Lexington Realty Trust Reports Second Quarter 2008 Results

NEW YORK, Aug. 7 /PRNewswire-FirstCall/ -- Lexington Realty Trust
("Lexington") (NYSE: LXP), a real estate investment trust focused on
single-tenant real estate investments, today announced results for the
second quarter ended June 30, 2008.


(Logo: http://www.newscom.com/cgi-bin/prnh/20070205/LAM022LOGO)

Second Quarter 2008 Highlights
-- Increased total gross revenues by 18.9% to $128.7 million.
-- Generated Company Funds From Operations ("Company FFO") of $77.7
million or $0.73 per diluted share/unit.(1)
-- Executed 37 new and renewal leases, totaling approximately 1.5 million
square feet.
-- Sold 5 properties for $46.1 million at a 7.4% cap rate.
-- Repurchased $121.0 million face amount of senior securities at a 28.8%
discount.
-- Received $28.7 million in lease termination payments from two tenants.

(1) See the last page of this press release for a reconciliation of GAAP
net income to Company FFO.

T. Wilson Eglin, President and Chief Executive Officer of Lexington
stated, "We are pleased with our accomplishments in the second quarter,
especially in the leasing area where we executed 37 leases totaling 1.5
million square feet. In addition, we continued to strengthen our balance
sheet as we reduced debt by $112.5 million through the repayment of
mortgages and repurchase of senior securities at a substantial discount.
Sales activity was $46.1 million at an average cap rate of 7.4% -- highly
satisfactory in an environment where cap rates have increased
significantly. Accordingly, the acquisition market has become attractive to
buyers, and we look forward to selectively growing our portfolio and
leveraging our investment capital through joint ventures."




FINANCIAL RESULTS

Revenues

For the quarter ended June 30, 2008, total gross revenues increased
18.9% to $128.7 million, compared with total gross revenues of $108.2
million for the quarter ended June 30, 2007. The increase is primarily due
to the acquisition of certain assets from our co-investment programs in the
second quarter of 2007 and $28.7 million of lease termination payments
received, partially offset by $4.1 million in accelerated amortization of
above and below market leases, in the second quarter of 2008.

Net Income (Loss) Allocable to Common Shareholders

For the quarter ended June 30, 2008, net loss allocable to common
shareholders was ($3.8) million, or a loss of ($0.04) per diluted share,
compared with net income allocable to common shareholders for the quarter
ended June 30, 2007 of $21.9 million, or income of $0.34 per diluted share.

Company FFO Applicable to Common Shareholders/Unitholders

For the quarter ended June 30, 2008, Company FFO was $77.7 million, or
$0.73 per diluted share/unit, compared with Company FFO for the quarter
ended June 30, 2007 of $59.9 million, or $0.54 per diluted share/unit.
Company FFO for the quarter ended June 30, 2008 was impacted by several
unusual items, including the impact of lease terminations and the
accelerated amortization of above and below market leases ($34.9 million)
as well as debt satisfaction gains ($28.0 million), including Lexington's
proportionate share through joint ventures, offset by impairment charges
recorded at certain of Lexington's joint ventures ($27.3 million). For the
quarter ended June 30, 2007, Company FFO was impacted by the recognition of
incentive fees and lease termination payments ($13.6 million), severance
costs ($4.5 million) and merger costs ($0.8 million).

Balance Sheet

Lexington's balance sheet continues to provide liquidity to deploy as
investment opportunities become available. At June 30, 2008, Lexington had
approximately $177.3 million of cash and restricted cash and $2.5 billion
in debt outstanding, equating to a debt-to-total capitalization of
approximately 58.8%. As of June 30, 2008, the weighted average interest
rate on Lexington's debt was 5.65% with a weighted average maturity of 6.5
years. Approximately 92% of Lexington's debt is subject to fixed interest
rates.

Common Share Dividend/Distribution

On June 13, 2008, Lexington's Board of Trustees declared a regular
quarterly cash dividend/distribution of $0.33 per share/unit, which was
paid on July 15, 2008, to common shareholders/unitholders of record as of
June 30, 2008, and which equated to an annualized dividend of $1.32 per
share.

