100 | % |
| 3820 Micro Dr. | | Millington | | TN | | Ingram Micro, LP (Ingram Micro, Inc.) | | 701,819 | | 9/25/2011 | | 100 | % |
| 19500 Bulverde Rd | | San Antonio | | TX | | Harcourt, Inc. (Harcourt General, Inc.) | | 559,258 | | 3/31/2016 | | 100 | % |
| 2425 Hwy 77 N. | | Waxahachie | | TX | | James Hardie Building Products, Inc. (James Hardie N.V.) | | 335,610 | | 3/31/2020 | | 100 | % |
| 291 Park Center Dr. | | Winchester | | VA | | Kraft Foods North America, Inc. | | 344,700 | | 5/31/2011 | | 100 | % |
| | | | | | | Industrial Total | | 19,592,832 | | | | | |
LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
RETAIL/OTHER
|
Property Location | | City | | State | | Primary Tenant (Guarantor) | | Net Rentable Square Feet | | Current Lease Term Expiration | | Percent Leased |
| 302 Coxcreek Pkwy | | Florence | | AL | | The Kroger Company | | 42,130 | | 7/1/2013 | | 100 | % |
| 5544 Atlanta Hwy | | Montgomery | | AL | | Vacant | | 60,698 | | None | | 0 | % |
| 10415 Grande Ave | | Sun City | | AZ | | Cafeteria Operators, LP (Furrs Restaurant Group, Inc.) | | 10,000 | | 4/30/2012 | | 100 | % |
| 255 Northgate Dr. | | Manteca | | CA | | Kmart Corporation | | 107,489 | | 12/31/2018 | | 100 | % |
| 12080 Carmel Mountain Rd | | San Diego | | CA | | Sears Holding Corporation | | 107,210 | | 12/31/2018 | | 100 | % |
| 10340 U.S. 19 | | Port Richey | | FL | | Kingswere Furniture | | 53, 280 | | 10/31/2018 | | 100 | % |
| 2010 Apalachee Pkwy | | Tallahassee | | FL | | Kohl’s Department Stores, Inc. | | 102,381 | | 1/31/2028 | | 100 | % |
| 1032 Fort St. Mall | | Honolulu | | HI | | Macy’s Department Stores, Inc. | | 85,610 | | 4/30/2019 | | 100 | % |
| 1150 W. Carl Sandburg Dr. | | Galesburg | | IL | | Kmart Corporation | | 94,970 | | 12/31/2018 | | 100 | % |
| 5104 N. Franklin Rd | | Lawrence | | IN | | Marsh Supermarkets, Inc. | | 28,721 | | 10/31/2013 | | 100 | % |
| 205 Homer Rd | | Minden | | LA | | Brookshire Grocery | | 35,000 | | 11/30/2012 | | 100 | % |
| 35400 Cowan Rd | | Westland | | MI | | Vacant | | 101,402 | | None | | 0 | % |
| 24th St. W. & St. John’s Ave | | Billings | | MT | | Safeway Stores, Inc. | | 40,800 | | 5/31/2015 | | 100 | % |
| 104 Branchwood Shopping Center | | Jacksonville | | NC | | Food Lion, Inc. (Delhaize America, Inc.) | | 23,000 | | 2/28/2013 | | 100 | % |
| US 221 & Hospital Rd | | Jefferson | | NC | | Food Lion, Inc. (Delhaize America, Inc.) | | 23,000 | | 2/28/2013 | | 100 | % |
| 291 Talbert Blvd. | | Lexington | | NC | | Food Lion, Inc. (Delhaize America, Inc.) | | 23,000 | | 2/28/2013 | | 100 | % |
| 835 Julian Ave | | Thomasville | | NC | | Mighty Dollar, LLC | | 23,767 | | 9/30/2018 | | 100 | % |
| 900 S. Canal St. | | Carlsbad | | NM | | Cafeteria Operators, LP (Furrs Restaurant Group, Inc.) | | 10,000 | | 4/30/2012 | | 100 | % |
| 130 Midland Ave | | Port Chester | | NY | | Pathmark Stores, Inc. | | 59,000 | | 10/31/2013 | | 100 | % |
| 21082 Pioneer Plaza Dr. | | Watertown | | NY | | Kmart Corporation | | 120,727 | | 12/31/2018 | | 100 | % |
| 4733 Hills and Dales Rd | | Canton | | OH | | Bally’s Total Fitness of the Midwest (Bally’s Health & Tennis Corporation) | | 37,214 | | 6/30/2011 | | 100 | % |
| 4831 Whipple Avenue N.W. | | Canton | | OH | | Best Buy Company, Inc. | | 46,350 | | 2/26/2018 | | 100 | % |
| 1084 E. Second St. | | Franklin | | OH | | Marsh Supermarkets, Inc. | | 29,119 | | 10/31/2013 | | 100 | % |
| 5350 Leavitt Rd | | Lorain | | OH | | Kmart Corporation | | 193,193 | | 12/31/2018 | | 100 | % |
| N.E.C. 45th Street & Lee Blvd. | | Lawton | | OK | | Associated Wholesale Grocers, Inc. | | 30,757 | | 3/31/2014 | | 100 | % |
| 6910 S. Memorial Hwy | | Tulsa | | OK | | Toys “R” Us, Inc. | | 43,123 | | 5/31/2011 | | 100 | % |
12525 S.E. 82nd Ave | | Clackamas | | OR | | Toys “R” Us, Inc. | | 42,842 | | 5/31/2011 | | 100 | % |
| S. Carolina 52/52 Bypass | | Moncks Corner | | SC | | Food Lion, Inc. (Delhaize America, Inc.) | | 23,000 | | 2/28/2013 | | 100 | % |
| 811 U.S. Highway 17 | | North Myrtle Beach | | SC | | Vacant | | 41,021 | | None | | 0 | % |
| 399 Peach Wood Centre Dr. | | Spartanburg | | SC | | Best Buy Company, Inc. | | 45,800 | | 2/26/2018 | | 100 | % |
| 1600 E. 23rd St. | | Chattanooga | | TN | | BI- LO, LLC | | 42,130 | | 7/1/2010 | | 100 | % |
LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
RETAIL/OTHER
|
Property Location | | City | | State | | Primary Tenant (Guarantor) | | Net Rentable Square Feet | | Current Lease Term Expiration | | Percent Leased |
| 1053 Mineral Springs Rd | | Paris | | TN | | The Kroger Company | | 31,170 | | 7/1/2013 | | 100 | % |
| 3040 Josey Lane | | Carrollton | | TX | | Ong’s Family, Inc. | | 61,000 | | 1/31/2021 | | 100 | % |
| 4121 S. Port Ave | | Corpus Christi | | TX | | Cafeteria Operators, LP (Furr’s Restaurant Group, Inc.) | | 10,000 | | 4/30/2012 | | 100 | % |
| 1610 S. Westmoreland Ave | | Dallas | | TX | | Malone’s Food Stores | | 68,024 | | 3/31/2017 | | 100 | % |
| 119 N. Balboa Rd | | El Paso | | TX | | Cafeteria Operators, LP (Furrs Restaurant Group, Inc.) | | 10,000 | | 4/30/2012 | | 100 | % |
| 3451 Alta Mesa Blvd. | | Fort Worth | | TX | | Minyard Food Stores, Inc. | | 44,000 | | 5/31/2012 | | 100 | % |
| 101 W. Buckingham Rd | | Garland | | TX | | Minyard Food Stores, Inc. | | 40,000 | | 11/30/2012 | | 100 | % |
| 4811 Wesley St. | | Greenville | | TX | | Safeway Stores, Inc. | | 48,492 | | 5/31/2011 | | 100 | % |
| 120 S. Waco St. | | Hillsboro | | TX | | Brookshire Grocery | | 35,000 | | 11/30/2012 | | 100 | % |
| 13133 Steubner Ave | | Houston | | TX | | The Kroger Company | | 52,200 | | 12/29/2011 | | 100 | % |
| 901 W. Expressway | | McAllen | | TX | | Cafeteria Operators, LP (Furrs Restaurant Group, Inc.) | | 10,000 | | 4/30/2012 | | 100 | % |
| 402 E. Crestwood Dr. | | Victoria | | TX | | Cafeteria Operators, LP (Furrs Restaurant Group, Inc.) | | 10,000 | | 4/30/2012 | | 100 | % |
| 3211 W. Beverly St. | | Staunton | | VA | | Food Lion, Inc. (Delhaize America, Inc.) | | 23,000 | | 2/28/2013 | | 100 | % |
| 9803 Edmonds Way | | Edmonds | | WA | | Pudget Consumers Co-op d/b/a PCC Natural Markets | | 34,459 | | 8/31/2028 | | 100 | % |
| 18601 Alderwood Mall Blvd. | | Lynnwood | | WA | | Toys “R” Us, Inc. | | 43,105 | | 5/31/2011 | | 100 | % |
| 1700 State Route 160 | | Port Orchard | | WA | | Moran Foods, Inc. d/b/a Save-A-Lot, Ltd. | | 27,968 | | 1/31/2015 | | 57 | % |
| 97 Seneca Trail | | Fairlea | | WV | | Kmart Corporation | | 90,933 | | 12/31/2018 | | 100 | % |
| | | | | | | Retail/Other Subtotal | | 2,366,085 | | | | | |
| | | | | | | Consolidated Portfolio Grand Total | | 38,323,793 | | | | | |
LEXINGTON
NON-CONSOLIDATED PORTFOLIO PROPERTY
CHART
|
Property Location | | City | | State | | Primary Tenant (Guarantor) | | Net Rentable Square Feet | | Current Lease Term Expiration | | Percent Leased |
| OFFICE | | | | | | | | | | | | | |
| 5201 W. Barraque St. | | Pine Bluff | | AR | | Entergy Services, Inc. | | 27,189 | | 10/31/2015 | | 100 | % |
| Route 64 W. & Junction 333 | | Russellville | | AR | | Entergy Gulf States | | 191,950 | | 5/9/2016 | | 100 | % |
| 19019 N. 59th Ave | | Glendale | | AZ | | Honeywell International, Inc. | | 252,300 | | 7/15/2011 | | 100 | % |
| 8555 S. River Pkwy | | Tempe | | AZ | | ASM Lithography, Inc. (ASM Lithography Holding NV) | | 95,133 | | 6/30/2013 | | 100 | % |
| 1440 E. 15th St. | | Tucson | | AZ | | CoxCom, Inc. | | 28,591 | | 7/31/2022 | | 100 | % |
| 10419 N. 30th St. | | Tampa | | FL | | Time Customer Service, Inc. | | 132,981 | | 6/30/2020 | | 100 | % |
| 2500 Patrick Henry Pkwy | | McDonough | | GA | | Georgia Power Company | | 111,911 | | 6/30/2015 | | 100 | % |
| 3500 N. Loop Court | | McDonough | | GA | | Litton Loan Servicing, LP | | 62,218 | | 8/31/2018 | | 100 | % |
| 3265 E. Goldstone Dr. | | Meridian | | ID | | VoiceStream PCS Holding, LLC (T-Mobile USA, Inc.) | | 77,484 | | 6/28/2019 | | 100 | % |
| 101 E. Washington Blvd. | | Fort Wayne | | IN | | American Electric Power | | 348,452 | | 10/31/2016 | | 100 | % |
| 9601 Renner Blvd. | | Lenexa | | KS | | Voicestream PCS II Corporation (T-Mobile USA, Inc.) | | 77,484 | | 10/31/2019 | | 100 | % |
| 70 Mechanic St. | | Foxboro | | MA | | Invensys Systems, Inc. (Siebe, Inc.) | | 251,914 | | 7/1/2014 | | 100 | % |
| First Park Dr. | | Oakland | | ME | | Omnipoint Holdings, Inc. (T-Mobile USA, Inc.) | | 78,610 | | 8/31/2020 | | 100 | % |
| 12000 & 12025 Tech Center Dr. | | Livonia | | MI | | Kelsey-Hayes Company (TRW Automotive, Inc.) | | 180,230 | | 4/30/2014 | | 100 | % |
| 3943 Denny Ave | | Pascagoula | | MS | | Northrop Grumman Systems Corporation | | 94,841 | | 10/14/2013 | | 100 | % |
| 3201 Quail Springs Pkwy | | Oklahoma City | | OK | | AT& T Wireless Services, Inc. | | 128,500 | | 11/30/2010 | | 90 | % |
| 2999 SW 6th St. | | Redmond | | OR | | VoiceStream PCS I, LLC (T-Mobile USA, Inc.) | | 77,484 | | 1/31/2019 | | 100 | % |
| 265 Lehigh St. | | Allentown | | PA | | Wachovia Bank National Association | | 71,230 | | 10/31/2010 | | 100 | % |
| 420 Riverport Rd | | Kingport | | TN | | Kingsport Power Company | | 42,770 | | 6/30/2013 | | 100 | % |
| 2401 Cherahala Blvd. | | Knoxville | | TN | | Advance PCS, Inc. | | 59,748 | | 5/31/2013 | | 100 | % |
| 601 & 701 Experian Pkwy | | Allen | | TX | | Experian Information Solutions, Inc. (Experian Holdings, Inc.) | | 292,700 | | 3/15/2018 | | 100 | % |
| 1401 & 1501 Nolan Ryan Pkwy | | Arlington | | TX | | Siemens Shared Services, LLC | | 236,547 | | 1/31/2014 | | 100 | % |
| 1200 Jupiter Rd | | Garland | | TX | | Raytheon Company | | 278,759 | | 5/31/2011 | | 100 | % |
| 2529 W. Thorne Dr. | | Houston | | TX | | Baker Hughes, Inc. | | 65,500 | | 9/27/2015 | | 100 | % |
| 26410 McDonald Rd | | Houston | | TX | | Montgomery County Management Company, LLC | | 41,000 | | 10/31/2019 | | 100 | % |
| 3711 San Gabriel | | Mission | | TX | | VoiceStream PCS II Corporation (T-Mobile USA, Inc.) | | 75,016 | | 6/30/2015 | | 100 | % |
| 11555 University Blvd. | | Sugar Land | | TX | | KS Management Services, LLP (St. Luke’s Episcopal Health System Corporation) | | 72,683 | | 11/30/2020 | | 100 | % |
| 1600 Eberhardt Rd | | Temple | | TX | | Nextel of Texas | | 108,800 | | 1/31/2016 | | 100 | % |
| 6455 State Hwy 303 N.E. | | Bremerton | | WA | | Nextel West Corporation | | 60,200 | | 7/14/2016 | | 100 | % |
| | | | | | | Office Total | | 3,622,225 | | | | | |
LEXINGTON
NON-CONSOLIDATED PORTFOLIO PROPERTY
CHART
|
Property Location | | City | | State | | Primary Tenant (Guarantor) | | Net Rentable Square Feet | | Current Lease Term Expiration | | Percent Leased |
| INDUSTRIAL | | | | | | | | | | | | | |
| 109 Stevens St. | | Jacksonville | | FL | | Cardinal Unijax, LLC and Camelot Drive Holdings, LLC | | 168,800 | | 3/31/2010 | | 35 | % |
| 359 Gateway Dr. | | Livonia | | GA | | TI Group Automotive Systems, LLC (TI Automotive Ltd.) | | 133,221 | | 5/31/2020 | | 100 | % |
| 3600 Army Post Rd | | Des Moines | | IA | | Electronic Data Systems, LLC | | 405,000 | | 4/30/2012 | | 100 | % |
| 2935 Van Vactor Way | | Plymouth | | IN | | Bay Valley Foods, LLC | | 300,500 | | 6/30/2015 | | 100 | % |
| 6938 Elm Valley Dr. | | Kalamazoo | | MI | | Dana Commercial Vehicle Products, LLC (Dana Holding Corporation and Dana Limited) | | 150,945 | | 10/25/2021 | | 100 | % |
| 904 Industrial Rd | | Marshall | | MI | | Tenneco Automotive Operating Company, Inc. (Tenneco, Inc.) | | 246,508 | | 9/30/2018 | | 100 | % |
| 1700 47th Ave N. | | Minneapolis | | MN | | Owens Corning Roofing and Asphalt, LLC | | 18,620 | | 6/30/2015 | | 100 | % |
| 324 Industrial Park Rd | | Franklin | | NC | | SKF USA, Inc. | | 72,868 | | 12/31/2014 | | 100 | % |
| 736 Addison Rd | | Erwin | | NY | | Corning, Inc. | | 408,000 | | 11/30/2016 | | 100 | % |
| 590 Ecology Lane | | Chester | | SC | | Owens Corning, Inc. | | 420,597 | | 7/14/2025 | | 100 | % |
| 120 S.E. Pkwy Dr. | | Franklin | | TN | | Essex Group, Inc. (United Technologies Corporation) | | 289,330 | | 12/31/2013 | | 100 | % |
| 9110 Grogans Mill Rd | | Houston | | TX | | Baker Hughes, Inc. | | 275,750 | | 9/27/2015 | | 100 | % |
| 2424 Alpine Rd | | Eau Claire | | WI | | Silver Spring Gardens, Inc. (Huntsinger Farms, Inc.) | | 159,000 | | 4/30/2027 | | 100 | % |
| | | | | | | Industrial Total | | 3,049,139 | | | | | |
LEXINGTON
NON-CONSOLIDATED PORTFOLIO PROPERTY
CHART
|
Property Location | | City | | State | | Primary Tenant (Guarantor) | | Net Rentable Square Feet | | Current Lease Term Expiration | | Percent Leased |
| RETAIL/OTHER | | | | | | | | | | | | | |
| 101 Creger Dr. | | Ft. Collins | | CO | | Lithia Motors | | 10,000 | | 5/31/2012 | | 100 | % |
| 11411 N. Kelly Ave | | Oklahoma City | | OK | | American Golf Corporation | | 13,924 | | 12/31/2017 | | 100 | % |
| 25500 State Hwy 249 | | Tomball | | TX | | Parkway Chevrolet, Inc. (R. Durdin, J. Durdin) | | 77,076 | | 8/31/2026 | | 100 | % |
| | | | | | | Retail/Other Total | | 101,000 | | | | | |
| | | | | | | Non-Consolidated Portfolio Grand Total | | 6,772,364 | | | | | |
Item 3. Legal Proceedings
From time to time we are directly and indirectly involved in legal proceedings arising in the ordinary course of our business. In our management’s opinion,We believe, based on currently available information, and after consultation with legal counsel, that the outcomeresults of such matters, includingproceedings, in the matters set forth below, areaggregate, will not expected to have a material adverse effect on our ownership, financial condition, management or operation ofbut might be material to our properties or business.operating results for any particular period, depending, in part, upon the operating results for such period. See note 19 to the Consolidated Financial Statements in Part II, Item 8 for information on certain legal proceedings.
Deutsche Bank Securities, Inc. and SPCP Group LLC v. Lexington Drake, L.P., et al. (Supreme Court of the State of New York-Index No. 603051/08)
On June 30, 2006, we, including a co-investment program as it relates to the Antioch claim, sold to Deutsche Bank Securities, Inc., which we refer to as Deutsche Bank, (1) a $7.7 million bankruptcy damage claim against Dana Corporation for $5.4 million, which we refer to as the Farmington Hills claim and (2) a $7.7 million bankruptcy damage claim against Dana Corporation for $5.7 million, which we refer to as the Antioch claim. Under the terms of the agreements covering the sale of the claims, we are obligated to reimburse Deutsche Bank should the claim ever be disallowed, subordinated or otherwise impaired, to the extent of such disallowance, subordination or impairment, plus interest at the rate of 10% per annum from the date of payment of the purchase price by Deutsche Bank to us. On October 12, 2007, Dana Corporation filed an objection to both claims. We assisted Deutsche Bank and the then holders of the claims in the preparation and filing of a response to the objection. Despite a belief by us that the objections were without merit, the holders of the claims, without our consent, settled the allowed amount of the claims at $6.5 million for the Farmington Hills claim and $7.2 million for the Antioch claim. Deutsche Bank made a formal demand with respect to the Farmington Hills claim in the amount of $0.8 million plus interest, but did not make a formal demand with respect to the Antioch claim. Following a rejection of the demand by us, Deutsche Bank and SPCP Group, LLC filed a summons and complaint with the Supreme Court of the State of New York, County of New York for the Farmington Hills and Antioch claims, and claimed damages of $1.2 million plus interest and expenses.
We answered the complaint on November 26, 2008 and served numerous discovery requests. After almost a year of inactivity, a preliminary conference occurred on February 1, 2010. A briefing schedule was established for both plaintiffs and defendants to file motions for summary judgment, while reserving all rights to future depositions and discovery if the court finds there are outstanding questions of fact and denies the motions. The motions must be filed on or before March 11, 2010, with oppositions due on April 13, 2010 and replies due on April 28, 2010. The hearing on the motions has been initially scheduled for May 19, 2010, subject to the court’s availability.
We intend to file a motion for summary judgment and to vigorously defend the claims for a variety of reasons, including that (1) the holders of the claims arbitrarily settled the claims for reasons based on factors other than the merits, (2) the holders of the claims voluntarily reduced the claims to participate in certain settlement pools and (3) the contract language that supports the plaintiff’s position was specifically negotiated out of the agreement covering the sale of the claims.
Inland American (Concord) Sub, LLC v. Lex-Win Concord LLC and Concord Debt Holdings LLC (Delaware Court of Chancery – C.A. No. 4617-VCL)
On May 22, 2009, Inland American (Concord) Sub, LLC, which we refer to as Inland Concord, a wholly-owned subsidiary of Inland American Real Estate Trust, Inc., filed a legal action against Lex-Win Concord and Concord generally seeking declaratory relief that Inland Concord should not be required to satisfy a May 11, 2009 capital call made by Concord in the amount of $24.0 million and that Inland Concord is entitled to a priority return of its capital. Lex-Win Concord filed counterclaims against Inland Concord, which state, in general, that Inland Concord is in material breach of their agreements with Lex-Win Concord and seeking to recover all losses incurred by it as a result of such breach.
On December 21, 2009, the applicable parties and certain of their affiliates entered into a settlement agreement to resolve the action, which would provide for, among other things, (1) no obligation on any of the parties to make additional contributions to Concord, (2) the allocation of distributions equally among Inland Concord, Winthrop and us and (3) the formation of a new entity to be owned by subsidiaries of Inland Concord, Winthrop and us which, under certain circumstances, would contribute assets to Concord Real Estate CDO 2006-1, LTD, which we refer to as CDO-1. The effectiveness of the settlement agreement is conditioned on certain conditions, including the ability of certain CDO-1 bonds held by a subsidiary of Concord to be cancelled.
Newkirk Skoob L.P. v. Elsevier STM, Inc. (Orange County, Florida Circuit Court – Case No. 09-CA-020180 Complex Business Litigation Court)
On June 24, 2009, Newkirk Skoob L.P., a wholly-owned subsidiary, (as successor to Skoob Associates L.P.) filed a complaint in the Complex Business Litigation Court of the Circuit Court of the Ninth Judicial Circuit in Orange County, Florida against Elsevier STM, Inc. (as successor to Harcourt Brace Jovanovich, Inc.), or Elsevier, the former tenant in our Orlando, Florida facility, for breach of lease and holdover rent pursuant to the lease and Section 83.06, Florida Statutes, for the time Elsevier remained on the premises after the lease’s expiration.
Elsevier filed its answer during the third quarter of 2009. We then filed a motion to strike certain of Elsevier’s affirmative defenses because several are insufficiently pled under Florida law, several are not legal defenses to the claims at issue, and several are not affirmative defenses at all. Elsevier filed a motion opposing our motion to strike Elsevier’s affirmative defenses and the court granted our motion to strike Elsevier’s affirmative defenses with leave for Elsevier to amend its answer by November 9, 2009.
In October, 2009, Elsevier paid a portion of past due rent, but a rent and real estate tax reimbursement balance of $1.1 million (not including default interest) remains unpaid.
Trial is set for April 2011. We filed a motion to amend our complaint to add additional allegations of breach including code violations and failure to remove items from the premises, which Elsevier opposed, and a hearing is set for March 3, 2010. Expert inspections have occurred and expert reports are being prepared. Discovery is continuing.
We intend to continue to pursue this claim vigorously, as we believe, after consultation with counsel, that we are entitled to recovery of the past due rent, real estate tax allocation and the costs of deferred maintenance under the lease.
Item 4. Submission of Matters to a Vote of Security HoldersMine Safety Disclosures
None.
Executive Officers of the RegistrantNot applicable.
The following sets forth certain information relating to our executive officers:
Name | | Business Experience |
E. Robert Roskind
Age 64
| | Mr. Roskind again became our Chairman on March 20, 2008, after initially serving as Chairman from October 1993 to December 31, 2006 and Co-Chief Executive Officer from October 1993 to January 2003. He founded The LCP Group, L.P., a real estate advisory firm, in 1973 and has been its Chairman since 1976. Mr. Roskind also serves as Chairman of Crescent Hotels and Resorts and as a member of the Board of Directors of LCP REIT Advisors, the external advisor to LCP Investment Corporation, a Japanese real estate investment trust listed on the Tokyo Stock Exchange. |
| | |
Richard J. Rouse
Age 64
| | Mr. Rouse became our Vice Chairman again on March 21, 2008, having previously served as our Co-Vice Chairman from December 31, 2006 to March 21, 2008, our President from October 1993 to April 1996 and our Co-Chief Executive Officer from October 1993 to January 2003, and continues to serve as our Chief Investment Officer since January 2003 and as one of our trustees since October 1993. |
| | |
T. Wilson Eglin
Age 45
| | Mr. Eglin has served as our Chief Executive Officer since January 2003, our Chief Operating Officer since October 1993, our President since April 1996 and as a trustee since May 1994. He served as one of our Executive Vice Presidents from October 1993 to April 1996. Mr. Eglin is a member of the Investment Committee of Concord appointed by us. |
| | |
Patrick Carroll
Age 46
| | Mr. Carroll has served as our Chief Financial Officer since May 1998, our Treasurer since January 1999 and one of our Executive Vice Presidents since January 2003. Prior to joining us, Mr. Carroll was, from 1986 to 1998, in the real estate practice of Coopers & Lybrand L.L.P., a public accounting firm that was one of the predecessors of PricewaterhouseCoopers LLP. |
| | |
Paul R. Wood
Age 49
| | Mr. Wood has served as one of our Vice Presidents, and our Chief Accounting Officer and Secretary since October 1993. |
PART II.
Item 5. Market For Registrant’sRegistrant's Common Equity, Related ShareholderMatters And Issuer Purchases of Equity Securities
Market Information. Our common shares are listed for trading on the NYSE under the symbol “LXP”. The following table sets forth the high and low sales prices as reported by the NYSE for our common shares for each of the periods indicated below:
| For the Quarters Ended: | | High | | | Low | |
| December 31, 2009 | | $ | 6.41 | | | $ | 3.96 | |
| September 30, 2009 | | | 5.98 | | | | 2.81 | |
| June 30, 2009 | | | 5.74 | | | | 2.22 | |
| March 31, 2009 | | | 6.08 | | | | 1.93 | |
| December 31, 2008 | | | 16.85 | | | | 2.99 | |
| September 30, 2008 | | | 17.24 | | | | 11.82 | |
| June 30, 2008 | | | 15.77 | | | | 13.55 | |
| March 31, 2008 | | | 16.11 | | | | 12.40 | |
|
| | | | | | | | |
| For the Quarters Ended: | | High | | Low |
| December 31, 2011 | | $ | 8.18 |
| | $ | 5.72 |
|
| September 30, 2011 | | 9.70 |
| | 6.17 |
|
| June 30, 2011 | | 10.14 |
| | 8.31 |
|
| March 31, 2011 | | 9.65 |
| | 7.80 |
|
| December 31, 2010 | | 8.96 |
| | 7.15 |
|
| September 30, 2010 | | 7.47 |
| | 5.39 |
|
| June 30, 2010 | | 7.76 |
| | 5.30 |
|
| March 31, 2010 | | 7.22 |
| | 5.17 |
|
The per common share closing price of our common shareson the NYSE was $5.94$8.49 on February 25, 2010.23, 2012.
Holders. As of February 25, 2010,23, 2012, we had approximately 4,2913,833 common shareholders of record.
Dividends. We Since our predecessor's formation in 1993, we have made quarterly distributions since October 1986 without interruption.
The common share dividends paid in each quarter for the last five years are as follows:
|
| | | | | | | | | | | | | | | | | | | | | |
| Quarters Ended | | 2011 | | 2010 | | 2009 | | 2008 | | 2007 |
| March 31, | | $ | 0.115 |
| | $ | 0.10 |
| | $ | 0.18 |
| | | $ | 2.475 |
| | $ | 0.5975 |
|
| June 30, | | $ | 0.115 |
| | $ | 0.10 |
| | $ | 0.18 |
| (1) | | $ | 0.330 |
| | $ | 0.3750 |
|
| September 30, | | $ | 0.115 |
| | $ | 0.10 |
| | $ | 0.18 |
| (1) | | $ | 0.330 |
| | $ | 0.3750 |
|
| December 31, | | $ | 0.115 |
| | $ | 0.10 |
| | $ | 0.18 |
| (1) | | $ | 0.330 |
| | $ | 0.3750 |
|
| Quarters Ended | | 2009 | | | 2008 | | | 2007 | | | 2006 | | | 2005 | |
| March 31, | | $ | 0.18 | | | $ | 2.475 | | | $ | 0.5975 | | | $ | 0.365 | | | $ | 0.360 | |
| June 30, | | $ | 0.18 | (1) | | $ | 0.33 | | | $ | 0.375 | | | $ | 0.365 | | | $ | 0.360 | |
| September 30, | | $ | 0.18 | (1) | | $ | 0.33 | | | $ | 0.375 | | | $ | 0.365 | | | $ | 0.360 | |
| December 31, | | $ | 0.18 | (1) | | $ | 0.33 | | | $ | 0.375 | | | $ | 0.365 | | | $ | 0.360 | |
_________________________
(1) DividendAggregate dividend paid 90% in our common shares and 10% in cash.
During the fourth quarter of 2007, we declared a special dividend of $2.10 per common share which was paid in January 2008. During the fourth quarter 2006, we declared a special dividend of $0.2325 per common share which was paid in January 2007.
During 2009, we issued an aggregate 13,304,198 common shares in lieu of cash payments of common share dividends during the quarters ended June 30, September 30 and December 31, 2009 in accordance with IRS Rev. Proc. 2008–68.Internal Revenue Service Revenue Procedure 2008-68.
Due toOn November 1, 2011 the sale of properties, a reduction in estimated taxable income, and the desire to retain capital and strengthen our balance sheet, thequarterly dividend per common share has been reducedwas increased to $0.10 per quarter for 2010,$0.125, which we expect will bewas paid cash.in January 2012 to common shareholders of record as of December 30, 2011.
While we intend to continue paying regular quarterly dividends to holders of our common shares, the authorization of future dividend declarations will be at the discretion of our Board of Trustees and will depend on our actual cash flow, our financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Code and such other factors as our Board of Trustees deems relevant. The actual cash flow available to pay dividends will be affected by a number of factors, including, among others, the risks discussed under “Risk Factors” in Part I, Item 1A and “Management’s“Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of this Annual Report.
We do not believe that the financial covenants contained in our loan agreements will have any adverse impact on our ability to pay dividends in the normal course of business to our common and preferred shareholders or to distribute amounts necessary to maintain our qualification as a REIT.
We maintain a dividend reinvestment and direct share purchase plan, which has two components, (i) a dividend reinvestment component and (ii) a direct share purchase component. Under the dividend reinvestment component, common shareholders and holders of OP units may elect to automatically reinvest their dividends and distributions to purchase our common shares free of commissions and other charges. We currently offer a 2.5%5.0% discount on the common shares purchased under the plan. We may, from time to time, either repurchase common shares in the open market, or issue new common shares, for the purpose of fulfilling our obligations under the dividend reinvestment program. Currently all of the common shares issued under this program are new common shares issued by us. Under the direct share purchase component, our current investors and new investors can make optional cash purchases of our common shares directly from us. In 2009,2011 and 2010, we issued approximately 4.31.1 million and 1.3 million common shares, respectively, under the direct share purchase component,plan, raising net proceeds of $20.9 million.$8.4 million and $8.6 million, respectively.
Equity Compensation Plan Information. The following table sets forth certain information, as of December 31, 2009,2011, with respect to the compensation planour 2011 Equity-Based Award Plan under which our equity securities are authorized for issuance.issuance as compensation.
| | | | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | | | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) |
| Plan Category | | (a) | | | (b) | | | (c) | | | (a) | | (b) | | (c) |
| Equity compensation plans approved by security holders | | | 2,252,000 | | | $ | 5.60 | | | | 2,289,164 | | | 3,888,281 |
| | $ | 6.36 |
| | 4,672,085 |
|
| Equity compensation plans not approved by security holders | | | 0 | | | | 0 | | | | — | | | — |
| | — |
| | — |
|
| Total | | | 2,252,000 | | | $ | 5.60 | | | | 2,289,164 | | | 3,888,281 |
| | $ | 6.36 |
| | 4,672,085 |
|
Comparison of Cumulative Five Year Total Return
| | | | | | INDEXED RETURNS | |
| | | Base | | | Years Ending | |
| | | Period | | | | | | | | | | | | | | | | |
| Company / Index | | 2004 | | | 2005 | | | 2006 | | | 2007 | | | 2008 | | | 2009 | |
| Lexington Realty Trust | | | 100 | | | | 100.52 | | | | 116.31 | | | | 93.17 | | | | 35.44 | | | | 51.36 | |
| S&P 500 Index | | | 100 | | | | 104.91 | | | | 121.48 | | | | 128.16 | | | | 80.74 | | | | 102.11 | |
| Russell 2000 Index | | | 100 | | | | 104.55 | | | | 123.76 | | | | 121.82 | | | | 80.66 | | | | 102.58 | |
| NAREIT Equity REIT Index | | | 100 | | | | 112.16 | | | | 151.49 | | | | 127.72 | | | | 79.53 | | | | 101.79 | |
Recent Sales of Unregistered Securities.
None, other than as previously disclosed in our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Share Repurchase Program.
The following table summarizes repurchases of our common shares/OP units during the fourth quarter of 20092011 pursuant to publicly announced repurchase plans:
|
| | | | | | | | | | | | | |
| Period | |
Total Number of Shares/Units Purchased | | |
Average Price Paid per Share/Unit ($) | | | Total Number of Shares/Units Purchased as Part of Publicly Announced Plans or Programs (1) | | | Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs (1) | |
October 1 — 31, 2009 | 1-31, 2011 | | — |
| | $ | — | |
| | — |
| | 1,056,731 | 1,056,731 |
|
November 1 — 30, 2009 | 1-30, 2011 | | — | |
| | — | |
| | — |
| | 1,056,731 | 1,056,731 |
|
December 1 — 31, 2009 | 1-31, 2011 | | — | |
| | — | |
| | — | |
| | 1,056,731 |
|
Fourth Quarter 2009 | 2011 | | — |
| | $ | — | |
| | — |
| | 1,056,731 | 1,056,731 |
|
_________________________
(1) Share repurchase plan most recently announced on December 17, 2007.
DuringOn October 28, 2011, we settled our common share forward purchase equity commitment and retired 3,974,645 common shares. In addition, during the year ended December 31, 2009,fourth quarter of 2011, we repurchased $123.4 million original principal amount of our 5.45% Exchangeable Guaranteed Notes at an average discount of 18.1% to the original principal amount.and retired 419,126 Series B Preferred Shares and 91,104 Series C Preferred Shares.
Item 6. Selected Financial Data
The following sets forth our selected consolidated financial data as of and for each of the years in the five-year period ended December 31, 2009. Selected consolidated financial data amounts presented in the table below for all periods presented.2011. The selected consolidated financial data should be read in conjunction with the Consolidated Financial Statements and the related notes appearing elsewhere in this Annual Report. ($000’s,000's, except per share data)
|
| | | | | | | | | | | | | | | | | | | |
| | 2011 | | 2010 | | 2009 | | 2008 | | 2007 |
| Total gross revenues | $ | 326,914 |
| | $ | 320,048 |
| | $ | 330,619 |
| | $ | 348,949 |
| | $ | 355,930 |
|
| Expenses applicable to revenues | (224,645 | ) | | (217,395 | ) | | (219,552 | ) | | (258,574 | ) | | (227,059 | ) |
| Interest and amortization expense | (107,515 | ) | | (118,907 | ) | | (122,715 | ) | | (142,579 | ) | | (150,189 | ) |
| Income (loss) from continuing operations | (49,674 | ) | | (4,456 | ) | | (129,998 | ) | | (15,418 | ) | | 10,964 |
|
| Total discontinued operations | (40,104 | ) | | (32,954 | ) | | (81,274 | ) | | 11,950 |
| | 80,965 |
|
| Net income (loss) | (89,778 | ) | | (37,410 | ) | | (211,272 | ) | | (3,468 | ) | | 91,929 |
|
| Net income (loss) attributable to Lexington Realty Trust | (79,584 | ) | | (32,960 | ) | | (210,152 | ) | | 2,754 |
| | 75,249 |
|
| Net income (loss) attributable to common shareholders | (103,721 | ) | | (58,096 | ) | | (242,876 | ) | | (18,974 | ) | | 47,155 |
|
| Loss from continuing operations per common share - basic and diluted | (0.42 | ) | | (0.26 | ) | | (1.51 | ) | | (0.33 | ) | | (0.34 | ) |
| Income (loss) from discontinued operations - basic and diluted | (0.26 | ) | | (0.18 | ) | | (0.71 | ) | | 0.05 |
| | 1.07 |
|
| Net income (loss) per common share - basic and diluted | (0.68 | ) | | (0.44 | ) | | (2.22 | ) | | (0.28 | ) | | 0.73 |
|
| Cash dividends declared per common share | 0.47 |
| | 0.415 |
| | 0.64 |
| | 1.17 |
| | 3.60 |
|
| Net cash provided by operating activities | 180,137 |
| | 164,751 |
| | 159,307 |
| | 230,201 |
| | 287,651 |
|
| Net cash provided by (used in) investing activities | (24,813 | ) | | (24,783 | ) | | 111,967 |
| | 230,128 |
| | (31,490 | ) |
| Net cash provided by (used in) financing activities | (144,257 | ) | | (141,189 | ) | | (285,207 | ) | | (804,637 | ) | | 38,973 |
|
| Ratio of earnings to combined fixed charges and preferred dividends | N/A |
| | N/A |
| | N/A |
| | N/A |
| | N/A |
|
| Real estate assets, net | 2,566,707 |
| | 2,773,605 |
| | 3,015,400 |
| | 3,294,527 |
| | 3,729,266 |
|
| Investments in and advances to non-consolidated entities | 90,558 |
| | 72,480 |
| | 55,985 |
| | 179,133 |
| | 226,476 |
|
| Total assets | 3,078,048 |
| | 3,334,996 |
| | 3,579,845 |
| | 4,105,725 |
| | 5,264,705 |
|
| Mortgages, notes payable and credit facility, including discontinued operations | 1,662,375 |
| | 1,778,077 |
| | 2,072,738 |
| | 2,372,323 |
| | 3,028,088 |
|
| Shareholders' equity | 1,163,074 |
| | 1,280,156 |
| | 1,208,669 |
| | 1,406,075 |
| | 960,601 |
|
| Total equity | 1,221,431 |
| | 1,356,129 |
| | 1,297,236 |
| | 1,501,071 |
| | 1,739,565 |
|
| Preferred share liquidation preference | 322,032 |
| | 338,760 |
| | 338,760 |
| | 363,915 |
| | 389,000 |
|
| | | 2009 | | | 2008 | | | 2007 | | | 2006 | | | 2005 | |
| Total gross revenues | | $ | 376,621 | | | $ | 418,149 | | | $ | 401,176 | | | $ | 179,416 | | | $ | 152,403 | |
| Expenses applicable to revenues | | | (257,462 | ) | | | (303,724 | ) | | | (271,625 | ) | | | (99,976 | ) | | | (76,157 | ) |
| Interest and amortization expense | | | (131,629 | ) | | | (152,904 | ) | | | (160,647 | ) | | | (60,660 | ) | | | (51,319 | ) |
| Income (loss) from continuing operations | | | (156,638 | ) | | | (1,471 | ) | | | 984 | | | | (8,770 | ) | | | 14,663 | |
| Total discontinued operations | | | (54,634 | ) | | | (1,997 | ) | | | 90,945 | | | | 14,997 | | | | 20,783 | |
| Net income (loss) | | | (211,272 | ) | | | (3,468 | ) | | | 91,929 | | | | 6,227 | | | | 35,446 | |
| Net income (loss) attributable to Lexington Realty Trust | | | (210,152 | ) | | | 2,754 | | | | 75,249 | | | | 7,753 | | | | 32,695 | |
| Net income (loss) attributable to common shareholders | | | (242,427 | ) | | | (18,483 | ) | | | 48,516 | | | | (8,682 | ) | | | 16,260 | |
| Loss from continuing operations per common share — basic and diluted | | | (1.75 | ) | | | (0.24 | ) | | | (0.37 | ) | | | (0.53 | ) | | | (0.08 | ) |
| Income (loss) from discontinued operations — basic and diluted | | | (0.47 | ) | | | (0.04 | ) | | | 1.10 | | | | 0.33 | | | | 0.39 | |
| Net income (loss) per common share — basic and diluted | | | (2.22 | ) | | | (0.28 | ) | | | 0.73 | | | | (0.20 | ) | | | 0.31 | |
| Cash dividends declared per common share | | | 0.64 | | | | 1.17 | | | | 3.60 | | | | 2.0575 | | | | 1.445 | |
| Net cash provided by operating activities | | | 159,307 | | | | 230,201 | | | | 287,651 | | | | 108,020 | | | | 105,457 | |
| Net cash provided by (used in) investing activities | | | 111,967 | | | | 230,128 | | | | (31,490 | ) | | | (154,080 | ) | | | (643,777 | ) |
| Net cash provided by (used in) financing activities | | | (285,207 | ) | | | (804,637 | ) | | | 38,973 | | | | 483 | | | | 444,878 | |
| Ratio of earnings to combined fixed charges and preferred dividends | | | N/A | | | | 1.08 | | | | N/A | | | | N/A | | | | 1.08 | |
| Real estate assets, net | | | 3,015,400 | | | | 3,294,527 | | | | 3,729,266 | | | | 3,475,073 | | | | 1,651,200 | |
| Investments in and advances to non-consolidated entities | | | 55,985 | | | | 179,133 | | | | 226,476 | | | | 247,045 | | | | 191,146 | |
| Total assets | | | 3,579,845 | | | | 4,105,725 | | | | 5,264,705 | | | | 4,624,857 | | | | 2,160,232 | |
| Mortgages, notes payable and credit facility, including discontinued operations | | | 2,072,738 | | | | 2,372,323 | | | | 3,028,088 | | | | 2,132,661 | | | | 1,170,560 | |
| Shareholders’ equity | | | 1,208,669 | | | | 1,406,075 | | | | 960,601 | | | | 1,122,444 | | | | 891,310 | |
| Total equity | | | 1,297,236 | | | | 1,501,071 | | | | 1,739,565 | | | | 2,025,185 | | | | 952,682 | |
| Preferred share liquidation preference | | | 338,760 | | | | 363,915 | | | | 389,000 | | | | 234,000 | | | | 234,000 | |
N/A — Ratio is below 1.0, deficit of $36,195, $69,682 |
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N/A - Ratio is below 1.0, deficit of $95,441, $45,720, $9,564, $151 and $59,705 exists at December 31, 2011, 2010, 2009, 2008 and $7,964 exists at December 31, 2009, 2007, and 2006, respectively. |
All years have also been adjusted to reflect the impact of operating properties sold during the years ended December 31, 2011, 2010, 2009, 2008 2007, 2006 and 2005,2007, which are reflected in discontinued operations in the Consolidated Statements of Operations.
Item 7. Management’sManagement's Discussion and Analysis of Financial Condition andResults of Operations
In this discussion, we have included statements that may constitute “forward-lookingstatements” within the meaning of the safe harbor provisions of the PrivateSecurities Litigation Reform Act of 1995. Forward-looking statements are nothistorical facts but instead represent only our beliefs regarding future events, manyof which, by their nature, are inherently uncertain and outside our control. Thesestatements may relate to our future plans and objectives, among other things. Byidentifying these statements for you in this manner, we are alerting you to thepossibility that our actual results may differ, possibly materially, from theanticipated results indicated in these forward-looking statements. Important factorsthat could cause our results to differ, possibly materially, from those indicated inthe forward-looking statements include, among others, those discussed above in “Risk“Risk Factors” in Part I, Item 1A of this Annual Report and “CautionaryStatements Concerning Forward Looking Statements” in Part I, of this AnnualReport.
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| Table of Contents | | Page |
| Overview | | 37 |
| Liquidity | | 42 |
| Capital Resources | | 46 |
| Results of Operations | | 46 |
| Off-Balance Sheet Arrangements | | 48 |
| Contractual Obligations | | 50 |
Overview
General. We are a self-managed and self-administered real estate investment trust formed under the laws of the State of Maryland. We operate primarily in one segment, net-leased real estate assets, and our primary business is the investment in and the acquisition, ownership and management of a geographically diverse portfolioportfolios of net-leasedsingle-tenanted office, industrial and retail properties. properties, including build-to-suit transactions.
As of December 31, 2009,2011, we had ownership interests in approximately 210185 consolidated real estate properties, located in 4039 states and the Netherlands and encompassing approximately 38.336.0 million square feet. Substantially allA majority of ourthese properties are subject to triple net or similar leases, where the tenant bears all or substantially all of the costs and/or cost increases for real estate taxes, utilities, insurance and ordinary repairs.
Our revenues and cash flows are generated predominantly from property rent receipts. As a result, growth in revenues and cash flows is directly correlated to our ability to (1) acquire income producing real estate assets, (2) to re-lease properties that are vacant, or may become vacant, at favorable rental rates and (3) earn fee income.
General StateAlthough there have been signs of recovery in the Economy. Ouroverall economy, our business continues to be impacted in a number of ways by the uncertainty in the overall economy and volatility in the capital markets, including (1) a need to preserve capital, generate additional liquidity and improve our overall financial flexibility, (2) difficulty obtainingour ability to find attractive financing, (3) challenges in acquiring suitable property investments and an increased cost of capital, (3) a decrease in property acquisitions, (4) a decrease in market sales prices for our assets, (5)tenant uncertainty with respect to future space needs. Since 2010, we have seen an increase in impairment charges on our assetsacquisition opportunities. In 2011 and (6) tenant defaults and bankruptcies. It2010, we acquired and/or engaged in build-to-suit projects encompassing an aggregate 3.3 million square feet. Since 2010, we have seen a slight strengthening in the availability of capital; however, it is difficult for us to predict how severewhen the impacteconomy will be to our business and how long the uncertainty and volatility will continue.fully recover.
In an effort to diversify, we lease ourinvest across the United States in properties leased to tenants in various industries, including finance/insurance, automotive, energy, technology automotive and service. Tenant defaults at our propertiesconsumer products. However, industry declines, to the extent we have concentration, and general economic declines could negatively impact our operating results. Leased space was approximately 91.5% at December 31, 2009, down approximately 1.8 percentage points from last year. We may continue to lose occupancy during 2010 due to current economic factors, which may include increased tenant defaultsresults of operations and bankruptcies or government conservatorship of tenants and the desire of certain tenants to contract leased space.cash flows.
Our principal sources of liquidity have been (1) undistributed cash flows generated from our investments, (2) the public and private equity and debt markets, including issuances of OP units, (3) property specific debt, (4)In addition to corporate level borrowings, (5) commitments from co-investment partners and (6) proceeds from salesnone of our investments. We expect that certainwhich matures in 2012 or 2013 as of these sources may be unavailable to us at times if the uncertainty and volatility in the capital markets continues.
Wedate of filing this Annual Report, we have consolidated property specific non-recourse mortgage debt with an aggregate of $106.0$147.9 million and $234.9 million in balloon payments that matureare to be paid in 2010. We also have (1) interest rate swap agreements2012 and (2) a forward equity commitment on our common shares. The counterparties of these arrangements are major financial institutions; however, we are exposed to credit risk in the event of non-performance by the counterparties. In addition, we may be required to make additional prepayments pursuant to our forward equity commitment if the value of the underlying equity falls below a specific threshold. As of December 31, 2009, the forward equity commitment has an outstanding balance of $4.0 million and must be settled by October 2011 in cash, common shares, or a combination of cash and common shares at our election.
Business Strategy. Our current business strategy is focused on ways to reduce leverage, preserve capital, generate additional liquiditymaintaining a strong balance sheet and revenue and improveimproving our overall financial flexibility.long-term growth prospectus. See “Business” in Part I, Item 1 of this Annual Report for a detailed description of our current business strategy.
We believe a positive impact is resulting from our business strategy. In 2011, 2010 and 2009, we reduced our overall consolidated indebtedness by $119.3 million, $300.3 million and $305.6 million, respectively, primarily (1) by repurchasing our 5.45% Exchangeable Guaranteed Notes at a discount and (2) through the sale, transfer or other disposition of properties to third parties and lenders. We expect our business strategy will enable us to continue to improve our liquidity and strengthen our overall balance sheet. We believe liquidity and a strong balance sheet which will positionallow us to take advantage of businessattractive investment opportunities upon the stabilization of the financial markets andas they arise, which will create meaningful shareholder value.
AcquisitionInvestment Trends. AcquiringMaking investments in income producing single-tenant real estate assets is one of our primary focuses. The challenge we face is finding investments that will provide an attractive return without compromising our real estate underwriting criteria. While weWe believe we have access to acquisition opportunities due to our relationshiprelationships with developers, brokers, corporate users and sellers, our acquisition activity decreased during the last few years as a result of market conditions.
As capitalization rates on investment opportunities began to compress at the end of 2006,sellers. When we began to decrease our acquisition activity. Following the Newkirk Merger, ouracquire real estate acquisition activity consisted primarilyassets, we look for general purpose office and industrial real estate assets subject to a long-term net lease which have one or more of acquiring the interests that we did not already own in certainfollowing characteristics (1) a credit-worthy tenant, (2) adaptability to a variety of our co-investment programs.users, including multi-tenant use and (3) an attractive geographic location.
During 2007,2009 and 2008, acquisition activity was low, except for the acquisition of 48 primarily single-tenant net-lease assets from our co-investment programs. During 2008 and 2009, acquisition activity continued to decreasedecreased as we focused on retiring senior debt and preferred securities at a discount.securities. In response to the compression in capitalization rates, we refocused our efforts into (1) repurchasing our senior debt at what we believe were attractive and secure yields to maturity and (2) disposing of real estate assets in compliance with regulatory and contractual requirements. Despite the current economic instability, we continue to review single investment acquisitions and strategic transactions including forming new co-investment programs and joint ventures. When we do acquire real estate assets, we look for general purpose office and industrial real estate assets subject to a long-term net lease which have one or more of the following characteristics (1) a credit-worthy tenant; (2) adaptability to a variety of users, including multi-tenant use; and (3) an attractive geographic location.
Beginning in the fourth quarter of 2009, we began to see an increase in our acquisition activity. activity as evidenced by the acquisition of an office property in Greenville, South Carolina.
Our recent acquisition activity consistsvolume for 2011 and 2010 consisted primarily of build-to-suit transactions whereby we (1) engage in build-to-suit transactions, or (2) provide capital to developers who are engaged in, build-to-suit transactions and/or (3) commit to purchase the property from developers upon completion. We believe these arrangements offer developers and/or tenants access to capital while simultaneously providing us with attractive risk-adjusted projected yields. We generally mitigate our cost exposure by requiring purchase agreements, development agreements and/or loan agreements to specify a maximum price and/or loan commitment amount prior to execution of the agreement. Cost overruns are generally the responsibility of the developer, or in some cases the prospective tenant. We believe we perform stringent underwriting procedures to ensure that our investments are not subject to compromise such as, among other items, (1) requiring payment and performance bonds and/or completion guarantees from developers and/or contractors; (2) engaging third-party construction managers and/or engineers to monitor construction progress and quality; (3) only hiring developers with a proven history of performance; (4) requiring developers to provide financial statements and in some cases personal guarantees from principals; (5) acquiring detailed plans and constructions budgets; (6) requiring a long-term tenant lease to be executed prior to funding; and (7) leveling liens on the property to the extent of construction funding.
The following is a summary of our 2011 and 2010 build-to-suit transactions and property acquisitions:
Build-to-Suit Transactions
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| | | | | | | | | | | |
| Location | | Property Type | | Square Feet (000's) | | Capitalized Cost/Maximum Commitment (millions) | | Date Acquired/Estimated Completion Date |
| Byhalia, MS | | Industrial | | 514 |
| | $ | 27.5 |
| | 2Q 2011 |
| Shelby, NC | | Industrial | | 674 |
| | 23.5 |
| | 2Q 2011 |
| Huntington, WV | | Office | | 70 |
| | 12.6 |
| | 1Q 2012 |
| Florence, SC | | Office | | 32 |
| | 5.1 |
| | 1Q 2012 |
| Saint Joseph, MO | | Office | | 99 |
| | 18.0 |
| | 2Q 2012 |
| Jessup, PA | | Office | | 150 |
| | 20.8 |
| | 2Q 2012 |
| Shreveport, LA | | Industrial | | 257 |
| | 13.1 |
| | 2Q 2012 |
Long Island City, NY(1) | | Industrial | | 143 |
| | 46.7 |
| | 1Q 2013 |
| | | | | 1,939 |
| | $ | 167.3 |
| | |
Property Acquisitions
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| | | | | | | | | | | |
| Location | | Property Type | | Square Feet (000's) | | Capitalized Cost (millions) | | Date Acquired |
| Columbus, OH | | Office | | 105 |
| | $ | 16.7 |
| | 4Q 2010 |
Aurora, IL(2) | | Office | | 210 |
| | 15.3 |
| | 4Q 2011 |
Allen, TX(3) | | Office | | 293 |
| | 36.3 |
| | 2Q 2011 |
| Rock Hill, SC | | Office | | 80 |
| | 7.4 |
| | 2Q 2011 |
| Columbus, OH | | Office | | 42 |
| | 6.1 |
| | 3Q 2011 |
Wilsonville, OR(4) | | Office | | 123 |
| | 5.6 |
| | 3Q 2011 |
| Chillicothe, OH | | Industrial | | 475 |
| | 12.1 |
| | 4Q 2011 |
| | | | | 1,328 |
| | $ | 99.5 |
| | |
(1) Joint venture investment: capitalized cost/maximum contribution represents our share.
(2) Joint venture investment.
(3) Acquired from NLS.
(4) Deed-in-lieu of foreclosure.
We, through lender subsidiaries, invest in debt investments secured by real estate assets, which (1) we feel comfortable owning for our investment should the borrower default for reasons other than an underlying tenant default. We expect acquisition activitydefault or (2) are necessary for net-lease assetsan efficient deposition of our equity interest in the property. During the first quarter of 2011, through a lender subsidiary, we loaned $3.0 million to increase if and when general market conditions improve.
On December 31, 2009, we acquired an officethe buyer in connection with the sale of a vacant industrial property in Greenville, South Carolina leased to Canal Insurance Company for $10.5$3.7 million. Canal Insurance Company has an option to purchaseThe loan is secured by the property, on December 31, 2014bears interest at fair market value, but not less than $10.7 million7.8% and not greater than $11.6 million. If Canal Insurance Company fails to exercise its purchase option,matures in January 2013. In 2011, we, have the right to require it to purchase the property for $10.7 million.
