Edgar Filing: LEXINGTON REALTY TRUST

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

(Mark One)

þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the fiscal year ended December 31, 2008

	or

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from to

Commission File Number 1-12386

LEXINGTON REALTY TRUST

(Exact name of Registrant as specified in its charter)

Maryland	13-3717318
(State or other jurisdiction of incorporation or organization) One Penn Plaza, Suite 4015	(I.R.S. Employer Identification No.)
New York, NY	10119-4015
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (212) 692-7200

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class		Name of Each Exchange on which Registered
Shares of beneficial interests, par value $0.0001, classified as Common Stock		New York Stock Exchange
8.05% Series B Cumulative Redeemable Preferred Stock, par value $0.0001		New York Stock Exchange
6.50% Series C Cumulative Convertible Preferred Stock, par value $0.0001		New York Stock Exchange
7.55% Series D Cumulative Redeemable Preferred Stock, par value $0.0001		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No þ.

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ.

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 þ No o.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨

(Do not check if a smaller reporting company)

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

The aggregate market value of the voting shares held by non-affiliates of the Registrant as of June 30, 2008, which was the last business day of the Registrant’s most recently completed second fiscal quarter was $846,151,259 based on the closing price of common shares as of that date, which was $13.63 per share.

Number of common shares outstanding as of February 23, 2009 was 100,641,638.

Certain information contained in the Definitive Proxy Statement for Registrant’s Annual Meeting of Shareholders, to be held on May 19, 2009 is incorporated by reference in this Annual Report on Form 10-K in response to Part III, Item 10, 11, 12, 13 and 14.

TABLE OF CONTENTS

Item of Form 10-K	Description	Page

	PART I
1	Business	1
1A.	Risk Factors	9
1B.	Unresolved Staff Comments	19
2.	Properties	20
3.	Legal Proceedings	32
4.	Submission of Matters to a Vote of Security Holders	32
	PART II
5.	Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	34
6.	Selected Financial Data	37
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
7A.	Quantitative and Qualitative Disclosures about Market Risk	58
8.	Financial Statements and Supplementary Data	60
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	101
9A.	Controls and Procedures	101
9B.	Other Information	101
	PART III
10.	Trustees and Executive Officers of the Registrant	101
11.	Executive Compensation	101
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	101
13.	Certain Relationships and Related Transactions	102
14.	Principal Accountant Fees and Services	102
	PART IV
15.	Exhibits and Financial Statement Schedules	102
Signatures		106

PART I.

Introduction

When we use the terms “Lexington,” the “Company,” “we,” “us” and “our,” we mean Lexington Realty Trust and all entities owned by us, including non-consolidated entities, except where it is clear that the term means only the parent company. References herein to our Annual Report are to our Annual Report on Form 10-K for the fiscal year ended December 31, 2008.

All references to 2008, 2007 and 2006 refer to our fiscal years ended, or the dates, as the context requires, December 31, 2008, December 31, 2007, and December 31, 2006, respectively.

Newkirk Realty Trust, Inc., or Newkirk, was merged with and into us on December 31, 2006, which we refer to as the Newkirk Merger. Unless otherwise noted, (A) the information in this Annual Report regarding items in our Consolidated Statements of Operations as of December 31, 2006 and prior, does not include the business and operations of Newkirk, and (B) the information in this Annual Report regarding items in our Consolidated Balance Sheet as of December 31, 2005 and prior, does not include the assets, liabilities and minority interests of Newkirk.

Cautionary Statements Concerning Forward-Looking Statements

This Annual Report, together with other statements and information publicly disseminated by us contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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,” 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 to differ materially from current expectations include, among others, those risks discussed below and under “Risk Factors” in Part I, Item 1A of the Annual Report and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Annual Report. We undertake no obligation to publicly release the results of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect occurrence of unanticipated events. Accordingly, there is no assurance that our expectations will be realized.

Item 1. Business

General

We are a self-managed and self-administered real estate investment trust, or REIT, formed under the laws of the State of Maryland. Our primary business is the acquisition, ownership and management of a geographically diverse portfolio of net leased office, industrial and retail properties. Substantially all of these properties are subject to triple net leases, which are generally characterized as leases in which the tenant bears all or substantially all of the costs and/or cost increases for real estate taxes, utilities, insurance and ordinary repairs. In addition, we acquire and hold investments in loan assets and debt securities related to real estate, which are primarily acquired and held through our 50% interest in Lex-Win Concord LLC, which we refer to as Lex-Win Concord.

As of December 31, 2008, we had ownership interests in approximately 225 consolidated real estate assets, located in 41 states and the Netherlands and containing an aggregate of approximately 40.2 million square feet of space, approximately 93.3% of which was subject to a lease. In 2008, 2007 and 2006, no tenant/guarantor represented greater than 10% of our annual base rental revenue.

In addition to our shares of beneficial interests, par value $0.0001 per share, which we refer to as common shares, we have three outstanding classes of beneficial interests classified as preferred stock, which we refer to as preferred shares: (1) 8.05% Series B Cumulative Redeemable Preferred Stock, which we refer to as our Series B Preferred Shares, (2) 6.50% Series C Cumulative Convertible Preferred Stock, which we refer to as our Series C Preferred Shares, and (3) 7.55% Series D Cumulative Redeemable Preferred Stock, which we refer to as our Series D Preferred Shares. Our common shares, Series B Preferred Shares, Series C Preferred Shares and Series D Preferred Shares are traded on the New York Stock Exchange, or NYSE, under the symbols “LXP”, “LXP pb”, “LXP pc” and “LXP pd”, respectively.

We elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, which we refer to as the Code, commencing with our taxable year ended December 31, 1993. If we qualify for taxation as a REIT, we generally will not be subject to federal corporate income taxes on our net income that is currently distributed to shareholders.

History

Our predecessor was organized in October 1993 upon the combination of two investment programs, Lepercq Corporate Income Fund L.P. and Lepercq Corporate Income Fund II L.P., which were formed to acquire net lease real estate assets that would provide current income. Our predecessor was merged into Lexington Corporate Properties Trust on December 31, 1997. On December 31, 2006, Lexington Corporate Properties Trust completed the Newkirk Merger. Newkirk’s primary business was similar to our primary business. All of Newkirk’s operations were conducted and all of its assets were held through its master limited partnership, The Newkirk Master Limited Partnership, which we refer to as the MLP. Newkirk was the general partner and owned, at the time of completion of the Newkirk Merger, a 31.0% general partner interest in the MLP. In connection with the Newkirk Merger, Lexington Corporate Properties Trust changed its name to Lexington Realty Trust, the MLP was renamed The Lexington Master Limited Partnership and one of our wholly-owned subsidiaries became the sole general partner of the MLP and another one of our wholly-owned susidiaries became the holder of a 31.0% limited partner interest in the MLP.

In the Newkirk Merger, each share of Newkirk’s common stock was exchanged for 0.80 of our common shares and the MLP effected a 1.0 for 0.80 reverse unit-split. Each MLP unit, other than the MLP units held directly or indirectly by us, was redeemable at the option of the holder for cash based on a value of our common shares or, if we elected, for our common shares on a one-for-one basis. As of December 31, 2007, we owned approximately 50% of the limited partner interest in the MLP. As of December 31, 2008, the MLP was merged with and into us and we issued 6.4 million common shares for the MLP units we did not already own.

We are structured as an umbrella partnership REIT, or UPREIT, and a portion of our business is conducted through our three operating partnership subsidiaries: (1) Lepercq Corporate Income Fund L.P.; (2) Lepercq Corporate Income Fund II L.P.; and (3) Net 3 Acquisition L.P. We refer to these subsidiaries as our operating partnerships and to limited partner interests in these operating partnerships as OP units. The UPREIT structure enables us to acquire properties through our operating partnerships by issuing to a property owner, as a form of consideration in exchange for the property, OP units. The OP units are generally redeemable, after certain dates, for our common shares or cash in certain instances. We believe that this structure facilitates our ability to raise capital and to acquire portfolio and individual properties by enabling us to structure transactions which may defer tax gains for a contributor of property. As of December 31, 2008, there were approximately 5.3 million OP units outstanding, other than OP units held directly or indirectly by us.

Global Credit and Financial Crisis

There is considerable uncertainty as to how severe the current global credit and financial crisis may be and how long it may continue. The crisis has impacted our acquisition activity and our financing ability and has strained the resources of certain of our tenants and their customers. It is difficult for us to predict how severe the impact of the crisis will be to our business.

We lease our properties to tenants in various industries, including finance/insurance, aerospace/defense, energy, technology and automotive. Tenant defaults at our properties could negatively impact our operating results. Leased space was approximately 93.3% at December 31, 2008, down approximately 2.3% from last year. We expect to lose occupancy during 2009 due to non-renewals and current economic factors which may include increased tenant bankruptcies or government conservatorship of tenants.

Our principal sources of liquidity have been (1) undistributed cash flows generated from our investments, (2) the public and private equity and debt markets, including issuances of OP units (3) property specific debt, (4) corporate level borrowings, and (5) commitments from co-investment partners.

On February 13, 2009, we refinanced our (1) unsecured revolving credit facility, with $25.0 million outstanding as of December 31, 2008, which was scheduled to expire in June 2009, and (2) secured term loan, with $174.3 million outstanding as of December 31, 2008, which was scheduled to mature in June 2009 (but could have been extended to December 2009 at our option), with a secured credit facility consisting of a $165.0 million term loan and a $85.0 million revolving credit agreement with KeyBank National Association, which we refer to as KeyBank, as agent. The new facility bears interest at 2.85% over LIBOR and matures in February 2011, but can be extended until February 2012 at our option. The new credit facility is secured by ownership interest pledges and guarantees by certain of our subsidiaries that in the aggregate own interests in a borrowing base consisting of 72 properties. With the consent of the lenders, we can increase the size of (1) the term loan by $135.0 million and (2) the revolving loan by $115.0 million (or $250.0 million in the aggregate, for a total facility size of $500.0 million) by adding properties to the borrowing base.

We have consolidated property specific non-recourse debt with an aggregate of $60.3 million of balloon payments that mature in 2009. We also have (1) interest rate swap agreements directly and through our investment in Lex-Win Concord and (2) a direct forward equity commitment. The counterparties of these arrangements are major financial institutions; however, we are exposed to credit risk in the event of non-performance by the counterparties. In addition, we may be required to make additional prepayments pursuant to our forward equity commitment.

Objectives and Strategy

General. As part of our ongoing business efforts, we expect to continue to (1) recycle capital in compliance with regulatory and contractual requirements; (2) refinance or repurchase outstanding indebtedness when advisable; (3) effect strategic transactions and portfolio and individual property acquisitions and dispositions; (4) expand existing properties; (5) execute new leases with tenants; (6) extend lease maturities in advance of expiration; and (7) explore new business lines and operating platforms. Additionally, we may continue to enter into joint ventures and co-investment programs with third-party investors as a means of creating additional growth and expanding the revenue realized from advisory and asset management activities as situations warrant.

Strategic Restructuring Plan. In June 2007, we announced a strategic restructuring plan. The plan was intended to restructure us into a company consisting primarily of:

•

a wholly-owned portfolio of core office assets;

•

a wholly-owned portfolio of core warehouse/distribution assets;

•

a continuing 50% interest in a co-investment program that invests in senior and subordinated debt interests secured by real estate collateral;

•

an interest in a co-investment program that invests in specialty single tenant real estate assets; and

•

equity securities in other net lease companies owned either individually or through an interest in one or more joint ventures or co-investment programs.

