Lexington Realty Trust Reports Third Quarter 2020 Results and Announces Dividend Increase
Lexington Realty Trust (NYSE:LXP) reported Q3 2020 earnings with net income of $40.3 million ($0.15/share) and Adjusted Company FFO of $53.8 million ($0.19/share). Total revenues rose to $84.5 million, up from $81.6 million in Q3 2019. The company secured 99.9% of cash base rents and expanded its industrial portfolio to 88.5% of total assets. A quarterly dividend of $0.1075 per common share was declared, marking a 2.4% increase. Lexington also acquired properties worth $70.1 million and disposed of assets totaling $66.5 million during the quarter.
- Net income of $40.3 million ($0.15/share), solid performance.
- Adjusted Company FFO increased to $53.8 million ($0.19/share).
- 99.9% of cash base rents collected during the quarter.
- Acquired two properties for $70.1 million, boosting portfolio strength.
- Quarterly dividend raised by 2.4% to $0.1075 per share.
- Net income decreased significantly from $141.6 million ($0.59/share) in Q3 2019.
- Adjusted Company FFO declined slightly compared to $48.7 million ($0.20/share) in Q3 2019.
NEW YORK, Nov. 05, 2020 (GLOBE NEWSWIRE) -- Lexington Realty Trust (“Lexington”) (NYSE:LXP), a real estate investment trust focused on single-tenant industrial real estate investments, today announced results for the third quarter ended September 30, 2020.
Third Quarter 2020 Highlights
- Recorded Net Income attributable to common shareholders of
$40.3 million , or$0.15 per diluted common share. - Generated Adjusted Company Funds From Operations available to all equityholders and unitholders - diluted (“Adjusted Company FFO”) of
$53.8 million , or$0.19 per diluted common share. - Collected
99.9% of Cash Base Rents due during the third quarter. - Acquired two industrial properties for an aggregate cost of
$70.1 million . - Disposed of three properties for an aggregate gross disposition price of
$66.5 million . - Increased industrial portfolio to
88.5% of gross book value of real estate assets, excluding held for sale assets. - Issued
$400.0 million aggregate principal amount of2.70% Senior Notes due 2030 at an issuance price of99.233% of the principal amount. - Repurchased
$61.2 million and$51.1 million aggregate principal amount of outstanding4.25% Senior Notes due 2023 and4.40% Senior Notes due 2024, respectively. - Repaid the full outstanding balance of
$40.0 million on the revolving credit facility. - Raised net proceeds of approximately
$6.7 million through the ATM program. - Entered into forward sales transactions through the ATM program for 3.9 million common shares at an initial weighted-average price of
$11.23 per common share. - Completed 1.3 million square feet of new leases and lease extensions.
Subsequent Events
- Disposed of three properties for an aggregate gross disposition price of
$39.6 million . - Entered into an agreement to fund a build-to-suit industrial property in the Phoenix, Arizona market for an estimated cost of
$72.0 million , which will be subject to a 15-year net lease. - Declared quarterly common share/unit dividend/distribution of
$0.10 75 per share/unit, an increase of2.4% .
Adjusted Company FFO is a non-GAAP financial measure. It and certain other non-GAAP financial measures are defined and reconciled later in this press release.
T. Wilson Eglin, Chairman and Chief Executive Officer of Lexington Realty Trust, commented, “Our operations continued to produce strong results in the third quarter. We collected nearly
FINANCIAL RESULTS
Revenues
For the quarter ended September 30, 2020, total gross revenues were
Net Income Attributable to Common Shareholders
For the quarter ended September 30, 2020, net income attributable to common shareholders was
Adjusted Company FFO
For the quarter ended September 30, 2020, Lexington generated Adjusted Company FFO of
Dividends/Distributions
As previously announced, during the third quarter of 2020, Lexington declared a regular quarterly common share/unit dividend/distribution for the quarter ended September 30, 2020 of
Today, Lexington announced that it declared a regular quarterly common share/unit dividend/distribution for the quarter ending December 31, 2020 of
Lexington also announced that it declared a cash dividend of
TRANSACTION ACTIVITY
| ACQUISITION TRANSACTIONS | ||||||||||
| Property Type | Market | Sq. Ft. | Initial Basis ( | Approximate Lease Term (Yrs) | ||||||
| Industrial-Warehouse/distribution | DC/Baltimore, MD | 324,535 | $ | 29,143 | 4 | |||||
| Industrial-Warehouse/distribution | Savannah, GA | 419,667 | 40,908 | 6 | ||||||
| 744,202 | $ | 70,051 | ||||||||
The above properties were acquired at aggregate weighted-average GAAP and Cash capitalization rates of
| DEVELOPMENT PROJECTS | ||||||||||||||||||||
| Project (% owned) | Market | Property Type | Estimated Sq. Ft. | Estimated Project Cost ( | GAAP Investment Balance as of 9/30/2020 ( | Lexington Amount Funded as of 9/30/2020 ( | Estimated Completion Date | |||||||||||||
| Consolidated: | ||||||||||||||||||||
| Fairburn ( | Atlanta, GA | Industrial | 910,000 | $ | 53,812 | $ | 30,638 | $ | 22,543 | 1Q 2021 | ||||||||||
| Rickenbacker ( | Columbus, OH | Industrial | 320,000 | 20,300 | 11,310 | 8,233 | 4Q 2020 | |||||||||||||
| $ | 74,112 | $ | 41,948 | $ | 30,776 | |||||||||||||||
| Non-consolidated: | ||||||||||||||||||||
| ETNA Park 70 ( | Columbus, OH | Industrial | TBD | TBD | $ | 11,352 | $ | 11,714 | TBD | |||||||||||
| ETNA Park 70 East ( | Columbus, OH | Industrial | TBD | TBD | 7,391 | 7,431 | TBD | |||||||||||||
| $ | 18,743 | $ | 19,145 | |||||||||||||||||
- GAAP investment balance is in real estate under construction for consolidated projects and investments in non-consolidated entities for non-consolidated projects.
