UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DCD.C. 20549

FORM 10-K

(Mark One)
þ
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2012
or
For the fiscal year ended December 31, 2009
or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from     to


For the transition period from _________________ to ________________
Commission File Numberfile number 1-12386
LEXINGTON REALTY TRUST
(Exact name of Registrantregistrant as specified in its charter)

Maryland13-3717318
(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.)
New York, NY10119-4015
(Address of principal executive offices)(Zip Code)

Registrant’sRegistrant's telephone number, including area codecode: (212) 692-7200

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

Title of Each Classeach className of Each Exchangeeach exchange on which Registeredregistered
Shares of beneficial interests,interest, par value $0.0001, classified as Common StockNew 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 registrant 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 registrant 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: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 registrant 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 registrant 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 registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  o No þx.

The aggregate market value of the voting shares of beneficial interest, par value $0.0001 per share, classified as common stock (“common shares”) of the registrant held by non-affiliates of the Registrant as of June 30, 2009,29, 2012, which was the last business day of the Registrant’sregistrant's most recently completed second fiscal quarter, was $360,735,859$1,293,326,650 based on the closing price of the common shares on the New York Stock Exchange as of that date, which was $3.40$8.47 per share.

Number of common shares outstanding as of February 25, 201021, 2013 was 121,944,615.188,840,892.

DOCUMENTS INCORPORATED BY REFERENCE
Certain information contained in the Definitive Proxy Statement for Registrant’sregistrant's Annual Meeting of Shareholders, to be held on May 18, 2010,21, 2013, is incorporated by reference in this Annual Report on Form 10-K in response to Part III, ItemItems 10, 11, 12, 13 and 14.14, which will be filed with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.


TABLE OF CONTENTS

Item of    
Form 10-K
 
Description
 
Page
     
  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
DescriptionPage
PART I
ITEM 1.
Business
3
ITEM 1A.
Risk Factors
11
ITEM 1B.
Unresolved Staff Comments
21
ITEM 2.
Properties
22
ITEM 3.
Legal Proceedings
34
ITEM 4.
Mine Safety Disclosures
34
PART II
ITEM 5.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
35
ITEM 6.
Selected Financial Data
37
ITEM 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
38
ITEM 7A.
Quantitative and Qualitative Disclosures about Market Risk
53
ITEM 8.
Financial Statements and Supplementary Data
54
ITEM 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
99
ITEM 9A.
Controls and Procedures
99
ITEM 9B.
Other Information
99
PART III
ITEM 10.
Directors, Executive Officers and Corporate Governance
100
ITEM 11.
Executive Compensation
100
ITEM 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
100
ITEM 13.
Certain Relationships and Related Transactions, and Director Independence
100
ITEM 14.
Principal Accounting Fees and Services
100
PART IV
ITEM 15.
Exhibits, Financial Statement Schedules
101

2
i

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. company or only the parent company and consolidated entities. 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, 2009.2012. When we use the term “REIT” we mean real estate investment trust.

All references to 2009, 20082012, 2011 and 20072010 refer to our fiscal years ended, or the dates, as the context requires, December 31, 2009, 2012, December 31, 2008,2011 and December 31, 2007,2010, 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, whichproperty management joint venture subsidiary.
When we refer to as LCI, was merged with and into us as of March 25, 2008.use the term “GAAP” we mean United States generally accepted accounting principles.

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”“projects,” “may,” “plans,” “predicts,” “will,” “will likely result” 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 Statestate of Maryland. Our primary business is the investment in and acquisition, ownership, financing and management of a geographically diverse portfolio consisting of net-leasedpredominantly single-tenant office, industrial and retail properties. Substantially allOur core assets primarily consist of general purpose, efficient, single-tenant 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/orincluding 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 single-tenant real estate.

As of December 31, 2009,2012, we had equity ownership interests in approximately 210220 consolidated real estate properties, located in 4041 states and the Netherlands and containing an aggregate of approximately 38.341.2 million square feet of space, approximately 91.5%97.3% of which was subject to a lease.leased. In 2009, 20082012, 2011 and 2007,2010, no tenant/guarantor represented greater than 10%10.0% of our annual base rental revenue.
1
In addition to our shares of beneficial interests,interest, par value $0.0001 per share, classified as “commoncommon stock,” which we refer to as common shares, as of December 31, 2012, we have threehad two outstanding classes of beneficial interestsinterest 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, par value $0.0001 per share, which we refer to as our Series C Preferred Shares, and (3)(2) 7.55% Series D Cumulative Redeemable Preferred Stock, par value $0.0001 per share, 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”“LXPPRC” and “LXP pd”“LXPPRD”, respectively.

3

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 the state of Delaware in October 1993 upon the combination of two investment programs, Lepercq Corporate Income Fund L.P., which we refer to as LCIF, and Lepercq Corporate Income Fund II L.P., which we refer to as LCIF II, 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 completedchanged its name to Lexington Realty Trust and was 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, andas a portion of our business is conducted through our threetwo operating partnership subsidiaries: (1) Lepercq Corporate Income Fund L.P.;LCIF and (2) Lepercq Corporate Income Fund II L.P.; and (3)LCIF II. 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, 2009,2012, there were approximately 4.83.8 million OP units outstanding, other than OP units held directly or indirectly by us, that are currently redeemable for approximately 5.44.3 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 focused on waysWe continue to reduce leverage, preserveimplement strategies which we believe will provide shareholders with dividend growth and capital generate additional liquidityappreciation. We believe that having a strong balance sheet supports these objectives. Since 2008, we believe we have strengthened our balance sheet primarily by (1) repurchasing and revenueretiring our debt and improvesenior securities or by extending their maturity date, (2) financing our overall financial flexibility. Someproperties with non-recourse mortgage debt or corporate credit facilities and term loans at what we believe are favorable rates and using the proceeds to retire higher rate or shorter term debt, (3) issuing equity when market conditions are favorable and (4) selling non-core and underperforming assets. We have used proceeds from non-core and underperforming asset sales and issuances of these strategies have included the following:common shares primarily to repurchase or retire our debt and acquire core assets.

-repurchasing our short-term debt and senior securities;
- issuing longer-term debt to pay down shorter-term debt and thereby extend maturities;
2
-aggressively managing our core portfolioOur core assets consist of general purpose, single-tenant net-leased 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 view our “core” assets as general purpose, efficient, single-tenant net-leased assets, in well-located and growing markets.markets or which are critical to the tenant's business, but may also include other asset types subject to long-term net-leases, such as retail facilities, schools and medical facilities. We believe education and health care are growing sectors of the U.S. economy and we have seen demand for build-to-suit transactions involving charter schools, private schools and medical facilities. A component of our business strategy includes exploring these other asset types when they are subject to long-term leases that will extend the weighted-average lease term of our portfolio. We intend to mitigate residual value risk associated with such assets by acquiring such assets primarily through joint ventures or disposing of such assets when there is sufficient remaining lease term to generate favorable sale prices.
When opportunities arise, we intend to make investments in single-tenant assets, which we believe will generate favorable returns. We seek to grow our portfolio primarily by (1) engaging in, or providing funds to developers who are engaged in, build-to-suit projects for single-tenant corporate users, (2) providing capital to corporations by buying properties and leasing them back to the sellers under net or similar leases, (3) acquiring properties already subject to net or similar leases and (4) making mortgage and mezzanine loans generally secured by single-tenant properties subject to net or similar leases.

4

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, including converting secured debt to unsecured debt, (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,following the Newkirk merger, subject to regulatory and contractual requirements, through 2009.requirements. During 20092012 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, 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 through the investmentbuild-to-suit transactions and investments 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. WeTo the extent of information publicly available or made available to us, 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.

InAcquisitions of Individual Net-lease Properties. We seek to acquire individual properties from (1) creditworthy companies in sale/leaseback transactions for properties that are integral to the Newkirk Merger, we succeeded Newkirksellers'/tenants' ongoing operations, (2) developers of newly constructed properties built to suit the needs of a corporate tenant by financing the project during the construction phase and/or agreeing to purchase the property upon completion of construction and occupancy by the tenant, and (3) sellers of properties subject to an agreement with a third party pursuantexisting lease. We believe that our geographical diversification and acquisition experience will allow us to which we will paycontinue to compete effectively for the third party for properties acquired by us and identified by the third party in an amount equal to (1) 1.5%acquisition 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.such properties.

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% 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 itsan interest in Concord Debt Holdings LLC, which we refer to as Concord, and Concord’s primary business is the ownership ofwhich owned real estate loan and bond assets. CDH CDO LLC, which we refer to as CDH CDO, was spun off of Concord to the members of Concord. In 2012, we sold our interest in these investments for $7.0 million.
3
DuringIn 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,2012, we acquired Inland NLS's interest in NLS for a cash payment of $9.4 million and the assumption of all outstanding liabilities. As a result, we now control, including through one of our operating partnership subsidiaries, 100% of NLS. At acquisition, NLS had (1) 41 properties totaling 5.8 million square feet in 23 states, plus a 40% tenant-in-common interest in an office property, (2) cash balances of $8.1 million and (3) approximately $258.0 million of consolidated debt. NLS is now a consolidated subsidiary.

5

We received a waiver from the U.S. Securities and Exchange Commission, which we refer to as the SEC, to not provide the 2012 financial statements of NLS, which was consolidated as of September 1, 2012, required under Rule 3-09 of Regulation S-X, as long as we provide the audited financial statements of NLS for the years ended December 31, 2011, 2010 and 2009 and the unaudited financial statements of NLS for the six months ended June 30, 2012, which are filed as Exhibit 99.1 and 99.2, respectively, to this Annual Report.
In 2012, we formed two joint ventures in which we have minority ownership interests of the New York State Common Retirement Fund15% and 36%, respectively. The venture in which we have a 15% interest acquired an inpatient rehabilitation hospital in Humble, Texas for $27.8 million and the Utah State Retirement Investment Fundventure in our co-investment programs with them, andwhich we distributed the propertieshave a 36% interest acquired a retail property in Palm Beach Gardens, Florida for $29.8 million. We are also a partner in six other partnerships, including an entity acquired in the co-investment programNLS transaction, with ING Clarion Lion Properties Fundownership percentages ranging between 27% and 40%, which own primarily net-leased properties. All profits, losses and cash flows are distributed in accordance with the respective joint venture or partnership agreements. As of December 31, 2012, these joint ventures and partnerships had $47.2 million in non-recourse mortgage debt (our proportionate share was $13.3 million), with interest rates ranging from 4.7% to us10.6%, a weighted-average interest rate of 7.0% and ING Clarion Lion Properties Fund,maturity dates ranging from 2015 to 2017.
In 2011, we acquired a majority interest in a joint venture that acquired an office property in Aurora, Illinois for $15.9 million, which was subject to a net-lease. We sold our interest in the joint venture in 2012 for $13.2 million and terminated all of our co-investment programs exceptcontinue to manage the investment for NLS and Lex-Win Concord.

the buyer.
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. See Part I, Item 1A “Risk Factors”, below.

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’/tenants’ ongoing operations; (2) developers of newly constructed properties built to suit the needs of a corporate tenant generally after construction has been completed to avoid the risks associated with the construction phase of a project; (3) other real estate investment companies through strategic transactions; and (4) sellers of properties subject to an existing lease. We believe that our geographical diversification and acquisition experience will allow us 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, such as banks and insurance companies, 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’s portfolio consists of 43 specialty net-leased assets and a 40% tenant-in-common interest in a property. These specialty net-leased assets include data centers, light manufacturing facilities, medical office facilities, a car dealership 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, Inland NLS owned 85%, and we owned 15% of NLS’s common equity, and we owned 100% of NLS’s preferred equity.

Lex-Win Concord LLC. We acquired a 50% common interest in Concord through the Newkirk Merger. Concord acquires and originates loans and debt securities secured, directly and indirectly, by real estate assets. As of December 31, 2009, the value of our investment in Lex-Win Concord has been reduced to zero. Concord’s obligations are non-recourse to us, and we have no obligation to fund the operations of Concord.

 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, the partnerships had $29.4 million in mortgage debt (our proportionate share was $8.8 million) with interest rates ranging from 9.4% to 11.5%, a weighted-average rate of 9.9% and maturity dates ranging from 2011 to 2016.

We have determined that as of December 31, 2009 and 2008, Lex-Win Concord and NLS have met the conditions of significant subsidiaries under Rule 1-02 (w) of Regulation S-X. 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.

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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 actively seek such opportunities.return.

Property Sales. Subject to regulatory and contractual requirements, we generally 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 convertthe property owner may seek to market the property for multi-tenant use and begin the process of leasing space.use. When appropriate, we seek to sell our interests in these 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 aOur property management joint venture with an unaffiliated third party to managemanages 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.

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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 level term loans, issuance of OP units and undistributed cash flows.

MortgageProperty Specific Debt. Generally, we seek to finance ourOur property owner subsidiaries historically financed their assets with non-recourse secured debt. However, beginning in 2008, the availability of single asset non-recourse financing became limited. As a result, we began to rely more on corporate level borrowings. Our property owner subsidiaries now seek non-recourse secured debt that has amortization, term and interest rate characteristics matchedon a limited basis including when credit tenant lease financing is available. Credit tenant lease financing allows us to significantly or fully leverage the term and characteristics of the cash flowsrental stream from the underlying investments.an investment at, what we believe are, attractive rates.

Corporate Level Borrowings. WeAs previously noted, we also use corporate-levelcorporate level borrowings, such as revolving loans, and term loans, and debt offerings. We expect to finance more of our operations with such corporate level borrowings as needed, and when other forms of financing are not available or appropriate. On February 13, 2009, we 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,non-recourse secured debt matures and (2) secured term loan, with $174.3 million outstanding as of December 31, 2008, which was scheduled to mature in June 2009 (but couldsuch borrowings are available on favorable terms.
Deleveraging and Interest Rate Reduction. In recent years, we have been extended to December 2009 atreduced our option), with a secured 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 facility bearsweighted-average interest at 2.85% over LIBOR and matures in February 2011 but can be extended until February 2012 at our option. With the consent of the lenders, we can increase the size of (1) the term loan by $135.0 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 million, assuming no prepayments of the term loan are made) by adding properties to the borrowing baserate or 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 facility is based upon the net operating income of the properties comprising the borrowing base as defined in the facility. As of December 31, 2009, the available additional borrowing under the facility was $96.6 million. As of December 31, 2009, $164.3 million was outstanding under the term loan, and $7.0 million was outstanding under the revolving loan. Subsequent to year end, we repaid $35.0 million of the term loan, all 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.
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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 on January 15, 2030. The holders of the notes may require us 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. We may not redeem any notes prior to January 15, 2017, except to preserve our 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 $7.09 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 2009 was, and our primary focus for 2010 is, to effectively useused our capital to deleverage our balance sheet by refinancing, satisfying and repurchasing our indebtedness. DuringFrom January 1, 2009 through December 31, 2011, we reduced our overall consolidated indebtedness by $305.6$725.2 million. In 2012, our overall consolidated indebtedness increased by $210.5 million including $123.4primarily due to the acquisition of NLS. However, we reduced our consolidated weighted-average interest rate by approximately 34 basis points. In addition, since the fourth quarter of 2012 through the date of filing this Annual Report, we converted $66.1 million originalaggregate principal amount of our 5.45% Exchangeable6.00% Convertible Guaranteed Notes at an average 18.1% discount to the original principal amount.

Common Share Dividends

During 2009, we issued approximately 13.3 million common shares in lieu of cash payments of common share dividends in accordance with Internal Revenue Service Revenue Procedure 2008–68,due 2030, which we refer 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 stock 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.

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 entered6.00% Convertible Notes, into a forward equity commitment to purchase 3.59.5 million common shares, attogether with a pricecash payment of $5.60 per share. We have prepaid $15.6$4.7 million, reducing the outstanding balance of the $19.6notes to $48.9 million.

Common Share Issuances
During 2012 and 2011, we raised $164.4 million purchase price. The contract is required to be settled no later than October 2011. No shares were repurchased in 2009. As of December 31, 2009, 1.1and $99.0 million, respectively, by issuing 18.3 million and 11.1 million common shares/OP units remained eligible for repurchase under the share repurchase authorization.

Direct Share Purchase Plan

During 2009, we issued approximately 4.3 million common shares through public offerings and under our direct share purchase plan raising netplan. The proceeds of $20.9 million. The net proceedsfrom these common share offerings were primarily used for working capital, including to fund investments and to retire short-term debt and senior securities at a discount.indebtedness.
In addition, we issued common shares upon conversion of our 6.00% Convertible Notes, as discussed above.

Preferred Share Repurchases
During 2012 and 2011, we repurchased and retired all outstanding shares of our 8.05% Series B Cumulative Redeemable Preferred Stock, par value $0.0001 per share, which we refer to as Series B Preferred Shares, and an aggregate 0.2 million Series C Preferred Shares for $85.5 million in the aggregate, or a $1.5 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. With the termination of certain of our co-investment programs in 2007 and our acquisition of NLS in 2012, advisory fees have declined in recent years. If and when we increase our co-investment joint venture activity, we expect advisory fees to increase.

Third Party Investors. In 2001, Lexington Realty Advisors, Inc., a wholly-owned taxable REIT subsidiary, which we refer to as2012, LRA entered into an advisory and asset management agreement to invest and manage an equity commitment ofarrange for investments up to $50.0$100.0 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.investor. Under the agreement, LRA earns acquisition fees (90 basis points of total acquisition costs), annual asset management fees (30 basis points of gross asset value)we will be a co-investor with a target to contribute 15% to each venture.We granted the third-party investor an exclusivity, until May 2015, on investment opportunities for (1) properties with a lease due to expire in less than 10 years, and an incentive fee (16% of(2) properties that are dedicated to non-office and non-warehouse/distribution uses, including properties with tenants in 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,medical, hospital 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 2009 or 2008.health care industries.

Affiliated Investors. We provided advisory services to our former co-investment programs and also 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 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 asset acquired by NLS.
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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.

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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,recommended, 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 2009,2012, 2011 and 2010, we incurred $175.9$10.0 million, $117.4 million and $56.9 million, respectively, of non-cash impairment charges primarily 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, or the possible sale or disposition, of assets at below book value and (3)(2) vacancies of certain assets. 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. Furthermore, we may take an impairment charge on a property subject to a non-recourse secured mortgage reducing the book value of such property to its estimated fair value which may be below the balance of the mortgage on our balance sheet. Upon foreclosure or other disposition of such property, we may recognize a gain on debt satisfaction equal to the difference between the fair value of the property and the balance of the mortgage.

Summary of 20092012 Transactions and Recent Developments

The following summarizes certain of our transactions during 2009.2012, including transactions disclosed above and in our other periodic reports.

Sales. With respect to sales activity, we:

- 
–sold 15disposed of our interests in properties, including a non-consolidated property, to unaffiliated third parties for an aggregate net proceedsgross disposition price of $108.5$181.4 million; and

- transferred two properties to lenders and disposed of one property through bankruptcy;
- –sold our entire interestsinterest in two joint ventures generating $12.6 million in net proceeds;Concord and CDH CDO for $7.0 million.

Acquisitions/Investments. With respect to acquisitions/investments, we:
- 
–sold two notes receivablepurchased an industrial property in Missouri City, Texas for $23.0 million and an office property in Phoenix, Arizona for $53.2 million;

–completed eight build-to-suit transactions for an aggregate discounted payoff amountcapitalized cost of $3.9$107.3 million;

- 
–raised gross proceedsformed a joint venture, in which we hold a 15% interest, which acquired an inpatient rehabilitation hospital in Humble, Texas for $27.8 million;

–formed a joint venture, in which we hold a 36% interest, which acquired a retail property in Palm Beach Gardens, Florida for $29.8 million and we made a $12.0 million non-recourse mortgage loan to the joint venture,which was repaid in February 2013;

–closed on two construction loans for an aggregate commitment of $4.8$40.6 million of which $11.5 million was funded in 2012;

–received $2.5 million in full satisfaction of a sale/leasebackloan receivable;

–acquired Inland NLS’s interest in NLS for $9.4 million and the assumption of its liabilities;


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–acquired 6.2 acres of land, transaction;which was previously leased, in Palm Beach Gardens, Florida for $6.0 million, on which we own the multi-tenant improvements; and

- 
–sold investments in debt securities forcontinued to fund four on-going build-to-suit transactions not yet completed at December 31, 2012 with an aggregate proceedsestimated cost of $9.5 million.$136.5 million of which $68.9 million was invested as of December 31, 2012.
    
Acquisitions. We acquiredThe 2012 property investments of $241.1 million discussed above have a property in Greenville, South Carolina for $10.5 million. The tenant hasweighted-average lease term of approximately 16 years and an option to purchase the property on December 31, 2014 at fair market value, but not less than $10.7 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 interests in a parcelinitial cap rate of land in Long Beach, California in connection with a tenant’s lease surrender obligations for an estimated fair value of $2.5 million.8.5%.
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Expansions. We funded $9.9 million in 2009 for the completion of a parking garage adjacent to our office building in Baltimore, Maryland, which had an aggregate construction cost of $23.3 million.
Leasing. We Our property owner subsidiaries entered into 8569 new leases and lease extensions and new leases encompassing an aggregate 3.87.4 million square feet and we received $3.2 million from five lease termination and deferred maintenance payments.raised our overall portfolio occupancy by 140 basis points to 97.3% as of December 31, 2012.

Financing. Co-Investment Programs. In 2012, we procured a $255.0 million secured term loan from Wells Fargo Bank, National Association, as agent, which matures in January 2019. The secured term loan requires regular payments of interest only at an interest rate, ranging from 2.00% to 2.85% over LIBOR depending on our leverage ratio, as defined therein. Upon the date when we obtain an investment grade debt rating from at least two of Standard & Poor’s Rating Services, which we refer to as S&P, Moody’s Investor Services, Inc., which we refer to as Moody’s, and Fitch, Inc., which we refer to as Fitch, the interest rate under the secured term loan will be dependent on our debt rating. Prepayments are permitted after January 12, 2013 subject to a premium until January 12, 2016.Lex-Win Concord recognized $230.2

Also in 2012, we refinanced our $300.0 million secured revolving credit facility with a new $300.0 million secured revolving credit facility with a maturity date of January 2015 but could have been extended until January 2016 at our option.

We satisfied $60.6 million of other-than-temporary impairments, loan lossesterm loans procured in 2008, repurchased and reserves,retired $62.2 million of which we recognized $66.6 million. In addition, we recorded $68.2original principal amount of 5.45% Exchangeable Guaranteed Notes and repaid $57.5 million of debt assumed in impairmentsthe NLS transaction.

We converted an aggregate $31.1 million original principal amount of 6.00% Convertible Notes into an aggregate 4.5 million common shares and made an aggregate cash payment of approximately $2.4 million plus accrued and unpaid interest on our investment in Lex-Win Concord, reducing our investment to zero.the converted notes.

Financing. With respect to financing activities, we:Our property owner subsidiaries:

-
–
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;
-
retired $95.2$190.5 million in property non-recourse mortgage debt due to sale/transferwith a weighted-average interest rate of properties to unrelated third parties or lenders;5.9%; and

-
–refinanced a $13.2obtained $121.0 million 8.19%in non-recourse mortgage loan due in April 2010financings with an $11.5 million, 6.375% non-recourse mortgage loan that matures in August 2014.a weighted-average interest rate of 4.1%.

Capital. With respect to capital activities, we:

-
–issued approximately 13.3an aggregate 18.3 million common shares in connection with our quarterly common share dividends;
-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;
-converted 0.5 million of our Series C Preferred Shares by issuing 3.0 million common shares;public offering and
-issued approximately 4.3 million common shares under our direct share purchase plan, raising net proceeds of approximately $20.9$164.4 million; and

–repurchased and retired all outstanding (approximately 2.7 million) Series B Preferred Shares and approximately 35 thousand Series C Preferred Shares for an aggregate purchase price of approximately $70.0 million.

Subsequent to December 31, 2009,2012, we:

-
–issued $115.0 million aggregateconverted $35.0 original principal amount of 6.00% Convertible Guaranteed Notes the termsfor approximately 5.0 million common shares and a cash payment of which are described above under “Financing Strategy – Corporate Level Borrowings”;$2.3 million plus accrued and unpaid interest;

-
–sold three properties forimplemented an At-The-Market or ATM offering program under which we may issue up to $100.0 million in common shares over the term of the program. As of the date of this Annual Report, we issued 3.4 million common shares under this program raising 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);$36.9 million;

-
–repurchased $23.0refinanced our $300.0 million original principal amount of 5.45% Exchangeable Guaranteed Notes at par;
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-madesecured revolving credit facility with a 15%, $11.0$300.0 million mortgage loan on an office buildingunsecured revolving credit facility with KeyBank National Association, which we refer to as KeyBank, as agent. The unsecured revolving credit facility matures in Schaumburg, Illinois, which matures January 15, 2012,February 2017 but can be extended one additional year byuntil February 2018 at our option. The unsecured revolving credit facility bears interest at LIBOR plus 1.50% to 2.05% based on our leverage ratio, as defined therein. Upon the borrower for a 50 basis point fee. The property is leased to Career Education Corporationdate when we obtain an investment grade credit rating from January 1, 2011 through December 31, 2022 for an average annual rentat least two of $4.0 million. In addition toS&P, Moody’s or Fitch, the initial $11.0 million investment, we are obligated to lend an additional $7.6 million overinterest rate under 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, weunsecured revolving credit facility will become obligated to lend an additional $12.2 million for tenant improvement costs;be dependent on our debt rating;


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-
–madein connection with the refinancing discussed above, we also procured a $17.0five-year $250.0 million mezzanineunsecured term loan secured by  a combination of limited partner interests in entities that own, and second mortgage liens against, five medical facilities.facility from KeyBank as agent. The mezzanineunsecured term loan is guaranteed by a parent entity and principal and matures in January 2012February 2018 and requires regular payments of interest only at ainterest rates ranging from LIBOR plus 1.45% to 2.00% dependent on our leverage ratio, as defined therein. Upon the date when we obtain an investment grade rating from at least two of S&P, Moody’s or Fitch, the interest rate of 14% forunder the first year and 16% thereafter;unsecured term loan will be dependent on our debt rating;

-
–repaid $35.0amended our $255.0 million on thesecured term loan under our secured credit facility, repaid all outstanding borrowings onagreement to release the revolving loan under our secured credit facility and increased the availability under the revolving loan by $25.0 million;collateral securing such loan;

-
–formedconveyed in foreclosure our property in Suwanee, Georgia for full satisfaction of the related $11.0 million non-recourse mortgage;

–obtained $40.0 million of 15-year secured non-recourse mortgage debt on our property in Lenexa, Kansas and a joint venture with an unaffiliated third party to manage certain of our properties that require suchobtained a $15.3 million secured non-recourse mortgage on its property management services;in Palm Beach Gardens, Florida; and

-
–purchased a parking lot in a sale/leaseback transaction with an existing tenant, Nevada Power Company, for $3.3gave notice to prepay $137.9 million and financed the purchase with a $2.5 millionof secured 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 todebt on March 1, 2013 with proceeds from 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.unsecured revolving credit facility.

Other

Employees. As of December 31, 2009,2012, we had 5950 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-leasedsingle-tenant 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.www.lxp.com. 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 ourthe Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee of our Board of Trustees, 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, NYNew York 10119-4015, Attn: Investor Relations, by telephone: (212) 692-7200, or by e-mail: ir@lxp.com.

Principal Executive Offices. Our principal executive offices are located at One Penn Plaza, Suite 4015, New York, NYNew York 10119-4015; our telephone number is (212) 692-7200.

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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.May 2012.

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Item 1A.Risk Factors

Set forth below are material factors that may adversely affect our business and operations.

We are subject to risks involved in single- tenantsingle-tenant leases.

We focus our acquisition activities on real estate 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 or complete reduction in the operating cash flow generated by the property leased to that tenant and might decrease the value of that property.property and result in an non-cash impairment charge. 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.

You should not rely on the credit ratings of our tenants.
Some of our tenants are rated by Moody's, Fitch and/or S&P. Any such credit ratings are subject to ongoing evaluation by these credit rating agencies and we cannot assure you that any such ratings will not be changed or withdrawn by these rating agencies in the future if, in their judgment, circumstances warrant. If these rating agencies assign a lower-than-expected rating or reduce or withdraw, or indicate that they may reduce or withdraw the credit rating of a tenant, the value of our investment in any properties leased by such tenant could significantly decline. Furthermore, our investment with these tenants is through a lease which is treated differently than unsecured debt in a bankruptcy.
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 GAAP, 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 2009,2012, 2011 and 2010, we incurred $175.9$10.0 million, $117.4 million and $56.9 million, respectively, of non-cash impairment charges, primarilycharges. A substantial portion of these impairments related to (1)assets acquired in the Newkirk Merger that had a relatively 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.
Furthermore, we may take an impairment charge on a property subject to a non-recourse secured mortgage which reduces the book value of such property to its fair value, which may be below the balance of the mortgage on our balance sheet. Upon foreclosure or other disposition, we may be required to recognize a gain on debt satisfaction equal to the difference between the fair value of the property and the balance of the mortgage.

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 many risks of delinquency as well as risk associated with the capital markets.including delinquency. 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 we would not recover the full value of the note andloan as the collateral may be non-performing.
As of December 31, 2012, one of our loans receivable, which is secured by an office property in Schaumburg, Illinois, was in default. The loan had an outstanding balance of $21.9 million (not including default interest and other penalties), which we believe is less than the fair value of the property. Also, as of December 31, 2012, the tenant of the property in Westmont, Illinois, which we sold in 2007 but issued a purchase mortgage to the buyer,exercised its option to terminate its lease effective November 2013. As of December 31, 2012, our note receivable was $26.8 million.

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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 subsidiaries may not be able to re-let all or a portion of thatsuch space, or the terms of re-letting (including the cost of concessions to tenants)tenants and leasing commissions) may be less favorable to us 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 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.

