Annual Report 2022
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, 2022
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 and posted on its corporate website, if any, 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 ☒
☐ Emerging growth company ☐
Smaller reporting company
Accelerated filer ☐
Non-accelerated filer
☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing
reflect the correction of an error to previously issued financial statements. Yes ☐ No ☒
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by
any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). Yes ☐ No ☒
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, 2022, which was the last business day of the registrant's most recently completed second fiscal quarter, was
$2,963,617,542 based on the closing price of the common shares on the New York Stock Exchange as of that date, which was $10.74 per share.
Number of common shares outstanding as of February 14, 2023 was 292,554,149.
DOCUMENTS INCORPORATED BY REFERENCE
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.
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.
ITEM 9.
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
ITEM 9A.
Controls and Procedures
ITEM 9B.
ITEM 9C.
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
ITEM 10.
PART III
Directors, Executive Officers and Corporate Governance
ITEM 11.
Executive Compensation
ITEM 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
ITEM 13.
Certain Relationships and Related Transactions, and Director Independence
ITEM 14.
Principal Accounting Fees and Services
ITEM 15.
Exhibits, Financial Statement Schedules
PART IV
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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 2022, 2021 and 2020 refer to our
fiscal years ended December 31, 2022, December 31, 2021 and December 31, 2020, 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.
When we use the term “Annualized Cash Base Rent,” (“ABR”) we mean the period end cash base rent multiplied by 12.
For leases with free rent periods or that were signed prior to the end of the quarter but have not commenced, the first cash base
rent payment is multiplied by 12.
When we use “Stabilized Portfolio,” we mean all real estate properties other than acquired or developed properties that
have not achieved 90% occupancy within one-year of acquisition or substantial completion. Non-stabilized, substantially
completed development projects are classified within investments in real estate under construction.
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.
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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, 2022, we had equity ownership interests in approximately 116 consolidated real estate properties, located
in 21 states and containing an aggregate of approximately 54.0 million square feet of space, approximately 99.5% of which was
leased.
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, 2022, there were approximately 0.7 million OP units outstanding, other
than OP units held by LXP, which were convertible into approximately 0.8 million common shares, assuming redemptions are
satisfied entirely with common shares.
Since December 31, 2015 through December 31, 2022, we transitioned our portfolio from approximately 16% warehouse/
distribution assets to approximately 98% warehouse/distribution assets. As of December 31, 2022, our portfolio consisted of 109
warehouse/distribution facilities and seven other properties.
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. We acquire and
develop warehouse/distribution properties in markets 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 and
speculative development properties. We believe our development strategy has the potential to provide us with higher returns than
we could obtain by acquiring fully-leased buildings. 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 mitigates against unexpected costs and the cyclicality of many asset classes and investment
strategies and provides shareholders with a secure dividend. We believe our strategy is more conservative than most industrial
REITs. We believe our strategy provides defensive attributes for investors in the industrial sector and better growth potential for
investors compared to 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.
Our target markets are where we believe there are strong growth prospects for us to build a concentration of assets. Strong
growth prospects are generally determined by:
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Expanding transportation and logistics networks;
Distances to major population centers;
Population growth;
Physical and regulatory constraints;
Labor cost and availability;
Utility costs;
Land cost and availability; and
Re-tenanting opportunities and costs.
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We focus our investments in the Sunbelt and Midwest. Our current target markets consist of the following:
We expect to grow in these markets by executing on our development pipeline and opportunistically acquiring facilities in
these markets.
The following markets are where we are currently invested, but we own no more than two assets, the markets do not meet
enough of our investment criteria, and we do not expect to build our concentration:
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Detroit, MI;
Kansas City, MO;
St. Louis, MO;
Cleveland, OH;
Champaign-Urbana, IL;
Erwin, NY;
New York/New Jersey; and
Philadelphia, PA.
We expect to opportunistically exit these markets.
Building Type. We target general purpose warehouse/distribution facilities that are versatile, 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; and
Ample trailer and employee parking.
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The average age of our warehouse/distribution properties as of December 31, 2022, was approximately 8.8 years.
Tenants. We believe we have a diversified tenant base and are not dependent upon any one tenant. While we invest primarily
in single-tenant facilities, we believe our tenant credit strength mitigates somewhat against binary risk in occupancy. As of
December 31, 2022, our largest tenant represented 6.8% of our ABR and 54.2% of our ABR were from tenants with investment
grade credit ratings (either tenant, guarantor or parent/ultimate parent). 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.
The third institutional joint venture, NNN MFG Cold JV L.P. (“MFG Cold JV”), owns a portfolio of 22 special purpose
industrial assets comprised of manufacturing and cold storage facilities in which we held a 20% interest as of December 31, 2022.
MFG Cold JV has additional equity commitments of $250 million, of which our proportionate share is $50 million, for the
acquisition of special purpose industrial properties outside of our core warehouse/distribution focus. We believe investing in
special purpose industrial properties in a joint venture structure 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. MFG Cold JV did not make
any acquisitions in 2022.
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 and deductibles 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. We also maintain Directors
and Officers, Crime, Fiduciary Liability, Employment Practices Liability, Cyber and Miscellaneous Professional Liability
insurance.
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.
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. While we have target markets, we do not
allocate capital by market or operate properties in specific markets independent of our overall portfolio.
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Human Capital
While our investment focus is on physical assets, human capital is critical to our success. We believe investing in our team
will result in value creation for our shareholders. 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, 2022, we had 66 full-time employees and one part-time employee. None of our employees
are covered by a collective bargaining agreement. 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 members 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.
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 ESG Committee of our Board of Trustees and, ultimately, our Board of Trustees.
Most of our employees continue to work remotely or on a hybrid basis. We hold in person employee events, but also
regularly engage with our employees through company-wide video-conference meetings and social events.
Attraction & Retention of Talent. We attract talent by maintaining a positive and good culture and providing competitive
compensation and benefits. Some of our benefit highlights are:
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The compensation for employees with the title Assistant Vice President and above generally includes long-term
equity awards, giving them ownership in us in an effort to retain their services.
• 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 all of 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.
A 401(k) plan where all employees can defer a portion of their compensation and receive matching and profit
sharing contributions from the Company.
Flexible working arrangements where employees are able to work from home on specified days per workweek.
Professional development policy providing full reimbursement for career-relevant trainings and classes and
professional organizations and other resources.
Employee stock purchase plan where all employees can defer a portion of their salary to purchase Company stock at
a discount.
Semi-annual performance reviews and an online platform to provide real-time feedback.
Due to the small size of our employee base, our turnover is generally low. In 2022, six employees voluntarily or involuntarily
separated service from us and we hired 10 employees for a net change of four employees.
Demographics. We believe there are many benefits to diversity in our employee base. Of our 66 full-time employees at
December 31, 2022, 59.1% were female and 45.5% were non-white. Of our 11 executive employees at December 31, 2022,
18.2% were female and 9.1% were non-white.
In 2020, our employees formed a Diversity, Equity and Inclusion Committee, or the DEIC. The mission of the DEIC is to
actively promote diversity, equity and inclusion Company-wide as well as for and among our current and future stakeholders. To
that end, the DEIC maintains 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.
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Training and Development. In addition to our professional development policy, we maintain a variety of training programs
for our employees, including annual trainings for sustainability, accounting, cybersecurity, human rights, harassment (for
managers and non-managers) and anti-corruption/bribery. During 2022, none of our employees violated our anti-corruption/
bribery policies and we did not pay any fines for violating anti-corruption/bribery laws or regulations.
Employee Engagement. We regularly engage our employees through the following methods:
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During 2022, 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 the
Compensation Committee of our Board of Trustees.
During 2022, we engaged our employees with several surveys, including an employee satisfaction survey. The
participation rate for the employee satisfaction survey was 60% and we achieved an 84% overall satisfaction rate.
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 RE Tech Advisors (formerly 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 2022 Transactions
The following summarizes certain of our transactions during 2022, including transactions disclosed elsewhere and in our
other periodic reports.
Leasing Activity.
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During 2022, we entered into new leases and lease extensions encompassing 4.1 million square feet. The average
fixed rent on these extended leases was $5.36 per square foot compared to the average fixed rent on these leases
before extension of $4.26 per square foot. The weighted-average cost of tenant improvements and lease
commissions was $7.82 per square foot for new leases and $0.91 per square foot for extended leases.
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Leased approximately 100 acres of industrial development land in the Phoenix, Arizona market for 20 years.
Investments.
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Acquired three warehouse/distribution facilities for an aggregate cost of $131.2 million.
Completed and placed into service a 0.8 million square foot warehouse/distribution facility in the Greenville/
Spartanburg, South Carolina market.
Commenced development of two warehouse/distribution facilities in the Central Florida market.
Invested an aggregate of $298.2 million in development activities, including $204.4 million in six ongoing
development projects and 60 acres of developable land.
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Capital Recycling.
Debt.
Equity.
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Disposed of our interests in 10 properties and one land parcel for an aggregate gross disposition price of $197.0
million.
NNN Office JV L.P. disposed of six properties for an aggregate disposition price of $354.9 million and satisfied an
aggregate of $229.5 million of non-recourse variable rate debt. We own 20% of the joint venture and we received
aggregate proceeds of $28.1 million.
Amended our revolving credit facility and the 2025 term loan to provide for a new revolving credit facility and the
continuation of the 2025 term loan (the “2022 Credit Agreement”). The 2022 Credit Agreement, among other things:
(i) extended the maturity date of the revolving portion from February 2023 to July 2026, with two six-month
extension options, subject to certain conditions, (ii) reduced the applicable margin for the revolving portion of the
credit facility by five basis points to a range from 0.725% to 1.40%, and allows for further reductions upon the
achievement of to-be-determined sustainability metrics, (iii) amended the debt covenants by reducing the
capitalization rate for determining asset value and (iv) transitioned the facility to SOFR. Simultaneously, we
converted the interest rate swap agreements to Term SOFR, which resulted in a new fixed interest rate of 2.722% on
the 2025 term loan.
Increased the availability under the share repurchase program by 10.0 million shares.
Repurchased and retired 12.1 million common shares for an average price of $10.78 per common share.
Settled 16.0 million common shares previously sold on a forward basis as part of an underwritten equity offering for
an aggregate settlement price of $183.4 million.
Settled 3.6 million common shares previously sold on a forward basis for net proceeds of $38.5 million.
Corporate Responsibility
We understand the importance of aligning with our stakeholders on environmental, social, governance, and resilience, or
ESG+R, matters. Our goal is to continue building a sustainable ESG+R platform that enhances both our company and shareholder
value. We are committed to implementing sustainability measures across our organization, from the way in which we assess
investment decisions to the business practices we promote at both the corporate and property levels. We believe our publicly
disclosed ESG+R objectives will contribute to our ongoing long-term success on behalf of our stakeholders, including our
shareholders, employees, tenants, suppliers, creditors, and local communities.
We find that communicating and engaging with our stakeholders to learn their needs enhances our knowledge and enables us
to take actions that we believe may increase the value of our assets. We understand that each stakeholder has a specific point-of-
view and unique needs. We seek to continuously identify avenues to engage with our stakeholders to better understand those
needs, and we maintain a stakeholder engagement policy. During 2022, we held various meetings with our shareholders and
tenants. We held townhall meetings with our employees, we completed questionnaires from shareholders and industry groups, and
we engaged our tenants and employees with satisfaction surveys.
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 ESG 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. When feasible, we will implement base building upgrades and provide tenants with improvement allowance funds to
complete sustainability efforts.
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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 and pursue ENERGY STAR
certification for eligible properties annually.
Annually review and evaluate opportunities to improve efficiency, reduce operating costs, and reduce our properties'
environmental footprint.
Evaluate the opportunity to increase renewable energy across the portfolio.
Performance:
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Benchmarked landlord paid energy, water, waste, and recycling across the portfolio and working to expand tenant-paid
utility data coverage.
Obtained green building certifications for six properties and ENERGY STAR certification for five properties in our
portfolio during 2022.
Circulated and maintained sustainability-focused resources for tenants and property managers, including a Tenant Fit-
Out Guide and an Industrial Tenant Sustainability Guide.
Evaluated sustainability and efficiency initiatives across the portfolio in an effort to reduce energy consumption and
drive down greenhouse gas emissions.
Included ESG+R into metrics for executive cash incentive awards.
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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.
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.
Collaborate with tenants and property managers on health and well-being focused initiatives.
Assess our tenant and employee satisfaction and feedback through annual surveys.
Circulate ESG+R focused newsletter to tenants and maintain a tenant portal with ESG+R resources.
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 resources focused on physical, emotional and financial health.
Track and highlight the diversity and inclusion metrics of our employees, board and executive management team.
Support and engage with local communities through philanthropic and volunteer events, focusing on food insecurity and
diversity, equity and inclusion initiatives.
Incorporate sustainability clauses into tenant leases, allowing collaboration on our ESG+R initiatives.
Performance:
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Conducted a tenant feedback survey through Kingsley Associates and achieved a satisfaction score in excess of the
Kingsley Associates average.
Engaged with our employees through regular surveys, including an employee satisfaction survey.
Organized employee volunteer opportunities at non-profit organizations on Company time and held clothing and food
drives.
• Maintained a paid-time-off policy for employees to volunteer in their local communities.
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Organized step and other health-related challenges for our employees.
Invited our employees to donate to non-profit organizations within the local communities of our office locations.
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Provided 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.
Awarded as a 2022 Best Company to Work for in New York.
Formed a women's mentorship program, where female employees are paired with female mentors for career related
advice and support.
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+R 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 by providing regular ESG updates to shareholders and other
stakeholders and aligning with appropriate reporting frameworks and industry groups, including GRESB, SASB, GRI
and TCFD.
• Monitor compliance with applicable benchmarking and disclosure legislation, including utility data reporting, audit and
retro-commissioning requirements, and greenhouse gas emission laws.
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Ensure employees operate in accordance with the highest ethical standards and maintain the policies outlined in our Code
of Business Conduct and Ethics.
Performance:
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Updated and disclosed our Code of Business Conduct and Ethics, which includes a whistleblower policy, and provided
annual training.
Performed enterprise risk assessments and management succession planning.
Participated in the GRESB Real Estate Assessment:
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Placed 3rd in the U.S. Industrial Distribution/Warehouse listed peer group;
Achieved an overall score of 69, an increase compared to 2021; and,
Received Public Disclosure Score of A, above the global average, and placed first in the U.S. Industrial Peer
Group.
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Published our 2021 Corporate Responsibility Report, aligned with GRI, SASB and TCFD.
• Maintained a Stakeholder Engagement Policy to disclose our process when working with our key stakeholders, including
investors, property management teams, and tenants.
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Continued to support the UN Women's Empowerment Principles and the CEO Action for Diversity & Inclusion.
Conducted annual ESG+R training for asset managers, lease administrators and property managers.
Resilience
We believe that our resilience to climate change-related physical and transition risks is critical to our long-term success.
