10-K 1 lxp2013123110k.htm 10-K LXP 2013.12.31 10K
 
 
 
 
 
 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 FORM 10-K
(Mark One)
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013
or
o
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
13-3717318
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
One Penn Plaza, Suite 4015
 
New York, NY
10119-4015
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (212) 692-7200
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Name of each exchange on which registered
Shares of beneficial interest, par value $0.0001 per share, classified as Common Stock
New York Stock Exchange
6.50% Series C Cumulative Convertible Preferred Stock,
par value $0.0001 per share
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x  No o.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  o No x.
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 o.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x  No o.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K x.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x  Accelerated filer o  Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company o 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  o No x.
The aggregate market value of the shares of beneficial interest, par value $0.0001 per share, classified as common stock (“common shares”) of the registrant held by non-affiliates as of June 28, 2013, which was the last business day of the registrant's most recently completed second fiscal quarter, was $2,453,413,854 based on the closing price of the common shares on the New York Stock Exchange as of that date, which was $11.68 per share.
Number of common shares outstanding as of February 25, 2014 was 229,236,491.
DOCUMENTS INCORPORATED BY REFERENCE
Certain information contained in the Definitive Proxy Statement for registrant's Annual Meeting of Shareholders, to be held on May 20, 2014, is incorporated by reference in this Annual Report on Form 10-K in response to Part III, Items 10, 11, 12, 13 and 14, which will be filed with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.
 
 
 
 
 
 
 
 
 
 



TABLE OF CONTENTS

 
Description
 
Page
 
 
 
 
 
PART I
 
 
 
 
 
 
 
 
 
PART II
 
 
 
 
 
 
 
 
 
 
 
PART III
 
 
 
 
 
 
 
 
PART IV
 
 
 

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PART I.
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 or only the parent company and consolidated entities. All interests in properties are held through special purpose entities, which we refer to as property owner subsidiaries or lender subsidiaries, which are separate and distinct legal entities, but in some instances are consolidated for financial statement purposes and/or disregarded for income tax purposes.
References herein to this Annual Report are to this Annual Report on Form 10-K for the fiscal year ended December 31, 2013. When we use the term “REIT” we mean real estate investment trust. All references to 2013, 2012 and 2011 refer to our fiscal years ended, or the dates, as the context requires, December 31, 2013, December 31, 2012 and December 31, 2011, respectively.
Management of our interests in properties is generally conducted through Lexington Realty Advisors, Inc., a taxable REIT subsidiary, which we refer to as LRA, or through a property management joint venture subsidiary.
When we use the term “GAAP” we mean United States generally accepted accounting principles.
Cautionary Statements Concerning Forward-Looking Statements

This Annual Report, together with other statements and information publicly disseminated by us contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “believes,” “expects,” “intends,” “anticipates,” “estimates,” “projects,” “may,” “plans,” “predicts,” “will,” “will likely result” or similar expressions. Readers should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could materially affect actual results, performances or achievements. In particular, among the factors that could cause actual results, performances or achievements to differ materially from current expectations, strategies or plans include, among others, those risks discussed below under “Risk Factors” in Part I, Item 1A of this Annual Report and “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of this Annual Report. Except as required by law, 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.

Item 1. Business

General
We are a Maryland REIT that owns a diversified portfolio of equity and debt investments in single-tenant properties and land. A majority of these properties and all land interests are subject to net or similar leases, where the tenant bears all or substantially all of the costs, including cost increases, for real estate taxes, utilities, insurance and ordinary repairs. We also provide investment advisory and asset management services to investors in the single-tenant area.
As of December 31, 2013, we had equity ownership interests in approximately 220 consolidated real estate properties, located in 41 states and containing an aggregate of approximately 40.7 million square feet of space, approximately 97.6% of which was leased. In 2013, 2012 and 2011, no tenant/guarantor represented greater than 10% of our annual base rental revenue.
In addition to our shares of beneficial interest, par value $0.0001 per share, classified as common stock, which we refer to as common shares, as of December 31, 2013, we had one outstanding class of beneficial interest classified as preferred stock, which we refer to as preferred shares: our 6.50% Series C Cumulative Convertible Preferred Stock, par value $0.0001 per share, which we refer to as our Series C Preferred Shares. Our common shares and Series C Preferred Shares are traded on the New York Stock Exchange, or NYSE, under the symbols “LXP” and “LXPPRC”, respectively.
We elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, which we refer to as the Code, commencing with our taxable year ended December 31, 1993. We intend to continue to qualify as a REIT. If we qualify for taxation as a REIT, we generally will not be subject to federal corporate income taxes on our net taxable income that is currently distributed to our common shareholders.

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History
Our predecessor, Lexington Corporate Properties, Inc., was organized in the state of Delaware in October 1993 upon the combination of two investment programs, Lepercq Corporate Income Fund L.P., which we refer to as LCIF, and Lepercq Corporate Income Fund II L.P., which we refer to as LCIF II, which were formed to acquire net-lease real estate assets providing current income. Our predecessor was merged into Lexington Corporate Properties Trust, a Maryland statutory REIT, on December 31, 1997. On December 31, 2006, Lexington Corporate Properties Trust changed its name to Lexington Realty Trust and was the successor in a merger with Newkirk Realty Trust, or Newkirk, which we refer to as the Newkirk Merger. All of Newkirk's operations were conducted, and all of its assets were held, through its master limited partnership, subsequently named The Lexington Master Limited Partnership, which we refer to as the MLP. As of December 31, 2008, the MLP was merged with and into us.
We are structured as an umbrella partnership REIT, or UPREIT, as a portion of our business has been conducted through our operating partnership subsidiaries: (1) LCIF and (2) LCIF II. We refer to these subsidiaries as our operating partnerships and to limited partner interests in these operating partnerships as OP units. On December 30, 2013, LCIF II was merged with and into LCIF, with LCIF as the surviving entity. We are party to a funding agreement with LCIF under which we may be required to fund distributions made on account of OP units. The UPREIT structure enables us to acquire properties through an operating partnership by issuing OP units to a seller of property, as a form of consideration in exchange for the property. The outstanding OP units are generally redeemable for our common shares on a one OP unit for approximately 1.13 common shares basis, or, at our election in certain instances, cash. We believe that this structure facilitates our ability to raise capital and to acquire portfolio and individual properties by enabling us to structure transactions which may defer tax gains for a contributor of property. Prior to the effective date of the LCIF and LCIF II merger, there were approximately 3.6 million OP units outstanding which were convertible into approximately 4.1 million common shares, assuming we satisfied redemptions entirely with common shares. Approximately 0.2 million former LCIF II OP units elected or were deemed to elect the cash consideration in the LCIF and LCIF II merger, by the February 1, 2014 deadline, and were converted into the right to receive such cash consideration.
Current Economic Uncertainty and Capital Market Volatility
Our business continues to be impacted in a number of ways by the continued uncertainty in the overall economy and volatility in the capital markets. We encourage you to read “Risk Factors” in Part I, Item 1A of this Annual Report for a discussion of certain risks we are facing and “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of this Annual Report for a detailed discussion of the trends we believe are impacting our business.
Investment and Strategy
General. Our current business strategy is focused on enhancing our cash flow growth and stability, growing our portfolio with attractive long-term leased investments and maintaining a strong and flexible balance sheet to allow us to act on opportunities as they arise. Our core assets consist of general purpose, single-tenant net-leased office and industrial assets and land investments subject to long-term leases, in well-located and growing markets or which are critical to the tenant's business, but may also include other asset types subject to long-term net-leases, such as retail facilities, schools and medical facilities. We attempt to manage residual value risk associated with such other asset types by acquiring such assets primarily through joint ventures or disposing of such assets when there is sufficient remaining lease term to generate favorable sale prices. We believe our strategy of investing in core assets will provide shareholders with dividend growth and capital appreciation.
We implement our strategy by (1) recycling capital in compliance with regulatory and contractual requirements, (2) refinancing or repurchasing outstanding indebtedness when advisable, including refinancing secured debt with unsecured debt, (3) effecting strategic transactions, portfolio and individual property acquisitions and dispositions, (4) expanding existing properties, (5) executing new leases with tenants, (6) extending lease maturities in advance of or at expiration and (7) exploring new business lines and operating platforms. Additionally, we may continue to enter into joint ventures and co-investment programs with third-party investors as a means of mitigating risk, creating additional growth and expanding the revenue realized from advisory and asset management activities as situations warrant.
Portfolio diversification is central to our investment strategy as we seek to create and maintain an asset base that provides steady, predictable and growing cash flows while being insulated against rising property operating expenses, regional recessions, industry-specific downturns and fluctuations in property values and market rent levels. Regardless of capital market and economic conditions, we intend to stay focused on (1) enhancing operating results, (2) improving portfolio quality, (3) mitigating risks relating to interest rates and real estate cycles and (4) implementing strategies where our management skills and real estate expertise can add value. We attempt to maintain a portfolio of properties that provide for income and capital appreciation. The proportion of total return generated from rental income versus capital appreciation will vary by asset type, lease term, contractual rental escalations and market location. We believe that our business strategy will continue to improve our liquidity and strengthen our overall balance sheet while creating meaningful shareholder value.

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In 2013, we became an issuer of investment-grade rated debt, which lowered our financing costs. We maintain a strong balance sheet primarily by (1) financing property acquisitions with non-recourse mortgage debt or unsecured corporate level borrowings at what we believe are favorable rates, (2) issuing equity when market conditions are favorable, (3) selling non-core and underperforming assets and (4) extending debt maturities and refinancing debt at lower rates.
Investments. Our management has established a broad network of contacts to source investments, including major corporate tenants, developers and brokers. Prior to effecting any investment, our underwriting includes analyzing the (1) property's design, construction quality, efficiency, functionality and location with respect to the immediate sub-market, city and region, (2) lease integrity with respect to term, rental rate increases, corporate guarantees and property maintenance provisions, (3) present and anticipated conditions in the local real estate market and (4) prospects for selling or re-leasing the property on favorable terms in the event of a vacancy. To the extent of information publicly available or made available to us, we also evaluate each potential tenant's financial strength, growth prospects, competitive position within its respective industry and a property's strategic location and function within a tenant's operations or distribution systems. We believe that our comprehensive underwriting process is critical to the assessment of long-term profitability of any investment by us.
We seek investments from (1) creditworthy companies in sale-leaseback transactions for properties that are integral to the sellers'/tenants' ongoing operations, (2) developers of newly constructed properties built to suit the needs of a corporate tenant by financing the project during the construction phase and/or agreeing to purchase the property upon completion of construction and occupancy by the tenant and (3) sellers of properties subject to an existing lease. We believe that our geographical diversification and acquisition experience will allow us to continue to compete effectively for such investments.
Strategic Transactions with Other Real Estate Investment Companies. We seek to capitalize on the unique investment experience of our management team as well as their network of relationships in the industry to achieve appropriate risk-adjusted yields through strategic transactions. Accordingly, we occasionally pursue the (1) acquisition of portfolios of assets and equity interests in companies with a significant number of single-tenant assets, including through mergers and acquisitions activity, and (2) participation in strategic partnerships, co-investment programs and joint ventures.
We believe that entering into co-investment programs and joint ventures with institutional investors and other real estate investment companies may mitigate our risk in certain assets and increase our return on equity to the extent we earn management or other fees. However, investments in co-investment programs and joint ventures limit our ability to make unilateral investment decisions relating to the assets and limit our ability to deploy capital. See Part I, Item 1A “Risk Factors”, below.
Competition
There are numerous commercial developers, real estate companies, financial institutions, such as banks and insurance companies, and other investors with greater financial or other resources that compete with us in seeking properties for acquisition and tenants who will lease space in these properties. Our competitors include other REITs, pension funds, banks, private companies and individuals.
Internal Growth and Effectively Managing Assets
Tenant Relations and Lease Compliance. We endeavor to maintain close contact with the tenants in the properties in which we have an interest in order to understand their financial strength and future real estate needs. We monitor the financial, property maintenance and other lease obligations of the tenants in properties in which we have an interest, through a variety of means, including periodic reviews of financial statements that we have access to and physical inspections of the properties.
Extending Lease Maturities. Our property owner subsidiaries seek to extend tenant leases in advance of the lease expiration in order for us to maintain a balanced lease rollover schedule and high occupancy levels.
Revenue Enhancing Property Expansions. Our property owner subsidiaries undertake expansions of properties based on lease requirements, tenant requirements or marketing opportunities. We believe that selective property expansions can provide attractive rates of return.
Capital Recycling. Subject to regulatory and contractual requirements, we generally sell our interests in properties when we believe that the return realized from selling a property will exceed the expected return from continuing to hold such property and/or there is a better use of the capital to be received upon sale.
We continue to recycle capital with a focus on capturing the value of our non-core assets and reducing our exposure to suburban office properties. Our objectives are to achieve a better balance between office and industrial asset revenue for lease terms shorter than ten years and make investments in core assets with lease terms longer than ten years.

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Occasionally, we provide seller financing as a means of efficiently disposing of an asset. As a result, if a buyer defaults under the seller financing, we will once again be the owner of the underlying asset.
Conversion to Multi-Tenant. If one of our property owner subsidiaries is unable to renew a single-tenant lease or if it is unable to find a replacement single tenant, we either attempt to sell our interest in the property or the property owner subsidiary may seek to market the property for multi-tenant use. When appropriate, we seek to sell our interests in these multi-tenant properties.
Property Management. From time to time, our property owner subsidiaries use property managers to manage certain properties. Our property management joint venture with an unaffiliated third party manages substantially all of these properties. We believe this joint venture provides us with (1) better management of our assets, (2) better tenant relationships, (3) revenue-enhancing opportunities and (4) cost efficiencies.
Financing Strategy
General. Since becoming a public company, our principal sources of financing have been the public and private equity and debt markets, property specific debt, revolving loans, corporate level term loans, issuance of OP units and undistributed cash flows.
Property Specific Debt. Our property owner subsidiaries historically financed their assets with non-recourse secured debt. However, beginning in 2008, the availability of single asset non-recourse financing became limited. As a result, we began to rely more on corporate level borrowings. Our property owner subsidiaries now seek non-recourse secured debt on a limited basis including when credit tenant lease financing is available. Credit tenant lease financing allows us to significantly or fully leverage the rental stream from an investment at, what we believe are, attractive rates.
Corporate Level Borrowings. As previously noted, we also use corporate level borrowings, such as revolving loans, term loans, and debt offerings. We expect to finance more of our operations with such corporate level borrowings as (1) non-recourse secured debt matures and (2) such corporate level borrowings are available on favorable terms. In 2013, we received a senior unsecured debt rating of Baa2 with a stable outlook from Moody’s Investor Services, Inc., or Moody’s, and a senior unsecured debt rating of BBB- with a stable outlook from Standard & Poor’s Rating Services, or S&P. Obtaining these ratings has lowered our debt financing costs. See - “Summary of 2013 Transactions and Recent Developments - Financings,” below.
Deleveraging and Interest Rate Reduction. In recent years, we have reduced our weighted-average interest rate and used our capital to deleverage our balance sheet by refinancing, satisfying and repurchasing indebtedness primarily taking advantage of the low interest rate environment by obtaining corporate level borrowings and credit tenant lease financings at attractive rates and using a portion of the proceeds to retire higher rate debt. As a result, our interest expense has been reduced. Our objective is to maintain a debt and preferred share to gross assets ratio of 40% to 45%. This ratio may increase over such levels at certain times due to the timing of financings.
Common Share Issuances
From time to time, we raise capital by issuing common shares through (1) our At-The-Market, or ATM, offering program, initiated in 2013, (2) underwritten public offerings, (3) block trades and (4) our direct share purchase plan. The proceeds from our common share offerings are generally used for working capital, including to fund investments and to retire indebtedness.
Preferred Share Repurchases
During 2013, we repurchased and retired all outstanding shares of our 7.55% Series D Cumulative Redeemable Preferred Stock, par value $0.0001 per share, which we refer to as Series D Preferred Shares. We also make repurchases of our preferred shares in individual transactions when we believe the discount to the liquidation preference is attractive.
Advisory Contracts
Certain members of our management have been in the business of investing in single-tenant net-lease properties since 1973. This experience has enabled us to provide advisory services to various net-lease investors, including institutional investors and high net-worth individuals. With the termination of certain of our co-investment programs in 2007 and our acquisition of NLS in 2012, advisory fees have declined in recent years. If and when we increase our co-investment joint venture activity, we expect advisory fees to increase.
In 2012, LRA entered into an agreement to arrange for up to $100.0 million of investments on behalf of a third-party investor. Under the agreement, we will be a co-investor with a target to contribute 15% to each venture.We granted the third-party investor an exclusivity, until May 2015 and subject to certain conditions, on investment opportunities for (1) properties with a lease due to expire in less than 10 years, and (2) properties that are dedicated to non-office and non-warehouse/distribution uses, including properties with tenants in the medical, hospital and health care industries.

