UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



x☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~September 30, 2017.~~March 31, 2023.



o☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _________________ to ________________

Commission File Number 1-12386

~~1-12386 (Lexington Realty Trust)~~LXP INDUSTRIAL TRUST

~~33-04215 (Lepercq Corporate Income Fund L.P.)~~

~~LEXINGTON REALTY TRUST~~

~~LEPERCQ CORPORATE INCOME FUND L.P.~~

(Exact name of registrant as specified in its charter)



Maryland ~~(Lexington Realty Trust)~~		13-3717318 ~~(Lexington Realty Trust)~~
~~Delaware (Lepercq Corporate Income Fund L.P.)~~		~~13-3779859 (Lepercq Corporate Income Fund L.P.)~~
(State or other jurisdiction of incorporation of organization)	(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)~~

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	Trading Symbol(s)	Name of each exchange on which registered
Shares of beneficial interest, par value $0.0001 per share, classified as Common Stock	LXP	New York Stock Exchange
6.50% Series C Cumulative Convertible Preferred Stock, par value $0.0001 per share	LXPPRC	New York Stock Exchange

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 ☐



~~Lexington Realty Trust~~	~~Yes~~ x No ¨
~~Lepercq Corporate Income Fund L.P.~~	~~Yes~~ x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate ~~Web site,~~website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).



~~Lexington Realty Trust~~	~~Yes~~ x No ¨
~~Lepercq Corporate Income Fund L.P.~~	~~Yes~~ x No ¨

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer”~~filer,” “smaller reporting company,” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act.

~~Lexington Realty Trust:~~

Large accelerated filerx

☒

Accelerated filer¨

☐

Non-accelerated filer¨

☐

Smaller reporting company¨

☐

Emerging growth

company

~~(Do not check if a smaller reporting company)~~

~~company~~ ¨

~~Lepercq Corporate Income Fund L.P.:~~

~~Large accelerated filer~~ ¨

~~Accelerated filer~~ ¨

~~Non-accelerated filer~~ x

~~Smaller reporting company~~ ¨

~~Emerging growth~~

~~(Do not check if a smaller reporting company)~~

~~company~~ ¨

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



~~Lexington Realty Trust~~	~~Yes~~ ¨ No x
~~Lepercq Corporate Income Fund L.P.~~	~~Yes~~ ¨ No x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒



~~Lexington Realty Trust~~	~~Yes~~ ¨ No x
~~Lepercq Corporate Income Fund L.P.~~	~~Yes~~ ¨ No x

Indicate the number of shares outstanding of each of ~~Lexington Realty Trust's~~the registrant's classes of common stock, as of the latest practicable date: ~~240,652,170~~292,580,615 common shares of beneficial interest, par value $0.0001 per share, as of ~~November 3, 2017.~~

May 1, 2023.

~~EXPLANATORY NOTE~~

This report combines the Quarterly Reports on Form 10-Q for the period ended September 30, 2017, which we refer to as this Quarterly Report, of (1) Lexington Realty Trust, which we refer to as the Company or the Trust, and subsidiaries and (2) Lepercq Corporate Income Fund L.P., which we refer to as the Partnership or LCIF, and subsidiaries. Unless stated otherwise or the context otherwise requires, (1) “we,” “our,” and “us” refer collectively to the Company and its consolidated subsidiaries, including LCIF and its consolidated subsidiaries, and (2) LCIF or the Partnership refers to LCIF and its consolidated subsidiaries. All of the Company's and LCIF'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, which are separate and distinct legal entities, but in some instances are consolidated for financial statement purposes and/or disregarded for income tax purposes.

The Company is the sole equity owner of (1) Lex GP-1 Trust, or Lex GP, a Delaware statutory trust, and (2) Lex LP-1 Trust, or Lex LP, a Delaware statutory trust. The Company, through Lex GP and Lex LP, holds, as of September 30, 2017, approximately 96% of LCIF's outstanding units of limited partner interest, which we refer to as OP units. The remaining OP units are beneficially owned by E. Robert Roskind, Chairman of the Trust, and certain non-affiliated investors. As the sole equity owner of LCIF’s general partner, the Company has the ability to control all of LCIF’s day-to-day operations subject to the terms of LCIF’s partnership agreement.

OP units not owned by LXP are accounted for as partners’ capital in LCIF’s unaudited condensed consolidated financial statements and as noncontrolling interests in the Trust’s unaudited condensed consolidated financial statements.

We believe it is important to understand the differences between the Trust and LCIF in the context of how the Trust and LCIF operate as an interrelated, consolidated company. The Trust’s and LCIF’s businesses are substantially the same, except that LCIF is dependent on the Trust for management of LCIF’s operations and future investments as LCIF does not have any employees, executive officers or a board of directors.

The Trust also invests in assets and conducts business directly and through other subsidiaries. The Trust allocates investments to itself and its other subsidiaries or LCIF as it deems appropriate and in accordance with certain obligations under LCIF’s partnership agreement with respect to allocations of non-recourse liabilities. The Trust and LCIF are co-borrowers under the Trust’s unsecured revolving credit facility and unsecured term loans. LCIF is a guarantor of the Trust’s publicly-traded debt securities.

~~We believe combining the quarterly reports on Form 10-Q of the Trust and LCIF into this single report results in the following benefits:~~

~~combined reports better reflect how management and the analyst community view the business as a single operating unit;~~

~~combined reports enhance investors’ understanding of the Trust and LCIF by enabling them to view the business as a whole and in the same manner as management;~~

~~combined reports are more efficient for the Trust and LCIF and result in savings in time, effort and expense; and~~

~~combined reports are more efficient for investors by reducing duplicative disclosure and providing a single document for their review.~~

To help investors understand the significant differences between the Trust and LCIF, this Quarterly Report separately presents the following for each of the Trust and LCIF: (1) the unaudited condensed consolidated financial statements and the notes thereto, (2) Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, (3) Part I, Item 4. Controls and Procedures, and (4) Exhibit 31 and Exhibit 32 certifications.

TABLE OF CONTENTS



PART I. — FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)
~~Lexington Realty Trust~~
Condensed Consolidated Balance Sheets		43
Condensed Consolidated Statements of Operations			54
Condensed Consolidated Statements of Comprehensive Income (Loss)			65
Condensed Consolidated Statements of Changes in Equity			76
Condensed Consolidated Statements of Cash Flows			87
Notes to Condensed Consolidated Financial Statements			98
~~Lepercq Corporate Income Fund L.P.~~
~~Condensed Consolidated Balance Sheets~~	25
~~Condensed Consolidated Statements of Operations~~	26
~~Condensed Consolidated Statements of Changes in Partners' Capital~~	27
~~Condensed Consolidated Statements of Cash Flows~~	28
~~Notes to Condensed Consolidated Financial Statements~~	29
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		3726
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk			4936
ITEM 4. Controls and Procedures			4936
PART II — OTHER INFORMATION
ITEM 1. Legal Proceedings			5237
ITEM 1A. Risk Factors			5237
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds			5237
ITEM 3. Defaults Upon Senior Securities			5337
ITEM 4. Mine Safety Disclosures			5337
ITEM 5. Other Information			5337
ITEM 6. Exhibits			5438
SIGNATURES			5640

WHERE YOU CAN FIND MORE INFORMATION:

We file and furnish annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission, which we refer to as the SEC. You may read and copy any materials that we file or furnish with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. We file and furnish information electronically with the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file or furnish electronically with the SEC. The address of the SEC's Internet site is http://www.sec.gov. We also maintain a web site at http://www.lxp.com through which you can obtain copies of documents that we file or furnish with the SEC. The contents of that web site are not incorporated by reference in or otherwise a part of this Quarterly Report on Form 10-Q or any other document that we file or furnish with the SEC.

Table of Contents

PART I. - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

~~LEXINGTON REALTY~~LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited and in thousands, except share and per share data)


	March 31, 2023		December 31, 2022

Assets:
Real estate, at cost	$	3,732,558	$	3,691,066
Real estate - intangible assets	328,607		328,607
Land held for development	84,507		84,412
Investments in real estate under construction	349,827		361,924
Real estate, gross	4,495,499		4,466,009
Less: accumulated depreciation and amortization	845,338		800,470
Real estate, net	3,650,161		3,665,539
Assets held for sale	44,286		66,434
Right-of-use assets, net	22,967		23,986
Cash and cash equivalents	42,923		54,390
Restricted cash	120		116
Investments in non-consolidated entities	52,571		58,206
Deferred expenses, net	25,485		25,207
Investment in a sales-type lease, net (allowance for credit loss $172 in 2023 and $93 in 2022)	61,680		61,233

Rent receivable – current	4,141		3,030
Rent receivable – deferred	74,394		71,392
Other assets	26,353		24,314
Total assets	$	4,005,081	$	4,053,847

Liabilities and Equity:
Liabilities:
Mortgages and notes payable, net	$	69,288	$	72,103

Term loan payable, net	299,084		298,959
Senior notes payable, net	989,636		989,295
Trust preferred securities, net	127,719		127,694
Dividends payable	38,164		38,416
Liabilities held for sale	1,889		1,150
Operating lease liabilities	23,985		25,118
Accounts payable and other liabilities	57,170		74,261
Accrued interest payable	10,431		9,181
Deferred revenue - including below-market leases, net	10,959		11,452
Prepaid rent	15,994		15,215
Total liabilities	1,644,319		1,662,844

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; 1,935,400 shares issued and outstanding	94,016		94,016
Common shares, par value $0.0001 per share; authorized 600,000,000 shares, 292,557,721 and 291,719,310 shares issued and outstanding in 2023 and 2022, respectively	29		29
Additional paid-in-capital	3,320,185		3,320,087
Accumulated distributions in excess of net income	(1,105,875)		(1,079,087)
Accumulated other comprehensive income	14,169		17,689
Total shareholders’ equity	2,322,524		2,352,734
Noncontrolling interests	38,238		38,269
Total equity	2,360,762		2,391,003
Total liabilities and equity	$	4,005,081	$	4,053,847

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Content

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited and in thousands, except share and per share data)

September 30, 2017 December 31, 2016
Assets:
Real estate, at cost $ 3,837,705
$ 3,533,172
Real estate - intangible assets 595,904
597,294
Investments in real estate under construction —
106,652
4,433,609
4,237,118
Less: accumulated depreciation and amortization 1,200,814
1,208,792
Real estate, net 3,232,795
3,028,326
Assets held for sale 8,638
23,808
Cash and cash equivalents 140,545
86,637
Restricted cash 34,946
31,142
Investment in and advances to non-consolidated entities 60,683
67,125
Deferred expenses, net 32,426
33,360
Loans receivable, net —
94,210
Rent receivable – current 6,388
7,516
Rent receivable – deferred 46,611
31,455
Other assets 32,124
37,888
Total assets $ 3,595,156
$ 3,441,467

Liabilities and Equity:

Liabilities:

Mortgages and notes payable, net $ 670,345
$ 738,047
Revolving credit facility borrowings 200,000
—
Term loans payable, net 596,369
501,093
Senior notes payable, net 494,989
494,362
Trust preferred securities, net 127,171
127,096
Dividends payable 48,494
47,264
Liabilities held for sale 442
191
Accounts payable and other liabilities 36,728
59,601
Accrued interest payable 11,683
6,704
Deferred revenue - including below market leases, net 34,069
39,895
Prepaid rent 15,371
14,723
Total liabilities 2,235,661
2,028,976

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; 1,935,400 shares issued and outstanding 94,016
94,016
Common shares, par value $0.0001 per share; authorized 400,000,000 shares, 240,643,775 and 238,037,177 shares issued and outstanding in 2017 and 2016, respectively 24
24
Additional paid-in-capital 2,824,379
2,800,736
Accumulated distributions in excess of net income (1,576,459 ) (1,500,966 )
Accumulated other comprehensive income (loss) 510
(1,033 )
Total shareholders’ equity 1,342,470
1,392,777
Noncontrolling interests 17,025
19,714
Total equity 1,359,495
1,412,491
Total liabilities and equity $ 3,595,156
$ 3,441,467


	Three Months Ended March 31,
	2023		2022
Gross revenues:
Rental revenue	$	83,417	$	78,536
Other revenue	1,658		1,742
Total gross revenues	85,075		80,278
Expense applicable to revenues:
Depreciation and amortization	(45,741)		(44,506)
Property operating	(15,243)		(14,616)
General and administrative	(9,242)		(10,737)

Non-operating income	194		32
Interest and amortization expense	(11,393)		(10,682)

Impairment charges	(3,523)		—
Change in allowance for credit loss	(79)		—
Gains on sales of properties	7,879		255

Income before provision for income taxes and equity in earnings of non-consolidated entities	7,927		24
Provision for income taxes	(216)		(417)
Equity in earnings of non-consolidated entities	3,604		11,301








Net income	11,315		10,908
Less net income attributable to noncontrolling interests	(149)		(286)
Net income attributable to LXP Industrial Trust shareholders	11,166		10,622
Dividends attributable to preferred shares – Series C	(1,572)		(1,572)
Allocation to participating securities	(72)		(61)
Net income attributable to common shareholders	$	9,522	$	8,989

Net income attributable to common shareholders - per common share basic	$	0.03	$	0.03


Weighted-average common shares outstanding – basic	290,080,508		283,640,465

Net income attributable to common shareholders - per common share diluted	$	0.03	$	0.03


Weighted-average common shares outstanding – diluted	291,040,466		289,067,778

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of ~~Contents~~Content

~~LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS~~

~~(Unaudited and in thousands, except share and per share data)~~

Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Gross revenues:
Rental $ 89,704
$ 98,602
$ 265,923
$ 310,804
Tenant reimbursements 7,985
7,379
23,549
23,366
Total gross revenues 97,689
105,981
289,472
334,170
Expense applicable to revenues:

Depreciation and amortization (43,495 ) (40,288 ) (128,706 ) (124,687 )
Property operating (11,694 ) (11,472 ) (36,784 ) (34,843 )
General and administrative (7,963 ) (7,510 ) (25,561 ) (23,032 )
Litigation reserve (2,050 ) —
(2,050 ) —
Non-operating income 1,005
3,080
4,997
9,500
Interest and amortization expense (18,887 ) (23,001 ) (57,828 ) (68,573 )
Debt satisfaction gains (charges), net 2,424
2,538
2,378
(818 )
Impairment charges and loan loss (21,986 ) (72,890 ) (43,577 ) (75,904 )
Gains on sales of properties 10,645
16,072
55,078
58,413
Income (loss) before provision for income taxes and equity in earnings (losses) of non-consolidated entities 5,688
(27,490 ) 57,419
74,226
Provision for income taxes (375 ) (462 ) (1,174 ) (1,099 )
Equity in earnings (losses) of non-consolidated entities 283
340
(1,064 ) 6,394
Net income (loss) 5,596
(27,612 ) 55,181
79,521
Less net (income) loss attributable to noncontrolling interests (55 ) 2,260
(448 ) 102
Net income (loss) attributable to Lexington Realty Trust shareholders 5,541
(25,352 ) 54,733
79,623
Dividends attributable to preferred shares – Series C (1,573 ) (1,573 ) (4,718 ) (4,718 )
Allocation to participating securities (52 ) (50 ) (183 ) (187 )
Net income (loss) attributable to common shareholders $ 3,916
$ (26,975 ) $ 49,832
$ 74,718

Net income (loss) attributable to common shareholders - per common share basic $ 0.02
$ (0.12 ) $ 0.21
$ 0.32
Weighted-average common shares outstanding – basic 237,989,098
234,207,396
237,632,572
233,151,600

Net income (loss) attributable to common shareholders - per common share diluted $ 0.02
$ (0.12 ) $ 0.21
$ 0.31
Weighted-average common shares outstanding – diluted 241,702,715
234,207,396
241,442,227
237,215,883

~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.~~

~~Table of Contents~~

~~LEXINGTON REALTY~~LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited and in thousands)

Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Net income (loss) $ 5,596
$ (27,612 ) $ 55,181
$ 79,521
Other comprehensive income (loss):

Change in unrealized gain (loss) on interest rate swaps, net 67
2,637
1,543
(2,944 )
Other comprehensive income (loss) 67
2,637
1,543
(2,944 )
Comprehensive income (loss) 5,663
(24,975 ) 56,724
76,577
Comprehensive (income) loss attributable to noncontrolling interests (55 ) 2,260
(448 ) 102
Comprehensive income (loss) attributable to Lexington Realty Trust shareholders $ 5,608
$ (22,715 ) $ 56,276
$ 76,679


	Three Months Ended March 31,
	2023		2022
Net income	$	11,315	$	10,908
Other comprehensive income (loss):

Change in unrealized income (loss) on interest rate swaps, net	(3,190)		12,266
Company's share of other comprehensive loss of non-consolidated entities	(330)		—
Other comprehensive income (loss)	(3,520)		12,266
Comprehensive income	7,795		23,174
Comprehensive income attributable to noncontrolling interests	(149)		(286)
Comprehensive income attributable to LXP Industrial Trust shareholders	$	7,646	$	22,888

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of ~~Contents~~Content

~~LEXINGTON REALTY~~LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited and in ~~thousands)~~thousands, except share and per share data)


			LXP Industrial Trust Shareholders
Three Months Ended March 31, 2023	Total		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
Balance December 31, 2022	$	2,391,003	1,935,400	$	94,016	291,719,310	$	29	$	3,320,087	$	(1,079,087)	$	17,689	$	38,269
Issuance of partnership interest in real estate	106		—	—		—	—		—		—		—		106
Redemption of noncontrolling OP units for common shares	—		—	—		3,572	—		18		—		—		(18)
Issuance of common shares and deferred compensation amortization, net	2,156		—	—		1,216,166	—		2,156		—		—		—

Repurchase of common shares to settle tax obligations	(2,076)		—	—		(204,780)	—		(2,076)		—		—		—
Forfeiture of employee common shares	—		—	—		(176,547)	—		—		—		—		—
Dividends/distributions ($0.125 per common share)	(38,222)		—	—		—	—		—		(37,954)		—		(268)
Net income	11,315		—	—		—	—		—		11,166		—		149
Other comprehensive loss	(3,190)		—	—		—	—		—		—		(3,190)		—

Company's share of other comprehensive loss of non-consolidated entities	(330)		—	—		—	—		—		—		(330)		—
Balance March 31, 2023	$	2,360,762	1,935,400	$	94,016	292,557,721	$	29	$	3,320,185	$	(1,105,875)	$	14,169	$	38,238


Three Months Ended March 31, 2022

Balance December 31, 2021	$	2,323,228	1,935,400	$	94,016	283,752,726	$	28	$	3,252,506	$	(1,049,434)	$	(6,258)	$	32,370
Issuance of partnership interest in real estate	4,109		—	—		—	—		—		—		—		4,109
Redemption of noncontrolling OP units for common shares	—		—	—		6,708	—		36		—		—		(36)
Purchase of noncontrolling interest in consolidated joint venture	(27,958)		—	—		—	—		(25,058)		—		—		(2,900)
Issuance of common shares and deferred compensation amortization, net	40,572		—	—		4,523,173	1		40,571		—		—		—


Repurchase of common shares to settle tax obligations	(6,285)		—	—		(410,958)	—		(6,285)		—		—		—

Dividends/distributions ($0.12 per common share)	(36,358)		—	—		—	—		—		(36,186)		—		(172)
Net income	10,908		—	—		—	—		—		10,622		—		286
Other comprehensive income	12,266		—	—		—	—		—		—		12,266		—

Balance March 31, 2022	$	2,320,482	1,935,400	$	94,016	287,871,649	$	29	$	3,261,770	$	(1,074,998)	$	6,008	$	33,657

Nine Months ended September 30, 2017 Lexington Realty Trust Shareholders
Total Preferred Shares Common Shares Additional Paid-in-Capital Accumulated Distributions in Excess of Net Income Accumulated Other Comprehensive Income (Loss) Noncontrolling Interests
Balance December 31, 2016 $ 1,412,491
$ 94,016
$ 24
$ 2,800,736
$ (1,500,966 ) $ (1,033 ) $ 19,714
Redemption of noncontrolling OP units for common shares —
—
—
574
—
—
(574 )
Issuance of common shares and deferred compensation amortization, net 23,069
—
—
23,069
—
—
—
Dividends/distributions (132,789 ) —
—
—
(130,226 ) —
(2,563 )
Net income 55,181
—
—
—
54,733
—
448
Other comprehensive income 1,543
—
—
—
—
1,543
—
Balance September 30, 2017 $ 1,359,495
$ 94,016
$ 24
$ 2,824,379
$ (1,576,459 ) $ 510
$ 17,025

Table of Content

Nine Months ended September 30, 2016 Lexington Realty Trust Shareholders
Total Preferred Shares Common Shares Additional Paid-in-Capital Accumulated Distributions in Excess of Net Income Accumulated Other Comprehensive Income (Loss) Noncontrolling Interests
Balance December 31, 2015 $ 1,462,531
$ 94,016
$ 23
$ 2,776,837
$ (1,428,908 ) $ (1,939 ) $ 22,502
Issuance of common shares upon conversion of convertible notes 12,027
—
—
12,027
—
—
—
Repurchase of common shares (8,973 ) —
—
(8,973 ) —
—
—
Redemption of noncontrolling OP units for common shares —
—
—
31
—
—
(31 )
Issuance of common shares and deferred compensation amortization, net 9,045
—
1
9,044
—
—
—
Dividends/distributions (128,319 ) —
—
—
(125,791 ) —
(2,528 )
Net income (loss) 79,521
—
—
—
79,623
—
(102 )
Other comprehensive loss (2,944 ) —
—
—
—
(2,944 ) —
Balance September 30, 2016 $ 1,422,888
$ 94,016
$ 24
$ 2,788,966
$ (1,475,076 ) $ (4,883 ) $ 19,841
LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and in thousands)


	Three Months Ended March 31,
	2023		2022
Net cash provided by operating activities:	$	37,546	$	42,090
Cash flows from investing activities:
Acquisition of real estate, including intangible assets	—		(72,148)
Investment in real estate under construction	(34,256)		(75,368)
Capital expenditures	(3,703)		(5,991)
Net proceeds from sale of properties	27,338		255
Principal payments on loans receivable	1,462		7
Investments in non-consolidated entities	(451)		(121)
Distributions from non-consolidated entities in excess of accumulated earnings	4,736		1,537
Deferred leasing costs	(410)		(536)
Change in real estate deposits, net	(245)		(167)
Net cash used in investing activities	(5,529)		(152,532)
Cash flows from financing activities:
Dividends to common and preferred shareholders	(38,207)		(36,827)

Principal amortization payments	(2,887)		(2,779)

Revolving credit facility borrowings	25,000		—
Revolving credit facility payments	(25,000)		—




Cash contributions from noncontrolling interests	106		4,109
Cash distributions to noncontrolling interests	(268)		(172)
Repurchases to settle tax obligations	(2,076)		(6,285)
Purchase of noncontrolling interest	—		(27,958)





Issuance of common shares, net	(148)		38,495


Net cash used in financing activities	(43,480)		(31,417)
Change in cash, cash equivalents and restricted cash	(11,463)		(141,859)

Cash, cash equivalents and restricted cash, at beginning of period	54,506		191,027
Cash, cash equivalents and restricted cash, at end of period	$	43,043	$	49,168

Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents at beginning of period	$	54,390	$	190,926
Restricted cash at beginning of period	116		101
Cash, cash equivalents and restricted cash at beginning of period	$	54,506	$	191,027

Cash and cash equivalents at end of period	$	42,923	$	49,063
Restricted cash at end of period	120		105
Cash, cash equivalents and restricted cash at end of period	$	43,043	$	49,168

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

~~LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(Unaudited and in thousands)~~

Nine Months ended September 30,
2017 2016
Net cash provided by operating activities: $ 172,581
$ 180,583
Cash flows from investing activities:

Acquisition of real estate, including intangible assets (418,574 ) (70,297 )
Investment in real estate under construction (81,364 ) (105,548 )
Capital expenditures (13,367 ) (3,267 )
Net proceeds from sale of properties 186,499
293,634
Net proceeds from sale of non-consolidated investment 6,127
—
Principal payments received on loans receivable 89,908
214
Investments in and advances to non-consolidated entities (4,068 ) (33,554 )
Distributions from non-consolidated entities in excess of accumulated earnings 477
7,299
Increase in deferred leasing costs (5,284 ) (6,165 )
Change in restricted cash (5,843 ) (32,450 )
Change in real estate deposits, net 10,938
(20,566 )
Net cash provided by (used in) investing activities (234,551 ) 29,300
Cash flows from financing activities:

Dividends to common and preferred shareholders (128,996 ) (123,287 )
Principal amortization payments (23,243 ) (20,887 )
Principal payments on debt, excluding normal amortization (41,488 ) (103,473 )
Retirement of convertible notes —
(672 )
Proceeds from term loans 95,000
—
Change in revolving credit facility borrowings, net 200,000
(177,000 )
Payment of developer liabilities —
(4,016 )
Change in deferred financing costs (1,252 ) (1,841 )
Proceeds of mortgages and notes payable —
254,650
Change in restricted cash 1,572
—
Cash distributions to noncontrolling interests (2,563 ) (2,528 )
Issuance of common shares, net 16,848
2,686
Repurchase of common shares —
(8,973 )
Net cash provided by (used in) financing activities 115,878
(185,341 )
Change in cash and cash equivalents 53,908
24,542
Cash and cash equivalents, at beginning of period 86,637
93,249
Cash and cash equivalents, at end of period $ 140,545
$ 117,791

~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.~~

~~Table of Contents~~

~~LEXINGTON REALTY~~LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2017~~March 31, 2023 and ~~2016~~2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

(1) The Company and Financial Statement Presentation


~~(1)~~	~~The Company and Financial Statement Presentation~~

~~Lexington Realty~~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 ~~diversified~~ portfolio of equity ~~and, from time to time, debt~~ investments infocused on single-tenant ~~commercial~~industrial properties.

