NEW YORK, Nov. 04, 2021 (GLOBE NEWSWIRE) — Lexington Realty Trust (NYSE:LXP), a real estate investment trust focused on single-tenant industrial real estate investments, today announced results for the third quarter ended September 30, 2021.
Third Quarter 2021 Highlights
- Recorded Net Income attributable to common shareholders of $5.0 million, or $0.02 per diluted common share.
- Generated Adjusted Company Funds From Operations available to all equityholders and unitholders – diluted (“Adjusted Company FFO”) of $53.6 million, or $0.19 per diluted common share.
- Completed 2.6 million square feet of new leases and lease extensions, raising industrial Base and Cash Base Rents by 6.5% and 4.7%, respectively.
- Acquired five warehouse/distribution properties for an aggregate cost of $134.8 million.
- Commenced development of five warehouse/distribution properties comprising an aggregate of 2.8 million square feet in the Greenville-Spartanburg, South Carolina and Phoenix, Arizona markets.
- Invested an aggregate of $57.3 million in eight ongoing development projects.
- Disposed of three non-industrial properties for an aggregate gross disposition price of $35.4 million.
- Issued $400.0 million aggregate principal amount of 2.375% senior notes due 2031 and redeemed all $188.8 million aggregate principal amount of 4.25% senior notes due 2023.
- Increased industrial portfolio to 94.9% of gross book value of real estate assets, excluding held for sale assets.
Subsequent Events
- Acquired three industrial properties for an aggregate cost of $76.4 million.
- Signed a seven-year lease for entire newly-constructed 908,000 square foot warehouse/distribution facility in Atlanta, Georgia.
T. Wilson Eglin, Chairman and Chief Executive Officer of LXP, commented, “Through our continued investment activity, we have substantially completed our portfolio transformation to an industrial REIT with approximately 95% of our gross assets now industrial. Tenant demand and market fundamentals continue to be strong as evidenced by our outstanding leasing results and the expansion of our development pipeline. We also increased our dividend significantly, which reflects the quality of our transformed portfolio, our confidence in underlying market rent growth across all our warehouse and distribution markets and commitment to growing distributions to our shareholders.”
FINANCIAL RESULTS
Revenues
For the quarter ended September 30, 2021, total gross revenues were $83.4 million, compared with total gross revenues of $84.5 million for the quarter ended September 30, 2020. The slight decrease is primarily attributable to property sales, partially offset by acquisitions.
Net Income Attributable to Common Shareholders
For the quarter ended September 30, 2021, net income attributable to common shareholders was $5.0 million, or $0.02 per diluted share, compared with net income attributable to common shareholders for the quarter ended September 30, 2020 of $40.3 million, or $0.15 per diluted share.
Adjusted Company FFO
For the quarter ended September 30, 2021, LXP generated Adjusted Company FFO of $53.6 million, or $0.19 per diluted share, compared to Adjusted Company FFO for the quarter ended September 30, 2020 of $53.8 million, or $0.19 per diluted share.
Dividends/Distributions
LXP announced that it declared a regular quarterly common share/unit dividend/distribution for the quarter ending December 31, 2021 of $0.12 per common share/unit payable on January 18, 2022 to common shareholders/unitholders of record as of December 31, 2021. This represents an increase of 11.6% from the previous quarterly per common share/unit dividend/distribution and equates to an annualized increase of $0.05 per common share/unit and an annualized dividend/distribution of $0.48 per common share/unit, subject to and assuming future declarations.
LXP also announced that it declared a cash dividend of $0.8125 per share of Series C Cumulative Convertible Preferred Stock (“Series C Preferred”) for the quarter ending December 31, 2021, which is expected to be paid on February 15, 2022 to shareholders of record as of January 31, 2022.
As previously announced, during the third quarter of 2021, LXP declared a regular quarterly common share/unit dividend/distribution for the quarter ended September 30, 2021 of $0.1075 per common share/unit, which was paid on October 15, 2021 to common shareholders/unitholders of record as of September 30, 2021. LXP also declared a cash dividend of $0.8125 per share on its Series C Preferred for the quarter ended September 30, 2021, which is expected to be paid on November 15, 2021 to Series C Preferred Shareholders of record as of October 29, 2021.
