lex10q.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
[X] Quarterly
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
For
the
quarterly period ended June 30, 2007.
[
] Transition Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
For
the
Transition period from _________________ to ________________
Commission File
Number 1-12386
LEXINGTON
REALTY TRUST
(Exact
name of registrant as specified in its charter)
Maryland
(State
or other jurisdiction of
incorporation
or organization)
|
13-3717318
(I.R.S.
Employer
Identification
No.)
|
One
Penn Plaza – Suite 4015
New
York, NY
(Address
of principal executive offices)
|
10119
(Zip
code)
|
(212)
692-7200
(Registrant's
telephone number, including area code)
Indicate
by check mark whether the registrant (1) has filed all reports required to
be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements
for
the past 90 days.
Yes x
No
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of
“accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange
Act.
Large
accelerated filer
[ x ] Accelerated
filer
[ ] Non-accelerated
filer [ ]
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes
No x
Indicate
the number of shares outstanding of each of the registrant's classes of common
shares, as of the latest practicable date: 64,031,973 common shares, par
value
$.0001 per share on August 2, 2007.
PART
1. - FINANCIAL INFORMATION
|
ITEM
1. FINANCIAL STATEMENTS
|
LEXINGTON
REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
June
30, 2007 (Unaudited) and December 31, 2006
|
(In
thousands, except share and per share
data)
|
|
|
June
30,
|
|
|
December
31,
|
|
|
|
2007
|
|
|
2006
|
|
Assets:
|
|
|
|
|
|
|
Real
estate, at cost
|
|
$ |
4,870,601
|
|
|
$ |
3,747,156
|
|
Less:
accumulated depreciation and amortization
|
|
|
372,062
|
|
|
|
276,129
|
|
|
|
|
4,498,539
|
|
|
|
3,471,027
|
|
Properties
held for sale – discontinued operations
|
|
|
28,078
|
|
|
|
69,612
|
|
Intangible
assets, net
|
|
|
660,504
|
|
|
|
468,244
|
|
Cash
and cash equivalents
|
|
|
75,419
|
|
|
|
97,547
|
|
Investment
in and advances to non-consolidated entities
|
|
|
150,747
|
|
|
|
247,045
|
|
Deferred
expenses, net
|
|
|
35,185
|
|
|
|
16,084
|
|
Notes
receivable
|
|
|
49,526
|
|
|
|
50,534
|
|
Rent
receivable – current
|
|
|
53,213
|
|
|
|
53,744
|
|
Rent
receivable – deferred
|
|
|
24,717
|
|
|
|
29,410
|
|
Investment
in marketable equity securities
|
|
|
18,052
|
|
|
|
32,036
|
|
Other
assets
|
|
|
81,194
|
|
|
|
89,574
|
|
|
|
$ |
5,675,174
|
|
|
$ |
4,624,857
|
|
Liabilities
and Shareholders’ Equity:
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Mortgages
and notes payable
|
|
$ |
2,598,230
|
|
|
$ |
2,126,810
|
|
Exchangeable
notes payable
|
|
|
450,000
|
|
|
|
—
|
|
Trust
notes payable
|
|
|
200,000
|
|
|
|
—
|
|
Contract
rights payable
|
|
|
12,823
|
|
|
|
12,231
|
|
Dividends
payable
|
|
|
31,021
|
|
|
|
44,948
|
|
Liabilities
– discontinued operations
|
|
|
3,169
|
|
|
|
6,064
|
|
Accounts
payable and other liabilities
|
|
|
34,744
|
|
|
|
25,877
|
|
Accrued
interest payable
|
|
|
24,804
|
|
|
|
10,818
|
|
Deferred
revenue - below market leases
|
|
|
348,967
|
|
|
|
362,815
|
|
Prepaid
rent
|
|
|
16,026
|
|
|
|
10,109
|
|
|
|
|
3,719,784
|
|
|
|
2,599,672
|
|
Minority
interests
|
|
|
818,069
|
|
|
|
902,741
|
|
|
|
|
4,537,853
|
|
|
|
3,502,413
|
|
Commitments
and contingencies (notes 12 and 13)
|
|
|
|
|
|
|
|
|
Shareholders’
equity:
|
|
|
|
|
|
|
|
|
Preferred
shares, par value $0.0001 per share; authorized 100,000,000
shares,
|
|
|
|
|
|
|
|
|
Series
B Cumulative Redeemable Preferred, liquidation preference $79,000,
3,160,000 shares issued and outstanding
|
|
|
76,315
|
|
|
|
76,315
|
|
Series
C Cumulative Convertible Preferred, liquidation preference $155,000,
3,100,000 shares issued and outstanding
|
|
|
150,589
|
|
|
|
150,589
|
|
Series
D Cumulative Redeemable Preferred, liquidation preference $155,000,
6,200,000 shares issued and outstanding in 2007
|
|
|
149,774
|
|
|
|
—
|
|
Special
Voting Preferred Share, par value $0.0001 per share; authorized,
issued
and outstanding 1 share
|
|
|
—
|
|
|
|
—
|
|
Common
shares, par value $0.0001 per share; authorized 400,000,000 shares,
63,964,637 and 69,051,781 shares issued and outstanding in 2007
and 2006,
respectively
|
|
|
6
|
|
|
|
7
|
|
Additional
paid-in-capital
|
|
|
1,084,665
|
|
|
|
1,188,900
|
|
Accumulated
distributions in excess of net income
|
|
|
(324,822 |
) |
|
|
(294,640 |
) |
Accumulated
other comprehensive income
|
|
|
794
|
|
|
|
1,273
|
|
|
|
|
1,137,321
|
|
|
|
1,122,444
|
|
|
|
$ |
5,675,174
|
|
|
$ |
4,624,857
|
|
The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
Three
and Six months ended June 30, 2007 and 2006
|
(Unaudited
and in thousands, except share and per share
data)
|
|
|
Three
Months Ended
|
|
|
Six
Months Ended
|
|
|
|
June
30,
|
|
|
June
30,
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
Gross
revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental
|
|
$ |
102,460
|
|
|
$ |
43,781
|
|
|
$ |
189,187
|
|
|
$ |
89,654
|
|
Advisory
and incentive fees
|
|
|
11,224
|
|
|
|
1,338
|
|
|
|
11,943
|
|
|
|
2,401
|
|
Tenant
reimbursements
|
|
|
6,769
|
|
|
|
3,887
|
|
|
|
12,420
|
|
|
|
8,320
|
|
Total
gross revenues
|
|
|
120,453
|
|
|
|
49,006
|
|
|
|
213,550
|
|
|
|
100,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expense
applicable to revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
(57,620 |
) |
|
|
(19,594 |
) |
|
|
(110,186 |
) |
|
|
(39,078 |
) |
Property
operating
|
|
|
(13,869 |
) |
|
|
(7,308 |
) |
|
|
(25,417 |
) |
|
|
(15,004 |
) |
General
and administrative
|
|
|
(12,355 |
) |
|
|
(4,858 |
) |
|
|
(21,142 |
) |
|
|
(10,475 |
) |
Non-operating
income
|
|
|
2,577
|
|
|
|
5,911
|
|
|
|
5,219
|
|
|
|
6,706
|
|
Interest
and amortization expense
|
|
|
(39,441 |
) |
|
|
(17,571 |
) |
|
|
(72,319 |
) |
|
|
(34,940 |
) |
Debt
satisfaction gains
|
|
|
—
|
|
|
|
1,241
|
|
|
|
—
|
|
|
|
294
|
|
Impairment
loss
|
|
|
—
|
|
|
|
(1,121 |
) |
|
|
—
|
|
|
|
(1,121 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
before benefit (provision) for income taxes, minority interests,
equity in
earnings of non-consolidated entities and discontinued
operations
|
|
|
(255 |
) |
|
|
5,706
|
|
|
|
(10,295 |
) |
|
|
6,757
|
|
Benefit
(provision) for income taxes
|
|
|
(1,804 |
) |
|
|
82
|
|
|
|
(2,242 |
) |
|
|
155
|
|
Minority
interests share of income
|
|
|
(19,270 |
) |
|
|
(798 |
) |
|
|
(12,064 |
) |
|
|
(970 |
) |
Equity
in earnings of non-consolidated entities
|
|
|
38,388
|
|
|
|
848
|
|
|
|
41,897
|
|
|
|
2,116
|
|
Income
from continuing operations
|
|
|
17,059
|
|
|
|
5,838
|
|
|
|
17,296
|
|
|
|
8,058
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued
operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from discontinued operations
|
|
|
4,905
|
|
|
|
1,302
|
|
|
|
7,508
|
|
|
|
3,281
|
|
Provision
for income taxes
|
|
|
(2,510 |
) |
|
|
(25 |
) |
|
|
(2,614 |
) |
|
|
(74 |
) |
Debt
satisfaction (charges) gains
|
|
|
(89 |
) |
|
|
5,843
|
|
|
|
(89 |
) |
|
|
5,765
|
|
Gains
on sales of properties
|
|
|
12,828
|
|
|
|
14,263
|
|
|
|
12,828
|
|
|
|
16,916
|
|
Minority
interests share of income
|
|
|
(3,254 |
) |
|
|
(1,701 |
) |
|
|
(3,775 |
) |
|
|
(2,348 |
) |
Total
discontinued operations
|
|
|
11,880
|
|
|
|
19,682
|
|
|
|
13,858
|
|
|
|
23,540
|
|
Net
income
|
|
|
28,939
|
|
|
|
25,520
|
|
|
|
31,154
|
|
|
|
31,598
|
|
Dividends
attributable to preferred shares – Series B
|
|
|
(1,590 |
) |
|
|
(1,590 |
) |
|
|
(3,180 |
) |
|
|
(3,180 |
) |
Dividends
attributable to preferred shares – Series C
|
|
|
(2,519 |
) |
|
|
(2,519 |
) |
|
|
(5,038 |
) |
|
|
(5,038 |
) |
Dividends
attributable to preferred shares – Series D
|
|
|
(2,925 |
) |
|
|
—
|
|
|
|
(4,447 |
) |
|
|
—
|
|
Net
income allocable to common shareholders
|
|
$ |
21,905
|
|
|
$ |
21,411
|
|
|
$ |
18,489
|
|
|
$ |
23,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per
common share – basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations, after preferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dividends
|
|
$ |
0.16
|
|
|
$ |
0.03
|
|
|
$ |
0.07
|
|
|
$ |
—
|
|
Income
from discontinued operations
|
|
|
0.18
|
|
|
|
0.38
|
|
|
|
0.21
|
|
|
|
0.45
|
|
Net
income allocable to common shareholders
|
|
$ |
0.34
|
|
|
$ |
0.41
|
|
|
$ |
0.28
|
|
|
$ |
0.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding – basic
|
|
|
65,265,217
|
|
|
|
52,116,003
|
|
|
|
66,892,769
|
|
|
|
51,980,753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per
common share – diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations, after preferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dividends
|
|
$ |
0.16
|
|
|
$ |
0.03
|
|
|
$ |
0.07
|
|
|
$ |
—
|
|
Income
from discontinued operations
|
|
|
0.18
|
|
|
|
0.38
|
|
|
|
0.21
|
|
|
|
0.45
|
|
Net
income allocable to common shareholders
|
|
$ |
0.34
|
|
|
$ |
0.41
|
|
|
$ |
0.28
|
|
|
$ |
0.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding – diluted
|
|
|
65,265,828
|
|
|
|
52,136,573
|
|
|
|
66,893,390
|
|
|
|
52,006,725
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these unaudited
condensed
consolidated financial statements.
|
|
LEXINGTON
REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
|
|
Three
and Six months ended June 30, 2007 and 2006
|
(Unaudited
and in thousands)
|
|
|
Three
Months Ended
|
|
|
Six
Months Ended
|
|
|
|
June
30,
|
|
|
June
30,
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$ |
28,939
|
|
|
$ |
25,520
|
|
|
$ |
31,154
|
|
|
$ |
31,598
|
|
Other
comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in unrealized gain in marketable equity securities
|
|
|
(362 |
) |
|
|
(92 |
) |
|
|
(520 |
) |
|
|
(92 |
) |
Change
in unrealized gain in foreign currency translation
|
|
|
5
|
|
|
|
293
|
|
|
|
41
|
|
|
|
143
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
|
$ |
28,582
|
|
|
$ |
25,721
|
|
|
$ |
30,675
|
|
|
$ |
31,649
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
|
|
LEXINGTON
REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
Six
months ended June 30, 2007 and 2006
|
(Unaudited
and in thousands)
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
Net
cash provided by operating activities
|
|
$ |
152,604
|
|
|
$ |
53,784
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
Acquisition
of interest in certain non-consolidated entities
|
|
|
(366,614 |
) |
|
|
—
|
|
Investment
in real estate, including intangibles
|
|
|
(133,722 |
) |
|
|
(52,283 |
) |
Acquisitions
of additional interests in LSAC
|
|
|
(24,114 |
) |
|
|
—
|
|
Issuance
of notes receivable - affiliate
|
|
|
—
|
|
|
|
(8,300 |
) |
Investment
in note receivable
|
|
|
—
|
|
|
|
(11,144 |
) |
Net
proceeds from sale/transfer of properties
|
|
|
108,523
|
|
|
|
55,762
|
|
Proceeds
from the sale of marketable equity securities
|
|
|
13,077
|
|
|
|
—
|
|
Real
estate deposits
|
|
|
(890 |
) |
|
|
(1,726 |
) |
Principal
payments received on loan receivable
|
|
|
1,332
|
|
|
|
—
|
|
Distributions
from non-consolidated entities in excess of accumulated
earnings
|
|
|
7,823
|
|
|
|
11,927
|
|
Investment
in and advances to / from non-consolidated entities
|
|
|
(45,824 |
) |
|
|
(10,154 |
) |
Investment
in marketable equity securities
|
|
|
(723 |
) |
|
|
(4,314 |
) |
Increase
in deferred leasing costs
|
|
|
(2,480 |
) |
|
|
(1,038 |
) |
Decrease (increase)
in escrow deposits
|
|
|
33,905
|
|
|
|
(822 |
) |
Net
cash used in investing activities
|
|
|
(409,707 |
) |
|
|
(22,092 |
) |
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
Dividends
to common and preferred shareholders
|
|
|
(75,353 |
) |
|
|
(46,730 |
) |
Principal
payments on debt, excluding normal amortization
|
|
|
(570,730 |
) |
|
|
(51,071 |
) |
Dividend
reinvestment plan proceeds
|
|
|
5,652
|
|
|
|
6,537
|
|
Principal
amortization payments
|
|
|
(36,034 |
) |
|
|
(13,573
|
) |
Proceeds
of mortgages and notes payable
|
|
|
67,225
|
|
|
|
77,936
|
|
Proceeds
from term loan
|
|
|
225,000
|
|
|
|
—
|
|
Proceeds
from trust preferred notes
|
|
|
200,000
|
|
|
|
—
|
|
Proceeds
from exchangeable notes
|
|
|
450,000
|
|
|
|
—
|
|
Increase
in deferred financing costs
|
|
|
(16,986 |
) |
|
|
(939 |
) |
Contributions
from minority partners
|
|
|
79
|
|
|
|
810
|
|
Cash
distributions to minority partners
|
|
|
(46,030 |
) |
|
|
(3,996 |
) |
Proceeds
from the sale of common and preferred shares, net
|
|
|
149,909
|
|
|
|
253
|
|
Repurchase
of common shares
|
|
|
(134,068 |
) |
|
|
—
|
|
Partnership
units repurchased
|
|
|
(3,114 |
) |
|
|
(116 |
) |
Net
cash provided by (used in) financing activities
|
|
|
215,550
|
|
|
|
(30,889 |
) |
|
|
|
|
|
|
|
|
|
Cash
acquired in co-investment program acquisition
|
|
|
20,867
|
|
|
|
—
|
|
Cash
associated with sale of interest in entity
|
|
|
(1,442 |
) |
|
|
—
|
|
Change
in cash and cash equivalents
|
|
|
(22,128 |
) |
|
|
803
|
|
Cash
and cash equivalents, at beginning of period
|
|
|
97,547
|
|
|
|
53,515
|
|
Cash
and cash equivalents, at end of period
|
|
$ |
75,419
|
|
|
$ |
54,318
|
|
The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
LEXINGTON
REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June
30,
2007 and 2006
(Unaudited
and dollars in thousands, except per share / unit data)
Lexington
Realty Trust (the “Company”), is a self-managed and self-administered Maryland
statutory real estate investment trust (“REIT”) that acquires, owns, and manages
a geographically diversified portfolio of net leased office, industrial and
retail properties and provides investment advisory and asset management services
to investors in the net lease area. As of June 30, 2007, the
Company owned or had interests in approximately 350 consolidated properties
in
44 states and the Netherlands. The real properties owned by the Company are
generally subject to net leases to corporate tenants, however certain leases
provide that the Company is responsible for certain operating
expenses.
