Annual Report 2021
report.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
For the transition period from _________________ to ________________
Commission File Number 1-12386
LXP INDUSTRIAL TRUST
(Exact name of registrant as specified in its charter)
Maryland
(State or other jurisdiction of
incorporation of organization)
13-3717318
(I.R.S. Employer
Identification No.)
One Penn Plaza, Suite 4015, New York, NY 10119-4015
(Address of principal executive offices) (zip code)
(212) 692-7200
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Shares of beneficial interest, par value $0.0001 per share,
classified as Common Stock
6.50% Series C Cumulative Convertible Preferred
Stock, par value $0.0001 per share
Trading Symbol
LXP
Name of each exchange on which registered
New York Stock Exchange
LXPPRC
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 ☒ No ☐
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 ☐ No ☒
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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 ☒ No ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its
audit report. Yes ☒ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an
emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in
Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐
Non-accelerated filer
☐
Smaller reporting company
☐ Emerging growth company ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of the shares of beneficial interest, par value $0.0001 per share, classified as common stock (“common shares”) of LXP Industrial
Trust held by non-affiliates as of June 30, 2021, which was the last business day of the registrant's most recently completed second fiscal quarter, was
$3,249,694,342 based on the closing price of the common shares on the New York Stock Exchange as of that date, which was $11.95 per share.
Number of common shares outstanding as of February 22, 2022 was 285,653,041.
Certain information contained in the Definitive Proxy Statement for LXP Industrial Trust's Annual Meeting of Shareholders, or an amendment on Form 10-K/
A, 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.
DOCUMENTS INCORPORATED BY REFERENCE
TABLE OF CONTENTS
Description
PART I
ITEM 1.
Business
ITEM 1A.
Risk Factors
ITEM 1B.
Unresolved Staff Comments
ITEM 2.
ITEM 3.
ITEM 4.
ITEM 5.
ITEM 6.
ITEM 7.
Properties
Legal Proceedings
Mine Safety Disclosures
PART II
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
[Reserved]
Management's Discussion and Analysis of Financial Condition and Results of Operations
ITEM 7A.
Quantitative and Qualitative Disclosures about Market Risk
ITEM 8.
Financial Statements and Supplementary Data
ITEM 9.
ITEM 9A.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
ITEM 9B.
Other Information
ITEM 10.
ITEM 11.
ITEM 12.
ITEM 13.
ITEM 14.
PART III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
PART IV
ITEM 15.
Exhibits, Financial Statement Schedules
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Introduction
Unless stated otherwise or the context otherwise requires, the “Company,” the “Trust,” “LXP ,” “we,” “our,” and “us” refer
collectively to LXP Industrial Trust and its consolidated subsidiaries. All of the Company's interests in properties are held, and
all property operating activities are conducted, through special purpose entities, which we refer to as property owner
subsidiaries or lender subsidiaries and are separate and distinct legal entities, but in some instances are consolidated for
financial statement purposes and/or disregarded for income tax purposes.
When we use the term “REIT,” we mean real estate investment trust. All references to 2021, 2020 and 2019 refer to our
fiscal years ended December 31, 2021, December 31, 2020 and December 31, 2019, respectively.
When we use the term “GAAP,” we mean United States generally accepted accounting principles in effect from time to
time.
When we use the term “common shares,” we mean our shares of beneficial interest par value $0.0001, classified as
common stock. When we use the term “Series C Preferred Shares,” we mean our beneficial interest classified as 6.50% Series C
Convertible Preferred Stock.
When we use the term “base rent,” we mean GAAP rental revenue and ancillary income, but excluding billed tenant
reimbursements and lease termination income.
The terms “FFO,” “Adjusted Company FFO,” and “NOI” are defined in “Management's Discussion and Analysis of
Financial Condition and Results of Operations” in Part II, Item 7 of this Annual Report.
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 under “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
PART I.
We are a Maryland real estate investment trust, qualified as a REIT for federal income tax purposes, focused on single-
tenant warehouse/distribution real estate investments. A majority of our properties 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. However, certain leases provide that the landlord is responsible for certain operating expenses.
As of December 31, 2021, we had equity ownership interests in approximately 121 consolidated real estate properties,
located in 23 states and containing an aggregate of approximately 54.8 million square feet of space, approximately 97.4% of
which was leased.
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History and Current Corporate Structure
We became a Maryland REIT in December 1997. Prior to that, our predecessor was organized in the state of Delaware in
October 1993 upon the rollup of two partnerships focused on the investment in diversified net-leased assets. Primarily all of our
business is conducted through wholly-owned subsidiaries, but we conduct a portion of our business through an operating
partnership subsidiary, Lepercq Corporate Income Fund L.P., which we refer to as LCIF.
Historically, LCIF enabled us to acquire properties by issuing limited partner interests in LCIF, which we refer to as OP
units, to sellers of property, as a form of consideration in exchange for the property. The outstanding OP units not held by LXP
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. As of December 31, 2021, there were approximately 0.8 million OP units outstanding, other
than OP units held by LXP, which were convertible into approximately 0.9 million common shares, assuming redemptions are
satisfied entirely with common shares.
Since December 31, 2015 through December 31, 2021, we transitioned our portfolio from approximately 16% warehouse/
distribution assets to approximately 98% warehouse/distribution assets. As of December 31, 2021, our portfolio consisted of 109
warehouse/distribution facilities and 12 other properties.
On February 8, 2022, we announced that our Board of Trustees initiated a review of our strategic alternatives.
Strategy
General. Our business strategy is focused on growing our portfolio with attractive warehouse/distribution properties in target
markets while maintaining a strong flexible balance sheet to allow us to act on opportunities as they arise. Going forward, we
intend to continue acquiring warehouse/distribution properties with strong income and growth characteristics that we believe
provide an optimal balance of income and capital appreciation.
We provide capital to merchant builders by providing construction financing and/or a takeout for build-to-suit projects,
speculative development properties and recently developed properties with vacancy. We believe our development strategy
provides us with higher returns than we could obtain in the existing purchase market. We also believe our strategy mitigates
against certain development risks and overhead costs because we partner with merchant builders, who are generally responsible
for typical cost overruns. However, we are constantly exploring ways to be more efficient and earn higher returns.
We believe our current strategy provides shareholders with a secure dividend that mitigates against unexpected costs and the
cyclicality of many asset classes and investment strategies. While we believe our strategy is more defensive than most industrial
REITs, we believe this makes us a “safe alternative” for investors in the industrial sector and the net lease sector.
Target Markets. We focus our investment strategy on growing markets where we believe there are advantages to building a
geographic concentration. The main driver of the growth in these markets is primarily to service population growth and the
expansion of e-commerce and supply chains. We focus less on market size, and more on the growth prospects of a market,
including the potential for a market to become a top 25 or top 50 market.
Our current target markets are in the Sunbelt and the Midwest. While our investment strategy of investing in predominately
single-tenant warehouse and distribution properties is not limited to specific markets, we believe that having concentration in
certain markets allows us to better manage our investments and source additional investments. However, we may purchase and
develop properties in other markets if favorable opportunities are identified and we may refine our investment strategy from time
to time depending on market developments.
Our target markets in the Sunbelt are Phoenix, Dallas-Fort Worth, Memphis, Atlanta, Savannah, Greenville-Spartanburg and
Central Florida. The markets in the Southeast offer favorable business climates, proximity to one of the fastest-growing
population regions in the United States and access to significant rail, port and air logistics networks.
Our target markets in the Midwest are in Illinois, Indiana and Ohio, with a particular focus on the lower Midwest markets of
Cincinnati, Columbus and Indianapolis. The markets in this geographic region are attractive to e-commerce tenants primarily due
to less expensive occupancy costs compared to coastal markets, their central location with access to major U.S. population centers
and extensive multi-modal transportation linkages.
We believe the attributes of our target markets attract tenants and drive demand for space in these markets. We expect to
continue to grow within each of these target markets while reviewing additional markets for expansion.
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Building Type. We target general purpose warehouse/distribution facilities that are versatile and easily leased to alternative
users and have other attractive features, including some or all of the following features:
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Clear heights generally ranging from 28 feet for smaller buildings to 40 feet for larger buildings.
Wide column spacing and speed bays.
Efficient loading dock ratios.
Deep truck courts.
Cross docking for larger facilities.
Ample trailer and employee parking.
The average age of the properties we acquired/completed and placed into service in 2021 was approximately 1.5 years.
Tenants. We believe we have a diversified tenant base and are not dependent upon any one tenant. See “Item 2—Properties
—Tenant Diversification.”
Institutional Fund Management. We also provide advisory services and co-invest with high-quality institutional investors in
non-consolidated entities. Two of these institutional joint ventures, for which there are no future commitments, are invested in
non-industrial assets.
During 2021, we recapitalized a portfolio of 22 special purpose industrial assets comprised of manufacturing and cold storage
assets through the formation of an institutional joint venture, NNN MFG Cold JV L.P. ("MFG Cold JV") in which we held a 20%
interest as of December 31, 2021. We expect to grow MFG Cold JV with an additional equity commitment of $250 million, of
which our proportionate share is $50 million, by acquiring special purpose industrial properties outside of our core warehouse/
distribution focus. We believe investing in special purpose industrial properties allows us to mitigate the risk of investing in these
types of industrial assets while earning certain fees related to the operation and growth of the joint venture.
Our institutional joint ventures use non-recourse mortgage loans to finance their investments.
Insurance
We maintain comprehensive property, liability and pollution insurance policies with limits that we believe are appropriate for
our portfolio. Our property insurance policy includes business interruption and windstorm coverage. The premiums for our
property liability and pollution insurance are generally reimbursed by our tenants.
Regulation
We are subject to various laws, ordinances and regulations, including:
REIT. 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. We conduct certain taxable activities through our taxable REIT
subsidiary, Lexington Realty Advisors, Inc.
Americans with Disabilities Act. Our properties must comply with the Americans with Disabilities Act of 1990, as amended,
or the Americans with Disabilities Act, to the extent that such properties are “public accommodations” as defined under the
Americans with Disabilities Act. Although we believe that our properties in the aggregate substantially comply with current
requirements of the Americans with Disabilities Act, and we have not received any notice for correction, we have not conducted a
comprehensive audit or investigation of all of our properties to determine whether we are in compliance.
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.
Competition
There are numerous 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.
5
Operating Segments
We manage our operations on an aggregated, single segment basis for purposes of assessing performance and making
operating decisions, and accordingly, have only one reporting and operating segment.
Human Capital
While our investment focus is on physical assets, human capital is critical to our success. We believe our management team is
best-in-class with a track record for value creation. We maintain a supportive work atmosphere that values community and
promotes professional and personal growth, work autonomy, and health and wellness. We rely on our employees and the
employees of our contractors and vendors to operate our business and implement our strategy.
Employees. As of December 31, 2021, we had 62 full-time employees and 1 part-time employee. Each of our employees
work in one or more of the following departments: Investments, Asset Management, Accounting, Tax, Corporate, Legal and
Information Technology.
Other than certain of our executive officers, we do not believe that any one employee is material to our operations, but we
believe that all of our employees are important for our operations. However, the compensation for employees with the title
Assistant Vice President and above generally includes long-term equity awards in an effort to retain their services.
On at least an annual basis, our Chief Executive Officer submits a management succession plan that provides for the ordinary
course and emergency succession for our Chief Executive Officer and other key members of management, which is reviewed by
the Nominating and Corporate Governance Committee of our Board of Trustees and, ultimately, our Board of Trustees.
Due to the ongoing COVID-19 pandemic, most of our employees are working remotely. We have regularly engaged with our
employees through company-wide video-conference meetings and social events.
Attraction & Retention of Talent. We attract talent by maintaining a good office culture and providing competitive
compensation and benefits. Some of our benefit highlights are:
• Medical insurance with a portion of the premiums paid by us. The minimum employee portion of premium to
participate in one of the medical insurance plans for a single employee making less than $100,000 in base salary per
year is $1 per month.
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Dental and vision benefits at no cost to our employees.
A minimum of 14 paid time off, or PTO, days for first year employees, which increases to 19 PTO days in the third
and fourth year of employment and 24 PTO days in the fifth year of employment.
Flexible working arrangements where employees are able to work from home on specified days per workweek
(during non-pandemic times).
Technology allowance to offset the costs of working remotely.
Due to the small size of our employee base, our turnover is generally low. In 2021, five employees voluntarily or
involuntarily separated service from us and we hired 12 employees for a net change of seven employees.
Demographics. We believe there are many benefits to diversity in our employee base. Of our 62 full-time employees at
December 31, 2021, 61% were female and 42% were non-white. Of our 11 executive employees at December 31, 2021, 27%
were female and 9% were non-white.
In 2020, our employees formed a Diversity, Equity and Inclusion Committee, or the DEIC. The mission of the DEIC is to
make LXP better by actively promoting diversity, equity and inclusion officewide as well as for and among our current and
future stakeholders. To that end, we are establishing programs and initiatives to motivate and empower LXP to make a positive
difference, including programs focused on recruiting. Furthermore, we maintain a diversity, equity and inclusion policy.
Training and Development. We maintain a variety of training programs for our employees, including those for sustainability,
accounting, cybersecurity, harassment and anti-corruption/bribery.
6
Employee Engagement. We regularly engage our employees through the following methods:
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During 2021, we conducted a mid-year performance review for our non-executive employees and a year-end
performance review for all of our employees. The year-end performance review consisted of a 180-degree review
where non-executive employees reviewed their immediate supervisor. We believe this 180-degree review provides
an objective measurement of our employees' performance. Our executive employees are reviewed by our Board of
Trustees.
•
During 2021, we engaged our employees with several surveys, including an employee satisfaction survey.
Human Rights. Respect for human rights and well-being is essential. We maintain an enterprise level human rights policy.
Vendors and Contractors. We outsource the following material functions:
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Information Technology. We use TetherView, LLC for managed IT services and BDO USA, LLC for virtual chief
technology officer services, including cybersecurity.
Internal Audit. We use Ernst & Young LLP for our internal audit function.
Property Management. We primarily use CBRE, Cushman & Wakefield and Jones Lang LaSalle for the
management of our properties where we have operating responsibilities. We also use the management affiliates of
the developer/sellers of properties we acquire for the management of such properties if we have operating
responsibilities and we believe it is important for such management affiliates to continue to manage the property.
ESG. We use Lord Green Real Estate Strategies, Inc. to assist us with our environmental, social and governance, or
ESG, initiatives.
We maintain a supplier code of conduct for our vendors and contractors.
Summary of 2021 Transactions and Recent Developments
The following summarizes certain of our transactions during 2021, including transactions disclosed elsewhere and in our
other periodic reports.
Leasing Activity.
During 2021, we entered into new leases and lease extensions encompassing 8.5 million square feet. The average fixed rent
on these extended leases was $4.04 per square foot compared to the average fixed rent on these leases before extension of $3.64
per square foot. The weighted-average cost of tenant improvements and lease commissions was $2.91 per square foot for new
leases and $2.75 per square foot for extended leases.
Investments/Capital Recycling.
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Debt.
Acquired/completed and placed into service an aggregate of 26 warehouse/distribution properties for a total cost
of $885.6 million.
Invested approximately $111.5 million in five ongoing development projects and acquired 490 acres of
developable land parcels.
Recapitalized 22 special purpose industrial assets to MFG Cold JV with a gross valuation of $550.0 million and
acquired a 20% interest for $30.8 million.
Disposed of our interests in an additional 15 properties for an aggregate gross disposition price of $276.7
million.
Satisfied $42.3 million of non-recourse debt with a weighted-average interest rate of 5.6%.
Issued $400 million aggregate principal amount of 2.375% Senior Notes due 2031, or 2031 Senior Notes, at an
issuance price of 99.758% of the principal amount.
Redeemed the remaining $188.8 million aggregate principal balance of our outstanding 4.25% Senior Notes due
2023 (the “2023 Senior Notes”).
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Equity.
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Issued 1.1 million common shares under our At-the-Market offering program generating net proceeds of
approximately $13.5 million.
Entered into forward sales contracts to sell 16.0 million common shares as part of an underwritten equity
offering and 3.6 million common shares under our At-the-Market offering program. As of December 31, 2021,
the contracts had an aggregate settlement price of $226.1 million.
Settled 5.0 million common shares previously sold on a forward basis for net proceeds of $53.6 million.
Subsequent to December 31, 2021, we acquired two warehouse/distribution properties for an aggregate cost of approximately
$71.8 million.
Corporate Responsibility
We seek to create a sustainable ESG+R platform that enhances both our company and shareholder value. We are committed
to supporting our shareholders, employees, tenants, suppliers, creditors, and communities as we execute on our ESG+R objectives
and initiatives. The ESG+R objectives below are integrated throughout our investment process and contribute to our ongoing
long-term success on behalf of our shareholders.
Due to the properties in our portfolio primarily being subject to net leases where tenants are responsible for maintaining the
buildings and are in control of their energy usage and environmental sustainability practices, our ability to implement ESG+R
initiatives throughout our portfolio may be limited.
The Nominating and Corporate Governance Committee of our Board of Trustees oversees our ESG+R strategy and
initiatives.
Environmental, Sustainability and Climate Change
Developing strategies that reduce our environmental impact and operational costs is a critical component of our ESG+R
program.
Actions:
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Track and monitor all landlord-paid utilities and track tenant utility data wherever possible.
Strategically implement green building certifications to highlight sustainability initiatives where feasible.
Annually review and evaluate sustainability opportunities to increase efficiency and reduce costs.
Evaluate the opportunity to increase renewable energy (e.g. solar) across the portfolio.
Performance:
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In process to collect, track and monitor landlord paid energy, water, waste and recycling across the portfolio, and
working to expand tenant-paid utility coverage.
Evaluated the portfolio for green building certifications and energy ratings and obtained certifications for 20 properties in
our portfolio as of December 31, 2021. In 2021, six properties received BREEAM USA In Use certifications.
• Maintained sustainability focused resources for tenants and property managers including a Tenant Fit-Out Guide and
Industrial Tenant Sustainability Guide.
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Continued to evaluate sustainability and efficiency initiatives across the portfolio to reduce energy consumption and
drive down greenhouse gas emissions.
Incorporated ESG into metrics for executive cash incentive awards.
Engaged a third-party to perform climate change analytics for the implementation of our resiliency strategy.
Published (i) ESG Objectives, including GHG emissions, energy consumption, water consumption, and diversion rate
targets in accordance with the Paris Agreement, and (ii) a stakeholder engagement policy.
Social
We believe that actively engaging with stakeholders is critical to our business and ESG+R efforts, providing valuable insight
to inform strategy, attract and retain top talent, and strengthen tenant relationships.
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Actions:
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Routinely engage with our tenants to understand leasing and operational needs at our assets and provide tools and
resources to promote sustainable tenant operations.
Coordinate with tenants and property managers on health and well-being focused initiatives.
Assess our tenant satisfaction and feedback through periodic tenant surveys.
Provide our employees with periodic trainings, industry updates and access to tools and resources related to ESG+R.
Provide our employees with health and well-being efforts focused on physical, emotional and financial health.
Support the communities in which we live and work through philanthropic events and support local charities through
volunteer events.
Performance:
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Collected and assessed feedback from our tenants through a survey conducted by a third party.
Engaged with our employees through regular surveys, including an employee satisfaction survey.
Participated in clothing and food drives, and implemented a paid-time off policy for employees to volunteer in their local
communities.
Organized step and other health-related challenges for our employees, including participating in the J.P. Morgan
Corporate Challenge, the world's largest corporate running event.
Provide an employee assistance program with 24/7 unlimited access to referrals and resources for all work-life needs,
including access to face-to-face and telephonic counseling sessions, legal and financial referrals and consultations.
Governance
Transparency to our stakeholders is essential. We pride ourselves on providing our stakeholders with regular reports and
detailed disclosures on our operational and financial health, and ESG efforts.
Actions:
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Strive to implement best governance practices, mindful of the concerns of our shareholders.
Increase our ESG+R transparency and disclosure through reporting to frameworks, such as GRESB (the global ESG+R
benchmark for real assets), and providing regular ESG updates to shareholders and other stakeholders.
• Monitor compliance with applicable benchmarking and disclosure legislation, including utility data reporting, audit and
retro-commissioning requirements, and GHG emission laws.
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Evaluate various industry groups that promote our alignment with recognized industry and ESG+R frameworks.
Performance:
• Maintain a Code of Business Conduct and Ethics, which includes a whistleblower policy, and provide annual training.
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Perform enterprise risk assessments and management succession planning.
Became a GRESB Member and participated in GRESB Real Estate Assessment for the first time in 2021, earning the
first-place ranking in our peer group, U.S. Industrial Listed.
Published our first corporate responsibility report in 2021 aligned with SASB Real Estate Standards.
Developed a Stakeholder Engagement Policy to disclose our process when working with our key stakeholders including
investors, property management teams, and tenants.
Signed on to support the UN Women's Empowerment Principles and the CEO Action for Diversity & Inclusion.
Conducted annual ESG+R training for asset managers.
Resilience
We believe that our resilience to climate change-related physical and transition risks is critical to our long-term success.
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Actions:
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Align our resilience program with the Task Force on Climate-Related Financial Disclosures (TCFD) framework.
Evaluate physical and transition climate-related risks as part of our acquisition due diligence process.
Utilize climate analytics metrics to (1) identify physical risk exposure across the portfolio, (2) identify high risk assets
and (3) expect to implement mitigation measures and emergency preparedness plans.
Assess transition risks and opportunities arising from the shift to a low-carbon economy, including market, reputation,
policy & legal, and technology.
Performance:
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Engaged a third-party consultant to conduct ESG+R assessments on all acquisitions.
Continued to be a supporter of the TCFD reporting framework.
Engaged a climate analytics firm to evaluate physical risk across the portfolio due to climate change.
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Corporate Information
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.
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 Securities and Exchange Commission, or SEC. Also posted on our web site, and available in print upon request
of any shareholder to our Investor Relations Department, are our declaration of trust and 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 whistleblower 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 or other people performing similar functions, and that relate to any matter enumerated in Item 406(b) of
Regulation S-K. 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.
The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding LXP
at http://www.sec.gov. 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 with or documents furnished to the SEC.
Our Investor Relations Department can be contacted at LXP Industrial 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.
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 2021.
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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 related to defaults under, or termination or expiration of, our leases.
We focus our acquisition activities on industrial real estate properties that are generally net leased to single tenants, and
certain of our tenants and/or their guarantors constitute a significant percentage of our rental revenues. 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. If the tenant represents a significant portion of our rental revenues, the impact on our financial position may
be material. Further, in any such event, our property owner subsidiary will be responsible for 100% of the operating costs
following a vacancy at a single-tenant building.
Under current bankruptcy law, a tenant can generally assume or reject a lease within a certain number of days of filing its
bankruptcy petition. If a tenant rejects the lease, a landlord's damages, subject to availability of funds from the bankruptcy estate,
are generally limited to the greater of (1) one year's rent and (2) the rent for 15% of the remaining term of the lease, not to exceed
three years.
Our property owner subsidiaries may not be able to retain tenants in any of our properties upon the expiration of leases.
Upon the expiration or other termination of current leases, our property owner subsidiaries may not be able to re-let all or a
portion of the vacancy, 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 one of our property owner subsidiaries is unable to promptly re-let all or
a substantial portion of the vacancy, 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.
Certain of our leases may permit tenants to terminate the leases to which they are a party.
Certain of our leases contain tenant termination options or economic discontinuance options that permit the tenants to
terminate their leases. While these options generally require a payment by the tenants, in most cases, the payments will be less
than the total remaining expected rental revenue. The termination of a lease by a tenant may impair the value of the property. In
addition, we will be responsible for 100% of the operating costs following the termination by any such tenant and subsequent
vacating of the property, and we will incur re-leasing costs.
Our ability to fully control the maintenance of our net-leased properties may be limited.
The tenants of our net-leased properties are responsible for maintenance and other day-to-day management of the properties.
If a property is not adequately maintained in accordance with the terms of the applicable lease, we may incur expenses for
deferred maintenance or other liabilities once the property is no longer leased. We generally visit our properties on an annual
basis, but these visits are not comprehensive inspections and deferred maintenance items may go unnoticed. While our leases
generally provide for recourse against the tenant in these instances, a bankrupt or financially-troubled tenant may be more likely
to defer maintenance, and it may be more difficult to enforce remedies against such a tenant.
You should not rely on the credit ratings of our tenants.
Some of our tenants, guarantors and/or their parent or sponsor entities are rated by certain rating agencies. In certain
instances, we may disclose the credit ratings of our tenants or their parent or sponsor entities even though those parent or sponsor
entities are not liable for the obligations of the tenant or guarantor under the lease. 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, guarantor or its
parent entity, the value of our investment in any properties leased by such tenant could significantly decline.
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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 includes 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. Based on this evaluation, we may from time to time take non-cash impairment charges. These impairments could
have a material adverse effect on our financial condition and results of operations. If we take an impairment charge on a property
subject to a non-recourse secured mortgage and reduce the book value of such property 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.
Our real estate development activities are subject to additional risks.
Development activities generally require various government and other approvals, which we may not receive. We rely on
third-party construction managers and/or engineers to monitor certain construction activities. If we engage or partner with a
developer, we rely on the developer to monitor construction activities and our interests may not be aligned. In addition,
development activities, including speculative development and redevelopment and renovation of vacant properties, are subject to
risks including, but not limited to:
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unsuccessful development opportunities could cause us to incur direct expenses;
construction costs of a project may exceed original estimates, possibly making the project less profitable than
originally estimated or unprofitable;
time required to complete the construction of a project or to lease up the completed project may be greater than
originally anticipated, thereby adversely affecting our cash flow and liquidity;
legal action to compel performance of contractors, developers or partners may cause delays and our costs may not be
reimbursed;
we may not be able to find tenants to lease the space built on a speculative basis or in a redeveloped or renovated
building, which will impact our cash flow and ability to finance or sell such properties;
there may be gaps in warranty obligations of our developers and contractors and the obligations to a tenant;
occupancy rates and rents of a completed project may not be sufficient to make the project profitable; and
favorable financing sources to fund development activities may not be available.
In addition, our development activities are subject to risks related to supply-chain disruptions and inflation, which increase
costs and may delay completion.
A tenant’s bankruptcy proceeding may result in the re-characterization of related sale-leaseback transactions or in the
restructuring of the tenant's payment obligations to us, either of which could adversely affect our financial condition.
We have entered and may continue to enter into sale-leaseback transactions, whereby we purchase a property and then lease
the same property back to the person from whom we purchased it. In the event of the bankruptcy of a tenant, a transaction
structured as a sale-leaseback may be re-characterized as either a financing or a joint venture. As a result of the foregoing, the re-
characterization of a sale-leaseback transaction could adversely affect our financial condition, cash flow and the amount available
for distributions to our shareholders.
If the sale-leaseback were re-characterized as a financing, we might not be considered the owner of the property, and as a
result, would have the status of a creditor in relation to the tenant. In that event, we would no longer have the right to sell or
encumber our ownership interest in the property. Instead, we would have a claim against the tenant for the amounts owed under
the lease, with the claim arguably secured by the property. The tenant/debtor might have the ability to propose a plan restructuring
the term, interest rate and amortization schedule of its outstanding balance. If confirmed by the bankruptcy court, we could be
bound by the new terms and prevented from foreclosing our lien on the property. If the sale-leaseback were re-characterized as a
joint venture, our tenant and we could be treated as co-venturers with regard to the property. As a result, we could be held liable,
under some circumstances, for debts incurred by the tenant relating to the property.
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A significant portion of our leases are long-term and do not have fair market rental rate adjustments, which could negatively
impact our income and reduce the amount of funds available to make distributions to shareholders.
A significant portion of our rental income comes from long-term net leases, which generally provide the tenant greater
discretion in using the leased property than ordinary property leases, such as the right to freely sublease the property, to make
alterations in the leased premises and to terminate the lease prior to its expiration under specified circumstances. Furthermore, net
leases typically have longer lease terms and, thus, there is an increased risk that contractual rental increases in future years will
fail to result in fair market rental rates during those years. If we do not accurately judge the potential for increases in market rental
rates when negotiating these long-term leases or if we are unable to obtain any increases in rental rates over the terms of our
leases, significant increases in future property operating costs, to the extent not covered under the net leases, could result in us
receiving less than fair value from these leases. As a result, our income and distributions to our shareholders could be lower than
they would otherwise be if we did not engage in long-term net leases.