During 2007, in connection with the strategic restructuring plan, we:

•

acquired all of the outstanding interests not otherwise owned by us in Triple Net Investment Company LLC, one of our former co-investment programs, which resulted in us becoming the sole owner of the co-investment program’s 15 primarily single tenant net leased properties;

•

acquired all of the outstanding interests not otherwise owned by us in Lexington Acquiport Company, LLC and Lexington Acquiport Company II, LLC, two of our former co-investment programs, which resulted in us becoming the sole owner of the co-investment programs’ 26 primarily single tenant net leased properties;

•

terminated Lexington/Lion Venture L.P., one of our former co-investment programs, and received a distribution in-kind of seven primarily single tenant net leased properties owned by the co-investment program;

•

commenced a disposition program, whereby we began marketing non-core assets for sale; and

•

formed a co-investment program, Net Lease Strategic Assets Fund LP, which we refer to as NLS, with a subsidiary of Inland American Real Estate Trust, Inc., which has acquired primarily 43 net leased assets plus a 40% interest in one property previously owned by us.

Capital Recycling. As part of our strategic restructuring plan, we began to dispose of non-core assets for sale. Following the completion of the strategic restructuring plan, we have continued to dispose of non-core assets and core assets, subject to regulatory and contractual requirements. During 2008, we primarily used the proceeds from such dispositions, to the extent permitted under our secured term loan agreements, to retire senior debt and preferred securities at what we believe are favorable spreads.

Acquisition Strategies. When market conditions warrant, we seek to enhance our net lease property portfolio through acquisitions of “core” assets, which we believe are general purpose, efficient, well-located assets in growing markets. Prior to effecting any acquisitions, we analyze the (1) property’s design, construction quality, efficiency, functionality and location with respect to the immediate sub-market, city and region; (2) lease integrity with respect to term, rental rate increases, corporate guarantees and property maintenance provisions; (3) present and anticipated conditions in the local real estate market; and (4) prospects for selling or re-leasing the property on favorable terms in the event of a vacancy. We also evaluate each potential tenant’s financial strength, growth prospects, competitive position within its respective industry and a property’s strategic location and function within a tenant’s operations or distribution systems. We believe that our comprehensive underwriting process is critical to the assessment of long-term profitability of any investment by us.

During 2002-2005, our acquisition volume increased significantly due primarily to the availability of low-cost long-term financing. As competition for single tenant net lease properties increased, the volume of our acquisitions decreased. This decrease became noticeable during the fourth quarter of 2006. At such time, we were preparing for the integration of the operations of Newkirk with our operations. During 2007, acquisition activity was low, except for the acquisition of 48 primarily single-tenant net lease assets from our co-investment programs. During 2008, acquisition activity continued to decrease as we focused on retiring senior debt and preferred securities at a discount. We expect acquisition activity to increase if and when general market conditions improve.

In the Newkirk Merger, we succeeded Newkirk to an agreement with a third party pursuant to which we will pay the third party for properties acquired by us and identified by the third party in an amount equal to (1) 1.5% of the gross purchase price and (2) 25% of the net proceeds and net cash flow (as defined) after we receive all of our invested capital plus a 12% internal rate of return. As of December 31, 2008, only one property, which was acquired in 2006, has been acquired subject to these terms. We have no other sourcing agreements.

Strategic Transactions with Other Real Estate Investment Companies. We seek to capitalize on the unique investment experience of our executive management team as well as its network of relationships in the industry to achieve appropriate risk-adjusted yields through strategic transactions. Accordingly, we endeavor to pursue the (1) acquisition of portfolios of assets and equity interests in companies with a significant number of single-tenant assets, including through mergers and acquisitions activity, and (2) participation in strategic partnerships, co-investment programs and joint ventures.

In 1999, we established our first co-investment program with the New York State Common Retirement Fund. Following a second co-investment program with the New York State Common Retirement Fund, we established co-investment programs with ING Clarion Lion Properties Fund, the Utah State Retirement Investment Fund and Inland American Real Estate Trust, Inc. In addition, in the Newkirk Merger, we acquired an interest in a co-investment program with Winthrop Realty Trust, which we refer to as Winthrop.

During 2007, we acquired the interests of the New York State Common Retirement Fund and the Utah State Retirement Investment Fund in certain of the co-investment programs and we distributed the properties in the co-investment program with ING Clarion Lion Properties Fund to us and ING Clarion Lion Properties Fund, and terminated all of our co-investment programs except for NLS and Lex-Win Concord, our co-investment program with Winthrop.

We believe that entering into co-investment programs and joint ventures with institutional investors and other real estate investment companies may mitigate our risk in certain assets and increase our return on equity to the extent we earn management or other fees.

Acquisitions of Portfolios and Individual Net Lease Properties. We seek to acquire portfolios and individual properties from (1) creditworthy corporations and other entities in sale/leaseback transactions for properties that are integral to the sellers’/tenants’ ongoing operations; (2) developers of newly-constructed properties built to suit the needs of a corporate tenant generally after construction has been completed to avoid the risks associated with the construction phase of a project; (3) other real estate investment companies through strategic transactions; and (4) sellers of properties subject to an existing lease. We believe that our geographical diversification and acquisition experience will allow us to compete effectively for the acquisition of such net leased properties.

Debt Investments. We originate and invest in real estate loan assets either directly or indirectly through our 50% interest in Lex-Win Concord. Lex-Win Concord’s primary asset is its interest in Concord Debt Holdings LLC, which we refer to as Concord. Our direct originations of loan assets primarily involve purchase money financing provided to purchasers of certain properties we have sold.

At December 31, 2008, of our approximately $4.1 billion of total assets, (1) $84.3 million consisted of directly held loan assets and (2) $114.6 million consisted of our investment in and advances to Lex-Win Concord. Lex-Win Concord is obligated to make additional capital contributions to Concord of up to $75.0 million only if such capital contributions are necessary under certain circumstances, of which our proportionate share is up to $37.5 million.

Competition

Through our predecessor entities we have been in the net lease business for over 35 years. Over this period, we have established a broad network of contacts, including major corporate tenants, developers, brokers and lenders. In addition, our management is associated with and/or participates in many industry organizations. Notwithstanding these relationships, there are numerous commercial developers, real estate companies, financial institutions and other investors with greater financial or other resources that compete with us in seeking properties for acquisition and tenants who will lease space in these properties. Our competitors include other REITs, pension funds, private companies and individuals.

Co-Investment Programs and Other Equity Method Investment Limited Partnerships

Lex-Win Concord LLC. We acquired a 50% common interest in Concord through the Newkirk Merger. Concord acquires and originates loans and debt securities secured, directly and indirectly, by real estate assets.

During 2008, we restructured our investment in Concord by contributing our common interest, together with Winthrop, the holder of the other 50% common interest in Concord, to Lex-Win Concord. Our former Executive Chairman and Director of Strategic Acquisitions is the chairman and chief executive officer of Winthrop. Following these contributions, Lex-Win Concord became the managing member of Concord and holder of all of the common equity in Concord.

In addition, a subsidiary of Inland American Real Estate Trust, Inc., which we refer to as Inland Concord, committed to contribute $100.0 million over an 18 month period in exchange for preferred equity in Concord, of which $76.0 million has been contributed as of December 31, 2008. Under the terms of the limited liability company agreement of Concord, Inland Concord’s capital is to be used primarily for the origination and acquisition of additional loan assets and debt securities and, with Inland Concord’s consent, to meet margin calls. Lex-Win Concord may be required to fund up to $75.0 million of additional capital in certain circumstances, including to meet margin calls; our proportionate share of which is $37.5 million.

If certain terms and conditions are met, including payment to Inland Concord of a 10% priority return, both us and Winthrop may elect to reduce our aggregate capital investment in Concord to $200.0 million (or $100.0 million each) through distributions of principal payments from the maturity of existing loan assets and debt securities in Concord’s portfolio.

Net Lease Strategic Assets Fund L.P. NLS was formed in 2007 by us and a subsidiary of Inland American Real Estate Trust, Inc., which we refer to as Inland NLS. NLS’s portfolio consists of 43 specialty net leased assets and a 40% interest in another property, which include data centers, light manufacturing facilities, medical office facilities, a car dealership and a golf course.

Since its formation, Inland NLS has contributed $216.0 million in cash to NLS and we have contributed 19 primarily net leased properties, having an agreed upon value of $318.1 million, and $15.0 million in cash to NLS, and we sold fee and leasehold interests in 24 primarily net leased properties and a 40% tenant-in-common interest in a property, having an agreed upon value of $425.4 million, to NLS. The properties we contributed and sold were encumbered by $339.5 million of mortgage debt with stated interest rates ranging from 5.1% to 8.5%, a weighted average interest rate of 6.1% and maturity dates ranging from 2009 to 2025. The mortgage debt was assumed by NLS.

At December 31, 2008, Inland NLS owned 85% and we owned 15% of NLS’s common equity and we owned 100% of NLS’s preferred equity.

Lex-Win Acquisition LLC. During 2007, Lex-Win Acquisition LLC, which we refer to as Lex-Win, an entity in which we hold a 28% ownership interest, acquired 3.9 million shares of common stock in Piedmont Office Realty Trust, Inc. (formerly known as Wells Real Estate Investment Trust, Inc., or Wells), a non-exchange traded entity, at a price per share of $9.30, in a tender offer. During 2007, we funded $12.5 million relating to this tender and received $1.9 million relating to an adjustment of the number of shares tendered. Winthrop and three other members hold the remaining interests in Lex-Win. Profits, losses and cash flows of Lex-Win are allocated in accordance with the membership interests pursuant to its limited liability agreement. During 2008, Lex-Win sold its entire interest in Wells for $8.31 per share.

Other Equity Method Investment Limited Partnerships. We are a partner in eight other partnerships with ownership percentages ranging between 26% and 40%, which own primarily net leased properties. All profits, losses and cash flows are distributed in accordance with the respective partnership agreements. As of December 31, 2008, the partnerships had $73.2 million in mortgage debt (our proportionate share was $23.5 million) with interest rates ranging from 6.7% to 15.0% with a weighted average rate of 9.9% and maturity dates ranging from 2009 to 2018.

Internal Growth and Effectively Managing Assets

Tenant Relations and Lease Compliance. We maintain close contact with our tenants in order to understand their future real estate needs. In addition to our headquarters in New York City, we have regional offices, located in properties we own, in Chicago and Dallas.

We monitor the financial, property maintenance and other lease obligations of our tenants through a variety of means, including periodic reviews of financial statements and physical inspections of the properties. We generally perform annual inspections of those properties where we have an ongoing obligation with respect to the maintenance of the property. Biannual physical inspections are generally undertaken for all other properties.

Extending Lease Maturities. We seek to extend our leases in advance of their expiration in order to maintain a balanced lease rollover schedule and high occupancy levels.

Revenue Enhancing Property Expansions. We undertake expansions of our properties based on tenant requirements or marketing opportunities. We believe that selective property expansions can provide us with attractive rates of return and actively seek such opportunities.

Property Sales. Subject to regulatory requirements, we sell properties when we believe that the return realized from selling a property will exceed the expected return from continuing to hold such property.

Conversion to Multi-Tenant. If we are unable to renew a single-tenant net lease or if we are unable to find a replacement single tenant, we either attempt to sell the property or convert the property for multi-tenant use and begin the process of leasing space. When appropriate, we seek to sell our multi-tenant properties.

Financing Strategy

General. Since becoming a public company, our principal sources of financing have been the public and private equity and debt markets, property specific debt, our credit facility and term loans, issuance of OP units and undistributed cash flows.

Mortgage Debt. Generally, we seek to finance our assets with non-recourse secured debt that has amortization, term and interest rate characteristics matched to the term and characteristics of the cash flows from the underlying investments.

Corporate Level Borrowings. We also use corporate level borrowings, such as revolving loans and term loans, as needed when other forms of financing are not available or appropriate.

Deleveraging. Our primary focus for 2008 was, and our primary focus for 2009 is, to effectively use our capital to deleverage our balance sheet by refinancing and repurchasing our indebtedness, at discounts, on what we believe are favorable terms.

Common Share Repurchases.