On
December 31, 2006, the Company completed its merger with Newkirk Realty Trust,
Inc., or Newkirk (the “Newkirk Merger”). Newkirk’s primary business was similar
to the primary business of the Company. All of Newkirk’s operations were
conducted and all of its assets were held through its master limited
partnership, The Newkirk Master Limited Partnership (“MLP”). Newkirk was the
general partner and owned 31.0% of the units of limited partnership in the
MLP
(the “MLP units”). In connection with the Newkirk Merger, the Company changed
its name to Lexington Realty Trust, the MLP was renamed The Lexington Master
Limited Partnership and an affiliate of the Company became the general partner
of the MLP and another affiliate of the Company became the holder of a 31.0%
ownership interest in the MLP.
In
the
Newkirk Merger, Newkirk merged with and into the Company, with the Company
as
the surviving entity. Each holder of Newkirk’s common stock received 0.80 common
shares of the Company in exchange for each share of Newkirk’s common stock, and
the MLP effected a reverse unit-split pursuant to which each outstanding MLP
unit was converted into 0.80 units, resulting in 35.5 million MLP units
applicable to the minority interest being outstanding after the Newkirk Merger.
Each MLP unit is redeemable at the option of the holder for cash based on the
value of a common share of the Company or, if the Company elects, on a
one-for-one basis for the Company’s common shares.
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 will be
subject to federal income taxes on the income from these
activities.
During
the first quarter of 2007, the Company’s Board of Trustees authorized the
Company to repurchase, from time to time, up to 10.0 million common shares
and/or operating partnership units in the Company’s operating partnership
subsidiaries (“OP Units”) depending on market conditions and other factors.
During the six months ended June 30, 2007, the Company repurchased
and retired approximately 6.6 million common shares/OP Unit at an average price
of approximately $20.66 per common share/OP Unit aggregating $137.0 million
(including broker commissions), in the open market and through private
transactions with employees and third parties.
On
June
4, 2007, the Company announced a strategic restructuring plan. The plan, when
and if completed, will restructure the Company into a company consisting
primarily of:
|
|
A
wholly owned portfolio of core
office assets;
|
|
|
A
wholly owned portfolio of core
warehouse/distribution
assets;
|
|
|
A
continuing 50% interest in a
joint venture that invests in senior and subordinated debt interests
secured by both net-leased and multi-tenanted real estate
collateral;
|
|
|
A
minority interest in a
to-be-formed joint venture that invests in specialty single-tenant
real
estate assets; and
|
|
|
Equity
securities in other net
lease companies owned either individually or through an interest
in one or
more joint ventures.
|
In
connection with the strategic
restructuring plan, the Company:
|
|
acquired
all of the outstanding interests not otherwise owned by the Company
in
Triple Net Investment Company LLC, one of the Company’s co-investment
programs, which resulted in the Company becoming the sole owner of
the
co-investment program’s 15 primarily single tenant net leased
properties;
|
|
|
acquired
all of the outstanding
interests not otherwise owned by the Company in Lexington Acquiport
Company, LLC and Lexington Acquiport Company II, LLC, two of the
Company’s
co-investment programs, which resulted in the Company becoming the
sole
owner of the co-investment program’s 26 primarily single tenant net leased
properties;
|
|
|
terminated
Lexington/Lion Venture
L.P., one of its co-investment programs, and was distributed 7 primarily
single tenant net leased properties owned by the co-investment
program;
|
|
·
|
announced
a disposition program,
whereby the Company is marketing approximately 140 non-core assets
for
sale; and
|
|
·
|
announced
its intention to create
a joint venture with an institutional funding source to invest in
“core
plus” net leased assets, such as manufacturing assets, call centers and
other specialty assets.
|
The
Company can provide no assurances that it will dispose of any assets under
its
disposition program or enter into a definitive agreement to create the joint
venture.
The
unaudited condensed consolidated financial statements reflect all adjustments,
which are, in the opinion of management, necessary to present a fair statement
of the financial condition and results of operations for the interim
periods. For a more complete understanding of the Company's
operations and financial position, reference is made to the financial statements
(including the notes thereto) previously filed with the Securities and Exchange
Commission with the Company's Annual Report on Form 10-K for the year ended
December 31, 2006.
(2)
|
Summary
of Significant Accounting
Policies
|
Basis
of Presentation and
Consolidation. The Company's
consolidated financial statements are prepared on the accrual basis of
accounting. The financial statements reflect the accounts of the
Company and its consolidated subsidiaries, including Lepercq Corporate Income
Fund L.P. (“LCIF”), Lepercq Corporate Income Fund II L.P. (“LCIF II”), Net 3
Acquisition L.P. (“Net 3”), the MLP, Lexington Realty Advisors, Inc. (“LRA”),
Lexington Contributions, Inc. (“LCI”), and Six Penn Center L.P. LRA
and LCI are wholly owned taxable REIT subsidiaries, and the Company is the
sole
unitholder of the general partner and a limited partner of each of LCIF, LCIF
II, Net 3, the MLP and Six Penn Center L.P. Lexington Strategic Asset
Corp. (“LSAC”), formerly a majority owned taxable REIT subsidiary,
was merged with and into the Company as of June 30, 2007. The Company determines
whether an entity for which it holds an interest should be consolidated pursuant
to Financial Accounting Standards Board (“FASB”) Interpretation No. 46,
Consolidation of Variable Interest
Entities
(“FIN 46R”). FIN 46R requires the Company to evaluate whether it has
a controlling financial interest in an entity through means other than voting
rights. If the entity is not a variable interest entity, and the
Company controls the entity’s voting shares or similar rights, the entity is
consolidated.
Earning
Per Share. Basic net income (loss) per share is computed by dividing net
income, reduced by preferred dividends, by the weighted average number of common
shares outstanding during the period. Diluted net income (loss) per share
amounts are similarly computed, but include the effect, when dilutive, of
in-the-money common share options, certain non-vested common shares, OP Units,
put options of certain partners’ interests in non-consolidated entities and
convertible securities.
Recently
Issued Accounting Standards. In December 2004, the FASB issued Statement of
Financial Accounting Standards (“SFAS”) No. 123, (revised 2004) Share-Based
Payment (“SFAS 123R”), which supersedes Accounting Principals Board (“APB”)
Opinion No. 25, Accounting for Stock Issued to Employees, and its related
implementation guidance. SFAS 123R establishes standards for the accounting
for
transactions in which an entity exchanges its equity instruments for goods
or
services. It also address transactions in which an entity incurs liabilities
in
exchange for goods or services that are based on the fair value of the entity’s
equity instruments or that may be settled by the issuance of those equity
instruments. SFAS 123R focuses primarily on accounting for transactions in
which
an entity obtains employee services in share-based payment transactions. SFAS
123R requires a public entity to measure the cost of employee services received
in exchange for an award of equity instruments based on the grant date fair
value of the award. The cost will be recognized over the period in which an
employee is required to provide services in exchange for the award. SFAS 123R
was effective for the fiscal year beginning on January 1, 2006. The impact
of
adopting this statement resulted in the elimination of $11,401 of deferred
compensation and additional paid-in-capital from the consolidated statements
of
changes in shareholders’ equity as of January 1, 2006 and the adoption did not
have a material impact on the Company’s results of operations or cash
flows.
In
June
2005, the FASB ratified the Emerging Issues Task Force’s (“EITF”) consensus on
EITF 04-05, Determining Whether a General Partner, or the General Partners
as a
Group, Controls a Limited Partnership or Similar Entity When the Limited
Partners Have Certain Rights (“EITF 04-05”). EITF 04-05 provides a framework for
determining whether a general partner controls, and should consolidate, a
limited partnership or a similar entity. It was effective after June
29, 2005 for all newly formed limited partnerships and for any pre-existing
limited partnerships that modify their partnership agreements after that date.
General partners of all other limited partnerships were required to apply the
consensus no later than the beginning of the first reporting period in fiscal
years beginning after December 15, 2005. The impact of the adoption
of EITF 04-05 did not have a material impact on the Company’s financial
position, results of operations or cash flows.
In
June 2006, the FASB issued FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes (“FIN 48”). FIN 48 clarifies the accounting for
uncertainty in income taxes recognized in accordance with SFAS 109. FIN 48
prescribes a recognition threshold and measurement attribute for financial
statement recognition and measurement of a tax position taken or expected to
be
taken in a tax return. FIN 48 was effective for fiscal years beginning after
December 15, 2006. The adoption of FIN 48, as of January 1, 2007, did not
have material impact on the Company’s financial position, results of operations
or cash flows.
In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements
(“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring
fair value in generally accepted accounting principles and expands disclosures
about fair value measurements. SFAS 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007 and interim
periods within those fiscal years. The adoption of this statement is not
expected to have a material impact on the Company’s financial position, results
of operations or cash flows.
In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities – Including an Amendment of FASB Statement No.
115 (“SFAS 159”). SFAS 159 permits entities to choose to measure many
financial assets and liabilities and certain other items at fair value. An
enterprise will report unrealized gains and losses on items for which the fair
value option has been elected in earnings at each subsequent reporting date.
The
fair value option may be applied on an instrument-by-instrument basis, with
several exceptions, such as investments accounted for by the equity method,
and
once elected, the option is irrevocable unless a new election date occurs.
The
fair value option can be applied only to entire instruments
and
not
to portions thereof. SFAS 159 is effective as of the beginning of an entity’s
first fiscal year beginning after November 15, 2007. Management is currently
evaluating the effects of adopting SFAS 159 on the Company’s financial
statements.
In
September 2006, the Securities and Exchange Commission released Staff
Accounting Bulletin No. 108 (“SAB 108”). SAB 108 provides guidance on how
the effects of the carryover or reversal of prior year financial statements
misstatements should be considered in quantifying a current period misstatement.
In addition, upon adoption, SAB 108 permits the Company to adjust the cumulative
effect of immaterial errors relating to prior years in the carrying amount
of
assets and liabilities as of the beginning of the current fiscal year, with
an
offsetting adjustment to the opening balance of retained earnings. SAB 108
also
requires the adjustment of any prior quarterly financial statement within the
fiscal year of adoption for the effects of such errors on the quarters when
the
information is next presented. The Company adopted SAB 108 effective December
31, 2006, and its adoption had no impact on the Company’s financial position,
results of operations or cash flows.
Use
of Estimates. Management has made a number of estimates and assumptions
relating to the reporting of assets and liabilities, the disclosure of
contingent assets and liabilities and the reported amounts of revenues and
expenses to prepare these consolidated financial statements in conformity with
generally accepted accounting principles. The most significant estimates made
include the recoverability of accounts receivable (primarily related to
straight-line rents), allocation of property purchase price to tangible and
intangible assets, the determination of impairment of long-lived assets and
the
useful lives of long-lived assets. Actual results could differ from those
estimates.
Business
Combinations. The Company follows the provisions of Statement of Financial
Accounting Standards No. 141, Business Combinations (“SFAS 141”) and
records all assets acquired and liabilities assumed at fair value. On
December 31, 2006, the Company acquired Newkirk, which was a variable
interest entity (VIE). The Company was considered the primary beneficiary under
FIN 46R, and therefore, consolidates the MLP. The Company follows the provisions
of FIN 46R and, as a result, has recorded the minority interest in Newkirk
at
estimated fair value on the date of acquisition. The value of the consideration
issued in common shares was based upon a reasonable period before and after
the
date that the terms of the Newkirk Merger were agreed to and
announced.
Purchase
Accounting for Acquisition of Real Estate. The fair value of the real
estate acquired, which includes the impact of mark-to-market adjustments for
assumed mortgage debt related to property acquisitions, is allocated to the
acquired tangible assets, consisting of land, building and improvements, and
identified intangible assets and liabilities, consisting of the value of
above-market and below-market leases, other value of in-place leases and value
of tenant relationships, based in each case on their fair values.
The
fair
value of the tangible assets of an acquired property (which includes land,
building and improvements and fixtures and equipment) is determined by valuing
the property as if it were vacant, and the “as-if-vacant” value is then
allocated to land, building and improvements based on management’s determination
of relative fair values of these assets. Factors considered by management in
performing these analyses include an estimate of carrying costs during the
expected lease-up periods considering current market conditions and costs to
execute similar leases. In estimating carrying costs, management includes real
estate taxes, insurance and other operating expenses and estimates of lost
rental revenue during the expected lease-up periods based on current market
demand. Management also estimates costs to execute similar leases including
leasing commissions.
In
allocating the fair value of the identified intangible assets and liabilities
of
an acquired property, above-market and below-market in-place lease values are
recorded based on the difference between the current in-place lease rent and
a
management estimate of current market rents. Below-market lease intangibles
are
recorded as part of deferred revenue and amortized into rental revenue over
the
non-cancelable periods and bargain renewal periods of the respective leases.
Above-market leases are recorded as part of intangible assets and amortized
as a
direct charge against rental revenue over the non-cancelable portion of the
respective leases.