As of ~~September 30, 2017,~~March 31, 2023, the Company had ownership interests in approximately ~~180~~116 consolidated real estate properties, located in 3820 states. The properties in which the Company has an interest are primarily net leased to tenants in various industries.

~~As of September 30, 2017, the~~The Company ~~operated in a manner intended to enable~~believes it ~~to continue to qualify~~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 ~~historically prohibited for REITs~~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 ~~either directly or~~ indirectly through (1) property owner ~~subsidiaries and lender~~ subsidiaries, which are single purpose entities, (2) an operating partnership, Lepercq Corporate Income Fund L.P. (“LCIF”), in which the Company is the sole unit holder of the general partner and the sole unit holder of the limited partner that holds a majority of the limited partner interests, (3) a wholly-owned TRS, Lexington Realty Advisors, Inc. (“LRA”), and ~~(4) investments in~~(3) joint ventures. ~~References to “OP units” refer to units of limited partner interests in LCIF.~~ 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.

The unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q (this “Quarterly Report”) for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2023 have been prepared by the Company in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all information and footnotes required by GAAP for complete financial statements. However, in the opinion of management, the interim financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair ~~statement~~presentation of the results of the periods presented. Interim results are not necessarily indicative of the results that may be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2016~~2022 filed with the SEC on ~~March 1, 2017~~February 16, 2023 (“Annual Report”).

Basis of Presentation and Consolidation. The Company's unaudited condensed consolidated financial statements are prepared on the accrual basis of accounting in accordance with GAAP. The financial statements reflect the accounts of the Company and its consolidated subsidiaries. The Company consolidates ~~the~~ 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.

Table of Contents

~~LEXINGTON REALTY~~LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2017~~March 31, 2023 and ~~2016~~2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

As of March 31, 2023, the Company had interests in seven consolidated joint ventures with developers, consisting of five ongoing 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 ~~was~~is the primary beneficiary in each of the joint ventures and as such, the joint ventures' operations are consolidated in the Company’s unaudited condensed 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, including LCIF, in which the Company has an approximate 96% interest. See the unaudited condensed consolidated financial statements of LCIF included within this Quarterly Report.~~

~~The Company has a joint venture limited partnership with a developer which~~entities. Lepercq Corporate Income Fund L.P. ("LCIF") is a consolidated ~~VIE. In January 2017,~~VIE and the ~~joint venture completed the development~~Company, as of March 31, 2023, had an office campus in Lake Jackson, Texas. The Company currently has a 100% interest in the joint venture; however, the developer has certain protective rights, and, upon project close-out, the developer will be credited with a notional capital account for a profit interest and certain cost savings. As of September 30, 2017, the joint venture had $144,169 in real estate, net.approximate 99% ownership interest.

The assets of each VIE are only available to satisfy such VIE's respective liabilities. ~~As of September 30, 2017, the VIEs' mortgages and notes payable are non-recourse to the Company.~~ Below is a summary of selected financial data of consolidated VIEs for which the Company is the primary beneficiary included in the unaudited condensed consolidated balance sheets as of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016:~~2022:


	March 31, 2023		December 31, 2022
Real estate, net	$	1,039,383	$	1,027,009
Total assets	$	1,141,236	$	1,125,558

Total liabilities	$	36,935	$	40,200

September 30, 2017 December 31, 2016
Real estate, net $ 790,185
$ 778,265
Total assets $ 898,620
$ 899,801
Mortgages and notes payable, net $ 360,426
$ 364,099
Total liabilities $ 371,000
$ 395,332
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).

Use of Estimates. Management has made a number of significant estimates and assumptions ~~to prepare these unaudited condensed consolidated financial statements in conformity with GAAP, including, among others, those~~ relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and ~~expenses.~~expenses to prepare these unaudited condensed 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.~~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, ~~the~~ 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 ~~loans receivable~~ and equity method investments, ~~the~~ valuation of derivative financial instruments, ~~the~~ 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 estimated credit losses for investments in sales-type leases and the useful lives of long-lived assets. Actual results could differ materially from those estimates.

~~Fair Value Measurements.~~ 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 ~~Company follows the~~ guidance in ASU 2020-04 is optional, applies for a limited period of time to ease the ~~Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 820, Fair Value Measurements~~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, ~~Disclosures,~~particularly, the risk of cessation of LIBOR and may be elected over time as ~~amended (“Topic 820”), to determine the fair value~~reference rate reform activities occur. As 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,March 31, 2020, 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~~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 ~~respect to measuring counterparty risk for all of its derivative transactions subject to master netting arrangements.~~

past presentation.

Table of Contents

~~LEXINGTON REALTY~~LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2017~~March 31, 2023 and ~~2016~~2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

~~Acquisition, Development and Construction Arrangements~~.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 evaluates loans receivable where the Company participates in residual profits through loan provisions or other contracts to ascertain whether the Company has the same risks and rewards as an owner or a joint venture partner. Where the Company concludes that such arrangements are more appropriately treated as an investment in real estate, the Company reflects such loan receivable as an equity investment in real estate under construction in the unaudited condensed consolidated balance sheets. In these cases, no interest income is recorded on the loan receivableadopted ASU 2020-04 and the Company capitalizes interest during the construction period. In arrangements where the Company engages a developer to construct a property or provides funds to a tenant to develop a property, the Company will capitalize the funds provided to the developer/tenant and internal costsadoption of ~~interest and real estate taxes, if applicable, during the construction period.~~

~~Revision to Previously Issued Financial Statements.~~ ~~During the quarter ended December 31, 2016, the Company corrected~~this standard did not have an immaterial error in the treatment of a lease termination payment received in the quarter ended June 30, 2016 in the amount of $7,685. The lease termination payment was originally amortized over the life of the new tenant lease that necessitated the lease termination. As corrected, the payment was fully recognized in the Company's total gross revenues in the quarter ended June 30, 2016.

The Company concluded that the error noted above was not material to any historical periods presented. However, in order to correctly present the treatment of the lease termination payment, management elected to revise previously issued financial statements in the Company's next subsequent periodic filing that included such financial statements. The following table shows the affected line items withinimpact on the Company's unaudited condensed consolidated financial ~~statements:~~

Three Months ended September 30, 2016
As Originally Reported Correction As Adjusted
Total gross revenues $ 106,331
$ (350 ) $ 105,981
Net loss $ (27,262 ) $ (350 ) $ (27,612 )
Net loss attributable to common shareholders $ (26,653 ) $ (322 ) $ (26,975 )
Net loss attributable to common shareholders - basic per share $ (0.11 ) $ (0.01 ) $ (0.12 )
Net loss attributable to common shareholders - diluted per share $ (0.11 ) $ (0.01 ) $ (0.12 )

Nine Months ended September 30, 2016
As Originally Reported Correction As Adjusted
Total gross revenues $ 327,524
$ 6,646
$ 334,170
Net income $ 72,875
$ 6,646
$ 79,521
Net income attributable to common shareholders $ 68,310
$ 6,408
$ 74,718
Net income attributable to common shareholders - basic per share $ 0.29
$ 0.03
$ 0.32
Net income attributable to common shareholders - diluted per share $ 0.28
$ 0.03
$ 0.31

~~Recently Issued Accounting Guidance.~~ ~~In May 2014, the FASB issued ASU 2014-09, Revenue~~statements. The Company's Trust Preferred Securities will transition from ~~Contracts with Customers (Topic 606), which amends the guidance for revenue recognition~~LIBOR to ~~eliminate the industry-specific revenue recognition guidance and replace it with a principle based approach for determining revenue recognition.~~SOFR after June 30, 2023. The effective date of the new guidance was updated by ASU 2015-14 and is effective for reporting periods beginning after December 15, 2017. The Company’s revenue-producing contracts are primarily leases that are not within the scope of this standard as leases are excluded from ASU 2014-09. The Company expects that it may be impacted in its recognition of non-lease revenue, non-lease components of revenue from lease agreements (upon adoption of ASU 2016-02) and the timing of its recognition of real estate sale transactions. Under ASU 2014-09, revenue recognition for real estate sales is largely based on the transfer of control and the buyer having the ability to direct the use of, or obtain substantially all of the remaining benefit from, the asset (which generally will occur on the closing date); the factor of continuing involvement is no longer a specific consideration for the timing of recognition. As a result, the Company generally expects that the new guidance may result in transactions qualifying as sales of real estate at an earlier date than under current accounting guidance. The Company is finalizing its evaluation of the impact of the standard but currently believes the impact would be limited to the timing and income statement presentation of revenue and not the total amount of revenue recognized over time. The

~~Table of Contents~~

~~LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017 and 2016~~

~~(Unaudited and dollars in thousands, except share/unit and per share/unit data)~~

Company will adopt ASU 2014-09 effective January 1, 2018 and anticipates using the modified retrospective approach. As the majority of the Company’s revenue is from rental income related to leases, the Company does not expect ~~the ASU to have~~ a material impact onto the ~~consolidated~~ financial statements ~~upon adoption.~~

~~In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize~~as a right of use asset and related lease liability for those leases classified as operating leases at the commencement date that have lease terms of more than 12 months and amends certain lessor guidance. The ASU is expected to result in the recognition of a right-to-use asset and related liability to account for the Company's future obligations under its ground lease arrangements for which the Company is the lessee. From a lessor perspective, the Company expects that it will be required to bifurcate lease agreements to separately recognize and disclose non-lease components that are executory in nature. Lease components will continue to be primarily recognized on a straight-line basis over the lease term and certain non-lease components will be accounted for under the new revenue recognition guidance in ASU 2014-09 (upon adoption of ASU 2016-02). Additionally, the new ASU will require that the Company capitalize, as initial direct costs, only those costs that are incurred due to the execution of a lease. ASU 2016-02 will be effective for fiscal years beginning after December 15, 2018, and interim periods within those years, and requires a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements; with early adoption permitted. The Company continues to evaluate the impact of the adoption of the new guidance on its consolidated financial statements.transition.

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation-Improvements to Employee Share-Based Payment Accounting (Topic 718), which involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company adopted this new guidance on January 1, 2017. This new guidance did not have a material impact on the Company's consolidated financial statements. The Company has made an accounting policy election to account for share-based award forfeitures in compensation costs when they occur.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which addresses how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those years; however early adoption is permitted. The Company does not believe this guidance will have a material impact on its consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which clarifies guidance on the classification and presentation of changes in restricted cash. The ASU is effective for reporting periods beginning after December 15, 2017, with early adoption permitted, and will be applied retrospectively to all periods presented. Upon adoption, restricted cash balances will be included along with cash and cash equivalents as of the end of the period and beginning of period, respectively, in the Company's consolidated statement of cash flows for all periods presented. Upon adoption, separate line items showing changes in restricted cash balances will be eliminated from the Company's consolidated statement of cash flows.(2)Earnings Per Share

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business when evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The ASU is effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The Company expects that acquisitions of real estate or in-substance real estate will not meet the revised definition of a business and thus will be treated as asset acquisitions. Acquisition costs for those acquisitions that are not businesses will be capitalized rather than expensed.

In February 2017, the FASB issued ASU 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Topic 610-20), which requires that all entities account for the derecognition of a business in accordance with ASC 810, including instances in which the business is considered in-substance real estate. The ASU requires the Company to measure at fair value any retained interest in a partial sale of real estate. The ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2017. The Company will adopt ASU 2017-05 effective January 1, 2018, along with the adoption of ASU 2014-09, and it is not expected to have a material impact on its consolidated financial statements.

~~Table of Contents~~

~~LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017 and 2016~~

~~(Unaudited and dollars in thousands, except share/unit and per share/unit data)~~

In August 2017, the FASB issued ASU-2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which amends the hedge accounting recognition and presentation requirements in Topic 815. The ASU is effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of the new guidance on its consolidated financial statements.


~~(2)~~	~~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 the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2023 and ~~2016:~~2022:


	Three Months ended September 30,						Nine months ended September 30,							Three Months Ended March 31,
	2017			2016			2017			2016				2023		2022
BASIC													BASIC
Net income (loss) attributable to common shareholders	$	3,916		$	(26,975	)	$	49,832		$	74,718

Net income attributable to common shareholders													Net income attributable to common shareholders	$	9,522	$	8,989
Weighted-average number of common shares outstanding - basic	237,989,098			234,207,396			237,632,572			233,151,600			Weighted-average number of common shares outstanding - basic	290,080,508		283,640,465

Net income (loss) attributable to common shareholders - per common share basic	$	0.02		$	(0.12	)	$	0.21		$	0.32
Net income attributable to common shareholders - per common share basic													Net income attributable to common shareholders - per common share basic	$	0.03	$	0.03

DILUTED													DILUTED
Net income (loss) attributable to common shareholders - basic	$	3,916		$	(26,975	)	$	49,832		$	74,718
Net income attributable to common shareholders - basic													Net income attributable to common shareholders - basic	$	9,522	$	8,989

Impact of assumed conversions	(173		)	—			(192		)	(845		)	Impact of assumed conversions	3		—
Net income (loss) attributable to common shareholders	$	3,743		$	(26,975	)	$	49,640		$	73,873
Net income attributable to common shareholders													Net income attributable to common shareholders	$	9,525	$	8,989

Weighted-average common shares outstanding - basic	237,989,098			234,207,396			237,632,572			233,151,600			Weighted-average common shares outstanding - basic	290,080,508		283,640,465
Effect of dilutive securities:													Effect of dilutive securities:
Share options	66,748			—			95,788			246,166
OP Units	3,646,869			—			3,713,867			3,818,117
Unvested share-based payment awards													Unvested share-based payment awards	127,871		1,078,891
Shares issuable under forward sales agreements													Shares issuable under forward sales agreements	—		4,348,422

Operating partnership units													Operating partnership units	832,087		—

Weighted-average common shares outstanding - diluted	241,702,715			234,207,396			241,442,227			237,215,883			Weighted-average common shares outstanding - diluted	291,040,466		289,067,778

Net income (loss) attributable to common shareholders - per common share diluted	$	0.02		$	(0.12	)	$	0.21		$	0.31

Net income attributable to common shareholders - per common share diluted													Net income attributable to common shareholders - per common share diluted	$	0.03	$	0.03

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.

Table of Contents

~~LEXINGTON REALTY~~LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2017~~March 31, 2023 and ~~2016~~2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

(3)Investments in Real Estate


~~(3)~~	~~Investments in Real Estate and Real Estate Under Construction~~

The Company completed and placed into service the following ~~acquisition and build-to-suit transactions~~warehouse/distribution facility during the ~~nine~~three months ended ~~September 30, 2017:~~March 31, 2023:


Market	Placed into Service Date	Initial Cost Basis		Lease Expiration Date	Land		Building and Improvements
Phoenix, Arizona(1)	March 2023	$	37,118	08/2033	$	7,552	$	29,566

Property Type Location Acquisition Date
Initial
Cost
Basis
Lease Expiration Land and Land Estate Building and Improvements Lease in-place Value Intangible Below Market Lease Intangible
Office
Lake Jackson, TX⁽¹⁾
January 2017 $ 70,401
10/2036 $ 3,078
$ 67,323
$ —
$ —
Industrial New Century, KS February 2017 12,056
01/2027 —
13,198
1,648
(2,790 )
Industrial Lebanon, IN February 2017 36,194
01/2024 2,100
29,443
4,651
—
Office Charlotte, NC April 2017 61,339
04/2032 3,771
47,064
10,504
—
Industrial Cleveland, TN May 2017 34,400
03/2024 1,871
29,743
2,786
—
Industrial Grand Prairie, TX June 2017 24,317
03/2037 3,166
17,985
3,166
—
Industrial San Antonio, TX June 2017 45,507
04/2027 1,311
36,644
7,552
—
Industrial Opelika, AL July 2017 37,269
05/2042 134
33,183
3,952
—
Industrial McDonough, GA August 2017 66,700
01/2028 5,441
52,762
8,497
—
Industrial Byhalia, MS September 2017 36,590
09/2027 1,751
31,236
3,603
—
Industrial Jackson, TN September 2017 57,920
10/2027 1,454
49,026
7,440
—
Industrial Smyrna, TN September 2017 104,890
04/2027 1,793
93,940
9,157
—
$ 587,583
$ 25,870
$ 501,547
$ 62,956
$ (2,790 )


~~(1)~~	~~Completed the construction of the final building of a four-building project. Initial cost basis excludes estimated developer partner payout of approximately $8,000.~~

(1) Initial basis excludes certain remaining costs, including developer partner promote, if any.

The Company recognized aggregate transaction costs of $1,100 and $329 for the nine months ended September 30, 2017 and 2016, respectively, which are included as property operating expenses within the Company's unaudited condensed consolidated statements of operations.

~~From time to time,~~In 2022, the Company ~~is engaged~~purchased the remaining 13% of equity owned by a noncontrolling interest in ~~various forms~~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 ~~build-to-suit~~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.

As of March 31, 2023, the details of the development ~~activities. The Company, through lender subsidiaries~~arrangements outstanding are as follows (in $000's, except square feet):


Project (% owned)	# of Buildings	Market	Estimated Sq. Ft. (unaudited)		Estimated Project Cost(1)		GAAP Investment Balance as of 3/31/2023		Amount Funded as of 3/31/2023(2)		Actual/Estimated Building Completion Date	% Leased as of 3/31/2023
The Cubes at Etna East (95%)(3)	1	Columbus, OH	1,074,840		$	72,850	$	61,240	$	59,888	3Q 2022	(4)
Ocala (80%)(3)	1	Central Florida	1,085,280		83,100		76,529		66,593		1Q 2023	—	%
Mt. Comfort (80%)(3)	1	Indianapolis, IN	1,053,360		65,500		61,614		52,119		1Q 2023	—	%

Smith Farms (90%)(5)	2	Greenville-Spartanburg, SC	1,396,772		101,550		85,290		72,690		2Q 2023	—	%
South Shore (100%)	2	Central Florida	270,885		41,200		31,844		26,277		2Q 2023	—	%
Cotton 303 (93%)(6)	1	Phoenix, AZ	488,400		44,100		33,310		31,458		3Q 2023	—	%
	8		$	5,369,537	$	408,300	$	349,827	$	309,025

(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 March 31, 2023.

(4) Subsequent to quarter end, the property ~~owner subsidiaries, may enter into the following acquisition, development and construction arrangements: (1) lend funds to construct a build-to-suit project~~was fully leased subject to a ~~single-tenant~~10-year lease with ~~an agreement~~initial annualized rent of approximately $5,213 with 3.5% annual escalations.

(5) Subsequent to ~~purchase~~quarter end, the ~~property upon completion~~base building comprised of ~~construction~~1,091,888 square feet was substantially completed.

(6) Originally a two building project. In March 2023, substantially completed and ~~commencement of the single-tenant lease, (2) hire~~placed into service a ~~developer to construct a built-to-suit project on owned property leased~~392,278 square foot facility subject to a ~~single tenant, (3) fund the construction of a build-to-suit~~10-year lease. Remaining project on owned property pursuant to the terms of a single-tenant lease or (4) enter into a purchase and sale agreement with a developer to acquire a single-tenant build-to-suit property upon completion of construction and commencement of a single-tenant lease. ongoing.

As of ~~September 30, 2017, the Company had no development arrangements outstanding. As of December~~March 31, ~~2016,~~2023, the Company's aggregate investment in development arrangements was ~~$106,652,~~$349,827, which included ~~$3,442~~capitalized interest of ~~capitalized interest~~$1,794 for the three months ended March 31, 2023 and is presented as investments in real estate under construction in the accompanying unaudited condensed consolidated balance ~~sheets.~~

sheet. For the three months ended March 31, 2022, capitalized interest for development arrangements was $1,146.