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. 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. For newly constructed build-to-suit properties, we may (1) provide a developer with either a combination of financing for construction of a build-to-suit property or a commitment to acquire a property upon completion of construction of a build-to-suit property and commencement of rent from the tenant or (2) acquire a property subject to a lease and engage a developer to complete construction of a 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.
Acquisitions of commercial properties entail certain risks, such as (1) underwriting assumptions such as 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. We may also 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, including the performance or timely completion by contractors and subcontractors. If a developer, contractor or subcontractor fails to perform, we may resort to legal action to compel performance, remove the developer or rescind the purchase or construction contract.


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10A developer's performance may also be affected or delayed by conditions beyond the developer's control. We attempt to mitigate such conditions by providing for penalties and related grace periods in the underlying lease.

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 highly leveraged,inaccurate or markets change, 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 or future economic crises. 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. Furthermore, multi-tenant properties 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 and/or the amounts budgeted.

We use leverage, which increases the risk of default on our obligations and debt service requirements.

We are highlymore leveraged compared tothan 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, 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, 2009,2012, we had no amounts outstanding $171.3 million in consolidated variable-rate indebtedness that were not subject to an interest-rate swap agreement. However, borrowings under our unsecured credit facility are subject to variable rates. 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 canmay increase if we are required to refinance our fixed-rate indebtedness atupon 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 ourthe 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.

TheSince 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 aton 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

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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 alsoAs of December 31, 2012, we have aggregate interest rate swap agreements directly and through our investment in Lex-Win Concord and have a direct forward equity commitment.on $255.0 million of borrowings. 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.

Covenants in certain of the agreements governing our debt could adversely affect our financial condition and our investment activities.
Our unsecured revolving credit facility, unsecured term loans and indenture governing our 6.00% Convertible Notes contain certain cross-default provisions as well as customary restrictions, requirements and other limitations on our ability to incur indebtedness. Our ability to borrow under both our unsecured revolving credit facility and our unsecured term loan is also subject to compliance with certain other covenants. In addition, failure to comply with our covenants could cause a default under the applicable debt instrument and we may then be required to make additional prepayments pursuantrepay such debt with capital from other sources. Under those circumstances other sources of capital may not be available to us or be available only on unattractive terms. Additionally, our forward equity commitment.ability to satisfy current or prospective lenders' insurance requirements may be adversely affected if lenders generally insist upon greater insurance coverage against acts of terrorism than is available to us in the marketplace or on commercially reasonable terms.
We rely on debt financing, including borrowings under our unsecured revolving credit facility, unsecured term loan and debt secured by individual properties, for working capital, including to finance our investment activities. If we are unable to obtain financing from these or other sources, or to refinance existing indebtedness upon maturity, our financial condition and results of operations could be adversely affected.

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 NYSE (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 and thiswe currently have interest rate swap agreements in place. 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 suchinvestments. 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.

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We face risks associated with refinancings.

A significant number of ourthe properties in which we have an interest, as well as corporate-levelcorporate level borrowings, are subject to mortgage or other secured notes with balloon payments due at maturity. In addition, our corporate level borrowings require interest only payments with all principal due at maturity.

As of December 31, 2009,2012, 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
2013 $238.4 million $—
 
2014 $251.0 million $—
 
2015 $288.6 million $—
 
2016 $148.6 million $—
 
2017 $68.7 million $83.9 million
(1) 
Year
Non-Recourse
Property-Specific
Balloon Payments
Corporate Recourse
Balloon Payments
2010(1)$106.0Assumes 6.00% Convertible Notes due in January 2030 are put to us in 2017. Subsequent to December 31, 2012, an additional $35.0 million$—
2011$85.2 of these notes were converted and, as a result, $48.9 million$171.3 million
2012$191.0 million$87.7 million
2013$234.9 million$60.7 million
2014$233.6 million$— is the amount of the expected payment in 2017 as of the date of the filing of this Annual Report.

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OurThe ability to make the scheduled balloon paymentspayment 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 securedunsecured credit facility and our(2) the property owner subsidiary's ability either to refinance the related mortgage debt or to sell the related property. If we arethe property owner subsidiary is unable to refinance or sell the related property, wethe property may convey the propertybe conveyed to the lender through foreclosure or the special purpose entity that owns title toother means or the property owner subsidiary may declare bankruptcy. However, theThe failure to pay the balloon payment may strain relationships with lenders but we do not believe it will have a material adverse impact on our ability to obtain additional financings.

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's only recourse upon an event of default is to foreclose on the property. During 2012, a vacant property in each of Tulsa, Oklahoma and Clive, Iowa, in which we had an interest, were sold in foreclosure. 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 financial condition and results of operations, relationships with lenders and 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 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. Although Michigan recently enacted laws preventing this and we believe this goes against the express intention of a non-recourse mortgage loan, to the extent these cases are not overturned on appeal or other courts grant similar relief to lenders, 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, 2009,2012, (1) the mortgages on twothree sets of two properties, one set of fourthree properties and one set of threefour properties are cross-collateralized. In addition, (1)were cross-collateralized and (2) our unsecured revolving credit facility isand our unsecured term loan were secured by ownership interest pledges in 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 ourthe properties in which we have an interest are cross-collateralized, any default by usthe 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, substantially all of our secured credit facility, secured term loans, 5.45% Exchangeable Guaranteed Notes and 6.00% Convertible Guaranteed Notes (only with respect to recourse indebtedness)corporate level borrowings contain cross-default provisions, which may be triggered if we default on certain 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, weour property owner subsidiaries may be liable for the costs of removal or remediation of certain hazardous or toxic substances at, on, in or under ourthe 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 usour 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 oura 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 ourthe 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 ourthe tenants of the properties in which we have an interest to satisfy any obligations with respect to the property leased to that tenant, weour 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, weour property owner subsidiaries authorize the preparation of Phase I environmental reports and, when necessary,recommended, Phase II environmental reports, with respect to ourtheir 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.


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There can be no assurance however, that thethese environmental reports will reveal all environmental conditions at ourthe 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 our properties.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 ourthe 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 were involved in during 2012 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 mostcertain of ourthe 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 wouldcould adversely affect our financial condition.condition and results of operations.

Future terrorist attacks, and the on-going 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 recent terrorist attacks since 2001, on-going and on-goingfuture 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. These typesThe increase in the price of oil will also 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.

properties or the value thereof.
We and ourthe 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 wouldcould adversely affect our financial condition.

Competition may adversely affect our ability to purchase properties.

There are numerous commercial developers, real estate companies, financial institutions, such as banks and insurance companies, and other investors, such as pension funds, private companies and individuals, with greater financial and other resources than we have that compete with us in seeking properties for acquisitioninvestments and tenants who will lease space in our properties.tenants. Due to our focus on net-leasesingle-tenant 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 that we wish to purchase orand lower returns and impact our ability to grow.

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Our failure to maintain effective internal controlscontrol over financial reporting 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 controlscontrol over financial reporting. If we fail to maintain the adequacy of our internal controls,control over financial reporting, as such standards may be modified, supplemented or amended from time to time, we will be required to disclose such failure and our financial reporting may not be able to ensure that we can concluderelied 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.by most investors. Moreover, effective internal controls,control, particularly those related to revenue recognition, areis necessary for us to produce reliable financial reports and to maintain our qualification as a REIT and areis important toin 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.

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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 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 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 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 mustis 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 investmentsInvestments in real estate are relatively illiquid and, therefore, our ability to change our portfolio promptly in response to changed conditions will beis 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. 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. No assurance can be given that we have qualified or will remain qualified 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.


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We may be subject to the REIT prohibited transactions tax, which could result in significant U.S. federal income tax liability to us.

We previouslyIn 2007, we announced a restructuring of our investment strategy, focusing on investing in core assets and core plusthe disposition of non-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.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.

CertainThere are certain limitations limiton a third party’sparty's ability to acquire us or effectuate a change in our control.

Limitations imposed to protect our REIT status.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. TheThese ownership limitlimits 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.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.control and the subsequent termination of the executive. 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.shares. Our amended and restated declaration of trust authorizes our400,000,000 common shares, 100,000,000 preferred shares and 500,000,000 excess shares. Our Board of Trustees is authorized to cause us to issue shares of any class, including preferredthese 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’shareholders' best interests. At December 31, 2009,2012, in addition to common shares, we had outstanding 3,160,000 Series B Preferred Shares that we issued in June 2003, 2,095,2001,935,400 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.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.


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Maryland Business Combination Act.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.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 (as defined in the Maryland General Corporation Law) 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’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.Act. Maryland law provides that a holder of “control shares” of a Maryland REIT acquired in a “control share acquisition” shall havehas no voting rights with respect to such shares 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,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 acquiroracquirer or in respect of which the acquiroracquirer is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquiroracquirer 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’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’shareholders meeting and the acquiroracquirer 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’shareholders' best interests.

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16

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.
Costs of complying with changes in governmental laws and regulations may adversely affect our results of operations.

We cannot predict what laws or regulations may be enacted in the future, how future laws or regulations will be administered or interpreted, or how future laws or regulations will affect our properties. Compliance with new laws or regulations, or stricter interpretation of existing laws, may require us or our tenants to incur significant expenditures, impose significant liability, restrict or prohibit business activities and could cause a material adverse effect on our results of operations.

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.
GAAP is subject to interpretation by various bodies formed to promulgate and interpret appropriate accounting principles such as the Financial Accounting Standards Board. 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 $0.60 per common share with respect to the 2013 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’shareholders' approval.

Subject to our fundamental investment policy to maintain our qualification as a REIT and invest in core assets, our Board of Trustees will determine itsour investment and financing policies, growth strategy and itsour 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 changesChanges 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 Accordingly, shareholders' control over changes in our growth strategy could adversely affect our financial conditionstrategies and results of operations.

Our growth strategypolicies 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 acquisition of a newly constructed property. We may provide a developer with a commitment to acquire a property upon completion of construction of a property and commencement of rent from the tenant or with a first mortgage which is satisfied upon conveyance of a fully constructed and leased facility. 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 andlimited to the negotiationelection 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.trustees.

The concentration of ownership by certain investors may limit other shareholders from influencing significant corporate decisions.

At December 31, 2009,2012, 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 (some of which are subject to restrictions under applicable award agreements) 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.


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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, 2012, an aggregate of approximately 7.67.8 million of our common shares arewere issuable upon the exercise of employee share options and onupon the exchange of OP units. There were also 12.1 million common shares underlying our 6.00% Convertible Notes as of December 31, 2012, 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 have entered into two-year employment agreements, which expire in January 2015, 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.


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Item 2. Properties

Real Estate Portfolio

General. As of December 31, 2009,2012, we had equity ownership interests in approximately 38.3220 consolidated office, industrial and retail properties containing approximately 41.2 million square feet of rentable space, in approximately 210 consolidated office, industrial and retail properties. As of December 31, 2009, these propertieswhich were approximately 91.5%97.3% leased based upon net rentable square feet. Generally, 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 or similar leases; however, in certain leases, wethe property owner subsidiaries are responsible for roof, structural and other repairs. In addition, certain of ourthe properties (including those held through non-consolidated entities)in which we have an interest 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 or will be 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 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, 2009,2012, we had interests in properties subject to outstanding mortgages and notes payable and corporate level debt of approximately $2.1$1.9 billion with a weighted-average interest rate of approximately 5.7%5.4%.

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Property Charts. The following tables list our properties by type, their locations, the primary tenant/guarantor, the net rentable square feet, the expiration of the primary lease term and percent leased, as applicable, as of December 31, 2012.

LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
OFFICE
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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, 2012
Property LocationCityStatePrimary Tenant (Guarantor)Net Rentable Square FeetCurrent Lease Term ExpirationPercent Leased
12209 W. Markham St.Little RockAREntergy Arkansas, Inc.36,311
10/31/2015100%
5201 West Barraque St.Pine BluffAREntergy Arkansas Inc.27,189
10/31/2015100%
19019 North 59th Ave.GlendaleAZHoneywell International Inc.252,300
7/15/2019100%
8555 South River Pkwy.TempeAZASM Lithography, Inc. (ASM Lithography Holding N.V.) (2013) / DuPont Airproducts Nanomaterials L.L.C. (2022)95,133
6/30/2022100%
1440 East 15th St.TucsonAZCoxCom, LLC28,591
7/31/2022100%
275 S. Valencia AveBreaCABank of America, National Association637,503
6/30/2019100%
26210 & 26220 Enterprise CourtLake ForestCAApria Healthcare, Inc. (Apria Healthcare Group, Inc.)100,012
1/31/2022100%
9201 E. Dry Creek RdCentennialCOThe Shaw Group, Inc.128,500
9/30/2017100%
1110 Bayfield Dr.Colorado SpringsCOHoneywell International Inc.166,575
11/30/2013100%
3940 South Teller St.LakewoodCOMoneyGram Payment Systems, Inc.68,165
3/31/2015100%
1315 W. Century Dr.LouisvilleCOGlobal Healthcare Exchange, Inc. (Global Healthcare Exchange, LLC)106,877
4/30/2017100%
100 Barnes RdWallingfordCT3M Company44,400
6/30/2018100%
5600 Broken Sound Blvd.Boca RatonFLOcé Printing Systems USA, Inc. (Océ -USA Holding, Inc.)143,290
2/14/2020100%
12600 Gateway Blvd.Fort MyersFLGartner, Inc.62,400
1/31/2013100%
550 Business Center Dr.Lake MaryFLJPMorgan Chase Bank, National Association125,920
9/30/2015100%
600 Business Center Dr.Lake MaryFLJPMorgan Chase Bank, National Association125,155
9/30/2015100%
9200 South Park Center LoopOrlandoFLCorinthian Colleges, Inc.59,927
9/30/2013100%
Sandlake Rd./Kirkman RdOrlandoFLLockheed Martin Corporation184,000
4/30/2018100%
4400 Northcorp ParkwayPalm Beach GardensFLOffice Suites Plus Properties, Inc.18,400
5/31/2019100%
10419 North 30th St.TampaFLTime Customer Service, Inc. (Time Incorporated)132,981
6/30/2020100%
2223 N. Druid Hills RdAtlantaGABank of America, N.A. (Bank of America Corporation)6,260
12/31/2014100%
6303 Barfield RdAtlantaGAInternational Business Machines Corporation / Internet Security Systems, Inc. (ISS Group, Inc.)238,600
5/31/2018100%
859 Mount Vernon HwyAtlantaGAInternational Business Machines Corporation / Internet Security Systems, Inc. (ISS Group, Inc.) / Problem Solved LLC50,400
5/31/2014100%
956 Ponce de Leon AveAtlantaGABank of America, N.A. (Bank of America Corporation)3,900
12/31/2014100%
4545 Chamblee-Dunwoody RdChambleeGABank of America, N.A. (Bank of America Corporation)4,565
12/31/2014100%
201 W. Main St.CummingGABank of America, N.A. (Bank of America Corporation)14,208
12/31/2014100%
1066 Main St.Forest ParkGABank of America, N.A. (Bank of America Corporation)14,859
12/31/2014100%
825 Southway Dr.JonesboroGABank of America, N.A. (Bank of America Corporation)4,894
12/31/2014100%

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LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
OFFICE
As of December 31, 2012
Property LocationCityStatePrimary Tenant (Guarantor)Net Rentable Square FeetCurrent Lease Term ExpirationPercent Leased
2500 Patrick Henry PkwyMcDonoughGAGeorgia Power Company111,911
6/30/2015100%
3500 N. Loop CourtMcDonoughGALitton Loan Servicing LP62,218
8/31/2018100%
1698 Mountain Industrial Blvd.Stone MountainGABank of America, N.A. (Bank of America Corporation)5,704
12/31/2014100%
3265 E. Goldstone Dr.MeridianIDT-Mobile PCS Holdings LLC (T-Mobile USA, Inc.)77,484
6/28/2019100%
101 E. Erie St.ChicagoILDraftfcb, Inc. (Interpublic Group of Companies, Inc.)230,704
3/15/201492%
850 & 950 Warrenville RdLisleILNational Louis University99,414
12/31/2019100%
500 Jackson St.ColumbusINCummins, Inc.390,100
7/31/2019100%
10300 Kincaid Dr.FishersINRoche Diagnostics Operations, Inc.193,000
1/31/2020100%
10475 Crosspoint Blvd.IndianapolisINJohn Wiley & Sons, Inc.141,047
10/31/201990%
5757 Decatur Blvd.IndianapolisIN
Allstate Insurance Company

88,566
1/31/201865%
9601 Renner Blvd.LenexaKSVoiceStream PCS II Corporation (T-Mobile USA, Inc.)77,484
10/31/2019100%
5200 Metcalf Ave.Overland ParkKSSwiss Re American Holding Corporation / Westport Insurance Corporation320,198
12/22/2018100%
4455 American WayBaton RougeLANew Cingular Wireless PCS, LLC70,100
10/31/2017100%
147 Milk St.BostonMAHarvard Vanguard Medical Associates, Inc.52,337
12/31/2022100%
33 Commercial St.FoxboroMAInvensys Systems, Inc. (Siebe, Inc.)164,689
6/30/2015100%
70 Mechanic St.FoxboroMAInvensys Systems, Inc. (Siebe, Inc.)251,914
6/30/2014100%
First Park Dr.OaklandMEOmnipoint Holdings, Inc. (T-Mobile USA, Inc.)78,610
8/31/2020100%
26555 Northwestern HwySouthfieldMIFederal-Mogul Corporation187,163
1/31/2015100%
3165 McKelvey Rd.BridgetonMOBJC Health System52,994
3/31/2013100%
9201 Stateline Rd.Kansas CityMOSwiss Re American Holding Corporation / Westport Insurance Corporation155,925
4/1/2019100%
3943 Denny Ave.PascagoulaMSNorthrop Grumman Systems Corporation94,841
10/31/2013100%
200 Lucent LaneCaryNCProgress Energy Service Company, LLC124,944
11/30/2014100%
700 US Hwy. Route 202-206BridgewaterNJBiovail Pharmaceuticals, Inc. (Valeant Pharmaceuticals International, Inc.)115,558
10/31/2014100%
333 Mount Hope Ave.RockawayNJBASF Corporation95,500
9/30/2014100%
1415 Wyckoff Rd.WallNJNew Jersey Natural Gas Company157,511
6/30/2021100%
29 S. Jefferson Rd.WhippanyNJCAE SimuFlite, Inc. (CAE Inc.)123,734
11/30/2021100%
180 S. Clinton St.RochesterNYFrontier Corporation226,000
12/31/2014100%
2000 Eastman Dr.MilfordOHSiemens Corporation221,215
4/30/2016100%
500 Olde Worthington Rd.WestervilleOHInVentiv Communications, Inc.97,000
9/30/2015100%

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LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
OFFICE
As of December 31, 2012
Property LocationCityStatePrimary Tenant (Guarantor)Net Rentable Square FeetCurrent Lease Term ExpirationPercent Leased
2999 Southwest 6th St.RedmondORVoiceStream PCS I LLC (T-Mobile USA, Inc.)77,484
1/31/2019100%
275 Technology Dr.CanonsburgPAANSYS, Inc.107,872
12/31/2014100%
2550 Interstate Dr.HarrisburgPANew Cingular Wireless PCS, LLC81,859
12/31/2013100%
1701 Market St.PhiladelphiaPAMorgan, Lewis & Bockius LLP304,037
1/31/202198%
1460 Tobias Gadson Blvd.CharlestonSCHagemeyer North America, Inc.50,076
7/8/2020100%
2210 Enterprise Dr.FlorenceSCJPMorgan Chase Bank, National Association179,300
10/30/2013100%
3476 Stateview Blvd.Fort MillSCWells Fargo Bank, N.A.169,083
5/31/2014100%
3480 Stateview Blvd.Fort MillSCWells Fargo Bank, N.A.169,218
5/31/2014100%
333 Three D Systems CircleRock HillSC3D Systems Corporation80,028
8/31/2021100%
420 Riverport Rd.KingportTNKingsport Power Company42,770
6/30/2018100%
2401 Cherahala Blvd.KnoxvilleTNAdvancePCS, Inc. / CaremarkPCS, L.L.C.59,748
5/31/2020100%
1409 Centerpoint Blvd.KnoxvilleTNAlstom Power, Inc.84,404
10/31/2014100%
104 & 110 S. Front St.MemphisTNHnedak Bobo Group, Inc.37,229
10/31/2016100%
3965 Airways Blvd.MemphisTNFederal Express Corporation521,286
6/19/2019100%
1401 & 1501 Nolan Ryan Pkwy.ArlingtonTXSiemens Dematic Postal Automation L.P. / Siemens Energy & Automation, Inc. / Siemens Shared Services, LLC236,547
1/31/2014100%
4001 International Pkwy.CarrolltonTXMotel 6 Operating, LP (Accor S.A.)138,443
7/31/2015100%
4201 Marsh Ln.CarrolltonTXCarlson Restaurants Inc. (Carlson, Inc.)130,000
11/30/2022100%
11511 Luna Rd.Farmers BranchTXHaggar Clothing Co. (Texas Holding Clothing Corporation & Haggar Corp.)180,507
4/30/2016100%
1200 Jupiter Rd.GarlandTXRaytheon Company278,759
5/31/2016100%
2529 West Thorne Dr.HoustonTXBaker Hughes, Incorporated65,500
9/27/2015100%
1311 Broadfield Blvd.HoustonTXTransocean Offshore Deepwater Drilling, Inc. (Transocean Sedco Forex, Inc.)155,040
3/31/2021100%
16676 Northchase Dr.HoustonTXKerr-McGee Oil & Gas Corporation (Kerr-McGee Corporation)101,111
7/31/2014100%
810 & 820 Gears Rd.HoustonTXRicoh Americas Corporation157,790
1/31/2013 & 1/31/2018100%
3711 San GabrielMissionTXVoiceStream PCS II Corporation / T-Mobile USA, Inc. / T-Mobile West Corporation75,016
6/30/2015100%
6200 Northwest Pkwy.San AntonioTXUnited HealthCare Services, Inc. / PacifiCare Healthsystems, LLC142,500
11/30/2017100%
1600 Eberhardt Rd.TempleTXNextel of Texas, Inc. (Nextel Finance Company)108,800
1/31/2016100%
2050 Roanoke Rd.WestlakeTXTD Auto Finance LLC130,290
12/31/2016100%
100 E. Shore Dr.Glen AllenVACapital One, National Association68,118
12/31/2017100%
       

25

LEXINGTON CONSOLIDATED PORTFOLIO
LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
OFFICE
As of December 31, 2012
Property LocationCityStatePrimary Tenant (Guarantor)Net Rentable Square FeetCurrent Lease Term ExpirationPercent Leased
120 E. Shore Dr.Glen AllenVACapital One Services, LLC77,045
12/31/2018100%
400 Butler Farm Rd.HamptonVANextel Communications of the Mid-Atlantic, Inc. (Nextel Finance Company)100,632
12/31/2014100%
421 Butler Farm Rd.HamptonVAPatient Advocate Foundation56,564
12/31/201965%
13651 McLearen Rd.HerndonVAUnited States of America159,644
5/30/2018100%
13775 McLearen Rd.HerndonVAOrange Business Services U.S., Inc. (Equant N.V.)125,293
4/30/2015100%
2800 Waterford Lake Dr.MidlothianVAAlstom Power, Inc.99,057
12/31/2021100%
1400 Northeast McWilliams Rd.BremertonWANextel West Corp. (Nextel Finance Company)60,200
7/14/2016100%
22011 Southeast 51st St.IssaquahWASpacelabs Medical, Inc. / OSI Systems, Inc. (Instrumentarium Corporation)95,600
12/14/2014100%
5150 220th Ave.IssaquahWASpacelabs Medical, Inc. / OSI Systems, Inc. (Instrumentarium Corporation)106,944
12/14/2014100%
   Office Total11,762,974
 99.3%
PROPERTY CHART
OFFICEThe 2012 net effective annual rent for the office portfolio as of December 31, 2012 was $13.29 per square foot and the weighted-average remaining lease term was 4.5 years.

26

LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
LONG-TERM LEASES
As of December 31, 2012
Property LocationCityStatePrimary Tenant (Guarantor)Property TypeNet Rentable Square FeetCurrent Lease Term ExpirationPercent Leased
1640 Parker WayOpelikaALGander Mountain CompanyRetail52,000
11/30/2027100%
2211 South 47th St.PhoenixAZAvnet, Inc.Office176,402
2/28/2023100%
3030 North 3rd StreetPhoenixAZCopperPoint Mutual Insurance CompanyOffice252,400
12/31/2029100%
2005 E. Technology Cir.TempeAZInfocrossing, Inc.Office60,000
12/31/2025100%
3333 Coyote Hill Rd.Palo AltoCAXerox CorporationOffice202,000
12/14/2023100%
6277 Sea Harbor Dr.OrlandoFLWyndham Vacation Ownership, Inc. (Wyndham Worldwide Corporation) / Aramak CorporationOffice359,514
10/31/202574%
278 Norman DriveValdostaGAGander Mountain CompanyRetail51,198
8/31/2027100%
11201 Renner Blvd.LenexaKSUnited States of AmericaOffice169,585
10/31/2027100%
10000 Business Blvd.Dry RidgeKYDana Light Axle Products, LLC (Dana Holding Corporation and Dana Limited)Industrial336,350
6/30/2025100%
730 North Black Branch Rd.ElizabethtownKYMetalsa Structural Products, Inc. / Dana Structural Products, LLC (Dana Holding Corporation and Dana Limited)Industrial167,770
6/30/2025100%
750 North Black Branch Rd.ElizabethtownKYMetalsa Structural Products, Inc. / Dana Structural Products, LLC (Dana Holding Corporation and Dana Limited)Industrial539,592
6/30/2025100%
301 Bill Bryan RdHopkinsvilleKYMetalsa Structural Products, Inc. / Dana Structural Products, LLC (Dana Holding Corporation and Dana Limited)Industrial424,904
6/30/2025100%
4010 Airpark Dr.OwensboroKYMetalsa Structural Products, Inc. / Dana Structural Products, LLC (Dana Holding Corporation and Dana Limited)Industrial211,598
6/30/2025100%
5001 Greenwood Rd.ShreveportLALibbey Glass Inc. (Libbey Inc.)Industrial646,000
10/31/2026100%
37101 Corporate Dr.Farmington HillsMIPanasonic Automotive Systems Company of America, a Division of Panasonic Corporation of North AmericaOffice128,829
6/30/202570%
12000 & 12025 Tech Center Dr.LivoniaMIKelsey-Hayes Company (TRW Automotive, Inc.)Office180,230
12/31/2024100%
3902 Gene Field Blvd.St. JosephMOBoehringer Ingelheim Vetmedica, Inc. (Boehringer Ingelheim USA Corporation)Office98,849
6/30/2027100%
459 Wingo Rd.ByhaliaMSAsics America Corporation (Asics Corporation)Industrial513,734
3/31/2026100%
US 221 & Hospital RdJeffersonNCFood Lion, LLC / Delhaize America, Inc.Retail34,555
2/28/2023100%
671 Washburn Switch Rd.ShelbyNCClearwater Paper CorporationIndustrial673,518
5/31/2031100%
11707 Miracle Hills Dr.OmahaNEInfocrossing, Inc.Office85,200
11/30/2025100%
121 Technology Dr.DurhamNHHeidelberg Americas, Inc. (Heidelberg Drackmaschinen AG) (2021) / Goss International America, Inc. (Goss International Corporation) (2026)Industrial500,500
3/30/2026100%
6226 West Sahara Ave.Las VegasNVNevada Power CompanyOffice282,000
1/31/2029100%
351 Chamber DriveChillicotheOHThe Kitchen Collection, Inc.Industrial475,218
6/30/2026100%
10590 Hamilton Ave.CincinnatiOHThe Hillman Group, Inc.Industrial248,700
12/31/2027100%
        

27

LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
LONG-TERM LEASES
As of December 31, 2012
Property LocationCityStatePrimary Tenant (Guarantor)Property TypeNet Rentable Square FeetCurrent Lease Term ExpirationPercent Leased
5500 New Albany Rd.ColumbusOHEvans, Mechwart, Hambleton & Tilton, Inc.Office104,807
12/29/2026100%
2221 Schrock Rd.ColumbusOHMS Consultants, Inc.Office42,290
7/6/2027100%
7005 Cochran RdGlenwillowOHRoyal Appliance Mfg. Co.Industrial458,000
7/31/2025100%
1700 Millrace DriveEugeneOROregon Research Institute / Educational Policy Improvement CenterOffice80,011
11/30/2027100%
250 Rittenhouse CircleBristolPANorthtec LLC (The Estée Lauder Companies Inc.)Industrial241,977
11/30/2026100%
25 Lakeview DriveJessupPATMG Health, Inc.Office150,000
8/7/2027100%
590 Ecology LaneChesterSCOwens Corning Sales, LLCIndustrial420,597
7/14/2025100%
1362 Celebration BlvdFlorenceSCMED3000, Inc.Office32,000
2/14/2024100%
400 E. Stone AveGreenvilleSCCanal Insurance CompanyOffice128,041
12/31/2029100%
601 & 701 Experian Pkwy.AllenTXExperian Information Solutions, Inc. / TRW, Inc. (Experian Holdings, Inc.)Office292,700
3/14/2025100%
10001 Richmond Ave.HoustonTXBaker Hughes Incorporated (2015) / Schlumberger Holdings Corp. (2025)Office554,385
9/30/2025100%
6555 Sierra Dr.IrvingTXTXU Energy Retail Company, LLC (Texas Competitive Electric Holdings Company, LLC)Office247,254
3/31/2023100%
8900 Freeport PkwyIrvingTXNissan Motor Acceptance Corporation (Nissan North America, Inc.)Office268,445
3/31/2023100%
13930 Pike RoadMissouri CityTXVulcan Construction Materials LP (Vulcan Materials Company)IndustrialN/A
4/30/2032100%
25500 State Hwy. 249TomballTXParkway Chevrolet, Inc. (Raymond Durdin & Jean W. Durdin)Specialty77,076
8/31/2026100%
9803 Edmonds WayEdmondsWAPudget Consumers Co-op d/b/a PCC Natural MarketsRetail35,459
8/31/2028100%
2424 Alpine Rd.Eau ClaireWISilver Spring Foods, Inc. (Huntsinger Farms, Inc.)Industrial159,000
4/30/2027100%
500 Kinetic DriveHuntingtonWVAMZN WVCS (Amazon.com, Inc.)Office68,693
11/30/2026100%
   Long-Term Leases Total 10,231,381
 98.7%

The 2012 net effective annual rent for the long-term lease portfolio as of December 31, 2012 was $7.06 per square foot and the weighted-average remaining lease term was 13.4 years.