TRANSACTION ACTIVITY
| ACQUISITION TRANSACTIONS | |||||||||||||
| Property Type | Market | Sq. Ft. | Initial Basis ($000) |
Approximate Lease Term (Yrs)(1) |
% Leased at Acquisition |
||||||||
| Warehouse/distribution | Greenville-Spartanburg, SC | 275,400 | $ | 29,421 | 8 | 100% | |||||||
| Warehouse/distribution | Greenville-Spartanburg, SC | 235,600 | 26,106 | 9 | 100% | ||||||||
| Warehouse/distribution(2) | Greenville-Spartanburg, SC | 195,000 | 18,394 | N/A | —% | ||||||||
| Warehouse/distribution | Greenville-Spartanburg, SC | 327,360 | 31,646 | 5 | 100% | ||||||||
| Warehouse/distribution | Columbus, OH | 292,730 | 29,265 | 8 | 100% | ||||||||
| 1,326,090 | $ | 134,832 | |||||||||||
(1) Represents the lease term of the primary tenant.
(2) Subsequent to acquisition, property fully leased for 5.5 years.
The above properties were acquired at aggregate weighted-average GAAP and Cash estimated stabilized capitalization rates of 4.9% and 4.6%, respectively. Year to date total 2021 acquisition activity, including development projects placed into service, was $410.6 million at aggregate weighted-average GAAP and Cash estimated stabilized capitalization rates of 5.0% and 4.9%, respectively.
| DEVELOPMENT PROJECTS | ||||||||||||||||||||||
| Project (% owned) | # of Buildings |
Market | Estimated Sq. Ft. |
Estimated Project Cost ($000) |
GAAP Investment Balance as of 9/30/2021 ($000) |
LXP Amount Funded as of 9/30/2021 ($000) |
Estimated Building Completion Date |
Approx. Lease Term |
% Leased as of 9/30/2021 |
|||||||||||||
| Consolidated: | ||||||||||||||||||||||
| Fairburn (87%)(1)(2) | 1 | Atlanta, GA | 907,675 | $ | 53,800 | $ | 47,551 | $ | 43,900 | 2Q 2021 | TBD | — | % | |||||||||
| KeHE Distributors, BTS (100%) | 1 | Phoenix, AZ | 468,182 | 72,000 | 60,044 | 52,329 | 4Q 2021 | 15 | 100 | % | ||||||||||||
| Mt. Comfort (80%)(1) | 1 | Indianapolis, IN | 1,053,360 | 60,300 | 15,808 | 9,912 | 2Q 2022 | TBD | — | % | ||||||||||||
| Smith Farms (90%)(1) | 3 | Greenville-Spartanburg, SC | 1,939,524 | 132,800 | 17,609 | 13,396 | 2Q 2022 | TBD | — | % | ||||||||||||
| Cotton 303 (93%)(1) | 2 | Phoenix, AZ | 880,678 | 84,200 | 23,636 | 20,339 | 2Q 2022 | TBD | — | % | ||||||||||||
| Ocala (80%)(1) | 1 | Central Florida | 1,085,280 | 80,900 | 21,056 | 15,093 | 3Q 2022 | TBD | — | % | ||||||||||||
| $ | 484,000 | $ | 185,704 | $ | 154,969 | |||||||||||||||||
| Non-consolidated: | ||||||||||||||||||||||
| ETNA Park 70 (90%)(3) | TBD | Columbus, OH | TBD | TBD | $ | 12,857 | $ | 13,321 | TBD | TBD | — | % | ||||||||||
| ETNA Park 70 East (90%)(3) | TBD | Columbus, OH | TBD | TBD | 7,979 | 8,176 | TBD | TBD | — | % | ||||||||||||
| $ | 20,836 | $ | 21,497 | |||||||||||||||||||
- Estimated project cost includes estimated tenant improvements and leasing costs and excludes potential developer partner promote.
- Base building substantially completed during the second quarter of 2021. Property not in service as of September 30, 2021. Subsequent to September 30, 2021, signed a seven-year lease for all 907,675 square feet.
