10-Q 1 lxp-20220930.htm 10-Q lxp-20220930
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2022.
or
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
 LXP INDUSTRIAL TRUST
(Exact name of registrant as specified in its charter)
Maryland13-3717318
(State or other jurisdiction of
incorporation of organization)
(I.R.S. Employer
Identification No.)
One Penn Plaza, Suite 4015, New York, NY 10119-4015
(Address of principal executive offices) (zip code)
(212) 692-7200
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Shares of beneficial interest, par value $0.0001 per share, classified as Common StockLXPNew York Stock Exchange
6.50% Series C Cumulative Convertible Preferred Stock, par value $0.0001 per share
LXPPRCNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth
company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: 275,723,255 common shares of beneficial interest, par value $0.0001 per share, as of November 2, 2022.



TABLE OF CONTENTS
PART I. — FINANCIAL INFORMATION  
 
 
 
 
PART II — OTHER INFORMATION  
 
 
 
 
 
 
 

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

2

PART I. - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands, except share and per share data)
September 30, 2022December 31, 2021
Assets: 
Real estate, at cost$3,642,114 $3,583,978 
Real estate - intangible assets332,646 341,403 
Land held for development108,379 104,160 
Investments in real estate under construction368,483 161,165 
Real estate, gross4,451,622 4,190,706 
Less: accumulated depreciation and amortization747,535 655,740 
Real estate, net3,704,087 3,534,966 
Assets held for sale73,761 82,586 
Right-of-use assets, net24,994 27,966 
Cash and cash equivalents 29,407 190,926 
Restricted cash113 101 
Investments in non-consolidated entities55,415 74,559 
Deferred expenses, net25,564 18,861 
Rent receivable – current 2,426 3,526 
Rent receivable – deferred 69,419 63,283 
Other assets 26,062 8,784 
Total assets$4,011,248 $4,005,558 
Liabilities and Equity:  
Liabilities:  
Mortgages and notes payable, net $74,891 $83,092 
Revolving credit facility borrowings130,000  
Term loan payable, net298,834 298,446 
Senior notes payable, net988,954 987,931 
Trust preferred securities, net127,669 127,595 
Dividends payable34,778 37,425 
Liabilities held for sale2,815 3,468 
Operating lease liabilities26,062 29,094 
Accounts payable and other liabilities 88,028 77,607 
Accrued interest payable10,278 8,481 
Deferred revenue - including below-market leases, net11,734 14,474 
Prepaid rent14,693 14,717 
Total liabilities1,808,736 1,682,330 
Commitments and contingencies
Equity:  
Preferred shares, par value $0.0001 per share; authorized 100,000,000 shares:
  
Series C Cumulative Convertible Preferred, liquidation preference $96,770; 1,935,400 shares issued and outstanding
94,016 94,016 
Common shares, par value $0.0001 per share; authorized 600,000,000 shares, 276,100,331 and 283,752,726 shares issued and outstanding in 2022 and 2021, respectively
28 28 
Additional paid-in-capital3,134,739 3,252,506 
Accumulated distributions in excess of net income(1,079,407)(1,049,434)
Accumulated other comprehensive income (loss)17,768 (6,258)
Total shareholders’ equity2,167,144 2,290,858 
Noncontrolling interests35,368 32,370 
Total equity2,202,512 2,323,228 
Total liabilities and equity$4,011,248 $4,005,558 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited and in thousands, except share and per share data)
Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Gross revenues:    
Rental revenue$78,274 $82,353 $234,749 $254,570 
Other revenue1,814 1,064 5,392 2,945 
Total gross revenues80,088 83,417 240,141 257,515 
Expense applicable to revenues:    
Depreciation and amortization(44,946)(45,359)(134,645)(130,579)
Property operating(13,961)(11,406)(42,279)(33,966)
General and administrative(9,060)(8,363)(29,093)(24,695)
Non-operating income242 472 353 953 
Interest and amortization expense(11,255)(12,210)(32,758)(35,170)
Debt satisfaction losses, net(119)(13,222)(119)(13,222)
Impairment charges(628)(2,048)(2,457)(2,048)
Gains on sales of properties24,841 16,122 52,951 104,767 
Selling profit from sales-type lease  9,314  
Income before provision for income taxes and equity in earnings (losses) of non-consolidated entities25,202 7,403 61,408 123,555 
Provision for income taxes(271)(270)(951)(986)
Equity in earnings (losses) of non-consolidated entities(1,340)(75)15,580 (249)
Net income23,591 7,058 76,037 122,320 
Less net income attributable to noncontrolling interests
(201)(420)(727)(1,962)
Net income attributable to LXP Industrial Trust shareholders23,390 6,638 75,310 120,358 
Dividends attributable to preferred shares – Series C(1,573)(1,573)(4,718)(4,718)
Allocation to participating securities(41)(37)(151)(170)
Net income attributable to common shareholders$21,776 $5,028 $70,441 $115,470 
    