28

LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
INDUSTRIAL
As of December 31, 2012
Property LocationCityStatePrimary Tenant (Guarantor)Net Rentable Square FeetCurrent Lease Term ExpirationPercent Leased
2415 U.S. Hwy 78 EastMoodyALCEVA Logistics U.S., Inc. (TNT Logistics Holdings, B.V.)595,346
1/1/2014100%
109 Stevens St.JacksonvilleFLWagner Industries, Inc.168,800
1/31/2014100%
2455 Premier Dr.OrlandoFLWalgreen Co. / Walgreen Eastern Co.205,016
3/31/2016100%
3102 Queen Palm Dr.TampaFLTime Customer Service, Inc. (Time Incorporated)229,605
6/30/2020100%
359 Gateway Dr.LavoniaGATI Group Automotive Systems, LLC (TI Automotive Ltd.)133,221
5/31/2020100%
1420 Greenwood Rd.McDonoughGAVersacold USA, Inc.296,972
10/31/2017100%
3600 Army Post Rd.Des MoinesIAHP Enterprises Services, LLC405,000
4/30/2017100%
7500 Chavenelle Rd.DubuqueIAThe McGraw-Hill Companies, Inc.330,988
6/30/2017100%
2935 Van Vactor Dr.PlymouthINBay Valley Foods, LLC300,500
6/30/2015100%
3686 S. Central Ave.RockfordILJacobson Warehouse Company, Inc. (Jacobson Distribution Company, Inc. and Jacobson Transportation Company, Inc.)90,000
12/31/2014100%
749 Southrock Dr.RockfordILJacobson Warehouse Company, Inc. (Jacobson Distribution Company, Inc. and Jacobson Transportation Company, Inc.)150,000
12/31/2015100%
1901 Ragu Dr.OwensboroKYUnilever Supply Chain, Inc. (Unilever United States, Inc.)443,380
12/19/2020100%
5417 Campus DriveShreveportLAThe Tire Rack, Inc.257,849
3/31/2022100%
113 Wells St.North BerwickMEUnited Technologies Corporation972,625
4/30/2019100%
6938 Elm Valley Dr.KalamazooMIDana Commercial Vehicle Products, LLC (Dana Holding Corporation and Dana Limited)150,945
10/25/2021100%
904 Industrial Rd.MarshallMITenneco Automotive Operating Company, Inc. (Tenneco, Inc.)246,508
9/30/2018100%
1601 Pratt Ave.MarshallMIVacant58,300
N/A0%
43955 Plymouth Oaks Blvd.PlymouthMITower Automotive Operations USA I, LLC / Tower Automotive Products Inc. (Tower Automotive, Inc.)290,133
10/31/2017100%
7111 Crabb Rd.TemperanceMIMichelin North America, Inc.744,570
1/31/2015100%
1700 47th Ave NorthMinneapolisMNOwens Corning / Owens Corning Roofing and Asphalt, LLC18,620
6/30/2015100%
7670 Hacks Cross Rd.Olive BranchMSMAHLE Clevite, Inc. (MAHLE Industries, Incorporated)268,104
2/28/2016100%
324 Industrial Park Rd.FranklinNCSKF USA Inc.72,868
12/31/2014100%
1133 Poplar Creek Rd.HendersonNCStaples, Inc. / Corporate Express, Inc.196,946
12/31/2013100%
250 Swathmore Ave.High PointNCSteelcase Inc.244,851
9/30/2017100%
2880 Kenny Biggs Rd.LumbertonNCQuickie Manufacturing Corporation423,280
11/30/2021100%
2203 Sherrill Dr.StatesvilleNCOzburn-Hessey Logistics, LLC (OHH Acquisition Corporation)639,800
12/31/2017100%
736 Addison Rd.ErwinNYCorning, Incorporated408,000
11/30/2016100%
1650 - 1654 Williams Rd.ColumbusOHODW Logistics, Inc.772,450
6/30/2018100%
191 Arrowhead Dr.HebronOHOwens Corning Insulating Systems, LLC250,410
MTM100%
200 Arrowhead Dr.HebronOHOwens Corning Insulating Systems, LLC400,522
5/30/2014100%

29

LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
INDUSTRIAL
As of December 31, 2012
Property LocationCityStatePrimary Tenant (Guarantor)Net Rentable Square FeetCurrent Lease Term ExpirationPercent Leased
10345 Philipp Pkwy.StreetsboroOHL'Oreal USA S/D, Inc. (L'Oreal USA, Inc.)649,250
10/17/2019100%
50 Tyger River Dr.DuncanSCPlastic Omnium Auto Exteriors, LLC221,833
9/30/2018100%
101 Michelin Dr.LaurensSCMichelin North America, Inc.1,164,000
1/31/2015100%
477 Distribution Pkwy.ColliervilleTNFederal Express Corporation / FedEx Techconnect, Inc.126,213
5/31/2021100%
900 Industrial Blvd.CrossvilleTNDana Commercial Vehicle Products, LLC222,200
9/30/2016100%
120 South East Pkwy Dr.FranklinTNEssex Group, Inc. (United Technologies Corporation)289,330
12/31/2018100%
3350 Miac Cove Rd.MemphisTNMimeo.com, Inc.140,079
9/30/202077%
3456 Meyers Ave.MemphisTNSears, Roebuck and Co. / Sears Logistics Services780,000
2/28/2017100%
3820 Micro Dr.MillingtonTNIngram Micro L.P. (Ingram Micro Inc.)701,819
9/30/2021100%
19500 Bulverde Rd.San AntonioTXElsevier STM Inc. (Reed Elsevier Inc.)559,258
3/31/2016100%
2425 Hwy. 77 NorthWaxahachieTXJames Hardie Building Products, Inc. (James Hardie NV & James Hardie Industries NV)335,610
3/31/2020100%
291 Park Center Dr.WinchesterVAKraft Foods Global, Inc.344,700
5/31/2016100%
   Industrial Total15,299,901
 99.4%

The 2012 net effective annual rent for the industrial portfolio as of December 31, 2012 was $3.10 per square foot and the weighted-average remaining lease term was 4.9 years.


30

LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
MULTI-TENANTED
As of December 31, 2012
Property LocationCityStatePrimary Tenant (Guarantor)Property TypeNet Rentable Square FeetCurrent Lease Term ExpirationPercent Leased
13430 N. Black Canyon FwyPhoenixAZMulti-tenantedOffice138,940
Various100%
2706 Media Center Dr.Los AngelesCASony Electronics Inc.Office83,252
8/31/201524%
10 John St.ClintonCTVacantOffice41,188
N/A0%
200 Executive Blvd. S.SouthingtonCTVacantOffice153,364
N/A0%
4200 Northcorp ParkwayPalm Beach GardensFLMulti-tenantedOffice95,065
Various26%
4000 Johns Creek PkwySuwaneeGAVacantOffice87,219
N/A0%
1032 Fort St. Mall/King St.HonoluluHIMulti-tenantedOffice318,451
Various92%
2300 Litton LaneHebronKYMulti-tenantedOffice80,440
Various95%
100 Light St.BaltimoreMDMulti-tenantedOffice476,459
Various95%
265 Lehigh St.AllentownPAPennsylvania School of Business, Inc.Office71,055
9/30/202132%
6050 Dana WayAntiochTNMulti-tenantedIndustrial672,629
Various70%
207 Mockingbird LaneJohnson CityTNMulti-tenantedOffice60,684
Various50%
17191 St. Luke's WayThe WoodlandsTXMulti-tenantedOffice41,000
Various33%
140 E. Shore Dr.Glen AllenVAMulti-tenantedOffice76,885
Various91%
   Multi-Tenanted Total 2,396,631
 67.4%

The 2012 net effective annual rent for the multi-tenant portfolio as of December 31, 2012 was $11.70 per square foot and the weighted-average remaining lease term was 8.3 years.

31

LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
RETAIL/SPECIALTY
As of December 31, 2012
Property LocationCityStatePrimary Tenant (Guarantor)Net Rentable Square FeetCurrent Lease Term ExpirationPercent Leased
255 Northgate Dr.MantecaCAKmart Corporation107,489
12/31/2018100%
12080 Carmel Mountain RdSan DiegoCAKmart Corporation107,210
12/31/2018100%
10340 U.S. 19Port RicheyFLKingswere Furniture, LLC53,820
10/31/2018100%
1150 W. Carl Sandburg Dr.GalesburgILKmart Corporation94,970
12/31/2018100%
5104 North Franklin RdLawrenceINMarsh Supermarkets, Inc. / Marsh Supermarkets, LLC28,721
10/31/2018100%
24th St. W. & St. John's AveBillingsMTSafeway, Inc.40,800
5/31/2015100%
291 Talbert Blvd.LexingtonNCFood Lion, LLC / Delhaize America, Inc.23,000
2/28/2018100%
835 Julian AveThomasvilleNCMighty Dollar, LLC23,767
9/30/2018100%
130 Midland Ave.Port ChesterNYPathmark Stores, Inc.59,000
10/31/2018100%
21082 Pioneer Plaza Dr.WatertownNYKmart Corporation120,727
12/31/2018100%
4831 Whipple Avenue N.W.CantonOHBest Buy Co., Inc.46,350
2/26/2018100%
1084 East Second St.FranklinOHMarsh Supermarkets, Inc. / Crystal Food Services, LLC29,119
10/31/2014100%
5350 Leavitt RdLorainOHKmart Corporation193,193
12/31/2018100%
N.E.C. 45th St/Lee Blvd.LawtonOKAssociated Wholesale Grocers, Inc. / Safeway, Inc.30,757
3/31/2014100%
11411 N. Kelly AveOklahoma CityOKAmerican Golf Corporation13,924
12/31/2017100%
6910 S. Memorial HwyTulsaOKToys "R" Us, Inc. / Toys “R” Us-Delaware, Inc.43,123
5/31/2016100%
12535 S.E. 82nd Ave
ClackamasORToys "R" Us-Delaware, Inc. / Toys "R" Us, Inc. / TRU 2005 RE I, LLC42,842
5/31/2016100%
S. Carolina 52/52 BypassMoncks CornerSCFood Lion, LLC / Delhaize America, Inc.23,000
2/28/2013100%
399 Peachwood Centre Dr.SpartanburgSCBest Buy Co., Inc.45,800
2/26/2018100%
1600 E. 23rd St.ChattanoogaTNBI- LO, LLC42,130
6/30/2017100%
1053 Mineral Springs RdParisTNThe Kroger Co.31,170
7/1/2018100%
1610 South Westmoreland Ave.DallasTXMalone's Food Stores, Ltd.70,910
3/31/2017100%
4811 Wesley St.GreenvilleTXBrookshire Grocery Company / Safeway, Inc.48,492
5/31/2016100%
3211 W. Beverly St.StauntonVAFood Lion, LLC / Delhaize America, Inc.23,000
2/28/2018100%
18601 Alderwood Mall Blvd.LynnwoodWAToys "R" Us-Delaware, Inc. / Toys "R" Us, Inc. /TRU 2005 RE I, LLC43,105
5/31/2016100%
1700 State Route 160Port OrchardWAMoran Foods, Inc. d/b/a Save-A-Lot, Ltd.27,968
1/31/201557%
97 Seneca TrailFairleaWVKmart Corporation90,933
12/31/2018100%
   Retail/Specialty Total1,505,320
 99.2%
   Consolidated Portfolio Grand Total41,196,207
 97.3%
The 2012 net effective annual rent for the retail/specialty portfolio as of December 31, 2012 was $5.93 per square foot and the weighted-average remaining lease term was 4.9 years.
The 2012 net effective annual rent per square foot for the consolidated portfolio as of December 31, 2012 was $7.60 per square foot and the weighted-average remaining lease term was 7.1 years.

32


 
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
NON-CONSOLIDATED PORTFOLIO PROPERTY
CHART
As of December 31, 2012
Property LocationCityStatePrimary Tenant (Guarantor)Property TypeNet Rentable Square FeetCurrent Lease Term ExpirationPercent Leased
        
Route 64 W. & Junction 333RussellvilleAREntergy Arkansas Inc. / Entergy Services, Inc.Office191,950
5/9/2016100%
100 Gander WayPalm Beach GardensFLGander Mountain CompanyRetail120,000
3/31/2028100%
101 E. Washington Blvd.Fort WayneINIndiana Michigan Power CompanyOffice348,452
10/31/2016100%
3201 Quail Springs Pkwy.Oklahoma CityOKAT&T Corp. / AT& T Services, Inc. / New Cingular Wireless Services, Inc.Office128,500
11/30/2015100%
18839 McKay Blvd.HumbleTXTriumph Rehabilitation Hospital of Northeast Houston, LLC (RehabCare Group, Inc.)Specialty55,646
1/31/2029100%
   Total 844,548
 100%

The 2012 net effective annual rent for the non-consolidated portfolio as of December 31, 2012 was $12.32 per square foot and the weighted-average remaining lease term was 7.2 years.
20
LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
OFFICEThe 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 FeetAnnual Rent ($000)
Percentage of
Annual Rent
2013351,368,416
 $10,508
 3.4% 
2014443,718,157
  37,914
 12.1% 
2015343,904,154
  26,508
 8.5% 
2016293,332,923
  20,567
 6.6% 
2017193,662,665
  19,170
 6.1% 
2018353,990,002
  27,892
 8.9% 
2019224,215,544
  35,865
 11.5% 
2020141,992,442
  14,907
 4.8% 
2021152,841,597
  26,869
 8.6% 
20226663,922
  6,374
 2.0% 
21


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     
22

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%

23


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     


24

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%

25


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     

26
The following chart sets forth the 2012 annual GAAP base rent ($000) based on the credit rating of our consolidated tenants at December 31, 2012(1):

LEXINGTON
NON-CONSOLIDATED PORTFOLIO PROPERTY
CHART
 GAAP Base Rent Percentage
Investment Grade$153,656
 49.1%
Non-investment Grade49,025
 15.7%
Unrated110,338
 35.2%
 $313,019
 100.0%
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     
(1) Credit ratings are based upon either tenant, guarantor or parent/sponsor. Generally, all multi-tenant assets are included in unrated. See Item 1A “Risk Factors”, above.

33
27


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     

28


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     

29

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 although the outcomeoutcomes of those normal course proceedings are uncertain, the results of such matters, includingproceedings, in the matters set forth below, areaggregate, will not expected to have a material adverse effect on our ownership,business, financial condition management or operationand results of our properties or business.operations. 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.

30
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.
31
Executive Officers of the RegistrantNot applicable.

The following sets forth certain information relating to our executive officers:

NameBusiness 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.

34
32

PART II.

Item 5. Market For Registrant’sRegistrant's Common Equity, Related Shareholder StockholderMatters 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 (composite) 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, 2012 $10.50
 $8.84
September 30, 2012 10.29
 8.44
June 30, 2012 9.19
 7.82
March 31, 2012 9.34
 7.34
December 31, 2011 8.18
 5.71
September 30, 2011 9.70
 6.17
June 30, 2011 10.14
 8.30
March 31, 2011 9.66
 7.80
The per common share closing price of our common shareson the NYSE (composite) was $5.94$11.00 on February 25, 2010.21, 2013.

Holders. As of February 25, 2010,21, 2013, we had approximately 4,2913,658 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 2012 2011 2010 2009 2008
March 31, $0.125
 $0.115
 $0.10
 $0.18
  $2.475
June 30, $0.125
 $0.115
 $0.10
 $0.18
(1) $0.330
September 30, $0.125
 $0.115
 $0.10
 $0.18
(1) $0.330
December 31, $0.150
 $0.115
 $0.10
 $0.18
(1) $0.330
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.

Due to the sale of properties, a reduction in estimated taxable income, and the desire to retain capital and strengthen our balance sheet, the dividend per common share has been reduced to $0.10 per quarter for 2010, which we expect will be paid cash.Internal Revenue Service Revenue Procedure 2008-68.

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 agreementsdebt instruments 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.

Direct Share Purchase Plan. 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 2009,2012, 2011 and 2010, we issued approximately 4.31.0 million, 1.1 million and 1.3 million common shares, respectively, under the direct share purchase component,plan, raising net proceeds of $20.9 million.$8.5 million, $8.4 million and $8.6 million, respectively.

35

ATM Program. In January 2013, we implemented an ATM program, under which we may, from time to time, sell up to $100.0 million in common shares over the term of the program. As of the date of filing this Annual Report, we issued 3,409,927 common shares, under this ATM program, at a weighted average issue price of $10.82 per common share, generating proceeds of approximately $36.2 million after deducting approximately $0.65 million of commissions. We intend to use the net proceeds from the ATM program for general working capital, which may include unspecified acquisitions and to repay indebtedness. As of the date of filing this Annual Report, we had approximately $63.1 million in common shares available for issuance under the ATM program.

33
Equity Compensation Plan Information. The following table sets forth certain information, as of December 31, 2009,2012, 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  3,480,080
 $6.44
 4,437,962
Equity compensation plans not approved by security holders  0    0   —  —
 —
 —
Total  2,252,000  $ 5.60   2,289,164  3,480,080
 $6.44
 4,437,962

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 

34
Recent Sales of Unregistered Securities.

None, other than asAs previously disclosed, inwe issued an aggregate 4.5 million common shares upon conversion of $31.1 million original principal amount of our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.6.00% Convertible Notes at the stated conversion rate of 144.2599 common shares per $1,000 principal amount of the notes during the fourth quarter of 2012. See Part I, Item 1 “Business”, above, for disclosure related to similar conversions subsequent to December 31, 2012.

Share Repurchase Program.

The following table summarizes repurchases of our common shares/OP units that were authorized to be repurchased during the fourth quarter of 20092012 pursuant to publicly announced repurchase plans:

Period 


Total Numbernumber of
Shares/Unitsshares/units
Purchasedpurchased
 


Average Priceprice
Paidpaid per
Share/Unitshare/unit ($)
 
Total Numbernumber of
Shares/Unitsshares/units
Purchasedpurchased as Partpart of
Publicly Announcedpublicly announced
Plansplans or Programsprograms (1)
 
Maximum Numbernumber of
Shares That May Yetshares/units that may yet
Be Purchased Underbe purchased under
the Plansplans or Programsprograms (1)
October 1 — 31, 20091-31, 2012 —
 $—
 —
 1,056,7311,056,731
November 1 — 30, 20091-30, 2012 —
 —
 —
 1,056,7311,056,731
December 1 — 31, 20091-31, 2012 —
 —
 —
 1,056,731
Fourth Quarter 20092012 —
 $—
 —
 1,056,7311,056,731

_________________________
(1) Share repurchase plan most recently announced on December 17, 2007.2007, which plan has no expiration date.

During the year ended December 31, 2009,In addition, during 2012, we repurchased $123.4 million original principal amountand retired all outstanding (approximately 2.7 million) Series B Preferred Shares and 35 thousand Series C Preferred Shares for an aggregate purchase price of our 5.45% Exchangeable Guaranteed Notes at an average discount of 18.1% to the original principal amount.approximately $70.0 million.

36
35

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.2012. The selected consolidated financial data should be read in conjunction with Item 7 “Management's Discussion and Analysis of Financial Condition and Results of Operations” below, and the Consolidated Financial Statements and the related notes appearing elsewhereset forth in this Annual Report.Item 8 “Financial Statements and Supplementary Data”, below. ($000’s,000's, except per share data)

 2012 2011 2010 2009 2008
Total gross revenues$344,879
 $313,826
 $305,350
 $318,531
 $333,238
Expenses applicable to revenues(222,089) (214,587) (208,668) (210,493) (247,829)
Interest and amortization expense(98,803) (106,478) (116,516) (119,997) (139,084)
Income (loss) from continuing operations178,856
 (19,111) (8,042) (132,638) (48,634)
Total discontinued operations5,782
 (70,667) (29,368) (78,634) 13,361
Net income (loss)184,638
 (89,778) (37,410) (211,272) (35,273)
Net income (loss) attributable to Lexington Realty Trust180,316
 (79,584) (32,960) (210,152) (29,052)
Net income (loss) attributable to common shareholders156,849
 (103,721) (58,096) (242,876) (50,778)
Income (loss) from continuing operations per common share - basic0.96
 (0.29) (0.28) (1.52) (0.81)
Income (loss) from discontinued operations - basic0.03
 (0.39) (0.16) (0.70) 0.06
Net income (loss) per common share - basic0.99
 (0.68) (0.44) (2.22) (0.75)
Income (loss) from continuing operations per common share - diluted0.91
 (0.29) (0.28) (1.52) (0.81)
Income (loss) from discontinued operations per common share - diluted0.02
 (0.39) (0.16) (0.70) 0.06
Net income (loss) per common share - diluted0.93
 (0.68) (0.44) (2.22) (0.75)
Cash dividends declared per common share0.55
 0.47
 0.415
 0.64
 1.17
Net cash provided by operating activities163,810
 180,137
 164,751
 159,307
 230,201
Net cash provided by (used in) investing activities(142,210) (24,813) (24,783) 111,967
 230,128
Net cash used in financing activities(59,394) (144,257) (141,189) (285,207) (804,637)
Ratio of earnings to combined fixed charges and preferred dividendsN/A
 N/A
 N/A
 N/A
 N/A
Real estate assets, net, including real estate - intangible assets3,165,085
 2,746,976
 2,977,100
 3,282,561
 3,637,719
Investments in and advances to non-consolidated entities27,129
 39,330
 21,252
 4,757
 127,905
Total assets3,418,203
 3,026,820
 3,283,768
 3,528,617
 4,054,497
Mortgages, notes payable and credit facility, including discontinued operations1,878,208
 1,662,375
 1,778,077
 2,072,738
 2,372,323
Shareholders' equity1,306,730
 1,111,846
 1,228,928
 1,157,441
 1,354,847
Total equity1,333,165
 1,170,203
 1,304,901
 1,246,008
 1,449,843
Preferred share liquidation preference251,770
 322,032
 338,760
 338,760
 363,915
_________
  
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 and $7,964 exists at December 31, 2009, 2007 and 2006,
N/A - Ratio is below 1.0, deficit of $25,454, $64,877, $49,287, $12,049 and $1,562 exists at December 31, 2012, 2011, 2010, 2009 and 2008, respectively.

All years have also been adjusted to reflect the impact of (1) operating properties sold during the years ended December 31, 2012, 2011, 2010, 2009 2008, 2007, 2006 and 2005,2008, which are reflected in discontinued operations in the Consolidated Statements of Operations.Operations and (2) the 2008 basis adjustment to our equity invested in NLS as discussed in note 4 in the Consolidated Financial Statements.


37

36

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 LookingForward-Looking Statements” in Part I, of this AnnualReport.

Table of ContentsPage
Overview37
38
Liquidity42
44
Capital Resources46
47
Results of Operations46
48
Off-Balance Sheet Arrangements48
52
Contractual Obligations50
52

Overview

General. We are a self-managed and self-administered real estate investment trustREIT formed under the laws of the Statestate of Maryland. We operate primarily in one segment, single-tenant real estate assets, and our primary business is the investment in and the acquisition, ownership, financing and management of a geographically diverse portfolio consisting of net-leasedpredominantly single-tenant office, industrial and retail properties.
As of December 31, 2009,2012, we had equity ownership interests in approximately 210220 consolidated real estate properties, located in 4041 states and the Netherlands and encompassing approximately 38.341.2 million square feet. Substantially allfeet, approximately 97.3% of ourwhich was leased. 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/orincluding 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 StateSince 2010, we have seen an increase in acquisition opportunities and strengthening in the availability of the Economy. Ourcapital. However, 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) an increase in impairment charges on our assets and (6) tenant defaults and bankruptcies. Ituncertainty with respect to future space needs. However, it is difficult for us to predict how severewhen, or if, the impacteconomy will be to our business and how long the uncertainty and volatility will continue.

fully recover.
In an effort to diversify our risk, we lease ourinvest across the United States in properties leased to tenants in various industries, including finance/insurance, technology, 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 continueresults of operations and cash flows.
In addition to lose occupancy during 2010 due to current economic factors, which may include increased tenant defaults and bankruptcies or government conservatorship of tenants and the desire of certain tenants to contract leased space.

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 salesnone of our investments. We expect that certainwhich matures in 2013 or 2014, 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$238.4 million and $251.0 million in balloon payments that mature in 2010. We also have (1) interest rate swap agreements2013 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.

2014, respectively.
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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 resultingcontinues to result from our business strategy. In 2009,2012, we increased our net assets by approximately $163.0 million as compared to 2011. In 2012, we completed acquisitions/build-to-suit transactions for an aggregate capitalized cost of approximately $247.0 million and reduced our weighted-average interest rate on outstanding consolidated indebtedness by approximately 34 basis points primarily by refinancing higher interest rate debt. In 2011 and 2010, we reduced our overall consolidated indebtedness by $305.6$119.3 million and $300.3 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.

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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 net-leased 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, oursellers. When we 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.
Commencing in 2008, 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, we began to decrease our acquisition activity. Following the Newkirk Merger, our real estate acquisition activity consisted primarily of acquiring the interests that we did not already own in certain of our co-investment programs.

During 2007, 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 decrease as we focused on retiring senior debt and preferred securities at a discount.to improve our balance sheet. In response to the compression in capitalization rates for investment opportunities, 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.
Our recent acquisition activity consistsvolume for 2012 and 2011 consisted primarily of debt investmentsbuild-to-suit transactions whereby we (1) provide capital to developers who are engaged in build-to-suit transactions and/or commit to purchase the property from developers upon completion or (2) acquire a property subject to a single-tenant net-lease and engage a developer to complete construction of a build-to-suit property as required by the lease. 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 our investment. Cost overruns are generally the responsibility of the developer, or in some cases the prospective tenant. To further mitigate risk, we believe we perform stringent underwriting procedures 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 consultants 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) obtaining and reviewing detailed plans and constructions budgets; (6) requiring a long-term tenant lease to be executed prior to funding; and (7) securing liens on the property to the extent of construction funding.
The following is a summary of our property acquisitions and build-to-suit transactions for the year ended December 31, 2012:
Property Acquisitions
Location Property Type Square Feet (000's) Capitalized Cost (millions) Lease Term (Years) Date Acquired
Missouri City, TX(1)
 Industrial —
 $23.0
 20 2Q 2012
Phoenix, AZ Office 252
 $53.2
 17 4Q 2012
    252
 $76.2
    
(1) Consists of a 152 acre industrial site with various structures, including storage areas and a rail spur.

Completed Build-to-Suit Transactions
Location Property Type Square Feet (000's) Capitalized Cost(millions) Lease Term (Years) Date Acquired Capitalized Cost Per Square Foot
Huntington, WV Office 69
 $12.6
 15 1Q 2012 $182.81
Florence, SC Office 32
 $5.1
 12 1Q 2012 $159.18
Shreveport, LA Industrial 258
 $12.9
 10 2Q 2012 $50.19
Jessup, PA(1)
 Office 150
 $24.9
 15 3Q 2012 $136.12
Saint Joseph, MO Office 99
 $17.6
 15 3Q 2012 $177.76
Valdosta, GA(2)
 Retail 51
 $8.3
 15 3Q 2012 $161.69
Opelika, AL(2)
 Retail 52
 $8.3
 15 4Q 2012 $160.24
Eugene, OR Office 80
 $17.6
 15 4Q 2012 $219.44
    791
 $107.3
      
(1) Capitalized cost includes $4.5 million funded by the tenant.
(2) Includes leasing costs of $0.5 million for Valdosta and $0.4 million for Opelika.

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On-going Build-to-Suit Transactions
Location Property Type Square Feet (000's) Expected Maximum Commitment/ Contribution (millions) Lease Term (years) Estimated Completion Date 
Costs Incurred as of 12/31/12(1)  (millions)
Long Island City, NY(2)
 Industrial 143
 $46.7
 15 1Q 13 $32.7
Denver, CO Office 163
 $38.4
 15 2Q 13 $22.8
Tuscaloosa, AL Retail 42
 $8.8
 15 2Q 13 $3.4
Rantoul, IL Industrial 813
 $42.6
 20 4Q 13 $10.0
    1,161
 $136.5
     $68.9
(1) Balance includes equity credit received.
(2) Joint venture investment.
We can provide no assurance with respect to the completion, cost or timing of these on-going build-to-suit transactions.
Loan Investments. We invest in loan assets secured by single-tenant 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 assets to increase if and when general market conditions improve.

Onan efficient disposition of our equity interest in the property. During the the year ended December 31, 2009,2012, we acquiredentered into an officearrangement to fund the construction of a charter school in Homestead, Florida. The loan, which had an outstanding principal balance of approximately $8.0 million as of December 31, 2012, matures in August 2014 and accrues interest at 7.5% per annum. During the fourth quarter of 2012, we contracted to lend up to $32.6 million for the construction of a data center in Norwalk, Connecticut. The interest-only loan bears interest at 7.5% and matures in November 2014. The loan had an outstanding principal balance of $3.5 million as of December 31, 2012.
During 2011, we loaned $3.0 million to the 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 was secured by the property, on December 31, 2014bore 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,was satisfied in full in 2012. 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. We made a 15%, $11.0$10.0 million mezzanine loan secured by a 100% pledge of all equity interests in the entities which owned 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, we made a 15.0% mortgage loan onsecured by an office building in Schaumburg, Illinois, which matureswas scheduled to mature 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 $21.9 million at December 31, 2012. 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 toThe tenant made a claim for a $12.2 million tenant improvement allowance, which is being offset by withholding rent. The borrower defaulted on the initial $11.0 million investment,mortgage loan and we have initiated foreclosure proceedings. If we are obligatedsuccessful on the foreclosure proceedings we will be required to fund an additional $7.6 million overpay the two-year termbalance 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 fund an additional $12.2 million for tenant improvement costs. We alsoallowance.
During 2010, we 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%14.0% through February 2011 and 16.0% 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.
Also as of December 31, 2012, the tenant of the property in Westmont, Illinois, which we sold in 2007 but issued a purchase mortgage to the buyer, exercised its option to terminate its lease effective November 2013. As of December 31, 2012, our note receivable was $26.8 million.
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 2013, and 16% thereafter.we anticipate continued acquisition activity for 2013. However, we can provide no assurances that any of these transactions will be consummated or, if consummated, will be successful.