Table of Contents

~~LEXINGTON REALTY~~LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2017~~March 31, 2023 and ~~2016~~2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

As of ~~September 30, 2017,~~March 31, 2023, the ~~Company had~~details of the ~~following forward purchase commitments:~~land held for industrial development are as follows (in $000's, except acres):

Location Square Feet (000's) Property Type Maximum Acquisition Cost Estimated Acquisition Date Approximate Lease Term (Yrs)
Warren, MI⁽¹⁾
260
Industrial $ 47,000
4Q 17 15
Romulus, MI 500
Industrial 39,330
4Q 17 15
Lafayette, IN 309
Industrial 17,450
4Q 17 7
1,069
$ 103,780


Project (% owned)	Market	Approx. Developable Acres	GAAP Investment Balance as of 3/31/2023		LXP Amount Funded as of 3/31/2023 (1)
Consolidated:
Reems & Olive (95.5%)	Phoenix, AZ	320	$	77,473	$	74,109
Mt. Comfort Phase II (80%)	Indianapolis, IN	116	5,303		4,250
ATL Fairburn JV (100%)	Atlanta, GA	14	1,731		1,736
		450	$	84,507	$	80,095

(1) ~~A $4,600 letter of credit secures the Company's obligation to purchase the property.~~Excludes noncontrolling interests' share.

~~The Company can give no assurances that any of these forward purchase commitments will be consummated or, if consummated, will perform to the Company's expectations.~~


~~(4)~~	~~Property Dispositions and Real Estate Impairment~~

(4)Dispositions and Impairment

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2023 and 2022, the Company disposed of its interests in various properties for an aggregate gross ~~sale~~disposition price of ~~$190,368~~$27,910 and conveyed a vacant office property, along with its escrow deposits, in satisfaction of a $3,496 non-recourse mortgage loan. During the nine months ended September 30, 2016, the Company disposed of its interests in various properties, including land investments, for an aggregate gross sale price of $561,817$289, respectively, and conveyed a vacant office property, along with its escrow deposits, in satisfaction of a $14,118 non-recourse mortgage loan; however, the lender brought a claim under the related non-recourse carve out guaranty (see note 13).

~~During the nine months ended September 30, 2017 and 2016, the Company~~ recognized aggregate gains on sales of properties of ~~$55,078~~$7,879 and ~~$58,413,~~$255, respectively. In addition, during the nine months ended September 30, 2017 and 2016, the Company recognized debt satisfaction gains (charges), net of $2,381 and $(381), respectively, relating to properties disposed of, including conveyed properties.

~~As of September 30, 2017 and December 31, 2016, the~~The Company had ~~one property~~two and ~~two~~three properties ~~respectively,~~ classified as held for ~~sale.~~

sale at March 31, 2023 and December 31, 2022, respectively. Assets and liabilities of the held for sale properties ~~as of September 30, 2017~~at March 31, 2023 and December 31, ~~2016~~2022 consisted of the following:


	September 30, 2017		December 31, 2016				March 31, 2023		December 31, 2022
Assets:						Assets:
Real estate, at cost	$	8,607	$	25,957		Real estate, at cost	$	54,654	$	131,557
Real estate, intangible assets	—		7,789			Real estate, intangible assets	1,777		9,942
Accumulated depreciation and amortization	—		(13,346		)	Accumulated depreciation and amortization	(14,119)		(76,205)
Rent receivable - current	11		—
Rent receivable - deferred	—		1,715
Other assets	20		1,693

Other						Other	1,974		1,140
	$	8,638	$	23,808			$	44,286	$	66,434

Liabilities:						Liabilities:
Other	$	442	$	191
Accounts payable and liabilities						Accounts payable and liabilities	$	863	$	637
Deferred revenue						Deferred revenue	134		143
Prepaid rent						Prepaid rent	892		370
	$	442	$	191			$	1,889	$	1,150

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, ~~and~~change in the estimated holding period of the asset, the potential sale or transfer of the property in the near ~~future.~~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.~~ value and the Company estimates that its cost will not be recovered.

During the ~~nine months~~three month period ended ~~September 30, 2017 and 2016,~~March 31, 2023, the Company recognized ~~aggregate~~an impairment charge of $3,523 due to a potential sale of the property. The Company recognized no impairment charges ~~of $38,283 and $75,904, respectively,~~ on ~~properties disposed of and properties held for use.~~real estate during the three month period ended March 31, 2022.

Table of Contents

~~LEXINGTON REALTY~~LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2017~~March 31, 2023 and ~~2016~~2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)


~~(5)~~	~~Loans Receivable~~

As of September 30, 2017, all of the Company's loans receivable were fully satisfied. As of December 31, 2016, the Company's loans receivable were comprised primarily of mortgage loans on real estate.

~~The following is a summary of the Company's loans receivable as of December 31, 2016:~~

Loan carrying-value⁽¹⁾

Loan 12/31/2016 Interest Rate Maturity Date
Kennewick, WA⁽²⁾
$ 85,709
9.00 % 05/2022
Oklahoma City, OK⁽³⁾
8,501
11.50 % 03/2016
$ 94,210


~~(1)~~	~~Loan carrying value includes accrued interest and is net of origination costs, if any.~~


~~(2)~~	Loan provided for a current pay rate of 8.75%, an accrual rate of 9.0% and a balloon of $87,245 at maturity. During the nine months ended September 30, 2017, the loan was assigned to a third party for 94% of its principal balance. The Company recognized a $5,294 loan loss on the transaction.

~~(3)~~

~~In June 2015, the Company loaned a tenant-in-common~~ ~~$8,420~~. The loan was secured by the tenant-in-common's interest in an office property, in which the Company had a 40% tenant-in-common interest. The loan was satisfied in full in February 2017. The Company incurred professional fees of $376 to collect this loan. Such fees are included in general and administrative expenses on the Company's unaudited condensed consolidated statements of operations for the nine months ended September 30, 2017.

~~(6)~~ (5)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 ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016,~~2022, aggregated by the level in the fair value hierarchy within which those measurements fall:


	Balance		Fair Value Measurements Using
Description	March 31, 2023		(Level 1)		(Level 2)		(Level 3)
Interest rate swap assets	$	13,128	$	—	$	13,128	$	—
Impaired real estate assets(1)	$	28,869	$	—	$	28,869	$	—


	Balance		Fair Value Measurements Using
Description	December 31, 2022		(Level 1)		(Level 2)		(Level 3)
Interest rate swap assets	$	16,318	$	—	$	16,318	$	—

Balance Fair Value Measurements Using
Description September 30, 2017 (Level 1) (Level 2) (Level 3)
Interest rate swap assets $ 510
$ —
$ 510
$ —
Impaired real estate assets* $ 20,264
$ —
$ —
$ 20,264

Balance Fair Value Measurements Using
Description December 31, 2016 (Level 1) (Level 2) (Level 3)
Interest rate swap assets $ 44
$ —
$ 44
$ —
Impaired real estate assets* $ 15,801
$ —
$ —
$ 15,801
Interest rate swap liabilities $ (1,077 ) $ —
$ (1,077 ) $ —

*(1) Represents a non-recurring fair value ~~measurement, including assets held for sale. Fair~~measurement. The fair value is calculated as of the ~~date~~impairment date. The fair value of ~~impairment.~~

~~Table of Contents~~

~~LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017~~$28,869 was based on an observable contract less estimated costs to sell and ~~2016~~

~~(Unaudited and dollars in thousands, except share/unit and per share/unit data)~~

~~The table below sets forth~~ the ~~carrying amounts and estimated~~Company determined that the fair ~~values~~value of the ~~Company's financial instruments as~~property falls within Level 2 of ~~September 30, 2017 and December 31, 2016.~~

As of September 30, 2017 As of December 31, 2016

Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
Assets
Loans Receivable $ —
$ —
$ 94,210
$ 94,911

Liabilities

Debt $ 2,088,874
$ 2,058,863
$ 1,860,598
$ 1,814,824
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 ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016,~~2022, the Company determined that the credit valuation adjustment relative to the overall ~~fair value of the~~ interest rate swaps was not significant. As a result, ~~the~~all interest rate swaps have been classified in Level 2 of the fair value hierarchy.

The ~~Company estimates~~table below sets forth the carrying amounts and estimated fair values of the Company's financial instruments, as of March 31, 2023 and December 31, 2022:


	As of March 31, 2023				As of December 31, 2022
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets

Investment in a sales-type lease, net	$	61,680	$	61,852	$	61,233	$	60,984

Liabilities
Debt	$	1,485,727	$	1,296,744	$	1,488,051	$	1,293,239

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 broker opinions of value, recent sale offers or discounted cash flow models, whichthe Company's investment in a sales-type lease, net is primarily ~~rely on Level 3 inputs. The cash flow models include~~ estimated cash inflows and outflows over a specified holding period. These cash flows may include contractual rental revenues, projected future rental revenues and expenses and forecasted tenant improvements and lease commissions based upon market conditions determined through discussion with local real estate professionals, experience the Company has with its other owned properties in such markets and expectations for growth. Capitalization rates and discount rates utilized in these models are estimated by management based upon rates that management believes to be within a reasonable range of current market rates for the respective properties based upon an analysis of factors such as property and tenant quality, geographical location and local supply and demand observations. To the extent the Company under estimates forecasted cash outflows (tenant improvements, lease commissions and operating costs) or over estimates forecasted cash inflows (rental revenue rates), the estimated fair value of its real estate assets could be overstated.

~~The Company estimated the fair values of its loans receivable~~ utilizing Level 3 inputs by using a discounted cash flow analysis ~~consisting of scheduled cash flows~~ and ~~discount rate estimates to approximate those that a willing buyer and seller might use and/or the estimated value~~an estimate of the ~~underlying collateral.~~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, except for the Company's senior notes payable.~~rates. The Company determines the fair value of its ~~senior notes~~Senior Notes payable 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.

Table of Contents

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 and 2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

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.

(6)Investments in Non-Consolidated Entities

Below is a schedule of the Company's investments in non-consolidated entities:


	Percentage Ownership at	Investment Balance as of				Equity in earnings (losses) of non-consolidated entities
Investment	March 31, 2023	March 31, 2023		December 31, 2022		March 31, 2023		March 31, 2022
NNN MFG Cold JV L.P. ("MFG Cold JV")(1)	20%	$	24,320	$	26,592	$	(802)	$	(150)
NNN Office JV L.P. ("NNN JV")(2)	20%	12,769		12,900		(131)		11,451
Etna Park 70 LLC(3)	90%	13,347		12,975		(38)		(25)
Etna Park East LLC(4)	90%	2,135		2,126		(33)		(24)
BSH Lessee L.P.(5)	25%	—		3,613		4,608		49
		$	52,571	$	58,206	$	3,604	$	11,301

(1) MFG Cold JV is a joint venture formed in 2021 that owns special purpose industrial properties formerly owned by the Company.

(2) NNN JV is a joint venture formed in 2018 that owns office properties formerly owned by the Company. During 2022, NNN JV sold two assets and the Company recognized its share of aggregate gains on sale of $11,315 within equity in earnings of non-consolidated entities within its unaudited condensed consolidated statements of operations.

(3) Joint venture formed in 2017 with a developer entity to acquire a parcel of land.

(4) Joint venture formed in 2019 with a developer entity to acquire a parcel of land.

(5) A joint venture investment which sold its sole single-tenant, net-leased asset in January 2023 and the Company recognized its share of the gain on sale of $4,791 within equity in earnings of non-consolidated entities within its unaudited condensed consolidated statements 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 for the three months ended March 31, 2023 and 2022 were $1,208 and $1,451, respectively.

(7)Debt

The Company had the following mortgages and notes payable outstanding as of March 31, 2023 and December 31, 2022:


	March 31, 2023		December 31, 2022
Mortgages and notes payable	$	70,266	$	73,154
Unamortized debt issuance costs	(978)		(1,051)
Mortgage notes payable, net	$	69,288	$	72,103

Interest rates, including imputed rates on mortgages and notes payable, ranged from 3.5% to 4.3%, at March 31, 2023 and December 31, 2022, respectively, and all mortgages and notes payable mature between 2023 and 2031 as of March 31, 2023. The weighted-average interest rate at March 31, 2023 and December 31, 2022 was approximately 4.0%, respectively.

Table of Contents

~~LEXINGTON REALTY~~LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2017~~March 31, 2023 and ~~2016~~2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)


~~(7)~~	~~Investment in and Advances to Non-Consolidated Entities~~

As of September 30, 2017, the Company had ownership interests ranging from 15% to 25% in certain non-consolidated entities, which primarily own single-tenant net-leased assets. The acquisitions of these assets by the non-consolidated entities were partially funded through non-recourse mortgage debt with an aggregate balance of $46,661 at September 30, 2017 (the Company's proportionate share was $8,395).

In February 2017, the Company sold its 40% tenant-in-common interest in its Oklahoma City, Oklahoma office property for $6,198. In January 2016, the Company received $6,681 in connection with the sale of a non-consolidated office property in Russellville, Arkansas. The Company recognized gains of $1,452 and $5,378, respectively, in connection with these sales, which are included in equity in earnings of non-consolidated entities.

During the nine months ended September 30, 2017, the Company recognized an impairment charge of $3,512 on its investment in a retail property in Palm Beach Gardens, Florida due to the bankruptcy of its tenant. This impairment charge reduced the Company's investment balance to zero.

In November 2014, the Company formed a joint venture to construct a private school in Houston, Texas. As of September 30, 2017, the Company had a 25% equity interest in the joint venture. The joint venture completed the project during 2016 for a total construction cost of $79,964. The Company was contractually obligated to provide construction financing to the joint venture up to $56,686. As of September 30, 2017, the Company's loan balance, net of origination costs, of $48,771 was included in investment in and advances to non-consolidated entities.


~~(8)~~	~~Debt~~

~~The Company had the following mortgages and notes payable outstanding as of September 30, 2017 and December 31, 2016:~~

September 30, 2017 December 31, 2016
Mortgages and notes payable $ 676,935
$ 745,173
Unamortized debt issuance costs (6,590 ) (7,126 )
$ 670,345
$ 738,047

Interest rates, including imputed rates on mortgages and notes payable, ranged from 2.2% to 7.8% at September 30, 2017 and December 31, 2016 and all mortgages and notes payables mature between 2017 and 2036 as of September 30, 2017. The weighted-average interest rate was 4.6% at September 30, 2017 and December 31, 2016.

The Company had the following senior notes outstanding as of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016:~~2022:

Issue Date September 30, 2017 December 31, 2016 Interest Rate Maturity Date Issue Price
May 2014 $ 250,000
$ 250,000
4.40 % June 2024 99.883 %
June 2013 250,000
250,000
4.25 % June 2023 99.026 %
500,000
500,000

Unamortized discount (1,576 ) (1,780 )
Unamortized debt issuance cost (3,435 ) (3,858 )
$ 494,989
$ 494,362


Issue Date	March 31, 2023		December 31, 2022		Interest Rate		Maturity Date	Issue Price
August 2021	$	400,000	$	400,000	2.375	%	October 2031	99.758	%
August 2020	400,000		400,000		2.70	%	September 2030	99.233	%
May 2014	198,932		198,932		4.40	%	June 2024	99.883	%
	998,932		998,932
Unamortized debt discount	(3,122)		(3,228)
Unamortized debt issuance costs	(6,174)		(6,409)
Senior notes payable, net	$	989,636	$	989,295

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 aany potential make-whole premium.

~~Table of Contents~~

~~LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017 and 2016~~

~~(Unaudited and dollars in thousands, except share/unit and per share/unit data)~~

~~In September 2017, the Company's $905,000~~The Company has an unsecured credit agreement with KeyBank National Association, as ~~agent, was amended to, among other things, increase the overall facility to $1,105,000. With lender approval, the Company can increase the size~~agent. The maturity dates and interest rates as of ~~the amended facility to an aggregate of $2,010,000. A summary of the significant terms~~March 31, 2023, are as follows:



		Maturity Date	~~Current~~ Interest Rate
$~~505,000~~600,000 Revolving Credit Facility⁽¹⁾		~~August 2019~~July 2026	~~LIBOR~~SOFR + ~~1.00%~~0.85%
$300,000 Term Loan⁽²⁾⁽⁴⁾		~~August 2020~~January 2025	~~LIBOR~~Term SOFR + ~~1.10%~~
~~$300,000 Term Loan~~⁽³⁾⁽⁴⁾	~~January 2021~~	~~LIBOR + 1.10%~~1.00%


~~(1)~~	Increased from $400,000. Maturity date can be extended to August 2020 at the Company's option. The interest rate ranges from LIBOR plus 0.85% to 1.55%. At September 30, 2017, the revolving credit facility had $200,000 borrowings outstanding, $4,600 of letters of credit and availability of $300,400, subject to covenant compliance.


~~(2)~~	Increased from $250,000. The interest rate ranges from LIBOR plus 0.90% to 1.75%. The Company previously entered into aggregate interest-rate swap agreements to fix the LIBOR component at a weighted-average rate of 1.09% through February 2018 on $250,000 of outstanding LIBOR-based borrowings.


~~(3)~~	Increased from $255,000. The interest rate ranges from LIBOR plus 0.90% to 1.75%. The Company previously entered into aggregate interest-rate swap agreements to fix the LIBOR component at a weighted-average rate of 1.42% through January 2019 on $255,000 of outstanding LIBOR-based borrowings.

~~(4)~~

~~The aggregate unamortized debt issuance costs for the term loans were $3,631 and $3,907 as of September 30, 2017 and December 31, 2016,~~

(1) Maturity date of the revolving credit facility can be extended to July 2027, subject to certain conditions. The interest rates range from 0.725% to 1.400%, and the revolving credit facility allows for further reductions upon the achievement of to-be-determined sustainability metrics. At March 31, 2023, the Company had no borrowings outstanding and availability of $600,000, 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. The aggregate unamortized debt issuance costs for the term loan was $916 and $1,041 as of March 31, 2023 and December 31, 2022, respectively.

The Company was ~~in compliance~~compliant with all applicable financial covenants contained in its ~~corporate level~~corporate-level debt agreements at ~~September 30, 2017.~~March 31, 2023.

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 ~~bore interest at a fixed rate of 6.804% through April 2017~~ and bear interest at a variable rate of ~~three month~~three-month LIBOR plus 170 basis points ~~thereafter~~ through maturity. The interest rate at ~~September 30, 2017~~March 31, 2023 was ~~3.011%~~6.502%. As of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016,~~2022, there was $129,120 original principal amount of Trust Preferred Securities outstanding and ~~$1,949~~$1,401 and ~~$2,024,~~$1,426, respectively, of unamortized debt issuance costs. The variable rate will transition from LIBOR to SOFR after June 30, 2023.

~~During~~The Company capitalized $1,996 and $1,166 of interest expense for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016, the Company incurred debt satisfaction charges, net~~2022, respectively.

Table of $3Contents

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 and ~~$437, respectively, on the retirement of various debt instruments, other than those disclosed elsewhere~~2022

(Unaudited and dollars in ~~the Company's condensed consolidated financial statements.~~thousands, except share/unit and per share/unit data)

(8) Derivatives and Hedging Activities


~~(9)~~	~~Derivatives and Hedging Activities~~

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~~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.

~~Table of Contents~~

~~LEXINGTON REALTY TRUST AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017 and 2016~~

~~(Unaudited and dollars in thousands, except share/unit and per share/unit data)~~

The ~~effective portion of~~ 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 ~~ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. The~~ Company did not incur any ineffectiveness during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016.~~2022.

~~The~~During July 2022, the Company ~~has designated the interest-rate~~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 ofin variability attributable to changes in the ~~LIBOR~~Term SOFR swap ~~rate~~rates on ~~$505,000 of LIBOR-indexed variable-rate~~its $300,000 SOFR-indexed variable rate unsecured term ~~loans.~~loan. Accordingly, changes in ~~the~~ fair value of the swaps are recorded in other comprehensive income (loss) and reclassified to earnings as interest becomes receivable or payable.

~~Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on~~ The swaps expire coterminous with the maturity of the term ~~loans.~~loan in January 2025. During the next 12 months, the Company estimates that an additional ~~$297~~$8,826 will be reclassified as a decrease toin interest ~~expense.~~expense if the swaps remain outstanding.

As of ~~September 30, 2017,~~March 31, 2023, 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

Notional

Interest Rate Derivative

Number of Instruments

Notional

Interest Rate Swaps

$505,000

Interest Rate Swaps

$300,000

The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the unaudited condensed consolidated balance ~~sheets as~~sheets:

As of March 31, 2023

As of December 31, 2022

Derivatives designated as hedging instruments:

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Interest Rate Swaps

Other Assets

13,128

Other Assets

16,318

Table of ~~September 30, 2017~~Contents

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 and ~~December 31, 2016.~~2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

As of September 30, 2017 As of December 31, 2016
Balance Sheet Location Fair Value Balance Sheet Location Fair Value
Derivatives designated as hedging instruments
Interest Rate Swap Asset Other Assets $ 510
Other Assets $ 44
Interest Rate Swap Liability Accounts Payable and Other Liabilities $ —
Accounts Payable and Other Liabilities $ (1,077 )

The ~~tables~~table below ~~present~~presents the effect of the Company's derivative financial instruments on the unaudited condensed consolidated statements of operations for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016.~~2022.


Derivatives in Cash Flow	Amount of Gain (Loss) Recognized in OCI on Derivatives March 31,				Amount of (Income) Loss Reclassified from Accumulated OCI into Income(1) March 31,
Hedging Relationships	2023		2022		2023		2022
Interest Rate Swaps	$	(1,019)	$	11,078	$	(2,171)	$	1,188
The Company's share of non-consolidated entity's interest rate cap	(45)		—		(285)		—
Total	$	(1,064)	$	11,078	$	(2,456)	$	1,188

Derivatives in Cash Flow Amount of Income (Loss) Recognized in OCI on Derivatives (Effective Portion) September 30,
Location of Loss
Reclassified from
Accumulated OCI into Income (Effective Portion)
Amount of Loss Reclassified from Accumulated OCI into Income (Effective Portion) September 30,
Hedging Relationships 2017 2016 2017 2016
Interest Rate Swaps $ 581
$ (6,035 ) Interest expense $ 962
$ 3,091
(1) Amounts reclassified from accumulated other comprehensive income (loss) to interest expense within the unaudited condensed consolidated statements of operations.

Total interest expense presented in the unaudited condensed consolidated statements of operations, in which the effects of cash flow hedges are recorded was $11,393 and $10,682 for the three months ended March 31, 2023 and 2022, 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 ~~September 30, 2017,~~March 31, 2023, the Company had not posted any collateral related to the agreements.

(9) Lease Accounting

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.

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.

Table of Contents

~~LEXINGTON REALTY~~LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2017~~March 31, 2023 and ~~2016~~2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

There were no write offs for the three months ended March 31, 2023. During the three months ended March 31, 2022, the Company wrote off an aggregate of $84, accounts receivable, net, relating to certain tenants suffering from the current economic conditions.


~~(10)~~	~~Concentration of Risk~~

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 unaudited condensed 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. For the three months ended March 31, 2023 and 2022, the Company incurred no costs that were not incremental to the execution of leases.

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. As of March 31, 2023, the Company had one lease that qualified as a sales-type lease.

The Company has 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 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. For the three months ended March 31, 2023, the interest income earned from sales-type leases of $1,833 is included in rental revenue in the unaudited condensed consolidated statements of operations. The Company earned no interest income from sales-type leases in 2022.

Rental Revenue Classification. The following table presents the Company’s classification of rental revenue for its operating leases and sales-type lease for the three months ended March 31, 2023 and 2022:


	Three Months Ended March 31,
Classification	2023		2022
Fixed	$	68,087	$	66,982
Sales-type lease income	1,833		—
Variable(1)	13,497		11,554
Total	$	83,417	$	78,536

(1) Primarily comprised of tenant reimbursements.