Net income attributable to common shareholders - per common share basic
$0.08 $0.02 $0.25 $0.42 
Weighted-average common shares outstanding – basic277,535,717 278,124,204 281,559,058 276,379,718 
Net income attributable to common shareholders - per common share diluted
$0.08 $0.02 $0.25 $0.41 
Weighted-average common shares outstanding – diluted
278,521,946 282,048,458 284,609,950 278,581,849 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited and in thousands)
Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Net income$23,591 $7,058 $76,037 $122,320 
Other comprehensive income:    
Change in unrealized income on interest rate swaps, net7,028 1,150 22,844 7,072 
Company's share of other comprehensive income of non-consolidated entities
1,182  1,182  
Other comprehensive income8,210 1,150 24,026 7,072 
Comprehensive income31,801 8,208 100,063 129,392 
Comprehensive income attributable to noncontrolling interests
(201)(420)(727)(1,962)
Comprehensive income attributable to LXP Industrial Trust shareholders$31,600 $7,788 $99,336 $127,430 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited and in thousands, except share and per share data)
Three Months Ended September 30, 2022LXP Industrial Trust Shareholders
TotalNumber of Preferred SharesPreferred SharesNumber of Common SharesCommon SharesAdditional Paid-in-CapitalAccumulated Distributions in Excess of Net IncomeAccumulated Other Comprehensive Income/(Loss)Noncontrolling Interests
Balance June 30, 2022$2,259,650 1,935,400 $94,016 281,670,437 $28 $3,189,713 $(1,068,408)$9,558 $34,743 
Issuance of partnership interest in real estate663 — — — — — — — 663 
Redemption of noncontrolling OP units for common shares— — — 13,146 — 68 — — (68)
Issuance of common shares and deferred compensation amortization, net1,916 — — 22,516 — 1,916 — — — 
Repurchase of common shares (56,958)— — (5,604,048)— (56,958)— — — 
Forfeiture of employee common shares1 — — (1,720)— — 1 — — 
Dividends/distributions ($0.12 per common share)
(34,561)— — — — — (34,390)— (171)
Net income23,591 — — — — — 23,390 — 201 
Other comprehensive income7,028 — — — — — — 7,028 — 
Company's share of other comprehensive income of non-consolidated entities1,182 — — — — — — 1,182 — 
Balance September 30, 2022$2,202,512 1,935,400 $94,016 276,100,331 $28 $3,134,739 $(1,079,407)$17,768 $35,368 

