Lexington Realty Trust Reports Fourth Quarter 2007 Results

NEW YORK, Feb. 27 /PRNewswire-FirstCall/ -- Lexington Realty Trust ("Lexington") , a real estate investment trust (REIT) focused on single-tenant real estate investments, today announced results for the fourth quarter and year ended December 31, 2007. All per share amounts are on a diluted basis. (1)

(Logo: http://www.newscom.com/cgi-bin/prnh/20070205/LAM022LOGO) Fourth Quarter 2007 Highlights -- Total gross revenues of $122.3 million -- Company Funds From Operations ("Company FFO") of $21.3 million or $0.20 per share(2) -- 19 new and renewal leases executed, totaling 1.9 million square feet -- $243.8 million in real estate dispositions -- Formed new co-investment program, raising $121.7 million in cash -- 2.6 million common shares/units repurchased at an average price of $17.72 per share/unit -- $2.475 common share/unit dividend/distribution declared, including $2.10 special common share/unit dividend/distribution. (1) Including common shares issuable upon the redemption of all operating partnership units and conversion of all Series C Cumulative Convertible Preferred shares. (2) See the last page of this press release for a reconciliation of GAAP net income to Company FFO and an explanation of the calculation of Company FFO. COMMENTS FROM MANAGEMENT

T. Wilson Eglin, President and Chief Executive Officer of Lexington stated, "We are pleased with our accomplishments in the fourth quarter. Pursuant to our Strategic Restructuring Plan, we sold $243.8 million of properties, bringing total disposition volume for the year to $473.0 million, and closed $408.5 million into our specialty property co-investment program. In addition, we continued to do well on the leasing front with 19 leases signed or extended, bringing our total for the year to 108 leases signed or extended, totaling 5.9 million square feet, and ended the quarter at 96% occupancy."

Patrick Carroll, Chief Financial Officer, commented, "Funds from operations for the fourth quarter were impacted by impairment charges totaling $22.7 million related to three vacant properties formerly leased to tenants in the automotive industry and several bond investments in the Concord joint venture, debt prepayment costs of $5.5 million relating to property sales that generated $70.9 million in gains, formation costs of $2.3 million relating to our new co-investment program and $5.9 million of lease termination and promoted interest payments received. Together, these items reduced Company FFO by about $0.23 per share. Adjusted for these and similar items in previous quarters, Company FFO was $1.83 per common share in 2007."

Mr. Eglin added, "Lexington ended the year with $412.1 million of cash, a portion of which was used to pay a special distribution of $2.10 per common share/unit in January, 2008. Including share repurchases, we have directly and indirectly returned over $400 million to our shareholders since January 1, 2007. We believe we continue to have substantial liquidity and financial flexibility, which enables us to act on favorable investment opportunities as they arise."

FINANCIAL RESULTS Revenue

For the quarter ended December 31, 2007, revenues increased 145.0% to $122.3 million, compared with revenues of $49.9 million for the quarter ended December 31, 2006. For the year ended December 31, 2007, revenues increased 131.3% to $431.7 million, compared with revenues of $186.7 million for the year ended December 31, 2006. The increases were primarily a result of the December 31, 2006 merger with Newkirk Realty Trust, Inc. and the second quarter 2007 acquisition of 48 properties, which Lexington had previously held in four co-investment programs.

Net Income Allocable to Common Shareholders

For the quarter ended December 31, 2007, net income allocable to common shareholders was $24.2 million, compared to the quarter ended December 31, 2006, which had a loss of $10.4 million. On a per share basis, net income allocable to common shareholders for the quarter ended December 31, 2007 was $0.39, compared with a loss of $0.20 for the comparable period last year. For the year ended December 31, 2007, net income allocable to common shareholders was $50.1 million, or $0.77 per share, as compared to a loss of $8.7 million, or $(0.17) per share, for the same period in 2006.

Company Funds From Operations Applicable to Common Shareholders

For the quarter ended December 31, 2007, Company FFO was $21.3 million, compared with Company FFO for the quarter ended December 31, 2006 of $15.1 million. On a per share basis, Company FFO was $0.20 for the quarter ended December 31, 2007, compared with $0.24 for the same period in 2006. For the year ended December 31, 2007, Company FFO was $180.2 million or $1.63 per share, as compared with $81.6 million or $1.28 per share for the same period in 2006.