Actions:
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Align our resilience program with the 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) 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.
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Performance:
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Engaged a third-party consultant to conduct ESG+R assessments on all new acquisitions.
Continued to be a supporter of the TCFD reporting framework.
Engaged a climate analytics firm to evaluate physical risk due to climate change across our portfolio.
Information Technology/Cybersecurity
We believe we maintain an information technology and cybersecurity program appropriate for a company our size taking into
account our operations. We outsource our IT managed services to Tetherview LLC, which provides customized private cloud
solutions featuring virtual desktops and servers in the Digital BunkerTM. The Digital BunkerTM is a zero-trust environment with
24/7 monitoring and is built to the NISI/ISO framework and is SOC 2 Type 2 Compliant.
We engage BDO USA, LLC to provide virtual Chief Technology Officer services, which includes cybersecurity advisory.
We also maintain cybersecurity insurance providing coverage for certain costs related to security failures and specified
cybersecurity-related incidents that interrupt our network or networks of our vendors, in all cases up to specified limits and
subject to certain exclusions.
The Audit and Cyber Risk Committee of our Board of Trustees oversees our information technology and cybersecurity
strategy and initiatives. One of the members of the Audit and Cyber Risk Committee of our Board of Trustees is an information
technology/cybersecurity expert. Our management and BDO USA, LLC report to the Audit and Cyber Risk Committee on at least
a quarterly basis.
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 ESG 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 2022.
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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
or their premises. 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 or a related person. 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 the claims 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 or impaired.
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 direct
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 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 outsource the maintenance of our information technology systems to third
party vendors. We are also continuously working 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 outsource partners and training may not be sufficient to protect us from all risks.
As a smaller company, we use third-party vendors to maintain 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 and lower costs of capital
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.
Industry and Economic Risks
The outbreak of highly infectious or contagious diseases, could adversely impact or cause disruption to our business, financial
condition, results of operations and cash flows. Further, any such outbreak may disrupt U.S. and global 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 COVID-19 have increased the
risk of a pandemic.
The COVID-19 pandemic 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 geopolitical factors have resulted in prolonged inflationary
conditions that have had a detrimental impact on our tenant base, our ability to lease vacant space and our ability to grow through
development and acquisition. This has also resulted in market volatility and large decreases in global stock prices. These potential
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risks have also negatively impacted access to capital, which negatively impacts 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 any outbreak precludes any prediction as to the ultimate adverse impact of such
outbreak. Nevertheless, 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.
Disruptions in the financial markets and uncertain economic conditions could adversely affect our ability to obtain debt
financing on reasonable terms, the value of our real estate investments, and have other adverse effects on us.
Concerns over economic recession, the COVID-19 pandemic, interest rate increases, policy priorities of the U.S. presidential
administration, trade wars, labor shortages, or inflation may contribute to increased volatility and diminished expectations for the
economy and markets and have caused the spreads on prospective debt financings to widen considerably. Additionally, concern
over geopolitical issues may also contribute to prolonged market volatility and instability. For example, the conflict between
Russia and Ukraine has led to disruption, instability and volatility in global markets and industries. The U.S. government and
other governments in jurisdictions have imposed severe economic sanctions, export controls and other against Russia and Russian
interests, and have threatened additional sanctions and controls. The full impact of these measures, as well as potential responses
to them by Russia, is unknown.
The United States credit markets have periodically experienced significant dislocations and liquidity disruptions due to a
variety of factors, including those enumerated above. 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.
These circumstances could also impact real estate fundamentals and result in lower occupancy, lower rental rates, and
declining values in our real estate portfolio and in the real estate collateral securing any indebtedness. As a result, the value of our
property investments could decrease below the amounts paid for such investments, the value of real estate collateral securing any
indebtedness could decrease below the outstanding principal amounts of such indebtedness, and revenues from our properties
could decrease due to fewer and/or delinquent tenants or lower rental rates. This could significantly harm our revenues, results of
operations, financial condition, business prospects and our ability to make distributions to our shareholders.
Natural disasters 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. Incurring losses, costs or business
interruptions related to natural disasters may adversely affect our operating and financial results.
We are exposed to the potential impacts of future climate change.
We are exposed to potential physical risks from possible future changes in climate. Our properties, especially the properties
near seaports, may be exposed to rare catastrophic weather events, such as severe storms, drought, earthquakes, floods, wildfires
or other extreme weather events. If the frequency of extreme weather events increases, our exposure to these events could increase
and could impact our tenants' operations and their ability to pay rent. We carry comprehensive insurance coverage to mitigate our
casualty risk, in amounts and of a kind that we believe are appropriate for the markets where each of our properties and their
business operations are located given climate change risk.
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We may be adversely impacted in the future by potential impacts to the supply chain or stricter energy efficiency standards or
greenhouse gas regulations for the commercial building sectors. Compliance with new laws or regulations relating to climate
change, including compliance with “green” building codes, may require us to make improvements to our existing properties or
result in increased operating costs that we may not be able to effectively pass on to our tenants. Any such laws or regulations
could also impose substantial costs on our tenants, thereby impacting the financial condition of our tenants and their ability to
meet their lease obligations and to lease or re-lease our properties. We cannot give any assurance that other such conditions do not
exist or may not arise in the future. The potential impacts of future climate change on our real estate properties could adversely
affect our ability to lease, develop or sell such properties or to borrow using such properties as collateral.
Risks Related to our Indebtedness
We have a substantial amount of indebtedness.
We have a substantial amount of debt. 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 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, 2022, 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;
•
•
•
•
•
•
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.
Furthermore, our growth strategy is dependent on speculative development of properties. Development activities do not
produce current income that can be used to pay debt service obligations.
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, 2022, we had $129.1 million of trust preferred securities that mature in April 2037 that is LIBOR indexed. In
addition, we have a $300.0 million unsecured term loan which matures January 2025 that is Term SOFR 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
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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.
Recent inflationary pressures have resulted in higher interest rates, which have a negative impact on our business.
Rising inflation and elevated U.S. budget deficits and overall debt levels, including as a result of federal pandemic relief and
stimulus legislation and/or economic or market and supply chain conditions, have put upward pressure on interest rates and could
be among the factors that could lead to higher interest rates in the future. Higher interest rates could adversely affect our overall
business, income, and our ability to pay dividends, including by reducing the fair value of many of our assets and adversely
affecting our ability to obtain financing on favorable terms or at all, and negatively impacting the value of properties and the
ability of prospective buyers to obtain financing for properties we intend to sell. This may affect our earnings results, reduce our
ability to sell our assets, or reduce our liquidity. Furthermore, our business and financial results may be harmed by our inability to
accurately anticipate developments associated with changes in, or the outlook for, interest rates.
The LIBOR index rate may not be available in the future.
On March 5, 2021, the Financial Conduct Authority 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 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.
The transition from LIBOR to an alternative reference rate could result in higher all-in interest costs on our trust preferred
securities, which could impact our financial performance.
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, 2022, 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.
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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.
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 a majority 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.
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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
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. In addition, in connection with our Board of Trustees' review of strategic alternatives in 2022, we
implemented a severance policy for non-executive employees that provided for payments in connection with a termination
following a change in control prior to June 30, 2024. Accordingly, these payments may discourage a third party from acquiring
us.
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Our ability to issue additional shares. Our declaration of trust authorizes 1,400,000,000 shares of beneficial interest (par
value $0.0001 per share) consisting of 600,000,000 common shares, 100,000,000 preferred shares and 700,000,000 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, 2022, 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.
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. 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.
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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
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.
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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.
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.
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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.
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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.
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Item 2. Properties
Real Estate Portfolio
General. As of December 31, 2022, we had ownership interests in approximately 116 consolidated real estate properties
containing approximately 54.0 million square feet of rentable space, which were approximately 99.5% 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, 2022, we had outstanding consolidated mortgages and notes payable of approximately $73.2
million with a weighted-average interest rate of approximately 4.0% and a weighted-average maturity of 6.7 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, 2022.
28
LXP CONSOLIDATED PORTFOLIO
PROPERTY CHART
WAREHOUSE/DISTRIBUTION
As of December 31, 2022
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.
8989 W. Buckeye Rd.
Parcel Number: 501-42-015B (1)
1515 South 91st Ave.
9494 W. Buckeye Rd.
5275 Drane Field Rd.
3400 NW 35th St.
2455 Premier Row
3775 Fancy Farms Rd.
3102 Queen Palm Dr.
95 International Pkwy.
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.
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 %
268,872
5/31/2037
100 %
N/A
11/5/2042
100 %
496,204
12/31/2027
100 %
186,336
9/30/2026
100 %
222,134
5/31/2036
100 %
617,055
8/31/2030
100 %
205,016
3/31/2026
100 %
510,484
9/30/2027
65 %
229,605
2/28/2026
100 %
225,211
3/31/2025
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 %
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
FL
FL
FL
FL
FL
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
GA
IL
IL
Chandler
Goodyear
Goodyear
Goodyear
Goodyear
Phoenix
Phoenix
Phoenix
Tolleson
Lakeland
Ocala
Orlando
Plant City
Tampa
Adairsville
Austell
Cartersville
Cartersville
Fairburn
McDonough
McDonough
Pooler
Savannah
Savannah
Savannah
Union City
Edwardsville
Edwardsville
29
LXP CONSOLIDATED PORTFOLIO
PROPERTY CHART
WAREHOUSE/DISTRIBUTION
As of December 31, 2022
Property Location
City
State
6225 E. Minooka Rd.
1460 Cargo Court
200 International Pkwy. S.
1001 Innovation Rd.
3686 S. Central Ave.
749 Southrock Dr.
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.
200 Richard Knock Way
300 Richard Knock Way
2860 Clark St.
Minooka
Minooka
Minooka
Rantoul
Rockford
Rockford
Lafayette
Lebanon
Whiteland
Whiteland
Whiteland
Whitestown
Whitestown
Whitestown
Whitestown
New Century
Walton
Walton
Detroit
1700 47th Ave. North
Minneapolis
549 Wingo Rd.
1550 Hwy. 302
554 Nissan Pkwy.
11555 Silo Dr.
11624 S. Distribution Cv.
6495 Polk Ln.
8500 Nail Rd.
671 Washburn Switch Rd.
2203 Sherrill Dr.
Byhalia
Byhalia
Canton
Olive Branch
Olive Branch
Olive Branch
Olive Branch
Shelby
Statesville
30
IL
IL
IL
IL
IL
IL
IN
IN
IN
IN
IN
IN
IN
IN
IN
KS
KY
KY
MI
MN
MS
MS
MS
MS
MS
MS
MS
NC
NC
Net Rentable
Square Feet
1,034,200
Primary Tenant
Current Lease
Term Expiration
9/30/2029
Percent
Leased
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 %
309,400
9/30/2029
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 %
232,500
12/31/2031
100 %
544,320
4/30/2032
100 %
189,960
10/22/2035
100 %
18,620
12/31/2025
100 %
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
5/31/2028
100 %
716,080
7/31/2029
100 %
673,425
5/31/2036
100 %
639,800
10/31/2026
100 %
LXP CONSOLIDATED PORTFOLIO
PROPERTY CHART
WAREHOUSE/DISTRIBUTION
As of December 31, 2022
Property Location
City
State
736 Addison Rd.
Erwin
29-01 Borden Ave. / 29-10 Hunters Point Ave.
Long Island City
351 Chamber Dr.
1860 Walcutt Rd.
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.
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.
21 Inland Pkwy.
7820 Reidville Rd.
7870 Reidville Rd.
8201 Reidville Rd.
5795 North Blackstock Rd.
1021 Tyger Lake Rd.
6050 Dana Way
1520 Lauderdale Memorial Hwy.
Chillicothe
Columbus
Glenwillow
Hebron
Hebron
Lockbourne
Monroe
Monroe
Monroe
Monroe
Streetsboro
Bristol
Duncan
Duncan
Duncan
Duncan
Duncan
Duncan
Duncan
Greer
Greer
Greer
Greer
Spartanburg
Spartanburg
Antioch
Cleveland
31
NY
NY
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
PA
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
SC
TN
TN
Net Rentable
Square Feet
408,000
Primary Tenant
Current Lease
Term Expiration
11/30/2026
Percent
Leased
100 %
140,330
3/31/2028
100 %
489,150
12/31/2031
100 %
292,730
11/21/2029
100 %
458,000
7/31/2025
100 %
250,410
9/30/2033
100 %
400,522
8/31/2027
100 %
320,190
3/31/2024
100 %
194,936
6/30/2024
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 %
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
3/31/2027
100 %
327,360
9/30/2026
100 %
1,318,680
12/31/2034
100 %
210,820
Various
100 %
396,073
9/30/2025
100 %
797,936
4/30/2035
100 %
341,660
7/31/2024
100 %
213,200
2/28/2031
100 %
674,528
6/30/2031
89 %
851,370
3/31/2024
100 %
LXP CONSOLIDATED PORTFOLIO
PROPERTY CHART
WAREHOUSE/DISTRIBUTION
As of December 31, 2022
Property Location
City
State
201 James Lawrence Rd.
633 Garrett Pkwy.
3820 Micro Dr.
200 Sam Griffin Rd.
2115 East Belt Line Rd.
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.
Jackson
Lewisburg
Millington
Smyrna
Carrollton
Dallas
Deer Park
Grand Prairie
Houston
Hutchins
Lancaster
Missouri City
Northlake
Northlake
Pasadena
Pasadena
Pasadena
Pasadena
San Antonio
Chester
Winchester
Winchester
Winchester
TN
TN
TN
TN
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
VA
VA
VA
VA
Net Rentable
Square Feet
1,062,055
Primary Tenant
Current Lease
Term Expiration
10/31/2027
Percent
Leased
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 %
510,400
9/30/2026
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
52,544,497
Warehouse/Distribution total
52,544,497
99.5 %
99.5 %
(1) Includes industrial development leased land.
As of December 31, 2022, annualized cash base rent for the warehouse/distribution portfolio, excluding assets primarily
consisting of land leases was $4.47 per square foot. The weighted-average remaining lease term was 6.5 years.
32
LXP CONSOLIDATED PORTFOLIO
PROPERTY CHART
OTHER
As of December 31, 2022
Property Location
City
State
3333 Coyote Hill Rd.
1901 Ragu Dr.
30 Light St.
4 Apollo Dr.
1701 Market St.
3476 Stateview Blvd.
3480 Stateview Blvd.
Palo Alto
Owensboro
Baltimore
Whippany
Philadelphia
Fort Mill
Fort Mill
Other total
CA
KY
MD
NJ
PA
SC
SC
Net Rentable
Square Feet
202,000
Primary Tenant
Current Lease
Term Expiration
12/14/2023
Percent
Leased
100 %
443,380
12/19/2025
100 %
N/A
12/31/2048
123,734
11/30/2031
304,037
1/31/2024
100 %
100 %
97 %
169,083
5/31/2024
100 %
169,218
5/31/2024
100 %
Consolidated portfolio total
53,955,949
1,411,452
99.4 %
99.5 %
As of December 31, 2022, annualized cash base rent for the other portfolio was $13.99 per square foot, excluding Baltimore,
Maryland, and the weighted-average remaining lease term was 2.4 years.