Three Months Ended September 30, 2021
Balance June 30, 2021$2,051,369 1,935,400 $94,016 277,660,102 $28 $3,195,040 $(1,250,735)$(12,041)$25,061 
Issuance of partnership interest in real estate5,965 — — — — — — — 5,965 
Redemption of noncontrolling OP units for common shares— — — 38,790 — 202 — — (202)
Redemption of noncontrolling OP units for real estate(22,305)— — — — (12,919)— — (9,386)
Issuance of common shares and deferred compensation amortization, net57,527 — — 4,939,815 — 57,527 — — — 
Dividends/distributions ($0.1075 per common share)
(32,402)— — — — — (32,037)— (365)
Net income7,058 — — — — — 6,638 — 420 
Other comprehensive income1,150 — — — — — — 1,150 — 
Balance September 30, 2021$2,068,362 1,935,400 $94,016 282,638,707 $28 $3,239,850 $(1,276,134)$(10,891)$21,493 
LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited and in thousands, except share and per share data)
Nine Months Ended September 30, 2022LXP Industrial Trust Shareholders
TotalNumber of Preferred SharesPreferred SharesNumber of Common SharesCommon SharesAdditional Paid-in-CapitalAccumulated Distributions in Excess of Net IncomeAccumulated Other Comprehensive Income/(Loss)Noncontrolling Interests
Balance December 31, 2021$2,323,228 1,935,400 $94,016 283,752,726 $28 $3,252,506 $(1,049,434)(6,258)32,370 
Issuance of partnership interest in real estate6,444 — — — — — — — 6,444 
Redemption of noncontrolling OP units for common shares— — — 33,378 — 177 — — (177)
Purchase of noncontrolling interest in consolidated joint venture(27,958)— — — — (25,058)— — (2,900)
Issuance of common shares and deferred compensation amortization, net44,075 — — 4,557,892 1 44,074 — — — 
Repurchase of common shares (130,676)— — (11,702,074)(1)(130,675)— — — 
Repurchase of common shares to settle tax obligations(6,285)— — (410,958)— (6,285)— — — 
Forfeiture of employee common shares9 — — (130,633)— — 9 — — 
Dividends/distributions ($0.36 per common share)
(106,388)— — — — — (105,292)— (1,096)
Net income76,037 — — — — — 75,310 — 727 
Other comprehensive income22,844 — — — — — — 22,844 — 
Company's share of other comprehensive income of non-consolidated entities1,182 — — — — — — 1,182 — 
Balance September 30, 20222,202,512 1,935,400 $94,016 276,100,331 $28 $3,134,739 $(1,079,407)$17,768 $35,368 

Nine Months Ended September 30, 2021
Balance December 31, 2020$1,991,137 1,935,400 $94,016 277,152,450 $28 $3,196,315 $(1,301,726)$(17,963)$20,467 
Issuance of partnership interest in real estate11,050 — — — — — — — 11,050 
Redemption of noncontrolling OP units for common shares— — — 129,397 — 670 — — (670)
Redemption of noncontrolling OP units for real estate(22,305)— — — — (12,919)— — (9,386)
Issuance of common shares and deferred compensation amortization, net60,469 — — 5,866,762 — 60,469 — — — 
Repurchase of common shares to settle tax obligations(5,120)— — (499,638)— (5,120)— — — 
Forfeiture of employee common shares2 — — (10,264)— — 2 — — 
Dividends/distributions ($0.3225 per common share)
(96,263)— — — — — (94,768)— (1,495)
Net income122,320 — — — — — 120,358 — 1,962 
Other comprehensive income7,072 — — — — — — 7,072 — 
Reallocation of noncontrolling interests— — — — — 435 — — (435)
Balance September 30, 2021$2,068,362 1,935,400 $94,016 282,638,707 $28 $3,239,850 $(1,276,134)$(10,891)$21,493 
6

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)
Nine Months Ended September 30,
 20222021
Net cash provided by operating activities:$154,113 $167,405 
Cash flows from investing activities:  
Acquisition of real estate, including intangible assets(132,026)(392,586)
Investment in real estate under construction(209,862)(119,885)
Capital expenditures(25,593)(9,371)
Net proceeds from sale of properties145,906 181,242 
Investments in loans receivable  (1,497)
Principal payments on loans receivable 20  
Investments in non-consolidated entities(307)(975)
Distributions from non-consolidated entities in excess of accumulated earnings19,250 6,170 
Deferred leasing costs(4,017)(5,546)
Change in real estate deposits, net(1,524)(1,658)
Net cash used in investing activities(208,153)(344,106)
Cash flows from financing activities:  
Dividends to common and preferred shareholders(107,939)(95,885)
Proceeds from mortgage loans  11,610 
Principal amortization payments(8,416)(10,571)
Principal payments on debt, excluding normal amortization (10,567)
Revolving credit facility borrowings210,000 215,000 
Revolving credit facility payments(80,000)(215,000)
Proceeds from issuance of senior notes 399,032 
Repurchase of senior notes (188,756)
Deferred financing costs(3,626)(3,977)
Payments for early extinguishment of debt (12,217)
Cash contributions from noncontrolling interests6,444 10,560 
Cash distributions to noncontrolling interests(1,096)(1,495)
Repurchases to settle tax obligations(6,285)(5,120)
Purchase of noncontrolling interest(27,958) 
Issuance of common shares, net38,436 55,116 
Repurchase of common shares(127,027) 
Net cash (used in) provided by financing activities(107,467)147,730 
Change in cash, cash equivalents and restricted cash(161,507)(28,971)
Cash, cash equivalents and restricted cash, at beginning of period191,027 179,421 
Cash, cash equivalents and restricted cash, at end of period$29,520 $150,450 
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents at beginning of period$190,926 $178,795 
Restricted cash at beginning of period101 626 
Cash, cash equivalents and restricted cash at beginning of period$191,027 $179,421 
Cash and cash equivalents at end of period$29,407 $150,077 
Restricted cash at end of period113 373 
Cash, cash equivalents and restricted cash at end of period$29,520 $150,450 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7


LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 and 2021
(Unaudited and dollars in thousands, except share/unit and per share/unit data)
(1) The Company and Financial Statement Presentation
LXP Industrial Trust (together with its consolidated subsidiaries, except when the context only applies to the parent entity, the “Company”) is a Maryland real estate investment trust (“REIT”) that owns a portfolio of equity investments focused on single-tenant industrial properties.
As of September 30, 2022, the Company had ownership interests in approximately 118 consolidated real estate properties, located in 21 states. The properties in which the Company has an interest are primarily net leased to tenants in various industries.
The Company believes it has qualified as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”). Accordingly, the Company will not be subject to federal income tax, provided that distributions to its shareholders equal at least the amount of its REIT taxable income as defined under the Code. The Company is permitted to participate in certain activities from which it was previously precluded in order to maintain its qualification as a REIT, so long as these activities are conducted in entities which elect to be treated as taxable REIT subsidiaries (“TRS”) under the Code. As such, the TRS are subject to federal income taxes on the income from these activities.
The Company conducts its operations indirectly through (1) property owner subsidiaries, which are single purpose entities, (2) a wholly-owned TRS, Lexington Realty Advisors, Inc. (“LRA”), and (3) joint ventures. Property owner subsidiaries are landlords under leases for properties in which the Company has an interest and/or borrowers under loan agreements secured by properties in which the Company has an interest and lender subsidiaries are lenders under loan agreements where the Company made an investment in a loan asset, but in all cases are separate and distinct legal entities. Each property owner subsidiary is a separate legal entity that maintains separate books and records. The assets and credit of each property owner subsidiary with a property subject to a mortgage loan are not available to creditors to satisfy the debt and other obligations of any other person, including any other property owner subsidiary or any other affiliate. Consolidated entities that are not property owner subsidiaries do not directly own any of the assets of a property owner subsidiary (or the general partner, member or managing member of such property owner subsidiary), but merely hold partnership, membership or beneficial interests therein, which interests are subordinate to the claims of such property owner subsidiary's (or its general partner's, member's or managing member's) creditors.
The financial statements contained in this Quarterly Report on Form 10-Q (this “Quarterly Report”) for the three and nine months ended September 30, 2022 have been prepared by the Company in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all information and footnotes required by GAAP for complete financial statements. However, in the opinion of management, the interim financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results of the periods presented. Interim results are not necessarily indicative of the results that may be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 24, 2022 (“Annual Report”).
Basis of Presentation and Consolidation. The Company's unaudited condensed consolidated financial statements are prepared on the accrual basis of accounting in accordance with GAAP. The financial statements reflect the accounts of the Company and its consolidated subsidiaries. The Company consolidates the wholly-owned subsidiaries, partnerships and joint ventures which it controls (i) through voting rights or similar rights or (ii) by means other than voting rights if the Company is the primary beneficiary of a variable interest entity ("VIE"). Entities which the Company does not control and entities which are VIEs in which the Company is not a primary beneficiary are accounted for under appropriate GAAP.
8


LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 and 2021
(Unaudited and dollars in thousands, except share/unit and per share/unit data)
As of September 30, 2022, the Company had interests in seven consolidated joint ventures with developers, consisting of five ongoing development projects and two land joint ventures with ownership interests ranging from 80% to 95.5%. Each joint venture owns land parcels with the intention of developing industrial properties. The Company determined that the joint ventures are variable interest entities in accordance with the applicable accounting guidance. The Company concluded that it is the primary beneficiary in each of the joint ventures and as such, the joint ventures' operations are consolidated in the Company’s financial statements.
In addition, the Company is the primary beneficiary of certain other VIEs as it has a controlling financial interest in these entities. Lepercq Corporate Income Fund L.P. ("LCIF") is a consolidated VIE and the Company, as of September 30, 2022, had an approximate 99% ownership interest.
The assets of each VIE are only available to satisfy such VIE's respective liabilities. Below is a summary of selected financial data of the consolidated VIEs for which the Company is the primary beneficiary included in the unaudited condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021:
September 30, 2022December 31, 2021
Real estate, net$985,808 $810,087 
Total assets$1,038,913 $952,611 
Total liabilities$58,796 $47,011 
In addition, the Company acquires, from time to time, properties using a reverse like-kind exchange structure pursuant to Section 1031 of the Internal Revenue Code (a "reverse 1031 exchange") and, as such, the properties are in the possession of an Exchange Accommodation Titleholder ("EAT") until the reverse 1031 exchange is completed. The EAT is classified as a VIE as it is a “thinly capitalized” entity. The Company consolidates the EAT because it is the primary beneficiary as it has the ability to control the activities that most significantly impact the EAT's economic performance and can collapse the 1031 exchange structure at any time. The assets of the EAT primarily consist of leased property (net real estate and intangibles).
Revenue Recognition. The Company recognizes lease revenue on a straight-line basis over the term of the lease unless another systematic and rational basis is more representative of the time pattern in which the use benefit is derived from the leased property. Revenue is recognized on a contractual basis for leases with escalations tied to a consumer price index with no floor. The Company evaluates the collectability of its rental payments and recognizes revenue on a cash basis when the Company believes it is no longer probable that it will receive substantially all of the remaining lease payments. Renewal options in leases are excluded from the calculation of straight-line rent if the renewals are not reasonably certain. If the Company funds tenant improvements and the improvements are deemed to be owned by the Company, revenue recognition will commence when the improvements are substantially completed and possession or control of the space is turned over to the tenant. If the Company determines that the tenant allowances are lease incentives, the Company commences revenue recognition when possession or control of the space is turned over to the tenant for tenant work to begin. The lease incentive is recorded as a deferred expense and amortized as a reduction of revenue on a straight-line basis over the respective lease term. The Company recognizes lease termination fees as rental revenue in the period received and writes off unamortized lease-related intangible and other lease-related account balances, provided there are no further Company obligations under the lease. Otherwise, such fees and balances are recognized on a straight-line basis over the remaining obligation period with the termination payments being recorded as a component of rent receivable-deferred on the unaudited condensed consolidated balance sheets.
Use of Estimates. Management has made a number of significant estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses to prepare these unaudited condensed consolidated financial statements in conformity with GAAP. These estimates and assumptions are based on management's best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment. Management adjusts such estimates when facts and circumstances dictate. The most significant estimates made include the recoverability of current and deferred accounts receivable and, allocation of property purchase price to tangible and intangible assets acquired and liabilities assumed, the determination of VIEs
9


LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 and 2021
(Unaudited and dollars in thousands, except share/unit and per share/unit data)
and which entities should be consolidated, the determination of impairment of long-lived assets and equity method investments, valuation of derivative financial instruments, valuation of awards granted under compensation plans, the determination of the incremental borrowing rate for leases where the Company is the lessee and the useful lives of long-lived assets. Actual results could differ materially from those estimates.
Restricted Cash. Restricted cash is comprised primarily of cash balances held by lenders.
Fair Value Measurements. The Company follows the guidance in the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurements and Disclosures ("Topic 820"), to determine the fair value of financial and non-financial instruments. Topic 820 defines fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. Topic 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 - quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 - observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and Level 3 - unobservable inputs, which are used when little or no market data is available. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as considering counterparty credit risk. The Company has formally elected to apply the portfolio exception within Topic 820 with respect to measuring counterparty risk for all of its derivative transactions subject to master netting arrangements.
The Company estimates the fair value of its real estate assets, including non-consolidated real estate assets, by using income and market valuation techniques. The Company may estimate fair values using market information such as recent sale contracts (Level 2 inputs) or recent sale offers or discounted cash flow models, which primarily rely on Level 3 inputs. The cash flow models include estimated cash inflows and outflows over a specified holding period. These cash flows may include contractual rental revenues, projected future rental revenues and expenses and forecasted tenant improvements and lease commissions based upon market conditions determined through discussion with local real estate professionals, experience the Company has with its other owned properties in such markets and expectations for growth. Capitalization rates and discount rates utilized in these models are estimated by management based upon rates that management believes to be within a reasonable range of current market rates for the respective properties based upon an analysis of factors such as property and tenant quality, geographical location and local supply and demand observations. To the extent the Company under-estimates forecasted cash out flows (tenant improvements, lease commissions and operating costs) or over-estimates forecasted cash inflows (rental revenue rates), the estimated fair value of its real estate assets could be overstated.
Cost Capitalization. The Company capitalizes interest and direct and indirect project costs associated with the initial construction of a property up to the time the property is substantially complete and ready for its intended use within investments in real estate under construction in the unaudited condensed consolidated balance sheets. If costs and activities incurred to ready the vacant space cease, then cost capitalization is also discontinued until such activities are resumed. Once construction has been completed on a vacant space, project costs are no longer capitalized.
Recently Issued Accounting Guidance. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts that reference the London Interbank Offered Rate, or LIBOR, or another reference rate expected to be discontinued because of reference rate reform. The guidance in ASU 2020-04 is optional, applies for a limited period of time to ease the potential burden in accounting for (or recognizing the effect of) reference rate reform on financial reporting, in response to concerns about structural risks of interbank offered rates, and, particularly, the risk of cessation of LIBOR and may be elected over time as reference rate reform activities occur. As of March 31, 2020, the Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation.