Our Board of Trustees has approved a share repurchase program. During 2008 and 2007, approximately 1.2 million and 9.8 million common shares/OP units, respectively, were repurchased under this program at an average cost of $14.28 and $19.83 per share/OP unit, respectively, in the open market and through private transactions with our employees and OP unitholders. During 2008, we entered into a forward equity commitment to purchase 3.5 million common shares at a price of $5.60 per share. We have prepaid $12.8 million of the $19.6 million purchase price. The contract is required to be settled no later than October 2011. As of December 31, 2008, 1.1 million common shares/OP units remained eligible for repurchase under the authorization.

Advisory Contracts

General. Members of our management have been in the business of investing in single-tenant net lease properties since 1973. This experience has enabled us to provide advisory services to various net lease investors.

Third Party Investors. In 2001, Lexington Realty Advisors Inc., a wholly-owned, taxable REIT subsidiary, which we refer to as LRA, entered into an advisory and asset management agreement to invest and manage an equity commitment of up to $50.0 million on behalf of a private third party investment fund. The investment fund could, depending on leverage utilized, acquire up to $140.0 million in single tenant, net leased office, industrial and retail properties in the United States. LRA earns acquisition fees (90 basis points of total acquisition costs), annual asset management fees (30 basis points of gross asset value) and an incentive fee of 16% of the return in excess of an internal rate of return of 10% earned by the investment fund. During 2007, the investment fund sold one of its two properties and LRA recognized an incentive fee of $1.1 million and an additional $0.4 million was held back by the investment fund pursuant to the agreement. The investment fund made no purchases in 2008 or 2007.

Affiliated Investors. We provided advisory services to our former co-investment programs. We also provide advisory services to NLS and certain equity method investment limited partnerships.

In exchange for providing advisory services to NLS, LRA receives (1) a management fee of 0.375% of the equity capital, (2) a property management fee of up to 3.0% of actual gross revenues from certain assets for which the landlord is obligated to provide property management services (contingent upon the recoverability of such fees from the tenant under the applicable lease), and (3) an acquisition fee of 0.5% of the gross purchase price of each acquired asset by NLS.

Environmental Matters

Under various federal, state and local environmental laws, statutes, ordinances, rules and regulations, an owner of real property may be liable for the costs of removal or remediation of certain hazardous or toxic substances at, on, in or under such property as well as certain other potential costs relating to hazardous or toxic substances. These liabilities may include government fines and penalties and damages for injuries to persons and adjacent property. Such laws often impose liability without regard to whether the owner knew of, or was responsible for, the presence or disposal of such substances. Although generally our tenants are primarily responsible for any environmental damage and claims related to the leased premises, in the event of the bankruptcy or inability of a tenant of such premises to satisfy any obligations with respect to such environmental liability, we may be required to satisfy such obligations. In addition, as the owner of such properties, we may be held directly liable for any such damages or claims irrespective of the provisions of any lease.

From time to time, in connection with the conduct of our business and generally upon acquisition of a property, we authorize the preparation of Phase I and, when necessary, Phase II environmental reports with respect to our properties. Based upon such environmental reports and our ongoing review of our properties, as of the date of this Annual Report, we are not aware of any environmental condition with respect to any of our properties which we believe would be reasonably likely to have a material adverse effect on our financial condition and/or results of operations. There can be no assurance, however, that (1) the discovery of environmental conditions, the existence or severity of which were previously unknown; (2) changes in law; (3) the conduct of tenants; or (4) activities relating to properties in the vicinity of our properties, will not expose us to material liability in the future. Changes in laws increasing the potential liability for environmental conditions existing on properties or increasing the restrictions on discharges or other conditions may result in significant unanticipated expenditures or may otherwise adversely affect the operations of our tenants, which would adversely affect our financial condition and/or results of operations.

Recent Developments

The following summarizes our significant transactions during 2008.

Sales. We sold 40 properties to unaffiliated third parties for an aggregate gross sales price of $242.3 million. In addition, we disposed of one property through a foreclosure with a lender and we contributed or sold 13 properties to NLS. We also sold our entire interest in Wells for $8.31 per share.

Acquisitions. We acquired two office properties in Kansas and Colorado for an aggregate capitalized cost of $56.1 million.

Expansions. We funded the expansion of two properties for an aggregate capitalized costs of $9.4 million.

Leasing. We entered into 103 lease extensions and new leases encompassing an aggregate 5.1 million square feet and we received $28.7 million from two lease terminations and land valued at $16.0 million which we recorded as non-operating income.

Investments. In addition to the properties we contributed to NLS, we invested $8.3 million in cash to NLS. In addition, we restructured our investment in Concord by forming Lex-Win Concord. During 2008, Lex-Win Concord recognized $104.9 million of other-than-temporary impairments and loan loss reserves of which our share was $52.4 million before minority interest.

Financing. With respect to financing activities, we:

repurchased, with cash and issuance of common shares, $239.0 million original principal amount of our 5.45% Exchangeable Guaranteed Notes at an average discount of 19.3%;

retired $70.9 million face of our Trust Preferred Securities at a discount of 37.1%;

entered into $25.0 million and $45.0 million original principal amount secured term loans with KeyBank and used the net proceeds of $68.0 million to partially repay and refinance indebtedness on three cross-collateralized mortgages;

made balloon payments of $39.6 million on property specific, non-recourse mortgage debt;

retired $86.5 million in property non-recourse mortgage debt due to sale of properties to unrelated third parties;

retired $48.6 million in corporate level secured borrowings;

obtained two non-recourse mortgages, one of which was assumed, with an aggregate principal balance of $21.2 million and a weighted average interest rate of 6.0%; and

borrowed $25.0 million under our unsecured revolving credit facility.

Capital. With respect to capital activities, we:

repurchased 1.2 million common shares under our share repurchase program;

entered into a forward equity commitment to purchase 3.5 million of our common shares at a price of $5.60 per share and prepaid in cash $12.8 million of the $19.6 million purchase price;

merged the MLP into us by acquiring the remaining limited partner interests that we did not already own;

repurchased and retired 0.5 million of our Series C Preferred Shares by issuing 0.7 million common shares and $7.5 million in cash; and

issued approximately 3.5 million common shares (exclusive of shares issued in connection with debt repurchases) raising net proceeds of approximately $47.2 million.

Subsequent to December 31, 2008, we:

refinanced our (1) unsecured revolving credit facility, with $25.0 million outstanding as of December 31, 2008, which was scheduled to expire in June 2009, and (2) secured term loan, with $174.3 million outstanding as of December 31, 2008, which was scheduled to mature in June 2009 (or December 2009 at our option), with a secured credit facility consisting of a $165.0 million term loan and a $85.0 million revolving credit agreement with KeyBank, as agent;

sold one property for an aggregate gross sale price of $11.4 million and satisfied the $5.3 million non-recourse mortgage note encumbering the property; and

repurchased $13.0 million face of 5.45% Exchangeable Guaranteed Notes at a discount of 34.2%.

Other

Employees. As of December 31, 2008, we had 65 full-time employees.

Industry Segments. We operate in primarily one industry segment, investment in net leased real estate assets.

Web Site. Our Internet address is www.lxp.com and the investor relations section of our web site is located at http://www.snl.com/irweblinkx/corporateprofile.aspx?iid=103128. We make available, free of charge, on or through the investor relations section of our web site or by contacting our Investor Relations Department, annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as well as proxy statements, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the U.S. Securities and Exchange Commission, which we refer to as the SEC. Also posted on our web site, and available in print upon request of any shareholder to our Investor Relations Department, are our amended and restated declaration of trust and amended and restated by-laws, charters for our Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee, our Corporate Governance Guidelines, our Code of Business Conduct and Ethics governing our trustees, officers and employees, and our Complaint Procedures Regarding Accounting and Auditing Matters. Within the time period required by the SEC and the NYSE, we will post on our web site any amendment to the Code of Business Conduct and Ethics and any waiver applicable to any of our trustees or executive officers. In addition, our web site includes information concerning purchases and sales of our equity securities by our executive officers and trustees, as well as disclosure relating to certain non-GAAP financial measures (as defined in the SEC’s Regulation G) that we may make public orally, telephonically, by webcast, by broadcast or by similar means from time to time. Information contained on our web site or the web site of any other person is not incorporated by reference into this Annual Report.

Our Investor Relations Department can be contacted at Lexington Realty Trust, One Penn Plaza, Suite 4015, New York, NY 10119-4015, Attn: Investor Relations, telephone: 212-692-7200, e-mail: ir@lxp.com.

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

NYSE CEO Certification. Our Chief Executive Officer made an unqualified certification to the NYSE with respect to our compliance with the NYSE corporate governance listing standards in June 2008.

Item 1A. Risk Factors

Set forth below are material factors that may adversely affect our business and operations.

We are subject to risks involved in single tenant leases.

We focus our acquisition activities on real properties that are net leased to single tenants. Therefore, the financial failure of, or other default by, a single tenant under its lease is likely to cause a significant reduction in the operating cash flow generated by the property leased to that tenant and might decrease the value of that property. In addition, we will be responsible for 100% of the operating costs following a vacancy at a single tenant building.

We rely on revenues derived from major tenants.

Revenues from several of our tenants and/or their guarantors constitute a significant percentage of our base rental revenues. The default, financial distress or bankruptcy of any of the tenants and/or guarantors of these properties could cause interruptions in the receipt of lease revenues and/or result in vacancies, which would reduce our revenues and increase operating costs until the affected property is re-let, and could decrease the ultimate sales value of that property. Upon the expiration or other termination of the leases that are currently in place with respect to these properties, we may not be able to re-lease the vacant property at a comparable lease rate, or at all, or without incurring additional expenditures in connection with the re-leasing. See Item 7. Management’s Discussion and Analysis of Financial Conditions and Results of Operations – Overview – Leasing Objectives, for a discussion of our tenants currently in bankruptcy.

We face uncertainties relating to lease renewals and re-letting of space.

Upon the expiration of current leases for space located in our properties, we may not be able to re-let all or a portion of that space, or the terms of re-letting (including the cost of concessions to tenants) may be less favorable to us than current lease terms or market rates. If we are unable to re-let promptly all or a substantial portion of the space located in our properties or if the rental rates we receive upon re-letting are significantly lower than current rates, our earnings and ability to make expected distributions to our shareholders will be adversely affected due to the resulting reduction in rent receipts and increase in our property operating costs. There can be no assurance that we will be able to retain tenants in any of our properties upon the expiration of their leases.

We could become more highly leveraged, resulting in increased risk of default on our obligations and in an increase in debt service requirements which could adversely affect our financial condition and results of operations and our ability to pay distributions.

We have incurred, and may continue to incur, indebtedness in furtherance of our activities. Neither our amended and restated declaration of trust nor any policy statement formally adopted by our Board of Trustees limits either the total amount of indebtedness or the specified percentage of indebtedness that we may incur. Accordingly, we could become more highly leveraged, resulting in an increased risk of default on our obligations and in an increase in debt service requirements which could adversely affect our financial condition and results of operations and our ability to pay distributions.

Market interest rates could have an adverse effect on our borrowing costs and profitability and can adversely affect our share price.

We have exposure to market risks relating to increases in interest rates due to our variable-rate debt. An increase in interest rates may increase our costs of borrowing on existing variable-rate indebtedness, leading to a reduction in our earnings. As of December 31, 2008, we had outstanding $199.3 million in consolidated variable-rate indebtedness, not subject to an interest-rate swap agreement. The level of our variable-rate indebtedness, along with the interest rate associated with such variable-rate indebtedness, may change in the future and materially affect our interest costs and earnings. In addition, our interest costs on our fixed-rate indebtedness can increase if we are required to refinance our fixed-rate indebtedness at maturity at higher interest rates.