As of December 31, 2022, annualized cash base rent for the consolidated portfolio was $4.72 per square foot, excluding assets
primarily consisting of land leases. The weighted-average remaining lease term was 6.2 years.
33
LXP NON-CONSOLIDATED PORTFOLIO
PROPERTY CHART
As of December 31, 2022
Property Location
City
State
Office/Other properties:
Percent
Owned
Net Rentable
Square Feet
Primary Tenant
Current Lease
Term Expiration
Percent
Leased
2500 Patrick Henry Pkwy.
McDonough
3902 Gene Field Rd.
1210 AvidXchange Ln.
2221 Schrock Rd.
500 Olde Worthington Rd.
25 Lakeview Dr.
601 & 701 Experian Pkwy.
St. Joseph
Charlotte
Columbus
Westerville
Jessup
Allen
4001 International Pkwy.
Carrollton
8900 Freeport Pkwy.
2203 North Westgreen Blvd.
Special purpose industrial properties:
Irving
Katy
Office/Other total
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.
904 Industrial Rd.
43955 Plymouth Oaks Blvd.
26700 Bunert Rd.
2880 Kenny Biggs Rd.
Anniston
Opelika
Romeoville
Dry Ridge
Elizabethtown
Elizabethtown
Hopkinsville
Owensboro
North Berwick
Marshall
Plymouth
Warren
Lumberton
5670 Nicco Way
North Las Vegas
10590 Hamilton Ave.
590 Ecology Ln.
Cincinnati
Chester
20%
20%
20%
20%
20%
20%
20%
20%
20%
25%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
GA
MO
NC
OH
OH
PA
TX
TX
TX
TX
AL
AL
IL
KY
KY
KY
KY
KY
ME
MI
MI
MI
NC
NV
OH
SC
34
111,911
6/30/2025
98,849
6/30/2027
201,450
4/30/2032
42,290
7/6/2027
97,000
3/31/2026
150,000
8/7/2027
100 %
100 %
100 %
100 %
100 %
100 %
292,700
3/14/2025
100 %
138,443
12/31/2025
261,305
3/31/2023
5/31/2033
100 %
100 %
274,000
8/31/2036
100 %
1,667,948
100.0 %
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
246,508
9/30/2028
311,612
10/31/2030
260,243
10/31/2032
423,280
11/30/2026
180,235
9/30/2034
264,598
12/31/2027
420,597
7/14/2025
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
LXP NON-CONSOLIDATED PORTFOLIO
PROPERTY CHART
As of December 31, 2022
Property Location
City
State
50 Tyger River Dr.
900 Industrial Blvd.
120 Southeast Pkwy. Dr.
7007 F.M. 362 Rd.
13863 Industrial Rd.
901 East Bingen Point Way
Duncan
Crossville
Franklin
Brookshire
Houston
Bingen
SC
TN
TN
TX
TX
WA
Percent
Owned
20%
Net Rentable
Square Feet
221,833
Primary Tenant
Current Lease
Term Expiration
8/31/2027
20%
20%
20%
20%
20%
222,200
9/30/2033
289,330
12/31/2028
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
8,387,158
Percent
Leased
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
In addition, we have two non-consolidated joint ventures with a developer, which own developable parcels of land in Etna, Ohio.
As of December 31, 2022, the annualized cash base rent for the non-consolidated portfolio was $8.56 per square foot and the
weighted-average remaining lease term was 7.1 years.
35
Development Projects
The following is a summary of our warehouse/distribution ongoing development projects as of December 31, 2022:
Ongoing Development Projects
Project (% owned)
Consolidated:
The Cubes at Etna East
(95%)(3)
Ocala (80%)
Mt. Comfort (80%)
South Shore (100%)
Cotton 303 (93%)(4)
Smith Farms (90%)(5)
1
1
1
2
2
2
# of
Buildings
Market
Estimated
Sq. Ft.
Estimated
Project
Cost(1)
GAAP
Investment
Balance as of
12/31/2022
($000)
LXP
Amount
Funded as
of
12/31/2022
($000)(2)
Actual/Estimated
Building
Completion
Date
% Leased
as of
12/31/2022
Columbus, OH 1,074,840 $
72,850 $
61,171 $
Central Florida
1,085,280
Indianapolis, IN 1,053,360
Central Florida
Phoenix, AZ
270,885
880,678
Greenville-
Spartanburg, SC 1,396,884
83,100
65,500
40,500
84,200
73,737
59,379
25,782
64,682
58,455
63,388
49,848
13,553
3Q 2022
1Q 2023
1Q 2023
2Q 2023
56,570 1Q 2023 - 2Q 2023
101,550
77,173
67,780 1Q 2023 - 2Q 2023
$ 447,700 $
361,924 $
309,594
— %
— %
— %
— %
45 %
— %
Land Held for Industrial Development
Project (% owned)
Consolidated:
Reems & Olive (95.5%)(6)
Mt. Comfort Phase II (80%)
Market
Phoenix, AZ
Indianapolis, IN
ATL Fairburn (100%)
Atlanta, GA
Approx.
Developable
Acres
GAAP Investment Balance
as of 12/31/2022
($000)
LXP Amount Funded
as of 12/31/2022
($000)(2)
320 $
116
14
450 $
77,379 $
5,301
1,732
84,412 $
73,957
4,213
1,736
79,906
Project (% owned)
Non-consolidated:
Etna Park 70 (90%)
Etna Park 70 East (90%)
Market
Approx.
Developable
Acres
GAAP Investment Balance
as of 12/31/2022
($000)
LXP Amount Funded
as of 12/31/2022
($000)(2)
Columbus, OH
Columbus, OH
66
21
$
$
12,975 $
2,126
15,101 $
13,599
2,363
15,962
(1)
(2)
(3)
(4)
(5)
(6)
Estimated project cost includes estimated tenant improvements and leasing costs and excludes potential developer partner promote, if any.
Excludes noncontrolling interests' share.
Base building achieved substantial completion. Property not in service as of December 31, 2022.
Pre-leased 392,278 square foot facility with a 10-year lease commencing upon substantial completion of the facility and notice to the tenant.
In December 2022, substantially completed and placed into service a 797,936 square foot facility subject to a 12-year lease that commenced upon
substantial completion of the facility. Remaining two projects ongoing.
Ground leased approximately 100 acres of the 420 acre development land parcel located in the Phoenix, Arizona market, subject to a 20-year ground
lease (with three, 10-year extension options). The initial annual rental payments are $5.2 million and escalate by 4% annually.
36
Tenant Diversification
We believe our tenant mix is well diversified. Below are the industries in our warehouse/distribution portfolio based on 2022
ABR for consolidated properties owned as of December 31, 2022:
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, 2022, the
weighted-average lease term in our industrial portfolio was 6.5 years.
37
The following table sets forth information about the 15 largest tenants/guarantors in our portfolio as of December 31, 2022
based on total annualized base rental revenue as of December 31, 2022 ($000s, except square feet).
Tenants(1)
Amazon
Nissan
Kellogg
Wal-Mart
GXO Logistics
Xerox
Watco
Morgan Lewis (5)
FedEx
Mars Wrigley
Aligned Data Centers (6)
Undisclosed (7)
Olam
Georgia-Pacific
Owens Corning
Property
Type
Industrial
Industrial
Industrial
Industrial
Industrial
Office
Industrial
Office
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Lease
Expirations
2026-2033
2027
2027-2029
2024 -2031
2024-2028
2023
2038
2024
2028
2025
2042
2034
2024 & 2037
2028 & 2031
2025-2027
Number
of Leases
6
2
3
3
3
1
1
1
2
1
1
1
2
2
3
Square Feet
Leased
3,864,731
2,971,000
2,801,916
2,351,917
1,697,475
202,000
132,449
289,432
292,021
604,852
—
1,318,680
1,196,614
1,283,102
863,242
Square Feet
Leased as
a % of the
Consolidated
Portfolio(2)(3)
ABR
Percentage of
ABR(2)(4)
7.2 % $ 18,241
12,908
5.5 %
9,575
5.2 %
8,773
4.4 %
3.2 %
0.4 %
0.3 %
0.5 %
0.5 %
1.1 %
— %
2.5 %
2.2 %
2.4 %
1.6 %
7,386
7,070
6,318
5,860
5,728
5,396
5,228
5,198
4,993
4,868
4,860
6.8 %
4.8 %
3.6 %
3.3 %
2.7 %
2.6 %
2.4 %
2.2 %
2.1 %
2.0 %
1.9 %
1.9 %
1.9 %
1.8 %
1.8 %
32
19,869,431
37.0 % $ 112,402
41.8 %
(1)
(2)
(3)
(4)
(5)
(6)
(7)
Tenant, guarantor or parent.
Total shown may differ from detail amounts due to rounding.
Excludes vacant square feet.
Based on ABR for consolidated properties owned as of December 31, 2022.
Includes parking operations.
Industrial development leased land, which is included in industrial portfolio.
Lease restricts certain disclosures.
In 2022, 2021 and 2020, 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, 2022:
Year
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
Number of
Lease Expirations
4
24
15
24
16
7
10
9
12
3
Square Feet
ABR ($000's)
Percentage of
ABR
1,137,055 $
7,187,622
3,584,019
6,857,828
8,885,590
2,668,246
6,329,161
6,274,840
4,332,795
687,984
10,526
34,876
20,000
29,917
37,149
15,335
23,063
26,104
20,791
5,232
3.9 %
13.1 %
7.5 %
11.2 %
13.9 %
5.7 %
8.6 %
9.8 %
7.8 %
2.0 %
38
The following chart sets forth the 2022 ABR ($000's) based on the credit rating of our consolidated tenants at December 31,
2022(1):
Investment Grade
Non-investment Grade
Unrated
ABR
Percentage of
ABR
$
$
145,758
37,408
85,600
268,766
54.2 %
13.9 %
31.9 %
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”.
39
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.
40
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 14, 2023, we had 2,197 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, 2022, with
respect to our 2022 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)
— $
—
— $
—
—
—
4,094,587
—
4,094,587
Recent Sales of Unregistered Securities.
We did not issue any common shares during 2022 on an unregistered basis.
Share Repurchase Program.
There were 400,000 common share repurchases at an average price of $9.10 per common share during the quarter ended
December 31, 2022 under our share repurchase authorization most recently announced on August 4, 2022, which has no
expiration date. There were 6,874,241 shares that may yet be repurchased under our share repurchase authorization as of
December 31, 2022.
41
Item 6. [Reserved]
42
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, 2022 and 2021, 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 2022, we acquired or completed and placed into service $195.2 million of warehouse and distribution assets, which is a
decrease of $690.4 million compared to 2021 investment activity of $885.6 million. The decrease was primarily due to the
substantial completion of our portfolio transformation efforts and related capital recycling and the disruptions in the capital
markets.
We expected to recycle our remaining other assets into warehouse and distribution facilities by the end of 2022, but, due to
current market conditions, we currently expect the remaining other assets to take longer to be sold. In addition, we expect to
recycle out of certain warehouse and distribution facilities located outside of our target markets and use the proceeds to satisfy
indebtedness and invest in our target markets. 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 remains one of the most resilient real estate markets in the current economic environment.
One of the main drivers of growth in the industrial real estate market has been e-commerce. We believe that growth is also being
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 competition for the acquisition of
industrial properties, specifically warehouse/distribution properties. In addition, recessionary fears may cause tenants to
reevaluate expansion and growth plans. We continue to prioritize development and acquiring vacancy over acquisitions of leased
properties due to the increased yield that development generally provides.
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 industrial 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 with greater total return potential than
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 leased properties.
Our development activities have been focused on speculative development and purchasing newly-developed properties with
vacancy. 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.
43
Leasing
General. Re-leasing properties that are currently vacant or become vacant 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 2022, we entered into 18 new leases and lease extensions encompassing approximately 4.1 million square feet. The
average base rent on these extended leases was approximately $5.36 per square foot compared to the average base rent on these
leases before extension of $4.26 per square foot. The weighted-average cost of tenant improvements and lease commissions
during 2022 was approximately $7.82 per square foot for new leases and $0.91 per square foot for extended leases. In addition,
we ground leased approximately 100 acres in the Phoenix, Arizona market for 20 years (with three, 10-year extension options).
The initial rent is $5.2 million per annum and escalate by 4% annually.
As of December 31, 2022, we had two single-tenant leases in our industrial portfolio where the lease term is scheduled to
expire in 2023, covering approximately 0.9 million square feet. As of December 31, 2022, approximately 52.6% of our industrial
ABR was from leases scheduled to expire during 2023 through 2028. 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 and a couple with rent increases based upon the consumer
price index. As of December 31, 2022, 95.7% of our single-tenant industrial leases had scheduled rent increases. The average
escalation rate of these leases based on the next rent step was 2.5% as of December 31, 2022. 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.
Other properties
We continue to recycle our other real estate investments into warehouse/distribution assets. As of December 31, 2022, we
owned seven consolidated other real estate assets consisting of office properties, a land ground lease and a heavy manufacturing
facility. 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.
Non-Recourse Mortgage Loan Resolutions
Since we have a limited number of consolidated properties subject to non-recourse mortgages, we do not expect many
foreclosure sales of consolidated properties in the future.
Impairment charges
During 2022 and 2021, we incurred impairment charges, of $3.0 million and $5.5 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 2022 and 2021
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.
44
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, 2022, 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. Lease classification tests require significant estimates and judgments by
management in its application. Upon lease commencement or lease modification, we assess the lease classification to determine
whether the lease should be classified as a direct financing, sales-type or operating lease. The determination of lease classification
requires the calculation of the rate implicit in the lease, which is driven by significant estimates, including the estimation of both
the value assigned to the property components on the lease commencement date or upon acquisition and the estimation of the
unguaranteed residual value of such components at the end of the lease term. The determination of the lease term also requires
judgement because the probability of purchase options and renewals have to be analyzed to conclude if they are reasonably certain
of being exercised. If the lease component is determined to be a direct financing or sales-type lease, revenue is recognized over
the life of the lease using the rate implicit in the lease.
Most of our leases are operating leases. We recognize operating 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.
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
45
capitalization and discount rates, or relevant market multiples, leasing prospects and local market information and whether certain
impairments are other-than-temporary.
Allowance for Credit Losses. “ASC 326, Financial Instruments-Credit Losses” (“ASC 326”) requires that we measure and
record current expected credit losses for our sales-type lease. We have elected to use a discounted cash flow model to estimate the
allowance for credit losses. This model requires us to develop cash flows which project estimated credit losses over the life of the
lease and discount these cash flows at the asset’s effective interest rate. We then record an allowance equal to the difference
between the amortized cost basis of the asset and the present value of the expected credit loss cash flows.
