UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~September~~June 30, ~~2022.~~2023.


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _________________ to ________________

Commission File Number 1-12386

LXP INDUSTRIAL TRUST

(Exact name of registrant as specified in its charter)


Maryland			13-3717318
(State or other jurisdiction of incorporation of organization)			(I.R.S. Employer Identification No.)

One Penn Plaza, Suite 4015, New York, NY 10119-4015

(Address of principal executive offices) (zip code)

(212) 692-7200

(Registrant's telephone number, including area code)

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


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

Indicate by check mark whether the registrant (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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate ~~Web site,~~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 ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth

company

☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: ~~275,723,255~~292,606,049 common shares of beneficial interest, par value $0.0001 per share, as of ~~November 2, 2022.~~August 1, 2023.

TABLE OF CONTENTS


PART I. — FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets						3
Condensed Consolidated Statements of Operations						4
Condensed Consolidated Statements of Comprehensive Income (Loss)						5
Condensed Consolidated Statements of Changes in Equity						6
Condensed Consolidated Statements of Cash Flows						7
Notes to Condensed Consolidated Financial Statements						8
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations						25
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk						3735
ITEM 4. Controls and Procedures						3735
PART II — OTHER INFORMATION
ITEM 1. Legal Proceedings						3836
ITEM 1A. Risk Factors						3836
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds						3936
ITEM 3. Defaults Upon Senior Securities						3936
ITEM 4. Mine Safety Disclosures						3936
ITEM 5. Other Information						3936
ITEM 6. Exhibits						4037
SIGNATURES						4339

WHERE YOU CAN FIND MORE INFORMATION:

We file and furnish annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission, which we refer to as the SEC. You may read and copy any materials that we file or furnish with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. We file and furnish information electronically with the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file or furnish electronically with the SEC. The address of the SEC's Internet site is http://www.sec.gov. We also maintain a web site at http://www.lxp.com through which you can obtain copies of documents that we file or furnish with the SEC. The contents of that web site are not incorporated by reference in or otherwise a part of this Quarterly Report on Form 10-Q or any other document that we file or furnish with the SEC.

Table of Contents

PART I. - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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


		September 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022

Assets:	Assets:					Assets:
Real estate, at cost	Real estate, at cost	$	3,642,114	$	3,583,978	Real estate, at cost	$	3,688,245	$	3,691,066
Real estate - intangible assets	Real estate - intangible assets	332,646		341,403		Real estate - intangible assets	326,422		328,607
Land held for development	Land held for development	108,379		104,160		Land held for development	84,591		84,412
Investments in real estate under construction	Investments in real estate under construction	368,483		161,165		Investments in real estate under construction	372,342		361,924
Real estate, gross	Real estate, gross	4,451,622		4,190,706		Real estate, gross	4,471,600		4,466,009
Less: accumulated depreciation and amortization	Less: accumulated depreciation and amortization	747,535		655,740		Less: accumulated depreciation and amortization	857,750		800,470
Real estate, net	Real estate, net	3,704,087		3,534,966		Real estate, net	3,613,850		3,665,539
Assets held for sale	Assets held for sale	73,761		82,586		Assets held for sale	49,644		66,434
Right-of-use assets, net	Right-of-use assets, net	24,994		27,966		Right-of-use assets, net	21,937		23,986
Cash and cash equivalents	Cash and cash equivalents	29,407		190,926		Cash and cash equivalents	23,161		54,390
Restricted cash	Restricted cash	113		101		Restricted cash	124		116
Investments in non-consolidated entities	Investments in non-consolidated entities	55,415		74,559		Investments in non-consolidated entities	50,683		58,206
Deferred expenses, net	Deferred expenses, net	25,564		18,861		Deferred expenses, net	31,565		25,207

Investment in a sales-type lease, net (allowance for credit loss $62 in 2023 and $93 in 2022)						Investment in a sales-type lease, net (allowance for credit loss $62 in 2023 and $93 in 2022)	62,331		61,233
Rent receivable – current	Rent receivable – current	2,426		3,526		Rent receivable – current	4,970		3,030
Rent receivable – deferred	Rent receivable – deferred	69,419		63,283		Rent receivable – deferred	76,620		71,392

Other assets	Other assets	26,062		8,784		Other assets	27,564		24,314
Total assets	Total assets	$	4,011,248	$	4,005,558	Total assets	$	3,962,449	$	4,053,847

Liabilities and Equity:	Liabilities and Equity:					Liabilities and Equity:
Liabilities:	Liabilities:					Liabilities:
Mortgages and notes payable, net	Mortgages and notes payable, net	$	74,891	$	83,092	Mortgages and notes payable, net	$	66,353	$	72,103
Revolving credit facility borrowings		130,000		—

Term loan payable, net	Term loan payable, net	298,834		298,446		Term loan payable, net	299,209		298,959
Senior notes payable, net	Senior notes payable, net	988,954		987,931		Senior notes payable, net	989,977		989,295
Trust preferred securities, net	Trust preferred securities, net	127,669		127,595		Trust preferred securities, net	127,744		127,694
Dividends payable	Dividends payable	34,778		37,425		Dividends payable	38,259		38,416
Liabilities held for sale	Liabilities held for sale	2,815		3,468		Liabilities held for sale	1,703		1,150
Operating lease liabilities	Operating lease liabilities	26,062		29,094		Operating lease liabilities	22,805		25,118
Accounts payable and other liabilities	Accounts payable and other liabilities	88,028		77,607		Accounts payable and other liabilities	64,399		74,261
Accrued interest payable	Accrued interest payable	10,278		8,481		Accrued interest payable	8,735		9,181
Deferred revenue - including below-market leases, net	Deferred revenue - including below-market leases, net	11,734		14,474		Deferred revenue - including below-market leases, net	10,350		11,452
Prepaid rent	Prepaid rent	14,693		14,717		Prepaid rent	14,192		15,215
Total liabilities	Total liabilities	1,808,736		1,682,330		Total liabilities	1,643,726		1,662,844

Commitments and contingencies	Commitments and contingencies					Commitments and contingencies
Equity:	Equity:					Equity:
Preferred shares, par value $0.0001 per share; authorized 100,000,000 shares:	Preferred shares, par value $0.0001 per share; authorized 100,000,000 shares:					Preferred shares, par value $0.0001 per share; authorized 100,000,000 shares:
Series C Cumulative Convertible Preferred, liquidation preference $96,770; 1,935,400 shares issued and outstanding	Series C Cumulative Convertible Preferred, liquidation preference $96,770; 1,935,400 shares issued and outstanding	94,016		94,016		Series C Cumulative Convertible Preferred, liquidation preference $96,770; 1,935,400 shares issued and outstanding	94,016		94,016
Common shares, par value $0.0001 per share; authorized 600,000,000 shares, 276,100,331 and 283,752,726 shares issued and outstanding in 2022 and 2021, respectively		28		28
Common shares, par value $0.0001 per share; authorized 600,000,000 shares, 292,581,929 and 291,719,310 shares issued and outstanding in 2023 and 2022, respectively						Common shares, par value $0.0001 per share; authorized 600,000,000 shares, 292,581,929 and 291,719,310 shares issued and outstanding in 2023 and 2022, respectively	29		29
Additional paid-in-capital	Additional paid-in-capital	3,134,739		3,252,506		Additional paid-in-capital	3,322,499		3,320,087
Accumulated distributions in excess of net income	Accumulated distributions in excess of net income	(1,079,407)		(1,049,434)		Accumulated distributions in excess of net income	(1,151,924)		(1,079,087)
Accumulated other comprehensive income (loss)		17,768		(6,258)
Accumulated other comprehensive income						Accumulated other comprehensive income	16,200		17,689
Total shareholders’ equity	Total shareholders’ equity	2,167,144		2,290,858		Total shareholders’ equity	2,280,820		2,352,734
Noncontrolling interests	Noncontrolling interests	35,368		32,370		Noncontrolling interests	37,903		38,269
Total equity	Total equity	2,202,512		2,323,228		Total equity	2,318,723		2,391,003
Total liabilities and equity	Total liabilities and equity	$	4,011,248	$	4,005,558	Total liabilities and equity	$	3,962,449	$	4,053,847

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

Table of Content

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Gross revenues:	Gross revenues:									Gross revenues:
Rental revenue	Rental revenue	$	78,274	$	82,353	$	234,749	$	254,570	Rental revenue	$	85,065	$	77,939	$	168,482	$	156,475
Other revenue	Other revenue	1,814		1,064		5,392		2,945		Other revenue	1,985		1,836		3,643		3,578
Total gross revenues	Total gross revenues	80,088		83,417		240,141		257,515		Total gross revenues	87,050		79,775		172,125		160,053
Expense applicable to revenues:	Expense applicable to revenues:									Expense applicable to revenues:
Depreciation and amortization	Depreciation and amortization	(44,946)		(45,359)		(134,645)		(130,579)		Depreciation and amortization	(45,993)		(45,193)		(91,734)		(89,699)
Property operating	Property operating	(13,961)		(11,406)		(42,279)		(33,966)		Property operating	(15,745)		(13,702)		(30,988)		(28,318)
General and administrative	General and administrative	(9,060)		(8,363)		(29,093)		(24,695)		General and administrative	(9,010)		(9,296)		(18,252)		(20,033)

Non-operating income	Non-operating income	242		472		353		953		Non-operating income	143		79		337		111
Interest and amortization expense	Interest and amortization expense	(11,255)		(12,210)		(32,758)		(35,170)		Interest and amortization expense	(10,144)		(10,821)		(21,537)		(21,503)
Debt satisfaction losses, net		(119)		(13,222)		(119)		(13,222)

Impairment charges	Impairment charges	(628)		(2,048)		(2,457)		(2,048)		Impairment charges	(12,967)		(1,829)		(16,490)		(1,829)
Change in allowance for credit loss										Change in allowance for credit loss	110		—		31		—
Gains on sales of properties	Gains on sales of properties	24,841		16,122		52,951		104,767		Gains on sales of properties	—		27,855		7,879		28,110
Selling profit from sales-type lease	Selling profit from sales-type lease	—		—		9,314		—		Selling profit from sales-type lease	—		9,314		—		9,314
Income before provision for income taxes and equity in earnings (losses) of non-consolidated entities		25,202		7,403		61,408		123,555
Income (loss) before provision for income taxes and equity in earnings (losses) of non-consolidated entities										Income (loss) before provision for income taxes and equity in earnings (losses) of non-consolidated entities	(6,556)		36,182		1,371		36,206
Provision for income taxes	Provision for income taxes	(271)		(270)		(951)		(986)		Provision for income taxes	(210)		(263)		(426)		(680)
Equity in earnings (losses) of non-consolidated entities	Equity in earnings (losses) of non-consolidated entities	(1,340)		(75)		15,580		(249)		Equity in earnings (losses) of non-consolidated entities	(1,014)		5,619		2,590		16,920

Net income		23,591		7,058		76,037		122,320
Net income (loss)										Net income (loss)	(7,780)		41,538		3,535		52,446
Less net income attributable to noncontrolling interests	Less net income attributable to noncontrolling interests	(201)		(420)		(727)		(1,962)		Less net income attributable to noncontrolling interests	(268)		(240)		(417)		(526)
Net income attributable to LXP Industrial Trust shareholders		23,390		6,638		75,310		120,358
Net income (loss) attributable to LXP Industrial Trust shareholders										Net income (loss) attributable to LXP Industrial Trust shareholders	(8,048)		41,298		3,118		51,920
Dividends attributable to preferred shares – Series C	Dividends attributable to preferred shares – Series C	(1,573)		(1,573)		(4,718)		(4,718)		Dividends attributable to preferred shares – Series C	(1,573)		(1,573)		(3,145)		(3,145)
Allocation to participating securities	Allocation to participating securities	(41)		(37)		(151)		(170)		Allocation to participating securities	(62)		(58)		(134)		(110)
Net income attributable to common shareholders		$	21,776	$	5,028	$	70,441	$	115,470
Net income (loss) attributable to common shareholders										Net income (loss) attributable to common shareholders	$	(9,683)	$	39,667	$	(161)	$	48,665

Net income attributable to common shareholders - per common share basic		$	0.08	$	0.02	$	0.25	$	0.42
Net income (loss) attributable to common shareholders - per common share basic										Net income (loss) attributable to common shareholders - per common share basic	$	(0.03)	$	0.14	$	—	$	0.17

Weighted-average common shares outstanding – basic	Weighted-average common shares outstanding – basic	277,535,717		278,124,204		281,559,058		276,379,718		Weighted-average common shares outstanding – basic	290,186,934		283,568,078		290,134,015		283,604,072

Net income attributable to common shareholders - per common share diluted		$	0.08	$	0.02	$	0.25	$	0.41
Net income (loss) attributable to common shareholders - per common share diluted										Net income (loss) attributable to common shareholders - per common share diluted	$	(0.03)	$	0.14	$	—	$	0.17

Weighted-average common shares outstanding – diluted	Weighted-average common shares outstanding – diluted	278,521,946		282,048,458		284,609,950		278,581,849		Weighted-average common shares outstanding – diluted	291,015,537		285,436,441		290,964,350		287,687,397

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

Table of Content

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited and in thousands)

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Net income $ 23,591 $ 7,058 $ 76,037 $ 122,320
Other comprehensive income:
Change in unrealized income on interest rate swaps, net 7,028 1,150 22,844 7,072
Company's share of other comprehensive income of non-consolidated entities 1,182 — 1,182 —
Other comprehensive income 8,210 1,150 24,026 7,072
Comprehensive income 31,801 8,208 100,063 129,392
Comprehensive income attributable to noncontrolling interests (201) (420) (727) (1,962)
Comprehensive income attributable to LXP Industrial Trust shareholders $ 31,600 $ 7,788 $ 99,336 $ 127,430


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net income (loss)	$	(7,780)	$	41,538	$	3,535	$	52,446
Other comprehensive income (loss):

Change in unrealized gain (loss) on interest rate swaps, net	2,139		3,550		(1,051)		15,816
Company's share of other comprehensive loss of non-consolidated entities	(108)		—		(438)		—
Other comprehensive income (loss)	2,031		3,550		(1,489)		15,816
Comprehensive income (loss)	(5,749)		45,088		2,046		68,262
Comprehensive income attributable to noncontrolling interests	(268)		(240)		(417)		(526)
Comprehensive income (loss) attributable to LXP Industrial Trust shareholders	$	(6,017)	$	44,848	$	1,629	$	67,736

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

Table of Content

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

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

Three Months Ended September 30, 2022 LXP Industrial 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 June 30, 2022 $ 2,259,650 1,935,400 $ 94,016 281,670,437 $ 28 $ 3,189,713 $ (1,068,408) $ 9,558 $ 34,743
Issuance of partnership interest in real estate 663 — — — — — — — 663
Redemption of noncontrolling OP units for common shares — — — 13,146 — 68 — — (68)
Issuance of common shares and deferred compensation amortization, net 1,916 — — 22,516 — 1,916 — — —
Repurchase of common shares (56,958) — — (5,604,048) — (56,958) — — —
Forfeiture of employee common shares 1 — — (1,720) — — 1 — —
Dividends/distributions ($0.12 per common share) (34,561) — — — — — (34,390) — (171)
Net income 23,591 — — — — — 23,390 — 201
Other comprehensive income 7,028 — — — — — — 7,028 —
Company's share of other comprehensive income of non-consolidated entities 1,182 — — — — — — 1,182 —
Balance September 30, 2022 $ 2,202,512 1,935,400 $ 94,016 276,100,331 $ 28 $ 3,134,739 $ (1,079,407) $ 17,768 $ 35,368


			LXP Industrial Trust Shareholders
Three months ended June 30, 2023	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 March 31, 2023	$	2,360,762	1,935,400	$	94,016	292,557,721	$	29	$	3,320,185	$	(1,105,875)	$	14,169	$	38,238
Issuance of partnership interest in real estate	190		—	—		—	—		—		—		—		190
Redemption of noncontrolling OP units for common shares	—		—	—		1,314	—		7		—		—		(7)
Issuance of common shares and deferred compensation amortization, net	2,307		—	—		22,894	—		2,307		—		—		—



Dividends/distributions ($0.125 per common share)	(38,787)		—	—		—	—		—		(38,001)		—		(786)
Net income (loss)	(7,780)		—	—		—	—		—		(8,048)		—		268
Other comprehensive income	2,139		—	—		—	—		—		—		2,139		—

Company's share of other comprehensive loss of non-consolidated entities	(108)		—	—		—	—		—		—		(108)		—
Balance June 30, 2023	$	2,318,723	1,935,400	$	94,016	292,581,929	$	29	$	3,322,499	$	(1,151,924)	$	16,200	$	37,903


Three Months Ended September 30, 2021
Three Months Ended June 30, 2022																		Three Months Ended June 30, 2022

Balance June 30, 2021		$	2,051,369	1,935,400	$	94,016	277,660,102	$	28	$	3,195,040	$	(1,250,735)	$	(12,041)	$	25,061
Balance March 31, 2022																		Balance March 31, 2022	$	2,320,482	1,935,400	$	94,016	287,871,649	$	29	$	3,261,770	$	(1,074,998)	$	6,008	$	33,657
Issuance of partnership interest in real estate	Issuance of partnership interest in real estate	5,965		—	—		—	—		—		—		—		5,965		Issuance of partnership interest in real estate	1,672		—	—		—	—		—		—		—		1,672
Redemption of noncontrolling OP units for common shares	Redemption of noncontrolling OP units for common shares	—		—	—		38,790	—		202		—		—		(202)		Redemption of noncontrolling OP units for common shares	—		—	—		13,524	—		73		—		—		(73)
Redemption of noncontrolling OP units for real estate		(22,305)		—	—		—	—		(12,919)		—		—		(9,386)

Issuance of common shares and deferred compensation amortization, net	Issuance of common shares and deferred compensation amortization, net	57,527		—	—		4,939,815	—		57,527		—		—		—		Issuance of common shares and deferred compensation amortization, net	1,587		—	—		12,203	—		1,587		—		—		—

Repurchase of common shares																		Repurchase of common shares	(73,718)		—	—		(6,098,026)	(1)		(73,717)		—		—		—

Dividends/distributions ($0.1075 per common share)		(32,402)		—	—		—	—		—		(32,037)		—		(365)
Forfeiture of employee common shares																		Forfeiture of employee common shares	8		—	—		(128,913)	—		—		8		—		—
Dividends/distributions ($0.12 per common share)																		Dividends/distributions ($0.12 per common share)	(35,469)		—	—		—	—		—		(34,716)		—		(753)
Net income	Net income	7,058		—	—		—	—		—		6,638		—		420		Net income	41,538		—	—		—	—		—		41,298		—		240
Other comprehensive income	Other comprehensive income	1,150		—	—		—	—		—		—		1,150		—		Other comprehensive income	3,550		—	—		—	—		—		—		3,550		—

Balance September 30, 2021		$	2,068,362	1,935,400	$	94,016	282,638,707	$	28	$	3,239,850	$	(1,276,134)	$	(10,891)	$	21,493
Balance June 30, 2022																		Balance June 30, 2022	$	2,259,650	1,935,400	$	94,016	281,670,437	$	28	$	3,189,713	$	(1,068,408)	$	9,558	$	34,743