The
aggregate value of other acquired intangible assets, consisting of in-place
leases and tenant relationships, is measured by the excess of (i) the
purchase price paid for a property over (ii) the estimated fair value of
the property as if vacant, determined as set forth above. This aggregate value
is allocated between in-place lease values and tenant relationships based on
management’s evaluation of the specific characteristics of each tenant’s lease.
The values of in-place leases are amortized to expense over the remaining
non-cancelable periods
and
any
bargain renewal periods of the respective leases. Customer relationships are
amortized to expense over the applicable lease term plus expected renewal
periods.
Revenue
Recognition. The Company recognizes revenue in accordance with Statement of
Financial Accounting Standards No. 13 Accounting for Leases, as amended
(“SFAS 13”). SFAS 13 requires that revenue be recognized on a straight-line
basis over the term of the lease unless another systematic and rational basis
is
more representative of the time pattern in which the use benefit is derived
from
the leased property. Renewal options in leases with rental terms that are lower
than those in the primary term are excluded from the calculation of
straight-line rent if they do not meet the criteria of a bargain renewal option.
In those instances in which the Company funds tenant improvements and the
improvements are deemed to be owned by the Company, revenue recognition will
commence when the improvements are substantially completed and possession or
control of the space is turned over to the tenant. When the Company determines
that the tenant allowances are lease incentives, the Company commences revenue
recognition when possession or control of the space is turned over to the tenant
for tenant work to begin. The lease incentive is recorded as a deferred expense
and amortized as a reduction of revenue on a straight-line basis over the
respective lease term.
Gains
on
sales of real estate are recognized pursuant to the provisions of Statement
of
Financial Accounting Standards No. 66 Accounting for Sales of Real Estate,
as amended (“SFAS 66”). The specific timing of the sale is measured against
various criteria in SFAS 66 related to the terms of the transactions and any
continuing involvement in the form of management or financial assistance
associated with the properties. If the sales criteria are not met, the gain
is
deferred and the finance, installment or cost recovery method, as appropriate,
is applied until the sales criteria are met.
Impairment
of Real Estate. The Company evaluates the carrying value of all real estate
and intangible assets held when a triggering event under Statement of Financial
Accounting Standards No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, as amended (“SFAS 144”) has occurred to determine if an
impairment has occurred which would require the recognition of a loss. The
evaluation includes reviewing anticipated cash flows of the property, based
on
current leases in place, coupled with an estimate of proceeds to be realized
upon sale. However, estimating future sale proceeds is highly subjective and
such estimates could differ materially from actual results.
Depreciation
is determined by the straight-line method over the remaining estimated economic
useful lives of the properties. The Company generally depreciates buildings
and
building improvements over periods ranging from 8 to 40 years, land
improvements from 15 to 20 years, and fixtures and equipment from 5 to
16 years. Only costs incurred to third parties in acquiring properties are
capitalized. No internal costs (rents, salaries, overhead) are capitalized.
Expenditures for maintenance and repairs are charged to operations as incurred.
Significant renovations which extend the useful life of the properties are
capitalized.
Properties
Held For Sale. The Company accounts for properties held for sale in
accordance with SFAS 144. SFAS 144 requires that the assets and liabilities
of
properties that meet various criteria in SFAS 144 be presented separately in
the
consolidated balance sheets, with assets and liabilities being separately
stated. The operating results of these properties are reflected as discontinued
operations in the consolidated statements of operations. Properties that do
not
meet the held for sale criteria of SFAS 144 are accounted for as operating
properties.
Investments
in Non-Consolidated Entities. The Company accounts for its investments in
50% or less owned entities under the equity method, unless pursuant to FIN
46R,
consolidation is required. If its investment in the entity is less than 3%
and
it has no influence over the control of the entity then the entity is accounted
for under the cost method.
Marketable
Equity Securities. The Company classifies its existing marketable equity
securities as available-for-sale in accordance with the provisions of SFAS
No. 115, Accounting for Certain Investments in Debt and Equity Securities.
These securities are carried at fair market value, with unrealized gains and
losses reported in shareholders’ equity as a component of accumulated other
comprehensive income. Gains or losses on securities sold and other than
temporary impairments are included in the consolidated statements of operations.
Sales of securities
are recorded on the trade date and gains and losses are determined by the
specific identification method.
Notes
Receivable. The Company evaluates the collectibility of both interest and
principal of each of its notes, if circumstances warrant, to determine whether
it is impaired. A note is considered to be impaired, when based on current
information and events, it is probable that the Company will be unable to
collect all amounts due according to the existing contractual terms. When a
note
is considered to be impaired, the amount of the loss accrual is calculated
by
comparing the recorded investment to the value determined by discounting the
expected future cash flows at the note’s effective interest rate. Interest on
impaired notes is recognized on a cash basis.
Deferred
Expenses. Deferred expenses consist primarily of debt and leasing costs.
Debt costs are amortized using the straight-line method, which approximates
the
interest method, over the terms of the debt instruments and leasing costs are
amortized over the term of the related lease.
Deferred
Compensation. Deferred compensation consists of the value of non-vested
common shares issued by the Company to employees. The deferred compensation
is
amortized ratably over the vesting period which generally is five years. Certain
common shares vest only when certain performance based measures are
met.
Tax
Status. The Company has made an election to qualify, and believes it is
operating so as to qualify, as a REIT for federal income tax purposes.
Accordingly, the Company generally will not be subject to federal income tax,
provided that distributions to its shareholders equal at least the amount of
its
REIT taxable income as defined under Sections 856 through 860 of the
Code.
The
Company is now permitted to participate in certain activities from which it
was
previously precluded in order to maintain its qualification as a REIT, so long
as these activities are conducted in entities which elect to be treated as
taxable REIT subsidiaries under the Code. LRA and LCI are, and LSAC was a,
taxable REIT subsidiaries. As such, the Company is subject to federal and state
income taxes on the income from these activities.
Income
taxes are accounted for under the asset and liability method. Deferred tax
assets and liabilities are recognized for the estimated future tax consequences
attributable to differences between the financial statement carrying amounts
of
existing assets and liabilities and their respective tax basis and operating
loss and tax credit carry-forwards. Deferred tax assets and liabilities are
measured using enacted tax rates in effect for the year in which those temporary
differences are expected to be recovered or settled.
Cash
and Cash Equivalents. The Company considers all highly liquid instruments
with maturities of three months or less from the date of purchase to be cash
equivalents.
Restricted
Cash. Restricted cash, which is included in other assets on the condensed
consolidated balance sheet, is comprised primarily of cash balances held by
lenders for construction and tenant improvement reserves and amounts deposited
to complete tax-free exchanges.
Foreign
Currency. The Company has determined that the functional currency of its
foreign operations is the respective local currency. As such, assets and
liabilities of the Company’s foreign operations are translated using period-end
exchange rates, and revenues and expenses are translated using exchange rates
as
determined throughout the period. Unrealized gains or losses resulting from
translation are included in other comprehensive income and as a separate
component of the Company’s shareholders’ equity.
Segment
Reporting. The Company operates in one industry segment, investment in net
leased real properties.
Environmental
Matters. Under various federal, state and local environmental laws,
statutes, ordinances, rules and regulations, an owner of real property may
be
liable for the costs of removal or remediation of certain hazardous or toxic
substances at, on, in or under such property as well as certain other potential
costs relating to hazardous or toxic substances. These liabilities may include
government fines and penalties and damages for injuries to persons and adjacent
property. Such laws often impose liability without regard to whether the owner
knew of, or was responsible for, the presence or disposal of such substances.
Although the Company’s tenants are primarily responsible for any environmental
damage and claims related to the leased premises, in the event of the bankruptcy
or inability of the tenant of such premises to satisfy any obligations with
respect to such environmental liability, the Company may be required to satisfy
any obligations. In addition, the Company as the owner of such properties may
be
held directly liable for any such damages or claims irrespective of the
provisions
of any lease. As of June 30, 2007, the Company is not aware of any environmental
matter that could have a material impact on the financial
statements.
Reclassification. Certain
amounts included in the 2006 financial statements have been reclassified to
conform with the 2007 presentation.
(3) Earnings
per Share
The
following is a reconciliation of the numerators and denominators of the basic
and diluted earnings per share computations for the three and six months ended
June 30, 2007 and 2006:
|
|
Three
Months Ended
|
|
|
Six
Months Ended
|
|
|
|
June
30,
|
|
|
June
30,
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
BASIC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations
|
|
$ |
17,059
|
|
|
$ |
5,838
|
|
|
$ |
17,296
|
|
|
$ |
8,058
|
|
Less
preferred dividends
|
|
|
(7,034 |
) |
|
|
(4,109 |
) |
|
|
(12,665 |
) |
|
|
(8,218 |
) |
Income
(loss) allocable to common
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shareholders from
continuing operations
|
|
|
10,025
|
|
|
|
1,729
|
|
|
|
4,631
|
|
|
|
(160 |
) |
Total
income from discontinued operations
|
|
|
11,880
|
|
|
|
19,682
|
|
|
|
13,858
|
|
|
|
23,540
|
|
Net
income allocable to common shareholders
|
|
$ |
21,905
|
|
|
$ |
21,411
|
|
|
$ |
18,489
|
|
|
$ |
23,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding
-basic
|
|
|
65,265,217
|
|
|
|
52,116,003
|
|
|
|
66,892,769
|
|
|
|
51,980,753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
per common share – basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations
|
|
$ |
0.16
|
|
|
$ |
0.03
|
|
|
$ |
0.07
|
|
|
$ |
—
|
|
Income
from discontinued operations
|
|
|
0.18
|
|
|
|
0.38
|
|
|
|
0.21
|
|
|
|
0.45
|
|
Net
income
|
|
$ |
0.34
|
|
|
$ |
0.41
|
|
|
$ |
0.28
|
|
|
$ |
0.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) allocable to common
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shareholders
from continuing operations –
basic
|
|
$ |
10,025
|
|
|
$ |
1,729
|
|
|
$ |
4,631
|
|
|
$ |
(160 |
) |
Incremental
income attributed to assumed conversion of dilutive
securities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Income
(loss) allocable to common
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shareholders from
continuing operations
|
|
|
10,025
|
|
|
|
1,729
|
|
|
|
4,631
|
|
|
|
(160 |
) |
Total
income from discontinued operations
|
|
|
11,880
|
|
|
|
19,682
|
|
|
|
13,858
|
|
|
|
23,540
|
|
Net
income allocable to common shareholders
|
|
$ |
21,905
|
|
|
$ |
21,411
|
|
|
$ |
18,489
|
|
|
$ |
23,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares used in calculation of basic
earnings per share
|
|
|
65,265,217
|
|
|
|
52,116,003
|
|
|
|
66,892,769
|
|
|
|
51,980,753
|
|
Add
incremental shares representing:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issuable upon exercise of employee share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
options
|
|
|
611
|
|
|
|
20,570
|
|
|
|
621
|
|
|
|
25,972
|
|
Shares
issuable upon conversion of dilutive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
securities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Weighted
average number of common shares outstanding- diluted
|
|
|
65,265,828
|
|
|
|
52,136,573
|
|
|
|
66,893,390
|
|
|
|
52,006,725
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
per common share - diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations
|
|
$ |
0.16
|
|
|
$ |
0.03
|
|
|
$ |
0.07
|
|
|
$ |
—
|
|
Income
from discontinued operations
|
|
|
0.18
|
|
|
|
0.38
|
|
|
|
0.21
|
|
|
|
0.45
|
|
Net
income
|
|
$ |
0.34
|
|
|
$ |
0.41
|
|
|
$ |
0.28
|
|
|
$ |
0.45
|
|
Incremental
shares are considered anti-dilutive for periods that have a loss from continuing
operations applicable to common shareholders. In addition, other common share
equivalents maybe anti-dilutive in certain periods.
(4)
|
|
Investments
in Real Estate and Intangibles
|
During
the six months ended June 30, 2007, the Company acquired seven properties from
third parties for an aggregate capitalized cost of $117,760 and allocated
$19,083 of the purchase price to intangible assets.
During
the six months ended June 30, 2007, the Company acquired additional shares
in
LSAC for $16,696. Also during the six months ended June 30, 2007, LSAC paid
$7,418 to repurchase its common stock in a tender offer. After these
transactions, on June 30, 2007, LSAC was merged with and into the Company and
ceased to exist. Each share of common stock of LSAC owned by the Company was
cancelled and each share of common stock of LSAC not owned by the Company,
(8,750 shares) was converted into the right to receive $10.00 per share,
cancelled and is reflected as an accounts payable at June 30, 2007.
The
Company completed the Newkirk Merger effective December 31, 2006. The
allocation of the purchase price was based upon estimates and
assumptions. The Company engaged a third party valuation expert to
assist with the fair value assessment of the real estate. During the
six months ended June 30, 2007, certain estimates were revised. In
addition, there may be certain additional items that the Company will revise
once the Company receives additional information. Accordingly,
these allocations are subject to revision when final information is available,
although the Company does not believe the past revisions had, or any future
revisions will have, a significant impact on its financial position or results
of operations.
The
following unaudited pro forma financial information for the three and six months
ended June 30, 2006 gives effect to the Newkirk Merger as if it had occurred
on
January 1, 2006. The unaudited pro forma results are based on historical data
and are not intended to be indicative of the results of future
operations.
|
|
|
Six
Months Ended June 30, 2006
|
|
|
Three
Months Ended June 30, 2006
|
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Total
gross revenues
|
|
$ |
183,608
|
|
|
$ |
94,641
|
|
|
Net
income
|
|
$ |
26,680
|
|
|
$ |
24,011
|
|
|
Net
income per common share
|
|
|
|
|
|
|
|
|
|
after
preferred dividends
|
|
|
|
|
|
|
|
|
|
basic
|
|
$ |
0.27
|
|
|
$ |
0.29
|
|
|
diluted
|
|
$ |
0.14
|
|
|
$ |
0.16
|
|
The
effect of the refinancing of the KeyBank facility with the proceeds from the
Exchangeable Guaranteed Notes has been reflected in the above unaudited pro
forma financial information data.
During
the six months ended June 30, 2007, the Company, including through its
consolidated subsidiaries, completed transactions with its joint venture
partners as summarized as follows:
Triple
Net Investment Company LLC (TNI)
On
May 1,
2007, the Company entered into a purchase agreement with the Utah State
Retirement Investment Fund, its partner in one of its co-investment programs,
TNI, and acquired the 70% of TNI it did not already own. Accordingly, the
Company became the sole owner of the 15 primarily single tenant net leased
real
estate properties owned by TNI. The Company acquired the interest through a
cash
payment of approximately $82,600 and the assumption of approximately $156,600
in
non-recourse mortgage debt. The debt assumed by the Company bears stated
interest at rates ranging from 4.9% to 9.4% with a weighted –
average stated rate of 5.9% and matures at various dates ranging from 2010
to
2021. In connection with this transaction, the Company recognized $2,064 as
an
incentive fee in accordance with the TNI partnership agreement.