- Plans and specifications have not been completed and the estimated square footage, project cost and completion date cannot be determined.
| PROPERTY DISPOSITIONS | |||||||||||||||||||||||
| Primary Tenant | Location | Property Type | Gross Disposition Price ( | Annualized Net Income(1) ( | Annualized NOI(1) ( | Month of Disposition | % Leased | ||||||||||||||||
| Quest Diagnostics | Lenexa, KS | Office | $ | 14,351 | $ | 883 | $ | (4 | ) | July | 100 | % | |||||||||||
| Wal-Mart | Moody, AL | Industrial | 20,046 | 386 | 478 | July | 26 | % | |||||||||||||||
| Vacant(2) | Overland Park, KS | Office | 32,112 | (3,269 | ) | (998 | ) | July | 0 | % | |||||||||||||
| $ | 66,509 | $ | (2,000 | ) | $ | (524 | ) | ||||||||||||||||
1. Generally, quarterly period prior to sale, annualized.
2. Sold in a foreclosure sale. Disposition price reflects non-recourse debt balance.
As of September 30, 2020, total consolidated property disposition volume was
| LEASING | ||||||||||||
| LEASE EXTENSIONS | ||||||||||||
| Location | Primary Tenant/Guarantor(1) | Prior Term | Lease Expiration Date | Sq. Ft. | ||||||||
| Industrial | ||||||||||||
| 1 | Hebron | OH | Owens Corning | 12/2021 | 03/2022 | 250,410 | ||||||
| 2 | Hebron | OH | Owens Corning | 12/2021 | 03/2022 | 400,522 | ||||||
| 3 | Orlando | FL | Walgreen Co. | 03/2021 | 03/2026 | 205,016 | ||||||
| 3 | Total industrial lease extensions | 855,948 | ||||||||||
| NEW LEASES | ||||||||||||
| Location | Primary Tenant/Guarantor(1) | Lease Expiration Date | Sq. Ft. | |||||||||
| Industrial/Multi-tenant | ||||||||||||
| 1 | Chillicothe | OH | Ernie Green Industries | 12/2021 | 42,264 | |||||||
| 2 | Chillicothe | OH | Pegasus Industries | 06/2026 | 276,112 | |||||||
| 3 | Henderson | NC | Select Tissue | 02/2034 | 147,448 | |||||||
| 3 | Total industrial/multi-tenant leases | 465,824 | ||||||||||
| 3 | Total New Leases | 465,824 | ||||||||||
| 6 | TOTAL NEW AND EXTENDED LEASES | 1,321,772 | ||||||||||
(1) Leases greater than 10,000 square feet.
As of September 30, 2020, Lexington's portfolio was
BALANCE SHEET/CAPITAL MARKETS
During the third quarter of 2020, Lexington issued
During the third quarter of 2020, Lexington issued 0.6 million common shares through its ATM program raising net proceeds of approximately
During the third quarter, Lexington repaid
2020 EARNINGS GUIDANCE
Lexington now estimates that its net income attributable to common shareholders for the year ended December 31, 2020 will be within an expected range of
Additionally, Lexington affirms its Adjusted Company FFO guidance for the year ended December 31, 2020 to be within a range of
THIRD QUARTER 2020 CONFERENCE CALL
Lexington will host a conference call today, November 5, 2020, at 8:30 a.m. Eastern Time, to discuss its results for the quarter ended September 30, 2020. Interested parties may participate in this conference call by dialing1-844-825-9783 (U.S.), 1-412-317-5163 (International) or 1-855-669-9657 (Canada). A replay of the call will be available through February 5, 2021, at 1-877-344-7529 (U.S.), 1-412-317-0088 (International) or 1-855-669-9658 (Canada), pin code for all replay numbers is 10148898. A link to a live webcast of the conference call is available at www.lxp.com within the Investors section.