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

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

Nine Months Ended September 30, 2022 LXP Industrial 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, 2021 $ 2,323,228 1,935,400 $ 94,016 283,752,726 $ 28 $ 3,252,506 $ (1,049,434) (6,258) 32,370
Issuance of partnership interest in real estate 6,444 — — — — — — — 6,444
Redemption of noncontrolling OP units for common shares — — — 33,378 — 177 — — (177)
Purchase of noncontrolling interest in consolidated joint venture (27,958) — — — — (25,058) — — (2,900)
Issuance of common shares and deferred compensation amortization, net 44,075 — — 4,557,892 1 44,074 — — —
Repurchase of common shares (130,676) — — (11,702,074) (1) (130,675) — — —
Repurchase of common shares to settle tax obligations (6,285) — — (410,958) — (6,285) — — —
Forfeiture of employee common shares 9 — — (130,633) — — 9 — —
Dividends/distributions ($0.36 per common share) (106,388) — — — — — (105,292) — (1,096)
Net income 76,037 — — — — — 75,310 — 727
Other comprehensive income 22,844 — — — — — — 22,844 —
Company's share of other comprehensive income of non-consolidated entities 1,182 — — — — — — 1,182 —
Balance September 30, 2022 2,202,512 1,935,400 $ 94,016 276,100,331 $ 28 $ 3,134,739 $ (1,079,407) $ 17,768 $ 35,368


			LXP Industrial Trust Shareholders
Six Months Ended June 30, 2023	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, 2022	$	2,391,003	1,935,400	$	94,016	291,719,310	$	29	$	3,320,087	$	(1,079,087)	$	17,689	$	38,269
Issuance of partnership interest in real estate	296		—	—		—	—		—		—		—		296
Redemption of noncontrolling OP units for common shares	—		—	—		4,886	—		25		—		—		(25)

Issuance of common shares and deferred compensation amortization, net	4,463		—	—		1,239,060	—		4,463		—		—		—

Repurchase of common shares to settle tax obligations	(2,076)		—	—		(204,780)	—		(2,076)		—		—		—
Forfeiture of employee common shares	—		—	—		(176,547)	—		—		—		—		—
Dividends/distributions ($0.25 per common share)	(77,009)		—	—			—		—		(75,955)		—		(1,054)
Net income	3,535		—	—		—	—		—		3,118		—		417
Other comprehensive loss	(1,051)		—	—		—	—		—		—		(1,051)		—
Company's share of other comprehensive loss of non-consolidated entities	(438)		—	—		—	—		—		—		(438)		—

Balance June 30, 2023	2,318,723		1,935,400	$	94,016	292,581,929	$	29	$	3,322,499	$	(1,151,924)	$	16,200	$	37,903


Six Months Ended June 30, 2022

Balance December 31, 2021	$	2,323,228	1,935,400	$	94,016	283,752,726	$	28	$	3,252,506	$	(1,049,434)	$	(6,258)	$	32,370
Issuance of partnership interest in real estate	5,781		—	—		—	—		—		—		—		5,781
Redemption of noncontrolling OP units for common shares	—		—	—		20,232	—		109		—		—		(109)
Purchase of noncontrolling interest in consolidated joint venture	(27,958)		—	—		—	—		(25,058)		—		—		(2,900)
Issuance of common shares and deferred compensation amortization, net	42,159		—	—		4,535,376	1		42,158		—		—		—
Repurchase of common shares	(73,718)		—	—		(6,098,026)	(1)		(73,717)		—		—		—
Repurchase of common shares to settle tax obligations	(6,285)		—	—		(410,958)	—		(6,285)		—		—		—
Forfeiture of employee common shares	8		—	—		(128,913)	—		—		8		—		—
Dividends/distributions ($0.24 per common share)	(71,827)		—	—		—	—		—		(70,902)		—		(925)
Net income	52,446		—	—		—	—		—		51,920		—		526
Other comprehensive income	15,816		—	—		—	—		—		—		15,816		—

Balance June 30, 2022	$	2,259,650	1,935,400	$	94,016	281,670,437	$	28	$	3,189,713	$	(1,068,408)	$	9,558	$	34,743

Nine Months Ended September 30, 2021
Balance December 31, 2020 $ 1,991,137 1,935,400 $ 94,016 277,152,450 $ 28 $ 3,196,315 $ (1,301,726) $ (17,963) $ 20,467
Issuance of partnership interest in real estate 11,050 — — — — — — — 11,050
Redemption of noncontrolling OP units for common shares — — — 129,397 — 670 — — (670)
Redemption of noncontrolling OP units for real estate (22,305) — — — — (12,919) — — (9,386)
Issuance of common shares and deferred compensation amortization, net 60,469 — — 5,866,762 — 60,469 — — —
Repurchase of common shares to settle tax obligations (5,120) — — (499,638) — (5,120) — — —
Forfeiture of employee common shares 2 — — (10,264) — — 2 — —
Dividends/distributions ($0.3225 per common share) (96,263) — — — — — (94,768) — (1,495)
Net income 122,320 — — — — — 120,358 — 1,962
Other comprehensive income 7,072 — — — — — — 7,072 —
Reallocation of noncontrolling interests — — — — — 435 — — (435)
Balance September 30, 2021 $ 2,068,362 1,935,400 $ 94,016 282,638,707 $ 28 $ 3,239,850 $ (1,276,134) $ (10,891) $ 21,493

Table of Content

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and in thousands)


		Nine Months Ended September 30,					Six Months Ended June 30,
		2022		2021			2023		2022
Net cash provided by operating activities:	Net cash provided by operating activities:	$	154,113	$	167,405	Net cash provided by operating activities:	$	92,644	$	95,207
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Acquisition of real estate, including intangible assets	Acquisition of real estate, including intangible assets	(132,026)		(392,586)		Acquisition of real estate, including intangible assets	—		(131,276)
Investment in real estate under construction	Investment in real estate under construction	(209,862)		(119,885)		Investment in real estate under construction	(62,650)		(135,826)
Capital expenditures	Capital expenditures	(25,593)		(9,371)		Capital expenditures	(7,910)		(15,798)
Net proceeds from sale of properties	Net proceeds from sale of properties	145,906		181,242		Net proceeds from sale of properties	27,338		54,523
Investments in loans receivable		—		(1,497)
Principal payments on loans receivable	Principal payments on loans receivable	20		—		Principal payments on loans receivable	1,462		14
Investments in non-consolidated entities	Investments in non-consolidated entities	(307)		(975)		Investments in non-consolidated entities	(485)		(178)
Distributions from non-consolidated entities in excess of accumulated earnings	Distributions from non-consolidated entities in excess of accumulated earnings	19,250		6,170		Distributions from non-consolidated entities in excess of accumulated earnings	5,536		15,609
Deferred leasing costs	Deferred leasing costs	(4,017)		(5,546)		Deferred leasing costs	(1,808)		(2,582)
Change in real estate deposits, net	Change in real estate deposits, net	(1,524)		(1,658)		Change in real estate deposits, net	(364)		(1,598)
Net cash used in investing activities	Net cash used in investing activities	(208,153)		(344,106)		Net cash used in investing activities	(38,881)		(217,112)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Dividends to common and preferred shareholders	Dividends to common and preferred shareholders	(107,939)		(95,885)		Dividends to common and preferred shareholders	(76,112)		(72,749)
Proceeds from mortgage loans		—		11,610

Principal amortization payments	Principal amortization payments	(8,416)		(10,571)		Principal amortization payments	(5,893)		(5,584)
Principal payments on debt, excluding normal amortization		—		(10,567)

Revolving credit facility borrowings	Revolving credit facility borrowings	210,000		215,000		Revolving credit facility borrowings	50,000		155,000
Revolving credit facility payments	Revolving credit facility payments	(80,000)		(215,000)		Revolving credit facility payments	(50,000)		(35,000)
Proceeds from issuance of senior notes		—		399,032
Repurchase of senior notes		—		(188,756)
Deferred financing costs		(3,626)		(3,977)
Payments for early extinguishment of debt		—		(12,217)

Cash contributions from noncontrolling interests	Cash contributions from noncontrolling interests	6,444		10,560		Cash contributions from noncontrolling interests	296		5,781
Cash distributions to noncontrolling interests	Cash distributions to noncontrolling interests	(1,096)		(1,495)		Cash distributions to noncontrolling interests	(1,054)		(925)
Repurchases to settle tax obligations	Repurchases to settle tax obligations	(6,285)		(5,120)		Repurchases to settle tax obligations	(2,076)		(6,285)
Purchase of noncontrolling interest	Purchase of noncontrolling interest	(27,958)		—		Purchase of noncontrolling interest	—		(27,958)

Issuance of common shares, net	Issuance of common shares, net	38,436		55,116		Issuance of common shares, net	(145)		38,497
Repurchase of common shares	Repurchase of common shares	(127,027)		—		Repurchase of common shares	—		(69,973)

Net cash (used in) provided by financing activities		(107,467)		147,730
Net cash used in financing activities						Net cash used in financing activities	(84,984)		(19,196)
Change in cash, cash equivalents and restricted cash	Change in cash, cash equivalents and restricted cash	(161,507)		(28,971)		Change in cash, cash equivalents and restricted cash	(31,221)		(141,101)

Cash, cash equivalents and restricted cash, at beginning of period	Cash, cash equivalents and restricted cash, at beginning of period	191,027		179,421		Cash, cash equivalents and restricted cash, at beginning of period	54,506		191,027
Cash, cash equivalents and restricted cash, at end of period	Cash, cash equivalents and restricted cash, at end of period	$	29,520	$	150,450	Cash, cash equivalents and restricted cash, at end of period	$	23,285	$	49,926

Reconciliation of cash, cash equivalents and restricted cash:	Reconciliation of cash, cash equivalents and restricted cash:					Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	$	190,926	$	178,795	Cash and cash equivalents at beginning of period	$	54,390	$	190,926
Restricted cash at beginning of period	Restricted cash at beginning of period	101		626		Restricted cash at beginning of period	116		101
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	$	191,027	$	179,421	Cash, cash equivalents and restricted cash at beginning of period	$	54,506	$	191,027

Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	29,407	$	150,077	Cash and cash equivalents at end of period	$	23,161	$	49,817
Restricted cash at end of period	Restricted cash at end of period	113		373		Restricted cash at end of period	124		109
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	29,520	$	150,450	Cash, cash equivalents and restricted cash at end of period	$	23,285	$	49,926

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

Table of Contents

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2022~~2023 and ~~2021~~2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

(1) The Company and Financial Statement Presentation

LXP Industrial Trust (together with its consolidated subsidiaries, except when the context only applies to the parent entity, the “Company”) is a Maryland real estate investment trust (“REIT”) that owns a portfolio of equity investments focused on single-tenant industrial properties.

As of ~~September~~June 30, ~~2022,~~2023, the Company had ownership interests in approximately ~~118~~116 consolidated real estate properties, located in 2120 states. The properties in which the Company has an interest are primarily net leased to tenants in various industries.

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 indirectly through (1) property owner subsidiaries, which are single purpose entities, (2) a wholly-owned TRS, Lexington Realty Advisors, Inc. ~~(“LRA”)~~, and (3) joint ventures. 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 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. Each property owner subsidiary is a separate legal entity that maintains separate books and records. The assets and credit of each property owner subsidiary with a property subject to a mortgage loan are not available to creditors to satisfy the debt and other obligations of any other person, including any other property owner subsidiary or any other affiliate. Consolidated entities that are not property owner subsidiaries do not directly own any of the assets of a property owner subsidiary (or the general partner, member or managing member of such property owner subsidiary), but merely hold partnership, membership or beneficial interests therein, which interests are subordinate to the claims of such property owner subsidiary's (or its general partner's, member's or managing member's) creditors.

The unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q (this “Quarterly Report”) for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 have been prepared by the Company in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all information and footnotes required by GAAP for complete financial statements. However, in the opinion of management, the interim financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results of the periods presented. Interim results are not necessarily indicative of the results that may be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 filed with the SEC on February ~~24, 2022~~16, 2023 (“Annual Report”).

Basis of Presentation and Consolidation. The Company's unaudited condensed consolidated financial statements are prepared on the accrual basis of accounting in accordance with GAAP. The financial statements reflect the accounts of the Company and its consolidated subsidiaries. The Company consolidates ~~the~~ wholly-owned subsidiaries, partnerships and joint ventures which it controls (i) through 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 VIEs in which the Company is not a primary beneficiary are accounted for under appropriate GAAP.

Table of Contents

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2022~~2023 and ~~2021~~2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

As of ~~September~~June 30, ~~2022,~~2023, the Company had interests in seven consolidated joint ventures with developers, consisting of five ongoing development projects and two land joint ventures with ownership interests ranging from 80% to 95.5%. Each joint venture owns land parcels with the intention of developing industrial properties. The Company determined that the joint ventures are variable interest entities in accordance with the applicable accounting guidance. The Company concluded that it is the primary beneficiary in each of the joint ventures and as such, the joint ventures' operations are consolidated in the Company’s unaudited condensed consolidated financial statements.

In addition, the Company is the primary beneficiary of certain other VIEs as it has a controlling financial interest in these entities. Lepercq Corporate Income Fund L.P. ("LCIF") is a consolidated VIE and the Company, as of ~~September~~June 30, ~~2022,~~2023, had an approximate 99% ownership interest.

The assets of each VIE are only available to satisfy such VIE's respective liabilities. Below is a summary of selected financial data of ~~the~~ consolidated VIEs for which the Company is the primary beneficiary included in the unaudited condensed consolidated balance sheets as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021:~~2022:


		September 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Real estate, net	Real estate, net	$	985,808	$	810,087	Real estate, net	$	1,032,057	$	1,027,009
Total assets	Total assets	$	1,038,913	$	952,611	Total assets	$	1,152,674	$	1,125,558

Total liabilities	Total liabilities	$	58,796	$	47,011	Total liabilities	$	43,364	$	40,200

In addition, the Company acquires, from time to time, properties using a reverse like-kind exchange structure pursuant to Section 1031 of the Internal Revenue Code (a "reverse 1031 exchange") and, as such, the properties are in the possession of an Exchange Accommodation Titleholder ("EAT") until the reverse 1031 exchange is completed. The EAT is classified as a VIE as it is a “thinly capitalized” entity. The Company consolidates the EAT because it is the primary beneficiary as it has the ability to control the activities that most significantly impact the EAT's economic performance and can collapse the 1031 exchange structure at any time. The assets of the EAT primarily consist of leased property (net real estate and intangibles).

~~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. Revenue is recognized on a contractual basis for leases with escalations tied to a consumer price index with no floor. The Company evaluates the collectability of its rental payments and recognizes revenue on a cash basis when the Company believes it is no longer probable that it will receive substantially all of the remaining lease payments. Renewal options in leases are excluded from the calculation of straight-line rent if the renewals are not reasonably certain. 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 on the unaudited condensed consolidated balance sheets.

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 unaudited condensed consolidated financial statements in conformity with GAAP. These estimates and assumptions are based on management'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. Management adjusts such estimates when facts and circumstances dictate. The most significant estimates made include the recoverability of current and deferred accounts receivable, ~~and,~~ allocation of property purchase price to tangible and intangible assets acquired and liabilities assumed, the determination of VIEs

~~Table of Contents~~

~~LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2022 and 2021~~

~~(Unaudited and dollars in thousands, except share/unit and per share/unit data)~~

and which entities should be consolidated, the determination of impairment of long-lived assets and equity method investments, valuation of derivative financial instruments, valuation of awards granted under compensation plans, the determination of the incremental borrowing rate for leases where the Company is the lessee, the determination of the term and fair value of sales-type leases, the estimated credit losses for investments in sales-type leases and the useful lives of long-lived assets. Actual results could differ materially from those estimates.

~~Restricted Cash. Restricted cash is comprised primarily of cash balances held by lenders.~~

~~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.

The Company estimates the fair value of its real estate assets, including non-consolidated real estate assets, by using income and market valuation techniques. The Company may estimate fair values using market information such as recent sale contracts (Level 2 inputs) or recent sale offers 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 out flows (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.

~~Cost Capitalization.~~ The Company capitalizes interest and direct and indirect project costs associated with the initial construction of a property up to the time the property is substantially complete and ready for its intended use within investments in real estate under construction in the unaudited condensed consolidated balance sheets. If costs and activities incurred to ready the vacant space cease, then cost capitalization is also discontinued until such activities are resumed. Once construction has been completed on a vacant space, project costs are no longer capitalized.

Recently Issued Accounting Guidance. In March 2020, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued ASU 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts that reference the London Interbank Offered Rate, or LIBOR, or another reference rate expected to be discontinued because of reference rate reform. The guidance in ASU 2020-04 is optional, applies for a limited period of time to ease the potential burden in accounting for (or recognizing the effect of) reference rate reform on financial reporting, in response to concerns about structural risks of interbank offered rates, and, particularly, the risk of cessation of LIBOR and may be elected over time as reference rate reform activities occur. As of March 31, 2020, the Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation.

109

Table of Contents

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2022~~2023 and ~~2021~~2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

On July 5, 2022, the Company transitioned its benchmark interest rate for its term loan from LIBOR to the Secured Overnight Financing Rate, or SOFR. The Company adopted ASU 2020-04 and the adoption of this standard did not have an impact on the Company's unaudited condensed consolidated financial statements. The Company's Trust Preferred Securities transitioned from LIBOR to SOFR after June 30, 2023. The Company does not expect a material impact to the financial statements as a result of the transition.

(2)Earnings Per Share

A portion of the Company's non-vested share-based payment awards are considered participating securities and as such, the Company is required to use the two-class method for the computation of basic and diluted earnings per share. Under the two-class computation method, net losses are not allocated to participating securities unless the holder of the security has a contractual obligation to share in the losses. The non-vested share-based payment awards are not allocated losses as the 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 the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021:~~2022:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
BASIC	BASIC									BASIC

Net income attributable to common shareholders		$	21,776	$	5,028	$	70,441	$	115,470
Net income (loss) attributable to common shareholders										Net income (loss) attributable to common shareholders	$	(9,683)	$	39,667	$	(161)	$	48,665
Weighted-average number of common shares outstanding - basic	Weighted-average number of common shares outstanding - basic	277,535,717		278,124,204		281,559,058		276,379,718		Weighted-average number of common shares outstanding - basic	290,186,934		283,568,078		290,134,015		283,604,072

Net income attributable to common shareholders - per common share basic		$	0.08	$	0.02	$	0.25	$	0.42
Net income (loss) attributable to common shareholders - per common share basic										Net income (loss) attributable to common shareholders - per common share basic	$	(0.03)	$	0.14	$	—	$	0.17

DILUTED	DILUTED									DILUTED
Net income attributable to common shareholders - basic		$	21,776	$	5,028	$	70,441	$	115,470
Net income (loss) attributable to common shareholders - basic										Net income (loss) attributable to common shareholders - basic	$	(9,683)	$	39,667	$	(161)	$	48,665

Impact of assumed conversions	Impact of assumed conversions	11		—		147		—		Impact of assumed conversions	(81)		47		(77)		136
Net income attributable to common shareholders		$	21,787	$	5,028	$	70,588	$	115,470
Net income (loss) attributable to common shareholders										Net income (loss) attributable to common shareholders	$	(9,764)	$	39,714	$	(238)	$	48,801

Weighted-average common shares outstanding - basic	Weighted-average common shares outstanding - basic	277,535,717		278,124,204		281,559,058		276,379,718		Weighted-average common shares outstanding - basic	290,186,934		283,568,078		290,134,015		283,604,072
Effect of dilutive securities:	Effect of dilutive securities:									Effect of dilutive securities:
Unvested share-based payment awards										Unvested share-based payment awards	—		257,371		—		668,130
Shares issuable under forward sales agreements	Shares issuable under forward sales agreements	—		2,765,030		1,699,789		1,290,968		Shares issuable under forward sales agreements	—		750,944		—		2,549,683
Unvested share-based payment awards		139,371		1,159,224		491,877		911,163

Operating partnership units	Operating partnership units	846,858		—		859,226		—		Operating partnership units	828,603		860,048		830,335		865,512

Weighted-average common shares outstanding - diluted	Weighted-average common shares outstanding - diluted	278,521,946		282,048,458		284,609,950		278,581,849		Weighted-average common shares outstanding - diluted	291,015,537		285,436,441		290,964,350		287,687,397

Net income attributable to common shareholders - per common share diluted		$	0.08	$	0.02	$	0.25	$	0.41
Net income (loss) attributable to common shareholders - per common share diluted										Net income (loss) attributable to common shareholders - per common share diluted	$	(0.03)	$	0.14	$	—	$	0.17

For per common share amounts, generally 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.