In addition, increases in interest rates may also negatively impact the value of our properties that are subject to long-term
leases. While a significant number of our net leases provide for annual escalations in the rental rate, the increase in interest rates
may outpace the annual escalations.
Interests in loans receivable are subject to delinquency, foreclosure and loss.
While loan receivables are not a primary focus, we make loans to purchasers of our properties and developers. 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.
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 industrial 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 or speculative property and/or the development of a land parcel. For newly
constructed properties, we may (1) provide a developer with either a combination of financing for the construction of a property
or a commitment to acquire a property upon completion of construction of a property and commencement of rent from the tenant,
(2) acquire a property subject to a lease and engage a developer to complete construction of a property as required by the lease, or
(3) partner with a developer to acquire and develop or acquire on our own and engage a developer to develop land and pursue
development opportunities.
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.
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.
Our investment and disposition activity may lead to dilution.
Our strategy is to increase our investment in general purpose, well located warehouse/distribution assets and reduce our
exposure to all other asset types. We believe this strategy will lessen capital expenditures over time and mitigate revenue
reductions on renewals and re-tenanting. To implement this strategy, we have been selling non-industrial assets and recapitalizing
special purpose industrial assets, which generally have higher capitalization rates, and buying warehouse and distribution
properties, which, in the current competitive market, generally have lower capitalization rates. This strategy impacts growth in
the short-term period. There can be no assurance that the implementation of our strategy will lead to improved results or that we
will be able to execute our strategy as contemplated or on terms acceptable to us.
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Investment activities may not produce expected results and may be affected by outside factors.
The demand for industrial space in the United States is generally related to the level of economic output and consumer
demand. Accordingly, reduced economic output and/or consumer demand may lead to lower occupancy rates for our properties.
The concentration of our investments, among other factors, in industrial assets may expose us to the risk of economic downturns
specific to industrial assets to a greater extent than if our investments were diversified.
Investment in commercial properties entail certain risks, such as (1) underwriting assumptions, including 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 and/or
tenant credit conditions at the time of dispositions.
We may not be successful in identifying suitable real estate properties or other assets that meet our investment criteria. We
may also fail to complete investments on satisfactory terms. Failure to identify or complete investments could slow our growth,
which could, in turn, have a material adverse effect on our financial condition and results of operations.
Properties where we have operating responsibilities and multi-tenant properties expose us to additional risks.
Properties where we have operating responsibilities involve risks not typically encountered in real estate properties which are
fully operated by a single tenant. The ownership of properties which are not fully operated by a single tenant 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. Depending on the tenant’s leverage in the lease negotiation,
the tenant may be successful in negotiating for caps on certain operating expenses and we are responsible for any amounts in
excess of any cap.
Multi-tenant properties are also subject 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. Moreover, tenant turnover and fluctuation in occupancy rates, could
affect our operating results. 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.
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.
Cybersecurity risks and cyber incidents may adversely affect our business by causing a disruption to our operations, a
compromise or corruption of our confidential information, misappropriation of assets and/or damage to our business
relationships, all of which could negatively impact our financial results.
Cyber incidents may result in disrupted operations, misstated or unreliable financial data, liability for stolen assets or
information, increased cybersecurity protection and insurance costs, litigation and damage to our tenant, investor and/or vendor
relationships. As our reliance on technology has increased, so have the risks posed to our information systems, both internal and
those we have outsourced. Any processes, procedures and internal controls that we implement, as well as our increased awareness
of the nature and extent of a risk of a cyber incident, do not guarantee that our financial results, operations, business relationships
or confidential information will not be negatively impacted by such an incident.
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Insider or employee cyber and security threats are increasingly a concern for all companies, including ours. In addition, social
engineering and phishing are a particular concern for companies with employees. As a landlord, we are also susceptible to cyber
attacks on our tenants and their payment systems. We are continuously working to install new, and to upgrade our existing,
network and information technology systems and to provide employee awareness training around phishing, malware and other
cyber risks to ensure that we are protected, to the greatest extent possible, against cyber risks and security breaches. However,
such upgrades, new technology and training may not be sufficient to protect us from all risks.
As a smaller company, we use third-party vendors to assist us with our network and information technology requirements.
While we carefully select these third-party vendors, we cannot control their actions. Any problems caused by these third parties,
including those resulting from breakdowns or other disruptions in communication services provided by a vendor, failure of a
vendor to handle current or higher volumes, cyber attacks and security breaches at a vendor could adversely affect our operations.
Competition may adversely affect our ability to purchase properties.
There are numerous other companies and individuals with greater financial and other resources than we have that compete
with us in seeking investments and tenants. This competition may result in a higher cost for properties and lower returns and
impact our ability to grow.
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 may have 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.
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, 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 may incur significant costs in connection with our Board of Trustees' review of strategic alternatives and related matters.
Such costs include, but are not limited to, legal and other professional advisory fees and expenses.
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Industry and Economic Risks
The current outbreak of COVID-19, or the future outbreak of any other highly infectious or contagious diseases, could
adversely impact or cause disruption to our business, financial condition, results of operations and cash flows. Further, the
spread of the COVID-19 outbreak has caused severe disruptions in the U.S. and global economy, may further disrupt financial
markets and could potentially create widespread business continuity issues.
In recent years the outbreaks of a number of diseases, including Avian Bird Flu, H1N1, and various other "super bugs," have
increased the risk of a pandemic. On March 11, 2020, the World Health Organization declared COVID-19, a novel strain of the
coronavirus, a pandemic, and on March 13, 2020 the United States declared a national emergency with respect to COVID-19.
Although vaccines have been developed and are widely distributed in the United States, newer and more contagious variants of
COVID-19 have further amplified the impact of the pandemic while significant components of the United States population are
resistant to vaccination efforts.
The COVID-19 pandemic has also coincided with labor shortages and increased staffing costs for many companies operating in
the United States. COVID-19 related disruptions to the international supply chain, including transportation and distribution
delays, longer lead times for construction materials and increased construction costs have resulted in shortages of certain goods
and inflationary conditions. These developments, as well as other ramifications of the COVID-19 pandemic may result in
prolonged inflationary conditions that could have a detrimental impact on our tenant base, our ability to lease vacant space and
our ability to grow through development and acquisition. Future adverse impacts to the economy caused by COVID-19 may also
result in market volatility and large swings in global stock prices that may negatively impact our share price. These potential risks
could also negatively impact our future ability to access capital, which would negatively impact our liquidity and our ability to
execute our strategic plans.
The impacts of the outbreak could, among other things, negatively affect (i) the operation of our properties, (ii) the effectiveness
of our strategic decision making, (iii) the operation of an effective cyber security function, (iv) the operation of our key
information systems, (v) our ability to make timely filings with the SEC and (vi) our ability to maintain an effective control
environment.
The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19.
Nevertheless, the COVID-19 outbreak has had, and future pandemics could have, a significant adverse impact on economic and
market conditions of economies around the world, including the United States, the results of which have and would present
material uncertainty and risk with respect to our performance, financial condition, results of operations and cash flows.
Potential disruptions in the financial markets could affect our ability to obtain debt financing on reasonable terms and have
other adverse effects on us.
The United States credit markets have periodically experienced significant dislocations and liquidity disruptions, which have
caused the spreads on prospective debt financings to widen considerably. These circumstances may materially impact liquidity in
the debt markets, making financing terms for borrowers less attractive, and in certain cases may result in the unavailability of
certain types of debt financing. 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 may have 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, our tenants or the economy in general.
Natural disasters and the effects of climate change could have a concentrated impact on the areas where we operate and could
adversely impact our results.
We invest in properties on a nationwide basis. Natural disasters, including earthquakes, storms, tornados, floods and
hurricanes, could impact our properties in these and other areas in which we operate. Potentially adverse consequences of global
warming, including rising sea levels, could similarly have an impact on our properties. Over time, these conditions could result in
declining demand for space in our buildings or the inability of us to operate the buildings at all. Climate change may also have
indirect effects on our business by increasing the cost of (or making unavailable) property insurance on terms we find acceptable,
increasing the cost of energy at our properties and requiring us to expend funds as we seek to repair and protect our properties
against such risks. Incurring these losses, costs or business interruptions may adversely affect our operating and financial results.
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Risks Related to our Indebtedness
We have a substantial amount of 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 may be 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 the total amount of indebtedness that we may incur, and
accordingly, we could become even more highly leveraged. As of December 31, 2021, our total consolidated indebtedness was
approximately $1.5 billion and we had approximately $600.0 million available for borrowing 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;
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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, which may 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 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, 2021, we have $129.1 million of trust preferred securities that matures in April 2037 that is LIBOR indexed. In
addition, we have a $300.0 million unsecured term loan which matures January 2025 that is LIBOR indexed and is subject to
interest rate swap agreements through January 2025. Also, our unsecured revolving credit facility is subject to a variable interest
rate. 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. Also,
fixed-rate debt securities generally decline in value as market rates rise because the premium, if any, over market interest rates
will decline.
The LIBOR index rate may not be available in the future.
In July 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced it intends to stop compelling
banks to submit rates for the calculation of LIBOR after 2021. On March 5, 2021, the Financial Conduct Authority further
announced that it intends to stop compelling banks to submit rates for the calculation of one, three and six month LIBOR after
June 30, 2023. It is unclear whether new methods of calculating such LIBOR periods will be established such that they continue
to exist after June 30, 2023. It is not possible to predict the effect of these changes, other reforms or the establishment of
alternative reference rates in the United States or elsewhere. The Alternative Reference Rates Committee (or ARRC) has
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proposed that the Secured Overnight Financing Rate (or SOFR) is the rate that represents best practice as the alternative to USD-
LIBOR for use in derivatives and other financial contracts that are currently indexed to USD-LIBOR. ARRC has proposed a
paced market transition plan to SOFR from USD-LIBOR and organizations are currently working on industry wide and company
specific transition plans as it relates to derivatives and cash markets exposed to USD-LIBOR. Our trust preferred securities do not
provide for a clear alternative to USD-LIBOR.
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 variable-rate liabilities. As of December 31, 2021, we had aggregate interest
rate swap agreements on $300.0 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 or default by the counterparties. Further, additional risks,
including losses on a hedge position, may reduce the return on our investments. Such losses may exceed the amount invested in
such instruments. We may also have to pay certain costs, such as transaction fees or breakage costs, related to hedging
transactions.
Covenants in certain of the agreements governing our debt could adversely affect our financial condition, investment activities
and/or operating activities.
Our unsecured revolving credit facility, unsecured term loan and indentures governing our senior 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 our unsecured revolving credit facility 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 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.
The documents governing our non-recourse indebtedness contain restrictions on the operations of our property owner
subsidiaries and their properties. Certain activities, like leasing and alterations, may be subject to the consent of the applicable
lender. In addition, certain lenders engage third-party loan servicers that may not be as responsive as we would be or as the
leasing market requires.
We face risks associated with refinancings.
Some of the properties in which we have an interest are subject to a 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.
Our ability to make the scheduled balloon payments on any corporate recourse note will depend on our access to the capital
markets, including our ability to refinance the maturing note. Our ability to make the scheduled balloon payment on any 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.
Some 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. In the event these properties are conveyed via
foreclosure to the lenders thereof, we would lose all of our interest in these properties. The loss of a significant number of
properties to foreclosure or through bankruptcy of a property owner subsidiary could adversely affect our financial condition and
results of operations, relationships with lenders and ability to obtain additional financing in the future.
19
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/or we may be
liable for all or a portion of such loan.
Certain of our indebtedness is subject to cross-default, cross-acceleration and cross-collateral provisions.
Substantially all of our corporate level borrowings and, in the future, certain of our secured indebtedness may, contain cross-
default and/or cross-acceleration provisions, which may be triggered if we default on certain indebtedness in excess of certain
thresholds. In the event of such a default, the resulting cross defaults and/or cross-accelerations may adversely impact our
financial condition.
Two of our non-consolidated joint ventures have portfolio loans where the loans are cross-collateral with all of the assets in
the portfolio.
We may not be able to generate sufficient cash flow to meet our debt service obligations.
Our ability to make payments on and to refinance our indebtedness 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. 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.
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 with respect to the secured collateral over unsecured creditors in the event of a bankruptcy, liquidation or similar
proceeding.
None of our subsidiaries are guarantors of our unsecured debt; therefore assets of our subsidiaries may not be available to
make payments on our unsecured indebtedness.
We are the sole borrower of our unsecured indebtedness and none of our subsidiaries were guarantors of our unsecured
indebtedness. In the event of a bankruptcy, liquidation or reorganization of any of our subsidiaries, holders of subsidiary debt,
including trade creditors, will generally be entitled to payment of their claims from the assets of our subsidiaries before any assets
are made available for distribution to us.
All of our assets are held through our subsidiaries. Consequently, our cash flow and our ability to meet our debt service
obligations depend 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.
Risks Related to Investment in our Equity
We may change the dividend policy for our common shares in the future.
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 and we also maintain an At-the-Market offering program and a
direct share purchase plan, pursuant to which we may issue additional common shares. There is no restriction on our issuing
additional common or preferred shares, including any securities that are convertible into or exchangeable for, or that represent the
right to receive, common or preferred shares or any substantially similar securities. Pursuant to our At-the-Market offering, we
20
may enter into forward sale agreements. Settlement provisions contained in any forward sale agreement could result in substantial
dilution to our earnings per share or result in substantial cash payment obligations. In addition, in the case of our bankruptcy or
insolvency, any forward sale agreement will automatically terminate, and we would not receive the expected proceeds from the
sale of our common shares under such agreement.
We disclose certain non-GAAP financial measures in documents filed and/or furnished with the SEC; however, the non-
GAAP financial measures we disclose are not equivalent to applicable comparable GAAP measures, and you should consider
GAAP measures to be more relevant to our operating performance.
We use and disclose to investors FFO, Adjusted Company FFO, NOI and other non-GAAP financial measures. FFO,
Adjusted Company FFO, NOI and the other non-GAAP financial measures are not equivalent to our net income or loss as
determined in accordance with GAAP, and investors should consider GAAP measures to be more relevant to evaluating our
operating performance. FFO, Adjusted Company FFO and NOI, and GAAP net income (loss) differ because FFO, Adjusted
Company FFO and NOI exclude many items that are factored into GAAP net income or loss.
Because of the differences between FFO, Adjusted Company FFO, NOI and GAAP net income or loss, FFO, Adjusted
Company FFO and NOI may not be accurate indicators of our operating performance, especially during periods in which we are
acquiring and selling properties. In addition, FFO, Adjusted Company FFO and NOI are not necessarily indicative of cash flow
available to fund cash needs and investors should not consider FFO, Adjusted Company FFO or NOI as alternatives to cash flows
from operations, as an indication of our liquidity or as indicative of funds available to fund our cash needs, including our ability to
make distributions to our shareholders.
Neither the SEC nor any other regulatory body has passed judgment on the acceptability of the adjustments that we use to
calculate FFO, Adjusted Company FFO and NOI. Also, because not all companies calculate FFO, Adjusted Company FFO and
NOI the same way, comparisons with other companies’ measures with similar titles may not be meaningful.
There are certain limitations on a third party's ability to acquire us or effectuate a change in our control.
Severance payments under our executive severance policy. Substantial termination payments may be required to be paid
under our executive severance policy applicable to and related agreements with our executives upon the termination of an
executive. If those executive officers are terminated without cause, as defined, or resign for good reason, 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 our executive severance policy and related agreements and the acceleration of certain non-
vested equity awards. Accordingly, these payments may discourage a third party from acquiring us.
Our ability to issue additional shares. Our declaration of trust authorizes 1,000,000,000 shares of beneficial interest (par
value $0.0001 per share) consisting of 400,000,000 common shares, 100,000,000 preferred shares and 500,000,000 shares of
beneficial interest classified as excess stock, or 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, 2021, 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, which 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.
Maryland Takeover Statutes. Certain provisions of the Maryland General Corporation Law, including the Maryland Business
Combination Act, the Maryland Control Share Act, and certain elective provisions of Maryland law under Subtitle 8 of the
Maryland General Corporation Law, each as further described under the heading “Restrictions on Transfers of Capital Stock and
Anti-Takeover Provisions – Maryland Law” in Exhibit 4.10 of this Annual Report, are applicable to Maryland REITs, such as the
Company. We are subject to the Maryland Business Combination Act, and while our 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. We have also not elected to be governed by any of the
specific provisions of Subtitle 8, however, through provisions of our declaration of trust and/or by-laws, as applicable, unrelated
to Subtitle 8, we provide for an 80% shareholder vote to remove trustees and then only for cause, and that the number of trustees
may be determined by a resolution of our Board of Trustees, subject to a minimum number. In addition, we can elect to be
governed by any or all of the provisions of Subtitle 8 of the Maryland General Corporation Law at any time in the future. These
statutes 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.
21
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 declaration of trust includes certain
restrictions regarding transfers of our capital shares and ownership limits.
In order to protect against the loss of our REIT status, among other things, actual or constructive ownership of our capital
shares in violation of the restrictions contained in our declaration of trust or in excess of 9.8% in value of our outstanding equity
shares, defined as our common shares, or preferred shares, subject to certain exceptions, 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.
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.
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.
Furthermore, in 2021, we disclosed communications with an activist shareholder. Such investor activism could interfere with
our ability to execute our strategic plan, divert the attention of our Board of Trustees, management and employees, give rise to
perceived uncertainties as to our future direction, adversely affect our relationships with key business partners, result in a loss of
potential business opportunities, make it more difficult to attract and retain qualified personnel, or require us to incur substantial
legal and public relations fees and expenses, any of which could adversely affect our business and operating results. 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.
Legal and Regulatory Risks
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 pay dividends.
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
22
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 and, in certain cases, we have provided lenders with environmental indemnities.
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. We are also subject to exposure to material liability from 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.
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, repealed or modified 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
or modified 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.
Legislation such as the Americans with Disabilities Act may require us to modify our properties at substantial costs and
noncompliance could result in the imposition of fines or an award of damages to private litigants. Future legislation may impose
additional requirements. We may incur additional costs to comply with any future requirements.
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 LXP has met the requirements for qualification as a REIT for federal income tax purposes beginning with its
taxable year ended December 31, 1993, and we intend for LXP 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 determination of various factual matters and circumstances not entirely
within our control may affect LXP's ability to continue to qualify as a REIT. No assurance can be given that LXP has 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 LXP does not qualify as a REIT, LXP would not be allowed a deduction for dividends paid
to shareholders in computing its net taxable income and LXP would not be required to continue making distributions. In addition,
LXP's income would be subject to tax at the regular corporate rates. LXP also could be disqualified from treatment as a REIT for
the four taxable years following the year during which qualification was lost. Cash required to be used to pay taxes would not be
available to satisfy LXP's debt service obligations and to make distributions to its shareholders. Although we currently intend for
LXP to continue to qualify as a REIT, it is possible that future economic, market, legal, tax or other considerations may cause
LXP, 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 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.
23
Distribution requirements imposed by law limit our flexibility.
To maintain LXP's status as a REIT for federal income tax purposes, LXP is generally required to distribute to its
shareholders at least 90% of its taxable income for that calendar year. LXP's taxable income is determined without regard to any
deduction for dividends paid and by excluding net capital gains. To the extent that LXP satisfies the distribution requirement but
distributes less than 100% of its taxable income, LXP will be subject to federal corporate income tax on its undistributed income.
In addition, LXP will incur a 4% nondeductible excise tax on the amount by which its distributions in any year are less than the
sum of (i) 85% of its ordinary income for that year, (ii) 95% of its capital gain net income for that year and (iii) 100% of its
undistributed taxable income from prior years. We intend for LXP to continue to make distributions to its shareholders to comply
with the distribution requirements of the Code and to reduce exposure to federal taxes. Differences in timing between the receipt
of income and the payment of expenses in determining its taxable income and the effect of required debt amortization payments
could require LXP 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.
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 or
equity security holder.
Federal tax legislation passed in 2017 made numerous changes to tax rules. These changes do not affect the REIT
qualification rules directly, but may otherwise affect us or our shareholders. For example, the top federal income tax rate for
individuals was reduced to 37%, there is a deduction available for certain Qualified Business Income that reduces the top effective
tax rate applicable to ordinary dividends from REITs to 29.6% (through a 20% deduction for ordinary REIT dividends received)
and various deductions are eliminated or limited. Most of the changes applicable to individuals are temporary.
General Risk Factors
A downgrade in our credit ratings could have a material adverse effect on our business and financial condition.
The credit ratings assigned to us and 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 the applicable
rating agency's judgment, circumstances warrant. Moreover, these credit ratings do not apply to our common and preferred shares
and are not recommendations to buy, sell or hold any other securities. Any downgrade of us or our debt could have a material
adverse effect on the market price of our debt securities and our common and preferred shares. If any credit rating agency that has
rated us or 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.
We are dependent upon our key personnel.
We are dependent upon key personnel, particularly certain of our executive officers. We do not have employment agreements
with our executive officers, but we have entered into severance arrangements with our executive officers that provide certain
payments upon specified termination events.
Our inability to retain the services of any of our key personnel, an unplanned loss of any of their services or our inability to
replace them upon termination as needed, could adversely impact our operations. We do not have key man life insurance coverage
on our executive officers.
24
Item 1B. Unresolved Staff Comments
There are no unresolved written comments that were received from the SEC staff relating to our periodic or current reports
under the Securities Exchange Act of 1934.
25
Item 2. Properties
Real Estate Portfolio
General. As of December 31, 2021, we had equity ownership interests in approximately 121 consolidated real estate
properties containing approximately 54.8 million square feet of rentable space, which were approximately 97.4% leased based
upon net rentable square feet. All properties in which we have an interest are held through at least one property owner subsidiary.
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 is exercised, the land together with all improvements thereon reverts to the
landowner.
Office Leases. We lease our headquarters office space in New York, New York and our satellite offices in Dallas, Texas and
West Palm Beach, Florida.
Leverage. As of December 31, 2021, we had outstanding consolidated mortgages and notes payable of approximately $84.4
million with a weighted-average interest rate of approximately 4.0% and a weighted-average maturity of 7.2 years.
Property Charts. The following tables list our properties by type, their locations, the net rentable square feet, the expiration of
the current lease term and percent leased, as applicable, as of December 31, 2021.
26
LXP CONSOLIDATED PORTFOLIO
PROPERTY CHART
WAREHOUSE/DISTRIBUTION
As of December 31, 2021
Property Location
City
State
Net Rentable
Square Feet
Primary Tenant
Current Lease
Term Expiration
Percent
Leased
Stabilized Properties:
3405 S. McQueen Rd.
4445 N. 169th Ave.
17510 W. Thomas Rd.
16811 W. Commerce Dr.
255 143rd Ave.
9494 W. Buckeye Rd.
3400 NW 35th St.
2455 Premier Row
3102 Queen Palm Dr.
7875 White Rd. SW
41 Busch Dr.
51 Busch Dr.
1625 Oakley Industrial Blvd.
490 Westridge Pkwy.
493 Westridge Pkwy.
335 Morgan Lakes Industrial Blvd.
1004 Trade Center Pkwy.
1315 Dean Forest Rd.
1319 Dean Forest Rd.
7225 Goodson Rd.
3931 Lakeview Corporate Dr.
4015 Lakeview Corporate Dr.
6225 E. Minooka Rd.
1460 Cargo Court
200 International Pkwy. S.
1001 Innovation Rd.
3686 S. Central Ave.
749 Southrock Dr.
201,784
3/31/2033
100 %
160,140
12/31/2025
100 %
468,182
11/30/2036
100 %
540,349
4/30/2026
100 %
801,424
9/30/2030
100 %
186,336
9/30/2026
100 %
617,055
8/31/2030
100 %
205,016
3/31/2026
100 %
229,605
2/28/2023
100 %
604,852
5/31/2025
100 %
396,000
9/30/2031
100 %
328,000
7/31/2031
100 %
907,675
10/31/2028
100 %
1,121,120
1/31/2028
100 %
676,000
10/31/2023
100 %
499,500
7/31/2027
100 %
419,667
7/31/2026
100 %
88,503
8/31/2025
100 %
355,527
6/30/2025
100 %
370,000
5/31/2024
100 %
769,500
9/30/2026
100 %
1,017,780
5/31/2030
100 %
1,034,200
9/30/2029
100 %
705,661
11/30/2029
100 %
473,280
12/31/2029
100 %
813,126
10/31/2034
100 %
93,000
12/31/2024
100 %
150,000
12/31/2024
100 %
AZ
AZ
AZ
AZ
AZ
AZ
FL
FL
FL
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
IL
IL
IL
IL
IL
IL
IL
IL
Chandler
Goodyear
Goodyear
Goodyear
Goodyear
Tolleson
Ocala
Orlando
Tampa
Austell
Cartersville
Cartersville
Fairburn
McDonough
McDonough
Pooler
Savannah
Savannah
Savannah
Union City
Edwardsville
Edwardsville
Minooka
Minooka
Minooka
Rantoul
Rockford
Rockford
27
LXP CONSOLIDATED PORTFOLIO
PROPERTY CHART
WAREHOUSE/DISTRIBUTION
As of December 31, 2021
Property Location
City
State
1621 Veterans Memorial Pkwy. E.
1285 W. State Road 32
19 Bob Glidden Blvd.
76 Bob Glidden Blvd.
180 Bob Glidden Blvd.
4600 Albert S White Dr.
4900 Albert S White Dr.
5352 Performance Way
3751 S. CR 500 E.
27200 West 157th St.
5001 Greenwood Rd.
5417 Campus Dr.
2860 Clark St.
16950 Pine Dr.
Lafayette
Lebanon
Whiteland
Whiteland
Whiteland
Whitestown
Whitestown
Whitestown
Whitestown
New Century
Shreveport
Shreveport
Detroit
Romulus
IN
IN
IN
IN
IN
IN
IN
IN
IN
KS
LA
LA
MI
MI
Net Rentable
Square Feet
309,400
Primary Tenant
Current Lease
Term Expiration
9/30/2024
Percent
Leased
100 %
741,880
1/31/2024
100 %
530,400
3/31/2031
100 %
168,480
12/31/2026
100 %
179,530
12/31/2026
100 %
149,072
12/31/2024
100 %
149,072
8/31/2025
100 %
380,000
7/31/2025
100 %
1,016,244
11/30/2031
100 %
446,500
1/31/2027
100 %
646,000
12/31/2023
100 %
257,849
8/31/2027
100 %
189,960
10/22/2035
100 %
500,023
8/24/2032
100 %
1700 47th Ave. North
Minneapolis
MN
18,620
12/31/2025
100 %
549 Wingo Rd.
1550 Hwy. 302
554 Nissan Pkwy.
11555 Silo Dr.
11624 S. Distribution Cv.
6495 Polk Ln.
8500 Nail Rd.
1133 Poplar Creek Rd.
671 Washburn Switch Rd.
2203 Sherrill Dr.
736 Addison Rd.
Byhalia
Byhalia
Canton
Olive Branch
Olive Branch
Olive Branch
Olive Branch
Henderson
Shelby
Statesville
Erwin
29-01 Borden Ave. / 29-10 Hunters Point Ave.
Long Island City
351 Chamber Dr.
1860 Walcutt Rd.
Chillicothe
Columbus
28
MS
MS
MS
MS
MS
MS
MS
NC
NC
NC
NY
NY
OH
OH
855,878
3/31/2030
100 %
615,600
9/30/2027
100 %
1,466,000
2/28/2027
100 %
927,742
4/30/2024
100 %
1,170,218
6/30/2029
100 %
269,902
5/31/2023
100 %
716,080
7/31/2029
100 %
147,448
4/30/2034
100 %
673,425
5/31/2036
100 %
639,800
10/31/2026
100 %
408,000
11/30/2026
100 %
140,330
3/31/2028
100 %
478,141
6/30/2026
91 %
292,730
11/21/2029
100 %
LXP CONSOLIDATED PORTFOLIO
PROPERTY CHART
WAREHOUSE/DISTRIBUTION
As of December 31, 2021
Property Location
City
State
7005 Cochran Rd.
191 Arrowhead Dr.
200 Arrowhead Dr.
2155 Rohr Rd.
575-599 Gateway Blvd.