OPERATING ACTIVITIES

Dispositions

During the quarter ended June 30, 2008, Lexington sold its interest in
five properties to third parties for an aggregate sales price of $46.1
million, which generated gains on sale of $3.9 million.

Leasing Activity

At June 30, 2008, Lexington's consolidated portfolio was approximately
94.1% leased. For the quarter ended June 30, 2008, Lexington executed 37
leases (new and renewal) for approximately 1.5 million square feet. During
the quarter, Lexington received an aggregate of $28.7 million in lease
termination payments from two tenants.

2008 EARNINGS GUIDANCE

Lexington reaffirmed its previously disclosed Company FFO guidance
range of $1.56 to $1.64 per diluted share/unit for the year ended December
31, 2008. This guidance excludes the impact of the 100 Light Street lease
termination transaction and other non-recurring items. This guidance is
based on current expectations and is forward-looking.

2ND QUARTER 2008 CONFERENCE CALL

Lexington will host a conference call today, Thursday, August 7, 2008,
at 11:00 a.m. Eastern Time, to discuss its results for the quarter ended
June 30, 2008. Interested parties may participate in this conference call
by dialing (877) 407-0778 or (201) 689-8565. A replay of the call will be
available through September 7, 2008, at (877) 660-6853, Account #: 286,
Conference ID #: 289670.

A live web cast 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 August 7, 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, One Penn Plaza,
Suite 4015, New York, New York 10119-4015, Attention: Investor Relations.

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 most recent annual report on
Form 10-K filed with the Securities and Exchange Commission (" SEC") on
February 29, 2008 and other periodic reports filed with the SEC, including
risks related to: (1) the failure to continue to qualify as a real estate
investment trust, (2) changes in general business and economic conditions,
(3) competition, (4) increases in real estate construction costs, (5)
changes in interest rates, or (6) changes in accessibility of debt and
equity capital markets. Copies of the periodic reports Lexington files with
the SEC are available on Lexington's website at http://www.lxp.com.
Forward-looking statements, which are based on certain assumptions and
describe the Lexington's future plans, strategies and expectations, are
generally identifiable by use of the words "believes," "expects,"
"intends," "anticipates," "estimates," "projects", "is optimistic" 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 Six Months ended June 30, 2008 and 2007
(Unaudited and in thousands, except share and per share data)

Three months ended Six months ended
June 30, June 30,
2008 2007 2008 2007

Gross Revenues:
Rental $118,100 $90,345 $215,105 $164,719
Advisory and
incentive fees 365 11,224 676 11,943
Tenant
reimbursements 10,209 6,617 20,251 12,057
Total gross
revenues 128,674 108,186 236,032 188,719


Expense applicable
to revenues:
Depreciation and
amortization (85,173) (54,006) (141,370) (101,968)
Property
operating (20,045) (13,527) (39,505) (24,693)
General and
administrative (7,310) (12,339) (18,377) (21,156)
Non-operating income 18,694 2,383 20,799 4,869
Interest and
amortization expense (39,921) (36,668) (83,277) (66,741)
Debt satisfaction
gains, net 27,005 - 36,711 -
Gains on
sale-affiliates 8,637 - 31,806 -


Income (loss) before
provision for income
taxes, minority interests,
equity in earnings
(losses) of non-
consolidated entities
and discontinued
operations 30,561 (5,971) 42,819 (20,970)
Provision for income
taxes (721) (1,667) (2,055) (2,193)
Minority interests
share of (income)
loss 10,967 (16,619) 2,587 (6,748)
Equity in earnings
(losses) of
non-consolidated
entities (27,194) 38,386 (21,647) 41,890
Income from
continuing operations 13,613 14,129 21,704 11,979


Discontinued operations:
Income from
discontinued
operations 378 10,622 2,202 18,190
Provision for income
taxes (45) (2,646) (69) (2,663)
Debt satisfaction
charges (313) (89) (313) (89)
Gains on sales of
properties 3,925 12,828 4,612 12,828
Impairment charge - - (2,694) -
Minority interests
share of income (1,833) (5,905) (1,905) (9,091)
Total discontinued
operations 2,112 14,810 1,833 19,175