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LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2022~~2023 and ~~2021~~2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

Calculation of dilutive earnings requires certain potentially dilutive shares to be excluded when the inclusion of such shares would be anti-dilutive. The following table summarizes the potentially dilutive shares excluded from the dilutive earnings per share calculation as inclusion of such shares would be anti-dilutive:


	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
Unvested share-based payment awards	135,172	10,140	131,522	34,762
Preferred shares - Series C	4,710,570	4,710,570	4,710,570	4,710,570

(3)Investments in Real Estate

The Company ~~acquired~~completed and placed in service the following warehouse/distribution ~~facilities~~facility during the ~~nine~~six months ended ~~September~~June 30, ~~2022(1)~~:2023:

Market Acquisition Date Initial
Cost
Basis Primary
Lease
Expiration at Acquisition Date Land Building and Improvements Lease in-place Intangible
Cincinnati/Dayton, OH(2)
February 2022 $ 23,382 N/A $ 2,010 $ 21,372 $ —
Cincinnati/Dayton, OH February 2022 48,660 04/2032 4,197 40,944 3,519
Phoenix, AZ April 2022 59,140 05/2037 5,366 50,281 3,493
$ 131,182 $ 11,573 $ 112,597 $ 7,012


Market	Placed in Service Date	Initial Cost Basis		Lease Expiration Date	Land		Building and Improvements
Phoenix, Arizona(1)	March 2023	$	37,118	08/2033	$	7,552	$	29,566

(1) ~~A land parcel located in Hebron, OH was also purchased for $747.~~

~~(2) Subsequent to acquisition, property was fully leased for approximately nine years.~~Initial basis excludes certain remaining costs, including developer partner promote, if any.

In 2022, the Company purchased the remaining 13% of equity owned by a noncontrolling interest in the Fairburn, Georgia warehouse/distribution facility for $27,958. As the Company previously consolidated its interest in the joint venture which owned the property, the acquisition of the noncontrolling ownership interest was recorded as an equity transaction with the difference between the purchase price and carrying balance of $25,058 recorded as a reduction in additional paid-in-capital.

As of ~~September~~June 30, ~~2022,~~2023, the details of the ~~warehouse/distribution real estate under construction~~development arrangements outstanding are as follows (in $000's, except square feet):


Project (% owned)	Project (% owned)	# of Buildings	Market	Estimated Sq. Ft.	Estimated Project Cost(1)		GAAP Investment Balance as of 9/30/2022		LXP Amount Funded as of 9/30/2022(2)		Estimated Building Completion Date	% Leased as of 9/30/2022		Project (% owned)	# of Buildings	Market	Estimated Sq. Ft.	Estimated Project Cost(1)		GAAP Investment Balance as of 6/30/2023(2)		LXP Amount Funded as of 6/30/2023(3)		Actual/Estimated Base Building Completion Date	% Leased as of 6/30/2023		Estimated Placed in Service Date
The Cubes at Etna East (95%)(3)		1	Columbus, OH	1,074,840	$	72,100	$	59,713	$	53,095	3Q 2022	—	%
Development Projects Leased:														Development Projects Leased:
ETNA Cubes(95%)														ETNA Cubes(95%)	1	Columbus, OH	1,074,840	$	76,600	$	63,370	$	66,148	3Q 2022	100	%	4Q 2023
Cotton 303 (93%)														Cotton 303 (93%)	1	Phoenix, AZ	488,400	55,300		39,182		32,652		3Q 2023	100	%	1Q 2024
															2		1,563,240	$	131,900	$	102,552	$	98,800
Development Projects Available for Lease:														Development Projects Available for Lease:
Ocala (80%)	Ocala (80%)	1	Central Florida	1,085,280	83,100		66,556		54,866		4Q 2022	—	%	Ocala (80%)	1	Central Florida	1,085,280	$	83,200	$	77,209	$	67,984	1Q 2023	—	%	—
Mt. Comfort (80%)	Mt. Comfort (80%)	1	Indianapolis, IN	1,053,360	65,500		48,354		38,278		4Q 2022	—	%	Mt. Comfort (80%)	1	Indianapolis, IN	1,053,360	65,900		63,790		55,312		1Q 2023	—	%	—
Smith Farms (90%)(4)		3	Greenville-Spartanburg, SC	2,194,820	170,400		123,582		97,906		4Q 2022 - 2Q 2023	36	%
Cotton 303 (93%)(5)		2	Phoenix, AZ	880,678	84,200		56,554		49,000		1Q 2023	45	%
Smith Farms (90%)														Smith Farms (90%)	2	Greenville-Spartanburg, SC	1,396,772	101,600		92,213		79,975		2Q 2023	—	%	—
South Shore (100%)	South Shore (100%)	2	Central Florida	270,885	40,500		13,724		10,435		2Q 2023	—	%	South Shore (100%)	2	Central Florida	270,885	42,500		36,578		30,313		2Q 2023 - 3Q 2023	—	%	—
					$	515,800	$	368,483	$	303,580					6		3,806,297	$	293,200	$	269,790	$	233,584

															8		5,369,537	$	425,100	$	372,342	$	332,384

(1) Estimated project cost includes estimated tenant improvements and leasing costs and excludes potential developer partner promote, if any.

(2) Excludes leasing costs.

(3) Excludes noncontrolling interests' share.

~~(3) Base building achieved substantial completion on September 30, 2022~~
. ~~Property not in service as of September 30, 2022.~~

~~(4) Pre-leased 797,936 square foot facility subject to a 12-year lease commencing upon substantial completion of the facility.~~

~~(5) Pre-leased 392,278 square foot facility subject to a 10-year lease commencing upon substantial completion of the facility.~~

As of September 30, 2022, the Company's aggregate investment in the development arrangements was $368,483, which included capitalized interest of $4,888 for the nine months ended September 30, 2022 and is presented as investments in real estate under construction in the accompanying unaudited condensed consolidated balance sheet. For the nine months ended September 30, 2021, capitalized interest for development arrangements was $1,806.

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LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2022~~2023 and ~~2021~~2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

As of ~~September~~June 30, 2023, the Company's aggregate investment in development arrangements was $372,342, which included capitalized interest of $5,194 for the six months ended June 30, 2023 and is presented as investments in real estate under construction in the accompanying unaudited condensed consolidated balance sheet. For the six months ended June 30, 2022, capitalized interest for development arrangements was $2,800.

As of June 30, 2023, the details of the land held for industrial development are as follows (in $000's, except acres):


Project (% owned)	Project (% owned)	Market	Approx. Developable Acres	GAAP Investment Balance as of 9/30/2022		LXP Amount Funded as of 9/30/2022 (1)		Project (% owned)	Market	Approx. Developable Acres	GAAP Investment Balance as of 6/30/2023		LXP Amount Funded as of 6/30/2023 (1)
Consolidated:

Reems & Olive (95.5%)	Reems & Olive (95.5%)	Phoenix, AZ	420	$	101,412	$	96,961	Reems & Olive (95.5%)	Phoenix, AZ	320	$	77,538	$	74,177
Mt. Comfort Phase II (80%)	Mt. Comfort Phase II (80%)	Indianapolis, IN	116	5,236		4,165		Mt. Comfort Phase II (80%)	Indianapolis, IN	116	5,321		4,266
ATL Fairburn JV (100%)	ATL Fairburn JV (100%)	Atlanta, GA	14	$	1,731	$	1,728	ATL Fairburn JV (100%)	Atlanta, GA	14	1,732		1,737
			550	$	108,379	$	102,854			450	$	84,591	$	80,180

(1) Excludes noncontrolling interests' share.

(4)Dispositions and Impairment

During the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, the Company disposed of its interests in various properties for an aggregate gross disposition price of ~~$147,345~~$27,910 and ~~$218,796,~~$55,395, respectively, and recognized aggregate gains on sales of properties of ~~$52,951~~$7,879 and ~~$104,767,~~$28,110, respectively.

Included in the 2021 dispositions are three non-industrial properties with an aggregate disposition price of $35,369, which was satisfied through (i) the redemption of 1,598,906 operating partnership units ("OP units"), (ii) the assumption of $11,610 of third party mortgage financing that encumbered two of the properties and (iii) $1,497 of seller financing. The seller financing note receivable has a fixed interest rate of 6.0% per annum and matures on August 1, 2025. There are no past due payments outstanding related to the seller financing as of September 30, 2022 and 2021.

The Company had ~~six~~four and ~~eight~~three properties classified as held for sale at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. Assets and liabilities of the held for sale properties at June 30, 2023 and December 31, 2022 consisted of the following:


		September 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Assets:	Assets:					Assets:
Real estate, at cost	Real estate, at cost	$	159,963	$	170,117	Real estate, at cost	$	59,918	$	131,557
Real estate, intangible assets	Real estate, intangible assets	8,572		9,454		Real estate, intangible assets	1,777		9,942
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(97,251)		(99,659)		Accumulated depreciation and amortization	(14,119)		(76,205)
Deferred expenses, net		1,629		1,759

Other	Other	848		915		Other	2,068		1,140
		$	73,761	$	82,586		$	49,644	$	66,434

Liabilities:	Liabilities:					Liabilities:
Accounts payable and liabilities	Accounts payable and liabilities	$	1,630	$	1,908	Accounts payable and liabilities	$	407	$	637
Deferred revenue	Deferred revenue	362		483		Deferred revenue	241		143
Prepaid rent	Prepaid rent	823		1,077		Prepaid rent	1,055		370
		$	2,815	$	3,468		$	1,703	$	1,150

The Company assesses on a regular basis whether there are any indicators that the carrying value of its real estate assets may be impaired. Potential indicators may include an increase in vacancy at a property, tenant financial instability, change in the estimated holding period of the asset, the potential sale or transfer of the property in the near future and changes in economic conditions. An asset is determined to be impaired if the asset's carrying value is in excess of its estimated fair value and the Company estimates that its cost will not be recovered.

During the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, the Company recognized anaggregate impairment ~~charge~~charges of $16,490 due to potential property sales. The Company recognized impairment charges of $1,829 on real estate ~~of $2,457~~during the six months ended June 30, 2022 due to vacancy at the property. ~~During the nine months ended September 30, 2021, the Company recognized impairment charges on real estate of $2,048 related to a vacant office property.~~

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LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2022~~2023 and ~~2021~~2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

(5)Fair Value Measurements

The following tables present the Company's assets and liabilities measured at fair value on a recurring and non-recurring basis as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, aggregated by the level in the fair value hierarchy within which those measurements fall:


		Balance		Fair Value Measurements Using							Balance		Fair Value Measurements Using
Description	Description	September 30, 2022		(Level 1)		(Level 2)		(Level 3)		Description	June 30, 2023		(Level 1)		(Level 2)		(Level 3)
Interest rate swap assets	Interest rate swap assets	$	16,586	$	—	$	16,586	$	—	Interest rate swap assets	$	15,268	$	—	$	15,268	$	—
Impaired real estate assets(1)	Impaired real estate assets(1)	$	1,056	$	—	$	1,056	$	—	Impaired real estate assets(1)	$	34,315	$	—	$	25,145	$	9,170

		Balance		Fair Value Measurements Using							Balance		Fair Value Measurements Using
Description	Description	December 31, 2021		(Level 1)		(Level 2)		(Level 3)		Description	December 31, 2022		(Level 1)		(Level 2)		(Level 3)
Interest rate swap liabilities		$	(6,258)	$	—	$	(6,258)	$	—
Impaired real estate assets(2)		$	12,735	$	—	$	—	$	12,735
Interest rate swap assets										Interest rate swap assets	$	16,318	$	—	$	16,318	$	—

(1) Represents non-recurring fair value measurement. The fair value is calculated as of the impairment date. ~~$1,056~~The fair value of $25,145 was based on an observable contract ~~and~~to sell the asset, less estimated costs to sell. The Company ~~determined that~~also estimated the fair value of ~~the property falls within Level 2 of the fair value reporting hierarchy.~~

~~(2) Represents non-recurring fair value measurement. The Company measured a $12,735 fair value of real estate assets~~$9,170 based on a discounted cash flow analysis using a discount rate ~~ranging from8.0% to~~of 10.0% and a residual capitalization rate ~~ranging from 7.5% to~~of 8.0%. As significant inputs to the models are unobservable, the Company determined that the value determined for these properties falls within Level 3 of the fair value reporting hierarchy.

The majority of the inputs used to value the Company's interest rate swaps ~~fell~~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 swaps ~~utilized~~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 ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company determined that the credit valuation adjustment relative to the overall ~~fair value of the~~ interest rate swaps was not significant. As a result, ~~the~~all interest rate swaps ~~were~~have been classified in Level 2 of the fair value hierarchy.

The table below sets forth the carrying amounts and estimated fair values of the Company's financial instruments, ~~excluding held for sale assets,~~ as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021:~~2022:


		As of September 30, 2022				As of December 31, 2021					As of June 30, 2023				As of December 31, 2022
		Carrying Amount		Fair Value		Carrying Amount		Fair Value			Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets										Assets

Investment in a sales-type lease, net										Investment in a sales-type lease, net	$	62,331	$	63,840	$	61,233	$	60,984

Liabilities	Liabilities									Liabilities
Debt	Debt	$	1,620,348	$	1,399,498	$	1,497,064	$	1,491,868	Debt	$	1,483,283	$	1,289,776	$	1,488,051	$	1,293,239

The fair value of the Company's investment in a sales-type lease, net is primarily estimated utilizing Level 3 inputs by using a discounted cash flow analysis and an estimate of the unguaranteed residual value.

The fair value of the Company's debt is primarily estimated utilizing Level 3 inputs by using a discounted cash flow analysis, based upon estimates of market interest ~~rates, except for the Company's senior notes payable.~~rates. The Company determines the fair value of its ~~senior notes~~Senior Notes payable using market prices. The inputs used in determining the fair value of these notes are categorized as Level 1 due to the fact that the Company uses quoted market rates to value these instruments. However, the inputs used in determining the fair value could be categorized as Level 2 if trading volumes are low.

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

Table of Contents

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 and 2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

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. 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.

~~Table of Contents~~

~~LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2022 and 2021~~

~~(Unaudited and dollars in thousands, except share/unit and per share/unit data)~~

(6)Investments in Non-Consolidated Entities

Below is a schedule of the Company's investments in non-consolidated entities:


			Percentage Ownership at	Investment Balance as of					Percentage Ownership at	Investment Balance as of				Equity in earnings (losses) of non-consolidated entities
Investment	Investment		September 30, 2022	September 30, 2022		December 31, 2021		Investment	June 30, 2023	June 30, 2023		December 31, 2022		June 30, 2023		June 30, 2022
NNN MFG Cold JV L.P. ("MFG Cold JV")(1)	NNN MFG Cold JV L.P. ("MFG Cold JV")(1)	(1)	20%	$	27,890	$	30,752	NNN MFG Cold JV L.P. ("MFG Cold JV")(1)	20%	$	22,617	$	26,592	$	(1,597)	$	(600)
NNN Office JV L.P. ("NNN JV")(2)	NNN Office JV L.P. ("NNN JV")(2)	(2)	20%	8,836		24,112		NNN Office JV L.P. ("NNN JV")(2)	20%	12,637		12,900		(263)		17,521
Etna Park 70 LLC(3)	Etna Park 70 LLC(3)	(3)	90%	12,959		12,874		Etna Park 70 LLC(3)	90%	13,333		12,975		(86)		(49)
Etna Park East LLC(4)	Etna Park East LLC(4)	(4)	90%	2,124		2,797		Etna Park East LLC(4)	90%	2,096		2,126		(72)		(48)
BSH Lessee L.P.(5)	BSH Lessee L.P.(5)	(5)	25%	3,606		4,024		BSH Lessee L.P.(5)	25%	—		3,613		4,608		96
				$	55,415	$	74,559			$	50,683	$	58,206	$	2,590	$	16,920

(1) MFG Cold JV is a joint venture formed in 2021 that owns special purpose industrial properties formerly owned by the Company.

(2) NNN JV is a joint venture formed in 2018 that owns office properties formerly owned by the Company. During 2022, NNN JV sold three assets and the Company recognized its share of aggregate gains on sale of $22,896 within equity in earnings of non-consolidated entities within its unaudited condensed consolidated statements of operations.

(3) Joint venture formed in 2017 with a developer entity to acquire a parcel of land. The ~~Company determined that it is not~~joint venture commenced development of a 250,000 square foot speculative development project for an estimated cost of $29,000. Subsequent to June 30, 2023, LXP entered into an agreement to fund all of the ~~primary beneficiary.~~construction costs, inclusive of its partner's share, to complete the Etna Park 70 industrial facility.

(4) Joint venture formed in 2019 with a developer entity to acquire a parcel of land. ~~The Company determined that it is not the primary beneficiary.~~

(5) A joint venture investment which ~~owns a~~sold its sole single-tenant, net-leased ~~asset.~~

~~During the nine months ended September 30, 2022, NNN JV sold three assets and recognized aggregate gains of $114,481~~asset in January 2023 and the Company recognized its share of the ~~aggregate gains~~gain on ~~the transactions~~sale of ~~$22,896~~$4,791 within equity in earnings ~~(losses)~~ of non-consolidated entities inwithin its unaudited condensed consolidated ~~statement~~statements of operations. ~~In conjunction with~~

The Company earns advisory fees from certain of these ~~property sales, NNN JV received net proceeds of $141,050 after~~non-consolidated entities for services related to acquisitions, asset management and debt placement. Advisory fees earned from these non-consolidated investments for the ~~satisfaction of an aggregate of $166,450 of its non-recourse mortgage indebtedness. NNN JV distributed $28,147 of net proceeds to the Company as a result of the property sales.~~six months ended June 30, 2023 and 2022 were $2,208 and $2,875, respectively.

(7)Debt

The Company had the following mortgages and notes payable outstanding as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021:~~2022:


		September 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Mortgages and notes payable	Mortgages and notes payable	$	76,013	$	84,429	Mortgages and notes payable	$	67,260	$	73,154
Unamortized debt issuance costs	Unamortized debt issuance costs	(1,122)		(1,337)		Unamortized debt issuance costs	(907)		(1,051)
Mortgages and notes payable, net		$	74,891	$	83,092
Mortgage notes payable, net						Mortgage notes payable, net	$	66,353	$	72,103

Interest rates, including imputed rates on mortgages and notes payable, ranged from 3.5% to 4.3%, at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022, respectively, and all mortgages and notes ~~payables~~payable mature between 2023 and 2031 as of ~~September~~June 30, ~~2022.~~2023. The weighted-average interest rate ~~was approximately 4.0%~~ at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021.~~

On July 12, 2021, LCIF encumbered two of its properties with mortgage debt in the amount of $11,610. Subsequently, on July 12, 2021, certain operating partnership unitholders assumed the mortgages upon purchasing the properties. See Note 4, Dispositions and Impairment.2022 was approximately 4.0%, respectively.