Furthermore, the public valuation of our common shares is related primarily to the earnings that we derive from rental income with respect to our properties and not from the underlying appraised value of the properties themselves. As a result, interest rate fluctuations and capital market conditions can affect the market value of our common shares. For instance, if interest rates rise, the market price of our common shares may decrease because potential investors seeking a higher dividend yield than they would receive from our common shares may sell our common shares in favor of higher rate interest-bearing securities.

Recent disruptions in the financial markets could affect our ability to obtain debt financing on reasonable terms and have other adverse effects on us.

The United States credit markets have experienced significant dislocations and liquidity disruptions which have caused the spreads on prospective debt financings to widen considerably. These circumstances have materially impacted liquidity in the debt markets, making financing terms for borrowers less attractive, and in certain cases have resulted in the unavailability of certain types of debt financing. Continued uncertainty in the credit markets may negatively impact our ability to access additional debt financing at reasonable terms, which may negatively affect our ability to make acquisitions. A prolonged downturn in the credit markets may cause us to seek alternative sources of potentially less attractive financing, and may require us to adjust our business plan accordingly. In addition, these factors may make it more difficult for us to sell properties or may adversely affect the price we receive for properties that we do sell, as prospective buyers may experience increased costs of debt financing or difficulties in obtaining debt financing. These events in the credit markets have also had an adverse effect on other financial markets in the United States, which may make it more difficult or costly for us to raise capital through the issuance of our common shares or preferred shares. These disruptions in the financial markets may have other adverse effects on us or the economy generally.

We also have interest rate swap agreements directly and through our investment in Lex-Win Concord and have a direct forward equity commitment. The counterparties of these arrangements are major financial institutions; however, we are exposed to credit risk in the event of non-performance by the counterparties. In addition, we may be required to make additional prepayments pursuant to our forward equity commitment.

We face risks associated with refinancings.

A significant number of our properties, as well as corporate level borrowings, are subject to mortgage or other secured notes with balloon payments due at maturity. As of December 31, 2008, the consolidated scheduled balloon payments, including discontinued operations, for the next five calendar years, are as follows:

Year	Balloon Payments
2009 (1)	$	259.6 million
2010	$	110.6 million
2011	$	88.8 million
2012	$	402.0 million
2013	$	295.7 million

(1) Subsequent to December 31, 2008, $199.3 million of the debt has been extended to 2011.

As of December 31, 2008, the scheduled balloon payments for our non-consolidated entities for the next five calendar years are as follows:

Year	Balloon Payments		Balloon Payments – our Proportionate Share
2009	$	69.3 million	$	32.2 million
2010	$	87.6 million	$	43.6 million
2011	$	190.5 million	$	94.3 million
2012	$	81.8 million	$	40.4 million
2013	$	16.6 million	$	8.0 million

Our ability to make the scheduled balloon payments will depend upon our cash balances, the amount available under our credit facility and our ability either to refinance the related mortgage debt or to sell the related property.

Certain of our properties are cross-collateralized and certain of our indebtedness is cross-defaulted.

As of December 31, 2008, the mortgages on two sets of two properties, one set of four properties and one set of three properties are cross-collateralized. In addition, (1) our new credit facility is secured by a borrowing base of interests in 72 properties, (2) our $45.0 million original principal amount secured term loan (of which $35.7 million was outstanding at December 31, 2008) is secured by a borrowing base of interests in 35 properties, and (3) our $25.0 million secured term loan is secured by a borrowing base of interests in three properties. To the extent that any of our properties are cross-collateralized, any default by us under the mortgage note relating to one property will result in a default under the financing arrangements relating to any other property that also provides security for that mortgage note or is cross-collateralized with such mortgage note.

In addition, our credit facility, secured term loans and 5.45% Exchangeable Guaranteed Notes contain cross-default provisions which may be triggered if we default on indebtedness in excess of certain thresholds.

We face possible liability relating to environmental matters.

Under various federal, state and local environmental laws, statutes, ordinances, rules and regulations, as an owner of real property, we may be liable for the costs of removal or remediation of certain hazardous or toxic substances at, on, in or under our properties, as well as certain other potential costs relating to hazardous or toxic substances. These liabilities may include government fines and penalties and damages for injuries to persons and adjacent property. These laws may impose liability without regard to whether we knew of, or were responsible for, the presence or disposal of those substances. This liability may be imposed on us in connection with the activities of an operator of, or tenant at, the property. The cost of any required remediation, removal, fines or personal or property damages and our liability therefore could exceed the value of the property and/or our aggregate assets. In addition, the presence of those substances, or the failure to properly dispose of or remove those substances, may adversely affect our ability to sell or rent that property or to borrow using that property as collateral, which, in turn, would reduce our revenues and ability to make distributions.

A property can also be adversely affected either through physical contamination or by virtue of an adverse effect upon value attributable to the migration of hazardous or toxic substances, or other contaminants that have or may have emanated from other properties. Although our tenants are primarily responsible for any environmental damages and claims related to the leased premises, in the event of the bankruptcy or inability of any of our tenants to satisfy any obligations with respect to the property leased to that tenant, we may be required to satisfy such obligations. In addition, we may be held directly liable for any such damages or claims irrespective of the provisions of any lease.

From time to time, in connection with the conduct of our business, we authorize the preparation of Phase I environmental reports and, when necessary, Phase II environmental reports, with respect to our properties. Based upon these environmental reports and our ongoing review of our properties, as of the date of this Annual Report, we are not aware of any environmental condition with respect to any of our properties that we believe would be reasonably likely to have a material adverse effect on us.

There can be no assurance, however, that the environmental reports will reveal all environmental conditions at our properties or that the following will not expose us to material liability in the future:

the discovery of previously unknown environmental conditions;

changes in law;

activities of tenants; or

activities relating to properties in the vicinity of our properties.

Changes in laws increasing the potential liability for environmental conditions existing on properties or increasing the restrictions on discharges or other conditions may result in significant unanticipated expenditures or may otherwise adversely affect the operations of our tenants, which could adversely affect our financial condition or results of operations.

Uninsured losses or a loss in excess of insured limits could adversely affect our financial condition.

We carry comprehensive liability, fire, extended coverage and rent loss insurance on most of our properties, with policy specifications and insured limits that we believe are customary for similar properties. However, with respect to those properties where the leases do not provide for abatement of rent under any circumstances, we generally do not maintain rent loss insurance. In addition, there are certain types of losses, such as losses resulting from wars, terrorism or certain acts of God that generally are not insured because they are either uninsurable or not economically insurable. Should an uninsured loss or a loss in excess of insured limits occur, we could lose capital invested in a property, as well as the anticipated future revenues from a property, while remaining obligated for any mortgage indebtedness or other financial obligations related to the property. Any loss of these types would adversely affect our financial condition.

Future terrorist attacks and the military conflicts could have a material adverse effect on general economic conditions, consumer confidence and market liquidity.

Among other things, it is possible that interest rates may be affected by these events. An increase in interest rates may increase our costs of borrowing, leading to a reduction in our earnings. These types of terrorist acts could also result in significant damages to, or loss of, our properties.

We and our tenants may be unable to obtain adequate insurance coverage on acceptable economic terms for losses resulting from acts of terrorism. Our lenders may require that we carry terrorism insurance even if we do not believe this insurance is necessary or cost effective. We may also be prohibited under the applicable lease from passing all or a portion of the cost of such insurance through to the tenant. Should an act of terrorism result in an uninsured loss or a loss in excess of insured limits, we could lose capital invested in a property, as well as the anticipated future revenues from a property, while remaining obligated for any mortgage indebtedness or other financial obligations related to the property. Any loss of these types would adversely affect our financial condition.

Competition may adversely affect our ability to purchase properties.

There are numerous commercial developers, real estate companies, financial institutions and other investors with greater financial resources than we have that compete with us in seeking properties for acquisition and tenants who will lease space in our properties. Due to our focus on net lease properties located throughout the United States, and because most competitors are locally and/or regionally focused, we do not encounter the same competitors in each market. Our competitors include other real estate investment trusts, or REITs, financial institutions, insurance companies, pension funds, private companies and individuals. This competition may result in a higher cost for properties that we wish to purchase.

Our failure to maintain effective internal controls could have a material adverse effect on our business, operating results and share price.

Section 404 of the Sarbanes-Oxley Act of 2002 requires annual management assessments of the effectiveness of our internal controls over financial reporting. If we fail to maintain the adequacy of our internal controls, as such standards may be modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and to maintain our qualification as a REIT and are important to helping prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, our REIT qualification could be jeopardized, investors could lose confidence in our reported financial information, and the trading price of our shares could drop significantly.

We may have limited control over our co-investment programs and joint venture investments.

Our co-investment programs and joint venture investments may involve risks not otherwise present for investments made solely by us, including the possibility that our partner might, at any time, become bankrupt, have different interests or goals than we do, or take action contrary to our instructions, requests, policies or objectives, including our policy with respect to maintaining our qualification as a REIT. Other risks of co-investment programs and joint venture investments include impasse on decisions, such as a sale, because neither we nor our partner have full control over the co-investment programs or joint venture. Also, there is no limitation under our organizational documents as to the amount of funds that may be invested in co-investment programs and joint ventures.

One of our co-investment programs, Lex-Win Concord, is owned equally by us and Winthrop. This co-investment program is managed by the members. Material actions taken by Lex-Win Concord require the consent of each of us and Winthrop. Accordingly, Lex-Win Concord may not take certain actions or invest in certain assets even if we believe it to be in its best interest. Michael L. Ashner, our former Executive Chairman and Director of Strategic Acquisitions is also the Chairman and Chief Executive Officer of each of Winthrop and WRP Sub-Management LLC, the administrative manager of Lex-Win Concord.

Another co-investment program, NLS, is managed by an Executive Committee comprised of three persons appointed by us and two persons appointed by our partner. With few exceptions, the vote of four members of the Executive Committee is required to conduct business. Accordingly, we do not control the business decisions of this co-investment.

Investments by our co-investment programs may conflict with our ability to make attractive investments.

Under the terms of the limited partnership agreement governing NLS, we are required to first offer to NLS all opportunities to acquire real estate assets which, among other criteria, are specialty in nature and net leased. Only if NLS elects not to approve the acquisition opportunity or the applicable exclusivity conditions have expired, may we pursue the opportunity directly. As a result, we may not be able to make attractive acquisitions directly and may only receive an interest in such acquisitions through our interest in NLS.

In addition, the agreements governing Lex-Win Concord and Concord may restrict our ability to make certain debt investments.

Certain of our trustees and officers may face conflicts of interest with respect to sales and refinancings.

E. Robert Roskind and Richard J. Rouse, our Chairman, and Vice Chairman and Chief Investment Officer, respectively, each own limited partner interests in certain of our operating partnerships, and as a result, may face different and more adverse tax consequences than our other shareholders will if we sell certain properties or reduce mortgage indebtedness on certain properties. Those individuals may, therefore, have different objectives than our other shareholders regarding the appropriate pricing and timing of any sale of such properties or reduction of mortgage debt.

Accordingly, there may be instances in which we may not sell a property or pay down the debt on a property even though doing so would be advantageous to our other shareholders. In the event of an appearance of a conflict of interest, the conflicted trustee or officer must recuse himself or herself from any decision making or seek a waiver of our Code of Business Conduct and Ethics.

Our ability to change our portfolio is limited because real estate investments are illiquid.

Equity investments in real estate are relatively illiquid and, therefore, our ability to change our portfolio promptly in response to changed conditions will be limited. Our Board of Trustees may establish investment criteria or limitations as it deems appropriate, but currently does not limit the number of properties in which we may seek to invest or on the concentration of investments in any one geographic region. We could change our investment, disposition and financing policies without a vote of our shareholders.

There can be no assurance that we will remain qualified as a REIT for federal income tax purposes.