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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 generally the tenants of the properties in which we have an interest are primarily responsible for any environmental damage and claims related to the leased premises, in the event of the bankruptcy or inability of a tenant of such premises to satisfy any obligations with respect to such environmental liability, a property owner subsidiary may be required to satisfy such obligations. In addition, as the owner of such properties, a property owner subsidiary may be held directly liable for any such damages or claims irrespective of the provisions of any lease.
From time to time, in connection with the conduct of our business and generally upon acquisition of a property and prior to surrender by a tenant, the property owner subsidiary authorizes the preparation of a Phase I and, when recommended, a Phase II environmental report with respect to its properties. Based upon such environmental reports and our ongoing review of the properties in which we have an interest, as of the date of this Annual Report, we are not aware of any environmental condition with respect to any of the properties in which we have an interest which we believe would be reasonably likely to have a material adverse effect on our financial condition and/or results of operations. There can be no assurance, however, that (1) the discovery of environmental conditions, the existence or severity of which were previously unknown, (2) changes in law, (3) the conduct of tenants or (4) activities relating to properties in the vicinity of the properties in which we have an interest, 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 the tenants of properties in which we have an interest, which would adversely affect our financial condition and/or results of operations.
Impairment Charges
In recent years, we have incurred non-cash impairment charges primarily related to (1) sales and other dispositions, or the possible sale or disposition, of assets at below book value and (2) vacancies of certain assets. In addition, we may continue to take similar non-cash impairment charges, which could be material in amount, due to (1) the current economic environment and (2) the implementation of our current business strategy, which may include sales of properties acquired in the Newkirk Merger that have a high cost basis because of our common share price at the time of the Newkirk Merger. Furthermore, we may take an impairment charge on a property subject to a non-recourse secured mortgage reducing the book value of such property to its estimated fair value which may be below the balance of the mortgage on our balance sheet. Upon foreclosure or other disposition of such property, we may recognize a gain on debt satisfaction equal to the difference between the fair value of the property and the balance of the mortgage.
Summary of 2013 Transactions and Recent Developments
The following summarizes certain of our transactions during 2013, including transactions disclosed elsewhere and in our other periodic reports.
Sales/Dispositions. With respect to sales/disposition activity, we:
disposed of our interests in properties to unaffiliated third parties for an aggregate gross disposition price of $117.8 million; and
conveyed in foreclosure or via deed-in-lieu of foreclosure properties for full satisfaction of the related aggregate $49.5 million non-recourse mortgages.
Acquisitions/Investments. With respect to acquisitions/investments, we:
purchased ten properties for an aggregate cost of $440.4 million;
completed four build-to-suit transactions for an aggregate capitalized cost, including the buyout of a joint venture partner, of $105.5 million;
formed two joint ventures, one, in which we hold a 15% interest, acquired a portfolio of veterinary hospitals for $39.5 million, and the other, in which we invested $5.0 million, owns an office property investment in Baltimore, Maryland;
closed on a construction loan for a commitment of $85.0 million of which $35.4 million was funded in 2013;

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continue to fund four on-going build-to-suit transactions not yet completed at December 31, 2013 with an aggregate estimated cost of $189.7 million of which $76.8 million was invested as of December 31, 2013; and
entered into a forward commitment to acquire a build-to-suit industrial property in Lewisburg, Tennessee for an estimated cost of $12.8 million. The property is subject to a 12-year net lease.
The 2013 consolidated property investments of $545.9 million discussed above have a weighted-average lease term by cash rents of approximately 54.3 years and an initial weighted-average cap rate of 6.2%. The weighted-average lease term is primarily impacted by the New York land transaction; excluding this transaction, the weighted-average lease term by cash rent was approximately 18.8 years.
Leasing. Our property owner subsidiaries entered into 59 new leases and lease extensions encompassing an aggregate 5.7 million square feet, ending the year with our overall portfolio leased at 97.6% as of December 31, 2013.
Financing. With respect to financing activities, we:
issued $250.0 million aggregate principal amount of 4.25% Senior Notes due 2023, or 4.25% Senior Notes, which are unsecured and rated investment grade by Moody’s and S&P;
refinanced our $300.0 million secured revolving credit facility with a $300.0 million unsecured revolving credit facility with KeyBank National Association, which we refer to as KeyBank, as agent. We also increased the availability from $300.0 million to $400.0 million. The unsecured revolving credit facility matures in February 2017 but can be extended until February 2018 at our option. The unsecured revolving credit facility bears interest at LIBOR plus 0.95% to 1.725% based on our unsecured debt investment-grade credit rating from S&P and Moody’s;
in connection with the refinancing discussed above, we also procured a five-year $250.0 million unsecured term loan facility from KeyBank as agent. The unsecured term loan matures in February 2018 and requires regular payments of interest only at interest rates ranging from LIBOR plus 1.10% to 2.10% based on our unsecured debt investment-grade rating from S&P and Moody’s;
amended our $255.0 million secured term loan agreement maturing in 2019 to release the collateral securing such term loan;
converted $54.9 million aggregate original principal amount of 6.00% Convertible Guaranteed Notes due 2030, or 6.00% Convertible Notes, for approximately 7.9 million common shares and aggregate cash payments of $3.3 million plus accrued and unpaid interest;
entered into interest rate swap agreements to fix the LIBOR component of $151.0 million in term loan borrowings at a weighted-average rate of 1.05%;
amended all agreements governing corporate level debt to release all subsidiary guarantors except LCIF;
retired $437.0 million in property non-recourse mortgage debt with a weighted-average interest rate of 5.8%; and
obtained $253.5 million in non-recourse mortgage financings with an initial weighted-average interest rate of 4.51%.
Capital. With respect to capital activities, we:
implemented an ATM offering program under which we may issue up to $100.0 million in common shares over the term of the program and we issued 3.4 million common shares under this program raising gross proceeds of $36.9 million;
issued an aggregate 36.0 million common shares in two public offerings and under our direct share purchase plan, raising net proceeds of approximately $399.6 million; and
repurchased and retired all outstanding Series D Preferred Shares (6.2 million shares) for an aggregate purchase price of approximately $155.6 million, including accrued and unpaid dividends.
Subsequent to December 31, 2013, we:
acquired the completed industrial property in Rantoul, Illinois for an aggregate capitalized cost of $41.1 million;

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purchased an office property in Parachute, Colorado for approximately $13.9 million. The property is subject to a 19-year net lease;
borrowed $99.0 million under our term loan maturing in 2018 and entered into an interest rate swap agreement fixing the LIBOR component of the borrowing at 1.155%;
entered into a forward commitment to acquire a build-to-suit office property in Auburn Hills, Michigan for approximately $40.0 million. The property will be subject to a 14-year net lease;
repaid all borrowings under our line of credit; and
commenced a registered exchange offer to exchange any and all outstanding 4.25% Senior Notes issued in June 2013 for an equal principal amount of new 4.25% Senior Notes due 2023 that have been registered under the Securities Act of 1933, as amended, or the Securities Act.
Other
Employees. As of December 31, 2013, we had 47 full-time employees. Lexington Realty Trust is a master employer and employee costs are allocated to subsidiaries as applicable.
Industry Segments. We primarily operate in one industry segment, single-tenant real estate assets.
Web Site. Our Internet address is www.lxp.com. We make available, free of charge, on or through the investors section of our web site or by contacting our Investor Relations Department, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as well as proxy statements, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Also posted on our web site, and available in print upon request of any shareholder to our Investor Relations Department, are our amended and restated declaration of trust and amended and restated by-laws, charters for the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee of our Board of Trustees, our Corporate Governance Guidelines, and our Code of Business Conduct and Ethics governing our trustees, officers and employees (which contains our whistle blower procedures). Within the time period required by the SEC and the NYSE, we will post on our web site any amendment to the Code of Business Conduct and Ethics and any waiver applicable to any of our trustees or executive officers. In addition, our web site includes information concerning purchases and sales of our equity securities by our executive officers and trustees as well as disclosure relating to certain non-GAAP financial measures (as defined in the SEC's Regulation G) that we may make public orally, telephonically, by webcast, by broadcast or by similar means from time to time. Information contained on our web site or the web site of any other person is not incorporated by reference into this Annual Report or any of our other filings or furnishings with the SEC.
Our Investor Relations Department can be contacted at Lexington Realty Trust, One Penn Plaza, Suite 4015, New York, New York 10119-4015, Attn: Investor Relations, by telephone: (212) 692-7200, or by e-mail: ir@lxp.com.

Principal Executive Offices. Our principal executive offices are located at One Penn Plaza, Suite 4015, New York, New York 10119-4015; our telephone number is (212) 692-7200.

NYSE CEO Certification. Our Chief Executive Officer made an unqualified certification to the NYSE with respect to our compliance with the NYSE corporate governance listing standards in 2013.

9


Item 1A. Risk Factors
Set forth below are material factors that may adversely affect our business and operations.
Risks Related to Our Business
We are subject to risks involved in single-tenant leases.
We focus our acquisition activities on real estate properties that are net leased to single tenants. Therefore, the financial failure of, or other default by, a single tenant under its lease is likely to cause a significant or complete reduction in the operating cash flow generated by the property leased to that tenant and might decrease the value of that property and result in a non-cash impairment charge. In addition, our property owner subsidiary will be responsible for 100% of the operating costs following a vacancy at a single-tenant building.
We rely on revenues derived from major tenants.
Revenues from several tenants and/or their guarantors constitute a significant percentage of our base rental revenues. The default, financial distress or bankruptcy of any of the tenants and/or guarantors of these properties could cause interruptions in the receipt of lease revenues and/or result in vacancies, which would reduce the property owner subsidiary's revenues and increase operating costs until the affected property is re-let, and could decrease the ultimate sale value of that property. Upon the expiration or other termination of the leases that are currently in place with respect to these properties, the property owner subsidiary may not be able to re-lease the vacant property at a comparable lease rate, at all, or without incurring additional expenditures in connection with the re-leasing. See “Management's Discussion and Analysis of Financial Conditions and Results of Operations - Overview - Leasing Trends” in Part II, Item 7 of this Annual Report for further discussion.
You should not rely on the credit ratings of our tenants.
Some of our tenants are rated by Moody's, Fitch, Inc. and/or S&P. Any such credit ratings are subject to ongoing evaluation by these credit rating agencies and we cannot assure you that any such ratings will not be changed or withdrawn by these rating agencies in the future if, in their judgment, circumstances warrant. If these rating agencies assign a lower-than-expected rating or reduce or withdraw, or indicate that they may reduce or withdraw the credit rating of a tenant, the value of our investment in any properties leased by such tenant could significantly decline. Furthermore, in a bankruptcy, leases are treated differently than unsecured debt.
Our assets may be subject to impairment charges.
We periodically evaluate our real estate investments and other assets for impairment indicators. The judgment regarding the existence of impairment indicators is based on GAAP, which include a variety of factors such as market conditions, the status of significant leases, the financial condition of major tenants and other factors that could affect the cash flow or value of an investment. During 2013, 2012 and 2011, we incurred $34.6 million, $10.0 million and $117.4 million, respectively, of non-cash impairment charges, excluding loan losses recorded on loans receivable. A substantial portion of these impairments related to assets acquired in the Newkirk Merger that had a relatively high cost basis because of our common share price at the time of the Newkirk Merger. We may continue to take similar non-cash impairment charges, which could affect the implementation of our current business strategy. These impairments could have a material adverse effect on our financial condition and results of operations.
Furthermore, we may take an impairment charge on a property subject to a non-recourse secured mortgage which reduces the book value of such property to its fair value, which may be below the balance of the mortgage on our balance sheet. Upon foreclosure or other disposition, we may be required to recognize a gain on debt satisfaction equal to the difference between the fair value of the property and the balance of the mortgage.
Our interests in loans receivable are subject to delinquency, foreclosure and loss.
Our interests in loans receivable are generally non-recourse and secured by real estate properties owned by borrowers that were unable to obtain similar financing from a commercial bank. These loans are subject to many risks including delinquency. The ability of a borrower to repay a loan secured by a real estate property is typically and primarily dependent upon the successful operation of such property rather than upon the existence of independent income or assets of the borrower. If a borrower were to default on a loan, it is possible that we would not recover the full value of the loan as the collateral may be non-performing.

10


In 2013, we foreclosed on one of our loans receivable, which was secured by an office property in Schaumburg, Illinois. The loan had an outstanding balance of $21.6 million (not including default interest and other penalties), which we believe was less than the estimated fair value of the property. Also, as of December 31, 2013, the tenant of the property in Westmont, Illinois, which we sold in 2007 but issued a purchase mortgage to the buyer, terminated its lease effective November 2013. Accordingly, we reduced our carrying value to an estimated fair value of $12.6 million and recorded a loan loss of $13.9 million.
We face uncertainties relating to lease renewals and re-letting of space.
Upon the expiration of current leases for space located in properties in which we have an interest, our property owner subsidiaries may not be able to re-let all or a portion of such space, or the terms of re-letting (including the cost of concessions to tenants and leasing commissions) may be less favorable than current lease terms or market rates. If our property owner subsidiaries are unable to promptly re-let all or a substantial portion of the space located in their respective properties, or if the rental rates a property owner subsidiary receives upon re-letting are significantly lower than current rates, our earnings and ability to satisfy our debt service obligations and to make expected distributions to our shareholders may be adversely affected due to the resulting reduction in rent receipts and increase in property operating costs. There can be no assurance that our property owner subsidiaries will be able to retain tenants in any of our properties upon the expiration of leases.
We may not be able to generate sufficient cash flow to meet our debt service obligations and to pay distributions on our common shares. 
Our ability to make payments on and to refinance our indebtedness, to make distributions on our common shares and to fund our operations, working capital and capital expenditures, depends on our ability to generate cash in the future. To a certain extent, our cash flow is subject to general economic, industry, financial, competitive, operating, legislative, regulatory and other factors, many of which are beyond our control. We cannot assure you that our business will generate sufficient cash flow from operations or that future sources of cash will be available to us in an amount sufficient to enable us to pay amounts due on our indebtedness or to make distributions on our common shares and fund our other liquidity needs. Additionally, if we incur additional indebtedness in connection with future acquisitions or development projects or for any other purpose, our debt service obligations could increase.
We may need to refinance all or a portion of our indebtedness on or before maturity. Our ability to refinance our indebtedness or obtain additional financing will depend on, among other things:
our financial condition and market conditions at the time; and
restrictions in the agreements governing our indebtedness.
As a result, we may not be able to refinance any of our indebtedness on commercially reasonable terms, or at all. If we do not generate sufficient cash flow from operations, and additional borrowings or refinancings or proceeds of asset sales or other sources of cash are not available to us, we may not have sufficient cash to enable us to meet all of our obligations. Accordingly, if we cannot service our indebtedness, we may have to take actions such as seeking additional equity, or delaying strategic acquisitions and alliances or capital expenditures, any of which could have a material adverse effect on our operations. We cannot assure you that we will be able to effect any of these actions on commercially reasonable terms, or at all.
Our inability to carry out our growth strategy could adversely affect our financial condition and results of operations.
Our growth strategy is based on the acquisition and development of additional properties and related assets. In the context of our business plan, “development” generally means an expansion or renovation of an existing property or the financing and/or acquisition of a newly constructed build-to-suit property. For newly constructed build-to-suit properties, we may (1) provide a developer with either a combination of financing for construction of a build-to-suit property or a commitment to acquire a property upon completion of construction of a build-to-suit property and commencement of rent from the tenant or (2) acquire a property subject to a lease and engage a developer to complete construction of a build-to-suit property as required by the lease.
Our plan to grow through the acquisition and development of new properties could be adversely affected by trends in the real estate and financing businesses. The consummation of any future acquisitions will be subject to satisfactory completion of an extensive valuation analysis and due diligence review and to the negotiation of definitive documentation. Our ability to implement our strategy may be impeded because we may have difficulty finding new properties and investments at attractive prices that meet our investment criteria, negotiating with new or existing tenants or securing acceptable financing. If we are unable to carry out our strategy, our financial condition and results of operations could be adversely affected. Acquisitions of additional properties entail the risk that investments will fail to perform in accordance with expectations, including operating and leasing expectations.