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Table of Contents

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2022~~2023 and ~~2021~~2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

The Company had the following senior notes outstanding as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021:~~2022:


Issue Date	Issue Date	September 30, 2022		December 31, 2021		Interest Rate		Maturity Date	Issue Price		Issue Date	June 30, 2023		December 31, 2022		Interest Rate		Maturity Date	Issue Price
August 2021	August 2021	$	400,000	$	400,000	2.375	%	October 2031	99.758	%	August 2021	$	400,000	$	400,000	2.375	%	October 2031	99.758	%
August 2020	August 2020	400,000		400,000		2.70	%	September 2030	99.233	%	August 2020	400,000		400,000		2.70	%	September 2030	99.233	%
May 2014	May 2014	198,932		198,932		4.40	%	June 2024	99.883	%	May 2014	198,932		198,932		4.40	%	June 2024	99.883	%
		998,932		998,932								998,932		998,932
Unamortized debt discount	Unamortized debt discount	(3,335)		(3,655)							Unamortized debt discount	(3,016)		(3,228)
Unamortized debt issuance costs	Unamortized debt issuance costs	(6,643)		(7,346)							Unamortized debt issuance costs	(5,939)		(6,409)
Senior notes payable, net	Senior notes payable, net	$	988,954	$	987,931						Senior notes payable, net	$	989,977	$	989,295

Each series of the senior notes is unsecured and requires payment of interest semi-annually in arrears. The Company may redeem the notes at its option at any time prior to maturity in whole or in part by paying the principal amount of the notes being redeemed plus aany potential make-whole premium.

In August 2021, the Company issued $400,000 aggregate principal amount of 2.375% Senior Notes due 2031 (“2031 Senior Notes”) at an issuance price of 99.758% of the principal amount. The Company issued the 2031 Senior Notes at an initial discount of $968 which is being recognized as additional interest expense over the term of the 2031 Senior Notes.

During the three months ended September 30, 2021, the Company used a portion of the net proceeds from the offering of the 2031 Senior Notes to redeem the $188,756 aggregate principal balance of its outstanding 4.25% Senior Notes due 2023 ("2023 Senior Notes"). The consideration paid included the make-whole premium of $12,191 and $2,028 of accrued and unpaid interest. The Company recognized a $12,948 debt satisfaction loss related to the aggregate redemptions.

The Company has an unsecured credit agreement with KeyBank National Association, as agent. The maturity dates and interest rates as of ~~September~~June 30, ~~2022,~~2023, are as follows:


	Maturity Date	~~Current~~ Interest Rate
$600,000 Revolving Credit Facility(1)	July 2026	SOFR + 0.85%
$300,000 Term Loan~~(1)~~(2)	January 2025	Term SOFR + 1.00%

(1) In July 2022, the Company amended its revolving credit facility and the 2025 term loan with a new revolving credit facility and the continuation of the 2025 term loan (the "2022 Credit Agreement"). The 2022 Credit Agreement, among other things: (i) extended the maturityMaturity date of the revolving ~~portion from February 2023~~credit facility can be extended to July ~~2026, with two six-month extension options,~~2027, subject to certain ~~conditions, (ii) reduced the applicable margin for the revolving portion of the credit facility by five basis points to a range~~conditions. The interest rate ranges from 0.725% to ~~1.40%~~1.400%, and the revolving credit facility allows for further reductions upon the achievement of to-be-determined sustainability metrics, (iii) amended the debt covenants by reducing the capitalization rate for determining asset value and (iv) transitioned the facility to SOFR. Simultaneously, the Company converted its interest rate swap agreements to Term SOFR, which resulted in a new fixed interest rate of 2.722% on the Company's 2025 term loan.metrics. At ~~September~~June 30, ~~2022,~~2023, the Company had ~~$130,000~~no borrowings outstanding and availability of ~~$470,000,~~$600,000, subject to covenant compliance.

(2) The ~~Company recognized $119~~Term SOFR portion of ~~debt satisfaction losses in connection with~~ the ~~transaction.~~

~~(2)~~interest rate was swapped to obtain a current fixed rate of 2.722% per annum. The aggregate unamortized debt issuance costs for the term loan was ~~$1,166~~$791 and ~~$1,554~~$1,041 as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

The Company was compliant with all applicable financial covenants contained in its corporate-level debt agreements at ~~September~~June 30, ~~2022.~~2023.

During 2007, the Company issued $200,000 original principal amount of Trust Preferred Securities. The Trust Preferred Securities, which are classified as debt, are due in 2037, are open for redemption at the Company's option and bear interest at a variable rate of three-month LIBOR plus 170 basis points through maturity. The interest rate at ~~September~~June 30, ~~2022~~2023 was ~~4.482%~~6.999%. As of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, there was $129,120 original principal amount of Trust Preferred Securities outstanding and ~~$1,451~~$1,376 and ~~$1,525,~~$1,426, respectively, of unamortized debt issuance costs. The variable rate transitioned from LIBOR to SOFR after June 30, 2023.

The Company capitalized $5,436 and $2,839 of interest expense for the six months ended June 30, 2023 and 2022, respectively.

1615

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LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2022~~2023 and ~~2021~~2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

~~Capitalized interest recorded during the nine months ended September 30, 2022 and 2021 was $4,927 and $2,124, respectively.~~

(8) 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. The Company's derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company's known or expected cash receipts and its known or expected cash payments principally related to the Company's investments and borrowings.

Cash Flow Hedges of Interest Rate Risk. The Company'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 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 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 Company did not incur any ineffectiveness during the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021.~~2022.

During July 2022, the Company transitioned its four interest rate swap agreements with its counterparties to a benchmark rate of Term SOFR. The swaps were designated as cash flow hedges of the risk in variability attributable to changes in the Term SOFR swap rates on its $300,000 SOFR-indexed variable rate unsecured term loan. Accordingly, changes in fair value of the swaps are recorded in other comprehensive income (loss) and reclassified to earnings as interest becomes receivable or payable. The swaps expire coterminous with the maturity of the term loan in January 2025. During the next 12 months, the Company estimates that an additional ~~$7,543~~$10,664 will be reclassified as a decrease in interest expense if the swaps remain outstanding.

Interest Rate Derivative Number of Instruments Notional
Interest Rate Swaps 4 $300,000
As of June 30, 2023, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:

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~~LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2022 and 2021~~

~~(Unaudited and dollars in thousands, except share/unit and per share/unit data)~~


Interest Rate Derivative	Number of Instruments	Notional
Interest Rate Swaps	4	$300,000

The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the unaudited condensed consolidated balance sheets:

As of September 30, 2022

As of December 31, 2021

As of June 30, 2023

As of December 31, 2022

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Derivatives designated as hedging instruments

Derivatives designated as hedging instruments:

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Interest Rate Swaps

Other Assets

16,586

Other Liabilities

(6,258)

Interest Rate Swaps

Other Assets

15,268

Other Assets

16,318

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LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 and 2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

The table below presents the effect of the Company's derivative financial instruments on the unaudited condensed consolidated statements of operations for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021.~~2022.


Derivatives in Cash Flow	Derivatives in Cash Flow	Amount of Gain Recognized in OCI on Derivatives September 30,				Amount of Loss Reclassified from Accumulated OCI into Income(1) September 30,				Derivatives in Cash Flow	Amount of Gain Recognized in OCI on Derivatives June 30,				Amount of (Income) Loss Reclassified from Accumulated OCI into Income(1) June 30,
Hedging Relationships	Hedging Relationships	2022		2021		2022		2021		Hedging Relationships	2023		2022		2023		2022
Interest Rate Swaps	Interest Rate Swaps	$	21,316	$	3,381	$	1,528	$	3,691	Interest Rate Swaps	$	3,668	$	13,895	$	(4,719)	$	1,921
The Company's share of non-consolidated entity's interest rate cap										The Company's share of non-consolidated entity's interest rate cap	220		—		(658)		—
Total										Total	$	3,888	$	13,895	$	(5,377)	$	1,921

(1) Amounts reclassified from accumulated other comprehensive income (loss) to interest expense within the unaudited condensed consolidated ~~statement~~statements of operations.

Total interest expense presented in the unaudited condensed consolidated statements of operations, in which ~~includes~~ the effects of cash flow hedges are recorded was ~~$32,758~~$21,537 and ~~$35,170~~$21,503 for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

The Company's agreements with the swap ~~derivatives~~derivative counterparties 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 ~~September~~June 30, ~~2022,~~2023, the Company had not posted any collateral related to the agreements.

(9) Lease Accounting

Lessor

Operating Leases.The Company’s lease portfolio as a lessor primarily includes general purpose, single-tenant net-leased real estate assets. Most of the Company’s leases require tenants to pay fixed annual rental payments that escalate on an annual basis and variable payments for other operating expenses, such as real estate taxes, insurance, common area maintenance ("CAM"), and utilities, that are based on the actual expenses incurred.

Certain leases allow for the tenant to renew the lease term upon expiration or earlier. Periods covered by a renewal option are included within the lease term only when renewals are deemed to be reasonably certain. Certain leases allow for the tenant to terminate the lease before the expiration of the lease term and certain leases provide the tenant with the right to purchase the leased property at fair market value or a stipulated price upon expiration of the lease term or before.

Accounting guidance under ~~Topic~~ASC 842 requires the Company to make certain assumptions and judgments in applying the guidance, including determining whether an arrangement includes a lease and determining the lease term when the contract has renewal, purchase or early termination provisions.

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~~LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2022 and 2021~~

~~(Unaudited and dollars in thousands, except share/unit and per share/unit data)~~

The Company analyzes its accounts receivable, customer creditworthiness and current economic trends when evaluating the adequacy of the collectability of the lessee's total accounts receivable balance on a lease by lease basis. In addition, tenants in bankruptcy are analyzed and considerations are made in connection with the expected pre-petition and post-petition claims. If a lessee's accounts receivable balance is considered uncollectible, the Company will write-off the receivable balances associated with the lease to rental revenue and cease to recognize lease income, including straight-line rent, unless cash is received. If the Company subsequently determines that it is probable it will collect substantially all of the lessee's remaining lease payments under the lease term; the Company will reinstate the straight-line balance adjusting for the amount related to the period when the lease was accounted for on a cash basis.

~~Certain tenants have been experiencing financial difficulties as a result~~

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LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 and 2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

There were no write offs for the ~~current economic conditions.~~six months ended June 30, 2023. During the ~~nine~~six months ended ~~September~~June 30, 2022, ~~and 2021,~~ the Company wrote off an aggregate of ~~$316 and $463, respectively,~~$198, accounts receivable, net, relating to certain tenants suffering from the current economic conditions.

The Company elected that the lease and non-lease components in its leases are a single lease component, which is, therefore, being recognized as rental revenue in its unaudited condensed consolidated statements of operations. The primary non-lease service included within rental revenue is CAM services provided as part of the Company’s real estate leases. ~~Topic~~ASC 842 requires that the Company capitalize, as initial direct costs, only those costs that are incurred due to the execution of a lease. For the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, the Company incurred $30 of costs that were not incremental to the execution of leases, which are included in property operating expenses on its unaudited condensed consolidated statements of operations. The Company incurred no costs that were not incremental to the execution of ~~leases in 2021.~~leases. For the six months ended June 30, 2022, the Company incurred $34 of costs that were not incremental to the execution of leases.

The Company manages the risk associated with the residual value of its leased properties by including contract clauses that make tenants responsible for surrendering the space in good condition upon lease termination, holding a diversified portfolio, and other activities. The Company does not have residual value guarantees on specific properties.

Sales-Type Leases. As of June 30, 2023, the Company had one lease that qualified as a sales-type lease.

The ~~following table presents~~Company has one ground lease for a 100-acre industrial development land parcel located in the ~~Company’s~~Phoenix, Arizona market that is classified as a sales-type lease. At the commencement date of the lease, the Company evaluated the lease classification and classified the lease as a sales-type lease. The lease contains a purchase option in the amount of $20.00 per land square foot starting on the second anniversary date of the lease and ending on the third anniversary date. The Company determined that the purchase option is not reasonably certain of being exercised. The lease met the sales-type lease criteria because the present value of the lease payments was equal to substantially all of the fair value of the underlying asset on the lease commencement date. For the six months ended June 30, 2023, the interest income earned from sales-type leases of $3,681 is included in rental revenue ~~for its operating~~in the unaudited condensed consolidated statements of operations. The Company earned no interest income from sales-type leases ~~for the three and nine months ended September 30, 2022 and 2021:~~

Three Months Ended September 30, Nine Months Ended September 30,
Classification 2022 2021 2022 2021
Fixed $ 66,956 $ 71,357 $ 200,965 $ 213,929
Variable(1)(2)
11,318 10,996 33,784 40,641
Total $ 78,274 $ 82,353 $ 234,749 $ 254,570

~~(1) Primarily comprised of tenant reimbursements.~~

(2) Variable income contains termination income of $238 and $14,105 for the nine months ended September 30, 2022 and 2021, respectively. The 2021 termination income is primarily related to a tenant that terminated its lease at the Company's Durham, New Hampshire industrial property.

in 2022.

In May 2022, one of the Company's tenants exercised the purchase option for $28,000 in its operating lease with a sale date of ~~July~~August 2022. The purchase option was not reasonably certain to be exercised at lease inception, resulting in a modification of the operating lease. As a result of this modification to the lease, the Company re-evaluated the lease classification and classified the lease as a sales-type lease. The Company recorded $28,000 in Investment in a sales-type lease and derecognized $17,292 from Real estate, net, $619 from Deferred expenses and $775 from Rent receivable-deferred on its unaudited condensed consolidated balance sheet. The Company recognized $9,314 in ~~Selling~~selling profit from sales-type leases in its unaudited condensed consolidated statements of operations for the ~~nine~~six months ended ~~September~~June 30, 2022. ~~In July,~~The remaining rent payments under the ~~tenant completed~~lease in 2022 in addition to the purchase option price was $371.

Rental Revenue Classification. The following table presents the Company’s classification of rental revenue for its operating leases and sales-type lease for the ~~property, resulting in the derecognition~~three and six months ended June 30, 2023 and 2022:


	Three Months Ended June 30,				Six Months Ended June 30,
Classification	2023		2022		2023		2022
Fixed	$	69,049	$	67,015	$	137,136	$	133,997
Sales-type lease income	1,848		—		3,681		—
Variable(1)	14,168		10,924		27,665		22,478
Total	$	85,065	$	77,939	$	168,482	$	156,475

(1) Primarily comprised of ~~the $28,000 investment in a sales-type lease.~~tenant reimbursements.

1918

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LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2022~~2023 and ~~2021~~2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

Future fixed rental receipts for operating and sales-type leases, assuming no new or re-negotiated leases as of ~~September~~June 30, ~~2022~~2023 were as follows:

Nine months ended September 30, Total
2022 - remainder $ 64,707
2023 260,818
2024 233,959
2025 213,892
2026 193,909
2027 158,445
Thereafter 591,832
Total $ 1,717,562


	Operating		Sales-Type
2023 - remainder	$	133,883	$	2,614
2024	251,719		5,263
2025	234,071		5,473
2026	214,826		5,692
2027	178,132		5,920
2028	147,865		6,156
Thereafter	500,591		733,006
Total	$	1,661,087	$	764,124
Difference between undiscounted cash flow and present value			(701,731)
Investment in a sales-type lease			$	62,393

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, unless such payments are reasonably certain to be received.

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 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, as lessee, has ground leases, corporate leases for office space, and office equipment leases. All leases were classified as operating leases as of ~~September~~June 30, ~~2022.~~2023. The leases have remaining lease terms of up to 3837 years. Renewal periods are included in the lease term only when renewal is deemed to be reasonably certain. The lease term also includes periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise the termination option. The Company measures its lease payments by including fixed rental payments and variable rental payments that tie to an index or a rate, such as CPI. The Company recognizes lease expense for its operating leases on a straight-line basis over the lease term and variable lease expense not included in the lease payment measurement as incurred.

The accounting guidance under ~~Topic~~ASC 842 requires the Company to make certain assumptions and judgments in applying the guidance, including determining whether an arrangement includes a lease, determining the term of a lease when the contract has renewal or termination provisions and determining the discount rate.

The Company determines whether an arrangement is or includes a lease at contract inception by evaluating whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. If the Company has the right to obtain substantially all of the economic benefits from and can direct the use of, the identified asset for a period of time, the Company accounts for the contract as a lease.

The Company uses the information available at the lease commencement date to determine the discount rate for any new leases. The Company used a portfolio approach to determine its incremental borrowing rate. Lease contracts were grouped based on similar lease terms and economic environments in a manner in which the Company reasonably expects that the outcome from applying a portfolio approach does not differ materially from an individual lease approach. The Company estimated a collateralized discount rate for each portfolio of leases.

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LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 and 2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

Supplemental information related to operating leases is as follows:


	Six Months Ended
	June 30, 2023		June 30, 2022
Weighted-average remaining lease term
Operating leases (years)	9.2		9.5
Weighted-average discount rate
Operating leases	4.1	%	4.0	%

The components of lease expense for the six months ended June 30, 2023 and 2022 were as follows:


Income Statement Classification	Fixed		Variable		Total
2023:
Property operating	$	1,771	$	7	$	1,778
General and administrative	767		151		918
Total	$	2,538	$	158	$	2,696

2022:
Property operating	$	1,771	$	—	$	1,771
General and administrative	767		42		809
Total	$	2,538	$	42	$	2,580

The Company recognized sublease income of $1,660 for the six months ended June 30, 2023 and 2022, respectively.

The following table shows the Company's maturity analysis of its operating lease liabilities as of June 30, 2023:


	Operating Leases
2023 - remainder	$	2,501
2024	5,199
2025	5,204
2026	4,174
2027	3,673
2028	1,061
Thereafter	6,440
Total lease payments	$	28,252
Less: Imputed interest	(5,447)
Present value of lease liabilities	$	22,805

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LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2022~~2023 and ~~2021~~2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

~~Supplemental information~~

(10)Allowance for Credit Loss

As of June 30, 2023, the Company had a $62 credit loss allowance resulting from an investment in a sales-type lease. There were no allowances for credit losses in 2022. The activity for the credit loss allowance related to ~~operating leases~~the sales-type lease is as follows:

Nine Months Ended
September 30, 2022 September 30, 2021
Weighted-average remaining lease term
Operating leases (years) 9.4 11.3
Weighted-average discount rate
Operating leases 4.0 % 4.1 %


	For the Six Months Ended June 30, 2023
	Balance at Beginning of Period		Write-Offs		General Allowance		Balance at End of Period
Allowance for credit loss	$	93	$	—	$	(31)	$	62

~~The components~~As of June 30, 2023, the lessee in the sales-type lease ~~expense for~~remains current on their obligations to the ~~nine months ended September 30, 2022~~Company and, ~~2021 were as follows:~~

Income Statement Classification Fixed Variable Total
2022:
Property operating $ 2,657 $ — $ 2,657
General and administrative 1,144 81 1,225
Total $ 3,801 $ 81 $ 3,882
2021:
Property operating $ 2,734 $ 2 $ 2,736
General and administrative 1,037 24 1,061
Total $ 3,771 $ 26 $ 3,797

~~The Company recognized sublease income of $2,490 and $2,569 for~~therefore, the ~~nine months ended September 30, 2022 and 2021, respectively.~~investment is not on non-accrual status.