We believe that we have met the requirements for qualification as a REIT for federal income tax purposes beginning with our taxable year ended December 31, 1993, and we intend to continue to meet these requirements in the future. However, qualification as a REIT involves the application of highly technical and complex provisions of the Code, for which there are only limited judicial or administrative interpretations. No assurance can be given that we have qualified or will remain qualified as a REIT. The Code provisions and income tax regulations applicable to REITs are more complex than those applicable to corporations. The determination of various factual matters and circumstances not entirely within our control may affect our ability to continue to qualify as a REIT. In addition, no assurance can be given that legislation, regulations, administrative interpretations or court decisions will not significantly change the requirements for qualification as a REIT or the federal income tax consequences of such qualification. If we do not qualify as a REIT, we would not be allowed a deduction for distributions to shareholders in computing our net taxable income. In addition, our income would be subject to tax at the regular corporate rates. We also could be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost. Cash available for distribution to our shareholders would be significantly reduced for each year in which we do not qualify as a REIT. In that event, we would not be required to continue to make distributions. Although we currently intend to continue to qualify as a REIT, it is possible that future economic, market, legal, tax or other considerations may cause us, without the consent of the shareholders, to revoke the REIT election or to otherwise take action that would result in disqualification.

We may be subject to the REIT prohibited transactions tax, which could result in significant U.S. federal income tax liability to us.

We previously announced a restructuring of our investment strategy, focusing on core and core plus assets. A real estate investment trust will incur a 100% tax on the net income from a prohibited transaction. Generally, a prohibited transaction includes a sale or disposition of property held primarily for sale to customers in the ordinary course of a trade or business. While we believe that the dispositions of our assets pursuant to the restructuring of our investment strategy should not be treated as prohibited transactions, whether a particular sale will be treated as a prohibited transaction depends on the underlying facts and circumstances. We have not sought and do not intend to seek a ruling from the Internal Revenue Service regarding any dispositions. Accordingly, there can be no assurance that our dispositions of such assets will not be subject to the prohibited transactions tax. If all or a significant portion of those dispositions were treated as prohibited transactions, we would incur a significant U.S. federal income tax liability, which could have a material adverse effect on our results of operations.

Distribution requirements imposed by law limit our flexibility.

To maintain our status as a REIT for federal income tax purposes, we are generally required to distribute to our shareholders at least 90% of our taxable income for that calendar year. Our taxable income is determined without regard to any deduction for dividends paid and by excluding net capital gains. To the extent that we satisfy the distribution requirement, but distribute less than 100% of our taxable income, we will be subject to federal corporate income tax on our undistributed income. In addition, we will incur a 4% nondeductible excise tax on the amount, if any, by which our distributions in any year are less than the sum of (i) 85% of our ordinary income for that year, (ii) 95% of our capital gain net income for that year and (iii) 100% of our undistributed taxable income from prior years. We intend to continue to make distributions to our shareholders to comply with the distribution requirements of the Code and to reduce exposure to federal income and nondeductible excise taxes. Differences in timing between the receipt of income and the payment of expenses in determining our income and the effect of required debt amortization payments could require us to borrow funds on a short-term basis in order to meet the distribution requirements that are necessary to achieve the tax benefits associated with qualifying as a REIT.

Certain limitations limit a third party’s ability to acquire us or effectuate a change in our control.

Limitations imposed to protect our REIT status. In order to protect us against the loss of our REIT status, our declaration of trust limits any shareholder from owning more than 9.8% in value of any class of our outstanding shares, subject to certain exceptions. The ownership limit may have the effect of precluding acquisition of control of us.

Severance payments under employment agreements. Substantial termination payments may be required to be paid under the provisions of employment agreements with certain of our executives upon a change of control. We have entered into employment agreements with four of our executive officers which provide that, upon the occurrence of a change in control of us (including a change in ownership of more than 50% of the total combined voting power of our outstanding securities, the sale of all or substantially all of our assets, dissolution, the acquisition, except from us, of 20% or more of our voting shares or a change in the majority of our Board of Trustees), those executive officers may be entitled to severance benefits based on their current annual base salaries, recent annual cash bonuses and the average of the value of the two most recent long-term incentive awards as defined in the employment agreements. Accordingly, these payments may discourage a third party from acquiring us.

Limitation due to our ability to issue preferred shares. Our amended and restated declaration of trust authorizes our Board of Trustees to issue preferred shares, without shareholder approval. The Board of Trustees is able to establish the preferences and rights of any preferred shares issued which could have the effect of delaying or preventing someone from taking control of us, even if a change in control were in shareholders’ best interests. At December 31, 2008, we had outstanding 3,160,000 Series B Preferred Shares, that we issued in June 2003, 2,598,300 Series C Preferred Shares, that we issued in December 2004 and January 2005, and 6,200,000 Series D Preferred Shares, that we issued in February 2007. Our Series B, Series C and Series D Preferred Shares include provisions that may deter a change of control. The establishment and issuance of shares of our existing series of preferred shares or a future series of preferred shares could make a change of control of us more difficult.

Limitation imposed by the Maryland Business Combination Act. The Maryland General Corporation Law, as applicable to Maryland REITs, establishes special restrictions against “business combinations” between a Maryland REIT and “interested shareholders” or their affiliates unless an exemption is applicable. An interested shareholder includes a person who beneficially owns, and an affiliate or associate of the trust who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of our then-outstanding voting shares, but a person is not an interested shareholder if the Board of Trustees approved in advance the transaction by which he otherwise would have been an interested shareholder. Among other things, Maryland law prohibits (for a period of five years) a merger and certain other transactions between a Maryland REIT and an interested shareholder. The five-year period runs from the most recent date on which the interested shareholder became an interested shareholder. Thereafter, any such business combination must be recommended by the Board of Trustees and approved by two super-majority shareholder votes unless, among other conditions, the common shareholders receive a minimum price for their shares and the consideration is received in cash or in the same form as previously paid by the interested shareholder for its shares. The statute permits various exemptions from its provisions, including business combinations that are exempted by the Board of Trustees prior to the time that the interested shareholder becomes an interested shareholder. The business combination statute could have the effect of discouraging offers to acquire us and of increasing the difficulty of consummating any such offers, even if such acquisition would be in shareholders’ best interests. In connection with our merger with Newkirk, Vornado Realty Trust, which we refer to as Vornado, was granted a limited exemption from the definition of “interested shareholder.”

Maryland Control Share Acquisition Act. Maryland law provides that “control shares” of a Maryland REIT acquired in a “control share acquisition” shall have no voting rights except to the extent approved by a vote of two-thirds of the vote entitled to be cast on the matter under the Maryland Control Share Acquisition Act. Shares owned by the acquiror, by our officers or by employees who are our trustees are excluded from shares entitled to vote on the matter. “Control Shares” means shares that, if aggregated with all other shares previously acquired by the acquiror or in respect of which the acquiror is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquiror to exercise voting power in electing trustees within one of the following ranges of voting power: one-tenth or more but less than one-third, one-third or more but less than a majority or a majority or more of all voting power. Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained shareholder approval. A “control share acquisition” means the acquisition of control shares, subject to certain exceptions. If voting rights of control shares acquired in a control share acquisition are not approved at a shareholders’ meeting, then subject to certain conditions and limitations the issuer may redeem any or all of the control shares for fair value. If voting rights of such control shares are approved at a shareholders’ meeting and the acquiror becomes entitled to vote a majority of the shares entitled to vote, all other shareholders may exercise appraisal rights. Any control shares acquired in a control share acquisition which are not exempt under our by-laws will be subject to the Maryland Control Share Acquisition Act. Our amended and restated by-laws contain a provision exempting from the Maryland Control Share Acquisition Act any and all acquisitions by any person of our shares. We cannot assure you that this provision will not be amended or eliminated at any time in the future.

Limits on ownership of our capital shares may have the effect of delaying, deferring or preventing someone from taking control of us.

For us to qualify as a REIT for federal income tax purposes, among other requirements, not more than 50% of the value of our outstanding capital shares may be owned, directly or indirectly, by five or fewer individuals (as defined for federal income tax purposes to include certain entities) during the last half of each taxable year, and these capital shares must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable year (in each case, other than the first such year for which a REIT election is made). Our amended and restated declaration of trust includes certain restrictions regarding transfers of our capital shares and ownership limits.

Actual or constructive ownership of our capital shares in excess of the share ownership limits contained in its declaration of trust would cause the violative transfer or ownership to be void or cause the shares to be transferred to a charitable trust and then sold to a person or entity who can own the shares without violating these limits. As a result, if a violative transfer were made, the recipient of the shares would not acquire any economic or voting rights attributable to the transferred shares. Additionally, the constructive ownership rules for these limits are complex and groups of related individuals or entities may be deemed a single owner and consequently in violation of the share ownership limits.

These restrictions and limits may not be adequate in all cases, however, to prevent the transfer of our capital shares in violation of the ownership limitations. The ownership limits discussed above may have the effect of delaying, deferring or preventing someone from taking control of us, even though a change of control could involve a premium price for the common shares or otherwise be in shareholders’ best interests.

Legislative or regulatory tax changes could have an adverse effect on us.

At any time, the federal income tax laws governing REITs or the administrative interpretations of those laws may be amended. Any of those new laws or interpretations may take effect retroactively and could adversely affect us or you as a shareholder. REIT dividends generally are not eligible for the reduced rates currently applicable to certain corporate dividends (unless attributable to dividends from taxable REIT subsidiaries and otherwise eligible for such rates). As a result, investment in non-REIT corporations may be relatively more attractive than investment in REITs. This could adversely affect the market price of our shares.

Our Board of Trustees may change our investment policy without shareholders’ approval.

Subject to our fundamental investment policy to maintain our qualification as a REIT, our Board of Trustees will determine its investment and financing policies, growth strategy and its debt, capitalization, distribution, acquisition, disposition and operating policies.

Our Board of Trustees may revise or amend these strategies and policies at any time without a vote by shareholders. Accordingly, shareholders’ control over changes in our strategies and policies is limited to the election of trustees, and changes made by our Board of Trustees may not serve the interests of shareholders and could adversely affect our financial condition or results of operations, including our ability to distribute cash to shareholders or qualify as a REIT.

Our inability to carry out our growth strategy could adversely affect our financial condition and results of operations.

Our growth strategy is based on the acquisition and development of additional properties and related assets, including acquisitions of large portfolios and real estate companies and acquisitions through co-investment programs such as joint ventures. In the context of our business plan, “development” generally means an expansion or renovation of an existing property or the acquisition of a newly constructed property. We may provide a developer with a commitment to acquire a property upon completion of construction of a property and commencement of rent from the tenant. Our plan to grow through the acquisition and development of new properties could be adversely affected by trends in the real estate and financing businesses. The consummation of any future acquisitions will be subject to satisfactory completion of an extensive valuation analysis and due diligence review and to the negotiation of definitive documentation. Our ability to implement our strategy may be impeded because we may have difficulty finding new properties and investments at attractive prices that meet our investment criteria, negotiating with new or existing tenants or securing acceptable financing. If we are unable to carry out our strategy, our financial condition and results of operations could be adversely affected.

Acquisitions of additional properties entail the risk that investments will fail to perform in accordance with expectations, including operating and leasing expectations. Redevelopment and new project development are subject to numerous risks, including risks of construction delays, cost overruns or force majeure events that may increase project costs, new project commencement risks such as the receipt of zoning, occupancy and other required governmental approvals and permits, and the incurrence of development costs in connection with projects that are not pursued to completion.

Some of our acquisitions and developments may be financed using the proceeds of periodic equity or debt offerings, lines of credit or other forms of secured or unsecured financing that may result in a risk that permanent financing for newly acquired projects might not be available or would be available only on disadvantageous terms. If permanent debt or equity financing is not available on acceptable terms to refinance acquisitions undertaken without permanent financing, further acquisitions may be curtailed or cash available for distribution to shareholders may be adversely affected.

The concentration of ownership by certain investors may limit other shareholders from influencing significant corporate decisions.