600 Gateway Blvd.
675 Gateway Blvd.
700 Gateway Blvd.
10345 Philipp Pkwy.
27255 SW 95th Ave.
250 Rittenhouse Cir.
70 Tyger River Dr.
230 Apple Valley Rd.
231 Apple Valley Rd.
235 Apple Valley Rd.
402 Apple Valley Rd.
417 Apple Valley Rd.
425 Apple Valley Rd.
27 Inland Pkwy.
7870 Reidville Rd.
5795 North Blackstock Rd.
1021 Tyger Lake Rd.
6050 Dana Way
1520 Lauderdale Memorial Hwy.
201 James Lawrence Rd.
633 Garrett Pkwy.
3820 Micro Dr.
200 Sam Griffin Rd.
2115 East Belt Line Rd.
OH
OH
OH
OH
OH
OH
OH
OH
OH
OR
PA
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
TN
TN
TN
TN
TN
TN
TX
Glenwillow
Hebron
Hebron
Lockbourne
Monroe
Monroe
Monroe
Monroe
Streetsboro
Wilsonville
Bristol
Duncan
Duncan
Duncan
Duncan
Duncan
Duncan
Duncan
Greer
Greer
Spartanburg
Spartanburg
Antioch
Cleveland
Jackson
Lewisburg
Millington
Smyrna
Carrollton
29
Net Rentable
Square Feet
458,000
Primary Tenant
Current Lease
Term Expiration
7/31/2025
Percent
Leased
100 %
250,410
3/31/2022
100 %
400,522
3/31/2022
100 %
320,190
3/31/2024
100 %
194,936
6/30/2023
100 %
994,013
8/31/2027
100 %
143,664
2/28/2032
100 %
1,299,492
6/30/2030
100 %
649,250
10/31/2026
100 %
508,277
10/31/2032
100 %
241,977
11/30/2026
100 %
408,000
1/31/2024
100 %
275,400
4/30/2029
100 %
196,000
1/31/2026
100 %
177,320
10/31/2026
100 %
235,600
12/31/2029
100 %
195,000
1/31/2027
100 %
327,360
9/30/2026
100 %
1,318,680
12/31/2034
100 %
396,073
9/30/2025
100 %
341,660
7/31/2024
100 %
213,200
2/28/2031
100 %
672,213
6/30/2031
89 %
851,370
3/31/2024
100 %
1,062,055
10/31/2027
100 %
310,000
3/31/2026
100 %
701,819
9/30/2024
100 %
1,505,000
4/30/2027
100 %
356,855
6/30/2035
100 %
LXP CONSOLIDATED PORTFOLIO
PROPERTY CHART
WAREHOUSE/DISTRIBUTION
As of December 31, 2021
Property Location
City
State
3737 Duncanville Rd.
4600 Underwood Rd.
4005 E. I-30
13901/14035 Industrial Rd.
1704 S. I-45
3201 N. Houston School Rd.
13930 Pike Rd.
8601 E. Sam Lee Ln.
17505 Interstate Hwy. 35W
10535 Red Bluff Rd.
10565 Red Bluff Rd.
4100 Malone Dr.
9701 New Decade Dr.
16407 Applewhite Rd.
2601 Bermuda Hundred Rd.
150 Mercury Way
291 Park Center Dr.
80 Tyson Dr.
Non-Stabilized Properties:
1515 South 91st Ave.
5275 Drane Field Rd.
3775 Fancy Farms Rd.
95 International Pkwy.
7820 Reidville Rd.
Dallas
Deer Park
Grand Prairie
Houston
Hutchins
Lancaster
Missouri City
Northlake
Northlake
Pasadena
Pasadena
Pasadena
Pasadena
San Antonio
Chester
Winchester
Winchester
Winchester
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
VA
VA
VA
VA
Net Rentable
Square Feet
510,400
Primary Tenant
Current Lease
Term Expiration
8/31/2023
Percent
Leased
100 %
402,648
12/31/2026
100 %
215,000
3/31/2037
100 %
132,449
3/31/2038
100 %
120,960
6/30/2030
468,300
1/31/2030
N/A
4/30/2032
1,214,526
8/31/2029
100 %
100 %
100 %
100 %
500,556
10/31/2024
100 %
257,835
8/31/2023
100 %
248,240
4/30/2025
100 %
233,190
8/31/2028
100 %
102,863
8/31/2024
100 %
849,275
4/30/2027
100 %
1,034,470
6/30/2030
100 %
324,535
11/30/2024
100 %
344,700
5/31/2031
100 %
400,400
12/18/2031
100 %
Stabilized total
51,082,289
Phoenix
Lakeland
Plant City
Adairsville
Greer
AZ
FL
FL
GA
SC
487,500
222,134
510,484
225,211
210,820
12/31/2031
5/31/2031
N/A
9/30/2025
Various
Non-Stabilized total
1,656,149
Warehouse/Distribution total
52,738,438
99.8 %
33 %
84 %
— %
45 %
62 %
34.9 %
97.7 %
The 2021 net effective annual base cash rent for the warehouse/distribution portfolio, excluding non-stabilized assets, and
Missouri City, Texas, as of December 31, 2021 was $4.31 per square foot and the weighted-average remaining lease term was 6.9
years.
We consider a recently acquired or completed property stabilized upon 90% occupancy or one-year from substantial completion.
30
LXP CONSOLIDATED PORTFOLIO
PROPERTY CHART
OTHER
As of December 31, 2021
Property Location
City
State
13430 North Black Canyon Fwy.
1440 E. 15th St.
3333 Coyote Hill Rd.
1420 Greenwood Rd.
3500 N. Loop Rd.
1901 Ragu Dr.
30 Light St.
6938 Elm Valley Dr.
4 Apollo Dr.
1701 Market St.
3476 Stateview Blvd.
3480 Stateview Blvd.
Phoenix
Tucson
Palo Alto
McDonough
McDonough
Owensboro
Baltimore
Kalamazoo
Whippany
Philadelphia
Fort Mill
Fort Mill
Other total
AZ
AZ
CA
GA
GA
KY
MD
MI
NJ
PA
SC
SC
Net Rentable
Square Feet
138,940
Current Lease
Term Expiration
Various
Percent
Leased
56 %
28,591
9/30/2027
100 %
202,000
12/14/2023
100 %
296,972
8/31/2028
100 %
62,218
N/A
— %
443,380
12/19/2025
100 %
N/A
12/31/2048
100 %
150,945
Various
123,734
11/30/2031
304,037
1/31/2024
35 %
100 %
100 %
169,083
5/31/2024
100 %
169,218
5/31/2024
100 %
Consolidated portfolio total
54,827,556
2,089,118
89.4 %
97.4 %
The 2021 net effective annual base cash rent for the other portfolio as of December 31, 2021 was $11.70 per square foot,
excluding Baltimore, Maryland, and the weighted-average remaining lease term was 3.8 years.
The 2021 net effective annual base cash rent for the consolidated portfolio as of December 31, 2021 was $4.60 per square foot,
excluding non-stabilized assets, Missouri City, Texas, and Baltimore, Maryland, and the weighted-average remaining lease term
was 6.6 years.
31
LXP NON-CONSOLIDATED PORTFOLIO
PROPERTY CHART
As of December 31, 2021
Property Location
City
State
Percent
Owned
Net Rentable
Square Feet
Current Lease
Term Expiration
Percent
Leased
Office/Other properties:
143 Diamond Ave.
2500 Patrick Henry Pkwy.
231 N. Martingale Rd.
3902 Gene Field Rd.
1210 AvidXchange Ln.
2221 Schrock Rd.
500 Olde Worthington Rd.
25 Lakeview Dr.
601 & 701 Experian Pkwy.
4001 International Pkwy.
10001 Richmond Ave.
810 Gears Rd.
6555 Sierra Dr.
8900 Freeport Pkwy.
2203 North Westgreen Blvd.
Parachute
McDonough
Schaumburg
St. Joseph
Charlotte
Columbus
Westerville
Jessup
Allen
Carrollton
Houston
Houston
Irving
Irving
Katy
800 East Canal St.
Richmond
Office/Other total
Special purpose industrial properties:
318 Pappy Dunn Blvd.
4801 North Park Dr.
1020 W. Airport Rd.
10000 Business Blvd.
730 North Black Branch Rd.
750 North Black Branch Rd.
301 Bill Bryan Blvd.
4010 Airpark Dr.
113 Wells St.
Anniston
Opelika
Romeoville
Dry Ridge
Elizabethtown
Elizabethtown
Hopkinsville
Owensboro
North Berwick
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
25%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
CO
GA
IL
MO
NC
OH
OH
PA
TX
TX
TX
TX
TX
TX
TX
VA
AL
AL
IL
KY
KY
KY
KY
KY
ME
32
49,024
4/30/2035
100 %
111,911
6/30/2025
317,198
12/31/2022
100 %
100 %
98,849
6/30/2027
100 %
201,450
4/30/2032
42,290
7/6/2027
97,000
3/31/2026
150,000
8/7/2027
100 %
100 %
100 %
100 %
292,700
3/14/2025
100 %
138,443
12/31/2025
554,385
9/30/2032
78,895
1/10/2031
100 %
100 %
87 %
247,254
2/28/2035
100 %
268,445
3/31/2023
100 %
274,000
8/31/2036
100 %
330,309
8/31/2030
96 %
3,252,153
99.3 %
276,782
11/24/2029
165,493
5/31/2042
188,166
10/31/2031
336,350
6/30/2031
167,770
6/30/2025
539,592
6/30/2025
424,904
6/30/2025
211,598
6/30/2025
993,685
4/30/2024
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
LXP NON-CONSOLIDATED PORTFOLIO
PROPERTY CHART
As of December 31, 2021
Property Location
City
State
904 Industrial Rd.
43955 Plymouth Oaks Blvd.
26700 Bunert Rd.
2880 Kenny Biggs Rd.
Marshall
Plymouth
Warren
Lumberton
5670 Nicco Way
North Las Vegas
10590 Hamilton Ave.
590 Ecology Ln.
50 Tyger River Dr.
900 Industrial Blvd.
120 Southeast Pkwy. Dr.
7007 F.M. 362 Rd.
13863 Industrial Rd.
901 East Bingen Point Way
Cincinnati
Chester
Duncan
Crossville
Franklin
Brookshire
Houston
Bingen
MI
MI
MI
NC
NV
OH
SC
SC
TN
TN
TX
TX
WA
Percent
Owned
20%
Net Rentable
Square Feet
246,508
Current Lease
Term Expiration
9/30/2028
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
311,612
10/31/2024
260,243
10/31/2032
423,280
11/30/2026
180,235
9/30/2034
264,598
12/31/2027
420,597
07/14/2025
221,833
08/31/2027
222,200
09/30/2033
289,330
12/31/2023
262,095
3/31/2035
187,800
3/31/2035
124,539
5/31/2024
Special purpose industrial total
Non-consolidated portfolio total
6,719,210
9,971,363
Percent
Leased
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
99.8 %
In addition, we have two non-consolidated joint ventures with a developer, which own developable parcels of land in Etna, Ohio.
The 2021 net effective annual base cash rent for the non-consolidated portfolio as of December 31, 2021 was $9.86 per square
foot and the weighted-average remaining lease term was 8.2 years.
33
Development Projects
The following is a summary of our warehouse/industrial development projects as of December 31, 2021:
Development Projects
Project (% owned)
Consolidated:
The Cubes at Etna East
(95%)(1)(4)
Mt. Comfort (80%)(1)
Cotton 303 (93%)(1)
Ocala (80%)(1)
Smith Farms (90%)(1)(3)
# of
Buildings
Market
Estimated
Sq. Ft.
Estimated
Project
Cost
GAAP
Investment
Balance as of
12/31/2021
($000)(2)
LXP
Amount
Funded as
of
12/31/2021
($000)
Estimated
Building
Completion
Date
% Leased
as of
12/31/2021
1
1
2
1
3
Columbus, OH 1,074,840 $
Indianapolis, IN 1,053,360
880,678
Phoenix, AZ
1,085,280
Central Florida
72,100 $
60,300
84,200
80,900
33,002 $
30,012
30,263
32,186
22,471
21,977
24,475
21,186
2Q 2022
3Q 2022
3Q 2022
3Q 2022
Greenville-
Spartanburg, SC 2,194,820
162,100
$ 459,600 $
35,702
161,165 $
21,433 4Q 2022 - 2Q 2023
111,542
— %
— %
— %
— %
36 %
Land Held for Development
Project (% owned)
Consolidated:
Market
Approx.
Developable
Acres
GAAP Investment Balance
as of 12/31/2021
($000)
LXP Amount Funded
as of 12/31/2021
($000)
Reems & Olive (95.5%)
Phoenix, AZ
Mt. Comfort Phase II (80%)
Indianapolis, IN
420
70
$
$
100,875 $
3,285
104,160 $
96,336
2,610
98,946
Project (% owned)
Non-consolidated:
Market
Approx.
Developable
Acres
GAAP Investment Balance
as of 12/31/2021
($000)(2)
LXP Amount Funded
as of 12/31/2021
($000)
Etna Park 70 (90%)
Etna Park 70 East (90%)(4)
Columbus, OH
Columbus, OH
66
21
$
$
12,875 $
2,797
15,672 $
13,362
2,064
15,426
(1)
(2)
(3)
(4)
Estimated project cost includes estimated tenant improvements and lease costs and excludes potential developer partner promote.
GAAP investment balance is reported in our consolidated balance sheets as a component of real estate under construction for consolidated projects and
a component of investments in non-consolidated entities for non-consolidated projects.
Preleased one 797,936 square foot facility subject to a twelve-year lease commencing upon substantial completion of the facility.
In December 2019, we acquired an 84-acre parcel of developable land in a joint venture. In December 2021, Etna Park 70 East distributed a subdivided
parcel consisting of 63 acres to its partners. The partners formed The Cubes at Etna 70 Building E, LLC to construct a 1.1 million square foot
speculative warehouse/distribution facility.
34
Tenant Diversification
We believe our tenant mix is well diversified. Below are the industries in our warehouse/distribution portfolio based on 2021
base rent for consolidated properties owned as of December 31, 2021:
Lease Term. As a primarily single-tenant investor, we generally maintain a weighted-average lease term that is longer than
most industrial REITs, favoring certainty of cash flow over lease-rollover risk inherent in single-tenant properties. However, we
will invest in shorter-term leases if we are optimistic about the location in a releasing context. As of December 31, 2021, the
weighted-average lease term in our industrial portfolio was 6.9 years.
35
The following table sets forth information about the 15 largest tenants/guarantors in our portfolio as of December 31, 2021
based on total base rental revenue as of December 31, 2021 ($000s, except square feet).
Tenants(1)
Amazon
Nissan
Kellogg
Undisclosed (5)
Watco
Xerox
FedEx
Wal-Mart
Undisclosed (5)
Morgan Lewis (6)
Mars Wrigley
Unis
Asics
Black and Decker
Vista Outdoor
Property
Type
Industrial
Industrial
Industrial
Industrial
Industrial
Office
Industrial
Industrial
Industrial
Office
Industrial
Industrial
Industrial
Industrial
Industrial
Lease
Expirations
Number of
Leases
2026-2033
2027
2027-2029
2031-2035
2038
2023
2023 & 2028
2024 -2031
2034
2024
2025
2023-2027
2030
2029
2034
6
2
3
3
1
1
2
3
1
1
1
3
1
1
1
Square Feet
Leased as
a % of the
Consolidated
Portfolio(2)(3)
Base Rent
Percentage of
Base Rental
Revenue(2)(4)
7.2 % $
5.6 %
5.2 %
17,434
12,760
9,732
2.0 %
0.2 %
0.4 %
0.5 %
4.4 %
2.5 %
0.5 %
1.1 %
1.9 %
1.6 %
2.3 %
1.5 %
7,139
6,773
6,642
5,719
5,659
5,544
5,276
4,734
4,548
4,388
4,278
4,195
7.6 %
5.5 %
4.2 %
3.1 %
2.9 %
2.9 %
2.5 %
2.5 %
2.4 %
2.3 %
2.1 %
2.0 %
1.9 %
1.9 %
1.8 %
Square Feet
Leased
3,864,731
2,971,000
2,801,916
1,090,383
132,449
202,000
292,021
2,351,917
1,318,680
289,432
604,852
1,005,575
855,878
1,214,526
813,126
30
19,808,486
37.1 % $
104,821
45.6 %
(1)
(2)
(3)
(4)
(5)
(6)
Tenant, guarantor or parent.
Total shown may differ from detail amounts due to rounding.
Excludes vacant square feet.
Excludes rents from prior tenants.
Lease restricts certain disclosures.
Includes parking operations.
In 2021, 2020 and 2019, no tenant/guarantor represented greater than 10% of our annual base rental revenue.
The following chart sets forth certain information regarding lease expirations for the next ten years in our consolidated portfolio at
December 31, 2021:
Year
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
Number of
Lease Expirations
5
10
26
15
24
13
8
9
9
11
Square Feet
Base Rent ($000's)
Percentage of
Base Rental Revenue
679,302 $
2,886,518
7,351,936
3,488,478
6,422,511
7,989,778
2,822,958
6,019,761
6,274,840
3,865,080
1,696
15,635
33,369
17,622
23,241
31,557
13,108
20,462
26,694
9,559
0.7 %
6.7 %
14.4 %
7.6 %
10.0 %
13.6 %
5.6 %
8.8 %
11.5 %
4.1 %
The following chart sets forth the 2021 base rent ($000's) based on the credit rating of our consolidated tenants at December 31,
2021(1):
Investment Grade
Non-investment Grade
Unrated
Base Rent
Percentage of
Base Rental Revenue
$
$
130,378
35,777
69,709
235,864
55.3 %
15.2 %
29.5 %
100.0 %
(1)
Credit ratings are based upon either tenant, guarantor or parent/ultimate parent. Generally, all multi-tenant assets are included in unrated. See Item 1A
“Risk Factors”.
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
Item 5. Market For Registrant's Common Equity, Related Stockholder Matters And Issuer Purchases of Equity Securities
PART II.
Market Information. Our common shares are listed for trading on the NYSE under the symbol “LXP”.
Holders. As of February 22, 2022, we had 2,297 common shareholders of record.
Dividends. Since our predecessor's formation in 1993, we have made quarterly distributions without interruption.
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.
Equity Compensation Plan Information. The following table sets forth certain information, as of December 31, 2021, with
respect to our Amended and Restated 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
Equity compensation plans approved
by security holders
Equity compensation plans not
approved by security holders
Total
(a)
(b)
(c)
— $
—
— $
—
—
—
1,410,110
—
1,410,110
Recent Sales of Unregistered Securities.
We did not issue any common shares during 2021 on an unregistered basis.
Share Repurchase Program.
There were no share repurchases during the quarter ended December 31, 2021 under our share repurchase authorization
most recently announced on November 2, 2018, which has no expiration date. There were 8,976,315 shares that may yet be
purchased under our share repurchase authorization as of December 31, 2021.
38
Item 6. [Reserved]
39
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 the
beginning of this Annual Report.
Introduction
The following is a discussion and analysis of the consolidated financial condition and results of operations of LXP Industrial
Trust for the years ended December 31, 2021 and 2020, and significant factors that could affect its prospective financial condition
and results of operations. This discussion should be read together with our accompanying consolidated financial statements
included herein and notes thereto.
Investment Trends
General. Over the last several years, we have focused our investment activity primarily on income producing single-tenant
warehouse and distribution assets and speculative development of warehouse and distribution assets.
In 2021, we acquired and/or completed and placed into service $885.6 million of warehouse and distribution assets, which is
an increase of $273.8 million compared to 2020 investment activity of $611.8 million. The increase was primarily due to our
ability to located attractive investment opportunities in our core industrial markets and the growth of our development pipeline.
As of December 31, 2021, our percentage of gross book value from industrial assets, excluding held for sale assets, increased
to 98.1% compared to 90.8% as of December 31, 2020 as a result of our acquisition and capital recycling efforts. We expect to
recycle our remaining other assets into warehouse and distribution facilities by the end of 2022. While our capital recycling
strategy has had and may continue to have a near-term dilutive impact on earnings due to the sales of revenue-producing
properties, we believe this strategy will benefit shareholder value in the long term.
The industrial real estate market was one of the most resilient real estate markets during the COVID-19 pandemic. One of the
main drivers of growth in the industrial real estate market has been e-commerce. We believe that growth will also be driven by
companies increasing their inventories in the United States to keep up with demand and to protect against future disruptions in the
supply chain.
While we believe the industrial market will continue to grow, there continues to be an increase in competition for the
acquisition of industrial properties, specifically warehouse/distribution properties, which drives up the cost of the assets we buy
and drives down the yield we are able to obtain. This trend was highlighted when initial capitalization rates compressed further
during 2021.
Lease Term. We primarily acquire assets subject to intermediate and long-term leases with escalating rents, which we believe
strengthen our future cash flows and provide a partial hedge against rising interest rates. We intend to maintain a weighted-
average lease term longer than many comparable companies and balance our lease expiration schedule.
Our industrial investment underwriting focuses less on tenant credit than our historical office investment underwriting as we
focus on real estate characteristics such as location and related demographic and local economic trends. This has allowed us to
acquire certain short-term leased warehouse/distribution assets, which may be acquired at a discount compared to long-term
leased warehouse/distribution assets and allow for a value-add strategy through the lease renewal or a multi-tenanting process.
Development. As a result of the competition for income producing single-tenant warehouse/distribution assets, in 2017, we
began selectively investing in development projects. We believe we can achieve higher yields from development projects than we
can by purchasing existing properties.
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Our development activities have been focused on speculative development. Our target markets are experiencing low vacancy
rates. Despite an increase in construction in recent years, we believe there is sufficient tenant demand for our development
projects.
Leasing
General. Re-leasing properties that are currently vacant or as leases expire at favorable effective rates is a primary area of
focus for our asset management. Renewals of industrial leases, particularly for warehouse/distribution facilities, are generally
dependent on location and occupancy alternatives for our tenants.
If a property cannot be re-let to a single user and the property can be adapted to multi-tenant use, we determine whether the
costs of adapting the property to multi-tenant use outweigh the benefit of funding operating costs while searching for a single-
tenant and whether selling a vacant property, which limits operating costs and allows us to redeploy capital, is in the best interest
of our shareholders.
During 2021, we entered into 30 new leases and lease extensions encompassing approximately 8.5 million square feet. The
average base rent on these extended leases was approximately $4.04 per square foot compared to the average base rent on these
leases before extension of $3.64 per square foot. The weighted-average cost of tenant improvements and lease commissions
during 2021 was approximately $2.91 per square foot for new leases and $2.75 per square foot for extended leases.
As of December 31, 2021, we had three single-tenant leases in our industrial portfolio where the lease term is scheduled to
expire in 2022, covering approximately 0.7 million square feet. As of December 31, 2021, approximately 50% of our industrial
base rental revenue was from leases scheduled to expire during 2022 through 2027. We expect an aggregate increase in rental
revenue as these leases are reset to market rates.
Inherent Growth. Many leases have scheduled fixed rent increases or rent increases based upon the consumer price index. As
of December 31, 2021, 95.4% of our single-tenant industrial leases had scheduled rent increases. The average escalation rate of
these leases based on the next rent step was 2.8% as of December 31, 2021. A majority of our leases require tenants to pay
operating expenses, including maintenance, real estate taxes, insurance and utilities, thereby reducing our exposure to increases in
costs and operating expenses. However, certain of our leases provide for some level of landlord responsibility for capital repairs
and replacements, the cost of which is generally factored into the rental rate. Our motivation to release vacant space requires us to
meet market demands with respect to rental rates, tenant concessions and landlord responsibilities. Developers are similarly
motivated when signing leases with tenants due to the significant competition in the industrial space. As a result, the obligations
of our property owner subsidiaries on new leases and newly renewed or extended leases may increase to include, among other
items, some form of responsibility for operating expenses and/or capital repairs and replacements.
Tenant Credit. We continue to monitor the credit of tenants of properties in which we have an interest by (1) subscribing to
rating agency information, so that we can monitor changes in the ratings of our rated tenants, (2) reviewing financial statements
that are publicly available or that are required to be delivered to us under the applicable lease, (3) monitoring news reports
regarding our tenants and their respective businesses, (4) monitoring the timeliness of rent collections and (5) meeting with our
tenants.
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Other properties
We continue to recycle our other real estate investments into warehouse/distribution assets. As of December 31, 2021, our
other real estate assets represented 1.9% of our gross book value, excluding held for sale assets. We have historically marketed
non-industrial assets for sale when we believe we have obtained the highest possible valuation through various means, including
lease renewals. However, we expect to accelerate the sale of most of our non-industrial assets in 2022.
Non-Recourse Mortgage Loan Resolutions
Since we have a limited number of industrial properties subject to non-recourse mortgages, we do not expect many
foreclosure sales of consolidated properties in the future.
Impairment charges
During 2021 and 2020, we incurred impairment charges, of $5.5 million and $14.5 million, respectively, on certain of our
assets due to each asset's carrying value being below its estimated fair value. Most of the impairment charges in 2021 and 2020
were incurred on non-core assets due to anticipated shortened holding periods. We cannot estimate if we will incur, or the amount
of, future impairment charges on our assets. See Part I, Item 1A “Risk Factors”, of this Annual Report.
Critical Accounting Estimates
In preparing the consolidated financial statements we have made estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
reporting periods. Accounting estimates are deemed critical if they involve a significant level of estimation uncertainty and have
had or are reasonably likely to have a material impact on our financial condition or results of operations. Below is a summary of
the critical accounting estimates used in the preparation of our consolidated financial statements. A summary of our significant
accounting policies which are important to the portrayal of our financial condition and results of operations is set forth in Note 2
to the Consolidated Financial Statements, which are included in “Financial Statements and Supplementary Data” in Part II, Item 8
of this Annual Report.
Acquisition of Real Estate. Primarily all of our acquisitions of real estate assets and liabilities are accounted for as asset
acquisitions. As such, the purchase prices of acquired tangible and intangible assets and liabilities are recorded and allocated at
fair value on a relative basis. The recorded allocations of tangible assets are based on the “as-if-vacant” value using estimated
cash flow projections of the properties acquired which incorporates discount, capitalization and interest rates as well as available
comparable market information. Allocations of intangible assets includes management’s estimates of current market rents and
leasing costs.
We use considerable judgement in our estimates of cash flow projections, discount, capitalization and interest rates, fair
market lease rates, carrying costs during hypothetical expected lease-up periods and costs to execute similar leases. While our
methodology for purchase price allocation did not change during the year ended December 31, 2021, the real estate market is fluid
and our assumptions are based on information currently available in the market at the time of acquisition. Significant increases or
decreases in these key estimates, particularly with regards to cash flow projections and discount and capitalization rates, would
result in a significantly lower or higher fair value measurement of the real estate assets being acquired.
Revenue Recognition. We enter into agreements with tenants that convey the right to control the use of identified space at our
properties in exchange for rental revenue. These agreements meet the criteria for recognition as leases under Accounting
Standards Codification (“ASC”) 842, Leases. We recognize lease revenue on a straight-line basis over the term of the lease unless
another systematic and rational basis is more representative of the time pattern in which the use benefit is derived from the leased
property. We commence revenue recognition when possession or control of the space is turned over to the tenant.
We evaluate the collectability of our rental payments and recognize revenue on a cash basis when we believe it is no longer
probable that we will receive substantially all of the remaining lease payments. Management exercises judgment in assessing
collectability of tenant receivables and considers payment history, current credit status, publicly available information about the
financial condition of the tenant and other factors. Our assessment of the collectability of tenant receivables can have a significant
impact on the rental revenue recognized in our consolidated statements of income.
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Impairment of Real Estate. We record impairments of our real estate assets classified as held for use when triggering events
dictate that an asset may be impaired. An impairment is recorded when the carrying amount of the asset exceeds the sum of its
undiscounted future operating and residual cash flows. The impairment is the difference between estimated fair value of the asset
and the carrying amount. We record impairments of our real estate assets classified as held for sale at the lower of the carrying
amount or estimated fair value using the estimated or contracted sales price less costs to sell. Any real estate assets recorded at fair
value on a non-recurring basis as a result of our impairment analysis are valued using unobservable local and national industry
market data such as comparable sales, appraisals, brokers’ opinions of value and/or terms of definitive sales contracts.
Additionally, the analysis includes considerable judgement in our estimates of hold periods, projected cash flows and discount and
capitalization rates. Significant increases or decreases in any of these inputs, particularly with regards to cash flow projections and
discount and capitalization rates, would result in a significantly lower or higher fair value measurement of the real estate assets
being assessed.