The following table ~~shows~~details the ~~Company's maturity analysis of its operating~~investment in a sales-type lease ~~liabilities~~ as of ~~September~~June 30, ~~2022:~~2023:

Operating Leases
2022 - remainder $ 1,198
2023 5,290
2024 5,199
2025 5,204
2026 4,174
2027 3,673
Thereafter 7,501
Total lease payments $ 32,239
Less: Imputed interest (6,177)
Present value of operating lease liabilities $ 26,062


	As of June 30, 2023
	Amortized cost		Allowance		Net Investment		Allowance as a % of Amortized Cost
Investment in a sales-type lease	$	62,393	$	(62)	$	62,331	0.10	%

~~(10)~~(11)Concentration of Risk

The Company seeks to reduce its operating and leasing risks through the geographic diversification of its properties in target markets, tenant industry diversification, avoidance of dependency on a single asset and the creditworthiness of its tenants. For the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, no single tenant represented greater than 10% of rental revenues.

Cash and cash equivalent balances at certain institutions may exceed insurable amounts. The Company believes it mitigates this risk by investing in or through major financial institutions.

~~Table of Contents~~

~~LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2022 and 2021~~

~~(Unaudited and dollars in thousands, except share/unit and per share/unit data)~~

~~(11)~~(12)Equity

Shareholders' Equity:

At-The-Market Offering Program. The Company maintains an At-The-Market offering program ("ATM program") under which the Company can issue common shares, including through forward sales contracts.

During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2023 and 2022, the ~~Company sold 1,052,800 shares under the ATM Program for net proceeds of $13,574. The~~ Company did not sell shares under the ATM ~~program during the nine months ended September 30, 2022.~~program.

During the ~~nine~~six months ended ~~September~~June 30, 2022, the Company issued 3,649,023 common shares previously sold on a forward basis in the first quarter of 2021 on the maturity date of the contracts and received $38,492 of net proceeds. ~~During the nine months ended September 30, 2021, the Company settled 3,875,751 common~~No shares ~~previously~~were sold on a forward basis onduring the ~~maturity date of the contract and received $41,933 of net proceeds.~~six months ended June 30, 2023.

During 2021, the Company amended the terms of its ATM ~~offering~~ program, under which the Company may, from time to time, sell up to $350,000 of common shares over the term of the program. As of ~~September~~June 30, ~~2022,~~2023, common shares with an aggregate value of $294,985 remain available for issuance under the ATM program.

~~Underwritten equity offerings.~~ During 2021, the Company entered into forward sales contracts for the sale of 16,000,000 common shares at a public offering price of $12.11 per common share in an underwritten equity offering that have not yet settled. The forward sales contracts mature in December 2022, subject to the Company's rights to elect cash or net share settlement. As of September 30, 2022, the forward sales contracts had an aggregate settlement price of $182,141, which is subject to adjustment in accordance with the forward sales contracts.

Stock Based Compensation. During the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, the Company issued ~~47,505~~46,440 and ~~38,803,~~25,297, respectively, of fully vested common shares to non-management members of the Company's Board of Trustees with a fair value of ~~$616~~$480 and ~~$437,~~$357, respectively.

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LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 and 2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

Share Repurchase Program. In August 2022, the Company's Board of Trustees authorized the repurchase of up to an additional ~~up to~~ 10,000,000 common shares under the Company's share repurchase program, ~~with no~~which does not have an expiration date. There were no common shares repurchased during the six months ended June 30, 2023. During the ~~nine~~six months ended ~~September~~June 30, 2022, ~~11,702,074~~6,098,026 common shares were repurchased and retired for an average price of ~~$10.84~~$11.45 per share. ~~There were no common shares repurchased during the nine months ended September 30, 2021.~~ As of ~~September~~June 30, ~~2022, 7,274,241~~2023, 6,874,241 common shares remain available for repurchase under this authorization. The Company records a liability for repurchases that have not yet been settled as of the period end. There were ~~$3,649 of~~no unsettled repurchases as of ~~September~~June 30, ~~2022.~~2023.

Series C Preferred Stock. The Company had 1,935,400 shares of Series C Cumulative Convertible Preferred Stock (“Series C Preferred”) outstanding at ~~September~~June 30, ~~2022.~~2023. The shares have a dividend of $3.25 per share per annum, ~~and~~ have a liquidation preference of ~~$96,770.~~$96,770, and the Company, if certain common share prices are achieved, can force conversion into common shares of the Company. As of ~~September~~June 30, ~~2022,~~2023, each share was convertible into 2.4339 common shares. This conversion ratio may increase over time if the Company'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's option, cause shares 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's common shares equals or exceeds 125% of the then prevailing conversion price of the Series C Preferred.

~~Table of Contents~~

~~LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2022 and 2021~~

~~(Unaudited and dollars in thousands, except share/unit and per share/unit data)~~

Holders of shares 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.

A summary of the changes in accumulated other comprehensive income (loss) related to the Company's cash flow hedges is as follows:


		Nine Months Ended September 30,					Six Months Ended June 30,
		2022		2021			2023		2022
Balance at beginning of period	Balance at beginning of period	$	(6,258)	$	(17,963)	Balance at beginning of period	$	17,689	$	(6,258)
Other comprehensive income before reclassifications	Other comprehensive income before reclassifications	22,469		3,381		Other comprehensive income before reclassifications	3,888		13,895
Amounts of loss reclassified from accumulated other comprehensive income to interest expense		1,557		3,691
Amounts of income (loss) reclassified from accumulated other comprehensive income (loss) to interest expense						Amounts of income (loss) reclassified from accumulated other comprehensive income (loss) to interest expense	(5,377)		1,921
Balance at end of period	Balance at end of period	$	17,768	$	(10,891)	Balance at end of period	$	16,200	$	9,558

Noncontrolling Interests. In conjunction with several of the Company's acquisitions in prior years, sellers were issued limited partner interests in LCIF (“OP units”) as a form of consideration. All OP units, other than OP units owned by the Company, are 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 ~~at the holder's option~~ for approximately 1.13 common shares, subject to future adjustments.

During the six months ended June 30, 2023 and 2022, 4,886 and 20,232 common shares, respectively, were issued by the Company, in connection with OP unit redemptions, for an aggregate value of $25 and $109, respectively.

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LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 and 2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

As of ~~September~~June 30, ~~2022,~~2023, there were approximately ~~745,000~~735,000 OP units outstanding other than OP units owned by the Company. All OP units receive distributions in accordance with the LCIF partnership agreement. To the extent that the Company's dividend per common share is less than the stated distribution per OP unit per the LCIF partnership agreement, the distributions per OP unit are reduced by the percentage reduction in the Company's dividend per common share. No OP units have a liquidation preference.

The following discloses the effects of changes in the Company's ownership interests in its noncontrolling interests:


		Net Income Attributable to Shareholders and Transfers from Noncontrolling Interests					Net Income Attributable to Shareholders and Transfers from Noncontrolling Interests
		Nine Months Ended September 30,					Six Months Ended June 30,
		2022		2021			2023		2022
Net income attributable to LXP Industrial Trust shareholders	Net income attributable to LXP Industrial Trust shareholders	$	75,310	$	120,358	Net income attributable to LXP Industrial Trust shareholders	$	3,118	$	51,920
Transfers from noncontrolling interests:	Transfers from noncontrolling interests:					Transfers from noncontrolling interests:
Increase in additional paid-in-capital for reallocation of noncontrolling interests		—		435

Increase in additional paid-in-capital for redemption of noncontrolling OP units	Increase in additional paid-in-capital for redemption of noncontrolling OP units	177		670		Increase in additional paid-in-capital for redemption of noncontrolling OP units	25		109
Change from net income attributable to shareholders and transfers from noncontrolling interests	Change from net income attributable to shareholders and transfers from noncontrolling interests	$	75,487	$	121,463	Change from net income attributable to shareholders and transfers from noncontrolling interests	$	3,143	$	52,029

~~(12)~~(13)Related Party Transactions

There were no related party transactions other than those disclosed elsewhere in these unaudited condensed consolidated financial statements.

~~(13)~~(14)Commitments and Contingencies

In addition to the commitments and contingencies disclosed elsewhere, the Company has the following commitments and contingencies.

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~~LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2022 and 2021~~

~~(Unaudited and dollars in thousands, except share/unit and per share/unit data)~~

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 ~~September~~June 30, ~~2022,~~2023, the Company had six ongoing consolidated development projects and expects to incur approximately ~~$56,400 and $113,300 in~~$77,000 of costs during the remainder of ~~2022 and~~ 2023, ~~respectively,~~ excluding noncontrolling interests' share, to substantially complete the construction and estimated tenant improvements and leasing costs of such projects. Etna Park 70, LLC, a joint venture that the ~~projects.~~Company has a 90% ownership interest, commenced construction of industrial facility estimated to cost $29,000. As of ~~September~~June 30, ~~2022,~~2023, the Company has interests in various industrial land parcels held for development. The Company is unable to estimate the timing of any required funding for the potential development projects on these parcels.

The Company and LCIF are parties to a funding agreement under which the Company may be required to fund distributions made on account of LCIF's OP units. Pursuant to the funding agreement, the parties agreed that, if LCIF does not have sufficient cash available to make a quarterly distribution to its limited partners in an amount in accordance with the partnership agreement, LXP Industrial Trust will fund the shortfall. Payments under the agreement will be made in the form of loans to LCIF and will bear interest at prevailing rates as determined by the Company in its discretion but, no less than the applicable federal rate. LCIF's right to receive these loans will expire if no OP units remain outstanding and all such loans are repaid. No amounts have been advanced under this agreement.

From time to time, the Company is directly or indirectly involved in legal proceedings arising in the ordinary course of business. Management believes, based on currently available information, and after consultation with legal counsel, that although the outcomes of those normal course proceedings are uncertain, the results of such proceedings, in the aggregate, will not have a material adverse effect on the Company's business, financial condition and results of operations.

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LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 and 2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

~~(14)~~(15)Supplemental Disclosure of Statement of Cash Flow Information

In addition to disclosures discussed elsewhere, during the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, the Company paid ~~$33,430~~$25,780 and ~~$35,515,~~$23,237, respectively, for interest and ~~$1,218~~$757 and ~~$1,273,~~$952, respectively, for income taxes.

During the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, the Company accrued additions for capital projects of ~~$52,049~~$34,884 and ~~$20,540,~~$50,591, respectively.

During the nine months ended September 30, 2021, the Company exercised extension options on a lease that resulted in a non-cash increase of $438 to the related operating lease liability and right of use asset.

During the nine months ended September 30, 2021, LCIF disposed of three real estate assets. The consideration included the redemption of 1,598,906 OP Units valued at $22,305 and the assumption of the aggregate related non-recourse debt of $11,610.

During the nine months ended September 30, 2021, the acquisition of the interests in RR Ocala 44, LLC joint venture not already owned by the Company included a $489 non-cash increase to investments in real estate under construction and the noncontrolling interest because a member of the joint venture made a non-cash contribution of the land in exchange for its ownership interest in the joint venture.

~~(15)~~(16)Subsequent Events

Subsequent to ~~September~~June 30, ~~2022,~~2023, the Company:

•~~leased approximately 100 acres of land~~- acquired a newly-constructed, vacant warehouse/distribution facility containing 124,450 square feet, located in the ~~Phoenix, Arizona~~Dallas, Texas market for ~~20 years;~~a cost of $14,930; and,

•~~repurchased and retired 400,000 common shares for an average price of $9.10 per share; and~~

•- borrowed ~~$55,000~~$50,000 net, on its revolving credit facility.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Introduction

~~When~~Unless stated otherwise or the context otherwise requires, when we use the terms the “Company,” the “Trust,” “LXP,” “we,” “our,” and “us,” we refer collectively to LXP Industrial Trust and its consolidated subsidiaries. All of the Company's interests are held, and all of the property operating activities are conducted through special purposes entities, which we refer to as property owner subsidiaries or lender subsidiaries and 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 ‘‘this Quarterly Report” are to this Quarterly Report on Form 10-Q for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022.~~2023. The results of operations contained herein for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 are not necessarily indicative of the results that may be expected for a full year.

When we use the term “REIT,” we mean real estate investment trust. All references to ~~2022~~2023 and ~~2021,~~2022, refer to the periods ending ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively and our fiscal year ended December 31, ~~2021.~~

2022.

When we use the term “GAAP,” we mean United States generally accepted accounting principles in effect from time to time.

When we use the term “common shares,” we mean our shares of beneficial interest par value $0.0001, classified as common stock. When we use the term “Series C Preferred Shares,” we mean our beneficial interest classified as 6.50% Series C Cumulative Convertible Preferred Stock.

When we use the term “base rent,” we mean GAAP rental revenue and ancillary income, excluding billed tenant reimbursements and lease termination income.

When we use “Stabilized Portfolio,” we mean all real estate properties other than acquired or developed properties that have not achieved 90% occupancy within one-year of acquisition or substantial completion. Non-stabilized, substantially completed development projects are classified within investments in real estate under construction.

The following is a discussion and analysis of the unaudited condensed consolidated financial condition and results of operations of LXP Industrial Trust for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, and significant factors that could affect its prospective financial condition and results of operations. This discussion should be read together with the accompanying unaudited condensed consolidated financial statements of the Company included herein and notes thereto and with the consolidated financial statements and notes thereto included in the Company's most recent Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission, or SEC, on February ~~24, 2022,~~16, 2023, which we refer to as the Annual Report. Historical results may not be indicative of future performance.

Forward-Looking Statements. This Quarterly Report, together with other statements and information publicly disseminated by us, contains 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, 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,” “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 in “Management's Discussion and Analysis of Financial Condition and Results of Operations,” and under the headings “Risk Factors” in this Quarterly Report and under “Risk Factors” in Part I, Item A and “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Annual Report and other periodic reports filed by the Company with the SEC. Except as required by law, we undertake no obligation to publicly release any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Accordingly, there is no assurance that our expectations will be realized.

~~Overview~~

As of September 30, 2022, we had equity ownership interests in approximately 118 consolidated real estate properties, located in 21 states and containing an aggregate of approximately 54.1 million square feet of space, approximately 99.1% of which was leased.

Since December 31, 2015 through September 30, 2022, we transitioned our portfolio from approximately 16% warehouse/distribution assets to approximately 99% warehouse/distribution assets. As of September 30, 2022, our portfolio consisted of 109 warehouse/distribution facilities and nine other properties.

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~~On February 8, 2022,~~Overview

As of June 30, 2023, we ~~announced that~~had equity ownership interests in approximately 116 consolidated real estate properties, located in 20 states and containing an aggregate of approximately 54.2 million square feet of space, approximately 99.5% of which was leased.

As of June 30, 2023, our ~~Board~~portfolio consisted of ~~Trustees initiated a review of~~109 warehouse/distribution facilities and seven other properties. Our warehouse/distribution portfolio is primarily focused in our ~~strategic alternatives. On April 8, 2022, we announced that~~target markets within the Sunbelt and Midwest. We expect to grow these markets by executing on our ~~Board of Trustees suspended the review of strategic alternatives.~~development pipeline and opportunistically acquiring facilities in these markets.

~~Third~~Second Quarter ~~2022~~2023 Transaction Summary.

The following summarizes our significant transactions during the three months ended ~~September~~June 30, ~~2022.~~2023.

Leasing Activity:

~~During the third quarter of 2022, we entered~~•Entered into new and extended leases ~~and lease extensions~~ encompassing ~~0.3~~2.0 million square ~~feet.~~feet, including leasing two speculative development projects containing an aggregate of 1.6 million square feet, located in the Columbus, Ohio and Phoenix, Arizona markets. The average fixed rent on ~~these extended~~the new leases was ~~$7.57 per square foot compared to the average fixed rent on these leases before extension of $5.38~~$7.27 per square foot. The weighted-average ~~cost of~~ tenant improvements and lease commissions was ~~$0.95 per square foot for extended leases and $2.26~~$15.71 per square foot for new ~~first generation~~ leases.

Investments:

•Completed construction of the core and shell for three warehouse/distribution facilities containing 1.5 million square feet in the Greenville-Spartanburg, South Carolina and Central Florida markets.

•Invested ~~$70.6~~an aggregate of $27.1 million in development activities, including $23.4 million in six ongoing development ~~projects, which amount excludes our joint venture partners' share.~~

~~Capital Recycling:~~

•~~Disposed of our interest in an industrial warehouse/distribution property and two office/other properties for an aggregate gross sales price of $92.0 million.~~

~~Debt:~~

•Amended our revolving credit facility and the 2025 term loan with a new revolving credit facility and the continuation of the 2025 term loan (the "2022 Credit Agreement"). The 2022 Credit Agreement, among other things: (i) extended the maturity date of the revolving portion from February 2023 to July 2026, with two six-month extension options, subject to certain conditions, (ii) reduced the applicable margin for the revolving portion of the credit facility by five basis points to a range from 0.725% to 1.40%, and allows for further reductions upon the achievement of to-be-determined sustainability metrics, (iii) amended the debt covenants by reducing the capitalization rate for determining asset value and (iv) transitioned the facility to SOFR. Simultaneously, we converted the interest rate swap agreements to Term SOFR, which resulted in a new fixed interest rate of 2.722% on the 2025 term loan.

•~~Borrowed $10.0 million, net, on our revolving credit facility.~~

~~Equity:~~

•~~Increased the availability under the repurchase program by 10.0 million shares.~~

•~~Repurchased and retired 5.6 million common shares for an average price of $10.16 per share.~~projects.

Acquisition/~~Disposition~~Development Activity:

During the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, we ~~acquired~~completed and placed in service the following warehouse/distribution ~~assets:~~asset:

Market Square Feet Initial Capitalized Cost
(millions) Date Acquired Approximate Lease Term
(years) % Leased at Acquisition
Cincinnati/Dayton, OH(1)
232,500 $ 23.4 February 2022 N/A — %
Cincinnati/Dayton, OH 544,320 48.7 February 2022 10 100 %
Phoenix, AZ 268,872 59.1 April 2022 15 100 %
1,045,692 $ 131.2

Market

Square Feet

Initial Capitalized Cost
(millions)

Placed in Service Date

Approximate Lease Term
(years)

% Leased

Phoenix, Arizona

392,278

37.1

March 2023

10.0

100%

~~(1) Subsequent to acquisition, property was fully leased for approximately nine years.~~

~~Our acquisition~~Increased financing costs have slowed transaction activity ~~for 2022 compared to~~and development starts in our ~~acquisition activity for 2021 has been,~~target markets and isthe markets where we own properties. Proceeds from our dispositions are expected to ~~continue~~be used to ~~be,~~

~~modest primarily due to current market conditions. In addition, we have been prioritizing~~fund our development ~~over acquisitions due to the increased yield that development generally provides. We continue to monitor the acquisition market, but price discovery has been occurring in most markets.~~

~~During the nine months ended September 30, 2022, we disposed of six properties, inclusive of the dispositions referenced above, for an aggregate gross disposition price of $147.3 million.~~

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~~Development Activity:~~obligations and reduce leverage.

As of ~~September~~June 30, ~~2022,~~2023, we had six consolidated development projects in process with an aggregate estimated total cost of ~~$515.8~~$425.0 million. We anticipate our remaining funding obligation to substantially complete the construction and estimated tenant improvements and leasing costs of these six projects, exclusive of our joint venture partners' share, to be approximately ~~$169.7~~$77.0 million. However, the risks associated with development, including supply chain issues, could adversely impact our estimates.

Critical Accounting Estimates

In preparing the consolidated financial statements we have made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Accounting estimates are deemed critical if they involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. Below is a summary of the critical accounting estimates used in the preparation of our unaudited condensed consolidated financial statements. A summary of our significant accounting policies which are important to the portrayal of our financial condition and results of operations is set forth in (1) Note 2 to our audited consolidated financial statements, which are included in “Financial Statements and Supplementary Data” in Part II, Item 8 of the Annual Report and (2) Note 2 to our unaudited condensed consolidated financial statements contained in this Quarterly Report.