Market Capitalization

At December 31, 2007, Lexington's total market capitalization was approximately $4.9 billion, based on the New York Stock Exchange closing price of Lexington's common shares on December 31, 2007, and assuming the conversion of all operating partnership units to common shares, the liquidation preference of preferred shares, and the principal balance of total debt outstanding.

Dividend

In December, 2007, Lexington declared a regular quarterly cash dividend/distribution of $0.375 per common share/unit, and a special dividend/distribution of $2.10 per common share/unit which were paid on January 15, 2008, to common shareholders/unitholders of record as of December 31, 2007. On February 21, 2008, Lexington declared a regular quarterly cash dividend/distribution of $0.33 per common share/unit (equal to $1.32 per common share/unit on an annualized basis) which will be paid on April 15, 2008 to shareholders/unitholders of record on March 31, 2008.

Lexington also declared dividends of $0.503125 per Series B Cumulative Redeemable Preferred Share, $0.8125 per Series C Cumulative Convertible Preferred Share, and $0.471875 per Series D Cumulative Convertible Preferred Share. The Series B and Series C Preferred Share dividends are payable on May 15, 2008, to shareholders of record of the Series B and Series C Preferred Shares as of April 30, 2008. The Series D Preferred Share dividend is payable April 15, 2008, to shareholders of record of the Series D Preferred Shares as of March 31, 2008.

Share Repurchase Authorization

During the quarter ended December 31, 2007, Lexington's share repurchase authorization was increased by 5.0 million common shares/units and Lexington repurchased approximately 2.6 million common shares/units at an average price of $17.72 per share/unit. For the year ended December 31, 2007, Lexington repurchased approximately 9.8 million common shares/units at an average price of $19.83 per share/unit, reducing the number of shares/units outstanding to approximately 100.8 million.

2008 EARNINGS GUIDANCE

On February 21, 2008 Lexington announced that it expects Company FFO to be $1.56-$1.64 per share in 2008. This guidance is based on current expectations and is forward looking.

INVESTMENT & DISPOSITION ACTIVITY Co-Investment Program

In December 2007, Lexington announced that its co-investment program with Inland American Real Estate Trust, Inc. closed on the acquisition of 30 primarily single-tenant net leased assets from Lexington and its subsidiaries for an aggregate purchase price of $408.5 million, including the assumption of non-recourse first mortgage financing secured by certain of the assets. The 30 properties contain an aggregate of approximately 3.5 million net rentable square feet, and are located in 23 states. A second closing of 13 properties for an aggregate purchase price of $335.0 million is expected to occur in 2008, with 11 properties expected to close on or before March 31, 2008 and the remaining two properties expected to close on or before June 30, 2008.

The acquisition of each of the remaining 13 assets by the co-investment program is subject to satisfaction of conditions precedent to closing, including obtaining lender consents, obtaining certain consents and waivers, the continuing financial solvency of the tenants, and certain other customary conditions. Accordingly, Lexington cannot provide any assurance that the acquisition by the co-investment program will be completed.

Acquisitions

For the quarter ended December 31, 2007, Lexington acquired one property for a capitalized cost of $13.7 million.

Dispositions

During the quarter ended December 31, 2007, Lexington sold 20 non-core properties under the disposition program of its previously announced Strategic Restructuring Plan for an aggregate price of $243.8 million.

LEASING ACTIVITY

At December 31, 2007, Lexington's portfolio was approximately 96% leased. For the quarter ended December 31, 2007, Lexington executed 19 leases for approximately 1.9 million square feet. Twelve new leases were executed, (nine office properties, two industrial properties and one retail property) encompassing 666,000 square feet. Seven lease renewals were executed (two office properties, four industrial properties and one retail property) encompassing approximately 1.2 million square feet.

FOURTH QUARTER 2007 CONFERENCE CALL

On Wednesday, February 27, 2008, at 11:00 a.m. Eastern Time, Lexington will host a conference call to discuss its results for the quarter ended December 31, 2007. Lexington's remarks will be followed by a question and answer period. Interested parties may participate in this conference call by dialing (877) 407-0781 or (201) 689-8568. A taped replay of the call will be available through March 27, 2008 at (877) 660-6853, Account 286, Conference ID 268025.