Table of Contents

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 and 2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

Future fixed rental receipts for operating and sales-type leases, assuming no new or re-negotiated leases as of March 31, 2023 were as follows:


	Operating		Sales-Type
2023 - remainder	$	199,952	$	3,921
2024	251,668		5,263
2025	234,021		5,473
2026	214,776		5,692
2027	178,082		5,920
2028	147,815		6,156
Thereafter	500,439		733,006
Total	$	1,726,753	$	765,431
Difference between undiscounted cash flow and present value			(703,579)
Investment in a sales-type lease			$	61,852

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, unless such payments are reasonably certain to be received.

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 March 31, 2023. 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.

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.

Table of Contents

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 and 2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

Supplemental information related to operating leases is as follows:


	Three Months Ended
	March 31, 2023		March 31, 2022
Weighted-average remaining lease term
Operating leases (years)	9.2		9.5
Weighted-average discount rate
Operating leases	4.0	%	4.0	%

The components of lease expense for the three months ended March 31, 2023 and 2022 were as follows:


Income Statement Classification	Fixed		Variable		Total
2023:
Property operating	$	886	$	7	$	893
General and administrative	377		39		416
Total	$	1,263	$	46	$	1,309

2022:
Property operating	$	886	$	—	$	886
General and administrative	377		35		412
Total	$	1,263	$	35	$	1,298

The Company recognized sublease income of $830 for the three months ended March 31, 2023 and 2022, respectively.

The following table shows the Company's maturity analysis of its operating lease liabilities as of March 31, 2023:


	Operating Leases
2023 - remainder	$	3,914
2024	5,199
2025	5,204
2026	4,174
2027	3,673
2028	1,061
Thereafter	6,440
Total lease payments	$	29,665
Less: Imputed interest	(5,680)
Present value of lease liabilities	$	23,985

Table of Contents

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 and 2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

(10)Allowance for Credit Loss

As of March 31, 2023, the Company had a $172 credit loss allowance resulting from an investment in a sales-type lease. There were no allowances for credit losses in 2022. The activity for the credit loss allowance related to the sales-type lease is as follows:


	For the Three Months Ended March 31, 2023
	Balance at Beginning of Period		Write-Offs		General Allowance		Balance at End of Period
Allowance for credit loss	$	93	$	—	$	79	$	172

As of March 31, 2023, 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 table details the investment in a sales-type lease as of March 31, 2023:


	As of March 31, 2023
	Amortized cost		Allowance		Net Investment		Allowance as a % of Amortized Cost
Investment in a sales-type lease	$	61,852	$	(172)	$	61,680	0.28	%

(11)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 ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016,~~2022, 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.

Table of Contents


~~(11)~~	~~Equity~~

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 and 2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

(12)Equity

Shareholders' ~~Equity.~~ During the nine months ended September 30, 2017, the Company issued 1,593,603 common shares under its At-The-Market offering program and generated aggregate gross proceeds of $17,362. During the nine months ended September 30, 2016, the Company issued 577,823 common shares under its direct share purchase plan, which includes its dividend reinvestment plan, raising net proceeds of $4,115.Equity:

During the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016,~~2022, the Company granted common shares to certain employees as follows:


	Three Months Ended March 31,
	2023		2022
Performance Shares:(1)
Shares granted:
Index - 1Q	407,611		282,720
Peer - 1Q	407,606		282,715
Grant date fair value per share:(2)
Index - 1Q	$	6.96	$	9.40
Peer - 1Q	$	6.50	$	8.78

Non-Vested Common Shares:(3)
Shares issued	376,480		295,230
Grant date fair value	$	4,010	$	4,304

Nine Months ended September 30,
2017 2016
Performance Shares⁽¹⁾

Shares granted:
Index - 1Q 106,706 404,466
Peer - 1Q 106,705 404,463
Index - 2Q 163,466 —
Peer - 2Q 163,463 —

Grant date fair value per share:⁽²⁾

Index - 1Q $6.82 $4.53
Peer - 1Q $6.34 $4.58
Index - 2Q $4.05 —
Peer - 2Q $4.27 —

Non-Vested Common Shares:⁽³⁾

Shares issued 237,560 225,090
Grant date fair value $2,551 $1,724

~~(1)~~

(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. The 2Q shares were subject to shareholder approval, which was obtained in May 2017.


~~(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~~ the ~~nine~~Company's total shareholder return growth after a three-year measurement period relative to an index and a group of peer companies. Dividends are not 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 the three months ended ~~September 30, 2017~~March 31, 2023, 266,812 performance shares of the remaining 443,359 issued in 2020 vested.

(2) The fair value of awards granted was determined at the grant date using a Monte Carlo simulation model.

(3) The shares vest ratably over a three-year service period.

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 the three months ended March 31, 2023 and ~~2016,~~2022, the Company did not sell shares under the ATM Program.

During the three months ended March 31, 2022, the Company issued ~~44,238~~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 ~~43,503,~~received $38,492 of net proceeds. No shares were sold on a forward basis during the three months ended March 31, 2023.

During 2021, the Company amended the terms of its ATM 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 March 31, 2023, common shares with an aggregate value of $294,985 remain available for issuance under the ATM program.

Stock Based Compensation. During the three months ended March 31, 2023 and 2022, the Company issued 24,008 and 13,304, respectively, of fully vested common shares to non-management members of the Company's Board of Trustees with a fair value of ~~$463~~$240 and ~~$350,~~$232, respectively.

Share Repurchase Program. In ~~July 2015,~~August 2022, the Company's Board of Trustees authorized the repurchase of up to an additional 10,000,000 common ~~shares. During~~shares under the ~~nine~~Company's share repurchase program, which does not have an expiration date. There were no common shares repurchased during the three months ended ~~September 30, 2016, the Company repurchased 1,184,113~~March 31, 2023 and 2022, respectively. As of March 31, 2023, 6,874,241 common shares ~~at an average price~~remain available for repurchase under this authorization. The Company records a liability for repurchases that have not yet been settled as of ~~$7.56 per common share. No~~the period end. There were no unsettled repurchases ~~occurred during the nine months ended September 30, 2017.~~as of March 31, 2023.

Table of Contents

~~LEXINGTON REALTY~~LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2017~~March 31, 2023 and ~~2016~~2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

Series C Preferred Stock. The Company had 1,935,400 shares of Series C Cumulative Convertible Preferred Stock (“Series C Preferred”) outstanding at March 31, 2023. 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 March 31, 2023, each share was convertible into 2.4339 common shares. This conversion ratio may increase over time if the Company's common share dividend exceeds certain quarterly thresholds.

If certain fundamental changes occur, holders may require the Company, in certain circumstances, to repurchase all or part of their shares of Series C Preferred. In addition, upon the occurrence of certain fundamental changes, the Company will, under certain circumstances, increase the conversion rate by a number of additional common shares or, in lieu thereof, may in certain circumstances elect to adjust the conversion rate upon the shares of Series C Preferred becoming convertible into shares of the public acquiring or surviving company.

The Company may, at the Company's option, cause shares of Series C Preferred to be automatically converted into that number of common shares that are issuable at the then prevailing conversion rate. The Company may exercise its conversion right only if, at certain times, the closing price of the Company's common shares equals or exceeds 125% of the then prevailing conversion price of the Series C Preferred.

Holders of shares of Series C Preferred generally have no voting rights, but will have limited voting rights if the Company fails to pay dividends for six or more quarters and under certain other circumstances. Upon conversion, the Company may choose to deliver the conversion value to investors in cash, common shares, or a combination of cash and common shares.

A summary of the changes in accumulated other comprehensive income (loss) related to the Company's cash flow hedges is as follows:


	Three Months Ended March 31,
	2023		2022
Balance at beginning of period	$	17,689	$	(6,258)
Other comprehensive income (loss) before reclassifications	(1,064)		11,078
Amounts of loss reclassified from accumulated other comprehensive income (loss) to interest expense	(2,456)		1,188
Balance at end of period	$	14,169	$	6,008

Nine Months ended September 30,
2017 2016
Balance at beginning of period $ (1,033 ) $ (1,939 )
Other comprehensive income (loss) before reclassifications 581
(6,035 )
Amounts of loss reclassified from accumulated other comprehensive income to interest expense 962
3,091
Balance at end of period $ 510
$ (4,883 )

Noncontrolling Interests. In conjunction with several of the Company's acquisitions in prior years, sellers were issued limited partner interests in LCIF (“OP ~~units~~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 ~~at the holder's option~~ for approximately 1.13 common shares, subject to future adjustments.

As of ~~September 30, 2017,~~March 31, 2023 and 2022, 3,572 and 6,708 common shares, respectively, were issued by the Company, in connection with OP unit redemptions, for an aggregate value of $18 and $36, respectively.

As of March 31, 2023, there were approximately ~~3,225,000~~736,000 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.


~~(12)~~	~~Related Party Transactions~~

In connection with efforts to procure non-recourse mezzanine financing from an affiliate of the Company's Chairman, pursuant to the terms of the EB-5 visa program administered by the United States Citizenship and Immigration Services (“USCIS”), for a joint venture in Houston, Texas, in which the Company has an investment, the Company executed a guaranty in favor of an affiliate of its Chairman. The guaranty provided that the Company would reimburse investors providing the funds for such financing if the following occured: (1) the joint venture received such funds, (2) the USCIS denied the financing solely because the project was not permitted under the EB-5 visa program, and (3) the joint venture failed to return such funds. As of September 30, 2017, USCIS approved the project, and the guaranty terminated by its terms.

In addition, in connection with efforts, on a non-binding basis, to procure non-recourse mezzanine financing from an affiliate of the Company's Chairman, pursuant to the terms of the EB-5 visa program administered by the USCIS, for an investment in Charlotte, North Carolina owned by LCIF, LCIF has agreed to reimburse the Chairman's affiliate up to approximately $107 for its expenses, but no expenses were reimbursed as of September 30, 2017.

~~There were no other related party transactions other than those disclosed elsewhere in this Quarterly Report and the audited consolidated financial statements in the Annual Report.~~

2223

Table of Contents

~~LEXINGTON REALTY~~LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2017~~March 31, 2023 and ~~2016~~2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)

The following discloses the effects of changes in the Company's ownership interests in its noncontrolling interests:


~~(13)~~	~~Commitments and Contingencies~~


	Net Income Attributable to Shareholders and Transfers from Noncontrolling Interests
	Three Months Ended March 31,
	2023		2022
Net income attributable to LXP Industrial Trust shareholders	$	11,166	$	10,622
Transfers from noncontrolling interests:

Increase in additional paid-in-capital for redemption of noncontrolling OP units	18		36
Change from net income attributable to shareholders and transfers from noncontrolling interests	$	11,184	$	10,658

(13)Related Party Transactions

There were no related party transactions other than those disclosed elsewhere in these unaudited condensed consolidated financial statements.

(14)Commitments and Contingencies

In addition to the commitments and contingencies disclosed elsewhere, ~~including in Note 12 above, and previously disclosed,~~ 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 March 31, 2023, the Company had six ongoing consolidated development projects and expects to incur approximately $76,000 of costs during the remainder of 2023, excluding noncontrolling interests' share, to substantially complete the construction of such projects. As of March 31, 2023, the Company has 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, ~~Lexington~~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 ~~and~~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.

~~GSMSC II 2006-GG6 Bridgewater Hills Corporate Center, LLC v. Lexington Realty Trust (Supreme Court~~

(15)Supplemental Disclosure of Statement of Cash Flow Information

In addition to disclosures discussed elsewhere, during the ~~State of New York, County of New York-Index No. 653117/2015)~~

~~On September 16, 2015, GSMSC II 2006-GG6 Bridgewater Hills Corporate Center, LLC commenced an action as lender against~~three months ended March 31, 2023 and 2022, the Company based on a limited guaranty of recourse obligations executed by a predecessor entity of the Company in connection with a mortgage loan secured by a property owner subsidiary's commercial property in Bridgewater, New Jersey. The property owner subsidiary defaulted due to non-payment after the sole tenant vacated at the end of the lease term. The lender claimed approximately $9,200 in order to satisfy the outstanding amount of the loan, pluspaid $11,320 and $9,261, respectively, for interest ~~reasonable attorney’s fees~~ and ~~other costs~~$126 and ~~disbursements related thereto.~~

The lender claimed that the Company's limited guaranty was triggered due to the merger of Newkirk Realty Trust, Inc. and Lexington Corporate Properties Trust on December 31, 2006, arguing that it constituted an event of default because it was a transfer that was not permitted by the loan agreement. The limited guaranty provides that the guarantor's liability$36, respectively, for the guaranteed obligations shall not exceed $10,000. The Company filed a motion to dismiss, which was generally denied. The parties conducted discovery consisting of document production. The Company recorded a $2,050 litigation reserve during the quarter ended September 30, 2017 relating to this litigation as the Company determined that a liability was "probable" (as defined by FASB ASC 450-20-20). A mediation was held on October 5, 2017, but a settlement was not reached that day. Following the mediation, a settlement agreement was executed that requires a $2,050 payment.

~~The lender also brought a foreclosure action against the property owner subsidiary. A foreclosure sale was held September 13, 2016 and the lender acquired the property for a nominal amount.~~

During the nine months ended September 30, 2017, the Company incurred $2,226 in legal costs relating to this litigation, which are included in general and administrative expense on the Company's unaudited condensed consolidated statement of operations.

income taxes.

Table of Contents

~~LEXINGTON REALTY~~LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2017~~March 31, 2023 and ~~2016~~2022

(Unaudited and dollars in thousands, except share/unit and per share/unit data)


~~(14)~~	~~Supplemental Disclosure of Statement of Cash Flow Information~~

~~In addition to disclosures discussed elsewhere, during~~During the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016,~~2022, the Company ~~paid $50,691~~accrued additions for capital projects of $34,924 and ~~$62,995, respectively, for interest and $1,687 and $1,163, respectively, for income taxes.~~$40,985, respectively.

~~During the nine months ended September 30, 2016,~~

(16)Subsequent Events

Subsequent to March 31, 2023, the Company ~~sold~~borrowed $20,000, net, on its ~~interests in certain properties, which included the assumption by the buyers of such properties of $242,269 of the related non-recourse mortgage debt.~~


~~(15)~~	~~Subsequent Events~~

~~Subsequent to September 30, 2017 and in addition to disclosures elsewhere in the unaudited condensed consolidated financial statements, the Company:~~

~~acquired an industrial property in Lafayette, Indiana for $17,450;~~

~~disposed of three properties to unrelated third parties for an aggregate gross sale price of $19,043; and~~

~~transferred an office property in Lisle, Illinois to its lender in full satisfaction of the related $9,120 non-recourse mortgage.~~

revolving credit facility.

Table of Contents

~~LEPERCQ CORPORATE INCOME FUND L.P. AND CONSOLIDATED SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED BALANCE SHEETS~~

~~(Unaudited and in thousands)~~

September 30, 2017 December 31, 2016
Assets:
Real estate, at cost $ 761,733
$ 731,202
Real estate - intangible assets 114,134
104,761
Investment in real estate under construction —
40,443
875,867
876,406
Less: accumulated depreciation and amortization 234,456
236,930
Real estate, net 641,411
639,476
Cash and cash equivalents 66,887
52,031
Restricted cash 1,540
1,545
Investment in and advances to non-consolidated entities 5,738
5,526
Deferred expenses, net 6,543
5,070
Rent receivable - current 233
358
Rent receivable - deferred 20,616
17,449
Related party advances, net —
5,967
Other assets 2,713
1,182
Total assets $ 745,681
$ 728,604

Liabilities and Partners' Capital:
Liabilities:
Mortgages and notes payable, net $ 168,490
$ 169,212
Co-borrower debt 165,839
146,404
Related party advances, net 2,157
—
Accounts payable and other liabilities 5,197
3,559
Accrued interest payable 663
673
Deferred revenue - including below market leases, net 853
1,003
Distributions payable 14,742
16,916
Prepaid rent 3,015
3,214
Total liabilities 360,956
340,981

Commitments and contingencies

Partners' capital 384,725
387,623
Total liabilities and partners' capital $ 745,681
$ 728,604

~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.~~

~~Table of Contents~~

~~LEPERCQ CORPORATE INCOME FUND L.P. AND CONSOLIDATED SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS~~

~~(Unaudited and in thousands, except unit data)~~

Three Months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Gross revenues:
Rental $ 19,126
$ 28,496
$ 55,125
$ 98,648
Tenant reimbursements 2,116
2,062
6,044
6,782
Total gross revenues 21,242
30,558
61,169
105,430
Expense applicable to revenues:
Depreciation and amortization (10,114 ) (7,793 ) (28,495 ) (25,402 )
Property operating (3,000 ) (3,371 ) (9,599 ) (11,079 )
General and administrative (1,727 ) (2,643 ) (5,019 ) (7,112 )
Non-operating income 3
44
235
299
Interest and amortization expense (4,099 ) (7,109 ) (11,438 ) (23,835 )
Debt satisfaction charges, net —
(5,773 ) —
(7,388 )
Impairment charges (6,802 ) (65,509 ) (12,061 ) (67,935 )
Gains on sales of properties —
—
—
16,029
Loss before provision for income taxes and equity in earnings of non-consolidated entities (4,497 ) (61,596 ) (5,208 ) (20,993 )
Provision for income taxes (4 ) (32 ) (30 ) (57 )
Equity in earnings of non-consolidated entities 79
49
338
252
Net loss $ (4,422 ) $ (61,579 ) $ (4,900 ) $ (20,798 )
Net loss per unit $ (0.05 ) $ (0.74 ) $ (0.06 ) $ (0.25 )
Weighted-average units outstanding 83,125,058
83,241,396
83,202,190
83,241,396

~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.~~

~~Table of Contents~~

~~LEPERCQ CORPORATE INCOME FUND L.P. AND CONSOLIDATED SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL~~

~~(Unaudited and in thousands, except unit amounts)~~

Nine Months ended September 30, 2017 Units Partners' Capital
Balance December 31, 2016 83,241,396
$ 387,623
Changes in co-borrower debt allocation —
180,565
Redemption of OP units (2,675,785 ) (129,990 )
Distributions —
(48,573 )
Net loss —
(4,900 )
Balance September 30, 2017 80,565,611
$ 384,725

Nine Months ended September 30, 2016
Balance December 31, 2015 83,241,396
$ 461,657
Changes in co-borrower debt allocation —
(17,179 )
Distributions —
(49,900 )
Net loss —
(20,798 )
Balance September 30, 2016 83,241,396
$ 373,780

~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.~~

~~Table of Contents~~

~~LEPERCQ CORPORATE INCOME FUND L.P. AND CONSOLIDATED SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(Unaudited and in thousands)~~

Nine Months ended September 30,
2017 2016
Net cash provided by operating activities $ 32,685
$ 30,975
Cash flows from investing activities:
Acquisition of real estate, including intangible assets (24,317 ) —
Investments in real estate under construction (20,894 ) (23,390 )
Capital expenditures (3,925 ) (1,226 )
Net proceeds from the sale of properties 7,106
185,219
Investment in and advances to non-consolidated entities (1,067 ) (81 )
Distributions from non-consolidated entities in excess of accumulated earnings 855
425
Increase in deferred leasing costs (2,157 ) (997 )
Change in restricted cash 5
812
Real estate deposits (24 ) 1,932
Net cash provided by (used in) investing activities (44,418 ) 162,694
Cash flows from financing activities:
Distributions to partners (50,747 ) (50,200 )
Principal amortization payments (785 ) (1,053 )
Increase in deferred financing costs (13 ) (79 )
Principal payments on debt, excluding normal amortization —
(23,934 )
Co-borrower debt borrowings (payments) 200,000
(58,000 )
OP unit redemptions (129,990 ) —
Related party advances, net 8,124
553
Net cash provided by (used in) financing activities 26,589
(132,713 )
Change in cash and cash equivalents 14,856
60,956
Cash and cash equivalents, at beginning of period 52,031
19,130
Cash and cash equivalents, at end of period $ 66,887
$ 80,086

~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.~~

~~Table of Contents~~

~~LEPERCQ CORPORATE INCOME FUND L.P. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017 and 2016~~

~~(Unaudited and dollars in thousands, except share/unit data)~~

~~(1)~~ ~~The Partnership and Financial Statement Presentation~~

Lepercq Corporate Income Fund L.P. (together with its consolidated subsidiaries, except when the context only applies to the parent entity, the “Partnership”) was organized in 1986 as a limited partnership under the Delaware Revised Uniform Limited Partnership Act. The Partnership's sole general partner, Lex GP-1 Trust (the “General Partner”), is a wholly-owned subsidiary of Lexington Realty Trust (“Lexington”). The Partnership serves as an operating partnership subsidiary for Lexington. As of September 30, 2017, Lexington, through Lex LP-1 Trust, a wholly-owned subsidiary, and the General Partner, owned approximately 96% of the outstanding units of the Partnership.

As of September 30, 2017, the Partnership had ownership interests in 33 consolidated real estate properties, located in 21 states. The properties in which the Partnership has an interest are leased to tenants in various industries.

The assets and credit of each property owner subsidiary of the Partnership with a property subject to a mortgage loan are not available to creditors to satisfy the debt and the other obligations of any other person, including any other property owner subsidiary of the Partnership 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.

The financial statements contained in this Quarterly Report on Form 10-Q (this “Quarterly Report”) for the three and nine months ended September 30, 2017 have been prepared by the Partnership in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all information and footnotes required by GAAP for complete financial statements. However, in the opinion of management, the interim financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results of the periods presented. Interim results are not necessarily indicative of the results that may be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the Partnership's audited consolidated financial statements and notes thereto included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on March 1, 2017 (“Annual Report”).

~~Basis of Presentation and Consolidation.~~ The Partnership's unaudited condensed consolidated financial statements are prepared on the accrual basis of accounting in accordance with GAAP. The financial statements reflect the accounts of the Partnership and its consolidated subsidiaries. The Partnership consolidates its wholly-owned subsidiaries, partnerships and joint ventures which it controls (i) through voting rights or similar rights or (ii) by means other than voting rights if the Partnership is the primary beneficiary of a variable interest entity (“VIE”). Entities that the Partnership does not control and entities that are VIEs in which the Partnership is not the primary beneficiary are accounted for under appropriate GAAP.

~~Earnings Per Unit. Net income (loss) per unit is computed by dividing net income (loss) by the weighted-average number of units outstanding during the period. There are no potential dilutive securities.~~

~~Unit Redemptions~~. The Partnership's limited partner units that are issued and outstanding, other than those held by Lexington, are currently redeemable at certain times, only at the option of the holders, for shares of beneficial interests classified as common stock of Lexington, par value $0.0001 per share ("common shares"), on a one to approximately 1.13 basis, subject to future adjustments. These units are not mandatorily redeemable by the Partnership. As of September 30, 2017, Lexington's common shares had a closing price of $10.22 per share. The estimated fair value of these units was $37,117, assuming all outstanding limited partner units not held by Lexington were redeemed on such date.