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.

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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 of theirassess the tenant's 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 determine 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 us 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 our 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 concessions 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 to include, among other items, some form of responsibility for capital repairs and replacements.
During 2012, we entered into 69 new leases and lease extensions encompassing approximately 7.4 million square feet. The average GAAP base rent on these extended leases was approximately $7.22 per square foot compared to the average GAAP base rent on these leases before extension of $7.62 per square foot. The weighted-average cost of tenant improvements and lease commissions was approximately $9.40 per square foot for new leases and $9.44 per square foot for extended leases. We expect renewal rents to be lower than expiring rents and tenant improvement allowance and leasing costs to remain at their current levels in the near future.
We continue to monitor the credit of tenants of properties in which we have an interest by (1) subscribing to S&P and Moody's, so that we can monitor changes in the ratings of our rated tenants, (2) reviewing financial statements that are publicly available or that are required to be delivered to us under the applicable lease, (3) monitoring news reports regarding our tenants and are particularly focused on our tenants intheir respective businesses and (4) monitoring the financial, retail and automotive industries.timeliness of rent collections. 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, subject to availability of funds from the bankruptcy estate, 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 consolidatedA vacant property in each of Tulsa, Oklahoma and Clive, Iowa in which we had an interest were disposed of in foreclosure in 2012. Our property owner subsidiaries may convey properties totaling approximately 3.8 million square feet with aggregate annual rental revenues of approximately $29.0 million that are leased to tenantslenders or the property owner subsidiary may declare bankruptcy in the automotive industry. The primary business of these tenantsfuture if a property owner subsidiary is supply, manufacturing and installation. We are closely monitoring the automotive industry in general and our tenants withinunable 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 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, the property was conveyed to the mortgage lender throughdoes not justify a foreclosure in satisfaction of the $15.5 million outstanding mortgage loan following the determination that the mortgage balance exceeded the value of the property and there were 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 obligationsexcess 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 there were no viable leasing prospects.

Johnson Controls Inc. was our tenant in our industrial building in Plymouth, Michigan. On August 31, 2007, their lease expired and they vacated the facility. The property was conveyed 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 of the property and there were no viable leasing prospects.balance.

Impairment charges.During 2009,2012, 2011 and 2010, we incurred substantial impairment charges on our assets of $10.0 million, $117.4 million and $56.9 million, respectively, due primarily to currentthe assets being sold below their carrying value and a deterioration in economic conditions.  Threeconditions since the acquisition of such assets. These real estate assets (Richmond, Virginia property previously leased to Circuit City Stores, Inc., Houston, Texas previously leased to Vastar Resources, Inc.were primarily non-core assets including retail properties, under performing and Plymouth, Michigan property previously leased to Johnson Controls Inc.) with an aggregate carrying valuemulti-tenant properties.
Given the continued uncertainty in general economic conditions, we cannot estimate if we will incur, or the amount 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 aggregatefuture 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 million on real estate assets which were disposed of below their carrying value.  These assets were non-core or non-performing assets and we used the net proceeds from these sales to deleverage our balance sheet.

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We determined that two of our investments in non-consolidated entities incurred other-than-temporary impairments in 2009 and recognized $74.7 million of impairment charges in equity in earnings (losses) from non-consolidated entities relating to these assets. 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.  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 valueassets. See Part I, Item 1A “Risk Factors”, of our investment to zero. In addition, 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 notes receivable assets during 2009.  During the first quarter of 2009, we agreed to the discounted payoff of two notes receivable with an aggregate carrying value of $5.0 million. During 2009, we wrote the notes 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 for $9.5 million during 2009 and realized a loss of $0.5 million. The proceeds from these transactions were used to reduce corporate level debt.Annual Report.

Critical Accounting Policies and Recently Issued Accounting GuidancePolicies.. Our accompanying consolidated financial statements have been prepared in conformityaccordance 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.reported and related disclosures of contingent assets and liabilities. 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.

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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 theseour 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.

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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 thevacant. 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 areis 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.


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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.

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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.

Acquisition, Development and Construction ArrangementsFair Value Measurements.. We We followevaluate loans receivable where we participate in residual profits through loan provisions or other contracts to ascertain whether we have the guidancesame risks and rewards as an owner or a joint venture partner. Where we conclude that such arrangements are more appropriately treated as an investment in FASB Accounting Standards Codification, whichreal estate, we referreflect 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 we record capitalized interest during the construction period. In arrangements where we engage a developer to as ASC, Topic 820, Fair Value Measurements and Disclosures, whichconstruct a property or provide funds to a tenant to develop a property, we refer to as Topic 820, to determinewill capitalize 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 principles 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 inputsfunds provided to the extent possible as well as consider counterparty credit risk, wheredeveloper/tenant and internal costs of interest and real estate taxes, if applicable, in our assessment of fair value.during the construction period.

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.


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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, corporate level borrowings, under our credit facility,capital recycling proceeds, issuances of equity, mortgage proceeds and debt and co-investment programs, as well asour other alternatives,principal sources of 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 $159.3$163.8 million for 2009, $230.22012, $180.1 million for 20082011 and $287.7$164.8 million for 2007.2010. Cash flows from operations in 2011 was primarily impacted by the receipt of a lease termination payment on our Lenexa, Kansas property. 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’ leases enhancesthe properties in which we have an interest mitigates the risks of the timing of 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)used in investing activities totaled $112.0$142.2 million in 2009, $230.12012, $24.8 million in 20082011 and ($31.5)$24.8 million in 2007.2010. 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 equityinterests in non-consolidated properties 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 notesand loans receivable, and 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)$59.4 million in 2009, ($804.6)2012, $144.3 million in 20082011 and $39.0$141.2 million in 2007.2010. Cash provided by financing activities during each year was primarily attributable to net proceeds from equity offerings,the issuance of common shares, contributions from noncontrolling interests, non-recourse mortgages and corporate borrowings, offset by dividend and distribution payments, repurchases of equity interests, forward equity commitment payments, net, an increase in deferred financing costs and debt payments and repurchases.

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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 2009,2012, 2011 and 2010, we issued approximately 4.3 million common shares under our direct share purchase plan raisingraised net proceeds of approximately $20.9 million. During 2008, we issued approximately 3.5$164.4 million, $99.0 million and $166.4 million, respectively, through the issuance of common shares raising net proceeds of approximately $47.2 million.shares. 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 $239.0 million original principal amount of theand retired all notes for $169.5$358.1 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 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..

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 principal 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 141.1383144.2599 common shares per $1,000 principal amount of the notes, representing a conversion price of approximately $7.09$6.93 per common share. The initial conversion rate is subject to adjustment under certain circumstances.circumstances, including increases in our 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 our election. During 2012, holders of the notes converted an aggregate $31.1 million of notes for 4.5 million common shares and an aggregate cash payment by us of $2.4 million plus accrued and unpaid interest.

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During 2012 and 2011, we repurchased and retired all outstanding Series B Preferred Shares (approximately 3.2 million) and approximately 0.2 million Series C Preferred Shares for an aggregate purchase price of $85.5 million, which was at a $1.5 million discount to the liquidation preferences of the preferred shares.

During 2008, we (1) repurchased 1.2 million common shares at an average price of $14.28 per share and (2) repurchased and retired 501,700 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 and we have prepaid $15.6 million of the $19.6 million purchase price as of December 31, 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 prepaid $15.6 million of the $19.6 million purchase price during 2008 and 2009. 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 and other markets in the future to implement our business strategy and to fund future growth. However, the continued general economic uncertainty and the volatility in these markets makes accessing these markets 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.

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On As of December 31, 2008, the MLP merged with and into us and 6.42012, there was a total of approximately 3.8 million OP units were exchanged into an equal number of common shares. As of December 31, 2009, there were 4.8 millionoutstanding other than OP units outstanding.held by us. Of thethis total, OP units outstanding, approximately 1.5 million are held by related parties.

As a result of the general deterioration in real estate values which commenced in 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, we2012, our property owner subsidiaries have related balloon payments of $106.0$238.4 million and $251.0 million maturing in 2013 and 2014, 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)34.0 million at December 31, 2012), borrowing capacity on our revolvingprimary credit facility ($96.6296.3 million at as of 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).
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. 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.

We expect to continue to use property specific, non-recourse mortgages in certain situations 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 our ability to obtain property specific debt on favorable terms.

terms in many cases. In August 2009, we refinanced a $13.2 million, 8.19% non-recourse2008, property specific mortgage lending nearly ceased. Since then, the number of lenders and available 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 the first quarter of 2009, we suspended debt service payments on the mortgage encumbering our property that was leased to Circuit City Stores, Inc. in Richmond, Virginia following the lease rejection and 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 quarter of 2009, we 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 to the lender in December 2009.proceeds have diminished significantly. In addition, we 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 declared bankruptcy in December 2009required loan to value ratios have decreased and the property and related debt were assumed by the bankruptcy estate.

During 2008,covenants, including required reserve amounts, have increased. Accordingly, we obtained or assumed $21.2 million in property specific non-recourse mortgage financings on two properties, which have a weighted-average-fixed interest rate of 6.0%. The proceeds of the financing not assumed were usedexpect to retire existing indebtedness.

During 2008, we informed the lender 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, we entered into a settlement agreement with the lender, and we were released from obligations under the mortgage.

Corporate Borrowings. Weprimarily use corporate level borrowings such as our secured revolving credit facility and secured term loans, to finance our investmentsacquisitions and operations.debt maturities.

On February 13, 2009,In 2012 and 2011, we entered intoobtained, through consolidated property owner subsidiaries, $121.0 million and $15.0 million, respectively, in non-recourse mortgage loans with interest rates ranging from 4.0% to 4.7% and maturity dates ranging from 2016 to 2023.

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Corporate Borrowings. In 2012, we procured 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$255.0 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).from Wells Fargo Bank, National Association, as agent. The new facility bears interest at 285 basis points over LIBOR andsecured term loan matures in February 2011,January 2019 and requires regular payments of interest only at an interest rate dependent on our leverage ratio, as defined therein, ranging from 2.00% to 2.85% over LIBOR. Upon the date when we obtain an investment grade debt rating from at least two of S&P, 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 facility through January 12, 2013, but can be extendedmay prepay outstanding borrowings anytime thereafter, however at a premium for the next three years. We entered into aggregate interest-rate swap agreements to February 2012fix LIBOR at our option. Withan aggregate weighted-average rate of 1.42% on $255.0 million of borrowings under the consentsecured term loan for seven years. As of the lenders, we can increasedate of filing of this Annual Report, $255.0 million was outstanding, the size of (1)collateral securing the term loan by $135.0 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 million, assuming no prepayments of the term loan are made) by adding properties to the borrowing base.

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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 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 of 75 properties as of December 31, 2009. As of December 31, 2009, $164.3 million and $7.0 million were outstanding on the term loan and revolving loan, respectively,was released and we were in compliance with the financial covenants contained in the term loan agreement. Subsequent

In addition, in 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 secured revolving facility required payments of interest at rates ranging from 1.625% to 2.375% over LIBOR depending on our leverage ratios, as defined therein. The secured revolving credit facility was to mature in January 2015, but could be extended to January 2016 at our option.

See Part I, Item 1 “Business”, for disclosure relating to the refinancing of our secured credit facility with an unsecured credit facility and the amendment of our secured term loan to an unsecured term loan subsequent to December 31, 2009, we repaid $35.0 million2012. As of the term loan, all borrowings underdate of filing of this Annual Report, no amounts were outstanding on our unsecured credit facility and we were in compliance with the revolving loan, and increasedfinancial covenants contained in the availability under the revolving loan by $25.0 million by admitting an additional lender to the bank group.credit agreement governing our unsecured credit facility.

In March 2008, we obtained $25.0 million and $45.0 million original principal amount secured term loans from KeyBank. The loans are interest only at LIBOR plus 60 basis points, however we entered into an interest rate swap agreement which fixedwere fully satisfied in January 2012 with proceeds from 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, $25.0 million and $35.7 million was outstanding on each secured term loan and our credit facility. Also in January 2012, we werefully satisfied the remaining $62.2 million original principal amount outstanding of our 5.45% Exchangeable Guaranteed Notes due in compliance with the covenants contained2027 obtained in each loan document.2007.

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) currently redeemable by us. As of December 31, 2012 and 2011, there were $129.1 million of these securities 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. We may seek a credit rating from certain credit agencies to improve the cost of our corporate level borrowings. However, no assurance can be given that we will seek such a rating or what rating we may receive.

Co-investment Programs and Joint Ventures. 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 such, as non-core assets. We believe this mitigates our exposure to the risks inherent in non-core assets. In 2012, we entered into two joint ventures which invested in an inpatient rehabilitation hospital and a retail property.

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 2009,2012, we (i) solddisposed of our interests in properties, which generated $66.6 millionincluding a non-consolidated property, for 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.$181.4 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, 2009,2012, we had approximately $2.1$1.9 billion of indebtedness, consisting of mortgages and notes payable outstanding, 5.45% Exchangeable Guaranteed6.00% Convertible Notes and Trust Preferred Securities, including discounts, with a weighted-average interest rate of approximately 5.7%5.4%. 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 costrisks described under "Risk Factors" in Part I, Item 1A of mortgage debt at the time, our equity in the mortgaged properties, the financial condition and the operating history of the mortgaged properties, the then current tax laws and the general national, regional and local economic conditions.this Annual Report.

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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 secured 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 currently 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$103.3 million in cash dividends to our common and preferred shareholders in 2009.2012. 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.

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Capital Resources

General. Due to the net-lease structure weof a majority of our investments, our 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 single-tenant properties in which we have an interest that are subject to net or similar 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, which may or may not be reimbursed. 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.responsibility, which may or may not be reimbursed.

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 generally 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 either additional secured borrowings, the repayment of which was, and will be, funded out of rental increases under the leases covering the expanded properties.properties or capital contributions from us.

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.


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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, 20092012 compared with December 31, 2008. Of the decrease2011. The increase in total gross revenues in 20092012 of $41.5$31.1 million $42.5 million iswas primarily attributable to rental revenue, offset by an increase in rental revenue of $32.7 million offset in part by a decrease in tenant reimbursements of $0.6 million and an increase in advisory and incentive fees of $0.4 million. $1.4 million and $0.2 million, respectively.

The decreaseincrease in rental revenue iswas primarily due to $28.7(1) 2012 and 2011 property acquisition revenue of $25.4 million, including $14.2 million from NLS properties acquired on September 1, 2012, (2) increased occupancy revenue from the Transmerica Tower in Baltimore, Maryland of $7.5 million and (3) $3.3 million of revenue recognized on our office property in connection with twoOrlando, Florida due to the commencement of a new lease. These increases were partially offset by a decrease in revenue of $4.7 million from our office property in Farmington Hills, Michigan due to lease terminations in 2008, the sale of properties to NLS in 2008 and an increase in vacancy.rollover.

The decrease in interest and amortization expense of $21.3$7.7 million iswas primarily due to (1) a reduction in the weighted-average interest rate on outstanding indebtedness, (2) retirement of debt which had corresponding debt discount amortization, (3) lower deferred financing cost amortization and (4) greater interest capitalized.

Depreciation and amortization increased $5.5 million primarily due to the decreaseacquisition of real estate properties in long-term debt.2012 and 2011 offset by (1) the acceleration of amortization on certain lease intangible assets due to tenant lease terminations and (2) assets becoming fully amortized in 2012.

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The increase in property operating expense of $8.2$2.0 million iswas primarily due to an increase in the number ofoccupancy at certain multi-tenant properties for which we have operating expense responsibility, includinghad an increase in vacancies.

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.properties with operating expense obligations.

The increase in general and administrative expense of $1.8 million was primarily due to a $2.1 million increase in personnel costs.

Non-operating income decreased $6.1 million primarily due to the satisfaction of notes receivable resulting in less interest earned and reduced interest income earned on a note receivable currently in default secured by an office property in Schaumburg, Illinois.

The change in the value of our forward equity commitment of $9.3$2.0 million was primarily a reflectiondue to the settlement of the increasecommitment in our common share price.October 2011.

The impairment charges and loan losseslitigation reserve of $27.4$2.8 million consist of a $14.3 million impairment charge 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 receivable and a debt security investment that we sold.

The decrease in gains on sale—affiliates2012 relates to the salea litigation that has been settled with a payment by us of properties to NLS.

Provision for income taxes decreased $0.6 million due to the merger of a taxable REIT subsidiary into us in 2008.$2.8 million.

The increase in lossesdebt satisfaction charges, net of $9.5 million was primarily due to the conversion of $31.1 million 6.00% Convertible Notes in 2012 and the write-off of deferred financing costs relating to the satisfaction of the $60.6 million term loans during the first quarter of 2012.

The gain on acquisition of $167.9 million primarily represents the gain recognized due to the increase in fair value of our investment in NLS at the date of acquisition of the remaining interest in NLS.

Impairment charges decreased by $31.7 million due to the timing of triggering events on properties held and used in operations.

The increase in the provision for income taxes of $1.8 million was primarily the result of the write-off of a deferred tax liability relating to the transfer of certain assets from our wholly-owned taxable REIT subsidiary to the REIT itself during the first quarter of 2011.

48

The decrease in equity in earnings of non-consolidated entities of $79.9$8.8 million iswas primarily due to impairment losses recognized on our investment(1) a $9.3 million decrease in Lex-Win Concord.

Net loss increased by $207.8 millionearnings from NLS primarily due to the consolidation of NLS on September 1, 2012, (2) a $1.4 million reduction due to the consolidation in 2012 of a previously non-consolidated property and (3) a reduction in earnings from various joint ventures of $1.5 million, offset by a $1.8 million increase in earnings recognized on our interests in Concord and CDH CDO and a $1.6 million impairment charge recognized in 2011 on an investment in a non-consolidated entity.

Discontinued operations represent properties sold or held for sale. The increase in net impactincome from discontinued operations of items discussed above coupled with$76.4 million was primarily due to a decrease in impairment charges of $75.8 million, an increase in gains on sales of $52.6properties of $6.7 million and a decrease in debt satisfaction charges of $0.4 million, offset in part by a $6.4 million increase in loss from discontinued operations.

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 discontinued operations decreased $52.6 million due to an increase in impairment charges of $57.3 million, a decrease in gains on sales of properties of $4.0 million and an increase in loss from discontinued operations of $0.2 million offset by a decrease in provision fornet income taxes of $0.5 million and an increase in debt satisfaction gains (charges), net of $8.4 million.

Net loss attributable to noncontrolling interests decreased $5.1of $14.5 million was primarily due to the merger of the MLP with and into us on December 31, 2008.

Net loss attributable to common shareholdersa decrease in 2009 increased $223.9 million 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.impairment charges incurred by non-wholly owned entities.

The increase in net income attributable to common shareholders of $260.6 million was primarily due to the items discussed 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, 20082011 compared with December 31, 2007.2010. Of the increase in total gross revenues in 20082011 of $17.0$8.5 million, (i) $19.2$6.6 million is attributable to an increase in rental revenue primarily due to $28.7 million recognized in connection with two lease terminations 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$1.0 million increase in tenant reimbursements due to an increase in acquisition and (iii)leasing activity and an increase in advisory and incentive fees of $0.9 million primarily relating to third-party managed account return hurdles being met.

The increase in rental revenue was primarily due to (1) 2011 and 2010 property acquisition revenue of $7.9 million, (2) increased occupancy revenue from the Transamerica Tower in Baltimore, Maryland of $2.3 million and (3) $2.1 million of revenue recognized on our Farmington Hills, Michigan property due to a tenant's lease termination. These increases were offset by a decrease of $12.1$5.6 million in advisorydue to lease rollover 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.amendments.

47
The decrease in interest and amortization expense of $7.7$10.0 million is primarily due primarily to athe decrease in long term debt.indebtedness.

Depreciation and amortization increased by $6.9 million primarily due to the acquisition of real estate properties and the acceleration of amortization on certain lease intangible assets due to tenant lease terminations.

The increasedecrease in property operating expense of $21.6$1.0 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.

The decrease in general and administrative expenses of $8.7 million is due primarily to a reduction in (1) costs of severance agreements with former officers and (2) merger costs incurred in 2007.an interest.

Non-operating income increased $13.0$1.2 million due primarily to land received in 2008 in connection with a lease termination.

Debt satisfaction gains (charges), net changed $60.9 millionwhich is primarily due to gains recognized on the retirement of our 5.45% Exchangeable Guaranteed Notesinvestments made in 2011 and Trust Preferred Securities in 2008.2010.

The change in value of our forward equity commitment representsof $6.9 million was primarily due to the period change in value of the prepaid portionper share price of our forward purchase equity contract entered into in 2008.common shares.

The increase in gainsimpairment charges and loan losses of $29.1 million was due to $35.9 million in impairment charges recognized in 2011 relating to our non-core properties, including certain retail, underperforming and multi-tenanted properties. We explored the possible disposition of these properties and determined that the estimated undiscounted future cash flows were below the properties carrying values. During 2010, the charges related to loan loss reserves ($3.9 million) on sale— affiliates relatestwo investments and a $3.0 million impairment charge due to the sale of properties to NLS.operational considerations at a property.

The charge in the benefit (provisions) for income taxes of $2.4 million was primarily the result of the write-off of a deferred tax liability relating to the transfer of certain assets from our wholly-owned taxable REIT subsidiary to the REIT itself.

The increase in equity in earnings (losses) of non-consolidated entities changed $89.8of $8.6 million and is primarily due to a decrease in earnings in our$2.2 million earned from an investment in Lex-WinLW Sofi LLC, $1.4 million earned on a new non-consolidated entity, Pemlex LLC, prior to consolidation and cash distributions of $4.0 million received from our investments in 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.related entities.

49

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, decreased $92.9sale. The total discontinued operations loss increased $41.3 million due to a decreasean increase in income from discontinued operationsimpairment charges of $27.8$31.4 million, and a decrease in gains on sales of properties of $79.7$8.1 million and an increase in debt satisfaction charges, net of $3.5 million, offset by a decrease in impairment charges of $0.7 million, a decreasean increase in the provision for income taxesfrom discontinued operations of $2.9 million and a change in debt satisfaction gains (charges), net of $11.0$1.8 million.

Net incomeloss attributable to noncontrolling interests decreased $22.9increased $5.7 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 $18.5increased $45.6 million compared to net income attributable to common shareholders in 2007 of $48.5 million. The decrease isprimarily due to the items discussed above plusabove.

Same-Store Results

Same-store results includes all consolidated properties except properties acquired and sold in 2012 and 2011. Our historical same-store occupancy was 97.0% at December 31, 2012 compared to 96.5% at December 31, 2011. The following presents our consolidated same-store net operating income, or NOI, for the years ended December 31, 2012 and 2011 ($000):
 2012 2011
Total base rent$272,542
 $272,208
Tenant reimbursements and other29,257
 31,396
Property operating expenses(58,169) (57,788)
Same-store NOI - Cash basis$243,630
 $245,816

The change in our same-store NOI from 2011 to 2012 was a reductiondecrease of 0.9%. This was primarily due to a decrease in Series C Preferred Share dividends of $1.2 milliontenant reimbursements and a redemption discount of $5.7 millionan increase in property operating expenses due to the repurchasetiming of new tenant leases and the establishment of base years for certain tenants.

Funds From Operations

We believe that Funds from Operations, or FFO, which is a non-GAAP measure, is a widely recognized and appropriate measure of the performance of an equity REIT. We believe FFO is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. As a result, FFO provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities, interest costs and other matters without the inclusion of depreciation and amortization, providing perspective that may not necessarily be apparent from net income.

The National Association of Real Estate Investment Trusts, or NAREIT, defines FFO as “net income (or loss) computed in accordance with GAAP, excluding gains (or losses) from sales of property, plus real estate depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures.” NAREIT clarified its computation of FFO to exclude impairment charges on depreciable real estate owned directly or indirectly. FFO does not represent cash generated from operating activities in accordance with GAAP and is not indicative of cash available to fund cash needs.

We present Reported Company FFO, which differs from FFO as it includes our OP units, our Series C Preferred Shares, offsetand our 6.00% Convertible Notes, because these securities are convertible, at the holder's option, into our common shares. Management believes this is appropriate and relevant to securities analysts, investors and other interested parties because we present Reported Company FFO on a company-wide basis as if all securities that are convertible, at the holder's option, into our common shares, are converted. We also present Company FFO, as adjusted, which adjusts Reported Company FFO for certain items which we believe are non-recurring and not indicative of the operating results of our real estate portfolio. We believe this is an appropriate presentation as it is frequently requested by security analysts, investors and other interested parties. Since others do not calculate funds from operations in a similar fashion, Reported Company FFO and Company FFO, as adjusted, may not be comparable to similarly titled measures as reported by others. Reported Company FFO and Company FFO, as adjusted, should not be considered as an increasealternative to net income as an indicator of $1.4 millionour operating performance or as an alternative to cash flow as a measure of liquidity.

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The following presents a reconciliation of net income (loss) attributable to Lexington Realty Trust shareholders to Reported Company FFO and Company FFO, as adjusted, for the the years ended December 31, 2012 and 2011 (unaudited and dollars in Series D Preferred Share dividends.thousands, except per share amounts):
  2012 2011
FUNDS FROM OPERATIONS:   
Basic and Diluted:   
Net income (loss) attributable to Lexington Realty Trust shareholders$180,316
 $(79,584)
Adjustments:   
 Depreciation and amortization163,890
 160,689
 Impairment charges - real estate9,969
 117,443
 Impairment charges - joint venture—
 4,811
 Noncontrolling interests - OP units1,192
 578
 Amortization of leasing commissions4,838
 3,918
 Joint venture and noncontrolling interest adjustment560
 (23,309)
 Preferred dividends - Series B & D(14,001) (17,852)
 Gains on sales of properties(13,291) (6,557)
 Gain on sale - joint venture investment(7,000) —
 Gain on acquisition(167,864) —
 Interest and amortization on 6.00% Convertible Notes8,953
 9,307
Reported Company FFO167,562
 169,444
 Debt satisfaction charges, net9,658
 561
 Forward equity commitment—
 (2,030)
 Litigation reserve2,775
 —
 Gains on loan sales - joint venture—
 (1,927)
 Other603
 3,966
Company FFO, as adjusted$180,598
 $170,014
Per Share Amounts   
Basic:   
Reported Company FFO$0.91
 $0.95
Company FFO, as adjusted$0.98
 $0.97
    
Diluted:   
Reported Company FFO$0.91
 $0.95
Company FFO, as adjusted$0.98
 $0.97
Basic: 2012 2011
Weighted-average common shares outstanding - EPS basic159,109,424
 152,473,336
6.00% Convertible Notes15,805,245
 16,232,862
Non-vested share-based payment awards244,366
 130,684
Operating Partnership Units4,438,708
 4,725,798
Preferred Shares - Series C4,712,421
 5,043,521
Weighted-average common shares outstanding - Reported Company FFO basic184,310,164
 178,606,201
Adjustments:   
 Forward equity commitment settlement—
 (2,760,608)
Weighted-average common shares outstanding - Company FFO, as adjusted184,310,164
 175,845,593
     
Diluted:   
Weighted-average common shares outstanding - Reported Company FFO basic184,310,164
 178,606,201
Options - Incremental shares306,449
 208,463
Weighted-average common shares outstanding - Reported Company FFO diluted184,616,613
 178,814,664
Adjustments:   
 Forward equity commitment settlement—
 (2,760,608)
Weighted-average common shares outstanding - Company FFO, as adjusted184,616,613
 176,054,056

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Off-Balance Sheet Arrangements

General.As of December 31, 2009,2012, 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 fraud and breaches of material representations.
Net Lease Strategic Assets Fund L.P. NLS is We have guaranteed such obligations for certain of our property owner subsidiaries. We have also agreed to indemnify a co-investment programthird-party for any draws on a letter of credit securing similar non-recourse exceptions with Inland NLS. NLS was establishedrespect to acquire single-tenant net-lease specialty real estate in the United States. Other than the acquisitionan investment we formerly owned but now manage. Upon expiration of the initial 43 properties andsuch letter of credit, we have agreed to deliver a 40% tenant-in-common interest in a property from us in 2007 and 2008, NLS has not acquired any additional properties.replacement $2.5 million letter of credit.

48
Inland NLS and we are currently entitled to a return on/of each of our respective investments as follows: (1) Inland NLS, 9% on its common equity ($220.6 million in common equity), (2) us, 6.5% on our preferred equity ($162.5 million in preferred equity), (3) us, 9% on our common equity ($38.9 million in common equity), (4) return of our preferred equity ($162.5 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, if not, allocations are 85% to Inland NLS and 15% to us.

In addition to the initial capital contributions, we and Inland NLS committed to invest up to an additional $22.5 million and $127.5 million, respectively, in NLS to acquire additional specialty single-tenant net-leased assets.

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.

Lex-Win Concord LLC. We 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.

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’s repurchase agreements. Furthermore, the ability to issue CDOs and the availability of new financing has effectively been eliminated, making the execution of Concord’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.

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’s loan and bond portfolio, (2) a margin call received by Concord and potential additional margin calls, (3) the preferred member’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, 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 aggregate $68.2 million other-than-temporary impairment charges during 2009. We have no obligation or intent to support Lex-Win Concord’s activities going forward and accordingly, we have suspended recognition of losses incurred at Lex-Win Concord.

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Contractual Obligations

The following summarizes our principal contractual obligations as of December 31, 20092012 ($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.
  2013 2014 2015 2016 2017 
2018 and
Thereafter
 Total
Notes payable1
 $272,192
 $283,460
 $313,474
 $167,312
 $171,058
 $676,481
 $1,883,977
Interest payable - fixed rate 91,722
 80,571
 60,233
 48,939
 31,000
 61,323
 373,788
Operating lease obligations2
 3,808
 3,527
 3,488
 2,008
 1,934
 15,884
 30,649
  $367,722
 $367,558
 $377,195
 $218,259
 $203,992
 $753,688
 $2,288,414

(2)Includes balloon payments.
1. Includes balloon payments. Amounts shown exclude a debt discount of $5.8 million and exclude $3.7 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. However, we do not believe these guarantees are material to us as the obligations under and risks associated with such guarantees are priced into the rent under the lease or the value of the property.