Our acquisition activity subsequent to December 31, 2009 consists primarily of loan investments where the underlying collateral is real estate. Wethrough a lender subsidiary, made a $10.0 million mezzanine loan secured by a 100% pledge of all equity interests in the entities which own two, to-be-constructed distribution facilities. The loan was scheduled to mature in June 2013 and had an interest rate of 15.0% for the first year and 18.5% for the second year. The loan was fully satisfied in November 2011 for a payment of $11.5 million which included accrued interest and yield maintenance.
During 2011 and 2010, through a lender subsidiary, we made a 15%, $11.0 million mortgage loan on an office building in Schaumburg, Illinois, which maturesmatured in January 15, 2012 but can becould have been extended one additional year by the borrower for a 50 basis point fee. The mortgage loan had an outstanding balance of $21.5 million at December 31, 2011. The property is leased to Career Education Corporation from January 1, 2011 through December 31, 2022 for an average annual rent of $4.0 million. In addition to the initial $11.0 million investment, we are obligated to fund an additional $7.6 million over the two-year term of the mortgage upon the occurrence of certain events. If the borrower exercises the one-year extension option and certain other events occur, we will becomeOur lender subsidiary may be obligated to fund an additional $12.2 million for tenant improvement costs. The borrower is currently in default. We believe the office building has an estimated fair value in excess of our investment and we have initiated foreclosure proceedings.
One of our lender subsidiaries also made a $17.0 million mezzanine loan secured by a combination of limited partner interests in entities that own,owned, and second mortgage liens or mortgage liens against, five medical facilities. The mezzanineThis loan iswas guaranteed by a parent entity and principal and maturesinitially matured in January 2012December 2011 and requiresrequired payments of interest only at a rate of 14% through February 2011 and 16% thereafter. The borrower prepaid an aggregate $7.5 million in December 2010 and February 2011 in connection with the sale of certain collateral, and repaid the remaining $9.5 million in December 2011.
Despite the current economic uncertainty, we have seen an increase in our acquisition pipeline, mostly consisting of build-to-suit transactions. We have several commitments and letters of intent for future acquisitions as of the first yearquarter of 2012, and 16% thereafter.we anticipate continued acquisition activity for 2012. However, we can provide no assurances that any of these transactions will be consummated.
Leasing Trends. Re-leasing properties that are currently vacant or as leases expire and properties currently vacant at favorable effective rates is one of our primary asset management focuses. The primary risks associated with re-tenanting properties are (1) the period of time required to find a new tenant, (2) whether rental rates will be lower than previously received, (3) the significance of leasing costs such as commissions and tenant improvement allowances and (4) the payment of capital expenditures and operating costs such as real estate taxes, insurance and insurance while there ismaintenance with no offsetting revenue.
WeOur property owner subsidiaries try to mitigate these risks by contacting(1) staying in close contact with our tenants wellduring the lease term in advance of lease maturityorder to get an understanding ofassess their current and future occupancy needs, contacting(2) maintaining relationships with local brokers to determine the depth of the rental market and (3) retaining local expertise to assist in the re-tenanting of a property. However, no assurance can be given that once a property becomes vacant it will subsequently be re-let.
Generally, a tenant in a single-tenant office property commences lease extension discussions well in advance of lease expiration. If the lease has a year or less remaining until expiration, there is a high likelihood that the tenant will not extend the lease.
If a property cannot be re-let to a single user and the property can be adapted to multi-tenant use, we determineour property owner subsidiary determines whether the costs of adapting the property to multi-tenant use outweigh the benefit of funding operating costs while searching for a single-tenant.
Certain of the long-term leases on our properties in which we have an ownership interest contain provisions that may mitigate the adverse impact of inflation on our operating results. Such provisions include clauses entitling usour property owner subsidiaries to receive (1) scheduled fixed base rent increases and (2) base rent increases based upon the consumer price index. In addition, a majority of the leases on ourthe single-tenant properties in which we have an ownership interest require tenants to pay operating expenses, including maintenance, real estate taxes, insurance and utilities, thereby reducing ourthe exposure to increases in costs and operating expenses. In addition, the leases on oursingle-tenant properties in which we have an ownership interest are generally structured in a way that minimizes our responsibility for capital improvements.
Since 2008, tenants have been more aggressive in lease and lease renewal negotiations with respect to rental rate, tenant improvement allowances and landlord responsibilities. As a result, the obligations of our property owner subsidiaries on new leases and newly renewed or extended leases have generally increased.
We continue to monitor the credit of our tenants and are particularly focused on our tenantsof properties in the financial, retail and automotive industries.which we have an interest. Under current bankruptcy law, a tenant can generally assume or reject a lease within a certain number of days of filing its bankruptcy petition. If a tenant rejects the lease, oura landlord's damages are generally limited to the greater of (1) one year’syear's rent and (2) the rent for 15%, not to exceed three years, of the remaining term of the lease.lease not to exceed three years rent.
We own 15 consolidated properties totaling approximately 3.8 million square feet with aggregate annual rental revenues of approximately $29.0 million that are leased to tenants in the automotive industry. The primary business of these tenants is supply, manufacturing and installation. We are closely monitoring the automotive industry in general and our tenants within that industry.
In addition to automotive tenants, we closely monitor the credit of all our tenants. Circuit City Stores, Inc. was our tenant in our office building located in Richmond, Virginia, which was part of its headquarter campus. On January 16, 2009, Circuit City Stores, Inc. announced that it had begun the process to liquidate its assets and rejected its lease for our facility. During 2009, thedue to economic conditions, three of our property wasowner subsidiaries each conveyed a property to the mortgageits lender throughand/or to a foreclosure in satisfactionbankruptcy estate as a result of the $15.5 million outstanding mortgage loan following the determination that the mortgage balance exceeded the value of thesingle-tenant vacating its property and there werebeing no viable leasing prospects.
Vastar Resources, Inc. was our tenant in our office building located in Houston, Texas. On September 15, 2009, their lease expired and they vacated the building. On December 11, 2009, Lexington Memorial LLC, our wholly-owned subsidiary that held title to the property declared bankruptcy and the bankruptcy estate took title to the property and succeeded to the obligations of the related approximate $18.2 million mortgage. The bankruptcy filing was made following the determination that the mortgage balance exceeded the value of the property and Although there were no viable leasing prospects.
Johnson Controls Inc. wassuch conveyances during 2011 and 2010, one of our tenantproperty owner subsidiaries conveyed a vacant property in our industrial buildingTulsa, Oklahoma to its lender in Plymouth, Michigan. On August 31, 2007, their lease expired and they vacated the facility. TheJanuary 2012. Our property was conveyedowner subsidiaries may convey properties to the lender through foreclosure in December 2009 in satisfaction of the $4.3 million outstanding mortgage loan following the determination that the mortgage balance exceeded the value oflenders or the property and there were no viable leasing prospects.owner subsidiary may declare bankruptcy in the future if a property owner subsidiary is unable to refinance, re-let or sell its vacated property or if a tenant renews at a lower rent or a new tenant pays a lower rent.
Impairment charges.During 2011, 2010 and 2009, we incurred substantial impairment charges on our assets, of $117.4 million, $56.9 million and $175.9 million, respectively, due primarily to currenta deterioration in economic conditions. Three real estate assets (Richmond, Virginia property previously leased to Circuit City Stores, Inc., Houston, Texas previously leased to Vastar Resources, Inc. and Plymouth, Michigan property previously leased to Johnson Controls Inc.) with an aggregate carrying valueconditions since the acquisition of $60.0 million were written down to their estimated aggregate fair value of $24.7 million in anticipation of foreclosure by their respective mortgage lenders or other disposition, resulting in aggregate impairment charges of $35.3 million.
We also recognized aggregate impairments in 2009 of $25.8 million on four properties classified in continuing operations as a result of triggering events with respect to the properties. Three of these properties with an aggregate carrying value of $11.5 million were written down to their aggregate estimated fair value of zero as we have determined that it is unlikely that we will recover any of our investment. In addition, we adjusted the $51.3 million carrying value of our property in San Francisco, California to its estimated fair value of $37.0 million due to an anticipated restructuring of the property’s entity structure and debt. In addition, we recognized impairments of $38.5 millionsuch assets. Impairments on real estate assets whichin discontinued operations were disposed of$48.9 million, $50.1 million and $99.6 million in 2011, 2010 and 2009, respectively, as the assets were ultimately sold or foreclosed upon below their carrying value. TheseThe assets that were sold were generally non-core or non-performing assets and weassets. We used the net proceeds from these sales to primarily deleverage our balance sheet.
In addition, we incurred $68.6 million and $3.0 million of impairment charges on real estate assets classified in continuing operations in 2011 and 2010, respectively. These real estate assets were primarily non-core assets including retail properties, under performing and multi-tenant properties acquired in the Newkirk Merger.
In 2011, we recognized a $1.6 million other-than-temporary impairment charge on a non-consolidated investment acquired in the Newkirk Merger due to a change in our estimate of net proceeds upon liquidation of the joint venture. We determined thatrecognized other-than-temporary impairments on two of our investments in non-consolidated entities incurred other-than-temporary impairments in 2009 and recognizedof $74.7 million, consisting of impairment charges in equity in earnings (losses) from non-consolidated entities relating to these assets.Lex-Win Concord and another joint venture. Concord experienced declines in the fair value of its loan securities consistent with liquidity concerns impacting the commercial bond and real estate markets and the overall economy.economy beginning in 2008. Concord has recorded significant other-than-temporary impairment charges during 2009 and 2008. As a result of these charges and other factors, we recorded other-than-temporary impairments of $68.2 million on our investment in Lex-Win Concord during 2009, reducing the carrying value of our investment to zero. In addition, during 2009, we recorded an impairment charge of $6.5 million on our investment in an unconsolidated joint venture acquired in the Newkirk Merger during 2009 due to the expiration of the net-lease on the hotel asset owned by the joint venture. We subsequently sold our interest in this joint venture for a nominal amount to another partner in the joint venture.
We have also incurred loan losses on our notesloans receivable assets during 2010 and 2009. During 2010, we recorded a $3.8 million loan loss on a loan receivable as the tenant supporting the collateral declared bankruptcy and announced liquidation proceedings. During the first quarter of 2009, we agreed to the discounted payoffpayoffs of two notesloans receivable with an aggregate carrying value of $5.0 million. During 2009, we wrote the notesloans receivable down to the aggregate agreed upon discounted payoff amount of $3.9 million, which approximated fair value, and recognized a loan loss reserve of $1.1 million. In addition, we sold investments in debt securities were sold for $9.5 million during 2009 and we realized a loss of $0.5 million. The proceeds from these transactions were used to reduce corporate level debt.
Given the continued uncertainty in general economic conditions, we cannot estimate if we will incur, or the amount of, future impairment charges on our assets. See Part I, Item 1A - “Risk Factors” of this Annual Report.
Critical Accounting Policies and Recently Issued Accounting GuidancePolicies.. Our accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States,GAAP, which require our management to make estimates that affect the amounts of revenues, expenses, assets and liabilities reported. A summary of our significant accounting policies and recently issued accounting guidance which are important to the portrayal of our financial condition and results of operations is set forth in note 2 to the Consolidated Financial Statements beginning on page 6265 of this Annual Report and incorporated herein.
The following is a summary of our critical accounting policies, and recently issued accounting guidance, which require some of management’smanagement's most difficult, subjective and complex judgments.
Basis of Presentation and Consolidation. Our consolidated financial statements are prepared on the accrual basis of accounting. The financial statements reflect our accounts and the accounts of our consolidated subsidiaries. We consolidate our wholly-owned subsidiaries, partnerships and joint ventures which we control through (i)(1) voting rights or similar rights or (ii)(2) by means other than voting rights if we are the primary beneficiary of a variable interest entity, which we refer to as a VIE. Entities which we do not control and entities which are VIE'sVIEs in which we are not the primary beneficiary are generally accounted for by the equity method. Significant judgments and assumptions are made by us to determine whether an entity is a VIE such as those regarding an entity’sentity's equity at risk, the entity’sentity's equity holder’s obligationholders' obligations to absorb anticipated losses and other factors. In addition, the determination of the primary beneficiary of a VIE requires judgments and assumptionsjudgment to determine the party that will incur a majority of the VIE’s anticipated losses and/or a majority of its expected returns. In June 2009, the Financial Accounting Standards Board, which we refer to as FASB, issued guidance which modifies the existing quantitative guidance used in determining the primary beneficiary of a VIE by requiring entities to qualitatively assess whether an enterprise is a primary beneficiary, based on whether the entity has (i)(1) power over the significant activities of the VIE and (ii)(2) an obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE. The adoption of this guidance on January 1, 2010 is not expected to have a material effect on our consolidated financial statements.
Judgments and Estimates. Our management has made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses to prepare these consolidated financial statements in conformity with U.S. generally accepted accounting principles.GAAP. These estimates and assumptions are based on our management’smanagement's best estimates and judgment. Our management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment. The current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions. Our management adjusts such estimates when facts and circumstances dictate. The most significant estimates made include the recoverability of accounts receivable, allocation of property purchase price to tangible and intangible assets acquired and liabilities assumed, the determination if certainof VIEs and entities that should be consolidated, the determination of impairment of long-lived assets, notesloans receivable and equity method investments, valuation and impairment of assets held by equity method investees, valuation of derivative financial instruments and the useful lives of long-lived assets.
Purchase Accounting and Acquisition of Real Estate. The fair value of the real estate acquired, which includes the impact of fair value adjustments for assumed mortgage debt related to property acquisitions, is allocated to the acquired tangible assets, consisting of land, building and improvements and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, other value of in-place leases and value of tenant relationships, based in each case on their fair values.
The fair value of the tangible assets of an acquired property (which includes land, building and improvements and fixtures and equipment) is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to land and building and improvements based on our management’smanagement's determination of relative fair values of these assets. Factors considered by our management in performing these analyses include an estimate of carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. In estimating carrying costs, our management includes real estate taxes, insurance and other operating expenses and estimates of lost rental revenue during the expected lease-up periods based on current market demand. Our management also estimates costs to execute similar leases including leasing commissions.
In allocating the fair value of the identified intangible assets and liabilities of an acquired property, above-market and below-market lease values are recorded based on the difference between the current in-place lease rent and management’smanagement's estimate of current market rents. Below-market lease intangibles are recorded as part of deferred revenue and amortized into rental revenue over the non-cancelable periods and bargain renewal periods of the respective leases. Above-market leases are recorded as part of intangible assets and amortized as a direct charge against rental revenue over the non-cancelable portion of the respective leases.
The aggregate value of other acquired intangible assets, consisting of in-place leases and tenant relationship values, is measured by the excess of (1) the purchase price paid for a property over (2) the estimated fair value of the property as if vacant, determined as set forth above. This aggregate value is allocated between in-place lease values and tenant relationship values based on management’smanagement's evaluation of the specific characteristics of each tenant’stenant's lease. The value of in-place leases are amortized to expense over the remaining non-cancelable periods and any bargain renewal periods of the respective leases. The value of tenant relationships is amortized to expense over the applicable lease term plus expected renewal periods.
Acquisition, Development and Construction Arrangements. We evaluate loans receivable where we participate in residual profits through loan provisions or other contracts to ascertain whether we have the same risks and rewards as an owner or joint venture partner. This evaluation takes significant judgment. Where we conclude that such arrangements are more appropriately treated as an investment in real estate, we record such loans receivable as an equity investment in real estate under construction.
Revenue Recognition. We recognize lease revenue on a straight-line basis over the term of the lease unless another systematic and rational basis is more representative of the time pattern in which the use benefit is derived from the leased property. Renewal options in leases with rental terms that are lower than those in the primary term are excluded from the calculation of straight line rent if the renewals are not reasonably assured. In those instances in which we fund tenant improvements and the improvements are deemed to be owned by us, revenue recognition will commence when the improvements are substantially completed and possession or control of the space is turned over to the tenant. When we determine that the tenant allowances are lease incentives, we commence revenue recognition when possession or control of the space is turned over to the tenant for tenant work to begin. The lease incentive is recorded as a deferred expense and amortized as a reduction of revenue on a straight-line basis over the respective lease term. Determining if a tenant allowance is a lease incentive requires significant judgment. We recognize lease termination payments as a component of rental revenue in the period received, provided that there are no further obligations under the lease.lease; otherwise the lease termination payment is amortized on a straight-line basis over the remaining obligation period. All above marketabove-market lease assets, below marketbelow-market lease liabilities and deferred rent assets or liabilities for terminated leases are charged against or credited to rental revenue in the period the lease is terminated. All other capitalized lease costs and lease intangibles are accelerated via amortization expense to the date of termination.
Gains on sales of real estate are recognized based on the specific timing of the sale as measured against various criteria related to the terms of the transactions and any continuing involvement associated with the properties. If the sales criteria are not met, the gain is deferred and the finance, installment or cost recovery method, as appropriate, is applied until the sales criteria are met. To the extent we sell a property and retain a partial ownership interest in the property, we recognize gain to the extent of the third-party ownership interest.
Accounts Receivable. We continuously monitor collections from our tenants and would make a provision for estimated losses based upon historical experience and any specific tenant collection issues that we have identified.
Impairment of Real Estate. We evaluate the carrying value of all tangible and intangible real estate assets for possible impairment when an event or change in circumstance has occurred that indicates its carrying value may not be recoverable. The evaluation includes estimating and reviewing anticipated future undiscounted cash flows to be derived from the asset. If such cash flows are less than the asset’sasset's carrying value, an impairment charge is recognized to the extent by which the asset’sasset's carrying value exceeds the estimated fair value. Estimating future cash flows is highly subjective and such estimates could differ materially from actual results.
Impairment of Equity Method Investments. We assess whether there are indicators that the value of our equity method investments may be impaired. An investment’sinvestment's value is impaired if we determine that a decline in the value of the investment below its carrying value is other-than-temporary. The assessment of impairment is highly subjective and involves the application of significant assumptions and judgments about our intent and ability to recover our investment given the nature and operations of the underlying investment, including the level of our involvement therein, among other factors. To the extent impairment has occurred, the loss is measured as the excess of the carrying amount of the investment over the estimated value of the investment.
NotesLoans Receivable. We evaluate the collectability of both interest and principal of each of our notes,loans, if circumstances warrant, to determine whether itthe loan is impaired. A noteloan is considered to be impaired, when based on current information and events, it is probable that we will be unable to collect all amounts due according to the existing contractual terms. Significant judgments are required in determining whether impairment has occurred. When a noteloan is considered to be impaired, the amount of the loss accrual is calculated by comparing the recorded investment to the value determined by discounting the expected future cash flows at the note’sloan's effective interest rate.rate, the loan's observable current market price or the fair value of the underlying collateral. Interest on impaired notesloans is recognized on a cash basis.
Fair Value Measurements. We follow the guidance in FASB Accounting Standards Codification, which we refer to as ASC, Topic 820, Fair Value Measurements and Disclosures, which we refer to as Topic 820, to determine the fair value of financial and non-financial investments. Topic 820 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principlesGAAP and expands disclosures about fair value measurements. Topic 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 –- quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 –- observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and Level 3 –- unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as consider counterparty credit risk, where applicable, in our assessment of fair value.
The accounting for these critical accounting policies and recentlyimplementation of accounting guidance issued accounting guidancein the future involves the making of estimates based on current facts, circumstances and assumptions which could change in a manner that would materially affect management’smanagement's future estimates with respect to such matters. Accordingly, future reported financial conditions and results could differ materially from financial conditions and results reported based on management’smanagement's current estimates.
Liquidity
General. Since becoming a public company, our principal sources of liquidity have been (1) undistributed cash flows generated from our investments, (2) the public and private equity and debt markets, including issuances of OP units, (3) property specific debt, (4) corporate level borrowings, (5) commitments from co-investment partners and (6) proceeds from the sales of our investments.
Our ability to incur additional debt to fund acquisitions is dependent upon our existing leverage, the value of the assets we are attempting to leverage and general economic and credit market conditions, which may be outside of management’smanagement's control or influence.
Cash Flows. We believe that cash flows from operations will continue to provide adequate capital to fund our operating and administrative expenses, regular debt service obligations and all dividend payments in accordance with REIT requirements in both the short-term and long-term. In addition, we anticipate that cash on hand, borrowings under our secured term loan and secured revolving credit facility, issuancesand our other principal sources of equity and debt and co-investment programs, as well as other alternatives,liquidity, will be available to provide the necessary capital required by us.to fund our operations and allow us to grow.
Cash flows from operations as reported in the Consolidated Statements of Cash Flows totaled $180.1 million for 2011, $164.8 million for 2010 and $159.3 million for 2009, $230.2 million for 2008 and $287.7 million for 2007.2009. The underlying drivers that impact working capital and therefore cash flows from operations are the timing of (1) the collection of rents includingand tenant reimbursements, loan interest payments from tenants, the collection ofborrowers, and advisory fees, and (2) the payment of interest on mortgage debt and payment of operating and general and administrative costs. We believe the net-lease structure of the leases encumbering a majority of our tenants’ leasesthe properties in which we have an interest enhances cash flows from operations since the payment and timing of operating costs related to the properties are generally borne directly by the tenant. Collection and timing of tenant rents is closely monitored by management as part of our cash management program.
Net cash provided by (used in) investing activities totaled $(24.8) million in 2011, $(24.8) million in 2010 and $112.0 million in 2009, $230.1 million in 2008 and ($31.5) million in 2007.2009. Cash provided by investing activities related primarily to proceeds from the sale of properties, collection of notesloans receivable, distributions from non-consolidated entities in excess of accumulated earnings, proceeds from the sale of marketable equity and debt securities and changechanges in escrow deposits and restricted cash. Cash used in investing activities related primarily to investments in real estate properties, co-investment programs, notesloans receivable, an increase in deferred leasing costs, deposits and the purchase of noncontrolling interests.restricted cash. Therefore, the fluctuation in investing activities relates primarily to the timing of investments and dispositions.
Net cash (used in) provided byused in financing activities totaled ($285.2)$144.3 million in 2009, ($804.6)2011, $141.2 million in 20082010 and $39.0$285.2 million in 2007.2009. Cash provided by financing activities during each year was primarily attributable to proceeds from equity offerings,the issuance of common shares, net, exercise of employee common share options, contributions from noncontrolling interests, non-recourse mortgages and corporate borrowings, offset by dividend and distribution payments, net, repurchases of equity interests, forward equity commitment payments, net, an increase in deferred financing costs and debt payments and repurchases.
Public and Private Equity and Debt Markets. We access the public and private equity and debt markets when we (1) believe conditions are favorable and we(2) have a compelling use of proceeds. During 2011 and 2010, we issued approximately 10.0 million and 22.4 million common shares, respectively, raising net proceeds of approximately $90.5 million and $157.8 million, respectively, in public common share offerings. During 2011, 2010 and 2009, we issued approximately 1.1 million, 1.3 million and 4.3 million common shares under our direct share purchase plan raising net proceeds of approximately $8.4 million, $8.6 million and $20.9 million. During 2008, we issued approximately 3.5 million, common shares raising net proceeds of approximately $47.2 million.respectively. We primarily used these proceeds to retire indebtedness.
During 2007, we issued, through a wholly-owned subsidiary, $200.0 million in Trust Preferred Securities, which bear interest at a fixed rate of 6.804% through April 2017 and thereafter at a variable rate of three month LIBOR plus 170 basis points through maturity. These securities are (1) classified as debt; (2) due in 2037; and (3) redeemable by us commencing April 2012. During 2008, we repurchased, through unsolicited offers, $70.9 million of these securities for $44.6 million in cash, which resulted in a gain on debt extinguishment of $24.7 million including a write off of $1.6 million in deferred financing costs.
During 2007, we issued an aggregate $450.0 million of 5.45% Exchangeable Guaranteed Notes due in 2027. These notes can be put to us commencing in 2012 and every five years thereafter through maturity. The notes are currently exchangeable by the holders into common shares at a price of $19.49 per share, subject to adjustment upon certain events, including increases in our dividend rate above a certain threshold. Upon exchange, the holders of the notes would receive (1) cash equal to the principal amount of the note and (2) to the extent the exchange value exceeds the principal amount of the note, either cash or common shares at our option. DuringSince 2008, we repurchased $239.0and retired $387.9 million original principal amount of the notes for $169.5$296.0 million in cash and 1.6 million common shares having a value at issuance of $23.5 million (or $14.50 per share), which resulted. The remaining notes were repurchased by us and retired in gains on debt extinguishment of $36.0 million, including write-offs of $12.8 million of the unamortized debt discount and deferred financing costs. During 2009, we repurchased an additional $123.4 million original principal amount of the notes for $101.0 million, which resulted in gains on debt extinguishment of $17.4 million, including write-offs of $5.0 million of the unamortized debt discount and deferred financing costs.January 2012 pursuant to a holder repurchase option.
During the first quarter of 2010, we issued $115.0 million aggregate principal amount of 6.00% Convertible Guaranteed Notes. The notes pay interest semi-annually in arrears and mature onin January 15, 2030. The holders of the notes may require us to repurchase their notes onin January 15, 2017, January 15, 2020 and January 15, 2025 for cash equal to 100% of the notes to be repurchased, plus any accrued and unpaid interest. We may not redeem any notes prior to January 15, 2017, except to preserve our REIT status. TheThereafter, we may redeem the notes for cash equal to 100% of the principal of the notes to be redeemed, plus any accrued and unpaid interest. As of the date of filing this Annual Report, the notes have an initiala conversion rate of 141.1383142.6917 common shares per $1,000 principal amount of the notes, representing a conversion price of approximately $7.09$7.01 per common share. The initial conversion rate is subject to adjustment under certain circumstances. The notes are convertible by the holders under certain circumstances for cash, common shares or a combination of cash and common shares at our election.
During 2008,2011, we (1) repurchased 1.2 million common shares at an average price of $14.28 per share and (2) repurchased and retired 501,700approximately 0.4 million Series B Preferred Shares and approximately 0.1 million Series C Preferred Shares at a discount to the respective liquidation preferences. During 2009, we converted approximately 0.5 million shares of our Series C Preferred Shares by issuing 0.7 million common shares and paying $7.5 million in cash. The difference between the cost to retire these Series C Preferred Shares and their historical cost was $5.7 million and is treated as an increase to shareholders equity and as a reduction in preferred dividends paid for calculating earnings per share. During 2009, we converted 503,100 shares of our Series C Preferred shares by issuing 3.0 million common shares. The difference between the fair value of the common shares issued pursuant to the original conversion terms of $7.0 million is considered a deemed dividend and as such is recorded as a reduction in shareholders’ equity and as an increase to preferred dividends paid for calculating earnings per share. During 2008, we also entered into a forward equity commitment to purchase 3.5 million of our common shares at a price of $5.60 per share, we haveshare. We prepaid $15.6 million of the $19.6 million purchase price as of December 31,during 2008 and 2009, agreed to make floating payments during the term of the forward purchase at LIBOR plus 250 basis points per annum and we retainretained all cash dividend payments. We settled the commitment in October 2011 for a cash payment of approximately $4.0 million and retired approximately 4.0 million common shares.
We may access these markets in the future to implement our business strategy including capital to fund future growth. However, the continued general economic uncertainty and the volatility in these markets makes accessing these market challenging.
UPREIT Structure. Our UPREIT structure permits us to effect acquisitions by issuing OP units to a property owner as a form of consideration in exchange for the property, OP units in our operating partnerships.property. Substantially all outstanding OP units are redeemable by the holder at certain times on a one OP unit for approximately 1.13 common shares or, at our election, with respect to certain OP units, cash. Substantially all outstanding OP units require us to pay quarterly distributions to the holders of such OP units equal to the dividends paid to our common shareholders on an as redeemed basis and the remaining OP units have stated distributions in accordance with their respective partnership agreement. To the extent that our dividend per share is less than a stated distribution per unit per the applicable partnership agreement, the stated distributions per unit are reduced by the percentage reduction in our dividend. We are party to a funding agreementagreements with our operating partnerships under which we may be required to fund distributions made on account of OP units. No OP units have a liquidation preference. The number of common shares that will be outstanding in the future should be expected to increase, and income (loss) attributable to noncontrolling interests should be expected to decrease (increase), as such OP units are redeemed for our common shares.
On December 31, 2008, the MLP merged with and into us and 6.4 million OP units were exchanged into an equal number of common shares. As of December 31, 2009,2011, there were 4.8was a total of approximately 4.0 million OP units outstanding. Of the totaloutstanding other than OP units outstanding,held by us. Of this total, approximately 1.5 million are held by related parties.
As a result of the general deterioration in real estate values since 2008, few sellers of real estate are seeking OP units as a form of consideration.
Property Specific Debt. We generally finance our business with property specific, non-recourse mortgage debt as well as corporate level debt. As of December 31, 2009, we2011, our property owner subsidiaries have related balloon payments of $106.0$147.9 million and $234.9 million to be paid during 2012 and 2013, respectively. With respect to mortgages encumbering properties where the expected lease rental revenues are sufficient to provide an estimated property value in excess of the mortgage balance, we believe our property specific, non-recourse mortgage debt maturing during 2010. We believe weowner subsidiaries have sufficient sources of liquidity to meet these obligations through future cash flow from operations, the credit markets and, if determined appropriate by us, a capital contribution from us from either cash on hand ($53.9 million)63.7 million at December 31, 2011), borrowing capacity on our new secured term loan (currently $107.0 million) and our new secured revolving credit facility ($96.6 million at December 31, 2009), which expires in 2011, but can be extended by us to 2012, and future cash flow from operations. We are currently in discussions with(currently $205.8 million).
In the lender ofevent that the estimated property value is less than the mortgage secured by our San Francisco, California property with respect to a $19.8 million balloon payment due in March 2010 to extendbalance, the maturity of the loan up to 3 years.
The mortgages encumbering ourthe properties in which we have an interest are generally non-recourse to us and the property owner subsidiaries, such that wea property owner subsidiary may, if appropriate, satisfy a mortgage obligation by transferring title of the property to the lender or permitting a lender to foreclose.
We expect to continue to use property specific, non-recourse mortgages as we believe that by properly matching a debt obligation, including the balloon maturity risk, with the terms of a lease, expiration, our cash-on-cash returns increase and the exposure to residual valuation risk is reduced. However, the current economic environment has impacted the ability of our abilityproperty owner subsidiaries to obtain property specific debt on favorable terms. In 2008, property specific mortgage lending nearly ceased. Since then, the number of lenders and available loan proceeds have diminished significantly. In addition, the required loan to value ratios have decreased and the covenants, including required reserve amounts, have increased.
In 2011, a property owner subsidiary, obtained a five-year, $15.0 million, 4.71% interest-only, non-recourse mortgage loan on an industrial property in Byhalia, Mississippi. During 2010, (1) one of our property owner subsidiaries obtained an $11.3 million, 3.56% fully amortizing, approximate nine-year, non-recourse mortgage loan on its North Berwick, Maine property and (2) another one of our property owner subsidiaries obtained a $9.0 million, 5.5% interest only, non-recourse mortgage loan on its Greenville South Carolina property, which matures in January 2015. In addition, one of our property owner subsidiaries obtained a $37.0 million non-recourse mortgage loan on its Salt Lake City, Utah property. The property was subsequently sold, and the loan was assumed by the buyer.
In August 2009, weone of our property owner subsidiaries refinanced a $13.2 million, 8.19% non-recourse mortgage loan on a property in Fishers, Indiana which was scheduled to mature in April 2010, with an $11.5 million, 6.375% non-recourse mortgage loan which matures in August 2014.
During 2011, a property owner subsidiary, suspended debt service payments on a vacant office property in Tulsa, Oklahoma. The property was conveyed to the first quarterlender in January 2012.
During 2009, one of 2009, weour property owner subsidiaries suspended debt service payments on the mortgage encumbering ourits property that was leased to Circuit City Stores, Inc. in Richmond, Virginia following the lease rejectionbeing rejected in the tenant's bankruptcy and subsequent vacancy. The non-recourse loan had a balance of $15.5 million at that time. The property was conveyed to the lender in a foreclosure sale during the third quarter of 2009.
In the third quarterDuring 2009, one of 2009, weour property owner subsidiaries suspended debt service payments on a vacant property in Plymouth, Michigan which had an outstanding mortgage balance of $4.3 million. The property was conveyed through a foreclosure sale to the lender in December 2009. In addition, weone of our property owner subsidiaries did not make an $18.2 million balloon payment on a property in Houston, Texas which was due in October 2009. The special purpose entity that owned the property owner subsidiary declared bankruptcy in December 2009 and the property and related debt were assumed by the bankruptcy estate. There are significant risks associated with conveying properties to lenders through foreclosure which are described in "Risk Factors" in Part I, Item 1A of this Annual Report.
During 2008,Corporate Borrowings. In January 2012, we obtained or assumed $21.2procured a $215.0 million secured term loan from Wells Fargo Bank, National Association, as agent. The secured term loan matures in property specific non-recourse mortgage financings on two properties, which have a weighted-average-fixedJanuary 2019. The secured term loan requires regular payments of interest only at an interest rate dependent on our leverage ratio, as defined, as follows: 2.00% plus LIBOR if our leverage ratio is less than 45%, 2.25% plus LIBOR if our leverage ratio is between 45% and 50%, 2.45% plus LIBOR if our leverage ratio is between 50% and 55%, and 2.85% plus LIBOR if our leverage ratio exceeds 55%. Upon the date when we obtain an investment grade debt rating from at least two of 6.0%. The proceeds ofStandard & Poor's, Moody's and Fitch, the financinginterest rate under the secured term loan will be dependent on our debt rating. We may not assumed were used to retire existing indebtedness.
During 2008, we informedprepay any outstanding borrowings under the lendersecured term loan facility through January 12, 2013, but may prepay outstanding borrowings anytime thereafter, however at a premium for the mortgage secured by our property in Auburn Hills, Michigan that we would no longer make debt service payments and our intention to convey the property to the lender. The lender foreclosed on this property on December 23, 2008, and on December 31, 2008,next three years. Effective February 1, 2012, we entered into a settlementan interest-rate swap agreement withto fix LIBOR at 1.512% on $108.0 million of borrowings under the lender,secured term loan for seven years. As of the date of filing of this Annual Report, $108.0 million was outstanding and we were released from obligations underin compliance with the mortgage.financial covenants contained in the secured term loan agreement.
Corporate BorrowingsIn addition, in January 2012, we refinanced our secured $300.0 million revolving credit facility procured in January 2011 with KeyBank, as agent, with a $300.0 million secured revolving credit facility. The new secured revolving facility bears interest at 1.625% plus LIBOR if our leverage ratio, as defined, is less than 45%, 1.875% plus LIBOR if our leverage ratio is between 45% and 50%, 2.125% plus LIBOR if our leverage ratio is between 50% and 55% and 2.375% plus LIBOR if the leverage ratio exceeds 55%. We use corporate level borrowings, such as ourThe new secured revolving credit facility and secured term loans, to finance our investments and operations.
On February 13, 2009, we entered into a secured credit facility with KeyBank, as agent, consisting of a $165.0 million term loan and an $85.0 million revolving loan. The proceeds were used to refinance our (1) $200.0 million unsecured revolving credit facility, which had $25.0 million outstanding, bore interest at 120-170 basis points over LIBOR, and was scheduled to expire in June 2009, and our (2) $225.0 million secured term loan with KeyBank, which had $174.3 million outstanding, bore interest at LIBOR plus 60 basis points, and was scheduled to mature in June 2009 (with an option to extend to December 2009 at our option). The new facility bears interest at 285 basis points over LIBOR and matures in February 2011,January 2015, but can be extended to February 2012January 2016 at our option. With the consent of the lenders, we can increase the size of (1) the term loansecured revolving credit facility by $135.0$225.0 million, and (2) the revolving loan by $115.0 million (or $250.0 million in the aggregate, for a total facility size of $500.0$525.0 million assuming no prepayments of the term loan are made) by adding properties to the borrowing base.
During the second quarter of 2009, we increased the availability under thebase and admitting additional lenders. The new revolving loan by $40.0 million by admitting an additional lender to the bank group, thus increasing the total facility to $290.0 million. The credit facility isand new term loan are secured by ownership interest pledges and guarantees by certain of our subsidiaries that in the aggregate own interests in a borrowing base of 75 properties as of December 31, 2009.properties. As of December 31, 2009, $164.3the date of filing of this Annual Report, $28.0 million and $7.0 million werewas outstanding on the term loan andnew secured revolving loan, respectively,credit facility and we were in compliance with the financial covenants contained in the loansecured revolving credit facility agreement. Subsequent to December 31, 2009, we repaid $35.0 million of the term loan, all borrowings under the revolving loan, and increased the availability under the revolving loan by $25.0 million by admitting an additional lender to the bank group.
In March 2008, we obtained $25.0 million and $45.0 million original principal amount secured term loans from KeyBank. The loans arewere scheduled to mature in 2013 and required payments of interest only at LIBOR plus 60 basis points,points; however, we entered into an interest rate swap agreement which fixed the interest rate at 5.52%, and mature in 2013. The net proceeds of the loans of $68.0 million were used to partially repay indebtedness on three cross-collateralized mortgages. After such repayment, the amount owed on the three mortgages was $103.5 million, the three loans were combined into one loan, which is interest only instead of having a portion as self-amortizing and matures in September 2014.. As of December 31, 2009,2011, $25.0 million and $35.7$35.6 million waswere respectively outstanding on eachthis secured term loan and we were in compliance with the financial covenants contained in each loan document. The loans and interest rate swap were fully satisfied in January 2012 with proceeds from the new secured term loan and the new secured revolving credit facility discussed above.
During 2007, we issued $200.0 million in Trust Preferred Securities, which bear interest at a fixed rate of 6.804% through April 2017 and thereafter at a variable rate of three month LIBOR plus 170 basis points through maturity. These securities are (1) classified as debt, (2) due in 2037 and (3) redeemable by us commencing April 2012. As of December 31, 2011 and 2010, there are $129.1 million outstanding.
While property specific mortgages have become harder to obtain, corporate level borrowings have generally been available and we expect this to continue to be the case in the near future.
Co-investment Programs. We believe that entering into co-investment programs and joint ventures with institutional investors and other real estate companies is a good way to access private capital while mitigating our risk in certain assets and increasing our return on equity to the extent we earn management or other fees. However, investments in co-investment programs and joint ventures limit our ability to make investment decisions unilaterally relating to the assets and limit our ability to deploy capital. If we continue to grow, we expect to enter into co-investment programs and joint ventures primarily with respect to assets that we ordinarily would not have invested in.
Capital Recycling. We attemptPart of our strategy to effectively manage our balance sheet in order to accretively reduce leverage through cash flow management of our tenant leases, maintaining occupancy,involves pursuing and executing well on property dispositions and recycling of capital and accessing the capital markets when opportunities arise.capital. During 2009,2011, we (i) soldmonetized 17 properties which generated $66.6 millionfor a gross price of net proceeds after mortgage satisfactions, (ii) raised $20.9 million from sales of common shares under our direct share purchase plan, and (iii) raised $18.1 million from the sale/maturity of debt investments.$160.1 million. These proceeds were used to retire indebtedness encumbering our properties and corporate level debt. As of December 31, 2009, we have approximately $96.6 million of borrowing capacity under our revolving credit facility. Also,in which we have an approximately $210.0 million accordion feature in our secured credit facility. This feature can be exercised by providing additional properties as collateral for the borrowing base or by admitting additional lenders. However, the approval of the lenders is required for this feature to be exercised.interest and make investments.
Liquidity Needs. Our principal liquidity needs are the contractual obligations set forth under the heading “Contractual Obligations,” below, and the payment of dividends to our shareholders and distributions to the holders of OP units.
As of December 31, 2009,2011, we and our property owner subsidiaries, in the aggregate, had approximately $2.1$1.7 billion of indebtedness, consisting of mortgages and notes payable outstanding, 6.00% Convertible Guaranteed Notes, 5.45% Exchangeable Guaranteed Notes (repurchased subsequent to year end pursuant to a holder option) and Trust Preferred Securities, including discounts, with a weighted-average interest rate of approximately 5.7%5.8%. OurThe ability of a property owner subsidiary to make debt service payments depends upon ourthe rental revenues of its property and ourits ability to refinance the mortgage related thereto, sell the related property, have available amounts under our secured credit facility or access capital from us or other capital. Oursources. A property owner subsidiary's ability to accomplish such goals will be affected by numerous economic factors affecting the real estate industry, including the availability and cost of mortgage debt at the time, ourits equity in the mortgaged properties,property, the financial condition and the operating history of the mortgaged properties,property, the then current tax laws and the general national, regional and local economic conditions.
If we are unable to satisfy our contractual obligations and other operating costs with our cash flow from operations, we intend to use borrowings under our new secured term loan and secured revolving credit facility and proceeds from issuances of equity or debt securities. If a property owner subsidiary is unable to satisfy its contractual obligations and other operating costs, it may default on its obligations and lose its assets in foreclosure or through bankruptcy proceedings.
We elected to be taxed as a REIT under Sections 856 through 860 of the Code, commencing with our taxable year ended December 31, 1993. If we qualify for taxation as a REIT, we generally will not be subject to federal corporate income taxes on our net taxable income that is currently distributed to shareholders.
In connection with our intention to continue to qualify as a REIT for federal income tax purposes, we expect to continue paying regular dividends to our shareholders. These dividends are expected to be paid from operating cash flows and/or from other sources. Since cash used to pay dividends reduces amounts available for capital investments, we generally intend to maintain a conservative dividend payout ratio or we may issue common shares in lieu of cash dividends as currentlyif permitted under the Code, reserving such amounts as we consider necessary for the maintenance or expansion of properties in our portfolio, debt reduction, the acquisition of interests in new properties as suitable opportunities arise, and such other factors as our Board of Trustees considers appropriate.
We paid approximately $49.6$94.9 million in cash dividends to our common and preferred shareholders in 2009.2011. Although weour property owner subsidiaries receive the majority of our base rental payments on a monthly basis, we intend to continue paying dividends quarterly. Amounts accumulated in advance of each quarterly distribution are invested by us in short-term money market or other suitable instruments.
Capital Resources
General. Due to the net-lease structure, weour property owner subsidiaries historically have not incurred significant expenditures in the ordinary course of business to maintain our properties.the properties in which we have an interest. However, particularly in 2009 andsince 2008, as leases have expired, weour property owner subsidiaries have incurred costs in extending the existing tenant leases, re-tenanting the properties with a single-tenant, or converting the property to multi-tenant.multi-tenant use. The amounts of these expenditures can vary significantly depending on tenant negotiations, market conditions and rental rates.
Single-Tenant Properties. We do not anticipate significant capital expenditures at ourthe properties in which we have an interest that are subject to net leases since ourthe tenants at these properties generally bear all or substantially all of the cost of property operations, maintenance and repairs. However, at certain properties subject to net leases, our property owner subsidiaries are responsible for replacement and/or repair of certain capital items. At certain single-tenant properties that are not subject to a net lease, weour property owner subsidiaries have a level of property operating expense responsibility.
Multi-Tenant Properties. Primarily as a result of non-renewals at single-tenant net-lease properties, we have interests in multi-tenant properties in our consolidated portfolio. While tenants are generally responsible for increases over base year expenses, weour property owner subsidiaries are responsible for the base-year expenses and capital expenditures at thethese properties.
Our property in Baltimore, Maryland was previously net-leased to St. Paul Fire and Marine Insurance Company. In April 2008, we entered into a lease termination with St. Paul Fire and Marine Insurance Company, and we assumed the direct subleases for the property. On September 30, 2009, the lease with the largest subtenant, Legg Mason, expired and the building is approximately 27% leased.
We are in the process of redeveloping the property to assist with our leasing effort. We expect to upgrade the exterior façade of the building and redesign the lobby and outside plaza. We estimate these improvements will cost approximately $19.8 million and will be completed over the next several years. We also own an adjacent parcel and constructed a parking garage to increase the parking ratio at the property for $23.3 million.
Our multi-tenant property in San Francisco, California is currently undergoing a seismic upgrade for an estimated cost of approximately $3.8 million.
Vacant Properties. To the extent there is a vacancy in a property, weour property owner subsidiary would be obligated for all operating expenses, including real estate taxes and insurance. If a property is vacant for an extended period of time, our property owner subsidiary may incur substantial capital expenditure costs to re-tenant the property.
In 2009, the lease for our Orlando, Florida property expired and following an approximately two and one-half month holdover, the tenant vacated the building. If we are unable to either sell the vacant building or lease the entire building to a single-user, we may incur significant costs to rehabilitate and convert the building to multi-tenant use.
Property Expansions. Under certain leases, our tenants have the right to expand the facility located on our property.a property in which we have an interest. In the past we haveour property owner subsidiary has generally funded, and in the future we intendour property owner subsidiary intends to generally fund, these property expansions with additional secured borrowings, the repayment of which was, and will be, funded out of rental increases under the leases covering the expanded properties.
Ground Leases. OurThe tenants of properties in which we have an interest generally pay the rental obligations on ground leases either directly to the fee holder or to usour property owner subsidiary as increased rent. However, weour property owner subsidiaries are responsible for these payments under certain leases and at vacant properties.
Environmental Matters. Based upon management’smanagement's ongoing review of ourthe properties in which we have an interest, management is not aware of any environmental condition with respect to any of ourthese properties, which would be reasonably likely to have a material adverse effect on us. There can be no assurance, however, that (1) the discovery of environmental conditions, which were previously unknown;unknown, (2) changes in law;law, (3) the conduct of tenants;tenants or (4) activities relating to properties in the vicinity of ourthe properties in which we have an interest, will not expose us to material liability in the future. Changes in laws increasing the potential liability for environmental conditions existing on properties or increasing the restrictions on discharges or other conditions may result in significant unanticipated expenditures or may otherwise adversely affect the operations of ourthe tenants of properties in which would adversely affect our financial condition and results of operations.we have an interest.
Results of Operations
Year ended December 31, 20092011 compared with December 31, 2008. Of the decrease2010. The increase in total gross revenues in 20092011 of $41.5 million, $42.5$6.9 million is attributable to a $5.8 million increase in rental revenue offset by anand a $0.2 million increase in tenant reimbursements of $0.6 milliondue to an increase in acquisitions and leasing activity and an increase of $0.9 million in advisory and incentive fees of $0.4 million. The decrease in rental revenue is primarily duerelating to $28.7 million recognized in connection with two lease terminations in 2008, the sale of properties to NLS in 2008 and an increase in vacancy.third-party managed account return hurdles being met.
The decrease in interest and amortization expense of $21.3 million is due to the decrease in long-term debt.
The increase in property operating expense of $8.2$11.4 million is primarily due to an increasea decrease in indebtedness.
Depreciation and amortization increased $7.9 million primarily due to the numberacquisition of real estate properties for which we have operating expense responsibility, including an increase in vacancies.and the acceleration of amortization on certain lease intangible assets due to tenant lease terminations.
Non-operating income increased $1.3 million primarily due to interest earned on investments made during 2011 and 2010.
The decrease in depreciation and amortization of $54.4 million is due primarily to the full amortization of lease intangibles and tenant improvements in 2008. Intangible assets are amortized over a shorter period of time (generally the lease term) than real estate assets.
The decrease in general and administrative expenses of $6.9 million is due primarily to a reduction in personnel costs and professional fees.
Non-operating income decreased $16.3 million which is primarily attributable to $16.0 million of income recognized with the acquisition of land as part of a tenant's lease surrender obligation during 2008.
Debt satisfaction gains (charges), net decreased $42.7 million due to the retirement of $70.9 million original principal amount of Trust Preferred Securities in 2008 and by the volume, timing and pricing of the repurchase of our 5.45% Exchangeable Guaranteed Notes.
The increase in the change in value of our forward equity commitment of $9.3$6.9 million was primarily a reflectiondue to the period change in the per share price of the increase in our common share price.shares.
The increase in impairment charges and loan losses was $61.7 million. In 2011, we recognized $68.6 million of $27.4impairment charges on non-core properties, including certain retail, underperforming and multi-tenant properties. We explored the possible disposition of these properties and determined that the estimated undiscounted future cash flows were below the properties carrying value. During 2010, we recognized a loan loss of $3.8 million consist ofon a $14.3loan receivable as the tenant supporting the collateral declared bankruptcy and announced liquidation proceedings. In addition, we recognized a $3.0 million impairment charge in 2010 on an office building in San Francisco, California, $4.7 million on an office building in Pleasanton, California, $6.8 million on two retail properties and $1.6 million of loan losses on two notes receivablea property due to operational considerations with respect to the property and a debt security investment that we sold.$0.1 million other-than-temporary impairment on a bond investment.
The decreasechange in gains on sale—affiliates relates to the sale of properties to NLS.
Provisionbenefit (provision) for income taxes decreased $0.6of $2.4 million duewas primarily the result of the write-off of a deferred tax liability relating to the mergertransfer of acertain assets from our wholly-owned taxable REIT subsidiary into usto the REIT itself in 2008.2011.
The increase in lossesequity in earnings (losses) of non-consolidated entities of $79.9$8.6 million is primarily due to impairment losses recognized on$2.2 million earned from our investment in Lex-Win Concord.
Net loss increased by $207.8LW Sofi LLC, $1.3 million primarily dueearned on a new non-consolidated entity, Pemlex LLC, prior to the net impactconsolidation and cash distributions of items discussed above coupled with an increase of $52.6$4.0 million received from our investments in loss from discontinued operations.Concord related entities.
Discontinued operations represents properties sold or held for sale. In 2009, 18 properties were sold, transferred to lenders or otherwise disposed of. In 2008, 42 properties were sold and/or foreclosed and classified as held for sale. The total loss from discontinued operations decreased $52.6increased $7.2 million due to an increase in impairment charges of $57.3 million, a decrease in gains on salessale of properties of $4.0 million and an increase in loss from discontinued operations of $0.2 million offset by a decrease in provision for income taxes of $0.5$8.1 million and an increase in debt satisfaction gains (charges),charges, net of $8.4$3.5 million, offset by a decrease in impairment charges of $1.2 million and an increase in income from discontinued operations of $3.3 million.
Net loss attributable to noncontrolling interests decreased $5.1increased $5.7 million primarily due to the merger of the MLP with and into usan increase in impairment charges incurred on December 31, 2008.noncontrolling interest properties.
Net loss attributable to common shareholders in 2009 increased $223.9$45.6 million primarily due to the items discussed above and an increase in preferred dividends of $11.0 million primarily due to the conversion of certain of our Series C Preferred Shares in 2009 and redemption of certain of our Series C Preferred Shares in 2008.above.
The increase in net income or decrease in net loss in future periods will be closely tied to the level of acquisitions made by us. Without acquisitions, the sources of growth in net income are limited to index adjusted rents (such as the consumer price index), percentage rents, reduced interest expense on amortizing mortgages and variable rate indebtedness and by controlling other variable overhead costs. However, there are many factors beyond management’smanagement's control that could offset these items including, without limitation, increased interest rates and tenant monetary defaults and the other risks described in this Annual Report.
Year ended December 31, 20082010 compared with December 31, 2007.2009. Of the increasedecrease in total gross revenues in 20082010 of $17.0$10.6 million, (i) $19.2$7.9 million is attributable to a decrease in rental revenue and a $1.9 million decrease in tenant reimbursements due to an increase in rental revenue, primarily due to $28.7 million recognizedvacancy in connection with two lease terminationscertain properties during the year ended December 31, 2010 and properties acquired from co-investment programs in 2007, offset by the sale/contribution of properties to NLS in 2007 and 2008, (ii) a $9.9 million increase in tenant reimbursements and (iii) offset by a decrease of $12.1 million in advisory and incentive fees. The primary decrease in advisory and incentive fees relates to promoted interests of $11.7 million earned in 2007 with respect to two former co-investment programs and one advisory agreement.$0.7 million.
The decrease in interest and amortization expense of $7.7$3.8 million is due primarily to athe decrease in long term debt.indebtedness.
The increasedecrease in property operating expense of $21.6$2.9 million is primarily due to a decrease in the operating expenses at certain multi-tenant properties which had an increase in the numbervacancy resulting in lower costs, and certain tenants taking direct responsibility for payments of properties foroperating costs in which weour property owner subsidiaries have operating expense responsibility, including vacancies and properties with tenant leases subject to expense stops and base year clauses.
The increase in depreciation and amortization of $10.5 million is due primarily to the growth in real estate and intangibles in 2007 through the acquisition of properties from our co-investment programs and the acceleration of amortization of certain intangible assets relating to lease terminations in 2008. Intangible assets are amortized over a shorter period of time (generally the lease term) than real estate assets.an interest.
The decrease in general and administrative expenses of $8.7$0.9 million is due primarily to a reduction in (1)professional and service fees, reduced spending on technology and reduced corporate depreciation, offset by higher personnel costs primarily due to accelerated amortization of severance agreements with former officers and (2) merger costs incurred in 2007.common share option costs.
Non-operating income increased $13.0$3.9 million which is primarily due primarily to land receivedinvestments made in 2008 in connection with a lease termination.2010.
Debt satisfaction gains, (charges), net changed $60.9decreased $16.8 million primarily due to gains recognized on the retirementvolume, timing and pricing of the repurchase of our 5.45% Exchangeable Guaranteed Notes and Trust Preferred Securities in 2008.Notes.
The changeincrease in value of forward equity commitment represents the change in value of our forward equity commitment of $1.7 million was primarily due to the prepaid portionperiod change in the per share price of our forward purchase equity contract entered into in 2008.common shares.
The increase in gains on sale— affiliates relates to the saleimpairment charges and loan losses of properties to NLS.
The equity in earnings (losses) of non-consolidated entities changed $89.8$5.3 million and is primarily due to an increase of $2.3 million in loan losses recognized by lender subsidiaries and a decrease$3.0 million impairment charge on a retail property.
The increase in earnings inincome of non-consolidated entities of $144.9 million is primarily due to impairment losses recognized on our investment in Lex-Win Concord of $35.3 million due to impairment charges and loan loss reserves of $104.9 million recognized by Lex-Win Concord, our share of which was $52.4 million; losses of $16.9 million recognized on our investment in NLS in 2008; and gains on sale realized of $34.2 million in 2007 relating to the dissolution of one of our former co-investment programs.2009.
Net income decreased by $95.4 million primarily due to a decrease of $92.9 million in income from discontinuedDiscontinued operations and the net impact of items discussed above.
In 2008, 42 properties were sold and/or foreclosed and classified as held for sale, compared to 56 properties sold and classified as held for sale in 2007. The total discontinued operations, which represents properties sold or held for sale,sale. The total discontinued operations loss decreased $92.9$48.3 million due to a decrease in income from discontinued operationsimpairment charges of $27.8$49.5 million, and a decreasean increase in gains on sales of properties of $79.7$5.5 million and a decrease in the loss from discontinued operations of $1.8 million, offset by a decrease in impairment charges of $0.7 million, a decrease in the provision for income taxes of $2.9 million and a change in debt satisfaction gains, (charges), net of $11.0$8.5 million.
Net incomeloss attributable to noncontrolling interests decreased $22.9increased $3.3 million primarily due to a decreasean increase in gainimpairment charges incurred on sale of properties and the exchange of OP units held by limited partners in the MLP for common shares.noncontrolling interest properties.
Net loss attributable to common shareholders in 2008 was $18.5decreased $184.8 million compared to net income attributable to common shareholders in 2007 of $48.5 million. The decrease isprimarily due to the items discussed above plus a reductionand an increase in Series C Preferred Sharepreferred dividends of $1.2$7.0 million and a redemption discount of $5.7 millionprimarily due to the repurchaseconversion of certain of our Series C Preferred Shares offset by an increase of $1.4 million in Series D Preferred Share dividends.2009.