Lexington
Acquiport Company LLC (LAC) and Lexington Acquiport Company II LLC (LAC
II)
On
June
1, 2007, the Company entered into purchase agreements with the Common
Retirement Fund of the State of New York, its 66.67% partner in one of its
co-investment programs, LAC and 75% partner in another of its
co-investment programs, LAC II, and acquired the interests in LAC and LAC II
it
did not already own. Accordingly, the Company became the sole owner of the
26
primarily single tenant net leased real estate properties owned collectively
by
LAC and LAC II. The Company acquired the interest through a cash payment of
approximately $277,400 and the assumption of approximately $515,000 in
non-recourse mortgage debt. The debt assumed by the Company bears interest
at
stated rates ranging from 5.0% to 8.2% with a weighted – average stated rate of
6.2% and matures at various dates ranging from 2009 to 2021.
Lexington
/Lion Venture L.P. (LION)
Effective
June 1, 2007, the Company and its 70% partner in LION agreed to terminate LION
and distribute the 17 primarily net leased properties owned by LION.
Accordingly, the Company was distributed 7 of the properties, which are subject
to non-recourse mortgage debt of approximately $112,500. The debt assumed by
the
Company bears interest at stated rates ranging from 4.8% to 6.2% with a weighted
– average stated rate of 5.4% and matures at various dates ranging from 2012
to
2016. In addition, the Company paid approximately $6,600 of additional
consideration to its former partner in connection with the termination. In
connection with this transaction, the Company recognized $8,530 as an incentive
fee in accordance with the LION partnership agreement and was allocated equity
in earnings of $34,164 related to its share of gains relating to the 10
properties transferred to the partner.
In
accordance with generally accepted accounting principles, the Company recorded
the assets and liabilities at fair value to the extent of the interests
acquired, with a carryover basis for all assets and liabilities to the extent
of
the Company’s ownership. The allocation of the purchase price is based upon
estimates and assumptions. The Company engaged a third party valuation expert
to
assist with the fair value assessment of the real estate. The current
allocations are substantially complete; however, there may be certain items
that
the Company will finalize once it receives additional information. Accordingly,
the allocations are subject to revision when final information is available,
although the Company does not expect future revisions to have a significant
impact on its financial position or results of operations.
(5)
|
Discontinued
Operations
|
During
the six months ended June 30, 2007, the Company sold ten properties to third
parties for aggregate sales proceeds of $108,523 which resulted in a gain of
$12,828. No gains on sale were recognized during the three months ended March
31, 2007. As of June 30, 2007, the Company had five properties held for
sale.
The
following presents the operating results for the properties sold and properties
held for sale for the applicable periods:
|
|
|
Three
Months Ended June 30,
|
|
|
Six
Months Ended June 30,
|
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
Rental
revenues
|
|
$ |
6,146
|
|
|
$ |
2,987
|
|
|
$ |
11,312
|
|
|
$ |
7,223
|
|
|
Pre-tax
income, including gains on sales
|
|
$ |
14,390
|
|
|
$ |
19,707
|
|
|
$ |
16,472
|
|
|
$ |
23,614
|
|
(6) Investment
in Non-Consolidated Entities
During
the six months ended June 30, 2007, the Company acquired all the interests
it
did not already own in TNI, LAC, LAC II and LION. See note 4 for a discussion
of
the transactions.
As
of
June 30, 2007, the Company had interests ranging from 24% to 40% in 8
partnerships which own real estate properties. The properties are encumbered
by
approximately $107,500 (of which the Company’s proportionate share is
approximately $34,200) in non-recourse debt with stated interest rates ranging
from 5.2% to 15.0% with a weighted-average stated rate of 8.9% and maturity
dates ranging from 2008 to 2018.
The
following is summary historical cost basis selected balance sheet data as of
June 30, 2007 and income statement data for the six months ended June 30, 2007
for Concord Debt Holdings LLC, the Company’s non-consolidated entity
in which it owns a 50% interest, acquired in the Newkirk Merger, that invests
in
real estate debt securities. The other 50% partner in this joint venture is
an
affiliate of the Company’s Executive Chairman.
|
|
|
6/30/2007
|
|
|
Investments
|
|
$ |
1,024,615
|
|
|
Cash
|
|
|
13,924
|
|
|
Warehouse
debt facilities
|
|
|
415,132
|
|
|
Collateralized
debt obligations
|
|
|
376,650
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
Interest
income
|
|
$ |
28,204
|
|
|
Interest
expense
|
|
|
(16,609 |
) |
|
Other
expense
|
|
|
(2,430 |
) |
|
Net
income
|
|
$ |
9,165
|
|
On
May
25, 2007, Lex-Win Acquisition LLC (“Lex-Win”), an entity in which the Company
holds a 28% ownership interest, commenced a tender offer to acquire up to
45,000,000 shares of common stock in Wells Real Estate Investment Trust, Inc.
(“Wells”) at a price per share of $9.30. The tender offer expired on July 20,
2007 at which time Lex- Win has received tenders for approximately 4,800,000
shares representing approximately 1% of the outstanding shares in Wells.
Winthrop Realty, L.P. also holds a 28% interest in Lex-Win. The Executive
Chairman of the Company is an affiliate of Winthrop Realty, L.P.
(7) Mortgages
and Notes Payable
During
the six months ended June 30, 2007, the Company obtained five non-recourse
mortgages aggregating $73,725 with interest rates ranging from 5.7% to 6.1%
and
maturity dates in 2017 and 2021.
During
the six months ended June 30, 2007, the Company repaid $547,199 of borrowings
under the MLP’s borrowing facility. In connection with the MLP
repayment, the Company incurred approximately $650 to terminate an interest
rate
swap agreement. As of June 30, 2007, the Company had borrowings of $45,500
under
its line of credit.
In
addition, the Company issued, through the MLP, an aggregate $450,000 of 5.45%
Exchangeable Guaranteed Notes due in 2027. These notes can be put to the Company
commencing in 2012 and every five years thereafter through maturity. The notes
are convertible by the holders into common shares at a price of $25.25 per
share, subject to adjustment upon certain events. The initial exchange rate
is
subject to adjustment under certain events including increases in the Company’s
rate of dividends. Upon exchange the holders of the notes would receive (i)
cash
equal to the principal amount of the note and (ii) to the extent the conversion
value exceeds the principal amount of the note, either cash or common shares
at
the Company’s option.
The
Company, through a wholly-owned subsidiary, issued $200,000 in Trust Preferred
Notes. These notes, which are classified as debt, are due in 2037, are
redeemable by the Company commencing April 2012 and bear interest at a fixed
rate of 6.804% through April 2017 and thereafter at a variable rate of three
month LIBOR plus 170 basis points through maturity.
The Company
obtained a $225,000 secured term loan from KeyBank N.A. The interest only
secured term loan matures June 2009 and bears interest at LIBOR plus 60 basis
points. The loan contains customary covenants which the Company is in compliance
with as of June 30, 2007. The proceeds of the secured term loan were used to
purchase the interests in the co-investment programs. See note 4 for a
discussion of the acquisition of co-investment programs and assumption of
mortgages related to the acquisitions.
(8) Concentration
of Risk
The
Company seeks to reduce its operating and leasing risks through the geographic
diversification of its properties, tenant industry diversification, avoiding
dependency on a single property and the creditworthiness of
its
tenants. For the six months ended June 30, 2007 and 2006,
no single tenant represented greater than 10% of rental revenues.
Cash
and
cash equivalent balances may exceed insurable amounts. The Company
believes it mitigates risk by investing in or through major financial
institutions.
(9) Minority
Interests
In
conjunction with several of the Company’s acquisitions in prior years, sellers
were given OP Units as a form of consideration. All OP Units are
redeemable at certain times, only at the option of the holders, generally for
the Company’s common shares on a one-for-one basis and are not otherwise
mandatorily redeemable by the Company.
During
the six months ended June 30, 2007, 1,078,536 OP Units were redeemed for common
shares and 138,595 OP Units were purchased by the Company for cash, which had
an
aggregate value of $24,381.
As
of
June 30, 2007, there were approximately 40.0 million OP Units
outstanding. All OP Units have stated distributions in accordance
with their respective partnership agreements. To the extent that the
Company’s dividend per common share is less than the stated distribution per OP
Unit per the applicable partnership agreement, the distributions per OP Unit
are
reduced by the percentage reduction in the Company’s dividend per common share.
No OP Units have a liquidation preference.
As
discussed in note 4, the Company acquired the remaining minority interest in
LSAC as of June 30, 2007.
(10) Related
Party Transactions
The
Company, through the MLP, has an ownership interest in a securitized pool of
first mortgages which includes two first mortgage loans encumbering MLP
properties. As of June 30, 2007 and December 31, 2006, the value of
the ownership interest was $16,151 and $16,371, respectively.
Winthrop
Management, LP, an entity partially owned and controlled by the Company’s
Executive Chairman, provides property management services at certain
properties owned by the MLP. The MLP incurred fees of $283 for these
services for the six months ended June 30, 2007.
As
of
June 30, 2007, a $16,594 mortgage note payable is due to an entity owned by
two
of the Company’s significant OP Unitholders and Executive Chairman. The mortgage
was assumed in connection with the Merger.
During
the six months ended June 30, 2007, the Company repurchased common shares from
two of its officers for an aggregate of $405 and LSAC shares for
$2,200.
During
the six months ended June 30, 2007, the MLP and Winthrop Realty LP, an entity
affiliated with the Company’s Executive Chairman, entered into a joint venture
with other unrelated partners, to acquire shares of Wells Real Estate Investment
Trust (see note 6).
The
Company’s Executive Chairman is an affiliate of the 50% partner in Concord Debt
Holdings LLC (see note 6).
(11) Shareholders’
Equity
During
the six months ended June 30, 2007, the Company issued $155,000 of its Series
D
Cumulative Redeemable Preferred Stock (“Series D Preferred”) which pays
dividends at an annual rate of 7.55%, raising net proceeds of $149,774. The
Series D Preferred has no maturity date and the Company is not required to
redeem the Series D Preferred at any time. Accordingly, the Series D Preferred
will remain outstanding indefinitely, unless the Company decides at its option
on or after February 14, 2012, to exercise its redemption right. If at any
time
following a change of control, the Series D Preferred are not listed on any
of
the national stock exchanges, the Company will have the option to redeem the
Series D Preferred, in whole but not in part, within
90
days
after the first date on which both the change of control has occurred and the
Series D Preferred are not so listed, for cash at a redemption price of $25.00
per share, plus accrued and unpaid dividends (whether or not declared) up to
but
excluding the redemption date. If the Company does not redeem the Series D
Preferred and the Series D Preferred are not so listed, the Series D
Preferred will a pay dividends at an annual rate of 8.55%.
(12) Commitments
and Contingencies
The
Company is obligated under certain tenant leases, including leases for
non-consolidated entities, to fund the expansion of the underlying leased
properties.
Included
in other assets is construction in progress of $12,922 and $4,046 as of June
30,
2007 and December 31, 2006, respectively.
As
of
June 30, 2007, the Company has entered into a letter of intent to purchase
one
property for an aggregate of $13,750.
During
the first quarter of 2007, the Company wrote off approximately $431 relating
to
costs incurred for the LSAC initial public offering. The costs were
written off when LSAC decided not to pursue an initial public offering of its
shares.
The
Company at times is involved in various legal actions occurring in the ordinary
course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company’s consolidated financial position, results of operations or
liquidity.
(13) Share
– Based Compensation
On
February 6, 2007, the Board of Trustees established the Lexington Realty
Trust 2007 Outperformance Program, a long-term incentive compensation
program. Under this program, participating officers will share in an
“outperformance pool” if the Company’s total shareholder return for the
three-year performance period beginning on the effective date of the Program,
January 1, 2007, exceeds the greater of an absolute compounded annual total
shareholder return of 10% or 110% of the compounded annual return of the MSCI
US
REIT INDEX during the same period measured against a baseline value equal to
the
average of the ten consecutive trading days immediately prior to April 1,
2007. The size of the outperformance pool for this program will be 10% of the
Company’s total shareholder return in excess of the performance hurdle, subject
to a maximum amount of $40,000. On April 2, 2007, the Compensation
Committee modified the effective date of the Program from January 1, 2007 to
April 1, 2007.
The
awards are considered liability awards because the number of shares issued
to
the participants are not fixed and determinable as of the grant date. These
awards contain both a service condition and a market condition. As these awards
are liability based awards, the measurement date for liability instruments
is
the date of settlement. Accordingly, liabilities incurred under share-based
payment arrangements were initially measured on the grant date of February
6, 2007 and are required to be measured at the end of each reporting period
until settlement.
A
third
party was engaged to value the awards and the Monte Carlo simulation approach
was used to estimate the compensation expense of the outperformance pool. As
of
grant date, it was determined that the value of the awards was $1,901. As of
June 30, 2007, the value of the awards was $2,581. The Company recognized $235
in compensation expense relating to the awards during the six months ended
June
30, 2007.
Each
participating officer’s award under this program will be designated as a
specified participation percentage of the aggregate outperformance pool. On
February 6, 2007, the Compensation Committee allocated 83% of the
outperformance pool to certain of the Company’s officers. During the
second quarter of 2007, one officer separated from the Company and the
rights relating to his allocated 8% were forfeited. The remaining unallocated
balance of 25% may be allocated by the Compensation Committee in its
discretion.
If
the
performance hurdle is met, the Company will grant each participating officer
non-vested common shares as of the end of the performance period with a value
equal to such participating officer’s share of the outperformance pool. The
non-vested common shares would vest in two equal installments on the first
two
anniversaries of the date the performance period ends provided the executive
continues employment. Once issued, the non-vested common shares would be
entitled to dividends and voting rights.
In
the
event of a change in control (as determined for purposes of the program) during
the performance period, the performance period will be shortened to end on
the
date of the change in control and participating officers’ awards will be based
on performance relative to the hurdle through the date of the change in control.
Any common shares earned upon a change in control will be fully vested. In
addition, the performance period will be shortened to end for an executive
officer if he or she is terminated by the Company without “cause” or
he or she resigns for “good reason,” as such terms are defined in the executive
officer’s employment agreement. All determinations, interpretations, and
assumptions relating to the vesting and the calculation of the awards under
this
program will be made by the Compensation Committee.
During
the second quarter of 2007, the Company and an executive officer entered into
an
employment separation agreement. In addition to a cash payment of $3,600,
non-vested common shares were accelerated and immediately vested which resulted
in a charge of $933.
During
the six months ended June 30, 2007 and 2006, the Company recognized $1,795
and
$3,321, respectively, in compensation relating to share grants to trustees
and
employees, in addition to the $933 discussed above.