Net income 15,725 28,939 23,537 31,154
Dividends
attributable to
preferred shares-
Series B (1,590) (1,590) (3,180) (3,180)
Dividends attributable
to preferred shares-
Series C (2,111) (2,519) (4,630) (5,038)
Dividends attributable
to preferred shares-
Series D (2,925) (2,925) (5,851) (4,447)
Redemption discount -
Series C 5,678 - 5,678 -
Net income allocable
to common
shareholders $14,777 $21,905 $15,554 $18,489


Income per common
share-basic:
Income (loss) from
continuing operations,
after preferred
dividends $0.21 $0.11 $0.23 $(0.01)
Income from
discontinued
operations 0.04 0.23 0.03 0.29
Net income allocable
to common
shareholders $0.25 $0.34 $0.26 $0.28

Weighted average
common shares
outstanding -
basic 60,163,396 65,265,217 59,994,988 66,892,769


Income (loss) per
common share-
diluted:
Income (loss) from
continuing
operations,
after preferred
dividends $(0.08) $0.11 $0.02 $(0.01)
Income from
discontinued
operations 0.04 0.23 0.03 0.29
Net income (loss)
allocable to
common
shareholders $(0.04) $0.34 $0.05 $0.28

Weighted average
common shares
outstanding-
diluted 100,554,903 65,265,828 100,567,119 66,892,769



LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
CONDENSED BALANCE SHEETS
June 30, 2008 and December 31, 2007
(Unaudited and in thousands, except share and per share data)

June 30, December 31,
2008 2007
Assets:
Real estate, at cost $3,805,177 $4,095,278
Less: accumulated depreciation
and amortization 413,878 379,831
3,391,299 3,715,447
Properties held for sale-discontinued
operations 4,558 150,907
Intangible assets, net 396,495 516,698
Cash and cash equivalents 157,849 412,106
Restricted cash 19,468 4,185
Investment in and advances to
non-consolidated entities 227,466 226,476
Deferred expenses, net 37,448 42,040
Notes receivable 68,754 69,775
Rent receivable-current 21,347 25,289
Rent receivable- deferred 16,818 15,303
Other assets 69,349 86,937
$4,410,851 $5,265,163
Liabilities and Shareholders' Equity:
Liabilities:
Mortgage and notes payable $2,075,404 $2,312,422
Exchangeable notes payable 325,000 450,000
Trust preferred securities 129,120 200,000
Contract rights payable 14,094 13,444
Dividends payable 27,929 158,168
Liabilities-discontinued operations 7,132 119,093
Accounts payable and other liabilities 42,340 49,442
Accrued interest payable 18,011 23,507
Deferred revenue-below market leases, net 170,533 217,389
Prepaid rent 17,857 16,764
2,827,420 3,560,229
Minority interests 642,774 765,863
3,470,194 4,326,092
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 $129,915 and
$155,000, respectively, and 2,598,300 and
3,100,000 shares issued and outstanding in
2008 and 2007, respectively 126,217 150,589
Series D Cumulative Redeemable Preferred,
liquidation preference $155,000, 6,200,000
shares issued and outstanding 149,774 149,774
Special Voting Preferred Share, par value
$0.0001 per share; 1 share authorized,
issued and outstanding - -
Common shares, par value $0.0001 per share;
authorized 400,000,000 shares, 64,552,304 and
61,064,334 shares issued and outstanding in
2008 and 2007, respectively 6 6
Additional paid-in-capital 1,080,697 1,033,332
Accumulated distributions in excess of
net income (493,779) (468,167)
Accumulated other comprehensive
income (loss) 1,427 (2,778)
Total shareholders' equity 940,657 939,071
$4,410,851 $5,265,163



LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
EARNINGS PER SHARE AND COMPANY FUNDS FROM OPERATIONS PER SHARE
(Unaudited and in thousands, except share and per share data)

Three Months ended Six Months ended
June 30, June 30,
2008 2007 2008 2007
EARNINGS PER SHARE:
Basic:
Income from continuing
operations $13,613 $14,129 $21,704 $11,979
Less preferred dividends (948) (7,034) (7,983) (12,665)
Income (loss)
allocable to common
shareholders from
continuing operations 12,665 7,095 13,721 (686)
Total income from
discontinued operations 2,112 14,810 1,833 19,175
Net income allocable
to common
shareholders $14,777 $21,905 $15,554 $18,489