At December 31, 2008, Vornado beneficially owned 16.1 million common shares and E. Robert Roskind, our Chairman, beneficially owned 0.9 million of our common shares and 1.5 million units of limited partner interest in our operating partnerships, which are redeemable for our common shares on a one for one basis, or with respect to a portion of the units, at our election, cash. Each of Vornado and Mr. Roskind may have substantial influence over us and on the outcome of any matters submitted to our shareholders for approval. In addition, certain decisions concerning our operations or financial structure may present conflicts of interest between each of Vornado and Mr. Roskind and our other equity or debt holders. In addition, Vornado engages in a wide variety of activities in the real estate business and may engage in activities that result in conflicts of interest with respect to matters affecting us, such as competition for properties and tenants.

Securities eligible for future sale may have adverse effects on our share price.

An aggregate of approximately 7.3 million of our common shares are issuable upon the exercise of employee share options and the exchange of units of limited partnership interests in our operating partnership subsidiaries. Depending upon the number of such securities exercised or exchanged at one time, an exercise or exchange of such securities could be dilutive to or otherwise adversely affect the interests of holders of our common shares.

We are dependent upon our key personnel.

We are dependent upon key personnel whose continued service is not guaranteed. We are dependent on our executive officers for business direction. We have entered into employment agreements with certain employees, including E. Robert Roskind, our Chairman, Richard J. Rouse, our Vice Chairman and Chief Investment Officer, T. Wilson Eglin, our Chief Executive Officer, President and Chief Operating Officer, and Patrick Carroll, our Executive Vice President, Chief Financial Officer and Treasurer.

Our inability to retain the services of any of our key personnel or our loss of any of their services could adversely impact our operations. We do not have key man life insurance coverage on our executive officers.

Risks Specific to Our Investment in Concord

In addition to the risks described above, our investment in Concord is subject to the following additional risks:

Concord engages in hedging transactions that may limit gains or result in losses.

Concord uses derivatives to hedge its liabilities and this has certain risks, including losses on a hedge position, which have in the past and may in the future reduce the return on our investment in Concord and such losses may exceed the amount invested in such instruments. In addition, counterparties to a hedging arrangement could default on their obligations. Concord may have to pay certain costs, such as transaction fees or brokerage costs related to its hedging transactions.

The loans Concord invests in are subject to delinquency, foreclosure and loss.

Concord’s commercial real estate loans and loan securities are directly and indirectly secured by income producing property. These loans are subject to risks of delinquency and foreclosure as well as risk associated with the capital markets. The ability of a borrower to repay a loan secured by an income-producing property typically is dependent primarily upon the successful operation of such property rather than upon the existence of independent income or assets of the borrower. If a borrower were to default on a loan, it is possible that Concord would not recover the full value of the loan.

The subordinate loan assets Concord invests in may be subject to risks relating to the structure and terms of the transactions, and there may not be sufficient funds or assets remaining to satisfy our subordinate notes, which may result in losses to Concord.

Concord invests in loan assets that are subordinate in payment and collateral to more senior loans. If a borrower defaults or declares bankruptcy, after the more senior obligations are satisfied, there may not be sufficient funds or assets remaining to satisfy Concord’s subordinate notes. Because each transaction is privately negotiated, subordinate loan assets can vary in their structural characteristics and lender rights including Concord’s rights to control the default or bankruptcy process varies from transaction to transaction. The subordinate loan assets that Concord invests in may not give Concord the right to demand foreclosure as a subordinate debtholder. Furthermore, the presence of intercreditor agreements may limit Concord’s ability to amend the loan documents, assign the loans, accept prepayments, exercise remedies and control decisions made in bankruptcy proceedings relating to borrowers. Bankruptcy and borrower litigation can significantly increase the time needed for Concord to acquire possession of underlying collateral in the event of a default, during which time the collateral may decline in value. In addition, there are significant costs and delays associated with the foreclosure process.

Concord invests in subordinate mortgage-backed securities which are subject to a greater risk of loss than senior securities. Concord may hold the most junior class of mortgage-backed securities which are subject to the first risk of loss if any losses are realized on the underlying mortgage loans.

Concord invests in a variety of subordinate loan securities, and sometimes hold a “first loss” subordinate holder position. The ability of a borrower to make payments on the loan underlying these securities is dependent primarily upon the successful operation of the property rather than upon the existence of independent income or assets of the borrower since the underlying loans are generally non-recourse in nature. In the event of default and the exhaustion of any equity support, reserve funds, letters of credit and any classes of securities junior to those in which Concord invests, Concord will not be able to recover all of its investment in the securities purchased.

The widening of credit spreads has had and will continue to have a negative impact on the value of Concord’s assets.

Although Concord acquired its loan assets and loan securities with the intent to hold them to maturity, the value of Concord’s loan assets and loan securities is dependent upon the yield demanded on these assets by the market based on the underlying credit. A large supply of these loan securities combined with reduced demand will generally cause the market to require a higher yield on these loan securities, resulting in a higher, or “wider,” spread over the benchmark rate of such loan securities. Under these conditions such as those that we are currently experiencing, the value of loan securities in Concord’s portfolio has and will tend to decline. Such changes in the market value of Concord’s portfolio has and will adversely affect Concord’s net equity through their impact on unrealized gains or losses on available-for-sale loan securities, and therefore Concord’s cash flow since Concord would be unable to realize gains through sale of such loan securities. Also, they have and could continue to adversely affect Concord’s ability to borrow and access capital.

Concord prices its assets based on its assumptions about future credit spreads for financing of those assets. Concord has obtained in the past longer term financing for its assets using structured financing techniques such as collateralized debt obligations (CDOs). Such issuances entail interest rates set at a spread over a certain benchmark, such as the yield on United States Treasury obligations, swaps or LIBOR. If the spread that investors are paying on structured finance vehicles over the benchmark widens and the rates Concord charges on its securitized assets are not increased accordingly, this may reduce Concord’s income or cause losses.

The deterioration of the credit markets has had an adverse impact on the ability of Concord’s borrowers to obtain replacement financing.

The deterioration of credit markets has made it extremely difficult for borrowers to obtain mortgage financing. The inability of Concord’s borrowers to obtain replacement financing has led and will likely continue to lead to more loan defaults thereby resulting in expensive and time consuming foreclosure actions and/or negotiated extensions to existing loans beyond their current expirations on terms which may not be as favorable to Concord as the existing loans.

The repurchase agreements that Concord uses to finance its investments may require it to provide additional collateral.

If the market value of the loan assets and loan securities pledged or sold by Concord to repurchase counterparties decline in value, which decline is determined, in most cases, by the repurchase counterparties, Concord may be required by the repurchase counterparties to provide additional collateral or pay down a portion of the funds advanced. Posting additional collateral to support its repurchase facilities will reduce Concord’s return on assets and liquidity as well as limit its ability to leverage its assets. If Concord cannot post additional collateral, Concord will be required to satisfy the margin calls in cash. Accordingly, if Concord is required to use its cash, or if it does not have sufficient cash, to meet such requirements, it will result in a rapid deterioration of Concord’s financial condition and solvency as well as the loss of assets to the repurchase counterparties, thereby adversely affecting our investment in Concord.

The credit and capital market deterioration has significantly strained Concord’s liquidity.

The inability of Concord to obtain replacement financing coupled with pending maturities and margin calls on its repurchase obligations has significantly strained Concord’s liquidity as cash from operations is required to be used primarily to satisfy repayments under repurchase agreements and margin calls. Until there is a recovery in the credit and capital markets and depending on the length of the extent of margin calls and loan defaults, Concord will likely have to utilize its cash flow to meet regular debt service payments as well as margin calls on its repurchase facilities and preferred distribution payments thereby reducing distributions to members. In addition, if alternative financing is not available or the level of defaults on Concord’s loan assets and loan securities increases, Concord may not have sufficient liquidity to satisfy its debt obligations which may require Concord to liquidate assets at unfavorable pricing.

Credit ratings assigned to Concord’s investments are subject to ongoing evaluations and we cannot be sure that the ratings currently assigned to Concord’s investments will not be downgraded.

Some of Concord’s investments are rated by the major rating agencies. The credit ratings on these investments are subject to ongoing evaluation by credit rating agencies. If rating agencies assign a lower rating or reduce, or indicate that they may reduce, their ratings of Concord’s investments, the market value of those investments could significantly decline, which could have an adverse affect on Concord’s financial condition.

The coverage tests in Concord’s existing CDO may have a negative impact on Concord’s operating results and cash flows.

Concord’s current CDO contains coverage tests, including over-collateralization tests, which are used primarily to determine whether and to what extent principal and interest proceeds on the underlying collateral debt securities and other assets may be used to pay principal and interest on the subordinate classes of bonds in the CDO. In the event the coverage tests are not met, distributions otherwise payable to Concord may be re-directed to pay principal on the bond classes senior to Concord’s. Therefore, Concord’s failure to satisfy the coverage tests could adversely affect Concord’s operating results and cash flows.

Certain coverage tests which may be applicable to Concord’s interest in its CDOs (based on delinquency levels or other criteria) may also restrict Concord’s ability to receive net income from assets pledged to secure the CDO. If Concord’s assets fail to perform as anticipated, Concord’s over-collateralization or other credit enhancement expense associated with its CDOs will increase.

Item 1B. Unresolved Staff Comments

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

Item 2. Properties

Real Estate Portfolio

General. As of December 31, 2008, we had ownership interests in approximately 40.2 million square feet of rentable space in approximately 225 consolidated office, industrial and retail properties. As of December 31, 2008, our properties were approximately 93.3% leased based upon net rentable square feet.

Our properties are generally subject to net leases; however, in certain leases we are responsible for roof and structural repairs. In such situations, we perform annual inspections of the properties. In addition, certain of our properties (including those held through non-consolidated entities) are subject to leases in which the landlord is responsible for a portion of the real estate taxes, utilities and general maintenance. We are responsible for all operating expenses of any vacant properties and we may be responsible for a significant amount of operating expenses of multi-tenant properties.

Ground Leases. Certain of our properties are subject to long-term ground leases where a third party owns and leases the underlying land to us. Certain of these properties are economically owned through the holding of industrial revenue bonds and as such neither ground lease payments nor bond interest payments are made or received, respectively. For certain of the properties held under a ground lease, we have a purchase option. At the end of these long-term ground leases, unless extended or the purchase option exercised, the land together with all improvements thereon reverts to the landowner. In addition, we have one property in which a portion of the land, on which a portion of the parking lot is located, is subject to a ground lease. At expiration of the ground lease, only that portion of the parking lot reverts to the landowner.

Leverage. As of December 31, 2008, we had outstanding mortgages and notes payable, including mortgages classified as discontinued operations, of $2.4 billion with a weighted average interest rate of 5.6%.

Table Regarding Real Estate Holdings

LEXINGTON CONSOLIDATED PORTFOLIO

PROPERTY CHART

OFFICE

Property Location

City

State

Primary Tenant (Guarantor)

Net

Rentable

Square

Feet

Current

Lease

Term

Expiration

Percent

Leased

12209 W. Markham St.

Little Rock

Entergy Arkansas, Inc.

36,311

10/31/2010

100

13430 N. Black Canyon Fwy

Phoenix

Bull HN Information Systems, Inc.

138,430

10/31/2015

2211 S. 47th St.

Phoenix

Avnet, Inc.

176,402

11/14/2012

100

2005 E. Technology Circle

Tempe

(i) Structure, LLC (Infocrossing, Inc.)

60,000

12/31/2025

100

275 S. Valencia Ave

Brea

Bank of America NT & SA

637,503

6/30/2012

100

1770 Cartwright Rd

Irvine

Multi-tenanted

149,194

Various

26210 & 26220 Enterprise Court

Lake Forest

Apria Healthcare, Inc. (Apria Healthcare Group, Inc.)

100,012

1/31/2012

100

1500 Hughes Way

Long Beach

Multi-tenanted

490,054

Various

2706 Media Center Dr.

Los Angeles

Playboy Enterprises, Inc.