Off-Balance Sheet Arrangements
General. As of December 31, 2009,2011, we had investments in various real estate entities with varying structures. The real estate investments owned by thethese entities are generally financed with non-recourse debt. Non-recourse debt is generally defined as debt whereby the lenders’lenders' sole recourse with respect to borrower defaults is limited to the value of the propertyassets collateralized by the mortgage.debt. The lender generally does not have recourse against any other assets owned by the borrower or any of the members or partners of the borrower, except for certain specified exceptions listed in the particular loan documents. These exceptions generally relate to limited circumstances"bad boy" acts, including breaches of material representations.
Net Lease Strategic Assets Fund L.P. NLS is a co-investment program with Inland NLS. NLS was established to acquire single-tenant net-lease specialty real estate in the United States. Other than the acquisition of the initial 43 properties and a 40% tenant-in-common interest in a property from us in 2007 and 2008, NLS has not acquired any additional properties.
InlandThe partners in NLS and we are currently entitled to a return on/of each of ourtheir respective investmentscapital contributions from operations as follows: (1) Inland NLS, 9% on its common equity ($220.6 million in common equity), (2) us, 10.5% return on our unpaid preferred equity allocated to properties that were previously sold or refinanced ($115.6 million in unpaid preferred equity) and 6.5% on our remaining preferred equity ($162.546.8 million in preferred equity), (3) us, 9% on our common equity ($38.9 million in common equity), (4) return of our preferred equity ($162.5162.4 million in preferred equity), (5) return of Inland NLS common equity ($220.6 million in common equity), (6) return of our common equity ($38.9 million in common equity) and (7) any remaining cash flow is allocated 65% to Inland NLS and 35% to us as long as we are the general partner,partners; if not, allocations are 85% to Inland NLS and 15% to us.
In addition, the partners in NLS are currently entitled to a return on/of each of their respective capital contributions from capital events as follows: (1) return of our unpaid preferred equity allocated to properties that were previously sold or refinanced, (2) Inland NLS, to the initialextent of any unpaid 9% return on its common equity, (3) us, to the extent of any unpaid 10.5% and 6.5% return on our remaining preferred equity, as applicable, (4) return of our preferred equity allocation with respect to the asset(s) involved in the capital contributions, we andevent, (5) us, to the extent of any unpaid 9% return on our common equity, (6) return of Inland NLS committedcommon equity, (7) return of our remaining preferred equity, (8) return of our common equity and (9) any remaining amount is allocated 65% to invest upInland NLS and 35% to an additional $22.5us as long as we are the general partner; if not, allocations are 85% to Inland NLS and 15% to us.
The NLS partnership agreement provides that (1) either limited partner can exercise the buy/sell right or the right of first offer after February 20, 2012 and (2) upon one limited partner's exercise of either right, the responding partner may not again trigger the buy/sell or the right of first offer until the termination of all procedures and timeframes pursuant to the exercising partner's chosen right.
On February 20, 2012 and February 21, 2012, we delivered notices to Inland NLS exercising the buy/sell right and specifying a price of $213.0 million, at which we would purchase the assets of NLS, pursuant to a purchase and $127.5 million, respectively,sale agreement included with the notice providing for a sale of Inland NLS's interest in NLS to acquire additional specialty single-tenant net-leased assets.us. The specified price would be distributed in accordance with the capital events distribution priority set forth in the paragraph describing distributions upon capital events above. Inland NLS must then elect to either sell its interest in NLS to us or buy our interest in NLS.
On February 21, 2012, Inland NLS delivered a notice to us exercising the right of first offer, which offered to sell 41 of the 43 properties in which NLS has an interest for a price of $548.7 million, including the assumption of any related debt, with closing to occur prior to August 21, 2012 and on other specified terms. If we do not elect to purchase the offered properties, Inland NLS has six months from the exercise notice to sell the properties to a bona fide third party. Upon the sale, the specified price would be distributed in accordance with the capital events distribution priority set forth in the paragraph describing distributions upon capital events above.
Under both the buy/sell right and the right of first offer, the responding partner has 45 days to respond.
LRA has entered into a management agreement with NLS whereby LRA will receiveperforms asset management services and receives (1) a management fee of 0.375% of the equity capital, as defined, (2) a property management fee of up to 3.0% of actual gross revenues from certain assets for which the landlord is obligated to provide property management services (contingent upon the recoverability of such fees from the tenant under the applicable lease), and (3) an acquisition fee of 0.5% of the gross purchase price of each acquired asset by NLS.
Lex-Win Concord Debt Holdings LLC and CDH CDO LLC. WeConcord and CDH CDO are two co-investment programs with Inland Concord and Winthrop, have a co-investment program, Lex-Win Concord, to acquire and originate loans secured, directly and indirectly, by real estate assets through Concord. Concord’s business has been to acquire and originate loan assets and loan securities collateralized by real estate assets including mortgage loans, subordinate interests in whole loans, mezzanine loans, preferred equity and commercial real estate securities including CMBS and CDOs. Concord sought to finance its loan assets and loan securities through various structures including repurchase facilities, credit lines, term loans and securitizations and, in this regard, Concord formed CDO-1, pursuant to which it financed approximately $464.7 million of its loan assets and loan securities. Concord has also sought additional capital through sales of preferred equity in Concord.assets.
Concord initially sought to produce a stable income stream from its investments in loan assets and loan securities by managing credit risk and interest rate risk. However, the disruption in the capital and credit markets increased margin calls on Concord’sConcord's repurchase agreements. Furthermore, the ability to issue CDOs and the availability of new financing has effectively been eliminated, making the execution of Concord’sConcord's strategy unfeasible at this time.
Concord began experiencing declines in the fair value of its loan securities in the fourth quarter of 2007 consistent with liquidity concerns impacting the commercial bond and real estate markets and the overall economy. As a result Concord has recorded significant other-than-temporary impairment charges during 2008 and 2009.charges.
In addition, we perform a comprehensive analysis of our investment in Lex-Win Concord on a quarterly basis to determine if the investment is other-than-temporarily impaired. Primarily due to (1) the continued deterioration in the value of Concord’sConcord's loan and bond portfolio, (2) a margin call received by Concord and potential additional margin calls, (3) the preferred member’smember's failure to fund thea requested Concord capital call, (4) an increase in Concord borrower defaults, (5) Concord’sConcord's debt covenant violations and (6) the distressed sale of assets and potential sale of assets at distressed levels to satisfy margin calls and amendments to lender agreements, we determined during the first half of 2009 that our investment in Lex-Win Concord had suffered a significant decrease in value and that ultimately our investment should be valued at zero. As a result, we recorded an aggregate of $68.2 million in other-than-temporary impairment charges during 2009. We have made no obligation or intentadditional contributions and we recognize future income from Concord and CDH CDO on the cash basis. Our investment in these ventures is valued at zero. We are only obligated to support Lex-Win Concord’s activities going forwardfund capital calls for new investments to the extent of management fees we receive from Concord and accordingly, we have suspended recognition of losses incurred at Lex-Win Concord.
Contractual Obligations
The following summarizes our principal contractual obligations as of December 31, 20092011 ($000’s)000's):
| | | 2010 | | | 2011 | | | 2012 | | | 2013 | | | 2014 | | | 2015 and Thereafter | | | Total | |
| Notes payable(1)(2)(3)(4) | | $ | 139,486 | | | $ | 287,408 | | | $ | 307,627 | | | $ | 319,557 | | | $ | 260,435 | | | $ | 758,225 | | | $ | 2,072,738 | |
| Contract right payable | | | 491 | | | | 540 | | | | 593 | | | | 652 | | | | 717 | | | | 12,259 | | | | 15,252 | |
| Purchase obligations (5) | | | — | | | | 4,024 | | | | — | | | | — | | | | — | | | | — | | | | 4,024 | |
| Operating lease obligations(6) | | | 3,523 | | | | 3,195 | | | | 1,664 | | | | 1,480 | | | | 1,074 | | | | 4,544 | | | | 15,480 | |
| | | $ | 143,500 | | | $ | 295,167 | | | $ | 309,884 | | | $ | 321,689 | | | $ | 262,226 | | | $ | 775,028 | | | $ | 2,107,494 | |
(1) | We have $7.5 million in outstanding letters of credit. |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2012 | | 2013 | | 2014 | | 2015 | | 2016 | | 2017 and Thereafter | | Total |
Notes payable1 | | $ | 238,500 |
| | $ | 320,873 |
| | $ | 252,699 |
| | $ | 283,767 |
| | $ | 131,406 |
| | $ | 446,225 |
| | $ | 1,673,470 |
|
| Interest payable - fixed rate | | 89,260 |
| | 72,461 |
| | 61,293 |
| | 42,264 |
| | 32,264 |
| | 28,838 |
| | 326,380 |
|
Operating lease obligations2 | | 3,573 |
| | 3,662 |
| | 3,183 |
| | 2,982 |
| | 1,501 |
| | 13,130 |
| | 28,031 |
|
| | | $ | 331,333 |
| | $ | 396,996 |
| | $ | 317,175 |
| | $ | 329,013 |
| | $ | 165,171 |
| | $ | 488,193 |
| | $ | 2,027,881 |
|
(2) | Includes balloon payments. |
1. Includes balloon payments. Amounts shown exclude debt discounts of $48 (2012), $1,196 (2013) and $9,851 (thereafter) and exclude $5.7 million in outstanding letters of credit.2. Includes ground lease payments and office rents. Amounts disclosed do not include rents that adjust to fair market value. In addition certain ground lease payments due under bond leases allow for a right of offset between the lease obligation and the debt service and accordingly are not included.
(3) | Subsequent to December 31, 2009, we issued $115.0 million 6.00% Convertible Guaranteed Notes. The notes mature on January 15, 2030 but may be redeemed by us after January 15, 2017 or by the holder on January 15, 2017, January 15, 2020 and January 15, 2025. We also retired $14.7 million, $78.4 million and $23.0 million of debt which would have matured in 2010, 2011 and 2012, respectively, using net proceeds from the offering and due to the assumption of mortgage debt in connection with two property sales. |
In addition, we guarantee certain tenant improvement allowances and lease commissions on behalf of certain property owner subsidiaries when required by the related tenant or lender.
(4) | 2012 and 2013 amounts are shown net of $1,941 and $3,170 in discounts, respectively. |
(5) | Represents the December 31, 2009 remaining forward purchase equity commitment which must be settled by October 2011. |
(6) | Includes ground lease payments and office rent. Amounts disclosed do not include rents that adjust to fair market value. In addition certain ground lease payments due under bond leases allow for a right of offset between the lease obligation and the debt service and accordingly are not included. |
Item 7A. Quantitative and Qualitative Disclosure about Market Risk
Our exposure to market risk relates primarily to our variable rate debt and fixed rate debt. As of December 31, 20092011 and 2008, our2010, we had no consolidated variable rate indebtedness was approximately $171.3 millionnot subject to an interest rate swap agreement. During 2011 and $199.3 million, respectively, which represented 8.3% and 8.4% of total long-term indebtedness, respectively. During 2009 and 2008,2010, our variable rate indebtedness had a weighted-average interest rate of 3.2%3.3% and 3.7%3.1%, respectively. Had the weighted-average interest rate been 100 basis points higher, our interest expense for 20092011 and 20082010 would have been increased by approximately $2.0$17 thousand and $0.8 million, in each year.respectively. As of December 31, 20092011 and 2008,2010, our consolidated fixed rate debt, including discontinued operations, was approximately $1.9$1.7 billion and $2.2$1.8 billion, respectively, which represented 91.7% and 91.6%, respectively,100.0% of total long-term indebtedness.
For certain of our financial instruments, fair values are not readily available since there are no active trading markets as characterized by current exchanges between willing parties. Accordingly, we derive or estimate fair values using various valuation techniques, such as computing the present value of estimated future cash flows using discount rates commensurate with the risks involved. However, the determination of estimated cash flows may be subjective and imprecise. Changes in assumptions or estimation methodologies can have a material effect on these estimated fair values. The following fair values were determined using the interest rates that we believe our outstanding fixed rate debt would warrant as of December 31, 20092011 and are indicative of the interest rate environment as of December 31, 2009,2011, and do not take into consideration the effects of subsequent interest rate fluctuations. Accordingly, we estimate that the fair value of our fixed rate debt is $1.6$1.5 billion as of December 31, 2009.2011.
Our interest rate risk objectives are to limit the impact of interest rate fluctuations on earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, we manage our exposure to fluctuations in market interest rates through the use of fixed rate debt instruments to the extent that reasonably favorable rates are obtainable with such arrangements. We may enter into derivative financial instruments such as interest rate swaps or caps to mitigate our interest rate risk on a related financial instrument or to effectively lock the interest rate on a portion of our variable rate debt. Currently,As of the date of filing this Annual Report, we have one interest rate swap agreement.agreement in our consolidated portfolio.
Item 8. Financial Statements and Supplementary Data
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
INDEX
50 |
| |
| Page |
| Management's Annual Report on Internal Control Over Financial Reporting | |
| Reports of Independent Registered Public Accounting Firm | |
| Consolidated Balance Sheets as of December 31, 2011 and 2010 | |
| Consolidated Statements of Operations for the years ended December 31, 2011, 2010 and 2009 | |
| Consolidated Statements of Comprehensive Loss for the years ended December 31, 2011, 2010 and 2009 | |
| Consolidated Statements of Changes in Equity for the years ended December 31, 2011, 2010 and 2009 | |
| Consolidated Statements of Cash Flows for the years ended December 31, 2011, 2010 and 2009 | |
| Notes to Consolidated Financial Statements | |
| Financial Statement Schedule | |
| Schedule III - Real Estate and Accumulated Depreciation | |
MANAGEMENT’SMANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROLSCONTROL
OVER FINANCIAL REPORTING
ManagementOur management is responsible for establishing and maintaining adequate internal controlscontrol over financial reporting. Ourreporting and for performing an assessment of the effectiveness of internal control over financial reporting as of December 31, 2011. Our system of internal control over financial reporting was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of published financial statements in accordance with U.S. generally accepted accounting principles.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance that financial statements are fairly presented in accordance with U.S. generally accepted accounting principles.
In assessing the effectiveness Our system of our internal controls over financial reporting, management used as guidance the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based upon the assessment performed, management believes that our internal controls over financial reporting are effective as of December 31, 2009.
Our internal control over financial reporting includes policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and the members of our Board of Trustees; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance that financial statements are fairly presented in accordance with U.S. generally accepted accounting principles.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2011. In assessing the effectiveness of our internal control over financial reporting, management used as guidance the criteria established in Internal Control -Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based upon the assessment performed, management believes that our internal control over financial reporting is effective as of December 31, 2011.
Our independent registered public accounting firm, KPMG LLP, independently assessed the effectiveness of our internal controlscontrol over financial reporting. KPMG LLP has issued a report which is included on page 5457 of this Annual Report.
Item 8. Financial Statements and Supplementary Data
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
INDEX
| Page |
Reports of Independent Registered Public Accounting Firm | 53 |
Consolidated Balance Sheets as of December 31, 2009 and 2008 | 55 |
Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and 2007 | 56 |
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2009, 2008 and 2007 | 57 |
Consolidated Statements of Changes in Equity for the years ended December 31, 2009, 2008 and 2007 | 58 |
Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007 | 61 |
Notes to Consolidated Financial Statements | 62 |
Financial Statement Schedule | |
Schedule III — Real Estate and Accumulated Depreciation | 92 |
Report of Independent Registered Public Accounting Firm
The Trustees and Shareholders
Lexington Realty Trust:
We have audited the accompanying consolidated financial statementsbalance sheets of Lexington Realty Trust and subsidiaries (the “Company”) as listedof December 31, 2011 and 2010, and the related consolidated statements of operations, changes in equity, comprehensive loss, and cash flows for each of the years in the accompanying index.three-year period ended December 31, 2011. In connection with our audits of the consolidated financial statements, we also have audited the accompanying financial statement schedule as listed in the accompanying index.schedule. These consolidated financial statements and financial statement schedule are the responsibility of the Company’sCompany's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits. We did not audit the 2008 financial statements of Lex-Win Concord LLC (“Concord”), a 50 percent owned investee company. The Company’s investment in Concord at December 31, 2008 was $109.6 million, and its equity in losses of Concord and other comprehensive loss attributable to Concord were $30.2 million and $6.1 million, respectively, for the year then ended. The financial statements of Concord were audited by other auditors whose report was furnished to us, and our opinion, insofar as it relates to the amounts included for Concord for 2008, is based solely on the report of the other auditors.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits, and the report of other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Lexington Realty Trust and subsidiaries as of December 31, 20092011 and 2008,2010, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2009,2011, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’sCompany's internal control over financial reporting as of December 31, 2009,2011, based on criteria established in Internal Control —- Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 1, 2010February 28, 2012 expressed an unqualified opinion on the effectiveness of the Company’sCompany's internal control over financial reporting.
(signed) KPMG LLP
New York, New York
March 1, 2010February 28, 2012
Report of Independent Registered Public Accounting Firm
The Trustees and Shareholders
Lexington Realty Trust:
We have audited Lexington Realty Trust’sTrust's (the “Company”“Company's”) internal control over financial reporting as of December 31, 2009,2011, based on criteria established in Internal Control –- Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’sCompany's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management’s annual reportManagement's Annual Report on internal controlsInternal Control over financial reporting.Financial Reporting. Our responsibility is to express an opinion on the Company’sCompany's internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’scompany's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’scompany's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and trustees of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’scompany's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009,2011, based on criteria established in Internal Control –- Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financialbalance sheets of the Company as of December 31, 2011 and 2010, and the related consolidated statements as listedof operations, changes in equity, comprehensive loss, and cash flows for each of the years in the accompanying index,three-year period ended December 31, 2011 and the related financial statement schedule, and our report dated March 1, 2010February 28, 2012 expressed an unqualified opinion on those consolidated financial statements.statements and financial statement schedule.
(signed) KPMG LLP
New York, New York
March 1, 2010February 28, 2012
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Consolidated Balance SheetsCONSOLIDATED BALANCE SHEETS
($000, except share and per share amounts)data)
As of December 31,
|
| | | | | | | |
| | 2011 | | 2010 |
| Assets: | | | |
| Real estate, at cost: | | | |
| Buildings and building improvements | $ | 2,638,626 |
| | $ | 2,789,985 |
|
| Land and land estates | 521,242 |
| | 545,236 |
|
| Land improvements | 797 |
| | 797 |
|
| Fixtures and equipment | 7,525 |
| | 7,525 |
|
| Construction in progress | 4,056 |
| | 20,043 |
|
| Investments in real estate under construction | 32,829 |
| | 11,258 |
|
| | 3,205,075 |
| | 3,374,844 |
|
| Less: accumulated depreciation and amortization | 638,368 |
| | 601,239 |
|
| | 2,566,707 |
| | 2,773,605 |
|
| Property held for sale – discontinued operations | — |
| | 7,316 |
|
| Intangible assets (net of accumulated amortization of $368,349 in 2011 and $374,139 in 2010) | 178,569 |
| | 203,495 |
|
| Cash and cash equivalents | 63,711 |
| | 52,644 |
|
| Restricted cash | 30,657 |
| | 26,644 |
|
| Investment in and advances to non-consolidated entities | 90,558 |
| | 72,480 |
|
| Deferred expenses (net of accumulated amortization of $22,708 in 2011 and $22,380 in 2010) | 43,966 |
| | 39,912 |
|
| Loans receivable, net | 66,619 |
| | 88,937 |
|
| Rent receivable – current | 7,271 |
| | 7,498 |
|
| Rent receivable – deferred | — |
| | 6,293 |
|
| Other assets | 29,990 |
| | 56,172 |
|
| Total assets | $ | 3,078,048 |
| | $ | 3,334,996 |
|
| Liabilities and Equity: | |
| | |
|
| Liabilities: | |
| | |
|
| Mortgages and notes payable | $ | 1,366,004 |
| | $ | 1,481,216 |
|
| Exchangeable notes payable | 62,102 |
| | 61,438 |
|
| Convertible notes payable | 105,149 |
| | 103,211 |
|
| Trust preferred securities | 129,120 |
| | 129,120 |
|
| Dividends payable | 25,273 |
| | 23,071 |
|
| Liabilities – discontinued operations | — |
| | 3,876 |
|
| Accounts payable and other liabilities | 53,058 |
| | 51,292 |
|
| Accrued interest payable | 13,019 |
| | 13,989 |
|
| Deferred revenue - including below market leases (net of accretion of $37,485 in 2011 and $35,969 in 2010) | 90,349 |
| | 96,490 |
|
| Prepaid rent | 12,543 |
| | 15,164 |
|
| Total liabilities | 1,856,617 |
| | 1,978,867 |
|
| | | | |
| Commitments and contingencies |
|
| |
|
|
| Equity: | |
| | |
|
| Preferred shares, par value $0.0001 per share; authorized 100,000,000 shares, | |
| | |
|
| Series B Cumulative Redeemable Preferred, liquidation preference $68,522 and $79,000; 2,740,874 and 3,160,000 shares issued and outstanding in 2011 and 2010, respectively | 66,193 |
| | 76,315 |
|
| Series C Cumulative Convertible Preferred, liquidation preference $98,510 and $104,760; and 1,970,200 and 2,095,200 shares issued and outstanding in 2011 and 2010, respectively | 95,706 |
| | 101,778 |
|
| Series D Cumulative Redeemable Preferred, liquidation preference $155,000; 6,200,000 shares issued and outstanding | 149,774 |
| | 149,774 |
|
| Common shares, par value $0.0001 per share; authorized 400,000,000 shares, 154,938,351 and 146,552,589 shares issued and outstanding in 2011 and 2010, respectively | 15 |
| | 15 |
|
| Additional paid-in-capital | 2,010,850 |
| | 1,937,942 |
|
| Accumulated distributions in excess of net income | (1,161,402 | ) | | (985,562 | ) |
| Accumulated other comprehensive income (loss) | 1,938 |
| | (106 | ) |
| Total shareholders’ equity | 1,163,074 |
| | 1,280,156 |
|
| Noncontrolling interests | 58,357 |
| | 75,973 |
|
| Total equity | 1,221,431 |
| | 1,356,129 |
|
| Total liabilities and equity | $ | 3,078,048 |
| | $ | 3,334,996 |
|
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
($000, except share and per share data)
| | | 2009 | | | 2008 | |
| ASSETS | |
| Real estate, at cost: | | | | | | |
| Buildings and building improvements | | $ | 2,955,583 | | | $ | 3,106,784 | |
| Land and land estates | | | 576,574 | | | | 617,762 | |
| Land improvements | | | 797 | | | | 797 | |
| Fixtures and equipment | | | 7,525 | | | | 8,089 | |
| Construction in progress | | | 12,327 | | | | 22,756 | |
| | | | 3,552,806 | | | | 3,756,188 | |
| Less: accumulated depreciation and amortization | | | 537,406 | | | | 461,661 | |
| | | | 3,015,400 | | | | 3,294,527 | |
| Properties held for sale — discontinued operations | | | — | | | | 8,150 | |
| Intangible assets (net of accumulated amortization of $341,615 in 2009 and $283,926 in 2008) | | | 267,161 | | | | 343,192 | |
| Cash and cash equivalents | | | 53,865 | | | | 67,798 | |
| Restricted cash | | | 21,519 | | | | 31,369 | |
| Investment in and advances to non-consolidated entities | | | 55,985 | | | | 179,133 | |
| Deferred expenses (net of accumulated amortization of $16,970 in 2009 and $13,894 in 2008) | | | 38,245 | | | | 35,741 | |
| Notes receivable, net | | | 60,567 | | | | 68,812 | |
| Rent receivable — current | | | 11,463 | | | | 19,829 | |
| Rent receivable — deferred | | | 12,529 | | | | 16,499 | |
| Other assets | | | 43,111 | | | | 40,675 | |
| Total assets | | $ | 3,579,845 | | | $ | 4,105,725 | |
| | | | | | | | | |
| LIABILITIES AND EQUITY | |
| Liabilities: | | | | | | | | |
| Mortgages and notes payable | | $ | 1,857,909 | | | $ | 2,033,854 | |
| Exchangeable notes payable | | | 85,709 | | | | 204,074 | |
| Trust preferred securities | | | 129,120 | | | | 129,120 | |
| Contract right payable | | | 15,252 | | | | 14,776 | |
| Dividends payable | | | 18,412 | | | | 24,681 | |
| Liabilities — discontinued operations | | | — | | | | 6,142 | |
| Accounts payable and other liabilities | | | 43,629 | | | | 33,814 | |
| Accrued interest payable | | | 11,068 | | | | 16,345 | |
| Deferred revenue – below market leases (net of accretion of $39,946 in 2009 and $36,474 in 2008) | | | 107,535 | | | | 121,722 | |
| Prepaid rent | | | 13,975 | | | | 20,126 | |
| | | | 2,282,609 | | | | 2,604,654 | |
| Commitments and contingencies (Notes 5, 9, 10, 11, 12, 13, 14, 15 ,17, 19 and 24) | | | | | | | | |
| Equity: | | | | | | | | |
| Preferred shares, par value $0.0001 per share; authorized 100,000,000 shares; | | | | | | | | |
| Series B Cumulative Redeemable Preferred, liquidation preference, $79,000; 3,160,000 shares issued and outstanding | | | 76,315 | | | | 76,315 | |
| Series C Cumulative Convertible Preferred, liquidation preference $104,760 and $129,915; 2,095,200 and 2,598,300 shares issued and outstanding in 2009 and 2008, respectively | | | 101,778 | | | | 126,217 | |
| Series D Cumulative Redeemable Preferred, liquidation preference $155,000; 6,200,000 shares issued and outstanding | | | 149,774 | | | | 149,774 | |
| Common shares, par value $0.0001 per share, authorized 400,000,000 shares, 121,943,258 and 100,300,238 shares issued and outstanding in 2009 and 2008, respectively | | | 12 | | | | 10 | |
| Additional paid-in-capital | | | 1,750,979 | | | | 1,638,540 | |
| Accumulated distributions in excess of net income | | | (870,862 | ) | | | (569,131 | ) |
| Accumulated other comprehensive income (loss) | | | 673 | | | | (15,650 | ) |
| Total shareholders’ equity | | | 1,208,669 | | | | 1,406,075 | |
| Noncontrolling interests | | | 88,567 | | | | 94,996 | |
| Total equity | | | 1,297,236 | | | | 1,501,071 | |
| Total liabilities and equity | | $ | 3,579,845 | | | $ | 4,105,725 | |
|
| | | | | | | | | | | |
| | | | | | |
| | 2011 | | 2010 | | 2009 |
| Gross revenues: | | | | | |
| Rental | $ | 292,689 |
| | $ | 286,902 |
| | $ | 294,812 |
|
| Advisory and incentive fees | 2,012 |
| | 1,108 |
| | 1,822 |
|
| Tenant reimbursements | 32,213 |
| | 32,038 |
| | 33,985 |
|
| Total gross revenues | 326,914 |
| | 320,048 |
| | 330,619 |
|
| Expense applicable to revenues: | | | | | |
| Depreciation and amortization | (162,284 | ) | | (154,433 | ) | | (153,685 | ) |
| Property operating | (62,361 | ) | | (62,962 | ) | | (65,867 | ) |
| General and administrative | (22,211 | ) | | (22,464 | ) | | (23,376 | ) |
| Non-operating income | 13,111 |
| | 11,832 |
| | 7,942 |
|
| Interest and amortization expense | (107,515 | ) | | (118,907 | ) | | (122,715 | ) |
| Debt satisfaction gains, net | 45 |
| | 212 |
| | 17,023 |
|
| Change in value of forward equity commitment | 2,030 |
| | 8,906 |
| | 7,182 |
|
| Impairment charges and loan losses | (68,560 | ) | | (6,879 | ) | | (1,576 | ) |
| Loss before benefit (provision) for income taxes, equity in earnings (losses) of non-consolidated entities and discontinued operations | (80,831 | ) | | (24,647 | ) | | (4,453 | ) |
| Benefit (provision) for income taxes | 823 |
| | (1,550 | ) | | (2,369 | ) |
| Equity in earnings (losses) of non-consolidated entities | 30,334 |
| | 21,741 |
| | (123,176 | ) |
| Loss from continuing operations | (49,674 | ) | | (4,456 | ) | | (129,998 | ) |
| Discontinued operations: | | | | | |
| Income (loss) from discontinued operations | 2,882 |
| | (408 | ) | | (2,202 | ) |
| Provision for income taxes | (54 | ) | | (22 | ) | | (87 | ) |
| Debt satisfaction gains (charges), net | (606 | ) | | 2,924 |
| | 11,471 |
|
| Gains on sales of properties | 6,557 |
| | 14,613 |
| | 9,134 |
|
| Impairment charges | (48,883 | ) | | (50,061 | ) | | (99,590 | ) |
| Total discontinued operations | (40,104 | ) | | (32,954 | ) | | (81,274 | ) |
| Net loss | (89,778 | ) | | (37,410 | ) | | (211,272 | ) |
| Less net loss attributable to noncontrolling interests | 10,194 |
| | 4,450 |
| | 1,120 |
|
| Net loss attributable to Lexington Realty Trust shareholders | (79,584 | ) | | (32,960 | ) | | (210,152 | ) |
| Dividends attributable to preferred shares – Series B – 8.05% rate | (6,149 | ) | | (6,360 | ) | | (6,360 | ) |
| Dividends attributable to preferred shares – Series C – 6.50% rate | (6,655 | ) | | (6,809 | ) | | (7,218 | ) |
| Dividends attributable to preferred shares – Series D – 7.55% rate | (11,703 | ) | | (11,703 | ) | | (11,703 | ) |
| Dividends attributable to non-vested common shares | (368 | ) | | (264 | ) | | (449 | ) |
| Deemed dividend – Series B | (95 | ) | | — |
| | — |
|
| Redemption discount – Series C | 833 |
| | — |
| | — |
|
| Conversion dividend – Series C | — |
| | — |
| | (6,994 | ) |
| Net loss attributable to common shareholders | $ | (103,721 | ) | | $ | (58,096 | ) | | $ | (242,876 | ) |
| Loss per common share–basic and diluted: | | | | | |
| Loss from continuing operations | $ | (0.42 | ) | | $ | (0.26 | ) | | $ | (1.51 | ) |
| Loss from discontinued operations | (0.26 | ) | | (0.18 | ) | | (0.71 | ) |
| Net loss attributable to common shareholders | $ | (0.68 | ) | | $ | (0.44 | ) | | $ | (2.22 | ) |
| Weighted-average common shares outstanding–basic and diluted | 152,473,336 |
| | 130,985,809 |
| | 109,280,955 |
|
| Amounts attributable to common shareholders: | | | | | |
| Loss from continuing operations | $ | (64,099 | ) | | $ | (34,098 | ) | | $ | (164,615 | ) |
| Loss from discontinued operations | (39,622 | ) | | (23,998 | ) | | (78,261 | ) |
| Net loss attributable to common shareholders | $ | (103,721 | ) | | $ | (58,096 | ) | | $ | (242,876 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Operations
($000 except per share amounts)
Years ended December 31,
| | | 2009 | | | 2008 | | | 2007 | |
| Gross revenues: | | | | | | | | | |
| Rental | | $ | 334,224 | | | $ | 376,760 | | | $ | 357,558 | |
| Advisory and incentive fees | | | 1,822 | | | | 1,432 | | | | 13,567 | |
| Tenant reimbursements | | | 40,575 | | | | 39,957 | | | | 30,051 | |
| Total gross revenues | | | 376,621 | | | | 418,149 | | | | 401,176 | |
| Expense applicable to revenues: | | | | | | | | | | | | |
| Depreciation and amortization | | | (174,119 | ) | | | (228,542 | ) | | | (218,047 | ) |
| Property operating | | | (83,343 | ) | | | (75,182 | ) | | | (53,578 | ) |
| General and administrative | | | (23,586 | ) | | | (30,497 | ) | | | (39,200 | ) |
| Non-operating income | | | 8,117 | | | | 24,407 | | | | 11,445 | |
| Interest and amortization expense | | | (131,629 | ) | | | (152,904 | ) | | | (160,647 | ) |
| Debt satisfaction gains (charges), net | | | 17,023 | | | | 59,710 | | | | (1,209 | ) |
| Change in value of forward equity commitment | | | 7,182 | | | | (2,128 | ) | | | — | |
| Impairment charges and loan losses | | | (27,350 | ) | | | — | | | | — | |
| Gains on sale - affiliates | | | — | | | | 31,806 | | | | 17,864 | |
| Income (loss) before provision for income taxes, equity in earnings (losses) of non-consolidated entities and discontinued operations | | | (31,084 | ) | | | 44,819 | | | | (42,196 | ) |
| Provision for income taxes | | | (2,378 | ) | | | (2,985 | ) | | | (3,287 | ) |
| Equity in earnings (losses) of non-consolidated entities | | | (123,176 | ) | | | (43,305 | ) | | | 46,467 | |
| Income (loss) from continuing operations | | | (156,638 | ) | | | (1,471 | ) | | | 984 | |
| Discontinued operations | | | | | | | | | | | | |
| Income (loss) from discontinued operations | | | (1,345 | ) | | | (1,162 | ) | | | 26,601 | |
| Provision for income taxes | | | (78 | ) | | | (529 | ) | | | (3,414 | ) |
| Debt satisfaction gains (charges), net | | | 11,471 | | | | 3,062 | | | | (7,950 | ) |
| Gains on sales of properties | | | 9,134 | | | | 13,151 | | | | 92,878 | |
| Impairment charges | | | (73,816 | ) | | | (16,519 | ) | | | (17,170 | ) |
| Total discontinued operations | | | (54,634 | ) | | | (1,997 | ) | | | 90,945 | |
| Net income (loss) | | | (211,272 | ) | | | (3,468 | ) | | | 91,929 | |
| Less net (income) loss attributable to noncontrolling interests | | | 1,120 | | | | 6,222 | | | | (16,680 | ) |
| Net income (loss) attributable to Lexington Realty Trust | | | (210,152 | ) | | | 2,754 | | | | 75,249 | |
| Dividends attributable to preferred shares — Series B | | | (6,360 | ) | | | (6,360 | ) | | | (6,360 | ) |
| Dividends attributable to preferred shares — Series C | | | (7,218 | ) | | | (8,852 | ) | | | (10,075 | ) |
| Dividends attributable to preferred shares — Series D | | | (11,703 | ) | | | (11,703 | ) | | | (10,298 | ) |
| Redemption discount – Series C | | | — | | | | 5,678 | | | | — | |
| Conversion dividend – Series C | | | (6,994 | ) | | | — | | | | — | |
| Net income (loss) attributable to common shareholders | | $ | (242,427 | ) | | $ | (18,483 | ) | | $ | 48,516 | |
| | | | | | | | | | | | | |
| Income (loss) per common share — basic: | | | | | | | | | | | | |
| Loss from continuing operations | | $ | (1.75 | ) | | $ | (0.24 | ) | | $ | (0.37 | ) |
| Income (loss) from discontinued operations | | | (0.47 | ) | | | (0.04 | ) | | | 1.10 | |
| Net income (loss) attributable to common shareholders | | $ | (2.22 | ) | | $ | (0.28 | ) | | $ | 0.73 | |
| Weighted average common shares outstanding — basic | | | 109,280,955 | | | | 67,872,590 | | | | 64,910,123 | |
| | | | | | | | | | | | | |
| Income (loss) per common share — diluted: | | | | | | | | | | | | |
| Loss from continuing operations | | $ | (1.75 | ) | | $ | (0.24 | ) | | $ | (0.37 | ) |
| Income (loss) from discontinued operations | | | (0.47 | ) | | | (0.04 | ) | | | 1.10 | |
| Net income (loss) attributable to common shareholders | | $ | (2.22 | ) | | $ | (0.28 | ) | | $ | 0.73 | |
| Weighted average common shares outstanding — diluted | | | 109,280,955 | | | | 67,872,590 | | | | 64,910,123 | |
| | | | | | | | | | | | | |
| Amounts attributable to common shareholders: | | | | | | | | | | | | |
| Loss from continuing operations | | $ | (190,635 | ) | | $ | (15,776 | ) | | $ | (22,708 | ) |
| Income (loss) from discontinued operations | | | (51,792 | ) | | | (2,707 | ) | | | 71,224 | |
| Net income (loss) attributable to common shareholders | | $ | (242,427 | ) | | $ | (18,483 | ) | | $ | 48,516 | |
The accompanying notes are an integral part of these consolidated financial statements
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Loss)CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
($000)
Years ended December 31,
| | | 2009 | | | 2008 | | | 2007 | |
| Net income (loss) | | $ | (211,272 | ) | | $ | (3,468 | ) | | $ | 91,929 | |
| Other comprehensive income (loss): | | | | | | | | | | | | |
| Change in unrealized gain (loss) on marketable equity securities, net | | | — | | | | 38 | | | | (827 | ) |
| Change in unrealized gain (loss) on foreign currency translation | | | (19 | ) | | | (96 | ) | | | 371 | |
| Change in unrealized gain (loss) on investments in non-consolidated entities, net | | | 26,174 | | | | (6,137 | ) | | | (8,390 | ) |
| Change in unrealized gain (loss) on interest rate swap, net | | | 1,815 | | | | (1,882 | ) | | | — | |
| Other comprehensive income (loss) | | | 27,970 | | | | (8,077 | ) | | | (8,846 | ) |
| Comprehensive income (loss) | | | (183,302 | ) | | | (11,545 | ) | | | 83,083 | |
| Comprehensive (income) loss attributable to noncontrolling interests | | | 1,120 | | | | 6,446 | | | | (11,885 | ) |
| Comprehensive income (loss) attributable to Lexington Realty Trust | | $ | (182,182 | ) | | $ | (5,099 | ) | | $ | 71,198 | |
|
| | | | | | | | | | | |
| | 2011 | | 2010 | | 2009 |
| Net loss | $ | (89,778 | ) | | $ | (37,410 | ) | | $ | (211,272 | ) |
| Other comprehensive income (loss): | |
| | | | |
| Change in unrealized gain on foreign currency translation, net | — |
| | (740 | ) | | (19 | ) |
| Change in unrealized loss on investments in non-consolidated entities and reclassifications, net | — |
| | — |
| | 26,174 |
|
| Change in unrealized gain (loss) on interest rate swap, net | 2,044 |
| | (39 | ) | | 1,815 |
|
| Other comprehensive income (loss) | 2,044 |
| | (779 | ) | | 27,970 |
|
| Comprehensive loss | (87,734 | ) | | (38,189 | ) | | (183,302 | ) |
| Comprehensive loss attributable to noncontrolling interests | 10,194 |
| | 4,450 |
| | 1,120 |
|
| Comprehensive loss attributable to Lexington Realty Trust shareholders | $ | (77,540 | ) | | $ | (33,739 | ) | | $ | (182,182 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
($000 except share amounts)
Year ended December 31, 2009
| | | | | | Lexington Realty Trust Shareholders | | | | |
| | | Total | | | Number of Preferred Shares | | | Preferred Shares | | | Number of Common Shares | | | Common Shares | | | Additional Paid-in- Capital | | | Accumulated Distributions in Excess of Net Income | | | Accumulated Other Comprehensive Income (Loss) | | | Non- controlling Interests | |
| Balance at December 31, 2006 | | $ | 2,025,185 | | | | 6,260,001 | | | $ | 226,904 | | | | 69,051,781 | | | $ | 7 | | | $ | 1,188,900 | | | $ | (294,640 | ) | | $ | 1,273 | | | $ | 902,741 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Redemption of OP Units | | | — | | | | — | | | | — | | | | 1,283,629 | | | | — | | | | 25,223 | | | | — | | | | — | | | | (25,223 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Repurchase of units/noncontrolling interests | | | (23,432 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (23,432 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Sale of noncontrolling interest | | | (11,832 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (11,832 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Finalization of purchase price allocation – Newkirk merger | | | 9,683 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 9,683 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of Exchangeable Notes | | | 23,132 | | | | — | | | | — | | | | — | | | | — | | | | 23,132 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of common shares, net | | | 9,432 | | | | — | | | | — | | | | 324,740 | | | | — | | | | 9,331 | | | | 101 | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of preferred shares | | | 149,774 | | | | 6,200,000 | | | | 149,774 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Repurchase of common shares | | | (190,123 | ) | | | — | | | | — | | | | (9,595,816 | ) | | | (1 | ) | | | (190,122 | ) | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Dividends/distributions | | | (335,337 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (250,479 | ) | | | — | | | | (84,858 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Comprehensive income (loss): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income (loss) | | | 91,929 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 75,249 | | | | — | | | | 16,680 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other comprehensive loss: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Change in unrealized gain (loss) on marketable equity securities, net | | | (827 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (896 | ) | | | 69 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Change in unrealized gain (loss) on foreign currency translation | | | 371 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 371 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Change in unrealized gain (loss) from non-consolidated entities, net | | | (8,390 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (3,526 | ) | | | (4,864 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other comprehensive income (loss) | | | (8,846 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Comprehensive income (loss) | | | 83,083 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance at December 31, 2007 | | $ | 1,739,565 | | | | 12,460,001 | | | $ | 376,678 | | | | 61,064,334 | | | $ | 6 | | | $ | 1,056,464 | | | $ | (469,769 | ) | | $ | (2,778 | ) | | $ | 778,964 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Lexington Realty Trust Shareholders | | |
| | Total | | Number of Preferred Shares | | Preferred Shares | | Number of Common Shares | | Common Shares | | Additional Paid-in-Capital | | Accumulated Distributions in Excess of Net Income | | Accumulated Other Comprehensive Income (Loss) | | Noncontrolling Interests |
| Balance December 31, 2008 | $ | 1,501,071 |
| | 11,958,300 |
| | $ | 352,306 |
| | 100,300,238 |
| | $ | 10 |
| | $ | 1,638,540 |
| | $ | (569,131 | ) | | $ | (15,650 | ) | | $ | 94,996 |
|
| Cumulative effect, change in accounting principle from non-consolidated entity | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 11,647 |
| | (11,647 | ) | | — |
|
| Contributions from noncontrolling interests | 1,756 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 1,756 |
|
| Redemption of noncontrolling OP units for common shares | — |
| | — |
| | — |
| | 572,213 |
| | — |
| | 3,580 |
| | — |
| | — |
| | (3,580 | ) |
| Conversion - Series C | — |
| | (503,100 | ) | | (24,439 | ) | | 2,955,368 |
| | — |
| | 31,433 |
| | (6,994 | ) | | — |
| | — |
|
| Issuance of common shares and deferred compensation amortization, net | 24,569 |
| | — |
| | — |
| | 4,811,241 |
| | 1 |
| | 24,568 |
| | — |
| | — |
| | — |
|
| Dividends/distributions | (46,858 | ) | | — |
| | — |
| | 13,304,198 |
| | 1 |
| | 52,858 |
| | (96,232 | ) | | — |
| | (3,485 | ) |
| Comprehensive income (loss): | | | | | | | | | | | | | | | | | |
| Net loss | (211,272 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | (210,152 | ) | | — |
| | (1,120 | ) |
| Other comprehensive income: | | | | | | | | | | | | | | | | | |
| Change in unrealized gain on foreign currency translation, net | (19 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (19 | ) | | — |
|
| Change in unrealized loss on investments in non-consolidated entities and reclassifications, net | 26,174 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 26,174 |
| | — |
|
| Change in unrealized gain on interest rate swap, net | 1,815 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 1,815 |
| | — |
|
| Other comprehensive income | 27,970 |
| | | | | | | | | | | | | | | | |
| Comprehensive loss | (183,302 | ) | | | | | | | | | | | | | | | | |
| Balance December 31, 2009 | $ | 1,297,236 |
| | 11,455,200 |
| | $ | 327,867 |
| | 121,943,258 |
| | $ | 12 |
| | $ | 1,750,979 |
| | $ | (870,862 | ) | | $ | 673 |
| | $ | 88,567 |
|
The accompanying notes are an integral part of thesethe consolidated financial statements.
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
($000 except share amounts)
Year ended December 31, 2010
58 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Lexington Realty Trust Shareholders | | |
| | Total | | Number of Preferred Shares | | Preferred Shares | | Number of Common Shares | | Common Shares | | Additional Paid-in-Capital | | Accumulated Distributions in Excess of Net Income | | Accumulated Other Comprehensive Income (Loss) | | Noncontrolling Interests |
| Balance December 31, 2009 | $ | 1,297,236 |
| | 11,455,200 |
| | $ | 327,867 |
| | 121,943,258 |
| | $ | 12 |
| | $ | 1,750,979 |
| | $ | (870,862 | ) | | $ | 673 |
| | $ | 88,567 |
|
| Contributions from noncontrolling interests | 4,854 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 4,854 |
|
| Redemption of noncontrolling OP units for common shares | — |
| | — |
| | — |
| | 457,351 |
| | — |
| | 2,685 |
| | — |
| | — |
| | (2,685 | ) |
| Transfer of noncontrolling interests | (1,957 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (1,957 | ) |
| Issuance of Convertible Notes | 13,134 |
| | — |
| | — |
| | — |
| | — |
| | 13,134 |
| | — |
| | — |
| | — |
|
| Forfeiture of employee performance common shares | 171 |
| | — |
| | — |
| | (21,720 | ) | | — |
| | — |
| | 171 |
| | — |
| | — |
|
| Exercise of employee common share options | (356 | ) | | — |
| | — |
| | 95,976 |
| | — |
| | (356 | ) | | — |
| | — |
| | — |
|
| Issuance of common shares and deferred compensation amortization, net | 171,503 |
| | — |
| | — |
| | 24,077,724 |
| | 3 |
| | 171,500 |
| | — |
| | — |
| | — |
|
| Dividends/distributions | (90,267 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | (81,911 | ) | | — |
| | (8,356 | ) |
| Comprehensive loss: | | | | | | | | | | | | | | | | | |
| Net loss | (37,410 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | (32,960 | ) | | — |
| | (4,450 | ) |
| Other comprehensive loss: | | | | | | | | | | | | | | | | | |
| Change in unrealized gain on foreign currency translation, net | (740 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (740 | ) | | — |
|
| Change in unrealized loss on interest rate swap, net | (39 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (39 | ) | | — |
|
| Other comprehensive loss | (779 | ) | | | | | | | | | | | | | | | | |
| Comprehensive loss | (38,189 | ) | | | | | | | | |
| | | | | | | | |
| Balance December 31, 2010 | $ | 1,356,129 |
| | 11,455,200 |
| | $ | 327,867 |
| | 146,552,589 |
| | $ | 15 |
| | $ | 1,937,942 |
| | $ | (985,562 | ) | | $ | (106 | ) | | $ | 75,973 |
|
The accompanying notes are an integral part of the consolidated financial statements.
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
($000 except share amounts)
Year ended December 31, 2011
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Lexington Realty Trust Shareholders | | |
| | Total | | Number of Preferred Shares | | Preferred Shares | | Number of Common Shares | | Common Shares | | Additional Paid-in-Capital | | Accumulated Distributions in Excess of Net Income | | Accumulated Other Comprehensive Income (Loss) | | Noncontrolling Interests |
| Balance December 31, 2010 | $ | 1,356,129 |
| | 11,455,200 |
| | $ | 327,867 |
| | 146,552,589 |
| | $ | 15 |
| | $ | 1,937,942 |
| | $ | (985,562 | ) | | $ | (106 | ) | | $ | 75,973 |
|
| Redemption of noncontrolling OP units for common shares | — |
| | — |
| | — |
| | 398,927 |
| | — |
| | 2,187 |
| | — |
| | — |
| | (2,187 | ) |
| Repurchase of common shares | (31,916 | ) | | — |
| | — |
| | (3,974,645 | ) | | — |
| | (31,916 | ) | | — |
| | — |
| | — |
|
| Repurchase of preferred shares | (15,456 | ) | | (544,126 | ) | | (16,194 | ) | | — |
| | — |
| | — |
| | 738 |
| | — |
| | — |
|
| Contributions from noncontrolling interests | 2 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 2 |
|
| Obtained control of noncontrolling investment | 574 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 574 |
|
| Exercise of employee common share options | 221 |
| | — |
| | — |
| | 250,355 |
| | — |
| | 221 |
| | — |
| | — |
| | — |
|
| Forfeiture of employee performance common shares | 69 |
| | — |
| | — |
| | (10,140 | ) | | — |
| | — |
| | 69 |
| | — |
| | — |
|
| Issuance of common shares and deferred compensation amortization, net | 102,416 |
| | — |
| | — |
| | 11,721,265 |
| | — |
| | 102,416 |
| | — |
| | — |
| | — |
|
| Dividends/distributions | (102,874 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | (97,063 | ) | | — |
| | (5,811 | ) |
| Comprehensive income (loss): | | | | | | | | | | | | | | | | | |
| Net loss | (89,778 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | (79,584 | ) | | — |
| | (10,194 | ) |
| Other comprehensive income: | | | | | | | | | | | | | | | | | |
| Change in unrealized gain on interest rate swap, net | 2,044 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 2,044 |
| | — |
|
| Other comprehensive income | 2,044 |
| | | | | | | | | | | | | | | | |
| Comprehensive loss | (87,734 | ) | | | | | | | | | | | | | | | | |
| Balance December 31, 2011 | $ | 1,221,431 |
| | 10,911,074 |
| | $ | 311,673 |
| | 154,938,351 |
| | $ | 15 |
| | $ | 2,010,850 |
| | $ | (1,161,402 | ) | | $ | 1,938 |
| | $ | 58,357 |
|
The accompanying notes are an integral part of the consolidated financial statements.
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
($000)
Years ended December 31,
| | | | Lexington Realty Trust Shareholders | | | | |
| | | Total | | | Number of Preferred Shares | | | Preferred Shares | | | Number of Common Shares | | | Common Shares | | | Additional Paid-in- Capital | | | Accumulated Distributions in Excess of Net Income | | | Accumulated Other Comprehensive Income (Loss) | | | Non- controlling Interests | |
| Balance at December 31, 2007 | | $ | 1,739,565 | | | | 12,460,001 | | | $ | 376,678 | | | | 61,064,334 | | | $ | 6 | | | $ | 1,056,464 | | | $ | (469,769 | ) | | $ | (2,778 | ) | | $ | 778,964 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Repurchase of exchangeable note equity component | | | (2,839 | ) | | | — | | | | — | | | | — | | | | — | | | | (2,839 | ) | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Contributions from noncontrolling interests | | | 1,957 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,957 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Redemption of OP Units | | | — | | | | — | | | | — | | | | 34,377,989 | | | | 3 | | | | 516,537 | | | | — | | | | — | | | | (516,540 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Repurchase of OP Units | | | (475 | ) | | | — | | | | — | | | | — | | | | — | | | | 156 | | | | — | | | | — | | | | (631 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Purchase of noncontrolling interest | | | (5,311 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (5,311 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Transfer of noncontrolling interest | | | (3,086 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (3,086 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of common shares, net | | | 85,101 | | | | — | | | | | | | | 6,037,715 | | | | 1 | | | | 85,075 | | | | 25 | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Repurchase of common shares | | | (16,853 | ) | | | — | | | | — | | | | (1,179,800 | ) | | | — | | | | (16,853 | ) | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Repurchase of preferred shares | | | (24,372 | ) | | | (501,700 | ) | | | (24,372 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Redemption discount – Series C | | | 5,678 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 5,678 | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Retirement of special voting preferred | | | — | | | | (1 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Dividends/distributions | | | (266,749 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (107,819 | ) | | | — | | | | (158,930 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Comprehensive income (loss): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income (loss) | | | (3,468 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,754 | | | | — | | | | (6,222 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other comprehensive income (loss): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Change in unrealized gain (loss) on marketable equity securities, net | | | 38 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 107 | | | | (69 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Change in unrealized gain (loss) on foreign currency translation | | | (96 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (96 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Change in unrealized gain (loss) on interest rate swap, net | | | (1,882 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (2,064 | ) | | | 182 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | �� |
| Change in unrealized gain (loss) from non-consolidated entities, net | | | (6,137 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (5,800 | ) | | | (337 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Transfer of noncontrolling interests share | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (5,019 | ) | | | 5,019 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other comprehensive income (loss) | | | (8,077 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Comprehensive income (loss) | | | (11,545 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance at December 31, 2008 | | $ | 1,501,071 | | | | 11,958,300 | | | $ | 352,306 | | | | 100,300,238 | | | $ | 10 | | | $ | 1,638,540 | | | $ | (569,131 | ) | | $ | (15,650 | ) | | $ | 94,996 | |
|
| | | | | | | | | | | |
| | 2011 | | 2010 | | 2009 |
| Cash flows from operating activities: | | | | | |
| Net loss | $ | (89,778 | ) | | $ | (37,410 | ) | | $ | (211,272 | ) |
| Adjustments to reconcile net loss to net cash provided by operating activities: | | | | | |
| Depreciation and amortization | 168,288 |
| | 172,301 |
| | 185,208 |
|
| Gains on sales of properties | (6,557 | ) | | (14,613 | ) | | (9,134 | ) |
| Debt satisfaction (gains) charges, net | 311 |
| | (3,590 | ) | | (29,872 | ) |
| Impairment charges and loan losses | 117,443 |
| | 56,940 |
| | 101,166 |
|
| Straight-line rents | (1,763 | ) | | 862 |
| | (240 | ) |
| Other non-cash (income) charges, net | (6,364 | ) | | (7,912 | ) | | (7,192 | ) |
| Equity in (earnings) losses of non-consolidated entities | (30,334 | ) | | (21,741 | ) | | 123,176 |
|
| Distributions of accumulated earnings from non-consolidated entities, net | 11,549 |
| | 3,233 |
| | 4,707 |
|
| Deferred taxes, net | (1,799 | ) | | 489 |
| | 196 |
|
| Increase (decrease) in accounts payable and other liabilities | 1,589 |
| | 5,186 |
| | 1,175 |
|
| Change in rent receivable and prepaid rent, net | 19,929 |
| | 12,272 |
| | 2,519 |
|
| Increase (decrease) in accrued interest payable | (970 | ) | | 2,921 |
| | (4,605 | ) |
| Other adjustments, net | (1,407 | ) | | (4,187 | ) | | 3,475 |
|
| Net cash provided by operating activities: | 180,137 |
| | 164,751 |
| | 159,307 |
|
| Cash flows from investing activities: | | | |
| | |
| Investment in real estate, including intangible assets and capital leases | (127,992 | ) | | (52,324 | ) | | (45,122 | ) |
| Net proceeds from sale of properties | 124,039 |
| | 80,224 |
| | 113,139 |
|
| Principal payments received on loans receivable | 46,867 |
| | 12,480 |
| | 12,886 |
|
| Investment in loans receivable | (32,591 | ) | | (40,632 | ) | | — |
|
| Investments in and advances to non-consolidated entities, net | (19,940 | ) | | (11,258 | ) | | 4,765 |
|
| Proceeds from sale of interest in non-consolidated entity | — |
| | 112 |
| | — |
|
| Distributions from non-consolidated entities in excess of accumulated earnings | 5,900 |
| | 1,356 |
| | 16,241 |
|
| Increase in deferred leasing costs | (15,870 | ) | | (5,129 | ) | | (8,641 | ) |
| Change in escrow deposits and restricted cash | (3,405 | ) | | (8,282 | ) | | 9,248 |
|
| Proceeds from the sale of marketable debt securities | — |
| | — |
| | 9,451 |
|
| Real estate deposits | (1,821 | ) | | (1,330 | ) | | — |
|
| Net cash provided by (used in) investing activities | (24,813 | ) | | (24,783 | ) | | 111,967 |
|
| Cash flows from financing activities: | | | |
| | |
| Dividends to common and preferred shareholders | (94,861 | ) | | (77,252 | ) | | (49,642 | ) |
| Repurchase of exchangeable notes | — |
| | (25,493 | ) | | (101,006 | ) |
| Proceeds from convertible notes | — |
| | 115,000 |
| | — |
|
| Principal amortization payments | (31,068 | ) | | (33,781 | ) | | (39,052 | ) |
| Principal payments on debt, excluding normal amortization | (105,266 | ) | | (331,295 | ) | | (264,399 | ) |
| Change in revolving credit facility borrowing, net | — |
| | (7,000 | ) | | (18,000 | ) |
| Increase in deferred financing costs | (4,214 | ) | | (5,760 | ) | | (5,317 | ) |
| Proceeds of mortgages and notes payable | 15,000 |
| | 59,769 |
| | 11,540 |
|
| Proceeds from term loans | — |
| | — |
| | 165,000 |
|
| Contributions from noncontrolling interests | 2 |
| | 4,854 |
| | 1,756 |
|
| Cash distributions to noncontrolling interests | (5,811 | ) | | (8,356 | ) | | (3,485 | ) |
| Repurchase of preferred shares | (15,456 | ) | | — |
| | — |
|
| Receipts (payments) on forward equity commitment, net | (2,313 | ) | | 1,473 |
| | (2,262 | ) |
| Swap termination costs | — |
| | — |
| | (366 | ) |
| Exercise of employee common share options | 777 |
| | 50 |
| | — |
|
| Issuance of common shares, net | 98,953 |
| | 166,602 |
| | 20,026 |
|
| Net cash used in financing activities | (144,257 | ) | | (141,189 | ) | | (285,207 | ) |
| Change in cash and cash equivalents | 11,067 |
| | (1,221 | ) | | (13,933 | ) |
| Cash and cash equivalents, at beginning of year | 52,644 |
| | 53,865 |
| | 67,798 |
|
| Cash and cash equivalents, at end of year | $ | 63,711 |
| | $ | 52,644 |
| | $ | 53,865 |
|
The accompanying notes are an integral part of these consolidated financial statements.