(4)2012 and 2013 amounts are shown net of $1,941 and $3,170 in discounts, respectively.
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(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, 20092012 and 2008, our2011, we had no consolidated variable rate indebtedness was approximately $171.3 millionnot subject to an interest rate swap agreement. During 2012 and $199.3 million, respectively, which represented 8.3% and 8.4% of total long-term indebtedness, respectively. During 2009 and 2008,2011, our variable rate indebtedness had a weighted-average interest rate of 3.2%2.5% and 3.7%3.3%, respectively. Had the weighted-average interest rate been 100 basis points higher, our interest expense for 20092012 and 20082011 would have been increased by approximately $2.0$0.6 million in each year.and $17 thousand, respectively. As of December 31, 20092012 and 2008,2011, our consolidated fixed rate debt including discontinued operations, was approximately $1.9 billion and $2.2$1.7 billion, respectively, which represented 91.7% and 91.6%, respectively,100.0% of total long-term indebtedness.indebtedness in each year.

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, 20092012 and are indicative of the interest rate environment as of December 31, 2009,2012, 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$1.8 billion as of December 31, 2009.2012.

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 maygenerally 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 onefive interest rate swap agreement.agreements in our consolidated portfolio.


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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
55
Reports of Independent Registered Public Accounting Firm
56
Consolidated Balance Sheets as of December 31, 2012 and 2011
58
Consolidated Statements of Operations for the years ended December 31, 2012, 2011 and 2010
59
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2012, 2011 and 2010
60
Consolidated Statements of Changes in Equity for the years ended December 31, 2012, 2011 and 2010
61
Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011 and 2010
64
Notes to Consolidated Financial Statements
65
Financial Statement Schedule
Schedule III - Real Estate and Accumulated Depreciation and Amortization
93


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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, 2012. 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 (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) 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 (3) 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, 2012. 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, 2012.

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.

51

Item 8. Financial Statements and Supplementary Data

LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES
INDEX

Page
Reports of Independent Registered Public Accounting Firm53
Consolidated Balance Sheets as of December 31, 2009 and 200855
Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and 200756
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2009, 2008 and 200757
Consolidated Statements of Changes in Equity for the years ended December 31, 2009, 2008 and 200758
Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 200761
Notes to Consolidated Financial Statements62
Financial Statement Schedule
Schedule III — Real Estate and Accumulated Depreciation92

55

52

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, 2012 and 2011, and the related consolidated statements of operations, comprehensive income (loss), changes in equity, and cash flows for each of the years in the accompanying index.three-year period ended December 31, 2012. 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, 20092012 and 2008,2011, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2009,2012, 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’sLexington Realty Trust's internal control over financial reporting as of December 31, 2009,2012, 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 25, 2013 expressed an unqualified opinion on the effectiveness of the Company’sCompany's internal control over financial reporting.

(signed)

/s/ KPMG LLP

New York, New York
March 1, 2010February 25, 2013

56
53

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, 2009,2012, 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, 2009,2012, 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 Lexington Realty Trust and subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements as listedof operations, comprehensive income (loss), changes in equity, and cash flows for each of the years in the accompanying index,three-year period ended December 31, 2012 and the related financial statement schedule, and our report dated March 1, 2010February 25, 2013 expressed an unqualified opinion on those consolidated financial statements.statements and financial statement schedule.

(signed)/s/ KPMG LLP

New York, New York
March 1, 2010February 25, 2013

57


LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES

Consolidated Balance SheetsCONSOLIDATED BALANCE SHEETS
($000, except share and per share amounts)data)
As of December 31,

 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 
2012 2011
Assets:   
Real estate, at cost$3,564,466
 $3,172,246
Real estate - intangible assets685,914
 546,918
Investments in real estate under construction65,122
 34,529
 3,552,806  3,756,188 4,315,502
 3,753,693
Less: accumulated depreciation and amortization  537,406   461,661 1,150,417
 1,006,717
 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 
Real estate, net3,165,085
 2,746,976
Cash and cash equivalents 53,865  67,798 34,024
 63,711
Restricted cash 21,519  31,369 26,741
 30,657
Investment in and advances to non-consolidated entities 55,985  179,133 27,129
 39,330
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 
Deferred expenses (net of accumulated amortization of $24,402 in 2012 and $22,708 in 2011)57,549
 43,966
Loans receivable, net72,540
 66,619
Rent receivable - current7,355
 7,271
Other assets  43,111   40,675 27,780
 28,290
Total assets $3,579,845  $4,105,725 $3,418,203
 $3,026,820
        
LIABILITIES AND EQUITY 
Liabilities and Equity: 
  
Liabilities:         
  
Mortgages and notes payable $1,857,909  $2,033,854 $1,415,961
 $1,366,004
Term loan payable255,000
 —
Exchangeable notes payable 85,709  204,074 —
 62,102
Convertible notes payable78,127
 105,149
Trust preferred securities 129,120  129,120 129,120
 129,120
Contract right payable 15,252  14,776 
Dividends payable 18,412  24,681 31,351
 25,273
Liabilities — discontinued operations —  6,142 
Accounts payable and other liabilities 43,629  33,814 70,367
 53,058
Accrued interest payable 11,068  16,345 11,980
 13,019
Deferred revenue – below market leases (net of accretion of $39,946 in 2009 and $36,474 in 2008) 107,535  121,722 
Deferred revenue - including below market leases (net of accretion of $44,706 in 2012 and $37,485 in 2011)79,908
 90,349
Prepaid rent  13,975   20,126 13,224
 12,543
Total liabilities2,085,038
 1,856,617
  2,282,609   2,604,654    
Commitments and contingencies (Notes 5, 9, 10, 11, 12, 13, 14, 15 ,17, 19 and 24)        
Commitments and contingencies

 

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 
Preferred shares, par value $0.0001 per share; authorized 100,000,000 shares, 
  
Series B Cumulative Redeemable Preferred, liquidation preference $68,522; 2,740,874 shares issued and outstanding in 2011—
 66,193
Series C Cumulative Convertible Preferred, liquidation preference $96,770 and $98,510; and 1,935,400 and 1,970,200 shares issued and outstanding in 2012 and 2011, respectively94,016
 95,706
Series D Cumulative Redeemable Preferred, liquidation preference $155,000; 6,200,000 shares issued and outstanding 149,774  149,774 149,774
 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 
Common shares, par value $0.0001 per share; authorized 400,000,000 shares, 178,616,664 and 154,938,351 shares issued and outstanding in 2012 and 2011, respectively18
 15
Additional paid-in-capital 1,750,979  1,638,540 2,212,949
 2,010,850
Accumulated distributions in excess of net income (870,862) (569,131)(1,143,803) (1,212,630)
Accumulated other comprehensive income (loss)  673   (15,650)(6,224) 1,938
Total shareholders’ equity 1,208,669  1,406,075 1,306,730
 1,111,846
Noncontrolling interests  88,567   94,996 26,435
 58,357
Total equity  1,297,236   1,501,071 1,333,165
 1,170,203
Total liabilities and equity $3,579,845  $4,105,725 $3,418,203
 $3,026,820

The accompanying notes are an integral part of these consolidated financial statements.

58
55
Table of Contents


LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES

Consolidated Statements of OperationsCONSOLIDATED STATEMENTS OF OPERATIONS
($000, except share and per share amounts)data)
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

56

LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES

Consolidated Statements of Comprehensive Income (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 

 2012 2011 2010
Gross revenues:     
Rental$313,081
 $280,410
 $273,788
Advisory and incentive fees1,806
 2,012
 1,108
Tenant reimbursements29,992
 31,404
 30,454
Total gross revenues344,879
 313,826
 305,350
Expense applicable to revenues:     
Depreciation and amortization(161,876) (156,358) (149,474)
Property operating(60,213) (58,229) (59,194)
General and administrative(23,956) (22,200) (22,456)
Non-operating income6,888
 13,020
 11,811
Interest and amortization expense(98,803) (106,478) (116,516)
Debt satisfaction gains (charges), net(9,480) 45
 212
Change in value of forward equity commitment—
 2,030
 8,906
Gain on acquisition167,864
 —
 —
Litigation reserve(2,775) —
 —
Impairment charges and loan losses(4,262) (35,946) (6,879)
Income (loss) before benefit (provision) for income taxes, equity in earnings of non-consolidated entities and discontinued operations158,266
 (50,290) (28,240)
Benefit (provision) for income taxes(941) 845
 (1,543)
Equity in earnings of non-consolidated entities21,531
 30,334
 21,741
Income (loss) from continuing operations178,856
 (19,111) (8,042)
Discontinued operations:     
Income (loss) from discontinued operations(1,463) 4,955
 3,185
Provision for income taxes(161) (76) (29)
Debt satisfaction gains (charges), net(178) (606) 2,924
Gains on sales of properties13,291
 6,557
 14,613
Impairment charges(5,707) (81,497) (50,061)
Total discontinued operations5,782
 (70,667) (29,368)
Net income (loss)184,638
 (89,778) (37,410)
Less net (income) loss attributable to noncontrolling interests(4,322) 10,194
 4,450
Net income (loss) attributable to Lexington Realty Trust shareholders180,316
 (79,584) (32,960)
Dividends attributable to preferred shares – Series B – 8.05% rate(2,298) (6,149) (6,360)
Dividends attributable to preferred shares – Series C – 6.50% rate(6,290) (6,655) (6,809)
Dividends attributable to preferred shares – Series D – 7.55% rate(11,703) (11,703) (11,703)
Allocation to participating securities(1,059) (368) (264)
Deemed dividend – Series B(2,346) (95) —
Redemption discount – Series C229
 833
 —
Net income (loss) attributable to common shareholders$156,849
 $(103,721) $(58,096)
Income (loss) per common share – basic:     
Income (loss) from continuing operations$0.96
 $(0.29) $(0.28)
Income (loss) from discontinued operations0.03
 (0.39) (0.16)
Net income (loss) attributable to common shareholders$0.99
 $(0.68) $(0.44)
Weighted-average common shares outstanding – basic159,109,424
 152,473,336
 130,985,809
Income (loss) per common share – diluted:     
Income (loss) from continuing operations$0.91
 $(0.29) $(0.28)
Income (loss) from discontinued operations0.02
 (0.39) (0.16)
Net income (loss) attributable to common shareholders$0.93
 $(0.68) $(0.44)
Weighted-average common shares outstanding – diluted179,659,826
 152,473,336
 130,985,809
Amounts attributable to common shareholders:     
Income (loss) from continuing operations$152,808
 $(44,703) $(37,008)
Income (loss) from discontinued operations4,041
 (59,018) (21,088)
Net income (loss) attributable to common shareholders$156,849
 $(103,721) $(58,096)
The accompanying notes are an integral part of these consolidated financial statements.

59

LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
($000)
Years ended December 31,
57
 2012 2011 2010
Net income (loss)$184,638
 $(89,778) $(37,410)
Other comprehensive income (loss): 
    
Change in unrealized gain on foreign currency translation, net—
 —
 (740)
Change in unrealized gain (loss) on interest rate swap, net(8,162) 2,044
 (39)
Other comprehensive income (loss)(8,162) 2,044
 (779)
Comprehensive income (loss)176,476
 (87,734) (38,189)
Comprehensive (income) loss attributable to noncontrolling interests(4,322) 10,194
 4,450
Comprehensive income (loss) attributable to Lexington Realty Trust shareholders$172,154
 $(77,540) $(33,739)
The accompanying notes are an integral part of these consolidated financial statements.

60

LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
($000 except share amounts)
Year ended December 31, 2010

     
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, 2009$1,246,008
 11,455,200
 $327,867
 121,943,258
 $12
 $1,750,979
 $(922,090) $673
 $88,567
Contributions from noncontrolling interests4,854
 —
 —
 —
 —
 —
 —
 —
 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 Notes13,134
 —
 —
 —
 —
 13,134
 —
 —
 —
Forfeiture of employee performance common shares171
 —
 —
 (21,720) —
 —
 171
 —
 —
Exercise of employee common share options(356) —
 —
 95,976
 —
 (356) —
 —
 —
Issuance of common shares and deferred compensation amortization, net171,503
 —
 —
 24,077,724
 3
 171,500
 —
 —
 —
Dividends/distributions(90,267) —
 —
 —
 —
 —
 (81,911) —
 (8,356)
Net loss(37,410) —
 —
 —
 —
 —
 (32,960) —
 (4,450)
Other comprehensive loss(779) —
 —
 —
 —
 —
 —
 (779)  
Balance December 31, 2010$1,304,901
 11,455,200
 $327,867
 146,552,589
 $15
 $1,937,942
 $(1,036,790) $(106) $75,973


The accompanying notes are an integral part of thesethe consolidated financial statements.

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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)
  
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 
  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$1,304,901
 11,455,200
 $327,867
 146,552,589
 $15
 $1,937,942
 $(1,036,790) $(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 interests2
 —
 —
 —
 —
 —
 —
 —
 2
Obtained control of noncontrolling investment574
 —
 —
 —
 —
 —
 —
 —
 574
Exercise of employee common share options221
 —
 —
 250,355
 —
 221
 —
 —
 —
Forfeiture of employee performance common shares69
 —
 —
 (10,140) —
 —
 69
 —
 —
Issuance of common shares and deferred compensation amortization, net102,416
 —
 —
 11,721,265
 —
 102,416
 —
 —
 —
Dividends/distributions(102,874) —
 —
 —
 —
 —
 (97,063) —
 (5,811)
Net loss(89,778) —
 —
 —
 —
 —
 (79,584) —
 (10,194)
Other comprehensive income2,044
 —
 —
 —
 —
 —
 —
 2,044
 —
Balance December 31, 2011$1,170,203
 10,911,074
 $311,673
 154,938,351
 $15
 $2,010,850
 $(1,212,630) $1,938
 $58,357

The accompanying notes are an integral part of thesethe consolidated financial statements.

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LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
($000 except share amounts)
Year ended December 31, 2012

  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, 2011$1,170,203
 10,911,074
 $311,673
 154,938,351
 $15
 $2,010,850
 $(1,212,630) $1,938
 $58,357
Contributions from noncontrolling interests1,262
 —
 —
 —
 —
 —
 —
 —
 1,262
Redemption of noncontrolling OP units for common shares—
 —
 —
 257,427
 —
 1,343
 —
 —
 (1,343)
Repurchase of preferred shares(70,000) (2,775,674) (67,883) —
 —
 —
 (2,117) —
 —
Issuance of common shares upon conversion of Convertible Notes33,770
 —
 —
 4,487,060
 1
 33,769
 —
 —
 —
Exercise of employee common share options, net(534) —
 —
 110,944
 —
 (534) —
 —
 —
Issuance of common shares and deferred compensation amortization, net167,523
 —
 —
 18,822,882
 2
 167,521
 —
 —
 —
Deconsolidation of consolidated joint venture(782) —
 —
 —
 —
 —
 —
 —
 (782)
Dividends/distributions(144,753) —
 —
 —
 —
 —
 (109,372) —
 (35,381)
Net income184,638
 —
 —
 —
 —
 —
 180,316
 —
 4,322
Other comprehensive loss(8,162) —
 —
 —
 —
 —
 —
 (8,162) —
Balance December 31, 2012$1,333,165
 8,135,400
 $243,790
 178,616,664
 $18
 $2,212,949
 $(1,143,803) $(6,224) $26,435


The accompanying notes are an integral part of the consolidated financial statements.


63

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, 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 

 2012 2011 2010
Cash flows from operating activities:     
Net income (loss)$184,638
 $(89,778) $(37,410)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:     
Depreciation and amortization171,969
 168,288
 172,301
Gain on acquisition(167,864) —
 —
Gains on sales of properties(13,291) (6,557) (14,613)
Debt satisfaction (gains) charges, net8,062
 311
 (3,590)
Impairment charges and loan losses9,969
 117,443
 56,940
Straight-line rents(7,372) (1,763) 862
Other non-cash income, net(1,139) (6,364) (7,912)
Equity in earnings of non-consolidated entities(21,531) (30,334) (21,741)
Distributions of accumulated earnings from non-consolidated entities, net7,498
 11,549
 3,233
Deferred taxes, net(186) (1,799) 489
Increase (decrease) in accounts payable and other liabilities(598) 1,589
 5,186
Change in rent receivable and prepaid rent, net(1,325) 19,929
 12,272
Increase (decrease) in accrued interest payable(2,473) (970) 2,921
Other adjustments, net(2,547) (1,407) (4,187)
Net cash provided by operating activities:163,810
 180,137
 164,751
Cash flows from investing activities:   
  
Investment in real estate, including intangible assets(98,083) (25,811) (17,250)
Investment in real estate under construction(113,262) (69,755) (11,258)
Capital expenditures(49,952) (32,426) (35,074)
Acquisition of remaining interest in NLS(9,438) —
 —
Net proceeds from sale of properties155,240
 124,039
 80,224
Principal payments received on loans receivable6,841
 46,867
 12,480
Investment in loans receivable(11,470) (32,591) (40,632)
Investments in and advances to non-consolidated entities, net(20,172) (19,940) —
Proceeds from sale of interest in non-consolidated entity7,000
 —
 112
Distributions from non-consolidated entities in excess of accumulated earnings351
 5,900
 1,356
Increase in deferred leasing costs(14,826) (15,870) (5,129)
Change in escrow deposits and restricted cash5,710
 (3,405) (8,282)
Real estate deposits(149) (1,821) (1,330)
Net cash used in investing activities(142,210) (24,813) (24,783)
Cash flows from financing activities:   
  
Dividends to common and preferred shareholders(103,295) (94,861) (77,252)
Repurchase of exchangeable notes(62,150) —
 (25,493)
Proceeds from convertible notes—
 —
 115,000
Conversion of convertible notes(2,427) —
 —
Principal amortization payments(31,252) (31,068) (33,781)
Principal payments on debt, excluding normal amortization(288,094) (105,266) (331,295)
Change in revolving credit facility borrowing, net—
 —
 (7,000)
Increase in deferred financing costs(6,431) (4,214) (5,760)
Proceeds of mortgages and notes payable121,000
 15,000
 59,769
Proceeds from term loans255,000
 —
 —
Contributions from noncontrolling interests889
 2
 4,854
Cash distributions to noncontrolling interests(35,381) (5,811) (8,356)
Repurchase of preferred shares(70,000) (15,456) —
Receipts (payments) on forward equity commitment, net—
 (2,313) 1,473
Issuance of common shares, net162,747
 99,730
 166,652
Net cash used in financing activities(59,394) (144,257) (141,189)
Cash acquired in acquisition of remaining interest in NLS8,107
 —
 —
Change in cash and cash equivalents(29,687) 11,067
 (1,221)
Cash and cash equivalents, at beginning of year63,711
 52,644
 53,865
Cash and cash equivalents, at end of year$34,024
 $63,711
 $52,644
The accompanying notes are an integral part of these consolidated financial statements.

64
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Table of Contents
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES

Consolidated Statements of Cash FlowsNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except per share amounts)
Years ended December 31,
share/unit data)


  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 
(1)     The accompanying notes are an integral part of these consolidated financial statements.
61
LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIESCompany

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 invests in and acquires, owns, finances and manages a geographically diversified portfolio of predominately net-leasedsingle-tenant office, industrial and retail properties. The Company also provides investment advisory and asset management services to investors in the net-leasesingle-tenant area. As of December 31, 2009,2012, the Company owned or had equity ownership interests in approximately 210220 consolidated properties located in 40 states and41 states. As of December 31, 2011, the Netherlands. TheCompany had equity ownership interests in approximately 185 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/orincluding 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 As of December 31, 2008, The Lexington Master Limited Partnership ("MLP")2012, a former operating partnership, merged with and into the Company and the MLP ceased to exist for financial reporting purposes. As of December 31, 2009, 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 or the right to receive benefits of an entity that could potentially be significant to the VIE.

Consolidated Variable Interest Entity.The Company's consolidated VIE was determined to be a VIE primarily because the entity's equity holders' obligation to absorb losses is protected. The Company determined that it was the primary beneficiary of the VIE because it has a controlling financial interest in the entity.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)


The Company's wholly-owned entity which owns an office building in Greenville, South Carolina is a VIE and is consolidated by the equity method.Company. 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, 2012 and 2011, 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 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 unvestedcertain non-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.
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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. The Company has formally elected to apply the portfolio exception within Topic 820 with respect to measuring counterparty risk for all of its derivative transactions subject to master netting arrangements.
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.

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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, 2012 and 2011, 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 thevacant. 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 areis 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 improvementsits real estate assets over periods ranging from 8up 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.
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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.

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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.charge. Interest on impaired loansincome is recognizedrecorded on a cash basis.

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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 accountedbasis for as a stock issuance upon distribution and earnings per share was adjusted prospectively.impaired loans.

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 or provide funds to a tenant to develop a property, the Company will capitalize the funds provided to the developer/tenant and internal costs of interest and real estate taxes, if applicable, 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.sell and depreciation and amortization are no longer recognized. 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 the interest rate swap is designated as a cash flow hedge, 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.

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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 does and may continue to utilize interest rate swap and cap agreements to manage interest rate risk, andbut 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.
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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.
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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 2008,2012, 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)


Segment Reporting. The Company operates generally in one industry segment, investment in net-leasedsingle-tenant 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 2009,2012, which are presented as discontinued operations.

(3)Earnings Per Share
Newly Adopted Accounting Guidance. In August 2009, the FASB amended guidance on fair value measurements which clarifies how entities should estimate the fair value
A significant portion 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.
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Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)

(3) Earnings Per Share

The Company’s unvestednon-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, 2009:2012:
 2012 2011 2010
BASIC     
Income (loss) from continuing operations attributable to common shareholders$152,808
 $(44,703) $(37,008)
Income (loss) from discontinued operations attributable to common shareholders4,041
 (59,018) (21,088)
Net income (loss) attributable to common shareholders$156,849
 $(103,721) $(58,096)
Weighted-average number of common shares outstanding159,109,424
 152,473,336
 130,985,809
Income (loss) per common share: 
    
Income (loss) from continuing operations$0.96
 $(0.29) $(0.28)
Income (loss) from discontinued operations0.03
 (0.39) (0.16)
Net income (loss) attributable to common shareholders$0.99
 $(0.68) $(0.44)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)

DILUTED:     
Income (loss) from continuing operations attributable to common shareholders$152,808
 $(44,703) $(37,008)
Impact of assumed conversions:     
Share Options—
 —
 —
Operating Partnership Units1,371
 —
 —
6.00% Convertible Guaranteed Notes8,953
 —
 —
Income (loss) from continuing operations attributable to common shareholders163,132
 (44,703) (37,008)
Income (loss) from discontinued operations attributable to common shareholders4,041
 (59,018) (21,088)
Impact of assumed conversions:     
Operating Partnership Units(179) —
 —
Income (loss) from discontinued operations attributable to common shareholders3,862
 (59,018) (21,088)
Net income (loss) attributable to common shareholders$166,994
 $(103,721) $(58,096)
      
Weighted-average common shares outstanding - basic159,109,424
 152,473,336
 130,985,809
Effect of dilutive securities:     
Share Options306,449
 —
 —
Operating Partnership Units4,438,708
 —
 —
6.00% Convertible Guaranteed Notes15,805,245
 —
 —
Weighted-average common shares outstanding179,659,826
 152,473,336
 130,985,809
      
Income (loss) per common share:     
Income (loss) from continuing operations$0.91
 $(0.29) $(0.28)
Income (loss) from discontinued operations0.02
 (0.39) (0.16)
Net income (loss) attributable to common shareholders$0.93
 $(0.68) $(0.44)

  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 
For per common share amounts, all incremental shares are considered anti-dilutive for periods that have a loss from continuing operations attributable to common shareholders. In addition, other common share equivalents may be anti-dilutive in certain periods.

During 2009, 503,1002012 and 2011, the Company repurchased and retired an aggregate 34,800 and 125,000 shares, respectively, of 6.50% Series C Cumulative Convertible Preferred SharesStock ("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 pursuantat a $229 and $833, discount to the original conversion terms of $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 from net income (loss) to arrive at net income (loss) attributable to common shareholders for 2009.

During 2008, the Company redeemed 501,700 shares of Series C Preferred at a $5,678 discount to their historical cost basis.basis, respectively. This discount constitutes a deemed negative dividend, offsetting other dividends, and is accretive to common shareholders. In addition, the common shareholdersCompany repurchased and accordingly, it has been addedretired an aggregate of 2,740,874 and 419,126 shares, respectively, of 8.05% Series B Cumulative Redeemable Preferred Stock ("Series B Preferred") at a $2,346 and $95, premium to historical cost, respectively. This premium is treated as a deemed dividend. Accordingly, net income (loss) was adjusted for these dividends to arrive at net income (loss) allocableattributable to common shareholders for the year ended December 31, 2008.2012 and 2011.

All incremental shares are considered anti-dilutive for periods that have a loss from continuing operations applicable to common shareholders.

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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) Investments in Real EstateThe Company's real estate, net, consists of the following at December 31, 2012 and Intangible Assets2011:
  2012 2011
Real estate, at cost:    
Buildings and building improvements $2,969,050
 $2,638,626
Land, land estates and land improvements 581,199
 522,039
Fixtures and equipment 7,705
 7,525
Construction in progress 6,512
 4,056
Real estate intangibles:    
In-place lease values 401,503
 327,589
Tenant relationships 179,655
 152,390
Above-market leases 104,756
 66,939
Investments in real estate under construction 65,122
 34,529
  4,315,502
 3,753,693
Accumulated depreciation and amortization(1)
 (1,150,417) (1,006,717)
Real estate, net $3,165,085
 $2,746,976
(1)
Includes accumulated amortization of real estate intangible assets of $412,349 and $368,349 in 2012 and 2011, respectively. The estimated amortization of the above real estate intangible assets for the next five years is $58,797 in 2013, $42,539 in 2014, $32,799 in 2015, $26,457 in 2016 and $23,056 in 2017.

During 2009,In addition, the Company acquired the remainder interests in land in Long Beach, California in connection with a tenant's lease surrender obligations for an estimated fair value of approximately $2,500 and recorded it as non-operating income, of which $1,125 was attributable to a noncontrolling interest in the property. During 2008, the Company made acquisitions, totaling $57,488.

As of December 31, 2009 and 2008, the components of intangible assets, are as follows:

  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 in 2012, $26,673 in 2013 and $21,500 in 2014.

Below-markethad below-market leases, net of accretion, which are included in deferred revenue, are $106,291of $71,513 and $121,284,$78,806, respectively in 2009as of December 31, 2012 and 2008.2011. The estimated accretion for the next five years is $8,456$7,378 in 2010, $8,3192013, $5,901 in 2011, $7,9762014, $4,838 in 2012, $7,5182015, $3,729 in 20132016 and $6,359$3,285 in 2014.2017.
The Company, through property owner subsidiaries, completed the following acquisitions and build-to-suit transactions during 2012 and 2011:

In addition, on December 31, 2009, the2012:
         Real Estate Intangibles
Property TypeLocationAcquisition/Completion DateInitial Cost BasisLease ExpirationLand and Land Estate Building and Improvements Lease in-place Value Tenant Relationships Value
OfficeHuntington, WVJanuary 2012$12,558
11/2026$1,368
 $9,527
 $1,405
 $258
OfficeFlorence, SCFebruary 2012$5,094
02/2024$774
 $3,629
 $505
 $186
IndustrialMissouri City, TXApril 2012$23,000
04/2032$14,555
 $5,895
 $2,135
 $415
IndustrialShreveport, LAJune 2012$12,941
03/2022$1,078
 $10,134
 $1,590
 $139
Retail
Valdosta, GA(1)
August 2012$7,791
08/2027$2,128
 $5,663
 $—
 $—
OfficeJessup, PAAugust 2012$24,917
08/2027$2,520
 $17,656
 $3,336
 $1,405
OfficeSaint Joseph, MOSeptember 2012$17,571
06/2027$607
 $14,004
 $2,528
 $432
Retail
Opelika, AL(1)
November 2012$7,978
11/2027$1,446
 $6,532
 $—
 $—
OfficePhoenix, AZDecember 2012$53,200
12/2029$5,585
 $36,099
 $8,956
 $2,560
OfficeEugene, ORDecember 2012$17,558
11/2027$1,541
 $13,099
 $2,414
 $504
   $182,608
 $31,602
 $122,238
 $22,869
 $5,899
            
Weighted-average life of intangible assets (years)      15.7
 16.0
(1) Incurred leasing costs of $488 for Valdosta and $355 for Opelika.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)

2011:
         Real Estate Intangibles
Property TypeLocationAcquisition/Consolidation DateInitial Cost BasisLease ExpirationLand Building and Improvements Above Market Lease Value Lease in-place Value Tenant Relationships Value
IndustrialByhalia, MSMay 2011$27,492
03/2026$1,005
 $21,483
 $—
 $4,097
 $907
OfficeRock Hill, SCMay 2011$7,395
08/2021$551
 $4,313
 $—
 $1,853
 $678
Office (1)
Allen, TXMay 2011$36,304
03/2018$5,591
 $21,607
 $—
 $5,127
 $3,979
IndustrialShelby, NCJune 2011$23,470
05/2031$1,421
 $18,917
 $—
 $2,712
 $420
OfficeColumbus, OHJuly 2011$6,137
07/2027$433
 $2,773
 $—
 $2,205
 $726
IndustrialChillicothe, OHOctober 2011$12,110
06/2026$736
 $9,021
 $—
 $1,859
 $494
Office (2)
Aurora, ILOctober 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 an office buildingthe property from Net Lease Strategic Assets Fund L.P. pursuant to a purchase option.
(2)    Obtained control of joint venture investment (see note 9).