We will record an impairment charge related to our investments, including investments in non-consolidated entities, if we
determine the fair value of the investments are less than their carrying value and such impairment is other-than-temporary. We
evaluate whether events or changes in circumstances indicate that the carrying amount of our investments may not be recoverable.
Our evaluation of changes in economic or operating conditions and whether an impairment is other-than-temporary may include
developing estimates of fair value, forecasted cash flows or operating income before depreciation and amortization. We estimate
undiscounted cash flows and fair value using observable and unobservable data such as operating income, hold periods, estimated
capitalization and discount rates, or relevant market multiples, leasing prospects and local market information and whether certain
impairments are other-than-temporary.
New Accounting Pronouncements
For a discussion of new accounting pronouncements, see note 2 "Summary of Significant Accounting Policies" to our
consolidated financial statements included in this report.
Cybersecurity
While we have yet to experience a cyber attack that disrupted our operations in any material respect, all companies, including
ours, are increasing the resources allocated to address and protect against cybersecurity threats. Due to the small size of our
organization, we rely on third-parties to provide advice and services with respect to cybersecurity, which is not currently, but
could become, a material cost.
Environmental, Social and Governance
ESG matters are becoming a central focus for our shareholders, employees, tenants, suppliers, creditors, and communities.
During 2021, we allocated an increased amount of resources to ESG matters. We expect to continue to increase our ESG efforts
and the resources allocated to ESG matters in the near future.
Liquidity
General. Our principal sources of liquidity have been (1) undistributed cash flows generated from our investments, (2) the
public and private equity and debt markets, (3) property specific debt, (4) corporate level borrowings, (5) commitments from co-
investment partners and (6) proceeds from the sales of our investments. We believe our ratio of dividends to Adjusted Company
Funds From Operations is conservative, and allows us to retain cash flow for internal growth.
Our ability to incur additional debt to fund acquisitions is dependent upon our existing leverage, the value of the assets we are
attempting to leverage and general economic and credit market conditions, which may be outside of management's control or
influence.
Cash Flows. We believe that cash flows from operations will continue to provide adequate capital to fund our operating and
administrative expenses, regular debt service obligations and all dividend payments in accordance with applicable REIT
requirements in both the short-term and long-term. However, our cash flow from operations may be negatively affected in the
near term if we grant tenant rent relief packages or experience tenant defaults as a result of the effects of COVID-19. In addition,
we anticipate that cash on hand, borrowings under our unsecured revolving credit facility, capital recycling proceeds, issuances of
equity, mortgage proceeds and other debt, as well as other available alternatives, will provide the necessary capital required by
our business.
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Cash flows from operations as reported in the Consolidated Statements of Cash Flows totaled $220.3 million for 2021 and
$201.8 million for 2020. The increase was primarily related to the impact of cash flow generated from acquiring properties and
termination fee income, partially offset by property sales and vacancies. The underlying drivers that impact our working capital,
and therefore cash flows from operations, are the timing of collection of rents, including reimbursements from tenants, payment of
interest on mortgage debt and payment of operating and general and administrative costs. We believe the net-lease structure of the
leases encumbering a majority of the properties in which we have an interest mitigates the risks of the timing of cash flows from
operations since the payment and timing of operating costs related to the properties are generally borne directly by the tenant. The
collection and timing of tenant rents are closely monitored by management as part of our cash management program.
Net cash used in investing activities totaled $337.8 million in 2021 and $494.4 million in 2020. Cash used in investing
activities related primarily to acquisitions of real estate, investments in real estate under construction, land held for development,
capital expenditures, lease costs, investments in non-consolidated entities, investment in a note receivable and changes in real
estate deposits, net. Cash provided by investing activities primarily related to net proceeds received from the disposition of real
estate and distributions from non-consolidated entities.
Net cash provided by financing activities totaled $129.1 million in 2021 and $342.6 million in 2020. Cash provided by
financing activities primarily related to the issuance of the 2031 and 2030 Senior Notes, revolving credit facility borrowings,
mortgage proceeds, issuances of common shares and cash contributions from noncontrolling interests. Cash used in financing
activities primarily related to the redemption of the 2023 and 2024 Senior Notes, dividend and debt service payments.
Public and Private Equity and Debt Markets. We access the public and private equity and debt markets on an opportunistic
basis when we (1) believe conditions are favorable and (2) have a compelling use of proceeds.
We expect to continue to access debt and equity markets in the future to implement our business strategy and to fund future
growth when market conditions are favorable. However, the volatility in the capital markets primarily resulting from the effects of
the COVID-19 pandemic may negatively affect our ability to access these capital markets.
Equity:
At-The-Market Offering Program. We maintain an At-The-Market offering program, or ATM program, under which we can
issue common shares. The following table summarizes common share issuances under the ATM program for the years ended
December 31, 2021 and 2020, respectively:
2021 ATM Issuances
2020 ATM Issuances
Year ended December 31, 2021
Shares Sold
1,052,800
Net Proceeds
$13.5 million
Year ended December 31, 2020
Shares Sold
5,950,882
Net Proceeds
$61.0 million
During 2021, we settled 4,990,717 common shares previously sold on a forward basis on the maturity date of the contract and
received $53.6 million of net proceeds. There were no forward settlements during 2020.
As of December 31, 2021, an aggregate of 3,649,023 common shares were sold in forward sales contracts that have not been
settled and had an aggregate settlement price of $38.5 million, which is subject to adjustment in accordance with the forward sales
contracts. We expect to settle the forward sales contracts by the maturity dates in February 2022.
During 2021, we amended the terms of our ATM offering program, under which we may, from time to time, sell up to $350.0
million common shares over the term of the program. As of December 31, 2021, common shares with an aggregate value of
$295.0 million remain available for issuance under the ATM program.
Underwritten equity offerings. During 2021, we entered into forward sales contracts for the sale of 16,000,000 common
shares at a public offering price of $12.11 per common share in an underwritten equity offering that have not yet settled. Subject
to our rights to elect cash or net share settlement, we expect to settle the forward sales contracts by the maturity date in May 2022.
As of December 31, 2021, the forward sales contracts had an aggregate settlement price $187.5 million, which is subject to
adjustment in accordance with the forward sales contracts.
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During 2020, we issued 17,250,000 common shares at a public offering price of $9.60 per common share in an underwritten
equity offering and generated net proceeds of approximately $164.0 million. The proceeds were used for general corporate
purposes, including acquisitions, and pending the application of the proceeds were used to pay down all of the then outstanding
balance under our revolving credit facility.
The volatility in the capital markets primarily resulting from the effects of the COVID-19 pandemic may negatively affect
our ability to access the capital markets through our ATM program and other offerings.
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. 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. No shares were purchased from us under the plan in 2021, 2020 and 2019.
Share Repurchase Program. During 2015, our Board of Trustees authorized the repurchase of up to 10.0 million common
shares and increased this authorization by 10.0 million common shares in 2018. The share repurchase program does not expire.
During 2020, we repurchased and retired approximately 1.3 million, at an average price of $8.28 per common share under the
repurchase program. During 2021, we did not repurchase any shares and approximately 9.0 million common shares remain
available for repurchase. We have continued to, and in the future may, repurchase our common shares in the context of our overall
capital plan, and to the extent we believe market volatility offers prudent investment opportunities based on our common share
price versus net asset value per share.
Operating Partnership Units. In recent years there has not been a great demand for OP units as consideration and, as a result,
we expect the percentage of common shares that will be outstanding in the future relative to OP units will increase, and income
attributable to noncontrolling interests should be expected to decrease, as such OP units are redeemed for our common shares.
Furthermore, our credit agreement requires us to own at least 95.5% of a subsidiary for the assets of such subsidiary to be
included in the calculation of our credit agreement covenants, which incents us to maintain our percentage ownership in LCIF and
not issue additional OP units.
During 2021, LCIF redeemed and cancelled 1,598,906 OP units in connection with the disposition of three properties. As of
December 31, 2021, there were 0.8 million OP units outstanding not owned by us which were convertible on a one OP unit for
approximately 1.13 common shares basis into an aggregate of 0.9 million common shares assuming we satisfied redemptions
entirely with common shares. All outstanding OP units are entitled to a distribution equal to the dividend on our common shares
or a stated distribution that may adjust based on our commons share dividend amount.
Debt:
Corporate Borrowings. In 2021, we issued $400.0 million aggregate principal amount of our 2031 Senior Notes. We used a
portion of the net proceeds from the offering of the 2031 Senior Notes to redeem $188.8 million aggregate principal balance of
our outstanding 2023 Senior Notes.
In 2020, we issued $400.0 million aggregate principal amount of our 2030 Senior Notes. We used a portion of the net
proceeds from the offering of the 2030 Senior Notes to repurchase $61.2 million and $51.1 million aggregate principal balance of
our outstanding 2023 Senior Notes and 2024 Senior Notes, respectively, through a tender offer.
The following Senior Notes were outstanding as of December 31, 2021:
Issue Date
August 2021
August 2020
May 2014
Face Amount
(millions)
Interest Rate
$
$
400.0
400.0
198.9
998.9
2.375 %
2.70 %
4.40 %
Maturity Date
October 2031
September 2030
June 2024
Issue Price
99.758 %
99.233 %
99.883 %
The Senior Notes are unsecured and pay interest semi-annually in arrears. We may redeem the Senior Notes at our option at
any time prior to maturity in whole or in part by paying the principal amount of the Senior Notes being redeemed plus a make-
whole premium.
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A summary of the maturity dates and interest rates of our unsecured credit agreement, as of December 31, 2021, are as
follows:
$600.0 Million Revolving Credit Facility(1)
$300.0 Million Term Loan(2)
Maturity Date
02/2023
01/2025
Interest Rate
LIBOR + 0.90%
LIBOR + 1.00%
(1) Maturity date of the revolving credit facility can be extended to February 2024 at our option. The interest rate ranges from LIBOR plus 0.775% to
1.45%. At December 31, 2021, we had no borrowings outstanding and availability of $600.0 million, subject to covenant compliance.
(2) The LIBOR portion of the interest rate was swapped to obtain a current fixed rate of 2.732% per annum.
As of December 31, 2021, we were in compliance with the financial covenants contained in our corporate level debt
agreements.
During 2007, we issued $200.0 million in Trust Preferred Securities, which bore interest at a fixed rate of 6.804% through
April 2017 and, thereafter, bears interest at a variable rate of three month LIBOR plus 170 basis points. These securities are (1)
classified as debt, (2) due in 2037 and (3) currently redeemable by us. As of December 31, 2021, there were $129.1 million of
these securities outstanding.
Property Specific Debt. As of December 31, 2021, we have a limited number of consolidated properties subject to mortgages.
Our property owner subsidiaries do not have mortgage maturities with balloon payments due until 2031. With respect to
mortgages encumbering properties where the expected lease rental revenues are sufficient to provide an estimated property value
in excess of the mortgage balance, we believe our property owner subsidiaries have sufficient sources of liquidity to meet these
obligations through future cash flows from operations, the credit markets and, if determined appropriate by us, a capital
contribution from us from either cash on hand ($190.9 million at December 31, 2021), property sale proceeds or borrowing
capacity on our primary credit facility ($600.0 million as of December 31, 2021, subject to covenant compliance).
Our secured debt decreased to approximately $84.4 million at December 31, 2021 compared to $138.4 million at
December 31, 2020. We expect to continue to use property specific, non-recourse mortgages in certain situations as we believe
that by properly matching a debt obligation, including the balloon maturity risk, with the terms of a lease, our cash-on-cash
returns increase and the exposure to residual valuation risk is reduced. In addition, we may procure credit tenant lease financing in
certain situations where we are able to monetize all or a significant portion of the rental revenues of a property at an attractive
rate.
Institutional Fund Management. We have entered into co-investment programs and joint ventures with institutional investors
to mitigate our risk in certain assets and increase our return on equity to the extent we earn management or other fees. However,
investments in certain co-investment programs and joint ventures limit our ability to make investment decisions unilaterally
relating to the assets and limit our ability to deploy capital.
During 2021, we recapitalized a portfolio of 22 special purpose industrial properties, primarily manufacturing assets, through
the formation of an institutional joint venture. This enabled us to capitalize on the compression of capitalization rates for these
industrial assets, while mitigating risks of staying fully invested in these assets. We own 20% of this institutional joint venture
and we and our partner are committed to fund an additional $50.0 million and $200.0 million, respectively, of future capital to
grow this joint venture by acquiring special purpose industrial properties that do not conflict with our warehouse and distribution
investment strategy.
The real estate investments owned by our institutional joint ventures are generally financed with non-recourse debt. Non-
recourse debt is generally defined as debt whereby the lenders' sole recourse with respect to borrower defaults is limited to the
value of the assets collateralized by the debt. The lender generally does not have recourse against any other assets owned by the
borrower or any of the members or partners of the borrower, except for certain specified exceptions listed in the particular loan
documents. These exceptions generally relate to "bad boy" acts, including fraud, prohibited transfers and breaches of material
representations, and environmental matters. We have guaranteed such obligations for certain of our non-consolidated entities with
respect to $776.0 million of such non-recourse debt. We believe the likelihood of making any payments under such guaranties is
remote and we generally have an agreement from each partner to reimburse us for its proportionate share of any liability related to
a guarantee trigger unless such trigger is caused solely by us.
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Capital Recycling. Part of our strategy to effectively manage our balance sheet involves pursuing and executing well on
property dispositions and recycling of capital. During 2021, we disposed of our interests in 15 properties for an aggregate gross
price of $276.7 million. Additionally, we disposed of 22 properties to a non-consolidated joint venture for an aggregate price of
$547.2 million, net of purchase price credits. The proceeds were primarily used to (1) retire corporate debt obligations and (2)
make investments in real property.
As we near the completion of the capital recycling of our non-industrial assets, we expect to continue our recycling efforts
with respect to our older industrial assets and/or those outside our target markets where we believe we can take advantage of the
strong current market. We believe capital recycling (1) provides cost effective and timely capital support for our investment
activities and (2) allows us to maintain line capacity and cash in advance of what we expect to be a growing investment pipeline.
Liquidity Needs. Our principal liquidity needs are the contractual obligations set forth under the heading “Contractual
Obligations,” below, and the payment of dividends to our shareholders and distributions to the holders of OP units. As we grow
our development pipeline, we expect that development activities will become a greater part of our liquidity needs.
As of December 31, 2021, we had approximately $1.5 billion of indebtedness, consisting of mortgages and notes payable
outstanding, a term loan, 2.375%, 2.70%, and 4.40% Senior Notes and Trust Preferred Securities, with a weighted-average
interest rate of approximately 2.8%. The ability of a property owner subsidiary to make debt service payments depends upon the
rental revenues of its property and its ability to refinance the mortgage related thereto, sell the related property, or access capital
from us or other sources. A property owner subsidiary's ability to accomplish such goals will be affected by numerous economic
factors affecting the real estate industry, including the risks described under "Risk Factors" in Part I, Item 1A of this Annual
Report.
If we are unable to satisfy our contractual obligations and other operating costs with our cash flow from operations, we intend
to use borrowings and proceeds from issuances of equity or debt securities. If a property owner subsidiary is unable to satisfy its
contractual obligations and other operating costs, it may default on its obligations and lose its assets in foreclosure or through
bankruptcy proceedings.
In connection with our intention to continue to qualify as a REIT for federal income tax purposes, we expect to continue
paying regular dividends to our shareholders. These dividends are expected to be paid from operating cash flows and/or from
other sources. Since cash used to pay dividends reduces amounts available for capital investments, we generally intend to
maintain a conservative dividend payout ratio, reserving such amounts as we consider necessary for the maintenance or expansion
of properties in our portfolio, debt reduction, the acquisition of interests in new properties as suitable opportunities arise, and such
other factors as our Board of Trustees considers appropriate.
We paid approximately $128.3 million in cash dividends to our common and preferred shareholders in 2021. Although our
property owner subsidiaries receive the majority of our base rental payments on a monthly basis, we intend to continue paying
dividends quarterly. Amounts accumulated in advance of each quarterly distribution are invested by us in short-term money
market or other suitable instruments.
Contractual Obligations
As of December 31, 2021, we had five ongoing consolidated development projects and expect to incur approximately $312.0
million of costs in 2022, excluding noncontrolling interests' share, to substantially complete the construction of such projects. As
of December 31, 2021, we had two consolidated and two non-consolidated joint ventures that own land parcels held for
development. We are unable to estimate the timing of any required fundings for potential development projects on these parcels.
Capital Resources
General. Due to the net-lease structure of a majority of our investments, our property owner subsidiaries historically have not
incurred significant expenditures in the ordinary course of business to maintain the properties in which we have an interest. As
leases expire, we expect our property owner subsidiaries to incur costs in extending the existing tenant leases, re-tenanting the
properties with a single-tenant, or converting the property to multi-tenant use. The amounts of these expenditures can vary
significantly depending on tenant negotiations, market conditions, rental rates and property type.
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Single-Tenant Properties. We do not anticipate significant capital expenditures at the single-tenant properties in which we
have an interest that are subject to net or similar leases since the tenants at these properties generally bear all or substantially all of
the cost of property operations, maintenance and repairs. However, at certain properties subject to net leases, our property owner
subsidiaries are responsible for replacement and/or repair of certain capital items, which may or may not be reimbursed. In
addition, at certain single-tenant properties that are not subject to a net lease, our property owner subsidiaries have a level of
property operating expense responsibility, which may or may not be reimbursed.
Multi-Tenant Properties. Primarily as a result of non-renewals at single-tenant net-lease properties, we have interests in
multi-tenant properties in our consolidated portfolio. While tenants of these properties are generally responsible for increases over
base year expenses, our property owner subsidiaries are generally responsible for the base-year expenses and capital expenditures,
and are responsible for all expenses related to vacant space, at these properties.
Vacant Properties. To the extent there is a vacancy in a property, our property owner subsidiary would be obligated for all
operating expenses, including capital expenditures, real estate taxes and insurance. When a property is vacant, our property owner
subsidiary may incur substantial capital expenditure and releasing costs to re-tenant the property. However, we believe that, over
the long term, our focus on industrial assets will result in significant savings compared to investing in office assets due to the
lower operating and retenanting costs of industrial assets compared to office assets.
Property Expansions. Under certain leases, tenants have the right to expand the facility located on a property in which we
have an interest. We expect our property owner subsidiaries may fund these property expansions with either additional secured
borrowings, the repayment of which will be funded out of rental increases under the leases covering the expanded properties, or
capital contributions from us.
Ground Leases. The tenants of properties in which we have an interest generally pay the rental obligations on ground leases
either directly to the fee holder or to our property owner subsidiary as increased rent. However, our property owner subsidiaries
are responsible for these payments (1) under certain leases without reimbursement and (2) at vacant properties.
Environmental Matters. Based upon management's ongoing review of the properties in which we have an interest,
management is not aware of any environmental condition with respect to any of these properties that would be reasonably likely
to have a material adverse effect on us. There can be no assurance, however, that (1) the discovery of environmental conditions,
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.
48
Results of Operations
Year ended December 31, 2021 compared with December 31, 2020. The increase in net income attributable to common
shareholders of $199.1 million was primarily due to the items discussed below.
The increase in total gross revenues of $13.5 million was primarily a result of an increase of $14.5 million of termination
income recognized during 2021. Additionally, tenant reimbursement income increased $5.1 million during 2021 because of an
increased in managed properties compared to the prior year. These increases were partially offset by a $5.3 million decrease in
rental revenue primarily due to the timing of property sales and a $0.6 million decrease in other revenue primarily due to an
incentive fee earned upon the sale of a property that we managed for a third-party real estate owner in 2020 with no comparable
revenue earned in 2021.
The increase in depreciation and amortization expense of $15.1 million was primarily due to acquisition activity.
The increase in property operating expense of $5.8 million was primarily due to an increase in operating expense
responsibilities at certain properties.
The increase in general and administrative expense of $5.1 million was primarily attributable to a $3.5 million increase in
payroll costs and deferred compensation expense and a $1.2 million increase in costs related to investor activism.
The increase in non-operating income of $0.6 million was primarily due to funds received for land easements at two of our
properties in 2021 with no comparable income in 2020.
The decrease in interest and amortization expense of $8.5 million related primarily to a decrease in the amount of our
mortgage debt outstanding and a decrease in our overall borrowing rate.
The decrease in debt satisfaction gains, net, of $35.3 million was primarily due to the recognition of aggregate debt
satisfaction gains of $29.0 million upon the foreclosure of our Charleston, South Carolina and Overland Park, Kansas properties
in 2020, offset by a $10.1 million debt satisfaction loss incurred as a result of the repurchase of a portion of the 2023 Senior Notes
and 2024 Senior Notes pursuant to a tender offer in 2020. During 2021, we incurred debt satisfaction losses of $13.9 million
primarily related to the redemption of our remaining 2023 Senior Notes.
The decrease in impairment charges of $8.9 million was primarily due to the timing of impairment charges taken on certain
properties. The impairments were primarily due to shortened hold periods, vacancy and lack of leasing prospects.
The increase in gains on sales of properties of $228.2 million was primarily related to the sale of 22 properties to a newly-
formed joint venture in 2021 and the timing of property dispositions.
The decrease in net income attributable to noncontrolling interests of $0.6 million was primarily a result of a decrease in
third-party OP unitholders.
The increase in net income or decrease in net loss in future periods will be closely tied to the level of acquisitions made by us.
Without acquisitions, the sources of growth in net income are limited to fixed rent adjustments and index adjustments (such as the
consumer price index), reduced interest expense on amortizing mortgages and variable rate indebtedness and by controlling other
variable overhead costs. However, there are many factors beyond management's control that could offset these items including,
without limitation, changes in economic conditions such as the recent economic uncertainty primarily caused by the COVID-19
pandemic, increased interest rates and tenant monetary defaults and the other risks described in this Annual Report.
The analysis of the results of operations for the year ended December 31, 2020 compared with December 31, 2019 is
included in our 2020 Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission, on
February 18, 2021.
49
Same-Store Results
Same-store net operating income, or NOI, which is a non-GAAP measure, represents the NOI for consolidated properties that
were owned and included in our portfolio for two comparable reporting periods. We define NOI as operating revenues (rental
income (less GAAP rent adjustments and lease termination income, net), and other property income) less property operating
expenses. As same-store NOI excludes the change in NOI from acquired and disposed of properties, it highlights operating trends
such as occupancy levels, rental rates and operating costs on properties. Other REITs may use different methodologies for
calculating same-store NOI, and accordingly same-store NOI may not be comparable to other REITs. Management believes that
same-store NOI is a useful supplemental measure of our operating performance. However, same-store NOI should not be viewed
as an alternative measure of our financial performance since it does not reflect the operations of our entire portfolio, nor does it
reflect the impact of general and administrative expenses, acquisition-related expenses, interest expense, depreciation and
amortization costs, other nonproperty income and losses, the level of capital expenditures and leasing costs necessary to maintain
the operating performance of our properties, or trends in development and construction activities which are significant economic
costs and activities that could materially impact our results from operations. We believe that net income is the most directly
comparable GAAP measure to same-store NOI.
The following presents our consolidated same-store NOI, for the years ended December 31, 2021 and 2020 ($000):
Total cash base rent
Tenant reimbursements
Property operating expenses
Same-store NOI
2021
2020
182,389 $
26,447
(31,429)
177,407 $
180,638
25,729
(30,034)
176,333
$
$
Our reported same-store NOI increased from 2020 to 2021 by 0.6% primarily due to an increase in occupancy and cash base rents.
As of December 31, 2021 and 2020, our historical same-store square footage leased was 99.1% and 98.1%, respectively.
50
Below is a reconciliation of net income to same-store NOI for periods presented:
Net income
Interest and amortization expense
Provision for income taxes
Depreciation and amortization
General and administrative
Transaction costs
Non-operating/advisory fee income
Gains on sales of properties
Impairment charges
Debt satisfaction (gains) losses, net
Equity in losses of non-consolidated entities
Lease termination income, net
Straight-line adjustments
Lease incentives
Amortization of above/below market leases
NOI
Less NOI:
Acquisitions and dispositions
Same-Store NOI
Funds From Operations
Twelve Months ended December 31,
2021
2020
$
385,091 $
186,391
46,708
1,293
176,714
35,458
432
(4,402)
(367,274)
5,541
13,894
190
(14,972)
(12,324)
780
(1,551)
265,578
55,201
1,584
161,592
30,371
255
(4,569)
(139,039)
14,460
(21,452)
169
(857)
(13,654)
921
(1,580)
269,793
$
(88,171)
177,407 $
(93,460)
176,333
We believe that Funds from Operations, or FFO, which is a non-GAAP measure, is a widely recognized and appropriate
measure of the performance of an equity REIT. We believe FFO is frequently used by securities analysts, investors and other
interested parties in the evaluation of REITs, many of which present FFO when reporting their results. FFO is intended to exclude
GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate
diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. As a result,
FFO provides a performance measure that, when compared year over year, reflects the impact to operations from trends in
occupancy rates, rental rates, operating costs, development activities, interest costs and other matters without the inclusion of
depreciation and amortization, providing a perspective that may not necessarily be apparent from net income.
The National Association of Real Estate Investment Trusts, or NAREIT, defines FFO as “net income (calculated in
accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from the sales of certain
real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and
investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the
entity. The reconciling items include amounts to adjust earnings from consolidated partially-owned entities and equity in earnings
of unconsolidated affiliates to FFO.” FFO does not represent cash generated from operating activities in accordance with GAAP
and is not indicative of cash available to fund cash needs.
We present FFO available to common shareholders and unitholders - basic and also present FFO available to all
equityholders and unitholders - diluted on a company-wide basis as if all securities that are convertible, at the holder's option, into
our common shares, are converted at the beginning of the period. We also present Adjusted Company FFO available to all
equityholders and unitholders - diluted, which adjusts FFO available to all equityholders and unitholders - diluted for certain items
which we believe are not indicative of the operating results of our real estate portfolio. We believe this is an appropriate
presentation as it is frequently requested by securities analysts, investors and other interested parties. Since others do not calculate
these measures in a similar fashion, these measures may not be comparable to similarly titled measures as reported by others.
These measures should not be considered as an alternative to net income as an indicator of our operating performance or as an
alternative to cash flow as a measure of liquidity.
51
The following presents a reconciliation of net income attributable to common shareholders to FFO available to common
shareholders and unitholders and Adjusted Company FFO available to all equityholders and unitholders for 2021 and 2020
(dollars in thousands, except share and per share amounts):
2021
2020
FUNDS FROM OPERATIONS:
Basic and Diluted:
Net income attributable to common shareholders
$
375,848 $
176,788
Adjustments:
Depreciation and amortization
Impairment charges - real estate
Noncontrolling interests - OP units
Amortization of leasing commissions
Joint venture and noncontrolling interest adjustment
Gains on sales of properties, including non-consolidated entities
FFO available to common shareholders and unitholders - basic
Preferred dividends
Amount allocated to participating securities
FFO available to all equityholders and unitholders - diluted
Debt satisfaction (gains) losses, net, including non-consolidated entities
Activist costs
Transaction costs
Adjusted Company FFO available to all equityholders and unitholders - diluted
Per Common Share and Unit Amounts
Basic:
FFO
Diluted:
FFO
Adjusted Company FFO
Weighted-Average Common Shares:
Basic:
Weighted-average common shares outstanding - basic EPS
Operating partnership units(1)
Weighted-average common shares outstanding - basic FFO
Diluted:
Weighted-average common shares outstanding - diluted EPS
Unvested share-based payment awards
Operating partnership units(1)
Preferred shares - Series C
Weighted-average common shares outstanding - diluted FFO
(1) Includes OP units other than OP units held by us.