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF CHANGES IN EQUITY
($000, except share amounts)share/unit data)
(1) The Company
| | | | | | Lexington Realty Trust Shareholders | | | | |
| | | Total | | | Number of Preferred Shares | | | Preferred Shares | | | Number of Common Shares | | | Common Shares | | | Additional Paid-in- Capital | | | Accumulated Distributions in Excess of Net Income | | | Accumulated Other Comprehensive Income (Loss) | | | Non- controlling Interests | |
| Balance at December 31, 2008 | | $ | 1,501,071 | | | | 11,958,300 | | | $ | 352,306 | | | | 100,300,238 | | | $ | 10 | | | $ | 1,638,540 | | | $ | (569,131 | ) | | $ | (15,650 | ) | | $ | 94,996 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cumulative effect, change in accounting principal from non-consolidated entity | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 11,647 | | | | (11,647 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Redemption of OP units | | | — | | | | — | | | | — | | | | 572,213 | | | | — | | | | 3,580 | | | | — | | | | — | | | | (3,580 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Contributions from noncontrolling interests | | | 1,756 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,756 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Conversion – Series C | | | — | | | | (503,100 | ) | | | (24,439 | ) | | | 2,955,368 | | | | — | | | | 31,433 | | | | (6,994 | ) | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of common shares, net | | | 24,569 | | | | — | | | | — | | | | 4,811,241 | | | | 1 | | | | 24,568 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Dividends/distributions | | | (46,858 | ) | | | — | | | | — | | | | 13,304,198 | | | | 1 | | | | 52,858 | | | | (96,232 | ) | | | — | | | | (3,485 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Comprehensive Income (loss): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net loss | | | (211,272 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (210,152 | ) | | | — | | | | (1,120 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other comprehensive income (loss): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Change in unrealized gain (loss) on foreign currency translation | | | (19 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (19 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Change in unrealized gain (loss) on interest rate swap, net | | | 1,815 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,815 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Change in unrealized gain (loss) from non-consolidated entity, net | | | 26,174 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 26,174 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other comprehensive income | | | 27,970 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Comprehensive loss | | | (183,302 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance at December 31, 2009 | | $ | 1,297,236 | | | | 11,455,200 | | | $ | 327,867 | | | | 121,943,258 | | | $ | 12 | | | $ | 1,750,979 | | | $ | (870,862 | ) | | $ | 673 | | | $ | 88,567 | |
The accompanying notes are an integral part of these consolidated financial statements.
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Cash Flows
($000 except per share amounts)
Years ended December 31,
| | | 2009 | | | 2008 | | | 2007 | |
| Cash flows from operating activities: | | | | | | | | | |
| Net income (loss) | | $ | (211,272 | ) | | $ | (3,468 | ) | | $ | 91,929 | |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities, net of effects from acquisitions: | | | | | | | | | | | | |
| Depreciation and amortization | | | 185,208 | | | | 252,389 | | | | 257,663 | |
| Gains on sales of properties | | | (9,134 | ) | | | (44,957 | ) | | | (110,742 | ) |
| Debt satisfaction charges (gains), net | | | (29,872 | ) | | | (62,889 | ) | | | 2,250 | |
| Impairment charges and loan losses | | | 101,166 | | | | 16,519 | | | | 17,170 | |
| Straight-line rents | | | (240 | ) | | | 2,114 | | | | 16,151 | |
| Other non-cash (income) charges, net | | | (7,192 | ) | | | 5,944 | | | | 18,376 | |
| Equity in (earnings) losses of non-consolidated entities | | | 123,176 | | | | 43,305 | | | | (46,474 | ) |
| Distributions of accumulated earnings from non-consolidated entities | | | 4,707 | | | | 1,697 | | | | 7,930 | |
| Deferred taxes, net | | | 196 | | | | 1,313 | | | | 2,358 | |
| Increase (decrease) in accounts payable and other liabilities | | | 1,175 | | | | (9,129 | ) | | | 4,999 | |
| Change in rent receivable and prepaid rent, net | | | 1,600 | | | | 22,829 | | | | 12,378 | |
| (Decrease) increase in accrued interest payable | | | (4,605 | ) | | | (6,026 | ) | | | 15,193 | |
| Other adjustments, net | | | 4,394 | | | | 10,560 | | | | (1,530 | ) |
| Net cash provided by operating activities | | | 159,307 | | | | 230,201 | | | | 287,651 | |
| Cash flows from investing activities: | | | | | | | | | | | | |
| Net proceeds from sales/transfers of properties | | | 113,139 | | | | 238,600 | | | | 423,634 | |
| Net proceeds from sales of properties-affiliates | | | — | | | | 95,576 | | | | 126,628 | |
| Purchase of noncontrolling interests | | | — | | | | (5,311 | ) | | | — | |
| Investments in real estate including intangible assets and capital leases | | | (45,122 | ) | | | (94,610 | ) | | | (163,746 | ) |
| Investments in and advances to non-consolidated entities, net | | | 4,765 | | | | (18,388 | ) | | | (97,942 | ) |
| Acquisition of interest in certain non-consolidated entities | | | — | | | | — | | | | (366,614 | ) |
| Acquisition of additional interest in LSAC | | | — | | | | — | | | | (24,199 | ) |
| Principal payments received on notes and loans receivable | | | 12,886 | | | | 1,468 | | | | 8,499 | |
| Real estate deposits | | | — | | | | 223 | | | | 1,756 | |
| Investment in notes receivable | | | — | | | | (1,000 | ) | | | — | |
| Proceeds from the sale of marketable equity and debt securities | | | 9,451 | | | | 2,506 | | | | 29,462 | |
| Investment in marketable equity securities | | | — | | | | — | | | | (723 | ) |
| Distribution from non-consolidated entities in excess of accumulated earnings | | | 16,241 | | | | 26,355 | | | | 9,457 | |
| Increase in deferred leasing costs | | | (8,641 | ) | | | (11,988 | ) | | | (5,713 | ) |
| Change in escrow deposits and restricted cash | | | 9,248 | | | | (3,303 | ) | | | 28,011 | |
| Net cash provided by (used in) investing activities | | | 111,967 | | | | 230,128 | | | | (31,490 | ) |
| Cash flows from financing activities: | | | | | | | | | | | | |
| Proceeds of mortgages and notes payable | | | 11,540 | | | | 13,700 | | | | 246,965 | |
| Change in revolving credit facility borrowing, net | | | (18,000 | ) | | | 25,000 | | | | (65,194 | ) |
| Dividends to common and preferred shareholders | | | (49,642 | ) | | | (241,306 | ) | | | (137,259 | ) |
| Dividend reinvestment plan proceeds | | | — | | | | — | | | | 5,652 | |
| Repurchase of exchangeable notes | | | (101,006 | ) | | | (169,479 | ) | | | — | |
| Repurchase of trust preferred securities | | | — | | | | (44,561 | ) | | | — | |
| Principal payments on debt, excluding normal amortization | | | (264,399 | ) | | | (242,679 | ) | | | (665,124 | ) |
| Principal amortization payments | | | (39,052 | ) | | | (64,552 | ) | | | (73,351 | ) |
| Proceeds from term loan | | | 165,000 | | | | 70,000 | | | | 225,000 | |
| Proceeds from trust preferred securities | | | — | | | | — | | | | 200,000 | |
| Proceeds from exchangeable notes | | | — | | | | — | | | | 450,000 | |
| Issuance of common/preferred shares, net | | | 20,026 | | | | 47,014 | | | | 149,898 | |
| Repurchase of common and preferred shares | | | — | | | | (24,374 | ) | | | (190,123 | ) |
| Contributions from noncontrolling interests | | | 1,756 | | | | 1,957 | | | | — | |
| Cash distributions to noncontrolling interests | | | (3,485 | ) | | | (158,930 | ) | | | (84,858 | ) |
| Increase in deferred financing costs | | | (5,317 | ) | | | (2,712 | ) | | | (18,707 | ) |
| Swap termination costs | | | (366 | ) | | | (415 | ) | | | — | |
| Payments on forward equity commitment, net | | | (2,262 | ) | | | (12,825 | ) | | | — | |
| Purchases of partnership units | | | — | | | | (475 | ) | | | (3,926 | ) |
| Net cash (used in) provided by financing activities | | | (285,207 | ) | | | (804,637 | ) | | | 38,973 | |
| Cash acquired in co-investment program acquisition | | | — | | | | — | | | | 20,867 | |
| Cash associated with sale of interest in entity | | | — | | | | — | | | | (1,442 | ) |
| Change in cash and cash equivalents | | | (13,933 | ) | | | (344,308 | ) | | | 314,559 | |
| Cash and cash equivalents, beginning of year | | | 67,798 | | | | 412,106 | | | | 97,547 | |
| Cash and cash equivalents, end of year | | $ | 53,865 | | | $ | 67,798 | | | $ | 412,106 | |
The accompanying notes are an integral part of these consolidated financial statements.
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)
(1) The Company
Lexington Realty Trust (the(together with its consolidated subsidiaries, except when the context only applies to the parent entity, the “Company”) is a self-managed and self-administered Maryland statutory real estate investment trust (“REIT”) that acquires, owns and manages a geographically diversified portfolio of predominately net-leased office, industrial and retail properties. The Company also provides investment advisory and asset management services to investors in the net-lease area. As of December 31, 2009,2011, the Company owned or had interests in approximately 210185 consolidated properties located in 40 states and39 states. As of December 31, 2010, the Netherlands. TheCompany had ownership interests in approximately 195 consolidated properties in 39 states. A majority of the real properties owned byin which the Company had an interest are generally subject to net leases or similar leases where the tenant pays all or substantially all of the cost and/or cost increases for real estate taxes, insurance, utilities and ordinary maintenance of the property. However, certain leases provide that the Companylandlord is responsible for certain operating expenses. As of December 31, 2008, the Company had ownership interests in approximately 225 consolidated properties in 41 states and the Netherlands.
The Company believes it has qualified as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”). Accordingly, the Company will not be subject to federal income tax, provided that distributions to its shareholders equal at least the amount of its REIT taxable income as defined under the Code. The Company is permitted to participate in certain activities from which it was previously precluded in order to maintain its qualification as a REIT, so long as these activities are conducted in entities which elect to be treated as taxable REIT subsidiaries (“TRS”) under the Code. As such, the TRS are subject to federal income taxes on the income from these activities.
The Company conducts its operations either directly or indirectly through (1) property owner subsidiaries and lender subsidiaries, (2) operating partnerships in which the Company is the sole unit holder of the general partner and the sole unit holder of the limited partner that holds a majority of the limited partner interests (“OP units”) or through(3) Lexington Realty Advisors, Inc. (“LRA”), a wholly-owned TRS. On December 31, 2008, The Lexington Master Limited Partnership ("MLP"2010, Net 3 Acquisition L.P. (“Net 3”), a former operating partnership, merged with and into the Company and the MLPNet 3 ceased to exist for financial reporting purposes. As of December 31, 2009,2011, the Company controlled threetwo operating partnerships: (1) Lepercq Corporate Income Fund L.P. (“LCIF”), and (2) Lepercq Corporate Income Fund II L.P. (“LCIF II”),. Property owner subsidiaries are landlords under leases for properties in which the Company has an interest and/or borrowers under loan agreements secured by properties in which the Company has an interest and (3) Net 3 Acquisition L.P. (“Net 3”).lender subsidiaries are lenders under loan agreements where the Company made an investment in a loan asset, but in all cases are separate and distinct legal entities.
(2) | |
| (2) | Summary of Significant Accounting Policies |
The Financial Accounting Standards Board's ("FASB") Accounting Standards Codification ("Codification") was released in June 2009. The Codification became the exclusive authoritative reference for non-governmental U.S. generally accepted accounting principles ("GAAP") for use in financial statements issued for interim and annual periods ending after September 15, 2009, except for SEC rules and interpretive releases, which are also authoritative GAAP for SEC registrants. The FASB divided non-governmental GAAP into the authoritative Codification and guidance that is nonauthoritative. The Codification supersedes all existing non-SEC accounting and reporting standards. All other non-grandfathered, non-SEC accounting literature not included in the Codification has become nonauthoritative. All references to accounting guidance in this report have been modified to conform to the Codification.
Basis of Presentation and Consolidation.The Company's consolidated financial statements are prepared on the accrual basis of accounting.accounting in accordance with U.S. generally accepted accounting principles (“GAAP”). The financial statements reflect the accounts of the Company and its consolidated subsidiaries, including LCIF, LCIF II, Net 3, LRA and Six Penn Center L.P. Lexington Contributions, Inc. ("LCI") and Lexington Strategic Asset Corp. (“LSAC”), each a former majority-owned TRS and the MLP, were merged with and into the Company as of March 25, 2008, June 30, 2007 and December 31, 2008, respectively, are included in the consolidated financial statements through their applicable merger dates.subsidiaries. The Company consolidates its wholly ownedwholly-owned subsidiaries, partnerships and joint ventures which it controls (i) through (i) voting rights or similar rights or (ii) by means other than voting rights if the Company is the primary beneficiary of a variable interest entity ("VIE"). Entities which the Company does not control and entities which are VIE'sVIEs in which the Company is not the primary beneficiary are accounted for under appropriate GAAP.
If an investment is determined to be a VIE, the Company performs an analysis to determine if the Company is the primary beneficiary of the VIE. GAAP requires a VIE to be consolidated by its primary beneficiary. The primary beneficiary is the party that has a controlling financial interest in an entity. In order for a party to have a controlling financial interest in an entity, it must have (1) the power to direct the activities of a VIE that most significantly impact the entity's economic performance and (2) the obligation to absorb losses of an entity that could potentially be significant to the VIE or the right to receive benefits from such entity that could potentially be significant to the VIE.
Consolidated Variable Interest Entities.The Company's consolidated VIEs were determined to be VIEs primarily because each entity's equity holders' obligation to absorb losses is protected or its equity investment at risk is not sufficient to permit the entities to finance activities without additional financial support. The Company determined that it was the primary beneficiary of these VIEs because it has a controlling financial interest in the entities.
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
The Company determined that a wholly-owned entity which owns an office building in Greenville, South Carolina is a VIE and is consolidated by the equity method.Company as the entity's obligation to absorb losses is protected. The tenant has an option to purchase the property on December 31, 2014 at fair market value, but not for less than $10,710 and not for greater than $11,550. If the tenant does not exercise the purchase option, the Company has the right to require the tenant to purchase the property for $10,710.
Non-Consolidated Variable Interest Entities. At December 31, 2011 and 2010, the Company held variable interests in certain non-consolidated VIEs; however, the Company was not the primary beneficiary of these VIEs as the Company does not have a controlling financial interest in the entities. The Company determined that Concord Debt Holdings LLC and related entities are VIEs. The Company's carrying value of these investments is zero and the Company has no obligation to fund future operations (see note 9). The Company has certain acquisition commitments and/ or acquisition, development and construction arrangements with VIEs. The Company is obligated to fund certain amounts as discussed in note 4.
Earnings Per Share.Share. Basic net income (loss) per share is computed by dividing net income (loss) reduced by preferred dividends and amounts allocated to unvestednon-vested share-based payment awards, if applicable, by the weighted averageweighted-average number of common shares outstanding during the period. Diluted net income (loss) per share amounts are similarly computed but include the effect, when dilutive, of in-the-money common share options, OP units and put options of certain partners’ interests in non-consolidated entities and convertible securities.
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)
Use of Estimates. Management has made a number of significant estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses to prepare these consolidated financial statements in conformity with GAAP. These estimates and assumptions are based on management’smanagement's best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment. The current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions. Management adjusts such estimates when facts and circumstances dictate. The most significant estimates made include the recoverability of accounts receivable, allocation of property purchase price to tangible and intangible assets acquired and liabilities assumed, the determination if certainof VIEs and which entities should be consolidated, classification of noncontrolling interests, the determination of impairment of long-lived assets, notesloans receivable and equity method investments, valuation and impairment of assets held by equity method investees, valuation of derivative financial instruments and the useful lives of long-lived assets. Actual results could differ materially from those estimates.
Fair Value Measurements. The Company follows the guidance in the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurements and Disclosures ("Topic 820"), to determine the fair value of financial and non-financial instruments. Topic 820 defines fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. Topic 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 - quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 - observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and Level 3 - unobservable inputs, which are used when little or no market data is available. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as considering counterparty credit risk.
Revenue Recognition. The Company recognizes lease revenue on a straight-line basis over the term of the lease unless another systematic and rational basis is more representative of the time pattern in which the use benefit is derived from the leased property. Renewal options in leases with rental terms that are lower than those in the primary term are excluded from the calculation of straight-line rent if the renewals are not reasonably assured. If the Company funds tenant improvements and the improvements are deemed to be owned by the Company, revenue recognition will commence when the improvements are substantially completed and possession or control of the space is turned over to the tenant. If the Company determines that the tenant allowances are lease incentives, the Company commences revenue recognition when possession or control of the space is turned over to the tenant for tenant work to begin. The lease incentive is recorded as a deferred expense and amortized as a reduction of revenue on a straight-line basis over the respective lease term. The Company recognizes lease termination fees as rental revenue in the period received and writes off unamortized lease-related intangible and other lease-related account balances, provided there are no further Company obligations under the lease. Otherwise, such fees and balances are recognized on a straight-line basis over the remaining obligation period with the termination payments being recorded as a component of rent receivable-deferred or deferred revenue on the Consolidated Balance Sheets.
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
Gains on sales of real estate are recognized based upon the specific timing of the sale as measured against various criteria related to the terms of the transactions and any continuing involvement associated with the properties. If the sales criteria are not met, the gain is deferred and the finance, installment or cost recovery method, as appropriate, is applied until the sales criteria are met. To the extent the Company sells a property and retains a partial ownership interest in the property, the Company recognizes gain to the extent of the third-party ownership interest.
Accounts Receivable. The Company continuously monitors collections from tenants and makes a provision for estimated losses based upon historical experience and any specific tenant collection issues that the Company has identified. As of December 31, 2011 and 2010, the Company's allowance for doubtful accounts was not significant.
Purchase Accounting and Acquisition of Real Estate. The fair value of the real estate acquired, which includes the impact of fair value adjustments for assumed mortgage debt related to property acquisitions, is allocated to the acquired tangible assets, consisting of land, building and improvements and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, other value of in-place leases and value of tenant relationships, based in each case on their fair values. Beginning in 2009, acquisitionAcquisition costs are expensed as incurred and are included in property operating expense in the accompanying consolidated statementConsolidated Statement of operations.Operations. Also, noncontrolling interests acquired are recorded at estimated fair market value.
The fair value of the tangible assets of an acquired property (which includes land, building and improvements and fixtures and equipment) is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to land and building and improvements based on management’smanagement's determination of relative fair values of these assets. Factors considered by management in performing these analyses include an estimate of carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rental revenue during the expected lease-up periods based on current market demand. Management also estimates costs to execute similar leases including leasing commissions.
In allocating the fair value of the identified intangible assets and liabilities of an acquired property, above-market and below-market lease values are recorded based on the difference between the current in-place lease rent and management’smanagement's estimate of current market rents. Below-market lease intangibles are recorded as part of deferred revenue and amortized into rental revenue over the non-cancelable periods and bargain renewal periods of the respective leases. Above-market leases are recorded as part of intangible assets and amortized as a direct charge against rental revenue over the non-cancelable portion of the respective leases.
The aggregate value of other acquired intangible assets, consisting of in-place leases and tenant relationship values, is measured by the excess of (1) the purchase price paid for a property over (2) the estimated fair value of the property as if vacant, determined as set forth above. This aggregate value is allocated between in-place lease values and tenant relationship values based on management’smanagement's evaluation of the specific characteristics of each tenant’stenant's lease. The value of in-place leases are amortized to expense over the remaining non-cancelable periods and any bargain renewal periods of the respective leases. The value of tenant relationships are amortized to expense over the applicable lease term plus expected renewal periods.
Depreciation is determined by the straight-line method over the remaining estimated economic useful lives of the properties. The Company generally depreciates buildings and building improvements over periods ranging from 8 to 40 years, land improvements from 15 to 20 years, and fixtures and equipment from 2 to 16 years.
Revenue Recognition. The Company recognizes revenue on a straight-line basis over the term of the lease unless another systematic and rational basis is more representative of the time pattern in which the use benefit is derived from the leased property. Renewal options in leases with rental terms that are lower than those in the primary term are excluded from the calculation of straight line rent if the renewals are not reasonably assured. In those instances in which the Company funds tenant improvements and the improvements are deemed to be owned by the Company, revenue recognition will commence when the improvements are substantially completed and possession or control of the space is turned over to the tenant. When the Company determines that the tenant allowances are lease incentives, the Company commences revenue recognition when possession or control of the space is turned over to the tenant for tenant work to begin. The lease incentive is recorded as a deferred expense and amortized as a reduction of revenue on a straight-line basis over the respective lease term. The Company recognizes lease termination payments as a component of rental revenue in the period received, provided that there are no further obligations under the lease. All above-market lease assets, below-market lease liabilities and deferred rent assets or liabilities for terminated leases are charged against or credited to rental revenue in the period the lease is terminated. All other capitalized lease costs and lease intangibles are accelerated via amortization expense to the date of termination.
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)
Gains on sales of real estate are recognized based upon the specific timing of the sale as measured against various criteria related to the terms of the transactions and any continuing involvement associated with the properties. If the sales criteria are not met, the gain is deferred and the finance, installment or cost recovery method, as appropriate, is applied until the sales criteria are met. To the extent the Company sells a property and retains a partial ownership interest in the property, the Company recognizes gain to the extent of the third party ownership interest.
Accounts Receivable. The Company continuously monitors collections from its tenants and would make a provision for estimated losses based upon historical experience and any specific tenant collection issues that the Company has identified. As of December 31, 2009 and 2008, the Company’s allowance for doubtful accounts was not significant.
Fair Value Measurements. The Company follows the guidance in FASB Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurements and Disclosures ("Topic 820") to determine the fair value of financial and non-financial instruments. Topic 820 defines fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. The provisions of the guidance were effective for financial statements issued for fiscal years beginning after November 15, 2007, except for those relating to nonfinancial assets and liabilities, which were deferred for one additional year, and a scope exception for purposes of fair value measurements affecting lease classification or measurement. Topic 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 – quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 – observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and Level 3 – unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as considering counterparty credit risk, where applicable, in the Company’s assessment of fair value.
Impairment of Real Estate. The Company evaluates the carrying value of all tangible and intangible real estate assets held for investment for possible impairment when an event or change in circumstance has occurred that indicates its carrying value may not be recoverable. The evaluation includes estimating and reviewing anticipated future undiscounted cash flows to be derived from the asset. If such cash flows are less than the asset’sasset's carrying value, an impairment charge is recognized to the extent by which the asset’sasset's carrying value exceeds the estimated fair value.value, which may be below the balance of any non-recourse financing. Estimating future cash flows and fair values is highly subjective and such estimates could differ materially from actual results.
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
Investments in Non-Consolidated Entities.Entities. The Company accounts for its investments in 50% or less owned entities under the equity method, unless consolidation is required or ifrequired. If the Company’sCompany's investment in the entity is less than 3%insignificant and the Company has no influence over the control of the entity then the entity is accounted for under the cost method.
Impairment of Equity Method Investments. On a quarterly basis, the The Company assesses whether there are indicators that the value of its equity method investments may be impaired. An impairment charge is recognized only if the Company determines that a decline in the value of the investment below its carrying value is other-than-temporary. The assessment of impairment is highly subjective and involves the application of significant assumptions and judgments about the Company’sCompany's intent and ability to recover its investment given the nature and operations of the underlying investment, including the level of the Company’sCompany's involvement therein, among other factors. To the extent an impairment is deemed to be other-than-temporary, the loss is measured as the excess of the carrying amount of the investment over the estimated fair value of the investment.
Loans Receivable. Loans held for investment are intended to be held to maturity and, accordingly, are carried at cost, net of unamortized loan origination costs and fees, loan purchase discounts, and net of an allowance for loan losses when such loan is deemed to be impaired. Loan origination costs and fees and loan purchase discounts are amortized over the term of the loan. The Company considers a loan impaired when, based upon current information and events, it is probable that it will be unable to collect all amounts due for both principal and interest according to the contractual terms of the loan agreement. Significant judgments are required in determining whether impairment has occurred. The Company performs an impairment analysis by comparing either the present value of expected future cash flows discounted at the loan’sloan's effective interest rate, or the loan’sloan's observable current market price or the fair value of the underlying collateral to the net carrying value of the loan, which may result in an allowance and corresponding charge to loan loss reserves. Interest on impaired loans is recognized on a cash basis.
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)
Common Shareholder Dividends. For three of its quarterly common share dividends declared during 2009, the Company relied upon Internal Revenue Service Revenue Procedure 2008-68 (“IRS Rev. Proc. 2008-68”). IRS Rev. Proc. 2008-68, through a date certain, allows REITs to offer shareholders elective stock dividends, which are dividends paid in a mixture of stock and cash, of which at least 10% must be paid in cash. The stock portion of the dividend was accounted for as a stock issuance upon distribution and earnings per share was adjusted prospectively.charge.
Acquisition, Development and Construction Arrangements. The Company evaluates loans receivable where the Company participates in residual profits through loan provisions or other contracts to ascertain whether the Company has the same risks and rewards as an owner or a joint venture partner. Where the Company concludes that such arrangements are more appropriately treated as an investment in real estate, the Company reflects such loan receivable as an equity investment in real estate under construction in the Consolidated Balance Sheets. In these cases, no interest income is recorded on the loan receivable and the Company records capitalized interest during the construction period. In arrangements where the Company engages a developer to construct a property, the Company will capitalize interest and real estate taxes during the construction period.
Properties Held For Sale. Assets and liabilities of properties that meet various held for sale criteria, including whether it is probable that a sale will occur within 12 months, are presented separately in the Consolidated Balance Sheets, with assets and liabilities being separately stated. The operating results of these properties are reflected as discontinued operations in the Consolidated Statements of Operations. Properties classified as held for sale are carried at the lower of net carrying value or estimated fair value less costs to sell. Properties that do not meet the held for sale criteria are accounted for as operating properties.
Deferred Expenses. Deferred expenses consist primarily of debt and leasing costs. Debt costs are amortized using the straight-line method, which approximates the interest method, over the terms of the debt instruments and leasing costs are amortized over the term of the related lease.
Derivative Financial Instruments.Instruments. The Company accounts for its interest rate swap agreements in accordance with FASB ASC Topic 815, Derivatives and Hedging ("Topic 815"). In accordance with Topic 815, suchthese agreements are carried on the balance sheet at their respective fair value,values, as an asset if their fair value is positive, or as a liability if their fair value is negative. If theThe interest rate swap is designated as a cash flow hedge whereby the effective portion of the swap’sinterest rate swap's change in fair value is reported as a component of other comprehensive income (loss) and; the ineffective portion, if any, is recognized in earnings as an increase or decrease to interest expense.
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
Upon entering into hedging transactions, the Company documents the relationship between the interest rate swap agreementsagreement and the hedged item. The Company also documents its risk-management policies, including objectives and strategies, as they relate to its hedging activities. The Company assesses, both at inception of a hedge and on an on-going basis, whether or not the hedge is highly effective. The Company will discontinue hedge accounting on a prospective basis with changes in the estimated fair value reflected in earnings when:when (1) it is determined that the derivative is no longer effective in offsetting cash flows of a hedged item (including forecasted transactions);, (2) it is no longer probable that the forecasted transaction will occur;occur or (3) it is determined that designating the derivative as an interest rate swap is no longer appropriate. The Company may utilize interest rate swap and cap agreements to manage interest rate risk and does not anticipate entering into derivative transactions for speculative trading purposes.
Stock Compensation. The Company maintains an equity participation plan. Non-vested share grants generally vest either based upon (1) time, (2) performance and/or (3) market conditions. Options granted under the plan in 2010 vest over a five-year period and expire ten years from the date of grant. Options granted under the plan in 2008 vest upon attainment of certain market performance measures and expire ten years from the date of grant. Non-vested share grants generally vest either based upon (i) time, (ii) performance and/or (iii) market conditions. Prior to January 1, 2003, the Company accounted for the plan under the intrinsic value-based method of accounting. Effective January 1, 2003, the Company adopted the prospective method for all employee awards granted, modified or settled after January 1, 2003. All share-based payments to employees, including grants of employee stock options, are recognized in the Consolidated Statements of Operations based on their fair values.
Tax Status. The Company has made an election to qualify, and believes it is operating so as to qualify, as a REIT for federal income tax purposes. Accordingly, the Company generally will not be subject to federal income tax, provided that distributions to its shareholders equal at least the amount of its REIT taxable income as defined under Sections 856 through 860 of the Code.
The Company is permitted to participate in certain activities from which it was previously precluded in order to maintain its qualification as a REIT, so long as these activities are conducted in entities which elect to be treated as taxable REIT subsidiaries under the Code. LRA is, and LCI and LSAC were, taxable REIT subsidiaries. As such, the Company is subject to federal and state income taxes on the income from these activities.
Income taxes, primarily related to the Company's taxable REIT subsidiaries, are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)
A summary of the average taxable nature of the Company’s common dividends for each of the years in the three-year period ended December 31, 2009, is as follows:
| | | 2009 | | | 2008 | | | 2007 | |
| Total dividends per share | | $ | 0.72000 | | | $ | 2.25408 | (1) | | $ | 2.93342 | (1)(2) |
| Ordinary income | | | 53.80 | % | | | 62.24 | % | | | 42.36 | % |
| 15% rate — qualifying dividend | | | 0.61 | % | | | 0.66 | % | | | 2.50 | % |
| 15% rate gain | | | — | | | | 14.12 | % | | | 35.62 | % |
| 25% rate gain | | | — | | | | 9.56 | % | | | 19.52 | % |
| Return of capital | | | 45.59 | % | | | 13.42 | % | | | — | |
| | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % |
(1) Of the total dividend paid in January 2008, $1.21092 is allocated to 2007 and $1.26408 is allocated to 2008.
(2) Includes the special dividend of $0.2325 paid in January 2007 and a portion of the special dividend of $2.10 paid in January 2008.
A summary of the average taxable nature of the Company’s dividend on Series B Cumulative Redeemable Preferred Shares for each of the years in the three-year period ended December 31, 2009, is as follows:
| | | 2009 | | | 2008 | | | 2007 | |
| Total dividends per share | | $ | 2.0125 | | | $ | 2.0125 | | | $ | 2.0125 | |
| Ordinary income | | | 98.87 | % | | | 71.90 | % | | | 42.36 | % |
| 15% rate — qualifying dividend | | | 1.13 | % | | | 0.76 | % | | | 2.50 | % |
| 15% rate gain | | | — | | | | 16.30 | % | | | 35.62 | % |
| 25% rate gain | | | — | | | | 11.04 | % | | | 19.52 | % |
| | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % |
A summary of the average taxable nature of the Company’s dividend on Series C Cumulative Convertible Preferred Shares for each of the years in the three-year period ended December 31, 2009, is as follows:
| | | 2009 | | | 2008 | | | 2007 | |
| Total dividends per share | | $ | 3.25 | | | $ | 7.63976 | (1) | | $ | 3.25 | |
| Ordinary income | | | 98.87 | % | | | 66.35 | % | | | 42.36 | % |
| 15% rate — qualifying dividend | | | 1.13 | % | | | 0.70 | % | | | 2.50 | % |
| 15% rate gain | | | — | | | | 15.05 | % | | | 35.62 | % |
| 25% rate gain | | | — | | | | 10.19 | % | | | 19.52 | % |
| Return of capital | | | — | | | | 7.71 | % | | | — | |
| | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % |
(1) Includes deemed distribution of $4.38976 due to an adjustment to the conversion rate.
A summary of the average taxable nature of the Company’s dividend on Series D Cumulative Redeemable Preferred shares for the years in the three-year period ended December 31, 2009, is as follows:
| | | 2009 | | | 2008 | | | 2007 | |
| Total dividends per share | | $ | 1.8875 | | | $ | 1.415625 | (1) | | $ | 1.662049 | |
| Ordinary income | | | 98.87 | % | | | 71.90 | % | | | 42.36 | % |
| 15% rate — qualifying dividend | | | 1.13 | % | | | 0.76 | % | | | 2.50 | % |
| 15% rate gain | | | — | | | | 16.30 | % | | | 35.62 | % |
| 25% rate gain | | | — | | | | 11.04 | % | | | 19.52 | % |
| | | | 100.00 | % | | | 100.00 | % | | | 100.00 | % |
(1) Dividend paid in January 2008 was allocated to 2007.
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)
Cash and Cash Equivalents.The Company considers all highly liquid instruments with original maturities of three months or less from the date of purchase to be cash equivalents.
Restricted Cash. Restricted cash is comprised primarily of cash balances held in escrow with lenders.
Foreign Currency. The Company has determined that the functional currency of its former foreign operation, iswhich was sold in 2010, was the respective local currency. As such, assets and liabilities of the Company’sCompany's former foreign operation iswas translated using the period-end exchange rates, and revenues and expenses arewere translated using the exchange rate as determined throughout the period. Unrealized gains or losses resulting from translation are included in accumulated other comprehensive income (loss) and as a separate component of the Company’s shareholders’Company's shareholders' equity.
Environmental Matters.Under various federal, state and local environmental laws, statutes, ordinances, rules and regulations, an owner of real property may be liable for the costs of removal or remediation of certain hazardous or toxic substances at, on, in or under such property as well as certain other potential costs relating to hazardous or toxic substances. These liabilities may include government fines, and penalties and damages for injuries to persons and adjacent property. Such laws often impose liability without regard to whether the owner knew of, or was responsible for, the presence or disposal of such substances. Although most of the Company’s tenants of properties in which the Company has an interest are primarily responsible for any environmental damage and claims related to the leased premises, in the event of the bankruptcy or inability of the tenant of such premises to satisfy any obligations with respect to such environmental liability, or if the Companytenant is not responsible, the Company's property owner subsidiary may be required to satisfy any such obligations, should they exist. In addition, the Companyproperty owner subsidiary, as the owner of such propertiesa property, may be held directly liable for any such damages or claims irrespective of the provisions of any lease. As of December 31, 2009 and 2008,2011, the Company was not aware of any environmental matter relating to any of its assetsinvestments that would have a material impact on the consolidated financial statements.
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
Segment Reporting. The Company operates generally in one industry segment, investment in net-leased real properties.estate assets.
Reclassifications. Certain amounts included in prior years’years' financial statements have been reclassified to conform withto the current year presentation, including certain statement of operations captions including activities for properties sold during 2009,2011, which are presented as discontinued operations.
Newly Adopted Accounting Guidance. In August 2009, the FASB amended guidance on fair value measurements which clarifies how entities should estimate the fair value of liabilities. The guidance was issued to improve the consistency of how entities apply the fair value guidance to liabilities and provides acceptable measurement techniques in circumstances when quoted market prices in an active market for an identical liability are not available. The new guidance is effective for annual and interim periods beginning after August 27, 2009. The adoption of this guidance did not have a material impact on the Company's financial position, results of operations or cash flows and was adopted by the Company effective October 1, 2009.
Recently Issued Accounting Guidance. In June 2009, the FASB issued guidance related to the consolidation of VIEs. The guidance requires reporting entities to evaluate former qualified special purpose entities for consolidation, changes the approach to determining a VIE's primary beneficiary from a quantitative assessment to a qualitative assessment designed to identify a controlling financial interest, and increases the frequency of required reassessments to determine whether a company is the primary beneficiary of a VIE. It also clarifies, but does not significantly change, the characteristics that identify a VIE. The guidance is effective for periods beginning after November 15, 2009. Management has determined that the guidance will not have a material impact on the Company's financial position, results of operations and cash flows.
On February 24, 2010, the FASB issued new guidance that updates guidance issued in May 2009 which establishes principles and requirements for subsequent events. This guidance was effective immediately and applies to the accounting for and disclosure of subsequent events not addressed in other applicable GAAP. The adoption of this guidance did not have a material impact on the Company's financial position, results of operations or cash flows.
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)
(3) Earnings Per Share
The Company’s unvestedCompany's non-vested share-based payment awards are considered participating securities and as such, the Company is required to use the two-class method for the computation of basic and diluted earnings per share. Under the two-class computation method, net losses are not allocated to participating securities unless the holder of the security has a contractual obligation to share in the losses, accordingly the unvestedlosses. The non-vested share-based payment awards are not allocated losses foras the years ending December 31, 2009, 2008 and 2007. awards do not have a contractual obligation to share in losses of the Company.
The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for each of the years in the three-year period ended December 31, 2009:2011:
|
| | | | | | | | | | | | |
| | | 2011 | | 2010 | | 2009 |
| BASIC AND DILUTED | | | | | | |
| Loss from continuing operations attributable to common shareholders | | $ | (64,099 | ) | | $ | (34,098 | ) | | $ | (164,615 | ) |
| Loss from discontinued operations attributable to common shareholders | | (39,622 | ) | | (23,998 | ) | | (78,261 | ) |
| Net loss attributable to common shareholders | | $ | (103,721 | ) | | $ | (58,096 | ) | | $ | (242,876 | ) |
| Weighted-average number of common shares outstanding | | 152,473,336 |
| | 130,985,809 |
| | 109,280,955 |
|
| Loss per common share: | | |
| | | | |
|
| Loss from continuing operations | | $ | (0.42 | ) | | $ | (0.26 | ) | | $ | (1.51 | ) |
| Loss from discontinued operations | | (0.26 | ) | | (0.18 | ) | | (0.71 | ) |
| Net loss attributable to common shareholders | | $ | (0.68 | ) | | $ | (0.44 | ) | | $ | (2.22 | ) |
| | | 2009 | | | 2008 | | | 2007 | |
| BASIC | | | | | | | | | |
| Loss from continuing operations attributable to common shareholders | | $ | (190,635 | ) | | $ | (15,776 | ) | | $ | (22,708 | ) |
| Less: Unvested common share dividends | | | (449 | ) | | | (491 | ) | | | (1,362 | ) |
| Loss attributable to common shareholders from continuing operations for earnings per share | | | (191,084 | ) | | | (16,267 | ) | | | (24,070 | ) |
| Income (loss) from discontinued operations attributable to common shareholders | | | (51,792 | ) | | | (2,707 | ) | | | 71,224 | |
| Net income (loss) attributable to common shareholders for earnings per share | | $ | (242,876 | ) | | $ | (18,974 | ) | | $ | 47,154 | |
| Weighted average number of common shares outstanding - basic | | | 109,280,955 | | | | 67,872,590 | | | | 64,910,123 | |
| Income (loss) per common share — basic: | | | | | | | | | | | | |
| Loss from continuing operations | | $ | (1.75 | ) | | $ | (0.24 | ) | | $ | (0.37 | ) |
| Income (loss) from discontinued operations | | | (0.47 | ) | | | (0.04 | ) | | | 1.10 | |
| Net income (loss) attributable to common shareholders | | $ | (2.22 | ) | | $ | (0.28 | ) | | $ | 0.73 | |
| DILUTED | | | | | | | | | | | | |
| Loss attributable to common shareholders from continuing operations for earnings per share — basic | | $ | (191,084 | ) | | $ | (16,267 | ) | | $ | (24,070 | ) |
| Incremental loss attributable to assumed conversion of dilutive securities | | | — | | | | — | | | | — | |
| Loss attributable to common shareholders from continuing operations for earnings per share | | | (191,084 | ) | | | (16,267 | ) | | | (24,070 | ) |
| Income (loss) from discontinued operations attributable to common shareholders | | | (51,792 | ) | | | (2,707 | ) | | | 71,224 | |
| Net income (loss) attributable to common shareholders for earnings per share - diluted | | $ | (242,876 | ) | | $ | (18,974 | ) | | $ | 47,154 | |
| Weighted average number of shares used in calculation of basic earnings per share | | | 109,280,955 | | | | 67,872,590 | | | | 64,910,123 | |
| Add — incremental shares representing: | | | | | | | | | | | | |
| Shares issuable upon conversion of dilutive securities | | | — | | | | — | | | | — | |
| Weighted average number of common shares – diluted | | | 109,280,955 | | | | 67,872,590 | | | | 64,910,123 | |
| Income (loss) per common share — diluted: | | | | | | | | | | | | |
| Loss from continuing operations | | $ | (1.75 | ) | | $ | (0.24 | ) | | $ | (0.37 | ) |
| Income (loss) from discontinued operations | | | (0.47 | ) | | | (0.04 | ) | | | 1.10 | |
| Net income (loss) attributable to common shareholders | | $ | (2.22 | ) | | $ | (0.28 | ) | | $ | 0.73 | |
During 2009, 503,1002011, the Company repurchased and retired an aggregate of 125,000 shares of Series C Cumulative Convertible Preferred SharesStock ("Series C Preferred") at a $833 discount to the historical cost basis. This discount constitutes a deemed negative dividend, offsetting other dividends, and is accretive to common shareholders. In addition, the Company repurchased and retired an aggregate of 419,126 shares of Series B Cumulative Redeemable Preferred Stock ("Series B Preferred") at a $95 premium to historical cost. This premium is treated as a deemed dividend. Accordingly, net loss was adjusted for these dividends to arrive at net loss attributable to common shareholders for 2011.
During 2009, 503,100 shares of Series C Preferred were converted into 2,955,368 common shares. The difference between the fair value of the securities transferred in excess of the fair value of the securities issuable pursuant to the original conversion terms of $6,994$6,994 constitutes a deemed dividend, even though the conversion was for equivalent fair values, and is dilutive to common shareholders and accordingly, it has been deducted fromshareholders. Accordingly, net income (loss)loss was adjusted to arrive at net income (loss)loss attributable to common shareholders for 2009.2009.
During 2008, the Company redeemed 501,700 shares70
Contents
All incremental shares are considered anti-dilutive for periods that have a loss from continuing operations applicable to common shareholders.
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements – (Continued)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except per share/unit amounts)data)
| |
| (4) | Investments in Real Estate and Real Estate Under Construction |
(4) InvestmentsThe Company, through property owner subsidiaries, acquired the following operating properties in Real Estate and Intangible Assetsseparate transactions during 2011:
During 2009, the |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Lease Intangibles |
| Property Type | Location | Acquisition/Consolidation Date | Initial Cost Basis | Lease Expiration | Land | | Building and Improvements | | Above Market Lease Value | | Lease in-place Value | | Tenant Relationships Value |
| Industrial | Byhalia, MS | May 2011 | $ | 27,492 |
| 03/2026 | $ | 1,005 |
| | $ | 21,483 |
| | $ | — |
| | $ | 4,097 |
| | $ | 907 |
|
| Office | Rock Hill, SC | May 2011 | $ | 7,395 |
| 08/2021 | $ | 551 |
| | $ | 4,313 |
| | $ | — |
| | $ | 1,853 |
| | $ | 678 |
|
Office (1) | Allen, TX | May 2011 | $ | 36,304 |
| 03/2018 | $ | 5,591 |
| | $ | 21,607 |
| | $ | — |
| | $ | 5,127 |
| | $ | 3,979 |
|
Industrial (2) | Shelby, NC | June 2011 | $ | 23,470 |
| 05/2031 | $ | 1,421 |
| | $ | 18,917 |
| | $ | — |
| | $ | 2,712 |
| | $ | 420 |
|
| Office | Columbus, OH | July 2011 | $ | 6,137 |
| 07/2027 | $ | 433 |
| | $ | 2,773 |
| | $ | — |
| | $ | 2,205 |
| | $ | 726 |
|
| Industrial | Chillicothe, OH | October 2011 | $ | 12,110 |
| 06/2026 | $ | 736 |
| | $ | 9,021 |
| | $ | — |
| | $ | 1,859 |
| | $ | 494 |
|
Office (3) | Aurora, IL | October 2011 | $ | 15,300 |
| 09/2017 | $ | 3,063 |
| | $ | 5,943 |
| | $ | 1,272 |
| | $ | 3,616 |
| | $ | 1,406 |
|
| | | | $ | 128,208 |
| | $ | 12,800 |
| | $ | 84,057 |
| | $ | 1,272 |
| | $ | 21,469 |
| | $ | 8,610 |
|
| | | | | | | | | | | | | | |
| Weighted-average life of intangible assets (years) | | | | | | 6.0 |
| | 11.8 |
| | 9.7 |
|
(1) The Company acquired the remainder interestsproperty from Net Lease Strategic Assets Fund L.P. pursuant to a purchase option.
(2) The Company funded the construction of the property commencing in land2010.
(3) Obtained control of joint venture investment (see note 9).
In addition, during 2011, the Company deposited $1,700 and posted a $1,600 letter of credit toward the purchase of a $17,558 to-be-built 80,000 square foot office property in Long Beach, CaliforniaEugene, Oregon. Substantial completion of the property is expected to occur in the first quarter of 2013 although there can be no assurance that the acquisition will be consummated.
During 2010, the Company, through a property owner subsidiary, acquired an office property for $16,650. The property is located in Columbus, Ohio and is net-leased for 16 years. In addition in 2010, the Company, through a property owner subsidiary, purchased a parcel and parking lot adjacent to a property in which the Company has an interest in a sale/leaseback transaction with an existing tenant, Nevada Power Company, for $3,275. One of the Company's property owner subsidiaries financed the purchase of the parking lot with a $2,450 non-recourse mortgage note that matures in September 2014 and bears interest at 7.5%. In connection with a tenant'sthe transaction, the Nevada Power Company's lease surrender obligations for an estimated fair valueon the existing property was extended from January 2014 to January 2029.
The Company recognized aggregate acquisition expenses of approximately $2,500$432 and recorded it as non-operating income,$164 in 2011 and 2010, respectively, which are included in property operating expenses within the Company's Consolidated Statements of which $1,125 was attributable to a noncontrolling interest in the property. During 2008, the Company made acquisitions, totaling $57,488.
Operations. As of December 31, 20092011 and 2008,2010, the components of intangible assets, are as follows:
|
| | | | | | | | |
| | | 2011 | | 2010 |
| In-place lease values | | $ | 327,589 |
| | $ | 335,152 |
|
| Tenant relationship values | | 152,390 |
| | 156,495 |
|
| Above-market leases | | 66,939 |
| | 85,987 |
|
| | | $ | 546,918 |
| | $ | 577,634 |
|
| | | 2009 | | | 2008 | |
| Lease origination costs | | $ | 349,864 | | | $ | 362,712 | |
| Tenant relationship values | | | 160,006 | | | | 165,009 | |
| Above-market leases | | | 98,906 | | | | 99,397 | |
| | | $ | 608,776 | | | $ | 627,118 | |
The estimated amortization of the above intangibles for the next five years is $53,180 in 2010, $48,211 in 2011, $37,892$37,925 in 2012, $26,673$27,862 in 2013, $22,406 in 2014, $16,819 in 2015 and $21,500$14,468 in 2014.2016.
Below-market leases, net of accretion, which are included in deferred revenue, are $106,291$78,806 and $121,284,$94,677, respectively in 2009as of December 31, 2011 and 2008.2010. The estimated accretion for the next five years is $8,456 in 2010, $8,319 in 2011, $7,976$7,134 in 2012, $7,518$6,696 in 2013, $5,734 in 2014, $4,671 in 2015 and $6,359$3,693 in 2014.2016.
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
In addition, on December 31, 2009,During 2011, the Company, acquired an office building in Greenville, South Carolina for $10,500. The tenant has an optionthrough lender subsidiaries and property owner subsidiaries, entered into three acquisition, development and construction arrangements whereby the lender subsidiaries agreed to lend funds to construct build-to-suit properties and the property owner subsidiaries agreed to purchase the property on properties upon completion of construction and commencement of a tenant lease. When the Company anticipates that it will indirectly participate in residual profits through the loan provisions and other contracts, the Company records the loan as an investment in real estate under construction. In addition, the Company hired developers to construct two office buildings and formed a joint venture with a developer to construct an industrial facility, which will be leased to single-tenants upon completion. As of December 31, 2014 at fair market value, but not less than $10,710 and not greater than $11,550. If the tenant does not exercise the purchase option,2011, the Company hashad the right to require the tenant to purchase the property for $10,710.following development arrangements outstanding:
|
| | | | | | | | | | | | | | | |
| Location | Property Type | Square Feet | | Expected Maximum Commitment/Contribution | | Estimated Purchase Price/Completion Cost | | Lease Term (Years) | | Estimated Completion Date |
Saint Joseph, MO(1) | Office | 99,000 |
| | $ | 17,991 |
| | $ | 17,991 |
| | 15 | | 2Q 12 |
Huntington, WV(1)(3) | Office | 70,000 |
| | $ | 11,826 |
| | $ | 12,600 |
| | 15 | | 1Q 12 |
Shreveport, LA(1) | Industrial | 257,000 |
| | $ | 2,520 |
| | $ | 13,064 |
| | 10 | | 2Q 12 |
| Florence, SC | Office | 32,000 |
| | $ | 5,128 |
| | $ | 5,128 |
| | 12 | | 1Q 12 |
Long Island City, NY(2) | Industrial | 143,000 |
| | $ | 46,728 |
| | $ | 55,524 |
| | 15 | | 1Q 13 |
| Jessup, PA | Office | 150,000 |
| | $ | 20,780 |
| | $ | 20,780 |
| | 15 | | 2Q 12 |
| | | 751,000 |
| | $ | 104,973 |
| | $ | 125,087 |
| | | | |
(2) Joint venture investment. The Company has determined thatguaranteed completion to the leaseground owner. The guarantee obligation was valued at $1,500 and is included in accounts payable and other liabilities in the Consolidated Balance Sheet. In addition, the Company may loan a direct financing leasemaximum of $4,398 to the joint venture under certain circumstances. The difference between the Company's expected contribution and the estimated completion cost represents the joint venture partner's equity.
(3) Property acquired in January 2012.
The Company has classified itvariable interests in other assetscertain developer entities constructing the facilities but is not the primary beneficiary of the entities as the Company does not have a controlling financial interest. As of December 31, 2011, the Company's aggregate investment in development arrangements is $32,829, which includes $619 of interest capitalized during 2011, and is presented as investments in real estate under construction in the accompanying Consolidated Balance Sheet.Sheets.
(5) Sales of Real Estate and Discontinued Operations
| |
| (5) | Sales of Real Estate and Discontinued Operations |
The Company sold to unrelated parties (1) 18its interests in 17 properties in 2011, 13 properties in 2010 and 18 properties in 2009, three of which were transferred to lenders or disposed of through bankruptcy, (2) 41 properties in 2008, one of which was transferred tobankruptcy. For the lender,years ended December 31, 2011, 2010 and (3) 53 properties in 2007, for2009, these sales generated aggregate net proceeds of $108,475, $238,600$124,039, $80,224 and $423,634,$108,475, respectively, which resulted in gains in 2009, 2008on sales of $6,557, $14,613 and 2007$9,134, respectively. For the years ended December 31, 2011, 2010 and 2009, the Company recognized net debt satisfaction gains (charges) relating to these properties of $9,134, $13,151$(606), $2,924 and $92,878,$11,471, respectively. These gains (charges) are included in discontinued operations.
At December 31, 2009 and 2008,2011, the Company had no properties and one property classified as held for sale respectively.and two properties classified as held for sale at December 31, 2010.
The following presents the operating results for the properties sold and held for sale during the years ended December 31, 2009, 20082011, 2010 and 2007:2009:
|
| | | | | | | | | | | | |
| | | Year Ending December 31, |
| | | 2011 | | 2010 | | 2009 |
| Total gross revenues | | $ | 9,630 |
| | $ | 31,874 |
| | $ | 58,687 |
|
| Pre-tax net loss, including gains on sales | | $ | (40,050 | ) | | $ | (32,932 | ) | | $ | (81,187 | ) |
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
| | | Year Ending December 31, | |
| | | 2009 | | | 2008 | | | 2007 | |
| Total gross revenues | | $ | 12,685 | | | $ | 33,938 | | | $ | 84,185 | |
| Pre-tax income (loss), including gains on sales | | $ | (54,556 | ) | | $ | (1,468 | ) | | $ | 94,359 | |
In 2009, the Company, through a property owner subsidiary, received gross proceeds of $4,750$4,750 in a sale-leaseback transaction of land in Palm Beach Gardens, Florida. The Company is leasing back the land for 30 years and has an option to purchase the land in June 2014 and June 2015. The Company has not recognized a gain on the transaction as the Company is considered to have continued involvement in the property due to the purchase option.
During 2009, the Company conveyed its interest in three properties to lenders in full satisfaction of the related aggregate $38,022$38,022 non-recourse mortgage notes payable.
During 2008, the Company conveyed one property to a lender in full satisfaction of the $6,516 non-recourse mortgage note payable. The Company recorded a gain on debt satisfaction of $3,990.
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)
During 2007, the Company sold one property for a sale price of $35,700 and provided $27,700 in secured financing to the buyer at a rate of 6.45%. The note matures in 2015 when a balloon payment of $25,731 is due.
The provision for income taxes included in discontinued operations in 2007 of $3,414 relates primarily to taxes incurred on the sale of properties by taxable REIT subsidiaries, including C-Corp built in gain taxes. The federal and state portion of the $3,414 is $2,731 and $683, respectively.
The Company has not treated properties sold to Net Lease Strategic Assets Fund L.P. as discontinued operations as it has continuing involvement with such assets through its partnership interest. In addition, management will not consider assets being marketed for sale as discontinued operations until it is probable that a sale will take place within 12 months.
(6) Impairments and Loan Losses
| |
| (6) | Impairment of Real Estate Investments |
The Company assesses on a regular basis whether there are any indicators that the carrying value of Companyreal estate assets have becomemay be impaired. IfPotential indicators may include an increase in vacancy at a property, tenant reduction in utilization of a property, tenant financial instability and the potential sale of the property in the near future. An asset is determined to be impaired if the Company reduces the asset’sasset's carrying value tois in excess of its estimated fair value.