The Company recognized aggregate acquisition expenses of $947 and $386 in Greenville, South Carolina for $10,500. 2012 and 2011, respectively, which are included in property operating expenses within the Company's Consolidated Statements of Operations.

The tenant has an optionCompany is engaged in various forms of build-to-suit development activities. The Company, through lender subsidiaries and property owner subsidiaries, may enter into the following acquisition, development and construction arrangements: (1) lend funds to construct build-to-suit projects subject to a single-tenant lease and agree to purchase the propertyproperties upon completion of construction and commencement of a single-tenant lease, (2) hire developers to construct built-to-suit projects on owned properties leased to single tenants, (3) fund the construction of build-to-suit projects on owned properties pursuant to the terms in single-tenant lease agreements or (4) enter into purchase and sale agreements with developers to acquire single-tenant build-to-suit properties 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,2012, the Company hashad the right to require the tenant to purchase the property for $10,710.following development arrangements outstanding:
LocationProperty TypeSquare Feet Expected Maximum Commitment/Contribution ($ millions) Estimated Purchase Price/Completion Cost ($ millions) Lease Term (Years) Estimated Completion Date
Long Island City, NY(1)
Industrial143,000
 $46.7
 $55.5
 15 1Q 13
Denver, COOffice163,000
 $38.4
 $38.4
 15 2Q 13
Tuscaloosa, ALRetail42,000
 $8.8
 $8.8
 15 2Q 13
Rantoul, ILIndustrial813,000
 $42.6
 $42.6
 20 4Q 13
  1,161,000
 $136.5
 $145.3
    
(1) 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.

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, 2012 and 2011, the Company's aggregate investment in development arrangements was $65,122 and $34,529, respectively, which includes $1,291 and $619 of interest capitalized during 2012 and 2011, respectively, and is presented as investments in real estate under construction in the accompanying Consolidated Balance Sheet.Sheets.


(5) Sales
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LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)

On September 1, 2012, the Company, together with an operating partnership subsidiary, acquired the remaining common equity interest in Net Lease Strategic Assets Fund L.P. (“NLS”) from Inland American (Net Lease) Sub, LLC (“Inland”) that the Company did not already own for a cash payment of $9,438 and Discontinued Operationsthe assumption of all outstanding liabilities. Immediately prior to the acquisition, the Company owned 15% of NLS's common equity and 100% of NLS's preferred equity and its investment balance in NLS was $40,047. At the date of acquisition, NLS owned 41 properties totaling 5.8 million square feet in 23 states, plus a 40% tenant-in-common interest in an office property.  The Company's investment in NLS had previously been accounted for under the equity method and is now consolidated. The acquisition resulted in a remeasurement of the net assets acquired to fair value. The Company engaged an independent third party to determine the fair value of the assets acquired and liabilities assumed.

The following table summarizes the allocation of the fair value of amounts recognized for each major class of assets and liabilities:
Real estate assets $325,310
Lease related intangible assets 124,330
Cash 8,107
Other assets 36,179
   
Total acquired assets 493,926
   
Secured debt 252,517
Other liabilities, including below-market leases 23,686
   
Total assumed liabilities 276,203
   
Fair value of acquired net assets (represents 100% interest) $217,723

The Company sold,recognized a gain on the transaction in the Consolidated Statement of Operations of $167,864 primarily related to unrelated parties (1) 18the revaluation of the Company's equity interest in NLS for the difference between its carrying value in NLS and the fair value of its ownership interest at acquisition. The noncontrolling interest share of the fair value of the net assets acquired was $373.

In 2007 and 2008, the Company recognized $19,422 and $31,806, respectively, in gains on sales of properties relating to the transfer of properties to NLS. In 2012, the Company determined that these gains should have been deferred and recognized as a basis adjustment to the Company's equity investment in NLS. Accordingly, the Company has recorded an adjustment to increase accumulated distributions in excess of net income and decrease investment in and advances to non-consolidated entities in the prior period's balance sheet and statements of changes in equity presented in the accompanying Consolidated Financial Statements by $51,228. The Company assessed the materiality of the adjustment and determined the amount was immaterial to previously reported financial statements. The adjustment has no impact on the Company's cash flows or liquidity.

Intangible assets and liabilities recorded in connection with the above acquisition are set forth as follows:
   Weighted Average Amortization Period (in Years)
In-place leases $59,819
6.2
Tenant relations 24,828
4.6
Above-market leases 39,683
8.4
Total intangible assets acquired $124,330
 
Below-market leases $1,529
2.7

The Company recognized gross revenues from continuing operations of $14,504 and a net loss of $1,667 from NLS properties since consolidation of NLS properties on September 1, 2012.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)

The following unaudited condensed consolidated pro forma information is presented as if the Company acquired the remaining equity in NLS on January 1, 2011. The information excludes activity that is non-recurring and not representative of future activity, primarily the gain on acquisition of $167,864 and acquisition costs of $230 for 2012. The information presented below is not necessarily indicative of what the actual results of operations would have been had the transaction been completed on January 1, 2011, nor does it purport to represent the Company's future operations:
  2012 2011
Gross revenues $372,603
 $356,918
Net income (loss) attributable to Lexington Realty Trust shareholders $8
 $(111,787)
Net loss attributable to common shareholders $(22,985) $(135,924)
Net loss per common share - basic and diluted $(0.14) $(0.89)

(5)Sales of Real Estate and Discontinued Operations

The Company disposed of its interests in 14 properties (excluding its interest in Pemlex LLC - see note 9) and a 6.9-acre land parcel in 2012, 17 properties in 2009, three of which were transferred to lenders or disposed of through bankruptcy, (2) 412011 and 13 properties in 2008, one of which was transferred to2010. For the lender,years ended December 31, 2012, 2011 and (3) 53 properties in 2007, for2010, these sales generated aggregate net proceeds of $108,475, $238,600$142,022, $124,039 and $423,634,$80,224, respectively, which resulted in gains in 2009, 2008on sales of $13,291, $6,557 and 2007$14,613, respectively. For the years ended December 31, 2012, 2011 and 2010, the Company recognized net debt satisfaction gains (charges) relating to these properties of $9,134, $13,151$(178), $(606) and $92,878,$2,924, respectively. These gains (charges) are included in discontinued operations.

At December 31, 20092012 and 2008,2011, the Company had no properties and one property classified as held for sale, respectively.sale.

The following presents the operating results for the properties sold and held for sale during the years ended December 31, 2009, 20082012, 2011 and 2007:2010:
  Year Ending December 31,
  2012 2011 2010
Total gross revenues $7,892
 $22,718
 $46,572
Pre-tax net income (loss), including gains on sales $5,943
 $(70,591) $(29,339)

  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 received gross proceeds of $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 three properties to lenders in full satisfaction of the related aggregate $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.

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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 2012, 2011 and 2010, the Company recognized aggregate impairment charges of $4,262, $35,946 and $2,955, respectively, on real estate assets classified in continuing operations. The Company estimateshas explored the fairpossible 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 assets by using several techniques such as income and market valuation which primarily rely on unobservable inputs, such asproperties to their estimated capitalization rates, which are within Level 3 of the fair value hierarchy.values.

During 2009, 20082012, 2011 and 2007,2010, the Company recognized $101,166, $16,519$5,707, $81,497 and $17,170,$50,061, 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.
During 2010, the Company recognized an other-than-temporary impairment of $168 on a bond investment secured by real estate assets.


·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.
75
·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 twoTable 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 2009 the Company recorded an impairment charge of $6,480 on its investment in an unconsolidated joint venture acquired in the merger with Newkirk due to the expiration of the net-lease on the hotel asset owned by the joint venture. The Company sold this investment for $60 in 2009.
Contents
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AND CONSOLIDATED SUBSIDIARIES

Notes to Consolidated Financial Statements – (Continued)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except per share/unit amounts)data)

(7)Loans Receivable

(7) Notes Receivable

As of December 31, 20092012 and 2008,2011, the Company’s notesCompany's loans receivable, including accrued interest and net of origination fees and loan loss reserves are comprised primarily of first and second mortgage loans and mezzanine loans on real estate aggregating $60,567$72,540 and $68,812, respectively, bearing$66,619, respectively. The loans bear interest, including imputed interest, at rates ranging from 4.6% to 16.0%20.0% and maturingmature at various dates between 2014through 2022.
The following is a summary of our loans receivable as of December 31, 2012 and 2022.2011:
  
Loan carrying-value(1)
    
Loan 12/31/2012 12/31/2011 Interest Rate Maturity Date
Norwalk, CT(2)
 $3,479
 $—
 7.50% 11/2014
Homestead, FL 8,036
 —
 7.50% 08/2014
Schaumburg, IL(3)
 21,885
 21,458
 20.00% 01/2012
Westmont, IL 26,902
 27,228
 6.45% 10/2015
Southfield, MI 7,364
 8,065
 4.55% 02/2015
New Kingstown, PA —
 2,941
 7.78% 01/2013
Austin, TX 2,038
 1,738
 16.00% 10/2018
Other 2,836
 5,189
 8.00% 2021-2022
  $72,540
 $66,619
    
(1)Loan carrying value includes accrued interest and is net of origination costs and fee eliminations, if any.
(2)
The Company is committed to lend up to $32,600.
(3)
Loan is in default. The Company did not record interest of $2,647 in 2012 representing the interest earned since default. The Company believes the office property collateral has an estimated fair value in excess of the Company's investment and the Company has initiated foreclosure proceedings.

The 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.

(8) Fair Value MeasurementsThe 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, 2012, the financing receivables were performing as anticipated other than the Schaumburg loan as discussed above and there were no other 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. During 2011, the borrower defaulted on the loan and the Company completed a deed-in-lieu of foreclosure and sold the property in 2012.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)

(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, 2012 and 2011and non-recurring basis as of during the year ended December 31, 20092012 and on a recurring basis as of December 31, 2008,2011, aggregated by the level in the fair value hierarchy within which those measurements fall:
   Fair Value Measurements Using
Description2012 (Level 1) (Level 2) (Level 3)
Interest rate swap liability$(6,556) $—
 $(6,556) $—
Impaired real estate assets*$3,327
 $—
 $—
 $3,327
  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                    
*Represents a non-recurring fair value measurement.

 Balance  Fair Value Measurements Using     Fair Value Measurements Using
Description December 31, 2008  (Level 1)  (Level 2)  (Level 3)   2011 (Level 1) (Level 2) (Level 3)
              
Forward purchase equity asset $10,698  $—  $10,698  $—    
                  
Interest rate swap liability $(7,055) $—  $(7,055) $—    $(3,236) $—
 $(3,236) $—
Impaired real estate assets*$133,220
 $—
 $—
 $133,220
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LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES*Represents a non-recurring fair value measurement.

Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)
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, 20092012 and 2008.2011:

 As of December 31, 2009  As of December 31, 2008 As of December 31, 2012 As of December 31, 2011
 
Carrying
Amount
  Fair Value  
Carrying
Amount
  Fair Value 
Carrying
Amount
 Fair Value 
Carrying
Amount
 Fair Value
Assets                   
Notes Receivable $60,567  $44,092  $68,812  $62,000 
Loans Receivable (Level 3)$72,540
 $61,734
 $66,619
 $54,179
                       
Liabilities                 
  
  
  
Debt $2,087,990  $1,748,617  $2,381,824  $2,068,725 
Debt (Level 3)$1,878,208
 $1,835,157
 $1,662,375
 $1,533,205

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, 2012 and 2011, 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.


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LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)

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.

(9)Investment in and Advances to Non-Consolidated Entities
(9) InvestmentDuring 2012, the Company formed two joint ventures in Non-Consolidated Entitieswhich it has a minority interest. One joint venture acquired a 120,000 square foot retail property in Palm Beach Gardens, Florida for $29,750 which is net-leased for an approximate 15-year term. The Company has a 36% interest in the venture and provided a $12,000 non-recourse mortgage loan to the venture which, subsequent to December 31, 2012, was repaid in full.

A second joint venture, in which the Company has a 15% interest, acquired a 100% economic interest in an inpatient rehabilitation hospital in Humble, Texas for $27,750, which is net-leased for an approximate 17-year term. The acquisition was partially funded by a non-recourse mortgage with an original principal amount of $15,260, which bears interest at a fixed rate of 4.7% and matures in May 2017.

Pemlex LLC. In April 2011, the Company made a $14,180 noncontrolling, preferred equity investment in a joint venture, Pemlex LLC, formed to acquire a 210,000 square foot office property in Aurora, Illinois. The Company was 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. The Company recorded its investment under the equity method of accounting and 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.

In July 2012, the Company sold its interest in Pemlex LLC for $13,218 in connection with a restructuring of Pemlex LLC. In addition, the Company (1) entered into a management agreement with the purchaser that provides for a backstop guaranty to a third party who delivered a letter of credit in the amount of $2,500 as security for "bad boy" acts under the purchaser's third-party acquisition financing and (2) agreed to deliver a replacement letter of credit, if necessary, in the amount of $2,500 to the purchaser's lender during the term of the management agreement. No gain or loss was recognized in the transaction as the investment was sold at its cost basis.

Net Lease Strategic Assets Fund L.P. (“NLS”). NLS iswas a co-investment program with a subsidiary of Inland American Real Estate Trust, Inc. (“Inland”).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 owned 85% and 15%, respectively, of NLS’sNLS's common equity, and the Company owns owned 100% of NLS’sNLS's preferred equity.
 
InlandDuring 2012, 2011 and the Company are currently entitled to a return on/of their respective investments as follows: (1) Inland, 9% on its common equity ($220,590 in common equity), (2) the Company, 6.5% on its preferred equity ($162,487 in preferred equity), (3) the Company, 9% on its common equity ($38,928 in common equity), (4) return of the Company preferred equity ($162,487 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, if not, allocations are 85% to Inland and 15% to the Company.
In addition to the capital contributions described above, the Company and Inland have committed to invest up to an additional $22,500 and $127,500, respectively, in NLS to acquire additional specialty single-tenant net-leased assets.
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.
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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, 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 2008,2010, the Company recognized $12,364$12,902, $21,572 and ($16,902)$19,468, 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 $94,723was $94,723 and iswas accreted into earningsincome over the estimated useful lives of NLS’sNLS's assets. During 20092012, 2011 and 2008,2010, the Company recorded earnings of $3,636$2,382, $3,599 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.

During 2008 and 2007,On September 1, 2012, the Company incurred transaction costs relating toacquired the formationremaining common equity interest in NLS and the Company now consolidates NLS (see note 4).

78
Table of NLS of $1,138 and $2,316, respectively, which are included in general and administrative expenses in the Consolidated Statements or Operations.Contents

LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)

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 In connection with the Company's merger with Newkirk Realty Trust, Inc. (“Newkirk”), the Company acquired a 50%an interest in a co-investment program, Concord, which ownsowned 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"). 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.
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LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES

Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)
The following is summary balance sheet data as of December 31, 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 2011, Concord was restructured and as a quarterly basis to determine ifresult of the investment is other-than-temporarily impaired. Duringrestructuring (i) Lex-Win Concord was dissolved and (ii) a new entity, CDH CDO LLC (“CDH CDO”), was created. The Company made no additional contributions and did not recognize any income or loss as a result of 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 itsrestructuring. The Company's investment in Lex-Win Concord had suffered a significant decrease in value and ultimately should bethese ventures was initially valued at zero. As a result,zero and the Company recognized income on the cash basis. During 2012 and 2011, the Company received aggregate distributions of $885 and $3,954 from all Concord related entities, respectively, which were recorded aggregate $68,213 of other-than-temporary impairment charges during 2009. These additional impairment charges are recognized as a component of equity in earnings (losses) of non-consolidated entities. Concord incurred additional losses during the remainder of 2009, of which the Company's share is $10,588. The Company has not recorded these losses and has suspended them asDuring 2012, 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 onesold all of its lenders, a capital contribution was made to Concord by Lex-Wininterest in 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 riskCDH CDO 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$7,000 cash, resulting insufficient equity within Concord 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, 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, and it does not plan to fund future operations of Concord. As a result, the Company will continue to account for the investment under the equity method.
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LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES

Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)

Lex-Win Acquisition LLC (“Lex-Win”). During 2007, Lex-Win, an entity in which the Company holds a 28% ownership interest, acquired 3.9 million shares 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 share of $9.30 in a tender offer. During 2007, the Company funded $12,542 relating to this tender and received $1,890 relating to an adjustment$7,000 gain on sale, which is included in equity in earnings 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 relating to its investment in Wells and sold its entire interest in Wells for $32,289.non-consolidated entities.

In June 2011, the Company formed an equally owned joint venture with Winthrop, LW Sofi LLC, to acquire the economic interest in a mezzanine loan owned by Concord. The Company recorded the Other Equity Method Investment Limited Partnerships $5,760. contribution to the joint venture in investments in and advances 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.

Other. During 2009,2011, the Company recognized an other-than-temporary impairment charge on a non-consolidated joint venture acquired in the merger with Newkirk due to a change in the Company's estimate of net proceeds to be received upon liquidation of the joint venture. Accordingly, the Company recognized a gain$1,559 impairment charge in equity in earnings of $2,000 onnon-consolidated entities and reduced the salecarrying value of an office building in Columbia, South Carolina, in which the Company held a 40% limited partnership interest. investment to $719.

The Company’s share of net proceeds from the sale was $12,513. In addition, the Company sold its interest in a hotel joint venture for $60 during 2009. The Company’sCompany's remaining equity method investments consist of interests in fivesix partnerships, including an entity acquired in the NLS acquisition, with ownership percentages ranging between 27% and 35%40%, 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$32,039 in mortgage debt (the Company’sCompany's proportionate share is $8,801)$11,034) with interest rates ranging from 9.4%5.2% to 11.5%10.6% with a weighted averageweighted-average rate of 9.9%7.5% and maturity dates ranging from 20112015 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$875, $804 and $1,226 in 2009, 2008$967 for the years ended December 31, 2012, 2011 and 2007,2010, 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$1,415,961 and $2,033,854$1,366,004 as of December 31, 20092012 and 2008, respectively, excluding discontinued operations.2011, respectively. Interest rates, including imputed rates on mortgages and notes payable, ranged from 3.1%3.6% to 10.3%8.5% at December 31, 20092012 and the mortgages and notes payable mature between 20102013 and 2022.2031. Interest rates, including imputed rates, ranged from 2.0%3.6% to 10.5%7.8% at December 31, 2008.2011. The weighted averageweighted-average interest rate at December 31, 20092012 and 20082011 was approximately 5.6% and 5.5%5.7%, respectively.

On February 13, 2009,In 2012, the Company procured a secured term loan from Wells Fargo Bank, National Association ("Wells Fargo"), as agent. The term loan was 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 interest rates ranging from LIBOR plus 2.00% to 2.85% dependent on the Company's leverage ratio, as defined therein. Upon the date when the Company obtains an investment grade debt rating from at least two of Standard & Poor’s Rating Services (“S&P”), Moody’s Investor Services, Inc. (“Moody’s”) and Fitch, Inc. (“Fitch”), the interest rate under the secured term loan will be dependent on the Company's 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 thereafter at a premium through January 12, 2016 and at par thereafter. During 2012, the Company entered into interest-rate swap agreements to fix LIBOR at a weighted-average rate of 1.42% through January 2019 on the $255,000 of outstanding LIBOR-based borrowings. At December 31, 2012, the Company had $255,000 outstanding under the secured term loan (see note 22).

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LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)

In addition, in 2012, 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 over LIBOR and maturesplus 1.625% to 2.375% based on the Company's leverage ratio, as defined therein. The secured revolving credit facility was scheduled to mature in February 2011,January 2015 but cancould be extended to February 2012January 2016, at the Company’s option.Company's option subject to the satisfaction of certain conditions. The secured revolving credit facility had the same security as the secured term loan. With the consent of the lenders, the Company cancould increase the size of (1) the term loansecured revolving credit facility by $135,000 and (2) the revolving loan by $115,000 (or $250,000 in the aggregate, for$225,000 (for a total facility size of $500,000, assuming no prepayments of the term loan are made) by adding properties to the borrowing base or admitting additional lenders. During the second quarter 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. The secured credit facility is secured by ownership interest pledges and guarantees by certain of the Company’s subsidiaries that in the aggregate own interests in a borrowing base consisting of 75 properties as of December 31, 2009.$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, 2009,2012, 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. In connection with the refinancing and the subsequent increase in the availability under the facility, the Company incurred $4,977 in financing costs and recognized $247 in debt satisfaction charges.$3,744. 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, 2009.2012. The secured revolving credit facility was refinanced in February 2013 (see note 22).
During 2008, theThe Company obtained $25,000had $25,000 and $45,000 original principal amount$35,551 secured term loans from KeyBank. The loans are interest only at LIBOR plus 60 basis points and mature in 2013. The net proceeds of 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.
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LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES

Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)

Pursuant to the new 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% through March 18, 2013,which were satisfied in January 2012 and the Company assumedrecognized debt satisfaction charges of $1,578 as a liability for the fair valueresult of the swap at inception of approximately $5,696 ($5,240 and $7,055 at December 31, 2009 and 2008, respectively). The new debt is presented net of a discount at inception of $5,696 ($3,170 and $4,158 at December 31, 2009 and 2008, respectively). The discount is being amortized as interest expense over the term of the loans.satisfaction.

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, $1,074$(16), $45 and $1,209$972 for the years ended December 31, 2009, 20082012, 2011 and 2007,2010, respectively, due to the satisfaction of mortgages and notes payable other than those disclosed elsewhere in this Annual Report.

Contract right mortgage payable is a promissory note with a fixedthese financial statements. In addition, the Company capitalized $3,062, $1,792 and $791 in interest rate of 9.68%, which provides for the following amortization payments:

Year ending
December 31,
 Total 
2010 $491 
2011  540 
2012  593 
2013  652 
2014  717 
Thereafter  12,259 
  $15,252 

years ended 2012, 2011 and 2010, respectively.
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
2013 $272,192
2014 283,460
2015 313,474
2016 167,312
2017 87,162
Thereafter 292,361
  $1,415,961

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
(11)Convertible Notes, Exchangeable Notes and $78,354 of 2011 maturities have been satisfied.Trust Preferred Securities
During 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 144.2599 common shares per one thousand principal amount of the notes, representing a conversion price of approximately $6.93 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. During 2012, $31,104 aggregate principal amount of the notes were converted for 4,487,060 common shares and an aggregate cash payment of $2,427 plus accrued and unpaid interest. The Company recognized an aggregate debt satisfaction charge of $7,842 relating to the conversions. Additional notes were converted in January 2013 (see note 22).

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AND CONSOLIDATED SUBSIDIARIES

Notes to Consolidated Financial Statements – (Continued)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except per share/unit amounts)data)

(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 2012 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 2008,2010, the Company repurchased $123,350 and $239,000, respectively,retired all outstanding original principal amount of the 5.45% Exchangeable Guaranteed Notesnotes for cash payments of $62,150and issuances of common shares of the Company of $101,006 and $192,984,$25,493, 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 charges, net of $44 and $760, respectively, including write-offs of $4,989$20 and $12,793,$768, respectively, of the unamortized debt discount and deferred financing costs.
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,
2012		 December 31,
2011		 December 31,
2012		 December 31,
2011
Principal amount of debt component$83,896
 $115,000
 $—
 $62,150
Unamortized discount(5,769) (9,851) —
 (48)
Carrying amount of debt component$78,127
 $105,149
 $—
 $62,102
Carrying amount of equity component$3,654
 $13,134
 $—
 $20,293
Effective interest rate8.1% 8.1% —% 7.0%
Period through which discount is being amortized, put date01/2017
 01/2017
 —
 01/2012
Aggregate if-converted value in excess of aggregate principal amount$42,579
 $7,907
 $—
 $—
Statements of Operations: 2012 2011 2010
6.00% Convertible Guaranteed Notes      
Coupon interest $6,634
 $6,900
 $6,408
Discount amortization 1,868
 1,938
 1,776
  $8,502
 $8,838
 $8,184
5.45% Exchangeable Guaranteed Notes  
  
  
Coupon interest $188
 $3,387
 $3,504
Discount amortization 34
 664
 689
  $222
 $4,051
 $4,193

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, were open for redemption at the CompanyCompany's option 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, 20092012 and 2008,2011, there was $129,120$129,120 original principal amount of Trust Preferred Securities outstanding.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)

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
2013 $—
2014 —
2015 —
2016 —
2017(1)
 83,896
Thereafter 129,120
  213,016
Debt discount (5,769)
  $207,247
__________

(1)Although the 5.45% Exchangeable6.00% Convertible Guaranteed Notes mature in 2027,2030, the notes can be put to the Company in 2012,2017. See note 22 for subsequent events.

(12)Derivatives 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.Hedging Activities

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Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)

(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,these objectives 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 agreementagreements with KeyBankits counterparties as a cash flow hedgehedges of the risk of variability attributable to changes in the LIBOR swap raterates on $45,000 and $25,000$255,000 of LIBOR-indexed variable-rate secured term loans. Accordingly, changes in the fair value of the swapswaps 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,In 2012, the Company cannot assume that there will be no ineffectiveness insettled 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 theinterest-rate swap agreement with KeyBank for a notional amount of $9,277 due to a payment of the same amount on the $45,000 term loan.$3,539. The Company recognized $253had a credit balance of interest expense during 2008 due to$1,837 in accumulated other comprehensive income at the swap’s ineffectiveness and forecasted transactions no longersettlement date which is being probable.amortized into earnings on a straight-line basis through February 2013.

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 thesethe $255,000 secured term loans.loan. During the next 12 months, the Company estimates that an additional $1,624$2,759 will be reclassified to earnings as an increase to interest expense.expense if the swaps remain outstanding.


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Notes to Consolidated Financial Statements – (Continued)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except per share/unit amounts)data)


As of December 31, 2009,2012, the Company had the following outstanding interest rate derivativederivatives that waswere designated as a cash flow hedgehedges of interest rate risk:

Interest Rate DerivativeNumber of InstrumentsNotionalNumber of InstrumentsNotional
Interest Rate Swap1$60,723
Interest Rate Swaps5$255,000

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:

ProductNumber of InstrumentsNotional
Forward purchase equity commitment1$24,166

During 2008, the Company entered into a forward purchase equity commitment with a financial institution to finance the repurchase of 3,500,000 common shares of the Company at $5.60$5.60 per share under the Company’sCompany's common share repurchase plan as approved by the Company's Board of Trustees. The Company has prepaid $15,576 with the remainder 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’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 retains the cash dividends paid on the common shares, however, the counterparty retains 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 party consultant determined the fair value of the equity commitment to be $20,141 and $10,698 at December 31, 2009 and 2008, respectively, and the Company recognized earnings during 20092011 and 2010 of $7,182$2,030 and losses of ($2,128) during 2008,$8,906, 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 of the Company’s$4,024 and retired 3,974,645 common share price but other observable inputs.shares.

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, 20092012 and 2008.2011.

  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 

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Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)
 As of December 31, 2012 As of December 31, 2011
 Balance Sheet Location Fair Value Balance Sheet Location Fair Value
Derivatives designated as hedging instruments:       
Interest Rate Swap LiabilityAccounts Payable and Other Liabilities $(6,556) Accounts Payable and Other Liabilities $(3,236)

The tables below present the effect of the Company’sCompany's derivative financial instruments on the Consolidated Statements of Operations for 2009.2012 and 2011:

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   2012 2011 2012 2011
       
Interest Rate Swap $990 Interest expense $(2,805) $(8,886) $(835) Interest expense $724
 $2,879

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 2012 2011
     
Forward Purchase Equity Commitment Change in value of forward purchase commitment $7,182  Change in value of forward equity commitment $—
 $2,030

The Company’s agreementCompany's agreements with the swap derivative counterparty contains a provisioncounterparties contain provisions 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, 2009,2012, the Company hashad not posted any collateral related to the agreement. If the Company had breached any of these provisions at December 31, 2009, it would have been required to settle its obligations under the agreements at the termination value of $5,665, 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 Entitiesagreements.


GAAP requires a VIE to be consolidated by its primary beneficiary. The primary beneficiary is the party that absorbs a majority
83
Table of the VIE’s anticipated losses and/or a majority of the expected returns. The Company evaluates its loans and investments to determine whether they are variable interests in a VIE. This evaluation resulted in the Company determining that its loans and investments were potential variable interests. For each of these investments, the Company has evaluated (1) the sufficiency of the fair value of the entities’ equity investments at risk to absorb losses; (2) that as a group the holders of the equity investments at risk have (a) the direct or indirect ability through voting rights to make decisions about the entities’ significant activities, (b) the obligation to absorb the expected losses of the entity and their obligations are not protected directly or indirectly and, (c) the right to receive the expected residual return of the entity and their rights are not capped; and (3) the voting rights of these investors are not proportional to their obligations to absorb the expected losses of the entity, their rights to receive the expected returns of the entity, or both, and that substantially all of the entities’ activities do not involve or are not conducted on behalf of an investor that has disproportionately few voting rights.
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.

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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 
2013  233,370  $335,434
2014  191,536  319,112
2015 276,155
2016 245,100
2017 222,542
Thereafter  712,274  1,111,022
 $2,023,114  $2,509,365
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
2013 $2,572
2014 2,328
2015 2,300
2016 1,971
2017 1,924
Thereafter 15,885
  $26,980
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$1,198, $776 and $1,481$955 in 2009, 20082012, 2011 and 2007,2010, respectively.

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Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)

The Company leases its corporate headquarters. The lease expires December 2015, with fixed rent fixed at $1,299of $1,153 per annum through December 2011 and will be adjusted to fair market value, as defined in the lease, thereafter.annum. 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$82 for 20102013, $45 for 2014, $36 for 2015 and 2011.2016 and $9 thereafter. Rent expense for 2009, 20082012, 2011 and 20072010 was $1,282, $958$1,029, $1,392 and $975, respectively, and is included in general and administrative expenses.$1,332, respectively.


(15) Noncontrolling Interests
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In conjunction with severalNOTES 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 Company’s acquisitions in priorcreditworthiness of its tenants. For the years sellers were issued OP units as a formended December 31, 2012, 2011 and 2010, no single tenant represented greater than 10% of consideration in exchange for the property. Substantially all OP units, other than the OP units held directly or indirectly by the Company, are redeemablerental revenues.
Cash and cash equivalent balances 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.