11


Redevelopment and new project development are subject to numerous risks, including risks of construction delays, cost overruns or force majeure events that may increase project costs, new project commencement risks such as the receipt of zoning, occupancy and other required governmental approvals and permits, and the incurrence of development costs in connection with projects that are not pursued to completion.
Some of our acquisitions and developments may be financed using the proceeds of periodic equity or debt offerings, lines of credit or other forms of secured or unsecured financing that may result in a risk that permanent financing for newly acquired projects might not be available or would be available only on disadvantageous terms. If permanent debt or equity financing is not available on acceptable terms to refinance acquisitions undertaken without permanent financing, further acquisitions may be curtailed, or cash available to satisfy our debt service obligations and distributions to shareholders may be adversely affected.
Acquisition activities may not produce expected results and may be affected by outside factors.
Acquisitions of commercial properties entail certain risks, such as (1) underwriting assumptions such as occupancy, rental rates and expenses may differ from estimates, (2) the properties may become subject to environmental liabilities that we were unaware of at the time we acquired the property despite any environmental testing, (3) we may have difficulty obtaining financing on acceptable terms or paying the operating expenses and debt service associated with acquired properties prior to sufficient occupancy and (4) projected exit strategies may not come to fruition due to a variety of factors such as market conditions at time of dispositions.
We may not be successful in identifying suitable real estate properties or other assets that meet our acquisition criteria. We may also fail to complete acquisitions or investments on satisfactory terms. Failure to identify or complete acquisitions could slow our growth, which could, in turn, have a material adverse effect on our financial condition and results of operations.
We face certain risks associated with our build-to-suit activities.
From time to time, we engage in, or provide capital to developers who are engaged in, build-to-suit activities. We face uncertainties, associated with a developer's performance and timely completion of a project, including the performance or timely completion by contractors and subcontractors. If a developer, contractor or subcontractor fails to perform, we may resort to legal action to compel performance, remove the developer or rescind the purchase or construction contract.
A developer's performance may also be affected or delayed by conditions beyond the developer's control. We attempt to mitigate such conditions by providing for penalties and related grace periods in the underlying lease.
We may incur additional risks when we make periodic progress payments or other advances to developers before completion of construction. These and other factors can result in increased costs of a project or loss of our investment. We also rely on third-party construction managers and/or engineers to monitor the construction activities.
We rely on rental income and expense projections and estimates of the fair market value of a property upon completion of construction when agreeing upon a purchase price at the time we acquire the property, which may be up to two years prior to the estimated date of completion. If our projections are inaccurate or markets change, we may pay more than the fair value of a property.
Our multi-tenant properties expose us to additional risks.
Our multi-tenant properties involve risks not typically encountered in real estate properties which are operated by a single tenant. The ownership of multi-tenant properties could expose us to the risk that a sufficient number of suitable tenants may not be found to enable the property to operate profitably and provide a return to us. This risk may be compounded by the failure of existing tenants to satisfy their obligations due to various factors. These risks, in turn, could cause a material adverse impact to our results of operations and business.
Multi-tenant properties are also subject to tenant turnover and fluctuation in occupancy rates, which could affect our operating results. Furthermore, multi-tenant properties expose us to the risk of potential "CAM slippage," which may occur when the actual cost of taxes, insurance and maintenance at the property exceeds the operating expenses paid by tenants and/or the amounts budgeted.

12


We face possible liability relating to environmental matters.
Under various federal, state and local environmental laws, statutes, ordinances, rules and regulations, as an owner of real property, our property owner subsidiaries may be liable for the costs of removal or remediation of certain hazardous or toxic substances at, on, in or under the properties in which we have an interest 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. These laws may impose liability without regard to whether we knew of, or were responsible for, the presence or disposal of those substances. This liability may be imposed on our property owner subsidiaries in connection with the activities of an operator of, or tenant at, the property. The cost of any required remediation, removal, fines or personal or property damages, and our liability therefore, could be significant and could exceed the value of the property and/or our aggregate assets. In addition, the presence of those substances, or the failure to properly dispose of or remove those substances, may adversely affect a property owner subsidiary's ability to sell or rent that property or to borrow using that property as collateral, which, in turn, would reduce our revenues and ability to satisfy our debt service obligations and to make distributions.
A property can also be adversely affected either through physical contamination or by virtue of an adverse effect upon value attributable to the migration of hazardous or toxic substances, or other contaminants that have or may have emanated from other properties. Although the tenants of the properties in which we have an interest are primarily responsible for any environmental damages and claims related to the leased premises, in the event of the bankruptcy or inability of any of the tenants of the properties in which we have an interest to satisfy any obligations with respect to the property leased to that tenant, our property owner subsidiary may be required to satisfy such obligations. In addition, we may be held directly liable for any such damages or claims irrespective of the provisions of any lease.
From time to time, in connection with the conduct of our business, our property owner subsidiaries authorize the preparation of Phase I environmental reports and, when recommended, Phase II environmental reports, with respect to their properties. There can be no assurance that these environmental reports will reveal all environmental conditions at the properties in which we have an interest or that the following will not expose us to material liability in the future:
the discovery of previously unknown environmental conditions;
changes in law;
activities of tenants; or
activities relating to properties in the vicinity of the properties in which we have an interest.
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 the tenants of the properties in which we have an interest, which could adversely affect our financial condition or results of operations.
From time to time we are involved in legal proceedings arising in the ordinary course of our business.
Legal proceedings arising in the ordinary course of our business require time and effort.  The outcomes of legal proceedings are subject to significant uncertainty. In the event that we are unsuccessful defending or prosecuting these proceedings, as applicable, we may incur a judgment or fail to realize an award of damages that could have an adverse effect on our financial condition.
Uninsured losses or a loss in excess of insured limits could adversely affect our financial condition.
We carry comprehensive liability, fire, extended coverage and rent loss insurance on certain of the properties in which we have an interest, with policy specifications and insured limits that we believe are customary for similar properties. However, with respect to those properties where the leases do not provide for abatement of rent under any circumstances, we generally do not maintain rent loss insurance. In addition, certain of our leases require the tenant to maintain all insurance on the property, and the failure of the tenant to maintain the proper insurance could adversely impact our investment in a property in the event of a loss. Furthermore, there are certain types of losses, such as losses resulting from wars, terrorism or certain acts of God, that generally are not insured because they are either uninsurable or not economically insurable. Should an uninsured loss or a loss in excess of insured limits occur, we could lose capital invested in a property as well as the anticipated future revenues from a property, while remaining obligated for any mortgage indebtedness or other financial obligations related to the property. Any loss of these types could adversely affect our financial condition and results of operations.

13


Future terrorist attacks, military conflicts and unrest in the Middle East could have a material adverse effect on general economic conditions, consumer confidence and market liquidity.
The types of terrorist attacks since 2001, on-going and future military conflicts and the continued unrest in the Middle East may affect commodity prices and interest rates, among other things. An increase in interest rates may increase our costs of borrowing, leading to a reduction in our earnings. An increase in the price of oil will also cause an increase in our operating costs, which may not be reimbursed by our tenants. Also, terrorist acts could result in significant damages to, or loss of, our properties or the value thereof.
We and the tenants of the properties in which we have an interest may be unable to obtain adequate insurance coverage on acceptable economic terms for losses resulting from acts of terrorism. Our lenders may require that we carry terrorism insurance even if we do not believe this insurance is necessary or cost effective. We may also be prohibited under the applicable lease from passing all or a portion of the cost of such insurance through to the tenant. Should an act of terrorism result in an uninsured loss or a loss in excess of insured limits, we could lose capital invested in a property as well as the anticipated future revenues from a property, while remaining obligated for any mortgage indebtedness or other financial obligations related to the property. Any loss of these types could adversely affect our financial condition.
Competition may adversely affect our ability to purchase properties.
There are numerous commercial developers, real estate companies, financial institutions, such as banks and insurance companies, and other investors, such as pension funds, private companies and individuals, with greater financial and other resources than we have that compete with us in seeking investments and tenants. Due to our focus on single-tenant properties located throughout the United States, and because most competitors are often locally and/or regionally focused, we do not always encounter the same competitors in each market. Our competitors include other REITs, financial institutions, insurance companies, pension funds, private companies and individuals. This competition may result in a higher cost for properties and lower returns and impact our ability to grow.
Our failure to maintain effective internal control over financial reporting could have a material adverse effect on our business, operating results and share price.
Section 404 of the Sarbanes-Oxley Act of 2002 requires annual management assessments of the effectiveness of our internal control over financial reporting. If we fail to maintain the adequacy of our internal control over financial reporting, as such standards may be modified, supplemented or amended from time to time, we will be required to disclose such failure and our financial reporting may not be relied on by most investors. Moreover, effective internal control, particularly related to revenue recognition, is necessary for us to produce reliable financial reports and to maintain our qualification as a REIT and is important in helping prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, our REIT qualification could be jeopardized, investors could lose confidence in our reported financial information and the trading price of our debt and equity securities could drop significantly.
We may have limited control over our joint venture investments.
Our joint venture investments involve risks not otherwise present for investments made solely by us, including the possibility that our partner might, at any time, become bankrupt, have different interests or goals than we do, or take action contrary to our expectations, its previous instructions or our instructions, requests, policies or objectives, including our policy with respect to maintaining our qualification as a REIT. Other risks of joint venture investments include impasses on decisions, such as a sale, because neither we nor our partner has full control over the joint venture. Also, there is no limitation under our organizational documents as to the amount of funds that may be invested in joint ventures.
Our ability to change our portfolio is limited because real estate investments are illiquid.
Investments in real estate are relatively illiquid and, therefore, our ability to change our portfolio promptly in response to changed conditions is limited. Our Board of Trustees may establish investment criteria or limitations as it deems appropriate, but currently does not limit the number or type of properties in which we may seek to invest or on the concentration of investments in any one geographic region.

14


Our reported financial results may be adversely affected by changes in accounting principles applicable to us and the tenants of properties in which we have an interest.
GAAP is subject to interpretation by various bodies formed to promulgate and interpret appropriate accounting principles such as the Financial Accounting Standards Board. A change in these principles or interpretations could have a significant effect on our reported financial results, could affect the reporting of transactions completed before the announcement of a change and could affect the business practices and decisions of the tenants of properties in which we have an interest.
We have engaged and may engage in hedging transactions that may limit gains or result in losses.
We have used derivatives to hedge certain of our liabilities and we currently have interest rate swap agreements in place. As of December 31, 2013, we have aggregate interest rate swap agreements on $406.0 million of borrowings. The counterparties of these arrangements are major financial institutions; however, we are exposed to credit risk in the event of non-performance by the counterparties. This has certain risks, including losses on a hedge position, which may reduce the return on our investments. Such losses may exceed the amount invested in such instruments. In addition, counterparties to a hedging arrangement could default on their obligations. We may have to pay certain costs, such as transaction fees or breakage costs, related to hedging transactions.
Our Board of Trustees may change our investment policy without shareholders' approval.
Subject to our fundamental investment policy to maintain our qualification as a REIT and invest in core assets, our Board of Trustees will determine our investment and financing policies, growth strategy and our debt, capitalization, distribution, acquisition, disposition and operating policies.
Our Board of Trustees may revise or amend these strategies and policies at any time without a vote by shareholders. Changes made by our Board of Trustees may not serve the interests of debt or equity security holders and could adversely affect our financial condition or results of operations, including our ability to satisfy our debt service obligations, distribute cash to shareholders and qualify as a REIT. Accordingly, shareholders' control over changes in our strategies and policies is limited to the election of trustees.
We are dependent upon our key personnel.
We are dependent upon key personnel whose continued service is not guaranteed. We are dependent on certain of our executive officers for business direction. We have employment agreements, which expire in January 2015, with each of T. Wilson Eglin, our Chief Executive Officer and President, E. Robert Roskind, our Chairman, Richard J. Rouse, our Vice Chairman and Chief Investment Officer, and Patrick Carroll, our Executive Vice President, Chief Financial Officer and Treasurer. However, an employment agreement does not itself prevent an employee from resigning.
Our inability to retain the services of any of our key personnel or our loss of any of their services could adversely impact our operations. We do not have key man life insurance coverage on our executive officers.
There may be conflicts of interest between E. Robert Roskind and us.
E. Robert Roskind, our Chairman, beneficially owns a significant number of OP units, and as a result, may face different and more adverse tax consequences than our other shareholders will if we sell our interests in certain properties or reduce mortgage indebtedness on certain properties. Our Chairman may, therefore, have different objectives than us and our debt and equity security holders regarding the appropriate pricing and timing of any sale of such properties or reduction of mortgage debt. In the event of an appearance of a conflict of interest and in accordance with our policy regarding related party transactions, Mr. Roskind is required to recuse himself from any decision making or seek a waiver of our Code of Business Conduct and Ethics, which will be reviewed by the non-conflicted members of our Board of Trustees or the Audit Committee of the Board of Trustees.
In addition, Mr. Roskind's employment agreement with us permits Mr. Roskind to spend approximately one third of his business time on the affairs of The LCP Group L.P. and its affiliates. While Mr. Roskind is required to prioritize his business time to address our needs ahead of The LCP Group L.P., Mr. Roskind and The LCP Group L.P. may engage in a wide variety of activities in the real estate business which may result in conflicts of interest with respect to matters affecting us.

15


Costs of complying with changes in governmental laws and regulations may adversely affect our results of operations.
We cannot predict what laws or regulations may be enacted in the future, how future laws or regulations will be administered or interpreted, or how future laws or regulations will affect our properties. Compliance with new laws or regulations, or stricter interpretation of existing laws, may require us or our tenants to incur significant expenditures, impose significant liability, restrict or prohibit business activities and could cause a material adverse effect on our results of operations.
Risks Related to Our Indebtedness
Our substantial indebtedness could adversely affect our financial condition and our ability to fulfill our obligations under the documents governing our unsecured indebtedness and otherwise adversely impact our business and growth prospects.
We have a substantial amount of debt. We are more leveraged than certain of our competitors. We have incurred, and may continue to incur, direct and indirect indebtedness in furtherance of our activities. Neither our declaration of trust nor any policy statement formerly adopted by our Board of Trustees limits either the total amount of indebtedness that we may incur, and accordingly, we could become even more highly leveraged. As of December 31, 2013, our total consolidated indebtedness was approximately $2.1 billion and we had approximately $443.4 million available for us to borrow under our principal credit agreement, subject to covenant compliance.
Our substantial indebtedness could adversely affect our financial condition and results of operations and have important consequences to us and our debt and equity security holders. For example, it could:
make it more difficult for us to satisfy our indebtedness and debt service obligations and adversely affect our ability to pay distributions;
increase our vulnerability to adverse economic and industry conditions;
require us to dedicate a substantial portion of our cash flow from operations to the payment of interest on and principal of our indebtedness, thereby reducing the availability of cash to fund working capital, capital expenditures and other general corporate purposes;
limit our ability to borrow money or sell stock to fund our development projects, working capital, capital expenditures, general corporate purposes or acquisitions;
restrict us from making strategic acquisitions or exploiting business opportunities;
place us at a disadvantage compared to competitors that have less debt; and
limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate.
In addition, the agreements that govern our current indebtedness contain, and the agreements that may govern any future indebtedness that we may incur may contain, financial and other restrictive covenants that will limit our ability to engage in activities that may be in our long-term best interests. Our failure to comply with those covenants could result in an event of default that, if not cured or waived, could result in the acceleration of our debt.
Market interest rates could have an adverse effect on our borrowing costs, profitability, our share price and the value of our fixed rate debt securities.
We have exposure to market risks relating to increases in interest rates due to our variable-rate debt. An increase in interest rates may increase our costs of borrowing on existing variable-rate indebtedness, leading to a reduction in our earnings. As of December 31, 2013, we had $48.0 million outstanding in consolidated variable-rate indebtedness that was not subject to an interest rate swap agreement. The level of our variable-rate indebtedness, along with the interest rate associated with such variable-rate indebtedness, may change in the future and materially affect our interest costs and earnings. In addition, our interest costs on our fixed-rate indebtedness may increase if we are required to refinance our fixed-rate indebtedness upon maturity at higher interest rates.