During 2011 and 2010, the Company recognized aggregate impairment charges of $68,560 and $2,955, respectively, on real estate assets classified in continuing operations. Of the $68,560 in impairment charges recognized in 2011, $29,022 relates to properties in which there are noncontrolling ownership interests. Accordingly, the noncontrolling partners' share of these impairments is $12,495 and is reflected in net loss attributable to noncontrolling interests in the Consolidated Statement of Operations. The Company estimateshas explored the possible disposition of some non-core properties, including retail, underperforming and multi-tenant properties and determined that the expected undiscounted cash flows based upon revised estimated holding periods of certain of these properties were below the current carrying values. Accordingly, the Company reduced the carrying value of these properties to their estimated fair values. Three of these properties have outstanding non-recourse mortgage debt, net of lender escrows, of $27,273. The properties were written down to the estimated aggregate fair value of these assets by using several techniques such as income and market valuation$19,558, which primarily rely on unobservable inputs, such as estimated capitalization rates, which are within Level 3 ofis $7,715 less than the fair value hierarchy.corresponding non-recourse mortgages encumbering the properties.
During 2009, 20082011, 2010 and 2007,2009, the Company recognized $101,166, $16,519$48,883, $50,061 and $17,170,$99,590, respectively, of impairment charges and loan losses, including amounts in discontinued operations, relating to real estate assets and certain loan assets.that were ultimately disposed of below their carrying value.
| · | During 2009, three real estate assets with an aggregate carrying value of $59,974 were written down to their estimated aggregate fair value of $24,650 in anticipation of foreclosure by their respective mortgage lenders, resulting in an aggregate impairment charge of $35,324. |
| · | The Company recognized impairments of $38,493, $12,031 and $1,670 during 2009, 2008 and 2007, respectively, on real estate assets that were disposed of below their carrying value. |
| · | During 2009, the Company recognized aggregate impairments of $25,773 on four properties acquired on December 31, 2006 in the merger with Newkirk Realty Trust (“Newkirk”), classified in continuing operations as a result of triggering events with respect to the properties. Three of these properties, with an aggregate carrying value of $11,512, were written down to their aggregate estimated fair value of zero, as the Company determined that it is unlikely that the Company will recover any of its investment. In addition, the Company adjusted the $51,267 carrying value of its consolidated variable interest property in San Francisco, California to its estimated fair value of $37,006 due to an anticipated restructuring of the property’s entity structure and debt. |
| · | During 2009, the Company agreed to the discounted payoff of two notes receivable with an aggregate carrying value of $4,950. The Company wrote the notes receivable down to the aggregate agreed-upon discounted payoff amount of $3,865, which approximated fair value and recognized a loan loss reserve of $1,085 during 2009. In addition, the Company sold investments in debt securities for $9,451 and realized a loss of $491. |
| · | During 2008, the Company conveyed one property to a lender and recognized an impairment loss of $4,488. |
| · | During 2007, the Company recognized an impairment loss of $5,500 on a vacant property and a $10,000 impairment loss on a property upon the tenant’s lease rejection. |
The Company also determined that two of its investments in non-consolidated entities incurred other-than-temporary impairments in 2009 and accordingly recognized $74,693 of impairment charges in equity in earnings (losses) from non-consolidated entities including other-than-temporary impairments of $68,213 on its investment in Lex-Win Concord LLC which reduced the carrying value of that investment to zero. In addition, in 2009During 2010, the Company recordedrecognized an other-than-temporary impairment charge of $6,480$168 on itsa bond investment in an unconsolidated joint venture acquired in the merger with Newkirk due to the expiration of the net-lease on the hotel asset ownedsecured by the joint venture.real estate assets. The Company sold this investmentinvestments in debt securities in 2009 for $60 in 2009.
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES$9,451 and realized a loss $491.
Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)
(7) Notes Receivable
As of December 31, 20092011 and 2008,2010, the Company’s notesCompany's loans receivable, including accrued interest and net of origination fees and loan losses, are comprised primarily of first and second mortgage loans and mezzanine loans on real estate aggregating $60,567$66,619 and $68,812, respectively, bearing$88,937, respectively. The loans bear interest, including imputed interest, at rates ranging from 4.6% to 16.0% and maturingmature at various dates between 20142012 and 2022.2022.
In the second quarter of 2011, the Company, through a lender subsidiary, made a $10,000 mezzanine loan secured by a 100% pledge of all equity interests in the entities which own two, to-be-constructed distribution facilities. The loan was scheduled to mature in June 2013 and had an interest rate of 15.0% for the first year and 18.5% for the second year. The loan, along with all accrued interest and yield maintenance premium, was fully satisfied in November 2011.
During the first quarter of 2011, the Company, through a lender subsidiary, loaned $3,003 to the buyer in connection with the sale for $3,650 of a vacant industrial property. The loan is secured by the property, bears interest at 7.8% and matures in January 2013.
During 2011 and 2010, the Company, through a lender subsidiary, made a mortgage loan to an entity which owns an office building in Schaumburg, Illinois, which had an outstanding balance of $21,515 at December 31, 2011 and bore interest at 15%. This mortgage loan had a maturity date of January 15, 2012 but could have been extended one additional year by the borrower for a 50 basis point fee. The property is net-leased from January 1, 2011 through December 31, 2022 for an average annual rent of $3,968. The lender subsidiary may be obligated to lend an additional $12,199 for tenant improvement costs. Subsequent to December 31, 2011, the borrower defaulted on the loan. The Company believes the office building has an estimated fair value in excess of the Company's investment and the Company has initiated foreclosure proceedings.
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
During 2010, the Company, through a lender subsidiary, made a $17,000 loan to entities which, collectively, owned five medical facilities. The loan (i) was guaranteed by a parent entity and principal, (ii) was principally secured by either ownership pledges for, second mortgage liens or mortgage liens against the medical facilities, (iii) matured in December 2011 and (iv) requires payments of interest only at a rate of 14.0% through February 2011 and 16.0% thereafter. The lender subsidiary received aggregate prepayments of $7,500 in December 2010 and February 2011, and the remaining $9,500 in December 2011.
(8) Fair Value MeasurementsThe Company has two types of financing receivables: loans receivable and a capitalized financing lease. The Company determined that its financing receivables operate within one portfolio segment as they are both within the same industry and use the same impairment methodology. The Company's loans receivable are secured by commercial real estate assets and the capitalized financing lease is for a commercial office property located in Greenville, South Carolina. In addition, the Company assesses all financing receivables for impairment, when warranted, based on an individual analysis of each receivable.
The Company's financing receivables operate within one class of financing receivables as these assets are collateralized by commercial real estate and similar metrics are used to monitor the risk and performance of these assets. The Company's management uses credit quality indicators to monitor financing receivables such as quality of collateral, the underlying tenant's credit rating and collection experience. As of December 31, 2011, the financing receivables were performing as anticipated and there were no significant delinquent amounts outstanding.
During 2010, the Company recorded a loan loss of $3,756 on a loan receivable secured by the property in Wilsonville, Oregon. In October 2010, the Company entered into a loan modification agreement with the borrower. In accordance with the terms of the modification agreement, in addition to other provisions, monthly payments were adjusted to interest only through maturity, the maturity was accelerated from July 2015 to December 2012 and the Company agreed to a discounted payoff prior to maturity. During 2011, the borrower defaulted on the loan and the Company completed a deed-in-lieu of foreclosure; accordingly the property is now included in real estate in the accompanying Consolidated Balance Sheet as of December 31, 2011.
During 2009, the Company agreed to the discounted payoff of two loans receivable with an aggregate carrying value of $4,950. The Company wrote the loans receivable down to the aggregate agreed-upon discounted payoff amount of $3,865, which approximated fair value and recognized a loan loss reserve of $1,085 during 2009.
| |
| (8) | Fair Value Measurements |
The following table presentstables present the Company’sCompany's assets and liabilities from continuing operations measured at fair value on a recurring basis as of December 31, 2011 and 2010 and non-recurring basis as of during the year ended December 31, 20092011 and on a recurring basis as of December 31, 2008,2010, aggregated by the level in the fair value hierarchy within which those measurements fall:
|
| | | | | | | | | | | | | | | |
| | | | Fair Value Measurements Using |
| Description | 2011 | | (Level 1) | | (Level 2) | | (Level 3) |
| Interest rate swap liability | $ | (3,236 | ) | | $ | — |
| | $ | (3,236 | ) | | $ | — |
|
| Impaired real estate assets* | $ | 133,220 |
| | $ | — |
| | $ | — |
| | $ | 133,220 |
|
| | | Balance | | | Fair Value Measurements Using | | | Year ended December 31, 2009 Total Gains | |
| Description | | December 31, 2009 | | | (Level 1) | | | (Level 2) | | | (Level 3) | | | (Losses) | |
| | | | | | | | | | | | | | | | |
| Forward purchase equity asset | | $ | 20,141 | | | $ | — | | | $ | 20,141 | | | $ | — | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Interest rate swap liability | | $ | (5,240 | ) | | $ | — | | | $ | (5,240 | ) | | $ | — | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Impaired real estate assets* | | $ | 36,658 | | | $ | — | | | $ | — | | | $ | 36,658 | | | $ | (99,590 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Investment in and advances to non-consolidated entities* | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | (74,693 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Impaired notes receivable* | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | (1,576 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| *Represents a non-recurring measurement. See note 6 regarding impairments and loan losses | | | | | | | | | | | | | | | | | | | | |
| | | | | Balance | | | Fair Value Measurements Using | | | | | | Fair Value Measurements Using |
| Description | | December 31, 2008 | | | (Level 1) | | | (Level 2) | | | (Level 3) | | | | 2010 | | (Level 1) | | (Level 2) | | (Level 3) |
| | | | | | | | | | | | | | | | |
| Forward purchase equity asset | | $ | 10,698 | | | $ | — | | | $ | 10,698 | | | $ | — | | | | | $ | 27,574 |
| | $ | — |
| | $ | 27,574 |
| | $ | — |
|
| | | | | | | | | | | | | | | | | | | | |
| Interest rate swap liability | | $ | (7,055 | ) | | $ | — | | | $ | (7,055 | ) | | $ | — | | | | | $ | (5,280 | ) | | $ | — |
| | $ | (5,280 | ) | | $ | — |
|
| Impaired real estate assets* | | $ | 235 |
| | $ | — |
| | $ | — |
| | $ | 235 |
|
| Impaired loan receivable* | | $ | 6,860 |
| | $ | — |
| | $ | — |
| | $ | 6,860 |
|
*Represents a non-recurring fair value measurement.
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements – (Continued)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except per share/unit amounts)data)
The Company has estimated the fair value of its other financial instruments at amounts which are based upon interpretation of available market information and valuation methodologies (including discounted cash flow analysis). The table below sets forth the carrying amounts and estimated fair values of the Company’sCompany's financial instruments as of December 31, 20092011 and 2008.2010:
|
| | | | | | | | | | | | | | | |
| | As of December 31, 2011 | | As of December 31, 2010 |
| | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value |
| Assets | | | | | | | |
| Loans Receivable | $ | 66,619 |
| | $ | 54,179 |
| | $ | 88,937 |
| | $ | 75,868 |
|
| | | | | | | | |
| Liabilities | |
| | |
| | |
| | |
|
| Debt | $ | 1,662,375 |
| | $ | 1,533,205 |
| | $ | 1,774,985 |
| | $ | 1,614,626 |
|
| | | As of December 31, 2009 | | | As of December 31, 2008 | |
| | | Carrying Amount | | | Fair Value | | | Carrying Amount | | | Fair Value | |
| Assets | | | | | | | | | | | | |
| Notes Receivable | | $ | 60,567 | | | $ | 44,092 | | | $ | 68,812 | | | $ | 62,000 | |
| | | | | | | | | | | | | | | | | |
| Liabilities | | | | | | | | | | | | | | | | |
| Debt | | $ | 2,087,990 | | | $ | 1,748,617 | | | $ | 2,381,824 | | | $ | 2,068,725 | |
The majority of the inputs used to value the Company's interest rate swap liability fall within Level 2 of the fair value hierarchy, such as observable market interest rate curves; however, the credit valuation associated with the interest rate swap liability utilizes Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. As of December 31, 2011 and December 31, 2010, the Company determined that the credit valuation adjustment relative to the overall interest rate swap liability is not significant. As a result, the entire interest rate swap liability has been classified in Level 2 of the fair value hierarchy.
The Company estimates the fair value of its real estate assets by using income and market valuation techniques. The Company may estimate fair values using market information such as broker opinions of value, recent sales data for similar assets or discounted cash flow models, which primarily rely on Level 3 inputs. The cash flow models include estimated cash inflows and outflows over a specified holding period. These cash flows may include contractual rental revenues, projected future rental revenues and expenses and forecasted tenant improvements and lease commissions based upon market conditions determined through discussion with local real estate professionals, experience the Company has with its other owned properties in such markets and expectations for growth. Capitalization rates and discount rates utilized in these models are estimated by management based upon rates that management believes to be within a reasonable range of current market rates for the respective properties based upon an analysis of factors such as property and tenant quality, geographical location and local supply and demand observations. To the extent the Company under estimates forecasted cash outflows (tenant improvements, lease commissions and operating costs) or over estimates forecasted cash inflows (rental revenue rates), the estimated fair value of its real estate assets could be overstated.
The Company estimates the fair values of its loans receivable by using an estimated discounted cash flow analysis consisting of scheduled cash flows and discount rate estimates to approximate those that a willing buyer and seller might use and/or the estimated value of the underlying collateral. The fair value of the Company's debt is estimated by using a discounted cash flow analysis, based upon estimates of market interest rates.
Fair values cannot be determined with precision, may not be substantiated by comparison to quoted prices in active markets and may not be realized upon sale. Additionally, there are inherent uncertainties in any fair value measurement technique, and changes in the underlying assumptions used, including discount rates, liquidity risks and estimates of future cash flows, could significantly affect the fair value measurement amounts.
Cash Equivalents, Restricted Cash, Accounts Receivable and Accounts Payable.Payable. The Company estimates that the fair value of cash equivalents, restricted cash, accounts receivable and accounts payable approximates carrying value due to the relatively short maturity of the instruments.
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
| |
| (9) | Investment in and Advances to Non-Consolidated Entities |
Pemlex LLC. In April 2011, the Company made a $14,180 noncontrolling, preferred equity investment in Non-Consolidated Entitiesa joint venture, Pemlex LLC, formed to acquire a 210,000 square foot office property in Aurora, Illinois. The property was purchased by a consolidated subsidiary of the joint venture for a gross purchase price of $15,900. The property is net-leased to a single tenant through September 2017. The Company is entitled to a 15.0% internal rate of return, including a 9.6% current annual preferred return, on its investment, subject to available cash proceeds.
At acquisition, the Company determined that Pemlex LLC was not a VIE. The Company recorded its investment under the equity method of accounting as it was not the controlling managing member of the entity. During 2011, the Company recognized $1,344 equity in income from non-consolidated entities relating to its share of income from Pemlex LLC based upon the hypothetical liquidation of book value method. The Company commenced consolidation of Pemlex LLC in October 2011, as the Company became the managing member of Pemlex LLC.
Net Lease Strategic Assets Fund L.P. (“NLS”).. NLS is a co-investment program with a subsidiary of Inland American Real Estate Trust, Inc. (“Inland”). NLS was established to acquire single-tenant net-lease specialty real estate in the United States. Since the formation of NLS in 2007, the Company has contributed fee and leasehold interests in 19 properties and $15,258 in cash to NLS, and Inland has contributed $217,340 in cash to NLS. In addition, the Company sold, for cash, leasehold interests in 24 properties, plus a 40% tenant-in-common interest in a property, to NLS and recorded an aggregate gain of $31,806 and $19,422 (including the Company’s share of gain on the 40% interest in a property) in 2008 and 2007, respectively, which was limited by the Company’s aggregate ownership interest in NLS’s common and preferred equity. The properties were subject to approximately $339,500 in mortgage debt, which was assumed by NLS. The mortgage debt assumed by NLS had stated interest rates ranging from 5.1% to 8.5%, with a weighted average interest rate of 6.1%, and maturity dates ranging from 2009 to 2025. After these transactions, Inland and the Company own 85% and 15%, respectively, of NLS’sNLS's common equity, and the Company owns 100% of NLS’sNLS's preferred equity.
Inland and the Company are currently entitled to a return on/of their respective investments as follows:capital contributions from operations in the following priority: (1) Inland, 9% on its common equity ($($220,590 in common equity), (2) the Company, 6.5%10.5% on its unpaid preferred equity ($162,487allocated to properties that were previously sold or refinanced ($115,579 in unpaid preferred equity) and 6.5% on its remaining preferred equity ($46,786 in remaining preferred equity), (3) the Company, 9% on its common equity ($($38,928 in common equity), (4) return of the Company preferred equity ($162,487($162,365 in preferred equity), (5) return of Inland common equity ($($220,590 in common equity), (6) return of the Company common equity ($($38,928 in common equity) and (7) any remaining cash flow is allocated 65% to Inland and 35% to the Company as long as the Company is the general partner,partner; and if not, allocations are 85% to Inland and 15% to the Company.
In addition, the partners in NLS are currently entitled to a return on/of each of their respective capital contributions from capital events as follows: (1) return of the Company's unpaid preferred equity allocated to properties that were previously sold or refinanced, (2) Inland to the capital contributions described above,extent of any unpaid 9% return on its common equity, (3) the Company, to the extent of any unpaid 10.5%and 6.5% return on its remaining preferred equity, as applicable, (4) return of the Company's preferred equity allocation with respect to the asset(s) involved in the capital event, (5) the Company, to the extent of any unpaid 9% return on its common equity, (6) return of Inland have committedcommon equity, (7) return of the Company's remaining preferred equity, (8) return of the Company's common equity and (9) any remaining amount is allocated 65% to invest upInland and 35% to an additional $22,500the Company as long as the Company is the general partner; and $127,500, respectively, in NLSif not, allocations are 85% to acquire additional specialty single-tenant net-leased assets.Inland and 15% to the Company.
LRA has entered into a management agreement with NLS, whereby LRA will receive (1) a management fee of 0.375% of the equity capital, as defined, (2) a property management fee of up to 3.0% of actual gross revenues from certain assets for which the landlord is obligated to provide property management services (contingent upon the recoverability of such fees from the tenant under the applicable lease), and (3) an acquisition fee of 0.5% of the gross purchase price of each acquired asset by NLS.
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)
The following is summary historical cost basis selected balance sheet data as of December 31,During 2011, 2010 and 2009, and 2008 and statement of operations data for the years ended December 31, 2009 and 2008, and for the period December 20, 2007 (inception) to December 31, 2007.
| | | As of 12/31/09 | | | As of 12/31/08 | |
| Real estate, including intangibles, net | | $ | 682,165 | | | $ | 719,409 | |
| Cash, including restricted cash | | | 10,586 | | | | 9,370 | |
| Mortgages payable | | | 312,273 | | | | 320,898 | |
| Noncontrolling preferred interest | | | 175,730 | | | | 170,772 | |
| Partners’ capital | | | 200,610 | | | | 233,281 | |
| | | For the Year Ended 12/31/09 | | | For the Year Ended 12/31/08 | | | For the Period 12/20/07 to 12/31/07 | |
| Total gross revenues | | $ | 58,642 | | | $ | 50,616 | | | $ | 951 | |
| Depreciation and amortization | | | (38,996 | ) | | | (32,499 | ) | | | — | |
| Interest expense | | | (19,715 | ) | | | (17,667 | ) | | | (338 | ) |
| Other expenses, net | | | (3,482 | ) | | | (3,272 | ) | | | (14 | ) |
| Net income (loss) | | $ | (3,551 | ) | | $ | (2,822 | ) | | $ | 599 | |
During the year ended December 31, 2009 and 2008, the Company recognized $12,364$21,572, $19,468 and ($16,902)$12,364, respectively, of equity in earnings (losses)income relating to NLS based upon the hypothetical liquidation of book value method. The initial difference between the assets contributed to NLS and the fair value of the Company’sCompany's initial equity investment in NLS is $94,723$94,723 and is accreted into earningsincome over the estimated useful lives of NLS’sNLS's assets. During 20092011, 2010 and 2008,2009, the Company recorded earnings of $3,636$3,599, $3,636 and $3,213,$3,636, respectively, related to this difference, which is included in equity in earnings (losses) of non-consolidated entities on the accompanying Consolidated StatementStatements of Operations.
The NLS partnership agreement provides that (1) either limited partner can exercise the buy/sell right or the right of first offer after February 20, 2012 and (2) upon one limited partner's exercise of either right, the responding partner may not again trigger the buy/sell right or the right of first offer until the termination of all procedures and timeframes pursuant to the exercising partner's chosen right.
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
On February 20, 2012 and February 21, 2012, the Company delivered notices to Inland exercising the buy/sell right and specifying a price of $213,014, at which the Company would purchase the assets of NLS, pursuant to a purchase and sale agreement included with the notice providing for a sale of Inland's interest in NLS to the Company. The specified price would be distributed in accordance with the capital events distribution priority set forth in the paragraph describing distributions upon capital events above. Inland must elect to either sell its interest in NLS to the Company or buy the Company's interest in NLS.
On February 21, 2012, Inland delivered a notice to the Company exercising the right of first offer, which offered to sell 41 of the 43 properties in which NLS has an interest for a price of $548,706, including the assumption of any related debt, with closing to occur prior to August 21, 2012 and on other specified terms. If the Company does not elect to purchase the offered properties, Inland has six months from the exercise notice to sell the properties to a bona fide third party. Upon the sale, the specified price would be distributed in accordance with the capital events distribution priority set forth in the paragraph describing distributions upon capital events above.
Under both the buy/sell right and the right of first offer, the responding partner has 45 days to respond.
On May 5, 2011, the Company made a $6,875 non-recourse mezzanine loan to NLS that bore interest at 15% per annum, matured in March 2018 and was secured by NLS's interest in Lexington Allen Manager LLC and Lexington Allen L.P. (the entities that own the Allen, Texas property). On May 31, 2011, the Company exercised a related purchase option and acquired the Allen, Texas property through the assumption of the $30,582 first mortgage and $6,875 mezzanine loan secured by the property. The $30,582 first mortgage was subsequently satisfied.
In May 2011, the Company loaned, at a 7.4% interest rate, a NLS entity $13,202 to satisfy a non-recourse mortgage balloon payment. The Company loaned a NLS entity $7,614 during 2010 to satisfy a non-recourse mortgage balloon payment. The loan bore interest at 6.9%. Both of these loans were repaid in full in July 2011.
During 2008 and 2007, the Company incurred transaction costs relating to the formation of NLS of $1,138 and $2,316, respectively, which are included in general and administrative expenses in the Consolidated Statements or Operations.
Concord Debt Holdings LLC (“Concord”) and, Lex-Win Concord LLC (“Lex-Win Concord”), CDH CDO LLC and LW Sofi LLC.. On December 31, 2006 in connection with the Company's merger with Newkirk Realty Trust, Inc. (“Newkirk”), the Company acquired a 50% interest in a co-investment program, Concord, which owns bonds and loans secured, directly and indirectly, by real estate assets. Newkirk has contributed $91,711 to the co-investment program and the Company has contributed $70,789 since the merger. The other 50% interest in Concord was held by WRT Realty L.P. ("Winthrop"(“Winthrop”). The Company’s former Executive Chairman and Director of Strategic Acquisitions is also the Chairman and Chief Executive Officer of the parent of Winthrop. The Company and Winthrop each contributed its interest in Concord to Lex-Win Concord.
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes During 2008, a wholly-owned subsidiary of Inland America Real Estate Trust (“Inland Concord”) was admitted to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)
The following is summary balance sheet dataConcord as of December 31,a preferred member. During 2009, and 2008 and statement of operations data for the years ended December 31, 2009, 2008 and 2007 for Lex-Win Concord:
| | | As of | | | As of | |
| | | 12/31/2009 | | | 12/31/2008 | |
| Assets | | $ | 634,508 | | | $ | 1,007,122 | |
| Liabilities | | | 569,894 | | | | 711,359 | |
| Noncontrolling preferred interest | | | 5,720 | | | | 76,441 | |
| Members' capital | | | 58,894 | | | | 219,322 | |
| | | For the Year Ended | |
| | | December 31, | |
| | | 2009 | | | 2008 | | | 2007 | |
| Income | | $ | 38,955 | | | $ | 87,336 | | | $ | 68,453 | |
| Other-than-temporary impairment losses, loan losses and reserves | | | (230,195 | ) | | | (104,885 | ) | | | (11,028 | ) |
| Interest and other expenses | | | (33,763 | ) | | | (41,234 | ) | | | (47,216 | ) |
| Net income (loss) | | | (225,003 | ) | | | (58,783 | ) | | | 10,209 | |
| Net (income) loss attributable to noncontrolling interests | | | 68,697 | | | | (1,631 | ) | | | (13 | ) |
| Net income (loss) attributable to members | | $ | (156,306 | ) | | $ | (60,414 | ) | | $ | 10,196 | |
Unless they are designated as held for sale, Concord’s loan assets are carried at cost, net of unamortized loan origination costs and fees, repayments and unfunded commitments unless such loan is deemed to be impaired. Concord’s loan assets that are designated as held for sale are carried at the lower of cost or fair value. Concord’s bonds are treated as available for sale securities and, accordingly, are marked-to-estimated fair value on a quarterly basis based on valuations performed by Concord’s management.
Concord began experiencing declines in the fair value of its loan securities in the fourth quarter of 2007 consistent with liquidity concerns impacting the bond and real estate markets and the overall economy. As a result, Concord has recorded significant other-than-temporary impairment charges in 2008 and 2009.
In addition, the Company’s management performed a comprehensive analysis ofCompany reduced its investment in Lex-Win Concord onto zero through impairment charges.
During 2010, Concord was restructured upon the effectiveness of a quarterly basis to determine if the investment is other-than-temporarily impaired. During the first half of 2009, primarily due to (1) the continued deterioration in the value of Concord’s loan and bond portfolio, (2) a margin call received by Concord and potential additional margin calls, (3) the preferred equity investor’s failure to fund the requested Concord capital call, (4) an increase in Concord borrower defaults, (5) Concord’s debt covenant violations, and (6) the distressed sale of assets and potential sale of assets at distressed levels to satisfy margin calls and amendments to lender agreements, the Company’s management determined that its investment in Lex-Win Concord had suffered a significant decrease in value and ultimately should be valued at zero.settlement agreement with Inland Concord. As a result of the restructuring (i) Lex-Win Concord was dissolved, (ii) Concord is now owned equally by subsidiaries of the Company, recorded aggregate $68,213Winthrop and Inland Concord and (iii) a new entity, CDH CDO LLC (“CDH CDO”), was created. The new entity purchased Concord Real Estate CDO 2006-1 LTD from Concord with funds contributed by Inland Concord. CDH CDO is also owned equally by subsidiaries of other-than-temporary impairment charges during 2009. Thesethe Company, Winthrop and Inland Concord. The Company made no additional impairment charges are recognizedcontributions and did not recognize any income or loss as a componentresult of the restructuring. The Company's investment in these ventures was initially valued at zero and the Company recognizes future income on the cash basis. During 2011, the Company received distributions of $258 from Lex-Win Concord, $3,596 from Concord and $100 from CDH CDO, which were recorded as equity in earnings (losses) of non-consolidated entities. Concord incurred additional losses during
In June 2011, the remainder of 2009, of whichCompany formed an equally owned joint venture with Winthrop, LW Sofi LLC, to acquire the Company's share is $10,588.economic interest in a mezzanine loan owned by Concord. The Company has not recorded these lossesthe $5,760 contribution to the joint venture in investments in and has suspended themadvances to non-consolidated entities. In November 2011, the Company received $7,937 upon full satisfaction of the mezzanine loan and dissolution of the joint venture.
The Company determined that Concord, CDH CDO and LW Sofi LLC are VIEs as the Company does not have any future obligation or the intent to fund the future operations of Concord.
In order to satisfy debt repayments of Concord to one of its lenders, a capital contribution was made to Concord by Lex-Win Concord, and short-term secured loans were made directly to a Concord subsidiary by the Company and Winthrop during the third quarter of 2009. The contribution was returned and loans were repaid in full within 30 days of initial funding. The contribution to Concord by Lex-Win Concord represented additional equity at risk for Lex-Win Concord at the time of the contribution, which triggered a reconsideration event during the third quarter of 2009 at both the Concord and the Lex-Win Concord levels. Due to the continued decline in value of Concord’s assets and resulting insufficient equity within Concordis not sufficient to finance its activities, Lex-Win Concord’s management determined that Concord, and by extension, Lex-Win Concord, are VIEs. The Company’s management performed an analysis and concurred with the assessment,entity's activities; however, the Company determined that it is not the primary beneficiary of these VIEs. The operations of the co-investment program are not controlled by the Company, and other than a non-recourse carve-out guaranty (for “bad boy” acts), the Company has not guaranteed any obligations of Concord. In addition, the Company has no obligation to fund the operations of Concord, andas it does not plan to fund future operationshave a controlling financial interest in these entities.
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements – (Continued)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except per share/unit amounts)data)
Other. Lex-Win Acquisition LLC (“Lex-Win”). During 2007, Lex-Win, an entity in whichthe first quarter of 2011, the Company holdsrecognized an other-than-temporary impairment charge on a 28% ownership interest,non-consolidated joint venture acquired 3.9 million sharesin the merger with Newkirk due to a change in the Company's estimate of common stock in Piedmont Office Realty Trust, Inc. (formerly known as Wells Real Estate Investment Trust, Inc.) (“Wells”), a non-exchange traded entity, at a price per sharenet proceeds to be received upon liquidation of $9.30 in a tender offer. During 2007,the joint venture. Accordingly, the Company funded $12,542 relating to this tenderrecognized a $1,559 impairment charge in equity in earnings of non-consolidated entities and received $1,890 relating to an adjustmentreduced the carrying value of the number of shares tendered. Winthrop and three other members hold the remaining interests in Lex-Win. The Company’s former Executive Chairman and Director of Strategic Acquisitions is the Chief Executive Officer of the parent of Winthrop. Profits, losses and cash flows of Lex-Win are allocated in accordance with the membership interests. During 2008, Lex-Win incurred losses of $3,847 relatinginvestment to its investment in Wells and sold its entire interest in Wells for $32,289.$719.
Other Equity Method Investment Limited Partnerships . During 2009, the Company recognized a gain of $2,000$2,000 on the sale of an office building in Columbia, South Carolina, in which the Company held a 40% limited partnership interest. The Company’sCompany's share of net proceeds from the sale was $12,513.$12,513. In addition, the Company sold its interest in a hotel joint venture for $60$60 and incurred an impairment charge of $6,480 during 2009. The Company’sCompany's remaining equity method investments consist of interests in five partnerships with ownership percentages ranging between 27% and 35%, which own primarily net-leased properties. All profits, losses and cash flows are distributed in accordance with the respective partnership agreements. The partnerships are encumbered by $29,433$21,563 in mortgage debt (the Company’sCompany's proportionate share is $8,801)$6,468 with interest rates ranging from 9.4% to 11.5% with a weighted averageweighted-average rate of 9.9% and maturity dates ranging from 20112012 to 2016.2016.
The Company, through LRA earns advisory fees from certain of these non-consolidated entities, including NLS, for services related to acquisitions, asset management and debt placement. Advisory fees earned from these non-consolidated investments were $1,140, $1,105$804, $967 and $1,226 in 2009, 2008$1,140 for the years ended December 31, 2011, 2010 and 2007,2009, respectively. In addition, the Company earned incentive fees in 2007 of $11,685.
| |
| (10) | Mortgages and Notes Payable |
(10) Mortgages and Notes Payable and Contract Right Payable
The Company had outstanding mortgages and notes payable of $1,857,909$1,366,004 and $2,033,854$1,481,216 as of December 31, 20092011 and 2008,2010, respectively, excluding discontinued operations. Interest rates, including imputed rates on mortgages and notes payable, ranged from 3.1%3.6% to 10.3%7.8% at December 31, 20092011 and the mortgages and notes payable mature between 20102012 and 2022.2021. Interest rates, including imputed rates, ranged from 2.0%3.6% to 10.5%7.8% at December 31, 2008.2010. The weighted averageweighted-average interest rate at December 31, 20092011 and 20082010 was approximately 5.6%5.7% and 5.5%5.8%, respectively.
On February 13, 2009,January 28, 2011, the Company refinanced its (1) $200,000 unsecuredsecured revolving credit facility which had $25,000 outstanding and was scheduled to expire in June 2009, and (2) $225,000 secured term loan, which had $174,280 outstanding and was scheduled to mature in 2009, with a $300,000secured revolving credit facility consisting of a $165,000 term loan and a $85,000 revolving loan with KeyBank N.A. (“KeyBank”), as agent. The $300,000secured revolving credit facility bearsbore interest at 285 basis points over2.50% plus LIBOR if the Company's leverage ratio, as defined, was less than 50%, 2.85% plus LIBOR if the Company's leverage ratio was between 50%and matures60%, and 3.10% plus LIBOR if the Company's leverage ratio exceeded 60%. The new secured revolving credit facility matured in February 2011,January 2014 but cancould be extended to February 2012January 2015, at the Company’s option. With the consent of the lenders, the Company can increase the size of (1) the term loan by $135,000 and (2) the revolving loan by $115,000 (or $250,000 in the aggregate, for a total facility size of $500,000, assuming no prepayments of the term loan are made) by adding propertiesCompany's option subject to the borrowing base or admitting additional lenders. During the second quartersatisfaction of 2009, the Company increased the availability under the revolving loan by $40,000, by admitting an additional lender to the bank group, thus increasing the total facility to $290,000.certain conditions. The secured revolving credit facility iswas secured by ownership interest pledges and guarantees by certain of the Company’sCompany's subsidiaries that in the aggregate own interests in a borrowing base consisting of 75 properties asproperties. With the consent of December 31, 2009.the lenders, the Company could increase the size of the secured revolving credit facility by $225,000 (for a total facility size of $525,000). The borrowing availability of the secured revolving credit facility iswas based upon the net operating income of the properties comprising the borrowing base as defined in the secured revolving credit facility. As of December 31, 2009,2011, no amounts were outstanding under the secured revolving credit facility and the available additional borrowing under the secured revolving credit facility was $96,578 and the Company had $7,483$300,000 less outstanding letters of credit. Ascredit of December 31, 2009, $164,348 was outstanding under the term loan and $7,000 was outstanding under the revolving loan.$5,682. In connection with the refinancing, and the subsequent increase in the availability under the facility, the Company incurred $4,977 inaggregate financing costs and recognized $247 in debt satisfaction charges.of $3,941 as of December 31, 2011. The secured revolving credit facility iswas subject to financial and other covenants such as leverage ratio and debt service coverages, which the Company was in compliance with at December 31, 2009.2011. The secured revolving credit facility was refinanced in January 2012 (see note 22).
During 2008, theThe Company obtained $25,000had $25,000 and $45,000 original principal amount$35,551 secured term loans fromwith KeyBank. The loans arewere interest only at LIBOR plus 60 basis points and maturematured in 2013. The net proceeds of2013. These secured term loans contained financial covenants which the loans of $68,000 were used to partially repay indebtedness on three cross-collateralized mortgages. After such repayment, the amount owed on the three mortgages was $103,511, the three mortgages were combined into one mortgage, which is interest only instead of having a portion as self-amortizing and matures in September 2014. The Company was in compliance with the loan covenants as of December 31, 2009. These loans have an outstanding principal balance of $25,000 and $35,723, respectively, as of December 31, 2009 and 2008.
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)
2011. Pursuant to the newsecured term loan agreements, the Company simultaneously entered into an interest-rate swap agreement with KeyBank to swap the LIBOR rate on the loans for a fixed rate of 4.9196%4.92% through March 18, 2013, and the Company assumed a liability for the fair value of the swap at inception of approximately $5,696 ($5,240$5,696 ($3,236 and $7,055$5,280 at December 31, 20092011 and 2008,2010, respectively). The new debt is presented netfair value of the swap at inception was accounted for as a discount at inception of $5,696 ($3,170on the debt and $4,158 at December 31, 2009 and 2008, respectively). The discount iswas being amortized as additional interest expense over the term of the loans. The remaining unamortized discount was $1,196 and $2,183 at December 31, 2011 and 2010, respectively. The Company satisfied the secured term loans and interest-rate swap in January 2012 (see note 22).
During 2009 and 2008, the Company obtained $11,540 and $21,245 original principal amount in non-recourse mortgages that bear interest at a weighted-average fixed rate of 6.4% and 6.0%, respectively, and have maturity dates ranging from 2012 to 2018.
During 2007, the Company settled an interest rate swap agreement for $1,870 in cash and recognized a loss of $649.
Included in the Consolidated Statements of Operations, the Company recognized debt satisfaction charges,gains (charges), net, excluding discontinued operations, of $85, $1,074$45, $972 and $1,209$(332) for the years ended December 31, 2009, 20082011, 2010 and 2007,2009, respectively, due to the satisfaction of mortgages and notes payable other than those disclosed elsewhere in this Annual Report.these financial statements.
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
Contract right mortgage payable is a promissory note with a fixed interest rate of 9.68%, which provides for the following amortization payments:NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
Year ending December 31, | | Total | |
| 2010 | | $ | 491 | |
| 2011 | | | 540 | |
| 2012 | | | 593 | |
| 2013 | | | 652 | |
| 2014 | | | 717 | |
| Thereafter | | | 12,259 | |
| | | $ | 15,252 | |
Mortgages payable and secured loans are generally collateralized by real estate and the related leases. Certain mortgages payable have yield maintenance or defeasance requirements relating to any prepayments. In addition, certain mortgages are cross-collateralized and cross-defaulted.
Scheduled principal and balloon payments for mortgages and notes payable for the next five years and thereafter are as follows:
Year ending December 31, | | Total | |
| 2010 (1) | | $ | 139,486 | |
| 2011 (1) | | | 287,408 | |
| 2012 | | | 221,918 | |
| 2013 | | | 319,557 | |
| 2014 | | | 260,435 | |
| Thereafter | | | 629,105 | |
| | | $ | 1,857,909 | |
(1) | Subsequent to December 31, 2009, $14,749 of 2010 and $78,354 of 2011 maturities have been satisfied. |
|
| | | | |
| Year ending December 31, | | Total |
| 2012 | | $ | 176,350 |
|
| 2013 | | 320,873 |
|
| 2014 | | 252,699 |
|
| 2015 | | 283,767 |
|
| 2016 | | 131,406 |
|
| Thereafter | | 202,105 |
|
| | | 1,367,200 |
|
| Debt discount | | (1,196 | ) |
| | | $ | 1,366,004 |
|
| |
| (11) | Convertible Notes, Exchangeable Notes and Trust Preferred Securities |
LEXINGTON REALTY TRUSTDuring 2010, the Company issued $115,000 aggregate principal amount of 6.00% Convertible Guaranteed Notes. The notes pay interest semi-annually in arrears and mature in January 2030. The holders of the notes may require the Company to repurchase their notes in January 2017, January 2020 and January 2025 for cash equal to 100% of the notes to be repurchased, plus any accrued and unpaid interest. The Company may not redeem any notes prior to January 2017, except to preserve its REIT status. As of the date of filing this Annual Report, the notes have a conversion rate of 142.6917 common shares per one thousand principal amount of the notes, representing a conversion price of approximately $7.01 per common share. The conversion rate is subject to adjustment under certain circumstances, including increases in the Company's dividend rate above a certain threshold and the issuance of stock dividends. The notes are convertible by the holders under certain circumstances for cash, common shares or a combination of cash and common shares at the Company's election. The notes are convertible prior to the close of business on the second business day immediately preceding the stated maturity date, at any time beginning in January 2029 and also upon the occurrence of specified events.
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)
(11) Exchangeable Notes and Trust Preferred Securities
During 2007, the Company issued an aggregate $450,000 original principal amount$450,000 of 5.45% Exchangeable Guaranteed Notes due in 2027.2027. These notes cancould be put to the Company commencing in 2012 and every five years thereafter through maturity and upon certain events.maturity. The notes arewere exchangeable by the holders into common shares of the Company at a current price of $19.49$19.49 per share, subject to adjustment upon certain events.events, including increases in the Company's rate of dividends above a certain threshold and the issuance of stock dividends. Upon exchange, the holders of the notes would receive (1) cash equal to the principal amount of the note and (2) to the extent the exchangeconversion value exceedsexceeded the principal amount of the note, either cash or common shares of the Company at the Company’sCompany's option. The notes had an outstanding balance of $85,709During 2010 and $204,074, net of unamortized discount of $1,941 and $6,926, as of December 31, 2009, and 2008, respectively. The initial discount of $23,693 was retrospectively recorded. The discount is being amortized as additional interest expense through January 2012, the first put date of the 5.45% Exchangeable Guaranteed Notes. Coupon interest expense on the 5.45% Exchangeable Guaranteed Notes was $7,554, $17,552 and $21,936 for 2009, 2008 and 2007, respectively. The discount amortization on the notes was $1,479, $3,544 and $4,231 for 2009, 2008 and 2007, respectively. The notes had an effective interest rate of 7.0%, 6.9% and 6.5% for 2009, 2008 and 2007, respectively.
During 2009 and 2008, the Company repurchased $123,350 and $239,000,retired $25,500 and $123,350, respectively, original principal amount of the 5.45% Exchangeable Guaranteed Notesnotes for cash payments of $25,493and issuances of common shares of the Company of $101,006 and $192,984,$101,006, respectively. As a result, the Company recognized a gain onThis resulted in debt extinguishment of $17,355 and $36,042, respectively, during 2009 and 2008,satisfaction gains (charges), net of ($760) and $17,355, respectively, including write-offs of $4,989$768 and $12,793,$4,989, respectively, of the unamortized debt discount and deferred financing costs.costs (see note 22).
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
Below is a summary of additional disclosures related to the 6.00% Convertible Guaranteed Notes and the 5.45% Exchangeable Guaranteed Notes.
|
| | | | | | | | | | | | | | | |
| | 6.00% Convertible Guaranteed Notes | | 5.45% Exchangeable Guaranteed Notes |
| Balance Sheets: | December 31,
2011 | | December 31,
2010 | | December 31,
2011 | | December 31,
2010 |
| Principal amount of debt component | $ | 115,000 |
| | $ | 115,000 |
| | $ | 62,150 |
| | $ | 62,150 |
|
| Unamortized discount | (9,851 | ) | | (11,789 | ) | | (48 | ) | | (712 | ) |
| Carrying amount of debt component | $ | 105,149 |
| | $ | 103,211 |
| | $ | 62,102 |
| | $ | 61,438 |
|
| Carrying amount of equity component | $ | 13,134 |
| | $ | 13,134 |
| | $ | 20,293 |
| | $ | 20,293 |
|
| Effective interest rate | 8.1 | % | | 7.5 | % | | 7.0 | % | | 7.0 | % |
| Period through which discount is being amortized, put date | 01/2017 |
| | 01/2017 |
| | 01/2012 |
| | 01/2012 |
|
| Aggregate if-converted value in excess of aggregate principal amount | $ | 7,907 |
| | $ | 14,036 |
| | $ | — |
| | $ | — |
|
|
| | | | | | | | | | | | |
| Statements of Operations: | | 2011 | | 2010 | | 2009 |
| 6.00% Convertible Guaranteed Notes | | | | | | |
| Coupon interest | | $ | 6,900 |
| | $ | 6,408 |
| | $ | — |
|
| Discount amortization | | 1,938 |
| | 1,776 |
| | — |
|
| | | $ | 8,838 |
| | $ | 8,184 |
| | $ | — |
|
| 5.45% Exchangeable Guaranteed Notes | | |
| | |
| | |
|
| Coupon interest | | $ | 3,387 |
| | $ | 3,504 |
| | $ | 7,554 |
|
| Discount amortization | | 664 |
| | 689 |
| | 1,479 |
|
| | | $ | 4,051 |
| | $ | 4,193 |
| | $ | 9,033 |
|
During 2007, the Company through a wholly-owned subsidiary, issued $200,000$200,000 original principal amount of Trust Preferred Securities. The Trust Preferred Securities, which are classified as debt, are due in 2037, are redeemable by the Company commencing April 2012 and bear interest at a fixed rate of 6.804% through April 2017 and thereafter, at a variable rate of three month LIBOR plus 170 basis points through maturity. During 2008, the Company repurchased $70,880 original principal amount of the Trust Preferred Securities for a cash payment of $44,561, which resulted in a gain on debt extinguishment of $24,742 including a write-off of $1,577 in deferred financing costs. As of December 31, 20092011 and 2008,2010, there was $129,120$129,120 original principal amount of Trust Preferred Securities outstanding.
Scheduled principal payments for these debt instrumentinstruments for the next five years and thereafter are as follows:
Year ending December 31, | | Total | |
| 2010 | | $ | — | |
| 2011 | | | — | |
| 2012 (1) | | | 85,709 | |
| 2013 | | | — | |
| 2014 | | | — | |
| Thereafter | | | 129,120 | |
| | | $ | 214,829 | |
|
| | | | |
| Year ending December 31, | | Total |
2012(1) | | $ | 62,150 |
|
| 2013 | | — |
|
| 2014 | | — |
|
| 2015 | | — |
|
| 2016 | | — |
|
| Thereafter | | 244,120 |
|
| | | 306,270 |
|
| Debt discounts | | (9,899 | ) |
| | | $ | 296,371 |
|
__________
| |
| (1) | Although the 5.45% Exchangeable Guaranteed Notes mature matured in 2027, the notes can bewere put to the Company in 2012, and the amount is shown net of $1,941 debt discount. Subsequent to December 31, 2009, $23,000 original principal amount of the notes was satisfied.2012. |
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements – (Continued)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except per share/unit amounts)data)
| |
| (12) | Derivatives and Hedging Activities |
(12) Derivatives and Hedging Activities
Risk Management Objective of Using Derivatives. The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the type, amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates and other factors.rates. The Company’sCompany's derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’sCompany's known or expected cash receipts and its known or expected cash payments principally related to the Company’sCompany's investments and borrowings.
Cash Flow Hedges of Interest Rate Risk. The Company’sCompany's objectives in using interest rate derivatives are to add stability to interest expense, to manage its exposure to interest rate movements and therefore manage its cash outflows as it relates to the underlying debt instruments. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy relating to certain of its variable rate debt instruments. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (loss) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings.
The Company has designated the interest-rate swap agreement with KeyBank as a cash flow hedge of the risk of variability attributable to changes in the LIBOR swap rate on $45,000$35,551 and $25,000$25,000 of LIBOR-indexed variable-rate secured term loans. Accordingly, changes in the fair value of the swap are recorded in other comprehensive income (loss) and reclassified to earnings as interest becomes receivable or payable. Because the fair value of the swap at inception of the hedge was not zero, the Company cannot assume that there will be no ineffectiveness in the hedging relationship. However, the Company expects the hedging relationship to be highly effective and will measure and report any ineffectiveness in earnings. During 2008, the Company terminated a portion of the swap for a notional amount of $9,277 due to a payment of the same amount on the $45,000 term loan. The Company recognized $253 of interest expense during 2008 due to the swap’s ineffectiveness and forecasted transactions no longer being probable.
The interest rate swap liability had a fair value of $5,240 and $7,055 at December 31, 2009 and 2008, respectively. Although the Company has determined that the majority of the inputs used to value its interest rate swap liability fall within Level 2 of the fair value hierarchy, the credit valuation associated with the interest rate swap liability utilizes Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of December 31, 2009 and 2008, the Company has determined that the credit valuation adjustment relative to the overall interest rate swap liability is not significant. As a result, the entire interest rate swap liability has been classified in Level 2 of the fair value hierarchy.
Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on these secured term loans. During the next 12 months, the Company estimates that an additional $1,624$1,695 will be reclassified to earnings as an increase to interest expense.
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIESexpense if the swap remains outstanding.
Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)
As of December 31, 2009,2011, the Company had the following outstanding interest rate derivative that was designated as a cash flow hedge of interest rate risk:
| | | Interest Rate Derivative | Number of Instruments | Notional | Number of Instruments | Notional |
| Interest Rate Swap | 1 | $60,723 | 1 | $60,551 |
Derivatives Not Designated as Hedges
Hedges. The Company does not use derivatives for trading or speculative purposes. As of December 31, 2009, the Company had the following outstanding derivative that was not designated as a hedge in a qualifying hedging relationship:
| Product | Number of Instruments | Notional |
| Forward purchase equity commitment | 1 | $24,166 |
During 2008, the Company entered into a forward purchase equity commitment with a financial institution to finance the repurchasepurchase of 3,500,000 common shares of the Company at $5.60$5.60 per share under the Company’s common share repurchase plan as specifically approved by the Company's Board of Trustees. The Company has prepaid $15,576 with the$15,576. The remainder was to be paid in October 2011 through (i) physical settlement or (ii) net cash settlement, net share settlement or a combination of both, at the Company’sCompany's option. The Company agreed to make floating payments during the term of the forward purchase at LIBOR plus 250 basis points per annum, and the Company retainsretained the cash dividends paid on the common shares,shares; however, the counterparty retainsretained any stock dividends as additional collateral. In addition, the Company may be required to make additional prepayments pursuant to the forward purchase equity commitment. The Company’s third partyCompany's third-party consultant determined the fair value of the equity commitment to be $20,141 and $10,698$27,574 at December 31, 2009 and 2008, respectively,2010, and the Company recognized earnings during 2011, 2010 and 2009 of $7,182$2,030, $8,906 and losses of ($2,128) during 2008,$7,182, respectively, primarily relating to the increase (decrease) in the fair value of the common shares held as collateral. The Company has determined that the forward purchase equity asset should fall within Level 2settled this commitment in October 2011 through a cash payment of the fair value hierarchy as its value is based not only on the value$4,024 and retired 3,974,645 common shares.
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
The table below presents the fair value of the Company’sCompany's derivative financial instruments as well as their classification on the Consolidated Balance Sheets as of December 31, 20092011 and 2008.2010.
| | | As of December 31, 2009 | | As of December 31, 2008 | |
| | | Balance Sheet Location | | Fair Value | | Balance Sheet Location | | Fair Value | |
| Derivatives designated as hedging instruments | | | | | | | | | |
| Interest Rate Swap Liability | | Accounts Payable and Other Liabilities | | $ | 5,240 | | Accounts Payable and Other Liabilities | | $ | 7,055 | |
| | | | | | | | | | | | |
Derivatives not designated as hedging instruments | | | | | | | | | | | |
| | | | | | | | | | | | |
| Forward Purchase Equity Commitment | | Other Assets | | $ | 20,141 | | Other Assets | | $ | 10,698 | |
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts) |
| | | | | | | | | | | |
| | As of December 31, 2011 | | As of December 31, 2010 |
| | Balance Sheet Location | | Fair Value | | Balance Sheet Location | | Fair Value |
| Derivatives designated as hedging instruments: | | | | | | | |
|
| Interest Rate Swap Liability | Accounts Payable and Other Liabilities | | $ | (3,236 | ) | | Accounts Payable and Other Liabilities | | $ | (5,280 | ) |
| | | | | | | | |
| Derivatives not designated as hedging instruments: | | | |
| | | | |
|
| Forward Purchase Equity Commitment | | | | | Other Assets | | $ | 27,574 |
|
The tables below present the effect of the Company’sCompany's derivative financial instruments on the Consolidated Statements of Operations for 2009.2011 and 2010:
| | | Derivatives in Cash Flow | | Amount of Loss Recognized in OCI on Derivative (Effective Portion) December 31, | | Location of Gain or (Loss) Reclassified from Accumulated OCI into Income | | Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) December 31, | | | Amount of Loss Recognized
in OCI on Derivative
(Effective Portion)
December 31, | | Location of Loss Reclassified from Accumulated OCI into Income (Effective Portion) | | Amount of Loss Reclassified
from Accumulated OCI into
Income (Effective Portion)
December 31, |
| Hedging Relationships | | 2009 | | (Effective Portion) | | 2009 | | | | 2011 | | 2010 | | 2011 | | 2010 |
| | | | | | | | | |
| Interest Rate Swap | | $ | 990 | | Interest expense | | $ | (2,805 | ) | | $ | (835 | ) | | $ | (2,914 | ) | | Interest expense | | $ | 2,879 |
| | $ | 2,875 |
|
| | | Derivatives Not Designated as | | Location of Gain or (Loss) Recognized in Income on | | Amount of Gain or (Loss) Recognized in Income on Derivative December 31, | | | Location of Gain Recognized in | | Amount of Gain Recognized in Income on Derivative December 31, |
| Hedging Instruments | | Derivative | | 2009 | | | Income on Derivative | | 2011 | | 2010 |
| | | | | | | |
| Forward Purchase Equity Commitment | | Change in value of forward purchase commitment | | $ | 7,182 | | | Change in value of forward equity commitment | | $ | 2,030 |
| | $ | 8,906 |
|
The Company’sCompany's agreement with the swap derivative counterparty contains a provision whereby if the Company defaults on the underlying indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default of the swap derivative obligation. As of December 31, 2009,2011, the Company hashad not posted any collateral related to the agreement. If the Company had breached any of these provisions at December 31, 2009,2011, it would have been required to settle its obligations under the agreementsagreement at the termination value of $5,665,$3,400, which includes accrued interest.
The Company’s forward purchase equity commitment contains default provisions, which, if triggered, would require the Company to settle the contract. The settlement value of the contract at December 31, 2009 was $4,024, net of prepayments.
(13) Variable Interest Entities
GAAP requires a VIE to be consolidated by its primary beneficiary. The primary beneficiary is the party that absorbs a majority82
Contents
The Company, through its merger with Newkirk as of December 31, 2006, has one loan which was made to a VIE, Camfex Associates Limited Partnership (“Camfex”). The Company has determined that it is the primary beneficiary of this VIE and, accordingly, has consolidated Camfex in its financial statements. Camfex owns two multi-tenanted office buildings in California, with a carrying value of approximately $36,658 at December 31, 2009. Camfex has additional mortgage debt of approximately $23,732 as of December 31, 2009. The lenders of the additional mortgage debt hold no recourse to other Company assets. The mortgage debt had a stated maturity date of December 1, 2009. During the fourth quarter of 2009, Camfex’s management entered into forbearance agreements with its senior lenders. As a result, one property was sold to its tenant/lender in January 2010. In addition, the Company paid $50 to receive a deed in lieu of foreclosure on the second property in 2010, and the Company is currently restructuring the senior debt with the property’s existing lender.
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements – (Continued)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except per share/unit amounts)data)
The Company identified two additional VIEs during 2009 due to reconsideration events, Lex-Win Concord (see note 9) and Linwood Avenue Limited Partnership (“Linwood”). The Company holds a 55% interest in Linwood. Linwood owns an office building and an industrial building in Long Beach, California, with an aggregate carrying value of approximately $103,499 at December 31, 2009. The lenders of Linwood’s contract right payable ($15,252 at December 31, 2009) hold no recourse to other Company assets. During 2009, Linwood required additional capital to fund tenant improvements and lease commissions. The Company contributed $2,146 to the joint venture during 2009, which is eliminated in consolidation, and the Company is not obligated to fund future amounts. The Company determined that it is the primary beneficiary of Linwood and thus continues to consolidate the venture.
The Company has determined that other loans and investments are not VIEs and as such, the Company has continued to account for these loans and investments as a loan or equity investment, as appropriate.