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Acquisition of Real Estate. Primarily all of our acquisitions of real estate assets and liabilities are accounted for as asset acquisitions. As such, the purchase prices of acquired tangible and intangible assets and liabilities are recorded and allocated at fair value on a relative basis. The recorded allocations of tangible assets are based on the “as-if-vacant” value using estimated cash flow projections of the properties acquired which incorporates discount, capitalization and interest rates as well as available comparable market information. Allocations of intangible assets includes management’s estimates of current market rents and leasing costs.

We use considerable judgement in our estimates of cash flow projections, discount, capitalization and interest rates, fair market lease rates, carrying costs during hypothetical expected lease-up periods and costs to execute similar leases. While our methodology for purchase price allocation did not change during the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, the real estate market is fluid and our assumptions are based on information currently available in the market at the time of acquisition. Significant increases or decreases in these key estimates, particularly with regards to cash flow projections and discount and capitalization rates, would result in a significantly lower or higher fair value measurement of the real estate assets being acquired.

Revenue Recognition. We enter into agreements with tenants that convey the right to control the use of identified space at our properties in exchange for rental revenue. These agreements meet the criteria for recognition as leases under Accounting Standards Codification (“ASC”) 842, Leases. Lease classification tests require significant estimates and judgments by management in its application. Upon lease commencement or lease modification, we assess the lease classification to determine whether the lease should be classified as a direct financing, sales-type or operating lease. The determination of lease classification requires the calculation of the rate implicit in the lease, which is driven by significant estimates, including the estimation of both the value assigned to the property components on the lease commencement date or upon acquisition and the estimation of the unguaranteed residual value of such components at the end of the lease term. The determination of the lease term also requires judgement because the probability of purchase options and renewals have to be analyzed to conclude if they are reasonably certain of being exercised. If the lease component is determined to be a direct financing or sales-type lease, revenue is recognized over the life of the lease using the rate implicit in the lease.

Most of our leases are operating leases. We recognize operating 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. We commence revenue recognition when possession or control of the space is turned over to the tenant.

We evaluate the collectability of our rental payments and recognize revenue on a cash basis when we believe it is no longer probable that we will receive substantially all of the remaining lease payments. Management exercises judgment in assessing collectability of tenant receivables and considers payment history, current credit status, publicly available information about the financial condition of the tenant and other factors. Our assessment of the collectability of tenant receivables can have a significant impact on the rental revenue recognized in our unaudited condensed consolidated statements of operations.

Impairment of Real Estate. We record impairments of our real estate assets classified as held for use when triggering events dictate that an asset may be impaired. An impairment is recorded when the carrying amount of the asset exceeds the sum of its undiscounted future operating and residual cash flows. The impairment recorded is the difference between estimated fair value of the asset and the carrying amount. We record impairments of our real estate assets classified as held for sale at the lower of the carrying amount or estimated fair value using the estimated or contracted sales price less costs to sell. Any real estate assets recorded at fair value on a non-recurring basis as a result of our impairment analysis are valued using unobservable local and national industry market data such as comparable sales, appraisals, brokers’ opinions of value and/or terms of definitive sales contracts. Additionally, the analysis includes considerable ~~judgment~~judgement in our estimates of hold periods, projected cash flows and discount and capitalization rates. Significant increases or decreases in any of these inputs, particularly with regards to cash flow projections and discount and capitalization rates, would result in a significantly lower or higher fair value measurement of the real estate assets being assessed.

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We will record an impairment charge related to our investments, including investments in non-consolidated entities, if we determine the fair value of the investments are less than their carrying value and such impairment is other-than-temporary. We evaluate whether events or changes in circumstances indicate that the carrying amount of our investments may not be recoverable. Our evaluation of changes in economic or operating conditions and whether an impairment is other-than-temporary may include developing estimates of fair value, forecasted cash flows or operating income before depreciation and amortization. We estimate undiscounted cash flows and fair value using observable and unobservable data such as operating income, hold periods, estimated capitalization and discount rates, or relevant market multiples, leasing prospects and local market information and whether certain impairments are other-than-temporary.

Allowance for Credit Losses.“ASC 326, Financial Instruments-Credit Losses” (“ASC 326”) requires that we measure and record current expected credit losses for our sales-type lease. We have elected to use a discounted cash flow model to estimate the allowance for credit losses. This model requires us to develop cash flows which project estimated credit losses over the life of the lease and discount these cash flows at the asset’s effective interest rate. We then record an allowance equal to the difference between the amortized cost basis of the asset and the present value of the expected credit loss cash flows.

Expected losses within our cash flows are determined by estimating the probability of default of our tenant and their parent guarantors over the term of the lease. We evaluate the collectability of our investment in a sales-type lease based various

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probability weighted default scenarios that include, but are not limited to, current payment status, the financial strength of our tenant and its parent guarantors, current economic conditions and 20 years of historical information on corporate defaults for entities with similar credit. Estimates in the discounted cash flow model are highly subjective. We have engaged a nationally recognized data analytics firm to assist us with estimating the probability of default of our tenant and their parent guarantor.

We regularly evaluate the extent and impact of any credit deterioration that could affect performance and the value of our investment in a sales-type lease, as well as the financial and operating capability of the tenant. We also evaluate the tenant’s competency in managing and operating the secured property and consider the overall economic environment, real estate sector and geographic sub-market in which the secured property is located. If a tenant's credit deteriorates and it defaults under the terms of the sales-type lease, we put the lease in non-accrual status until it is determined that all payments under the lease are probable of being collected. The criteria evaluated to determine when a lease is in non-accrual status is subjective.

Liquidity and Capital Resources

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 applicable REIT requirements in both the short-term and long-term, however, our cash flow from operations may be negatively affected in the near term if we experience tenant defaults as a result of the effects of the current economic ~~condition.~~conditions. In addition, we anticipate that cash on hand, borrowings under our unsecured revolving credit facility, capital recycling proceeds, issuances of equity, mortgage proceeds and other debt, as well as other available alternatives, will provide the necessary capital required by our business.

At ~~September~~June 30, ~~2022,~~2023, our property owner subsidiaries do not have mortgage maturities with balloon payments due until 2031. In addition, certain of our subsidiaries are obligated to fund the construction of our development projects and we sometimes guaranty these obligations. We believe our property owner subsidiaries have sufficient sources of liquidity to meet these obligations through future cash flows from operations, the credit markets and, if determined appropriate by us, a capital contribution from us from either cash on hand ($~~29.4~~23.2 million at ~~September~~June 30, ~~2022)~~2023), property sale proceeds and borrowing capacity under our unsecured revolving credit facility ($~~470.0~~600.0 million at ~~September~~June 30, ~~2022,~~2023, subject to covenant compliance)~~, unsettled forward common share sale contracts, and future cash flows from operations.~~.

Cash flows from operations were ~~$154.1~~$92.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 as compared to ~~$167.4~~$95.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. The decrease was primarily related to property sales, ~~and a decrease in termination fee income,~~ partially offset by the impact of cash flow generated from acquiring ~~properties.~~properties and stabilizing development assets. The underlying drivers that impact our working capital, and therefore cash flows from operations, are the timing of collection of rents, including reimbursements from tenants, 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 the 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. The collection and timing of tenant rents are closely monitored by management as part of our cash management program.

Net cash used in investing activities totaled ~~$208.2~~$38.9 million and ~~$344.1~~$217.1 million during the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. Cash used in investing activities in 2023 related primarily to ~~acquisitions of real estate,~~ investments in real estate under construction, capital expenditures, lease costs, investments in non-consolidated entities and changes in real estate deposits, net. Cash provided by investing activities primarily related to net proceeds received from the disposition of real estate and distributions from non-consolidated entities. During the six months ended June 30, 2022, cash used in investing activities included additional acquisition and development activity when compared to 2023.

Net cash ~~(used in) provided by~~used in financing activities totaled ~~$(107.5)~~$85.0 million and ~~$147.7~~$19.2 million during the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. Cash used in financing activities in 2023 was primarily related to dividend and debt service payments. Cash used in financing activities in 2022 was primarily related to the repurchase of common ~~shares,~~stock, the purchase of a noncontrolling interest and dividend and debt service payments, offset by ~~credit facility borrowings. Cash provided by financing activities in 2021 was primarily related to the issuance of the 2031 Senior Notes,~~common stock issuances and revolving credit facility ~~borrowings, mortgage proceeds, issuances of common shares and cash contributions from noncontrolling interests, offset by the redemption of the 2023 Senior Notes, dividend and debt service payments.~~borrowings.

~~Common Share Issuances:~~

At-The-Market Offering Program. We maintain an At-The-Market offering program ("ATM program") under which ~~the Company~~we can issue common shares, including through forward sales contracts.

~~During the nine months ended September 30, 2021, we sold 1.1 million shares under the ATM Program for net proceeds of $13.6 million.~~ We did not sell shares under the ATM program during the ~~nine~~six months ended ~~September~~June 30, ~~2022.~~2023 and June 30, 2022, respectively.

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During the ~~nine~~six months ended ~~September~~June 30, 2022, we settled 3.6 million common shares previously sold in 2021 on a forward basis on the maturity date of the contracts and received $38.5 million of net proceeds. During the nine months ended September 30, 2021, we settled 3.9 million common shares previously sold on a forward basis on the maturity date of the contract and received ~~$41.9~~$38.5 million of net proceeds. ~~All~~No shares were sold on a forward ~~sales contracts under our ATM program have been settled as of September~~basis during the six months ended June 30, ~~2022.~~2023.

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In February 2021, we amended the terms of our ATM ~~offering~~ program, under which we may, from time to time, sell up to $350.0 million common shares over the term of the program. As of ~~September~~June 30, ~~2022,~~2023, common shares with an aggregate value of $295.0 million remain available for issuance under the ATM program.

~~Underwritten Equity Offerings~~. In May 2021, we entered into forward sales contracts for the sale of 16,000,000 common shares at a public offering price of $12.11 per common share in an underwritten equity offering that have not yet settled. The forward sales contracts mature in December 2022, subject to our right to elect cash or net share settlement. As of September 30, 2022, the forward sales contracts had an aggregate settlement price of $182.1 million, which is subject to adjustment in accordance with the forward sales contracts.

The volatility in the capital markets primarily resulting from the effects of the current economic conditions may negatively affect our ability to access the capital markets through our ATM program and other offerings.

Share Repurchase Program. During 2022, our Board of Trustees authorized the repurchase of an additional 10.0 million common shares under ~~the Company's~~our share repurchase program with no expiration date. ~~During the nine months ended September 30, 2022, we repurchased and retired approximately 11.7 million common shares at an average price of $10.84 per share.~~ We did not repurchase any common shares during the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2023. During the six months ended June 30, 2022, we repurchased and retired approximately 6.1 million common shares at an average price of $11.45 per share. Approximately ~~7.3~~6.9 million common shares remained available for repurchase under the current authorization as of ~~September~~June 30, ~~2022.~~2023. We, ~~have continued to, and~~ in the future, may repurchase our common shares in the context of our overall capital plan and to the extent we believe market volatility offers prudent investment opportunities based on our common share price versus net asset value per share.

Dividends. Dividends paid to our common and preferred shareholders were ~~$107.9~~$76.1 million and ~~$95.9~~$72.7 million in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

We declared a quarterly dividend of ~~$0.12~~$0.125 per common share during the ~~three~~six months ended ~~September~~June 30, ~~2022,~~2023, which is an increase of $0.005 per common share from the ~~$0.1075~~$0.12 per common share quarterly dividend declared during the ~~three~~six months ended ~~September~~June 30, ~~2021.~~2022.

~~UPREIT Structure.~~Operating Partnership. As of ~~September~~June 30, ~~2022,~~2023, 0.7 million units of limited partner interests, or OP units, in our operating partnership, LCIF, were outstanding not including OP units held by us. Assuming all outstanding OP units not held by us were redeemed on such date, the estimated fair value of such OP units was ~~$7.7~~$8.1 million based on our closing price of ~~$9.16~~$9.75 per common share as of ~~September~~June 30, ~~2022~~2023 and a redemption factor of approximately 1.13 common shares per OP unit.

Financings. The following senior notes were outstanding as of ~~September~~June 30, ~~2022:~~2023:


Issue Date	Issue Date	Face Amount ($000)		Interest Rate		Maturity Date	Issue Price		Issue Date	Face Amount (millions)		Interest Rate		Maturity Date	Issue Price
August 2021	August 2021	$	400,000	2.375	%	October 2031	99.758	%	August 2021	$	400.0	2.375	%	October 2031	99.758	%
August 2020	August 2020	400,000		2.70	%	September 2030	99.233	%	August 2020	400.0		2.70	%	September 2030	99.233	%
May 2014	May 2014	198,932		4.40	%	June 2024	99.883	%	May 2014	198.9		4.40	%	June 2024	99.883	%
		$	998,932
Senior note payable									Senior note payable	$	998.9

Each series of senior notes is unsecured and requires payment of interest semi-annually in arrears. We may redeem the notes at our option at any time prior to maturity in whole or in part by paying the principal amount of the senior notes being redeemed plus aany potential make-whole premium.

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A summary of the maturity dates and interest rates of our unsecured credit agreement, as of ~~September~~June 30, ~~2022,~~2023, are as follows:


	Maturity Date	Current Interest Rate
$600.0 Million Revolving Credit Facility(1)	July 2026	SOFR + 0.85%
$300.0 Million Term Loan(2)	January 2025	Term SOFR + 1.00%

(1) Maturity date of the revolving credit facility can be extended to July 2027 at our ~~option.~~option, subject to certain conditions. The interest rate ranges from SOFR plus 0.725% to 1.40%. At ~~September~~June 30, ~~2022,~~2023, we had ~~$130.0 million~~no borrowings outstanding and availability of ~~$470.0~~$600.0 million, subject to covenant compliance.

(2) The Term SOFR portion of the interest rate was swapped to obtain a current fixed rate of 2.722%.

As of ~~September~~June 30, ~~2022,~~2023, we were compliant with all applicable financial covenants contained in our corporate-level debt agreements.

~~Contractual Obligations~~

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Development Costs

As of ~~September~~June 30, ~~2022,~~2023, we had six ongoing consolidated development projects and expect to incur approximately ~~$56.4 million and $113.3~~$77.0 million of costs induring the remainder of ~~2022 and~~ 2023, ~~respectively,~~ excluding noncontrolling interests' share, to substantially complete the construction of such ~~projects and~~projects. Etna Park 70, LLC, a joint venture that the Company has a 90% ownership interest, commenced construction of industrial facility estimated ~~tenant improvement and leasing costs.~~to cost $29.0 million. As of ~~September~~June 30, ~~2022,~~2023, we had ~~interests in various~~three consolidated and two non-consolidated subsidiaries that owned land parcels held for industrial development. We are unable to estimate the timing of any required funding for potential development projects on these parcels.

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Results of Operations

Three months ended ~~September~~June 30, ~~2022~~2023 compared with three months ended ~~September~~June 30, ~~2021~~2022. The ~~increase~~decrease in net income (loss) attributable to common shareholders of ~~$16.7~~$49.4 million was primarily due to the items discussed below.

The ~~decrease~~increase in total gross revenues of ~~$3.3~~$7.3 million was primarily due to ~~property sales, including the recapitalization~~an increase of ~~our special purpose industrial portfolio now owned by MFG Cold JV, which was~~$3.9 million in base rental revenue and a $3.2 million increase in tenant reimbursement income primarily due to acquisitions, properties placed in service and leasing, partially offset by a decrease in rental revenue ~~from recently acquired properties and an~~due to property sales.

The increase in ~~advisory fees during the three months ended September~~depreciation and amortization expense of $0.8 million was primarily due to properties acquired and/or completed and placed in service subsequent to June 30, 2022.

The increase in property operating expense of ~~$2.6~~$2.0 million was primarily due to an increase in operating expense responsibilities at certain properties.

The ~~increase in general and administrative expenses of $0.7 million was primarily due to an increase in costs related to shareholder activism and trustee fees.~~

~~The~~ decrease in interest and amortization expense of ~~$1.0~~$0.7 million related primarily to a ~~$1.4~~$1.8 million increase in capitalized interest related to ~~increased~~our on-going development. ~~The decrease was partially~~Additionally, interest expense decreased $0.3 million related to secured debt outstanding. These decreases were offset by a $1.4 million increase in interest expense related to increased interest rates on our variable-rate unsecured debt during the three months ended ~~September~~June 30, ~~2022~~2023 compared to the three months ended ~~September~~June 30, ~~2021.~~2022.

The ~~decrease in debt satisfaction losses, net of $13.1 million was primarily related to the redemption of the 2023 Senior Notes in the third quarter of 2021.~~

~~The decrease~~increase in impairment charges of ~~$1.4~~$11.1 million was primarily related to the timing of impairment charges recognized on certain properties. The impairments in ~~each period~~2023 were taken on office assets primarily due to a potential ~~sale, vacancy and lack of leasing prospects.~~sales.

The ~~increase~~decrease in gains on sales of properties of ~~$8.7~~$27.9 million was related to the timing of property dispositions.

The decrease in equity in earnings (losses) of non-consolidated entities of $1.3 million was primarily due to property sales and recognizing our share of impairment charges related to NNN JV in 2022 that resulted in a decrease in equity in earnings of $0.7 million. Additionally, we incurred $0.6 million of net losses from MFG Cold JV, which was formed subsequent to September 30, 2021.

~~Nine months ended September 30, 2022 compared with nine months ended September 30, 2021~~. ~~The decrease in net income attributable to common shareholders of $45.0 million was primarily due to the items discussed below.~~

The decrease in total gross revenues of $17.4 million was primarily due to a decrease in termination income of $13.9 million recognized during the nine months ended September 30, 2021. In addition, property sales, including the recapitalization of our special purpose industrial portfolio now owned by MFG Cold JV, contributed to the decrease, which was partially offset by revenue from recently acquired properties and an increase in advisory fees.

~~The increase in depreciation and amortization expense of $4.1 million was primarily due to acquisition activity.~~

~~The increase in property operating expense of $8.3 million was primarily due to an increase in operating expense responsibilities at certain properties.~~

The increase in general and administrative expenses of $4.4 million was primarily due to an increase of $2.6 million in costs incurred related to the Board of Trustees' strategic alternatives review and costs related to shareholder activism. The remaining $1.8 million increase is primarily due to an increase in payroll expense, trustee fees, legal and other consulting costs.

~~The decrease in non-operating income of $0.6 million was primarily due to funds received for land easements at two of our properties in 2021 with no comparable income in 2022.~~

The decrease in interest and amortization expense of $2.4 million related primarily to the satisfaction of secured debt in 2021 and a $2.8 million increase in capitalized interest mostly related to increased development. The decrease was partially offset by an increase in interest expense related to increased unsecured debt outstanding and increased interest rates on our variable-rate unsecured debt during the nine months ended September 30, 2022 compared to the September 30, 2021.

~~The decrease in debt satisfaction losses, net of $13.1 million was primarily related to the redemption of the 2023 Senior Notes during the nine months ended September 30, 2021.~~

~~The decrease in gains on sales of properties of $51.8 million was related to the timing of property dispositions.~~

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~~The increase~~ in selling profit from sales-type lease of $9.3 million is due to a tenant exercising its purchase option resulting in a change in lease classification from an operating lease to a sales-type lease in 2022 with no comparable transaction in ~~2021.~~2023.