16


Furthermore, the public valuation of our common shares is related primarily to the earnings that we derive from rental income with respect to the properties in which we have an interest and not from the underlying appraised value of the properties themselves. As a result, interest rate fluctuations and capital market conditions can affect the market value of our common shares. For instance, if interest rates rise, the market price of our common shares may decrease because potential investors seeking a higher yield than they would receive from our common shares may sell our common shares in favor of higher yielding securities. In addition, fixed rate debt securities generally decline in value as market rates rise because the premium, if any, over market interest rates will decline.
Continued disruptions in the financial markets could affect our ability to obtain debt financing on reasonable terms and have other adverse effects on us.
In recent years, the United States credit markets have experienced significant dislocations and liquidity disruptions which have caused the spreads on prospective debt financings to widen considerably. These circumstances have materially impacted liquidity in the debt markets, making financing terms for borrowers less attractive, and in certain cases have resulted in the unavailability of certain types of debt financing. Continued uncertainty in the credit markets may negatively impact our ability to access additional debt financing on reasonable terms, which may negatively affect our ability to make acquisitions. A prolonged downturn in the credit markets may cause us to seek alternative sources of potentially less attractive financing and may require us to adjust our business plan accordingly. In addition, these factors may make it more difficult for us to sell properties or may adversely affect the price we receive for properties that we do sell, as prospective buyers may experience increased costs of capital or difficulties in obtaining capital. These events in the credit markets have also had an adverse effect on other financial markets in the United States, which may make it more difficult or costly for us to raise capital through the issuance of our common shares or preferred shares. These disruptions in the financial markets may have other adverse effects on us or the economy in general.
Covenants in certain of the agreements governing our debt could adversely affect our financial condition and our investment activities.
Our unsecured revolving credit facility, unsecured term loans and indentures governing our 4.25% Senior Notes and 6.00% Convertible Notes contain certain cross-default and cross-acceleration provisions as well as customary restrictions, requirements and other limitations on our ability to incur indebtedness and consummate mergers, consolidations or sales of all or substantially all of our assets. Our ability to borrow under both our unsecured revolving credit facility and our unsecured term loan is also subject to compliance with certain other covenants. In addition, failure to comply with our covenants could cause a default under the applicable debt instrument and we may then be required to repay such debt with capital from other sources. Under those circumstances other sources of capital may not be available to us or be available only on unattractive terms. Additionally, our ability to satisfy current or prospective lenders' insurance requirements may be adversely affected if lenders generally insist upon greater insurance coverage against acts of terrorism than is available to us in the marketplace or on commercially reasonable terms.
We rely on debt financing, including borrowings under our unsecured revolving credit facility, unsecured term loan, debt securities, and debt secured by individual properties, for working capital, including to finance our investment activities. If we are unable to obtain financing from these or other sources, or to refinance existing indebtedness upon maturity, our financial condition and results of operations could be adversely affected.
A downgrade in our credit ratings could materially adversely affect our business and financial condition.
The credit ratings assigned to our debt could change based upon, among other things, our results of operations and financial condition or the real estate industry generally. These ratings are subject to ongoing evaluation by credit rating agencies, and we cannot assure you that any rating will not be changed or withdrawn by a rating agency in the future if, in its judgment, circumstances warrant. Moreover, these credit ratings do not apply to our common shares and are not recommendations to buy, sell or hold any other securities. Any downgrade of our debt could materially adversely affect the market price of our debt securities and our common shares. If any of the credit rating agencies that have rated our debt downgrades or lowers its credit rating, or if any credit rating agency indicates that it has placed any such rating on a so-called “watch list” for a possible downgrading or lowering or otherwise indicates that its outlook for that rating is negative, it could also have a material adverse effect on our costs and availability of capital, which could in turn have a material adverse effect on our financial condition, results of operations, cash flows and our ability to satisfy our debt service obligations and to make dividends and distributions on our common shares and preferred shares. 

17


We face risks associated with refinancings.
A significant number of the properties in which we have an interest are subject to mortgage or other secured notes with balloon payments due at maturity. In addition, our corporate level borrowings require interest only payments with all principal due at maturity.
As of December 31, 2013, the consolidated scheduled balloon payments, for the next five calendar years, are as follows ($ in millions):
Year
 
Non-Recourse
Property-Specific
Balloon Payments
 
Corporate Recourse Balloon Payments
 
2014
 
$
93.0

 
$
0

 
2015
 
$
275.3

 
$
0

 
2016
 
$
148.6

 
$
0

 
2017
 
$
68.7

 
$
77.0

(1) 
2018
 
$
18.2

 
$
151.0

 
(1) Assumes 6.00% Convertible Notes due in January 2030 are put to us in 2017.
The ability to make the scheduled balloon payment on a non-recourse mortgage note will depend upon (1) in the event we determine to contribute capital, our cash balances and the amount available under our unsecured credit facility and (2) the property owner subsidiary's ability either to refinance the related mortgage debt or to sell the related property. If the property owner subsidiary is unable to refinance or sell the related property, the property may be conveyed to the lender through foreclosure or other means or the property owner subsidiary may declare bankruptcy.
We face risks associated with returning properties to lenders.
A significant number of the properties in which we have an interest are subject to non-recourse mortgages, which generally provide that a lender's only recourse upon an event of default is to foreclose on the property. During 2013, four properties in which we had an interest, were sold via deed-in-lieu of foreclosure or in foreclosure. As a result, we lost all of our interest in these properties and any future opportunities to re-tenant these properties. The loss of a significant number of properties to foreclosure or bankruptcy could adversely affect our financial condition and results of operations, relationships with lenders and ability to obtain additional financing in the future.
In addition, a lender may attempt to trigger a carve out to the non-recourse nature of a mortgage loan. To the extent a lender is successful, the ability of our property owner subsidiary to return the property to the lender may be inhibited and we may be liable for all or a portion of such loan.
Certain of our properties are cross-collateralized, and certain of our indebtedness is subject to cross-default and cross-acceleration provisions.
As of December 31, 2013, the mortgages on certain of our properties were cross-collateralized. To the extent that any of the properties in which we have an interest are cross-collateralized, any default by the property owner subsidiary under the mortgage note relating to one property will result in a default under the financing arrangements relating to any other property that also provides security for that mortgage note or is cross-collateralized with such mortgage note.
In addition, substantially all of our corporate level borrowings contain cross-default and/or cross-acceleration provisions, which may be triggered if we default on certain indebtedness in excess of certain thresholds.

18


Risks Related to Our Outstanding Debt Securities
The effective subordination of our unsecured indebtedness and any related guaranty may reduce amounts available for payment on our unsecured indebtedness and any related guaranty.
The holders of our secured debt may foreclose on the assets securing such debt, reducing the cash flow from the foreclosed property available for payment of unsecured debt and any related guaranty. The holders of any of our secured debt also would have priority over unsecured creditors in the event of a bankruptcy, liquidation or similar proceeding.
Not all of our subsidiaries are guarantors of our unsecured debt, assets of non-guarantor subsidiaries may not be available to make payments on our unsecured indebtedness and any related guarantees may be released in the future if certain events occur.
As of December 31, 2013, only we and/or LCIF are borrowers or a guarantor of our unsecured indebtedness.  In the event of a bankruptcy, liquidation or reorganization of any of our non-guarantor subsidiaries, holders of non-guarantor subsidiary debt, including trade creditors, will generally be entitled to payment of their claims from the assets of non-guarantor subsidiaries before any assets are made available for distribution to us or any of the subsidiary guarantors.
 In addition, any subsidiary guarantor, including LCIF, will be deemed released if such subsidiary guarantor’s obligations as a borrower or guarantor under our principal credit agreement terminates pursuant to the terms of our principal credit agreement or if our principal credit agreement is amended to remove certain or all of the subsidiary guarantors as borrowers or guarantors. To the extent any of our unsecured indebtedness is no longer guaranteed by any of our subsidiaries in the future, such debt will be our obligations exclusively. All of our assets are held through our operating partnership and our other subsidiaries. Consequently, our cash flow and our ability to meet our debt service obligations depends in large part upon the cash flow of our subsidiaries and the payment of funds by our subsidiaries to us in the form of distributions or otherwise.
Federal and state statutes allow courts, under specific circumstances, to void guarantees and require holders of certain of our unsecured indebtedness to return payments received from us or any related guarantor.
Under the federal bankruptcy law and comparable provisions of state fraudulent transfer laws, a guarantee could be voided, or claims in respect of a guarantee could be subordinated to all other debts of that guarantor if, among other things, the guarantor, at the time it incurred the debt evidenced by its guarantee:
issued the guarantee to delay, hinder or defraud present or future creditors; or
received less than reasonably equivalent value or fair consideration for the incurrence of such guarantee, and:
was insolvent or rendered insolvent by reason of such incurrence;
was engaged or about to engage in a business or transaction for which the guarantor’s remaining unencumbered assets constituted unreasonably small capital to carry on its business; or
intended to incur, or believed that it would incur, debts beyond its ability to pay the debts as they mature.
In addition, any payment by that guarantor pursuant to its guarantee could be voided and required to be returned to the guarantor, or to a fund for the benefit of the creditors of the guarantor.
The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, a guarantor would be considered insolvent if, at the time it incurred the debt:
the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all of its assets;
the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or
it could not pay its debts as they become due.

19


We cannot be sure as to the standards that a court would use to determine whether or not any guarantor was solvent at the relevant time, or, regardless of the standard that the court uses, that the issuance of such guaranty would not be voided or any such guaranty would not be subordinated to that of such guarantor’s other debt. If a case were to occur, any such guaranty could also be subject to the claim that, since the guaranty was incurred for our benefit, and only indirectly for the benefit of such guarantor, the obligations of such guarantor were incurred for less than fair consideration. A court could thus void the obligations under the guarantees or subordinate the guarantees to such guarantor’s other debt or take other action detrimental to holders of our unsecured indebtedness.
Risks Related to Our REIT Status
There can be no assurance that we will remain qualified as a REIT for federal income tax purposes.
We believe that we have met the requirements for qualification as a REIT for federal income tax purposes beginning with our taxable year ended December 31, 1993, and we intend to continue to meet these requirements in the future. However, qualification as a REIT involves the application of highly technical and complex provisions of the Code, for which there are only limited judicial or administrative interpretations. The Code provisions and income tax regulations applicable to REITs are more complex than those applicable to corporations. The determination of various factual matters and circumstances not entirely within our control may affect our ability to continue to qualify as a REIT. No assurance can be given that we have qualified or will remain qualified as a REIT. In addition, no assurance can be given that legislation, regulations, administrative interpretations or court decisions will not significantly change the requirements for qualification as a REIT or the federal income tax consequences of such qualification. If we do not qualify as a REIT, we would not be allowed a deduction for distributions to shareholders in computing our net taxable income. In addition, our income would be subject to tax at the regular corporate rates. We also could be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost. Cash available to satisfy our debt service obligations and distributions to our shareholders would be significantly reduced or suspended for each year in which we do not qualify as a REIT. In that event, we would not be required to continue to make distributions. Although we currently intend to continue to qualify as a REIT, it is possible that future economic, market, legal, tax or other considerations may cause us, without the consent of the shareholders, to revoke the REIT election or to otherwise take action that would result in disqualification.
We may be subject to the REIT prohibited transactions tax, which could result in significant U.S. federal income tax liability to us.
A REIT will incur a 100% tax on the net income from a prohibited transaction. Generally, a prohibited transaction includes a sale or disposition of property held primarily for sale to customers in the ordinary course of a trade or business. While we believe that the dispositions of our assets pursuant to our investment strategy should not be treated as prohibited transactions, whether a particular sale will be treated as a prohibited transaction depends on the underlying facts and circumstances. We have not sought and do not intend to seek a ruling from the Internal Revenue Service regarding any dispositions. Accordingly, there can be no assurance that our dispositions of such assets will not be subject to the prohibited transactions tax. If all or a significant portion of those dispositions were treated as prohibited transactions, we would incur a significant U.S. federal income tax liability, which could have a material adverse effect on our financial position, results of operations and cash flows.
Distribution requirements imposed by law limit our flexibility.
To maintain our status as a REIT for federal income tax purposes, we are generally required to distribute to our shareholders at least 90% of our taxable income for that calendar year. Our taxable income is determined without regard to any deduction for dividends paid and by excluding net capital gains. To the extent that we satisfy the distribution requirement but distribute less than 100% of our taxable income, we will be subject to federal corporate income tax on our undistributed income. In addition, we will incur a 4% nondeductible excise tax on the amount, if any, by which our distributions in any year are less than the sum of (i) 85% of our ordinary income for that year, (ii) 95% of our capital gain net income for that year and (iii) 100% of our undistributed taxable income from prior years. We intend to continue to make distributions to our shareholders to comply with the distribution requirements of the Code and to reduce exposure to federal income and nondeductible excise taxes. Differences in timing between the receipt of income and the payment of expenses in determining our taxable income and the effect of required debt amortization payments could require us to borrow funds on a short-term basis in order to meet the distribution requirements that are necessary to achieve the tax benefits associated with qualifying as a REIT.

20


Legislative or regulatory tax changes could have an adverse effect on us.
At any time, the federal income tax laws governing REITs or the administrative interpretations of those laws may be amended. Any of those new laws or interpretations may take effect retroactively and could adversely affect us or you as a debt and/or equity security holder. REIT dividends generally are not eligible for the reduced rates currently applicable to certain corporate dividends (unless attributable to dividends from taxable REIT subsidiaries and otherwise eligible for such rates). As a result, investment in non-REIT corporations may be relatively more attractive than investment in REITs. This could adversely affect the market price of our shares.
Risks Related to Our Shares
We may change the dividend policy for our common shares in the future.
We currently expect to pay an aggregate annual dividend of $0.66 per common share with respect to the 2014 taxable year. However, the decision to declare and pay dividends on our common shares in the future, as well as the timing, amount and composition of any such future dividends, will be at the sole discretion of our Board of Trustees in light of conditions then existing, including our earnings, financial condition, capital requirements, debt maturities, the availability of debt and equity capital, applicable REIT and legal restrictions and the general overall economic conditions and other factors. The actual dividend payable will be determined by our Board of Trustees based upon the circumstances at the time of declaration and the actual dividend payable may vary from such expected amount. Any change in our dividend policy could have a material adverse effect on the market price of our common shares.
Securities eligible for future sale may have adverse effects on our share price.
We have an unallocated universal shelf registration statement, pursuant to which we maintain an ATM program, and we also maintain a direct share purchase plan, pursuant to which we may issue additional common shares. In addition, after giving effect to the LCIF and LCIF II merger, as of December 31, 2013, an aggregate of approximately 5.8 million of our common shares were issuable upon the exercise of employee share options and upon the exchange of OP units. There were also approximately 4.2 million common shares underlying our 6.00% Convertible Notes as of December 31, 2013, which is subject to increase upon certain events, including if we pay a quarterly common share dividend in excess of $0.10 per common share. Depending upon the number of such securities issued, exercised or exchanged at one time, an issuance, exercise or exchange of such securities could be dilutive to or otherwise adversely affect the interests of holders of our common shares.
There are certain limitations on a third party's ability to acquire us or effectuate a change in our control.
Limitations imposed to protect our REIT status. In order to protect against the loss of our REIT status, among other purposes, our declaration of trust limits any shareholder from owning more than 9.8% in value of our outstanding equity shares, defined as common shares or preferred shares, subject to certain exceptions. These ownership limits may have the effect of precluding acquisition of control of us. Our Board of Trustees has granted a limited waiver of the ownership limits to BlackRock, Inc.
Severance payments under employment agreements. Substantial termination payments may be required to be paid under the provisions of employment agreements with certain of our executives upon a change of control and the subsequent termination of the executive. We have entered into employment agreements with four of our executive officers which provide that, upon the occurrence of a change in control of us (including a change in ownership of more than 50% of the total combined voting power of our outstanding securities, the sale of all or substantially all of our assets, dissolution, the acquisition, except from us, of 20% or more of our voting shares or a change in the majority of our Board of Trustees), if those executive officers are terminated without cause, as defined, those executive officers may be entitled to severance benefits based on their current annual base salaries and trailing average of recent annual cash bonuses as defined in the employment agreements. Accordingly, these payments may discourage a third party from acquiring us.
Our ability to issue additional shares. Our declaration of trust authorizes 400,000,000 common shares, 100,000,000 preferred shares and 500,000,000 excess shares. Our Board of Trustees is authorized to cause us to issue these shares without shareholder approval. Our Board of Trustees may establish the preferences and rights of any such class or series of additional shares, which could have the effect of delaying or preventing someone from taking control of us, even if a change in control were in shareholders' best interests. At December 31, 2013, in addition to common shares, we had outstanding 1,935,400 Series C Preferred Shares. Our Series C Preferred Shares include provisions, such as increases in dividend rates or adjustments to conversion rates, that may deter a change of control. The establishment and issuance of shares of our existing series of preferred shares or a future class or series of shares could make a change of control of us more difficult.