As of December 31, 2009, there were approximately 4,787,000 OP units outstanding, 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 shareholders 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.institutions may exceed insurable amounts. 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 changesbelieves it mitigates this risk by investing in the Company’s ownership interests in its noncontrolling interests:or through major financial institutions.
(15)Equity

  
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’ Equity

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)
 
           
First quarter 2009 $0.18 April 24, 2009  5,097,229  $1,819 
Second quarter 2009 $0.18 July 30, 2009  4,333,183  $1,970 
Third quarter 2009 $0.18 October 16, 2009  3,873,786  $2,110 
Fourth quarter 2009 $0.10 January 15, 2010  -  $12,194 
Shareholders' Equity:

During 2009,2012, 2011 and 2010, the Company issued 4,338,91518,289,557, 11,109,760 and 23,712,980 common shares, respectively, through public offerings and under its direct share purchase plan, raising net proceeds of $20,947.approximately

$164,429, $98,953 and $166,427 respectively. The proceeds were primarily used for general working capital, to fund investments and retire indebtedness.
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Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)
In June 2009,During the first quarter of 2010, the Company converted 503,100 sharesrecorded $13,134 in additional paid-in-capital, representing the conversion feature of its Series C Preferred by issuing 2,955,368the 6.00% Convertible Guaranteed Notes. During 2012, this amount was reduced to $3,654 due to the issuance of its common shares. The difference between the fair value of4,487,060 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 thoughupon the conversion was for equivalent fair values.of $31,104 6.00% Convertible Guaranteed Notes.

During 2008, the Company repurchasedAccumulated other comprehensive income (loss) as of December 31, 2012 and retired 501,700 shares of Series C Preferred by issuing 727,759 of its common shares2011 represented $(6,224) 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,$1,938, 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.unrealized gain (loss) on interest rate swaps.

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 1,935,400 shares of Series C Preferred, outstanding at December 31, 2009.2012. The shares have a dividend of $3.25$3.25 per share per annum, have a liquidation preference of $104,760,$96,770, 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, 20082012, 2011 and 2007, holders 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.

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LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES

Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)

During 2009 and 2008,2010, the Company issued 376,400643,450, 609,182 and 211,125361,320 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. Seecriteria (see note 17.16).
During 2012 and 2011, the Company repurchased and retired all of its 3,160,000 shares of Series B Preferred for cash payments of $68,539 and $10,217, respectively.
Noncontrolling Interests:

During 2007,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 for common shares 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)


During 2012, 2011 and 2010, 257,427, 398,927 and 457,351 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.$1,343, $2,187 and $2,685, respectively.

The Company has retrospectively recorded an additional paid-in-capital amountAs of $23,132 representingDecember 31, 2012, there were approximately 3,797,000 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 Income (Loss) Attributable to Shareholders and Transfers from Noncontrolling Interests
 2012 2011 2010
Net income (loss) attributable to Lexington Realty Trust shareholders$180,316
 $(79,584) $(32,960)
Transfers from noncontrolling interests:     
Increase in additional paid-in-capital for redemption of noncontrolling OP units1,343
 2,187
 2,685
Change from net income (loss) attributable to shareholders and transfers from noncontrolling interests$181,659
 $(77,397) $(30,275)

  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)
(16)Benefit Plans

(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 yearsNo common share options were issued in 2012 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.2011. 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.

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%

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In addition, theLEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)

The 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$1,197, $1,384 and $1,824 in compensation expense during 2009in 2012, 2011 and 2010, respectively, 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$2,559 relating to the outstanding options as of December 31, 2009.

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LEXINGTON REALTY TRUST
AND CONSOLIDATED SUBSIDIARIES

Notes to Consolidated Financial Statements – (Continued)
(2012. The intrinsic value of an option is the amount by which the market value of the underlying common share at the date the option is exercised exceeds the exercise price of the option. The total intrinsic value of options exercised for the years ended December 31, 2012, 2011 and 2010 were $000 except per share/unit amounts)

1,603, $2,100 and $1,145, respectively.
Share option activity during the years indicated is as follows:

 
 Number of
Shares
 
Weighted-Average
Exercise Price
Per Share
Balance at December 31, 20092,252,000
 $4.97
Granted2,514,001
 7.16
Exercised(352,628) 4.97
Forfeited(23,768) 5.18
Balance at December 31, 20104,389,605
 6.23
Exercised(501,324) 5.16
Balance at December 31, 20113,888,281
 6.36
Exercised(408,201) 5.73
Balance at December 31, 20123,480,080
 $6.44
  
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 

The Company sponsors a 401(k) retirement savings plan covering all eligible employees. During the year ended As of December 31, 2009,2012, the Company matched 100%aggregate intrinsic value of the first approximately 1.125% 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 matchingoptions that were outstanding 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 and $382 of contributions are applicable to 2009, 2008 and 2007, respectively.exercisable was $3,930.

Non-vested share activity for the years ended December 31, 20092012 and 2008,2011, is as follows:
 
Number of
Shares
 
Weighted-Average
Value Per Share
Balance at December 31, 2010819,577
 $10.16
Granted582,102
 7.49
Vested(211,954) 13.56
Forfeited(10,140) 21.99
Balance at December 31, 20111,179,585
 8.13
Granted606,500
 9.75
Vested(320,639) 8.86
Balance at December 31, 20121,465,446
 $8.64

   
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, 2009,2012, of the remaining 743,3421,465,446 non-vested shares, 210,9031,092,306 are subject to timetime-based vesting and 532,439373,140 are subject to performanceperformance-based vesting. At December 31, 2009,2012, there are 2,289,1644,437,962 awards available for grant. The Company has $4,654$9,648 in unrecognized compensation costs relating to the unvestednon-vested shares that will be charged to compensation expense over an average of approximately 2.22.6 years.

During 2009, 2008 and 2007, the Company recognized $3,369, $3,980 and $3,645, respectively, in compensation expense relating to share grants to trustees and employees.

The Company has established a trust for certain officers in which non-vestedvested 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, 20092012 and 2008,2011, there were 427,531 common shares in the trust.

On February 6, 2007,The Company sponsors a 401(k) retirement savings plan covering all eligible employees. The Company makes a discretionary matching contribution on a portion of employee participant salaries and, based on its profitability, may make an additional discretionary contribution at each fiscal year end to all eligible employees. These discretionary contributions are subject to vesting under a schedule providing for 25% annual vesting starting with the Company’s Boardfirst year of Trustees established the Lexington Realty Trust 2007 Outperformance Program, a long-term incentive compensation program. Awards under the programemployment and 100% vesting after four years of employment. Approximately $279, $308 and $311 of contributions are considered liability awards because the number of shares issuedapplicable to the participants are not fixed2012, 2011 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.2010, respectively.

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AND CONSOLIDATED SUBSIDIARIES

Notes to Consolidated Financial Statements – (Continued)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except per share/unit amounts)data)

During 2012, 2011 and 2010, the Company recognized $3,030, $2,062 and $3,232, respectively, in compensation expense relating to scheduled vesting and issuance of common share grants.

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.
(17)Related Party Transactions

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 related party transactions discussed elsewhere in this Annual Report, the Company has an aggregate cash paymentindemnity obligation to Vornado Realty Trust, one of $1,500 paid in 2008, non-vested common shares previously issuedits significant shareholders, with respect to actions by the officer were accelerated and immediately vested which resulted inCompany that affect Vornado Realty Trust's status as a charge of $265.REIT.

All related party acquisitions, sales and loans were approved by the independent members of the Company's Board of Trustees or the Audit Committee.

During the second quarter of 2007,2011 and 2010, the Company advanced an aggregate $20,077and an executive officer entered into an employment separation agreement. In addition$7,614, respectively, to a cash paymentNLS entities in the form of $3,600, non-vested common sharesinterest bearing, non-recourse mortgage notes to satisfy maturing non-recourse mortgages. These advances were accelerated and immediately vested which resultedsatisfied in a charge of $933.full in 2011.

(18) Income TaxesThe Company leases certain properties to entities in which Vornado Realty Trust, a significant shareholder, has an interest. During 2012, 2011 and 2010, the Company recognized $842, $864 and $905, respectively, in rental revenue from these properties. The Company leases its corporate office from an affiliate of Vornado Realty Trust. Rent expense for this property was $919, $1,281 and $1,272 in 2012, 2011 and 2010, respectively.

The provisionCompany's Board of Trustees granted a waiver of the Company's Code of Business Conduct and Ethics to allow the Company to enter into a joint venture with an affiliate of its Chairman, which intends to raise capital from foreign investors seeking entry into the United States of America. As of the date of filing this Annual Report, no joint venture agreement has been entered into by the Company with the affiliate of its Chairman.

(18)Income Taxes

The benefit (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.

The Company’s provisionCompany's benefit (provision) for income taxes for the years ended December 31, 2009, 20082012, 2011 and 20072010 is summarized as follows:
 2012 2011 2010
Current:     
Federal$(371) $(440) $—
State and local(1,157) (1,080) (1,072)
NOL utilized401
 566
 —
Deferred:     
Federal141
 1,399
 (418)
State and local45
 400
 (53)
 $(941) $845
 $(1,543)

  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 of $638$858 and $442$672 are included in other liabilitiesassets on the accompanying Consolidated Balance Sheets at December 31, 20092012 and 2008,2011, respectively. These net deferred tax liabilitiesassets relate primarily to differences in the timing of the recognition of income/income (loss) between GAAP and tax basis of real estate investments and net operating loss carry forwards.


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LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)

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) $488 
2012 2011 2010
Federal provision at statutory tax rate (34%)$(573) $(580) $(388)
State and local taxes, net of federal benefit  (33)  (45)  4 (110) (100) (31)
Other  (1,969)  (2,543)  (3,779)(258) 1,525
 (1,124)
 $(2,378) $(2,985) $(3,287)$(941) $845
 $(1,543)

For the years ended December 31, 2009, 20082012, 2011 and 2007,2010, the “other” amount is comprised primarily of state taxes of $2,051, $1,804$1,043, $954 and $2,309,$1,072, respectively, and the write-off of deferred tax assetsliabilities of $0, $742$0, $3,535 and $1,605,$0, respectively, relating to the dissolutiontransfer of certain assets of the Company’sCompany's taxable subsidiaries.

As of December 31, 20092012 and 2008,2011, the Company has estimated net operating loss carry forwards for federal income tax reporting purposes of $2,549$1,635 and $3,476,$2,735, respectively, which would begin to expire in tax year 2025. No2026. As of December 31, 2012 and 2011, a valuation allowances haveallowance of $0 and $712, respectively, has been recorded against deferred tax assets as the Company believes they are fully realizable, 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, 2012, is as follows:
 2012 2011 2010
Total dividends per share$0.525
 $0.46
 $0.40
Ordinary income95.68% 47.33% 99.11%
15% rate - qualifying dividend0.99% 1.11% 0.89%
15% rate gain—
 —
 —
25% rate gain—
 —
 —
Return of capital3.33% 51.56% —%
 100.00% 100.00% 100.00%
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, 2012, is as follows:
 2012 2011 2010
Total dividends per share$1.341667
 $2.0125
 $2.0125
Ordinary income98.98% 97.70% 99.11%
15% rate - qualifying dividend1.02% 2.30% 0.89%
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, 2012, is as follows:
 2012 2011 2010
Total dividends per share$3.25
 $3.25
 $3.25
Ordinary income98.98% 97.70% 99.11%
15% rate - qualifying dividend1.02% 2.30% 0.89%
15% rate gain—
 —
 —
25% rate gain—
 —
 —
Return of capital—
 —
 —
 100.00% 100.00% 100.00%

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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 D Cumulative Redeemable Preferred Stock for the years in the three-year period ended December 31, 2012, is as follows:
(19) Commitments
 2012 2011 2010
Total dividends per share$1.8875
 $1.76498(1) $2.01002(1)
Ordinary income98.98% 97.70% 99.11%
15% rate - qualifying dividend1.02% 2.30% 0.89%
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.
The Company is obligated under certain tenant leases, including its proportionate share for leases for non-consolidated entities, to fund the expansion of the underlying leased properties. The Company, under certain circumstances, may guarantee to tenants the completion of base building improvements and the payment of tenant improvement allowances and lease commissions on behalf of its subsidiaries. As of December 31, 2012, the Company had two outstanding guarantees for (1) the completion of the base building improvements and the payment of a related tenant improvement allowance for an office property in Orlando, Florida, which the unfunded amounts were estimated to be $8,414 and (2) the payment of a tenant improvement allowance and related lease commission of $5,567 for a property in Allen, Texas.

From time to time, the Company is directly or indirectly involved in legal proceedings arising in the ordinary course of the Company's business. In management’s opinion,Management believes, based on currently available information, and after consultation with legal counsel, that although the outcomeoutcomes of those normal course proceedings are uncertain, the results 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 business, financial position, resultcondition and results of operations or cash flows.operations. During the year ended December 31, 2012, the following two legal proceedings were resolved:

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 were 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.


The
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LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)

Together 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 all rights to future depositions and discovery ifrelated opposing and supporting motions. On November 22, 2010, the court finds there are outstanding questionsruled in favor of fact and denies the motions. The motions must be filedplaintiffs 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.

The Company intends to file atheir motion for summary judgmentjudgment. 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 vigorously defend the claims for a varietybe taken into consideration with respect to computation 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.damages, if any.

Inland American (Concord) Sub, LLC v. Lex-Win Concord LLCAfter motions before the special referee and Concord Debt Holdings LLC (Delaware Courtdiscovery on July 11, 2012, the special referee recommended damages in favor of Chancery – C.A. No. 4617-VCL)the plaintiffs as follows: (1) . On May 22, 2009, Inland American (Concord) Sub, LLC, (“Inland Concord”), a wholly-owned subsidiary$826 for the Farmington Hills claim as well as 10% interest as 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 ConcordApril 27, 2012 in the amountsum of $24,000$482 and that Inland Concord is entitledadditional prejudgment interest from April 28, 2012 to a priority returnentry of its capital. Lex-Win Concord filed counterclaims against Inland Concord which state,judgment and thereafter statutory interest of 9%; (2) $388 for the Antioch claim as well as 10% interest as of April 27, 2012 in general, that Inland Concord is in material breachthe sum of the agreements with Lex-Win Concord$226 and seekingadditional prejudgment interest from April 28, 2012 to recover all losses incurred by it as a resultentry of such breach.

On December 21, 2009, the applicable partiesjudgment and certainthereafter statutory interest 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 Company9%; and (3) the formationattorneys' fee and disbursements of a new entity$827 together with statutory interest of 9% as to fees and disbursements to be owned by subsidiariescalculated from July 11, 2012. The Company recorded a $2,800 litigation reserve during the second quarter of Inland Concord, Winthrop2012 relating to this litigation and settled 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.

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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 complaintlitigation 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,2012 for $2,775 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.mutual releases.

Unified Government of Wyandotte County/Kansas City, Kansas v. United States General Services Administration (United States District Court for the District of Kansas-Case Number 11-2400-JTM-KMH)Other.. On 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 lease termination payment of Certain employees$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 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 protest with the United States Government Accountability Office ("GAO") protesting the award of the lease 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. On March 21, 2012, the District Court issued a memorandum opinion transferring the case to the United States Court of Federal Claims. The Company intervened in the action. On June 1, 2012, the plaintiff filed a notice of dismissal and the case was dismissed. The Company does not expect any further activity with respect to this litigation.

Other. Four of our executive officers have employment contracts and are entitled to severance benefits upon termination by the Company without cause or termination by the executive officer with good reason, in theeach case, of a change of control, 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 expansion of the underlying leased properties.
(20)Supplemental Disclosure of Statement of Cash Flow Information

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 discloseddisclosures discussed elsewhere, the Company was a party to the following related party transactions.

All related party acquisitions, salesduring 2012, 2011 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.

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Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)

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 Chairman 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 2007,2010, the Company paid $132,376, $160,134$101,262, $103,427 and $154,917,$114,031, respectively, for interest and $2,483, $767$1,018, $1,289 and $3,452,$1,019, respectively, for income taxes.

In connection with the formation of NLS in 2008 and 2007,During 2012, the Company contributed real estate and intangibles, netsold its interest in a property, which included the assumption of accumulated depreciation and amortization,the related non-recourse mortgage debt 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.$8,921.

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 shares of the Company. These redemptions resulted in increases in shareholders’ equity and corresponding decreases in noncontrolling interests of $3,580, $511,521 and $25,223, respectively.

During 2009, the Company acquired the remainder interests in land with an estimated fair value of $2,500 in connection with a tenant's lease surrender obligation.

During 2009,2012, the Company conveyed threeits interests in two properties to lenders in full satisfaction of the aggregate $38,022$12,409 non-recourse mortgage notes payable. The Company recognized aggregate net gains on debt satisfaction of $13,180$317 relating to these transactions.

During 2008,In October 2011, the Company assumedacquired control of a $7,545 mortgage note payable in connection withjoint venture, Pemlex LLC, and recorded land and building assets of $9,006, lease intangible assets of $6,294, other assets, net, of $107 and a property acquisition.$574 noncontrolling interest.

In 2008,During 2011, the Company received landsold interests in a lease termination transaction with an appraised valuethree properties, which included the assumption of $16,000,the aggregate related non-recourse debt of $28,648 and $3,003 in seller financing.

During 2010, the Company sold interests in three properties, which is included in non-operating income in the Consolidated Statementassumption of Operations.the aggregate related non-recourse mortgage debt of $74,504.

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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 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) (21)    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)

 2012
 3/31/2012 6/30/2012 9/30/2012 12/31/2012
Total gross revenues(1)$79,123
 $82,750
 $87,473
 $95,533
Net income (loss)$5,478
 $5,626
 $175,289
 $(1,755)
Net income (loss) attributable to common shareholders$(2,187) $(3,392) $168,950
 $(7,039)
Net income (loss) attributable to common shareholders - basic per share$(0.01) $(0.02) $1.09
 $(0.04)
Net income (loss) attributable to common shareholders - diluted per share$(0.01) $(0.02) $0.96
 $(0.04)
 2011
 3/31/2011 6/30/2011 9/30/2011 12/31/2011
Total gross revenues(1)$77,290
 $77,474
 $79,492
 $79,570
Net income (loss)$(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
per share
$(0.16) $(0.33) $(0.24) $0.05
Net income (loss) attributable to common shareholders - diluted per share
per share
$(0.16) $(0.33) $(0.24) $0.05
_____________
  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.
(1) All periods have been adjusted to reflect the impact of properties sold during the years ended December 31, 2012 and 2011, 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) attributable to common shareholders and per common share amounts may not equal the full year amounts primarily because the computations of amounts allocated to participating securities and the weighted averageweighted-average number of common shares of the Company outstanding for each quarter and the full year are made independently.

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(22)Subsequent Events

Notes to Consolidated Financial Statements – (Continued)
($000 except per share/unit amounts)

(24) Subsequent Events

Subsequent to December 31, 20092012 and in addition to any other events discloseddisclosures elsewhere in the financial statements, the Company:

conveyed to the lender its property in Suwanee, Georgia for full satisfaction of the related $10,964 non-recourse mortgage;
-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;
converted $35,000 original principal amount of 6.00% Convertible Guaranteed Notes for 5,049,096 common shares and a cash payment of $2,275 plus accrued and unpaid interest on the notes;
implemented an At-The-Market offering program under which the Company may issue up to $100,000 in common shares over the term of the program. The Company issued 3,409,927 common shares under this program as of the date of this Annual Report raising gross proceeds of $36,884;
-repurchased $23,000 original principal amount of the 5.45% Exchangeable Guaranteed Notes for $23,031 including accrued interest of $38;
amended the Company's $255,000 secured term loan agreement to release the collateral securing the term loan;
refinanced its $300,000 secured revolving credit facility with a $300,000 unsecured revolving credit facility with KeyBank, as agent. The unsecured revolving credit facility matures in February 2017 but can be extended until February 2018 at the Company's option. The unsecured revolving credit facility bears interest at LIBOR plus 1.50% to 2.05% based on the Company's leverage ratio, as defined therein. Upon the date when the Company obtains an investment grade rating from at least two of S&P, Moody’s or Fitch, the interest rate under the unsecured revolving credit facility will be dependent on the Company's debt rating; and
-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);
in connection with the refinancing discussed above, also procured a five-year $250,000 unsecured term loan facility from KeyBank, as agent. The unsecured term loan matures in February 2018 and requires regular payments of interest only at interest rates ranging from LIBOR plus 1.45% to 2.00% dependent on the Company's leverage ratio, as defined therein. Upon the date when the Company obtains an investment grade rating from at least two of S&P, Moody’s and Fitch, the interest rate under the unsecured term loan will be dependent on the Company’s debt rating.
-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;
-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;
-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.

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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 EstatesBuildings and ImprovementsTotalAccumulated Depreciation and AmortizationDate AcquiredDate ConstructedUseful 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 $—
$1,353
$2,260
$3,613
$379
Dec-06198040
Office Palm Beach Gardens, FL (1)  0  3,578  15,685  19,263  4,279 May-98 1996 11 - 40 Pine Bluff, AR —
271
603
874
23
Sep-121964/1972/ 19883, 4 & 13
Office Herndon, VA  17,553  5,127  22,610  27,737  5,212 Dec-99 1987 9, 31, 36 & 40 Glendale, AZ —
9,418
7,810
17,228
213
Sep-121986/1997/ 20007 & 24
Office Hampton, VA  6,779  2,333  10,311  12,644  1,914 Mar-00 1999 2.5 & 40 Tempe, AZ 12,211
—
12,074
12,074
141
Sep-12199810, 11 & 36
Office Phoenix, AZ  18,068  4,666  19,966  24,632  5,094 May-00 1997 6 & 40 Tucson, AZ —
681
4,037
4,718
58
Sep-1219887, 10 & 30
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 Brea, CA 73,445
37,269
45,695
82,964
12,754
Jun-07198340
Office Florence, SC (1)  0  3,235  12,941  16,176  2,568 May-04 1998 40 Lake Forest, CA —
3,442
13,769
17,211
3,715
Mar-02200140
Office Clive, IA  5,611  2,761  7,453  10,214  2,493 Jun-04 2003 12, 13 & 40 Centenial, CO —
4,851
15,187
20,038
4,094
May-07200110 & 40
Office Carrollton, TX  13,451  1,789  18,157  19,946  3,944 Jun-04 2003 19 & 40 Colorado Springs, CO 10,252
2,748
12,554
15,302
3,096
Jun-07198040
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 Lakewood, CO —
1,569
8,857
10,426
4,252
Apr-0520022, 3, 12 & 40
Industrial San Antonio, TX  27,631  2,482  38,535  41,017  10,127 Jul-04 2001 17 & 40 
OfficeLouisville, CO —
3,657
9,605
13,262
1,753
Sep-0819878, 9 & 40
OfficeWallingford, CT —
1,049
4,773
5,822
1,112
Dec-031978/19858 & 40
OfficeBoca Raton, FL 20,317
4,290
17,160
21,450
4,236
Feb-031983/200240
OfficeFort Myers, FL 8,595
795
2,478
3,273
66
Apr-0519975 & 32
OfficeLake Mary, FL —
4,535
14,830
19,365
3,796
Jun-0719974, 7 & 40
OfficeLake Mary, FL —
4,438
15,103
19,541
3,762
Jun-0719994, 7 & 40
OfficeOrlando, FL —
586
35,012
35,598
5,450
Dec-06198240
OfficeOrlando, FL 9,865
3,538
9,019
12,557
3,464
Jan-07200312 & 40
OfficePalm Beach Gardens, FL —
787
2,895
3,682
1,050
May-9819968 - 40
OfficeTampa, FL —
2,018
7,950
9,968
132
Sep-1219868 & 27
OfficeAtlanta, GA 40,639
4,600
55,333
59,933
24,809
Apr-05200313 & 40
OfficeAtlanta, GA —
1,014
269
1,283
202
Dec-06197240
OfficeAtlanta, GA —
870
187
1,057
163
Dec-06197540
OfficeChamblee, GA —
770
186
956
167
Dec-06197240
OfficeCumming, GA —
1,558
1,368
2,926
447
Dec-06196840
OfficeForest Park, GA —
668
1,242
1,910
304
Dec-06196940
OfficeJonesboro, GA —
778
146
924
144
Dec-06197140
OfficeMcDonough, GA 11,887
1,443
11,234
12,677
149
Sep-1219993, 11 & 38
OfficeMcDonough, GA —
693
6,405
7,098
86
Sep-1220076, 11 & 40
OfficeStone Mountain, GA —
672
276
948
149
Dec-06197340
OfficeClive, IA —
1,158
—
1,158
—
Jun-042003—
OfficeMeridian, ID 10,553
2,255
7,797
10,052
134
Sep-1220047 & 37
OfficeChicago, IL 29,583
5,155
46,180
51,335
11,751
Jun-07198615 & 40
OfficeLisle, IL 9,910
3,236
13,692
16,928
2,715
Dec-061985 3 & 40
OfficeColumbus, IN(2)26,417
235
45,729
45,964
7,140
Dec-06198340
OfficeFishers, IN 10,870
2,808
19,272
22,080
4,323
Jun-0719993 - 40
OfficeIndianapolis, IN 11,817
1,700
17,291
18,991
9,948
Apr-0519993, 9, 10, & 40
OfficeIndianapolis, IN 8,686
1,360
13,228
14,588
6,163
Apr-0520027, 12 & 40
OfficeLenexa, KS 10,594
2,828
6,075
8,903
96
Sep-1220047, 12 & 37
OfficeOverland Park, KS 35,829
4,769
41,956
46,725
8,792
Jun-07198012 & 40
OfficeBaton Rouge, LA —
1,252
10,244
11,496
2,454
May-0719976 & 40
OfficeBoston, MA 12,975
3,814
16,040
19,854
2,164
Mar-07191010 & 40
OfficeFoxboro, MA 5,719
2,231
25,653
27,884
10,452
Dec-04198216 & 40
OfficeFoxboro, MA 2,578
3,791
5,405
9,196
224
Sep-121965/1967/ 19712, 6 & 20
OfficeOakland, ME 9,446
551
8,774
9,325
120
Sep-1220058, 12 & 40
OfficeSouthfield, MI —
—
12,124
12,124
6,166
Jul-041963/19657, 16 & 40
OfficeBridgeton, MO —
1,853
4,469
6,322
754
Dec-06198040
OfficeKansas City, MO 17,087
2,433
20,154
22,587
4,208
Jun-07198012 & 40
OfficePascagoula, MS —
618
3,677
4,295
81
Sep-1219951, 9 & 31
OfficeCary, NC —
5,342
15,116
20,458
4,438
Jun-0719992 & 40
OfficeBridgewater, NJ 14,476
4,738
27,908
32,646
4,366
Dec-06198615 & 40
OfficeRockaway, NJ 14,900
4,646
20,428
25,074
3,888
Dec-06200240
OfficeWall, NJ 23,706
8,985
26,961
35,946
9,416
Jan-04198322 & 40
OfficeWhippany, NJ 14,977
4,063
19,711
23,774
4,966
Nov-06200620 & 40