A live web cast (listen-only mode) of the conference call will be available at http://www.lxp.com/ within the Investor Relations section. An online replay will also be available through February 27, 2009.

ABOUT LEXINGTON REALTY TRUST

Lexington Realty Trust is a real estate investment trust that owns, invests in, and manages office, industrial and retail properties net-leased to major corporations throughout the United States and provides investment advisory and asset management services to investors in the net lease area. Lexington shares are traded on the New York Stock Exchange under the symbol "LXP". Additional information about Lexington is available on-line at http://www.lxp.com/ or by contacting Lexington Realty Trust, Investor Relations, One Penn Plaza, Suite 4015, New York, New York 10119-4015.

This release contains certain forward-looking statements which involve known and unknown risks, uncertainties or other factors not under Lexington's control which may cause actual results, performance or achievements of Lexington to be materially different from the results, performance, or other expectations implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed under the headings "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" in Lexington's periodic reports filed with the SEC, including risks related to: (1) the failure to successfully complete the strategic restructuring plan, (2) the failure to complete the sale of the remaining 13 assets to the newly formed co-investment program described above, (3) the failure to integrate our operations and properties with those of Newkirk Realty Trust, (4) the failure to continue to qualify as a real estate investment trust, (5) changes in general business and economic conditions, (6) competition, (7) increases in real estate construction costs, (8) changes in interest rates, or (9) changes in accessibility of debt and equity capital markets. Copies of periodic reports Lexington files with the SEC are available on Lexington's website at http://www.lxp.com/. In addition all dividend declarations are subject to the approval of Lexington's Board of Trustees. Forward-looking statements, which are based on certain assumptions and describe Lexington's future plans, strategies and expectations, are generally identifiable by use of the words "believes," "expects," "intends," "anticipates," "estimates," "projects" or similar expressions. Lexington undertakes no obligation to publicly release the results of any revisions to those forward-looking statements which may be made to reflect events or circumstances after the occurrence of unanticipated events. Accordingly, there is no assurance that Lexington's expectations will be realized.

LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three and Twelve months ended December 31, 2007 and 2006 (Unaudited and in thousands, except share and per share data) Three Months Ended Year Ended December 31, December 31, 2007 2006 2007 2006 Gross revenues: Rental $110,710 $44,142 $385,898 $165,275 Advisory and incentive fees 1,384 1,027 13,567 4,555 Tenant reimbursements 10,168 4,732 32,282 16,863 Total gross revenues 122,262 49,901 431,747 186,693 Expense applicable to revenues: Depreciation and amortization (67,113) (20,296) (236,044) (75,849) Property operating (18,448) (8,731) (61,095) (30,947) General and administrative (10,692) (19,667) (39,389) (35,514) Non-operating income 3,219 1,244 10,726 8,913 Interest and amortization expense (48,494) (17,440) (163,628) (65,097) Debt satisfaction gains (charges) (1,209) 7,443 (1,209) 7,228 Impairment loss (15,500) (6,100) (15,500) (7,221) Income (loss) before benefit (provision) for income taxes, minority interests, equity in earnings of non-consolidated entities, gains on sale of properties - affiliates and discontinued operations (35,975) (13,646) (74,392) (11,794) Benefit (provision) for income taxes (745) 261 (3,374) 238 Minority interests share of (income) loss 6,796 (115) 2,652 (601) Equity in earnings of non-consolidated entities 522 1,115 46,467 4,248 Gains on sale of properties-affiliates 17,864 -- 17,864 -- Income (loss) from continuing operations (11,538) (12,385) (10,783) (7,909) Discontinued operations: Income from discontinued operations 4,002 4,129 29,561 14,459 (Provision) benefit for income taxes (687) -- (3,327) (73) Debt satisfaction (charges) gains (4,265) (1,287) (7,950) 4,492 Gains on sales of properties 53,070 4,029 92,878 22,866 Impairment charges (1,670) -- (1,670) (28,209) Minority interests share of (income) loss (7,678) (735) (21,858) 2,127 Total discontinued operations 42,772 6,136 87,634 15,662 Net income (loss) 31,234 (6,249) 76,851 7,753 Dividends attributable to preferred shares - Series B (1,590) (1,590) (6,360) (6,360) Dividends attributable to preferred shares - Series C (2,519) (2,519) (10,075) (10,075) Dividends attributable to preferred shares - Series D (2,926) -- (10,298) -- Net income (loss) allocable to common shareholders $24,199 $(10,358) $50,118 $(8,682) Income(loss) per common share - basic: Income (loss) from continuing operations, after preferred dividends $(0.30) $(0.31) $(0.58) $(0.47) Income (loss) from discontinued operations 0.69 0.11 1.35 0.30 Net income (loss) allocable to common shareholders $0.39 $(0.20) $0.77 $(0.17) Weighted average common shares outstanding - basic 62,461,438 52,407,057 64,910,123 52,163,569 Income(loss) per common share - diluted: Income (loss) from continuing operations, after preferred dividends $ (0.30) $ (0.31) $ (0.58) $ (0.47) Income (loss) from discontinued operations 0.69 0.11 1.35 0.30 Net income (loss) allocable to common shareholders $0.39 $(0.20) $0.77 $(0.17) Weighted average common shares outstanding - diluted 62,461,438 52,407,057 64,910,123 52,163,569 LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS December 31, 2007 (Unaudited) and December 31, 2006 (In thousands, except share and per share data) 2007 2006 Assets: Real estate, at cost $4,095,278 $3,747,156 Less: accumulated depreciation 379,831 276,129 3,715,447 3,471,027 Properties held for sale - discontinued operations 150,907 69,612 Intangible assets 516,698 468,244 Investment in and advances to non-consolidated entities 226,476 247,045 Cash and cash equivalents 412,106 97,547 Investment in marketable equity securities 2,609 32,036 Deferred expenses 42,040 16,084 Rent receivable - current 25,289 43,283 Rent receivable - deferred 15,303 29,410 Notes receivable 69,775 50,534 Other assets, net 88,513 100,035 $5,265,163 $4,624,857 Liabilities and Shareholders' Equity Liabilities: Mortgages and notes payable $2,312,422 $2,126,810 Exchangable notes payable 450,000 -- Trust notes payable 200,000 -- Contract rights payable 13,444 12,231 Liabilities - discontinued operations 119,093 6,064 Accounts payable and other liabilities 49,442 25,877 Accrued interest payable 23,507 10,818 Dividends payable 158,168 44,948 Prepaid rent 16,764 10,109 Deferred revenue 217,389 362,815 3,560,229 2,599,672 Minority interests 765,863 902,741 4,326,092 3,502,413 Commitments and contingencies 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 Convertible 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 and issued 1 share in 2007 and 2006 -- -- Common shares, par value $0.0001 per share, authorized 400,000,000 shares, 61,064,334 and 69,051,781 shares issued and outstanding in 2007 and 2006, respectively 6 7 Additional paid-in-capital 1,033,332 1,188,900 Accumulated distributions in excess of net income (468,167) (294,640) Accumulated other comprehensive income (loss) (2,778) 1,273 Total shareholders' equity 939,071 1,122,444 $5,265,163 $4,624,857 LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES EARNINGS PER SHARE AND FUNDS FROM OPERATIONS PER SHARE (In thousands, except share data) Three Months Ended Twelve Months Ended December 31, December 31, 2007 2006 2007 2006 EARNINGS PER SHARE: Basic: Income (loss) from continuing operations $(11,538) $(12,385) $(10,783) $(7,909) Less preferred dividends (7,035) (4,109) (26,733) (16,435) Income (loss) allocable to common shareholders from continuing operations (18,573) (16,494) (37,516) (24,344) Total income (loss) from discontinued operations 42,772 6,136 87,634 