(14) (13) Leases
Lessor:
Minimum future rental receipts under the non-cancellablenon-cancelable portion of tenant leases, assuming no new or re-negotiated leases, for the next five years and thereafter are as follows:
| | Year ending December 31, | | Total | | | Total |
| 2010 | | $ | 310,480 | | |
| 2011 | | | 301,566 | | |
| 2012 | | | 273,888 | | | $ | 285,462 |
|
| 2013 | | | 233,370 | | | 267,912 |
|
| 2014 | | | 191,536 | | | 234,097 |
|
| 2015 | | | 196,446 |
|
| 2016 | | | 167,297 |
|
| Thereafter | | | 712,274 | | | 752,745 |
|
| | | $ | 2,023,114 | | | $ | 1,903,959 |
|
The above minimum lease payments do not include reimbursements to be received from tenants for certain operating expenses and real estate taxes and do not include early termination payments provided for in certain leases.
Certain leases allow for the tenant to terminate the lease if the property is deemed obsolete, as defined, and upon payment of a termination fee to the Company,landlord, as stipulated in the lease. In addition, certain leases provide the tenant with the right to purchase the leased property at fair market value or a stipulated price.
Lessee:
The Company holds, through property owner subsidiaries, leasehold interests in various properties. Generally, the ground rents on these properties are either paid directly by the tenants to the fee holder or reimbursed to the Company as additional rent. Certain properties are economically owned through the holding of industrial revenue bonds and as such neither ground lease payments nor bond debt service payments are made or received, respectively. For certain of these properties, the Company has an option to purchase the fee interest.
Minimum future rental payments under non-cancellablenon-cancelable leasehold interests, excluding leases held through industrial revenue bonds and lease payments in the future that are based upon fair market value, for the next five years and thereafter are as follows:
|
| | | | |
Year ending December 31, | | Total |
| 2012 | | $ | 2,624 |
|
| 2013 | | 2,426 |
|
| 2014 | | 1,985 |
|
| 2015 | | 1,793 |
|
| 2016 | | 1,465 |
|
| Thereafter | | 13,121 |
|
| | | $ | 23,414 |
|
Year ending December 31, | | Total | |
| 2010 | | $ | 2,148 | |
| 2011 | | | 1,896 | |
| 2012 | | | 1,664 | |
| 2013 | | | 1,480 | |
| 2014 | | | 1,074 | |
| Thereafter | | | 4,544 | |
| | | $ | 12,806 | |
Rent expense for the leasehold interests, including discontinued operations, was $1,039, $995$776, $955 and $1,481$1,039 in 2011, 2010 and 2009, 2008 and 2007, respectively.
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)
The Company leases its corporate headquarters. The lease expires December 2015, with rent fixed at $1,299$1,299 per annum through December 2011, $865 in 2012 and will be adjusted to fair market value, as defined in the lease,$1,153 per annum, thereafter. The Company is also responsible for its proportionate share of operating expenses and real estate taxes above a base year. As an incentive to enter the lease, the Company received a payment of $845$845 which it is amortizing as a reduction of rent expense. In addition, the Company leases office space for its regional offices. The minimum lease payments for the officeCompany's regional offices are $1,299$84 for 20102012, $83 for 2013, $45 for 2014, $36 for 2015 and 2011.2016 and $9 thereafter. Rent expense for 2011, 2010 and 2009 2008was $1,392, $1,332 and 2007 was $1,282, $958 and $975,$1,299, respectively, and is included in general and administrative expenses.
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
| |
| (14) | Concentration of Risk |
The Company seeks to reduce its operating and leasing risks through the geographic diversification of its properties, tenant industry diversification, avoidance of dependency on a single asset and the creditworthiness of its tenants. For the years ended December 31, 2011, 2010 and 2009, no single tenant represented greater than 10% of rental revenues.
Cash and cash equivalent balances at certain institutions may exceed insurable amounts. The Company believes it mitigates this risk by investing in or through major financial institutions.
Shareholders' Equity:
(15) Noncontrolling InterestsDuring 2011, 2010 and 2009, the Company issued 11,109,760, 23,712,980 and 4,338,915 common shares, respectively, through public offerings and under its direct share purchase plan, raising proceeds of approximately $98,953, $166,427 and $20,947 respectively. The proceeds were used for general working capital, to fund investments and retire indebtedness.
In conjunction with severalDuring the first quarter of 2010, the Company recorded $13,134 in additional paid-in-capital, representing the conversion feature of the Company’s acquisitions in prior years, sellers were issued OP units as a form of consideration in exchange for the property. Substantially all OP units, other than the OP units held directly or indirectly by the Company, are redeemable at certain times, only at the option of the holders, and are not otherwise mandatorily redeemable by the Company. The OP units are classified as a component of permanent equity as the Company determined that the OP units are not redeemable securities. Each OP unit is currently redeemable for approximately 1.13 common shares, subject to future adjustments.6.00% Convertible Guaranteed Notes.
AsAccumulated other comprehensive income (loss) as of December 31, 2009, there were approximately 4,787,000 OP units outstanding,2011 and 2010 represented $1,938 and $(106), respectively, of which approximately 1,519,000 are held by related parties. Generally, holders of OP units are entitled to receive distributions equal to the dividends paid to the Company’s common shareholdersunrealized gain (loss) on an as redeemed basis, except that certain OP units have stated distributions in accordance with their respective partnership agreement. To the extent that the Company’s dividend per share is less than the stated distribution per unit per the applicable partnership agreement, the stated distributions per unit are reduced by the percentage reduction in the Company’s dividend. The Company is party to a funding agreement with the Company’s operating partnerships under which the Company may be required to fund distributions made on account of OP units. No OP units have a liquidation preference.
The following discloses the effects of changes in the Company’s ownership interests in its noncontrolling interests:
| | | Net Income Attributable to Lexington Realty Trust and Transfers (to) from Noncontrolling Interests | |
| | | 2009 | | | 2008 | | | 2007 | |
| Net income (loss) attributable to Lexington Realty Trust | | $ | (210,152 | ) | | $ | 2,754 | | | $ | 75,249 | |
| Transfers from noncontrolling interests: | | | | | | | | | | | | |
| Increase in additional paid-in-capital/common shares for redemption/repurchase of noncontrolling interest OP units | | | 3,580 | | | | 516,696 | | | | 25,223 | |
| Decrease in accumulated other comprehensive income for redemption of noncontrolling interest OP units | | | — | | | | (5,019 | ) | | | — | |
| Change from net income (loss) attributable to Lexington Realty Trust and transfers (to) from noncontrolling interest | | $ | (206,572 | ) | | $ | 514,431 | | | $ | 100,472 | |
(16) Shareholders’ Equityinterest rate swap.
During 2009, the Company declared that three of its quarterly common share dividends would be paid in a combination of cash (10% in the aggregate) and common shares. The following details the declared 2009 quarterly common share dividends:
| | | Dividend | | Per common share amount | | Dividend | | Common Shares Issued | | | Cash Paid ($000) | | | Per Common Share Amount | | Dividend | | Common Shares Issued | | Cash Paid |
| | | | | | | | | | | | |
| First quarter 2009 | | $ | 0.18 | | April 24, 2009 | | 5,097,229 | | | $ | 1,819 | | | $ | 0.18 |
| | April 24, 2009 | | 5,097,229 |
| | $ | 1,819 |
|
| Second quarter 2009 | | $ | 0.18 | | July 30, 2009 | | 4,333,183 | | | $ | 1,970 | | | $ | 0.18 |
| | July 30, 2009 | | 4,333,183 |
| | $ | 1,970 |
|
| Third quarter 2009 | | $ | 0.18 | | October 16, 2009 | | 3,873,786 | | | $ | 2,110 | | | $ | 0.18 |
| | October 16, 2009 | | 3,873,786 |
| | $ | 2,110 |
|
| Fourth quarter 2009 | | $ | 0.10 | | January 15, 2010 | | | - | | | $ | 12,194 | | | $ | 0.10 |
| | January 15, 2010 | | — |
| | $ | 12,194 |
|
During 2009, the Company issued 4,338,915 common shares under its direct share purchase plan, raising net proceeds of $20,947.
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)
In June 2009, the Company converted 503,100 shares of its Series C Preferred by issuing 2,955,368 of its common shares. The difference between the fair value of common shares issued and the fair value of common shares issuable pursuant to the original conversion terms of $6,994 is considered a deemed dividend and as such is recorded as a reduction in shareholders' equity and as an increase to preferred dividends paid for calculating earnings (loss) per share, even though the conversion was for equivalent fair values.
During 2008, the Company repurchased and retired 501,700 shares of Series C Preferred by issuing 727,759 of its common shares and paying $7,522 in cash. The difference between the cost to retire these shares of Series C Preferred and the historical cost of these shares was $5,678 and is treated as an increase to shareholders’ equity and as a reduction in preferred dividends paid for calculating earnings (loss) per share.
On June 30, 2008, the Company issued 3,450,000 of its common shares raising net proceeds of approximately $47,237. The proceeds, along with cash held, were used to retire $25,000 original principal amount of the 5.45% Exchangeable Guaranteed Notes at a price plus accrued interest of $22,937, and $67,755 original principal amount of the Trust Preferred Securities at a price plus accrued interest of $43,454.
During 2008 and 2007, the Company repurchased and retired 1,213,251 and 9,784,062, respectively, of its common shares and OP units under a repurchase plan authorized by the Company’s Board of Trustees. The common shares and OP units were repurchased in the open market and through private transactions with employees and third parties at an average price of $14.28 and $19.83, respectively, per common share/OP unit. As of December 31, 2009, approximately 1,057,000 common shares/OP units were eligible for repurchase under the current authorization adopted by the Company’s Board of Trustees.
During 2007, the Company issued 6,200,000 shares of its Series D Cumulative Redeemable Preferred Stock (“Series D Preferred”) having a liquidation amount of $155,000 and annual dividends at a rate of 7.55%, raising net proceeds of $149,774. The Series D Preferred has no maturity date and the Company is not required to redeem the Series D Preferred at any time. Accordingly, the Series D Preferred will remain outstanding indefinitely, unless the Company decides at its option on or after February 14, 2012, to exercise its redemption right. If at any time following a change of control, the Series D Preferred are not listed on any of the national stock exchanges, the Company will have the option to redeem the Series D Preferred, in whole but not in part, within 90 days after the first date on which both the change of control has occurred and the Series D Preferred are not so listed, for cash at a redemption price of $25.00 per share, plus accrued and unpaid dividends (whether or not declared) up to but excluding the redemption date. If the Company does not redeem the Series D Preferred and the Series D Preferred are not so listed, the Series D Preferred will pay dividends at an annual rate of 8.55%.
The Company has 2,095,200had 1,970,200 shares of Series C Preferred, outstanding at December 31, 2009.2011. The shares have a dividend of $3.25$3.25 per share per annum, have a liquidation preference of $104,760,$98,510, and the Company, if certain common share prices are achieved, can force conversion into common shares of the Company. TheAs of the date of filing this Annual Report, the shares are currently convertible into 2.4339 common shares. This conversion ratio may increase over time if the Company’sCompany's common share dividend exceeds certain quarterly thresholds.
If certain fundamental changes occur, holders may require the Company, in certain circumstances, to repurchase all or part of their shares of Series C Preferred. In addition, upon the occurrence of certain fundamental changes, the Company will, under certain circumstances, increase the conversion rate by a number of additional common shares or, in lieu thereof, may in certain circumstances elect to adjust the conversion rate upon the shares of Series C Preferred becoming convertible into shares of the public acquiring or surviving company.
The Company may, at the Company’sCompany's option, cause theshares of Series C Preferred to be automatically converted into that number of common shares that are issuable at the then prevailing conversion rate. The Company may exercise its conversion right only if, at certain times, the closing price of the Company’sCompany's common shares equals or exceeds 125% of the then prevailing conversion price of the Series C Preferred.
Investors in theshares of Series C Preferred generally have no voting rights, but will have limited voting rights if the Company fails to pay dividends for six or more quarters and under certain other circumstances. Upon conversion, the Company may choose to deliver the conversion value to investors in cash, common shares, or a combination of cash and common shares.
During 2009, 2008 and 2007, holdersTable of an aggregate of 520,487, 34,377,989 and 1,283,629 OP units, respectively, redeemed such OP units for common shares of the Company. These redemptions resulted in an aggregate increase in shareholders’ equity and corresponding decrease in noncontrolling interest of $3,580, $511,521 and $25,223, respectively.
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements – (Continued)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except per share/unit amounts)data)
During 20092011, 2010 and 2008,2009, the Company issued 376,400609,182, 361,320 and 211,125466,935 of its common shares, respectively, to certain employees and trustees. Common shares issuedTypically, trustee share grants vest immediately. Employee share grants generally vest ratably, on anniversaries of the grant date, however, in certain situations the vesting is cliff-based after a specific number of years and/or subject to meeting certain performance criteria. See note 17.16.
During 2007,Noncontrolling Interests:
In conjunction with several of the Company's acquisitions in prior years, sellers were issued OP units as a form of consideration. All OP units, other than OP units owned by the Company, issued 282,051are redeemable at certain times, at the option of the holders, and are generally not otherwise mandatorily redeemable by the Company. The OP units are classified as a component of permanent equity as the Company has determined that the OP units are not redeemable securities as defined by GAAP. Each OP unit is currently redeemable for approximately 1.13 common shares, subject to future adjustments.
During 2011, 2010 and 2009, 398,927, 457,351 and 572,213 common shares, respectively, under its dividend reinvestment plan which allows shareholders to reinvest dividendswere issued by the Company, in common sharesconnection with OP unit redemptions, for an aggregate value of the Company.$2,187, $2,685 and $3,580, respectively.
The Company has retrospectively recorded an additional paid-in-capital amountAs of $23,132 representingDecember 31, 2011, there were approximately 4,026,000 OP units outstanding other than OP units owned by the conversion feature ofCompany. All OP units receive distributions in accordance with their respective partnership agreements. To the 5.45% Exchangeable Guaranteed Notes withextent that the adoption of new accounting guidance. The initial amount of $23,132 wasCompany's dividend per common share is less than the stated distribution per OP unit per the applicable partnership agreement, the distributions per OP unit are reduced to $20,293 during 2008 asby the percentage reduction in the Company's dividend per common share. No OP units have a result of the Company’s repurchases of certain of these notes.liquidation preference.
The following representsdiscloses the componentseffects of accumulated other comprehensive income (loss) as of December 31,changes in the Company's ownership interests in its noncontrolling interests:
|
| | | | | | | | | | | |
| | Net Loss Attributable to Shareholders and Transfers from Noncontrolling Interests |
| | 2011 | | 2010 | | 2009 |
| Net loss attributable to Lexington Realty Trust shareholders | $ | (79,584 | ) | | $ | (32,960 | ) | | $ | (210,152 | ) |
| Transfers from noncontrolling interests: | | | | | |
| Increase in additional paid-in-capital for redemption of noncontrolling OP units | 2,187 |
| | 2,685 |
| | 3,580 |
|
| Change from net loss attributable to shareholders and transfers from noncontrolling interests | $ | (77,397 | ) | | $ | (30,275 | ) | | $ | (206,572 | ) |
| | | 2009 | | | 2008 | | | 2007 | |
| Unrealized gain (loss) on foreign currency translation | | $ | 740 | | | $ | 759 | | | $ | 855 | |
| | | | | | | | | | | | | |
| Unrealized gain (loss) on marketable equity securities | | | - | | | | - | | | | (107 | ) |
| | | | | | | | | | | | | |
| Unrealized gain (loss) on interest rate swap | | | (67 | ) | | | (1,882 | ) | | | — | |
| | | | | | | | | | | | | |
| Unrealized gain (loss) from non-consolidated entities | | | - | | | | (14,527 | ) | | | (3,526 | ) |
| Total accumulated other comprehensive income (loss) | | $ | 673 | | | $ | (15,650 | ) | | $ | (2,778 | ) |
(17) Benefit Plans
The Company maintains an equity award plan pursuant to which qualified and non-qualified options may be issued. Options granted under the plan prior to 2008 generally vested over a period of one to four years and expired five years from date of grant. No compensation cost was reflected in earnings as all options granted under the plan prior to 2008 had an exercise price equal to the market value of the underlying common shares on the date of grant. The Company granted 1,248,501, 1,265,500 and 2,000,000 common share options on December 31, 2008.2010 (“2010 options”), January 8, 2010 (“2009 options”) and December 31, 2008 (“2008 options”), respectively, at an exercise price of $7.95, $6.39 and $5.60, respectively. The 2010 options (1) vest 20% annually on each December 31, 2011 through 2015 and (2) terminate on the earlier of (x) six months of termination of service with the Company and (y) December 31, 2020. The 2009 options (1) vest 20% annually on each December 31, 2010 through 2014 and (2) terminate on the earlier of (x) six months of termination of service with the Company and (y) December 31, 2019. The 2008 options (1) vested 50% following a 20-day20-day trading period where the average closing price of a common share of the Company on the New York Stock Exchange (“NYSE”) is $8.00$8.00 or higher and vest 50% following a 20-day20-day trading period where the average closing price of a common share of the Company on the NYSE is $10.00$10.00 or higher, and (2) expire 10 years from dateterminate on the earlier of grant.(x) termination of service with the Company or (y) December 31, 2018. As a result of the share dividends paid in 2009, each of thesethe 2008 options is exchangeable for approximately 1.13 common shares.shares at an exercise price of $4.97 per common share.
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
The Company engaged a third partyparties to value the options as of December 31, 2008.each option's respective grant date. The third partyparties determined the value to be $2,480$2,422 and $2,771 for the 2010 options and 2009 options, respectively, using the Black-Scholes model and $2,480 for the 2008 options using the Monte Carlo simulation model. The options are considered equity awards as they are settled through the numberissuance of options issued is fixed and determinable at the date of grant.common shares. As such, the options were valued as of the grant date of the grant and do not require subsequent remeasurement. There were several assumptions used to fair value the options including the expected volatility in the Company’sCompany's common share price based upon the fluctuation in the Company’sCompany's historical common share price. The more significant assumptions underlying the determination of fair value for options granted during 2008 were as follows:
| Year Ended December 31, | | 2008 | |
| Weighted average fair value of options granted | | $ | 1.24 | |
| Weighted average risk-free interest rates | | | 1.33 | % |
| Weighted average expected option lives (in years) | | | 3.60 | |
| Weighted average expected volatility | | | 59.94 | % |
| Weighted average expected dividend yield | | | 14.40 | % |
|
| | | | | | | | | | | | |
| | | 2010 Options | | 2009 Options | | 2008 Options |
| Weighted-average fair value of options granted | | $ | 1.94 |
| | $ | 2.19 |
| | $ | 1.24 |
|
| Weighted-average risk-free interest rate | | 2.54 | % | | 3.29 | % | | 1.33 | % |
| Weighted-average expected option lives (in years) | | 6.50 |
| | 6.70 |
| | 3.60 |
|
| Weighted-average expected volatility | | 49.00 | % | | 59.08 | % | | 59.94 | % |
| Weighted-average expected dividend yield | | 7.40 | % | | 6.26 | % | | 14.40 | % |
In addition, theThe Company recognizes compensation expense relating to these options over an average of 5.0 years for the 2010 options and 2009 options and 3.6 years. years for the 2008 options. The Company recognized $688$1,384, $1,824 and $688 in compensation expense duringin 2011, 2010 and 2009, andrespectively, relating to options, $629 of the 2010 amount reflects the accelerated vesting of certain 2008 options, due to performance criteria being met. The Company has unrecognized compensation costs of $1,792$3,755 relating to the outstanding options as of December 31, 2009.
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)2011.
Share option activity during the years indicated is as follows:
|
| | | | | | |
| | Number of Shares | | Weighted-Average Exercise Price Per Share |
| Balance at December 31, 2008 (1) | 2,252,000 |
| | $ | 4.97 |
|
| Granted | — |
| | — |
|
| Balance at December 31, 2009 | 2,252,000 |
| | 4.97 |
|
| Granted | 2,514,001 |
| | 7.16 |
|
| Exercised | (352,628 | ) | | 4.97 |
|
| Forfeited | (23,768 | ) | | 5.18 |
|
| Balance at December 31, 2010 | 4,389,605 |
| | 6.23 |
|
| Exercised | (501,324 | ) | | 5.16 |
|
| Balance at December 31, 2011 | 3,888,281 |
| | $ | 6.36 |
|
| | | Number of Shares | | | Weighted-Average Exercise Price Per Share | |
| Balance at December 31, 2006 | | | 16,500 | | | $ | 15.56 | |
| Granted | | | — | | | | — | |
| Exercised | | | (15,500 | ) | | | 15.56 | |
| Forfeited | | | — | | | | — | |
| Expired | | | (1,000 | ) | | | 15.50 | |
| Balance at December 31, 2007 | | | — | | | | — | |
| Granted | | | 2,000,000 | | | | 5.60 | |
| Balance at December 31, 2008 | | | 2,000,000 | | | | 5.60 | |
| Granted | | | — | | | | — | |
| Balance at December 31, 2009 | | | 2,000,000 | | | $ | 5.60 | |
Non-vested share activity for the years ended December 31, 2011 and 2010, is as follows:
|
| | | | | | |
| | Number of Shares | | Weighted-Average Value Per Share |
| Balance at December 31, 2009 | 743,342 |
| | $ | 13.28 |
|
| Granted | 267,170 |
| | 7.95 |
|
| Vested | (169,215 | ) | | 18.87 |
|
| Forfeited | (21,720 | ) | | 22.10 |
|
| Balance at December 31, 2010 | 819,577 |
| | 10.16 |
|
| Granted | 582,102 |
| | 7.49 |
|
| Vested | (211,954 | ) | | 13.56 |
|
| Forfeited | (10,140 | ) | | 21.99 |
|
| Balance at December 31, 2011 | 1,179,585 |
| | $ | 8.13 |
|
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
As of December 31, 2011, of the remaining 1,179,585 non-vested shares, 806,445 are subject to time-based vesting and 373,140 are subject to performance-based vesting. At December 31, 2011, there are 4,672,085 awards available for grant. The Company has $6,459 in unrecognized compensation costs relating to the non-vested shares that will be charged to compensation expense over an average of approximately 2.7 years.
The Company has established a trust for certain officers in which vested common shares granted for the benefit of the officers are deposited. The officers exert no control over the common shares in the trust and the common shares are available to the general creditors of the Company. As of December 31, 2011 and 2010, there were 427,531 common shares in the trust.
The Company sponsors a 401(k) retirement savings plan covering all eligible employees. During the year ended December 31, 2009, theThe Company matched 100% of the first 1.0% of employee participant salaries in 2011 and 2010 and approximately 1.125% of employee participant salaries in 2009 of employee contributions. In addition, based on its profitability, the Company may make a discretionary contribution at each fiscal year end to all eligible employees. The matching and discretionary contributions are subject to vesting under a schedule providing for 25% annual vesting starting with the first year of employment and 100% vesting after four years of employment. Approximately $321, $366$308, $311 and $382$321 of contributions are applicable to 2009, 20082011, 2010 and 2007,2009, respectively.
Non-vested share activity for the years ended December 31, 2009During 2011, 2010 and 2008, is as follows:
| | | Number of Shares | | | Weighted- Average Value Per Share | |
| Balance at December 31, 2007 | | | 421,723 | | | $ | 22.06 | |
| Granted | | | 211,125 | | | | 13.47 | |
| Forfeited | | | (5,622 | ) | | | 18.47 | |
| Vested | | | (139,682 | ) | | | 17.54 | |
| Balance at December 31, 2008 | | | 487,544 | | | | 19.48 | |
| Granted | | | 376,400 | | | | 4.94 | |
| Vested | | | (120,602 | ) | | | 12.28 | |
| Balance at December 31, 2009 | | | 743,342 | | | $ | 13.28 | |
As of December 31, 2009 of the remaining 743,342 non-vested shares, 210,903 are subject to time vesting and 532,439 are subject to performance vesting. At December 31, 2009, there are 2,289,164 awards available for grant. The Company has $4,654 in unrecognized compensation costs relating to the unvested shares that will be charged to compensation expense over an average of approximately 2.2 years.
During 2009, 2008 and 2007,, the Company recognized $3,369, $3,980$2,062, $3,232 and $3,645,$3,369, respectively, in compensation expense relating to scheduled vesting and issuance of common share grantsgrants.
| |
| (17) | Related Party Transactions |
In addition to trusteesrelated party transactions discussed elsewhere in this Annual Report, the Company has an indemnity obligation to Vornado Realty Trust, one of its significant shareholders, with respect to actions by the Company that affect Vornado Realty Trust's status as a REIT.
All related party acquisitions, sales and employees.loans were approved by the independent members of the Company's Board of Trustees or the Audit Committee.
During 2011 and 2010, the Company advanced an aggregate $20,077 and $7,614, respectively, to NLS entities in the form of interest bearing, non-recourse mortgage notes to satisfy maturing non-recourse mortgages. These advances were satisfied in full in 2011.
The Company leases certain properties to entities owned by significant shareholders and/or the former Company's Executive Chairman and Director of Strategic Acquisitions. During 2011, 2010 and 2009, the Company recognized $864, $905 and $1,538, respectively, in rental revenue from these properties. The Company leases its corporate office in New York City from an affiliate of Vornado Realty Trust. Rent expense for this property was $1,281, $1,272 and $1,282 in 2011, 2010 and 2009, respectively.
The Company has established a trust for certain officers in which non-vested common shares, which generally vest ratably over five years, granted for the benefit of the officers are deposited. The officers exert no control over the common shares in the trust and the common shares are available to the general creditors of the Company. As of December 31, 2009 and 2008, there were 427,531 common shares in the trust.
On February 6, 2007, the Company’s Board of Trustees established the Lexington Realty Trust 2007 Outperformance Program, a long-term incentive compensation program. Awards under the program are considered liability awards because the number of shares issued to the participants are not fixed and determinable as of the grant date. These awards contain both a service condition and a market condition. As these awards are liability based awards, the measurement date for liability instruments is the date of settlement. Accordingly, liabilities incurred under share-based payment arrangements were initially measured on the grant date of February 6, 2007 and are required to be measured at the end of each reporting period until settlement. The determination period to calculate the number of common shares issued under the program expired on December 31, 2009 and no common shares were issued.
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)
A third party was engaged to value the awards and the Monte Carlo simulation model was used to estimate the compensation expense of the outperformance pool. As of grant date, it was determined that the value of the awards was $1,901. As of December 31, 2009 and 2008, the value of the awards was $0 and $343, respectively. The Company recognized $96, $15 and ($111) in compensation income (expense) relating to the award during the years ended December 31, 2009, 2008 and 2007, respectively.
During 2008, the Company and a former executive officer and his affiliate entered into a Services and Non-Compete Agreement and a Separation and General Release. In addition to an aggregate cash payment of $1,500 paid in 2008, non-vested common shares previously issued to the officer were accelerated and immediately vested which resulted in a charge of $265.
During the second quarter of 2007, the Company and an executive officer entered into an employment separation agreement. In addition to a cash payment of $3,600, non-vested common shares were accelerated and immediately vested which resulted in a charge of $933.
(18) Income Taxes
The provision(provision) for income taxes relates primarily to the taxable income of the Company’sCompany's taxable REIT subsidiaries. The earnings, other than in taxable REIT subsidiaries, of the Company are not generally subject to Federalfederal income taxes at the Company level due to the REIT election made by the Company.
Income taxes have been provided for on the asset and liability method. Under the asset and liability method, deferred income taxes are recognized for the temporary differences between the financial reporting basis and the tax basis of assets and liabilities.
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
The Company’s provisionCompany's benefit (provision) for income taxes for the years ended December 31, 2009, 20082011, 2010 and 20072009 is summarized as follows:
|
| | | | | | | | | | | |
| | 2011 | | 2010 | | 2009 |
| Current: | | | | | |
| Federal | $ | (440 | ) | | $ | — |
| | $ | (401 | ) |
| State and local | (1,102 | ) | | (1,079 | ) | | (2,098 | ) |
| NOL utilized | 566 |
| | — |
| | 343 |
|
| Deferred: | | | | |
|
| Federal | 1,399 |
| | (418 | ) | | (187 | ) |
| State and local | 400 |
| | (53 | ) | | (26 | ) |
| | $ | 823 |
| | $ | (1,550 | ) | | $ | (2,369 | ) |
| | | 2009 | | | 2008 | | | 2007 | |
| Current: | | | | | | | | | |
| Federal | | $ | (401 | ) | | $ | (395 | ) | | $ | (928 | ) |
| State and local | | | (2,107 | ) | | | (1,866 | ) | | | (2,592 | ) |
| NOL utilized | | | 343 | | | | 629 | | | | 799 | |
| Deferred: | | | | | | | | | | | | |
| Federal | | | (187 | ) | | | (972 | ) | | | (407 | ) |
| State and local | | | (26 | ) | | | (381 | ) | | | (159 | ) |
| | | $ | (2,378 | ) | | $ | (2,985 | ) | | $ | (3,287 | ) |
DeferredNet deferred tax liabilitiesassets (liabilities) of $638$672 and $442$(1,127) are included in other liabilitiesassets (liabilities) on the accompanying Consolidated Balance Sheets at December 31, 20092011 and 2008,2010, respectively. These net deferred tax liabilitiesassets (liabilities) relate primarily to differences in the timing of the recognition of income/(loss) between GAAP and tax basis of real estate investments and net operating loss carry forwards.
The income tax benefit (provision) differs from the amount computed by applying the statutory federal income tax rate to pre-tax operating income as follows:
| | | 2009 | | | 2008 | | | 2007 | | |
| Federal benefit (provision) at statutory tax rate (34)% | | $ | (376 | ) | | $ | (397 | ) | | $ | 488 | | |
| | | | 2011 | | 2010 | | 2009 |
| Federal provision at statutory tax rate (34%) | | $ | (580 | ) | | $ | (388 | ) | | $ | (376 | ) |
| State and local taxes, net of federal benefit | | | (33 | ) | | | (45 | ) | | | 4 | | (100 | ) | | (31 | ) | | (33 | ) |
| Other | | | (1,969 | ) | | | (2,543 | ) | | | (3,779 | ) | 1,503 |
| | (1,131 | ) | | (1,960 | ) |
| | | $ | (2,378 | ) | | $ | (2,985 | ) | | $ | (3,287 | ) | $ | 823 |
| | $ | (1,550 | ) | | $ | (2,369 | ) |
For the years ended December 31, 2009, 20082011, 2010 and 2007,2009, the “other” amount is comprised primarily of state taxes of $2,051, $1,804$976, $1,078 and $2,309,$2,042, respectively, and the write-off of deferred tax assetsliabilities of $0, $742$3,535, $0 and $1,605,$0, respectively, relating to the dissolutiontransfer of certain assets of the Company’sCompany's taxable subsidiaries.
As of December 31, 20092011 and 2008,2010, the Company has estimated net operating loss carry forwards for federal income tax reporting purposes of $2,549$2,735 and $3,476,$4,156, respectively, which would begin to expire in tax year 2025. No2026. A valuation allowances haveallowance of $712 has been recorded against deferred tax assets as the Company believes they are fully realizable,in 2011 based upon projected future taxable income.
A summary of the average taxable nature of the Company's common dividends for each of the years in the three-year period ended December 31, 2011, is as follows:
|
| | | | | | | | | | | |
| | 2011 | | 2010 | | 2009 |
| Total dividends per share | $ | 0.46 |
| | $ | 0.40 |
| | $ | 0.72 |
|
| Ordinary income | 47.33 | % | | 99.11 | % | | 53.80 | % |
| 15% rate - qualifying dividend | 1.11 | % | | 0.89 | % | | 0.61 | % |
| 15% rate gain | — |
| | — |
| | — |
|
| 25% rate gain | — |
| | — |
| | — |
|
| Return of capital | 51.56 | % | | — |
| | 45.59 | % |
| | 100.00 | % | | 100.00 | % | | 100.00 | % |
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements – (Continued)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except per share/unit amounts)data)
A summary of the average taxable nature of the Company's dividend on shares of its Series B Preferred for each of the years in the three-year period ended December 31, 2011, is as follows:
(19) Commitments |
| | | | | | | | | | | |
| | 2011 | | 2010 | | 2009 |
| Total dividends per share | $ | 2.0125 |
| | $ | 2.0125 |
| | $ | 2.0125 |
|
| Ordinary income | 97.70 | % | | 99.11 | % | | 98.87 | % |
| 15% rate - qualifying dividend | 2.30 | % | | 0.89 | % | | 1.13 | % |
| 15% rate gain | — |
| | — |
| | — |
|
| 25% rate gain | — |
| | — |
| | — |
|
| | 100.00 | % | | 100.00 | % | | 100.00 | % |
A summary of the average taxable nature of the Company's dividend on shares of its Series C Preferred for each of the years in the three-year period ended December 31, 2011, is as follows:
|
| | | | | | | | | | | |
| | 2011 | | 2010 | | 2009 |
| Total dividends per share | $ | 3.25 |
| | $ | 3.25 |
| | $ | 3.25 |
|
| Ordinary income | 97.70 | % | | 99.11 | % | | 98.87 | % |
| 15% rate - qualifying dividend | 2.30 | % | | 0.89 | % | | 1.13 | % |
| 15% rate gain | — |
| | — |
| | — |
|
| 25% rate gain | — |
| | — |
| | — |
|
| Return of capital | — |
| | — |
| | — |
|
| | 100.00 | % | | 100.00 | % | | 100.00 | % |
A summary of the average taxable nature of the Company's dividend on shares of its Series D Cumulative Redeemable Preferred Stock for the years in the three-year period ended December 31, 2011, is as follows:
|
| | | | | | | | | | |
| | 2011 | | 2010 | | 2009 |
| Total dividends per share | $ | 1.76498 |
| | $2.01002(1) |
| | $ | 1.8875 |
|
| Ordinary income | 97.70 | % | | 99.11 | % | | 98.87 | % |
| 15% rate - qualifying dividend | 2.30 | % | | 0.89 | % | | 1.13 | % |
| 15% rate gain | — |
| | — |
| | — |
|
| 25% rate gain | — |
| | — |
| | — |
|
| | 100.00 | % | | 100.00 | % | | 100.00 | % |
_________
(1)Of the total dividend paid in January 2011, $0.12252 is allocated to 2010 and Contingencies$0.349355 is allocated to 2011.
| |
| (19) | Commitments and Contingencies |
In addition to the commitments and contingencies disclosed elsewhere, the Company has the following commitments and contingencies.
Certain of the Company's property owner subsidiaries are obligated under certain tenant leases, including leases for non-consolidated entities, to fund the expansion of the underlying leased properties. The Company, under certain circumstances, may guarantee the completion of base building improvements and the payment of tenant improvement allowances and lease commissions on behalf of its subsidiaries.
From time to time, the Company is involved directly or indirectly in legal proceedings arising in the ordinary course of business. In management’s opinion, after consultation with legal counsel,Management believes, based on currently available information, that the outcomeresults of such matters, includingproceedings, in the matters set forth below, areaggregate, will not expected to have a material adverse effect on the Company’sCompany's financial position, result of operations or cash flows.condition, but could be material to the Company's operating results for any particular period, depending, in part, upon the operating results for such period. In addition, the following two legal proceedings are pending:
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
Deutsche Bank Securities, Inc. and SPCP Group LLC v. Lexington Drake, L.P., et al. (Supreme Court of the State of New York, County of New York-Index No. 603051/08). On June 30, 2006, one of the Company, includingCompany's property owner subsidiaries and a property owner subsidiary of a then co-investment program as it relates to the Antioch claim,respectively sold to Deutsche Bank Securities, Inc. ("(“Deutsche Bank"Bank”), (1) a $7,680$7,680 bankruptcy damage claim against Dana Corporation for $5,376 (the "Farmington$5,376 (“Farmington Hills claim"claim”), and (2) a $7,727$7,727 bankruptcy damage claim against Dana Corporation for $5,680 (the "Antioch claim"$5,680 (“Antioch claim”). Under the terms of the agreements covering the sale of the claims, which were guaranteed by the Company, isthe property owner subsidiaries are obligated to reimburse Deutsche Bank should the claim ever be disallowed, subordinated or otherwise impaired, to the extent of such disallowance, subordination or impairment, plus interest at the rate of 10% per annum from the date of payment of the purchase price by Deutsche Bank to the Company.Bank. On October 12, 2007, Dana Corporation filed an objection to both claims. The Company assisted Deutsche Bank and the then holders of the claims in the preparation and filing of a response to the objection. Despite a belief by the Company that the objections were without merit, the holders of the claims, without the Company’sCompany's consent, settled the allowed amount of the claims at $6,500$6,500 for the Farmington Hills claim and $7,200$7,200 for the Antioch claim.claim in order to participate in a special settlement pool for allowed intangible unsecured claims and a preferred share rights offering having a value thought to be equal to, or greater than, the reduction of the claims. Deutsche Bank made a formal demand with respect to the Farmington Hills claim in the amount of $826$826 plus interest, but did not make a formal demand with respect to the Antioch claim. Following a rejection of the demand by the Company, on December 11, 2009, Deutsche Bank and SPCP Group, LLCthe then holders of the claims filed a summons and complaint with the Supreme Court of the State of New York, County of New York for the Farmington Hills and Antioch claims, and claimed damages of approximately $1,200$1,200 plus interest from the date of assignment at the rate of 10% per year and expenses.expenses, which the Company believes would be its maximum exposure.
TheTogether with the property owner subsidiaries, the Company answered the complaint on November 26, 2008 and served numerous discovery requests. After almost a year of inactivity, a preliminary conference occurred on February 1, 2010. A briefing schedule was established for bothMarch 18, 2010, the defendants and the plaintiffs and defendants to filefiled motions for summary judgment while reserving alland related opposing and supporting motions. On November 22, 2010, the court ruled in favor of the plaintiffs on their motion for summary judgment. The court referred the issue of damages to a special referee to determine the value of plaintiffs' participation in the preferred share rights offering and a settlement pool for allowed intangible unsecured claims so as to future depositionsbe taken into consideration with respect to computation of damages, if any.
The Company filed a notice of appeal but withdrew such notice without prejudice to renew after final determination of the damages. The Company intends to appeal the court's ruling if the special referee determines there are damages. The special referee, upon the Company's request, issued a discovery order requiring the plaintiffs to provide requested discovery materials regarding the damages. On March 28, 2011, the plaintiffs filed a motion to vacate the discovery order issued by the special referee. On May 17, 2011, the motion to vacate was denied and discovery if the court finds there are outstanding questions of fact and denies the motions. The motions must be filed on or before March 11, 2010, with oppositions due on April 13, 2010 and replies due on April 28, 2010. The hearing on the motions has been initially scheduled for May 19, 2010, subject to the court’s availability.damage issue continues.
The Company intends to file a motion for summary judgment andcontinue to vigorously defend the claims for a variety of reasons, including that (1) after requiring and supporting the defense of the objections to the claims, the holders of the claims arbitrarily settled the claims for reasons based on factors other than the merits, (2) the holders of the claims voluntarily reduced the claims to participate in the preferred share rights offering and certain settlement pools, and (3) the contract language that supports the plaintiff’splaintiff's position was specifically negotiated out of the agreement covering the sale of the claims.claims and (4) the plaintiffs have no damages.
Inland American (Concord) Sub, LLCUnified Government of Wyandotte County/Kansas City, Kansas v. Lex-Win Concord LLC and Concord Debt Holdings LLC (DelawareUnited States General Services Administration (United States District Court for the District of Chancery – C.A. No. 4617-VCL)Kansas-Case Number 11-2400-JTM-KMH). On May 22, 2009, Inland American (Concord) Sub, LLC, (“Inland Concord”)April 4, 2011, one of the Company's property owner subsidiaries entered into a lease termination with Applebee's Services, Inc., pursuant to which Applebee's Services, Inc. made a wholly-ownedlease termination payment of $19,910 in October 2011 and vacated the Lenexa, Kansas facility in November 2011. Also on April 4, 2011, the Company's property owner subsidiary of Inland American Real Estate Trust, Inc.,entered into a ten year lease with the United States General Services Administration ("GSA") for the same facility. On April 15, 2011, an unsuccessful bidder for the GSA lease filed a legal action against Lex-Win Concord and Concord generally seeking declaratory relief that Inland Concord should not be required to satisfy a May 11, 2009 capital call made by Concord inprotest with the amount of $24,000 and that Inland Concord is entitled to a priority return of its capital. Lex-Win Concord filed counterclaims against Inland Concord which state, in general, that Inland Concord is in material breachUnited States Government Accountability Office ("GAO") protesting the award of the agreements with Lex-Win Concordlease to the Company's property owner subsidiary. On July 22, 2011, after a full briefing of the protest, the GAO denied the protest. However, prior to the GAO ruling on July 19, 2011, the Unified Government of Wyandotte County, Kansas City filed a claim against the GSA requesting, among other things, an injunction against the award of the ten year lease. The Company has intervened and seekingis monitoring this claim; however, the Company does not anticipate any impact to recover all losses incurred by it as a resultits financial position or results of such breach.operations from this claim.
On December 21, 2009, the applicable parties and certainOther. Four of their affiliates entered into a settlement agreement to resolve the action, which would provide for, among other things, (1) no obligation on any of the parties to make additional contributions to Concord, (2) the allocation of distributions equally among Inland Concord, Winthrop and the Company and (3) the formation of a new entity to be owned by subsidiaries of Inland Concord, Winthrop and the Company which, under certain circumstances would contribute assets to Concord Real Estate CDO 2006-1, LTD (“CDO-1”). The effectiveness of the settlement agreement is conditioned on certain conditions, including the ability of certain CDO-1 bonds held by a subsidiary of Concord to be cancelled.
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)
Newkirk Skoob L.P. v. Elsevier STM, Inc. (Orange County, Florida Circuit Court – Case No. 09-CA-020180 Complex Business Litigation Court). On June 24, 2009, Newkirk Skoob L.P., a wholly-owned subsidiary, (as successor to Skoob Associates L.P.) filed a complaint in the Complex Business Litigation Court of the Circuit Court of the Ninth Judicial Circuit in Orange County, Florida against Elsevier STM, Inc., (as successor to Harcourt Brace Jovanovich, Inc.) (“Elsevier”), the former tenant in the Company’s Orlando, Florida facility, for breach of lease and holdover rent pursuant to the lease and Section 83.06, Florida Statutes, for the time Elsevier remained on the premises after the lease’s expiration.
Elsevier filed its answer during the third quarter of 2009. The Company then filed a motion to strike certain of Elsevier’s affirmative defenses because several are insufficiently pled under Florida law, several are not legal defenses to the claims at issue, and several are not affirmative defenses at all. Elsevier filed a motion opposing our motion to strike Elsevier’s affirmative defenses, and the court granted our motion to strike Elsevier’s affirmative defenses with leave for Elsevier to amend its answer by November 9, 2009.
In October, 2009, Elsevier paid a portion of past-due rent, but a rent and real estate tax reimbursement balance of $1,106 (not including default interest) remains unpaid.
Trial is set for April 2011. The Company filed a motion to amend its complaint to add additional allegations of breach including code violations and failure to remove items from the premises, which Elsevier opposed, and a hearing is set for March 3, 2010. Expert inspections have occurred, and expert reports are being prepared. Discovery is continuing.
The Company intends to pursue this claim vigorously, as the Company believes after consultation with counsel that the Company is entitled to recovery of the past-due rent, real estate tax allocation and the costs of deferred maintenance under the lease.
Other. Certain employeesexecutive officers have employment contracts and are entitled to severance benefits inupon termination by the case of a change of control,Company without cause, as defined in the employment contract.
The Company, including its non-consolidated entities, are obligated under certain tenant leases to fund tenant improvements and the expansion90
During 2007, the Company wrote off approximately $431 relating to costs incurred for the LSAC initial public offering. The costs were written off when LSAC decided not to pursue an initial public offering of its shares.
The Company has entered into sales agreements with two financial institutions to sell up to 9,000,000 common shares of the Company from time to time in controlled at-the-market equity offerings. Sales of the common shares of the Company, if any, will depend on market conditions and other factors. The Company has no obligations to sell any common shares of the Company covered by the sales agreements and may terminate the sales agreements at any time.
(20) Related Party Transactions
In addition to related party transactions disclosed elsewhere, the Company was a party to the following related party transactions.
All related party acquisitions, sales and loans were approved by the independent members of the Company’s Board of Trustees or the Audit Committee.
Entities partially owned and controlled by the Company’s former Executive Chairman and Director of Strategic Acquisitions provide property management services at certain properties and co-investments owned by the Company. These entities earned, including reimbursed expenses, $4,735, $5,136 and $3,693 respectively, for these services for the years ended 2009, 2008 and 2007.
On March 20, 2008, the Company entered into a Services and Non-Compete Agreement with its former Executive Chairman and Director of Strategic Acquisitions and his affiliate, which provides that the Company’s former Executive Chairman and Director of Strategic Acquisitions and his affiliate will provide the Company with certain asset management services in exchange for $1,500. The $1,500 is included in general and administrative expenses in the Consolidated Statement of Operations for the year ended December 31, 2008.
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements – (Continued)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except per share/unit amounts)data)
| |
| (20) | Supplemental Disclosure of Statement of Cash Flow Information |
A mortgage note payable with an outstanding balance as of December 31, 2009 and 2008 of $3,808 and $4,102, respectively, is owed to an entity owned by significant shareholders and the former Executive Chairman and Director of Strategic Acquisitions. The mortgage was assumed in connection with the merger with Newkirk. In addition the Company leases four properties to entities owned by significant shareholders and/or the former Executive Chairmandisclosures discussed elsewhere, during 2011, 2010 and Director of Strategic Acquisitions. During 2009 2008 and 2007, the Company recognized $1,538, $1,575 and $1,575, respectively, in rental revenue from these properties. The Company leases its corporate office in New York City from an affiliate of Vornado Realty Trust, a significant shareholder. Rent expense for this property was $1,282, $865 and $829 in 2009, 2008 and 2007, respectively.
During 2007, the Company repurchased common shares from two of its officers for an aggregate of $405 and purchased LSAC shares from several of its officers for $2,200.
Winthrop, an affiliate of the Company’s former Executive Chairman and Director of Strategic Acquisitions, is the 50% partner in Lex-Win Concord (see note 9).
In addition, the Company earns fees from certain of its non-consolidated investments (see note 9).
The Company has an indemnity obligation to Vornado Realty Trust with respect to actions by the Company that affect Vornado Realty Trust’s status as a REIT.
(21) Concentration of Risk
The Company seeks to reduce its operating and leasing risks through diversification achieved by the geographic distribution of its properties, avoiding dependency on a single property and the creditworthiness of its tenants.
For the years ended December 31, 2009, 2008 and 2007, no tenant represented 10% or more of gross revenues.
Cash and cash equivalent balances may exceed insurable amounts. The Company believes it mitigates risk by investing in or through major financial institutions.
(22) Supplemental Disclosure of Statement of Cash Flow Information
During 2009, 2008 and 2007,, the Company paid $132,376, $160,134$103,427, $114,031 and $154,917,$132,376, respectively, for interest and $2,483, $767$1,289, $1,019 and $3,452,$2,483, respectively, for income taxes.
In connection with the formation of NLS in 2008 and 2007,October 2011, the Company contributed real estateacquired control of a joint venture, Pemlex LLC, and intangibles,recorded land and building assets of $9,006, lease intangible assets of $6,294, other assets, net, of accumulated depreciation$107 and amortization, of $90,200 and $129,427, respectively, to NLS. The Company’s contributed or sold properties to NLS with consolidated mortgage notes payable in the amount of $155,824 and $171,502, respectively, which were assumed by NLS.a $574 noncontrolling interest.
During 2009, 2008 and 2007, holders of an aggregate of 520,487, 34,377,989 and 1,283,629 OP units, respectively, redeemed such units for common shares2011, the Company sold interests in three properties, which included the assumption of the Company. These redemptions resultedaggregate related non-recourse debt of $28,648 and $3,003 in increases in shareholders’ equity and corresponding decreases in noncontrolling interests of $3,580, $511,521 and $25,223, respectively.seller financing.
During 2009,2010, the Company sold interests in three properties, which included the assumption of the aggregate related non-recourse mortgage debt of $74,504.
During 2009, the Company acquired, through a property owner subsidiary, the remainder interests in land with an estimated fair value of $2,500$2,500 in connection with a tenant's lease surrender obligation.
During 2009, the Company conveyed its interests in three properties to lenders in full satisfaction of the aggregate $38,022$38,022 non-recourse mortgage notes payable. The Company recognized aggregate net gains on debt satisfaction of $13,180$13,180 relating to these transactions.
During 2008,(21) Unaudited Quarterly Financial Data
|
| | | | | | | | | | | | | | | |
| | 2011 |
| | 3/31/2011 | | 6/30/2011 | | 9/30/2011 | | 12/31/2011 |
| Total gross revenues(1) | $ | 80,594 |
| | $ | 80,622 |
| | $ | 82,808 |
| | $ | 82,890 |
|
| Net income (loss) | $ | (15,993 | ) | | $ | (56,957 | ) | | $ | (30,844 | ) | | $ | 14,016 |
|
| Net income (loss) attributable to common shareholders | $ | (23,638 | ) | | $ | (50,539 | ) | | $ | (37,048 | ) | | $ | 7,504 |
|
| Net income (loss) attributable to common shareholders - basic per share | $ | (0.16 | ) | | $ | (0.33 | ) | | $ | (0.24 | ) | | $ | 0.05 |
|
| Net income (loss) attributable to common shareholders - diluted per share | $ | (0.21 | ) | | $ | (0.33 | ) | | $ | (0.24 | ) | | $ | 0.05 |
|
|
| | | | | | | | | | | | | | | |
| | 2010 |
| | 3/31/2010 | | 6/30/2010 | | 9/30/2010 | | 12/31/2010 |
| Total gross revenues(1) | $ | 79,909 |
| | $ | 78,890 |
| | $ | 81,065 |
| | $ | 80,184 |
|
| Net income (loss) | $ | (29,326 | ) | | $ | (29,701 | ) | | $ | 7,340 |
| | $ | 14,277 |
|
| Net income (loss) attributable to common shareholders | $ | (33,048 | ) | | $ | (30,379 | ) | | $ | 58 |
| | $ | 5,273 |
|
Net income (loss) attributable to common shareholders - basic and diluted per share | $ | (0.27 | ) | | $ | (0.23 | ) | | $ | 0.00 |
| | $ | 0.04 |
|
(1) All periods have been adjusted to reflect the Company assumed a $7,545 mortgage note payableimpact of properties sold during the years ended December 31, 2011 and 2010, and properties classified as held for sale, which are reflected in connection with a property acquisition.
In 2008, the Company received land in a lease termination transaction with an appraised value of $16,000, which is included in non-operating incomediscontinued operations in the Consolidated StatementStatements of Operations.
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)
During 2008, the Company entered into a swap obligation with an initial value of $5,696, which was reflected as a reduction of mortgages payable and included in accounts payable and other liabilities.
During 2008, the Company sold one property through foreclosure with a mortgage principal balance of $6,516 and an asset carrying value of $6,488.
In 2009, 2008 and 2007, the Company had a net increase (decrease) in the non-cash accruals for construction in progress, deferred leasing costs and deferred financing costs of $5,639, ($14,333) and $18,085, respectively.
During 2008, the Company issued 1,620,879 common shares (with a value at issuance of $23,505) and cash of $5,432 to repurchase $32,500 of 5.45% Exchangeable Guaranteed Notes.
During 2007, the Company sold one property for a sale price of $35,700 and provided $27,700 in secured financing to the buyer.
In connection with the acquisition of the co-investment programs in 2007, the Company paid approximately $366,600 in cash and acquired approximately $1,071,000 in real estate, $264,000 in intangibles, $21,000 in cash, assumed $785,000 in mortgages payable, $40,000 in below-market leases and $14,000 in all other assets and liabilities.
(23) Unaudited Quarterly Financial Data
| | | 2009 | |
| | | 3/31/2009 | | | 6/30/2009 | | | 9/30/2009 | | | 12/31/2009 | |
| Total gross revenues(1) | | $ | 94,677 | | | $ | 96,646 | | | $ | 95,228 | | | $ | 90,070 | |
| Net loss | | $ | (63,820 | ) | | $ | (76,393 | ) | | $ | (22,131 | ) | | $ | (48,928 | ) |
| Net loss attributable to common shareholders for earnings per share — basic | | $ | (71,703 | ) | | $ | (90,450 | ) | | $ | (28,474 | ) | | $ | (52,249 | ) |
| Net loss attributable to common shareholders — per share: | | | | | | | | | | | | | | | | |
| Basic and diluted | | $ | (0.72 | ) | | $ | (0.87 | ) | | $ | (0.25 | ) | | $ | (0.43 | ) |
| | | 2008 | |
| | | 3/31/2008 | | | 6/30/2008 | | | 9/30/2008 | | | 12/31/2008 | |
| Total gross revenues(1) | | $ | 100,407 | | | $ | 121,619 | | | $ | 97,553 | | | $ | 98,570 | |
| Net income (loss) | | $ | 11,937 | | | $ | 5,030 | | | $ | (4,439 | ) | | $ | (15,996 | ) |
| Net income (loss) attributable to common shareholders for earnings per share — basic | | $ | (1,539 | ) | | $ | 13,815 | | | $ | (10,764 | ) | | $ | (20,486 | ) |
| Net income (loss) attributable to common shareholders — per share: | | | | | | | | | | | | | | | | |
| Basic | | $ | (0.02 | ) | | $ | 0.23 | | | $ | (0.17 | ) | | $ | (0.23 | ) |
| Diluted | | $ | (0.02 | ) | | $ | (0.06 | ) | | $ | (0.17 | ) | | $ | (0.23 | ) |
(1) | All periods have been adjusted to reflect the impact of properties sold during the years ended December 31, 2009 and 2008, and properties classified as held for sale, which are reflected in discontinued operations in the Consolidated Statements of Operations. |
The sum of the quarterly income (loss) per common share amounts may not equal the full year amounts primarily because the computations of the weighted averageweighted-average number of common shares of the Company outstanding for each quarter and the full year are made independently.