The ~~increase~~decrease in equity in earnings (losses) of non-consolidated entities of ~~$15.8~~$6.6 million was primarily due to recognizing our share of gains on sale of ~~three properties~~one property from the NNN Office JV L.P. in 2022 in the amount of ~~$22.9~~$11.6 million with no property sales at our non-consolidated entities in ~~2021.~~2023. The ~~increase~~decrease was primarily offset by recognizing our share of impairment charges and losses on debt satisfaction related to NNN Office JV L.P. in 2022 in the amount of ~~$4.8~~$4.2 million and $1.5 million, ~~respectively.~~respectively, with no similar transactions in 2023.

Six months ended June 30, 2023 compared with six months ended June 30, 2022.The decrease in net income (loss) attributable to ~~noncontrolling interests~~common shareholders of ~~$1.2~~$48.8 million was primarily ~~attributable~~due to the items discussed below.

The increase in total gross revenues of $12.1 million was primarily due to an increase of $6.8 million in base rental revenue and a $5.2 million increase in tenant reimbursement income primarily due to acquisitions, properties placed in service and leasing, partially offset by property sales.

The increase in depreciation and amortization expense of $2.0 million was primarily due to properties acquired and/or completed and placed in service subsequent to January 1, 2022.

The increase in property operating expense of $2.7 million was primarily due to an increase in operating expense responsibilities at certain properties.

The decrease of $1.8 million in general and administrative expense is primarily related to a decrease of $1.9 million in ~~third-party OP unitholders~~costs incurred related to the Board of Trustees' strategic alternatives review and consulting costs related to shareholder activism in 2022. There were no consulting costs incurred related to shareholder activism during the six months ended June 30, 2023.

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The increase in impairment charges of $14.7 million was primarily related to the timing of impairment charges recognized on certain properties. The impairments in 2023 were taken on office assets primarily due to potential sales.

The decrease in gains ~~recognized~~ on sales of properties ~~by LCIF.~~of $20.2 million was related to the timing of property dispositions.

The decrease in selling profit from sales-type lease of $9.3 million is due to a tenant exercising its purchase option resulting in a change in lease classification from an operating lease to a sales-type lease in 2022 with no comparable transaction in 2023.

The decrease in equity in earnings (losses) of non-consolidated entities of $14.3 million was primarily due to timing of property sales within our non-consolidated entities.

Same-Store Results

Same-store net operating income, or NOI, which is a non-GAAP measure, represents the NOI for consolidated properties that were owned, ~~stabilized and~~ included ~~in our portfolio~~ for the entirety of two comparable reporting periods. We define NOI as operating revenues (rental income (less non-cash GAAP rent adjustments, non-cash income related to sales-type leases and lease termination income, net), and other property income) less property operating expenses. As same-store NOI excludes the change in NOI from acquired and disposed of properties, it highlights operating trends such as occupancy levels, rental rates and operating costs on properties. Other REITs may use different methodologies for calculating same-store NOI, and accordingly same-store NOI may not be comparable to other REITs. Management believes that same-store NOI is a useful supplemental measure of our operating performance. However, same-store NOI should not be viewed as an alternative measure of our financial performance since it does not reflect the operations of our entire portfolio, nor does it reflect the impact of general and administrative expenses, acquisition-related expenses, interest expense, depreciation and amortization costs, other nonproperty income and losses, the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, or trends in development and construction activities which are significant economic costs and activities that could materially impact our results from operations. We believe that net income is the most directly comparable GAAP measure to same-store NOI.

The following presents our consolidated same-store NOI, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 ($000's):

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Total cash base rent $ 55,508 $ 52,858 $ 158,298 $ 152,005
Tenant reimbursements 10,063 8,283 27,291 24,736
Property operating expenses (11,646) (9,317) (32,135) (28,060)
Same-store NOI $ 53,925 $ 51,824 $ 153,454 $ 148,681


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Total cash base rent	$	62,350	$	59,194	$	121,357	$	115,936
Tenant reimbursements	13,526		10,961		25,759		22,096
Property operating expenses	(14,291)		(11,818)		(27,162)		(23,907)
Same-store NOI	$	61,585	$	58,337	$	119,954	$	114,125

Our ~~reported~~ same-store NOI increased for the three and ~~nine~~six months ~~of 2021~~ended June 30, 2023 compared to ~~the~~ three and ~~nine~~six months ofended June 30, 2022 by ~~4.1%~~5.6% and ~~3.2%~~5.1%, respectively, primarily due to an increase in cash base rents. As of ~~September~~June 30, 2023 and 2022, ~~and 2021,~~ our ~~historical~~ same-store ~~square footage~~properties were 99.8% leased, ~~was 99.5% and 99.9%,~~ respectively.

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Below is a reconciliation of net income (loss) to same-store NOI for periods presented ($000's):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Net income		$	23,591	$	7,058	$	76,037	$	122,320
Net income (loss)										Net income (loss)	$	(7,780)	$	41,538	$	3,535	$	52,446

Interest and amortization expense	Interest and amortization expense	11,255		12,210		32,758		35,170		Interest and amortization expense	10,144		10,821		21,537		21,503
Provision for income taxes	Provision for income taxes	271		270		951		986		Provision for income taxes	210		263		426		680
Depreciation and amortization	Depreciation and amortization	44,946		45,359		134,645		130,579		Depreciation and amortization	45,993		45,193		91,734		89,699
General and administrative	General and administrative	9,060		8,363		29,093		24,695		General and administrative	9,010		9,296		18,252		20,033
Transaction costs	Transaction costs	1		64		56		205		Transaction costs	—		(34)		4		55
Non-operating/advisory fee income	Non-operating/advisory fee income	(1,630)		(1,265)		(4,616)		(3,239)		Non-operating/advisory fee income	(1,143)		(1,503)		(2,545)		(2,986)
Gains on sales of properties	Gains on sales of properties	(24,841)		(16,122)		(52,951)		(104,767)		Gains on sales of properties	—		(27,855)		(7,879)		(28,110)
Impairment charges	Impairment charges	628		2,048		2,457		2,048		Impairment charges	12,967		1,829		16,490		1,829
Debt satisfaction (gains) losses, net		119		13,222		119		13,222
Selling profit from sales-type lease	Selling profit from sales-type lease	—		—		(9,314)		—		Selling profit from sales-type lease	—		(9,314)		—		(9,314)

Equity in (earnings) losses of non-consolidated entities	Equity in (earnings) losses of non-consolidated entities	1,340		75		(15,580)		249		Equity in (earnings) losses of non-consolidated entities	1,014		(5,619)		(2,590)		(16,920)
Lease termination income, net		(238)		(1,960)		(238)		(13,787)

Straight-line adjustments	Straight-line adjustments	(2,078)		(3,196)		(8,893)		(8,146)		Straight-line adjustments	(2,638)		(3,313)		(5,725)		(6,815)
Lease incentives	Lease incentives	128		192		391		605		Lease incentives	109		129		205		263
Amortization of above/below market leases	Amortization of above/below market leases	(455)		(314)		(1,416)		(1,211)		Amortization of above/below market leases	(449)		(481)		(898)		(961)
Sales-type lease interest income		13		—		—		—
Sales-types lease adjustments										Sales-types lease adjustments	(651)		(13)		(1,098)		(13)
NOI	NOI	62,110		66,004		183,499		198,929		NOI	66,786		60,937		131,448		121,389

Less NOI:	Less NOI:									Less NOI:
Acquisitions, development and dispositions		(8,185)		(14,180)		(30,045)		(50,248)
Acquisitions, developments and dispositions										Acquisitions, developments and dispositions	(5,201)		(2,600)		(11,494)		(7,264)

Same-Store NOI	Same-Store NOI	$	53,925	$	51,824	$	153,454	$	148,681	Same-Store NOI	$	61,585	$	58,337	$	119,954	$	114,125

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 (calculated in accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from the sales of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. The reconciling items include amounts to adjust earnings from consolidated partially-owned entities and equity in earnings of unconsolidated affiliates to FFO.” FFO does not represent cash generated from operating activities in accordance with GAAP and is not indicative of cash available to fund cash needs.

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We present FFO available to common shareholders and unitholders - basic and also present FFO available to all equityholders and unitholders - diluted on a company-wide basis as if all securities that are convertible, at the holder's option, into our common shares, are converted at the beginning of the period. We also present Adjusted Company FFO available to all equityholders and unitholders - diluted which adjusts FFO available to all equityholders and unitholders - diluted for certain items which we believe are not indicative of the operating results of 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 these measures in a similar fashion, these measures may not be comparable to similarly titled measures as reported by others. These measures should not be considered as an alternative to net income as an indicator of our 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 common shareholders to FFO available to common shareholders and unitholders and Adjusted Company FFO available to all equityholders and unitholders for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 (unaudited and dollars in thousands, except share and per share amounts):


		Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			Three Months Ended June 30,				Six Months Ended June 30,
FUNDS FROM OPERATIONS:	FUNDS FROM OPERATIONS:									FUNDS FROM OPERATIONS:	2023		2022		2023		2022
Basic and Diluted:	Basic and Diluted:									Basic and Diluted:
Net income attributable to common shareholders		$	21,776	$	5,028	$	70,441	$	115,470
Net income (loss) attributable to common shareholders										Net income (loss) attributable to common shareholders	$	(9,683)	$	39,667	$	(161)	$	48,665
Adjustments:	Adjustments:									Adjustments:
Depreciation and amortization		44,227		44,652		132,600		128,442
Impairment charges - real estate, including our share of non-consolidated entities		1,256		2,048		7,299		2,048
Depreciation and amortization - real estate										Depreciation and amortization - real estate	45,028		44,523		89,888		88,373
Impairment charges - real estate										Impairment charges - real estate	12,967		6,043		16,490		6,043
Noncontrolling interests - OP units	Noncontrolling interests - OP units	11		240		147		1,391		Noncontrolling interests - OP units	(81)		47		(78)		136
Amortization of leasing commissions	Amortization of leasing commissions	719		707		2,045		2,137		Amortization of leasing commissions	965		670		1,846		1,326
Joint venture and noncontrolling interest adjustment	Joint venture and noncontrolling interest adjustment	2,612		2,115		8,585		6,344		Joint venture and noncontrolling interest adjustment	1,929		2,823		4,329		5,973
Gains on sales of properties, including our share of non-consolidated entities, net of tax		(24,842)		(16,122)		(75,803)		(104,767)
Gains on sales of properties, including our share of non-consolidated entities										Gains on sales of properties, including our share of non-consolidated entities	—		(39,435)		(12,654)		(50,961)
FFO available to common shareholders and unitholders - basic	FFO available to common shareholders and unitholders - basic	45,759		38,668		145,314		151,065		FFO available to common shareholders and unitholders - basic	51,125		54,338		99,660		99,555
Preferred dividends	Preferred dividends	1,573		1,573		4,718		4,718		Preferred dividends	1,573		1,573		3,145		3,145
Amount allocated to participating securities	Amount allocated to participating securities	41		37		151		170		Amount allocated to participating securities	62		58		134		110
FFO available to all equityholders and unitholders - diluted	FFO available to all equityholders and unitholders - diluted	47,373		40,278		150,183		155,953		FFO available to all equityholders and unitholders - diluted	52,760		55,969		102,939		102,810

Selling profit from sales-type lease(1)	Selling profit from sales-type lease(1)	—		—		(9,314)		—		Selling profit from sales-type lease(1)	—		(9,314)		—		(9,314)
Non-recurring costs(2)		640		64		2,629		205
Allowance for credit losses										Allowance for credit losses	(110)		—		(31)		—
Transaction costs(2)										Transaction costs(2)	—		(34)		4		55
Debt satisfaction losses, net, including our share of non-consolidated entities	Debt satisfaction losses, net, including our share of non-consolidated entities	119		13,222		1,614		13,222		Debt satisfaction losses, net, including our share of non-consolidated entities	—		1,495		—		1,495
Other non-recurring costs(3)										Other non-recurring costs(3)	—		753		—		1,934
Noncontrolling interest adjustments										Noncontrolling interest adjustments	5		—		1		—
Adjusted Company FFO available to all equityholders and unitholders - diluted	Adjusted Company FFO available to all equityholders and unitholders - diluted	$	48,132	$	53,564	$	145,112	$	169,380	Adjusted Company FFO available to all equityholders and unitholders - diluted	$	52,655	$	48,869	$	102,913	$	96,980


Per Common Share and Unit Amounts	Per Common Share and Unit Amounts									Per Common Share and Unit Amounts
Basic:	Basic:									Basic:
FFO	FFO	$	0.16	$	0.14	$	0.51	$	0.54	FFO	$	0.18	$	0.19	$	0.34	$	0.35

Diluted:	Diluted:									Diluted:
FFO	FFO	$	0.17	$	0.14	$	0.52	$	0.55	FFO	$	0.18	$	0.19	$	0.35	$	0.35
Adjusted Company FFO	Adjusted Company FFO	$	0.17	$	0.19	$	0.50	$	0.59	Adjusted Company FFO	$	0.18	$	0.17	$	0.35	$	0.33


Weighted-Average Common Shares:	Weighted-Average Common Shares:					Weighted-Average Common Shares:
Basic:	Basic:					Basic:
Weighted-average common shares outstanding - basic EPS	Weighted-average common shares outstanding - basic EPS	277,535,717	278,124,204	281,559,058	276,379,718	Weighted-average common shares outstanding - basic EPS	290,186,934	283,568,078	290,134,015	283,604,072
Operating partnership units~~(3)~~(4)	Operating partnership units~~(3)~~(4)	846,858	1,161,757	859,226	2,263,105	Operating partnership units~~(3)~~(4)	828,603	860,048	830,335	865,512
Weighted-average common shares outstanding - basic FFO	Weighted-average common shares outstanding - basic FFO	278,382,575	279,285,961	282,418,284	278,642,823	Weighted-average common shares outstanding - basic FFO	291,015,537	284,428,126	290,964,350	284,469,584

Diluted:	Diluted:					Diluted:
Weighted-average common shares outstanding - diluted EPS	Weighted-average common shares outstanding - diluted EPS	278,521,946	282,048,458	284,609,950	278,581,849	Weighted-average common shares outstanding - diluted EPS	291,015,537	285,436,441	290,964,350	287,687,397
Operating partnership units(3)		—	1,161,757	—	2,263,105

Unvested share-based payment awards	Unvested share-based payment awards	—	53,320	23,175	35,645	Unvested share-based payment awards	135,172	10,140	131,522	34,762
Preferred shares - Series C	Preferred shares - Series C	4,710,570	4,710,570	4,710,570	4,710,570	Preferred shares - Series C	4,710,570	4,710,570	4,710,570	4,710,570
Weighted-average common shares outstanding - diluted FFO	Weighted-average common shares outstanding - diluted FFO	283,232,516	287,974,105	289,343,695	285,591,169	Weighted-average common shares outstanding - diluted FFO	295,861,279	290,157,151	295,806,442	292,432,729

(1) Gain recognized upon exercise of the tenant's purchase option in the lease.

(2) Includes ~~transaction,~~costs related to entering into a sales-type lease and other investments costs.

(3) Includes strategic alternatives and costs related to shareholder activism.

~~(3)~~(4) Includes ~~all~~ OP units other than OP units held by us.

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Off-Balance Sheet Arrangements

As of ~~September~~June 30, ~~2022,~~2023, we had investments in various real estate entities with varying structures. The real estate investments owned by ~~these entities~~our institutional joint ventures are generally financed with non-recourse debt. Non-recourse debt is generally defined as debt whereby the lenders' sole recourse with respect to borrower defaults is limited to the value of the assets collateralized by the 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 "bad boy" acts, including fraud, prohibited transfers and breaches of material ~~representations.~~representations, and environmental matters. We have guaranteed such obligations for certain of our non-consolidated entities with respect to ~~$608.7~~$503.9 million of such non-recourse debt. We believe the likelihood of making any payments under such guaranties is remote and we generally have an agreement from each partner to reimburse us for its proportionate share of any liability related to a guarantee trigger unless such trigger is caused solely by us.

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ITEM 3. QUANTITATIVE AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk relates primarily to our variable-rate indebtedness not subject to interest rate swaps and our fixed-rate debt. Our consolidated aggregate principal variable-rate indebtedness not subject to interest rate swaps was ~~$259.1~~$129.1 million and ~~$129.1~~$249.1 million, respectively, at ~~each of September~~June 30, ~~2022~~2023 and ~~2021,~~2022, which represented ~~15.9%~~8.6% and ~~8.4%~~15.3%, respectively, of our aggregate principal consolidated indebtedness. During the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, our variable-rate indebtedness had a weighted-average interest rate of ~~3.5%~~6.7% and ~~1.4%~~2.3%, respectively. Had the weighted-average interest rate been 100 basis points higher, our interest expense for the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 would have increased by $0.5 million and $0.6 million, ~~in each period.~~respectively. During the ~~nine~~six months ended ~~September~~June 30, 2023 and 2022, ~~and 2021,~~ our variable-rate indebtedness had a weighted-average ~~variable-rate~~ interest rate ~~was 2.7%~~of 6.5% and ~~1.7%~~2.2%, respectively. Had the weighted-average interest rate been 100 basis points higher, our interest expense for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 would have increased ~~by $1.5~~$1.0 million and ~~$1.3~~$0.9 million, respectively. At each of ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, our aggregate principal consolidated fixed-rate debt was $1.4 billion, respectively, which represented ~~84.1%~~91.4% and ~~91.6%~~84.7%, respectively, of our aggregate principal indebtedness.

For certain of our financial instruments, fair values are not readily available since there are no active trading markets as characterized by current exchanges between willing parties. Accordingly, we derive or estimate fair values using various valuation techniques, such as computing the present value of estimated future cash flows using discount rates commensurate with the risks involved. However, the determination of estimated cash flows may be subjective and imprecise. Changes in assumptions or estimation methodologies can have a material effect on these estimated fair values, especially given the volatility of the current economic environment. The following fair value was determined using the interest rates that we believe our outstanding fixed-rate indebtedness would warrant as of ~~September~~June 30, ~~2022.~~2023. We believe the fair value is indicative of the interest rate environment as of ~~September~~June 30, ~~2022,~~2023, but this amount does not take into consideration the effects of subsequent interest rate fluctuations. Accordingly, we estimate that the fair value of our fixed-rate indebtedness was $1.2 billion as of ~~September~~June 30, ~~2022.~~2023.

Our interest rate risk objectives are to limit the impact of interest rate fluctuations on earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, we manage our exposure to fluctuations in market interest rates through the use of fixed-rate debt instruments to the extent that reasonably favorable rates are obtainable with such arrangements. We may enter into derivative financial instruments such as interest rate swaps or caps to mitigate our interest rate risk on a related financial instrument or to effectively lock the interest rate on a portion of our variable-rate debt. As of ~~September~~June 30, ~~2022,~~2023, we had four interest rate swap agreements (see ~~note~~Note 8 to our unaudited condensed consolidated financial statements contained in this Quarterly Report).

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as such terms are defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report to determine if such controls and procedures were effective to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and 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 Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management, including each of our Chief Executive Officer and Chief Financial Officer, has concluded that our disclosure controls and procedures were effective as of ~~September~~June 30, ~~2022.~~2023.

Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this Quarterly Report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls. Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

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PART II - OTHER INFORMATION

ITEM 1.Legal Proceedings.

From time to time, we are directly and indirectly involved in legal proceedings arising in the ordinary course of our business, including claims by lenders under non-recourse carve-out guarantees. We believe, based on currently available information, and after consultation with legal counsel, that although the outcomes of those normal course proceedings are uncertain, the results of such proceedings, in the aggregate, will not have a material adverse effect on our business, financial condition and results of operations.

ITEM 1A.Risk Factors.