(14) Supplemental
Disclosure of Statement of Cash Flow Information
During
the six months ended June 30, 2007 and 2006, the Company paid $57,252 and
$35,148, respectively, for interest and $2,691 and $169, respectively, for
income taxes.
During
the six months ended June 30, 2007 and 2006, holders of an aggregate of
1,078,536 and 91,869 OP Units, respectively, redeemed such OP Units for common
shares of the Company. These redemptions resulted in an increase in
shareholders’ equity and corresponding decrease in minority interest of $21,408
and $1,041, respectively.
In
connection with the acquisition of the co-investment programs, the Company
paid
approximately $366,600 in cash and acquired approximately
$1,071,000 in real estate, $264,000 in intangibles, $21,000 in cash,
assumed $785,000 in mortgages payable, $40,000 in below market leases
and $14,000 in all other assets and liabilities (see Note 4).
In
connection with a mortgage obtained in January 2007, the lender held back $6,500
until completion of the secured property’s expansion project. The $6,500 is
included in other assets on the accompanying condensed consolidated
balance sheet. The Company received these funds from the lender in July
2007.
Subsequent
to June 30, 2007 the Company:
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·
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funded
$12,542 to Lex-Win in connection with its purchase of 4.8 million
shares
of Wells; and
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|
·
|
borrowed
$12,000 under its line of credit.
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ITEM
2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION
AND RESULTS OF OPERATIONS
Introduction
When
we
use the terms “Lexington,” the “Company,” “we,” “us” and “our,” we mean
Lexington Realty Trust and all entities owned by us, including non-consolidated
entities, except where it is clear that the term means only the parent company.
References herein to our Quarterly Report are to our Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 2007.
We
merged
with Newkirk Realty Trust, Inc., or Newkirk, on December 31, 2006, which we
refer to as the Newkirk Merger. Information regarding items in our Consolidated
Statements of Operations as of December 31, 2006, contained in our Annual Report
on Form 10-K for the year ended December 31, 2006, did not include the business
and operations of Newkirk. Information regarding items in
our Consolidated Balance Sheet at December 31, 2006, contained in our Annual
Report on Form 10-K for the year ended December 31, 2006, included
the assets, liabilities and minority interests of Newkirk. Commencing
January 1, 2007, the business and operations of Newkirk are included in our
Consolidated Statements of Operations. Since prior and comparable
interim periods did not include information regarding the assets, liabilities
and minority interests of Newkirk or the business and operations of Newkirk,
you
may not be able to effectively compare interim periods because of the material
impact to our financial condition and results of operations resulting from
the
Newkirk Merger.
On
June
4, 2007, we announced a strategic restructuring plan. The plan, when and if
completed, will restructure us into a company consisting primarily
of:
|
|
A
wholly owned portfolio of core
office assets;
|
|
|
A
wholly owned portfolio of core
warehouse/distribution
assets;
|
|
|
A
continuing 50% interest in a
joint venture that invests in senior and subordinated debt interests
secured by both net-leased and multi-tenanted real estate
collateral;
|
|
|
A
minority interest in a
to-be-formed joint venture that invests in specialty single-tenant
real
estate assets; and
|
|
|
Equity
securities in other net
lease companies owned either individually or through an interest
in one or
more joint ventures.
|
In
connection with the strategic restructuring plan, we:
|
|
acquired
all of the outstanding interests not otherwise owned by us in Triple
Net
Investment Company LLC, one of our co-investment programs, which
resulted
in us becoming the sole owner of the co-investment program's 15 primarily
single tenant net leased
properties;
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|
|
acquired
all of the outstanding
interests not otherwise owned by us in Lexington Acquiport Company,
LLC
and Lexington Acquiport Company II, LLC, two of our co-investment
programs, which resulted in us becoming the sole owner of the
co-investment program's 26 primarily single tenant net leased
properties;
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|
|
terminated
Lexington/Lion Venture
L.P., one of our co-investment programs, and were distributed 7 primarily
single tenant net leased properties owned by the co-investment
program;
|
|
·
|
announced
a disposition program,
whereby we are marketing approximately 140 non-core assets for sale;
and
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|
·
|
announced
our intention to create
a joint venture with an institutional funding source to invest in
“core
plus” net leased assets, such as manufacturing assets, call centers and
other specialty assets.
|
The
Company can provide no assurances that it will dispose of any assets under
its
disposition program or enter into a definitive agreement to create the joint
venture
Forward-Looking
Statements
The
following is a discussion and analysis of our consolidated financial condition
and results of operations for the three and six month periods ended June 30,
2007 and 2006, and significant factors that could affect our prospective
financial condition and results of operations. This discussion should
be read together with the accompanying unaudited condensed consolidated
financial statements and notes and with our consolidated financial statements
and notes included in our Annual Report on Form 10-K for the year ended December
31, 2006 which we refer to as our Annual Report. Historical results
may not be indicative of future performance.
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, and Section
21E of the Securities Exchange Act of 1934, as amended. We intend
such forward-looking statements to be covered by the safe harbor provisions
for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995 and include this statement for purposes of complying with these
safe
harbor provisions. Forward-looking statements, which are based on
certain assumptions and describe our future plans, strategies and expectations,
are generally identifiable by use of the words “believes,” “expects,” “intends,”
“anticipates,” “estimates,” “projects” or similar
expressions. Readers should not rely on forward-looking statements
since they involve known and unknown risks, uncertainties and other factors
which are, in some cases, beyond our control and which could materially affect
actual results, performances or achievements. In particular, among
the factors that could cause actual results to differ materially from current
expectations include, but are not limited to, (i) the failure to suceessfully
complete the strategic restructuring plan, (ii) the failure to integrate our
operations and properties with those of Newkirk Realty Trust, Inc., (iii) the
failure to achieve the anticipated results of our strategic restructuring plan,
(iv) the failure to continue to qualify as a real estate investment trust,
(v)
changes in general business and economic conditions, (vi) competition, (vii)
increases in real estate construction costs, (viii) changes in interest rates,
or (ix) changes in accessibility of debt and equity capital
markets. We undertake no obligation to publicly release the results
of any revisions to these forward-looking statements which may be made to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events. Accordingly, there is no
assurance that our expectations will be realized.
Critical
Accounting Policies
A
summary
of our critical accounting policies is included in our Annual Report on Form
10-K for the year ended December 31, 2006. There have been no significant
changes to those policies during 2007.
New
Accounting Pronouncements
In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements
(“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring
fair value in generally accepted accounting principles and expands disclosures
about fair value measurements. SFAS 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007 and interim
periods within those fiscal years. The adoption of this statement is not
expected to have a material impact on our financial position, results of
operations or cash flows.
In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities – Including an Amendment of FASB Statement No.
115 (“SFAS 159”). SFAS 159 permits entities to choose to measure many
financial assets and liabilities and certain other items at fair value. An
enterprise will report unrealized gains and losses on items for which the fair
value option has been elected in earnings at each subsequent reporting date.
The
fair value option may be applied on an instrument-by-instrument basis, with
several exceptions, such as investments accounted for by the equity method,
and
once elected, the option is irrevocable unless a new election date occurs.
The
fair value option can be applied only to entire instruments and not to portions
thereof. SFAS 159 is effective as of the beginning of an entity’s first fiscal
year beginning after November 15, 2007. Management is currently evaluating
the
effects of adopting SFAS 159 on our financial statements.
Liquidity
and Capital Resources
Real Estate Assets. As of June 30, 2007,
we held interests in approximately 350 consolidated real estate assets, which
were located in 44 states and the Netherlands. The real estate assets
are primarily subject to triple net leases, which are
generally
characterized as leases in which the tenant pays all or substantially all of
the
cost and cost increases for real estate taxes, capital expenditures, insurance,
utilities and ordinary maintenance of the property.
During
the six months ended June 30, 2007, in addition to the acquisition of the
co-investment programs, we purchased seven properties from third parties for
a
capitalized cost of $117.8 million and sold 10 properties to third parties
for
aggregate sales proceeds of $108.5 million, which resulted in a gain of $12.8
million.
Our
principal sources of liquidity are revenues generated from the properties,
interest on cash balances, amounts available under our unsecured credit
facility, the MLP’s $225.0 million secured loan and amounts that may be raised
through the sale of securities in private or public offerings. For
the six months ended June 30, 2007, the leases on our consolidated properties
generated $189.2 million in rental revenue compared to $89.7 million during
the
same period in 2006. The significant increase is due to an increase in the
number assets acquired in the Newkirk Merger.
As
more
fully described in note 4 to the condensed consolidated financial statements,
we
acquired the remaining interests we did not already own in three co-investment
programs and liquidated the remaining one co-investment program. We paid $366.6
million in cash and assumed approximately $785.0 million in non-recourse
mortgage debt to acquire full interests in 48 real estate
properties.
Dividends. We
have made quarterly distributions since October 1986. We declared a common
dividend of $0.375 per share, with respect to the quarter ended June 30, 2007,
to common shareholders of record as of June 29, 2007, which was paid on July
16,
2007. This dividend equates to an annualized common dividend
rate of $1.50 per share. We also declared a dividend on our
Series B preferred shares of $0.503125 per share, with respect to the quarter
ended June 30, 2007, to preferred shareholders of record as of July 31, 2007,
payable on August 15, 2007. The annual preferred dividend rate on the
Series B preferred shares is $2.0125 per share. We also declared a dividend
on
our Series C preferred shares of $0.8125 per share, with respect to the quarter
ended June 30, 2007, to preferred shareholders of record as of July 31, 2007,
payable on August 15, 2007. The annual preferred dividend rate on the
Series C preferred shares is $3.25 per share. We also declared a
dividend on our Series D preferred shares of $0.471875 per share, with respect
to the quarter ended June 30, 2007, to preferred shareholders of record as
of
June 29, 2007, which was paid on July 16, 2007. The annual preferred
dividend rate on the Series D preferred shares is $1.8875 per
share.
During
the six months ended June 30, 2007, we completed an offering of 6.2 million
Series D Preferred Shares, at $25 per share, with an annual dividend rate of
7.55%, raising net proceeds of $149.8 million.
Cash
dividends paid to common and preferred shareholders for the six months ended
June 30, 2007 and 2006, were $75.4 million and $46.7 million, respectively.
The
increase in the amount of cash dividends paid results from an increase in
the number of shareholders resulting from the Newkirk Merger and a special
distribution paid in January 2007 relating to the Newkirk Merger.
Although
we receive the majority of our base rental payments on a monthly basis, we
intend to continue paying dividends quarterly. Amounts accumulated in advance
of
each quarterly distribution are invested by us in short-term money market or
other suitable instruments.
We
believe that cash flows from operations will continue to provide adequate
capital to fund our operating and administrative expenses, regular debt service
obligations and all dividend payments in accordance with REIT requirements
and
the terms of our outstanding preferred shares in both the short-term and
long–term. In addition, we anticipate that cash on hand, borrowings under our
credit facility, issuance of equity and debt, as well as other alternatives,
will provide the necessary capital required by the Company. Cash flows from
operations were $152.6 million and $53.8 million for the six months ended June
30, 2007 and 2006, respectively. The increase from 2006 to 2007 is primarily
a
result of additional operating cash flows associated with Newkirk’s real estate
assets. The underlying drivers that impact working capital and therefore cash
flows from operations are the timing of collection of rents, including
reimbursements from tenants, the collection of advisory fees, payment of
interest on mortgage debt and payment of operating and general and
administrative costs. Due to the acquisition of all of the outstanding interests
in our co-investment programs and the merger of LSAC with and into us, we
anticipate a significant decline in advisory and incentive fees in future
periods which we believe will be offset by increased rental revenues from
acquiring said interests. We believe the net lease structure of the majority
of
our tenants’ leases enhances cash flows from operations since the payment and
timing of operating costs related to the properties are generally borne directly
by the tenant. Collection and timing of tenant rents is closely monitored by
management as part of our cash management program.
Net
cash used in investing activities totaled $409.7
million and $22.1 million for the six months ended June 30, 2007 and 2006,
respectively. Cash used in investing activities was primarily
attributable to the acquisition of and deposits made
for
real
estate (including acquiring our co-investment partners’ interests), purchase of
LSAC shares and the investment in non-consolidated entities. Cash
provided by investing activities relates primarily to the sale of properties,
proceeds from the sale of marketable securities, release of escrow deposits
and
distributions from non-consolidated entities. Therefore, the
fluctuation in investing activities relates primarily to the timing of
investments and dispositions.
Net
cash
provided by (used in) financing activities totaled $215.6 million and ($30.9)
million for the six months ended June 30, 2007 and 2006,
respectively. Cash used in financing activities was primarily
attributable to dividends (net of proceeds reinvested under our dividend
reinvestment plan), distributions to limited partners, repurchase of common
shares/ OP Units and repayment of indebtedness. Cash provided by
financing activities relates primarily to proceeds from equity offerings and
debt financings. Due to the reduction in the discount from 5% to 0%, we expect
that the proceeds reinvested under our dividend reinvestment plan will be
significantly reduced. In addition, in 2007, we started purchasing shares in
the
open market to be issued under the dividend re-investment plan whereas
previously we issued the shares from treasury.
Financing
General. As
of June 30, 2007, total outstanding mortgages and notes payable were
approximately $3.3 billion, which bore interest at a weighted average interest
rate of approximately 5.9%.
Revolving Credit Facility. As
of June 30, 2007, we were in compliance with all covenants, there were $45.5
million in borrowings outstanding, $152.9 million was available to be borrowed
and $1.6 million in letters of credit were outstanding under our unsecured
revolving credit facility.
Corporate
Borrowings. During the six months ended June 30, 2007, we issued $450.0
million in 5.45% Exchangeable Guaranteed Notes due in 2027. In addition, we
issued $200.0 million in Trust Preferred Notes due in 2037, which bear interest
at 6.804% through April 2017 and thereafter at three month LIBOR plus 170 basis
points. We used the proceeds from these issuances, along with other cash
sources, to fully repay the $547.2 million in outstanding borrowings on the
MLP’s secured borrowing facility and balances on our line of
credit. During the six months ended June 30, 2007, the MLP borrowed
$225.0 million from KeyBank N.A. The interest only secured loan matures June
2009 and bears interest at LIBOR plus 60 basis points. The proceeds of the
loan
were used to purchase the interests in the co-investment programs discussed
above in - “Liquidity and Capital Resources – Real Estate Assets.”
Other
Lease Obligations. Since
our tenants generally bear all or substantially all of the cost of property
operations, maintenance and repairs, we do not anticipate significant cash
needs
for these costs. We generally fund property expansions with available
cash and additional secured borrowings, the repayment of which is funded out
of
rental increases under the leases covering the expanded properties.
Capital
Expenditures. As of June 30, 2007, we have entered into a letter
of intent to purchase one property for an aggregate estimated obligation of
$13.8 million. This expenditure is expected to be funded from operating cash
flows or borrowings on our unsecured revolving credit facility.