21


Maryland Business Combination Act. The Maryland General Corporation Law, as applicable to Maryland REITs, establishes special restrictions against “business combinations” between a Maryland REIT and “interested shareholders” or their affiliates unless an exemption is applicable. An interested shareholder includes a person who beneficially owns, and an affiliate or associate of the trust who, at any time within the two-year period prior to the date in question was the beneficial owner of, 10% or more of the voting power of our then-outstanding voting shares, but a person is not an interested shareholder if the Board of Trustees approved in advance the transaction by which he otherwise would have become an interested shareholder, which approval may be conditioned by the Board of Trustees. Among other things, Maryland law prohibits (for a period of five years) a merger and certain other transactions between a Maryland REIT and an interested shareholder, or an affiliate of an interested shareholder. The five-year period runs from the most recent date on which the interested shareholder became an interested shareholder. Thereafter, any such business combination must be recommended by the Board of Trustees and approved by two super-majority shareholder votes unless, among other conditions, the common shareholders receive a minimum price (as defined in the Maryland General Corporation Law) for their shares and the consideration is received in cash or in the same form as previously paid by the interested shareholder for its shares. The statute permits various exemptions from its provisions, including business combinations that are exempted by the Board of Trustees prior to the time that the interested shareholder becomes an interested shareholder. The business combination statute could have the effect of discouraging offers to acquire us and of increasing the difficulty of consummating any such offers, even if such acquisition would be in shareholders' best interests. In connection with the Newkirk Merger, Vornado Realty Trust, which we refer to as Vornado, was granted a limited exemption from the definition of “interested shareholder.”
Maryland Control Share Acquisition Act. Maryland law provides that a holder of “control shares” of a Maryland REIT acquired in a “control share acquisition” has no voting rights with respect to such shares except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter under the Maryland Control Share Acquisition Act. Shares owned by the acquirer, by our officers or by employees who are our trustees are excluded from shares entitled to vote on the matter. “Control Shares” means voting shares that, if aggregated with all other shares previously acquired by the acquirer or in respect of which the acquirer is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise voting power in electing trustees within one of the following ranges of voting power: one-tenth or more but less than one-third, one-third or more but less than a majority or a majority or more of all voting power. Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained shareholder approval. A “control share acquisition” means the acquisition of issued and outstanding control shares, subject to certain exceptions. If voting rights of control shares acquired in a control share acquisition are not approved at a shareholders meeting or if the acquiring person does not deliver an acquiring person statement as required under the statute, then, subject to certain conditions and limitations, the issuer may redeem any or all of the control shares for fair value, except those for which voting rights have been previously approved. If voting rights of such control shares are approved at a shareholders meeting and the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other shareholders may exercise appraisal rights. Any control shares acquired in a control share acquisition which are not exempt under our by-laws will be subject to the Maryland Control Share Acquisition Act. The Maryland Control Share Acquisition Act does not apply to shares acquired in a merger, consolidation or statutory share exchange if the Maryland REIT is a party to the transaction, or to acquisitions approved or exempted by the declaration of trust or by-laws of the Maryland REIT. Our amended and restated by-laws contain a provision exempting from the Maryland Control Share Acquisition Act any and all acquisitions by any person of our shares. We cannot assure you that this provision will not be amended or eliminated at any time in the future.
Limits on ownership of our capital shares may have the effect of delaying, deferring or preventing someone from taking control of us.
For us to qualify as a REIT for federal income tax purposes, among other requirements, not more than 50% of the value of our outstanding capital shares may be owned, directly or indirectly, by five or fewer individuals (as defined for federal income tax purposes to include certain entities) during the last half of each taxable year, and these capital shares must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable year (in each case, other than the first such year for which a REIT election is made). Our amended and restated declaration of trust includes certain restrictions regarding transfers of our capital shares and ownership limits.
Actual or constructive ownership of our capital shares in violation of the restrictions or in excess of the share ownership limits contained in our amended and restated declaration of trust would cause the violative transfer or ownership to be void or cause the shares to be transferred to a charitable trust and then sold to a person or entity who can own the shares without violating these limits. As a result, if a violative transfer were made, the recipient of the shares would not acquire any economic or voting rights attributable to the transferred shares. Additionally, the constructive ownership rules for these limits are complex, and groups of related individuals or entities may be deemed a single owner and consequently in violation of the share ownership limits.

22


However, these restrictions and limits may not be adequate in all cases to prevent the transfer of our capital shares in violation of the ownership limitations. The ownership limits discussed above may have the effect of delaying, deferring or preventing someone from taking control of us, even though a change of control could involve a premium price for the common shares or otherwise be in shareholders' best interests.
The trading price of our common shares has been, and may continue to be, subject to significant fluctuations.
Since January 1, 2011, the closing sale price of our common shares on the NYSE (composite) has ranged from $13.64 to $5.96 per share. The market price of our common shares may fluctuate in response to company-specific and general market events and developments, including those described in this Annual Report. In addition, our leverage may impact investor demand for our common shares, which could have a material effect on the market price of our common shares.

Item 1B. Unresolved Staff Comments

There are no unresolved written comments that were received from the SEC staff 180 days or more before the end of our fiscal year relating to our periodic or current reports under the Securities Exchange Act of 1934.


23


Item 2. Properties

Real Estate Portfolio

General. As of December 31, 2013, we had equity ownership interests in approximately 220 consolidated real estate properties containing approximately 40.7 million square feet of rentable space, which were approximately 97.6% leased based upon net rentable square feet. Generally, all properties in which we have an interest are held through at least one property owner subsidiary.

The properties in which we have an interest are generally subject to net or similar leases; however, in certain leases, the property owner subsidiaries are responsible for roof, structural and other repairs. In addition, certain of the properties in which we have an interest are subject to leases in which the landlord is responsible for a portion of the real estate taxes, utilities and general maintenance. Furthermore, the property owner subsidiaries are or will be responsible for all operating expenses of any vacant properties, and the property owner subsidiaries may be responsible for a significant amount of operating expenses of multi-tenant properties.

Ground Leases. Certain of the properties in which we have an interest are subject to long-term ground leases where either the tenant of the building on the property or a third party owns and leases the underlying land to the property owner subsidiary. Certain of these properties are economically owned through the holding of industrial revenue bonds primarily for real estate tax abatement purposes and as such, neither ground lease payments nor bond interest payments are made or received, respectively. For certain of the properties held under a ground lease, the ground lessee has a purchase option. At the end of these long-term ground leases, unless extended or the purchase option exercised, the land together with all improvements thereon reverts to the landowner.

Leverage. As of December 31, 2013, we had outstanding mortgages and notes payable and corporate level debt of approximately $2.1 billion with a weighted-average interest rate of approximately 4.7% and a weighted-average maturity of 7.0 years.

Property Charts. The following tables list our properties by type, their locations, the primary tenant/guarantor, the net rentable square feet, the expiration of the primary lease term and percent leased, as applicable, as of December 31, 2013.

24


LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
OFFICE
As of December 31, 2013
Property Location
City
State
Primary Tenant (Guarantor)
Net Rentable Square Feet
Current Lease Term Expiration
Percent Leased
12209 W. Markham St.
Little Rock
AR
Entergy Arkansas, Inc.
36,311

10/31/2015
100
%
2211 South 47th St.
Phoenix
AZ
Avnet, Inc.
176,402

2/28/2023
100
%
5201 West Barraque St.
Pine Bluff
AR
Entergy Arkansas Inc.
27,189

10/31/2015
100
%
19019 North 59th Ave.
Glendale
AZ
Honeywell International Inc.
252,300

7/15/2019
100
%
8555 South River Pkwy.
Tempe
AZ
DA Nanomaterials L.L.C. / Air Products and Chemicals, Inc.
95,133

6/30/2022
100
%
1440 East 15th St.
Tucson
AZ
CoxCom, LLC
28,591

7/31/2022
100
%
275 S. Valencia Ave.
Brea
CA
Bank of America, National Association
637,503

7/1/2023
100
%
26210 and 26220 Enterprise Court
Lake Forest
CA
Apria Healthcare, Inc. (Apria Healthcare Group, Inc.)
100,012

1/31/2022
100
%
3333 Coyote Hill Rd.
Palo Alto
CA
Xerox Corporation
202,000

12/14/2023
100
%
9201 E. Dry Creek Rd.
Centennial
CO
The Shaw Group, Inc.
128,500

9/30/2017
100
%
1110 Bayfield Dr.
Colorado Springs
CO
Honeywell International Inc.
166,575

11/30/2016
100
%
3940 South Teller St.
Lakewood
CO
MoneyGram Payment Systems, Inc.
68,165

3/31/2015
100
%
1315 West Century Dr.
Louisville
CO
Global Healthcare Exchange, Inc. (Global Healthcare Exchange, LLC)
106,877

4/30/2017
100
%
100 Barnes Rd.
Wallingford
CT
3M Company
44,400

6/30/2018
100
%
5600 Broken Sound Blvd.
Boca Raton
FL
Canon Solutions America, Inc. (Océ -USA Holding, Inc.)
143,290

2/14/2020
100
%
12600 Gateway Blvd.
Fort Myers
FL
Alta Resources Corp.
63,261

6/30/2023
100
%
550 Business Center Dr.
Lake Mary
FL
JPMorgan Chase Bank, National Association
125,920

9/30/2015
100
%
600 Business Center Dr.
Lake Mary
FL
JPMorgan Chase Bank, National Association
125,155

9/30/2015
100
%
9200 South Park Center Loop
Orlando
FL
Corinthian Colleges, Inc.
59,927

9/30/2020
100
%
Sandlake Rd./Kirkman Rd.
Orlando
FL
Lockheed Martin Corporation
184,000

4/30/2018
100
%
4400 Northcorp Pkwy.
Palm Beach Gardens
FL
Office Suites Plus Properties, Inc.
18,400

4/30/2014
100
%
10419 North 30th St.
Tampa
FL
Time Customer Service, Inc. (Time Incorporated)
132,981

6/30/2020
100
%
2223 N. Druid Hills Rd.
Atlanta
GA
Bank of America, N.A. (Bank of America Corporation)
6,260

12/31/2019
100
%
956 Ponce de Leon Ave.
Atlanta
GA
Bank of America, N.A. (Bank of America Corporation)
3,900

12/31/2019
100
%
4545 Chamblee-Dunwoody Rd.
Chamblee
GA
Bank of America, N.A. (Bank of America Corporation)
4,565

12/31/2019
100
%
201 W. Main St.
Cumming
GA
Bank of America, N.A. (Bank of America Corporation)
14,208

12/31/2019
100
%
1066 Main St.
Forest Park
GA
Bank of America, N.A. (Bank of America Corporation)
14,859

12/31/2019
100
%

25


LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
OFFICE
As of December 31, 2013
Property Location
City
State
Primary Tenant (Guarantor)
Net Rentable Square Feet
Current Lease Term Expiration
Percent Leased
825 Southway Dr.
Jonesboro
GA
Bank of America, N.A. (Bank of America Corporation)
4,894

12/31/2019
100
%
3500 N. Loop Court
McDonough
GA
Litton Loan Servicing LP
62,218

8/31/2018
100
%
1698 Mountain Industrial Blvd.
Stone Mountain
GA
Bank of America, N.A. (Bank of America Corporation)
5,704

12/31/2019
100
%
3265 E. Goldstone Dr.
Meridian
ID
VoiceStream PCS Holding, LLC / T-Mobile PCS Holdings, LLC (T-Mobile USA, Inc.)
77,484

6/28/2019
100
%
101 E. Erie St.
Chicago
IL
Draftfcb, Inc. (Interpublic Group of Companies, Inc.)
230,704

3/15/2014
91
%
850 & 950 Warrenville Rd.
Lisle
IL
National-Louis University
99,414

12/31/2019
100
%
231 N. Martingale Rd.
Schaumburg
IL
CEC Educational Services, LLC (Career Education Corporation)
317,198

12/31/2022
100
%
500 Jackson St.
Columbus
IN
Cummins, Inc.
390,100

7/31/2019
100
%
10300 Kincaid Dr.
Fishers
IN
Roche Diagnostics Operations, Inc.
193,000

1/31/2020
100
%
10475 Crosspoint Blvd.
Indianapolis
IN
John Wiley & Sons, Inc.
141,416

10/31/2019
97
%
9601 Renner Blvd.
Lenexa
KS
VoiceStream PCS II Corporation (T-Mobile USA, Inc.)
77,484

10/31/2019
100
%
5200 Metcalf Ave.
Overland Park
KS
Swiss Re America Holding Corporation / Westport Insurance Corporation
320,198

12/22/2018
100
%
4455 American Way
Baton Rouge
LA
New Cingular Wireless PCS, LLC
70,100

10/31/2017
100
%
147 Milk St.
Boston
MA
Harvard Vanguard Medical Associates, Inc.
52,337

12/31/2022
100
%
33 Commercial St.
Foxboro
MA
Invensys Systems, Inc. (Siebe, Inc.)
164,689

6/30/2015
100
%
First Park Dr.
Oakland
ME
Omnipoint Holdings, Inc. (T-Mobile USA, Inc.)
78,610

8/31/2020
100
%
26555 Northwestern Hwy.
Southfield
MI
Federal-Mogul Corporation
187,163

1/31/2015
100
%
9201 Stateline Rd.
Kansas City
MO
Swiss Re America Holding Corporation / Westport Insurance Corporation
155,925

4/1/2019
100
%
3943 Denny Ave.
Pascagoula
MS
Huntington Ingalls Incorporated
94,841

10/31/2018
100
%
700 US Hwy. Route 202-206
Bridgewater
NJ
Biovail Pharmaceuticals, Inc. (Valeant Pharmaceuticals International, Inc.)
115,558

10/31/2014
100
%
333 Mount Hope Ave.
Rockaway
NJ
BASF Corporation
95,500

9/30/2014
100
%
1415 Wyckoff Rd.
Wall
NJ
New Jersey Natural Gas Company
157,511

6/30/2021
100
%
29 S. Jefferson Rd.
Whippany
NJ
CAE SimuFlite, Inc. (CAE Inc.)
123,734