93
92

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 EncumbrancesLand and Land EstatesBuildings and ImprovementsTotalAccumulated Depreciation and AmortizationDate AcquiredDate ConstructedUseful 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 
Office Foxboro, MA  13,750  2,231  25,653  27,884  6,552 Dec-04 1982 16 & 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 
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 Fort Meyers, FL  8,912  1,820  10,198  12,018  2,857 Apr-05 1997 13 & 40 Rochester, NY(5)17,813
645
25,992
26,637
4,219
Dec-061988 8, 10, 15 & 40
Office Harrisburg, PA  8,687  900  10,556  11,456  4,185 Apr-05 1998 9 & 40 Milford, OH —
3,124
16,140
19,264
4,320
Jun-0719915, 6, 7, 15, 20 & 40
Office Indianapolis, IN  12,482  1,700  16,601  18,301  5,956 Apr-05 1999 5, 10 & 40 Westerville, OH —
2,085
9,265
11,350
1,866
May-07200040
Office Tulsa, OK  7,282  2,126  8,493  10,619  3,000 Apr-05 2000 11 & 40 Redmond, OR 8,743
2,064
8,316
10,380
120
Sep-1220046, 13 & 40
Office Houston, TX  16,753  3,750  21,149  24,899  5,925 Apr-05 2000 13 & 40 Canonsburg, PA 9,087
1,055
10,910
11,965
2,952
May-0719978 & 40
Office Houston, TX  16,075  800  24,696  25,496  7,246 Apr-05 2000 11, 12 & 40 Harrisburg, PA 8,221
900
10,676
11,576
6,879
Apr-0519982, 9, 15 & 40
Office San Antonio, TX  12,400  2,800  14,587  17,387  4,797 Apr-05 2000 11 & 40 Philadelphia, PA 44,885
13,209
54,909
68,118
22,930
Jun-0519574, 5, 9,10 ,15 & 40
Office Richmond, VA  10,073  1,100  11,919  13,019  2,997 Apr-05 2000 15 & 40 Charleston, SC 7,350
1,189
8,724
9,913
2,327
Nov-06200640
Office Suwannee, GA  11,325  3,200  10,903  14,103  3,275 Apr-05 2001 12 & 40 Florence, SC —
3,235
12,941
16,176
3,540
May-04199840
Office Indianapolis, IN  9,127  1,360  13,150  14,510  3,758 Apr-05 2002 12 & 40 Fort Mill, SC —
3,601
14,494
18,095
3,670
Dec-0220025, 20 & 40
Office Lakewood, CO  8,238  1,400  8,653  10,053  2,571 Apr-05 2002 12 & 40 Fort Mill, SC 18,745
1,798
25,192
26,990
11,152
Nov-04200415 & 40
Office Atlanta, GA  42,883  4,600  55,333  59,933  15,157 Apr-05 2003 13 & 40 Rock Hill, SC —
551
4,313
4,864
180
May-11200640
Office Houston, TX  12,557  1,500  14,581  16,081  3,732 Apr-05 2003 14 & 40 Kingsport, TN —
513
403
916
15
Sep-1219815, 6 & 14
Office Philadelphia, PA  47,309  13,209  51,104  64,313  13,146 Jun-05 1957  5 - 40 Knoxville, TN 7,013
1,079
10,762
11,841
4,455
Mar-05200114 & 40
Industrial Dry Ridge, KY  6,463  560  12,553  13,113  1,963 Jun-05 1988 25 & 40 
Industrial Elizabethtown, KY  2,846  352  4,862  5,214  760 Jun-05 2001 25 & 40 
Industrial Elizabethtown, KY  15,084  890  26,868  27,758  4,202 Jun-05 1995/2001 25 & 40 
Industrial Owensboro, KY  5,743  393  11,956  12,349  2,004 Jun-05 1998/2000 25 & 40 
Industrial Hopkinsville, KY  8,842  631  16,154  16,785  2,575 Jun-05 Various 25 & 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 
Industrial Crossville, TN (1)  0  545  6,999  7,544  1,395 Jan-06 1989/2006 17 & 40 
Office Renswoude, Netherlands  36,354  2,835  25,698  28,533  4,698 Jan-06 1994/2003 17 & 40 Knoxville, TN 4,560
486
5,815
6,301
124
Sep-1220021, 5 & 40
Office Memphis, TN  3,903  464  4,467  4,931  576 Nov-06 1888 20 & 40 Memphis, TN 3,742
464
4,467
4,931
1,129
Nov-06188820 & 40
Office Charleston, SC  7,350  1,189  8,724  9,913  1,187 Nov-06 2006 40 Memphis, TN(2)47,302
5,291
97,032
102,323
15,162
Dec-06198540
Office Hanover, NJ  16,030  4,063  19,711  23,774  2,534 Nov-06 2006 20 & 40 Arlington, TX 19,808
1,863
20,199
22,062
380
Sep-1220031, 12 & 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 Carrollton, TX 12,642
1,789
18,157
19,946
6,294
Jun-04200319 & 40
Office Westlake, TX  18,495  2,361  22,396  24,757  3,527 May-07 2007 5 & 40 Carrollton, TX 19,393
3,427
22,050
25,477
5,363
Jun-0720038 & 40
Industrial Antioch, TN  13,418  5,568  16,871  22,439  2,141 May-07 1983 5 - 40 
Office Canonsburg, PA  9,076  1,055  10,910  11,965  1,634 May-07 1997 8 & 40 Farmers Branch, TX 18,459
3,984
27,308
31,292
6,742
Jun-07200240
Retail Galesburg, IL  651  560  2,366  2,926  271 May-07 1992 12 & 40 
Retail Lewisburg, WV  766  501  1,985  2,486  163 May-07 1993 12 & 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 
OfficeGarland, TX —
2,218
8,473
10,691
209
Sep-1219804, 5 & 18
OfficeHouston, TX 15,849
3,750
21,164
24,914
9,697
Apr-0520005, 13 & 40
OfficeHouston, TX 11,893
1,500
14,683
16,183
6,113
Apr-05200314, 15 & 40
OfficeHouston, TX 15,218
800
26,924
27,724
12,844
Apr-05200010, 11, 12 & 40
OfficeHouston, TX 4,076
490
2,813
3,303
94
Sep-121982/19993, 9 & 25
OfficeMission, TX 5,702
2,556
2,911
5,467
67
Sep-1220033, 8 & 35
OfficeSan Antonio, TX 11,740
2,800
15,585
18,385
8,037
Apr-0520006, 11 & 40
OfficeTemple, TX 8,628
227
8,132
8,359
145
Sep-1220013, 12 & 40
OfficeWestlake, TX —
2,361
22,742
25,103
6,337
May-0720074, 5 & 40
OfficeGlen Allen, VA 12,382
1,543
19,340
20,883
6,124
Jun-0720005 - 40
OfficeHampton, VA —
2,333
10,683
13,016
3,249
Mar-0019992.5, 5, 10 & 40
OfficeHampton, VA —
1,353
6,006
7,359
1,896
Nov-01200010 & 40
OfficeHerndon, VA —
5,127
24,640
29,767
7,120
Dec-9919879 - 40
OfficeHerndon, VA 10,928
9,409
12,853
22,262
3,540
Jun-07198740
OfficeMidlothian, VA 9,538
1,100
11,925
13,025
4,904
Apr-0520007, 15 & 40
OfficeBremerton, WA 6,489
1,655
5,445
7,100
92
Sep-1220024, 13 & 40
OfficeIssaquah, WA(6)31,028
5,126
13,778
18,904
3,797
Jun-0719873, 6, 8 & 40
OfficeIssaquah, WA(6)—
6,268
16,058
22,326
4,315
Jun-0719878 & 40
Long Term Lease - OfficePhoenix, AZ 16,811
4,666
19,966
24,632
7,183
May-0019976 & 40
Long Term Lease - OfficePhoenix, AZ —
5,585
36,099
41,684
—
Dec-121986/200710, 17, & 40
Long Term Lease - OfficeTempe, AZ 7,662
—
9,442
9,442
2,022
Dec-05199830 & 40
Long Term Lease - OfficePalo Alto, CA 59,409
12,398
16,977
29,375
13,917
Dec-06197440
Long Term Lease - OfficeOrlando, FL —
11,498
64,156
75,654
33,993
Dec-061984/2012 3, 5, 10,13 & 25
Long Term Lease - OfficeLenexa, KS —
6,909
41,073
47,982
6,504
July-0820071, 5, 15 & 40
Long Term Lease - OfficeFarmington Hills, MI 17,639
2,765
9,265
12,030
785
Jun-0719991, 13 & 40
Long Term Lease - OfficeLivonia, MI —
935
12,091
13,026
246
Sep-121987/1988/ 19902, 3, 7, 28 & 34
Long Term Lease - OfficeSt Joseph, MO —
607
14,004
14,611
147
Sep-12201215 & 40
Long Term Lease - OfficeOmaha, NE 8,113
2,566
8,324
10,890
1,804
Nov-05199530 & 40
Long Term Lease - OfficeLas Vegas, NV(2)32,141
12,099
53,164
65,263
8,153
Dec-06198240
Long Term Lease - OfficeColumbus, OH —
1,594
10,481
12,075
524
Dec-10200540
Long Term Lease - OfficeColumbus, OH —
432
2,773
3,205
104
Jul-111999/200640
Long Term Lease - OfficeEugene, OR —
1,541
13,098
14,639
—
Dec-122011/2012 07,12,15,25 & 40

94
93

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 EncumbrancesLand and Land EstatesBuildings and ImprovementsTotalAccumulated Depreciation and AmortizationDate AcquiredDate ConstructedUseful life computing depreciation in latest income statement (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 
Long Term Lease - OfficeJessup, PA —
2,520
17,656
20,176
291
Aug-122012 13,15,30 & 40
Long Term Lease - OfficeFlorence, SC —
774
3,629
4,403
96
Feb-122012 12 & 40
Long Term Lease - OfficeAllen, TX —
5,591
21,606
27,197
2,242
May-111981/19837 & 25
Long Term Lease - OfficeHouston, TX 35,811
16,613
58,226
74,839
11,524
Mar-041976/198410 & 40
Long Term Lease - OfficeIrving, TX 36,691
7,476
42,807
50,283
11,843
May-0719996, 10 & 40
Long Term Lease - OfficeIrving, TX —
4,889
29,701
34,590
7,434
June-071999 12 & 40
Long Term Lease - OfficeHuntington, WV 6,500
1,368
9,527
10,895
297
Jan-122011 14 & 40
Long Term Lease - IndustrialDry Ridge, KY(3)4,335
560
12,553
13,113
3,272
Jun-05198825 & 40
Long Term Lease - IndustrialElizabethtown, KY(4)14,152
890
26,868
27,758
7,003
Jun-051995/200125 & 40
Long Term Lease - IndustrialElizabethtown, KY(4)2,675
352
4,862
5,214
1,267
Jun-05200125 & 40
Long Term Lease - IndustrialHopkinsville, KY 8,301
631
16,154
16,785
4,404
Jun-05Various25 & 40
Long Term Lease - IndustrialOwensboro, KY(3)3,787
393
11,956
12,349
3,494
Jun-051998/200025 & 40
Long Term Lease - IndustrialShreveport, LA 19,000
860
21,840
22,700
3,162
Mar-07200640
Long Term Lease - IndustrialByhalia, MS 15,000
1,006
21,483
22,489
895
May-11201140
Long Term Lease - IndustrialShelby, NC —
1,421
18,862
20,283
1,060
Jun-11201111, 20 & 40
Long Term Lease - IndustrialDurham, NH —
3,464
18,094
21,558
3,637
Jun-07198640
Long Term Lease - IndustrialChillicothe, OH —
735
9,021
9,756
555
Oct-111995 6, 15 & 26
Long Term Lease - IndustrialCincinnati, OH —
1,009
7,007
8,016
1,274
Dec-06199140
Long Term Lease - IndustrialGlenwillow, OH 16,093
2,228
24,530
26,758
4,005
Dec-06199640
Long Term Lease - IndustrialBristol, PA —
2,508
15,815
18,323
4,346
Mar-98198210, 16, 30 & 40
Long Term Lease - IndustrialChester, SC 10,582
1,629
8,470
10,099
103
Sep-122001/20059, 13 & 34
Long Term Lease - IndustrialMissouri City, TX —
14,555
5,895
20,450
561
Apr-1220057
Long Term Lease - IndustrialEau Claire, WI —
421
5,590
6,011
79
Sep-121993/200410, 15 & 28
Long Term Lease - RetailOpelika, AL —
1,446
6,532
7,978
34
Nov-12201215 & 40
Long Term Lease - RetailValdosta, GA —
2,128
5,663
7,791
73
Aug-12201215 & 40
Long Term Lease - RetailJefferson, NC —
71
884
955
154
Dec-06197940
Long Term Lease - RetailEdmonds, WA —
—
3,947
3,947
682
Dec-06198140
Long Term Lease - SpecialtyTomball, TX 9,464
3,174
7,405
10,579
94
Sep-12200513, 14 & 40
Industrial Rockford, IL  0  371  2,573  2,944  227 Dec-06 1998 40 Moody, AL 6,518
654
9,943
10,597
4,637
Feb-04200415 & 40
Industrial Rockford, IL  6,799  509  5,289  5,798  435 Dec-06 1992 40 Jacksonville, FL —
573
1,247
1,820
76
Sep-121959/19671, 3 & 10
Industrial North Berwick, ME (1)  0  1,383  32,397  33,780  2,489 Dec-06 1965 10 & 40 Orlando, FL —
1,030
10,869
11,899
1,839
Dec-06198140
Industrial Statesville, NC  13,893  891  16,494  17,385  1,913 Dec-06 1999 40 Tampa, FL —
2,160
7,328
9,488
5,247
Jul-8819869 - 40
Industrial Orlando, FL (1)  0  1,030  10,869  11,899  919 Dec-06 1981 40 Lavonia, GA 8,549
171
7,657
7,828
72
Sep-122005  8, 12 & 40
Industrial Cincinnati, OH (1)  0  1,009  7,007  8,016  637 Dec-06 1991 40 McDonough, GA 23,000
2,463
24,291
26,754
3,863
Dec-06200040
Industrial Shreveport, LA  19,000  860  21,840  22,700  1,524 Mar-07 2006 40 Des Moines, IA —
1,528
14,247
15,775
195
Sep-1220005, 11 & 34
Industrial Duncan, SC (1)  0  884  8,626  9,510  569 Jun-07 2005 40 Dubuque, IA 9,725
2,052
8,443
10,495
2,080
Jul-03200211, 12 & 40
Industrial Laurens, SC  15,386  5,552  20,886  26,438  2,397 Jun-07 1991 40 Rockford, IL(5)—
371
2,573
2,944
453
Dec-06199840
Industrial Winchester, VA  10,126  3,823  12,226  16,049  1,500 Jun-07 2001 40 Rockford, IL(5)6,538
509
5,289
5,798
870
Dec-06199240
Industrial Temperance, MI  10,314  3,040  14,738  17,778  1,650 Jun-07 1980 40 Plymouth, IN 6,147
254
7,969
8,223
98
Sep-122000/20033, 6 & 34
Industrial Logan, NJ  7,168  1,825  10,776  12,601  973 Jun-07 1998 40 Owensboro, KY —
819
2,439
3,258
628
Dec-06197540
Industrial Plymouth, MI  11,170  2,296  13,398  15,694  2,200 Jun-07 1996 40 Shreveport, LA —
1,078
10,134
11,212
186
Jun-1220128,10 & 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 
IndustrialNorth Berwick, ME 8,677
1,383
32,397
33,780
5,071
Dec-06196510 & 40
IndustrialKalamazoo, MI 16,485
1,942
14,169
16,111
190
Sep-121999/20048, 9 & 40
IndustrialMarshall, MI —
40
900
940
628
Aug-87197912, 20 & 40
IndustrialMarshall, MI —
143
4,302
4,445
158
Sep-121968/1972/ 20084, 6 & 10
IndustrialPlymouth, MI —
2,296
13,398
15,694
3,684
Jun-07199640
IndustrialTemperance, MI —
3,040
14,738
17,778
2,866
Jun-07198040
IndustrialMinneapolis, MN —
1,886
1,922
3,808
21
Sep-1220033, 29 & 40
IndustrialOlive Branch, MS —
198
10,276
10,474
6,004
Dec-0419898, 15 & 40
IndustrialFranklin, NC 552
296
1,320
1,616
22
Sep-1219962, 8 & 29
IndustrialHenderson, NC —
1,488
5,953
7,441
1,656
Nov-01199840
IndustrialHigh Point, NC —
1,330
11,183
12,513
4,200
Jul-04200218 & 40
IndustrialLumberton, NC —
405
12,049
12,454
2,325
Dec-06199840
IndustrialStatesville, NC(5)13,360
891
16,696
17,587
3,346
Dec-0619993 & 40
IndustrialErwin, NY 9,082
1,648
10,810
12,458
136
Sep-1220064, 8 & 34

95
94

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 
DescriptionLocation EncumbrancesLand and Land EstatesBuildings and ImprovementsTotalAccumulated Depreciation and AmortizationDate AcquiredDate ConstructedUseful life computing depreciation in latest income statement (years)
IndustrialColumbus, OH —
1,990
10,580
12,570
2,087
Dec-06197340
IndustrialHebron, OH —
1,063
4,271
5,334
1,179
Dec-97200040
IndustrialHebron, OH —
1,681
7,033
8,714
2,069
Dec-0119992, 5 & 40
IndustrialStreetsboro, OH 18,497
2,441
25,092
27,533
4,880
Jun-07200412, 20, 25 & 40
IndustrialDuncan, SC —
884
8,626
9,510
1,257
Jun-07200540
IndustrialLaurens, SC —
5,552
20,886
26,438
4,136
Jun-07199140
IndustrialCollierville, TN —
714
4,816
5,530
862
Dec-052005/201220 & 40
IndustrialCrossville, TN —
545
6,999
7,544
2,453
Jan-061989/200617 & 40
IndustrialFranklin, TN —
—
5,673
5,673
172
Sep-121970/19831, 4 & 12
IndustrialMemphis, TN —
1,054
11,538
12,592
11,341
Feb-8819878 &15
IndustrialMemphis, TN —
1,553
12,326
13,879
2,275
Dec-06197340
IndustrialMillington, TN —
723
19,195
19,918
7,375
Apr-05199710, 16 & 40
IndustrialSan Antonio, TX —
2,482
38,535
41,017
15,696
Jul-04200117 & 40
IndustrialWaxahachie, TX —
652
13,045
13,697
8,295
Dec-031996/199710, 16 & 40
IndustrialWinchester, VA —
3,823
12,276
16,099
2,450
Jun-0720014 & 40
Multi-tenantedPhoenix, AZ —
1,831
14,892
16,723
1,163
Nov-011995/19945 - 40
Multi-tenantedLos Angeles, CA 10,298
5,110
10,911
16,021
5,197
Dec-04200013 & 40
Multi-tenantedClinton, CT —
—
—
—
—
Dec-06197140
Multi-tenantedSouthington, CT 12,317
3,240
25,339
28,579
15,295
Nov-05198310, 12, 28 & 40
Multi-tenantedPalm Beach Gardens, FL —
4,066
16,566
20,632
4,769
May-9819968 - 40
Multi-tenantedSuwannee, GA 10,964
1,371
2,776
4,147
375
Apr-05200112 & 40
Multi-tenantedHonolulu, HI —
21,094
24,495
45,589
13,134
Dec-061917/1955/ 1960/1980 5 & 40
Multi-tenantedHebron, KY —
1,615
8,173
9,788
3,543
Mar-9819876, 12 & 40
Multi-tenantedBaltimore, MD 55,000
37,564
148,359
185,923
35,332
Dec-0619735 - 40
Multi-tenantedAllentown, PA —
1,052
1,503
2,555
44
Sep-121980 5, 9 & 18
Multi-tenantedAntioch, TN —
3,847
10,025
13,872
580
May-071983 5 - 39
Multi-tenantedJohnson City, TN —
1,214
9,385
10,599
1,364
Dec-061983 9, 10 & 40
Multi-tenantedThe Woodlands, TX 7,445
1,827
5,405
7,232
72
Sep-1220045, 12 & 35
Multi-tenantedGlen Allen, VA 6,558
818
10,243
11,061
3,244
Jun-0720005 - 40
RetailManteca, CA 866
2,082
6,464
8,546
1,137
May-07199323 & 40
RetailSan Diego, CA 552
—
13,310
13,310
1,947
May-07199323 & 40
RetailPort Richey, FL —
1,376
1,664
3,040
456
Dec-06198040
RetailGalesburg, IL 486
560
2,366
2,926
492
May-07199212 & 40
RetailLawrence, IN —
404
1,737
2,141
270
Dec-06198340
RetailBillings, MT —
273
1,775
2,048
111
Dec-0619814, 19, & 36
RetailLexington, NC —
832
1,429
2,261
215
Dec-06198340
RetailThomasville, NC —
208
561
769
24
Dec-06199840
RetailPortchester, NY —
7,086
9,313
16,399
2,809
Dec-06198240
RetailWatertown, NY 814
386
5,162
5,548
965
May-07199323 & 40
RetailCanton, OH —
884
3,534
4,418
983
Nov-01199540
RetailFranklin, OH —
722
999
1,721
43
Dec-06196140
RetailLorain, OH 1,225
1,893
7,024
8,917
1,237
May-07199323 & 40
RetailLawton, OK —
663
1,288
1,951
294
Dec-06198440
RetailOklahoma City, OK —
1,782
912
2,694
45
Sep-121991/19965 & 13
RetailTulsa, OK —
447
2,432
2,879
2,095
Dec-96198114 & 24
RetailClackamas, OR —
523
2,848
3,371
2,452
Dec-96198114 & 24
RetailMoncks Corner, SC —
13
1,510
1,523
244
Dec-06198240
RetailSpartanburg, SC —
833
3,334
4,167
927
Nov-01199640
RetailChattanooga, TN —
487
956
1,443
40
Dec-06198240
RetailParis, TN —
247
547
794
121
Dec-06198240
RetailDallas, TX —
861
2,362
3,223
169
Dec-06196040
RetailGreenville, TX —
562
2,743
3,305
503
Dec-06198540
RetailStaunton, VA —
1,028
326
1,354
75
Dec-06197140
RetailLynnwood, WA —
488
2,658
3,146
2,289
Dec-96198114 & 24
RetailPort Orchard, WA —
147
94
241
21
Dec-06198340

96
95
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)
 
Office
 Atlanta, GA (1)  0  870  187  1,057  85 Dec-06 1975 40 
Office
 Chamblee, GA (1)  0  770  186  956  97 Dec-06 1972 40 
Office
 Cumming, GA (1)  0  1,558  1,368  2,926  229 Dec-06 1968 40 
Office
 Duluth, GA (1)  0  660  1,014  1,674  135 Dec-06 1971 40 
Office
 Forest Park, GA (1)  0  668  1,242  1,910  163 Dec-06 1969 40 
Office
 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       

(1) – Properties are collateral for a $164,348 secured term loan and a $7,000 secured revolving loan.
(2) – Properties are collateral for a $25,000 secured term loan.
(3) – Properties are encumbered by a $15,252 contract right payable.
(4) – Certain equity interests are pledged as collateral for a term loan.

96

LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
Real Estate and Accumulated Depreciation and Amortization
Schedule III ($000) – (continued)- continued

DescriptionLocation EncumbrancesLand and Land EstatesBuildings and ImprovementsTotalAccumulated Depreciation and AmortizationDate AcquiredDate ConstructedUseful life computing depreciation in latest income statement (years)
RetailFairlea, WV 572
501
1,985
2,486
327
May-07199312 & 40
Construction in progress  —
—
—
6,512
—
—


           
 Subtotal 1,406,961
581,199
2,976,755
3,564,466
738,068
   
 (1) 9,000
       
   $1,415,961
$581,199
$2,976,755
$3,564,466
$738,068
   

(1) - Property is classified as a capital lease.
(2) - Properties are cross-collaterized.
(3) - Properties are cross-collaterized.
(4) - Properties are cross-collaterized.
(5) - Properties are cross-collaterized.
(6) - Properties are cross-collaterized.



97

LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
Real Estate and Accumulated Depreciation and Amortization
Schedule III ($000) - continued

(A) The initial cost includes the purchase price paid directly or indirectly by the Company and acquisition fees and expenses.Company. The total cost basis of the Company’sCompany's properties at December 31, 20092012 for Federalfederal income tax purposes was approximately $3.9 billion.$4.2 billion.
 2012 2011 2010
Reconciliation of real estate, at cost(1):
     
Balance at the beginning of year$3,172,246
 $3,363,586
 $3,552,806
Additions during year540,847
 143,382
 46,994
Properties sold during year(138,041) (230,397) (221,875)
Reclassified held for sale properties—
 —
 (9,381)
Properties impaired during the year(10,553) (103,727) (3,327)
Translation adjustment on foreign currency—
 —
 (1,432)
Other reclassifications(33) (598) (199)
Balance at end of year$3,564,466
 $3,172,246
 $3,363,586
      
Reconciliation of accumulated depreciation and amortization:     
Balance at the beginning of year$638,368
 $601,239
 $537,406
Depreciation and amortization expense119,067
 114,247
 115,553
Accumulated depreciation and amortization of properties sold, impaired and held for sale during year(19,367) (76,939) (51,478)
Translation adjustment on foreign currency—
 —
 (242)
Other reclassifications—
 (179) —
Balance at end of year$738,068
 $638,368
 $601,239

(1) Certain amounts in 2011 and 2010 have been reclassified to conform with the 2012 presentation.
  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 



98


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, 20092012 that have materially affected, or are reasonably likely to materially affect, our internal controlscontrol over financial reporting.

Item 9B. Other Information

Not applicable.

99

PART III.

Item 10. TrusteesDirectors, Executive Officers and Corporate Governance

Executive Officers of the Registrant

The following sets forth certain information regardingrelating to our executive officers required to be furnished pursuant to this item is set forth in Part I following Item 4 of this Annual Report. Informationofficers:
NameBusiness Experience
E. Robert Roskind
 Age 67
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 REIT listed on the Tokyo Stock Exchange.
Richard J. Rouse
 Age 67
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 48
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 49
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 52
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 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 20102013 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.

98

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 88 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.


100


Item 15. Exhibits, Financial Statement Schedules

 Page
(a)(1) Financial Statements52
54
(2) Financial Statement Schedule92
93
(3) Exhibits99
101

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–lawsBy-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 9/09/10/99 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)
99

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)

101

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 Current Report on Form 8-K filed on January 2, 2009 (the “01/02/09 8-K”))2009)(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)
100

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)
4.11—Seventh Supplemental Indenture, dated as of September 28, 2012, among the Company, certain subsidiaries of the Company signatories thereto, 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 October 3, 2012)(1)
4.12—Eight Supplemental Indenture, dated as of February 13, 2013, among the Company, certain subsidiaries of the Company signatories thereto, 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 February 13, 2013 (“02/13/13 8-K”))(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)(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)

102

10.10—Form of Nonvested Share Agreement (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on December 26, 2012)(1, 4)
10.11—Employment Agreement, dated as of January 15, 2012, between the Company and E. Robert Roskind (filed as Exhibit 10.10 to the Company's Annual Report on Form 10-K for the year ended December 31, 2011 (the "2011 10-K"))(1, 4)
10.12—Employment Agreement, dated as of January 15, 2012, between the Company and T. Wilson Eglin (filed as Exhibit 10.11 to the 2011 10-K)(1, 4)
10.13 — FormEmployment Agreement, dated as of Employment AgreementJanuary 15, 2012, between the Company and eachRichard J. Rouse (filed as Exhibit 10.12 to the 2011 10-K)(1, 4)
10.14—Employment Agreement, dated as of E. Robert Roskind,January 15, 2012, between the Company and Patrick Carroll (filed as Exhibit 10.13 to the 2011 10-K)(1, 4)
10.15—Long-Term Nonvested Share Agreement dated as of January 12, 2012, between the Company and T. Wilson Eglin Richard J. Rouse and Patrick Carroll, dated January 15, 2010(filed as Exhibit 10.14 to the 2011 10-K)(4)
10.16—Form of Long-Term Retention Nonvested Share Agreement (filed as Exhibit 10.1 to the Company’sCompany's Current Report on Form 8-K filed on January 20, 2010)11, 2013)(1, 4))
10.1410.17 — 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)
10.1510.18 — Second Amended and Restated Credit Agreement, dated as of February 13, 200912, 2013 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 February 17, 2009)02/13/13 8-K)(1)
10.1610.19 — Master TermsAmended and Conditions for Issuer Forward Transactions betweenRestated Term Loan Agreement, dated as of January 13, 2012 among the Company, LCIF and Citigroup Financial Products Inc., effectiveLCIF II, as borrowers, Wells Fargo Bank, National Association, as agent, and each of October 28, 2008the 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”))02/13/13 8-K)(1)
10.1710.20 — 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)99.4 to the Company's Current Report on Form 8-K filed on July 24, 2006)(1)
10.1810.21 — 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)
10.1910.22 — 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’sNKT’s S-11)(1)
10.2010.23 — 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)
10.2110.24 — 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)
10.2210.25 — 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)
10.2310.26—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)
10.27 — 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)
10.2410.28 — Registration Rights Agreement Regarding Disposition of Property and Other Matters, dated as of January 29, 2007,April 27, 2012, 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)
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10.25—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)
10.26—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) Inland American (Net Lease) Sub, LLC and NLSAF (filed as Exhibit 10.1 to the Company’sCompany's Current Report on Form 8-K filed on February 21, 2008) (1)
10.27—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)
10.28—Sales Agreement with Cantor Fitzgerald & Co., dated as of December 12, 2008 (filed as Exhibit 1.1 to the Company’s Current Report on Form 8-K filed on December 12, 2008 (the “12/12/08 8-K”))April 30, 2012)(1)
10.29 — SalesInterest Purchase and Sale Agreement, with Merrill Lynch, Pierce, Fenner & Smith Incorporated, dated as of December 12, 2008August 31, 2012, among the Company, LCIF and Inland American (Net Lease) Sub, LLC, LMLP GP LLC and Net Lease Strategic Assets Fund L.P. (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on September 6, 2012)(1)
10.30—Equity Distribution Agreement, dated as of January 11, 2013, among the Company, LCIF and LCIF II, on the one hand, and Jefferies & Company, Inc., on the other hand (filed as Exhibit 1.1 to the 12/12/08Company's Current Report on Form 8-K filed on January 14, 2013 (the “01/14/13 8-K”))(1)
10.31—Equity Distribution Agreement, dated as of January 11, 2013, among the Company, LCIF and LCIF II, on the one hand, and KeyBanc Capital Markets Inc., on the other hand (filed as Exhibit 1.2 to the 01/14/13 8-K)(1)

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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)
23.123 — Consent of KPMG LLP (2)
23.224 — ConsentPower of PricewaterhouseCoopers LLP (2)
23.3—Consent of KPMG LLP (2)Attorney (included on signature page)
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. for the years ended December 31, 2011, 2010 and 2009 (2)
99.2 — Financial statements and related financial statement schedule of Net Lease Strategic Assets Fund L.P. for the six months ended June 30, 2012 and 2011 (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.This exhibit shall not be 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 shall not be part of any registration statement to which it may relate, and shall not be incorporated by 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 Contractcontract or compensatory plan or arrangement.
(5)Attached as Exhibit 101 to this Annual Report on Form 10-K are the following materials, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets at December 31, 2012 and 2011; (ii) the Consolidated Statements of Operations for the years ended December 31, 2012, 2011 and 2010; (iii) the Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2012, 2011 and 2010; (iv) the Consolidated Statements of Changes in Equity for the years ended December 31, 2012, 2011 and 2010; (v) the Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011 and 2010; and (vi) Notes to Consolidated Financial Statements tagged as blocks of text. The XBRL related information shall not be 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 shall not be part of any registration statement to which it may relate, and shall not be incorporated by 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.



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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.

 Lexington Realty Trust
   
 
Dated: February 25, 2013By:/s/ T. Wilson Eglin
  T. Wilson Eglin
  Chief Executive Officer
(principal 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
SignatureTitle
/s/ E. Robert RoskindChairman 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. Rouseand 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, Executive Vice President and Treasurer
 (principal financial officer and principal accounting officer)
/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 CarrollExecutive Vice PresidentTrustee
  
/s/ Paul R. WoodRichard S. Frary
Richard S. Frary
Vice President, Chief Accounting Officer
Paul R. Woodand SecretaryTrustee
  
/s/ Clifford Broser
James Grosfeld
James Grosfeld
Trustee
Clifford Broser  
/s/ Geoffrey DohrmannTrustee
Geoffrey Dohrmann
/s/ Carl D. GlickmanTrustee
Carl D. Glickman
/s/ James GrosfeldTrustee
James Grosfeld
/s/ Harold FirstTrustee
Harold First
/s/ Richard FraryTrustee
Richard Frary
/s/ Kevin W. Lynch
Kevin W. Lynch
Trustee
Kevin W. Lynch

DATE: March 1, 2010Each dated: February 25, 2013

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