Expected losses within our cash flows are determined by estimating the probability of default of our tenant and their parent
guarantors over the term of the lease. We evaluate the collectability of our investment in a sales-type lease based various
probability weighted default scenarios that include, but are not limited to, current payment status, the financial strength of our
tenant and its parent guarantors, current economic conditions and 20 years of historical information on corporate defaults for
entities with similar credit. Estimates in the discounted cash flow model are highly subjective. We have engaged a nationally
recognized data analytics firm to assist us with estimating the probability default of our tenant and their parent guarantor.
We regularly evaluate the extent and impact of any credit deterioration that could affect performance and the value of our
investment in a sales-type leases, as well as the financial and operating capability of the tenant. We also evaluate the tenant’s
competency in managing and operating the secured property and consider the overall economic environment, real estate sector
and geographic sub-market in which the secured property is located. If a tenant's credit deteriorates and it defaults under the terms
of the sales-type lease, we put the lease in non-accrual status until it is determined that all payments under the lease are probable
of being collected. The criteria evaluated to determine when a lease is in non-accrual status is subjective.
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 2022, 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)
proceeds from the sales of our investments, (3) the public and private equity and debt markets, (4) corporate level borrowings, (5)
property specific debt, and (6) commitments from co-investment partners. 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, our revenues 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 experience tenant defaults. 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.
46
Cash flows from operations as reported in the consolidated statements of cash flows totaled $194.3 million for 2022 and
$220.3 million for 2021. The decrease was primarily related to property sales and a decrease in termination fee income, partially
offset by cash flow generated from acquiring properties. 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 $236.9 million in 2022 and $337.8 million in 2021. 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 (used in) provided by financing activities totaled ($93.9) million in 2022 and $129.1 million in 2021. Cash used in
financing activities in 2022 was primarily related to the repurchase of common shares, the purchase of a noncontrolling interest
and dividend and debt service payments, offset by common share issuances and contributions from noncontrolling interests . Cash
provided by financing activities in 2021 was primarily related to the issuance of the 2031 Senior Notes, revolving credit facility
borrowings, mortgage proceeds, issuances of common shares and cash contributions from noncontrolling interests, offset by the
redemption of the 2023 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
rising interest rate volatility and rising inflation 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, including through forward contracts.
During 2022, we issued 3.6 million common shares previously sold on a forward basis in the first quarter of 2021 on the
maturity date of the contracts and received $38.5 million of net proceeds. During 2021, we settled 5.0 million common shares
previously sold on a forward basis on the maturity date of the contract and received $53.6 million of net proceeds.
During 2021, we sold 1.1 million shares under the ATM program for net proceeds of $13.5 million. We did not sell shares
under the ATM program during 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, 2022, 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 16.0 million common
shares at a public offering price of $12.11 per common share in an underwritten equity offering. In December 2022, we issued
16.0 million common shares and we received $183.4 million of net proceeds.
The volatility in the capital markets primarily resulting from the effects of interest rate volatility and rising inflation 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 2022 and 2021.
47
Share Repurchase Program. In August 2022, our Board of Trustees authorized the repurchase of up to an additional 10.0
million common shares under our share repurchase program, which does not have an expiration date. During 2022, 12.1 million
common shares were repurchased and retired for an average price of $10.78 per share. During 2021, there were no share
repurchases. As of December 31, 2022, 6.9 million common shares remain available for repurchase under this authorization.
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 canceled 1,598,906 OP units in connection with the disposition of three properties. As of
December 31, 2022, there were 0.7 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 0.8 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 common share dividend amount. We expect to merge LCIF with and into us
by the end of 2023.
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 the $188.8 million aggregate principal balance
of our outstanding 2023 Senior Notes.
The following Senior Notes were outstanding as of December 31, 2022:
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.
A summary of the maturity dates and interest rates under our unsecured credit agreement, as of December 31, 2022, are as
follows:
$600.0 Million Revolving Credit Facility(1)
$300.0 Million Term Loan(2)
Maturity Date
07/2026
01/2025
Interest Rate
SOFR + 0.85%
Term SOFR + 1.00%
(1) Maturity date of the revolving credit facility can be extended to July 2027 at our option. The interest rate ranges from SOFR plus 0.725% to
1.40%. At December 31, 2022, we had no borrowings outstanding and availability of $600.0 million, subject to covenant compliance.
(2) The Term SOFR portion of the interest rate was swapped to obtain a current fixed rate of 2.722% per annum.
As of December 31, 2022, 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, 2022, there were $129.1 million of
these securities outstanding. During 2023, we expect to transition from LIBOR to a new benchmark rate.
48
Property Specific Debt. As of December 31, 2022, 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 ($54.4 million at December 31, 2022), property sale proceeds or borrowing
capacity on our primary credit facility ($600.0 million as of December 31, 2022, subject to covenant compliance).
Our secured debt decreased to approximately $73.2 million at December 31, 2022 compared to $84.4 million at
December 31, 2021. 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. No additional acquisitions have been made by this joint venture and it is unlikely that this joint venture will
make acquisitions until interest rates stabilize and financing is more accessible.
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 $552.8 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.
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 2022, we disposed of our interests in 10 properties and one land parcel for
an aggregate gross price of $197.0 million. Additionally, the NNN Office JV disposed of six properties for an aggregate $354.9
million of gross proceeds and distributed $28.1 million to us after repayment of an aggregate of $229.5 million of non-recourse
debt. The proceeds were primarily used to (1) fund the development pipeline and (2) make investments in real property.
As we near the completion of the capital recycling of our non-industrial assets, we have recycled, and we expect to continue
our recycling efforts with respect to our older industrial assets and/or those outside our target markets. We believe capital
recycling (1) provides cost effective and timely capital to deleverage and to support for our investment activities and (2) allows us
to maintain line capacity and cash in advance of our development commitments.
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.
49
As of December 31, 2022, 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 3.2%. 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 $142.5 million in cash dividends to our common and preferred shareholders in 2022. 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, 2022, we had six ongoing consolidated development projects and expect to incur approximately $107.0
million of costs in 2023, excluding noncontrolling interests' share, to substantially complete the construction of such projects. As
of December 31, 2022, we had three consolidated and two non-consolidated subsidiaries that owned land parcels held for
industrial 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.
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.
50
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.
Results of Operations
Year ended December 31, 2022 compared with December 31, 2021. The decrease in net income attributable to common
shareholders of $268.5 million was primarily due to the items discussed below.
The decrease in total gross revenues of $22.8 million was primarily a result of a decrease of $15.1 million of termination
income. In addition, property sales, including the recapitalization in December 2021 of our special purpose industrial portfolio
now owned by MFG Cold JV, contributed to the decrease, which was partially offset by revenue from recently acquired properties
and an increase in advisory fees during 2022.
The increase in depreciation and amortization expense of $3.9 million was primarily due to acquisition activity.
The increase in property operating expense of $7.6 million was primarily due to an increase in operating expense
responsibilities at certain properties.
The increase in general and administrative expense of $3.3 million was primarily due to an increase of $1.4 million in costs
incurred related to the Board of Trustees' strategic alternatives review and costs related to shareholder activism. The remaining
$1.9 million increase is primarily due to an increase in severance expense, payroll expense, trustee fees, legal and other consulting
costs.
The increase in transaction costs of $3.7 million is primarily related to recognizing the direct costs of entering into a sales-
type lease as an expense in accordance with the applicable GAAP accounting guidance, with no similar transaction in the prior
year.
The decrease in interest and amortization expense of $1.3 million related primarily to the satisfaction of secured debt in 2021
and a $4.3 million increase in capitalized interest mostly related to increased development. The decrease was partially offset by an
increase in interest expense related to increased interest rates on our variable-rate unsecured debt and increased amounts of
unsecured debt during 2022 compared to 2021.
The decrease in debt satisfaction losses, net, of $13.8 million was primarily related to the redemption of the 2023 Senior
Notes during 2021.
The decrease in impairment charges of $2.5 million was primarily due to the timing of impairment charges taken on certain
properties. The impairments were primarily due to shortened hold periods, rising interest rates, vacancy and lack of leasing
prospects.
The decrease in gains on sales of properties of $308.2 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 increase in selling profit from sales-type leases of $47.1 million was due to three leases qualifying as sales-type leases in
2022 with no comparable transactions in 2021.
51
The increase in equity in earnings (losses) of non-consolidated entities of $16.2 million was primarily due to recognizing our
share of gains on sale of five properties from NNN Office JV L.P. in 2022 in the amount of $24.5 million with no property sales
at our non-consolidated entities in 2021. The increase was primarily offset by recognizing our share of impairment charges and
losses on debt satisfaction related to NNN Office JV L.P. in 2022 in the amount of $5.1 million and $1.5 million, respectively.
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, 2021 compared with December 31, 2020 is
included in our 2021 Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission, on
February 24, 2022.
52
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, non-cash income related to sales-type leases 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, 2022 and 2021 ($000):
Total cash base rent
Tenant reimbursements
Property operating expenses
Same-store NOI
Year Ended December 31,
2021
2022
$
$
207,087 $
35,221
(39,049)
203,259 $
197,684
33,186
(36,910)
193,960
Our reported same-store NOI increased from 2021 to 2022 by 4.8% primarily due to an increase in occupancy and cash base rents.
As of December 31, 2022 and 2021, our historical same-store square footage leased was 99.8% and 99.7%, respectively.
53
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
Selling profit from sales-type leases
Debt satisfaction losses, net
Equity in (earnings) losses of non-consolidated entities
Lease termination income, net
Straight-line adjustments
Lease incentives
Amortization of above/below market leases
Sales-type lease adjustments
NOI
Less NOI:
Acquisitions and dispositions
Same-Store NOI
Funds From Operations
Year ended December 31,
2021
2022
$
116,243 $
385,091
45,417
1,102
180,567
38,714
4,177
(6,550)
(59,094)
3,037
(47,059)
119
(16,006)
(238)
(11,412)
518
(1,865)
(249)
247,421
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
$
(44,162)
203,259 $
(71,618)
193,960
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.
54
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 2022 and 2021
(dollars in thousands, except share and per share amounts):
FUNDS FROM OPERATIONS:
Basic and Diluted:
Net income attributable to common shareholders
Adjustments:
Year Ended December31,
2022
2021
$
107,307 $
375,848
Depreciation and amortization
Impairment charges - real estate, including our share of non-consolidated entities
Noncontrolling interests - OP units
Amortization of leasing commissions
Joint venture and noncontrolling interest adjustment
Gains on sales of properties, including our share of 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
Selling profit from sales-type leases (1)
Allowance for credit losses
Transaction costs(2)
Debt satisfaction losses, net, including our share of non-consolidated entities
Other non-recurring costs(3)
Noncontrolling interest adjustments
Adjusted Company FFO available to all equityholders and unitholders - diluted
$
Per Common Share and Unit Amounts
177,725
8,137
156
2,842
11,112
(83,562)
223,717
6,290
186
230,193
(47,059)
93
4,177
1,615
2,573
1,469
193,061 $
173,833
5,541
1,672
2,881
8,370
(367,274)
200,871
6,290
510
207,671
—
—
432
13,894
1,199
—
223,196
Basic:
FFO
Diluted:
FFO
Adjusted Company FFO
Weighted-Average Common Shares:
Basic:
Weighted-average common shares outstanding - basic EPS
Operating partnership units(4)
Weighted-average common shares outstanding - basic FFO
Diluted:
Weighted-average common shares outstanding - diluted EPS
Unvested share-based payment awards
Preferred shares - Series C
Weighted-average common shares outstanding - diluted FFO
$
$
$
0.80
$
0.72
0.80
0.67
$
$
0.72
0.78
279,887,760
853,259
280,741,019
277,640,835
1,918,845
279,559,680
282,473,458
17,381
4,710,570
287,201,409
287,369,742
44,261
—
287,414,003
(1)
(2)
(3)
(4)
Aggregate gains recognized upon entering into a sales-type lease and exercises of tenant's purchase options in leases.
Includes initial direct costs incurred in connection with entering into investments classified as sales-type leases and other acquisition related costs.
Includes strategic alternatives and costs related to shareholder activism.
Includes OP units other than OP units held by us.
55
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, 2022 and
2021, which represented 8.6% and 8.5%, respectively, of our aggregate principal consolidated indebtedness. During 2022 and
2021, our variable-rate indebtedness had a weighted-average interest rate of 3.5% and 1.7%, respectively. Had the weighted-
average interest rate been 100 basis points higher, our interest expense for 2022 and 2021 would have increased by $2.3 million
and $1.7 million, respectively. As of December 31, 2022 and 2021, our aggregate principal consolidated fixed-rate debt was $1.4
billion, which represented 91.4% and 91.5%, 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, 2022 and is indicative of
the interest rate environment as of December 31, 2022, 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 $1.2 billion as of December 31, 2022.
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,
2022, we had four interest rate swap agreements in our consolidated portfolio, all of which expire in January 2025.
56
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, 2022 and December 31, 2021
Consolidated Statements of Operations for the years ended December 31, 2022, December 31, 2021 and December 31,
2020
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2022, December 31, 2021
and December 31, 2020
Consolidated Statements of Changes in Equity for the years ended December 31, 2022, December 31, 2021 and
December 31, 2020
Consolidated Statements of Cash Flows for the years ended December 31, 2022, December 31, 2021 and December 31,
2020
Notes to Consolidated Financial Statements
59
62
63
64
65
68
69
57
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 and subsidiaries (the “Company”) as of
December 31, 2022 and 2021, 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, 2022, 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, 2022 and 2021, and
the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, 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, 2022, 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 16, 2023, 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
applied to determine fair value of the assets. Changes in these assumptions could have a significant impact on the identification
58
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, 2022 were $3.7 billion. The Company recorded $3.0 million of impairment charges
on real estate assets during the year ended December 31, 2022.
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 for which the fair value for those that the carrying value was determined not to be recoverable by performing
the following:
a. 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 16, 2023
We have served as the Company's auditor since 2017.
59
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 and subsidiaries (the “Company”) as of
December 31, 2022, 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, 2022, 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, 2022, of the Company and our
report dated February 16, 2023, 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 16, 2023
60
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 $20,348 in 2022 and $18,356 in 2021)
Investment in a sales-type lease, net (allowance for credit loss of $93 in 2022)
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 $15,430 in 2022 and
$14,258 in 2021)
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 600,000,000 shares, 291,719,310 and
283,752,726 shares issued and outstanding in 2022 and 2021, respectively
Additional paid-in-capital
Accumulated distributions in excess of net income
Accumulated other comprehensive income (loss)
Total shareholders’ equity
Noncontrolling interests
Total equity
Total liabilities and equity
2022
2021
$
3,691,066 $
3,583,978
328,607
84,412
361,924
4,466,009
800,470
3,665,539
66,434
23,986
54,390
116
58,206
25,207
61,233
3,030
71,392
24,314
4,053,847 $
72,103 $
298,959
989,295
127,694
38,416
1,150
25,118
74,261
9,181
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
11,452
15,215
1,662,844
14,474
14,717
1,682,330
$
$
94,016
94,016
29
3,320,087
(1,079,087)
17,689
2,352,734
38,269
2,391,003
4,053,847 $
28
3,252,506
(1,049,434)
(6,258)
2,290,858
32,370
2,323,228
4,005,558
$
The accompanying notes are an integral part of these consolidated financial statements.