11/30/2021
100
%
180 S. Clinton St.
Rochester
NY
Frontier Corporation
226,000

12/31/2014
100
%
2000 Eastman Dr.
Milford
OH
Siemens Corporation
221,215

4/30/2016
100
%
500 Olde Worthington Rd.
Westerville
OH
InVentiv Communications, Inc.
97,000

9/30/2015
100
%

26


LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
OFFICE
As of December 31, 2013
Property Location
City
State
Primary Tenant (Guarantor)
Net Rentable Square Feet
Current Lease Term Expiration
Percent Leased
2999 Southwest 6th St.
Redmond
OR
VoiceStream PCS I, LLC / T-Mobile West Corporation (T-Mobile USA, Inc.)
77,484

1/31/2019
100
%
275 Technology Dr.
Canonsburg
PA
ANSYS, Inc.
107,872

12/31/2014
100
%
2550 Interstate Dr.
Harrisburg
PA
AT&T Services, Inc.
89,350

12/31/2018
69
%
1701 Market St.
Philadelphia
PA
Morgan, Lewis & Bockius LLP
304,037

1/31/2021
98
%
1460 Tobias Gadsen Blvd.
Charleston
SC
Hagemeyer North America, Inc.
50,076

7/8/2020
100
%
333 Three D Systems Circle
Rock Hill
SC
3D Systems Corporation
80,028

8/31/2021
100
%
420 Riverport Rd.
Kingport
TN
Kingsport Power Company
42,770

6/30/2018
100
%
2401 Cherahala Blvd.
Knoxville
TN
AdvancePCS, Inc. / CaremarkPCS, L.L.C.
59,748

5/31/2020
100
%
104 & 110 S. Front St.
Memphis
TN
Hnedak Bobo Group, Inc.
37,229

10/31/2016
100
%
3965 Airways Blvd.
Memphis
TN
Federal Express Corporation
521,286

6/19/2019
100
%
4001 International Pkwy.
Carrollton
TX
Motel 6 Operating, LP (Accor S.A.)
138,443

7/31/2015
100
%
4201 Marsh Ln.
Carrollton
TX
Carlson Restaurants Inc. (Carlson, Inc.)
130,000

11/30/2022
100
%
11511 Luna Rd.
Farmers Branch
TX
Haggar Clothing Co. (Texas Holding Clothing Corporation and Haggar Corp.)
180,507

4/30/2016
100
%
1200 Jupiter Rd.
Garland
TX
Raytheon Company
278,759

5/31/2016
100
%
2529 West Thorne Dr.
Houston
TX
Baker Hughes, Incorporated
65,500

9/27/2015
100
%
820 Gears Rd.
Houston
TX
Ricoh Americas Corporation
78,895

1/31/2018
100
%
1311 Broadfield Blvd.
Houston
TX
Transocean Offshore Deepwater Drilling, Inc. (Transocean Sedco Forex, Inc.)
155,040

3/31/2021
100
%
16676 Northchase Dr.
Houston
TX
Kerr-McGee Oil & Gas Corporation (Kerr-McGee Corporation)
101,111

7/31/2014
100
%
6555 Sierra Dr.
Irving
TX
TXU Energy Retail Company, LLC (Texas Competitive Electric Holdings Company, LLC)
247,254

3/31/2023
100
%
8900 Freeport Pkwy.
Irving
TX
Nissan Motor Acceptance Corporation (Nissan North America, Inc.)
268,445

3/31/2023
100
%
3711 San Gabriel
Mission
TX
VoiceStream PCS II Corporation / T-Mobile USA, Inc. / T-Mobile West Corporation
75,016

6/30/2015
100
%
6200 Northwest Pkwy.
San Antonio
TX
United HealthCare Services, Inc. / PacifiCare Healthsystems, LLC
142,500

11/30/2017
100
%
1600 Eberhardt Rd.
Temple
TX
Nextel of Texas, Inc. (Nextel Finance Company)
108,800

1/31/2016
100
%
2050 Roanoke Rd.
Westlake
TX
TD Auto Finance LLC
130,290

12/31/2016
100
%
100 East Shore Dr.
Glen Allen
VA
Capital One, National Association
68,118

12/31/2017
100
%

27


LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
OFFICE
As of December 31, 2013
Property Location
City
State
Primary Tenant (Guarantor)
Net Rentable Square Feet
Current Lease Term Expiration
Percent Leased
120 East Shore Dr.
Glen Allen
VA
Capital One Services, LLC
77,045

12/31/2018
100
%
400 Butler Farm Rd.
Hampton
VA
Nextel Communications of the Mid-Atlantic, Inc. (Nextel Finance Company)
100,632

12/31/2014
100
%
13651 McLearen Rd.
Herndon
VA
United States of America
159,644

5/30/2018
100
%
13775 McLearen Rd.
Herndon
VA
Orange Business Services U.S., Inc. (Equant N.V.)
136,617

7/31/2020
100
%
2800 Waterford Lake Dr.
Midlothian
VA
Alstom Power, Inc.
99,057

12/31/2021
100
%
1400 Northeast McWilliams Rd.
Bremerton
WA
Nextel West Corporation (Nextel Finance Company)
60,200

7/14/2016
100
%
22011 Southeast 51st St.
Issaquah
WA
Spacelabs Medical, Inc. / OSI Systems, Inc. (Instrumentarium Corporation)
95,600

12/14/2014
100
%
5150 220th Ave.
Issaquah
WA
Spacelabs Medical, Inc. / OSI Systems, Inc. (Instrumentarium Corporation)
106,944

12/14/2014
100
%
 
 
 
Office Total
11,100,978

 
99.5
%

The 2013 net effective annual cash rent for the office portfolio as of December 31, 2013 was $14.41 per square foot and the weighted-average remaining lease term was 5.0 years.

28


LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
LONG-TERM LEASES
As of December 31, 2013
Property Location
City
State
Primary Tenant (Guarantor)
Property Type
Net Rentable Square Feet
Current Lease Term Expiration
Percent Leased
3030 North 3rd St.
Phoenix
AZ
CopperPoint Mutual Insurance Company
Office
252,400

12/31/2029
100
%
2005 E. Technology Cir.
Tempe
AZ
Infocrossing, Inc.
Office
60,000

12/31/2025
100
%
9655 Maroon Circle
Englewood
CO
TriZetto Corporation
Office
166,912

4/30/2028
100
%
6277 Sea Harbor Dr.
Orlando
FL
Wyndham Vacation Ownership, Inc. (Wyndham Worldwide Corporation)
Office
359,514

10/31/2025
87
%
2910 Bush Lake Blvd.
Tampa
FL
BluePearl Holdings, LLC
Office
2,500

12/31/2033
100
%
3000 Bush Lake Blvd.
Tampa
FL
BluePearl Holdings, LLC
Office
17,000

12/31/2033
100
%
832 N. Westover Blvd.
Albany
GA
Gander Mountain Company
Retail
45,064

11/30/2028
100
%
2500 Patrick Henry Pkwy.
McDonough
GA
Georgia Power Company
Office
111,911

6/30/2025
100
%
11201 Renner Blvd.
Lenexa
KS
United States of America
Office
169,585

10/31/2027
100
%
10000 Business Blvd.
Dry Ridge
KY
Dana Light Axle Products, LLC (Dana Holding Corporation and Dana Limited)
Industrial
336,350

6/30/2025
100
%
730 North Black Branch Rd.
Elizabethtown
KY
Metalsa Structural Products, Inc. / Dana Structural Products, LLC (Dana Holding Corporation and Dana Limited)
Industrial
167,770

6/30/2025
100
%
750 North Black Branch Rd.
Elizabethtown
KY
Metalsa Structural Products, Inc. / Dana Structural Products, LLC (Dana Holding Corporation and Dana Limited)
Industrial
539,592

6/30/2025
100
%
301 Bill Bryan Rd.
Hopkinsville
KY
Metalsa Structural Products, Inc. / Dana Structural Products, LLC (Dana Holding Corporation and Dana Limited)
Industrial
424,904

6/30/2025
100
%
4010 Airpark Dr.
Owensboro
KY
Metalsa Structural Products, Inc. / Dana Structural Products, LLC (Dana Holding Corporation and Dana Limited)
Industrial
211,598

6/30/2025
100
%
5001 Greenwood Rd.
Shreveport
LA
Libbey Glass Inc. (Libbey Inc.)
Industrial
646,000

10/31/2026
100
%
70 Mechanic St.
Foxboro
MA
Invensys Systems, Inc. (Siebe, Inc.)
Office
251,924

6/30/2024
100
%
12000 & 12025 Tech Center Dr.
Livonia
MI
Kelsey-Hayes Company (TRW Automotive Inc.)
Office
180,230

12/31/2024
100
%
3902 Gene Field Rd.
St. Joseph
MO
Boehringer Ingelheim Vetmedica, Inc. (Boehringer Ingelheim USA Corporation)
Office
98,849

6/30/2027
100
%
459 Wingo Rd.
Byhalia
MS
Asics America Corporation (Asics Corporation)
Industrial
513,734

3/31/2026
100
%
671 Washburn Switch Rd.
Shelby
NC
Clearwater Paper Corporation
Industrial
673,518

5/31/2031
100
%
11707 Miracle Hills Dr.
Omaha
NE
Infocrossing, Inc.
Office
85,200

11/30/2025
100
%
1331 Capital Ave.
Omaha
NE
The Gavilon Group, LLC
Office
127,810

11/30/2033
100
%
121 Technology Dr.
Durham
NH
Heidelberg Americas, Inc. (Heidelberg Drackmaschinen AG) (2021) / Goss International America, Inc. (Goss International Corporation) (2026)
Industrial
500,500

3/30/2026
100
%

29


LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
LONG-TERM LEASES
As of December 31, 2013
Property Location
City
State
Primary Tenant (Guarantor)
Property Type
Net Rentable Square Feet
Current Lease Term Expiration
Percent Leased
6226 West Sahara Ave.
Las Vegas
NV
Nevada Power Company
Office
282,000

1/31/2029
100
%
29-01 Borden Ave. & 29-10 Hunters Point Ave.
Long Island City
NY
FedEx Ground Package Systems, Inc. (Federal Express Corporation)
Industrial
140,330

3/31/2028
100
%
8-12 Stone St.
New York
NY
Al-Stone Ground Tenant LLC
Land
N/A

10/31/2112
100
%
350 and 370-272 Canal St.
New York
NY
FC-Canal Ground Tenant LLC
Land
N/A

10/31/2112
100
%
309-313 West 39th St.
New York
NY
LG-39 Ground Tenant LLC
Land
N/A

10/31/2112
100
%
351 Chamber Dr.
Chillicothe
OH
The Kitchen Collection, Inc.
Industrial
475,218

6/30/2026
100
%
10590 Hamilton Ave.
Cincinnati
OH
The Hillman Group, Inc.
Industrial
264,598

12/31/2027
100
%
5500 New Albany Rd.
Columbus
OH
Evans, Mechwart, Hambleton & Tilton, Inc.
Office
104,807

12/29/2026
100
%
2221 Schrock Rd.
Columbus
OH
MS Consultants, Inc.
Office
42,290

7/6/2027
100
%
7005 Cochran Rd.
Glenwillow
OH
Royal Appliance Mfg. Co.
Industrial
458,000

7/31/2025
100
%
1700 Millrace Dr.
Eugene
OR
Oregon Research Institute / Educational Policy Improvement Center
Office
80,011

11/30/2027
100
%
250 Rittenhouse Circle
Bristol
PA
Northtec LLC (The Estée Lauder Companies Inc.)
Industrial
241,977

11/30/2026
100
%
25 Lakeview Dr.
Jessup
PA
TMG Health, Inc.
Office
150,000

8/7/2027
100
%
590 Ecology Ln.
Chester
SC
Boral Stone Products LLC (Boral Limited)
Industrial
420,597

7/14/2025
100
%
1362 Celebration Blvd.
Florence
SC
MED3000, Inc.
Office
32,000

2/14/2024
100
%
3476 Stateview Blvd.
Fort Mill
SC
Wells Fargo Bank, N.A.
Office
169,083

5/31/2024
100
%
3480 Stateview Blvd.
Fort Mill
SC
Wells Fargo Bank, N.A.
Office
169,218

5/31/2024
100
%
400 E. Stone Ave.
Greenville
SC
Canal Insurance Company
Office
128,041

12/31/2029
100
%
1409 Centerpoint Blvd.
Knoxville
TN
Alstom Power, Inc.
Office
84,404

10/31/2024
100
%
601 & 701 Experian Pkwy.
Allen
TX
Experian Information Solutions, Inc. / TRW, Inc. (Experian Holdings, Inc.)
Office
292,700

3/14/2025
100
%
1401 Nolan Ryan Pkwy.
Arlington
TX
Triumph Aerostructures, LLC (Triumph Group, Inc.)
Office
161,808

1/31/2025
69
%
10001 Richmond Ave.
Houston
TX
Baker Hughes Incorporated (2015) / Schlumberger Holdings Corp. (2025)
Office
554,385

9/30/2025
100
%
13930 Pike Rd.
Missouri City
TX
Vulcan Construction Materials, LP (Vulcan Materials Company)
Land/Infrastructure
N/A

4/30/2032
100
%
13901/14035 Industrial Rd.
Houston
TX
Industrial Terminals Management, L.L.C. (Maritime Holdings (Delaware) LLC)
Industrial
132,449

3/31/2038
100
%
19311 SH 249
Houston
TX
BluePearl Holdings, LLC
Office
12,622

12/31/2033
100
%

30


LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
LONG-TERM LEASES
As of December 31, 2013
Property Location
City
State
Primary Tenant (Guarantor)
Property Type
Net Rentable Square Feet
Current Lease Term Expiration
Percent Leased
25500 State Hwy. 249
Tomball
TX
Parkway Chevrolet, Inc. (Raymond Durdin & Jean W. Durdin)
Specialty
77,076

8/31/2026
100
%
175 Holt Garrison Pkwy.
Danville
VA
Home Depot USA, Inc.
Land
N/A

1/31/2029
100
%
9803 Edmonds Way
Edmonds
WA
Pudget Consumers Co-op d/b/a PCC Natural Markets
Retail
35,459

8/31/2028
100
%
2424 Alpine Rd.
Eau Claire
WI
Silver Spring Foods, Inc. (Huntsinger Farms, Inc.)
Industrial
159,000

4/30/2027
100
%
500 Kinetic Dr.
Huntington
WV
AMZN WVCS (Amazon.com, Inc.)
Office
68,693

11/30/2026
100
%
 
 
 
Long-Term Leases Total
 
10,679,631

 
99.1
%

The 2013 net effective annual cash rent for the long-term lease portfolio as of December 31, 2013 was $9.26 per square foot, excluding land investments, and the weighted-average remaining lease term was 24.4 years.