~~Table of Contents~~

~~LEPERCQ CORPORATE INCOME FUND L.P. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017 and 2016~~

~~(Unaudited and dollars in thousands, except share/unit data)~~

~~Allocation of Overhead Expenses~~. The Partnership does not pay a fee to the General Partner for the day-to-day management of the Partnership. Certain expenses incurred by the General Partner and its affiliates, including Lexington, such as corporate-level interest, amortization of deferred loan costs, payroll and general and administrative expenses are allocated to the Partnership and reimbursed to the General Partner in accordance with the Partnership's partnership agreement. The allocation is based upon gross rental revenues.

~~Distributions; Allocations of Income and Loss~~. As provided in the Partnership's partnership agreement, distributions and income and loss for financial reporting purposes are allocated to the partners based on their ownership of units. Special allocation rules included in the partnership agreement affect the allocation of taxable income and loss. The Partnership paid or accrued gross distributions of $48,573 ($0.58 per weighted-average unit) and $49,900 ($0.60 per weighted-average unit) to its partners during the nine months ended September 30, 2017 and 2016, respectively.

~~Use of Estimates.~~ The Partnership has made a number of significant estimates and assumptions to prepare these unaudited condensed consolidated financial statements in conformity with GAAP, including, among others, relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. These estimates and assumptions are based on management's best estimates and judgment. The Partnership evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors. The Partnership adjusts such estimates when facts and circumstances dictate. The most significant estimates made include the recoverability of accounts receivable, allocation of property purchase price to tangible and intangible assets acquired and liabilities assumed, the determination of VIEs and which entities should be consolidated, the determination of impairment of long-lived assets and equity method investments and the useful lives of long-lived assets. Actual results could differ materially from those estimates.

~~Fair Value Measurements.~~ The Partnership 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 Partnership 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.

~~Acquisition, Development and Construction Arrangements.~~ The Partnership evaluates loans receivable where the Partnership participates in residual profits through loan provisions or other contracts to ascertain whether the Partnership has the same risks and rewards as an owner or a joint venture partner. Where the Partnership concludes that such arrangements are more appropriately treated as an investment in real estate, the Partnership reflects such loan receivable as an equity investment in real estate under construction in the unaudited condensed consolidated balance sheets. In these cases, no interest income is recorded on the loan receivable and the Partnership records capitalized interest during the construction period. In arrangements where the Partnership engages a developer to construct a property or provide funds to a tenant to develop a property, the Partnership will capitalize the funds provided to the developer/tenant and internal costs of interest and real estate taxes, if applicable, during the construction period.

~~Co-borrower Debt.~~ The Partnership is subject to ASC 405-40, which requires recognition of such obligations as the sum of (a) the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and (b) any additional amount the reporting entity expects to pay on behalf of its co-obligors.

~~Revision to Previously Issued Financial Statements.~~ During the quarter ended December 31, 2016, the Partnership corrected an immaterial error in the treatment of a lease termination payment received in the quarter of June 30, 2016 in the amount of $7,685. The lease termination payment was originally amortized over the life of the new tenant lease that necessitated the lease termination. As corrected, the payment was fully recognized in the Partnership's total gross revenues in the quarter ended June 30, 2016.

~~Table of Contents~~

~~LEPERCQ CORPORATE INCOME FUND L.P. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017 and 2016~~

~~(Unaudited and dollars in thousands, except share/unit data)~~

The Partnership concluded that the error noted above was not material to any historical periods presented. However, in order to correctly present the treatment of the lease termination payment, management elected to revise previously issued financial statements in the Partnership's next subsequent periodic filing that included such financial statements. The following table shows the affected line items within the Partnership's unaudited condensed consolidated financial statements:

For the three months ended September 30, 2016
As Originally Reported Correction As Adjusted
Total gross revenues $ 30,908
$ (350 ) $ 30,558
Net loss $ (60,901 ) $ (678 ) $ (61,579 )
Net loss per unit $ (0.73 ) $ (0.01 ) $ (0.74 )

For the nine months ended September 30, 2016
As Originally Reported Correction As Adjusted
Total gross revenues $ 98,784
$ 6,646
$ 105,430
Net income (loss) $ (26,652 ) $ 5,854
$ (20,798 )
Net income (loss) per unit $ (0.32 ) $ 0.07
$ (0.25 )

~~Recently Issued Accounting Guidance.~~ In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which amends the guidance for revenue recognition to eliminate the industry-specific revenue recognition guidance and replace it with a principle based approach for determining revenue recognition. The effective date of the new guidance was updated by ASU 2015-14 and is effective for reporting periods beginning after December 15, 2017. The Partnership’s revenue-producing contracts are primarily leases that are not within the scope of this standard as leases are excluded from ASU 2014-09. The Partnership expects that it may be impacted in its recognition of non-lease revenue, non-lease components of revenue from lease agreements (upon adoption of ASU 2016-02) and the timing of its recognition of real estate sale transactions. Under ASU 2014-09, revenue recognition for real estate sales is largely based on the transfer of control and the buyer having the ability to direct the use of, or obtain substantially all of the remaining benefit from, the asset (which generally will occur on the closing date); the factor of continuing involvement is no longer a specific consideration for the timing of recognition. As a result, the Partnership generally expects that the new guidance may result in transactions qualifying as sales of real estate at an earlier date than under current accounting guidance. The Partnership is finalizing its evaluation of the impact of the standard but currently believes the impact would be limited to the timing and income statement presentation of revenue and not the total amount of revenue recognized over time. The Partnership will adopt ASU 2014-09 effective January 1, 2018 and anticipates using the modified retrospective approach. As the majority of the Partnership’s revenue is from rental income related to leases, the Partnership does not expect the ASU to have a material impact on the consolidated financial statements upon adoption.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize a right of use asset and related lease liability for those leases classified as operating leases at the commencement date that have lease terms of more than 12 months and amends certain lessor guidance. The ASU is expected to result in the recognition of a right-to-use asset and related liability to account for the Partnership's future obligations under its ground lease arrangements for which the Partnership is the lessee. From a lessor perspective, the Partnership expects that it will be required to bifurcate lease agreements to separately recognize and disclose non-lease components that are executory in nature. Lease components will continue to be primarily recognized on a straight-line basis over the lease term and certain non-lease components will be accounted for under the new revenue recognition guidance in ASU 2014-09 (upon adoption of ASU 2016-02). Additionally, the new ASU will require that the Partnership capitalize, as initial direct costs, only those costs that are incurred due to the execution of a lease. ASU 2016-02 will be effective for fiscal years beginning after December 15, 2018, and interim periods within those years, and requires a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements; with early adoption permitted. The Partnership continues to evaluate the impact of the adoption of the new guidance on its consolidated financial statements.

~~Table of Contents~~

~~LEPERCQ CORPORATE INCOME FUND L.P. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017 and 2016~~

~~(Unaudited and dollars in thousands, except share/unit data)~~

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which addresses how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those years; however early adoption is permitted. The Partnership does not believe this guidance will have a material impact on its consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which clarifies guidance on the classification and presentation of changes in restricted cash. The ASU is effective for reporting periods beginning after December 15, 2017, with early adoption permitted, and will be applied retrospectively to all periods presented. Upon adoption, restricted cash balances will be included along with cash and cash equivalents as of the end of the period and beginning of period, respectively, in the Partnership's consolidated statement of cash flows for all periods presented. Upon adoption, separate line items showing changes in restricted cash balances will be eliminated from the Partnership's consolidated statement of cash flows.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business when evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The ASU is effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The Partnership expects that acquisitions of real estate or in-substance real estate will not meet the revised definition of a business and thus will be treated as asset acquisitions. Acquisition costs for those acquisitions that are not businesses will be capitalized rather than expensed.

In February 2017, the FASB issued ASU 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Topic 610-20), which requires that all entities account for the derecognition of a business in accordance with ASC 810, including instances in which the business is considered in-substance real estate. The ASU requires the Partnership to measure at fair value any retained interest in a partial sale of real estate. The ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2017. The Partnership will adopt ASU 2017-05 effective January 1, 2018, along with ASU 2014-09, and it is not expected to have a material impact on its consolidated financial statements.

~~(2)~~ ~~Investment in Real Estate and Real Estate Under Construction~~

~~The Partnership completed the following acquisitions and build-to-suit arrangements during the nine months ended September 30, 2017:~~

Property Type Location Acquisition Date
Initial
Cost
Basis
Lease Expiration Land and Land Estate Building and Improvements Lease in-place Value Intangible
Office Charlotte, NC April 2017 $ 61,339
04/2032 $ 3,771
$ 47,064
$ 10,504
Industrial Grand Prairie, TX June 2017 24,317
03/2037 3,166
17,985
3,166
$ 85,656
$ 6,937
$ 65,049
$ 13,670

During the nine months ended September 30, 2017, the Partnership disposed of its interest in two vacant office properties for an aggregate gross sale price of $7,591 and recognized aggregate impairment charges of $5,259. During the nine months ended September 30, 2016, the Partnership disposed of its interest in certain properties, including land investments, for an aggregate gross sale price of $445,565. The Partnership recognized aggregate gains on sales of properties of $16,029, aggregate impairment charges of $67,935 and aggregate debt satisfaction charges of $7,388 relating to properties disposed of during the nine months ended September 30, 2016. The aggregate impairment charges recorded during the nine months ended September 30, 2016, related primarily to the sale of the three land investments in New York, New York. The land investments were subject to 99-year leases with annual escalations, and the deferred rent receivable balance at the date of sale of $91,213 was written off.

~~Table of Contents~~

~~LEPERCQ CORPORATE INCOME FUND L.P. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017 and 2016~~

~~(Unaudited and dollars in thousands, except share/unit data)~~

The Partnership 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 and the potential sale or transfer of the property in the near future. An asset is determined to be impaired if the asset's carrying value is in excess of its estimated fair value. During the nine months ended September 30, 2017, the Partnership recognized an impairment charge of $6,802 on a partially vacant office property.

~~(3)~~ ~~Investments in and Advances to Non-Consolidated Entities~~

~~In July 2014, the Partnership acquired a 1.0% interest in an office property in Philadelphia, Pennsylvania for $263. The Partnership accounts for this investment under the cost basis of accounting.~~

~~On September 1, 2012, the Partnership acquired a 2% equity interest in Net Lease Strategic Assets Fund L.P. (“NLS”) for cash of $189 and the issuance of 457,211 limited partner units to Lexington.~~

The Partnership's carrying value in NLS at September 30, 2017 and December 31, 2016 was $5,436 and $5,224, respectively. The Partnership recognized net income from NLS of $323 and $236 in equity in earnings from non-consolidated entities during the nine months ended September 30, 2017 and 2016, respectively. The Partnership contributed $1,067 and $81 to NLS during the nine months ended September 30, 2017 and 2016, respectively. In addition, the Partnership received distributions of $1,178 and $661 from NLS during the nine months ended September 30, 2017 and 2016, respectively.

~~(4)~~ ~~Fair Value Measurements~~

~~The following table presents the Partnership's assets measured at fair value as of September 30, 2017, aggregated by the level in the fair value hierarchy within which those measurements fall:~~

Balance Fair Value Measurements Using
Description September 30, 2017 (Level 1) (Level 2) (Level 3)
Impaired real estate assets* $ 2,090
$ —
$ —
$ 2,090

* Represents a non-recurring fair value measurement as of the date of impairment.

~~The table below sets forth the carrying amounts and estimated fair values of the Partnership's financial instruments as of September 30, 2017 and December 31, 2016:~~

As of September 30, 2017 As of December 31, 2016
Carrying Amount Fair Value Carrying Amount Fair Value
Liabilities
Debt $ 334,329
$ 333,181
$ 315,616
$ 314,509

The Partnership estimates the fair value of its real estate assets, including non-consolidated real estate assets, by using income and market valuation techniques. The Partnership may estimate fair values using market information such as broker opinions of value, 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 Partnership 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 Partnership under-estimates forecasted cash outflows (tenant improvements, lease commissions and operating costs) or over-estimates forecasted cash inflows (rental revenue rates), the estimated fair value of its real estate assets could be overstated.

~~Table of Contents~~

~~LEPERCQ CORPORATE INCOME FUND L.P. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017 and 2016~~

~~(Unaudited and dollars in thousands, except share/unit data)~~

~~The fair value of the Partnership's debt is primarily estimated utilizing Level 3 inputs by using an estimated discounted cash flow analysis, based upon estimates of market interest rates.~~

~~Cash Equivalents, Restricted Cash, Accounts Receivable and Accounts Payable~~. The Partnership 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.

~~(5)~~ ~~Mortgages and Notes Payable and Co-Borrower Debt~~

~~The Partnership had the following mortgages and notes payable outstanding as of September 30, 2017 and December 31, 2016:~~

September 30, 2017 December 31, 2016
Mortgages and notes payable $ 169,173
$ 169,958
Unamortized debt issuance costs (683 ) (746 )
$ 168,490
$ 169,212

Interest rates, including imputed rates, ranged from 4.0% to 6.5% at September 30, 2017 and December 31, 2016, and the mortgages and notes payable mature between 2019 and 2026. The weighted-average interest rate at September 30, 2017 and December 31, 2016 was approximately 4.7%.

Lexington's, and the Partnership's as co-borrower, $905,000 unsecured credit agreement with KeyBank National Association, as agent, was amended in September 2017 to, among other things, increase the overall facility to $1,105,000. With lender approval, Lexington can increase the size of the amended facility to an aggregate $2,010,000. A summary of the significant terms are as follows:



	~~Maturity Date~~	~~Current~~ ~~Interest Rate~~
~~$505,000 Revolving Credit Facility~~⁽¹⁾	~~August 2019~~	~~LIBOR + 1.00%~~
~~$300,000 Term Loan~~⁽²⁾	~~August 2020~~	~~LIBOR + 1.10%~~
~~$300,000 Term Loan~~⁽³⁾	~~January 2021~~	~~LIBOR + 1.10%~~


~~(1)~~	Increased from $400,000. Maturity date can be extended to August 2020 at the Lexington's option. The interest rate ranges from LIBOR plus 0.85% to 1.55%. At September 30, 2017, the revolving credit facility had $200,000 of borrowings outstanding, $4,600 of letters of credit and availability of $300,400 subject to covenant compliance.


~~(2)~~	Increased from $250,000. The interest rate ranges from LIBOR plus 0.90% to 1.75%. Interest-rate swap agreements were previously entered into to fix the LIBOR component at a weighted-average rate of 1.09% through February 2018 on $250,000 of outstanding LIBOR-based borrowings.


~~(3)~~	Increased from $255,000. The interest rate ranges from LIBOR plus 0.90% to 1.75%. Interest-rate swap agreements were previously entered into to fix the LIBOR component at a weighted-average rate of 1.42% through January 2019 on $255,000 of outstanding LIBOR-based borrowings.

~~Lexington was in compliance with all applicable financial covenants contained in its corporate level debt agreements at September 30, 2017.~~

In accordance with the guidance of ASC 405-40, the Partnership, as it is a co-borrower with Lexington, recognizes a proportion of the outstanding amounts of the above-mentioned term loans and revolving credit facility as co-borrower debt in the accompanying unaudited condensed consolidated balances sheets. In accordance with the Partnership’s partnership agreement, the Partnership is allocated a portion of these debts based on gross rental revenues, which represents its agreed to obligation. The Partnership's allocated co-borrower debt was $165,839 and $146,404 as of September 30, 2017 and December 31, 2016, respectively. Non-cash changes in co-borrower debt are recognized in partners’ capital in the accompanying unaudited condensed consolidated statements of changes in partners’ capital.

~~Table of Contents~~

~~LEPERCQ CORPORATE INCOME FUND L.P. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017 and 2016~~

~~(Unaudited and dollars in thousands, except share/unit data)~~

~~(6)~~ ~~Concentration of Risk~~

Subject to the terms of the partnership agreement, the Partnership seeks to reduce its operating and leasing risks through the geographic diversification of its properties, tenant industry diversification, avoidance of dependency on a single asset and the creditworthiness of its tenants. For the nine months ended September 30, 2017 and 2016, the following tenants represented greater than 10% of rental revenues:

2017 2016
Preferred Freezer Services of Richland, LLC 17.9 % N/A
SM Ascott LLC⁽¹⁾
N/A
13.1 %
Tribeca Ascott LLC⁽¹⁾
N/A
11.2 %
AL-Stone Ground Tenant LLC⁽¹⁾
N/A
10.2 %


~~(1)~~	The Partnership net leased these individual land parcels to the tenants under non-cancellable 99-year (original term) leases. The improvements on these parcels are owned by the tenants and consist of three high-rise hotels located in New York, NY. The Partnership sold these assets in September 2016.

~~Cash and cash equivalent balances at certain institutions may exceed insurable amounts. The Partnership believes it mitigates this risk by investing in or through major financial institutions.~~

~~(7)~~ ~~Related Party Transactions~~

The Partnership had the following related party transactions in addition to related party transactions discussed elsewhere in this Quarterly Report and the audited consolidated financial statements in the Annual Report.

~~The Partnership had outstanding net advances owed from (to) Lexington of $(2,157) and $5,967 as of September 30, 2017 and December 31, 2016, respectively. The advances are payable on demand.~~

Lexington earned distributions of $46,732 and $48,032 during the nine months ended September 30, 2017 and 2016, respectively. In September 2017, the Partnership redeemed 2,675,785 OP units owned by Lexington that were entitled to aggregate annual distributions of $3.25 per unit for $129,990.

The Partnership was allocated interest expense by Lexington, in accordance with the partnership agreement, relating to certain lending facilities of $5,913 and $9,605 for the nine months ended September 30, 2017 and 2016, respectively.

Lexington, on behalf of the General Partner, pays for certain general administrative and other costs on behalf of the Partnership from time to time. These costs are reimbursable by the Partnership. These costs were approximately $4,911 and $7,262 for the nine months ended September 30, 2017 and 2016, respectively.

A Lexington affiliate provides property management services for certain Partnership properties. The Partnership recognized property operating expenses of $515 and $580 for the nine months ended September 30, 2017 and 2016, respectively, for aggregate fees charged by the affiliate.

~~(8)~~ ~~Commitments and Contingencies~~

~~In addition to the commitments and contingencies disclosed elsewhere, the Partnership has the following commitments and contingencies.~~

The Partnership 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 Partnership, 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.

~~Table of Contents~~

~~LEPERCQ CORPORATE INCOME FUND L.P. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017 and 2016~~

~~(Unaudited and dollars in thousands, except share/unit data)~~

The Partnership and Lexington are parties to a funding agreement under which Lexington may be required to fund distributions made on account of OP units. Pursuant to the funding agreement, if the Partnership does not have sufficient cash available to make a quarterly distribution to its limited partners in an amount in accordance with the partnership agreement, Lexington is required to fund the shortfall. Payments under the agreement will be made in the form of loans to the Partnership and will bear interest at prevailing rates as determined by Lexington in its discretion, but no less than the applicable federal rate. The Partnership's right to receive these loans will expire if no OP units remain outstanding and all such loans are repaid. No amounts had been advanced under this funding agreement.

In May 2014, the Partnership guaranteed $250,000 aggregate principal amount of 4.40% Senior Notes due 2024 (“2024 Senior Notes”) issued by Lexington at an issuance price of 99.883% of the principal amount and in June 2013, the Partnership guaranteed $250,000 aggregate principal amount of 4.25% Senior Notes due 2023 (“2023 Senior Notes”) issued by Lexington at an issuance price of 99.026% of the principal amount, collectively referred to as the Senior Notes. The Senior Notes are unsecured and pay interest semi-annually in arrears. Lexington may redeem the Senior 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 premium.

From time to time, the Partnership is directly or indirectly involved in legal proceedings arising in the ordinary course of the Partnership's business. The Partnership 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 Partnership's business, financial condition and results of operations.

~~(9)~~ ~~Supplemental Disclosure of Statement of Cash Flow Information~~

In addition to disclosures discussed elsewhere, during the nine months ended September 30, 2017 and 2016, the Partnership paid $11,527 and $23,570, respectively, for interest and $121 and $33, respectively, for income taxes.

~~In 2016, the Partnership sold its interest in certain land investments, which included the assumption of the aggregate related non-recourse mortgage debt of $242,269.~~

~~(10)~~ ~~Subsequent Events~~

~~Subsequent to September 30, 2017, the Partnership sold its interest in a vacant industrial property for $10,000.~~

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Introduction

~~When we use~~Unless stated otherwise or the ~~terms “the Company,~~context otherwise requires, the “Company,” the “Trust,” “LXP,” “we,” ~~“us”~~“our,” and ~~“our,~~“us,” we ~~mean Lexington Realty~~refer collectively to LXP Industrial Trust and ~~all entities owned by us, including non-consolidated entities, except where it is clear that~~its consolidated subsidiaries. All of the ~~term means only Lexington Realty Trust. When we use the terms the “Partnership” or “LCIF”, we mean Lepercq Corporate Income Fund L.P.~~Company's interests are held, and all of the property operating activities are conducted through special purposes entities, ~~owned by it, including non-consolidated~~which we refer to as property owner subsidiaries or lender subsidiaries and are separate and distinct legal entities, ~~except where it is clear that the term means only LCIF.~~but in some instances are consolidated for financial statement purposes and/or disregarded for income tax purposes. References herein to ‘‘this Quarterly Report” are to this Quarterly Report on Form 10-Q for the three ~~and nine~~ months ended ~~September 30, 2017.~~March 31, 2023. The results of operations contained herein for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022 are not necessarily indicative of the results that may be expected for a full year.

When we use the term “REIT,” we mean real estate investment trust. All references to 2023 and 2022, refer to the periods ending March 31, 2023 and 2022, respectively and our fiscal year ended December 31, 2022.

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 Cumulative Convertible Preferred Stock.

When we use the term “base rent,” we mean GAAP rental revenue and ancillary income, excluding billed tenant reimbursements and lease termination income.

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 following is a discussion and analysis of the unaudited condensed consolidated financial condition and results of operations of ~~Lexington Realty~~LXP Industrial Trust ~~and LCIF~~ for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~,2022, and significant factors that could affect ~~their~~its prospective financial condition and results of operations. This discussion should be read together with the accompanying unaudited condensed consolidated financial statements of the Company ~~and the Partnership~~ included herein and notes thereto and with the consolidated financial statements and notes thereto included in the Company's ~~and the Partnership's~~ most recent Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission, or SEC, on ~~March 1, 2017,~~February 16, 2023, which we refer to as the Annual Report. Historical results may not be indicative of future performance.

Forward-Looking Statements. This Quarterly Report, together with other statements and information publicly disseminated by us, contains 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, ~~which we refer to as~~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, ~~any~~those risks discussed below in ~~the respective~~ “Management's Discussion and Analysis of Financial Condition and Results of Operations,” and under the headings “Risk Factors” in this Quarterly Report and under “Risk Factors” in Part I, Item A and “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Annual Report and other periodic reports filed by the Company ~~or the Partnership~~ with the SEC. Except as required by law, we undertake no obligation to publicly release 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.