61
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
Transaction costs
Non-operating income
Interest and amortization expense
Debt satisfaction gains (losses), net
Impairment charges
Change in allowance for credit loss
Gains on sales of properties
Selling profit from sales-type leases
Income before provision for income taxes and equity in earnings
(losses) of non-consolidated entities
Provision for income taxes
Equity in earnings (losses) of non-consolidated entities
Net income
2022
2021
2020
$
313,992 $
339,944 $
325,811
7,253
321,245
4,053
343,997
4,637
330,448
(180,567)
(176,714)
(161,592)
(54,870)
(38,714)
(4,177)
935
(45,417)
(119)
(3,037)
(93)
59,094
47,059
101,339
(1,102)
16,006
116,243
(47,314)
(35,458)
(432)
1,364
(46,708)
(13,894)
(5,541)
—
367,274
—
386,574
(1,293)
(190)
385,091
(41,659)
(30,371)
(255)
743
(55,201)
21,452
(14,460)
—
139,039
—
188,144
(1,584)
(169)
186,391
(3,089)
183,302
(6,290)
(224)
Less net income attributable to noncontrolling interests
(2,460)
(2,443)
Net income attributable to LXP Industrial Trust shareholders
113,783
382,648
Dividends attributable to preferred shares - Series C
Allocation to participating securities
(6,290)
(186)
(6,290)
(510)
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
$
$
$
107,307 $
375,848 $
176,788
0.38 $
1.35 $
279,887,760
277,640,835
0.38 $
1.34 $
0.66
266,914,843
0.66
268,182,552
Weighted-average common shares outstanding - diluted
282,473,458
287,369,742
The accompanying notes are an integral part of these consolidated financial statements.
62
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
Company's share of other comprehensive income of non-consolidated
entities
Other comprehensive income (loss)
Comprehensive income
2022
2021
2020
$
116,243 $
385,091 $
186,391
22,576
11,705
(16,035)
1,371
23,947
140,190
—
11,705
396,796
—
(16,035)
170,356
Comprehensive income attributable to noncontrolling interests
(2,460)
(2,443)
(3,089)
Comprehensive income attributable to LXP Industrial Trust shareholders
$
137,730 $
394,353 $
167,267
The accompanying notes are an integral part of these consolidated financial statements.
63
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
($000 except share amounts)
Year ended December 31, 2022
LXP Industrial Trust Shareholders
Number of
Preferred
Shares
Preferred
Shares
Number of
Common
Shares
Common
Shares
Additional
Paid-in-
Capital
Accumulated
Distributions
in Excess of
Net Income
Accumulated
Other
Comprehensive
Income/(Loss)
Noncontrolling
Interests
1,935,400 $ 94,016
283,752,726 $
28 $ 3,252,506 $ (1,049,434) $
(6,258) $
32,370
Total
$ 2,323,228
7,814
—
(27,958)
229,390
(130,676)
(6,285)
16
(144,716)
116,243
22,576
Balance December 31, 2021
Issuance of partnership interest in
real estate
Redemption of noncontrolling OP
units for common shares
Purchase of noncontrolling
interest in consolidated joint
venture
Issuance of common shares and
deferred compensation
amortization, net
Repurchase of common shares
Repurchase of common shares to
settle tax obligations
Forfeiture of employee common
shares
Dividends/distributions ($0.485
per common share)
Net income
Other comprehensive income
Company's share of other
comprehensive income of non-
consolidated entities
Balance December 31, 2022
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
39,747
—
—
—
211
—
—
(25,058)
20,580,816
(12,102,074)
2
(1)
229,388
(130,675)
—
—
—
—
—
(6,285)
—
—
—
—
(410,958)
(140,947)
—
—
—
—
291,719,310 $
—
—
—
—
—
—
16
—
—
—
—
—
—
—
7,814
(211)
(2,900)
—
—
—
—
(143,452)
113,783
—
—
—
22,576
(1,264)
2,460
—
1,371
$ 2,391,003
—
—
1,935,400 $ 94,016
—
29 $ 3,320,087 $ (1,079,087) $
—
—
1,371
17,689 $
—
38,269
The accompanying notes are an integral part of the consolidated financial statements.
64
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
($000 except share amounts)
Year ended December 31, 2021
LXP Industrial Trust Shareholders
Number of
Preferred
Shares
Preferred
Shares
Number of
Common
Shares
Common
Shares
Additional
Paid-in-
Capital
Accumulated
Distributions
in Excess of
Net Income
Accumulated
Other
Comprehensive
Loss
Noncontrolling
Interests
1,935,400 $ 94,016
277,152,450 $
28 $ 3,196,315 $ (1,301,726) $
(17,963) $
20,467
Total
$ 1,991,137
21,901
—
(22,305)
73,851
(6,134)
2
(132,020)
385,091
11,705
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$ 2,323,228
—
—
1,935,400 $ 94,016
—
185,270
—
6,993,194
(567,924)
(10,264)
—
—
—
—
283,752,726 $
—
—
—
—
—
—
—
—
—
—
958
(12,919)
73,851
(6,134)
—
—
—
—
—
—
—
—
—
2
(130,358)
382,648
—
—
28 $ 3,252,506 $ (1,049,434) $
435
—
—
—
—
—
—
—
—
—
11,705
—
(6,258) $
21,901
(958)
(9,386)
—
—
—
(1,662)
2,443
—
(435)
32,370
Balance December 31, 2020
Issuance of partnership interest in
real estate
Redemption of noncontrolling OP
units for common shares
Redemption of noncontrolling OP
units for real estate
Issuance of common shares and
deferred compensation
amortization, net
Repurchase of common shares to
settle tax obligations
Forfeiture of employee common
shares
Dividends/distributions ($0.4425
per common share)
Net income
Other comprehensive income
Reallocation of noncontrolling
interests
Balance December 31, 2021
The accompanying notes are an integral part of the consolidated financial statements.
65
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
($000 except share amounts)
Year ended December 31, 2020
LXP Industrial Trust Shareholders
Number of
Preferred
Shares
Preferred
Shares
Number of
Common
Shares
Common
Shares
Additional
Paid-in-
Capital
Accumulated
Distributions
in Excess of
Net Income
Accumulated
Other
Comprehensive
Loss
Noncontrolling
Interests
1,935,400 $ 94,016
254,770,719 $
25 $ 2,976,670 $ (1,363,676) $
(1,928) $
19,612
Total
$ 1,724,719
1,285
—
231,699
(11,042)
(2,623)
1
Balance December 31, 2019
Issuance of partnership interest in
real estate
Redemption of noncontrolling OP
units for common shares
Issuance of common shares and
deferred compensation
amortization, net
Repurchase of common shares
Repurchase of common shares to
settle tax obligations
Forfeiture of employee common
shares
Dividends/distributions ($0.4225
per common share)
Net income
Other comprehensive loss
Balance December 31, 2020
—
—
—
—
—
—
—
—
—
—
—
—
—
327,453
23,962,696
(1,329,940)
(576,011)
(2,467)
—
—
—
277,152,450 $
—
—
3
—
—
—
—
1,614
231,696
(11,042)
(2,623)
—
—
—
—
—
—
1
—
—
—
28 $ 3,196,315 $ (1,301,726) $
(121,353)
183,302
—
—
—
—
—
—
—
—
—
—
—
—
(16,035)
(17,963) $
1,285
(1,614)
—
—
—
—
(1,905)
3,089
—
20,467
(123,258)
186,391
(16,035)
—
—
—
—
—
—
1,935,400 $ 94,016
$ 1,991,137
The accompanying notes are an integral part of the consolidated financial statements
66
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:
2022
2021
2020
$
116,243 $
385,091 $
186,391
Depreciation and amortization
Gains on sales of properties
Change in allowance for credit loss
Selling profit from sales-type leases
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
Changes in assets and liabilities
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 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
Payments for early extinguishment of debt
Deferred financing costs
Cash distributions to noncontrolling interests
Cash contributions from noncontrolling interests
Repurchase of common shares
Purchase of noncontrolling interest
Issuance of common shares, net of costs and repurchases to settle tax obligations
Net cash (used in) provided by 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
183,419
(59,094)
93
(47,059)
119
3,037
(11,363)
3,980
6,072
(16,006)
17,024
(1,574)
623
700
(1,945)
194,269
(132,026)
(276,706)
(32,562)
194,472
—
27
(3,225)
19,930
(5,156)
(1,673)
(236,919)
(142,461)
(11,275)
—
—
280,000
(280,000)
—
—
—
(3,626)
(1,264)
7,814
(130,675)
(27,958)
215,574
(93,871)
(136,521)
—
191,027
54,506 $
$
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)
—
—
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
The accompanying notes are an integral part of these consolidated financial statements.
67
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
(1)
The Company and Financial Statement Presentation
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, 2022, the Company had ownership interests in approximately 116 consolidated properties located in
21 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 interests 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 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 a primary beneficiary are
accounted for under appropriate GAAP.
As of December 31, 2022, the Company had interests in seven consolidated 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 owns land parcels with the intention of developing industrial properties. The Company determined
that the joint ventures are variable interest entities in accordance with the applicable accounting guidance. The Company
concluded that it is the primary beneficiary in each of the joint ventures and as such, the joint ventures' operations are
consolidated in the Company's consolidated 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, as of December 31,
2022, has an approximate 99% ownership interest.
68
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. 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, 2022 and 2021:
Real estate, net
Total assets
Total liabilities
December 31, 2022
December 31, 2021
$
$
$
1,027,009 $
1,125,558 $
40,200 $
810,087
952,611
47,011
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 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 operating 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 certain. 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. Sales-type lease income is recognized on an
effective interest rate basis at a constant rate of return over the term of the applicable leases using the rate implicit in the
leases. The investment in a sales-type lease balance is increased every period to reflect income on the net investment in
the lease and reduced by the amount of lease payments collected during the period.
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.
69
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
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 current economic environment. Management
adjusts such estimates when facts and circumstances dictate. The most significant estimates made include the
recoverability of current and deferred 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, the determination of the term and fair value of sales-type leases, the estimate
of credit losses for investments in sales-type leases and the useful lives of long-lived assets. Actual results could differ
materially from those estimates.
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 based on the lease revenue and market value of lease up costs avoided as a result of having an in-place lease
on the acquisition date. 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.
70
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
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.
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 out flows (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 direct and indirect project costs associated with construction of a property
or improvements, including interest and compensation costs of employees directly contributing to the completion of each
construction project, up to the time the property is substantially complete and ready for its intended use. These costs are
included within investments in real estate under construction for development projects and in construction in progress
within real estate, at cost for improvements in the consolidated balance sheets. If activities and costs incurred to ready the
vacant space cease, then cost capitalization is also discontinued until such activities are resumed. Once construction is
substantially complete on a vacant space, costs are no longer capitalized. The Company will reclassify a development
project to real estate, at cost from investments in real estate under construction once in service upon stabilization. The
Company considers stabilization to occur upon 90% occupancy of the property or one-year from substantial completion.
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.
Properties are held for sale for a period longer than 12 months if events or circumstances out of the Company's control
occur that delay the sale and while management continues to be committed to the plan of sale and is performing actions
necessary to respond to the conditions causing the delay the properties held for sale remain salable in their current
condition. The operating results of these properties are reflected as discontinued operations in the consolidated
71
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
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.
Held for sale properties are evaluated quarterly to ensure that properties continue to meet the held for sale criteria. If
properties are required to be reclassified from held for sale to held for use due to changes to a plan of sale, they are
recorded at the lower of fair value or the carrying amount before the property was classified as held for sale, adjusted for
any depreciation and amortization expense that would have been recognized had the property been continuously
classified as held and used. 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.
Investment in Sales-Type Leases. Investments in sales-type leases are accounted for under ASC 842 “Leases” (“ASC
842”). Upon lease commencement or lease modification, the Company assesses lease classification to determine whether
the lease should be classified as a direct financing, sales-type or operating lease. As required by ASC 842, the Company
separately assesses the land and building components of the property to determine the classification of each component
unless the effect of separately accounting for the land component will be insignificant. If the lease is determined to be a
direct financing or sales-type lease, the Company records a net investment in the lease, which is equal to the sum of the
lease receivable and the unguaranteed residual asset, discounted at the rate implicit in the lease. Any difference between
the fair value of the asset and the net investment in the lease is considered selling profit or loss and is either recognized
upon execution of the lease or deferred and recognized over the life of the lease, depending on the lease classification
and the collectability of the minimum lease payments. Initial direct costs are recognized as an expense if, at the
commencement date, the fair value of the underlying asset is different from its carrying amount. If the fair value of the
underlying asset equals its carrying amount, initial direct costs are deferred at the commencement date and included in
the measurement of the net investment in the lease.
Allowance for Credit Losses. On January 1, 2020, the Company adopted ASC 326 “Financial Instruments-Credit
Losses” (“ASC 326” or “CECL”), which requires that the Company measures and records current expected credit losses
for its investments, the scope of which includes investment in sales-type leases in its consolidated balance sheets.
The Company has elected to use a discounted cash flow model to estimate the allowance for credit losses. This model
requires us to develop cash flows which is used to project estimated credit losses over the life of the lease and discount
these cash flows at the asset’s effective interest rate. The Company then records an allowance equal to the difference
between the amortized cost basis of the asset and the present value of the expected credit loss cash flows.
Expected losses within the Company's cash flows are determined by estimating the probability of default of the tenant
and their parent guarantors over the term of the lease. The Company evaluates the collectability of its investment in
sales-type leases, net based various probability weighted default scenarios that include, but are not limited to, current
payment status, the financial strength of its tenant and its parent guarantors, current economic conditions and 20 years of
historical information on corporate defaults. The Company is unable to use its historical data to estimate losses as it has
no relevant loss history to date.
The allowance is recorded as a reduction to our investment in sales-type leases, net, on the consolidated balance sheets.
The Company is required to update its allowance on a quarterly basis with the resulting change being recorded in the
consolidated statement of operations for the relevant period. The Company regularly evaluates the extent and impact of
any credit deterioration that could affect performance and the value its investment in sales-type leases, as well as the
financial and operating capability of the tenant. The Company also evaluates the tenant’s competency in managing and
operating the secured property and considers the overall economic environment, real estate sector and geographic sub-
market in which the secured property is located. If a tenant's credit deteriorates and it defaults under the terms of the
sales-type lease, the Company puts the lease in non-accrual status until it is determined that all payments under the lease
are probable of being collected. Write-offs are deducted from the allowance in the period in which they are deemed
uncollectible. Recoveries previously written off are recorded when received.