173,833
5,541
1,672
2,881
8,370
(367,274)
200,871
6,290
510
207,671
13,894
1,199
432
158,655
14,460
2,347
2,937
8,578
(139,596)
224,169
6,290
224
230,683
(21,396)
—
255
$
$
$
$
223,196 $
209,542
0.72 $
0.83
0.72 $
0.78 $
0.84
0.76
277,640,835
1,918,845
279,559,680
266,914,843
3,083,320
269,998,163
287,369,742
44,261
—
—
287,414,003
268,182,552
17,180
3,083,320
4,710,570
275,993,622
52
Item 7A. Quantitative and Qualitative Disclosure about Market Risk
Our exposure to market risk relates primarily to our variable-rate indebtedness not subject to interest rate swaps and our
fixed-rate debt. Our consolidated aggregate principal variable-rate indebtedness was $129.1 million at December 31, 2021 and
2020, which represented 8.5% and 9.5%, respectively, of our aggregate principal consolidated indebtedness. During 2021 and
2020, our variable-rate indebtedness had a weighted-average interest rate of 1.7% and 2.4%, respectively. Had the weighted-
average interest rate been 100 basis points higher, our interest expense for 2021 and 2020 would have increased by $1.7 million
and $1.8 million, respectively. As of December 31, 2021 and 2020, our aggregate principal consolidated fixed-rate debt was $1.4
billion and $1.2 billion, respectively, which represented 91.5% and 90.5%, respectively, of our aggregate principal indebtedness.
For certain of our financial instruments, fair values are not readily available since there are no active trading markets as
characterized by current exchanges between willing parties. Accordingly, we derive or estimate fair values using various
valuation techniques, such as computing the present value of estimated future cash flows using discount rates commensurate with
the risks involved. However, the determination of estimated cash flows may be subjective and imprecise. Changes in assumptions
or estimation methodologies can have a material effect on these estimated fair values. The following fair value was determined
using the interest rates that we believe our outstanding fixed-rate debt would warrant as of December 31, 2021 and is indicative of
the interest rate environment as of December 31, 2021, and does not take into consideration the effects of subsequent interest rate
fluctuations. Accordingly, we estimate that the fair value of our fixed-rate debt was $1.4 billion as of December 31, 2021.
Our interest rate risk objectives are to limit the impact of interest rate fluctuations on earnings and cash flows and to lower
our overall borrowing costs. To achieve these objectives, we manage our exposure to fluctuations in market interest rates through
the use of fixed-rate debt instruments to the extent that reasonably favorable rates are obtainable with such arrangements. We
have historically entered into derivative financial instruments such as interest rate swaps or caps to mitigate our interest rate risk
on a related financial instrument or to effectively lock the interest rate on a portion of our variable-rate debt. As of December 31,
2021, we had four interest rate swap agreements in our consolidated portfolio, all of which expire in January 2025.
53
Item 8. Financial Statements and Supplementary Data
Financial Statements and Supplementary Data
Reports of Independent Registered Public Accounting Firm (PCAOB ID No. 34)
Consolidated Balance Sheets as of December 31, 2021 and December 31, 2020
Consolidated Statements of Operations for the years ended December 31, 2021, December 31, 2020 and December 31,
2019
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2021, December 31, 2020
and December 31, 2019
Consolidated Statements of Changes in Equity for the years ended December 31, 2021, December 31, 2020 and
December 31, 2019
Consolidated Statements of Cash Flows as of December 31, 2021, December 31, 2020 and December 31, 2019
Notes to Consolidated Financial Statements
55
58
59
60
61
64
65
54
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Trustees of LXP Industrial Trust
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of LXP Industrial Trust (formerly Lexington Realty Trust) and
subsidiaries (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations,
comprehensive income (loss), changes in equity, and cash flows, for each of the three years in the period ended December 31,
2021, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the “financial statements”).
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of
December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended
December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in
Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated February 24, 2022, expressed an unqualified opinion on the Company’s internal control over
financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and
we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Real Estate, net — Determination of Impairment Indicators and Impairment — Refer to Notes 2 and 5 of the financial
statements
Critical Audit Matter Description
The Company’s evaluation of real estate assets for impairment involves an initial assessment of each real estate asset to
determine whether events or changes in circumstances exist that indicate that the carrying value of real estate assets may no
longer be recoverable. Possible indications of impairment may include increases in vacancy at a property, tenant financial
instability, or whether there is a current expectation that, more likely than not, a long-lived asset or asset group will be sold or
otherwise disposed of before the end of its previously estimated useful life. When such events or changes in circumstances
exist, the Company evaluates its real estate assets for impairment by comparing anticipated future undiscounted cash flows
expected to be derived from the asset to the respective carrying value. If the carrying value of an asset exceeds the undiscounted
cash flows, an analysis is performed to determine the fair value of the asset. An asset is determined to be impaired if the asset's
carrying value exceeds its estimated fair value.
The Company makes significant assumptions to estimate its holding period of an asset. Additionally, for those real estate assets
where indications of impairment have been identified, the Company makes significant estimates and assumptions related to
rental rates and capitalization rates included in the estimated future undiscounted cash flows and, as necessary, the discount rate
55
applied to determine fair value of the assets. Changes in these assumptions could have a significant impact on the identification
of real estate assets for impairment, the estimated fair value of the asset, or the amount of any impairment charge recognized.
Total real estate assets as of December 31, 2021 were $3.5 billion. The Company recorded $5.5 million of impairment charges
on real estate assets during the year ended December 31, 2021.
Auditing management’s assumptions requires evaluation of whether management appropriately identified impairment indicators
relating to the asset’s estimated holding periods and whether management’s anticipated future undiscounted cash flows and
estimated fair values are reasonable. Because of the subjectivity of these assumptions our audit procedures required a high
degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures to evaluate management’s estimated holding period of an asset and to evaluate the assumptions used in
undiscounted cash flows and fair value models included the following, among others:
• We tested the effectiveness of controls over management's evaluation of real estate assets for impairment, specifically over
identification of possible events or changes in estimated holding period of an asset, controls over rental rates and
capitalization rates used in management’s anticipated future undiscounted cash flows, as well as controls over management
selection and estimate of discount rates in estimating fair value of real estate assets.
• We evaluated the Company’s assessment of estimated holding periods by:
a. Comparing management’s previous holding period assumptions to the Company’s subsequent sale of an asset.
b. Discussing with accounting and operations management the Company’s intent regarding sale or holding onto the asset.
c. Evaluating the consistency of the assumptions used with obtained audit evidence in other audit areas.
d. Reading minutes of the executive committee and board of directors’ meetings to identify any indicators that a long-
lived asset will likely be sold or otherwise disposed of before the end of its previously estimated useful life.
• We evaluated the Company’s determination of anticipated future undiscounted cash flows for those assets with impairment
indicators and the fair value for those that the carrying value was determined not to be recoverable by performing the
following:
With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology; (2)
significant assumptions made, including testing the source information underlying the determination of the discount rate, rental
rates, capitalization rates and developing a range of independent estimates based on external market sources and comparing our
estimates to the assumptions utilized by management; and (3) mathematical accuracy of the calculation.
/s/ Deloitte & Touche LLP
New York, New York
February 24, 2022
We have served as the Company's auditor since 2017.
56
Report of Independent Registered Public Accounting Firm
To the shareholders and the Board of Trustees of LXP Industrial Trust
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of LXP Industrial Trust (formerly Lexington Realty Trust) and
subsidiaries (the “Company”) as of December 31, 2021, based on criteria established in Internal Control — Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our
opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31,
2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated financial statements as of and for the year ended December 31, 2021, of the Company and our
report dated February 24, 2022, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report
on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
New York, New York
February 24, 2022
57
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($000, except share and per share data)
As of December 31,
Assets:
Real estate, at cost
Real estate - intangible assets
Land held for development
Investments in real estate under construction
Real estate, gross
Less: accumulated depreciation and amortization
Real estate, net
Assets held for sale
Right-of-use assets, net
Cash and cash equivalents
Restricted cash
Investments in non-consolidated entities
Deferred expenses (net of accumulated amortization of $18,356 in 2021 and $23,171 in 2020)
Rent receivable - current
Rent receivable - deferred
Other assets
Total assets
Liabilities and Equity:
Liabilities:
Mortgages and notes payable, net
Term loan payable, net
Senior notes payable, net
Trust preferred securities, net
Dividends payable
Liabilities held for sale
Operating lease liabilities
Accounts payable and other liabilities
Accrued interest payable
Deferred revenue - including below market leases (net of accumulated accretion of $14,258 in 2021 and
$12,758 in 2020)
Prepaid rent
Total liabilities
Commitments and contingencies
Equity:
Preferred shares, par value $0.0001 per share; authorized 100,000,000 shares,
Series C Cumulative Convertible Preferred, liquidation preference $96,770 and 1,935,400 shares
issued and outstanding
Common shares, par value $0.0001 per share; authorized 400,000,000 shares, 283,752,726 and
277,152,450 shares issued and outstanding in 2021 and 2020, respectively
Additional paid-in-capital
Accumulated distributions in excess of net income
Accumulated other comprehensive loss
Total shareholders’ equity
Noncontrolling interests
Total equity
Total liabilities and equity
2021
2020
$
3,583,978 $
3,514,564
341,403
104,160
161,165
4,190,706
655,740
3,534,966
82,586
27,966
190,926
101
74,559
18,861
3,526
63,283
8,784
4,005,558 $
$
$
83,092 $
298,446
987,931
127,595
37,425
3,468
29,094
77,607
8,481
409,293
—
75,906
3,999,763
884,465
3,115,298
16,530
31,423
178,795
626
56,464
15,901
2,899
66,959
8,331
3,493,226
136,529
297,943
779,275
127,495
35,401
790
32,515
55,208
6,334
14,474
14,717
1,682,330
17,264
13,335
1,502,089
94,016
94,016
28
3,252,506
(1,049,434)
(6,258)
2,290,858
32,370
2,323,228
4,005,558 $
28
3,196,315
(1,301,726)
(17,963)
1,970,670
20,467
1,991,137
3,493,226
$
The accompanying notes are an integral part of these consolidated financial statements.
58
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
($000, except share and per share data)
Years ended December 31,
Gross revenues:
Rental revenue
Other revenue
Total gross revenues
Expense applicable to revenues:
Depreciation and amortization
Property operating
General and administrative
Non-operating income
Interest and amortization expense
Debt satisfaction gains (losses), net
Impairment charges
Gains on sales of properties
Income before provision for income taxes, equity in earnings (losses)
of non-consolidated entities
Provision for income taxes
Equity in earnings (losses) of non-consolidated entities
Net income
Less net income attributable to noncontrolling interests
Net income attributable to LXP Industrial Trust shareholders
Dividends attributable to preferred shares - Series C
Allocation to participating securities
Net income attributable to common shareholders
Net income attributable to common shareholders - per common share
basic
Weighted-average common shares outstanding - basic
Net income attributable to common shareholders - per common share
diluted
$
$
$
2021
2020
2019
$
339,944 $
325,811 $
320,622
4,053
343,997
4,637
330,448
(176,714)
(47,746)
(35,458)
1,364
(46,708)
(13,894)
(5,541)
367,274
(161,592)
(41,914)
(30,371)
743
(55,201)
21,452
(14,460)
139,039
386,574
188,144
(1,293)
(190)
(1,584)
(169)
385,091
186,391
(2,443)
(3,089)
382,648
(6,290)
(510)
375,848 $
183,302
(6,290)
(224)
176,788 $
5,347
325,969
(147,594)
(42,018)
(30,785)
2,262
(65,095)
(4,517)
(5,329)
250,889
283,782
(1,379)
2,890
285,293
(5,383)
279,910
(6,290)
(395)
273,225
1.35 $
0.66 $
1.15
277,640,835
266,914,843
237,642,048
1.34 $
0.66 $
1.15
237,934,515
Weighted-average common shares outstanding - diluted
287,369,742
268,182,552
The accompanying notes are an integral part of these consolidated financial statements.
59
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
($000)
Years ended December 31,
Net income
Other comprehensive income (loss):
Change in unrealized income (loss) on interest rate swaps, net
Other comprehensive income (loss)
Comprehensive income
Comprehensive income attributable to noncontrolling interests
2021
2020
2019
$
385,091 $
186,391 $
285,293
11,705
11,705
(16,035)
(16,035)
396,796
170,356
(2,443)
(3,089)
(2,004)
(2,004)
283,289
(5,383)
Comprehensive income attributable to LXP Industrial Trust shareholders
$
394,353 $
167,267 $
277,906
The accompanying notes are an integral part of these consolidated financial statements.
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6
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
($000)
Years ended December 31,
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Gains on sales of properties
Debt satisfaction (gains) losses, net
Impairment charges
Straight-line rents
Amortization of right of use assets
Other non-cash expense, net
Equity in (earnings) losses of non-consolidated entities
Distributions of accumulated earnings from non-consolidated entities
Change in accounts payable and other liabilities
Change in rent receivable and prepaid rent, net
Change in accrued interest payable
Other adjustments, net
Net cash provided by operating activities
Cash flows from investing activities:
Acquisition of real estate, including intangible assets
Investment in real estate under construction
Capital expenditures
Net proceeds from sale of properties
Investment in loans receivable
Principal payments received on loans receivable
Investments in non-consolidated entities, net
Distributions from non-consolidated entities in excess of accumulated earnings
Payments of deferred leasing costs
Change in real estate deposits, net
Net cash used in investing activities
Cash flows from financing activities:
Dividends to common and preferred shareholders
Principal amortization payments
Principal payments on debt, excluding normal amortization
Proceeds of mortgages and notes payable
Revolving credit facility borrowings
Revolving credit facility payments
Proceeds from issuance of senior notes
Repurchase of senior notes
Payment for early extinguishment of debt
Deferred financing costs
Cash distributions to noncontrolling interests
Cash contributions from noncontrolling interests
Repurchase of common shares
Issuance of common shares, net of costs and repurchases to settle tax obligations
Net cash provided by (used in) financing activities
Change in cash, cash equivalents and restricted cash
Less restricted cash classified as held for sale
Cash, cash equivalents and restricted cash, at beginning of year
Cash, cash equivalents and restricted cash, at end of year
2021
2020
2019
$
385,091 $
186,391 $
285,293
179,523
(367,274)
13,894
5,541
(12,275)
3,726
6,734
190
—
7,996
1,058
2,138
(5,996)
220,346
(758,371)
(288,519)
(15,207)
728,360
(1,497)
8
(4,533)
8,347
(7,297)
947
(337,762)
(128,334)
(13,552)
(14,581)
11,610
555,000
(555,000)
399,032
(188,756)
(12,664)
(3,977)
(1,662)
21,411
—
60,575
129,102
11,686
(80)
179,421
191,027 $
$
164,260
(139,039)
(21,452)
14,460
(13,602)
3,763
6,210
169
—
2,859
80
1,866
(4,130)
201,835
(611,754)
(53,971)
(17,250)
192,560
—
—
(7,528)
8,055
(4,841)
379
(494,350)
(118,384)
(19,441)
—
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170,000
(170,000)
396,932
(112,312)
(11,094)
(3,803)
(1,905)
1,285
(11,042)
222,390
342,626
50,111
—
129,310
179,421 $
150,440
(250,889)
4,517
5,329
(14,264)
3,645
6,060
(2,890)
2,571
(270)
3,770
3,368
(4,496)
192,184
(662,010)
(11,332)
(17,829)
504,118
—
—
(8,018)
17,119
(8,196)
(817)
(186,965)
(122,843)
(24,259)
(89,242)
—
110,000
(110,000)
—
—
(3,505)
(5,456)
(2,763)
867
(3,598)
197,643
(53,156)
(47,937)
—
177,247
129,310
The accompanying notes are an integral part of these consolidated financial statements.
64
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
(1)
The Company
LXP Industrial Trust (together with its consolidated subsidiaries, except when the context only applies to the parent
entity, the “Company”) is a Maryland real estate investment trust (“REIT”) that owns a portfolio of equity investments
focused on single-tenant industrial properties.
As of December 31, 2021, the Company had equity ownership interests in approximately 121 consolidated properties
located in 23 states. The properties in which the Company has an interest are primarily net leased to tenants in various
industries.
The Company believes it has qualified as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”).
Accordingly, the Company will not be subject to federal income tax, provided that distributions to its shareholders equal
at least the amount of its REIT taxable income as defined under the Code. The Company is permitted to participate in
certain activities from which it was previously precluded in order to maintain its qualification as a REIT, so long as these
activities are conducted in entities which elect to be treated as taxable REIT subsidiaries (“TRS”) under the Code. As
such, the TRS are subject to federal income taxes on the income from these activities.
The Company conducts its operations indirectly through (1) property owner subsidiaries, which are single purpose
entities, (2) a wholly-owned TRS, Lexington Realty Advisors, Inc. (“LRA”), and (3) joint ventures. Property owner
subsidiaries are landlords under leases for properties in which the Company has an interest and/or borrowers under loan
agreements secured by properties in which the Company has an interest and lender subsidiaries are lenders under loan
agreements where the Company made an investment in a loan asset, but in all cases are separate and distinct legal
entities. Each property owner subsidiary is a separate legal entity that maintains separate books and records. The assets
and credit of each property owner subsidiary with a property subject to a mortgage loan are not available to creditors to
satisfy the debt and other obligations of any other person, including any other property owner subsidiary or any other
affiliate. Consolidated entities that are not property owner subsidiaries do not directly own any of the assets of a property
owner subsidiary (or the general partner, member or managing member of such property owner subsidiary), but merely
hold partnership, membership or beneficial interest therein, which interests are subordinate to the claims of such property
owner subsidiary's (or its general partner's, member's or managing member's) creditors.
(2)
Summary of Significant Accounting Policies
Basis of Presentation and Consolidation. The Company's consolidated financial statements are prepared on the accrual
basis of accounting in accordance with U.S. generally accepted accounting principles (“GAAP”). The financial
statements reflect the accounts of the Company and its consolidated subsidiaries. The Company consolidates its wholly-
owned subsidiaries, partnerships and joint ventures which it controls (i) through voting rights or similar rights or (ii) by
means other than voting rights if the Company is the primary beneficiary of a variable interest entity ("VIE"). Entities
which the Company does not control and entities which are VIEs in which the Company is not the primary beneficiary
are accounted for under the equity method of accounting.
During 2021, the Company acquired interests in seven joint ventures with developers, consisting of five on-going
development projects and two land joint ventures, with ownership interests ranging from 80% to 95.5%. Each joint
venture acquired land parcels to develop industrial properties. The Company determined that the joint ventures are VIEs
in which the Company is the primary beneficiary. As a result, these joint ventures’ operations are consolidated in the
Company's financial statements.
In addition, the Company is the primary beneficiary of certain other VIEs as it has a controlling financial interest in these
entities. Lepercq Corporate Income Fund L.P. (“LCIF”) is a consolidated VIE and the Company has an approximate
99% ownership interest.
65
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
The assets of each VIE are only available to satisfy such VIE's respective liabilities. As of December 31, 2020, the VIEs'
mortgages and notes payable were non-recourse to the Company. Below is a summary of selected financial data of
consolidated VIEs for which the Company is the primary beneficiary included in the consolidated balance sheets as of
December 31, 2021 and 2020:
Real estate, net
Total assets
Mortgages and notes payable, net
Total liabilities
December 31, 2021
December 31, 2020
$
$
$
$
810,087 $
952,611 $
— $
47,011 $
569,461
679,786
25,600
40,974
In addition, the Company acquires, from time to time, properties using a reverse like-kind exchange structure pursuant to
Section 1031 of the Internal Revenue Code (a "reverse 1031 exchange") and, as such, the properties are in the possession
of an Exchange Accommodation Titleholder ("EAT") until the reverse 1031 exchange is completed. The EAT is
classified as a VIE as it is a “thinly capitalized” entity. The Company consolidates the EAT because it is the primary
beneficiary as it has the ability to control the activities that most significantly impact the EAT's economic performance
and can collapse the reverse 1031 exchange structure at any time. The assets of the EAT primarily consist of leased
property (net real estate and intangibles).
Revenue Recognition. The Company recognizes lease revenue on a straight-line basis over the term of the lease unless
another systematic and rational basis is more representative of the time pattern in which the use benefit is derived from
the leased property. Revenue is recognized on a contractual basis for leases with escalations tied to a consumer price
index with no floor. The Company evaluates the collectability of its rental payments and recognizes revenue on a cash
basis when the Company believes it is no longer probable that it will receive substantially all of the remaining lease
payments. Renewal options in leases are excluded from the calculation of straight-line rent if the renewals are not
reasonably assured. If the Company funds tenant improvements and the improvements are deemed to be owned by the
Company, revenue recognition will commence when the improvements are substantially completed and possession or
control of the space is turned over to the tenant. If the Company determines that the tenant allowances are lease
incentives, the Company commences revenue recognition when possession or control of the space is turned over to the
tenant for tenant work to begin. The lease incentive is recorded as a deferred expense and amortized as a reduction of
revenue on a straight-line basis over the respective lease term. The Company recognizes lease termination fees as rental
revenue in the period received and writes off unamortized lease-related intangible and other lease-related account
balances, provided there are no further Company obligations under the lease. Otherwise, such fees and balances are
recognized on a straight-line basis over the remaining obligation period with the termination payments being recorded as
a component of rent receivable-deferred on the consolidated balance sheets.
Earnings Per Share. Basic net income (loss) per share is computed under the two-class method by dividing net income
(loss) reduced by preferred dividends and amounts allocated to certain non-vested share-based payment awards, if
applicable, by the weighted-average number of common shares outstanding during the period. Diluted net income (loss)
per share amounts are similarly computed but include the effect, when dilutive, of in-the-money common share options
and non-vested common shares, unsettled common shares sold in forward sales transactions, OP units and put options of
certain convertible securities.
Use of Estimates. Management has made a number of significant estimates and assumptions relating to the reporting of
assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and
expenses to prepare these consolidated financial statements in conformity with GAAP. These estimates and assumptions
are based on management's best estimates and judgment. Management evaluates its estimates and assumptions on an
ongoing basis using historical experience and other factors, including the economic environment. Management adjusts
such estimates when facts and circumstances dictate. The most significant estimates made include the recoverability of
accounts receivable, allocation of property purchase price to tangible and intangible assets acquired and liabilities
assumed, the determination of VIEs and which entities should be consolidated, the determination of impairment of long-
lived assets and equity method investments, valuation of derivative financial instruments, valuation of awards granted
under compensation plans, the determination of the incremental borrowing rate for leases where the Company is the
lessee and the useful lives of long-lived assets. Actual results could differ materially from those estimates.
66
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
Acquisition of Real Estate. The fair value of the real estate acquired, which includes the impact of fair value adjustments
for assumed mortgage debt related to property acquisitions, is allocated to the acquired tangible assets, consisting of
land, building and improvements and identified intangible assets and liabilities, consisting of the value of above-market
and below-market leases, other value of in-place leases and value of tenant relationships, based in each case on their fair
values. The Company's acquisitions are primarily considered asset acquisitions, thus acquisition costs are capitalized.
The fair value of the tangible assets of an acquired property (which includes land, building and improvements and
fixtures and equipment) is determined by valuing the property as if it were vacant. The “as-if-vacant” value is then
allocated to land and building and improvements based on management's determination of relative fair values of these
assets. Factors considered by management in performing these analyses include an estimate of carrying costs during the
expected lease-up periods considering current market conditions and costs to execute similar leases. In estimating
carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rental
revenue during the expected lease-up periods based on current market demand. Management also estimates costs to
execute similar leases including leasing commissions. Management generally retains a third party to assist in the
allocations.
In allocating the fair value of the identified intangible assets and liabilities of an acquired property, above-market and
below-market lease values are recorded based on the difference between the current in-place lease rent and
management's estimate of current market rents. Below-market lease intangibles are recorded as part of deferred revenue
and amortized into rental revenue over the non-cancelable periods and bargain renewal periods of the respective leases.
Above-market leases are recorded as part of intangible assets and amortized as a direct charge against rental revenue over
the non-cancelable portion of the respective leases.
The aggregate value of other acquired intangible assets, consisting of in-place leases and tenant relationship values, is
measured by the excess of (1) the purchase price paid for a property over (2) the estimated fair value of the property as if
vacant, determined as set forth above. This aggregate value is allocated between in-place lease values and tenant
relationship values based on management's evaluation of the specific characteristics of each tenant's lease. The value of
in-place leases is amortized to expense over the remaining non-cancelable periods and any bargain renewal periods of the
respective leases. The value of tenant relationships is amortized to expense over the applicable lease term plus expected
renewal periods.
Depreciation is determined by the straight-line method over the remaining estimated economic useful lives of the
properties. The Company generally depreciates its real estate assets over periods ranging up to 40 years.
Impairment of Real Estate. The Company evaluates the carrying value of all tangible and intangible real estate assets
held for investment for possible impairment when an event or change in circumstance has occurred that indicates its
carrying value may not be recoverable. The Company considers the strategic decisions regarding the future plans to sell
properties and other market factors. The Company regularly updates significant estimates and assumptions including
rental rates, capitalization rates and discount rates, which are included in the anticipated future undiscounted cash flows
derived from the asset. If such cash flows are less than the asset's carrying value, an impairment charge is recognized to
the extent by which the asset's carrying value exceeds its estimated fair value, which may be below the balance of any
non-recourse financing. Estimating future cash flows and fair values is highly subjective and such estimates could differ
materially from actual results.
Investments in Non-Consolidated Entities. The Company uses the equity method of accounting for those joint ventures
where it exercises significant influence but does not have control. If the Company's investment in the entity is
insignificant and the Company has no influence over the control of the entity then the entity is accounted for under the
cost method.
67
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
Impairment of Equity Method Investments. The Company assesses whether there are indicators that the value of its equity
method investments may be impaired. An impairment charge is recognized only if the Company determines that a
decline in the value of the investment below its carrying value is other-than-temporary. The assessment of impairment is
highly subjective and involves the application of significant assumptions and judgments about the Company's intent and
ability to recover its investment given the nature and operations of the underlying investment, including the level of the
Company's involvement therein, among other factors. To the extent an impairment is deemed to be other-than-temporary,
the loss is measured as the excess of the carrying amount of the investment over the estimated fair value of the
investment.
Fair Value Measurements. The Company follows the guidance in the Financial Accounting Standards Board ("FASB")
Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurements and Disclosures ("Topic 820"), to
determine the fair value of financial and non-financial instruments. Topic 820 defines fair value, establishes a framework
for measuring fair value in GAAP and expands disclosures about fair value measurements. Topic 820 establishes a fair
value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 -
quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 -
observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and Level 3 -
unobservable inputs, which are used when little or no market data is available. The fair value hierarchy gives the highest
priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, the Company utilizes
valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the
extent possible, as well as considering counterparty credit risk. The Company has formally elected to apply the portfolio
exception within Topic 820 with respect to measuring counterparty risk for all of its derivative transactions subject to
master netting arrangements.
The Company estimates the fair value of its real estate assets, including non-consolidated real estate assets, by using
income and market valuation techniques. The Company may estimate fair values using market information such as recent
sale contracts (Level 2 inputs) or recent sale offers or discounted cash flow models, which primarily rely on Level 3
inputs. The cash flow models include estimated cash inflows and outflows over a specified holding period. These cash
flows may include contractual rental revenues, projected future rental revenues and expenses and forecasted tenant
improvements and lease commissions based upon market conditions determined through discussion with local real estate
professionals, experience the Company has with its other owned properties in such markets and expectations for growth.
Capitalization rates and discount rates utilized in these models are estimated by management based upon rates that
management believes to be within a reasonable range of current market rates for the respective properties based upon an
analysis of factors such as property and tenant quality, geographical location and local supply and demand observations.
To the extent the Company under-estimates forecasted cash outflows (tenant improvements, lease commissions and
operating costs) or over-estimates forecasted cash inflows (rental revenue rates), the estimated fair value of its real estate
assets could be overstated.
Cost Capitalization. The Company capitalizes interest and direct and indirect project costs associated with the initial
construction of a property up to the time the property is substantially complete and ready for its intended use in real
estate under construction in the consolidated balance sheets. If costs and activities incurred to ready the vacant space
cease, then cost capitalization is also discontinued until such activities are resumed. Once necessary work has been
completed on a vacant space, project costs are no longer capitalized.
Properties Held For Sale. Assets and liabilities of properties that meet various held for sale criteria, including whether it
is probable that a sale will occur within 12 months, are presented separately in the consolidated balance sheets. The
operating results of these properties are reflected as discontinued operations in the consolidated statements of operations
only if the sale of these assets represents a major strategic shift in operations; if not, the operating results are included in
continuing operations. Properties classified as held for sale are carried at the lower of net carrying value or estimated fair
value less costs to sell and depreciation and amortization are no longer recognized. Properties that do not meet the held
for sale criteria are accounted for as operating properties.