Environmental
Matters. Based upon management’s ongoing review of our
properties, management is not aware of any environmental condition with respect
to any of our properties, which would be reasonably likely to have a material
adverse effect on us. There can be no assurance, however, that (i) the discovery
of environmental conditions, which were previously unknown, (ii) changes in
law,
(iii) the conduct of tenants or (iv) activities relating to properties in the
vicinity of our properties, will not expose us to material liability in the
future. Changes in laws increasing the potential liability for environmental
conditions existing on properties or increasing the restrictions on discharges
or other conditions may result in significant unanticipated expenditures or
may
otherwise adversely affect the operations of our tenants, which would adversely
affect our financial condition and results of operations.
Results of
Operations
Three
months ended June 30, 2007 compared with June 30, 2006. Changes in our
results of operations are primarily due to the growth of our portfolio and
costs
associated with such growth primarily related to the Newkirk Merger, which
was
effective December 31, 2006, and the acquisition of the outstanding interests
in
our co-investment programs. Of the increase in total gross revenues
in 2007 of $71.4 million, $58.7 million is attributable to rental
revenue. The remaining $12.7 million increase in gross revenues in
2007 was primarily attributable to an increase in advisory and incentive fees
of
$9.9
million and a $2.8 million increase in tenant reimbursements. The increase
in
advisory and incentive fees relates primarily to incentive fees earned on two
of
our co–investment programs that we acquired in the second quarter of
2007.
The
increase in interest and amortization expense of $21.9 million is due to the
growth of our portfolio resulting from the Newkirk Merger and the acquisition
of
the outstanding interests in our co-investment programs.
The
increase in property operating expense of $6.6 million is primarily due to
an
increase in properties for which we have operating expense responsibility and
an
increase in vacancy.
The
increase in depreciation and amortization of $38.0 million is due primarily
to
the growth in real estate and intangibles through the acquisition of properties
in the Newkirk Merger and the acquisition of the outstanding interests in
our co-investment programs. Intangible assets are amortized over a
shorter period of time (generally the lease term) than real estate
assets.
The
increase in general and administrative expenses of $7.5 million is due primarily
to increases in personnel costs (including severance charges of approximately
$4.5 million incurred for a former officer) and professional
fees. The increases in personnel costs (other than relating to
severance) and professional fees are attributable to the additional employees
hired due to the Newkirk Merger, the increase in our operations resulting from
the Newkirk Merger and the acceleration of vesting of LSAC common shares
resulting from its merger into us.
Non-operating
income decreased $3.3 million due primarily to a non-recurring $5.4 million
gain
on sale of a bankruptcy claim in 2006 offset by an increase in interest and
dividend income.
Debt
satisfaction gain decreased $1.2 million as no debt was satisfied in continuing
operations in 2007.
Impairment
loss decreased $1.1 million due to a non-recurring write-off in
2006.
The
increase in provision for income taxes of $1.9 million relates to earnings
at
the taxable REIT subsidiaries and the write-off of deferred tax assets relating
to the LSAC merger.
The
minority interest share of income increase of $18.5 million is due to an
increase in earnings at the partnership level (primarily related to the equity
in earnings and incentive fees earned on the disposition of the co- investment
program offset by depreciation and amortization of real estate and intangibles),
resulting primarily from the minority interest related to the MLP, the former
operating partnership for Newkirk.
The
equity in earnings of non-consolidated entities increase of $37.5 million is
primarily due to the sale of ten properties to a co-investment program
partner, offset by a reduction in earnings due to the termination of the four
co-investment programs.
Net
income increased by $3.4 million primarily due to the net impact of items
discussed above coupled with a decrease of $7.8 million in income from
discontinued operations.
Discontinued
operations represents properties sold or held for sale. The total discontinued
operations decreased $7.8 million due to an increase in income from discontinued
operations of $3.6 million offset by a reduction in debt satisfaction gains
of
$5.9 million, a reduction in gains on sale of $1.4 million, an increase in
provision for increase taxes of $2.5 million and an increase in minority
interests share of income of $1.6 million.
Net
income applicable to common shareholders in 2007 increased by $0.5 million
compared to net income applicable to common shareholders in 2006. The increase
is due to the items discussed above offset by an increase in preferred dividends
of $2.9 million resulting from the issuance of Series D Preferred
Shares. The increase in net income in future periods will be closely
tied to the level of acquisitions made by us. Without acquisitions,
the sources of growth in net income are limited to index adjusted rents (such
as
the consumer price index), percentage rents, reduced interest expense on
amortizing mortgages and by controlling other variable overhead
costs. However, there are many factors beyond management’s control
that could offset these items including, without limitation, increased interest
rates and tenant monetary defaults and the other risks described in this
Quarterly Report and our Annual Report.
Six
months ended June 30, 2007 compared with June 30, 2006. Changes in our
results of operations are primarily due to the growth of our portfolio and
costs
associated with such growth primarily related to the Newkirk Merger, which
was
effective December 31, 2006 and the acquisition of the outstanding interests
in
our co-investment programs. Of the increase in total gross revenues
in 2007 of $113.2 million, $99.5 million is attributable to rental
revenue. The remaining
$13.7
million increase in gross revenues in 2007 was primarily attributable to an
increase in advisory and incentive fees of $9.6 million and a $4.1 million
increase in tenant reimbursements. The increase in advisory and
incentive fees relates primarily to incentive fees earned on two of our
co–investment programs that we acquired in the second quarter of
2007.
The
increase in interest and amortization expense of $37.4 million is due to the
growth of our portfolio resulting from the Newkirk Merger and the acquisition
of
the outstanding interests in our co-investment programs.
The
increase in property operating expense of $10.4 million is primarily due to
an
increase in properties for which we have operating expense responsibility and
an
increase in vacancy.
The
increase in depreciation and amortization of $71.1 million is due primarily
to
the growth in real estate and intangibles through the acquisition of properties
in the Newkirk Merger and the acquisition of the outstanding interests in our
co-investment programs. Intangible assets are amortized over a
shorter period of time (generally the lease term) than real estate
assets.
The
increase in general and administrative expenses of $10.7 million is due
primarily to increases in trustee fees, personnel costs (including severance
charges incurred of approximately $4.5 million for a former officer) and
professional fees. Fixed trustee fees were historically paid pro rata
over the balance of the year; however, in 2007, fixed trustee fees were expensed
during the three months ended March 31, 2007. The increases in personnel costs
(other than relating to severance) and professional fees are attributable to
the
additional employees hired due to the Merger, the increase in our operations
resulting from the Newkirk Merger and the acceleration of vesting of LSAC common
shares resulting from its merger into us.
Non-operating
income decreased $1.5 million due primarily to a non–recurring $5.4 million gain
on sale of a bankruptcy claim in 2006 offset by an increase in interest and
dividend income.
Debt
satisfaction gains decreased $0.3 million as no debt was satisfied in continuing
operations in 2007.
Impairment
loss decreased $1.1 million due to a non-recurring write-off on
2006.
The
increase in provision for income taxes of $2.4 million relates to earnings
of
the taxable REIT subsidiaries and the write-off of deferred tax assets relating
to the LSAC merger.
The
minority interest share of income increase of $11.1 million is due to an
increase in earnings at the partnership level (primarily related to the equity
in earnings and incentive fees earned on the disposition of the co-
investment program offset by depreciation and amortization of real estate and
intangibles), resulting primarily from the minority interest related to the
MLP,
the former operating partnership for Newkirk.
The
equity in earnings of non-consolidated entities increase of $39.8 million is
primarily due to the sale of properties to the co- investment program partner
offset by a reduction in earnings due to the termination of four co-investment
programs.
Net
income decreased by $0.4 million primarily due to the net impact of items
discussed above coupled with a decrease of $9.7 million in income from
discontinued operations.
Discontinued
operations represents properties sold or held for sale. The total discontinued
operations decreased $9.7 million due to an increase in income from discontinued
operations of $4.2 million offset by a reduction in debt satisfaction gains
of
$5.9 million, a reduction in gains on sale of $4.1 million, an increase in
provision for income taxes of $2.5 million and an increase in minority interests
share of income of $1.4 million.
Net
income applicable to common shareholders in 2007 decreased $4.9 million compared
to net income applicable to common shareholders in 2006. The decrease is due
to
the items discussed above plus an increase in preferred dividends of $4.4
million resulting from the issuance of Series D Preferred Shares. The
increase in net income in future periods will be closely tied to the level
of
acquisitions made by us. Without acquisitions, which in addition to
generating rental revenue, generate acquisition, debt placement and asset
management fees from non-consolidated entities, the sources of growth in net
income are limited to index adjusted rents (such as the consumer price index),
percentage rents, reduced interest expense on amortizing mortgages and by
controlling other variable overhead costs. However, there are many
factors beyond management’s control that could offset these items including,
without limitation, increased interest rates and tenant monetary
defaults.
Off-Balance
Sheet Arrangements
Non-Consolidated
Real Estate Entities. As of June 30, 2007, we had investments in
various real estate entities with varying structures. The real estate
investments owned by the entities (which include direct property investments
and
investments in real estate debt securities) are 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 property collateralized by the mortgage. The lender generally
does not have recourse against any other assets owned by the borrower or any
of
the members of the borrower, except for certain specified exceptions listed
in
the particular loan documents. These exceptions generally relate to
limited circumstances including breaches of material
representations.
ITEM
3.
QUANTITATIVE AND QUALITATIVE
DISCLOSURES
ABOUT MARKET RISK ($000’s)
Our
exposure to market risk relates primarily to our variable rate and fixed rate
debt. As of June 30, 2007 and 2006, our consolidated variable rate
indebtedness was $271,000 and $0, respectively, which represented 8.3% and
0% of
total long-term indebtedness, respectively. During the three months
ended June 30, 2007 and 2006, our variable rate indebtedness had a weighted
average interest rate of 7.4% and 8.0%, respectively. Had the
weighted average interest rate been 100 basis points higher, our interest
expense for the three months ended June 30, 2007 and 2006 would have been
increased by approximately $233 and $36, respectively. During
the six months ended June 30, 2007 and 2006, our variable rate indebtedness
had
a weighted average interest rate of 7.4% and 8.1%, respectively. Had
the weighted average interest rate been 100 basis points higher, our interest
expense for the six months ended June 30, 2007 and 2006 would have been
increased by approximately $338 and $66, respectively. As of June 30,
2007 and 2006, our consolidated fixed rate debt was approximately $3,000,000
and
$1,200,000, respectively, which represented 91.7% and 100%, respectively, of
total long-term indebtness. The weighted average interest rate as of
June 30, 2007 of fixed rate debt was 5.9%, which approximates the interest
rate
on fixed rate debt incurred by us during the three months ended June 30, 2007.
With no fixed rate debt maturing until 2008, we believe we have limited market
risk exposure to rising interest rates as it relates to our fixed rate debt
obligations. However, had the fixed interest rate been higher by 100
basis points, our interest expense would have been increased by $6,258 for
the
three months ended June 30, 2007 and by $2,919 for the three months ended June
30, 2006. Had the fixed interest rate been higher by 100 basis points, our
interest expense would have been increased by $11,456 for the six months ended
June 30, 2007 and by $5,846 for the six months ended June 30, 2006. Our interest
rate risk objectives are to limit the impact of interest rate fluctuations
on
earnings and cash flows and to lower our overall borrowing costs. To achieve
these objectives, we manage our exposure to fluctuations in market interest
rates through the use of fixed rate debt instruments to the extent that
reasonably favorable rates are obtainable with such arrangements. We may enter
into derivative financial instruments such as interest rate swaps or caps to
mitigate our interest rate risk on a related financial instrument or to
effectively lock the interest rate on a portion of our variable rate debt.
Currently, we have one interest rate cap agreement.
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, has evaluated the
effectiveness of our disclosure controls and procedures (as such term is defined
in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934,
as
amended (the “Exchange Act”)) as of the end of the period covered by this
report. Based on such evaluation, our Chief Executive Officer and
Chief Financial Officer have concluded that, as of the end of such period,
our
disclosure controls and procedures are effective.
Internal
Control Over Financial Reporting. There have been no significant
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 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.
PART
II -
OTHER INFORMATION
ITEM
1.
|
Legal
Proceedings.
|
There
have been no material legal proceedings beyond those previously disclosed in
our
Annual Report on Form 10-K for the year ended December 31, 2006.
Other
than as set forth below, there have been no material changes in our risk factors
from those disclosed in our Annual Report on Form 10-K for the year ended
December 31, 2006.
We
may not be able to successfully implement and complete the strategic
restructuring plan. We can provide no assurance that we will be able
to implement and complete the strategic restructuring plan as disclosed in
our
Current Report on Form 8-K filed with the Securities and Exchange Commission
on
June 7, 2007. As a result, we may not realize any of the anticipated
benefits of the strategic restructuring plan. We may also incur
significant expenses and experience operational interruptions while implementing
the strategic restructuring plan.
ITEM
2.
|
Unregistered
Sales of Equity Securities and Use of
Proceeds.
|
Share
Repurchase Program
The
following table summarizes repurchases of our common shares/operating
partnership units during the three months ended June 30, 2007:
Period
|
|
Total
number of Shares/ Units Purchased
|
|
|
Average
Price Paid Per Share/ Units
|
|
|
Total
Number of Shares/Units Purchased as Part of Publicly Announced Plans
Programs
|
|
|
Maximum
Number of Shares That May Yet Be Purchased Under the Plans or
Programs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April
1 -30, 2007
|
|
|
444,117
|
|
|
$ |
21.16
|
|
|
|
444,117
|
|
|
|
5,968,661
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May
1 -31, 2007
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,968,661
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
1-30, 2007
|
|
|
2,048,456
|
|
|
$ |
20.96
|
|
|
|
2,048,456
|
|
|
|
3,920,205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second
Quarter 2007
|
|
|
2,492,573
|
|
|
$ |
21.00
|
|
|
|
2,492,573
|
|
|
|
3,920,205
|
|
ITEM
3.
|
Defaults
Upon Senior Securities - not
applicable.
|
ITEM
4.
|
Submission
of Matters to a Vote of Security
Holders
|
At
our
Annual Meeting of Shareholders held on May 22, 2007, the following actions
were taken:
The
shareholders elected 11 individuals nominated to serve as our trustees until
the
2008 Annual Meeting, as set forth in Proposal No. 1 in our Notice of Annual
Meeting of Shareholders and Proxy Statement for the Annual Meeting. The 11
individuals elected, and the number of votes cast for, or withheld, with respect
to each of them follows:
Nominee
for Trustee
|
|
For
|
|
Withhold
|
Michael
L. Ashner
|
|
94,735,663
|
|
2,106,067
|
E.
Robert Roskind
|
|
93,408,485
|
|
3,433,245
|
Richard
J. Rouse
|
|
93,405,352
|
|
3,436,378
|
T.