Weighted average
number of common
shares outstanding 60,163,396 65,265,217 59,994,988 66,892,769


Income (loss) per
common share-basic:
Income (loss) from
continuing operations $0.21 $0.11 $0.23 $(0.01)
Income from continuing
operations 0.04 0.23 0.03 0.29
Net income $0.25 $0.34 $0.26 $0.28

Diluted:
Income allocable to
common shareholders
from continuing
operations- basic $12,665 $7,095 $13,721 $(686)
Incremental loss
attributed to assumed
conversion of dilutive
securities (20,450) - (11,775) -
Income (loss)
allocable to common
shareholders from
continuing operations (7,785) 7,095 1,946 (686)
Total income from
discontinued
operations 3,970 14,810 2,957 19,175
Net income (loss)
allocable to
common shareholders $(3,815) $21,905 $4,903 $18,489

Weighted average
number of common
shares used in
calculation of
basic earnings per
share 60,163,396 65,265,217 59,994,988 66,892,769
Add incremental
shares
representing:
Shares issuable
upon exercise
of employee
share options
/non-vested
shares - 611 10,373 -
Shares issuable
upon conversion
of dilutive
securities 40,391,507 - 40,561,758 -
Weighted average
number of shares
used in
calculation
of diluted
earnings per
share 100,554,903 65,265,828 100,567,119 66,892,769

Income (loss) per
common share-
diluted:
Income (loss)
from continuing
operations $(0.08) $0.11 $0.02 $(0.01)
Income from
discontinued
operations 0.04 0.23 0.03 0.29
Net income (loss) $(0.04) $0.34 $0.05 $0.28



LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES
EARNINGS PER SHARE AND COMPANY FUNDS FROM OPERATIONS PER SHARE (Continued)
(Unaudited and in thousands, except share and per share data)

Three Months ended Six Months ended
June 30, June 30,
2008 2007 2008 2007
COMPANY FUNDS FROM
OPERATIONS: (1)
Basic and Diluted:
Net income allocable
to common
shareholders-basic $14,777 $21,905 $15,554 $18,489
Adjustments:
Depreciation and
amortization 84,785 58,153 140,741 112,785
Minority interests-
OP units (12,913) 21,334 (5,379) 13,915
Amortization of
leasing commissions 420 283 1,012 536
Joint venture
adjustment-
depreciation 6,733 932 7,438 3,046
Preferred dividends-
Series C (3,567) 2,519 (1,048) 5,038
Gains on sale of
properties (12,562) (12,828) (36,418) (12,828)
Taxes and minority
interest on sale
of property - 1,749 84 1,749
Gains on sale of
joint venture
properties - (34,164) - (34,164)
Company FFO $77,673 $59,883 $121,984 $108,566

Basic:
Weighted average
shares outstanding-
basic EPS 60,163,396 65,265,217 59,994,988 66,892,769
Operating
partnership units 39,519,599 40,133,160 39,581,887 40,339,893
Preferred Shares-
Series C 6,398,965 5,779,330 6,560,348 5,779,330
Weighted average
shares
outstanding-
basic Company
FFO 106,081,960 111,177,707 106,137,223 113,011,992
Company FFO per
share $0.73 $0.54 $1.15 $0.96

Diluted:
Weighted average
shares
outstanding
- diluted EPS 100,554,903 65,265,828 100,567,119 66,892,769
Employee share
options/non-
vested shares 10,197 - - 621
Operating
partnership units - 40,133,160 - 40,339,893
Preferred Shares-
Series C 5,527,057 5,779,330 5,580,477 5,779,330
Weighted average
shares outstanding
- diluted Company
FFO 106,092,157 111,178,318 106,147,596 113,012,613
Company FFO per
share $0.73 $0.54 $1.15 $0.96

(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
generally accepted accounting principles ("GAAP"), historical cost
depreciation and amortization of real estate and related assets,
which assumes that the value of real estate diminishes ratably over
time. Historically, however, real estate values have risen or fallen
with market conditions. As a result, FFO provides a performance
measure that, when compared year over year, reflects the impact to
operations from trends in occupancy rates, rental rates, operating
costs, development activities, interest costs and other matters
without the inclusion of depreciation and amortization, providing
perspective that may not necessarily be apparent from net income.

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.
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.

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