~~Lexington Realty Trust:~~

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Overview

~~General. We are a Maryland real estate investment trust, or REIT, that owns a diversified portfolio of equity investments in single-tenant commercial properties.~~

As of ~~September 30, 2017~~,March 31, 2023, we had equity ownership interests in approximately ~~180~~116 consolidated real estate properties, located in 3820 states and containing an aggregate of approximately ~~47.9~~54.2 million square feet of space, approximately ~~97.9%~~99.5% of which was ~~leased, excluding properties subject to secured mortgage loans currently in default. The properties in which we have an interest are primarily net leased to tenants in various industries.~~leased.

~~Our revenues and cash flows are generated predominantly from property rent receipts.~~ As a result, growth in revenues and cash flows is directly correlated to our ability to (1) acquire income producing real estate investments and (2) re-lease properties that are vacant, or may become vacant, at favorable rental rates.

~~Our current business strategy is focused on enhancing our cash flow growth and stability, growing~~of March 31, 2023, our portfolio ~~with attractive leased investments, reducing lease rollover risk~~consisted of 109 warehouse/distribution facilities and ~~maintaining a strong~~seven other properties. Our warehouse/distribution portfolio is primarily focused in our target markets within the Sunbelt and ~~flexible balance sheet~~Midwest. We expect to ~~allow us to act~~grow these markets by executing on ~~opportunities as they arise. To that end,~~our development pipeline and opportunistically acquiring facilities in ~~2017, we continued to be an active seller of non-core assets such as vacant properties and properties subject to short-term leases, and we have invested proceeds in predominantly industrial assets.~~these markets.

First Quarter 2023 Transaction Summary.

~~Table of Contents~~The following summarizes our significant transactions during the three months ended March 31, 2023.

Leasing Activity:

~~Leasing Activity~~. Re-leasing properties that are currently vacant or as leases expire at favorable effective rates is one of our primary areas of focus for asset management. We strive to manage down our shorter-term leases and extend our weighted-average lease term on a cash basis, which was approximately 9.1 years at September 30, 2017 on a cash basis. Our weighted-average lease term at September 30, 2016 was 8.6 years on a cash basis.

•During the ~~third~~first quarter of ~~2017,~~2023, we entered into ~~new leases and~~ lease extensions encompassing ~~approximately 1.2~~2.3 million square feet. The average ~~U.S. generally accepted accounting principles, or GAAP, base~~fixed rent on these extended leases was ~~$3.97~~$4.25 per square foot compared to the average ~~GAAP base~~fixed rent on these leases before extension of ~~$3.74~~$3.30 per square foot. The weighted-average cost of tenant improvements and lease commissions was ~~$2.07~~$1.10 per square foot for extended ~~leases on~~leases.

Investments:

•Completed construction and placed into service a ~~GAAP basis~~0.4 million square foot warehouse/distribution facility in the Phoenix, Arizona market subject to a 10-year lease.

•Completed construction of two warehouse/distribution facilities containing an aggregate of 2.1 million square feet in the Central Florida and ~~there were no tenant improvements or lease commissions on new leases.~~Indianapolis, Indiana markets.

•Invested an aggregate of $34.6 million in development activities, including $31.0 million in six ongoing development projects.

~~ThirdQuarter2017 Transaction Summary~~.Capital Recycling:

~~The following summarizes~~•Disposed of our ~~significant transactions during~~interest in a warehouse/distribution property for a gross sales price of $27.9 million.

•BSH Lessee L.P disposed of its only asset for $82.0 million and satisfied an aggregate of $48.9 million of non-recourse debt, we owned 25% of the joint venture and received net proceeds of $8.1 million.

Acquisition/Development Activity:

During the three months ended ~~September 30, 2017.~~March 31, 2023, we completed and placed into service the following warehouse/distribution asset:

~~Investments:~~

Market

Square Feet

Initial Capitalized Cost
(millions)

Placed into Service Date

Approximate Lease Term
(years)

% Leased

Phoenix, Arizona

392,278

37.1

March 2023

10.0

100%

~~Acquired four industrial properties for~~Increased financing costs have slowed transaction activity and development starts in our target markets and the markets where we own properties. Proceeds from our dispositions are expected to be used to fund our development obligations and reduce leverage.

As of March 31, 2023, we had six consolidated development projects in process with an aggregate estimated total cost of ~~$266.1~~$408.3 million. ~~The properties are net leased for an approximate 10-year term.~~

~~Completed~~We anticipate our remaining funding obligation to substantially complete the construction and estimated tenant improvements and leasing costs of ~~the Opelika, Alabama industrial build-to-suit project for $37.3 million, which is net leased for a 25-year term.~~

~~Capital Recycling:~~

~~Disposed~~these six projects, exclusive of our ~~interests in various consolidated properties for~~joint venture partners' share, to be approximately ~~$42.0~~$76.0 million.

~~Debt:~~

~~Amended~~ However, the risks associated with development, including supply chain issues, could adversely impact our unsecured credit agreement, increasing the borrowing capacity by $200.0 million consisting of a $105.0 million increase to the revolving credit facility, a $50.0 million increase to the term loan maturing in 2020 and a $45.0 million increase to the term loan maturing in 2021.

~~Satisfied an aggregate of $25.2 million of non-recourse debt.~~

~~Acquisition and Development Activity.~~

Our acquisition and development activity for the past several years has consisted primarily of build-to-suit transactions whereby we (1) hire a developer, or provide funding to a tenant, to develop a property, or (2) provide capital to developers and commit to purchase the property upon completion. However, none of these transactions are done on a speculative basis without a committed tenant subject to a long-term lease.

~~During the nine months ended September 30, 2017, we completed the following acquisition and build-to-suit transactions:~~estimates.

Location Property Type Square Feet (000's) Capitalized Cost (millions) Date Acquired Approximate Lease Term (Years)
Lake Jackson, TX⁽¹⁾
Office 275
$ 70.4
January 2017 20
Lebanon, IN Industrial 742
36.2
February 2017 7
New Century, KS Industrial 447
12.1
February 2017 10
Charlotte, NC Office 201
61.3
April 2017 15
Cleveland, TN Industrial 851
34.4
May 2017 7
Grand Prairie, TX Industrial 215
24.3
June 2017 20
San Antonio, TX Industrial 849
45.5
June 2017 10
Opelika, AL Industrial 165
37.3
July 2017 25
McDonough, GA⁽²⁾
Industrial 1,121
66.7
August 2017 10
Byhalia, MS Industrial 616
36.6
September 2017 10
Jackson, TN Industrial 1,062
57.9
September 2017 10
Smyrna, TN Industrial 1,505
104.9
September 2017 10
8,049
$ 587.6


~~(1)~~	~~Completed the construction of the final building of a four-building project. Capitalized cost excludes estimated developer partner payout of approximately $8.0 million.~~


~~(2)~~	~~Square footage includes a 220 thousand square foot expansion to be completed in 2018.~~

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~~In addition, as of September 30, 2017, we had the following forward purchase commitments:~~

Location Square Feet (000's) Property Type Maximum Acquisition Cost (millions) Estimated Acquisition Date Approximate Lease Term (Yrs)
Warren, MI⁽¹⁾
260
Industrial $ 47.0
4Q 17 15
Romulus, MI 500
Industrial 39.3
4Q 17 15
Lafayette, IN⁽²⁾
309
Industrial 17.5
4Q 17 7
1,069
$ 103.8

~~(1) A $4.6 million letter of credit secures our obligation to purchase the property.~~

~~(2) We acquired the property in October 2017.~~

~~We can give no assurances that any unconsummated transactions described in this Quarterly Report will be consummated or, if consummated, will perform to our expectations.~~

Critical Accounting ~~Policies~~Estimates

~~Management's discussion~~In preparing the consolidated financial statements we have made estimates and ~~analysis~~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 unaudited condensed 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 ~~based upon~~set forth in (1) Note 2 to our ~~unaudited condensed~~audited consolidated financial statements, which ~~have been prepared~~are included in ~~accordance with GAAP. In preparing our unaudited condensed consolidated financial statements~~“Financial Statements and Supplementary Data” in ~~accordance with GAAP and pursuant to the rules and regulations~~Part II, Item 8 of the SEC, we make assumptions, judgments and estimates that affect the reported amounts of assets, liabilities, revenue, and expenses, and related disclosures of contingent assets and liabilities. We base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. On a regular basis, we evaluate our assumptions, judgments and estimates. Certain of our accounting policies are discussed under (1) Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report, (2) note 2 to our consolidated financial statements contained in our Annual Report and ~~(3) note 1~~(2) Note 2 to our unaudited condensed consolidated financial statements contained in this Quarterly 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 ~~believe there have been no material changes~~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 three months ended March 31, 2023, 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 ~~items~~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 recorded 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.

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We will record an impairment charge related to our investments, including investments in non-consolidated entities, if we determine the fair value of the investments are less than their carrying value and such impairment is other-than-temporary. We evaluate whether events or changes in circumstances indicate that the carrying amount of our investments may not be recoverable. Our evaluation of changes in economic or operating conditions and whether an impairment is other-than-temporary may include developing estimates of fair value, forecasted cash flows or operating income before depreciation and amortization. We estimate undiscounted cash flows and fair value using observable and unobservable data such as operating income, hold periods, estimated capitalization and discount rates, or relevant market multiples, leasing prospects and local market information and whether certain impairments are other-than-temporary.

Allowance for Credit Losses.“ASC 326, Financial Instruments-Credit Losses” (“ASC 326”) requires that we ~~disclosed~~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 of 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 lease, as ~~our critical accounting policies~~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 ~~Item 7, “Management's Discussion and Analysis~~the terms of ~~Financial Condition and Results~~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 ~~Operations”~~being collected. The criteria evaluated to determine when a lease is in ~~our Annual Report.~~non-accrual status is subjective.

Liquidity and Capital Resources

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.~~long-term, however, our cash flow from operations may be negatively affected in the near term if we experience tenant defaults as a result of the effects of the current economic conditions. 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.

At ~~September 30, 2017~~,March 31, 2023, our property owner subsidiaries do not have mortgage maturities with balloon payments due until 2031. In addition, certain of our subsidiaries are obligated to fund the construction of our development projects and we had $18.4 million and $6.6 million of property specific mortgage balloon debt due in 2017 and 2018, respectively. The 2017 non-recourse maturities aggregating $18.4 million were in maturity default at September 30, 2017.sometimes guaranty these obligations. We believe weour property owner subsidiaries have sufficient sources of liquidity to meet these obligations ~~we are required to meet~~ through future cash flows from operations, the credit markets and, if determined appropriate by us, a capital contribution from us from either cash on hand ($~~140.5~~42.9 million at ~~September 30, 2017)~~March 31, 2023), property sale proceeds and borrowing capacity under our unsecured revolving credit facility ($~~300.4~~600.0 million at ~~September 30, 2017), which expires in 2019, but can be extended by us~~March 31, 2023, subject to ~~2020, and future cash flows from operations.~~

The mortgages encumbering the properties in which we have an interest are generally non-recourse to us, such that in situations where we believe it is beneficial to satisfy a mortgage obligation by transferring title of the property to the lender, including through a foreclosure, we may do so.covenant compliance).

Cash flows from operations were ~~$172.6~~$37.5 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 as compared to ~~$180.6~~$42.1 million for the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2022. The decrease was primarily related to property sales, partially offset by the impact of ~~property sales and vacancies, a decrease in lease termination payments and an increase in payments of legal costs, offset by~~ cash ~~flows~~flow generated from ~~acquired properties.~~acquiring properties and stabilizing development assets. 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. ~~Collection~~The collection and timing of tenant rents isare closely monitored by management as part of our cash management program.

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Net cash ~~provided by (used in)~~used in investing activities totaled ~~$(234.6)~~$5.5 million and ~~$29.3~~$152.5 million during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016,~~2022, respectively. Cash used in investing activities in 2023 related primarily to ~~acquisitions of real estate and~~ investments in real estate under construction, capital expenditures, lease costs, ~~changes in restricted cash and~~ investments in ~~and advances to~~ non-consolidated ~~entities. Cash provided by investing activities related primarily to proceeds from the sale of properties, collection of loans receivable~~entities 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. During the three months ended March 31, 2022, cash used in investing activities included additional acquisition and development activity when compared to 2023.

Net cash ~~provided by (used in)~~used in financing activities totaled ~~$115.9~~$43.5 million and ~~$(185.3)~~$31.4 million during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016,~~2022, respectively. Cash provided by financing activities related primarily to proceeds of term loans and mortgages and notes payable, borrowings under our revolving credit facility and the net proceeds from the issuance of common shares. Cash used in financing activities in 2023 was primarily ~~attributable~~related to dividend and ~~distribution~~debt service payments. Cash used in financing activities in 2022 was primarily related to the purchase of a noncontrolling interest and dividend and debt service payments, ~~payment~~offset by common stock issuances.

Common Share Issuances:

At-The-Market Offering Program. We maintain an At-The-Market offering program ("ATM program") under which we can issue common shares, including through forward sales contracts.

We did not sell shares under the ATM program during the three months ended March 31, 2023 and March 31, 2022, respectively.

During the three months ended March 31, 2022, we settled 3.6 million common shares previously sold on a forward basis on the maturity date of ~~developer liabilities, repayment~~the contract and received $38.5 million of ~~debt obligations~~net proceeds. No shares were sold on a forward basis during the three months ended March 31, 2023.

In February 2021, we amended the terms of our ATM 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 March 31, 2023, common shares with an aggregate value of $295.0 million remain available for issuance under the ATM program.

The volatility in the capital markets primarily resulting from the effects of the current economic conditions may negatively affect our ability to access the capital markets through our ATM program and ~~repurchases~~other offerings.

Share Repurchase Program. During 2022, our Board of Trustees authorized the repurchase of an additional 10.0 million common ~~shares.~~shares under our share repurchase program with no expiration date. We did not repurchase any common shares during the three months ended March 31, 2023 and 2022, respectively. Approximately 6.9 million common shares remained available for repurchase under the current authorization as of March 31, 2023. We, in the future, may repurchase our common shares in the context of our overall capital plan and to the extent we believe market volatility offers prudent investment opportunities based on our common share price versus net asset value per share.

Dividends. Dividends paid to our common and preferred shareholders were ~~$129.0~~$38.2 million and ~~$123.3~~$36.8 million in the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016,~~2022, respectively.

We declared a quarterly dividend of $0.125 per common share during the three months ended March 31, 2023, which is an increase of $0.005 per common share from the $0.12 per common share quarterly dividend declared during the three months ended March 31, 2022.

UPREIT Structure. As of ~~September 30, 2017, 3.2~~March 31, 2023, 0.7 million units of limited partner interests, or OP units, in our operating partnership, LCIF, were outstanding not including OP units held by us. Assuming all outstanding OP units not held by us were redeemed on such date, the estimated fair value of such OP units was ~~$37.1~~$8.5 million based on our closing price of ~~$10.22~~$10.31 per common share on ~~September 30, 2017~~as of March 31, 2023 and a redemption factor of approximately 1.13 common shares per OP unit.

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Financings. The following senior notes were outstanding as of ~~September 30, 2017~~:March 31, 2023:


Issue Date	Face Amount (millions)		Interest Rate		Maturity Date	Issue Price
August 2021	$	400.0	2.375	%	October 2031	99.758	%
August 2020	400.0		2.70	%	September 2030	99.233	%
May 2014	198.9		4.40	%	June 2024	99.883	%
Senior note payable	$	998.9

Issue Date Face Amount ($000) Interest Rate Maturity Date Issue Price
May 2014 $ 250,000
4.40 % June 2024 99.883 %
June 2013 250,000
4.25 % June 2023 99.026 %
$ 500,000

~~The~~Each series of senior notes ~~are~~is unsecured and ~~pay~~requires payment of 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 aany potential make-whole premium.

During September 2017, our $905.0 million unsecured credit agreement with KeyBank National Association, as agent, was amended to, among other things, increase the overall facility to $1.105 billion. With lender approval, we can increase the size of the amended facility to an aggregate $2.01 billion. A summary of the ~~significant terms~~maturity dates and interest rates of our unsecured credit agreement, as of March 31, 2023, are as follows:



		Maturity Date	Current Interest Rate
$~~505.0~~600.0 Million Revolving Credit Facility⁽¹⁾		~~August 2019~~July 2026	~~LIBOR~~SOFR + ~~1.00%~~0.85%
$300.0 Million Term Loan⁽²⁾		~~August 2020~~January 2025	~~LIBOR~~Term SOFR + ~~1.10%~~
~~$300.0 Million Term Loan~~⁽³⁾	~~January 2021~~	~~LIBOR + 1.10%~~1.00%

~~(1)~~

Increased from $400.0 million. Maturity date can be extended to August 2020 at our option. The interest rate ranges from LIBOR plus 0.85% to 1.55%. At September 30, 2017, the unsecured revolving credit facility had $200 million of borrowings outstanding, $4.6 million of letters of credit, and availability of $300.4

(1) Maturity date of the revolving credit facility can be extended to July 2027 at our option, subject to certain conditions. The interest rate ranges from SOFR plus 0.725% to 1.40%. At March 31, 2023, we had no borrowings outstanding and availability of $600.0 million, subject to covenant compliance.


~~(2)~~	Increased from $250.0 million. The interest rate ranges from LIBOR plus 0.90% to 1.75%. We previously entered into aggregate interest-rate swap agreements to fix the LIBOR component at a weighted-average rate of 1.09% through February 2018 on $250.0 million of outstanding LIBOR-based borrowings.


~~(3)~~	Increased from $255.0 million. The interest rate ranges from LIBOR plus 0.90% to 1.75%. We previously entered into aggregate interest-rate swap agreements to fix the LIBOR component at a weighted-average rate of 1.42% through January 2019 on $255.0 million of outstanding LIBOR-based borrowings.

(2) The Term SOFR portion of the interest rate was swapped to obtain a current fixed rate of 2.722%.

As of ~~September 30, 2017~~,March 31, 2023, we were ~~in compliance~~compliant with all applicable financial covenants contained in our ~~corporate level~~corporate-level debt agreements.

Contractual Obligations

As of March 31, 2023, we had six ongoing consolidated development projects and expect to incur approximately $76.0 million of costs in the remaining of 2023, excluding noncontrolling interests' share, to substantially complete the construction of such projects. As of March 31, 2023, 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.

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Results of Operations

Three months ended ~~September 30, 2017~~March 31, 2023 compared with three months ended ~~September 30, 2016~~March 31, 2022. The increase in net income attributable to common shareholders of ~~$30.9~~$0.5 million was primarily due to the items discussed below.

The ~~decrease~~increase in total gross revenues ~~during the three months ended September 30, 2017~~ of ~~$8.3~~$4.8 million was primarily ~~attributable~~due to an increase in rental revenue and an increase in tenant reimbursement income due to acquisitions and properties placed into service, partially offset by a decrease in rental ~~revenue. Rental~~ revenue ~~decreased $8.9~~due to property sales in 2022.

The increase in property operating expense of $0.6 million was primarily due to ~~a $17.9 million decrease~~an increase in ~~revenue from properties disposed of, primarily the New York City land investments, a $1.7 million decrease in termination income and a $1.2 million decrease in revenue from~~operating expense responsibilities at certain ~~held properties due to changes in occupancy, partially offset by 2017 and 2016 property acquisitions rental revenue of $11.5 million.~~properties.

The increase in depreciation and amortization expense of ~~$3.2~~$1.2 million is primarily related to properties acquired and / or completed and placed into service subsequent to March 31, 2022.

The decrease in general and administrative expenses of $1.5 million was primarily due to ~~acquisitions of certain properties.~~a decrease in costs related to shareholder activism.

The increase ~~in general and administrative expense of $0.5 million was primarily due to an increase in professional fees.~~

The $2.05 million litigation reserve recognized as of September 30, 2017, represents the probable settlement amount related to the litigation disclosed in note 13 to our consolidated financial statements.

~~The decrease in non-operating income of $2.1 million was due to the collection of loans receivable.~~

~~The decrease~~ in interest and amortization expense of ~~$4.1~~$0.7 million related primarily to ~~the satisfaction~~an increase of ~~mortgage debt~~$1.5 million from our variable-rate unsecured debt. The increase was partially offset by an increase in ~~connection with property sales and a decrease in the~~capitalized interest ~~rate~~ on our ~~$129.1 million of trust preferred securities.~~development projects during the three months ended March 31, 2023 compared to the three months ended March 31, 2022.

The ~~decrease~~increase in gains on sales of properties of $7.6 million was related to the timing of property dispositions.

The increase in impairment charges of ~~$50.9~~$3.5 million was related to the timing of impairment charges recognized on ~~properties~~certain properties. The impairment in 2023 was primarily due to ~~sales, vacancies and lack of leasing prospects. In 2016,~~ a ~~$65.5 million impairment charge was recognized on the sale of three of our New York, New York land investments.~~potential sale.

The decrease in ~~gains on sales~~equity in earnings of ~~properties~~non-consolidated entities of ~~$5.4 million related to the timing of sales of properties.~~

~~The change in net (income) loss attributable to noncontrolling interests of $2.3 million related primarily to a decrease in the net loss of LCIF in 2017 compared to 2016.~~

Any increase in net income in future periods will be closely tied to the level of acquisitions and dispositions and leasing activity. Without acquisitions and favorable leasing activity, the sources of growth in net income are limited to index-adjusted rents (such as the consumer price index), reduced interest expense on amortizing mortgages and debt refinancings and by controlling other variable overhead costs and, periodically, gains on sales of properties. However, there are many factors beyond management's control that could offset these items including, without limitation, increased interest rates, decreased occupancy rates, tenant monetary defaults, delayed acquisitions and the other risks described in our periodic reports filed with the SEC.

~~Ninemonths endedSeptember 30, 2017 compared with nine months ended September 30, 2016.The decrease in net income attributable to common shareholders of $24.9~~$7.7 million was primarily due to ~~the items discussed below.~~

The decrease in total gross revenues during the nine months ended September 30, 2017 of $44.7 million was primarily attributable to a decrease in rental revenue. Rental revenue decreased $44.9 million primarily due to a $57.8 million decrease in revenue from properties disposed of, primarily the New York City land investments, a $12.5 million decrease in termination income and a $3.8 million decrease in revenue from certain held properties due to changes in occupancy, partially offset by 2017 and 2016 property ~~acquisitions rental revenue of $28.4 million.~~

~~The increase in depreciation and amortization expense of $4.0 million was primarily due to acquisitions of certain properties.~~

The increase in property operating expense of $1.9 million was primarily due to costs incurred on properties acquired in 2017 and 2016, costs incurred on vacant properties prior to sale and an increase in acquisition costs, offset in part by reduced operating costs associated with sold properties.

~~The increase in general and administrative expenses of $2.5 million related primarily to an increase in professional fees, primarily legal fees.~~

~~The $2.05 million litigation reserve recognized as of September 30, 2017, represents the probable settlement amount~~sales related to ~~the litigation disclosed~~NNN JV in ~~note 13 to our consolidated financial statements.~~

~~The decrease~~2022 that resulted in ~~non-operating income of $4.5 million was due to the collection of loans receivable.~~

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The decrease in interest and amortization expense of $10.7 million related primarily to the satisfaction of mortgage debt in connection with property sales and a decrease in the interest rate on our $129.1 million of trust preferred securities.