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements – (Continued)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except per share/unit amounts)data)
(24) Subsequent Events
Subsequent to December 31, 20092011 and in addition to any other events discloseddisclosures elsewhere in the financial statements, the Company:
| - | issued $115.0 million aggregate principal amount of 6.00% Convertible Guaranteed Notes. The notes pay interest semi-annually in arrears and mature on January 15, 2030. The holders of the notes may require the Company to repurchase their notes on January 15, 2017, January 15, 2020 and January 15, 2025 for cash equal to 100% of the notes to be repurchased, plus any accrued and unpaid interest. The Company may not redeem any notes prior to January 15, 2017, except to preserve its REIT status. The notes have an initial conversion rate of 141.1383 common shares per $1,000 principal amount of the notes, representing a conversion price of approximately $7.09 per common share. The initial conversion rate is subject to adjustment under certain circumstances. The notes are convertible by the holders under certain circumstances for cash, common shares or a combination of cash and common shares at the Company’s election. The notes are convertible prior to the close of business on the second business day immediately preceding the stated maturity date, at any time beginning on January 15, 2029 and also upon the occurrence of specified events; |
procured a $215,000 secured term loan from Wells Fargo Bank, National Association, as agent. The term loan is secured by ownership interest pledges by certain subsidiaries that collectively own a borrowing base of properties. The secured term loan matures in January 2019. The secured term loan requires regular payments of interest only at an interest rate dependent on the Company's leverage ratio, as defined as follows: 2.00% plus LIBOR if its leverage ratio is less than 45%, 2.25% plus LIBOR if its leverage ratio is between 45% and 50%, 2.45% plus LIBOR if its leverage ratio is between 50% and 55%, and 2.85% plus LIBOR if its leverage ratio exceeds 55%. Upon the date when the Company obtains an investment grade debt rating from at least two of Standard & Poor's, Moody's and Fitch, the interest rate under the secured term loan is dependent on its debt rating. The Company may not prepay any outstanding borrowings under the secured term loan facility through January 12, 2013, but may prepay outstanding borrowings anytime thereafter, however at premium for the next three years;
| - | repurchased $23,000 original principal amount of the 5.45% Exchangeable Guaranteed Notes for $23,031 including accrued interest of $38; |
refinanced its $300,000 secured revolving credit facility, which was scheduled to expire in January 2014, but could have been extended to January 2015 at the Company's option, with a new $300,000 secured revolving credit facility with KeyBank, as agent. The new revolving credit facility has the same security as the new secured term loan. The new secured revolving credit facility bears interest at 1.625% plus LIBOR if the Company's leverage ratio, as defined, is less than 45%, 1.875% plus LIBOR if the leverage ratio is between 45% and 50%, 2.125% plus LIBOR if the leverage ratio is between 50% and 55% and 2.375% plus LIBOR if the leverage ratio exceeds 55%. The new secured revolving credit facility matures in January 2015 but can be extended until January 2016 at the Company's option. With the consent of the lenders, the Company can increase the size of the secured revolving credit facility by $225,000 for a total secured revolving credit facility size of $525,000 by adding properties to the borrowing base or admitting additional lenders. The borrowing availability of the secured revolving credit facility is based upon the net operating income, as defined, of the properties comprising the borrowing base;
| - | sold three properties for gross cash proceeds of $1,800 and the purchasers of two properties assumed the corresponding mortgage notes ($40,162 at December 31, 2009); |
borrowed $108,000 under the new secured term loan and $28,000 under the new secured revolving credit facility, and repaid (1) the term loans in the outstanding aggregate principal amount of $60,551, which were procured from KeyBank in March 2008, (2) a swap liability of $3,539 and (3) $62,150 outstanding principal amount of 5.45% Exchangeable Guaranteed Notes that were tendered pursuant to a holder repurchase option. In addition, effective February 1, 2012, the Company entered into an interest-rate swap agreement to fix LIBOR at 1.512% for seven years on $108,000 of new secured term loan LIBOR based debt. Accordingly, the new secured term loan currently bears interest at an interest rate of 3.76%;
| - | made a 15%, $10,960 mortgage loan on an office building in Schaumberg, Illinois, which matures January 15, 2012, but can be extended one additional year by the borrower for a 50 basis point fee. The property is leased to Career Education Corporation from January 1, 2011 through December 31, 2022 for an average annual rent of $3,968. In addition to the initial investment, the Company is obligated to lend an additional $7,575 over the two-year term of the mortgage upon the occurrence of certain events. If the borrower exercises the one-year extension option and certain other events occur, the Company will become obligated to lend an additional $12,199 for tenant improvement costs; |
conveyed to the lender its property in Tulsa, Oklahoma for full satisfaction of the related non-recourse mortgage, which was approximately $1,700 in excess of the net carrying value of the property;
| - | repaid $35,000 on the Company’s term loan under the Company’s secured credit facility, repaid all outstanding borrowings on the Company’s revolving loan under the Company’s secured credit facility and increased the availability under the revolving loan by $25,000; |
acquired the 70,000 square foot office build-to-suit property in Huntington, West Virginia for a capitalized cost of approximately $12,600 and procured a $6,500, 4.2% interest-only five year non-recourse mortgage; and
| - | made a $17,000 mezzanine loan secured by a combination of limited partner interests in entities that own, and second mortgage liens against, five medical facilities. The mezzanine loan is guaranteed by a parent entity and principal and matures in January 2012 and requires payments of interest only at a rate of 14% for the first year and 16% thereafter; |
| - | formed a joint venture with an unaffiliated third party to manage certain of the Company’s properties that require such property management services; and |
| - | purchased a parking lot in a sales/leaseback transaction with Nevada Power Company, an existing tenant, for $3,275 and financed the purchase with a $2,450 non-recourse note mortgage, which matures in September 2014, bears interest at 7.5% and has a 25 year amortization schedule. The parking lot is adjacent to the Company’s existing property in Las Vegas, Nevada, leased to Nevada Power Company. In connection with the transaction, the Nevada Power Company’s lease on the Company’s existing property has been extended from January 2014 to January 2029, the same expiration date as the parking lot lease. |
delivered a notice of exercising the buy/sell right in the NLS partnership agreement and received a notice from its partner exercising the right of first offer in the NLS partnership agreement (see note 9).
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
Real Estate and Accumulated Depreciation and Amortization
Schedule III ($000)
| | | Description | | Location | | Encumbrances | | Land, Improvements and Land Estates | | Buildings and Improvements | | Total | | Accumulated Depreciation and Amortization | | Date Acquired | | Date Constructed | | Useful life computing depreciation in latest income statements (years) | | Location | | Encumbrances |
| Land and Land Estates | Buildings and Improvements | Total | Accumulated Depreciation and Amortization | Date Acquired | Date Constructed | Useful life computing depreciation in latest income statement (years) |
| Industrial | | Marshall, MI (1) | | $ | 0 | | $ | 40 | | $ | 900 | | $ | 940 | | $ | 567 | | Aug-87 | | 1979 | | 12, 20 & 40 | | |
| Office/Warehouse | | Memphis, TN (1) | | | 0 | | | 1,054 | | | 11,539 | | | 12,593 | | | 11,269 | | Feb-88 | | 1987 | | 8 &15 | | |
| Office | | Tampa, FL | | | 5,561 | | | 2,160 | | | 7,273 | | | 9,433 | | | 4,632 | | Jul-88 | | 1986 | | 9 - 40 | | |
| Retail/Health Club | | Canton, OH | | | 0 | | | 603 | | | 3,819 | | | 4,422 | | | 1,336 | | Dec-95 | | 1987 | | 40 | | |
| Office | | Salt Lake City, UT | | | 0 | | | 0 | | | 55,404 | | | 55,404 | | | 29,085 | | May-96 | | 1982 | | 26 | | |
| Retail | | Honolulu, HI (1) | | | 0 | | | 0 | | | 11,147 | | | 11,147 | | | 11,147 | | Dec-96 | | 1980 | | 5 | | |
| Retail | | Tulsa, OK (1) | | | 0 | | | 447 | | | 2,432 | | | 2,879 | | | 1,765 | | Dec-96 | | 1981 | | 14 & 24 | | |
| Retail | | Clackamas, OR (1) | | | 0 | | | 523 | | | 2,848 | | | 3,371 | | | 2,066 | | Dec-96 | | 1981 | | 14 & 24 | | |
| Retail | | Lynnwood, WA (1) | | | 0 | | | 488 | | | 2,658 | | | 3,146 | | | 1,929 | | Dec-96 | | 1981 | | 14 & 24 | | |
| Warehouse | | New Kingston, PA | | | 3,092 | | | 674 | | | 5,360 | | | 6,034 | | | 1,714 | | Mar-97 | | 1981 | | 40 | | |
| Warehouse | | Mechanicsburg, PA | | | 4,779 | | | 1,012 | | | 8,039 | | | 9,051 | | | 2,571 | | Mar-97 | | 1985 | | 40 | | |
| Warehouse | | New Kingston, PA | | | 6,490 | | | 1,380 | | | 10,963 | | | 12,343 | | | 3,506 | | Mar-97 | | 1989 | | 40 | | |
| Office | | Decatur, GA | | | 0 | | | 975 | | | 18,319 | | | 19,294 | | | 4,569 | | Dec-97 | | 1983 | | 3 - 40 | | |
| Office | | Hebron, OH | | | 0 | | | 1,063 | | | 4,271 | | | 5,334 | | | 859 | | Dec-97 | | 2000 | | 40 | | |
| Office/Warehouse | | Bristol, PA | | | 0 | | | 2,508 | | | 11,606 | | | 14,114 | | | 3,044 | | Mar-98 | | 1982 | | 10, 30 & 40 | | |
| Office | | Hebron, KY (1) | | | 0 | | | 1,615 | | | 8,125 | | | 9,740 | | | 2,516 | | Mar-98 | | 1987 | | 6, 12 & 40 | | Little Rock, AR | (5) | — |
| 1,353 |
| 2,260 |
| 3,613 |
| 324 |
| Dec-06 | 1980 | 40 |
| Office | | Palm Beach Gardens, FL (1) | | | 0 | | | 3,578 | | | 15,685 | | | 19,263 | | | 4,279 | | May-98 | | 1996 | | 11 - 40 | | Brea, CA | | 74,492 |
| 37,269 |
| 45,695 |
| 82,964 |
| 10,952 |
| Jun-07 | 1983 | 40 |
| Office | | Herndon, VA | | | 17,553 | | | 5,127 | | | 22,610 | | | 27,737 | | | 5,212 | | Dec-99 | | 1987 | | 9, 31, 36 & 40 | | Los Angeles, CA | | 10,491 |
| 5,110 |
| 10,911 |
| 16,021 |
| 4,549 |
| Dec-04 | 2000 | 13 & 40 |
| Office | | Hampton, VA | | | 6,779 | | | 2,333 | | | 10,311 | | | 12,644 | | | 1,914 | | Mar-00 | | 1999 | | 2.5 & 40 | | Palo Alto, CA | (5) | — |
| 12,398 |
| 16,977 |
| 29,375 |
| 11,086 |
| Dec-06 | 1974 | 40 |
| Office | | Phoenix, AZ | | | 18,068 | | | 4,666 | | | 19,966 | | | 24,632 | | | 5,094 | | May-00 | | 1997 | | 6 & 40 | | Centenial, CO | | 13,975 |
| 4,851 |
| 15,187 |
| 20,038 |
| 3,497 |
| May-07 | 2001 | 10 & 40 |
| Retail | | Canton, OH (1) | | | 0 | | | 884 | | | 3,534 | | | 4,418 | | | 718 | | Nov-01 | | 1995 | | 40 | | |
| Retail | | Spartanburg, SC (1) | | | 0 | | | 833 | | | 3,334 | | | 4,167 | | | 677 | | Nov-01 | | 1996 | | 40 | | |
| Industrial | | Henderson, NC (1) | | | 0 | | | 1,488 | | | 5,953 | | | 7,441 | | | 1,209 | | Nov-01 | | 1998 | | 40 | | |
| Office | | Hampton, VA | | | 4,162 | | | 1,353 | | | 5,441 | | | 6,794 | | | 1,332 | | Nov-01 | | 2000 | | 40 | | |
| Retail | | Westland, MI | | | 0 | | | 1,444 | | | 5,777 | | | 7,221 | | | 1,173 | | Nov-01 | | 1987/1997 | | 40 | | |
| Office | | Phoenix, AZ (1) | | | 0 | | | 2,287 | | | 22,117 | | | 24,404 | | | 3,596 | | Nov-01 | | 1995/1994 | | 5 - 40 | | |
| Industrial | | Hebron, OH (1) | | | 0 | | | 1,681 | | | 6,779 | | | 8,460 | | | 1,383 | | Dec-01 | | 1999 | | 5 & 40 | | |
| Industrial | | Dillon, SC | | | 22,056 | | | 3,223 | | | 26,054 | | | 29,277 | | | 4,925 | | Dec-01 | | 2001/2005 | | 22 & 40 | | |
| Office | | Lake Forest, CA | | | 10,055 | | | 3,442 | | | 13,769 | | | 17,211 | | | 2,682 | | Mar-02 | | 2001 | | 40 | | |
| Office | | Fort Mill, SC | | | 10,533 | | | 3,601 | | | 14,479 | | | 18,080 | | | 2,543 | | Dec-02 | | 2002 | | 5 & 40 | | |
| Office | | Boca Raton, FL | | | 20,400 | | | 4,290 | | | 17,160 | | | 21,450 | | | 2,949 | | Feb-03 | | 1983/2002 | | 40 | | |
| Industrial | | Dubuque, IA | | | 10,277 | | | 2,052 | | | 8,443 | | | 10,495 | | | 1,405 | | Jul-03 | | 2002 | | 11, 12 & 40 | | |
| Office | | Wallingford, CT | | | 3,261 | | | 1,049 | | | 4,198 | | | 5,247 | | | 634 | | Dec-03 | | 1978/1985 | | 40 | | |
| Industrial | | Waxahachie, TX (1) | | | 0 | | | 652 | | | 13,045 | | | 13,697 | | | 5,543 | | Dec-03 | | 1996/1997 | | 10, 16 & 40 | | |
| Office | | Wall Township, NJ | | | 28,098 | | | 8,985 | | | 26,961 | | | 35,946 | | | 6,263 | | Jan-04 | | 1983 | | 22 & 40 | | |
| Industrial | | Moody, AL | | | 6,974 | | | 654 | | | 9,943 | | | 10,597 | | | 3,069 | | Feb-04 | | 2004 | | 15 & 40 | | |
| Office | | Sugar Land, TX | | | 13,477 | | | 1,834 | | | 16,536 | | | 18,370 | | | 2,377 | | Mar-04 | | 1997 | | 40 | | Colorado Springs, CO | | 10,503 |
| 2,748 |
| 12,554 |
| 15,302 |
| 2,607 |
| Jun-07 | 1980 | 40 |
| Office | | Florence, SC (1) | | | 0 | | | 3,235 | | | 12,941 | | | 16,176 | | | 2,568 | | May-04 | | 1998 | | 40 | | Lakewood, CO | | 7,942 |
| 1,569 |
| 8,653 |
| 10,222 |
| 3,667 |
| Apr-05 | 2002 | 12 & 40 |
| Office | | Clive, IA | | | 5,611 | | | 2,761 | | | 7,453 | | | 10,214 | | | 2,493 | | Jun-04 | | 2003 | | 12, 13 & 40 | | Louisville, CO | (5) | — |
| 3,657 |
| 9,605 |
| 13,262 |
| 1,343 |
| Sep-08 | 1987 | 8, 9 & 40 |
| Office | | Carrollton, TX | | | 13,451 | | | 1,789 | | | 18,157 | | | 19,946 | | | 3,944 | | Jun-04 | | 2003 | | 19 & 40 | | Southington, CT | | 12,551 |
| 3,240 |
| 25,339 |
| 28,579 |
| 14,178 |
| Nov-05 | 1983 | 12, 28 & 40 |
| Industrial | | High Point, NC (1) | | | 0 | | | 1,330 | | | 11,183 | | | 12,513 | | | 2,711 | | Jul-04 | | 2002 | | 18 & 40 | | |
| Office | | Southfield, MI (1) | | | 0 | | | 0 | | | 12,124 | | | 12,124 | | | 4,236 | | Jul-04 | | 1963/1965 | | 7, 16 & 40 | | Wallingford, CT | (5) | — |
| 1,049 |
| 4,773 |
| 5,822 |
| 933 |
| Dec-03 | 1978/1985 | 8 & 40 |
| Industrial | | San Antonio, TX | | | 27,631 | | | 2,482 | | | 38,535 | | | 41,017 | | | 10,127 | | Jul-04 | | 2001 | | 17 & 40 | | |
| Office | | Boca Raton, FL | | 20,400 |
| 4,290 |
| 17,160 |
| 21,450 |
| 3,807 |
| Feb-03 | 1983/2002 | 40 |
| Office | | Fort Meyers, FL | | 8,713 |
| 1,820 |
| 10,198 |
| 12,018 |
| 4,069 |
| Apr-05 | 1997 | 13 & 40 |
| Office | | Lake Mary, FL | (5) | — |
| 4,535 |
| 14,830 |
| 19,365 |
| 3,290 |
| Jun-07 | 1997 | 7 & 40 |
| Office | | Lake Mary, FL | (5) | — |
| 4,438 |
| 15,080 |
| 19,518 |
| 3,244 |
| Jun-07 | 1999 | 7 & 40 |
| Office | | Orlando, FL | (5) | — |
| 586 |
| 35,012 |
| 35,598 |
| 4,542 |
| Dec-06 | 1982 | 40 |
| Office | | Orlando, FL | | — |
| 11,498 |
| 34,014 |
| 45,512 |
| 24,239 |
| Dec-06 | 1984 | 3 |
| Office | | Atlanta, GA | | 41,443 |
| 4,600 |
| 55,333 |
| 59,933 |
| 21,602 |
| Apr-05 | 2003 | 13 & 40 |
| Office | | Atlanta, GA | (5) | — |
| 1,014 |
| 269 |
| 1,283 |
| 170 |
| Dec-06 | 1972 | 40 |
| Office | | Atlanta, GA | (5) | — |
| 870 |
| 187 |
| 1,057 |
| 137 |
| Dec-06 | 1975 | 40 |
| Office | | Chamblee, GA | (5) | — |
| 770 |
| 186 |
| 956 |
| 144 |
| Dec-06 | 1972 | 40 |
| Office | | Cumming, GA | (5) | — |
| 1,558 |
| 1,368 |
| 2,926 |
| 374 |
| Dec-06 | 1968 | 40 |
| Office | | Forest Park, GA | (5) | — |
| 668 |
| 1,242 |
| 1,910 |
| 257 |
| Dec-06 | 1969 | 40 |
| Office | | Jonesboro, GA | (5) | — |
| 778 |
| 146 |
| 924 |
| 121 |
| Dec-06 | 1971 | 40 |
| Office | | Stone Mountain, GA | (5) | — |
| 672 |
| 276 |
| 948 |
| 125 |
| Dec-06 | 1973 | 40 |
| Office | | Suwannee, GA | | 11,084 |
| 1,371 |
| 2,776 |
| 4,147 |
| 75 |
| Apr-05 | 2001 | 12 & 40 |
| Office | | Clive, IA | | 5,412 |
| 2,761 |
| 7,453 |
| 10,214 |
| 3,395 |
| Jun-04 | 2003 | 12, 13 & 40 |
| Office | | Aurora, IL | | — |
| 3,063 |
| 5,943 |
| 9,006 |
| 38 |
| Oct-11 | 1996 | 40 |
| Office | | Chicago, IL | | 29,445 |
| 5,155 |
| 46,180 |
| 51,335 |
| 10,004 |
| Jun-07 | 1986 | 15 & 40 |
| Office | | Lisle, IL | | 10,033 |
| 3,236 |
| 13,698 |
| 16,934 |
| 2,257 |
| Dec-06 | 1985 | 40 |
| Office | | Columbus, IN | (1) (4) | 26,427 |
| 235 |
| 45,729 |
| 45,964 |
| 5,900 |
| Dec-06 | 1983 | 40 |
| Office | | Fishers, IN | | 11,089 |
| 2,808 |
| 19,163 |
| 21,971 |
| 3,829 |
| Jun-07 | 1999 | 9, 10, 38 & 40 |
| Office | | Indianapolis, IN | | 12,036 |
| 1,700 |
| 17,211 |
| 18,911 |
| 8,592 |
| Apr-05 | 1999 | 2-40 |
| Office | | Indianapolis, IN | | 8,802 |
| 1,360 |
| 13,169 |
| 14,529 |
| 5,358 |
| Apr-05 | 2002 | 12 & 40 |
| Office | | Overland Park, KS | | 36,325 |
| 4,769 |
| 41,956 |
| 46,725 |
| 7,397 |
| Jun-07 | 1980 | 12 & 40 |
| Office | | Baton Rouge, LA | | 6,045 |
| 1,252 |
| 10,244 |
| 11,496 |
| 2,096 |
| May-07 | 1997 | 6 & 40 |
| Office | | Foxboro, MA | | 8,559 |
| 2,231 |
| 25,653 |
| 27,884 |
| 9,152 |
| Dec-04 | 1982 | 16 & 40 |
| Office | | Southfield, MI | (5) | — |
| — |
| 12,124 |
| 12,124 |
| 5,637 |
| Jul-04 | 1963/1965 | 7, 16 & 40 |
| Office | | Bridgeton, MO | (5) | — |
| 1,853 |
| 4,469 |
| 6,322 |
| 628 |
| Dec-06 | 1980 | 40 |
| Office | | Kansas City, MO | | 17,307 |
| 2,433 |
| 20,154 |
| 22,587 |
| 3,539 |
| Jun-07 | 1980 | 12 & 40 |
| Office | | Cary, NC | | 12,581 |
| 5,342 |
| 14,866 |
| 20,208 |
| 3,857 |
| Jun-07 | 1999 | 40 |
| Office | | Bridgewater, NJ | | 14,675 |
| 4,738 |
| 27,331 |
| 32,069 |
| 3,622 |
| Dec-06 | 1986 | 40 |
| Office | | Rockaway, NJ | | 14,900 |
| 4,646 |
| 20,428 |
| 25,074 |
| 3,240 |
| Dec-06 | 2002 | 40 |
| Office | | Whippany, NJ | | 15,349 |
| 4,063 |
| 19,711 |
| 23,774 |
| 4,155 |
| Nov-06 | 2006 | 20 & 40 |
| Office | | Wall, NJ | | 25,343 |
| 8,985 |
| 26,961 |
| 35,946 |
| 8,365 |
| Jan-04 | 1983 | 22 & 40 |
| Office | | Rochester, NY | (4) | 18,063 |
| 645 |
| 25,942 |
| 26,587 |
| 3,512 |
| Dec-06 | 1988 | 40 |
| Office | | Milford, OH | (5) | — |
| 3,124 |
| 16,042 |
| 19,166 |
| 3,845 |
| Jun-07 | 1991 | 6, 7 & 40 |
| Office | | Westerville, OH | (5) | — |
| 2,085 |
| 9,265 |
| 11,350 |
| 1,534 |
| May-07 | 2000 | 40 |
| Office | | Canonsburg, PA | | 9,084 |
| 1,055 |
| 10,910 |
| 11,965 |
| 2,513 |
| May-07 | 1997 | 8 & 40 |
| Office | | Harrisburg, PA | | 8,388 |
| 900 |
| 10,556 |
| 11,456 |
| 5,965 |
| Apr-05 | 1998 | 9 & 40 |
| Office | | Philadelphia, PA | | 45,731 |
| 13,209 |
| 52,105 |
| 65,314 |
| 19,457 |
| Jun-05 | 1957 | 4, 5 & 40 |
| Office | | Charleston, SC | | 7,350 |
| 1,189 |
| 8,724 |
| 9,913 |
| 1,947 |
| Nov-06 | 2006 | 40 |
| Office | | Florence, SC | (5) | — |
| 3,235 |
| 12,941 |
| 16,176 |
| 3,216 |
| May-04 | 1998 | 40 |
| Office | | Fort Mill, SC | | 10,113 |
| 3,601 |
| 14,494 |
| 18,095 |
| 3,294 |
| Dec-02 | 2002 | 5 & 40 |
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
Real Estate and Accumulated Depreciation and Amortization
Schedule III ($000) – (continued)- continued
| | | Description | | Location | | Encumbrances | | Land, Improvements and Land Estates | | Buildings and Improvements | | Total | | Accumulated Depreciation and Amortization | | Date Acquired | | Date Constructed | | Useful life computing depreciation in latest income statements (years) | | Location | | Encumbrances | Land and Land Estates | Buildings and Improvements | Total | Accumulated Depreciation and Amortization | Date Acquired | Date Constructed | Useful life computing depreciation in latest income statement (years) |
| Office | | Fort Mill, SC | | | 19,690 | | | 1,798 | | | 25,192 | | | 26,990 | | | 7,161 | | Nov-04 | | 2004 | | 15 & 40 | | Fort Mill, SC | | 19,075 |
| 1,798 |
| 25,192 |
| 26,990 |
| 9,822 |
| Nov-04 | 2004 | 15 & 40 |
| Office | | Foxboro, MA | | | 13,750 | | | 2,231 | | | 25,653 | | | 27,884 | | | 6,552 | | Dec-04 | | 1982 | | 16 & 40 | | Rock Hill, SC | (5) | — |
| 551 |
| 4,313 |
| 4,864 |
| 72 |
| May-11 | 2006 | 40 |
| Industrial | | Olive Branch, MS (1) | | | 0 | | | 198 | | | 10,276 | | | 10,474 | | | 3,831 | | Dec-04 | | 1989 | | 8, 15 & 40 | | |
| Office | | Los Angeles, CA | | | 10,898 | | | 5,110 | | | 10,911 | | | 16,021 | | | 3,252 | | Dec-04 | | 2000 | | 13 & 40 | | Knoxville, TN | | 7,151 |
| 1,079 |
| 10,762 |
| 11,841 |
| 3,883 |
| Mar-05 | 2001 | 14 & 40 |
| Industrial | | Knoxville, TN | | | 7,407 | | | 1,079 | | | 10,762 | | | 11,841 | | | 2,741 | | Mar-05 | | 2001 | | 14 & 40 | | |
| Industrial | | Millington, TN | | | 16,896 | | | 723 | | | 19,118 | | | 19,841 | | | 4,518 | | Apr-05 | | 1997 | | 16 & 40 | | |
| Office | | Memphis, TN | | 3,798 |
| 464 |
| 4,467 |
| 4,931 |
| 944 |
| Nov-06 | 1888 | 20 & 40 |
| Office | | Memphis, TN | (1) (4) | 47,320 |
| 5,291 |
| 97,032 |
| 102,323 |
| 12,635 |
| Dec-06 | 1985 | 40 |
| Office | | Allen, TX | (5) | — |
| 5,591 |
| 21,605 |
| 27,196 |
| 826 |
| May-11 | 1981/1983 | 7 & 25 |
| Office | | Carrollton, TX | | 19,639 |
| 3,427 |
| 22,050 |
| 25,477 |
| 4,494 |
| Jun-07 | 2003 | 8 & 40 |
| Office | | Farmers Branch, TX | | 18,481 |
| 3,984 |
| 27,308 |
| 31,292 |
| 5,610 |
| Jun-07 | 2002 | 40 |
| Office | | Fort Meyers, FL | | | 8,912 | | | 1,820 | | | 10,198 | | | 12,018 | | | 2,857 | | Apr-05 | | 1997 | | 13 & 40 | | Houston, TX | | 41,545 |
| 16,613 |
| 52,682 |
| 69,295 |
| 10,207 |
| Mar-04 | 1976/1984 | 40 |
| Office | | Harrisburg, PA | | | 8,687 | | | 900 | | | 10,556 | | | 11,456 | | | 4,185 | | Apr-05 | | 1998 | | 9 & 40 | | Houston, TX | | 16,165 |
| 3,750 |
| 21,160 |
| 24,910 |
| 8,439 |
| Apr-05 | 2000 | 13 & 40 |
| Office | | Indianapolis, IN | | | 12,482 | | | 1,700 | | | 16,601 | | | 18,301 | | | 5,956 | | Apr-05 | | 1999 | | 5, 10 & 40 | | Houston, TX | | 12,131 |
| 1,500 |
| 14,581 |
| 16,081 |
| 5,317 |
| Apr-05 | 2003 | 14 & 40 |
| Office | | Tulsa, OK | | | 7,282 | | | 2,126 | | | 8,493 | | | 10,619 | | | 3,000 | | Apr-05 | | 2000 | | 11 & 40 | | Houston, TX | | 15,525 |
| 800 |
| 26,879 |
| 27,679 |
| 10,925 |
| Apr-05 | 2000 | 11, 12 & 40 |
| Office | | Houston, TX | | | 16,753 | | | 3,750 | | | 21,149 | | | 24,899 | | | 5,925 | | Apr-05 | | 2000 | | 13 & 40 | | San Antonio, TX | | 11,971 |
| 2,800 |
| 15,585 |
| 18,385 |
| 6,857 |
| Apr-05 | 2000 | 11 & 40 |
| Office | | Houston, TX | | | 16,075 | | | 800 | | | 24,696 | | | 25,496 | | | 7,246 | | Apr-05 | | 2000 | | 11, 12 & 40 | | Sugar Land, TX | | 10,839 |
| 1,834 |
| 16,536 |
| 18,370 |
| 3,204 |
| Mar-04 | 1997 | 40 |
| Office | | San Antonio, TX | | | 12,400 | | | 2,800 | | | 14,587 | | | 17,387 | | | 4,797 | | Apr-05 | | 2000 | | 11 & 40 | | Westlake, TX | | 17,928 |
| 2,361 |
| 22,503 |
| 24,864 |
| 5,511 |
| May-07 | 2007 | 5, 40 |
| Office | | Richmond, VA | | | 10,073 | | | 1,100 | | | 11,919 | | | 13,019 | | | 2,997 | | Apr-05 | | 2000 | | 15 & 40 | | Hampton, VA | (5) | — |
| 2,333 |
| 10,454 |
| 12,787 |
| 2,790 |
| Mar-00 | 1999 | 2.5, 5 & 40 |
| Office | | Suwannee, GA | | | 11,325 | | | 3,200 | | | 10,903 | | | 14,103 | | | 3,275 | | Apr-05 | | 2001 | | 12 & 40 | | Hampton, VA | | — |
| 1,353 |
| 6,006 |
| 7,359 |
| 1,702 |
| Nov-01 | 2000 | 10 & 40 |
| Office | | Indianapolis, IN | | | 9,127 | | | 1,360 | | | 13,150 | | | 14,510 | | | 3,758 | | Apr-05 | | 2002 | | 12 & 40 | | Herndon, VA | (5) | — |
| 5,127 |
| 24,504 |
| 29,631 |
| 6,430 |
| Dec-99 | 1987 | 9, 31, 36 & 40 |
| Office | | Lakewood, CO | | | 8,238 | | | 1,400 | | | 8,653 | | | 10,053 | | | 2,571 | | Apr-05 | | 2002 | | 12 & 40 | | Herndon, VA | | 11,138 |
| 9,409 |
| 12,853 |
| 22,262 |
| 3,039 |
| Jun-07 | 1987 | 40 |
| Office | | Atlanta, GA | | | 42,883 | | | 4,600 | | | 55,333 | | | 59,933 | | | 15,157 | | Apr-05 | | 2003 | | 13 & 40 | | Midlothian, VA | | 9,725 |
| 1,100 |
| 11,919 |
| 13,019 |
| 4,268 |
| Apr-05 | 2000 | 15 & 40 |
| Office | | Houston, TX | | | 12,557 | | | 1,500 | | | 14,581 | | | 16,081 | | | 3,732 | | Apr-05 | | 2003 | | 14 & 40 | | Issaquah, WA | (4) | 31,369 |
| 5,126 |
| 13,647 |
| 18,773 |
| 3,183 |
| Jun-07 | 1987 | 8 & 40 |
| Office | | Philadelphia, PA | | | 47,309 | | | 13,209 | | | 51,104 | | | 64,313 | | | 13,146 | | Jun-05 | | 1957 | | 5 - 40 | | Issaquah, WA | (4) | — |
| 6,268 |
| 16,058 |
| 22,326 |
| 3,660 |
| Jun-07 | 1987 | 8 & 40 |
| Industrial | | Dry Ridge, KY | | | 6,463 | | | 560 | | | 12,553 | | | 13,113 | | | 1,963 | | Jun-05 | | 1988 | | 25 & 40 | | Moody, AL | | 6,677 |
| 654 |
| 9,943 |
| 10,597 |
| 4,114 |
| Feb-04 | 2004 | 15 & 40 |
| Industrial | | Elizabethtown, KY | | | 2,846 | | | 352 | | | 4,862 | | | 5,214 | | | 760 | | Jun-05 | | 2001 | | 25 & 40 | | Orlando, FL | (5) | — |
| 1,030 |
| 10,869 |
| 11,899 |
| 1,532 |
| Dec-06 | 1981 | 40 |
| Industrial | | Elizabethtown, KY | | | 15,084 | | | 890 | | | 26,868 | | | 27,758 | | | 4,202 | | Jun-05 | | 1995/2001 | | 25 & 40 | | Tampa, FL | (5) | — |
| 2,160 |
| 7,281 |
| 9,441 |
| 5,041 |
| Jul-88 | 1986 | 9 - 40 |
| Industrial | | Owensboro, KY | | | 5,743 | | | 393 | | | 11,956 | | | 12,349 | | | 2,004 | | Jun-05 | | 1998/2000 | | 25 & 40 | | McDonough, GA | | 23,000 |
| 2,463 |
| 24,291 |
| 26,754 |
| 3,208 |
| Dec-06 | 2000 | 40 |
| Industrial | | Hopkinsville, KY | | | 8,842 | | | 631 | | | 16,154 | | | 16,785 | | | 2,575 | | Jun-05 | | Various | | 25 & 40 | | Dubuque, IA | | 9,918 |
| 2,052 |
| 8,443 |
| 10,495 |
| 1,855 |
| Jul-03 | 2002 | 11, 12 & 40 |
| Office | | Southington, CT | | | 13,028 | | | 3,240 | | | 25,339 | | | 28,579 | | | 13,003 | | Nov-05 | | 1983 | | 12, 28 & 40 | | |
| Office | | Omaha, NE | | | 8,550 | | | 2,566 | | | 8,324 | | | 10,890 | | | 1,044 | | Nov-05 | | 1995 | | 30 & 40 | | |
| Office | | Tempe, AZ | | | 8,075 | | | 0 | | | 9,442 | | | 9,442 | | | 1,161 | | Dec-05 | | 1998 | | 30 & 40 | | |
| Industrial | | Collierville, TN (1) | | | 0 | | | 714 | | | 2,483 | | | 3,197 | | | 414 | | Dec-05 | | 2005 | | 20 & 40 | | Rockford, IL | (4) | — |
| 371 |
| 2,573 |
| 2,944 |
| 378 |
| Dec-06 | 1998 | 40 |
| Industrial | | Crossville, TN (1) | | | 0 | | | 545 | | | 6,999 | | | 7,544 | | | 1,395 | | Jan-06 | | 1989/2006 | | 17 & 40 | | Rockford, IL | (4) | 6,630 |
| 509 |
| 5,289 |
| 5,798 |
| 725 |
| Dec-06 | 1992 | 40 |
| Office | | Renswoude, Netherlands | | | 36,354 | | | 2,835 | | | 25,698 | | | 28,533 | | | 4,698 | | Jan-06 | | 1994/2003 | | 17 & 40 | | |
| Office | | Memphis, TN | | | 3,903 | | | 464 | | | 4,467 | | | 4,931 | | | 576 | | Nov-06 | | 1888 | | 20 & 40 | | |
| Office | | Charleston, SC | | | 7,350 | | | 1,189 | | | 8,724 | | | 9,913 | | | 1,187 | | Nov-06 | | 2006 | | 40 | | |
| Office | | Hanover, NJ | | | 16,030 | | | 4,063 | | | 19,711 | | | 23,774 | | | 2,534 | | Nov-06 | | 2006 | | 20 & 40 | | |
| Retail, Office, Garage | | Honolulu, HI (1) | | | 0 | | | 21,094 | | | 13,217 | | | 34,311 | | | 987 | | Dec-06 | | 1917/1955/1960/1980 | | 40 | | |
| Office | | Orlando, FL | | | 9,975 | | | 3,538 | | | 9,019 | | | 12,557 | | | 1,720 | | Jan-07 | | 2003 | | 12 & 40 | | |
| Office | | Westlake, TX | | | 18,495 | | | 2,361 | | | 22,396 | | | 24,757 | | | 3,527 | | May-07 | | 2007 | | 5 & 40 | | |
| Industrial | | Antioch, TN | | | 13,418 | | | 5,568 | | | 16,871 | | | 22,439 | | | 2,141 | | May-07 | | 1983 | | 5 - 40 | | Owensboro, KY | (5) | — |
| 819 |
| 2,439 |
| 3,258 |
| 550 |
| Dec-06 | 1975 | 40 |
| Office | | Canonsburg, PA | | | 9,076 | | | 1,055 | | | 10,910 | | | 11,965 | | | 1,634 | | May-07 | | 1997 | | 8 & 40 | | |
| Industrial | | North Berwick, ME | | 9,877 |
| 1,383 |
| 32,397 |
| 33,780 |
| 4,220 |
| Dec-06 | 1965 | 10 & 40 |
| Industrial | | Marshall, MI | (5) | — |
| 40 |
| 900 |
| 940 |
| 607 |
| Aug-87 | 1979 | 12, 20 & 40 |
| Industrial | | Plymouth, MI | | 10,407 |
| 2,296 |
| 13,398 |
| 15,694 |
| 3,197 |
| Jun-07 | 1996 | 40 |
| Industrial | | Temperance, MI | | 9,641 |
| 3,040 |
| 14,738 |
| 17,778 |
| 2,472 |
| Jun-07 | 1980 | 40 |
| Industrial | | Olive Branch, MS | (5) | — |
| 198 |
| 10,276 |
| 10,474 |
| 5,424 |
| Dec-04 | 1989 | 8, 15 & 40 |
| Industrial | | Henderson, NC | (5) | — |
| 1,488 |
| 5,953 |
| 7,441 |
| 1,507 |
| Nov-01 | 1998 | 40 |
| Industrial | | High Point, NC | (5) | — |
| 1,330 |
| 11,183 |
| 12,513 |
| 3,704 |
| Jul-04 | 2002 | 18 & 40 |
| Industrial | | Lumberton, NC | (5) | — |
| 405 |
| 12,049 |
| 12,454 |
| 1,938 |
| Dec-06 | 1998 | 40 |
| Industrial | | Statesville, NC | (4) | 13,547 |
| 891 |
| 16,696 |
| 17,587 |
| 2,891 |
| Dec-06 | 1999 | 3 & 40 |
| Industrial | | Cincinnati, OH | (5) | — |
| 1,009 |
| 7,007 |
| 8,016 |
| 1,062 |
| Dec-06 | 1991 | 40 |
| Industrial | | Columbus, OH | (5) | — |
| 1,990 |
| 10,580 |
| 12,570 |
| 1,739 |
| Dec-06 | 1973 | 40 |
| Industrial | | Hebron, OH | | — |
| 1,063 |
| 4,271 |
| 5,334 |
| 1,072 |
| Dec-97 | 2000 | 40 |
| Industrial | | Hebron, OH | (5) | — |
| 1,681 |
| 7,010 |
| 8,691 |
| 1,733 |
| Dec-01 | 1999 | 5 & 40 |
| Industrial | | Streetsboro, OH | | 18,733 |
| 2,441 |
| 25,092 |
| 27,533 |
| 4,093 |
| Jun-07 | 2004 | 12, 20, 25 & 40 |
| Industrial | | Duncan, SC | (5) | — |
| 884 |
| 8,626 |
| 9,510 |
| 1,028 |
| Jun-07 | 2005 | 40 |
| Industrial | | Laurens, SC | | 14,382 |
| 5,552 |
| 20,886 |
| 26,438 |
| 3,573 |
| Jun-07 | 1991 | 40 |
| Industrial | | Collierville, TN | (5) | — |
| 714 |
| 2,483 |
| 3,197 |
| 626 |
| Dec-05 | 2005 | 20 & 40 |
| Industrial | | Crossville, TN | (5) | — |
| 545 |
| 6,999 |
| 7,544 |
| 2,100 |
| Jan-06 | 1989/2006 | 17 & 40 |
| Industrial | | Memphis, TN | (5) | — |
| 1,054 |
| 11,539 |
| 12,593 |
| 11,317 |
| Feb-88 | 1987 | 8 &15 |
| Industrial | | Memphis, TN | (5) | — |
| 1,553 |
| 12,326 |
| 13,879 |
| 1,896 |
| Dec-06 | 1973 | 40 |
| Industrial | | Millington, TN | | 16,301 |
| 723 |
| 19,118 |
| 19,841 |
| 6,468 |
| Apr-05 | 1997 | 16 & 40 |
| Industrial | | San Antonio, TX | | 26,499 |
| 2,482 |
| 38,535 |
| 41,017 |
| 13,840 |
| Jul-04 | 2001 | 17 & 40 |
| Industrial | | Waxahachie, TX | (5) | — |
| 652 |
| 13,045 |
| 13,697 |
| 7,378 |
| Dec-03 | 1996/1997 | 10, 16 & 40 |
| Industrial | | Winchester, VA | (5) | — |
| 3,823 |
| 12,226 |
| 16,049 |
| 2,137 |
| Jun-07 | 2001 | 40 |
| Retail | | Galesburg, IL | | | 651 | | | 560 | | | 2,366 | | | 2,926 | | | 271 | | May-07 | | 1992 | | 12 & 40 | | Sun City, AZ | (5) | — |
| 1,207 |
| 1,377 |
| 2,584 |
| 230 |
| Dec-06 | 1982 | 40 |
| Retail | | Lewisburg, WV | | | 766 | | | 501 | | | 1,985 | | | 2,486 | | | 163 | | May-07 | | 1993 | | 12 & 40 | | Manteca, CA | | 875 |
| 2,082 |
| 6,464 |
| 8,546 |
| 956 |
| May-07 | 1993 | 23 & 40 |
| Retail | | Lorain, OH | | | 1,642 | | | 1,893 | | | 7,024 | | | 8,917 | | | 648 | | May-07 | | 1993 | | 23 & 40 | | |
| Retail | | Manteca, CA | | | 1,160 | | | 2,082 | | | 6,464 | | | 8,546 | | | 594 | | May-07 | | 1993 | | 23 & 40 | | |
| Retail | | San Diego, CA | | | 740 | | | 0 | | | 13,310 | | | 13,310 | | | 933 | | May-07 | | 1993 | | 23 & 40 | | |
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
Real Estate and Accumulated Depreciation and Amortization
Schedule III ($000) – (continued)- continued
| Description | | Location | | Encumbrances | | Land, Improvements and Land Estates | | Buildings and Improvements | | Total | | Accumulated Depreciation and Amortization | | Date Acquired | | Date Constructed | | Useful life computing depreciation in latest income statements (years) | |
| Retail | | Watertown, NY | | | 1,090 | | | 386 | | | 5,162 | | | 5,548 | | | 517 | | May-07 | | 1993 | | 23 & 40 | |
| Office | | Irving, TX | | | 38,501 | | | 7,476 | | | 42,780 | | | 50,256 | | | 6,513 | | May-07 | | 1999 | | 6 & 40 | |
| Office | | Baton Rouge, LA | | | 6,265 | | | 1,252 | | | 10,244 | | | 11,496 | | | 1,370 | | May-07 | | 1997 | | 6 & 40 | |
| Office | | Centenial, CO | | | 14,687 | | | 4,851 | | | 15,187 | | | 20,038 | | | 2,302 | | May-07 | | 2001 | | 10 & 40 | |
| Office | | Overland Park, KS | | | 37,242 | | | 4,769 | | | 41,956 | | | 46,725 | | | 4,605 | | Jun-07 | | 1980 | | 12 & 40 | |
| Office | | Carrollton, TX | | | 20,080 | | | 3,427 | | | 22,050 | | | 25,477 | | | 2,757 | | Jun-07 | | 2003 | | 8 & 40 | |
| Industrial | | Durham, NH | | | 18,866 | | | 3,464 | | | 18,094 | | | 21,558 | | | 1,955 | | Jun-07 | | 1986 | | 40 | |
| Office | | Dallas, TX | | | 18,526 | | | 3,984 | | | 27,308 | | | 31,292 | | | 3,347 | | Jun-07 | | 2002 | | 40 | |
| Office | | Farmington Hills, MI | | | 18,853 | | | 4,876 | | | 21,115 | | | 25,991 | | | 3,244 | | Jun-07 | | 1999 | | 10 & 40 | |
| Office | | Kansas City, MO | | | 17,751 | | | 2,433 | | | 20,154 | | | 22,587 | | | 2,200 | | Jun-07 | | 1980 | | 12 & 40 | |
| Industrial | | Streetsboro, OH | | | 19,209 | | | 2,441 | | | 25,092 | | | 27,533 | | | 2,521 | | Jun-07 | | 2004 | | 12, 20, 25 & 40 | |
| Office | | Issaquah, WA | | | 31,890 | | | 5,126 | | | 13,554 | | | 18,680 | | | 2,045 | | Jun-07 | | 1987 | | 8 & 40 | |
| Office | | Issaquah, WA | | | 0 | | | 6,268 | | | 16,058 | | | 22,326 | | | 2,351 | | Jun-07 | | 1987 | | 8 & 40 | |
| Office | | Louisville, CO | | | 7,419 | | | 3,657 | | | 9,605 | | | 13,262 | | | 522 | | Sep-08 | | 1987 | | 8, 9 & 40 | |
| Fitness Center | | Baltimore, MD | | | 0 | | | 0 | | | 104 | | | 104 | | | 2 | | Nov-09 | | 2009 | | 7 | |
| Office | | Lenexa, KS (1) | | | 0 | | | 6,909 | | | 29,032 | | | 35,941 | | | 1,282 | | Jul-08 | | 2007 | | 15 & 40 | |
| Industrial | | Saugerties, NY (1) | | | 0 | | | 508 | | | 2,837 | | | 3,345 | | | 220 | | Dec-06 | | 1979 | | 40 | |
| Industrial | | Owensboro, KY (1) | | | 0 | | | 819 | | | 2,439 | | | 3,258 | | | 395 | | Dec-06 | | 1975 | | 40 | |
| Industrial | | Memphis, TN (1) | | | 0 | | | 1,553 | | | 12,326 | | | 13,879 | | | 1,137 | | Dec-06 | | 1973 | | 40 | |
| Industrial | | N. Myrtle Beach, SC | | | 0 | | | 0 | | | 0 | | | 0 | | | - | | Dec-06 | | 1983 | | 40 | |
| Industrial | | Long Beach, CA (3) | | | 0 | | | 5,888 | | | 7,802 | | | 13,690 | | | 654 | | Dec-06 | | 1981 | | 40 | |
| Industrial | | Lumberton, NC (1) | | | 0 | | | 405 | | | 12,049 | | | 12,454 | | | 1,163 | | Dec-06 | | 1998 | | 40 | |
| Industrial | | McDonough, GA | | | 23,000 | | | 2,463 | | | 24,291 | | | 26,754 | | | 1,896 | | Dec-06 | | 2000 | | 40 | |
| Industrial | | Columbus, OH (1) | | | 0 | | | 1,990 | | | 10,580 | | | 12,570 | | | 1,044 | | Dec-06 | | 1973 | | 40 | |
| Office | | Palo Alto, CA (1) | | | 0 | | | 12,398 | | | 16,977 | | | 29,375 | | | 6,661 | | Dec-06 | | 1974 | | 40 | |
| Industrial | | Rockford, IL | | | 0 | | | 371 | | | 2,573 | | | 2,944 | | | 227 | | Dec-06 | | 1998 | | 40 | |
| Industrial | | Rockford, IL | | | 6,799 | | | 509 | | | 5,289 | | | 5,798 | | | 435 | | Dec-06 | | 1992 | | 40 | |
| Industrial | | North Berwick, ME (1) | | | 0 | | | 1,383 | | | 32,397 | | | 33,780 | | | 2,489 | | Dec-06 | | 1965 | | 10 & 40 | |
| Industrial | | Statesville, NC | | | 13,893 | | | 891 | | | 16,494 | | | 17,385 | | | 1,913 | | Dec-06 | | 1999 | | 40 | |
| Industrial | | Orlando, FL (1) | | | 0 | | | 1,030 | | | 10,869 | | | 11,899 | | | 919 | | Dec-06 | | 1981 | | 40 | |
| Industrial | | Cincinnati, OH (1) | | | 0 | | | 1,009 | | | 7,007 | | | 8,016 | | | 637 | | Dec-06 | | 1991 | | 40 | |
| Industrial | | Shreveport, LA | | | 19,000 | | | 860 | | | 21,840 | | | 22,700 | | | 1,524 | | Mar-07 | | 2006 | | 40 | |
| Industrial | | Duncan, SC (1) | | | 0 | | | 884 | | | 8,626 | | | 9,510 | | | 569 | | Jun-07 | | 2005 | | 40 | |
| Industrial | | Laurens, SC | | | 15,386 | | | 5,552 | | | 20,886 | | | 26,438 | | | 2,397 | | Jun-07 | | 1991 | | 40 | |
| Industrial | | Winchester, VA | | | 10,126 | | | 3,823 | | | 12,226 | | | 16,049 | | | 1,500 | | Jun-07 | | 2001 | | 40 | |
| Industrial | | Temperance, MI | | | 10,314 | | | 3,040 | | | 14,738 | | | 17,778 | | | 1,650 | | Jun-07 | | 1980 | | 40 | |
| Industrial | | Logan, NJ | | | 7,168 | | | 1,825 | | | 10,776 | | | 12,601 | | | 973 | | Jun-07 | | 1998 | | 40 | |
| Industrial | | Plymouth, MI | | | 11,170 | | | 2,296 | | | 13,398 | | | 15,694 | | | 2,200 | | Jun-07 | | 1996 | | 40 | |
| Retail, Garage | | Baltimore, MD | | | 0 | | | 0 | | | 23,333 | | | 23,333 | | | 339 | | May-09 | | 2009 | | 40 | |
| Land | | Baltimore, MD | | | 0 | | | 4,605 | | | 0 | | | 4,605 | | | - | | Dec-06 | | N/A | | N/A | |
| Office | | Clinton, CT | | | 0 | | | 285 | | | 4,043 | | | 4,328 | | | 632 | | Dec-06 | | 1971 | | 40 | |
| Office | | Irvine, CA | | | 0 | | | 4,758 | | | 37,674 | | | 42,432 | | | 5,220 | | Dec-06 | | 1983 | | 7 - 40 | |
| Office | | Lisle, IL | | | 10,279 | | | 3,236 | | | 13,667 | | | 16,903 | | | 1,352 | | Dec-06 | | 1985 | | 40 | |
| Office | | Dallas, TX | | | 0 | | | 4,042 | | | 17,484 | | | 21,526 | | | 1,564 | | Dec-06 | | 1981 | | 5, 7 & 40 | |
|
| | | | | | | | | | | | | | | | | | | | | |
| Description | Location | | Encumbrances | Land and Land Estates | Buildings and Improvements | Total | Accumulated Depreciation and Amortization | Date Acquired | Date Constructed | Useful life computing depreciation in latest income statement (years) |
| Retail | San Diego, CA | | 557 |
| — |
| 13,310 |
| 13,310 |
| 1,609 |
| May-07 | 1993 | 23 & 40 |
| Retail | Port Richey, FL | | — |
| 1,376 |
| 1,664 |
| 3,040 |
| 380 |
| Dec-06 | 1980 | 40 |
| Retail | Honolulu, HI | (5) | — |
| — |
| 11,147 |
| 11,147 |
| 11,147 |
| Dec-96 | 1980 | 5 |
| Retail | Galesburg, IL | | 491 |
| 560 |
| 2,366 |
| 2,926 |
| 418 |
| May-07 | 1992 | 12 & 40 |
| Retail | Lawrence, IN | (5) | — |
| 404 |
| 1,737 |
| 2,141 |
| 226 |
| Dec-06 | 1983 | 40 |
| Retail | Minden, LA | (5) | — |
| 224 |
| 2,907 |
| 3,131 |
| 41 |
| Dec-06 | 1982 | 40 |
| Retail | Billings, MT | (5) | — |
| 273 |
| 1,775 |
| 2,048 |
| 37 |
| Dec-06 | 1981 | 40 |
| Retail | Jefferson, NC | (5) | — |
| 71 |
| 884 |
| 955 |
| 128 |
| Dec-06 | 1979 | 40 |
| Retail | Lexington, NC | (5) | — |
| 832 |
| 1,429 |
| 2,261 |
| 180 |
| Dec-06 | 1983 | 40 |
| Retail | Thomasville, NC | (5) | — |
| 208 |
| 561 |
| 769 |
| 8 |
| Dec-06 | 1998 | 40 |
| Retail | Carlsbad, NM | (5) | — |
| 918 |
| 775 |
| 1,693 |
| 225 |
| Dec-06 | 1980 | 40 |
| Retail | Port Chester, NY | (5) | — |
| 7,086 |
| 9,313 |
| 16,399 |
| 2,341 |
| Dec-06 | 1982 | 40 |
| Retail | Watertown, NY | | 822 |
| 386 |
| 5,162 |
| 5,548 |
| 816 |
| May-07 | 1993 | 23 & 40 |
| Retail | Canton, OH | (5) | — |
| 884 |
| 3,534 |
| 4,418 |
| 894 |
| Nov-01 | 1995 | 40 |
| Retail | Franklin, OH | (5) | — |
| 722 |
| 999 |
| 1,721 |
| 14 |
| Dec-06 | 1961 | 40 |
| Retail | Lorain, OH | | 1,238 |
| 1,893 |
| 7,024 |
| 8,917 |
| 1,041 |
| May-07 | 1993 | 23 & 40 |
| Retail | Lawton, OK | (5) | — |
| 663 |
| 1,288 |
| 1,951 |
| 246 |
| Dec-06 | 1984 | 40 |
| Retail | Tulsa, OK | (5) | — |
| 447 |
| 2,432 |
| 2,879 |
| 1,991 |
| Dec-96 | 1981 | 14 & 24 |
| Retail | Clackamas, OR | (5) | — |
| 523 |
| 2,848 |
| 3,371 |
| 2,331 |
| Dec-96 | 1981 | 14 & 24 |
| Retail | Moncks Corner, SC | (5) | — |
| 13 |
| 1,510 |
| 1,523 |
| 203 |
| Dec-06 | 1982 | 40 |
| Retail | Spartanburg, SC | (5) | — |
| 833 |
| 3,334 |
| 4,167 |
| 844 |
| Nov-01 | 1996 | 40 |
| Retail | Chattanooga, TN | (5) | — |
| 487 |
| 956 |
| 1,443 |
| 13 |
| Dec-06 | 1982 | 40 |
| Retail | Paris, TN | (5) | — |
| 247 |
| 547 |
| 794 |
| 101 |
| Dec-06 | 1982 | 40 |
| Retail | Corpus Christi, TX | (5) | — |
| 823 |
| 715 |
| 1,538 |
| 120 |
| Dec-06 | 1983 | 40 |
| Retail | Dallas, TX | (5) | — |
| 861 |
| 2,362 |
| 3,223 |
| 56 |
| Dec-06 | 1960 | 40 |
| Retail | Fort Worth, TX | (5) | — |
| 756 |
| 2,412 |
| 3,168 |
| 55 |
| Dec-06 | 1985 | 40 |
| Retail | Garland, TX | (5) | — |
| 451 |
| 1,299 |
| 1,750 |
| 9 |
| Dec-06 | 1983 | 40 |
| Retail | Greenville, TX | (5) | — |
| 562 |
| 2,743 |
| 3,305 |
| 419 |
| Dec-06 | 1985 | 40 |
| Retail | Victoria, TX | (5) | — |
| 300 |
| 1,149 |
| 1,449 |
| 306 |
| Dec-06 | 1981 | 40 |
| Retail | Staunton, VA | (5) | — |
| 1,028 |
| 326 |
| 1,354 |
| 67 |
| Dec-06 | 1971 | 40 |
| Retail | Lynnwood, WA | (5) | — |
| 488 |
| 2,658 |
| 3,146 |
| 2,176 |
| Dec-96 | 1981 | 14 & 24 |
| Retail | Port Orchard, WA | | — |
| 147 |
| 94 |
| 241 |
| 13 |
| Dec-06 | 1983 | 40 |
| Retail | Fairlea, WV | | 578 |
| 501 |
| 1,985 |
| 2,486 |
| 272 |
| May-07 | 1993 | 12 & 40 |
| Long Term Lease - Office | Phoenix, AZ | | 17,231 |
| 4,666 |
| 19,966 |
| 24,632 |
| 6,500 |
| May-00 | 1997 | 6 & 40 |
| Long Term Lease - Office | Tempe, AZ | | 7,807 |
| — |
| 9,442 |
| 9,442 |
| 1,735 |
| Dec-05 | 1998 | 30 & 40 |
| Long Term Lease - Office | Lake Forest, CA | (5) | — |
| 3,442 |
| 13,769 |
| 17,211 |
| 3,371 |
| Mar-02 | 2001 | 40 |
| Long Term Lease - Office | Lenexa, KS | (5) | — |
| 6,909 |
| 29,032 |
| 35,941 |
| 5,869 |
| July-08 | 2007 | 15 & 40 |
| Long Term Lease - Office | Boston, MA | | 13,173 |
| 3,814 |
| 14,728 |
| 18,542 |
| 1,764 |
| Mar-07 | 1910 | 40 |
| Long Term Lease - Office | Omaha, NE | | 8,266 |
| 2,566 |
| 8,324 |
| 10,890 |
| 1,551 |
| Nov-05 | 1995 | 30 & 40 |
| Long Term Lease - Office | Las Vegas, NV | (1) (4) | 32,152 |
| 12,099 |
| 53,164 |
| 65,263 |
| 6,794 |
| Dec-06 | 1982 | 40 |
| Long Term Lease - Office | Columbus, OH | (5) | — |
| 433 |
| 2,773 |
| 3,206 |
| 35 |
| Jul-11 | 1999/2006 | 40 |
| Long Term Lease - Office | Columbus, OH | (5) | — |
| 1,594 |
| 10,480 |
| 12,074 |
| 262 |
| Dec-10 | 2005 | 40 |
| Long Term Lease - Office | Carrollton, TX | | 12,927 |
| 1,789 |
| 18,157 |
| 19,946 |
| 5,511 |
| Jun-04 | 2003 | 19 & 40 |
| Long Term Lease - Office | Irving, TX | | 37,340 |
| 7,476 |
| 42,780 |
| 50,256 |
| 10,066 |
| May-07 | 1999 | 6 & 40 |
| Long Term Lease - Office | Irving, TX | (5) | — |
| 4,889 |
| 29,695 |
| 34,584 |
| 6,403 |
| June-07 | 1999 | 40 |
| Long Term Lease - Industrial | Dry Ridge, KY | (4) | 5,226 |
| 560 |
| 12,553 |
| 13,113 |
| 2,835 |
| Jun-05 | 1988 | 25 & 40 |
| Long Term Lease - Industrial | Elizabethtown, KY | (4) | 14,466 |
| 890 |
| 26,868 |
| 27,758 |
| 6,069 |
| Jun-05 | 1995/2001 | 25 & 40 |
| Long Term Lease - Industrial | Elizabethtown, KY | (4) | 2,732 |
| 352 |
| 4,862 |
| 5,214 |
| 1,098 |
| Jun-05 | 2001 | 25 & 40 |
| Long Term Lease - Industrial | Hopkinsville, KY | | 8,484 |
| 631 |
| 16,154 |
| 16,785 |
| 3,794 |
| Jun-05 | Various | 25 & 40 |
| Long Term Lease - Industrial | Owensboro, KY | (4) | 4,605 |
| 393 |
| 11,956 |
| 12,349 |
| 2,998 |
| Jun-05 | 1998/2000 | 25 & 40 |
| Long Term Lease - Industrial | Shreveport, LA | | 19,000 |
| 860 |
| 21,840 |
| 22,700 |
| 2,616 |
| Mar-07 | 2006 | 40 |
| Long Term Lease - Industrial | Byhalia, MS | | 15,000 |
| 1,006 |
| 21,482 |
| 22,488 |
| 358 |
| May-11 | 2011 | 40 |
| Long Term Lease - Industrial | Shelby, NC | (5) | — |
| 1,421 |
| 18,860 |
| 20,281 |
| 353 |
| Jun-11 | 2011 | 11, 20 & 40 |
| Long Term Lease - Industrial | Durham, NH | (5) | — |
| 3,464 |
| 18,094 |
| 21,558 |
| 3,076 |
| Jun-07 | 1986 | 40 |
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
Real Estate and Accumulated Depreciation and Amortization
Schedule III ($000) – (continued)- continued
| Description | | Location | | Encumbrances | | Land, Improvements and Land Estates | | Buildings and Improvements | | Total | | Accumulated Depreciation and Amortization | | Date Acquired | | Date Constructed | | Useful life computing depreciation in latest income statements (years) | |
| Office | | Bridgewater, NJ | | | 14,805 | | | 4,738 | | | 27,331 | | | 32,069 | | | 2,173 | | Dec-06 | | 1986 | | 40 | |
| Office | | Pleasanton, CA | | | 3,808 | | | 0 | | | 0 | | | 0 | | | - | | Dec-06 | | 1984 | | 40 | |
| Office | | San Francisco, CA | | | 19,924 | | | 10,244 | | | 26,810 | | | 37,054 | | | 2,802 | | Dec-06 | | 1959 | | 40 | |
| Office | | Colorado Springs, CO | | | 0 | | | 1,018 | | | 2,459 | | | 3,477 | | | 277 | | Dec-06 | | 1982 | | 40 | |
| Office | | Bridgeton, MO (1) | | | 0 | | | 1,853 | | | 4,469 | | | 6,322 | | | 377 | | Dec-06 | | 1980 | | 40 | |
| Office | | Glenwillow, OH | | | 16,746 | | | 2,228 | | | 24,530 | | | 26,758 | | | 2,003 | | Dec-06 | | 1996 | | 40 | |
| Office | | Columbus, IN (2) | | | 25,831 | | | 235 | | | 45,729 | | | 45,964 | | | 3,421 | | Dec-06 | | 1983 | | 40 | |
| Office | | Johnson City, TN (1) | | | 0 | | | 1,214 | | | 7,568 | | | 8,782 | | | 635 | | Dec-06 | | 1983 | | 40 | |
| Office | | Memphis, TN (2) | | | 46,253 | | | 5,291 | | | 97,032 | | | 102,323 | | | 7,581 | | Dec-06 | | 1985 | | 40 | |
| Office | | Orlando, FL (1) | | | 0 | | | 586 | | | 35,012 | | | 35,598 | | | 2,725 | | Dec-06 | | 1982 | | 40 | |