Wilson Eglin
|
|
95,861,481
|
|
980,249
|
William
J. Borruso
|
|
96,159,311
|
|
682,419
|
Clifford
Broser
|
|
95,160,467
|
|
1,681,263
|
Geoffrey
Dohrmann
|
|
96,278,050
|
|
563,680
|
Carl
D. Glickman
|
|
95,984,151
|
|
857,579
|
James
Grosfeld
|
|
96,151,550
|
|
690,180
|
Richard
Frary
|
|
96,278,853
|
|
562,877
|
Kevin
W. Lynch
|
|
94,829,510
|
|
2,012,220
|
The
shareholders approved and adopted the Lexington Realty Trust 2007 Equity-Based
Award Plan, as set forth in Proposal No. 2 in our Notice of Annual Meeting
of
Shareholders and Proxy Statement for the Annual Meeting. The number of
votes cast for, against, or abstained, with respect to Proposal No. 2
follows:
For
|
|
Against
|
|
Abstain
|
75,490,907
|
|
7,408,832
|
|
465,125
|
The
shareholders ratified the appointment of KPMG LLP as our independent registered
public accounting firm for our fiscal year ending December 31, 2007, as set
forth in Proposal No. 3 in our Notice of Annual Meeting of Shareholders and
Proxy Statement for the Annual Meeting. The number of votes cast for,
against, or abstained, with respect to Proposal No. 3 follows:
For
|
|
Against
|
|
Abstain
|
95,129,603
|
|
1,456,178
|
|
255,949
|
ITEM
5.
|
Other
Information - not applicable.
|
Exhibit
No.
|
|
Description
|
2.1
|
—
|
Agreement
and Plan of Merger, dated July 23, 2006, by and between Newkirk Realty
Trust, Inc. (“Newkirk”) and Lexington Realty Trust (formerly known as
Lexington Corporate Properties Trust, the “Company”) (filed as Exhibit 2.1
to the Company’s Current Report on Form 8-K filed July 24, 2006 (the
“07/24/06 8-K”)) (1)
|
|
|
|
2.2
|
—
|
Amendment
No. 1 to Agreement and Plan of Merger, dated as of September 11,
2006, by
and between Newkirk and the Company (filed as Exhibit 2.1 to the
Company’s
Current Report on Form 8-K filed September 13, 2006 (the “09/13/06 8-K”))
(1)
|
|
|
|
2.3
|
—
|
Amendment
No. 2 to Agreement and Plan of Merger, dated as of October 13, 2006,
by
and between Newkirk and the Company (filed as Exhibit 2.1 to the
Company’s
Current Report on Form 8-K filed October 13, 2006) (1)
|
|
|
|
3.1
|
—
|
Articles
of Merger and Amended and Restated Declaration of Trust of the Company,
dated December 31, 2006 (filed as Exhibit 3.1 to the Company’s Current
Report on Form 8-K filed January 8, 2007 (the “01/08/07 8-K”))
(1)
|
|
|
|
3.2
|
—
|
Articles
Supplementary Relating to the 7.55% Series D Cumulative Redeemable
Preferred Stock, par value $.0001 per share (filed as Exhibit 3.3
to the
Company’s Registration Statement on Form 8A filed February 14, 2007 (the
“02/14/07 Registration Statement”)) (1)
|
|
|
|
3.3
|
—
|
Amended
and Restated By-laws of the Company (filed as Exhibit 3.2 to the
01/08/07
8-K) (1)
|
|
|
|
3.4
|
—
|
Fifth
Amended and Restated Agreement of Limited Partnership of Lepercq
Corporate
Income Fund L.P. (“LCIF”), dated as of December 31, 1996, as supplemented
(the “LCIF Partnership Agreement”) (filed as Exhibit 3.3 to the Company’s
Registration Statement of Form S-3/A filed September 10, 1999 (the
“09/10/99 Registration Statement”)) (1)
|
|
|
|
3.5
|
—
|
Amendment
No. 1 to the LCIF Partnership Agreement dated as of December 31,
2000
(filed as Exhibit 3.11 to the Company’s Annual Report on Form 10-K for the
year ended December 31, 2003, filed February 26, 2004 (the “2003 10-K”))
(1)
|
|
|
|
3.6
|
—
|
First
Amendment to the LCIF Partnership Agreement effective as of June
19, 2003
(filed as Exhibit 3.12 to the 2003 10-K) (1)
|
|
|
|
3.7
|
—
|
Second
Amendment to the LCIF Partnership Agreement effective as of June
30, 2003
(filed as Exhibit 3.13 to the 2003 10-K) (1)
|
|
|
|
3.8
|
—
|
Third
Amendment to the LCIF Partnership Agreement effective as of December
31,
2003 (filed as Exhibit 3.13 to the Company’s Annual Report on Form 10-K
for the year ended December 31, 2004, filed on March 16, 2005 (the
“2004
10-K”)) (1)
|
|
|
|
3.9
|
—
|
Fourth
Amendment to the LCIF Partnership Agreement effective as of October
28,
2004 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K
filed November 4, 2004) (1)
|
|
|
|
3.10
|
—
|
Fifth
Amendment to the LCIF Partnership Agreement effective as of December
8,
2004 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K
filed December 14, 2004 (the “12/14/04 8-K”)) (1)
|
|
|
|
3.11
|
—
|
Sixth
Amendment to the LCIF Partnership Agreement effective as of June
30, 2003
(filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed
January 3, 2005 (the “01/03/05 8-K”)) (1)
|
|
|
|
3.12
|
—
|
Seventh
Amendment to the LCIF Partnership Agreement (filed as Exhibit 10.1
to the
Company’s Current Report on Form 8-K filed November 3,
2005)(1)
|
|
|
|
3.13
|
—
|
Second
Amended and Restated Agreement of Limited Partnership of Lepercq
Corporate
Income Fund II L.P. (“LCIF II”), dated as of August 27, 1998 the (“LCIF II
Partnership Agreement”) (filed as Exhibit 3.4 to the 9/10/99 Registration
Statement)(1)
|
|
|
|
3.14
|
—
|
First
Amendment to the LCIF II Partnership Agreement effective as of June
19,
2003 (filed as Exhibit 3.14 to the 2003 10-K) (1)
|
|
|
|
3.15
|
—
|
Second
Amendment to the LCIF II Partnership Agreement effective as of June
30,
2003 (filed as Exhibit 3.15 to the 2003 10-K) (1)
|
|
|
|
3.16
|
—
|
Third
Amendment to the LCIF II Partnership Agreement effective as of December
8,
2004 (filed as Exhibit 10.2 to 12/14/04 8-K) (1)
|
|
|
|
3.17
|
—
|
Fourth
Amendment to the LCIF II Partnership Agreement effective as of January
3,
2005 (filed as Exhibit 10.2 to 01/03/05 8-K) (1)
|
|
|
|
3.18
|
—
|
Fifth
Amendment to the LCIF II Partnership Agreement effective as of July
23,
2006 (filed as Exhibit 99.5 to the 07/24/06 8-K) (1)
|
|
|
|
3.19
|
—
|
Sixth
Amendment to the LCIF II Partnership Agreement effective as of December
20, 2006 (filed as Exhibit 10.1 to the Company’s Current Report on Form
8-K filed December 22, 2006)(1)
|
|
|
|
3.20
|
—
|
Amended
and Restated Agreement of Limited Partnership of Net 3 Acquisition
L.P.
(the “Net 3 Partnership Agreement”) (filed as Exhibit 3.16 to the
Company’s Registration Statement of Form S-3 filed November 16, 2006)
(1)
|
|
|
|
3.21
|
—
|
First
Amendment to the Net 3 Partnership Agreement effective as of November
29,
2001 (filed as Exhibit 3.17 to the 2003 10-K) (1)
|
|
|
|
3.22
|
—
|
Second
Amendment to the Net 3 Partnership Agreement effective as of June
19, 2003
(filed as Exhibit 3.18 to the 2003 10-K) (1)
|
|
|
|
3.23
|
—
|
Third
Amendment to the Net 3 Partnership Agreement effective as of June
30, 2003
(filed as Exhibit 3.19 to the 2003 10-K) (1)
|
|
|
|
3.24
|
—
|
Fourth
Amendment to the Net 3 Partnership Agreement effective as of December
8,
2004 (filed as Exhibit 10.3 to 12/14/04 8-K) (1)
|
|
|
|
3.25
|
—
|
Fifth
Amendment to the Net 3 Partnership Agreement effective as of January
3,
2005 (filed as Exhibit 10.3 to 01/03/05 8-K) (1)
|
|
|
|
3.26
|
—
|
Second
Amended and Restated Agreement of Limited Partnership of The Lexington
Master Limited Partnership (formerly known as The Newkirk Master
Limited
Partnership, the “MLP”), dated as of December 31, 2006, between Lex GP-1
Trust and Lex LP-1 Trust (filed as Exhibit 10.4 to the 01/08/07 8-K)
(1)
|
|
|
|
4.1
|
—
|
Specimen
of Common Shares Certificate of the Company (filed as Exhibit 4.1
to the
Company’s Annual Report on Form 10-K for the year ended December 31, 2006
(the “2006 10-K”)) (1)
|
|
|
|
4.2
|
—
|
Form
of 8.05% Series B Cumulative Redeemable Preferred Stock certificate
(filed
as Exhibit 4.1 to the Company’s Registration Statement on Form 8A filed
June 17, 2003) (1)
|
|
|
|
4.3
|
—
|
Form
of 6.50% Series C Cumulative Convertible Preferred Stock certificate
(filed as Exhibit 4.1 to the Company’s Registration Statement on Form 8A
filed December 8, 2004) (1)
|
|
|
|
4.4
|
—
|
Form
of 7.55% Series D Cumulative Redeemable Preferred Stock certificate
(filed
as Exhibit 4.1 to the 02/14/07 Registration Statement)
(1)
|
|
|
|
4.5
|
—
|
Form
of Special Voting Preferred Stock certificate (filed as Exhibit 4.5
to the
2006 10-K) (1)
|
|
|
|
4.6
|
—
|
Indenture,
dated as of January 29, 2007, among The Lexington Master Limited
Partnership, 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 29, 2007 (the “01/29/07 8-K”))
(1)
|
|
|
|
4.7
|
—
|
First
Supplemental Indenture, dated as of January 29, 2007, among The Lexington
Master Limited Partnership, the Company, the other guarantors named
therein and U.S. Bank National Association, as trustee, including
the Form
of 5.45% Exchangeable Guaranteed Notes due 2027 (filed as Exhibit
4.2 to
the 01/29/07 8-K) (1)
|
|
|
|
4.8
|
—
|
Second Supplemental
Indenture, dated as of March 9, 2007, among The Lexington Master
Limited
Partnership, the Company, the other guarantors named therein and
U.S. Bank
National Association, as trustee, including the Form of 5.45% Exchangeable
Guaranteed Notes due 2027 (filed as Exhibit 4.3 to the Company’s Current
Report on form 8-k filed on March 9, 2007 (the “03/09/07 8-K”))
(1)
|
|
|
|
4.9
|
—
|
Amended
and Restated Trust Agreement, dated March 21, 2007, among Lexington
Realty
Trust, The Bank of New York Trust Company, National Association,
The Bank
of New York (Delaware), the Administrative Trustees (as named therein)
and
the several holders of the Preferred Securities from time to time
(filed
as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March
27, 2007 (the “03/27/2007 8-K”)) (1)
|
|
|
|
4.10
|
—
|
Third
Supplemental Indenture, dated as of June 19, 207, among the MLP,
the
Company, the other guarantors named therein and U.S. bank National
Association, as trustee, including the form of 5.45% Exchangeable
Guaranteed Notes due 2027 (filed as Exhibit 4.1 to the Company’s Report on
form 8-k filed on June 22, 2007 (1)
|
|
|
|
4.11
|
—
|
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) |
|
|
|
9.1
|
—
|
Voting
Trustee Agreement, dated as of December 31, 2006, among the Company,
The
Lexington Master Limited Partnership and NKT Advisors LLC (filed
as
Exhibit 10.6 to the 01/08/07 8-K) (1)
|
|
|
|
10.1
|
—
|
Form
of 1994 Outside Director Shares Plan of the Company (filed as Exhibit
10.8
to the Company’s Annual Report on Form 10-K for the year ended December
31, 1993) (1, 4)
|
|
|
|
10.2
|
—
|
Amended
and Restated 2002 Equity-Based Award Plan of the Company (filed as
Exhibit
10.54 to the Company’s Annual Report on Form 10-K for the year ended
December 31, 2002, filed on March 24, 2003 (the “2002 10-K”))
(1)
|
|
|
|
10.3
|
—
|
1994
Employee Stock Purchase Plan (filed as Exhibit D to the Company’s
Definitive Proxy Statement dated April 12, 1994) (1, 4)
|
|
|
|
10.4
|
—
|
1998
Share Option Plan (filed as Exhibit A to the Company’s Definitive Proxy
Statement filed on April 22, 1998) (1, 4)
|
|
|
|
10.5
|
—
|
Amendment
to 1998 Share Option Plan (filed as Exhibit 10.3 to the Company’s Current
Report on Form 8-K filed on February 6, 2006 (the “02/06/06 8-K”)) (1,
4)
|
|
|
|
10.6
|
—
|
Amendment
to 1998 Share Option Plan (filed as Exhibit 10.3 to the Company’s Current
Report on Form 8-K filed on January 3, 2007 (the “01/03/07 8-K”)) (1,
4)
|
|
|
|
10.7
|
—
|
Form
of Compensation Agreement (Bonus and Long-Term Compensation) between
the
Company and John B. Vander Zwaag (filed as Exhibit 10.13 to the 2004
10-K)
(1, 4)
|
|
|
|
10.8
|
—
|
2007
Outperformance Program (filed as Exhibit 10.1 to the Company’s Current
Report on Form 8-K filed on April 5, 2007) (1,4)
|
|
|
|
10.9
|
—
|
Form
of Compensation Agreement (Long-Term Compensation) between the Company
and
the following officers: Richard J. Rouse and Patrick Carroll (filed
as
Exhibit 10.15 to the 2004 10-K) (1, 4)
|
|
|
|
10.10
|
—
|
Form
of Compensation Agreement (Bonus and Long-Term Compensation) between
the
Company and the following officers: E. Robert Roskind and T. Wilson
Eglin
(filed as Exhibit 10.16 to the 2004 10-K) (1, 4)
|
|
|
|
10.11
|
—
|
Form
of Nonvested Share Agreement (Performance Bonus Award) between the
Company
and the following officers: E. Robert Roskind, T. Wilson Eglin, Richard
J.