Lexington Realty Trust (NYSE: LXP) is a publicly traded real estate investment trust (REIT) that owns a portfolio of real estate assets consisting primarily of equity investments in single-tenant net-leased industrial properties across the United States. Lexington seeks to expand its industrial portfolio through build-to-suit transactions, sale-leaseback transactions and other transactions, including acquisitions. For more information, including Lexington's Quarterly Supplemental Information package, or to follow Lexington on social media, visit www.lxp.com.
Contact:
Investor or Media Inquiries for Lexington Realty Trust:
Heather Gentry, Senior Vice President of Investor Relations
Lexington Realty Trust
Phone: (212) 692-7200 E-mail: hgentry@lxp.com
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 Securities and Exchange Commission, including risks related to: (1) the potential adverse impact on Lexington or its tenants from the novel coronavirus (COVID-19); (2) the authorization by Lexington's Board of Trustees of future dividend declarations, (3) Lexington's ability to achieve its estimates of net income attributable to common shareholders and Adjusted Company FFO for the year ending December 31, 2020, (4) the successful consummation of any lease, acquisition, build-to-suit, disposition, financing or other transaction, (5) the failure to continue to qualify as a real estate investment trust, (6) changes in general business and economic conditions, including the impact of any legislation, (7) competition, (8) increases in real estate construction costs, (9) changes in interest rates, (10) changes in accessibility of debt and equity capital markets, and (11) future impairment charges. Copies of the periodic reports Lexington files with the Securities and Exchange Commission are available on Lexington's web site at www.lxp.com. 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”, “may,” “plans,” “predicts,” “will,” “will likely result,” “is optimistic,” “goal,” “objective” or similar expressions. Except as required by law, 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.
References to Lexington refer to Lexington Realty Trust and its consolidated subsidiaries. All interests in properties and loans are held, and all property operating activities are conducted, through special purpose entities, which are separate and distinct legal entities that maintain separate books and records, but in some instances are consolidated for financial statement purposes and/or disregarded for income tax purposes. The assets and credit of each special purpose entity with a property subject to a mortgage loan are not available to creditors to satisfy the debt and other obligations of any other person, including any other special purpose entity or affiliate. Consolidated entities that are not property owner subsidiaries do not directly own any of the assets of a property owner subsidiary (or the general partner, member of managing member of such property owner subsidiary), but merely hold partnership, membership or beneficial interests therein which interests are subordinate to the claims of the property owner subsidiary's (or its general partner's, member's or managing member's) creditors.
Non-GAAP Financial Measures - Definitions
Lexington has used non-GAAP financial measures as defined by the Securities and Exchange Commission Regulation G in this Quarterly Earnings Release and in other public disclosures.
Lexington believes that the measures defined below are helpful to investors in measuring our performance or that of an individual investment. Since these measures exclude certain items which are included in their respective most comparable measures under generally accepted accounting principles (“GAAP”), reliance on the measures has limitations; management compensates for these limitations by using the measures simply as supplemental measures that are weighed in balance with other GAAP measures. These measures are not necessarily indications of our cash flow available to fund cash needs. Additionally, they should not be used as an alternative to the respective most comparable GAAP measures when evaluating Lexington's financial performance or cash flow from operating, investing or financing activities or liquidity
Cash Base Rent: Cash Base Rent is calculated by making adjustments to GAAP rental revenue to remove the impact of GAAP required adjustments to rental income such as adjustments for straight-line rents related to free rent periods and contractual rent increases. Cash Base Rent excludes billed tenant reimbursements and lease termination income and includes ancillary income. Lexington believes Cash Base Rent provides a meaningful indication of an investments ability to fund cash needs.
Company Funds Available for Distribution (“FAD”): FAD is calculated by making adjustments to Adjusted Company FFO (see below) for (1) straight-line adjustments, (2) lease incentive amortization, (3) amortization of above/below market leases, (4) lease termination payments, net, (5) non-cash interest, net, (6) non-cash charges, net, (7) cash paid for tenant improvements, and (8) cash paid for lease costs. Although FAD may not be comparable to that of other real estate investment trusts (“REITs”), Lexington believes it provides a meaningful indication of its ability to fund cash needs. FAD is a non-GAAP financial measure and should not be viewed as an alternative measurement of operating performance to net income, as an alternative to net cash flows from operating activities or as a measure of liquidity.
Funds from Operations (“FFO”) and Adjusted Company FFO: Lexington believes that
FAQ
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