| Office | | Long Beach, CA (3) | | | 0 | | | 21,092 | | | 71,772 | | | 92,864 | | | 5,782 | | Dec-06 | | 1981 | | 4, 9, 10 & 40 | |
| Office | | Little Rock, AR (1) | | | 0 | | | 1,353 | | | 2,260 | | | 3,613 | | | 203 | | Dec-06 | | 1980 | | 40 | |
| Office | | Baltimore, MD | | | 0 | | | 32,959 | | | 82,310 | | | 115,269 | | | 23,268 | | Dec-06 | | 1973 | | 10 & 40 | |
| Office | | Rockaway, NJ | | | 14,900 | | | 4,646 | | | 20,428 | | | 25,074 | | | 1,944 | | Dec-06 | | 2002 | | 40 | |
| Office | | Orlando, FL | | | 0 | | | 11,498 | | | 33,671 | | | 45,169 | | | 4,802 | | Dec-06 | | 1984 | | 40 | |
| Office | | Beaumont, TX (1) | | | 0 | | | 30 | | | 27,311 | | | 27,341 | | | 2,430 | | Dec-06 | | 1983 | | 3 - 40 | |
| Office | | Rochester, NY | | | 18,524 | | | 645 | | | 25,892 | | | 26,537 | | | 2,106 | | Dec-06 | | 1988 | | 40 | |
| Office | | Las Vegas, NV (2) | | | 31,427 | | | 8,824 | | | 53,164 | | | 61,988 | | | 4,076 | | Dec-06 | | 1982 | | 40 | |
| Office | | Boston, MA | | | 13,535 | | | 3,814 | | | 14,728 | | | 18,542 | | | 1,028 | | Mar-07 | | 1910 | | 40 | |
| Office | | Westerville, OH (1) | | | 0 | | | 2,085 | | | 9,265 | | | 11,350 | | | 872 | | May-07 | | 2000 | | 40 | |
| Office | | Brea, CA | | | 76,435 | | | 37,269 | | | 45,695 | | | 82,964 | | | 7,018 | | Jun-07 | | 1983 | | 40 | |
| Office | | Houston, TX | | | 51,989 | | | 16,613 | | | 52,682 | | | 69,295 | | | 7,573 | | Mar-04 | | 1976/1984 | | 40 | |
| Office | | Fishers, IN | | | 11,493 | | | 2,808 | | | 19,039 | | | 21,847 | | | 2,885 | | Jun-07 | | 1999 | | 10, 38 & 40 | |
| Office | | Irving, TX | | | 25,036 | | | 4,889 | | | 29,598 | | | 34,487 | | | 4,353 | | Jun-07 | | 1999 | | 40 | |
| Office | | Milford, OH | | | 14,541 | | | 3,124 | | | 15,990 | | | 19,114 | | | 2,734 | | Jun-07 | | 1991 | | 7 & 40 | |
| Office | | Lake Mary, FL | | | 12,367 | | | 4,535 | | | 14,701 | | | 19,236 | | | 2,342 | | Jun-07 | | 1997 | | 7 & 40 | |
| Office | | Lake Mary, FL | | | 12,360 | | | 4,438 | | | 14,957 | | | 19,395 | | | 2,275 | | Jun-07 | | 1999 | | 7 & 40 | |
| Office | | Parisppany, NJ | | | 38,260 | | | 7,478 | | | 84,051 | | | 91,529 | | | 10,924 | | Jun-07 | | 2000 | | 40 | |
| Office | | Colorado Springs, CO | | | 10,970 | | | 2,748 | | | 12,554 | | | 15,302 | | | 1,629 | | Jun-07 | | 1980 | | 40 | |
| Office | | Herndon, VA | | | 11,558 | | | 9,409 | | | 12,853 | | | 22,262 | | | 2,036 | | Jun-07 | | 1987 | | 40 | |
| Office | | Chicago, IL | | | 29,201 | | | 5,155 | | | 46,180 | | | 51,335 | | | 6,510 | | Jun-07 | | 1986 | | 15 & 40 | |
| Office | | Glen Allen, VA | | | 19,561 | | | 2,361 | | | 29,362 | | | 31,723 | | | 5,441 | | Jun-07 | | 1998 | | 6, 10 & 40 | |
| Office | | Cary, NC | | | 12,727 | | | 5,342 | | | 14,866 | | | 20,208 | | | 2,469 | | Jun-07 | | 1999 | | 40 | |
| Other | | Sun City, AZ (1) | | | 0 | | | 2,154 | | | 2,775 | | | 4,929 | | | 213 | | Dec-06 | | 1982 | | 40 | |
| Other | | Carlsbad, NM (1) | | | 0 | | | 918 | | | 775 | | | 1,693 | | | 75 | | Dec-06 | | 1980 | | 40 | |
| Other | | Corpus Christi, TX (1) | | | 0 | | | 987 | | | 974 | | | 1,961 | | | 78 | | Dec-06 | | 1983 | | 40 | |
| Other | | El Paso, TX (1) | | | 0 | | | 220 | | | 1,749 | | | 1,969 | | | 136 | | Dec-06 | | 1982 | | 40 | |
| Other | | McAllen, TX (1) | | | 0 | | | 606 | | | 1,257 | | | 1,863 | | | 99 | | Dec-06 | | 2004 | | 40 | |
| Other | | Victoria, TX (1) | | | 0 | | | 300 | | | 1,149 | | | 1,449 | | | 91 | | Dec-06 | | 1981 | | 40 | |
| Retail | | Florence, AL (1) | | | 0 | | | 862 | | | 3,747 | | | 4,609 | | | 284 | | Dec-06 | | 1983 | | 40 | |
| Retail | | Chattanooga, TN (1) | | | 0 | | | 556 | | | 1,241 | | | 1,797 | | | 105 | | Dec-06 | | 1982 | | 40 | |
| Retail | | Paris, TN (1) | | | 0 | | | 247 | | | 547 | | | 794 | | | 61 | | Dec-06 | | 1982 | | 40 | |
| Retail | | Carrollton, TX (1) | | | 0 | | | 2,262 | | | 1,085 | | | 3,347 | | | 150 | | Dec-06 | | 1984 | | 40 | |
| Office | | Atlanta, GA (1) | | | 0 | | | 1,014 | | | 269 | | | 1,283 | | | 107 | | Dec-06 | | 1972 | | 40 | |
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
Real Estate and Accumulated Depreciation and Amortization
Schedule III ($000) – (continued)
Description | | Location | | Encumbrances | | Land, Improvements and Land Estates | | Buildings and Improvements | | Total | | Accumulated Depreciation and Amortization | | Date Acquired | | Date Constructed | | Useful life computing depreciation in latest income statements (years) | |
| | Atlanta, GA (1) | | | 0 | | | 870 | | | 187 | | | 1,057 | | | 85 | | Dec-06 | | 1975 | | 40 | |
| | Chamblee, GA (1) | | | 0 | | | 770 | | | 186 | | | 956 | | | 97 | | Dec-06 | | 1972 | | 40 | |
| | Cumming, GA (1) | | | 0 | | | 1,558 | | | 1,368 | | | 2,926 | | | 229 | | Dec-06 | | 1968 | | 40 | |
| | Duluth, GA (1) | | | 0 | | | 660 | | | 1,014 | | | 1,674 | | | 135 | | Dec-06 | | 1971 | | 40 | |
| | Forest Park, GA (1) | | | 0 | | | 668 | | | 1,242 | | | 1,910 | | | 163 | | Dec-06 | | 1969 | | 40 | |
| | Jonesboro, GA (1) | | | 0 | | | 778 | | | 146 | | | 924 | | | 75 | | Dec-06 | | 1971 | | 40 | |
| Office | | Stone Mountain, GA (1) | | | 0 | | | 672 | | | 276 | | | 948 | | | 79 | | Dec-06 | | 1973 | | 40 | |
| Retail | | Thomasville, NC (1) | | | 0 | | | 610 | | | 1,861 | | | 2,471 | | | 141 | | Dec-06 | | 1998 | | 40 | |
| Retail | | Lawrence, IN (1) | | | 0 | | | 404 | | | 1,737 | | | 2,141 | | | 140 | | Dec-06 | | 1983 | | 40 | |
| Retail | | Franklin, OH (1) | | | 0 | | | 1,089 | | | 1,699 | | | 2,788 | | | 129 | | Dec-06 | | 1961 | | 40 | |
| Retail | | Houston, TX (1) | | | 0 | | | 1,336 | | | 5,183 | | | 6,519 | | | 500 | | Dec-06 | | 1982 | | 40 | |
| Retail | | Dallas, TX (1) | | | 0 | | | 1,637 | | | 5,381 | | | 7,018 | | | 628 | | Dec-06 | | 1960 | | 40 | |
| Retail | | Port Richey, FL | | | 0 | | | 1,376 | | | 1,664 | | | 3,040 | | | 228 | | Dec-06 | | 1980 | | 40 | |
| Retail | | Billings, MT (1) | | | 0 | | | 506 | | | 3,062 | | | 3,568 | | | 331 | | Dec-06 | | 1981 | | 40 | |
| Retail | | Fort Worth, TX (1) | | | 0 | | | 1,003 | | | 3,304 | | | 4,307 | | | 385 | | Dec-06 | | 1985 | | 40 | |
| Retail | | Greenville, TX (1) | | | 0 | | | 562 | | | 2,743 | | | 3,305 | | | 252 | | Dec-06 | | 1985 | | 40 | |
| Retail | | Lawton, OK (1) | | | 0 | | | 663 | | | 1,288 | | | 1,951 | | | 148 | | Dec-06 | | 1984 | | 40 | |
| Retail | | Jacksonville, NC | | | 0 | | | 1,151 | | | 221 | | | 1,372 | | | 45 | | Dec-06 | | 1982 | | 40 | |
| Retail | | Jefferson, NC (1) | | | 0 | | | 71 | | | 884 | | | 955 | | | 77 | | Dec-06 | | 1979 | | 40 | |
| Retail | | Lexington, NC (1) | | | 0 | | | 832 | | | 1,429 | | | 2,261 | | | 108 | | Dec-06 | | 1983 | | 40 | |
| Retail | | Moncks Corner, SC (1) | | | 0 | | | 13 | | | 1,510 | | | 1,523 | | | 122 | | Dec-06 | | 1982 | | 40 | |
| Retail | | Staunton, VA (1) | | | 0 | | | 1,028 | | | 326 | | | 1,354 | | | 53 | | Dec-06 | | 1971 | | 40 | |
| Retail | | Montgomery, AL | | | 0 | | | 0 | | | 0 | | | 0 | | | - | | Dec-06 | | 1980 | | 40 | |
| Retail | | Port Orchard, WA | | | 0 | | | 2,167 | | | 1,399 | | | 3,566 | | | 316 | | Dec-06 | | 1983 | | 40 | |
| Retail | | Minden, LA (1) | | | 0 | | | 334 | | | 4,888 | | | 5,222 | | | 369 | | Dec-06 | | 1982 | | 40 | |
| Retail | | Garland, TX (1) | | | 0 | | | 905 | | | 3,448 | | | 4,353 | | | 715 | | Dec-06 | | 1983 | | 40 | |
| Retail | | Hillsboro, TX (1) | | | 0 | | | 139 | | | 1,581 | | | 1,720 | | | 130 | | Dec-06 | | 1982 | | 40 | |
| Retail | | Portchester, NY (1) | | | 0 | | | 7,086 | | | 9,313 | | | 16,399 | | | 1,405 | | Dec-06 | | 1982 | | 40 | |
| Retail | | Tallahassee, FL (1) | | | 0 | | | 0 | | | 3,700 | | | 3,700 | | | 278 | | Dec-06 | | 1980 | | 40 | |
| Retail | | Edmonds, WA (1) | | | 0 | | | 0 | | | 3,947 | | | 3,947 | | | 285 | | Dec-06 | | 1981 | | 40 | |
| Construction in progress | | | | | | | | | | | 12,327 | | | 12,327 | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Subtotal | | | 1,629,008 | | | 577,371 | | | 2,975,435 | | | 3,552,806 | | | 537,406 | | | | | | | |
| | | (1) | | | 171,348 | | | | | | | | | | | | | | | | | | | |
| | | (2) | | | 25,000 | | | | | | | | | | | | | | | | | | | |
| | | (4) | | | 32,553 | | | | | | | | | | | | | | | | | | | |
| | | Total | | $ | 1,857,909 | | $ | 577,371 | | $ | 2,975,435 | | $ | 3,552,806 | | $ | 537,406 | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | |
| Description | Location | | Encumbrances | Land and Land Estates | Buildings and Improvements | Total | Accumulated Depreciation and Amortization | Date Acquired | Date Constructed | Useful life computing depreciation in latest income statement (years) |
| Long Term Lease - Industrial | Chillicothe, OH | | — |
| 736 |
| 9,021 |
| 9,757 |
| 111 |
| Oct-11 | 1995 | 6, 15 & 26 |
| Long Term Lease - Industrial | Glenwillow, OH | | 16,340 |
| 2,228 |
| 24,530 |
| 26,758 |
| 3,338 |
| Dec-06 | 1996 | 40 |
| Long Term Lease - Industrial | Bristol, PA | (5) | — |
| 2,508 |
| 15,815 |
| 18,323 |
| 3,793 |
| Mar-98 | 1982 | 10, 30 & 40 |
| Long Term Lease - Retail | Edmonds, WA | (5) | — |
| — |
| 3,947 |
| 3,947 |
| 550 |
| Dec-06 | 1981 | 40 |
| Multi-tenanted | Phoenix, AZ | (5) | — |
| 1,831 |
| 14,892 |
| 16,723 |
| 388 |
| Nov-01 | 1995/1994 | 5 - 40 |
| Multi-tenanted | Long Beach, CA | | — |
| 15,016 |
| 48,001 |
| 63,017 |
| 881 |
| Dec-06 | 1981 | 4, 9, 10 & 40 |
| Multi-tenanted | Clinton, CT | | — |
| — |
| — |
| — |
| — |
| Dec-06 | 1971 | 40 |
| Multi-tenanted | Orlando, FL | | 9,975 |
| 3,538 |
| 9,019 |
| 12,557 |
| 2,881 |
| Jan-07 | 2003 | 12 & 40 |
| Multi-tenanted | Palm Beach Gardens, FL | (5) | — |
| 3,578 |
| 18,258 |
| 21,836 |
| 5,152 |
| May-98 | 1996 | 11 - 40 |
| Multi-tenanted | Honolulu, HI | (5) | — |
| 21,094 |
| 13,324 |
| 34,418 |
| 1,647 |
| Dec-06 | 1917/1955/ 1960/1980 | 40 |
| Multi-tenanted | Hebron, KY | (5) | — |
| 1,615 |
| 8,125 |
| 9,740 |
| 3,213 |
| Mar-98 | 1987 | 6, 12 & 40 |
| Multi-tenanted | Baltimore, MD | | — |
| 37,565 |
| 150,545 |
| 188,110 |
| 30,348 |
| Dec-06 | 1973 | 5, 10, 25 & 40 |
| Multi-tenanted | Farmington Hills, MI | | 17,994 |
| 2,765 |
| 9,196 |
| 11,961 |
| 442 |
| Jun-07 | 1999 | 2, 13 & 40 |
| Multi-tenanted | Tulsa, OK | | 7,119 |
| 1,642 |
| 3,261 |
| 4,903 |
| — |
| Apr-05 | 2000 | 11 & 40 |
| Multi-tenanted | Wilsonville, OR | | — |
| 751 |
| 4,808 |
| 5,559 |
| 400 |
| Aug-11 | 1980 | 5 |
| Multi-tenanted | Antioch, TN | | — |
| 3,847 |
| 9,801 |
| 13,648 |
| 192 |
| May-07 | 1983 | 5 - 40 |
| Multi-tenanted | Johnson City, TN | | — |
| 1,214 |
| 7,978 |
| 9,192 |
| 1,059 |
| Dec-06 | 1983 | 40 |
| Multi-tenanted | Glen Allen, VA | | 19,188 |
| 2,362 |
| 29,555 |
| 31,917 |
| 8,083 |
| Jun-07 | 1998 | 5 - 40 |
| Construction in progress | | | — |
| — |
| — |
| 4,056 |
| — |
| — | — | — |
| Investment in real estate under construction | | | — |
| — |
| — |
| 32,829 |
| — |
| — | — | — |
| | | | | | | | | | | |
| | Subtotal | | 1,297,649 |
| 522,039 |
| 2,646,151 |
| 3,205,075 |
| 638,368 |
| | | |
| | (1 | ) | | 25,000 |
| | | | | | | |
| | (2 | ) | | 34,355 |
| | | | | | | |
| | (3 | ) | | 9,000 |
| | | | | | | |
| | | | $ | 1,366,004 |
| $ | 522,039 |
| $ | 2,646,151 |
| $ | 3,205,075 |
| $ | 638,368 |
| | | |
(1) –- Properties are collateral for a $164,348 secured term loan and a $7,000 secured revolving loan.
(2) – Properties are collateralcross-collateralized for a $25,000 secured term loan.loan at 12/31/11.
(3) – Properties are encumbered by a $15,252 contract right payable.
(4) –(2) - Certain equity interests are pledged as collateral.
(3) - Property is classified as a capital lease.
(4) - Properties are cross-collaterized properties.
(5) - Properties are collateral for athe Company's new secured revolving credit facility and secured term loan.
LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
Real Estate and Accumulated Depreciation and Amortization
Schedule III ($000) – (continued)- continued
(A) The initial cost includes the purchase price paid directly or indirectly by the Company and pre-2009 acquisition fees and expenses. The total cost basis of the Company’sCompany's properties at December 31, 20092011 for Federalfederal income tax purposes was approximately $3.9 billion.$3.6 billion.
|
| | | | | | | | | | | |
| | 2011 | | 2010 | | 2009 |
| Reconciliation of real estate owned: | | | | | |
| Balance at the beginning of year | $ | 3,374,844 |
| | $ | 3,552,806 |
| | $ | 3,756,188 |
|
| Additions in real estate under construction, net | 21,571 |
| | 11,258 |
| | — |
|
| Additions during year | 143,382 |
| | 46,994 |
| | 42,818 |
|
| Properties sold during year | (230,397 | ) | | (221,875 | ) | | (217,923 | ) |
| Reclassified held for sale properties | — |
| | (9,381 | ) | | — |
|
| Properties impaired during the year | (103,727 | ) | | (3,327 | ) | | (27,271 | ) |
| Translation adjustment on foreign currency | — |
| | (1,432 | ) | | 467 |
|
| Other reclassifications | (598 | ) | | (199 | ) | | (1,473 | ) |
| Balance at end of year | $ | 3,205,075 |
| | $ | 3,374,844 |
| | $ | 3,552,806 |
|
| | | | | | |
| Reconciliation of accumulated depreciation and amortization: | | | | | |
| Balance at the beginning of year | $ | 601,239 |
| | $ | 537,406 |
| | $ | 461,661 |
|
| Depreciation and amortization expense | 114,247 |
| | 115,553 |
| | 113,828 |
|
| Accumulated depreciation and amortization of properties sold, impaired and held for sale during year | (76,939 | ) | | (51,478 | ) | | (36,749 | ) |
| Translation adjustment on foreign currency | — |
| | (242 | ) | | 89 |
|
| Other reclassifications | (179 | ) | | — |
| | (1,423 | ) |
| Balance at end of year | $ | 638,368 |
| | $ | 601,239 |
| | $ | 537,406 |
|
| | | 2009 | | | 2008 | | | 2007 | |
| Reconciliation of real estate owned: | | | | | | | | | |
| Balance at the beginning of year | | $ | 3,756,188 | | | $ | 4,109,097 | | | $ | 3,751,202 | |
| Merger basis reallocation | | | — | | | | — | | | | 8,235 | |
| Additions during year | | | 42,818 | | | | 101,038 | | | | 146,252 | |
| Properties sold during year | | | (217,923 | ) | | | (341,762 | ) | | | (634,560 | ) |
| Property contributed to joint venture during year | | | — | | | | (100,415 | ) | | | (132,054 | ) |
| Properties consolidated during the year | | | — | | | | — | | | | 1,109,064 | |
| Reclassified held for sale properties | | | — | | | | (8,782 | ) | | | (138,163 | ) |
| Properties impaired during the year | | | (27,271 | ) | | | — | | | | (15,500 | ) |
| Properties held for sale placed back in service | | | — | | | | — | | | | 1,830 | |
| Translation adjustment on foreign currency | | | 467 | | | | (1,250 | ) | | | 3,018 | |
| Other reclassifications | | | (1,473 | ) | | | (1,738 | ) | | | — | |
| Construction in progress reclassification | | | — | | | | — | | | | 9,773 | |
| Balance at end of year | | $ | 3,552,806 | | | $ | 3,756,188 | | | $ | 4,109,097 | |
| | | | | | | | | | | | | |
| Reconciliation of accumulated depreciation and amortization: | | | | | | | | | | | | |
| Balance at the beginning of year | | $ | 461,661 | | | $ | 379,831 | | | $ | 276,129 | |
| Depreciation and amortization expense | | | 113,828 | | | | 142,597 | | | | 137,525 | |
| Accumulated depreciation and amortization of properties sold, impaired and held for sale during year | | | (36,749 | ) | | | (15,859 | ) | | | (54,737 | ) |
| Accumulated depreciation of property contributed to joint venture | | | — | | | | (43,018 | ) | | | (16,887 | ) |
| Accumulated depreciation of properties consolidated during the year | | | — | | | | — | | | | 37,597 | |
| Translation adjustment on foreign currency | | | 89 | | | | (152 | ) | | | 204 | |
| Other reclassifications | | | (1,423 | ) | | | (1,738 | ) | | | — | |
| Balance at end of year | | $ | 537,406 | | | $ | 461,661 | | | $ | 379,831 | |
Item 9. Changes in and Disagreements with Accountants on Accounting andFinancial Disclosure
Not applicable.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
An evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act), as of the end of the period covered by this Annual Report was made under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer.Officer who are our Principal Executive Officer and our Principal Financial/Accounting Officer, respectively. Based upon this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures (a) are effective to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is timely recorded, processed, summarized and reported and (b) include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Management’sManagement's Report on Internal Control Over Financial Reporting
Management’sManagement's Report on Internal Control Over Financial Reporting, which appears on page 5155 of this Annual Report, is incorporated herein by reference.
Attestation Report of our Independent Registered Public Accounting Firm
The Report of our Independent Registered Public Accounting Firm constituting the Attestation Report of our Independent Registered Public Accounting Firm, which appears on page 5457 of this Annual Report, is incorporated herein by reference.
Changes in Internal Control Over Financial Reporting
There were no changes to our internal controlscontrol over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the fourth quarter ended December 31, 20092011 that have materially affected, or are reasonably likely to materially affect, our internal controlscontrol over financial reporting.
Item 9B. Other Information
Not applicable.
PART III.
Item 10. TrusteesDirectors, Executive Officers and Corporate Governance
Executive Officers of the Registrant
The following sets forth certain information relating to our executive officers:
|
| |
| Name | Business Experience |
E. Robert Roskind Age 66 | Mr. Roskind, our Chairman since March 2008, previously served as Co-Vice Chairman from December 2006 to March 2008, Chairman from October 1993 to December 2006 and Co-Chief Executive Officer from October 1993 to January 2003. He founded The LCP Group, L.P., a real estate advisory firm, in 1973 and has been its Chairman since 1976. Mr. Roskind also serves as Chairman of Crescent Hotels and Resorts and as a member of the Board of Directors of Consonant REIT Advisors, the external advisor to Invincible Investment Corporation, a Japanese real estate investment trust listed on the Tokyo Stock Exchange. |
Richard J. Rouse Age 66 | Mr. Rouse, our Vice Chairman since March 2008 and our Chief Investment Officer since January 2003, previously served as one of our trustees from October 1993 to May 2010, our Co-Vice Chairman from December 2006 to March 2008, our President from October 1993 to April 1996 and our Co-Chief Executive Officer from October 1993 to January 2003. |
T. Wilson Eglin Age 47 | Mr. Eglin has served as our Chief Executive Officer since January 2003, our President since April 1996 and as a trustee since May 1994. He served as one of our Executive Vice Presidents from October 1993 to April 1996 and our Chief Operating Officer from October 1993 to December 2010. |
Patrick Carroll Age 48 | Mr. Carroll has served as our Chief Financial Officer since May 1998, our Treasurer since January 1999 and one of our Executive Vice Presidents since January 2003. Prior to joining us, Mr. Carroll was, from 1986 to 1998, in the real estate practice of Coopers & Lybrand L.L.P., a public accounting firm that was one of the predecessors of PricewaterhouseCoopers LLP. |
Paul R. Wood Age 51 | Mr. Wood served as our Chief Accounting Officer from October 1993 to December 2010, and has served as one of our Vice Presidents and our Secretary since 1993 and our Chief Tax Compliance Officer since January 2011. |
The information regarding our executive officers required to be furnished pursuant to this item is set forth in Part I following Item 4 of this Annual Report. Information relating to our Code of Business Conduct and Ethics, is included in Part I, Item 1 of this Annual Report. The information relating to our trustees, including the audit committee of our Board of Trustees and our Audit Committee financial expert, and certain information relating to our executive officers will be in our Definitive Proxy Statement for our 20102012 Annual Meeting of Shareholders, which we refer to as our Proxy Statement and is incorporated herein by reference.
Item 11. Executive Compensation
The information required to be furnished pursuant to this item will be set forth under the appropriate captions in the Proxy Statement, and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Managementand Related Stockholder Matters
The information required to be furnished pursuant to this item will be set forth under the appropriate captions in the Proxy Statement, and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required to be furnished pursuant to this item will be set forth under the appropriate captions in the Proxy Statement, and is incorporated herein by reference. In addition, certain information regarding related party transactions is set forth in note 2017 to the Consolidated Financial Statements beginning on page 8887 of this Annual Report.
Item 14. Principal Accounting Fees and Services
The information required to be furnished pursuant to this item will be set forth under the appropriate captions in the Proxy Statement, and is incorporated herein by reference.
Item 15. Exhibits, Financial Statement Schedules
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| | Page |
| (a)(1) Financial Statements | 52 |
| (2) Financial Statement Schedule | 92 |
| (3) Exhibits | 99 |
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| Exhibit No. | | | | Description |
| | | | | |
| 3.1 | | — | | Articles of Merger and Amended and Restated Declaration of Trust of the Company, dated December 31, 2006 (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed January 8, 2007 (the “01/08/07 8-K”))(1) |
| 3.2 | | — | | Articles Supplementary Relating to the 7.55% Series D Cumulative Redeemable Preferred Stock, par value $.0001 per share (filed as Exhibit 3.3 to the Company’s Registration Statement on Form 8A filed February 14, 2007 (the “02/14/07 Registration Statement”))(1) |
| 3.3 | | — | | Amended and Restated By-laws of the Company (filed as Exhibit 3.2 to the 01/08/07 8-K)(1) |
| 3.4 | | — | | First Amendment to Amended and Restated By–laws of the Company (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed November 20, 2009)(1) |
| 3.5 | | — | | Fifth Amended and Restated Agreement of Limited Partnership of Lepercq Corporate Income Fund L.P. (“LCIF”), dated as of December 31, 1996, as supplemented (the “LCIF Partnership Agreement”) (filed as Exhibit 3.3 to the Company’s Registration Statement on Form S-3/A filed September 10, 1999 (the “09/10/99 Registration Statement”))(1) |
| 3.6 | | — | | Amendment No. 1 to the LCIF Partnership Agreement dated as of December 31, 2000 (filed as Exhibit 3.11 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003, filed February 26, 2004 (the “2003 10-K”))(1) |
| 3.7 | | — | | First Amendment to the LCIF Partnership Agreement effective as of June 19, 2003 (filed as Exhibit 3.12 to the 2003 10-K)(1) |
| 3.8 | | — | | Second Amendment to the LCIF Partnership Agreement effective as of June 30, 2003 (filed as Exhibit 3.13 to the 2003 10-K)(1) |
| 3.9 | | — | | Third Amendment to the LCIF Partnership Agreement effective as of December 31, 2003 (filed as Exhibit 3.13 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004, filed on March 16, 2005 (the “2004 10-K”))(1) |
| 3.10 | | — | | Fourth Amendment to the LCIF Partnership Agreement effective as of October 28, 2004 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November 4, 2004)(1) |
| 3.11 | | — | | Fifth Amendment to the LCIF Partnership Agreement effective as of December 8, 2004 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed December 14, 2004 (the “12/14/04 8-K”))(1) |
| 3.12 | | — | | Sixth Amendment to the LCIF Partnership Agreement effective as of June 30, 2003 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed January 3, 2005 (the “01/03/05 8-K”))(1) |
| 3.13 | | — | | Seventh Amendment to the LCIF Partnership Agreement (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November 3, 2005)(1) |
| 3.14 | | — | | Eighth Amendment to the LCIF Partnership Agreement effective as of March 26, 2009 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 27, 2009 (the “4/27/09 8-K”)(1) |
| 3.15 | | — | | Second Amended and Restated Agreement of Limited Partnership of Lepercq Corporate Income Fund II L.P. (“LCIF II”), dated as of August 27, 1998 the (“LCIF II Partnership Agreement”) (filed as Exhibit 3.4 to the 9/10/99 Registration Statement)(1) |
| 3.16 | | — | | First Amendment to the LCIF II Partnership Agreement effective as of June 19, 2003 (filed as Exhibit 3.14 to the 2003 10-K)(1) |
| 3.17 | | — | | Second Amendment to the LCIF II Partnership Agreement effective as of June 30, 2003 (filed as Exhibit 3.15 to the 2003 10-K)(1) |
| 3.18 | | — | | Third Amendment to the LCIF II Partnership Agreement effective as of December 8, 2004 (filed as Exhibit 10.2 to 12/14/04 8-K)(1) |
| 3.19 | | — | | Fourth Amendment to the LCIF II Partnership Agreement effective as of January 3, 2005 (filed as Exhibit 10.2 to 01/03/05 8-K)(1) |
| 3.20 | | — | | Fifth Amendment to the LCIF II Partnership Agreement effective as of July 23, 2006 (filed as Exhibit 99.5 to the Company’s Current Report on Form 8-K filed July 24, 2006)(1) |
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| 3.21 | | — | | Sixth Amendment to the LCIF II Partnership Agreement effective as of December 20, 2006 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed December 22, 2006)(1) |
| 3.22 | | — | | Seventh Amendment to the LCIF II Partnership Agreement effective as of March 26, 2009 (filed as Exhibit 10.2 to the 4/27/09 8-K)(1) |
3.23 | | — | | Amended and Restated Agreement of Limited Partnership (“the Net 3 Partnership Agreement”) of Net 3 Acquisition L.P. (“Net 3”) (filed as Exhibit 3.16 to the Company’s Registration Statement on Form S-3 filed November 16, 2006)(1) |
3.24 | | — | | First Amendment to the Net 3 Partnership Agreement effective as of November 29, 2001 (filed as Exhibit 3.17 to the 2003 10-K)(1) |
3.25 | | �� | | Second Amendment to the Net 3 Partnership Agreement effective as of June 19, 2003 (filed as Exhibit 3.18 to the 2003 10-K)(1) |
3.26 | | — | | Third Amendment to the Net 3 Partnership Agreement effective as of June 30, 2003 (filed as Exhibit 3.19 to the 2003 10-K)(1) |
3.27 | | — | | Fourth Amendment to the Net 3 Partnership Agreement effective as of December 8, 2004 (filed as Exhibit 10.3 to 12/14/04 8-K)(1) |
3.28 | | — | | Fifth Amendment to the Net 3 Partnership Agreement effective as of January 3, 2005 (filed as Exhibit 10.3 to 01/03/05 8-K)(1) |
3.29 | | — | | Sixth Amendment to the Net 3 Partnership Agreement effective as of March 26, 2009 (filed as Exhibit 10.4 to the 4/27/09 8-K)(1) |
| 4.1 | | — | | Specimen of Common Shares Certificate of the Company (filed as Exhibit 4.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2006)(1) |
| 4.2 | | — | | Form of 8.05% Series B Cumulative Redeemable Preferred Stock certificate (filed as Exhibit 4.1 to the Company’s Registration Statement on Form 8A filed June 17, 2003)(1) |
| 4.3 | | — | | Form of 6.50% Series C Cumulative Convertible Preferred Stock certificate (filed as Exhibit 4.1 to the Company’s Registration Statement on Form 8A filed December 8, 2004)(1) |
| 4.4 | | — | | Form of 7.55% Series D Cumulative Redeemable Preferred Stock certificate (filed as Exhibit 4.1 to the 02/14/07 Registration Statement)(1) |
| 4.5 | | — | | Indenture, dated as of January 29, 2007, among the Company (as successor to the MLP)by merger), the other guarantors named therein and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed January 29, 2007 (the “01/29/07 8-K”))(1) |
| 4.6 | | — | | First Supplemental Indenture, dated as of January 29, 2007, among the Company (as successor to the MLP), the other guarantors named therein and U.S. Bank National Association, as trustee, including the Form of 5.45% Exchangeable Guaranteed Notes due 2027 (filed as Exhibit 4.2 to the 01/29/07 8-K)(1) |
4.7 | | — | | Second Supplemental Indenture, dated as of March 9, 2007, among the Company (as successor to the MLP), the other guarantors named therein and U.S. Bank National Association, as trustee (filed as Exhibit 4.3 to the Company’s Current Report on Form 8-K filed on March 9, 2007 (the “03/09/07 8-K”))(1) |
4.8 | | — | | Amended and Restated Trust Agreement, dated March 21, 2007, among the Company, The Bank of New York Trust Company, National Association, The Bank of New York (Delaware), the Administrative Trustees (as named therein) and the several holders of the Preferred Securities from time to time (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March 27, 2007 (the “03/27/2007 8-K”))(1) |
4.9 | | — | | Third Supplemental Indenture, dated as of June 19, 2007, among the Company (as successor to The Lexington Master Limited Partnership), the other guarantors named therein and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to the Company’s Report on Form 8-K filed on June 22, 2007)(1) |
4.104.7 | | — | | Junior Subordinated Indenture, dated as of March 21, 2007, between Lexington Realty Trust and The Bank of New York Trust Company, National Association (filed as Exhibit 4.2 to the 03/27/07 8-K)(1) |
4.114.8 | | — | | Fourth Supplemental Indenture, dated as of December 31, 2008, among the Company, the other guarantors named therein and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to the Company’s Report on Form 8-K filed on January 2, 2009 (the “01/02/09 8-K”))(1) |
4.124.9 | | — | | Fifth Supplemental Indenture, dated as of June 9, 2009, among the Company (as successor to the MLP), the other guarantors named therein and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on June 15, 2009)(1) |
4.134.10 | | — | | Sixth Supplemental Indenture, dated as of January 26, 2010 among the Company, the guarantors named therein and U.S. Bank National Association, as trustee, including the Form of 6.00% Convertible Guaranteed Notes due 2030 (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed January 26, 2010)(1) |
| 10.1 | | — | | 1994 Employee Stock Purchase Plan (filed as Exhibit D to the Company’s Definitive Proxy Statement dated April 12, 1994)(1, 4) |
| 10.2 | | — | | The Company’s 2007 Equity2011 Equity-Based Award Plan (filed as Annex AExhibit 10.1 to the Company’s Definitive Proxy Statement dated April 19, 2007)(1,4)Company's Current Report on Form 8-K/A filed June 22, 2011)(1, 4) |
| 10.3 | | — | | Form of Compensation Agreement (Long-Term Compensation) between the Company and each of the following officers: Richard J. Rouse and Patrick Carroll (filed as Exhibit 10.15 to the 2004 10-K)(1, 4) |
| 10.4 | | — | | Form of Compensation Agreement (Bonus and Long-Term Compensation) between the Company and each of the following officers: E. Robert Roskind and T. Wilson Eglin (filed as Exhibit 10.16 to the 2004 10-K)(1, 4) |
| 10.5 | | — | | Form of Nonvested Share Agreement (Performance Bonus Award) between the Company and each of the following officers: E. Robert Roskind, T. Wilson Eglin, Richard J. Rouse and Patrick Carroll (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 6, 2006 (the “02/06/06 8-K”))(1, 4) |
10.6 | | — | | Form of Nonvested Share Agreement (Long-Term Incentive Award) between the Company and each of the following officers: E. Robert Roskind, T. Wilson Eglin, Richard J. Rouse and Patrick Carroll (filed as Exhibit 10.2 to the 02/06/06 8-K)(1, 4) |
10.7 | | — | | Form of the Company’s Nonvested Share Agreement, dated as of December 28, 2006 (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on January 3, 2007 (the “01/03/07 8-K”))(1,4) |
10.8 | | — | | Form of Lock-Up and Claw-Back Agreement, dated as of December 28, 2006 (filed as Exhibit 10.4 to the 01/03/07 8-K)(1) |
10.9 | | — | | Form of 2007 Annual Long-Term Incentive Award Agreement (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 11, 2008)(1,4) |
10.10 | | — | | Form of Share Option Award Agreement (filed as Exhibit 10.3 to the 01/02/09 8-K)(1,4)Company’s Current Report on Form 8-K/A filed on November 24, 2010)(1, 4) |
10.1110.6 | | — | | Form of 2010 Share Option Award Agreement (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K8-K/A filed January 11,November 24, 2010)(1, 4) |
10.1210.7 | | — | | Form of December 2010 Share Option Award Agreement (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed January 6, 2011(1,4) |
| 10.8 | | — | | Amended and Restated Rabbi Trust Agreement, originally dated January 26, 1999 (filed as Exhibit 10.2 to the 01/02/09 8-K)(1, 4) |
| 10.9 | | — | | Form of 2011 Nonvested Share Agreement (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on January 6, 2012 (the "01/06/12 8-K")(1,4) |
| 10.10 | | — | | Employment Agreement, dated as of January 15, 2012, between the Company and E. Robert Roskind (2,4) |
| 10.11 | | — | | Employment Agreement, dated as of January 15, 2012, between the Company and T. Wilson Eglin (2,4) |
| 10.12 | | — | | Employment Agreement, dated as of January 15, 2012, between the Company and Richard J. Rouse (2,4) |
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| | | | |
| 10.13 | | — | | FormEmployment Agreement, dated as of Employment AgreementJanuary 15, 2012, between the Company and eachPatrick Carroll (2,4) |
| 10.14 | | — | | Long-Term Nonvested Share Agreement dated as of E. Robert Roskind,January 12, 2012, between the Company and T. Wilson Eglin Richard J. Rouse and Patrick Carroll, dated January 15, 2010 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed January 20, 2010)(1, 4)(2,4) |
10.1410.15 | | — | | Form of Amended and Restated Indemnification Agreement between the Company and certain officers and trustees (filed as Exhibit 10.20 to the Company’s Quarterly Report Form 10-Q for the quarter ended September 30, 2008)(1) |
10.1510.16 | | — | | Amended and Restated Credit Agreement, dated as of FebruaryJanuary 13, 20092012 among the Company, LCIF and LCIF II Net 3, jointly and severally as borrowers, certain subsidiaries of the Company, as guarantors, KeyBank National Association, as agent, and each of the financial institutions initially a signatory thereto together with their assignees pursuant to Section 12.5 therein (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed FebruaryJanuary 17, 2009)2012 (the "01/17/12 8-K"))(1) |
10.1610.17 | | — | | Master Terms and Conditions for Issuer Forward Transactions betweenTerm Loan Agreement, dated as of January 13, 2012 among the Company, LCIF and Citigroup Financial Products Inc., effectiveLCIF II, as borrowers, certain subsidiaries of October 28, 2008the Company, as guarantors, Wells Fargo Bank, National Association, as agent, and each of the financial institutions initially a signatory thereto (filed as Exhibit 10.110.2 to the Company’s Current Report on Form 8-K filed November 6, 2008 (the “11/06/08 8-K”))01/17/12 8-K)(1) |
10.1710.18 | | — | | Intercreditor Agreement, dated as of January 13, 2012, among the Company, LCIF, LCIF II, the other grantors party thereto, KeyBank, National Association, and Wells Fargo Bank, National Association (filed as Exhibit 10.3 to the 01/17/12 8-K)(1) |
| 10.19 | | — | | Funding Agreement, dated as of July 23, 2006, by and among LCIF, LCIF II and Net 3 Acquisition L.P. (“Net 3”) and the Company (filed as Exhibit 99.4)(1) |
10.1810.20 | | — | | Letter Agreement among the Company (as successor to Newkirk)by merger), Apollo Real Estate Investment Fund III, L.P., NKT Advisors LLC, Vornado Realty Trust, VNK Corp., Vornado Newkirk LLC, Vornado MLP GP LLC and WEM-Brynmawr Associates LLC (filed as Exhibit 10.15 to Amendment No. 5 to Newkirk Registration Statement on Form S-11/A filed October 28, 2005 (“Amendment No. 5 to NKT’s S-11”))(1) |
10.1910.21 | | — | | Amendment to the Letter Agreement among Newkirk,the Company (as successor by merger), Apollo Real Estate Investment Fund III, L.P., NKT Advisors LLC, Vornado Realty Trust, Vornado Realty L.P., VNK Corp., Vornado Newkirk LLC, Vornado MLP GP LLC, and WEM-Brynmawr Associates LLC (filed as Exhibit 10.25 to Amendment No. 5 to Newkirk’s S-11)(1) |
10.2010.22 | | — | | Second Amended and Restated Ownership Limit Waiver Agreement (Vornado), dated as of October 28, 2008,December 6, 2010, between the Company and Vornado Realty, L.P. (together with certain affiliates) (filed as Exhibit 10.210.1 to the 11/06/08 8-K)Company’s Current Report on Form 8-K filed on December 6, 2010)(1) |
10.2110.23 | | — | | Amendment No. 1 to Amended and Restated Ownership LimitLimitation Waiver Agreement (BlackRock), dated as of April 21, 2009, between the Company and Vornado Realty L.P.November 18, 2010 (filed as of Exhibit 10.410.1 to the 4/27/09 8-K)Company’s Current Report on Form 8-K filed on November 24, 2010 (the “11/24/10 8-K”)(1) |
10.2210.24 | | — | | Registration RightsOwnership Limitation Waiver Agreement (Cohen & Steers), dated as of December 31, 2006, between the Company and Michael L. AshnerNovember 18, 2010 (filed as Exhibit 10.1010.2 to the 01/08/0711/24/10 8-K)(1) |
10.2310.25 | | — | | First Amendment to Ownership Limitation Waiver Agreement (Cohen & Steers), dated as of April 19, 2011 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 25, 2011)(1) |
| 10.26 | | — | | Amended and Restated Registration Rights Agreement, dated as of November 3, 2008, between the Company and Vornado Realty, L.P. and Vornado LXP LLC (filed as Exhibit 10.3 to the 11/06/08 8-K)(1) |
10.2410.27 | | — | | Registration Rights Agreement, dated as of January 29, 2007, among the Company, LCIF, LCIF II, Net 3, Lehman Brothers Inc. and Bear, Stearns & Co. Inc., for themselves and on behalf of the initial purchasers named therein (filed as Exhibit 4.3 to the 01/29/07 8-K)(1) |
10.2510.28 | | — | | Registration Rights Agreement, dated as of March 9, 2007, among the MLP, the Company, LCIF, LCIF II, Net 3, Lehman Brothers Inc. and Bear, Stearns & Co. Inc., for themselves and on behalf of the initial purchasers named therein (filed as Exhibit 4.4 to the 03/09/07 8-K)(1) |
10.2610.29 | | — | | Second Amendment and Restated Limited Partnership Agreement of Net Lease Strategic Assets fund L.P. (“NLSAF”), dated as of February 20, 2008, among LMLP GP LLC, the Company (as successor to the MLP)by merger) Inland American (Net Lease) Sub, LLC (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 21, 2008)(1) |
10.2710.30 | | — | | Management Agreement, dated as of August 10, 2007, between NLSAF and Lexington Realty Advisors, Inc. (filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on August 17, 2007)(1) |
10.2810.31 | | — | | SalesFunding Agreement with Cantor Fitzgerald & Co., dated as of December 12, 2008July 23, 2006, by and among LCIF, LCIF II and the Company (filed as Exhibit 1.199.4 to the Company’s Current Report on Form 8-K filed on December 12, 2008 (the “12/12/08 8-K”))(1) |
10.29 | | — | | Sales Agreement with Merrill Lynch, Pierce, Fenner & Smith Incorporated, dated as of December 12, 2008 (filed as Exhibit 1.1 to the 12/12/08 8-K)July 24, 2006)(1) |
| 12 | | — | | Statement of Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Dividends (2) |
| 14.1 | | — | | Amended and Restated Code of Business Conduct and Ethics (filed as Exhibit 14.1 to the Company’s AnnualCompany's Current Report on Form 10-K for the year ended8-K filed on December 31, 2007 8, 2010)(1) |
| 21 | | — | | List of Subsidiariessubsidiaries (2) |
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| 23.1 | | — | | Consent of KPMG LLP (2) |
| 23.2 | | — | | Consent of PricewaterhouseCoopersPricewaterhouse Coopers LLP (2) |
| 23.3 | | — | | Consent of KPMG LLP (2) |
| 31.1 | | — | | Certification of Chief Executive Officer pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(3)2002(2) |
| 31.2 | | — | | Certification of Chief Financial Officer pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(3)2002(2) |
| 32.1 | | — | | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(3) |
| 32.2 | | — | | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(3) |
| 99.1 | | — | | Financial statements and related financial statement schedule of Lex-Win Concord LLCNet Lease Strategic Assets Fund L.P. (2) |
| 99.2 | | — | | Financial statements and related financial statement schedule of Net Lease Strategic Assets Fund L.P.Lex-Win Concord LLC (2) |
| 101.INS | | — | | XBRL Instance Document (2, 5) |
| 101.SCH | | — | | XBRL Taxonomy Extension Schema (2, 5) |
| 101.CAL | | — | | XBRL Taxonomy Extension Calculation Linkbase (2, 5) |
| 101.DEF | | — | | XBRL Taxonomy Extension Definition Linkbase Document (2, 5) |
| 101.LAB | | — | | XBRL Taxonomy Extension Label Linkbase Document (2, 5) |
| 101.PRE | | — | | XBRL Taxonomy Extension Presentation Linkbase Document (2, 5) |
(1) Incorporated by reference.
(2) Filed herewith.
(3) Furnished herewith.
(4) Management contract or compensatory plan or arrangement.
(1) | Incorporated |
| (5) | The XBRL related information in this Annual Report, Exhibit 101, is not deemed "filed" for purposes of Section 11 or 12 of the Securities Act of 1933, as amended (the "Securities Act"), or Section 18 of the Securities Exchanges Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of those sections, and is not part of any registration statement to which it may relate, and is not incorporated by reference.reference into any registration statement or other document filed under the Securities Act or the Exchange Act, except as set forth by specific reference in such filing or document. |
(4) | Management Contract or compensatory plan or arrangement. |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Companyregistrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| | | |
| | Lexington Realty Trust |
| | | | |
| | | | |
| Dated: February 28, 2012 | By: | /s/ T. Wilson Eglin |
| | | | T. Wilson Eglin |
| | | Chief Executive Officer |
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints T. Wilson Eglin and Patrick Carroll, and each of them severally, his true and lawful attorney-in-fact with power of substitution and resubstitution to sign in his name, place and stead, in any and all capacities, to do any and all things and execute any and all instruments that such attorney may deem necessary or advisable under the Securities Exchange Act of 1934 and any rules, regulations and requirements of the U.S. Securities and Exchange Commission in connection with this Annual Report on Form 10-K and any and all amendments hereto, as fully for all intents and purposes as he might or could do in person, and hereby ratifies and confirms all said attorneys-in-fact and agents, each acting alone, and his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the CompanyRegistrant and in the capacities and on the date indicated.
Signature |
| |
| Signature | Title |
| | |
/s/ E. Robert Roskind | | Chairman of the Board of Trustees |
E. Robert Roskind | | |
| | | |
/s/ Richard J. RouseE. Robert Roskind E. Robert Roskind | | Vice Chairman of the Board of Trustees |
Richard J. Rouse | | and Chief Investment Officer |
| | |
/s/ Richard J. Rouse Richard J. Rouse | Vice Chairman and Chief Investment Officer |
| |
/s/ T. Wilson Eglin T. Wilson Eglin | | Chief Executive Officer, President Chief and Trustee |
T. Wilson Eglin | |
Operating/s/ Patrick Carroll Patrick Carroll | Chief Financial Officer, Treasurer and Executive Vice President |
| |
/s/ Paul R. Wood Paul R. Wood | Vice President, Chief Tax Compliance Officer and Secretary |
| |
/s/ Clifford Broser Clifford Broser | Trustee |
| | | |
/s/ Patrick CarrollHarold First Harold First | | Chief Financial Officer, Treasurer and |
Patrick Carroll | | Executive Vice PresidentTrustee |
| | | |
/s/ Paul R. WoodRichard S. Frary Richard S. Frary | | Vice President, Chief Accounting Officer |
Paul R. Wood | | and SecretaryTrustee |
| | | |
/s/ Clifford Broser | James Grosfeld James Grosfeld | Trustee |
Clifford Broser | | |
| | |
/s/ Geoffrey Dohrmann | | Trustee |
Geoffrey Dohrmann | | |
| | |
/s/ Carl D. Glickman | | Trustee |
Carl D. Glickman | | |
| | |
/s/ James Grosfeld | | Trustee |
James Grosfeld | | |
| | |
/s/ Harold First | | Trustee |
Harold First | | |
| | |
/s/ Richard Frary | | Trustee |
Richard Frary | | |
| | |
/s/ Kevin W. Lynch | Kevin W. Lynch | Trustee |
Kevin W. Lynch | | |
DATE: March 1, 2010Each dated: February 28, 2012