72
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). The Company also accounts for its share of cash
flow hedges from non-consolidated entities as part of investment in non-consolidated entities and accumulated 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.
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, 2022, 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.
73
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.
On July 5, 2022, the Company transitioned its benchmark interest rate for its term loan from LIBOR to the Secured
Overnight Financing Rate, or SOFR. The Company adopted ASU 2020-04 and the adoption of this standard did not have
an impact on the Company's consolidated financial statements.
(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, 2022:
2022
2021
2020
107,307 $
$
279,887,760
375,848 $
176,788
266,914,843
277,640,835
$
0.38 $
1.35 $
0.66
BASIC
Net income attributable to common shareholders
Weighted-average number of common shares outstanding
Net income attributable to common shareholders - per common
share basic
74
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
DILUTED:
Net income attributable to common shareholders - basic
Impact of assumed conversions
Net income attributable to common shareholders
2022
2021
2020
$
$
107,307 $
156
107,463 $
375,848 $
7,962
383,810 $
176,788
—
176,788
Weighted-average common shares outstanding - basic
279,887,760
277,640,835
266,914,843
Effect of dilutive securities:
Unvested share-based payment awards and options
Shares issuable under forward sales agreements
Operating Partnership Units
Series C Cumulative Convertible Preferred
457,597
1,274,842
853,259
—
989,177
1,267,709
2,110,315
1,918,845
4,710,570
—
—
—
Weighted-average common shares outstanding - diluted
282,473,458
287,369,742
268,182,552
Net income attributable to common shareholders - per common share
diluted
$
0.38 $
1.34 $
0.66
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, 2022 and 2021:
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
2022
2021
3,335,029 $
346,816
9,221
309,393
12,519
6,695
84,412
361,924
4,466,009
(800,470)
3,665,539 $
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
$
$
(1)
Includes accumulated amortization of real estate intangible assets of $173,443 and $151,041 in 2022 and 2021, respectively. The estimated
amortization of the above real estate intangible assets for the next five years is $31,971 in 2023, $26,487 in 2024, $22,558 in 2025, $19,550 in
2026 and $14,466 in 2027.
The Company had below-market leases, net of accumulated accretion, which are included in deferred revenue, of
$11,214 and $14,401, respectively, as of December 31, 2022 and 2021. The estimated accretion for the next five years is
$1,830 in 2023, $1,830 in 2024, $1,740 in 2025, $1,538 in 2026 and $1,292 in 2027.
75
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
The Company acquired or completed and placed into service the following assets during 2022 and 2021:
2022:
Market(1)
Cincinnati/Dayton, OH(2)
Cincinnati/Dayton, OH
Phoenix, AZ
Greenville-Spartanburg, SC(3)
Acquisition/
Completion
Date
February 2022
February 2022
April 2022
December 2022
$
Initial
Cost
Basis
23,382
48,660
59,140
64,067
Primary Lease
Expiration at
Acquisition
N/A
04/2032
05/2037
04/2035
Land
Building and
Improvements
$
2,010 $
21,372 $
Lease in-place
Value Intangible
—
4,197
5,366
2,484
40,944
50,281
61,583
3,519
3,493
—
7,012
12.7
Weighted-average life of intangible assets (years)
$
195,249
$
14,057 $
174,180 $
(1) A land parcel located in Hebron, OH was also purchased for $747.
(2) Subsequent to acquisition, property was fully leased for approximately nine years.
(3) Development project substantially completed and placed into service. Initial basis excludes certain remaining costs, including developer partner
promote.
In 2022, the Company purchased the remaining 13% of equity owned by a noncontrolling interest in the Fairburn,
Georgia warehouse/distribution facility for $27,958. As the Company previously consolidated its interest in the joint
venture which owned the property, the acquisition of the noncontrolling ownership interest was recorded as an equity
transaction with the difference between the purchase price and carrying balance of $25,058 recorded as a reduction in
additional paid-in-capital.
2021:
Market(1)
Acquisition/
Completion
Date
Initial
Cost
Basis
Primary Lease
Expiration at
Acquisition
Land
Building and
Improvements
Lease in-place
Value
Intangible
Above
(Below)
Market
Lease
Intangible
$
January 2021
Indianapolis, IN
January 2021
Indianapolis, IN
January 2021
Central Florida
Columbus, OH(2)
March 2021
May 2021
Houston, TX
May 2021
Houston, TX
May 2021
Houston, TX
June 2021
Cincinnati/Dayton, OH
June 2021
Central Florida
June 2021
Greenville-Spartanburg, SC
June 2021
Greenville-Spartanburg, SC
July 2021
Greenville-Spartanburg, SC
Greenville-Spartanburg, SC
July 2021
Greenville-Spartanburg, SC(3) July 2021
July 2021
Greenville-Spartanburg, SC
August 2021
Columbus, OH
October 2021
Indianapolis, IN
October 2021
Indianapolis, IN
October 2021
Indianapolis, IN
Atlanta, GA(2)(4)
November 2021
Phoenix, AZ(2)
November 2021
December 2021
Phoenix, AZ
December 2021
Indianapolis, IN
December 2021
Atlanta, GA
December 2021
Atlanta, GA
December 2021
Atlanta, GA
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
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
$
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
$
885,617
$
80,230 $
765,108 $
40,264 $
15
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
15
Weighted-average life of intangible assets (years)
7.3
3.5
76
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
(1) A land parcel located in Hebron, OH was also purchased for $371.
(2) Development project substantially completed and placed into service.
(3) Subsequent to acquisition, property fully leased for 5.5 years.
(4)
Initial basis excludes certain remaining costs, including developer partner promote.
As of December 31, 2022, the details of the development arrangements outstanding are as follows (in $000's, except
square feet):
Project (% owned)
The Cubes at Etna East (95%)(3)
Ocala (80%)
Mt. Comfort (80%)
South Shore (100%)
Cotton 303 (93%)(4)
Smith Farms (90%)(5)
1
1
1
2
2
2
# of
Buildings
Market
Estimated
Sq. Ft.
(unaudited)
Estimated
Project
Cost(1)
GAAP
Investment
Balance as of
12/31/2022
Columbus, OH 1,074,840 $ 72,850 $
Central Florida
1,085,280
Indianapolis, IN 1,053,360
Central Florida
270,885
83,100
65,500
40,500
Actual/
Estimated
Building
Completion
Date
(unaudited)
3Q 2022
Amount
Funded as of
12/31/2022(2)
58,455
61,171 $
73,737
59,379
25,782
63,388
1Q 2023
49,848
1Q 2023
13,553
2Q 2023
Phoenix, AZ
880,678
84,200
64,682
56,570
Greenville-
Spartanburg, SC 1,396,884
101,550
77,173
67,780
$ 447,700 $
361,924 $
309,594
1Q 2023 -
2Q 2023
1Q 2023 -
2Q 2023
% Leased
as of
12/31/2022
— %
— %
— %
— %
45 %
— %
(1) Estimated project cost includes estimated tenant improvements and leasing costs and excludes potential developer partner promote, if any.
(2) Excludes noncontrolling interests' share.
(3) Base building achieved substantial completion. Property not in service as of December 31, 2022.
(4) Pre-leased 392,278 square foot facility with a 10-year lease commencing upon substantial completion of the facility and notice to the tenant.
(5)
In December 2022, substantially completed and placed into service a 797,936 square foot facility subject to a 12-year lease that commenced upon
substantial completion of the facility. Remaining two projects ongoing.
As of December 31, 2022, the Company's aggregate investment in development arrangements was $361,924, which
included capitalized interest of $6,330 for the year ended December 31, 2022 and is presented as investments in real
estate under construction in the accompanying consolidated balance sheets. For the year ended December 31, 2021,
capitalized interest for development arrangements was $1,114.
As of December 31, 2022, the details of the land held for industrial development are as follows (in $000's, except acres):
Project (% owned)
Consolidated:
Reems & Olive (95.5%)(2)
Mt. Comfort Phase II (80%)
ATL Fairburn (100%)
Market
Phoenix, AZ
Indianapolis, IN
Atlanta, GA
Approx.
Developable
Acres
(unaudited)
GAAP Investment
Balance as of
12/31/2022
LXP Amount Funded
as of
12/31/2022(1)
$
320
116
14
450
$
77,379 $
5,301
1,732
84,412 $
73,957
4,213
1,736
79,906
(1) Excludes noncontrolling interests' share.
(2) Ground leased approximately 100 acres of the original 420 acre development land parcel located in the Phoenix, Arizona market, subject to a 20-
year ground lease (with three, 10-year extension options). The initial annual rental payments are $5,228 and escalate by 4% annually.
(5)
Dispositions and Impairment
For the years ended December 31, 2022, 2021 and 2020, the Company disposed of its interests in various properties for
an aggregate gross disposition price of $196,989, $823,966 and $432,843, respectively, which resulted in gains on sales
of $59,094, $367,274 and $139,039, 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
77
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
note receivable has a fixed interest rate of 6.0% per annum and matures on August 1, 2025. As of December 31, 2022,
the balance of the note receivable is $1,462.
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
and 2020, the Company recognized net debt satisfaction charges relating to properties sold of $229 and $2,879,
respectively.
The Company had three and eight properties classified as held for sale at December 31, 2022 and December 31, 2021,
respectively. Assets and liabilities of the held for sale properties consisted of the following:
Assets:
Real estate, at cost
Real estate, intangible assets
Accumulated depreciation and amortization
Other
Total assets held for sale
Liabilities:
Accounts payable and other liabilities
Deferred revenue
Prepaid rent
Total liabilities held for sale
December 31, 2022
December 31, 2021
$
$
$
$
131,557 $
9,942
(76,205)
1,140
66,434 $
637 $
143
370
1,150 $
170,117
9,454
(99,659)
2,674
82,586
1,908
483
1,077
3,468
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.
The Company's Fort Mill, South Carolina office properties that were held for sale as of December 31, 2021 were not sold
as of December 31, 2022. It was determined that the properties were not salable in their current condition as of
December 31, 2022 and were reclassified as held and used properties. The properties were reclassified to real estate
assets, net at $18,625 as of December 31, 2022.
During 2022, 2021 and 2020, the Company recognized aggregate impairment charges on real estate properties of $3,037,
$5,541 and $14,460, respectively. During 2022, 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.
(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, 2022 and 2021, aggregated by the level in the fair value hierarchy within which those
measurements fall:
Description
2022
(Level 1)
(Level 2)
(Level 3)
Interest rate swap assets
$
16,318 $
— $
16,318 $
—
Fair Value Measurements Using
78
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
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
Fair Value Measurements Using
(1) Represents non-recurring fair value measurement. The Company measured $12,735 of these fair values based on a discounted cash flow analysis,
using a discount rate ranging from 8.0% to 10.0% and residual capitalization rates 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.
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, 2022 and 2021, 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, 2022 and 2021:
Assets
Investment in a sales-type lease, net
Liabilities
Debt
As of December 31, 2022
As of December 31, 2021
Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
$
61,233 $
60,984 $
— $
—
$ 1,488,051 $ 1,293,239 $ 1,497,064 $ 1,491,868
The fair value of the Company's investment in a sales-type lease, net is primarily estimated utilizing Level 3 inputs by
using a discounted cash flow analysis and an estimate of the unguaranteed residual value.
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.
79
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
NNN MFG Cold JV
L.P. ("MFG Cold
JV")(1)
NNN Office JV L.P.
("NNN JV")(2)(6)
Etna Park 70 LLC(3)
Etna Park 70 East
LLC(4)
BSH Lessee L.P.(5)
Percentage
Ownership at
Investment Balance as of December 31,
Equity in earnings (losses) of non-consolidated entities
Years ended December 31,
December 31, 2022
2022
2021
2022
2021
2020
20%
20%
90%
90%
25%
$
26,592 $
30,752 $
(2,050) $
— $
12,900
12,975
2,126
3,613
24,112
12,874
2,797
4,024
18,156
(137)
(174)
211
$
58,206 $
74,559 $
16,006 $
(140)
(93)
(114)
157
(190) $
—
(84)
(104)
(89)
108
(169)
(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.
Joint venture formed in 2017 with a developer entity to acquire a parcel of land.
Joint venture formed in 2019 with a developer entity to acquire a parcel of land.
(2) NNN JV is a joint venture formed in 2018 and owns office properties formerly owned by the Company.
(3)
(4)
(5) A joint venture investment, which owns a single-tenant, net-leased asset.
(6) During 2022, NNN JV sold six assets and the Company recognized its share of aggregate gains on sale and impairment charges of $24,513 and
$257, respectively, within equity in earnings (losses) of non-consolidated entities within its consolidated statement of operations. During 2020,
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.
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 $5,615,
$2,968 and $3,028 for the years ended December 31, 2022, 2021 and 2020.
(8)
Leases
Lessor
Operating Leases. 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 ASC 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.
80
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
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 uncollectible, 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.
Certain tenants have been experiencing financial difficulties as a result of the current economic conditions. During the
years ended December 31, 2022, 2021 and 2020, the Company wrote off an aggregate of $417, $370 and $389,
respectively, accounts receivable, net, relating to certain tenants suffering from the current economic conditions.
The Company elected 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
included within rental revenue is CAM services provided as part of the Company’s real estate leases. ASC 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, 2022, 2021 and 2020, the Company incurred $2, $19 and $67, 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.
Sales-Type Leases. During the year ended December 31 2022, the Company had three transactions that qualified as sales-
type leases.
In 2022, the Company had two tenants that exercised the purchase option within their lease for an aggregate purchase
option price of $34,841. The purchase options were not reasonably certain to be exercised at the commencement date of
each lease, resulting in modifications of the operating leases. As a result of these modifications to the leases, the
Company re-evaluated the lease classifications and classified both leases as sales-type leases. The Company recognized
an aggregate of $10,184 in selling profit from sales-type leases in its consolidated statements of operations related to
these transactions for the year ended December 31, 2022.
As of December 31, 2022, the Company had one ground lease for a 100-acre industrial development land parcel located
in the Phoenix, Arizona market that is classified as a sales-type lease. At the commencement date of the lease, the
Company evaluated the lease classification and classified the lease as a sales-type lease. The lease contains a purchase
option in the amount of $20.00 per land square foot starting on the second anniversary date of the lease ending and
ending on the third anniversary date. The Company determined that the purchase option is not reasonably certain of
being exercised. The lease met the sales-type lease criteria because the present value of the lease payments was equal to
substantially all of the fair value of the underlying asset on the lease commencement date. The Company recorded
$60,984 in investment in a sales-type lease, net and derecognized $24,109 from land held for development in the
consolidated balance sheets. The Company recognized $36,875 in selling profit from sales-type leases and $4,119 of
direct costs to enter into the lease within transaction costs in the consolidated statements of operations for the year ended
December 31, 2022. The interest income earned from sales-type leases is included in rental revenue in the consolidated
statements of operations. The residual value of the land parcel at the end of the ground lease is estimated to equal it's fair
value on the commencement date of the lease of $60,984 because land values typically appreciate over time but the
accounting guidance does not allow the residual value at the end of the lease to be in excess of the fair value at the
commencement date of the lease.