31


LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
INDUSTRIAL
As of December 31, 2013
Property Location
City
State
Primary Tenant (Guarantor)
Net Rentable Square Feet
Current Lease Term Expiration
Percent Leased
2415 U.S. Hwy 78 East
Moody
AL
CEVA Logistics U.S., Inc. (CEVA Logistics Holdings, B.V. / PostNL N.V.)
595,346

12/31/2017
100
%
109 Stevens St.
Jacksonville
FL
Wagner Industries, Inc.
168,800

1/31/2014
100
%
2455 Premier Dr.
Orlando
FL
Walgreen Co. / Walgreen Eastern Co.
205,016

3/31/2016
100
%
3102 Queen Palm Dr.
Tampa
FL
Time Customer Service, Inc. (Time Incorporated)
229,605

6/30/2020
100
%
359 Gateway Dr.
Lavonia
GA
TI Group Automotive Systems, LLC (TI Automotive Ltd.)
133,221

5/31/2020
100
%
1420 Greenwood Rd.
McDonough
GA
Versacold USA, Inc.
296,972

10/31/2017
100
%
3600 Army Post Rd.
Des Moines
IA
HP Enterprise Services, LLC
405,000

4/30/2017
100
%
7500 Chavenelle Rd.
Dubuque
IA
The McGraw-Hill Companies, Inc.
330,988

6/30/2017
100
%
2935 Van Vactor Dr.
Plymouth
IN
Bay Valley Foods, LLC
300,500

6/30/2015
100
%
3686 S. Central Ave.
Rockford
IL
Jacobson Warehouse Company, Inc. (Jacobson Distribution Company, Inc. and Jacobson Transportation Company, Inc.) / Pierce Packaging Co.
90,000

12/31/2016
100
%
749 Southrock Dr.
Rockford
IL
Jacobson Warehouse Company, Inc. (Jacobson Distribution Company, Inc. and Jacobson Transportation Company, Inc.)
150,000

12/31/2015
100
%
1901 Ragu Dr.
Owensboro
KY
Unilever Supply Chain, Inc. (Unilever United States, Inc.)
443,380

12/19/2020
100
%
5417 Campus Dr.
Shreveport
LA
The Tire Rack, Inc.
257,849

3/31/2022
100
%
113 Wells St.
North Berwick
ME
United Technologies Corporation
972,625

4/30/2019
100
%
6938 Elm Valley Dr.
Kalamazoo
MI
Dana Commercial Vehicle Products, LLC (Dana Holding Corporation and Dana Limited)
150,945

10/25/2021
100
%
904 Industrial Rd.
Marshall
MI
Tenneco Automotive Operating Company, Inc. (Tenneco, Inc.)
246,508

9/30/2018
100
%
1601 Pratt Ave.
Marshall
MI
Autocam Corporation
58,707

12/31/2023
100
%
43955 Plymouth Oaks Blvd.
Plymouth
MI
Tower Automotive Operations USA I, LLC / Tower Automotive Products Inc. (Tower Automotive, Inc.)
290,133

10/31/2017
100
%
7111 Crabb Rd.
Temperance
MI
Michelin North America, Inc.
744,570

7/31/2016
100
%
1700 47th Ave North
Minneapolis
MN
Owens Corning / Owens Corning Roofing and Asphalt, LLC
18,620

6/30/2015
100
%
7670 Hacks Cross Rd.
Olive Branch
MS
MAHLE Clevite, Inc. (MAHLE Industries, Incorporated)
268,104

2/28/2016
100
%
324 Industrial Park Rd.
Franklin
NC
SKF USA Inc.
72,868

12/31/2014
100
%
1133 Poplar Creek Rd.
Henderson
NC
Staples, Inc. / Corporate Express, Inc.
196,946

6/30/2016
100
%
250 Swathmore Ave.
High Point
NC
Steelcase Inc.
244,851

9/30/2017
100
%
2880 Kenny Biggs Rd.
Lumberton
NC
Quickie Manufacturing Corporation
423,280

11/30/2021
100
%

32


LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
INDUSTRIAL
As of December 31, 2013
Property Location
City
State
Primary Tenant (Guarantor)
Net Rentable Square Feet
Current Lease Term Expiration
Percent Leased
2203 Sherrill Dr.
Statesville
NC
Ozburn-Hessey Logistics, LLC (OHH Acquisition Corporation)
639,800

12/31/2017
100
%
736 Addison Rd.
Erwin
NY
Corning, Incorporated
408,000

11/30/2016
100
%
1650 - 1654 Williams Rd.
Columbus
OH
ODW Logistics, Inc.
772,450

6/30/2018
100
%
191 Arrowhead Dr.
Hebron
OH
Owens Corning Insulating Systems, LLC
250,410

5/31/2014
100
%
200 Arrowhead Dr.
Hebron
OH
Owens Corning Insulating Systems, LLC
400,522

5/31/2014
100
%
10345 Philipp Pkwy.
Streetsboro
OH
L'Oreal USA S/D, Inc. (L'Oreal USA, Inc.)
649,250

10/17/2019
100
%
50 Tyger River Dr.
Duncan
SC
Plastic Omnium Auto Exteriors, LLC
221,833

9/30/2018
100
%
101 Michelin Dr.
Laurens
SC
Michelin North America, Inc.
1,164,000

1/31/2017
100
%
477 Distribution Pkwy.
Collierville
TN
Federal Express Corporation / FedEx Techconnect, Inc.
126,213

5/31/2021
100
%
900 Industrial Blvd.
Crossville
TN
Dana Commercial Vehicle Products, LLC
222,200

9/30/2016
100
%
120 South East Pkwy Dr.
Franklin
TN
Essex Group, Inc. (United Technologies Corporation)
289,330

12/31/2018
100
%
3350 Miac Cove Rd.
Memphis
TN
Mimeo.com, Inc.
140,079

9/30/2020
77
%
3456 Meyers Ave.
Memphis
TN
Sears, Roebuck and Co. / Sears Logistics Services
780,000

2/28/2017
100
%
3820 Micro Dr.
Millington
TN
Ingram Micro L.P. (Ingram Micro Inc.)
701,819

9/30/2021
100
%
19500 Bulverde Rd.
San Antonio
TX
Elsevier STM Inc. (Reed Elsevier Inc.)
559,258

3/31/2016
100
%
2425 Hwy. 77 North
Waxahachie
TX
James Hardie Building Products, Inc. (James Hardie NV & James Hardie Industries NV)
335,610

3/31/2020
100
%
291 Park Center Dr.
Winchester
VA
Kraft Foods Global, Inc.
344,700

5/31/2016
100
%
 
 
 
Industrial Total
15,300,308

 
99.8
%

The 2013 net effective annual cash rent for the industrial portfolio as of December 31, 2013 was $3.62 per square foot and the weighted-average remaining lease term was 4.3 years.


33


LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
MULTI-TENANTED
As of December 31, 2013
Property Location
City
State
Primary Tenant (Guarantor)
Property Type
Net Rentable Square Feet
Current Lease Term Expiration
Percent Leased
13430 North Black Canyon Fwy.
Phoenix
AZ
Multi-tenanted
Office
138,940

Various
100
%
2706 Media Center Dr.
Los Angeles
CA
Sony Electronics Inc.
Office
83,252

8/31/2015
24
%
4200 Northcorp Pkwy.
Palm Beach Gardens
FL
Multi-tenanted
Office
95,065

Various
36
%
King St./1042 Fort St. Mall
Honolulu
HI
Multi-tenanted
Office
77,459

Various
69
%
100 Light St.
Baltimore
MD
Multi-tenanted
Office
476,459

Various
95
%
3165 McKelvey Rd.
Bridgeton
MO
BJC Health System
Office
51,065

12/31/2018
50
%
200 Lucent Ln.
Cary
NC
Vacant
Office
124,944

N/A
0
%
265 Lehigh St.
Allentown
PA
Pennsylvania School of Business, Inc.
Office
71,055

9/30/2021
32
%
2210 Enterprise Dr.
Florence
SC
Multi-tenanted
Office
176,557

Various
70
%
6050 Dana Way
Antioch
TN
Multi-tenanted
Industrial
672,629

Various
79
%
207 Mockingbird Ln.
Johnson City
TN
Multi-tenanted
Office
61,245

Various
46
%
1501 Nolan Ryan Pkwy.
Arlington
TX
Vacant
Office
74,739

N/A
0
%
810 Gears Rd.
Houston
TX
Vacant
Office
78,895

N/A
0
%
140 East Shore Dr.
Glen Allen
VA
Multi-tenanted
Office
76,885

Various
92
%
 
 
 
Multi-Tenanted Total
 
2,259,189

 
66.4
%

The 2013 net effective annual cash rent for the multi-tenant portfolio as of December 31, 2013 was $10.13 per square foot and the weighted-average remaining lease term was 7.0 years.

34


LEXINGTON CONSOLIDATED PORTFOLIO
PROPERTY CHART
RETAIL/SPECIALTY
As of December 31, 2013
Property Location
City
State
Primary Tenant (Guarantor)
Net Rentable Square Feet
Current Lease Term Expiration
Percent Leased
255 Northgate Dr.
Manteca
CA
Kmart Corporation
107,489

12/31/2018
100
%
12080 Carmel Mountain Rd.
San Diego
CA
Kmart Corporation
107,210

12/31/2018
100
%
10340 U.S. 19
Port Richey
FL
Kingswere Furniture, LLC
53,820

10/31/2018
100
%
1150 W. Carl Sandburg Dr.
Galesburg
IL
Kmart Corporation
94,970

12/31/2018
100
%
5104 North Franklin Rd.
Lawrence
IN
Marsh Supermarkets, Inc. / Marsh Supermarkets, LLC
28,721

10/31/2018
100
%
24th St. West & St. John's Ave.
Billings
MT
Safeway, Inc.
40,800

5/31/2015
100
%
US 221 & Hospital Rd.
Jefferson
NC
Food Lion, LLC / Delhaize America, Inc.
34,555

2/28/2023
100
%
291 Talbert Blvd.
Lexington
NC
Food Lion, LLC / Delhaize America, Inc.
23,000

2/28/2018
100
%
835 Julian Ave.
Thomasville
NC
Mighty Dollar, LLC
23,767

9/30/2018
100
%
130 Midland Ave.
Port Chester
NY
A&P Real Property, LLC (Pathmark Stores, Inc.)
59,000

10/31/2018
100
%
21082 Pioneer Plaza Dr.
Watertown
NY
Kmart Corporation
120,727

12/31/2018
100
%
4831 Whipple Avenue N.W.
Canton
OH
Best Buy Co., Inc.
46,350

2/26/2018
100
%
1084 East Second St.
Franklin
OH
Marsh Supermarkets, LLC / Crystal Food Services, LLC
29,119

10/31/2014
100
%
5350 Leavitt Rd.
Lorain
OH
Kmart Corporation
193,193

12/31/2018
100
%
N.E.C. 45th St/Lee Blvd.
Lawton
OK
Associated Wholesale Grocers, Inc. / Safeway, Inc.
30,757

3/31/2019
100
%
11411 N. Kelly Ave.
Oklahoma City
OK
American Golf Corporation
13,924

12/31/2017
100
%
6910 S. Memorial Hwy.
Tulsa
OK
Toys "R" Us, Inc. / Toys “R” Us-Delaware, Inc.
43,123

5/31/2016
100
%
S. Carolina 52/52 Bypass
Moncks Corner
SC
Vacant
23,000

N/A
0
%
1600 E. 23rd St.
Chattanooga
TN
BI- LO, LLC
42,130

6/30/2017
100
%
1053 Mineral Springs Rd.
Paris
TN
The Kroger Co.
31,170

7/1/2018
100
%
1610 South Westmoreland Ave.
Dallas
TX
Malone's Food Stores, Ltd.
70,910

3/31/2017
100
%
3211 W. Beverly St.
Staunton
VA
Food Lion, LLC / Delhaize America, Inc.
23,000

2/28/2018
100
%
97 Seneca Trail
Fairlea
WV
Kmart Corporation
90,933

12/31/2018
100
%
 
 
 
Retail/Specialty Total
1,331,668

 
98.3
%
 
 
 
Consolidated Portfolio Grand Total
40,671,774

 
97.6
%
The 2013 net effective annual cash rent for the retail/specialty portfolio as of December 31, 2013 was $4.38 per square foot and the weighted-average remaining lease term was 4.4 years.
The 2013 net effective annual cash rent for the consolidated portfolio as of December 31, 2013 was $8.43 per square foot, excluding land investments, and the weighted-average remaining lease term was 11.2 years.

35


LEXINGTON
NON-CONSOLIDATED PORTFOLIO PROPERTY
CHART
As of December 31, 2013
Property Location
City
State
Primary Tenant (Guarantor)
Property Type
Net Rentable Square Feet
Current Lease Term Expiration
Percent Leased
Route 64 W. & Junction 333
Russellville
AR
Entergy Arkansas Inc. / Entergy Services, Inc.
Office
191,950

5/9/2016
100
%
607 & 611 Lumsden Professional Ct.
Brandon
FL
BluePearl Holdings, LLC
Office
8,500

10/31/2033
100
%
4525 Ulmerton Rd.
Clearwater
FL
BluePearl Holdings, LLC
Office
3,000

10/31/2033
100
%
100 Gander Way
Palm Beach Gardens
FL
Gander Mountain Company
Retail
120,000

3/31/2028
100
%
455 Abernathy Rd.
Atlanta
GA
BluePearl Holdings, LLC
Office
32,000

10/31/2033
100
%
820 Frontage Rd.
Northfield
IL
BluePearl Holdings, LLC
Office
14,000

10/31/2033
100
%
101 E. Washington Blvd.
Fort Wayne
IN
American Electric Power
Office
299,516

10/31/2016
100
%
201-215 N. Charles St.
Baltimore
MD
201 NC Leasehold LLC
Land
N/A

8/31/2112
100
%
29080 Inkster Rd.
Southfield
MI
BluePearl Holdings, LLC
Office
38,000

10/31/2033
100
%
4126 Parkcard Rd.
Ann Arbor
MI
BluePearl Holdings, LLC
Office
3,500

10/31/2033
100
%
3201 Quail Springs Pkwy.
Oklahoma City
OK
AT&T Corp. / AT&T Services, Inc. / New Cingular Wireless Services, Inc.
Office
128,500

11/30/2015
100
%
18839 McKay Blvd.
Humble
TX
Triumph Rehabilitation Hospital of Northeast Houston, LLC (RehabCare Group, Inc.)
Specialty
55,646

1/31/2029
100
%
 
 
 
Total
 
894,612

 
100
%
The 2013 net effective annual rent for the non-consolidated portfolio as of December 31, 2013 was $18.93 per square foot, excluding land investments, and the weighted-average remaining lease term was 11.2 years.

The following chart sets forth certain information regarding lease expirations for the next ten years in our consolidated portfolio:
Year
Number of
Lease Expirations
Square Feet
Annual Rent ($000)
Percentage of
Annual Rent
2014
41
2,286,287

 
$
24,845

 
6.9
%
 
2015
35
1,743,569

 
 
20,645

 
5.8
%
 
2016
31
4,398,234

 
 
28,533

 
8.0
%
 
2017
20
5,403,121

 
 
25,105

 
7.0
%
 
2018
35
3,836,386

 
 
30,972

 
8.6
%
 
2019
30
3,624,092

 
 
31,896

 
8.9
%
 
2020
15
2,180,475

 
 
20,639

 
5.8
%
 
2021
14
2,841,597

 
 
28,120

 
7.9
%
 
2022
7
981,120

 
 
9,581

 
2.7
%
 
2023
8
1,644,731

 
 
21,899

 
6.1
%
 

The following chart sets forth the 2013 annual GAAP base rent ($000) based on the credit rating of our consolidated tenants at December 31, 2013(1):
 
GAAP Base Rent
 
Percentage
Investment Grade
$
167,292

 
45.6
%
Non-investment Grade
$
49,466

 
13.5
%
Unrated
$
149,760

 
40.9
%
 
$
366,518

 
100.0
%
(1) Credit ratings are based upon either tenant, guarantor or parent/sponsor. Generally, all multi-tenant assets are included in unrated. See Item 1A “Risk Factors”, above.

36


Item 3. Legal Proceedings

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

Item 4. Mine Safety Disclosures

Not applicable.


37


PART II.
Item 5. Market For Registrant's Common Equity, Related Stockholder Matters And Issuer Purchases of Equity Securities

Market Information. Our common shares are listed for trading on the NYSE under the symbol “LXP”. The following table sets forth the high and low sales prices as reported by the NYSE (composite) for our common shares for each of the periods indicated below:
For the Quarters Ended:
 
High
 
Low
December 31, 2013
 
$
11.98

 
$
10.05

September 30, 2013
 
12.98

 
11.09

June 30, 2013
 
13.82

 
11.08

March 31, 2013
 
12.19

 
10.47

December 31, 2012
 
10.50

 
8.84

September 30, 2012
 
10.29

 
8.44

June 30, 2012
 
9.19

 
7.82

March 31, 2012
 
9.34

 
7.34

The per common share closing price on the NYSE (composite) was $11.21 on February 25, 2014.

Holders. As of February 25, 2014, we had approximately 3,454 common shareholders of record.

Dividends. Since our predecessor's formation in 1993, we have made quarterly distributions without interruption.