~~The change in debt satisfaction gains (charges), net of $3.2 million was primarily due to the timing of debt satisfactions.~~

The decrease in impairment charges and loan loss of $32.3 million related primarily to the timing of impairment charges recognized on properties due to sales, vacancies and lack of leasing prospects and a $5.3 million loan loss recognized on the sale of our Kennewick, Washington loan receivable in 2017. In 2016, a $65.5 million impairment charge was recognized on the sale of three of our New York, New York land investments.

~~The decrease in gains on sales of properties of $3.3 million related to the timing of sales of properties.~~

~~The change~~an increase in equity in earnings ~~(losses)~~ of ~~non-consolidated entities of $7.5 million~~$11.3 million. The decrease was ~~primarily due to the timing of gains recognized on the sale of non-consolidated investments,~~ partially offset byfrom recognizing our share of a property sale related to BSH Lessee L.P. in 2023 that resulted in an ~~impairment charge recognized~~increase in ~~2017 on our investment~~equity in ~~Palm Beach Gardens, Florida where the sole tenant filed for bankruptcy.~~

~~The change in net (income) loss attributable to noncontrolling interests~~earnings of ~~$0.6 million related primarily to a decrease in the net loss of LCIF in 2017 compared to 2016.~~$4.8 million.

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, excluding properties encumbered by mortgage loans in default and the revenue associated with the expansion of properties, as applicable.~~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)~~income, net), ~~tenant reimbursements~~ and other property income) less property operating expenses. As same-store NOI excludes the change in NOI from acquired and disposed of ~~properties and certain other~~ 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 ~~the Company's~~our operating performance. However, same-store NOI should not be viewed as an alternative measure of ~~the Company's~~our financial performance since it does not reflect the operations of ~~the Company's~~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 ~~the Company's~~our properties, or trends in development and construction activities which are significant economic costs and activities that could materially impact ~~the Company's~~our results from operations. ~~Lexington believes~~We believe that net income is the most directly comparable GAAP measure to same-store NOI.

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The following presents our consolidated same-store NOI, for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022 ($000's):


								Three Months Ended March 31,
	2017			2016				2023		2022
Total cash base rent	$	218,871		$	218,710		Total cash base rent	$	60,456	$	57,902
Tenant reimbursements	18,788			19,807			Tenant reimbursements	12,698		11,506
Property operating expenses	(28,461		)	(28,388		)	Property operating expenses	(13,317)		(12,450)
Same-store NOI	$	209,198		$	210,129		Same-store NOI	$	59,837	$	56,958

Our reported same-store NOI ~~decreased~~increased from ~~2016~~2022 compared to ~~2017~~2023 by ~~0.4%. The decrease in same-store NOI between periods~~5.1%, primarily ~~related~~due to an increase in ~~vacancy in certain~~cash base rents. As of March 31, 2023 and 2022, our ~~office properties. Our~~ historical same-store square footage leased was ~~97.2% at September 30, 2017 and 98.9% at September 30, 2016.~~99.8% , respectively.

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Below is a reconciliation of net income to same-store NOI for periods presented ($000's):


	Nine Months ended September 30,							Three Months Ended March 31,
	2017			2016				2023		2022
Net income	$	55,181		$	79,521		Net income	$	11,315	$	10,908

Interest and amortization expense	57,828			68,573			Interest and amortization expense	11,393		10,682
Provision for income taxes	1,174			1,099			Provision for income taxes	216		417
Depreciation and amortization	128,706			124,687			Depreciation and amortization	45,741		44,506
General and administrative	25,561			23,032			General and administrative	9,242		10,737
Litigation reserve	2,050			—
Transaction costs	1,100			329			Transaction costs	4		89
Non-operating income	(4,997		)	(9,500		)
Non-operating/advisory fee income							Non-operating/advisory fee income	(1,402)		(1,483)
Gains on sales of properties	(55,078		)	(58,413		)	Gains on sales of properties	(7,879)		(255)
Impairment charges and loan loss	43,577			75,904
Debt satisfaction (gains) charges, net	(2,378		)	818
Equity in (earnings) losses of non-consolidated entities	1,064			(6,394		)
Lease termination income	(2,934		)	(15,390		)
Impairment charges							Impairment charges	3,523		—

Equity in earnings of non-consolidated entities							Equity in earnings of non-consolidated entities	(3,604)		(11,301)

Straight-line adjustments	(12,552		)	(35,697		)	Straight-line adjustments	(3,087)		(3,502)
Lease incentives	1,456			1,256			Lease incentives	96		134
Amortization of above/below market leases	1,180			1,527			Amortization of above/below market leases	(449)		(480)
Sales-types lease adjustments							Sales-types lease adjustments	(447)		—
NOI	240,938			251,352			NOI	64,662		60,452

Less NOI:							Less NOI:
Disposed of properties	(2,455		)	(36,441		)
Acquired properties	(27,047		)	(2,556		)
Properties in default	(2,238		)	(2,226		)
Acquisitions, developments and dispositions							Acquisitions, developments and dispositions	(4,825)		(3,494)

Same-Store NOI	$	209,198		$	210,129		Same-Store NOI	$	59,837	$	56,958

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Funds From Operations

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 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 ~~(or loss) computed~~(calculated in accordance with ~~GAAP,~~GAAP), excluding ~~gains (or losses) from sales of property, plus real estate~~ depreciation and amortization related to real estate, gains and ~~after adjustments for non-consolidated partnerships~~losses from the sales of certain real estate assets, gains and ~~joint ventures.” NAREIT clarified its computation~~losses from change in control and impairment write-downs of ~~FFO~~certain real estate assets and investments in entities when the impairment is directly attributable to ~~exclude impairment charges on~~decreases in the value of depreciable real estate ~~owned directly or indirectly.~~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 security 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.

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The following presents a reconciliation of net income ~~(loss)~~ attributable to common shareholders to FFO available to common shareholders and unitholders and Adjusted Company FFO available to all equityholders and unitholders for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022 (unaudited and dollars in thousands, except share and per share amounts):


	Three Months Ended March 31,
FUNDS FROM OPERATIONS:	2023		2022
Basic and Diluted:
Net income attributable to common shareholders	$	9,522	$	8,989
Adjustments:
Depreciation and amortization	44,860		43,850
Impairment charges - real estate	3,523		—
Noncontrolling interests - OP units	3		89
Amortization of leasing commissions	881		656
Joint venture and noncontrolling interest adjustment	2,400		3,150
Gains on sales of properties, including our share of non-consolidated entities	(12,654)		(11,526)
FFO available to common shareholders and unitholders - basic	48,535		45,208
Preferred dividends	1,572		1,572
Amount allocated to participating securities	72		61
FFO available to all equityholders and unitholders - diluted	50,179		46,841

Allowance for credit losses	79		—
Transaction costs(1)	4		89

Other non-recurring costs(2)	—		1,181
Noncontrolling interest adjustments	(4)		—
Adjusted Company FFO available to all equityholders and unitholders - diluted	$	50,258	$	48,111

Three Months ended September 30, Nine Months ended September 30,
2017 2016 2017 2016
FUNDS FROM OPERATIONS:
Basic and Diluted:
Net income (loss) attributable to common shareholders $ 3,916
$ (26,975 ) $ 49,832
$ 74,718
Adjustments:

Depreciation and amortization 42,015
38,642
124,633
119,523
Impairment charges - real estate, including non-consolidated entities 21,986
72,890
41,795
75,904
Noncontrolling interests - OP units (173 ) (2,507 ) (192 ) (845 )
Amortization of leasing commissions 1,480
1,646
4,073
5,164
Joint venture and noncontrolling interest adjustment 259
284
864
742
Gains on sales of properties, including non-consolidated entities (10,645 ) (16,072 ) (56,530 ) (63,791 )
Tax on sales of properties —
—
—
50
FFO available to common shareholders and unitholders - basic 58,838
67,908
164,475
211,465
Preferred dividends 1,573
1,573
4,718
4,718
Interest and amortization on 6.00% Convertible Guaranteed Notes —
47
—
532
Amount allocated to participating securities 52
50
183
187
FFO available to all equityholders and unitholders - diluted 60,463
69,578
169,376
216,902
Litigation reserve 2,050
—
2,050
—
Debt satisfaction (gains) charges, net (2,424 ) (2,538 ) (2,378 ) 818
Loan loss —
—
5,294
—
Transaction costs 612
115
1,100
329
Adjusted Company FFO available to all equityholders and unitholders - diluted $ 60,701
$ 67,155
$ 175,442
$ 218,049


Per Common Share and Unit Amounts
Basic:
FFO	$	0.17	$	0.16


Diluted:
FFO	$	0.17	$	0.16
Adjusted Company FFO	$	0.17	$	0.16

Per Common Share and Unit Amounts
Basic:
FFO $ 0.24
$ 0.29
$ 0.68
$ 0.89

Diluted:
FFO $ 0.24
$ 0.29
$ 0.69
$ 0.89
Adjusted Company FFO $ 0.25
$ 0.28
$ 0.71
$ 0.89


		Three Months ended September 30,		Nine Months ended September 30,
		2017	2016	2017	2016
Weighted-Average Common Shares:	Weighted-Average Common Shares:					Weighted-Average Common Shares:
Basic:	Basic:					Basic:
Weighted-average common shares outstanding - basic EPS	Weighted-average common shares outstanding - basic EPS	237,989,098	234,207,396	237,632,572	233,151,600	Weighted-average common shares outstanding - basic EPS	290,080,508	283,640,465
Operating partnership units⁽¹⁾		3,646,869	3,815,386	3,713,867	3,818,117
Operating partnership units(3)						Operating partnership units(3)	832,087	871,037
Weighted-average common shares outstanding - basic FFO	Weighted-average common shares outstanding - basic FFO	241,635,967	238,022,782	241,346,439	236,969,717	Weighted-average common shares outstanding - basic FFO	290,912,595	284,511,502

Diluted:	Diluted:					Diluted:
Weighted-average common shares outstanding - diluted EPS	Weighted-average common shares outstanding - diluted EPS	241,702,715	234,207,396	241,442,227	237,215,883	Weighted-average common shares outstanding - diluted EPS	291,040,466	289,067,778
Operating partnership units⁽¹⁾		—	3,815,386	—	—
6.00% Convertible Guaranteed Notes		—	508,912	—	1,439,456
Operating partnership units(3)						Operating partnership units(3)	—	871,037
Unvested share-based payment awards	Unvested share-based payment awards	655,228	570,260	650,348	478,329	Unvested share-based payment awards	—	59,384
Share options		—	238,395	—	—
Preferred shares - Series C	Preferred shares - Series C	4,710,570	4,710,570	4,710,570	4,710,570	Preferred shares - Series C	4,710,570	4,710,570
Weighted-average common shares outstanding - diluted FFO	Weighted-average common shares outstanding - diluted FFO	247,068,513	244,050,919	246,803,145	243,844,238	Weighted-average common shares outstanding - diluted FFO	295,751,036	294,708,769

(1) Includes ~~all~~costs related to entering into a sales-type lease and other investments costs.

(2) Includes strategic alternatives and costs related to shareholder activism.

(3) Includes OP units other than OP units held by us.

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Off-Balance Sheet Arrangements

As of ~~September 30, 2017,~~March 31, 2023, we had investments in various real estate entities with varying structures. The real estate investments owned by ~~these entities~~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.~~representations, and environmental matters. We have guaranteed such obligations for certain of our non-consolidated ~~entities.~~

entities with respect to $503.9 million of such non-recourse debt. We believe the likelihood of making any payments under such guaranties is remote and we generally have an agreement from each partner to reimburse us for its proportionate share of any liability related to a guarantee trigger unless such trigger is caused solely by us.

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~~Lepercq Corporate Income Fund L.P.:~~

~~Critical Accounting Policies~~

Management's discussion and analysis of financial condition and results of operations is based upon the Partnership's unaudited condensed consolidated financial statements, which have been prepared in accordance with GAAP. In preparing the Partnership's unaudited condensed consolidated financial statements in accordance with GAAP and pursuant to the rules and regulations of the SEC, the Partnership makes assumptions, judgments and estimates that affect the reported amounts of assets, liabilities, revenue, and expenses, and related disclosures of contingent assets and liabilities. The Partnership bases its assumptions, judgments and estimates on historical experience and various other factors that the Partnership believes to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. On a regular basis, the Partnership evaluates its assumptions, judgments and estimates. Certain of the Partnership's accounting policies are discussed under (1) Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” in the Annual Report, (2) note 2 to the consolidated financial statements contained in the Annual Report and (3) note 1 to the Partnership's unaudited condensed consolidated financial statements contained in this Quarterly Report. The Partnership believes there have been no material changes to the items that the Partnership disclosed as the Partnership's critical accounting policies under Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” in the Annual Report.

~~Liquidity~~

~~Cash Flows~~. The Partnership believes that its cash flows from operations will continue to provide adequate capital to fund its operating and administrative expenses, regular debt service obligations, working capital needs and all distribution payments in accordance with partnership agreement requirements in both the short-term and long-term. However, without a capital event, which would most likely involve the Company, the Partnership does not have the ability to fund balloon payments on maturing mortgages or acquire new investments.

Cash flows from operations totaled $32.7 million and $31.0 million during the nine months ended September 30, 2017 and 2016, respectively. The increase was primarily due to the impact of cash flow generated from acquired properties and interest cost savings due to mortgage satisfactions offset by reduced cash flows attributable to sold properties. The underlying drivers that impact working capital and therefore cash flows from operations are the timing of (1) the collection of rents and tenant reimbursements, (2) the payment of interest on mortgage debt and (3) operating and general and administrative costs. The Partnership believes the net-lease structure of the leases encumbering a majority of the properties in which the Partnership has 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. Collection and timing of tenant rents is closely monitored by management as part of the Partnership cash management program.

Net cash provided by (used in) investing activities totaled $(44.4) million and $162.7 million during the nine months ended September 30, 2017 and 2016, respectively. Cash provided by investing activities related primarily to proceeds from the sale of properties, real estate deposits and distributions from non-consolidated entities in excess of accumulated earnings. Cash used in investing activities related primarily to capital expenditures on real estate properties, acquisition of real estate, investments in real estate under construction, investments in non-consolidated entities and an increase in deferred lease costs.

Net cash provided by (used in) financing activities totaled $26.6 million and $(132.7) million during the nine months ended September 30, 2017 and 2016, respectively. Cash used in financing activities was primarily attributable to distribution payments, an increase in deferred financing costs, debt payments and OP unit redemptions. Cash provided by financing activities was primarily attributable to related party advances, net and co-borrower debt borrowings.

~~Property Specific Debt~~. As of September 30, 2017, the Partnership had no property-specific debt maturing in 2017 and 2018. However, if a mortgage loan is unable to be refinanced upon maturity, the Partnership will be dependent on the Company's liquidity resources to satisfy such mortgage loan to avoid transferring the underlying property to the lender or selling the underlying property to a third party. During the nine months ended September 30, 2016, the Partnership satisfied a $15.0 million balloon maturity on its Byhalia Mississippi property.

~~Capital Recycling.~~During the nine months ended September 30, 2017 and 2016, the Partnership disposed of its interests in certain investments for an aggregate gross sales price of $7.6 million and $445.6 million, respectively. During the nine months ended September 30, 2016, the Partnership satisfied an aggregate $251.2 million of non-recourse mortgage debt in connection with the sales.

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~~Results of Operations~~

~~Three months ended September 30, 2017 compared with the three months ended September 30, 2016~~. The decrease in total gross revenues of $9.3 million was primarily attributable to a decrease in rental revenue. The decrease in rental revenue of $9.4 million was primarily due to a reduction in rental revenue of $12.4 million due to a decrease in revenue from properties sold and a reduction in lease termination income, partially offset by rental revenue from newly acquired properties of $2.8 million.

~~The increase in depreciation and amortization expense of $2.3 million was primarily due to acquisitions of certain properties.~~

~~The decrease in general and administrative expense of $0.9 million primarily related to a decrease in the allocation of expenses from Lexington.~~

The decrease in interest and amortization expense of $3.0 million was primarily due to the sale of encumbered properties in 2016, particularly the New York, New York land investments, and a decrease in the allocation of interest and amortization expense from Lexington.

~~The decrease in debt satisfaction charges, net of $5.8 million was primarily due to the timing of debt satisfactions.~~

The decrease in impairment charges of $58.7 million primarily related to the timing of impairment charges recognized on the sales of properties. In 2016, a $65.5 million impairment charge was recognized on the sale of three New York, New York land investments.

~~Ninemonths endedSeptember 30, 2017 compared with the nine months ended September 30, 2016~~. The decrease in total gross revenues of $44.3 million was primarily attributable to a decrease in rental revenue. The decrease in rental revenue of $43.5 million was primarily due to a reduction in rental revenue of $49.7 million due to a decrease in revenue from properties sold and a reduction in lease termination income, partially offset by rental revenue from newly acquired properties of $5.7 million.

~~The increase in depreciation and amortization expense of $3.1 million was primarily due to acquisitions of certain properties.~~

~~Property operating expense decreased $1.5 million primarily due to the sale of properties, including multi-tenanted properties, where LCIF had operating expense responsibilities.~~

~~The decrease in general and administrative expense of $2.1 million primarily related to a decrease in the allocation of expenses from Lexington.~~

The decrease in interest and amortization expense of $12.4 million was primarily due to the sale of encumbered properties in 2016, particularly the New York, New York land investments, and a decrease in the allocation of interest and amortization expense from Lexington.

~~The decrease in debt satisfaction charges, net of $7.4 million was primarily due to the timing of debt satisfactions.~~

The decrease in impairment charges of $55.9 million related primarily to the timing of impairment charges recognized on the sales of properties. In 2016, a $65.5 million impairment charge was recognized on the sale of three New York, New York land investments.

~~The decrease in gains on sales of properties of $16.0 million related to the timing of sales of properties.~~

~~Off-Balance Sheet Arrangements~~

The Partnership is a co-borrower or guarantor of corporate borrowing facilities and debt securities of the Company (see notes 5 and 8 to the Partnership's unaudited condensed consolidated financial statements with respect to debt securities). In addition, the Partnership, from time to time, guarantees certain tenant improvement allowances and lease commissions on behalf of its subsidiaries when required by the related tenant or lender. However, the Partnership does not believe these guarantees are material to it as the obligations under and risks associated with such guarantees are priced into the rent under the applicable lease or the value of the applicable property.

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ITEM 3. QUANTITATIVE AND QUALITATIVE

DISCLOSURES 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 not subject to interest rate swaps was ~~$424.1~~$129.1 million at ~~September 30, 2017,~~March 31, 2023 and 2022, which represented ~~20.1%~~8.6%, respectively, of our aggregate principal consolidated indebtedness. ~~We had no consolidated variable-rate indebtedness outstanding at September 30, 2016.~~ During the ~~three-month periods~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016,~~2022, our variable-rate indebtedness had a weighted-average interest rate of ~~2.9%~~6.3% and ~~1.5%~~1.9%, respectively. Had the weighted-average interest rate been 100 basis points higher, our interest expense for the three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022 would have increased ~~by $475 thousand~~$0.5 million and $197 thousand, respectively. During the nine-month period ended September 30, 2017 and 2016, our variable-rate indebtedness had a weighted-average interest rate of 2.9% and 1.4%, respectively. Had the weighted-average interest rate been 100 basis points higher, our interest expense for the nine months ended September 30, 2017 and 2016 would have increased by $694 thousand and $1.0$0.3 million, respectively. AsAt each of ~~September 30, 2017~~March 31, 2023 and ~~2016,~~2022, our aggregate principal consolidated fixed-rate debt was ~~$1.7~~$1.4 billion, ~~and $1.9 billion, respectively,~~ which represented ~~79.9% and 100.0%~~91.4%, 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.~~values, especially given the volatility of the current economic environment. The following fair value was determined using the interest rates that we believe our outstanding fixed-rate indebtedness would warrant as of ~~September 30, 2017~~.March 31, 2023. We believe the fair value is indicative of the interest rate environment as of ~~September 30, 2017~~,March 31, 2023, but this amount does not take into consideration the effects of subsequent interest rate fluctuations. Accordingly, we estimate that the fair value of our fixed-rate indebtedness was ~~$1.7~~$1.2 billion as of ~~September 30, 2017~~.March 31, 2023.

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 may enter 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 ~~September 30, 2017~~,March 31, 2023, we had 10four interest rate swap agreements (see ~~note 9~~Note 8 to our unaudited condensed consolidated financial statements contained in this Quarterly Report).

~~The Partnership has similar exposure to market risk and interest rate risk relating to its variable-rate indebtedness because the Partnership is a co-borrower of the Company's variable-rate debt.~~

ITEM 4. CONTROLS AND PROCEDURES

~~Lexington Realty Trust:~~

Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as such terms are defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report to determine if such controls and procedures were effective to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that information required to be disclosed by us in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. ~~As discussed in the Annual Report, management has identified a material weakness in our internal control over financial reporting, and management,~~Management, including each of our Chief Executive Officer and Chief Financial Officer, has concluded that our disclosure controls and procedures were ~~not~~ effective as of September 30, 2017 due to this material weakness. Management believes the unaudited condensed consolidated financial statements contained herein present fairly, in all material respects, our financial position as of the specified dates and our results of operations and cash flows for the specified periods.March 31, 2023.

~~Table of Contents~~

Changes in Internal Control Over Financial Reporting. During the quarter ended June 30, 2017, management began implementing a remediation plan that was approved by the Audit Committee of our Board of Trustees with respect to the material weakness described in the Annual Report. Management took the following steps as part of the remediation:

Evaluated and revised our financial reporting process to align our control environment, business processes and monitoring and personnel with our financial reporting objectives, with an emphasis on critical accounting policies and significant or unusual transactions.

Improved the documentation of our system of internal control over financial reporting, specifically the application of critical accounting policies and identification of significant or unusual transactions, by establishing a policy guidance for the identification and critical accounting analysis of significant or unusual transactions.

Implemented additional controls over the communication, review and authorization of significant or unusual transactions, including, appropriate oversight by our Board of Trustees and Audit Committee of our Board of Trustees, as applicable.

The changes resulting from this remediation plan have not been fully tested. Until testing occurs and the changes operate for an appropriate period of time to insure their effectiveness, the material weakness described in the Annual Report will not be considered remediated. There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this Quarterly Report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls. Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

~~Lepercq Corporate Income Fund L.P.:~~

~~Evaluation of Disclosure Controls and Procedures.~~ The Partnership’s management, with the participation of Lex GP’s President and Lex GP’s Vice President and Treasurer, evaluated the effectiveness of the Partnership’s disclosure controls and procedures (as such terms are defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report to determine if such controls and procedures were effective to ensure that information required to be disclosed by the Partnership in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that information required to be disclosed by the Partnership in reports filed or submitted under the Exchange Act is accumulated and communicated to the Partnership’s management, including Lex GP’s President and Lex GP’s Vice President and Treasurer, as appropriate, to allow timely decisions regarding required disclosure. As discussed in the Annual Report, management has identified a material weakness in the Partnership's internal control over financial reporting, and management, including each of Lex GP's President and Lex GP's Vice President and Treasurer, has concluded that the Partnership's disclosure controls and procedures were not effective as of September 30, 2017 due to this material weakness. Management believes the unaudited condensed consolidated financial statements contained herein present fairly, in all material respects, the Partnership's financial position as of the specified dates and the Partnership's results of operations and cash flows for the specified periods.