81
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
Rental Revenue Classification. The following table presents the Company’s classification of rental revenue for its
operating and sales-type leases for the year ended December 31, 2022, 2021 and 2020:
Classification
Fixed
Sales-type lease income
Variable(1)(2)
Total
Years Ended December 31,
2022
2021
2020
$
$
267,644 $
287,552 $
293,457
1,936
44,412
—
52,392
313,992 $
339,944 $
—
32,354
325,811
(1) Primarily comprised of tenant reimbursements.
(2) Variable lease payments contain termination revenue of $238, $15,371, and $857 for the years ending December 31, 2022, 2021 and 2020,
respectively.
Future fixed rental receipts for operating and sales-type leases, assuming no new or re-negotiated leases as of
December 31, 2022 were as follows:
Year ending December 31,
Operating
Sales-Type
2023
2024
2025
2026
2027
Thereafter
$
263,035 $
240,160
220,981
201,251
164,056
615,728
Total
Difference between undiscounted cash flow and present
value
$
1,705,211 $
Investment in a sales-type lease
$
5,228
5,263
5,473
5,692
5,920
739,162
766,738
705,412
61,326
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, as lessee, has ground leases, corporate leases for office space, and office equipment leases. All leases
were classified as operating leases as of December 31, 2022. The leases have remaining lease terms of up to 38 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. 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 ASC 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.
82
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
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.
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
Years Ended December 31,
2021
2022
9.4
4.0 %
9.7
4.0 %
The components of lease expense for the year ended December 31, 2022, 2021 and 2020 were as follows:
Income Statement Classification
Fixed
Variable
Total
2022:
Property operating
General and administrative
Total
2021:
Property operating
General and administrative
Total
2020:
Property operating
General and administrative
Total
$
$
$
$
$
$
3,543 $
1,520
5,063 $
3,645 $
1,380
5,025 $
3,969 $
1,348
5,317 $
— $
122
122 $
3 $
70
73 $
2 $
105
107 $
3,543
1,642
5,185
3,648
1,450
5,098
3,971
1,453
5,424
The Company recognized sublease income of $3,320, $3,425 and $3,756 in 2022, 2021 and 2020, respectively.
83
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
The following table shows the Company's maturity analysis of its operating lease liabilities as of December 31, 2022:
Year ending December 31,
2023
2024
2025
2026
2027
Thereafter
Total lease payments
Less: Imputed interest
Present value of lease liabilities
(9) Allowance for Credit Loss
Operating Leases
5,290
5,199
5,204
4,174
3,673
7,501
31,041
(5,923)
25,118
$
$
During 2022, the Company recognized a $93 credit loss allowance resulting from an investment in a sales-type lease.
There were no allowances for credit losses in 2021 or 2020.
As of December 31, 2022, the lessee in the sales-type lease remains current on their obligations to the Company and,
therefore, the investment is not on non-accrual status.
The following tables detail the allowance for credit loss as of December 31, 2022:
Investment in a sales-type lease
Amortized cost
Allowance
Net Investment
Allowance as a % of Amortized Cost
$
61,326 $
(93) $
61,233
0.15 %
As of December 31, 2022
(10) Mortgages and Notes Payable
The Company had the following mortgages and notes payable outstanding as of December 31, 2022 and 2021:
Mortgages and notes payable
Unamortized debt issuance costs
December 31, 2022
December 31, 2021
$
$
73,154 $
(1,051)
72,103 $
84,429
(1,337)
83,092
Interest rates, including imputed rates on mortgages and notes payable, ranged from 3.5% to 4.3% at December 31, 2022
and 2021, respectively, and all mortgages and notes payable mature between 2023 and 2031, as of December 31, 2022.
The weighted-average interest rate at December 31, 2022 and 2021 was approximately 4.0%, respectively.
The Company has an unsecured credit agreement with KeyBank National Association, as agent. The maturity dates and
interest rates as of December 31, 2022, are as follows:
$600,000 Revolving Credit Facility(1)
$300,000 Term Loan(2)
Maturity Date
July 2026
Interest Rate
SOFR + 0.85%
January 2025
Term SOFR + 1.00%
(1)
In July 2022, the Company amended its revolving credit facility and the 2025 term loan to provide for a new revolving credit facility and the
continuation of the 2025 term loan (the "2022 Credit Agreement"). The 2022 Credit Agreement, among other things: (i) extended the maturity
date of the revolving portion from February 2023 to July 2026, with two six-month extension options, subject to certain conditions, (ii) reduced
the applicable margin for the revolving portion of the credit facility by five basis points to a range from 0.725% to 1.400%, and allows for further
reductions upon the achievement of to-be-determined sustainability metrics, (iii) amended the debt covenants by reducing the capitalization rate
for determining asset value and (iv) transitioned the facility to SOFR. Simultaneously, the Company converted its interest rate swap agreements
to Term SOFR, which resulted in a new fixed interest rate of 2.722% on the Company's 2025 term loan. The Company recognized $119 of debt
84
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
satisfaction losses in connection with the transaction. At December 31, 2022, the Company had no borrowings outstanding and availability of
$600,000, subject to covenant compliance.
(2) The aggregate unamortized debt issuance costs for the term loan was $1,041 and $1,554 as of December 31, 2022 and 2021, respectively.
The Company was compliant with all applicable financial covenants contained in its corporate-level debt agreements at
December 31, 2022.
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,
2023
2024
2025
2026
2027
Thereafter
Unamortized debt issuance costs
$
$
Total
12,265
5,373
5,570
5,773
5,984
38,189
73,154
(1,051)
72,103
Included in the consolidated statements of operations, the Company recognized debt satisfaction charges, net, of $717 for
the year ended 2021 due to the satisfaction of mortgages and notes payable other than those disclosed elsewhere in these
financial statements. In addition, the Company capitalized $7,235, $2,974 and $1,745 of interest expense for the years
ended 2022, 2021 and 2020, respectively.
(11)
Senior Notes, Convertible Notes and Trust Preferred Securities
The Company had the following Senior Notes outstanding as of December 31, 2022 and 2021:
Issue Date
August 2021
August 2020
May 2014
Unamortized debt discount
Unamortized debt issuance cost
December 31, 2022 December 31, 2021
$
400,000 $
400,000
198,932
998,932
(3,228)
(6,409)
400,000
400,000
198,932
998,932
(3,655)
(7,346)
$
989,295 $
987,931
Interest
Rate
Maturity Date
Issue
Price
2.375 %
October 2031
99.758 %
2.70 % September 2030
99.233 %
4.40 %
June 2024
99.883 %
Each series of the senior notes is unsecured and requires payment of 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.
85
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
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 $10,199 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, 2022 was
6.115%. As of December 31, 2022 and 2021, there was $129,120 original principal amount of Trust Preferred Securities
outstanding and $1,426 and $1,525, respectively, of unamortized debt issuance costs.
Scheduled principal payments for these debt instruments for the next five years and thereafter are as follows:
Year ending December 31,
2023
2024
2025
2026
2027
Thereafter
Unamortized debt discounts
Unamortized debt issuance costs
(12) Derivatives and Hedging Activities
Total
—
198,932
—
—
—
929,120
1,128,052
(3,228)
(7,835)
1,116,989
$
$
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 2022 and 2021.
86
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
During July 2022, the Company transitioned its four interest rate swap agreements with its counterparties to a benchmark
rate of Term SOFR. The swaps were designated as cash flow hedges of the risk in variability attributable to changes in
the Term SOFR swap rates on its $300,000 SOFR-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 maturity of the term loan in January 2025.
During the next 12 months, the Company estimates that an additional $9,373 will be reclassified as a decrease to interest
expense if the swaps remain outstanding.
As of December 31, 2022, 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
Notional
$300,000
The table below presents the fair value of the Company's derivative financial instruments as well as their classification
on the consolidated balance sheets.
As of December 31, 2022
As of December 31, 2021
Derivatives designated as hedging instruments:
Balance Sheet Location
Fair Value
Balance Sheet Location
Fair Value
Interest Rate Swap Liability
Other Assets
$ 16,318
Other Liabilities
$ (6,258)
The table below present the effect of the Company's derivative financial instruments on the consolidated statements of
operations for 2022 and 2021:
Derivatives in Cash Flow
Hedging Relationships
Interest Rate Swap
The Company's share of non-consolidated
entity's interest rate cap
Total
$
$
Amount of Gain Recognized
in OCI on Derivative
December 31,
2022
2021
Amount of (Income) Loss
Reclassified from
Accumulated OCI into Income (1)
December 31,
2022
2021
22,578 $
6,755 $
(2) $
4,950
1,455
24,033 $
—
6,755 $
(84)
(86) $
—
4,950
(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 $45,417 and $46,708 for 2022 and 2021, 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, 2022,
the Company had not posted any collateral related to the agreements.
(13)
Concentration of Risk
The Company seeks to reduce its operating and leasing risks through the geographic diversification of its properties in
target markets, tenant industry diversification, avoidance of dependency on a single asset and the creditworthiness of its
tenants. For the years ended December 31, 2022, 2021 and 2020, 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.
87
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
(14)
Equity
Shareholders' 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, including through forward sales contracts.
During 2022, the Company issued 3,649,023 common shares previously sold on a forward basis in the first quarter of
2021 on the maturity date of the contracts and received $38,492 of net proceeds. 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.
During 2021, the Company sold 1,052,800 common shares under the ATM program for net proceeds of $13,532. The
Company did not sell common shares under the ATM program during the twelve months ended December 31, 2022.
During 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, 2022, common 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. The forward sale contracts were settled in December 2022, and the Company received $183,419 of
net proceeds.
Stock Based Compensation. In addition, during the years ended December 31, 2022, 2021 and 2020, the Company issued
930,602, 949,573 and 756,380 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 August 2022, the Company's Board of Trustees authorized the repurchase of up to an
additional 10,000,000 common shares under the Company's share repurchase program, which does not have an
expiration date. During 2022, 12,102,074 common shares were repurchased and retired for an average price of $10.78
per share. During 2021, there were no share repurchases. As of December 31, 2022, 6,874,241 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. There were no unsettled repurchases as of December 31, 2022.
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, 2022. 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, 2022, 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.
88
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
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:
Years ended December 31,
2022
2021
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
$
$
(6,258) $
24,033
(86)
17,689 $
(17,963)
6,755
4,950
(6,258)
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 canceled 1,598,906 OP units in connection with the disposition of the three properties.
During 2022, 2021 and 2020, 39,747, 185,270 and 327,453 common shares, respectively, were issued by the Company,
in connection with OP unit redemptions, for an aggregate value of $211, $958 and $1,614, respectively.
As of December 31, 2022, there were approximately 739,000 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.
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
2022
2021
2020
Net income attributable to LXP Industrial Trust shareholders
$
113,783 $
382,648 $
183,302
Transfers from noncontrolling interests:
Increase in additional paid-in-capital for reallocation of noncontrolling
interests
Increase in additional paid-in-capital for redemption of noncontrolling
OP units
—
211
435
958
—
1,614
Change from net income attributable to shareholders and transfers from
noncontrolling interests
$
113,994 $
384,041 $
184,916
89
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
(15)
Benefit Plans
Non-vested share activity for the years ended December 31, 2022 and 2021, is as follows:
Balance at December 31, 2020
Granted
Vested
Forfeited
Balance at December 31, 2021
Granted
Vested
Forfeited
Balance at December 31, 2022
Number of
Shares
Weighted-
Average Grant-
Date Fair
Value Per Share
2,704,729 $
899,328
(1,303,149)
(10,264)
2,290,644
860,665
(951,472)
(140,947)
2,058,890 $
7.27
7.85
7.82
10.09
7.17
10.97
7.00
9.21
8.70
During 2022 and 2021, 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
2022
2021
282,720
282,715
9.40 $
8.78 $
297,636
297,632
7.13
6.23
295,230
4,304 $
304,060
3,080
$
$
$
(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 2022, all of the 552,121 performance shares issued in 2019 vested. During 2021, all
of the 662,044 performance shares issued in 2018 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.
In addition, during 2022, 2021 and 2020, the Company issued 69,937, 50,245, and 47,130, respectively, of fully vested
common shares to non-management members of the Company's Board of Trustees with a fair value of $849, $587, and
$500, respectively.
As of December 31, 2022, of the remaining 2,058,890 non-vested shares, 533,827 are subject to time-based vesting and
1,525,063 are subject to performance-based vesting. At December 31, 2022, there are 4,094,587 awards available for
grant. The Company has $7,968 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 a certain officer in which vested common shares granted for the benefit of the
officers are deposited. The officer exerts 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, 2022 and 2021, there were 130,863 common
shares in the trust.
90
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
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 $480, $426 and $393 of contributions are
applicable to 2022, 2021 and 2020, respectively.
During 2022, 2021 and 2020, the Company recognized $6,636, $6,554 and $6,185, respectively, in expense relating to
scheduled vesting of common share grants.
(16)
Related Party Transactions
There were no related party transactions other than those disclosed elsewhere in the consolidated financial statements.
(17)
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, 2022, 2021 and 2020 is summarized as
follows:
Current:
Federal
State and local
Deferred federal(1)
Total
2022
2021
2020
$
$
— $
(1,120)
18
(1,102) $
(26) $
(1,267)
—
(1,293) $
(173)
(1,411)
—
(1,584)
(1)
deferred tax asset relates primarily to a net operating loss carryforward.
The net deferred tax asset is included in Other assets on the accompanying consolidated balance sheets at December 31, 2022. This net
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
Total
2022
2021
2020
$
$
18 $
—
(1,120)
(1,102) $
(35) $
—
(1,258)
(1,293) $
(195)
(77)
(1,312)
(1,584)
For the years ended December 31, 2022, 2021 and 2020, the “other” amount is comprised primarily of state franchise
taxes of $1,121, $1,267 and $1,314, respectively.
As of December 31, 2022, the Company had estimated net operating loss carry forward for income tax reporting
purposes of $84.