There have been no material changes in our risk factors from those disclosed in the Annual ~~Report other than the following:~~

~~Recent inflationary pressures could result in higher interest rates, which would have a negative impact on our business.~~

Rising inflation and elevated U.S. budget deficits and overall debt levels, including as a result of federal pandemic relief and stimulus legislation and/or economic or market and supply chain conditions, can put upward pressure on interest rates and could be among the factors that could lead to higher interest rates in the future. Higher interest rates could adversely affect our overall business, income, and our ability to pay dividends, including by reducing the fair value of many of our assets and adversely affecting our ability to obtain financing on favorable terms or at all, and negatively impacting the value of properties and the ability of prospective buyers to obtain financing for properties we intend to sell. This may affect our earnings results, reduce our ability to sell our assets, or reduce our liquidity. Furthermore, our business and financial results may be harmed by our inability to accurately anticipate developments associated with changes in, or the outlook for, interest rates.

~~Disruptions in the financial markets and uncertain economic conditions could adversely affect the value of our real estate investments.~~

Disruptions in the financial markets could adversely affect the value of our real estate investments. Concerns over economic recession, the COVID-19 pandemic, interest rate increases, policy priorities of the U.S. presidential administration, trade wars, labor shortages, or inflation may contribute to increased volatility and diminished expectations for the economy and markets. Additionally, concern over geopolitical issues may also contribute to prolonged market volatility and instability. For example, the conflict between Russia and Ukraine has led to disruption, instability and volatility in global markets and industries. The U.S. government and other governments in jurisdictions have imposed severe economic sanctions, export controls and other against Russia and Russian interests, and have threatened additional sanctions and controls. The full impact of these measures, as well as potential responses to them by Russia, is unknown. Such conditions could impact real estate fundamentals and result in lower occupancy, lower rental rates, and declining values in our real estate portfolio and in the real estate collateral securing any indebtedness. As a result, the value of our property investments could decrease below the amounts paid for such investments, the value of real estate collateral securing any indebtedness could decrease below the outstanding principal amounts of such indebtedness, and revenues from our properties could decrease due to fewer and/or delinquent tenants or lower rental rates. This could significantly harm our revenues, results of operations, financial condition, business prospects and our ability to make distributions to our shareholders.

~~The LIBOR index rate may not be available in the future.~~

In July 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. On March 5, 2021, the Financial Conduct Authority further announced that it intends to stop compelling banks to submit rates for the calculation of one, three and six month LIBOR after June 30, 2023. It is unclear whether new methods of calculating such LIBOR periods will be established such that they continue to exist after June 30, 2023. It is not possible to predict the effect of these changes, other reforms or the establishment of alternative reference rates in the United States or elsewhere. The Alternative Reference Rates Committee (or ARRC) has proposed that the Secured Overnight Financing Rate (or SOFR) is the rate that represents best practice as the alternative to USD-LIBOR for use in derivatives and other financial contracts that are currently indexed to USD-LIBOR. ARRC has proposed a paced market transition plan to SOFR from USD-LIBOR and organizations are currently working on industry wide and company specific transition plans as it relates to derivatives and cash markets exposed to USD-LIBOR. Our trust preferred securities do not provide for a clear alternative to USD-LIBOR.

The transition from LIBOR to an alternative reference rate could result in higher all-in interest costs and could hinder our ability to maintain effective hedges, which could impact our financial performance. Further, the impact or potential impact of LIBOR transition could incentivize us to prepay debt and/or unwind hedge positions earlier than we anticipated when closing the debt facility and/or entering into the hedge position. If we prepay debt, we may owe prepayment penalties or other breakage costs. If we unwind hedge positions, we could owe unwind payments to our counterparties, which could be significant.

~~Table of Contents~~

Report.

ITEM 2.Unregistered Sales of Equity Securities and Use of Proceeds.

The following table summarizes repurchases of our common shares/OP units during the three months ended ~~September~~June 30, ~~2022~~2023 pursuant to publicly announced repurchase plans (1):

Period (a)
Total Number of Shares/Units Purchased (b)
Average Price Paid for Share/Unit
(c)
Total Number of Shares/Units Purchased as Part of Publicly Announced Plans or Programs (1)
(d)
Maximum Number of Shares/Units That May Yet Be Purchased Under the Plans or Programs (1)
July 1 - 31, 2022 1,800,000 $ 10.65 1,800,000 1,078,289
August 1 - 31, 2022 615,641 $ 10.59 615,641 10,462,648
September 1 - 30, 2022(2)
3,188,407 $ 9.80 3,188,407 7,274,241
Third quarter 2022 5,604,048 $ 10.16 5,604,048 7,274,241


Period	(a) Total Number of Shares/Units Purchased	(b) Average Price Paid for Share/Unit		(c) Total Number of Shares/Units Purchased as Part of Publicly Announced Plans or Programs (1)	(d) Maximum Number of Shares/Units That May Yet Be Purchased Under the Plans or Programs (1)
April 1 - 30, 2023	—	$	—	—	6,874,241
May 1 - 31, 2023	—	$	—	—	6,874,241
June 1 - 30, 2023	—	$	—	—	6,874,241
Second quarter 2023	—	$	—	—	6,874,241

(1) Share repurchase authorization of an additional 10.0 million common shares announced on August 4, 2022, which has no expiration date.

~~(2) Excludes 400,000 common shares that were purchased in September 2022 that were settled in October 2022.~~

ITEM 3.Defaults Upon Senior Securities - not applicable.

ITEM 4.Mine Safety Disclosures - not applicable.

ITEM 5.Other ~~Information.~~Information

~~Effective November 2, 2022, our Board~~During the three months ended June 30, 2023, no trustee or officer of ~~Trustees~~the Company adopted ~~the Second Amended and Restated By-laws~~or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of ~~LXP Industrial Trust, which amended and restated our Amended and Restated By-laws. Among other things, the Second and Amended Restated By-laws:~~Regulation S-K.

•
~~Enhance the procedural mechanics and disclosure requirements in connection with~~ ~~shareholder nominations of trustees and submissions of proposals regarding other business at~~ ~~shareholder meetings~~ (other than nominations pursuant to the existing proxy access provision in Section 1.13 of the Second Amended and Restated By-laws and proposals to be included in the our proxy materials pursuant to Rule 14a-8 under the Exchange Act) or by means of written or electronic consent, including by requiring:

–additional background information and disclosures regarding proposing shareholders, the proposed nominees and business, and certain related parties pertaining to a shareholder’s solicitation of proxies, including additional disclosures with respect to the nature of the interests held by such persons in us and other potentially interested parties, and the existence of agreements, arrangements or understandings with third parties that may be material to the shareholder’s solicitation of proxies;

–~~any~~ ~~shareholder~~ submitting a nomination notice make an undertaking to solicit proxies from holders of at least 67% of the voting power of all of our shares of beneficial interest entitled to vote generally in the election of trustees;

–compliance with the requirements of Regulation 14A under the Exchange Act (including the newly effective “universal proxy rules”) in order for shareholder nominations and proposals for other business to be deemed properly given under the Second Amended and Restated By-laws; and

–any nominee proposed by a shareholder deliver a written questionnaire with respect to the nominee’s background and qualification and a written certification representing that the nominee is not and will not become party to any commitment with any third party with respect to the nominee’s actions as a trustee, or which could limit or interfere with the nominee’s ability to comply with their fiduciary duties.

•~~Provide that any shareholder soliciting proxies from other shareholder must use a proxy card color other than white;~~

•~~Remove the requirement to provide a list of all shareholders entitled to vote at meetings of shareholders; and~~

•~~Make various other updates, including ministerial, clarifying and conforming changes and changes in furtherance of gender neutrality.~~

This description of the Second Amended and Restated By-laws is qualified in its entirety by reference to the complete text of the Second Amended and Restated By-laws, a copy of which is filed herewith as Exhibit 3.6 and incorporated herein by reference.

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ITEM 6.Exhibits.


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”))~~2007)(1)
3.2	—	Articles Supplementary Relating to the Reclassification of 8.05% Series B Cumulative Redeemable Preferred Stock, par value $0.0001 per share, and 7.55% Series D Cumulative Redeemable Preferred Stock, par value $0.0001 per share (filed as Exhibit 3.4 to the Company's Current Report on Form 8-K filed November 21, 2013)(1)
3.3	—	Articles of Amendment to the Amended and Restated Declaration of Trust, dated as of December 14, 2021 (filed as Exhibit 3.1 to the Company's Current Report on Form 8-K filed on December 16, 2021)(1)
3.4	—	Articles of Amendment to the Amended and Restated Declaration of Trust, dated as of May 26, 2022 (filed as Exhibit 3.1 to the Company's Current Report on Form 8-K filed on May 27, 2022)(1)
3.5	—	Third Amended and Restated By-laws of the Company (filed as Exhibit ~~3.2~~3.1 to the ~~01/08/07 8-K)~~Company's Quarterly Report on from 10-Q filed May 19, 2023)(1)
3.6	—	~~SecondAmended and Restated By-laws of the Company~~ ~~(2)~~
~~3.7~~	—	Sixth Amended and Restated Agreement of Limited Partnership of LCIF, dated as of December 30, 2013 (filed as Exhibit 3.25 to the Company's Annual Report on Form 10-K filed February 26, 2014)(1)
~~3.8~~3.7	—	First Amendment to Sixth Amended and Restated Agreement of Limited Partnership of LCIF, dated as of July 12, 2021 (filed as Exhibit 3.1 to the Company's Current Report on Form 8-K filed July 16, 2021)(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, 2021)(1)
4.2	—	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)
4.3	—	Indenture, dated as of January 29, 2007, among the Company (as successor 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)
~~4.4~~	—	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 March 27, 2007 (the “03/27/2007 8-K”))(1)
~~4.5~~4.4	—	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)
~~4.6~~	—	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 January 2, 2009)(1)
~~4.7~~	—	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 June 15, 2009)(1)
~~4.8~~	—	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)
~~4.9~~	—	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 October 3, 2012)(1)

~~Table of Contents~~

~~4.10~~

—

Eighth 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 February 13, 2013 (the “02/13/13 8-K”))(1)

~~4.11~~

—

Ninth Supplemental Indenture, dated as of May 6, 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 May 8, 2013)(1)

~~4.12~~

—

Tenth Supplemental Indenture, dated as of June 13, 2013, among the Company, certain subsidiaries of the Company signatories thereto, 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 June 13, 2013 (the “06/13/13 8-K”))(1)

~~4.13~~

—

Tenth Supplemental Indenture, dated as of September 30, 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 October 3, 2013 (the “10/03/2013 8-K”))(1)

~~4.14~~4.5

—

Indenture, dated as of June 10, 2013, among the Company, certain subsidiaries of the ~~subsidiary guarantors named therein,~~Company signatories thereto, and U.S. Bank, ~~National Association,~~ as trustee (filed as Exhibit 4.1 to the ~~06/13/2013 8-K))~~Company's Current Report on Form 8-K filed on June 13, 2013)(1)

~~4.15~~4.6

—

First Supplemental Indenture, dated as of September 30, 2013, ~~among~~between the Company ~~the subsidiary guarantors named therein,~~ and U.S. Bank, ~~National Association,~~ as trustee (filed as Exhibit 4.2 to the ~~10/03/2013 8-K)~~Company's Current Report on Form 8-K filed on October 3, 2013)(1)

~~4.16~~4.7

—

Indenture, dated as of May 9, 2014, among the Company ~~LCIF~~ and U.S. Bank, ~~National Association,~~ as trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed May 13, 2014)(1)

~~4.17~~4.8

—

First Supplemental Indenture, dated as of May 20, 2014, among the Company, LCIF and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed May 20, 2014)(1)

~~4.18~~4.9

—

Second Supplemental Indenture, dated as of August 28, 2020, among the Company and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed August 28, 2020)(1)

~~4.19~~4.10

—

Third Supplemental Indenture, dated as of August 30, 2021, among the Company and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed August 30, 2021)(1)

~~10.1~~

Table of Contents

	—	Second Amended and Restated Credit Agreement, dated as of July 5, 2022, among the Company, as borrower, each of the financial institutions initially a signatory thereto together with their assignees pursuant to Section 12.5 therein, and KeyBank National Association, as agent~~(filed as Exhibit 10.1 to the Company's Current~~ ~~Report on Form~~ ~~8-K filed on July 11, 2022)(1)~~
31.1			—	Certification 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(2)
31.2			—	Certification 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(2)
32.1			—	Certification 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 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(3)
101.INS			—	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document (2, 5)
101.SCH			—	Inline XBRL Taxonomy Extension Schema (2, 5)
101.CAL			—	Inline XBRL Taxonomy Extension Calculation Linkbase (2, 5)
101.DEF			—	Inline XBRL Taxonomy Extension Definition Linkbase Document (2, 5)
101.LAB			—	Inline XBRL Taxonomy Extension Label Linkbase Document (2, 5)
101.PRE			—	Inline XBRL Taxonomy Extension Presentation Linkbase Document (2, 5)

~~Table of Contents~~

(1) Incorporated by reference.

(2) Filed herewith.

(3) Furnished herewith. This exhibit shall not be deemed ~~"filed"~~“filed” for purposes of Section 11 or 12 of the Securities Act of 1933, as amended (the ~~"Securities Act"~~“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 contract or compensatory plan or arrangement.

(5) The following materials from this Quarterly Report on Form 10-Q for the period ended ~~September~~June 30, ~~2022~~2023 are formatted in Inline XBRL (Extensible Business Reporting Language): (i) Unaudited Condensed Consolidated Balance Sheets of the Company; (ii) Unaudited Condensed Consolidated Statements of Operations of the Company; (iii) Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) of the Company; (iv) Unaudited Condensed Consolidated Statements of Changes in Equity of the Company; (v) Unaudited Condensed Consolidated Statements of Cash Flows of the Company; and (vi) Notes to Unaudited Condensed Consolidated Financial Statements of the Company, detailed tagged.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		LXP Industrial Trust

Date:	~~November 3, 2022~~August 2, 2023	By:	/s/ T. Wilson Eglin
			T. Wilson Eglin
			Chief Executive Officer and President (principal executive officer)

Date:	~~November 3, 2022~~August 2, 2023	By:	/s/ Beth Boulerice
			Beth Boulerice
			Chief Financial Officer, Executive Vice President and Treasurer (principal financial officer)

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Three Months Ended September 30, 2022			LXP Industrial 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 June 30, 2022	$	2,259,650	1,935,400	$	94,016	281,670,437	$	28	$	3,189,713	$	(1,068,408)	$	9,558	$	34,743
Issuance of partnership interest in real estate	663		—	—		—	—		—		—		—		663
Redemption of noncontrolling OP units for common shares	—		—	—		13,146	—		68		—		—		(68)
Issuance of common shares and deferred compensation amortization, net	1,916		—	—		22,516	—		1,916		—		—		—
Repurchase of common shares	(56,958)		—	—		(5,604,048)	—		(56,958)		—		—		—

Forfeiture of employee common shares	1		—	—		(1,720)	—		—		1		—		—
Dividends/distributions ($0.12 per common share)	(34,561)		—	—		—	—		—		(34,390)		—		(171)
Net income	23,591		—	—		—	—		—		23,390		—		201
Other comprehensive income	7,028		—	—		—	—		—		—		7,028		—

Company's share of other comprehensive income of non-consolidated entities	1,182		—	—		—	—		—		—		1,182		—
Balance September 30, 2022	$	2,202,512	1,935,400	$	94,016	276,100,331	$	28	$	3,134,739	$	(1,079,407)	$	17,768	$	35,368


Nine Months Ended September 30, 2022			LXP Industrial 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, 2021	$	2,323,228	1,935,400	$	94,016	283,752,726	$	28	$	3,252,506	$	(1,049,434)	(6,258)		32,370
Issuance of partnership interest in real estate	6,444		—	—		—	—		—		—		—		6,444
Redemption of noncontrolling OP units for common shares	—		—	—		33,378	—		177		—		—		(177)
Purchase of noncontrolling interest in consolidated joint venture	(27,958)		—	—		—	—		(25,058)		—		—		(2,900)
Issuance of common shares and deferred compensation amortization, net	44,075		—	—		4,557,892	1		44,074		—		—		—
Repurchase of common shares	(130,676)		—	—		(11,702,074)	(1)		(130,675)		—		—		—
Repurchase of common shares to settle tax obligations	(6,285)		—	—		(410,958)	—		(6,285)		—		—		—

Forfeiture of employee common shares	9		—	—		(130,633)	—		—		9		—		—
Dividends/distributions ($0.36 per common share)	(106,388)		—	—		—	—		—		(105,292)		—		(1,096)
Net income	76,037		—	—		—	—		—		75,310		—		727
Other comprehensive income	22,844		—	—		—	—		—		—		22,844		—
Company's share of other comprehensive income of non-consolidated entities	1,182		—	—		—	—		—		—		1,182		—

Balance September 30, 2022	2,202,512		1,935,400	$	94,016	276,100,331	$	28	$	3,134,739	$	(1,079,407)	$	17,768	$	35,368


Nine Months Ended September 30, 2021

Balance December 31, 2020	$	1,991,137	1,935,400	$	94,016	277,152,450	$	28	$	3,196,315	$	(1,301,726)	$	(17,963)	$	20,467
Issuance of partnership interest in real estate	11,050		—	—		—	—		—		—		—		11,050
Redemption of noncontrolling OP units for common shares	—		—	—		129,397	—		670		—		—		(670)
Redemption of noncontrolling OP units for real estate	(22,305)		—	—		—	—		(12,919)		—		—		(9,386)
Issuance of common shares and deferred compensation amortization, net	60,469		—	—		5,866,762	—		60,469		—		—		—

Repurchase of common shares to settle tax obligations	(5,120)		—	—		(499,638)	—		(5,120)		—		—		—
Forfeiture of employee common shares	2		—	—		(10,264)	—		—		2		—		—
Dividends/distributions ($0.3225 per common share)	(96,263)		—	—		—	—		—		(94,768)		—		(1,495)
Net income	122,320		—	—		—	—		—		120,358		—		1,962
Other comprehensive income	7,072		—	—		—	—		—		—		7,072		—
Reallocation of noncontrolling interests	—		—	—		—	—		435		—		—		(435)
Balance September 30, 2021	$	2,068,362	1,935,400	$	94,016	282,638,707	$	28	$	3,239,850	$	(1,276,134)	$	(10,891)	$	21,493


Market	Acquisition Date	Initial Cost Basis		Primary Lease Expiration at Acquisition Date	Land		Building and Improvements		Lease in-place Intangible
Cincinnati/Dayton, OH(2)	February 2022	$	23,382	N/A	$	2,010	$	21,372	$	—
Cincinnati/Dayton, OH	February 2022	48,660		04/2032	4,197		40,944		3,519
Phoenix, AZ	April 2022	59,140		05/2037	5,366		50,281		3,493


		$	131,182		$	11,573	$	112,597	$	7,012


Nine months ended September 30,	Total
2022 - remainder	$	64,707
2023	260,818
2024	233,959
2025	213,892
2026	193,909
2027	158,445
Thereafter	591,832
Total	$	1,717,562


	Nine Months Ended
	September 30, 2022		September 30, 2021
Weighted-average remaining lease term
Operating leases (years)	9.4		11.3
Weighted-average discount rate
Operating leases	4.0	%	4.1	%


	Operating Leases
2022 - remainder	$	1,198
2023	5,290
2024	5,199
2025	5,204
2026	4,174
2027	3,673
Thereafter	7,501
Total lease payments	$	32,239
Less: Imputed interest	(6,177)
Present value of operating lease liabilities	$	26,062