Deferred Expenses. Deferred expenses consist primarily of revolving line of credit debt and leasing costs. Debt costs are
amortized using the straight-line method, which approximates the interest method, over the terms of the debt instruments
and leasing costs are amortized over the term of the related lease.
68
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
Derivative Financial Instruments. The Company accounts for its interest rate swap agreements in accordance with FASB
ASC Topic 815, Derivatives and Hedging ("Topic 815"). In accordance with Topic 815, these agreements are carried on
the balance sheet at their respective fair values, as an asset if fair value is positive, or as a liability if fair value is
negative. If the interest rate swap is designated as a cash flow hedge, the portion of the interest rate swap's change in fair
value is reported as a component of other comprehensive income (loss).
Upon entering into hedging transactions, the Company documents the relationship between the interest rate swap
agreement and the hedged item. The Company also documents its risk-management policies, including objectives and
strategies, as they relate to its hedging activities. The Company assesses, both at inception of a hedge and on an ongoing
basis, whether or not the hedge is highly effective. The Company will discontinue hedge accounting on a prospective
basis with changes in the estimated fair value reflected in earnings when (1) it is determined that the derivative is no
longer effective in offsetting cash flows of a hedged item (including forecasted transactions), (2) it is no longer probable
that the forecasted transaction will occur or (3) it is determined that designating the derivative as an interest rate swap is
no longer appropriate. The Company does and may continue to utilize interest rate swap and cap agreements to manage
interest rate risk, but does not anticipate entering into derivative transactions for speculative trading purposes.
Stock Compensation. The Company maintains an equity participation plan. Non-vested share grants generally vest either
based upon (1) time, (2) performance and/or (3) market conditions. All share-based payments to employees are
recognized in the consolidated statements of operations based on their fair values. The Company has made an accounting
policy election to account for share-based award forfeitures in compensation costs when they occur.
Tax Status. The Company has made an election to qualify, and believes it is operating so as to qualify, as a REIT for
federal income tax purposes. Accordingly, the Company generally will not be subject to federal income tax, provided
that distributions to its shareholders equal at least the amount of its REIT taxable income as defined under Sections 856
through 860 of the Code.
The Company is permitted to participate in certain activities from which it was previously precluded in order to maintain
its qualification as a REIT, so long as these activities are conducted in entities which elect to be treated as taxable REIT
subsidiaries under the Code. As such, the Company is subject to federal and state income taxes on the income from these
activities.
Income taxes, primarily related to the Company's taxable REIT subsidiaries, are accounted for under the asset and
liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable
to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax
basis and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax
rates in effect for the year in which those temporary differences are expected to be recovered or settled.
Cash and Cash Equivalents. The Company considers all highly liquid instruments with maturities of three months or less
from the date of purchase to be cash equivalents.
Restricted Cash. Restricted cash is comprised primarily of cash balances held by lenders and operating cash reserves
held in escrow for one property.
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, 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 most of the tenants of properties in which the Company has 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 the tenant of such premises to satisfy any obligations with respect to such environmental
liability, or if the tenant is not responsible, the Company's property owner subsidiary may be required to satisfy any such
obligations, should they exist. In addition, the property owner subsidiary, as the owner of such a property, may be held
directly liable for any such damages or claims irrespective of the provisions of any lease. As of December 31, 2021, the
Company was not aware of any environmental matter relating to any of its investments that would have a material impact
on the consolidated financial statements.
69
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
Segment Reporting. The Company operates generally in one industry segment, single-tenant real estate assets.
Reclassifications. Certain amounts included in prior years' financial statements have been reclassified to conform to the
current year's presentation.
Recently Issued Accounting Guidance. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic
848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases,
derivatives and other contracts that reference the London Interbank Offered Rate, or LIBOR, or another reference rate
expected to be discontinued because of reference rate reform. The guidance in ASU 2020-04 is optional, applies for a
limited period of time to ease the potential burden in accounting for (or recognizing the effect of) reference rate reform
on financial reporting, in response to concerns about structural risks of interbank offered rates, and, particularly, the risk
of cessation of LIBOR and may be elected over time as reference rate reform activities occur. As of March 31, 2020, the
Company has elected to apply the hedge accounting expedients related to probability and the assessments of
effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will
be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation
of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may
apply other elections as applicable as additional changes in the market occur.
In July 2021, the FASB issued ASU 2021-05, Lease (Topic 842): Lessors-Certain Leases with Variable Lease Payments,
to amend the guidance to provide alternative accounting for sales type and direct finance leases with variable lease
payments. The amendments in ASU 2021-05 amend the accounting guidance to allow lessors to classify and account for
variable leases payments that do no depend on a reference index or a rate as an operating lease if certain criteria are met.
The standard is effective for fiscal years beginning after December 15, 2021 with early adoption permitted. The
Company does not currently have any leases that are classified as sales-type or direct finance leases. Therefore, the
Company early adopted the measure on a prospective basis to applicable leases that commenced or were modified on or
after July 1, 2021.
(3)
Earnings Per Share
A portion of the Company's non-vested share-based payment awards are considered participating securities and as such,
the Company is required to use the two-class method for the computation of basic and diluted earnings per share. Under
the two-class computation method, net losses are not allocated to participating securities unless the holder of the security
has a contractual obligation to share in the losses. The non-vested share-based payment awards are not allocated losses as
the awards do not have a contractual obligation to share in losses of the Company.
The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share
computations for each of the years in the three-year period ended December 31, 2021:
BASIC
Net income attributable to common shareholders
$
375,848 $
176,788 $
273,225
Weighted-average number of common shares outstanding
277,640,835
266,914,843
237,642,048
Net income attributable to common shareholders - per common
share basic
$
1.35 $
0.66 $
1.15
2021
2020
2019
70
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
DILUTED:
Net income attributable to common shareholders - basic
$
375,848 $
176,788 $
273,225
Impact of assumed conversions
7,962
—
—
Net income attributable to common shareholders
$
383,810 $
176,788 $
273,225
2021
2020
2019
Weighted-average common shares outstanding - basic
277,640,835
266,914,843
237,642,048
Effect of dilutive securities:
Unvested share-based payment awards and options
989,177
1,267,709
292,467
Shares issuable under forward sales agreements
Operating Partnership Units
Series C Cumulative Convertible Preferred
2,110,315
1,918,845
4,710,570
—
—
—
—
—
—
Weighted-average common shares outstanding - diluted
287,369,742
268,182,552
237,934,515
Net income attributable to common shareholders - per common share
diluted
$
1.34 $
0.66 $
1.15
For per common share amounts, all incremental shares are considered anti-dilutive for periods that have a loss from
continuing operations attributable to common shareholders. In addition, other common share equivalents may be anti-
dilutive in certain periods.
(4)
Investments in Real Estate
The Company's real estate, net, consists of the following at December 31, 2021 and 2020:
Real estate, at cost:
Buildings and building improvements
Land, land estates and land improvements
Construction in progress
Real estate intangibles:
In-place lease values
Tenant relationships
Above-market leases
Land held for development
Investments in real estate under construction
Accumulated depreciation and amortization(1)
Real estate, net
2021
2020
3,235,601 $
342,895
5,482
320,847
13,205
7,351
104,160
161,165
4,190,706
(655,740)
3,534,966 $
3,144,176
367,272
3,116
357,640
33,327
18,326
—
75,906
3,999,763
(884,465)
3,115,298
$
$
(1)
Includes accumulated amortization of real estate intangible assets of $151,041 and $199,997 in 2021 and 2020, respectively. The estimated
amortization of the above real estate intangible assets for the next five years is $33,710 in 2022, $32,501 in 2023, $26,638 in 2024, $22,709 in
2025 and $19,701 in 2026.
The Company had below-market leases, net of accumulated accretion, which are included in deferred revenue, of
$14,401 and $16,531, respectively, as of December 31, 2021 and 2020. The estimated accretion for the next five years is
$1,955 in 2022, $1,955 in 2023, $1,955 in 2024, $1,865 in 2025 and $1,663 in 2026.
71
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
The Company completed the following acquisitions during 2021 and 2020:
2021:
Market(1)
Indianapolis, IN
Indianapolis, IN
Central Florida
Columbus, OH(2)
Houston, TX
Houston, TX
Houston, TX
Cincinnati/Dayton, OH
Central Florida
Greenville-Spartanburg, SC
Acquisition/
Completion
Date
Initial
Cost
Basis
$
January 2021
January 2021
January 2021
March 2021
May 2021
May 2021
May 2021
June 2021
June 2021
June 2021
Greenville-Spartanburg, SC
June 2021
Greenville-Spartanburg, SC
July 2021
Greenville-Spartanburg, SC
July 2021
Greenville-Spartanburg, SC(3) July 2021
July 2021
Greenville-Spartanburg, SC
Columbus, OH
Indianapolis, IN
Indianapolis, IN
Indianapolis, IN
Atlanta, GA(2)(4)
Phoenix, AZ(2)
Phoenix, AZ
Indianapolis, IN
Atlanta, GA
Atlanta, GA
Atlanta, GA
August 2021
October 2021
October 2021
October 2021
November 2021
November 2021
December 2021
December 2021
December 2021
December 2021
December 2021
$
Primary Lease
Expiration at
Acquisition
12/2024
08/2025
05/2031
03/2024
08/2028
12/2026
08/2024
06/2023
N/A
09/2025
06/2026
04/2029
12/2029
N/A
09/2026
11/2029
12/2026
03/2031
12/2026
10/2028
11/2036
12/2031
11/2031
07/2031
09/2031
09/2025
14,310
14,120
22,358
19,531
28,293
37,686
11,512
18,674
48,593
36,903
23,812
29,421
26,106
18,394
31,646
29,265
16,315
44,479
15,644
47,568
61,490
83,517
93,899
37,625
47,618
26,838
Land
Building and
Improvements
Lease in-place
Value
Intangible
Above
(Below)
Market
Lease
Intangible
1,208 $
1,162
1,416
2,800
4,272
6,489
1,792
1,109
2,610
2,376
1,329
2,819
1,169
1,020
1,710
2,251
741
1,991
695
7,209
11,732
8,027
8,335
2,006
2,497
1,465
12,052 $
11,825
19,910
16,731
22,296
28,470
9,089
16,477
45,983
32,121
21,419
24,508
23,070
17,374
27,817
25,184
14,488
39,338
13,958
40,359
49,758
73,650
80,051
33,276
42,255
23,649
1,035 $
1,133
1,032
—
1,725
2,727
631
1,088
—
2,406
1,064
2,094
1,867
—
2,119
1,830
1,086
3,150
991
—
—
1,840
5,513
2,343
2,866
1,724
15
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
15
$
885,617
$
80,230 $
765,108 $
40,264 $
Weighted-average life of intangible assets (years)
7.3
3.5
(1)
(2)
(3)
(4)
A land parcel located in Hebron, OH was also purchased for $371.
Development project substantially completed and placed into service.
Subsequent to acquisition, property fully leased for 5.5 years.
Initial basis excludes certain remaining costs, including developer partner promote.
72
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
2020:
Market
Chicago, IL
Phoenix, AZ
Chicago, IL
Dallas, TX
Savannah, GA
Dallas, TX
Savannah, GA
Savannah, GA
Houston, TX
Ocala, FL
DC/Baltimore, MD
Savannah, GA
Phoenix, AZ
Dallas, TX
$
Acquisition Date
January 2020
January 2020
January 2020
February 2020
April 2020
May 2020
June 2020
June 2020
June 2020
June 2020
September 2020
September 2020
November 2020
December 2020
Greenville-Spartanburg, SC
December 2020
Dallas, TX
December 2020
Initial
Cost
Basis
53,642
19,164
39,153
83,495
34,753
10,731
30,448
9,130
20,949
58,283
29,143
40,908
87,820
44,030
18,595
31,556
$
Lease
Expiration
11/2029
12/2025
12/2029
08/2029
07/2027
06/2030
06/2025
08/2025
04/2025
08/2030
11/2024
07/2026
03/2033
10/2024
02/2031
01/2030
Land
Building and
Improvements
Lease in-place
Value Intangible
3,681 $
1,614
1,788
4,500
45,817 $
16,222
34,301
71,635
1,689
1,308
2,560
1,070
2,202
4,113
2,818
3,775
10,733
3,938
1,186
3,847
30,346
8,466
25,697
7,448
17,101
49,904
24,423
34,322
69,491
37,185
15,814
25,038
4,144
1,328
3,064
7,360
2,718
957
2,191
612
1,646
4,266
1,902
2,811
7,596
2,907
1,595
2,671
$
611,800
$
50,822 $
513,210 $
47,768
Weighted-average life of intangible assets
(years)
8.7
As of December 31, 2021, the details of the development arrangements outstanding are as follows (in $000's, except
square feet):
Project (% owned)
The Cubes at Etna East (95%)(1)(2)
Mt. Comfort (80%)(1)
Cotton 303 (93%)(1)
Ocala (80%)(1)
Smith Farms (90%)(1)(3)
1
1
2
1
3
# of
Buildings
Market
Estimated
Sq. Ft.
Estimated
Project
Cost
GAAP
Investment
Balance as of
12/31/2021
Columbus, OH 1,074,840 $ 72,100 $
33,002 $
Amount
Funded as of
12/31/2021(4)
22,471
Estimated
Building
Completion
Date
2Q 2022
Indianapolis, IN 1,053,360
Phoenix, AZ
880,678
Central Florida
1,085,280
Greenville-
Spartanburg, SC 2,194,820
60,300
84,200
80,900
30,012
30,263
32,186
21,977
3Q 2022
24,475
3Q 2022
21,186
3Q 2022
162,100
35,702
21,433
$ 459,600 $
161,165 $
111,542
4Q 2022 -
2Q 2023
% Leased as
of
12/31/2021
— %
— %
— %
— %
36 %
(1) Estimated project cost includes estimated tenant improvements and leasing costs and excludes potential developer partner promote.
(2) Land parcel distributed from the Etna Park 70 East joint venture during the fourth quarter.
(3) Preleased one 797,936 square foot facility subject to a 12-year lease commencing upon substantial completion of the facility.
(4) Excludes noncontrolling interests' share.
As of December 31, 2021, the Company's aggregate investment in five consolidated development arrangements was
$161,165, which included capitalized interest of $1,114 for the year ended December 31, 2021 and is presented as
investments in real estate under construction in the accompanying consolidated balance sheets.
In December 2021, the Company acquired ownership interests of 95.5% and 80% in two newly-formed consolidated
joint ventures, Lex Reems & Olive, LLC and Hancock 14 RRL, LLC, respectively. Lex Reems & Olive, LLC invested
$100,875 in a 420-acre land parcel in the Phoenix, Arizona market. Hancock 14 RRL, LLC invested $3,285 in a 73-acre
land parcel in the Indianapolis, Indiana market. The land parcels are classified as land held for development in the
consolidated balance sheets.
73
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
(5)
Dispositions and Impairment
For the years ended December 31, 2021, 2020 and 2019, the Company disposed of its interests in various properties for
an aggregate gross disposition price of $823,966, $432,843 and $504,118, respectively, which resulted in gains on sales
of $367,274, $139,039 and $250,889, respectively, including, in 2021 the sale of 22 special purpose industrial assets to a
newly-formed joint venture, NNN MFG Cold JV L.P. (“MFG Cold JV”), with an unaffiliated third-party.
Included in the 2021 dispositions are three non-industrial properties with a disposition price of $35,369, which was
satisfied through (i) the redemption of 1,598,906 operating units ("OP units"), (ii) the assumption of $11,610 of third
party mortgage financing that encumbered two of the properties and (iii) $1,497 of seller financing. The seller financing
note receivable has a fixed interest rate of 6.0% per annum and matures on August 1, 2025. As of December 31, 2021,
the balance of the note receivable is $1,489.
Included in the 2020 dispositions are three properties which were conveyed to the lenders in forgiveness of the mortgage
loan encumbering each property. The balances of the non-recourse mortgage loans were in excess of the value of the
property collateral, resulting in aggregate debt satisfaction gains, net of $34,450. For the years ended December 31,
2021, 2020 and 2019, the Company recognized net debt satisfaction charges relating to properties sold of $229, $2,879
and $4,415, respectively.
The Company had eight and two properties classified as held for sale at December 31, 2021 and December 31, 2020,
respectively. Assets and liabilities of the held for sale properties as of December 31, 2021 and December 31, 2020
consisted of the following:
Assets:
Real estate, at cost
Real estate, intangible assets
Accumulated depreciation and amortization
Deferred expenses, net
Other
Liabilities:
Accounts payable and other liabilities
Deferred revenue
Prepaid rent
December 31, 2021
December 31, 2020
$
$
$
$
170,117 $
9,454
(99,659)
1,759
915
82,586 $
1,908 $
483
1,077
3,468 $
32,629
7,941
(24,312)
—
272
16,530
588
—
202
790
The Company assesses on a regular basis whether there are any indicators that the carrying value of its real estate assets
may be impaired. Potential indicators may include an increase in vacancy at a property, tenant financial instability,
change in the estimated holding period of the asset, the potential sale or transfer of the property in the near future and
changes in economic conditions. An asset is determined to be impaired if the asset's carrying value is in excess of its
estimated fair value and the Company estimates that its cost will not be recovered.
During 2021, 2020 and 2019, the Company recognized aggregate impairment charges on real estate properties of $5,541,
$14,460 and $5,329, respectively. During 2021 and 2020, the aggregate impairment charges were recognized on
properties that were primarily impaired due to a reduction in the anticipated holding period for those properties. During
2019, aggregate impairment charges of $2,106 were recognized on two vacant retail properties, which were sold in 2019,
and a held for use impairment of $2,974 was recognized on an office property due to a reduction of the anticipated
holding period and leasing prospects.
74
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
(6)
Fair Value Measurements
The following tables present the Company's assets and liabilities measured at fair value on a recurring and non-recurring
basis as of December 31, 2021 and 2020, aggregated by the level in the fair value hierarchy within which those
measurements fall:
Description
2021
(Level 1)
(Level 2)
(Level 3)
Interest rate swap liabilities
Impaired real estate assets (1)
$
$
(6,258) $
12,735 $
— $
— $
(6,258) $
—
— $
12,735
(1) Represents non-recurring fair value measurement. The Company measured the $12,735 fair value based on a discounted cash flow analysis, using
a discount rate ranging from 8.0% to 10.0% and a residual capitalization rate ranging from 7.5% to 8.0%. As significant inputs to the models are
unobservable, the Company determined that the value determined for these properties falls within Level 3 of the fair value reporting hierarchy.
Fair Value Measurements Using
Description
2020
(Level 1)
(Level 2)
(Level 3)
Interest rate swap liabilities
Impaired real estate assets (1)
$
$
(17,963) $
21,141 $
— $
— $
(17,963) $
2,480 $
—
18,661
(1) Represents non-recurring fair value measurement. The fair value is calculated as of the impairment date. $2,480 was based on an observable
contract thus Level 2. The Company measured $18,661 of these fair values based on a discounted cash flow analysis, using a discount rate of
9.0% and residual capitalization rates ranging from 8.0% to 9.0%. As significant inputs to the models are unobservable, the Company determined
that the value determined for these properties falls within Level 3 of the fair value reporting hierarchy.
Fair Value Measurements Using
The majority of the inputs used to value the Company's interest rate swaps fall within Level 2 of the fair value hierarchy,
such as observable market interest rate curves; however, the credit valuation associated with the interest rate swaps
utilizes Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company
and its counterparties. As of December 31, 2021 and 2020, the Company determined that the credit valuation adjustment
relative to the overall interest rate swaps was not significant. As a result, all interest rate swaps have been classified in
Level 2 of the fair value hierarchy.
The table below sets forth the carrying amounts and estimated fair values of the Company's financial instruments as of
December 31, 2021 and 2020:
Liabilities
Debt
As of December 31, 2021
As of December 31, 2020
Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
$ 1,497,064 $ 1,491,868 $ 1,341,242 $ 1,368,151
The fair value of the Company's debt is primarily estimated utilizing Level 3 inputs by using a discounted cash flow
analysis, based upon estimates of market interest rates. The Company determines the fair value of its Senior Notes using
market prices. The inputs used in determining the fair value of these notes are categorized as Level 1 due to the fact that
the Company uses quoted market rates to value these instruments. However, the inputs used in determining the fair value
could be categorized as Level 2 if trading volumes are low.
Fair values cannot be determined with precision, may not be substantiated by comparison to quoted prices in active
markets and may not be realized upon sale. Additionally, there are inherent uncertainties in any fair value measurement
technique, and changes in the underlying assumptions used, including discount rates, liquidity risks and estimates of
future cash flows, could significantly affect the fair value measurement amounts.
Cash Equivalents, Restricted Cash, Accounts Receivable and Accounts Payable. The Company estimates that the fair
value of cash equivalents, restricted cash, accounts receivable and accounts payable approximates carrying value due to
the relatively short maturity of the instruments.
75
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
(7)
Investments in Non-Consolidated Entities
Below is a schedule of the Company's investments in non-consolidated entities:
Investment
MFG Cold JV
NNN Office JV L.P.
Etna Park 70 LLC
Etna Park 70 East LLC
BSH Lessee L.P.
(1)
(2)
(3)
(4)
(5)
Percentage Ownership at
Investment Balance as of
December 31, 2021
December 31, 2021
December 31, 2020
20%
20%
90%
90%
25%
$
$
30,752 $
24,112
12,874
2,797
4,024
74,559 $
—
31,615
12,514
7,484
4,851
56,464
(1) During 2021, the Company disposed of 22 special purpose industrial assets to MFG Cold JV for an aggregate disposition price of $550,000, net
of $2,775 of purchase price adjustments, and acquired a 20% interest in the MFG Cold JV. The Company recognized a gain of $239,386 in
connection with the disposition of the assets, and, in addition, MFG Cold JV assumed $25,850 of non-recourse mortgage debt in the transaction.
MFG Cold JV obtained $381,000 of non-recourse mortgage financing which bears interest at one month Term SOFR plus 245 basis points and
has an initial term of two years but can be extended for three additional terms of one year each. MFG Cold JV entered into an interest rate
agreement which caps the one-month Term SOFR component of the $381,000 mortgage financing at 3% for two years.
(2) NNN Office JV L.P. is a joint venture formed in 2018 and owns office properties formerly owned by the Company.
(3)
(4) Joint venture formed in 2019 with a developer entity to acquire a parcel of land. During the fourth quarter of 2021, a land parcel was distributed
Joint venture formed in 2017 with a developer entity to acquire a parcel of land.
from the Etna Park 70 East LLC to The Cubes at Etna East, a consolidated development joint venture.
(5) A joint venture investment, which owns a single-tenant, net-leased asset.
During 2020, NNN Office JV L.P. (“NNN JV”) sold two assets and the Company recognized aggregate gains on the
transactions of $557 within equity in earnings (losses) of non-consolidated entities within its consolidated statement of
operations. In conjunction with these property sales, NNN JV received aggregate net proceeds of $8,504 after the
satisfaction of an aggregate of $40,800 of its non-recourse mortgage indebtedness. The NNN JV distributed $1,701 of
the net proceeds to the Company as a result of the property sales.
During 2019, NNN JV sold four assets and the Company recognized aggregate gains on the transactions of $3,529 within
equity in earnings of non-consolidated entities in its consolidated statement of operations. In conjunction with these
property sales, NNN JV received aggregate net proceeds of $45,208 after satisfaction of an aggregate of $101,520 of its
non-recourse mortgage indebtedness. The NNN JV distributed $7,549 of the net proceeds to the Company as a result of
the property sales.
In February 2019, a non-consolidated real estate entity, in which the Company owned a 15% ownership interest, sold its
only asset and the Company received $2,317 of proceeds. The Company recognized a gain on the transaction of $824,
which is included in equity in earnings of non-consolidated entities in its consolidated statement of operations.
The Company earns advisory fees from certain of these non-consolidated entities for services related to acquisitions,
asset management and debt placement. Advisory fees earned from these non-consolidated investments were $2,968,
$3,028 and $3,596 for the years ended December 31, 2021, 2020 and 2019.
(8)
Mortgages and Notes Payable
The Company had the following mortgages and notes payable outstanding as of December 31, 2021 and 2020:
Mortgages and notes payable
Unamortized debt issuance costs
December 31, 2021
December 31, 2020
$
$
84,429 $
(1,337)
83,092 $
138,412
(1,883)
136,529
76
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
Interest rates, including imputed rates on mortgages and notes payable, ranged from 3.5% to 4.3% and 3.5% to 6.3% at
December 31, 2021 and 2020, respectively, and all mortgages and notes payable mature between 2023 and 2031, as of
December 31, 2021. The weighted-average interest rate at December 31, 2021 and 2020 was approximately 4.0% and
4.5%, respectively.
On July 12, 2021, LCIF encumbered two of its properties with mortgage debt in the amount of $11,610. Subsequently,
on July 12, 2021, certain operating partnership unitholders assumed the mortgages upon purchasing the properties.
The Company has an unsecured credit agreement with KeyBank National Association, as agent. The maturity dates and
interest rates as of December 31, 2021, are as follows:
$600,000 Revolving Credit Facility(1)
$300,000 Term Loan(2)
Maturity Date
February 2023
January 2025
Interest Rate
LIBOR + 0.90%
LIBOR + 1.00%
(1) Maturity date of the revolving credit facility can be extended to February 2024 at the Company's option. The interest rate ranges from LIBOR
plus 0.775% to 1.45%. At December 31, 2021, the Company had no borrowings outstanding and availability of $600,000, subject to covenant
compliance.
(2) The LIBOR portion of the interest rate was swapped to obtain a current fixed rate of 2.732% per annum. The aggregate unamortized debt
issuance costs for the term loan was $1,554 and $2,057 as of December 31, 2021 and 2020, respectively.
The Company was compliant with all applicable financial covenants contained in its corporate-level debt agreements at
December 31, 2021.
Mortgages payable and secured loans are generally collateralized by real estate and the related leases. Certain mortgages
payable have yield maintenance or defeasance requirements relating to any prepayments.
Scheduled principal and balloon payments for mortgages, notes payable and term loan for the next five years and
thereafter are as follows:
Year ending
December 31,
2022
2023
2024
2025
2026
Thereafter
Unamortized debt issuance costs
$
$
Total
11,275
12,265
5,373
5,570
5,773
44,173
84,429
(1,337)
83,092
Included in the consolidated statements of operations, the Company recognized debt satisfaction charges, net, of $717
and $9 for the years ended December 31, 2021 and 2019, respectively, due to the satisfaction of mortgages and notes
payable other than those disclosed elsewhere in these financial statements. In addition, the Company capitalized $2,974,
$1,745 and $410 in interest for the years ended 2021, 2020 and 2019, respectively.
77
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
(9)
Senior Notes, Convertible Notes and Trust Preferred Securities
The Company had the following Senior Notes outstanding as of December 31, 2021 and 2020:
Issue Date
August 2021
August 2020
May 2014
June 2013
Unamortized debt discount
Unamortized debt issuance cost
December 31, 2021 December 31, 2020
Interest
Rate
Maturity Date
Issue
Price
$
400,000 $
—
2.375 %
October 2031
99.758 %
400,000
198,932
—
998,932
(3,655)
(7,346)
400,000
198,932
188,756
787,688
(3,491)
(4,922)
$
987,931 $
779,275
2.70 % September 2030
99.233 %
4.40 %
4.25 %
June 2024
June 2023
99.883 %
99.026 %
Each series of the Senior Notes is unsecured and pays interest semi-annually in arrears. The Company may redeem the
notes at its option at any time prior to maturity in whole or in part by paying the principal amount of the notes being
redeemed plus a make-whole premium.
In August 2021, the Company issued $400,000 aggregate principal amount of 2.375% Senior Notes due 2031 ("2031
Senior Notes") at an issuance price of 99.758% of the principal amount. The Company issued the 2031 Senior Notes at
an initial discount of $968 which is being recognized as additional interest expense over the term of the 2031 Senior
Notes. The Company used a portion of the net proceeds from the offering of the 2031 Senior Notes to redeem the
$188,756 aggregate principal balance of its outstanding 4.25% Senior Notes due 2023 ("2023 Senior Notes"). The
consideration paid included a make-whole premium of $12,191 and $2,028 of accrued and unpaid interest. The Company
recognized a $12,948 debt satisfaction loss related to the aggregate redemptions.