The common share dividends paid in each quarter for the last five years are as follows:
Quarters Ended
 
2013
 
2012
 
2011
 
2010
 
2009
March 31,
 
$
0.15

 
$
0.125

 
$
0.115

 
$
0.10

 
$
0.18

 
June 30,
 
$
0.15

 
$
0.125

 
$
0.115

 
$
0.10

 
$
0.18

(1)
September 30,
 
$
0.15

 
$
0.125

 
$
0.115

 
$
0.10

 
$
0.18

(1)
December 31,
 
$
0.15

 
$
0.150

 
$
0.115

 
$
0.10

 
$
0.18

(1)
_________________________________________
(1) Aggregate dividend paid 90% in our common shares and 10% in cash.

During 2009, we issued an aggregate 13,304,198 common shares in lieu of cash payments of common share dividends during the quarters ended June 30, September 30 and December 31, 2009 in accordance with Internal Revenue Service Revenue Procedure 2008-68.

While we intend to continue paying regular quarterly dividends to holders of our common shares, the authorization of future dividend declarations will be at the discretion of our Board of Trustees and will depend on our actual cash flow, our financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Code and such other factors as our Board of Trustees deems relevant. The actual cash flow available to pay dividends will be affected by a number of factors, including, among others, the risks discussed under “Risk Factors” in Part I, Item 1A and “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of this Annual Report.

We do not believe that the financial covenants contained in our debt instruments will have any adverse impact on our ability to pay dividends in the normal course of business to our common and preferred shareholders or to distribute amounts necessary to maintain our qualification as a REIT.

Direct Share Purchase Plan. We maintain a direct share purchase plan, which has two components, (i) a dividend reinvestment component and (ii) a direct share purchase component. Under the dividend reinvestment component, common shareholders and holders of OP units may elect to automatically reinvest their dividends and distributions to purchase our common shares free of commissions and other charges. We currently offer a 5.0% discount on the common shares reinvested under the dividend reinvestment component. Under the direct share purchase component, our current investors and new investors can make optional cash purchases of our common shares. The administrator of the plan, Computershare Trust Company, N.A., purchases common shares for the accounts of the participants under the plan, at our discretion, either directly from us, on the open market or through a combination of those two options. In 2013, 2012 and 2011, we issued approximately 1.5 million, 1.0 million and 1.1 million common shares, respectively, under the plan, raising net proceeds of $16.5 million, $8.5 million and $8.4 million, respectively.

38


ATM Program. In January 2013, we implemented an ATM program, under which we may, from time to time, sell up to $100.0 million in common shares over the term of the program. As of December 31, 2013, we issued 3,409,927 common shares under this ATM program at a weighted-average issue price of $10.82 per common share, generating gross proceeds of approximately $36.9 million. We used the proceeds from the ATM program for general working capital, which included investments and to repay indebtedness. As of December 31, 2013, we had approximately $63.1 million in common shares available for issuance under the ATM program.

Equity Compensation Plan Information. The following table sets forth certain information, as of December 31, 2013, with respect to our 2011 Equity-Based Award Plan under which our equity securities are authorized for issuance as compensation.
 
 
Number of securities to be issued upon exercise of outstanding options,
warrants and rights
 
 
 
 
Weighted-average
exercise price of
outstanding options,
warrants and rights
 
Number of securities
remaining available for future issuance under equity compensation plans (excluding
securities reflected in
column (a))
Plan Category
 
(a)
 
(b)
 
(c)
Equity compensation plans approved by security holders
 
1,955,701

 
$
6.95

 
3,486,552

Equity compensation plans not approved by security holders
 

 

 

Total
 
1,955,701

 
$
6.95

 
3,486,552


Recent Sales of Unregistered Securities.

As previously disclosed, we issued an aggregate 7.9 million common shares upon conversion of $54.9 million original principal amount of our 6.00% Convertible Notes at the then stated conversion rates during 2013.

In June 2013, we issued $250.0 million aggregate principal amount of 4.25% Senior Notes in a private offering in reliance on the exemptions from registration provided by Section 4(2) of the Securities Act and Rule 144A and Regulation S under the Securities Act.

Share Repurchase Program.

The following table summarizes common shares/OP units that were authorized to be repurchased during the fourth quarter of 2013 pursuant to publicly announced repurchase plans:

Period
 


Total number of
shares/units
purchased
 


Average price
paid per
share/unit ($)
 
Total number of
shares/units
purchased as part of
publicly announced
plans or programs (1)
 
Maximum number of
shares/units that may yet
be purchased under
the plans or programs (1)
October 1-31, 2013
 

 
$

 

 
1,056,731

November 1-30, 2013
 

 

 

 
1,056,731

December 1-31, 2013
 

 

 

 
1,056,731

Fourth Quarter 2013
 

 
$

 

 
1,056,731

_________________________
(1) Share repurchase plan most recently announced on December 17, 2007, which plan has no expiration date.

On December 30, 2013, LCIF II was merged with and into LCIF and 170,193 OP units were converted into the right to receive approximately $2.0 million in aggregate cash.

In addition, during 2013, we repurchased and retired all outstanding (approximately 6.2 million) Series D Preferred Shares for an aggregate purchase price of approximately $155.6 million, including accrued and unpaid dividends.

39


Item 6. Selected Financial Data

The following sets forth our selected consolidated financial data as of and for each of the years in the five-year period ended December 31, 2013. The selected consolidated financial data should be read in conjunction with Item 7 “Management's Discussion and Analysis of Financial Condition and Results of Operations” below, and the Consolidated Financial Statements and the related notes set forth in Item 8 “Financial Statements and Supplementary Data”, below. ($000's, except per share data)

 
2013
 
2012
 
2011
 
2010
 
2009
Total gross revenues
$
398,440

 
$
330,180

 
$
292,298

 
$
285,268

 
$
298,013

Expenses applicable to revenues
(236,467
)
 
(208,339
)
 
(200,107
)
 
(194,579
)
 
(196,224
)
Interest and amortization expense
(91,271
)
 
(93,677
)
 
(101,401
)
 
(111,322
)
 
(114,387
)
Income (loss) from continuing operations
(14,148
)
 
182,994

 
(2,132
)
 
(5,805
)
 
(133,290
)
Total discontinued operations
18,011

 
1,644

 
(87,646
)
 
(31,605
)
 
(77,982
)
Net income (loss)
3,863

 
184,638

 
(89,778
)
 
(37,410
)
 
(211,272
)
Net income (loss) attributable to Lexington Realty Trust
1,630

 
180,316

 
(79,584
)
 
(32,960
)
 
(210,152
)
Net income (loss) attributable to common shareholders
(14,089
)
 
156,821

 
(103,721
)
 
(58,096
)
 
(242,876
)
Income (loss) from continuing operations per common share - basic
(0.15
)
 
0.99

 
(0.20
)
 
(0.26
)
 
(1.52
)
Income (loss) from discontinued operations - basic
0.08

 

 
(0.48
)
 
(0.18
)
 
(0.70
)
Net income (loss) per common share - basic
(0.07
)
 
0.99

 
(0.68
)
 
(0.44
)
 
(2.22
)
Income (loss) from continuing operations per common share - diluted
(0.15
)
 
0.93

 
(0.20
)
 
(0.26
)
 
(1.52
)
Income (loss) from discontinued operations per common share - diluted
0.08

 

 
(0.48
)
 
(0.18
)
 
(0.70
)
Net income (loss) per common share - diluted
(0.07
)
 
0.93

 
(0.68
)
 
(0.44
)
 
(2.22
)
Cash dividends declared per common share
0.615

 
0.55

 
0.47

 
0.415

 
0.64

Net cash provided by operating activities
206,304

 
163,810

 
180,137

 
164,751

 
159,307

Net cash provided by (used in) investing activities
(597,583
)
 
(134,103
)
 
(24,813
)
 
(24,783
)
 
111,967

Net cash provided by (used in) financing activities
434,516

 
(59,394
)
 
(144,257
)
 
(141,189
)
 
(285,207
)
Ratio of earnings to combined fixed charges and preferred dividends
N/A

 
N/A

 
N/A

 
N/A

 
N/A

Real estate assets, net, including real estate - intangible assets
3,425,420

 
3,165,085

 
2,746,976

 
2,977,100

 
3,282,561

Investments in and advances to non-consolidated entities
18,442

 
27,129

 
39,330

 
21,252

 
4,757

Total assets
3,772,281

 
3,418,203

 
3,026,820

 
3,283,768

 
3,528,617

Mortgages, notes payable, credit facility and term loans, including discontinued operations
2,055,807

 
1,878,208

 
1,662,375

 
1,778,077

 
2,072,738

Shareholders' equity
1,515,738

 
1,306,730

 
1,111,846

 
1,228,928

 
1,157,441

Total equity
1,539,483

 
1,333,165

 
1,170,203

 
1,304,901

 
1,246,008

Preferred share liquidation preference
96,770

 
251,770

 
322,032

 
338,760

 
338,760

_________
N/A - Ratio is below 1.0, deficit of $21,974, $21,196, $47,935, $47,046 and $12,703 exists at December 31, 2013, 2012, 2011, 2010 and 2009, respectively.

All years have been adjusted to reflect the impact of operating properties sold during the years ended December 31, 2013, 2012, 2011, 2010 and 2009, which are reflected in discontinued operations in the Consolidated Statements of Operations.


40


Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
In this discussion, we have included statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts but instead represent only our beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside our control. These statements may relate to our future plans and objectives, among other things. By identifying these statements for you in this manner, we are alerting you to the possibility that our actual results may differ, possibly materially, from the anticipated results indicated in these forward-looking statements. Important factors that could cause our results to differ, possibly materially, from those indicated in the forward-looking statements include, among others, those discussed above in “Risk Factors” in Part I, Item 1A of this Annual Report and “Cautionary Statements Concerning Forward-Looking Statements” in Part I, of this Annual Report.
Table of Contents
Page
Overview
Liquidity
Capital Resources
Results of Operations
Off-Balance Sheet Arrangements
Contractual Obligations

Overview
General. We are a Maryland REIT that owns a diversified portfolio of equity and debt investments in single-tenant properties and land. A majority of these properties and all land interests are subject to net or similar leases, where the tenant bears all or substantially all of the costs, including cost increases, for real estate taxes, utilities, insurance and ordinary repairs.
As of December 31, 2013, we had equity ownership interests in approximately 220 consolidated real estate properties, located in 41 states and encompassing approximately 40.7 million square feet, approximately 97.6% of which was leased.
Our revenues and cash flows are generated predominantly from property rent receipts. As a result, growth in revenues and cash flows is directly correlated to our ability to (1) acquire income producing real estate assets and (2) re-lease properties that are vacant, or may become vacant, at favorable rental rates.
In recent years, we have seen an increase in acquisition opportunities and strengthening in the availability of capital. However, our business continues to be subject to the uncertainty and volatility in the capital markets, which may (1) lead to a need to preserve capital, generate additional liquidity and improve our overall financial flexibility, (2) limit our ability to find attractive financing, (3) create challenges in acquiring suitable property investments and (4) impact tenant demand with respect to future space needs. However, it is difficult for us to predict when, or if, these conditions may arise.
In an effort to diversify our risk, we invest across the United States in properties leased to tenants in various industries, including finance/insurance, technology, service, energy and transportation/logistics. However, industry declines, to the extent we have concentration, and general economic declines could negatively impact our results of operations and cash flows.
Portfolio Management. During the year ended December 31, 2013, we generated approximately 30.1% of our rental revenue from leases ten years or longer, compared to approximately 23.1% for the year ended December 31, 2012. Our objective is to generate at least half of our rental revenue from leases ten years or longer, which we expect to achieve primarily through capital recycling of assets with shorter-term leases and acquiring new investments with leases longer than ten years.
At December 31, 2013, our rental revenue from single-tenant leases scheduled to expire through 2018 has been reduced to approximately 36.9% compared to approximately 44.7% at December 31, 2012. We believe we no longer have concentrated risk of lease rollover in any one year. In addition, we extended our weighted-average lease term on a cash basis to approximately 11.2 years at December 31, 2013 compared to approximately 6.9 years at December 31, 2012. This was primarily due to our acquisition volume in 2013, including the addition of long-term land leases to our portfolio. However, certain of the long-term leases have tenant purchase options.

41


In recent years, demand for space in the suburban office market has not been as strong as demand for space in the industrial market. We believe this is due to a continuing trend of downsizing of corporate office employment. In addition, industrial assets generally require less capital to maintain and re-lease than office assets. As of December 31, 2013, the ratio of rental revenue from office assets to the rental revenue from industrial assets, each with lease terms shorter than ten years, was approximately 3:1. Our objective is to manage this ratio down to approximately 2:1 over the next several years, which we expect to accomplish partly through sales of office assets and growing our portfolio. While we continue to see challenges in the suburban office market, we believe vacant office values have increased over the last several years. This has allowed us to dispose of certain vacant properties at higher than expected values.

Business Strategy. Our current business strategy is focused on enhancing our cash flow growth and stability, growing our portfolio with attractive long-term leased investments and maintaining a strong and flexible balance sheet to allow us to act on opportunities as they arise. See “Business” in Part I, Item 1 of this Annual Report for a detailed description of our current business strategy.
We believe a positive impact continues to result from our business strategy. In 2013, we increased our net assets by approximately $206.3 million as compared to 2012. In 2013, we completed real estate acquisitions/build-to-suit transactions, including joint venture investments, for an aggregate capitalized cost of approximately $590.4 million and reduced our weighted-average interest rate on outstanding consolidated indebtedness by approximately 74 basis points primarily by refinancing higher interest rate debt. Since 2008, we reduced our overall consolidated indebtedness by $338.6 million primarily (1) by repurchasing our debt and (2) through the sale, transfer or other disposition of properties to third parties and lenders. Our secured debt decreased to approximately $1.2 billion at December 31, 2013 compared to $1.7 billion at December 31, 2012, which was 23.9% and 36.5% of total gross assets, respectively. Our objective is to lower our secured debt to approximately 20% or less of total gross assets. We expect to achieve this objective by satisfying secured debt as it matures and acquiring new investments without secured debt. We believe this will also allow us to further lower our financing costs and improve our cash flow, financial flexibility and credit metrics.
We expect our business strategy will enable us to continue to improve our liquidity and strengthen our overall balance sheet. We believe liquidity and a strong balance sheet will allow us to take advantage of attractive investment opportunities as they arise, which will create meaningful shareholder value.
Investment Trends. Making investments in income producing single-tenant net-leased real estate assets is one of our primary focuses. The challenge we face is finding investments that will provide an attractive return without compromising our real estate underwriting criteria. We believe we have access to acquisition opportunities due to our relationships with developers, brokers, corporate users and sellers. When we acquire real estate assets, we look for commercial real estate assets or land interests subject to a long-term net-lease which have one or more of the following characteristics (1) a credit-worthy tenant, (2) adaptability to a variety of users, including multi-tenant use, (3) an attractive geographic location, and (4) the potential for capital appreciation.
Our acquisition volume consists primarily of sale-leaseback transactions and build-to-suit transactions whereby we (1) provide capital to developers who are engaged in build-to-suit transactions and/or commit to purchase the property from developers upon completion or (2) acquire a property subject to a single-tenant net-lease and engage a developer to complete construction of a build-to-suit property as required by the lease. We believe these arrangements offer developers and/or tenants access to capital while simultaneously providing us with attractive risk-adjusted projected yields.
We generally mitigate our cost exposure by requiring purchase agreements, development agreements and/or loan agreements to specify a maximum price and/or loan commitment amount prior to our investment. Cost overruns are generally the responsibility of the developer, or in some cases the prospective tenant. To further mitigate risk, we believe we perform stringent underwriting procedures such as, among other items, (1) requiring payment and performance bonds and/or completion guarantees from developers and/or contractors; (2) engaging third-party construction consultants and/or engineers to monitor construction progress and quality; (3) only hiring developers with a proven history of performance; (4) requiring developers to provide financial statements and in some cases personal guarantees from principals; (5) obtaining and reviewing detailed plans and construction budgets; (6) requiring a long-term tenant lease to be executed prior to funding; and (7) securing liens on the property to the extent of construction funding.

42


The following is a summary of our property acquisitions and build-to-suit transactions for the year ended December 31, 2013:
Property Acquisitions
Location