~~Changes in Internal Control Over Financial Reporting~~. During the quarter ended June 30, 2017, the Partnership’s management began implementing a remediation plan that was approved by the Audit Committee of Lexington’s Board of Trustees with respect to the material weakness described in the Annual Report. The Partnership’s management took the following steps as part of the remediation:

Evaluated and revised the Partnership’s financial reporting process to align the Partnership’s control environment, business processes and monitoring and personnel with the Partnership’s financial reporting objectives, with an emphasis on critical accounting policies and significant or unusual transactions.

Improved the documentation of the Partnership’s system of internal control over financial reporting, specifically the application of critical accounting policies and identification of significant or unusual transactions, by establishing a policy guidance for the identification and critical accounting analysis of significant or unusual transactions.

Implemented additional controls over the communication, review and authorization of significant or unusual transactions, including, appropriate oversight by Lexington’s Board of Trustees and Audit Committee of Lexington’s Board of Trustees, as applicable.

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The changes resulting from this remediation plan have not been fully tested. Until testing occurs and the changes operate for an appropriate period of time to insure their effectiveness, the material weakness described in the Annual Report will not be considered remediated. There were no changes in the Partnership’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this Quarterly Report relates that have materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

~~Limitations on the Effectiveness of Controls~~. Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

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PART II - OTHER INFORMATION


~~ITEM 1.~~	~~Legal Proceedings.~~

ITEM 1.Legal Proceedings.

From time to time, ~~the Company and Partnership~~we are directly and indirectly involved in legal proceedings arising in the ordinary course of ~~the Company's and Partnership's~~our business, including claims by lenders under non-recourse carve-out guarantees. 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 ~~the Company's or the Partnership's~~our business, financial condition and results of operations.

~~GSMSC II 2006-GG6 Bridgewater Hills Corporate Center, LLC v. Lexington Realty Trust (Supreme Court of the State of New York, County of New York-Index No. 653117/2015)~~

On September 16, 2015, GSMSC II 2006-GG6 Bridgewater Hills Corporate Center, LLC commenced an action as lender against the Company based on a limited guaranty of recourse obligations executed by a predecessor entity of the Company in connection with a mortgage loan secured by a property owner subsidiary's commercial property in Bridgewater, New Jersey. The property owner subsidiary defaulted due to non-payment after the sole tenant vacated at the end of the lease term. The lender claimed approximately $9.2 million in order to satisfy the outstanding amount of the loan, plus interest, reasonable attorney’s fees and other costs and disbursements related thereto.

The lender claimed that the Company's limited guaranty was triggered due to the merger of Newkirk Realty Trust, Inc. and Lexington Corporate Properties Trust on December 31, 2006, arguing that it constituted an event of default because it was a transfer that was not permitted by the loan agreement. The limited guaranty provides that the guarantor's liability for the guaranteed obligations shall not exceed $10.0 million. The Company filed a motion to dismiss, which was generally denied. The parties conducted discovery consisting of document production. The Company recorded a $2.05 million litigation reserve during the quarter ended September 30, 2017 relating to this litigation as the Company determined that a liability was "probable" (as defined by FASB ASC 450-20-20). A mediation was held on October 5, 2017, but a settlement was not reached that day. Following the mediation, a settlement agreement was executed that requires a $2.05 million payment.

~~The lender also brought a foreclosure action against the property owner subsidiary. A foreclosure sale was held September 13, 2016 and the lender acquired the property for a nominal amount.~~


~~ITEM 1A.~~	~~Risk Factors.~~

ITEM 1A.Risk Factors.

There have been no material changes in our ~~or the Partnership's~~ risk factors from those disclosed in the Annual Report.


~~ITEM 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds.~~

ITEM 2.Unregistered Sales of Equity Securities and Use of Proceeds.

The following table summarizes repurchases of our common shares/OP units during the three months ended ~~September 30, 2017~~March 31, 2023 pursuant to publicly announced repurchase plans⁽¹⁾:



~~Issuer Purchases of Equity Securities~~
Period		(a) Total Number of Shares/Units Purchased				(b) Average Price Paid ~~Per~~for Share/Unit			(c) Total Number of Shares/Units Purchased as Part of Publicly Announced Plans or Programs⁽¹⁾		(d) Maximum Number of Shares/Units That May Yet Be Purchased Under the Plans or Programs⁽¹⁾
~~July~~January 1 - 31, ~~2017~~2023				—			$	—		—		~~6,599,088~~6,874,241
~~August~~February 1 - 28, 2023				—			$	—		—		6,874,241
March 1 - 31, ~~2017~~2023				—			$	—		—		~~6,599,088~~
~~September 1 - 30, 2017~~	—		$	—	—		~~6,599,088~~
~~Third quarter 2017~~	—		$	—	—		~~6,599,088~~

6,874,241
~~(1)~~First quarter 2023			~~Share repurchase authorization announced on July 2, 2015, which has no expiration date.~~			—						$	—					—						6,874,241

~~During September 2017, the Partnership redeemed 2,675,785 OP units that were owned by Lexington for $130.0~~

(1) Share repurchase authorization of an additional 10.0 million ~~or $48.58 per unit.~~common shares announced on August 4, 2022, which has no expiration date.

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~~ITEM 3.~~	~~Defaults Upon Senior Securities - not applicable.~~

ITEM 3.Defaults Upon Senior Securities - not applicable.


~~ITEM 4.~~	~~Mine Safety Disclosures - not applicable.~~

ITEM 4.Mine Safety Disclosures - not applicable.


~~ITEM 5.~~	~~Other Information - not applicable.~~

ITEM 5.Other Information. - not applicable.

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ITEM 6.Exhibits.


~~ITEM 6.~~	~~Exhibits.~~



Exhibit No.				Description

3.1			—	Articles of Merger and Amended and Restated Declaration of Trust of the Company, dated December 31, 2006 (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed January 8, ~~2007 (the “01/08/07 8-K”))~~2007)(1)
3.2			—	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)
3.3			—	Articles of Amendment to the Amended and Restated ~~By-laws~~Declaration of ~~the Company (filed~~Trust, dated as ~~Exhibit 3.2 to the 01/08/07 8-K)(1)~~
~~3.4~~	—	~~First Amendment to Amended and Restated By-laws~~ of ~~the Company (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed November 20, 2009)(1)~~
~~3.5~~	__	~~Second Amendment to Amended and Restated By-Laws of the Company~~December 14, 2021 (filed as Exhibit 3.1 to the Company's Current Report on Form 8-K filed ~~April 3, 2017)~~ on December 16, 2021)(1)
~~3.6~~3.4			—	~~Agreement~~Articles of Amendment to the Amended and ~~Plan~~Restated Declaration of ~~Merger~~Trust, dated as of ~~December 23, 2013, by and among Lepercq Corporate Income Fund L.P. (“LCIF”) and Lepercq Corporate Income Fund II L.P. (“LCIF II”)~~May 26, 2022 (filed as Exhibit ~~10.1~~3.1 to the Company's Current Report on Form 8-K filed ~~December 24, 2013)~~on May 27, 2022)(1)
~~3.7~~3.5			—	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)
3.6			—	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 filed February 26, 2014)(1)
3 .7			—	First Amendment to Sixth Amended and Restated Agreement of Limited Partnership of LCIF, dated as of July 12, 2021 (filed as Exhibit 3.1 to the Company's Current Report on Form 8-K filed July 16, 2021)(1)
4.1			—	Specimen of Common Shares Certificate of the Company (filed as Exhibit 4.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2006)~~2021)(1)
4.2			—	Form of 6.50% Series C Cumulative Convertible Preferred Stock certificate (filed as Exhibit 4.1 to the Company's Registration Statement on Form 8A filed December 8, 2004)(1)
4.3			—	Indenture, dated as of January 29, 2007, among the Company (as successor by merger), the other guarantors named therein and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed January 29, 2007 (the “01/29/07 8-K”))(1)
~~4.4~~	—	Amended and Restated Trust Agreement, dated March 21, 2007, among the Company, The Bank of New York Trust Company, National Association, 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 March 27, 2007 (the “03/27/2007 8-K”))(1)
~~4.5~~4.4			—	Junior Subordinated Indenture, dated as of March 21, 2007, between Lexington Realty Trust and The Bank of New York Trust Company, National Association (filed as Exhibit 4.2 to the 03/27/07 8-K)(1)
~~4.6~~4.5			—	Fourth Supplemental Indenture, dated as of December 31, 2008, among the Company, the other guarantors named therein and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed January 2, 2009)(1)
~~4.7~~	—	~~Fifth Supplemental~~ Indenture, dated as of June ~~9, 2009,~~10, 2013, among the Company, ~~(as successor to~~certain subsidiaries of the ~~MLP), the other guarantors named therein~~Company signatories thereto, and U.S. Bank, ~~National Association,~~ as trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on June ~~15, 2009)~~13, 2013)(1)
~~4.8~~4.6			—	Sixth Supplemental Indenture, dated as of January 26, 2010 among the Company, the guarantors named therein and U.S. Bank National Association, as trustee, including the Form of 6.00% Convertible Guaranteed Notes due 2030 (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed January 26, 2010)(1)
~~4.9~~	—	~~Seventh~~First Supplemental Indenture, dated as of September ~~28, 2012, among~~30, 2013, between the Company ~~certain subsidiaries of the Company signatories thereto,~~ and U.S. Bank, ~~National Association,~~ as trustee (filed as Exhibit ~~4.1 to the Company's Current Report on Form 8-K filed October 3, 2012)(1)~~
~~4.10~~	—	Eighth Supplemental Indenture, dated as of February 13, 2013, among the Company, certain subsidiaries of the Company signatories thereto, and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed February 13, 2013 (the “02/13/13 8-K”))(1)
~~4.11~~	—	Ninth Supplemental Indenture, dated as of May 6, 2013, among the Company, certain subsidiaries of the Company signatories thereto, and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed May 8, 2013)(1)
~~4.12~~	—	Tenth Supplemental Indenture, dated as of June 13, 2013, among the Company, certain subsidiaries of the Company signatories thereto, and U.S. Bank National Association, as trustee (filed as Exhibit 4.34.2 to the Company's Current Report on Form 8-K filed on ~~June 13, 2013 (“06/13/13 8-K”))~~October 3, 2013)(1)
~~4.13~~4.7		—	Tenth Supplemental Indenture, dated as of September 30, 2013, among the Company, certain subsidiaries of the Company signatories thereto, and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on October 3, 2013 (the “10/03/2013 8-K”))(1)

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~~4.14~~

—

~~Indenture, dated as of June 10, 2013, among the Company, the subsidiary guarantors named therein, and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to the 06/13/2013 8-K))(1)~~

~~4.15~~

—

First Supplemental Indenture, dated as of September 30, 2013, among the Company, the subsidiary guarantors named therein, and U.S. Bank National Association, as trustee (filed as Exhibit 4.2 to the 10/03/2013 8-K)(1)

~~4.16~~

—

Indenture, dated as of May 9, 2014, among the Company ~~LCIF~~ and U.S. Bank, ~~National Association,~~ as trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed May 13, 2014)(1)

~~4.17~~4.8

—

First Supplemental Indenture, dated as of May 20, 2014, among the Company, LCIF and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed May 20, 2014)(1)

~~10.1~~4.9

—

~~First Amendment to Credit Agreement and Agreement Regarding Revolving Loan Commitment and Term Loan Increases,~~Second Supplemental Indenture, dated as of ~~September 29, 2017,~~August 28, 2020, among the Company and ~~LCIF, as borrowers, KeyBank~~U.S. Bank National Association, as ~~agent,~~trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed August 28, 2020)(1)

4.10

—

Third Supplemental Indenture, dated as of August 30, 2021, among the Company and ~~each~~U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed August 30, 2021)(1)

Table of Contents


4.11			—	Description of the ~~lenders signatory thereto (filed~~Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (2)
10.1				Form of LXP Industrial Trust Restricted Share Agreement (Filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed ~~October 2, 2017)(1)~~on January 17, 2023 (the "01/17/23 8-K"))(1, 4)
1 0.2				Form of LXP Industrial Trust Nonvested Share Agreement (Filed as Exhibit 10.2 to the 1/17/2023 8-K))(1, 4)
31.1			—	Certification pursuant to ~~rule~~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)
31.2			—	Certification pursuant to ~~rule~~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)
~~31.3~~32.1			—	~~Certification 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)~~
~~31.4~~	—	~~Certification 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)~~
~~32.1~~	—	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(3)
32.2			—	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(3)
~~32.3~~ 101.INS			—	~~Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(3)~~
~~32.4~~	—	~~Certification 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 its XBRL tags are embedded within the Inline XBRL document (2, 5)
101.SCH			—	Inline XBRL Taxonomy Extension Schema (2, 5)
101.CAL			—	Inline XBRL Taxonomy Extension Calculation Linkbase (2, 5)
101.DEF			—	Inline XBRL Taxonomy Extension Definition Linkbase Document (2, 5)
101.LAB			—	Inline XBRL Taxonomy Extension Label Linkbase Document (2, 5)
101.PRE			—	Inline XBRL Taxonomy Extension Presentation Linkbase Document (2, 5)


~~(1)~~	~~Incorporated by reference.~~


~~(2)~~	~~Filed herewith.~~

~~(3)~~

Furnished 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.


~~(4)~~	~~Management contract or compensatory plan or arrangement.~~

~~(5)~~

~~The following materials from this Quarterly Report on Form 10-Q for the period ended September 30, 2017~~

(1) Incorporated by reference.

(2) Filed herewith.

(3) Furnished 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.

(4) Management contract or compensatory plan or arrangement.

(5) The following materials from this Quarterly Report on Form 10-Q for the period ended March 31, 2023 are formatted in Inline XBRL (Extensible Business Reporting Language): (i) Unaudited Condensed Consolidated Balance Sheets of the Company; (ii) Unaudited Condensed Consolidated Statements of Operations of the Company; (iii) Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) of the Company; (iv) Unaudited Condensed Consolidated Statements of Changes in Equity of the Company; (v) Unaudited Condensed Consolidated Statements of Cash Flows of the Company; and (vi) Notes to Unaudited Condensed Consolidated Financial Statements of the Company, detailed tagged; (vii) Unaudited Condensed Consolidated Balance Sheets of LCIF; (viii) Unaudited Condensed Consolidated Statements of Operations of LCIF; (ix) Unaudited Condensed Consolidated Statements of Changes in Partners' Capital of LCIF; (x) Unaudited Condensed Consolidated Statements of Cash Flows of LCIF; and (xi) Notes to Unaudited Condensed Consolidated Financial Statements of LCIF, detailed tagged.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the ~~undersigned registrants have~~registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		~~Lexington Realty~~LXP Industrial Trust

Date:	~~November 7, 2017~~May 3, 2023	By:	/s/ T. Wilson Eglin
			T. Wilson Eglin
			Chief Executive Officer and President (principal executive officer)

Date:	~~November 7, 2017~~May 3, 2023	By:	/s/ ~~Patrick Carroll~~Beth Boulerice
			~~Patrick Carroll~~Beth Boulerice
			Chief Financial Officer, Executive ~~Vice President~~ ~~and Treasurer~~ ~~(principal financial officer)~~



		~~Lepercq Corporate Income Fund L.P.~~

		~~By:~~	~~Lex GP-1 Trust, its General Partner~~

~~Date:~~	~~November 7, 2017~~	~~By:~~	~~/s/ T. Wilson Eglin~~
			~~T. Wilson Eglin~~
			~~President~~ ~~(principal executive officer)~~

~~Date:~~	~~November 7, 2017~~	~~By:~~	~~/s/ Patrick Carroll~~
			~~Patrick Carroll~~
			Vice President and Treasurer (principal financial officer)



Nine Months ended September 30, 2017				Lexington Realty Trust Shareholders
	Total			Preferred Shares		Common Shares		Additional Paid-in-Capital		Accumulated Distributions in Excess of Net Income			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests
Balance December 31, 2016	$	1,412,491		$	94,016	$	24	$	2,800,736	$	(1,500,966	)	$	(1,033	)	$	19,714
Redemption of noncontrolling OP units for common shares	—			—		—		574		—			—			(574		)
Issuance of common shares and deferred compensation amortization, net	23,069			—		—		23,069		—			—			—
Dividends/distributions	(132,789		)	—		—		—		(130,226		)	—			(2,563		)
Net income	55,181			—		—		—		54,733			—			448
Other comprehensive income	1,543			—		—		—		—			1,543			—
Balance September 30, 2017	$	1,359,495		$	94,016	$	24	$	2,824,379	$	(1,576,459	)	$	510		$	17,025



Nine Months ended September 30, 2016				Lexington Realty Trust Shareholders
	Total			Preferred Shares		Common Shares		Additional Paid-in-Capital			Accumulated Distributions in Excess of Net Income			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests
Balance December 31, 2015	$	1,462,531		$	94,016	$	23	$	2,776,837		$	(1,428,908	)	$	(1,939	)	$	22,502
Issuance of common shares upon conversion of convertible notes	12,027			—		—		12,027			—			—			—
Repurchase of common shares	(8,973		)	—		—		(8,973		)	—			—			—
Redemption of noncontrolling OP units for common shares	—			—		—		31			—			—			(31		)
Issuance of common shares and deferred compensation amortization, net	9,045			—		1		9,044			—			—			—
Dividends/distributions	(128,319		)	—		—		—			(125,791		)	—			(2,528		)
Net income (loss)	79,521			—		—		—			79,623			—			(102		)
Other comprehensive loss	(2,944		)	—		—		—			—			(2,944		)	—
Balance September 30, 2016	$	1,422,888		$	94,016	$	24	$	2,788,966		$	(1,475,076	)	$	(4,883	)	$	19,841



Three Months ended September 30, 2016
	As Originally Reported			Correction			As Adjusted
Total gross revenues	$	106,331		$	(350	)	$	105,981
Net loss	$	(27,262	)	$	(350	)	$	(27,612	)
Net loss attributable to common shareholders	$	(26,653	)	$	(322	)	$	(26,975	)
Net loss attributable to common shareholders - basic per share	$	(0.11	)	$	(0.01	)	$	(0.12	)
Net loss attributable to common shareholders - diluted per share	$	(0.11	)	$	(0.01	)	$	(0.12	)



Property Type	Location	Acquisition Date	Initial Cost Basis		Lease Expiration	Land and Land Estate		Building and Improvements		Lease in-place Value Intangible		Below Market Lease Intangible
Office	Lake Jackson, TX⁽¹⁾	January 2017	$	70,401	10/2036	$	3,078	$	67,323	$	—	$	—
Industrial	New Century, KS	February 2017	12,056		01/2027	—		13,198		1,648		(2,790		)
Industrial	Lebanon, IN	February 2017	36,194		01/2024	2,100		29,443		4,651		—
Office	Charlotte, NC	April 2017	61,339		04/2032	3,771		47,064		10,504		—
Industrial	Cleveland, TN	May 2017	34,400		03/2024	1,871		29,743		2,786		—
Industrial	Grand Prairie, TX	June 2017	24,317		03/2037	3,166		17,985		3,166		—
Industrial	San Antonio, TX	June 2017	45,507		04/2027	1,311		36,644		7,552		—
Industrial	Opelika, AL	July 2017	37,269		05/2042	134		33,183		3,952		—
Industrial	McDonough, GA	August 2017	66,700		01/2028	5,441		52,762		8,497		—
Industrial	Byhalia, MS	September 2017	36,590		09/2027	1,751		31,236		3,603		—
Industrial	Jackson, TN	September 2017	57,920		10/2027	1,454		49,026		7,440		—
Industrial	Smyrna, TN	September 2017	104,890		04/2027	1,793		93,940		9,157		—
			$	587,583		$	25,870	$	501,547	$	62,956	$	(2,790	)



Location	Square Feet (000's)	Property Type	Maximum Acquisition Cost		Estimated Acquisition Date	Approximate Lease Term (Yrs)
Warren, MI⁽¹⁾	260	Industrial	$	47,000	4Q 17	15
Romulus, MI	500	Industrial	39,330		4Q 17	15
Lafayette, IN	309	Industrial	17,450		4Q 17	7
	1,069		$	103,780



	Loan carrying-value⁽¹⁾
Loan		12/31/2016		Interest Rate		Maturity Date
Kennewick, WA⁽²⁾		$	85,709	9.00	%	05/2022
Oklahoma City, OK⁽³⁾		8,501		11.50	%	03/2016
		$	94,210



	As of September 30, 2017				As of December 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets
Loans Receivable	$	—	$	—	$	94,210	$	94,911

Liabilities
Debt	$	2,088,874	$	2,058,863	$	1,860,598	$	1,814,824



Derivatives in Cash Flow	Amount of Income (Loss) Recognized in OCI on Derivatives (Effective Portion) September 30,					Location of Loss Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Loss Reclassified from Accumulated OCI into Income (Effective Portion) September 30,
Hedging Relationships	2017		2016				2017		2016
Interest Rate Swaps	$	581	$	(6,035	)	Interest expense	$	962	$	3,091



Nine Months ended September 30, 2017	Units		Partners' Capital
Balance December 31, 2016	83,241,396		$	387,623
Changes in co-borrower debt allocation	—		180,565
Redemption of OP units	(2,675,785	)	(129,990		)
Distributions	—		(48,573		)
Net loss	—		(4,900		)
Balance September 30, 2017	80,565,611		$	384,725

Nine Months ended September 30, 2016
Balance December 31, 2015	83,241,396		$	461,657
Changes in co-borrower debt allocation	—		(17,179		)
Distributions	—		(49,900		)
Net loss	—		(20,798		)
Balance September 30, 2016	83,241,396		$	373,780



	As of September 30, 2017				As of December 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Liabilities
Debt	$	334,329	$	333,181	$	315,616	$	314,509



	2017		2016
Preferred Freezer Services of Richland, LLC	17.9	%	N/A
SM Ascott LLC⁽¹⁾	N/A		13.1	%
Tribeca Ascott LLC⁽¹⁾	N/A		11.2	%
AL-Stone Ground Tenant LLC⁽¹⁾	N/A		10.2	%



Issue Date	Face Amount ($000)		Interest Rate		Maturity Date	Issue Price
May 2014	$	250,000	4.40	%	June 2024	99.883	%
June 2013	250,000		4.25	%	June 2023	99.026	%
	$	500,000



Per Common Share and Unit Amounts
Basic:
FFO	$	0.24	$	0.29	$	0.68	$	0.89

Diluted:
FFO	$	0.24	$	0.29	$	0.69	$	0.89
Adjusted Company FFO	$	0.25	$	0.28	$	0.71	$	0.89