In August 2020, the Company issued $400,000 aggregate principal amount of 2.70% Senior Notes due 2030 ("2030
Senior Notes") at an issuance price of 99.233% of the principal amount. The Company issued the 2030 Senior Notes at
an initial discount of $3,068 which is being recognized as additional interest expense over the term of the 2030 Senior
Notes. The Company used the proceeds from the offering of the 2030 Notes to repurchase $61,244 and $51,068
aggregate principal balance of its outstanding 2023 Senior Notes and 4.40% Senior Notes 2024, respectively through a
tender offer. The Company recognized a $10,119 debt satisfaction loss related to the aggregate repurchases, which
included a write-off of the proportionate amount of unamortized discount and debt issuance costs related to the 2023 and
2024 senior notes.
During 2007, the Company issued $200,000 original principal amount of Trust Preferred Securities. The Trust Preferred
Securities, which are classified as debt, are due in 2037, are open for redemption at the Company's option, bear interest at
a variable rate of three month LIBOR plus 170 basis points through maturity. The interest rate at December 31, 2021 was
1.832%. As of December 31, 2021 and 2020, there was $129,120 original principal amount of Trust Preferred Securities
outstanding and $1,525 and $1,625, respectively, of unamortized debt issuance costs.
78
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
Scheduled principal payments for these debt instruments for the next five years and thereafter are as follows:
Year ending December 31,
2022
2023
2024
2025
2026
Thereafter
Unamortized debt discounts
Unamortized debt issuance costs
(10)
Derivatives and Hedging Activities
Total
—
—
198,932
—
—
929,120
1,128,052
(3,655)
(8,871)
1,115,526
$
$
Risk Management Objective of Using Derivatives. The Company is exposed to certain risks arising from both its business
operations and economic conditions. The Company principally manages its exposures to a wide variety of business and
operational risks through management of its core business activities. The Company manages economic risks, including
interest rate, liquidity, and credit risk primarily by managing the type, amount, sources, and duration of its debt funding
and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to
manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain
cash amounts, the value of which are determined by interest rates. The Company's derivative financial instruments are
used to manage differences in the amount, timing, and duration of the Company's known or expected cash receipts and
its known or expected cash payments principally related to the Company's investments and borrowings.
Cash Flow Hedges of Interest Rate Risk. The Company's objectives in using interest rate derivatives are to add stability
to interest expense, to manage its exposure to interest rate movements and therefore manage its cash outflows as it relates
to the underlying debt instruments. To accomplish these objectives the Company primarily uses interest rate swaps as
part of its interest rate risk management strategy relating to certain of its variable rate debt instruments. Interest rate
swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for
the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional
amount.
The changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated
other comprehensive income (loss) and is subsequently reclassified into earnings in the period that the hedged forecasted
transaction affects earnings. The Company did not incur any ineffectiveness during 2021 and 2020.
During July 2019, the Company entered into four interest rate swap agreements with its counterparties. The swaps were
designated as cash flow hedges of the risk of variability attributable to changes in the LIBOR swap rates on its $300,000
LIBOR-indexed variable-rate unsecured term loan. Accordingly, changes in fair value of the swaps are recorded in other
comprehensive income (loss) and reclassified to earnings as interest becomes receivable or payable. The swaps expire
coterminous with the extended maturity of the term loan in January 2025. During the next 12 months, the Company
estimates that an additional $3,848 will be reclassified as an increase to interest expense if the swaps remain outstanding.
As of December 31, 2021, the Company had the following outstanding interest rate derivatives that were designated as
cash flow hedges of interest rate risk:
Interest Rate Derivative
Number of Instruments
Interest Rate Swaps
4
79
Notional
$300,000
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
The table below presents the fair value of the Company's derivative financial instruments as well as their classification
on the consolidated balance sheet.
As of December 31, 2021
As of December 31, 2020
Balance Sheet Location
Fair Value
Balance Sheet Location
Fair Value
Derivatives designated as hedging
instruments:
Interest Rate Swap Liability
Other liabilities
$ (6,258)
Other liabilities
$ (17,963)
The table below present the effect of the Company's derivative financial instruments on the consolidated statements of
operations for 2021 and 2020:
Derivatives in Cash Flow
Hedging Relationships
Amount of Gain (Loss) Recognized
in OCI on Derivative
December 31,
Amount of Loss
Reclassified from
Accumulated OCI into Income (1)
December 31,
2021
2020
2021
2020
Interest Rate Swap
$
6,755 $
(19,422) $
4,950 $
3,387
(1) Amounts reclassified from accumulated other comprehensive income (loss) to interest expense within the consolidated statements of operations.
Total interest expense presented in the consolidated statements of operations in which the effects of cash flow hedges are
recorded was $46,708 and $55,201 for 2021 and 2020, respectively.
The Company's agreements with the swap derivative counterparties contain provisions whereby if the Company defaults
on the underlying indebtedness, including default where repayment of the indebtedness has not been accelerated by the
lender, then the Company could also be declared in default of the swap derivative obligation. As of December 31, 2021,
the Company had not posted any collateral related to the agreements.
80
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
(11)
Leases
Lessor
The Company's lease portfolio as a lessor primarily includes general purpose, single-tenant net-leased real estate
assets. Most of the Company’s leases require tenants to pay fixed annual rental payments that escalate on an annual
basis and variable payments for other operating expenses, such as real estate taxes, insurance, common area
maintenance ("CAM"), and utilities, that are based on the actual expenses incurred.
Certain leases allow for the tenant to renew the lease term upon expiration or earlier. Periods covered by a renewal
option are included within the lease term only when renewals are deemed to be reasonably certain. Certain leases allow
for the tenant to terminate the lease before the expiration of the lease term and certain leases provide the tenant with
the right to purchase the leased property at fair market value or a stipulated price upon expiration of the lease term or
before.
Accounting guidance under Topic 842 requires the Company to make certain assumptions and judgments in applying
the guidance, including determining whether an arrangement includes a lease and determining the lease term when the
contract has renewal, purchase or early termination provisions.
The Company analyzes its accounts receivable, customer creditworthiness and current economic trends when
evaluating the adequacy of the collectability of the lessee's total accounts receivable balance on a lease by lease basis.
In addition, tenants in bankruptcy are analyzed and considerations are made in connection with the expected pre-
petition and post-petition claims. If a lessee's accounts receivable balance is considered uncollectable, the Company
will write-off the receivable balances associated with the lease to rental revenue and cease to recognize lease income,
including straight-line rent, unless cash is received. If the Company subsequently determines that it is probable it will
collect substantially all of the lessee's remaining lease payments under the lease term; the Company will reinstate the
straight-line balance adjusting for the amount related to the period when the lease was accounted for on a cash basis. In
February 2020, the Company wrote off a deferred rent receivable balance of $615 as a reduction of rental revenue
related to a tenant that dissolved and surrendered its leased premises in an industrial property located in the Columbus,
Ohio market. During 2019, rental revenue was reduced by an aggregate of $352 for accounts receivable deemed
uncollectible.
Certain tenants have been experiencing financial difficulties as a result of the COVID-19 pandemic. During 2020, the
Company wrote off aggregate deferred rent receivable balances of $1,383, as a reduction of rental revenue, related to
tenants with rent collectability concerns. As of December 31, 2021 and 2020, the Company also wrote off or reserved
an aggregate of $370 and $389, respectively, accounts receivable, net, relating to certain tenants suffering from the
current economic conditions.
The Company determined that the lease and non-lease components in its leases are a single lease component, which is,
therefore, being recognized as rental revenue in its consolidated statements of operations. The primary non-lease
service that is included within rental revenue is CAM services provided as part of the Company’s real estate leases.
Topic 842 requires that the Company capitalize, as initial direct costs, only those costs that are incurred due to the
execution of a lease. As of December 31, 2021, 2020 and 2019, the Company incurred $19, $67 and $191,
respectively, of costs that were not incremental to the execution of leases, which are included in property operating
expenses in its consolidated statements of operations.
The Company manages the risk associated with the residual value of its leased properties by including contract clauses
that make tenants responsible for surrendering the space in good condition upon lease termination, holding a
diversified portfolio, and other activities. The Company does not have residual value guarantees on specific properties.
81
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
The following table presents the Company’s classification of rental revenue for its operating leases for the year ended
December 31, 2021 and 2020:
Classification
Fixed
Variable(1)(2)
Total
December 31, 2021
December 31, 2020
$
$
287,552 $
52,392
339,944 $
293,457
32,354
325,811
(1) Primarily comprised of tenant reimbursements.
(2) Variable lease payments contain termination revenue of $15,371 and $857 for the year ending December 31, 2021 and 2020, respectively. The
2021 termination fee revenue primarily related to a tenant that terminated its lease at the Company's Durham, New Hampshire industrial
property.
Future fixed rental receipts for leases, assuming no new or re-negotiated leases as of December 31, 2021 were as
follows:
Year ending December 31,
2022
2023
2024
2025
2026
Thereafter
Total
Total
$
254,733
258,475
228,697
208,404
189,243
710,938
$
1,850,490
The above minimum lease payments do not include reimbursements to be received from tenants for certain operating
expenses and real estate taxes and do not include early termination payments provided for in certain leases, if not
reasonably certain.
Certain leases allow for the tenant to terminate the lease if the property is deemed obsolete, as defined, and upon
payment of a termination fee to the landlord, as stipulated in the lease. In addition, certain leases provide the tenant
with the right to purchase the leased property at fair market value or a stipulated price.
Lessee
The Company has ground leases, corporate leases for office space, and office equipment leases. All leases were
classified as operating leases as of December 31, 2021. The leases have remaining lease terms of up to 39 years.
Renewal periods are included in the lease term only when renewal is deemed to be reasonably certain. The lease term
also includes periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise
the termination option. The Company measures its lease payments by including fixed rental payments and variable
rental payments that tie to an index or a rate, such as CPI. Minimum lease payments for leases that commenced before
the date of adoption of ASC 842 were determined based on previous leases guidance under ASC 840. The Company
recognizes lease expense for its operating leases on a straight-line basis over the lease term and variable lease expense
not included in the lease payment measurement as incurred.
The accounting guidance under Topic 842 requires the Company to make certain assumptions and judgments in
applying the guidance, including determining whether an arrangement includes a lease, determining the term of a lease
when the contract has renewal or termination provisions and determining the discount rate.
The Company determines whether an arrangement is or includes a lease at contract inception by evaluating whether
the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. If the Company has the right to obtain substantially all of the economic benefits from and can direct the
use of, the identified asset for a period of time, the Company accounts for the contract as a lease.
82
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
As the Company does not know the rate implicit in the respective leases, the Company used its incremental borrowing
rate based on the information available at the transition date for such existing leases. The Company uses the
information available at the lease commencement date to determine the discount rate for any new leases. The
Company used a portfolio approach to determine its incremental borrowing rate. Lease contracts were grouped based
on similar lease terms and economic environments in a manner in which the Company reasonably expects that the
outcome from applying a portfolio approach does not differ materially from an individual lease approach. The
Company estimated a collateralized discount rate for each portfolio of leases.
Supplemental information related to operating leases is as follows:
Weighted-average remaining lease term
Operating leases (years)
Weighted-average discount rate
Operating leases
The Year Ended
December 31, 2021 December 31, 2020
9.7
4.0 %
11.7
4.1 %
The components of lease expense for the year ended December 31, 2021 and 2020 were as follows:
Income Statement Classification
Fixed
Variable
Total
2021:
Property operating
General and administrative
Total
2020:
Property operating
General and administrative
Total
$
$
$
$
3,645 $
1,380
5,025 $
3,969 $
1,348
5,317 $
3 $
70
73 $
2 $
105
107 $
3,648
1,450
5,098
3,971
1,453
5,424
The Company recognized sublease income of $3,425, $3,756 and $3,764 in 2021, 2020 and 2019, respectively.
The following table shows the Company's maturity analysis of its operating lease liabilities as of December 31, 2021:
Year ending December 31,
2022
2023
2024
2025
2026
Thereafter
Total lease payments
Less: Imputed interest
Present value of lease liabilities
(12)
Concentration of Risk
Operating Leases
5,046
5,290
5,199
5,204
4,174
11,174
36,087
(6,993)
29,094
$
$
The Company seeks to reduce its operating and leasing risks through the geographic diversification of its properties,
tenant industry diversification, avoidance of dependency on a single asset and the creditworthiness of its tenants. For
the years ended December 31, 2021, 2020 and 2019, no single tenant represented greater than 10% of rental revenues.
Cash and cash equivalent balances at certain institutions may exceed insurable amounts. The Company believes it
mitigates this risk by investing in or through major financial institutions.
83
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
(13)
Equity
At-The-Market Offering Program. The Company maintains an At-The-Market offering program ("ATM program") under
which the Company can issue common shares. The following table summarizes common share issuances under the
ATM program:
2021 ATM Issuances
2020 ATM Issuances
Year ended December 31, 2021
Shares Sold
1,052,800
Net Proceeds
$13,532
Year ended December 31, 2020
Shares Sold
5,950,882
Net Proceeds
$60,977
During 2021, the Company settled 4,990,717 common shares previously sold on a forward basis on the maturity date of
the contract and received $53,567 of net proceeds. There were no forward settlements during 2020.
As of December 31, 2021, an aggregate of 3,649,023 common shares were sold in forward sales contracts that had not
been settled and had an aggregate settlement price of $38,544, which is subject to adjustment in accordance with the
forward sales contracts. The Company expects to settle the forward sales contracts by the maturity dates in February
2022.
In 2021, the Company amended the terms of its ATM offering program, under which the Company may, from time to
time, sell up to $350,000 of common shares over the term of the program. As of December 31, 2021, commons shares
with an aggregate value of $294,985 remain available for issuance under the ATM program.
Underwritten Equity Offerings. During 2021, the Company entered into forward sales contracts for the sale of
16,000,000 common shares at a public offering price of $12.11 per common share in an underwritten equity offering that
have not yet settled. Subject to the Company's rights to elect cash or net share settlement, the Company expects to settle
the forward sales contracts by the maturity date in May 2022. As of December 31, 2021, the forward sales contracts had
an aggregate settlement price $187,528, which is subject to adjustment in accordance with the forward sales contracts.
During 2020, the Company issued 17,250,000 common shares at $9.60 per common share in an underwritten offering
and generated net proceeds of approximately $164,000. The net proceeds were used for general corporate purposes,
including acquisitions, and pending the application of the proceeds were used to pay down all the then outstanding
balance under the Company's revolving credit facility.
Stock Based Compensation. In addition, during the years ended December 31, 2021, 2020 and 2019, the Company issued
949,573, 756,380 and 896,807 of its common shares, respectively, to certain employees and trustees. Typically, trustee
share grants vest immediately. Employee share grants generally vest ratably, on anniversaries of the grant date, however,
in certain situations vesting is cliff-based after a specific number of years and/or subject to meeting certain performance
criteria.
Share Repurchase Program. In July 2015, the Company's Board of Trustees authorized the repurchase of up to
10,000,000 common shares and increased this authorization by 10,000,000 in 2018. This share repurchase program has
no expiration date. During 2020 and 2019, the Company repurchased and retired, 1,329,940 and 441,581 common
shares, respectively, at an average price of, $8.28 and $8.13, respectively, per common share under the share repurchase
program. During 2021, there were no share repurchases. As of December 31, 2021, 8,976,315 common shares remain
available for repurchase under this authorization. The Company records a liability for repurchases that have not yet been
settled as of the period end.
84
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
Series C Preferred Stock. The Company had 1,935,400 shares of Series C Cumulative Convertible Preferred Stock
(“Series C Preferred”) outstanding at December 31, 2021. The shares have a dividend of $3.25 per share per annum, have
a liquidation preference of $96,770, and the Company, if certain common share prices are achieved, can force conversion
into common shares of the Company. As of December 31, 2021, each share was convertible into 2.4339 common shares.
This conversion ratio may increase over time if the Company's common share dividend exceeds certain quarterly
thresholds.
If certain fundamental changes occur, holders may require the Company, in certain circumstances, to repurchase all or
part of their shares of Series C Preferred. In addition, upon the occurrence of certain fundamental changes, the Company
will, under certain circumstances, increase the conversion rate by a number of additional common shares or, in lieu
thereof, may in certain circumstances elect to adjust the conversion rate upon the shares of Series C Preferred becoming
convertible into shares of the public acquiring or surviving company.
The Company may, at the Company's option, cause shares of Series C Preferred to be automatically converted into that
number of common shares that are issuable at the then prevailing conversion rate. The Company may exercise its
conversion right only if, at certain times, the closing price of the Company's common shares equals or exceeds 125% of
the then prevailing conversion price of the Series C Preferred.
Holders of shares of Series C Preferred generally have no voting rights, but will have limited voting rights if the
Company fails to pay dividends for six or more quarters and under certain other circumstances. Upon conversion, the
Company may choose to deliver the conversion value to investors in cash, common shares, or a combination of cash and
common shares.
A summary of the changes in accumulated other comprehensive income (loss) related to the Company's cash flow hedges
is as follows:
Twelve months ended December 31,
2021
2020
Balance at beginning of period
Other comprehensive income (loss) before reclassifications
Amounts of loss reclassified from accumulated other
comprehensive loss to interest expense
Balance at end of period
$
$
(17,963) $
6,755
4,950
(6,258) $
(1,928)
(19,422)
3,387
(17,963)
Noncontrolling Interests. In conjunction with several of the Company's acquisitions in prior years, sellers were issued
limited partner interests in LCIF (“OP units”) OP units as a form of consideration. All OP units, other than OP units
owned by the Company, are redeemable for common shares at certain times, at the option of the holders, and are
generally not otherwise mandatorily redeemable by the Company. The OP units are classified as a component of
permanent equity as the Company has determined that the OP units are not redeemable securities as defined by GAAP.
Each OP unit is currently redeemable for approximately 1.13 common shares, subject to future adjustments.
During 2021, LCIF redeemed and cancelled 1,598,906 OP units in connection with the disposition of the three
properties.
During 2021, 2020 and 2019, 185,270, 327,453 and 391,993 common shares, respectively, were issued by the Company,
in connection with OP unit redemptions, for an aggregate value of $958, $1,614 and $1,655, respectively.
As of December 31, 2021, there were approximately 775,000 OP units outstanding other than OP units owned by the
Company. All OP units receive distributions in accordance with the LCIF partnership agreement. To the extent that the
Company's dividend per common share is less than the stated distribution per OP unit per the LCIF partnership
agreement, the distributions per OP unit are reduced by the percentage reduction in the Company's dividend per common
share. No OP units have a liquidation preference.
85
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
The following discloses the effects of changes in the Company's ownership interests in its noncontrolling interests:
Net Income Attributable to Shareholders and
Transfers from Noncontrolling Interests
2021
2020
2019
Net income attributable to LXP Industrial Trust shareholders
$
382,648 $
183,302 $
279,910
Transfers (to) from noncontrolling interests:
Increase (decrease) in additional paid-in-capital for reallocation of
noncontrolling interests
Increase in additional paid-in-capital for redemption of noncontrolling
OP units
435
958
—
(973)
1,614
1,655
Change from net income attributable to shareholders and transfers from
noncontrolling interests
$
384,041 $
184,916 $
280,592
(14)
Benefit Plans
Non-vested share activity for the years ended December 31, 2021 and 2020, is as follows:
Balance at December 31, 2019
Granted
Vested
Forfeited
Balance at December 31, 2020
Granted
Vested
Forfeited
Balance at December 31, 2021
Number of
Shares
Weighted-
Average Grant-
Date Fair
Value Per Share
2,941,412 $
709,250
(613,504)
(332,429)
2,704,729
899,328
(1,303,149)
(10,264)
2,290,644 $
7.30
7.77
8.80
5.30
7.27
7.85
7.82
10.09
7.17
During 2021 and 2020, the Company granted common shares to certain employees and trustees as follows:
Performance Shares(1)
Shares issued:
Index
Peer
Grant date fair value per share:(2)
Index
Peer
Non-Vested Common Shares:(3)
Shares issued
Grant date fair value
2021
2020
297,636
297,632
7.13 $
6.23 $
232,993
232,987
6.59
5.97
304,060
3,080 $
243,270
2,581
$
$
$
(1) The shares vest based on the Company's total shareholder return growth after a three-year measurement period relative to an index and a group of
Company peers. Dividends will not be paid on these grants until earned. Once the performance criteria are met and the actual number of shares
earned is determined, such shares vest immediately. During 2021, all of the 662,044 performance shares issued in 2018 vested. During 2020,
122,779 of the 452,737 performance shares issued in 2017 vested.
(2) The fair value of grants was determined at the grant date using a Monte Carlo simulation model.
(3) The shares vest ratably over a three-year service period.
86
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
In addition, during 2021, 2020 and 2019, the Company issued 50,245, 47,130, and 67,226, respectively, of fully vested
common shares to non-management members of the Company's Board of Trustees with a fair value of $587, $500, and
$595, respectively.
As of December 31, 2021, of the remaining 2,290,644 non-vested shares, 677,275 are subject to time-based vesting and
1,613,369 are subject to performance-based vesting. At December 31, 2021, there are 1,410,110 awards available for
grant. The Company has $6,502 in unrecognized compensation costs relating to the non-vested shares that will be
charged to compensation expense over an average of approximately 1.7 years.
The Company has established a trust for certain officers in which vested common shares granted for the benefit of the
officers are deposited. The officers exert no control over the common shares in the trust and the common shares are
available to the general creditors of the Company. As of December 31, 2021 and 2020, there were 130,863 common
shares in the trust.
The Company sponsors a 401(k) retirement savings plan covering all eligible employees. The Company makes a
discretionary matching contribution on a portion of employee participant salaries and, based on its profitability, may
make an additional discretionary contribution at each fiscal year end to all eligible employees. These discretionary
contributions are subject to vesting under a schedule providing for 25% annual vesting starting with the first year of
employment and 100% vesting after four years of employment. Approximately $426, $393 and $403 of contributions are
applicable to 2021, 2020 and 2019, respectively.
During 2021, 2020 and 2019, the Company recognized $6,554, $6,185 and $5,831, respectively, in expense relating to
scheduled vesting of common share grants.
(15)
Related Party Transactions
There were no related party transactions other than those disclosed elsewhere in the consolidated financial statements.
(16)
Income Taxes
The provision for income taxes relates primarily to the taxable income of the Company's taxable REIT subsidiaries. The
earnings, other than in taxable REIT subsidiaries, of the Company are not generally subject to federal income taxes at the
Company level due to the REIT election made by the Company.
Income taxes have been provided for on the asset and liability method. Under the asset and liability method, deferred
income taxes are recognized for the temporary differences between the financial reporting basis and the tax basis of
assets and liabilities.
The Company's provision for income taxes for the years ended December 31, 2021, 2020 and 2019 is summarized as
follows:
Current:
Federal
State and local
2021
2020
2019
$
$
(26) $
(1,267)
(1,293) $
(173) $
(1,411)
(1,584) $
(70)
(1,309)
(1,379)
The income tax provision differs from the amount computed by applying the statutory federal income tax rate to pre-tax
operating income as follows:
Federal provision at statutory tax rate (21%)
State and local taxes, net of federal benefit
Other
2021
2020
2019
$
$
(35) $
—
(1,258)
(1,293) $
(195) $
(77)
(1,312)
(1,584) $
(73)
(10)
(1,296)
(1,379)
87
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
For the years ended December 31, 2021, 2020 and 2019, the “other” amount is comprised primarily of state franchise
taxes of $1,267, $1,314 and $1,289, respectively.
A summary of the average taxable nature of the Company's common dividends for each of the years in the 3-year period
ended December 31, 2021, is as follows:
Total dividends per share
Ordinary income
Qualifying dividend
Capital gain
Return of capital
$
$
$
2021
0.430
65.89 %
0.10 %
—
34.01 %
100.00 %
2020
0.420
95.1 %
0.6 %
—
4.3 %
100.00 %
2019
0.485
61.07 %
0.22 %
—
38.71 %
100.00 %
A summary of the average taxable nature of the Company's dividend on shares of its Series C Preferred for each of the
years in the 3-year period ended December 31, 2021, is as follows:
Total dividends per share
Ordinary income
Qualifying dividend
Capital gain
Return of capital
(17)
Commitments and Contingencies
$
$
$
2021
3.25
99.84 %
0.16 %
—
—
100.00 %
2020
3.25
99.38 %
0.62 %
—
—
100.00 %
2019
3.25
99.64 %
0.36 %
—
—
100.00 %
In addition to the commitments and contingencies disclosed elsewhere, the Company has the following commitments
and contingencies.
The Company is obligated under certain tenant leases, including its proportionate share for leases for non-consolidated
entities, to fund the expansion of the underlying leased properties. The Company, under certain circumstances, may
guarantee to tenants the completion of base building improvements and the payment of tenant improvement allowances
and lease commissions on behalf of its subsidiaries.
As of December 31, 2021, the Company had five ongoing consolidated development projects and expects to incur
approximately $312,000 of costs in 2022, excluding noncontrolling interests' share, to substantially complete the
construction of such projects. As of December 31, 2021, the Company had two consolidated and two non-consolidated
joint ventures that own land parcels held for development. The Company is unable to estimate the timing of any required
fundings for potential development projects on these parcels.
The Company and LCIF are parties to a funding agreement under which the Company may be required to fund
distributions made on account of LCIF's OP units. Pursuant to the funding agreement, the parties agreed that, if LCIF
does not have sufficient cash available to make a quarterly distribution to its limited partners in an amount in accordance
with the partnership agreement, LXP Industrial Trust will fund the shortfall. Payments under the agreement will be made
in the form of loans to LCIF and will bear interest at prevailing rates as determined by the Company in its discretion but,
no less than the applicable federal rate. LCIF's right to receive these loans will expire if no OP units remain outstanding
and all such loans are repaid. No amounts have been advanced under this agreement.
From time to time, the Company is directly or indirectly involved in legal proceedings arising in the ordinary course of
business. Management believes, 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 the Company's business, financial condition and results of
operations.
88
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
(18)
Supplemental Disclosure of Statement of Cash Flow Information
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents at beginning of period
Restricted cash at beginning of period
2021
2020
2019
$ 178,795 $ 122,666 $ 168,750
626
6,644
8,497
Cash, cash equivalents and restricted cash at beginning of period
$ 179,421 $ 129,310 $ 177,247
Cash and cash equivalents at end of period
Restricted cash at end of period
$ 190,926 $ 178,795 $ 122,666
101
626
6,644
Cash, cash equivalents and restricted cash at end of period
$ 191,027 $ 179,421 $ 129,310
In addition to disclosures discussed elsewhere, during 2021, 2020 and 2019, the Company paid $44,234, $52,059 and
$59,018, respectively, for interest and $1,569, $1,748 and $1,482, respectively, for income taxes.
In 2021, LCIF disposed of three real estate assets. The consideration included the redemption of OP units valued at
$22,305 and the assumption of the aggregate related non-recourse mortgage debt of $11,610.
In 2021, as a result of the formation of the MFG Cold JV, the Company recognized a non-cash increase to investments in
non-consolidated entities of $28,075 for its 20% interest in MFG Cold JV. Additionally, MFG Cold JV assumed a
mortgage loan encumbering one property resulting in a non-cash decrease of $25,850 to mortgages and notes payable,
net.
The acquisition of the RR Ocala 44, LLC joint venture in 2021 included a $489 non-cash increase to investments in real
estate under construction and the noncontrolling interest because a member of the joint venture made a non-cash
contribution of the land in exchange for its ownership interest in the joint venture.
In 2021 and 2020, the Company entered into new leases and exercised extension options on leases resulting in an
aggregate non-cash increase of $1,589 and $719, respectively, to the related operating lease liabilities and right of use
assets.
In 2020, the Company sold its interest in a property, which included the assumption by the buyer of the related non-
recourse mortgage debt of $178,662.
As a result of the foreclosure of three office properties located in South Carolina, Kansas and Florida, during 2020, there
was an aggregate non-cash charge of $57,356 and $28,078 in mortgages and notes payable, net, and real estate, net,
respectively.
During 2019, the Company assumed a $41,877 non-recourse mortgage debt upon the acquisition of a property. In
addition, in 2019, the Company sold its interest in a property, which included the assumption by the buyer of the related
non-recourse mortgage debt of $110,000.
(19)
Subsequent Events
Subsequent to December 31, 2021 and in addition to disclosures elsewhere in the financial statements, the Company
acquired two industrial properties for an aggregate cost of approximately $71,800.