83,252

11/7/2012

100

3333 Coyote Hill Road

Palo Alto

Xerox Corporation

202,000

12/13/2013

100

5724 W. Las Positas Blvd.

Pleasanton

NK Leasehold

40,914

11/30/2009

100

255 California St.

San Francisco

Multi-tenanted

169,927

Various

9201 E. Dry Creek Rd

Centennial

The Shaw Group, Inc.

128,500

9/30/2017

100

1110 Bayfield Dr.

Colorado Springs

Honeywell International, Inc.

166,575

11/30/2013

100

5550 Tech Center Dr.

Colorado Springs

Federal Express Corporation

61,690

4/30/2009

100

3940 S. Teller St.

Lakewood

Travelers Express Company, Inc.

68,165

3/31/2012

100

1315 W. Century Dr.

Louisville

Global Healthcare Exchange

106,877

4/30/2017

100

10 John St.

Clinton

Vacant

41,188

None

200 Executive Blvd. S.

Southington

Hartford Fire Insurance Company

153,364

12/31/2012

100

100 Barnes Rd

Wallingford

3M Company

44,400

12/31/2010

100

5600 Broken Sound Blvd.

Boca Raton

Océ Printing Systems USA, Inc. (Océ -USA Holding, Inc.)

136,789

2/14/2020

100

12600 Gateway Blvd.

Fort Meyers

Gartner, Inc.

62,400

1/31/2013

100

550 Business Center Dr.

Lake Mary

JPMorgan Chase Bank, NA

125,920

9/30/2015

100

600 Business Center Dr.

Lake Mary

JPMorgan Chase Bank, NA

125,155

9/30/2015

100

LEXINGTON CONSOLIDATED PORTFOLIO

PROPERTY CHART

OFFICE

Property Location

City

State

Primary Tenant (Guarantor)

Net

Rentable

Square

Feet

Current

Lease

Term

Expiration

Percent

Leased

6277 Sea Harbor Dr.

Orlando

Harcourt Brace Jovanovich, Inc.

355,840

3/31/2009

100

9200 S. Park Center Loop

Orlando

Corinthian Colleges, Inc.

59,927

9/30/2013

100

Sandlake Rd./Kirkman Rd

Orlando

Lockheed Martin Corporation

184,000

4/30/2013

100

4200 RCA Blvd.

Palm Beach Gardens

The Wackenhut Corporation

114,518

2/28/2011

100

6303 Barfield Rd

Atlanta

International Business Machines Corporation (Internet Security Systems, Inc.)

238,600

5/31/2013

100

859 Mount Vernon Hwy

Atlanta

International Business Machines Corporation (Internet Security Systems, Inc.)

50,400

5/31/2013

100

160 Clairemont Ave

Decatur

Multi-tenanted

121,686

Various

4000 Johns Creek Pkwy

Suwanee

Kraft Foods N.A., Inc.

87,219

1/31/2012

100

King St.

Honolulu

Multi-tenanted

239,291

Various

1275 N.W. 128th St.

Clive

Principal Life Insurance Company

61,180

1/31/2012

100

101 E. Erie St.

Chicago

Draftfcb, Inc. (Interpublic Group of Companies, Inc.)

230,684

3/15/2014

100

850 & 950 Warrenville Rd

Lisle

National Louis University

99,329

12/31/2019

100

500 Jackson St.

Columbus

Cummins, Inc.

390,100

7/31/2019

100

10300 Kincaid Dr.

Fishers

JP Morgan Chase Bank, N.A.

193,000

10/31/2009

100

10475 Crosspoint Blvd.

Fishers

John Wiley & Sons, Inc.

141,047

10/31/2019

100

5757 Decatur Blvd.

Indianapolis

Allstate Insurance Company

89,956

8/31/2012

100

11201 Renner Blvd.

Lenexa

Applebee’s Services, Inc. (DineEquity, Inc.)

178,000

7/31/2023

100

5200 Metcalf Ave

Overland Park

Swiss Re American Holding Corporation

320,198

12/22/2018

100

2300 Litton Lane

Hebron

Zwicker & Associates, P.C.

83,441

8/31/2012

100

4455 American Way

Baton Rouge

Bell South Mobility, Inc.

70,100

10/31/2012

100

147 Milk St.

Boston

Harvard Vanguard Medical Association

52,337

12/31/2022

100

33 Commercial St.

Foxboro

Invensys Systems, Inc. (Siebe, Inc.)

164,689

7/1/2015

100

100 Light St.

Baltimore

Multi-tenanted

523,240

Various

37101 Corporate Dr.

Farmington Hills

TEMIC Automotive of North America, Inc.

119,829

12/31/2016

100

26555 Northwestern Hwy

Southfield

Federal-Mogul Corporation

187,163

1/31/2015

100

3165 McKelvey Rd

Bridgeton

BJC Health System

52,994

3/31/2013

100

9201 Stateline Rd

Kansas City

Swiss Re American Holding Corporation

155,925

4/1/2019

100

200 Lucent Lane

Cary

Alcatel-Lucent USA, Inc.

124,944

9/30/2011

100

11707 Miracle Hills Dr.

Omaha

Infocrossing, LLC (Infocrossing, Inc.)

85,200

11/30/2025

100

700 US Hwy. Route 202-206

Bridgewater

Biovail Pharmaceuticals, Inc. (Biovail Corporation)

115,558

10/31/2014

100

389 & 399 Interpace Hwy

Parsippany

Sanofi-aventis U.S., Inc. (Aventis, Inc. & Aventis Pharma Holding GmbH)

340,240

1/31/2010

100

333 Mount Hope Ave

Rockaway

BASF Corporation

95,500

9/30/2014

100

1415 Wyckoff Rd

Wall

New Jersey Natural Gas Company

157,511

6/30/2021

100

29 S. Jefferson Rd

Whippany

CAE SimuFlite, Inc.

123,734

11/30/2021

100

LEXINGTON CONSOLIDATED PORTFOLIO

PROPERTY CHART

OFFICE

Property Location

City

State

Primary Tenant (Guarantor)

Net

Rentable

Square

Feet

Current

Lease

Term

Expiration

Percent

Leased

6226 W. Sahara Ave

Las Vegas

Nevada Power Company

282,000

1/31/2014

100

180 S. Clinton St.

Rochester

Frontier Corporation

226,000

12/31/2014

100

5550 Britton Pkwy

Hilliard

BMW Financial Services NA, LLC

220,966

2/28/2021

100

2000 Eastman Dr.

Milford

Siemens Product Lifestyle Management Software, Inc.

221,215

4/30/2016

100

500 Olde Worthington Rd

Westerville

InVentiv Communications, Inc.

97,000

9/30/2015

100

4848 129th E. Ave

Tulsa

Metris Direct, Inc. (Metris Companies, Inc.)

101,100

1/31/2010

100

180 Rittenhouse Circle

Bristol

Jones Management Service Company

96,000

7/31/2018

100

275 Technology Dr.

Canonsburg

ANSYS, Inc.

107,872

12/31/2014

100

2550 Interstate Dr.

Harrisburg

New Cingular Wireless PCS, LLC

81,859

12/13/2013

100

1701 Market St.

Philadelphia

Morgan, Lewis & Bockius, LLC

307,775

1/31/2014

100

1460 Tobias Gadsen Blvd.

Charleston

Hagemeyer North America, Inc.

50,076

7/8/2020

100

2210 Enterprise Dr.

Florence

JPMorgan Chase Bank, NA

179,300

6/30/2013

100

3476 Stateview Blvd.

Fort Mill

Wells Fargo Home Mortgage, Inc.

169,083

1/30/2013

100

3480 Stateview Blvd.

Fort Mill

Wells Fargo Bank, N.A.

169,218

5/31/2014

100

15 Nijborg

3927 DA Renswoude

The Netherlands

AS Watson (Health & Beauty Continental Europe, BV)

17,610

12/20/2011

100

17 Nijborg

3927 DA Renswoude

The Netherlands

AS Watson (Health & Beauty Continental Europe, BV)

114,195

6/14/2018

100

207 Mockingbird Lane

Johnson City

Sun Trust Bank

63,800

11/30/2011

100

1409 Centerpoint Blvd.

Knoxville

Alstom Power, Inc.

84,404

10/31/2014

100

104 & 110 S. Front St.

Memphis

Hnedak Bobo Group, Inc.

37,229

10/31/2016

100

3965 Airways Blvd.

Memphis

Federal Express Corporation

521,286

6/19/2019

100

350 Pine St.

Beaumont

Multi-tenanted

425,198

Various

3535 Calder Ave

Beaumont

Compass Bank

49,639

12/31/2014

100

4001 International Pkwy

Carrollton

Motel 6 Operating, LP (Accor S.A.)

138,443

7/31/2015

100

4201 Marsh Lane

Carrollton

Carlson Restaurants Worldwide, Inc. (Carlson Companies, Inc.)

130,000

11/30/2018

100

555 Dividend Dr.

Coppell

Brinks, Inc.

101,844

4/30/2017

100

1600 Viceroy Dr.

Dallas

TFC Services, Inc. (Freeman Decorating Company)

212,744

1/31/2019

6301 Gaston Ave

Dallas

Multi-tenanted

173,855

Various

11511 Luna Rd

Farmers Branch

Haggar Clothing Company (Texas Holding Clothing Corporation & Haggar Corporation)

180,507

4/30/2016

100

10001 Richmond Ave

Houston

Baker Hughes, Inc.

554,385

9/27/2015

100

1311 Broadfield Blvd.

Houston

Transocean Offshore Deepwater Drilling, Inc. (Transocean Sedco Forex, Inc.)

155,991

3/31/2011

100

15375 Memorial Dr.

Houston

BP America Production Company

349,674

9/15/2009

100

LEXINGTON CONSOLIDATED PORTFOLIO

PROPERTY CHART

OFFICE

Property Location

City

State

Primary Tenant (Guarantor)

Net

Rentable

Square

Feet

Current

Lease

Term

Expiration

Percent

Leased

16676 Northchase Dr.

Houston

Anadarko Petroleum Corporation

101,111

7/31/2014

100

810 & 820 Gears Rd

Houston

IKON Office Solutions, Inc.

157,790

1/31/2013

100

6555 Sierra Dr.

Irving

TXU Energy Retail Company, LLC (Texas Competitive Electric Holdings Company, LLC)

247,254

3/31/2023

100

8900 Freeport Pkwy

Irving

Nissan Motor Acceptance Corporation (Nissan North America, Inc.)

268,445

3/31/2013

100

6200 Northwest Pkwy

San Antonio

United Healthcare Services, Inc.

142,500

11/30/2010

100

12645 W. Airport Rd

Sugar Land

Baker Hughes, Inc.

165,836

9/27/2015

100

2050 Roanoke Rd

Westlake

Daimler Chrysler Services North America, LLC

130,290

12/31/2011

100

295 Chipeta Way

Salt Lake City

Northwest Pipeline Corporation

295,000

9/15/2018

100

100 E. Shore Dr.

Glen Allen

Multi-tenanted

67,508

Various

120 E. Shore Dr.

Glen Allen

Capital One Services, Inc.

77,045

3/31/2010

100

130 E. Shore Dr.

Glen Allen

Capital One Services, Inc.

79,675

2/10/2010

100

400 Butler Farm Rd

Hampton

Nextel Communications of the Mid-Atlantic, Inc. (Nextel Finance Company)

100,632

12/31/2014

100

421 Butler Farm Rd

Hampton

Nextel Communications of the Mid-Atlantic, Inc. (Nextel Finance Company)

56,515

1/14/2010

100

13651 McLearen Rd

Herndon

US Government

159,664

5/30/2018

100

13775 McLearen Rd

Herndon

Equant, Inc. (Equant N.V.)

125,293

4/30/2015

100

2800 Waterford Lake Dr.

Richmond

Alstom Power, Inc.