91
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
A summary of the average taxable nature of the Company's common dividends for each of the years in the three-year
period ended December 31, 2022, is as follows:
Total dividends per share
Ordinary income
Qualifying dividend
Capital gain
Return of capital
$
$
$
2022
0.48
81.26 %
— %
—
18.74 %
100.00 %
2021
0.43
65.89 %
0.1 %
—
34.01 %
100.00 %
2020
0.42
95.10 %
0.6 %
—
4.3 %
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 three-year period ended December 31, 2022, is as follows:
Total dividends per share
Ordinary income
Qualifying dividend
Capital gain
Return of capital
(18)
Commitments and Contingencies
$
$
2022
3.25
100.00 %
— %
—
—
100.00 %
$
2021
3.25
99.84 %
0.16 %
—
—
100.00 %
2020
3.25
99.38 %
0.62 %
—
—
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, 2022, the Company had six ongoing consolidated development projects and expects to incur
approximately $107,000 of costs in 2023, excluding noncontrolling interests' share, to substantially complete the
construction of such projects. As of December 31, 2022, the Company had interests in various industrial land parcels
held for development. The Company is unable to estimate the timing of any required funding for the 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.
92
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000, except share/unit data)
(19)
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
2022
2021
2020
$ 190,926 $ 178,795 $ 122,666
101
626
6,644
Cash, cash equivalents and restricted cash at beginning of period
$ 191,027 $ 179,421 $ 129,310
Cash and cash equivalents at end of period
Restricted cash at end of period
$ 54,390 $ 190,926 $ 178,795
116
101
626
Cash, cash equivalents and restricted cash at end of period
$ 54,506 $ 191,027 $ 179,421
In addition to disclosures discussed elsewhere, during 2022, 2021 and 2020, the Company paid $48,675, $44,234 and
$52,059, respectively, for interest and $1,265, $1,569 and $1,748, respectively, for income taxes.
During the year ended December 31, 2022, 2021 and 2020, the Company accrued additions for capital projects of
$42,962, $41,100 and $12,666, respectively.
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.
(20)
Subsequent Events
Subsequent to December 31, 2022, the Company borrowed $20,000, net, on its revolving credit facility.
93
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
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
Phoenix, AZ
Phoenix, AZ
Tolleson, AZ
Lakeland, FL
Ocala, FL
Orlando, FL
Plant City, FL
Tampa, FL
Adairsville, GA
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
Walton, KY
Walton, KY
Minneapolis, MN
Byhalia, MS
Byhalia, MS
Canton, MS
Olive Branch, MS
Olive Branch, MS
Olive Branch, MS
Olive Branch, MS
Shelby, NC
Statesville, NC
$
— $
10,733 $
69,517 $
80,250 $
36,115
50,072
16,222
52,840
77,140
50,281
16,013
20,986
49,991
10,869
45,983
11,109
23,950
51,518
42,242
33,279
44,030
52,790
30,956
30,346
34,357
25,812
7,458
22,830
34,588
41,310
34,301
40,949
45,817
32,562
2,647
5,921
15,814
29,996
14,486
39,334
13,956
11,825
17,011
12,052
80,054
13,424
21,457
41,043
1,922
35,795
31,429
71,289
48,907
38,702
40,446
15,630
18,862
21,994
41,362
62,042
17,836
64,572
85,167
55,647
19,324
22,402
54,104
11,899
48,593
13,269
25,415
54,769
44,739
35,285
51,239
58,231
34,209
32,036
38,132
28,372
8,528
25,366
39,181
44,959
36,089
44,381
49,498
33,866
3,018
6,430
16,476
32,096
15,227
41,325
14,651
12,987
18,965
13,260
88,389
13,424
23,467
45,240
3,808
36,801
33,180
76,366
51,407
40,660
43,092
16,481
20,283
22,885
—
40,935
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
5,247
11,970
1,614
11,732
8,027
5,366
3,311
1,416
4,113
1,030
2,610
2,160
1,465
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
—
2,010
4,197
1,886
1,006
1,751
5,077
2,500
1,958
2,646
851
1,421
891
94
2021
2021
2014
7,001
6,738
6,822
1,975
2,486
3,326
1,575
2,295
1,676
5,469
4,903
3,161
8,065
1,040
10,517
1,901
1,460
2,083
11,870
5,286
3,664
3,414
2,861
830
3,528
8,606
8,388
4,181
5,325
5,809
8,052
1,171
2,391
4,203
7,230
785
2,195
755
992
2,917
1,014
3,695
3,515
790
1,504
618
Nov-20
Nov-18
Nov-19
Jan-20
Nov-21
Dec-21
Apr-22
Oct-19
Jan-21
Jun-20
Dec-06
Dec-21
Jul-88
Dec-21
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
Feb-22
Feb-22
Sep-12
10,679
May-11
2011
9,588
Sep-17
26,763
Mar-15
9,176
8,500
6,238
2,360
7,978
7,831
Apr-18
Apr-18
May-19
May-19
Jun-11
Dec-06
2011
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
Industrial
Industrial
Industrial
OTHER PROPERTIES
Other
Other
Other
Other
Erwin, NY
Long Island City, NY
—
25,046
Chillicothe, OH
Columbus, OH
Glenwillow, OH
Hebron, OH
Hebron, OH
Lockbourne, OH
Monroe, OH
Monroe, OH
Monroe, OH
Monroe, OH
Streetsboro, OH
Bristol, PA
Duncan, SC
Duncan, SC
Duncan, SC
Duncan, SC
Duncan, SC
Duncan, SC
Duncan, SC
Greer, SC
Greer, 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
Palo Alto, CA
Owensboro, KY
Baltimore, MD
Fort Mill, SC
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
7,173
—
—
—
14,162
42,759
11,674
27,530
26,758
7,599
12,368
19,478
17,586
14,664
63,825
92,372
27,723
18,371
27,328
24,239
19,348
29,527
15,678
14,509
29,445
23,722
85,364
34,505
64,067
25,205
17,006
21,204
31,614
50,588
11,038
21,387
95,733
19,462
25,750
34,959
21,151
73,004
9,779
28,884
20,450
76,136
41,127
26,567
19,337
10,881
21,867
37,955
61,611
34,524
27,240
16,196
29,377
3,258
4,605
28,762
12,514
42,759
10,939
25,279
24,530
5,796
10,316
16,678
16,477
14,120
60,702
88,422
25,282
15,863
24,509
23,070
18,328
27,817
14,272
13,252
27,830
22,393
78,405
32,129
61,583
23,758
15,820
17,357
29,743
49,134
10,865
20,664
93,940
16,234
23,330
28,470
17,985
57,949
8,472
25,037
5,895
71,636
37,189
22,295
17,135
9,089
17,810
36,644
53,067
32,536
24,422
12,373
16,977
2,439
—
26,964
1,648
—
735
2,251
2,228
1,803
2,052
2,800
1,109
544
3,123
3,950
2,441
2,508
2,819
1,169
1,020
1,710
1,406
1,257
1,615
1,329
6,959
2,376
2,484
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
4,272
2,202
1,792
4,057
1,311
8,544
1,988
2,818
3,823
12,400
819
4,605
1,798
95
Accumulated
Depreciation
and
Amortization(1)
Date
Acquired
Date
Constructed
4,956
Sep-12
27,976
Mar-13
2013
2021
2022
4,719
1,476
10,168
2,797
4,716
1,456
1,137
1,912
9,031
12,667
12,742
9,909
1,588
1,469
1,136
1,782
2,014
1,877
4,515
1,417
9,992
2,062
—
5,548
1,394
5,858
7,354
Oct-11
Aug-21
Dec-06
Dec-97
Dec-01
Mar-21
Dec-21
Sep-19
Sep-19
Sep-19
Jun-07
Mar-98
Jul-21
Jul-21
Jul-21
Jul-21
Oct-19
Oct-19
Apr-19
Jun-21
Dec-19
Jun-21
Jul-21
Aug-18
Dec-20
May-07
May-17
11,038
Sep-17
2,941
May-14
15,887
21,646
4,278
3,613
2,070
4,289
Apr-05
Sep-17
Sep-18
Apr-19
May-21
Jun-17
17,586
Mar-13
974
May-20
2,195
5,895
8,676
3,466
1,604
1,843
Dec-20
Apr-12
Feb-20
Dec-20
May-21
Jun-20
648
May-21
3,526
8,669
10,757
6,959
2,497
5,530
28,131
1,401
—
Aug-18
Jun-17
Dec-18
Dec-17
Sep-20
Jun-07
Dec-06
Dec-06
Dec-06
21,574
Aug-04
LXP INDUSTRIAL TRUST AND SUBSIDIARIES
Real Estate and Accumulated Depreciation and Amortization
Schedule III ($000) - continued
Description
Other
Construction in progress
Deferred loan costs, net
Location
Encumbrances
Land and Land
Estates
Buildings and
Improvements
Total
Accumulated
Depreciation
and
Amortization(1)
Date
Acquired
Date
Constructed
Fort Mill, SC
—
—
(1,051)
3,601
16,306
19,907
8,471
Dec-02
—
—
—
—
9,221
—
—
—
(1) Depreciation and amortization expense is calculated on a straight-line basis over the following lives:
$
72,103 $
346,816 $
3,335,029 $
3,691,066 $
627,027
Building and improvements
Up to 40 years
Land estates
Tenant improvements
Up to 51 years
Shorter of useful life or term
of related lease
96
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, 2022 for federal income tax purposes was approximately $4.4 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
Balance at end of year
2022
2021
2020
$
3,583,978 $
3,514,564 $
3,320,574
229,962
860,311
580,861
(161,393)
(653,247)
(354,218)
38,519
(137,650)
(32,653)
$
3,691,066 $
3,583,978 $
3,514,564
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
$
504,699 $
684,468 $
144,163
138,879
675,596
127,504
(43,521)
(244,751)
(102,261)
21,686
(73,897)
(16,371)
$
627,027 $
504,699 $
684,468
97
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, 2022.
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, 2022. 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, 2022. 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, 2022.
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 the quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
Item 9B. Other Information
Not applicable.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
98
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 2023 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.
99
Item 15. Exhibits, Financial Statement Schedules
PART IV.
(a)(1) Financial Statements
(2) Financial Statement Schedules
(3) Exhibits
Exhibit No.
Description
Page
58
95
101
3.1
3.2
3.3
3.4
3.5
3.6
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
10.3
— 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)(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)
Articles of Amendment to the Amended and Restated Declaration of Trust dated as of May 26, 2022
(filed as Exhibit 3.1 to the Company's Current Report on Form 8-K filed May 27, 2022 (the "05/27/22 8-
K")(1)
— Second Amended and Restated By-laws of the Company (filed as Exhibit 3.6 to the Company's
Quarterly Report on from 10-Q filed November 3, 2022)(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, filed on February 26, 2014)(1)
— Specimen of Common Shares Certificate of the Company (filed as Exhibit 4.1 to the Company's Annual
Report on Form 10-K for year ended December 31, 2021)(1)
— 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 for the year ended December 31, 2018, filed on March 13, 2019)(1)
— LXP Industrial Trust Amended 2022 Equity-Based Award Plan (filed as Exhibit 10.1 to the 05/27/2022
8-K)(1, 4)
— 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)
100
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
— 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, filed on March 1,
2017)(1, 4)
Form of LXP Industrial Trust Restricted Share Agreement (Filed as Exhibit 10.1 to the Company's
Current Report on Form 8-K filed on January 17, 2023 (the "01/17/23 8-K"))(1, 4))
Form of LXP Industrial Trust Nonvested Share Agreement (Filed as Exhibit 10.2 to the 1/17/2023 8-
K))(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
(filed as Exhibit 10.7 to the Company's Annual Report on Form 10-K for the year ended December 31,
2021, filed on February 24, 2022) (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)
— Second Amended and Restated Credit Agreement, dated as of July 5, 2022, 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 July 11, 2022)(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)
10.15
— Amendment to Equity Sales Agreement, dated as of February 19, 2021, between the Company and the
Sales Agents and Bank of America, N.A. and Mizuho Markets Americas LLC (filed as of Exhibit 1.2 to
the Company's Current Report on Form 8-K filed on February 22, 2021)(1)
10.16
— 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)
10.17
10.18
10.19
10.20
10.21
21
23
24
31.1
— 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 LXPDK II GP
LLC, as a general partner (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed on
January 3, 2022)(1)
— Amendment
to Master Confirmation and Supplemental Confirmation of Registered Forward
Transaction, dated as of May 6, 2022, between the Company and JPMorgan Chase Bank, National
Association (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 12,
2022)(1)
— Amendment
to Master Confirmation and Supplemental Confirmation of Registered Forward
Transaction, dated as of May 6, 2022, between the Trust and Wells Fargo Bank, National Association
(filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on May 12, 2022)(1)
— Amendment
to Master Confirmation and Supplemental Confirmation of Registered Forward
Transaction, dated as of June 14, 2022, between the Company and Wells Fargo Bank, National
Association (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 21,
2022)(1)
— Amendment
to Master Confirmation and Supplemental Confirmation of Registered Forward
Transaction, dated as of June 16, 2022, between the Company and JPMorgan Chase Bank, National
Association (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on June 21,
2022)(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)
101
31.2
32.1
32.2
— 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)
(4)
(5)
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.
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, 2022 and 2021; (ii) the Consolidated Statements of Operations for the years ended
December 31, 2022, 2021 and 2020; (iii) the Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2022,
2021 and 2020; (iv) the Consolidated Statements of Changes in Equity for the years ended December 31, 2022, 2021 and 2020; (v) the Consolidated
Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020; and (vi) Notes to Consolidated Financial Statements, detailed
tagged.
102
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 16, 2023
LXP Industrial Trust
By:
/s/ T. Wilson Eglin
T. Wilson Eglin
Chief Executive Officer
103
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/ Arun Gupta
Arun Gupta
/s/ Jamie Handwerker
Jamie Handwerker
/s/ Derrick L. Johnson
Derrick L. Johnson
/s/ Claire A. Koeneman
Claire A. Koeneman
/s/ Nancy Elizabeth Noe
Nancy Elizabeth Noe
/s/ Howard Roth
Howard Roth
Each dated: February 16, 2023
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
Trustee of the Trust
Trustee of the Trust
104
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 16, 2023
/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 16, 2023
/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,
2022 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 16, 2023
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,
2022 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 16, 2023
Total Return Performance
LXP Industrial Trust
S&P 500 Index
Russell 2000 Index
MSCI U.S. REIT Index
250
200
150
100
l
e
u
a
V
x
e
d
n
I
50
12/31/17
12/31/18
12/31/19
12/31/20
12/31/21
12/31/22
Period Ending
12/31/17
100.00
100.00
100.00
100.00
12/31/18
92.85
95.62
88.99
95.43
12/31/19
125.29
125.72
111.70
120.09
12/31/20
130.54
148.85
134.00
110.99
12/31/21
198.73
191.58
153.85
158.79
12/31/22
133.22
156.88
122.41
119.87
Index
LXP Industrial Trust
S&P 500 Index
Russell 2000 Index
MSCI U.S. REIT Index
Source: S&P Global Market Intelligence
© 2022
Our annual letter to shareholders is available on the investors section of our web site at www.lxp.com. Information contained on our
website, including the annual letter to shareholders, 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, 2022, which is included herein. In addition, in 2022, we submitted an unqualified certification
required by section 303A.12(a) of the Listed Company Manual of the New York Stock Exchange.