89
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
Real Estate and Accumulated Depreciation and Amortization
Schedule III ($000)
Description
Location
Encumbrances
WAREHOUSE/DISTRIBUTION PROPERTIES
Land and Land
Estates
Buildings and
Improvements
Total
Accumulated
Depreciation
and
Amortization(1)
Date
Acquired
Date
Constructed
$
— $
10,733 $
69,491 $
80,224 $
Stabilized:
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Chandler, AZ
Goodyear, AZ
Goodyear, AZ
Goodyear, AZ
Goodyear, AZ
Tolleson, AZ
Ocala, FL
Orlando, FL
Tampa, FL
Austell, GA
Cartersville, GA
Cartersville, GA
Fairburn, GA
McDonough, GA
McDonough, GA
Pooler, GA
Rincon, GA
Savannah, GA
Savannah, GA
Union City, GA
Edwardsville, IL
Edwardsville, IL
Minooka, IL
Minooka, IL
Minooka, IL
Rantoul, IL
Rockford, IL
Rockford, IL
Lafayette, IN
Lebanon, IN
Whiteland, IN
Whiteland, IN
Whiteland, IN
Whitestown, IN
Whitestown, IN
Whitestown, IN
Whitestown, IN
New Century, KS
Shreveport, LA
Shreveport, LA
Detroit, MI
Romulus, MI
Minneapolis, MN
Byhalia, MS
Byhalia, MS
Canton, MS
Olive Branch, MS
Olive Branch, MS
Olive Branch, MS
Olive Branch, MS
Henderson, NC
Shelby, NC
Statesville, NC
Erwin, NY
—
41,646
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
36,115
48,925
16,222
49,758
16,013
49,936
10,869
10,311
48,459
42,255
33,276
40,359
52,790
30,956
30,346
34,325
25,812
7,458
22,830
34,565
41,310
34,301
40,949
45,817
32,562
2,647
5,921
15,578
29,996
14,488
39,338
13,958
11,825
17,011
12,052
80,051
13,424
10,134
21,840
25,009
33,786
1,922
35,795
31,429
71,289
42,556
38,702
40,446
15,464
7,222
18,862
18,594
12,514
42,759
41,362
60,895
17,836
61,490
19,324
54,049
11,899
12,471
51,710
44,752
35,282
47,568
58,231
34,209
32,036
38,100
28,372
8,528
25,366
39,158
44,959
36,089
44,381
49,498
33,866
3,018
6,430
16,240
32,096
15,229
41,329
14,653
12,987
18,965
13,260
88,386
13,424
11,212
22,700
26,142
36,224
3,808
36,801
33,180
76,366
45,056
40,660
43,092
16,315
8,710
20,283
19,485
14,162
42,759
5,247
11,970
1,614
11,732
3,311
4,113
1,030
2,160
3,251
2,497
2,006
7,209
5,441
3,253
1,690
3,775
2,560
1,070
2,536
4,593
3,649
1,788
3,432
3,681
1,304
371
509
662
2,100
741
1,991
695
1,162
1,954
1,208
8,335
—
1,078
860
1,133
2,438
1,886
1,006
1,751
5,077
2,500
1,958
2,646
851
1,488
1,421
891
1,648
—
90
3,768
5,088
4,584
1,317
Nov-20
Nov-18
Nov-19
Jan-20
345
Nov-21
2021
1,589
3,278
4,597
7,697
6,775
—
—
269
9,678
3,936
2,332
1,896
1,752
508
2,520
7,130
6,524
2,747
3,550
3,873
7,157
1,109
2,234
3,401
5,985
157
439
151
475
2,171
485
—
2,898
3,379
8,075
7,805
7,389
Oct-19
Jun-20
Dec-06
Jul-88
Jun-19
Dec-21
Dec-21
Nov-21
Aug-17
Feb-19
Apr-20
Sep-20
Jun-20
Jun-20
Jun-19
Dec-16
Jun-18
Jan-20
Dec-19
Jan-20
Jan-14
Dec-06
Dec-06
Oct-17
Feb-17
Oct-21
Oct-21
Oct-21
Jan-21
Jan-19
Jan-21
Dec-21
Feb-17
Jun-12
Mar-07
Jan-16
Nov-17
559
Sep-12
9,570
7,735
May-11
Sep-17
23,310
Mar-15
7,299
6,710
4,497
1,699
3,091
7,420
7,036
4,488
Apr-18
Apr-18
May-19
May-19
Nov-01
Jun-11
Dec-06
Sep-12
2021
2014
2012
2011
2011
25,128
Mar-13
2013
Long Island City, NY
28,980
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
Real Estate and Accumulated Depreciation and Amortization
Schedule III ($000) - continued
Description
Location
Encumbrances
Land and Land
Estates
Buildings and
Improvements
Total
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Not stabilized:
Industrial
Industrial
Industrial
Industrial
Industrial
OTHER PROPERTIES
Chillicothe, OH
Columbus, OH
Glenwillow, OH
Hebron, OH
Hebron, OH
Lockbourne, OH
Monroe, OH
Monroe, OH
Monroe, OH
Monroe, OH
Streetsboro, OH
Wilsonville, OR
Bristol, PA
Duncan, SC
Duncan, SC
Duncan, SC
Duncan, SC
Duncan, SC
Duncan, SC
Duncan, SC
Greer, SC
Greer, SC
Spartanburg, SC
Spartanburg, SC
Antioch, TN
Cleveland, TN
Jackson, TN
Lewisburg, TN
Millington, TN
Smyrna, TN
Carrollton, TX
Dallas, TX
Deer Park, TX
Grand Prairie, TX
Houston, TX
Hutchins, TX
Lancaster, TX
Missouri City, TX
Northlake, TX
Northlake, TX
Pasadena, TX
Pasadena, TX
Pasadena, TX
Pasadena, TX
San Antonio, TX
Chester, VA
Winchester, VA
Winchester, VA
Winchester, VA
Phoenix, AZ
Lakeland, FL
Plant City, FL
Adairsville, GA
Greer, SC
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
735
2,251
2,228
1,063
2,052
2,800
1,109
544
3,123
3,950
2,441
6,815
2,508
2,819
1,169
1,020
1,710
1,406
1,257
1,615
2,376
6,959
1,447
1,186
3,847
1,871
1,454
173
723
1,793
3,228
2,420
6,489
3,166
15,055
1,307
3,847
14,555
4,500
3,938
2,202
4,272
1,792
4,057
1,311
8,544
1,988
3,823
2,818
8,027
1,416
2,610
1,465
1,329
10,939
25,280
24,530
4,947
8,179
16,731
16,477
12,370
60,702
88,422
25,282
32,424
15,863
24,508
23,070
17,444
27,817
14,272
13,252
27,830
32,127
78,405
23,758
15,820
13,926
29,743
49,132
10,865
20,383
93,940
16,234
23,330
28,470
17,985
57,949
8,466
25,037
5,895
71,636
37,189
17,096
22,296
9,089
17,810
36,644
53,067
32,536
12,276
24,422
73,650
20,140
45,983
23,649
21,465
11,674
27,531
26,758
6,010
10,231
19,531
17,586
12,914
63,825
92,372
27,723
39,239
18,371
27,327
24,239
18,464
29,527
15,678
14,509
29,445
34,503
85,364
25,205
17,006
17,773
31,614
50,586
11,038
21,106
95,733
19,462
25,750
34,959
21,151
73,004
9,773
28,884
20,450
76,136
41,127
19,298
26,568
10,881
21,867
37,955
61,611
34,524
16,099
27,240
81,677
21,556
48,593
25,114
22,794
Accumulated
Depreciation
and
Amortization(1)
Date
Acquired
Date
Constructed
4,315
Oct-11
364
Aug-21
2021
9,570
2,565
4,373
626
419
1,236
6,321
8,867
11,970
7,444
9,355
529
490
371
594
1,395
1,300
3,284
687
6,661
4,267
Dec-06
Dec-97
Dec-01
Mar-21
Dec-21
Sep-19
Sep-19
Sep-19
Jun-07
Sep-16
Mar-98
Jul-21
Jul-21
Jul-21
Jul-21
Oct-19
Oct-19
Apr-19
Jun-21
Dec-19
Aug-18
697
Dec-20
5,152
6,056
8,928
2,601
15,590
17,523
3,301
2,628
May-07
May-17
Sep-17
May-14
Apr-05
Sep-17
Sep-18
Apr-19
828
May-21
3,509
Jun-17
15,783
Mar-13
596
May-20
1,098
5,895
5,614
1,802
1,104
642
259
2,713
7,093
8,123
5,567
5,222
1,427
—
782
1,165
—
465
Dec-20
Apr-12
Feb-20
Dec-20
Jun-20
May-21
May-21
Aug-18
Jun-17
Dec-18
Dec-17
Jun-07
Sep-20
Dec-21
Jan-21
Jun-21
Dec-21
Jun-21
Other
Palo Alto, CA
13,803
12,400
16,977
29,377
26,886
Dec-06
91
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
Real Estate and Accumulated Depreciation and Amortization
Schedule III ($000) - continued
Description
Location
Encumbrances
Land and Land
Estates
Buildings and
Improvements
Total
Accumulated
Depreciation
and
Amortization(1)
Date
Acquired
Date
Constructed
Other
Other
Other
McDonough, GA
Owensboro, KY
Baltimore, MD
Construction in progress
Deferred loan costs, net
—
—
—
—
(1,337)
2,463
819
4,605
—
—
24,811
2,439
—
—
—
27,274
3,258
4,605
5,482
—
Dec-06
Dec-06
Dec-06
9,718
1,324
—
—
—
(1) Depreciation and amortization expense is calculated on a straight-line basis over the following lives:
$
83,092 $
342,895 $
3,235,601 $
3,583,978 $
504,699
Building and improvements
Up to 40 years
Land estates
Tenant improvements
Up to 51 years
Shorter of useful life or term
of related lease
92
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
Real Estate and Accumulated Depreciation and Amortization
Schedule III ($000) - continued
The initial cost includes the purchase price paid directly or indirectly by the Company. The total cost basis of the
Company's properties at December 31, 2021 for federal income tax purposes was approximately $4.2 billion.
Reconciliation of real estate, at cost:
Balance at the beginning of year
Additions during year
Properties sold and impaired during the year
Other reclassifications
2021
2020
2019
$
3,514,564 $
3,320,574 $
3,090,134
860,311
(653,247)
(137,650)
580,861
(354,218)
(32,653)
663,742
(496,730)
63,428
Balance at end of year
$
3,583,978 $
3,514,564 $
3,320,574
Reconciliation of accumulated depreciation and amortization:
Balance at the beginning of year
Depreciation and amortization expense
Accumulated depreciation and amortization of properties sold
and impaired during year
Other reclassifications
Balance at end of year
$
$
684,468 $
138,879
675,596 $
127,504
722,644
118,525
(244,751)
(102,261)
(177,709)
(73,897)
504,699 $
(16,371)
684,468 $
12,136
675,596
93
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
An evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures” (as defined in
Rule 13a-15(e) or 15d-15(e) under the Exchange Act), as of the end of the period covered by this Annual Report, was made under
the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial
Officer who are our Principal Executive Officer and our Principal Financial Officer, respectively. Management, including our
Chief Executive Officer and our Chief Financial Officer, has concluded that our disclosure controls and procedures were effective
as of December 31, 2021.
Management's Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for
performing an assessment of the effectiveness of internal control over financial reporting as of December 31, 2021. Our system
of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation and fair presentation of published financial statements in accordance with U.S. generally accepted
accounting principles. Our system of internal control over financial reporting includes policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with U.S. generally accepted accounting principles and that receipts and expenditures are being made only in
accordance with authorizations of our management and the members of our Board of Trustees; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a
material effect on our financial statements.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance that financial statements are fairly presented in accordance with
U.S. generally accepted accounting principles.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2021. In
assessing the effectiveness of our internal control over financial reporting, management used as guidance the criteria established
in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based upon the assessment performed, management has concluded that our internal control over financial reporting
was effective as of December 31, 2021.
Our independent registered public accounting firm, Deloitte & Touche LLP, which audited the financial statements included
in this Annual Report on Form 10-K that contain the disclosure required by this Item, independently assessed the effectiveness of
the Company's internal control over financial reporting. Deloitte & Touche LLP has issued an unqualified report on the
Company's internal control over financial reporting, which is included in “Financial Statements and Supplementary Data” in Part
II, Item 8 of this Annual Report.
Changes in Internal Control Over Financial Reporting
There were no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the
Exchange Act) during quarter ended December 31, 2021 that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
Item 9B. Other Information
On February 23, 2022, we amended and restated the form of executive severance policy agreement under the Lexington
Realty Trust Executive Severance Plan adopted January 14, 2018 (the “Executive Severance Plan”) primarily to correct a
typographical error in the severance formula and to amend the definition of “Good Reason”. The foregoing summary of the
amendments to the severance policy agreements is qualified in its entirety by reference to the form of Executive Severance Policy
Agreement, a copy of which is attached hereto as Exhibit 10.7.
94
Item 10. Directors, Executive Officers and Corporate Governance
PART III.
The information relating to our Code of Business Conduct and Ethics, is included in Part I, Item 1 of this Annual Report.
The information relating to our trustees, including the audit committee of our Board of Trustees and our Audit Committee
financial expert, and certain information relating to our executive officers, trustees and trustee independence will be in our
Definitive Proxy Statement for our 2022 Annual Meeting of Shareholders, which we refer to as our Proxy Statement, and is
incorporated herein by reference.
Item 11. Executive Compensation
The information required to be furnished pursuant to this item will be set forth under the appropriate captions in the Proxy
Statement, and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required to be furnished pursuant to this item will be set forth under the appropriate captions in the Proxy
Statement, and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required to be furnished pursuant to this item will be set forth under the appropriate captions in the Proxy
Statement, and is incorporated herein by reference. In addition, certain information regarding related party transactions is set
forth in note 15 to the Company's Consolidated Financial Statements in “Financial Statements and Supplementary Data” in Part
II, Item 8 of this Annual Report.
Item 14. Principal Accounting Fees and Services
The information required to be furnished pursuant to this item will be set forth under the appropriate captions in the Proxy
Statement, and is incorporated herein by reference.
95
Item 15. Exhibits, Financial Statement Schedules
PART IV.
(a)(1) Financial Statements
(2) Financial Statement Schedules
(3) Exhibits
Exhibit No.
Description
Page
54
90
96
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
10.1
10.2
— Articles of Merger and Amended and Restated Declaration of Trust of the Company, dated December
31, 2006 (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed January 8, 2007 (the
“01/08/07 8-K”))(1)
— Articles Supplementary Relating to the Reclassification of 8.05% Series B Cumulative Redeemable
Preferred Stock, par value $0.0001 per share, and 7.55% Series D Cumulative Redeemable Preferred
Stock, par value $0.0001 per share (filed as Exhibit 3.4 to the Company's Current Report on Form 8-K
filed November 21, 2013)(1)
— Articles of Amendment to the Amended and Restated Declaration of Trust, dated as of December 14,
2021 (filed as of Exhibit 3.1 to the Company's Current Report on Form 8-K filed on December 16,
2021)(1)
— Amended and Restated By-laws of the Company (filed as Exhibit 3.2 to the 01/08/07 8-K)(1)
— First Amendment to Amended and Restated By-laws of the Company (filed as Exhibit 3.1 to the
Company’s Current Report on Form 8-K filed November 20, 2009)(1)
— Second Amendment to the Amended and Restated By-laws of the Company (filed as Exhibit 3.1 to the
Company's Current Report on Form 8-K filed April 3, 2017)(1)
— Third Amendment to the Amended and Restated By-laws of the Company (filed as Exhibit 3.1 to the
Company's Current Report filed on Form 8-K on April 9, 2020)(1)
— Sixth Amended and Restated Agreement of Limited Partnership of LCIF, dated as of December 30,
2013 (filed as Exhibit 3.25 to the Company's Annual Report on Form 10-K for the year ended December
31, 2013)(1)
— Specimen of Common Shares Certificate of the Company (2)
— Form of 6.50% Series C Cumulative Convertible Preferred Stock certificate (filed as Exhibit 4.1 to the
Company’s Registration Statement on Form 8A filed December 8, 2004)(1)
— Amended and Restated Trust Agreement, dated March 21, 2007, among the Company, The Bank of
New York Trust Company, National Association (“BONY”), The Bank of New York (Delaware), the
Administrative Trustees (as named therein) and the several holders of the Preferred Securities from time
to time (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March 27, 2007 (the
“03/27/2007 8-K”))(1)
— Junior Subordinated Indenture, dated as of March 21, 2007, between the Company and BONY (filed as
Exhibit 4.2 to the 03/27/2007 8-K)(1)
— Indenture, dated as of June 10, 2013, among the Company, certain subsidiaries of the Company
signatories thereto, and U.S. Bank, as trustee (filed as Exhibit 4.1 to the Company's Current Report on
Form 8-K filed on June 13, 2013)(1)
— First Supplemental Indenture, dated as of September 30, 2013, between the Company and U.S. Bank, as
trustee (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K filed on October 3, 2013)(1)
— Indenture, dated as of May 9, 2014, among the Company and U.S. Bank, as trustee (filed as Exhibit 4.1
to the Company's Current Report on Form 8-K filed May 13, 2014)(1)
— First Supplemental Indenture, dated as of May 20, 2014, among the Company and U.S. Bank, as trustee
(filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed May 20, 2014)(1)
— Second Supplemental Indenture, filed as of August 28, 2020, between the Company and U.S. Bank, as
trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed August 28, 2020)(1)
— Third Supplemental Indenture, dated as of August 30, 2021, among the Company and U.S. Bank, as
trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed August 30, 2021)(1)
— Description of the Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange
Act of 1934 (2)
— 1994 Employee Stock Purchase Plan (filed as Exhibit 10.1 to the Company's Annual Report on Form
10-K filed on March 13, 2019)(1)
— LXP Industrial Trust Amended and Restated 2011 Equity-Based Award Plan (filed as Exhibit 10.1 to the
Company's Current Report on Form 8-K filed May 18, 2017)(1, 4)
96
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
— Amended and Restated Rabbi Trust Agreement, originally dated January 26, 1999 (filed as Exhibit 10.2
to the Company's Current Report on Form 8-K filed January 2, 2009)(1, 4)
— Form of Long-Term Retention Nonvested Share Agreement (filed as Exhibit 10.1 to the Company's
Current Report on Form 8-K filed on January 11, 2013)(1, 4))
— Form of Nonvested Share Agreement (Performance and Service) (filed as Exhibit 10.17 to the
Company's Annual Report on Form 10-K for the year ended December 31, 2016)(1, 4)
— Executive Severance Plan (filed as Exhibit 10.3 to the Company's Current Report on Form 8-K (filed on
January 19, 2018)(1, 4)
— Form of Executive Severance Agreement under the Executive Severance Plan adopted January 18, 2018
(1, 2)
— Form of Amended and Restated Indemnification Agreement between the Company and certain officers
and trustees (filed as Exhibit 10.20 to the Company’s Quarterly Report Form 10-Q for the quarter ended
September 30, 2008)(1)
— Funding Agreement, dated as of July 23, 2006, by and between LCIF and the Company (filed as Exhibit
99.4 to the Company's Current Report on Form 8-K filed on July 24, 2006)(1)
— Amended and Restated Credit Agreement, dated as of February 6, 2019, among the Company, as
borrower, each of the financial institutions initially signatory thereto together with their assignees
pursuant to Section 12.5 therein and KeyBank, as agent (filed as Exhibit 10.1 to the Company's Current
Report on Form 8-K filed on February 11, 2019)(1)
— First Amendment to Amended and Restated Credit Agreement, dated as of July 25, 2019, among the
Company, as borrower, KeyBank, as agent, and each of the lenders signatory thereto (filed as Exhibit
10.1 to the Company's Current Report on Form 8-K filed on July 29, 2019)(1)
— Equity Sales Agreement, dated as of November 27, 2019, between the Company and Jefferies LLC,
KeyBanc Capital Markets Inc., Regions Securities LLC, BofA Securities, Inc., Mizuho Securities USA
LLC and Evercore Group L.L.C. (filed as Exhibit 1.1 to the Company's Current Report on Form 8-K
filed on November 29, 2019)(1)
10.13
— Limited Partnership Agreement of NNN Office JV L.P., dated as of August 31, 2018, among LX JV
Investor LLC, as a limited partner, NLSAF LP1 LLC, UHA LP2 LLC, and LXPDK GP LLC (filed as
Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on September 5, 2018)(1)
10.14
10.15
21
23
24
31.1
31.2
32.1
32.2
— Purchase and Sale Agreement, dated as of December 29, 2021, among the Company, LCIF, Net Lease
Strategic Assets Fund L.P. and LX JV Investor II LLC (filed as Exhibit 10.1 to the Company's Current
Report on Form 8-K filed on January 3, 2022 (the “1/3/2022 8-K”))(1)
— Limited Partnership Agreement of NNN MFG Cold JV L.P., dated as of December 29, 2021, among LX
JV Investor II LLC, as a limited partner, LXP MFG C L.P., as a limited partner, and LXP DK II GP
LLC, as a general partner (filed as Exhibit 10.2 to the 1/3/2022 8-K)(1)
— List of subsidiaries (2)
— Consent of Deloitte & Touche LLP (2)
— Power of Attorney (included on signature page)
— Certification of Chief Executive Officer pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange
Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (2)
— Certification of Chief Financial Officer pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange
Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (2)
— Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (3)
— Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (3)
101.INS
— XBRL Instance Document - the instance document does not appear in the Interactive Data File because
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
its XBRL tags are embedded within the Inline XBRL document (2, 5)
— Inline XBRL Taxonomy Extension Schema (2, 5)
— Inline XBRL Taxonomy Extension Calculation Linkbase (2, 5)
— Inline XBRL Taxonomy Extension Definition Linkbase Document (2, 5)
— Inline XBRL Taxonomy Extension Label Linkbase Document (2, 5)
— Inline XBRL Taxonomy Extension Presentation Linkbase Document (2, 5)
(1)
(2)
(3)
Incorporated by reference.
Filed herewith.
This exhibit shall not be deemed “filed” for purposes of Section 11 or 12 of the Securities Act of 1933, as amended (the “Securities Act”), or Section
18 of the Securities Exchanges Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of those sections, and shall not
be part of any registration statement to which it may relate, and shall not be incorporated by reference into any registration statement or other
document filed under the Securities Act or the Exchange Act, except as set forth by specific reference in such filing or document.
97
(4)
(5)
Management contract or compensatory plan or arrangement.
Attached as Exhibit 101 to this Annual Report on Form 10-K are the following materials, formatted in Inline XBRL (Extensible Business Reporting
Language): (i) the Consolidated Balance Sheets at December 31, 2021 and 2020; (ii) the Consolidated Statements of Operations for the years ended
December 31, 2021, 2020 and 2019; (iii) the Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2021,
2020 and 2019; (iv) the Consolidated Statements of Changes in Equity for the years ended December 31, 2021, 2020 and 2019; (v) the Consolidated
Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019; and (vi) Notes to Consolidated Financial Statements, detailed
tagged.
98
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Dated: February 24, 2022
LXP Industrial Trust
By:
/s/ T. Wilson Eglin
T. Wilson Eglin
Chief Executive Officer
99
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints T.
Wilson Eglin, Beth Boulerice and Mark Cherone, and each of them severally, his or her true and lawful attorney-in-fact with
power of substitution and resubstitution to sign in his or her name, place and stead, in any and all capacities, to do any and all
things and execute any and all instruments that such attorney may deem necessary or advisable under the Securities Exchange
Act of 1934 and any rules, regulations and requirements of the U.S. Securities and Exchange Commission in connection with
this Annual Report on Form 10-K and any and all amendments hereto, as fully for all intents and purposes as he might or could
do in person, and hereby ratifies and confirms all said attorneys-in-fact and agents, each acting alone, and his or her substitute
or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on
the date indicated.
Signature
Title
/s/ T. Wilson Eglin
T. Wilson Eglin
/s/ Beth Boulerice
Beth Boulerice
/s/ Mark Cherone
Mark Cherone
/s/ Richard S. Frary
Richard S. Frary
/s/ Lawrence L. Gray
Lawrence L. Gray
/s/ Jamie Handwerker
Jamie Handwerker
/s/ Claire A. Koeneman
Claire A. Koeneman
/s/ Nancy Elizabeth Noe
Nancy Elizabeth Noe
/s/ Howard Roth
Howard Roth
Each dated: February 24, 2022
Chairman, Chief Executive Officer and President of the Trust
(principal executive officer)
Chief Financial Officer, Executive Vice President and Treasurer of the Trust
(principal financial officer)
Senior Vice President and Chief Accounting Officer of the Trust
(principal accounting officer)
Trustee of the Trust
Trustee of the Trust
Trustee of the Trust
Trustee of the Trust
Trustee of the Trust
Trustee of the Trust
100
CHIEF EXECUTIVE OFFICER CERTIFICATION
PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
Exhibit 31.1
I, T. Wilson Eglin, certify that:
1.
2.
3.
4.
I have reviewed this report on Form 10-K of LXP Industrial Trust;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:
a)
b)
c)
d)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
disclosed in this report any change in the registrant's internal control over financial reporting that occurred
during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control
over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or
persons performing the equivalent functions):
a)
b)
all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant's internal control over financial reporting.
February 24, 2022
/s/ T. Wilson Eglin
T. Wilson Eglin
Chief Executive Officer
CHIEF FINANCIAL OFFICER CERTIFICATION
PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
Exhibit 31.2
I, Beth Boulerice, certify that:
1.
2.
3.
4.
I have reviewed this report on Form 10-K of LXP Industrial Trust;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:
a)
b)
c)
d)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
disclosed in this report any change in the registrant's internal control over financial reporting that occurred
during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control
over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or
persons performing the equivalent functions):
a)
b)
all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant's internal control over financial reporting.
February 24, 2022
/s/ Beth Boulerice
Beth Boulerice
Chief Financial Officer
CHIEF EXECUTIVE OFFICER CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.1
In connection with the Annual Report of LXP Industrial Trust (the “Trust”) on Form 10-K for the period ended December 31,
2021 as filed with the Securities and Exchange Commission on the date hereof, I, T. Wilson Eglin, Chief Executive Officer of
the Trust, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Annual Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934; and
(2) The information contained in the Annual Report fairly presents, in all material respects, the financial condition and
results of operations of the issuer.
/s/ T. Wilson Eglin
T. Wilson Eglin
Chief Executive Officer
February 24, 2022
CHIEF FINANCIAL OFFICER CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.2
In connection with the Annual Report of LXP Industrial Trust (the “Trust”) on Form 10-K for the period ended December 31,
2021 as filed with the Securities and Exchange Commission on the date hereof, I, Beth Boulerice, Chief Financial Officer of the
Trust, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Annual Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934; and
(2) The information contained in the Annual Report fairly presents, in all material respects, the financial condition and
results of operations of the issuer.
/s/ Beth Boulerice
Beth Boulerice
Chief Financial Officer
February 24, 2022
Total Return Performance
LXP Industrial Trust
S&P 500 Index
Russell 2000 Index
FTSE NAREIT Equity REITs Index
250
200
150
100
e
u
l
a
V
x
e
d
n
I
50
12/31/16
12/31/17
12/31/18
12/31/19
12/31/20
12/31/21
Index
LXP Industrial Trust
S&P 500 Index
Russell 2000 Index
FTSE NAREIT Equity REITs Index
Source: S&P Global Market Intelligence
© 2022
Period Ending
12/31/16
100.00
100.00
100.00
100.00
12/31/17
95.87
121.83
114.65
105.23
12/31/18
89.02
116.49
102.02
100.36
12/31/19
120.12
153.17
128.06
126.45
12/31/20
125.15
181.35
153.62
116.34
12/31/21
190.52
233.41
176.39
166.64
Our annual letter to shareholders is available on the investors section of our web site at www.lxp.com. Information contained on our
website is not incorporated by reference into this Annual Report.
We filed the certifications required by Section 302 of the Sarbanes-Oxley Act of 2002 as an exhibit to our Annual Report on Form 10-
K for the year ended December 31, 2021, which is included herein. In addition, in 2021, we submitted an unqualified certification
required by section 303A.12(a) of the Listed Company Manual of the New York Stock Exchange.
report.