Rouse and Patrick Carroll (filed as Exhibit 10.1 to the 02/06/06
8-K) (1,
4)
|
|
|
|
10.12
|
—
|
Form
of Nonvested Share Agreement (Long-Term Incentive Award) between
the
Company and the following officers: E. Robert Roskind, T. Wilson
Eglin,
Richard J. Rouse, Patrick Carroll and John B. Vander Zwaag (filed
as
Exhibit 10.2 to the 02/06/06 8-K) (1, 4)
|
|
|
|
10.13
|
—
|
Form
of the Company’s Nonvested Share Agreement, dated as of December 28, 2006
(filed as Exhibit 10.2 to the 01/03/07 8-K) (1,4)
|
|
|
|
10.14
|
—
|
Form
of Lock-Up and Claw-Back Agreement, dated as of December 28, 2006
(filed
as Exhibit 10.4 to the 01/03/07 8-K) (1)
|
|
|
|
10.15
|
—
|
Form
of Rescission of Restricted Share Award Agreement under the LSAC
2005
Equity Incentive Compensation Plan (filed as Exhibit 10.2 to the
10/06/05
8-K) (1, 4)
|
|
|
|
10.16
|
—
|
Employment
Agreement between the Company and E. Robert Roskind, dated May 4,
2006
(filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed
May 5, 2006 (the “05/05/06 8-K”)) (1, 4)
|
|
|
|
10.17
|
—
|
Employment
Agreement between the Company and T. Wilson Eglin, dated May 4, 2006
(filed as Exhibit 99.2 to the 05/05/06 8-K) (1, 4)
|
|
|
|
10.18
|
—
|
Employment
Agreement between the Company and Richard J. Rouse, dated May 4,
2006
(filed as Exhibit 99.3 to the 05/05/06 8-K) (1, 4)
|
|
|
|
10.19
|
—
|
Employment
Agreement between the Company and Patrick Carroll, dated May 4, 2006
(filed as Exhibit 99.4 to the 05/05/06 8-K) (1, 4)
|
|
|
|
10.20
|
—
|
Employment
Agreement between the Company and John B. Vander Zwaag, dated May
4, 2006
(filed as Exhibit 99.5 to the 05/05/06 8-K) (1, 4)
|
|
|
|
10.21
|
—
|
Employment
Agreement, effective as of December 31, 2006, between the Company
and
Michael L. Ashner (filed as Exhibit 10.16 to the 01/08/07 8-K)
(1,4)
|
|
|
|
10.22
|
—
|
Waiver
Letters, dated as of July 23, 2006 and delivered by each of E. Robert
Roskind, Richard J. Rouse, T. Wilson Eglin, Patrick Carroll and John
B.
Vander Zwaag (filed as Exhibit 10.17 to the 01/08/07 8-K)
(1)
|
|
|
|
10.23
|
|
2007
Trustee Fees Term Sheet (detailed on the Company’s Current Report on Form
8-K filed February 12, 2007) (1, 4)
|
|
|
|
10.24
|
—
|
Form
of Indemnification Agreement between the Company and certain officers
and
trustees (filed as Exhibit 10.3 to the 2002 10-K) (1)
|
|
|
|
10.25
|
—
|
Credit
Agreement among the Company, LCIF, LCIF II, Net 3 Acquisition L.P.,
jointly and severally as borrowers, certain subsidiaries of the Company,
as guarantors, Wachovia Capital Markets, LLC, as lead arranger, Wachovia
Bank, National Association, as agent, Key Bank, N.A., as Syndication
agent, each of Sovereign Bank and PNC Bank, National Association,
as
co-documentation agent, and each of the financial institutions initially
a
signatory thereto together with their assignees pursuant to Section
12.5(d) therein (filed as Exhibit 10.1 to the Company’s Current Report on
Form 8-K filed June 30, 2005) (1)
|
|
|
|
10.26
|
—
|
First
Amendment to Credit Agreement, dated as of June 1, 2006 (filed as
Exhibit
10.1 to the Company’s Current Report on Form 8-K filed June 2, 2006)
(1)
|
|
|
|
10.27
|
—
|
Second
Amendment to Credit Agreement, dated as of December 27, 2006 (filed
as
Exhibit 10.1 to the 01/03/07 8-K) (1)
|
|
|
|
10.28
|
—
|
Credit
Agreement, dated as of June 1, 2007, among the Company, the MLP,
LCIF,
LCIF II and Net 3, jointly and severally as borrowers, KeyBanc Capital
Markets, as lead arranger and book running manager, KeyBank National
Association, as agent, and each of the financial institutions initially
a
signatory thereto together with their assignees pursuant to Section
12.5.(d) therein (filed as Exhibit 10.1 to the Company’s Current Report on
Form 8-K filed on June 7, 2007 (the “06/07/2007 8-K”))
(1)
|
|
|
|
10.29
|
—
|
Master
Repurchase Agreement, dated May 24, 2006, between Bear, Stearns
International Limited and 111 Debt Acquisition-Two LLC (filed as
Exhibit
10.1 to Newkirk’s Current Report on Form 8-K filed May 30, 2006)
(1)
|
|
|
|
10.30
|
—
|
Master
Repurchase Agreement, dated March 30, 2006, among Column Financial
Inc.,
111 Debt Acquisition LLC, 111 Debt Acquisition Mezz LLC and Newkirk
(filed
as Exhibit 10.2 to Newkirk’s Current Report on Form 8-K filed April 5,
2006 (the “NKT 04/05/06 8-K”)) (1)
|
|
|
|
10.31
|
—
|
Limited
Liability Company Agreement of 111 Debt Holdings LLC, dated March
31,
2006, among the MLP, WRT Realty, L.P. and FUR Holdings LLC (filed
as
Exhibit 10.1 to the NKT 04/05/06 8-K) (1, 4)
|
|
|
|
10.32
|
—
|
Funding
Agreement, dated as of July 23, 2006, by and among LCIF, LCIF II
and Net 3
Acquisition L.P. (“Net 3”) and the Company (filed as Exhibit
99.4 to the 07/24/06 8-K) (1)
|
|
|
|
10.33
|
—
|
Funding
Agreement, dated as of December 31, 2006, by and among LCIF, LCIF
II, Net
3, the MLP and the Company (filed as Exhibit 10.2 to the 01/08/07
8-K)(1)
|
|
|
|
10.34
|
—
|
Guaranty
Agreement, effective as of December 31, 2006, between the Company
and the
MLP (filed as Exhibit 10.5 to the 01/08/07 8-K) (1)
|
|
|
|
10.35
|
—
|
Amended
and Restated Exclusivity Services Agreement, dated as of December
31,
2006, between the Company and Michael L. Ashner (filed as Exhibit
10.1 to
the 01/08/07 8-K) (1)
|
|
|
|
10.36
|
—
|
Transition
Services Agreement, dated as of December 31, 2006, between the
Company and
First Winthrop
|
|
|
Corporation
(filed as Exhibit 10.3 to the 01/08/07 8-K) (1) |
|
|
|
10.37
|
—
|
Acquisition
Agreement, dated as of November 7, 2005, between Newkirk and First
Union
Real Estate Equity and Mortgage Investments (“First Union”) (filed as
Exhibit 10.4 to First Union’s Current Report on Form 8-K filed on November
10, 2005) (1)
|
|
|
|
10.38
|
—
|
Amendment
to Acquisition Agreement and Assignment and Assumption, dated as
of
December 31, 2006, among NKT, Winthrop Realty Trust and the Company
(filed
as Exhibit 10.7 to the 01/08/07 8-K) (1)
|
|
|
|
10.39
|
—
|
Letter
Agreement among Newkirk, Apollo Real Estate Investment Fund III,
L.P., the
MLP, NKT Advisors LLC, Vornado Realty Trust, VNK Corp., Vornado Newkirk
LLC, Vornado MLP GP LLC and WEM Bryn Mawr Associates LLC (filed as
Exhibit
10.15 to Amendment No. 5 to Newkirk Registration Statement on Form
S-11/A
filed October 28, 2005 (“Amendment No. 5 to NKT’s S-11”))
(1)
|
|
|
|
10.40
|
—
|
Amendment
to the Letter Agreement among Newkirk, Apollo Real Estate Investment
Fund
III, L.P., the MLP, NKT Advisors LLC, Vornado Realty Trust, Vornado
Realty
L.P., VNK Corp., Vornado Newkirk LLC, Vornado MLP GP LLC, and WEM-Brynmawr
Associates LLC (filed as Exhibit 10.25 to Amendment No. 5 to Newkirk’s
S-11) (1)
|
|
|
|
10.41
|
—
|
Ownership
Limit Waiver Agreement, dated as of December 31, 2006, between the
Company
and Vornado Realty, L.P. (filed as Exhibit 10.8 to the 01/08/07 8-K)
(1)
|
|
|
|
10.42
|
—
|
Ownership
Limit Waiver Agreement, dated as of December 31, 2006, between the
Company
and Apollo Real Estate Investment Fund III, L.P. (filed as Exhibit
10.9 to
the 01/08/07 8-K) (1)
|
|
|
|
10.43
|
—
|
Registration
Rights Agreement, dated as of December 31, 2006, between the Company
and
Michael L. Ashner (filed as Exhibit 10.10 to the 01/08/07 8-K)
(1)
|
|
|
|
10.44
|
—
|
Registration
Rights Agreement, dated as of December 31, 2006, between the Company
and
WEM-Brynmawr Associates LLC (filed as Exhibit 10.11 to the 01/08/07
8-K)
(1)
|
|
|
|
10.45
|
—
|
Registration
Rights Agreement, dated as of November 7, 2005, between Newkirk and
Vornado Realty Trust (filed as Exhibit 10.4 to Newkirk’s Current Report on
Form 8-K filed November 15, 2005 (“NKT’s 11/15/05 8-K”))
(1)
|
|
|
|
10.46
|
—
|
Registration
Rights Agreement, dated as of November 7, 2005, between Newkirk and
Apollo
Real Estate Investment Fund III, L.P. (“Apollo”) (filed as Exhibit 10.5 to
NKT’s 11/15/05 8-K) (1)
|
|
|
|
10.47
|
—
|
Registration
Rights Agreement, dated as of November 7, 2005, between the Company
and
First Union (filed as Exhibit 10.6 to NKT’s 11/15/05 8-K)
(1)
|
|
|
|
10.48
|
—
|
Assignment
and Assumption Agreement, effective as of December 31, 2006, among
Newkirk, the Company, and Vornado Realty L.P. (filed as Exhibit 10.12
to
the 01/08/07 8-K) (1)
|
|
|
|
10.49
|
—
|
Assignment
and Assumption Agreement, effective as of December 31, 2006 among
Newkirk,
the Company, and Apollo Real Estate Investment Fund III, L.P. (filed
as
Exhibit 10.13 to the 01/08/07 8-K) (1)
|
|
|
|
10.50
|
—
|
Assignment
and Assumption Agreement, effective as of December 31, 2006, among
Newkirk, the Company, and Winthrop Realty Trust filed as Exhibit
10.14 to
the 01/08/07 8-K) (1)
|
|
|
|
10.51
|
—
|
Registration
Rights Agreement, dated as of January 29, 2007, among the MLP, the
Company, LCIF, LCIF II, Net 3, Lehman Brothers Inc. and Bear, Stearns
& Co. Inc., for themselves and on behalf of the initial purchasers
named therein (filed as Exhibit 4.3 to the 01/29/07 8-K)
(1)
|
|
|
|
10.52
|
—
|
Common
Share Delivery Agreement, made as of January 29, 2007, between the
MLP and
the Company (filed as Exhibit 10.77 to the 2006 10-K)
(1)
|
|
|
|
10.53
|
—
|
Registration
Rights Agreement, dated as of March 9, 2007, among the MLP, the Company,
LCIF, LCIF II, Net 3, Lehman Brothers Inc. and Bear, Stearns & Co.
Inc., for themselves and on behalf of the initial purchasers named
therein
(filed as Exhibit 4.4 to the 03/09/07 8-K) (1)
|
|
|
|
10.54
|
—
|
Common
Share Delivery Agreement, made as of March 9, 2007, between the MLP
and
the Company (filed
|
|
|
|
|
|
as
Exhibit 4.5 to the 03/09/2007 8-K) (1)
|
|
|
|
10.55
|
—
|
Property
Management Agreement, dated as of December 31, 2006, among the Company,
the MLP, and Winthrop Management L.P. (filed as Exhibit 10.15 to
the
01/08/07 8-K) (1)
|
|
|
|
10.56
|
—
|
Contribution
Agreement, dated as of June 1, 2007, between the Company and the
MLP
(filed as Exhibit 10.2 to the 06/07/2007 8-K) (1)
|
|
|
|
10.57
|
|
Purchase
Agreement, dated as of June 1, 2007, between the MLP and the Common
Retirement Fund of the State of New York for interests in Lexington
Acquiport Company, LLC (filed as Exhibit 10.3 to the 06/07/2007 8-K)
(1)
|
|
|
|
10.58
|
|
Purchase
Agreement, dated as of June 1, 2007, between the Company and the
Common
Retirement Fund of the State of New York for interests in Lexington
Acquiport Company II, LLC (filed as Exhibit 10.4 to the 06/07/2007
8-K)
(1)
|
|
|
|
10.59
|
|
Partial
Redemption Agreement, dated as of June 5, 2007, between Lexington/Lion
Venture L.P., CLPF-LXP/LV, L.P. and the Company (filed as Exhibit
10.1 to
the Company’s Current Report on Form 8-K filed on June 28, 2007 (the
“06/28/2007 8-K”) (1)
|
|
|
|
10.60
|
|
Contribution
Agreement, dated as of June 5, 2007, between the Company and the
MLP
(filed as Exhibit 10.2 to the 06/28/2007 8-K) (1)
|
|
|
|
10.61
|
|
Redemption
Agreement, dated as of June 5, 2007, between Lexington/Lion Venture
L.P.,
CLPF-LXP/LV, L.P. and CLPF-LXP/Lion Venture GP, LLC (filed as Exhibit
10.3
to the 06/28/2007 8-K) (1)
|
31.1
|
—
|
Certification
of Chief Financial Officer pursuant to rule 13a-14(a)/15d-14(a) of
the
Securities Exchange Act of 1934, as adopted pursuant to Section 302
of the
Sarbanes-Oxley Act of 2002 (3)
|
|
|
|
31.2
|
|
Certification
of Chief Financial Officer pursuant to rule 13a-14(a)/15d-14(a) of
the
Securities Exchange Act of 1934, as adopted pursuant to Section 302
of the
Sarbanes-Oxley Act of 2002 (3)
|
|
|
|
32.1
|
—
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(3)
|
|
|
|
32.2
|
—
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(3)
|
|
|
|
____________
(1)
|
Incorporated
by reference.
|
(4)
|
Management
contract or compensatory plan or
arrangement.
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
|
Lexington
Realty Trust
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date:
August 9, 2007
|
By:
|
/s/
T.
Wilson Eglin |
|
|
|
T.
Wilson Eglin |
|
|
|
Chief
Executive Officer, President and Chief Operating
Officer |
|
|
|
|
|
Date:
August 9, 2007
|
By:
|
/s/
Patrick
Carroll |
|
|
|
Chief
Financial Officer, Executive Vice President
and
Treasurer
|
|
|
|
|
|
|
|
|
|
34