99,057

10/31/2014

100

9950 Mayland Dr.

Richmond

Circuit City Stores, Inc.

288,000

2/28/2010

100

22011 S.E. 51st St.

Issaquah

OSI Systems, Inc. (Instrumentarium Corporation)

95,600

12/14/2014

100

5150 220th Ave

Issaquah

OSI Systems, Inc. (Instrumentarium Corporation)

106,944

12/14/2014

100

Office Total

17,496,829

LEXINGTON CONSOLIDATED PORTFOLIO

PROPERTY CHART

INDUSTRIAL

Property Location

City

State

Primary Tenant (Guarantor)

Net

Rentable

Square

Feet

Current

Lease

Term

Expiration

Percent

Leased

2415 U.S. Hwy 78 E.

Moody

CEVA Logistics U.S., Inc. (TNT Holdings B.V.)

595,346

1/2/2014

100

1665 Hughes Way

Long Beach

Vacant

200,541

None

2455 Premier Dr.

Orlando

Walgreen Company

205,016

3/31/2011

100

3102 Queen Palm Dr.

Tampa

Time Customer Service, Inc. (Time, Inc.)

229,605

6/30/2020

100

1420 Greenwood Rd

McDonough

Versacold USA, Inc.

296,972

10/31/2017

100

7500 Chavenelle Rd

Dubuque

The McGraw-Hill Companies, Inc.

330,988

6/30/2017

100

3600 Southgate Dr.

Danville

The Sygma Network, Inc. (Sysco Corporation)

201,369

9/30/2023

100

3686 S. Central Ave

Rockford

Jacobson Warehouse Company, Inc. (Jacobson Distribution Company, Inc. and Jacobson Transportation Company, Inc.)

90,000

12/31/2014

100

749 Southrock Dr.

Rockford

Jacobson Warehouse Company, Inc. (Jacobson Distribution Company, Inc. and Jacobson Transportation Company, Inc.)

150,000

12/31/2015

100

10000 Business Blvd.

Dry Ridge

Dana Light Axle Products, LLC (Dana Limited)

336,350

6/30/2025

100

730 N. Black Branch Rd

Elizabethtown

Dana Structural Products, LLC (Dana Limited)

167,770

6/30/2025

100

750 N. Black Branch Rd

Elizabethtown

Dana Structural Products, LLC (Dana Limited)

539,592

6/30/2025

100

301 Bill Bryan Rd

Hopkinsville

Dana Structural Products, LLC (Dana Limited)

424,904

6/30/2025

100

1901 Ragu Dr.

Owensboro

Unilever Supply Chain, Inc. (Unilever United States, Inc.)

443,380

12/19/2020

100

4010 Airpark Dr.

Owensboro

Dana Structural Products, LLC (Dana Limited)

211,598

6/30/2025

100

7150 Exchequer Dr.

Baton Rouge

Corporate Express Office Products, Inc. (Corporate Express US, Inc.)

79,086

10/31/2013

100

5001 Greenwood Rd

Shreveport

Libbey Glass, Inc. (Libbey, Inc.)

646,000

10/31/2026

100

113 Wells St.

North Berwick

United Technologies Corporation

820,868

12/31/2010

100

1601 Pratt Ave

Marshall

Joseph Campbell Company

58,300

9/30/2011

100

43955 Plymouth Oaks Blvd.

Plymouth

Tower Automotive Operations USA I, LLC (Tower Automotive Holdings I, LLC)

290,133

10/31/2012

100

46600 Port St.

Plymouth

Vacant

134,160

None

7111 Crabb Rd

Temperance

CEVA Logistics U.S., Inc. (TNT Holdings B.V.)

744,570

8/4/2012

100

7670 Hacks Cross Rd

Olive Branch

MAHLE Clevite, Inc. (MAHLE Industries, Inc,)

268,104

2/28/2016

100

1133 Poplar Creek Rd

Henderson

Corporate Express Office Products, Inc. (Corporate Express US, Inc.)

196,946

1/31/2014

100

250 Swathmore Ave

High Point

Steelcase, Inc.

244,851

9/30/2017

100

2880 Kenny Biggs Rd

Lumberton

Quickie Manufacturing Corporation

423,280

11/30/2021

100

2203 Sherrill Dr.

Statesville

LA-Z-Boy Greensboro, Inc. (LA-Z-Boy, Inc.)

639,600

4/30/2010

100

121 Technology Dr.

Durham

Heidelberg Web Systems, Inc.

500,500

3/30/2021

100

1109 Commerce Blvd.

Swedesboro

Vacant

262,644

None

75 N. St.

Saugerties

Rotron, Inc. (EG&G)

52,000

12/31/2009

100

10590 Hamilton Ave

Cincinnati

The Hillman Group, Inc.

247,088

8/31/2016

100

1650 - 1654 Williams Rd

Columbus

ODW Logistics, Inc.

772,450

6/30/2018

100

7005 Cochran Rd

Glenwillow

Royal Appliance Manufacturing Company

458,000

7/31/2025

100

LEXINGTON CONSOLIDATED PORTFOLIO

PROPERTY CHART

INDUSTRIAL

Property Location

City

State

Primary Tenant (Guarantor)

Net

Rentable

Square

Feet

Current

Lease

Term

Expiration

Percent

Leased

191 Arrowhead Dr.

Hebron

Owens Corning Insulating Systems, LLC

250,410

Month to Month

200 Arrowhead Dr.

Hebron

Owens Corning Insulating Systems, LLC

401,260

5/31/2009

100

10345 Philipp Pkwy

Streetsboro

L'Oreal USA S/D, Inc. (L’Oreal USA, Inc.)

649,250

10/17/2019

100

250 Rittenhouse Circle

Bristol

Vacant

255,019

None

245 Salem Church Rd

Mechanicsburg

Exel Logistics, Inc. (NFC plc)

252,000

12/31/2012

100

34 E. Main St.

New Kingston

Vacant

179,200

None

6 Doughten Rd

New Kingston

Vacant

330,000

None

224 Harbor Freight Rd.

Dillon

Harbor Freight Tools USA, Inc. (Central Purchasing, Inc.)

1,010,859

12/31/2021

100

50 Tyger River Dr.

Duncan

Plastic Omnium Exteriors, LLC

221,833

9/30/2018

100

101 Michelin Dr.

Laurens

CEVA Logistics U.S., Inc. (TNT Holdings B.V.)

1,164,000

8/4/2012

100

6050 Dana Way

Antioch

W.M. Wright Company

677,400

3/31/2021

477 Distribution Pkwy

Collierville

Federal Express Corporation

120,000

5/31/2021

100

900 Industrial Blvd.

Crossville

Dana Commercial Vehicle Products, LLC (Dana Limited)

222,200

9/30/2016

100

3350 Miac Cove Rd

Memphis

Mimeo.com, Inc.

141,359

9/30/2020

3456 Meyers Ave

Memphis

Sears, Roebuck & Company

780,000

2/28/2017

100

3820 Micro Dr.

Millington

Ingram Micro, LP (Ingram Micro, Inc.)

701,819

9/25/2011

100

19500 Bulverde Rd

San Antonio

Harcourt, Inc. (Harcourt General, Inc.)

559,258

3/31/2016

100

2425 Hwy 77 N.

Waxahachie

James Hardie Building Products, Inc. (James Hardie N.V.)

335,610

3/31/2020

100

291 Park Center Dr.

Winchester

Kraft Foods North America, Inc.

344,700

5/31/2011

100

Industrial Total

19,858,188

LEXINGTON CONSOLIDATED PORTFOLIO

PROPERTY CHART

RETAIL/OTHER

Property Location

City

State

Primary Tenant (Guarantor)

Net

Rentable

Square

Feet

Current

Lease

Term

Expiration

Percent

Leased

302 Coxcreek Pkwy

Florence

The Kroger Company

42,130

7/1/2013

100

5544 Atlanta Hwy

Montgomery

Vacant

60,698

None

10415 Grande Ave

Sun City

Cafeteria Operators, LP (Furrs Restaurant Group, Inc.)

10,000

4/30/2012

100

255 Northgate Dr.

Manteca

Kmart Corporation

107,489

12/31/2018

100

12080 Carmel Mountain Rd

San Diego

Sears Holding Corporation

107,210

12/31/2018

100

10340 U.S. 19

Port Richey

Kingswere Furniture

53,820

11/30/2017

100

2010 Apalachee Pkwy

Tallahassee

Kohl’s Department Stores, Inc.

102,381

1/31/2028

100

2223 N. Druid Hills Rd

Atlanta

Bank of America, N.A. (Bank of America Corporation)

6,260

12/31/2014

100

956 Ponce de Leon Ave

Atlanta

Bank of America, N.A. (Bank of America Corporation)

3,900

12/31/2014

100

4545 Chamblee-Dunwoody Rd

Chamblee

Bank of America, N.A. (Bank of America Corporation)

4,565

12/31/2014

100

201 W. Main St.

Cumming

Bank of America, N.A. (Bank of America Corporation)

14,208

12/31/2014

100

3468 Georgia Hwy 120

Duluth

Bank of America, N.A. (Bank of America Corporation)

9,300

12/31/2009

100

1066 Main St.

Forest Park

Bank of America, N.A. (Bank of America Corporation)

14,859

12/31/2014

100

825 Southway Dr. Blvd.

Jonesboro

Bank of America, N.A. (Bank of America Corporation)

4,894

12/31/2014

100

1698 Mountain Industrial

Stone Mountain

Bank of America, N.A. (Bank of America Corporation)

5,704

12/31/2014

100

1032 Fort St. Mall

Honolulu

Macy’s Department Stores, Inc.

85,610

9/30/2009

100

1150 W. Carl Sandburg Dr.

Galesburg

Kmart Corporation

94,970

12/31/2018

100

928 First Ave

Rock Falls

Rock Falls Country Market, LLC (Rock Island Country Market, LLC)

27,650

9/30/2011

100

5104 N. Franklin Rd

Lawrence

Marsh Supermarkets, Inc.

28,721

10/31/2013

100

205 Homer Rd

Minden

Brookshire Grocery

35,000

11/30/2012

100

35400 Cowan Rd

Westland

Sam’s Real Estate Business Trust

101,402

1/31/2009

100

24th St. W. & St. John’s Ave

Billings

Safeway Stores, Inc.

40,800

5/31/2010

100

2526 Little Rock Rd

Charlotte

Food Lion, Inc.

33,640

10/31/2013

100

3501 U.S. 601 S.

Concord

Food Lion, Inc.

32,259

10/31/2013

100

104 Branchwood Shopping Center

Jacksonville

Food Lion, Inc.

23,000

2/28/2013

100

US 221 & Hospital Rd

Jefferson

Food Lion, Inc.

23,000

2/28/2013

100

291 Talbert Blvd.

Lexington

Food Lion, Inc.

23,000

2/28/2013

100

835 Julian Ave

Thomasville

Mighty Dollar, LLC

23,767

9/30/2018

100

900 S. Canal St.

Carlsbad

Cafeteria Operators, LP (Furrs Restaurant Group, Inc.)

10,000

4/30/2012

100

130 Midland Ave

Port Chester

Pathmark Stores, Inc.

59,000

10/31/2013

100

21082 Pioneer Plaza Dr.

Watertown

Kmart Corporation

120,727

12/31/2018

100

4733 Hills and Dales Rd

Canton

Bally’s Total Fitness of the Midwest (Bally’s Health & Tennis Corporation)

37,214

12/31/2009

100

4831 Whipple Avenue N.W.

Canton

Best Buy Company, Inc.

46,350

2/26/2018

100

LEXINGTON CONSOLIDATED PORTFOLIO

PROPERTY CHART

RETAIL/OTHER

Property Location

City

State

Primary Tenant (Guarantor)

Net

Rentable

Square

Feet

Current

Lease

Term

Expiration