- Plans and specifications have not been completed and the estimated square footage, project cost and completion date cannot be determined.
| PROPERTY DISPOSITIONS | ||||||||||||||||
| Location | Property Type | Gross Disposition Price ($000) |
Annualized Net Income(1) ($000) |
Annualized NOI(1) ($000) |
Month of Disposition |
% Leased | ||||||||||
| Mission, TX(2) | Office | $ | 10,426 | $ | 963 | $ | 1,033 | July | 100 | % | ||||||
| Venice, FL(2) | Other | 19,261 | 1,744 | 1,423 | July | 100 | % | |||||||||
| Baltimore, MD(2) | Other | 5,682 | 305 | 309 | July | 100 | % | |||||||||
| $ | 35,369 | $ | 3,012 | $ | 2,765 | |||||||||||
1. Generally, quarterly period prior to sale, annualized.
2. Sales price partially satisfied via the redemption of 1,598,906 operating partnership units.
As of September 30, 2021, total consolidated 2021 property disposition volume was $218.8 million and resulted in aggregate weighted-average GAAP and Cash capitalization rates of 7.6% and 7.9%, respectively.
| LEASING | ||||||||||
| LEASE EXTENSIONS | ||||||||||
| Location | Prior Term |
Lease Expiration Date |
Sq. Ft. | |||||||
| Industrial | ||||||||||
| 1 | Antioch | TN | 08/2021 | 09/2026 | 67,200 | |||||
| 2 | Shreveport | LA | 03/2022 | 08/2027 | 257,849 | |||||
| 2 | Total industrial lease extensions | 325,049 | ||||||||
| NEW LEASES | ||||||||||
| Location | Lease Expiration Date | Sq. Ft. | ||||||||
| Industrial | ||||||||||
| 1 | Monroe | OH | 02/2032 | 143,664 | ||||||
| 2 | Statesville | NC | 10/2026 | 639,800 | ||||||
| 3 | Lakeland(1) | FL | 01/2027 | 68,420 | ||||||
| 4 | Olive Branch | MS | 08/2024 | 1,170,218 | ||||||
| 5 | Kalamazoo | MI | 10/2028 | 9,431 | ||||||
| 6 | Kalamazoo | MI | 10/2023 | 9,981 | ||||||
| 7 | Duncan(1) | SC | 01/2027 | 195,000 | ||||||
| 7 | Total new industrial leases | 2,236,514 | ||||||||
| 9 | TOTAL NEW AND EXTENDED INDUSTRIAL LEASES | 2,561,563 | ||||||||
1. No prior leases. These tenants filled first generation space that was acquired vacant in 2021.
As of September 30, 2021, LXP’s Stabilized Portfolio was 98.9% leased. A total of 5.2 million square feet of new and extended leases were entered into during 2021 as of September 30, 2021. Base and Cash Base Rents increased by 12.2% and 6.0%, respectively, for extended industrial leases and by 8.4% and 8.2%, respectively, for new industrial leases (as compared to prior tenants’ rent, if any).
BALANCE SHEET/CAPITAL MARKETS
During the third quarter of 2021, LXP issued an aggregate of 4,928,551 common shares, a majority of which were previously sold on a forward basis, and received $55.8 million of aggregate net proceeds. As of September 30, 2021, LXP had an aggregate of $240.5 million under unsettled forward common share sales contracts, including outstanding contracts under its underwritten offering and ATM program, which are subject to adjustment in accordance with the forward sales contracts.
During the third quarter of 2021, LXP issued $400.0 million aggregated principal amount of 2.375% Senior Notes due 2031 at an issuance price of 99.758% of the principal amount. LXP used the net proceeds and cash on hand to fully redeem the $188.8 million aggregate principal amount of 4.25% Senior Notes due 2023 and fully repay the outstanding balance of $215.0 million on the revolving credit facility.
As of September 30, 2021, LXP ended the quarter with net debt to Adjusted EBITDA at 5.4x.
2021 EARNINGS GUIDANCE
LXP now estimates that its net income attributable to common shareholders for the year ended December 31, 2021 will be within an expected range of $0.52 to $0.55 per diluted common share.
Additionally, LXP is increasing the low and high end of its Adjusted Company FFO guidance range for the year ended December 31, 2021 by a penny, to a revised range of $0.75 to $0.78 per diluted common share. This guidance is forward looking, excludes the impact of certain items and is based on current expectations.
Lexington Realty Trust (NYSE: LXP) is a publicly traded real estate investment trust (REIT) focused on single-tenant industrial real estate investments across the United States. LXP seeks to expand its industrial portfolio through acquisitions, build-to-suit transactions, sale-leaseback transactions, development projects and other transactions. For more information, including LXP’s Quarterly Supplemental Information package, or to follow LXP on social media, visit www.lxp.com.