15,662 Net income (loss) allocable to common shareholders $24,199 $(10,358) $50,118 $(8,682) Weighted average number of common shares outstanding 62,461,438 52,407,057 64,910,123 52,163,569 Income (loss) per common share - basic: Income (loss) from continuing operations $(0.30) $(0.31) $(0.58) $(0.47) Income (loss) from discontinued operations 0.69 0.11 1.35 0.30 Net income (loss) $0.39 $(0.20) $0.77 $(0.17) Diluted: Income (loss) allocable to common shareholders from continuing operations $(18,573) $(16,494) $(37,516) $(24,344) Incremental income attributed to assumed conversion of dilutive securities -- -- -- -- Income (loss) allocable to common shareholders from continuing operations (18,573) (16,494) (37,516) (24,344) Total income (loss) from discontinued operations 42,772 6,136 87,634 15,662 Net income (loss) allocable to common shareholders $24,199 $(10,358) $50,118 $(8,682) Weighted average number of common shares used in calculation of basic earnings per share 62,461,438 52,407,057 64,910,123 52,163,569 Add incremental shares representing: Shares issuable upon exercise of employee share options -- -- -- -- Shares issuable upon conversion of dilutive securities -- -- -- -- Weighted average number of shares used in calculation of diluted earnings per common share 62,461,438 52,407,057 64,910,123 52,163,569 Income per common share - diluted: Income (loss) from continuing operations $(0.30) $(0.31) $(0.58) $(0.47) Income (loss) from discontinued operations 0.69 0.11 1.35 0.30 Net income (loss) $0.39 $(0.20) $0.77 $ (0.17) LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES EARNINGS PER SHARE AND FUNDS FROM OPERATIONS PER SHARE (Continued) (In thousands, except share data) Three Months Ended Twelve Months Ended December 31, December 31, 2007 2006 2007 2006 The Company's Funds from Operations: (1) Basic and Diluted: Net income (loss) allocable to common shareholders $24,199 $(10,358) $50,118 $(8,682) Adjustments: Depreciation and amortization 67,387 21,502 247,611 82,228 Minority interests - OP units (320) 985 14,547 (1,040) Amortization of leasing commissions 370 242 1,252 721 Joint venture and minority interest adjustment (1,056) 4,199 642 21,047 Preferred dividends - Series C 2,519 2,519 10,075 10,075 Gains on sale of properties (70,934) (4,029) (110,742) (22,866) Taxes incurred on sale of properties 673 -- 2,422 74 Gains on sale of joint venture properties (1,558) -- (35,722) -- Company's funds from operations $21,280 $15,060 $180,203 $81,557 Basic: Weighted average shares outstanding - basic EPS 62,461,438 52,407,057 64,910,123 52,163,569 Operating partnership units 39,748,268 5,622,950 40,057,955 5,630,166 Preferred shares - Series C 5,779,330 5,779,330 5,779,330 5,779,330 Weighted average shares outstanding - basic 107,989,036 63,809,337 110,747,408 63,573,065 Company's funds from operations per share $0.20 $0.24 $1.63 $1.28 Diluted: Weighted average shares outstanding - diluted EPS 62,461,438 52,407,057 64,910,123 52,163,569 Operating partnership units 39,748,268 5,622,950 40,057,955 5,630,166 Preferred shares - Series C 5,779,330 5,779,330 5,779,330 5,779,330 Other -- 20,159 367 22,136 Adjusted weighted average shares outstanding - diluted 107,989,036 63,829,496 110,747,775 63,595,201 Company's funds from operations per share $0.20 $0.24 $1.63 $1.28 (1)Lexington believes that Funds from Operations ("FFO") is a widely recognized and appropriate measure of the performance of an equity REIT. Lexington presents FFO because it considers FFO an important supplemental measure of Lexington's operating performance. Lexington believes FFO is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. FFO is intended to exclude historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. As a result, FFO provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities, interest costs and other matters without the inclusion of depreciation and amortization, providing perspective that may not necessarily be apparent from net income. Lexington computes FFO in accordance with standards established by the National Association of Real Estate Investment Trusts, Inc. ("NAREIT"). FFO is defined by NAREIT as "net income (or loss) computed in accordance with GAAP, excluding gains (or losses) from sales of property, plus real estate depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures." FFO does not represent cash generated from operating activities in accordance with GAAP and is not indicative of cash available to fund cash needs. FFO should not be considered as an alternative to net income as an indicator of our operating performance or as an alternative to cash flow as a measure of liquidity. Lexington includes in its calculation of FFO, which Lexington refers to as the "Company's funds from operations" or "Company FFO," Lexington's operating partnership units and Lexington's Series C Cumulative Convertible Preferred Shares because these securities are convertible, at the holder's option, into Lexington's common shares, and also incentive fees earned from joint ventures. Management believes this is appropriate and relevant to securities analysts, investors and other interested parties because Lexington presents Company FFO on a company- wide basis as if all securities that are convertible, at the holder's option, into Lexington's common shares, are converted. Since others do not calculate FFO in a similar fashion, Company FFO may not be comparable to similarly titled measures as reported by others.