10


LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 and 2021
(Unaudited and dollars in thousands, except share/unit and per share/unit data)
On July 5, 2022, the Company transitioned its benchmark interest rate for its term loan from LIBOR to the Secured Overnight Financing Rate, or SOFR. The Company adopted ASU 2020-04 and the adoption of this standard did not have an impact on the Company's unaudited condensed consolidated financial statements.

(2)Earnings Per Share
A portion of the Company's non-vested share-based payment awards are considered participating securities and as such, the Company is required to use the two-class method for the computation of basic and diluted earnings per share. Under the two-class computation method, net losses are not allocated to participating securities unless the holder of the security has a contractual obligation to share in the losses. The non-vested share-based payment awards are not allocated losses as the awards do not have a contractual obligation to share in losses of the Company.
The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for the three and nine months ended September 30, 2022 and 2021:
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
BASIC  
Net income attributable to common shareholders
$21,776 $5,028 $70,441 $115,470 
Weighted-average number of common shares outstanding - basic
277,535,717 278,124,204 281,559,058 276,379,718 
 
Net income attributable to common shareholders - per common share basic
$0.08 $0.02 $0.25 $0.42 
DILUTED
Net income attributable to common shareholders - basic
$21,776 $5,028 $70,441 $115,470 
Impact of assumed conversions
11  147  
Net income attributable to common shareholders
$21,787 $5,028 $70,588 $115,470 
Weighted-average common shares outstanding - basic
277,535,717 278,124,204 281,559,058 276,379,718 
Effect of dilutive securities:
Shares issuable under forward sales agreements
 2,765,030 1,699,789 1,290,968 
Unvested share-based payment awards139,371 1,159,224 491,877 911,163 
Operating partnership units846,858  859,226  
Weighted-average common shares outstanding - diluted
278,521,946 282,048,458 284,609,950 278,581,849 
Net income attributable to common shareholders - per common share diluted
$0.08 $0.02 $0.25 $0.41 
For per common share amounts, all incremental shares are considered anti-dilutive for periods that have a loss from continuing operations attributable to common shareholders. In addition, other common share equivalents may be anti-dilutive in certain periods.
11


LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 and 2021
(Unaudited and dollars in thousands, except share/unit and per share/unit data)
(3)Investments in Real Estate
The Company acquired the following warehouse/distribution facilities during the nine months ended September 30, 2022(1):
MarketAcquisition DateInitial
Cost
Basis
Primary
Lease
Expiration at Acquisition Date
LandBuilding and ImprovementsLease in-place Intangible
Cincinnati/Dayton, OH(2)
February 2022$23,382 N/A$2,010 $21,372 $ 
Cincinnati/Dayton, OHFebruary 202248,660 04/20324,197 40,944 3,519 
Phoenix, AZApril 202259,140 05/20375,366 50,281 3,493 
$131,182 $11,573 $112,597 $7,012 
(1)    A land parcel located in Hebron, OH was also purchased for $747.
(2)    Subsequent to acquisition, property was fully leased for approximately nine years.
In 2022, the Company purchased the remaining 13% of equity owned by a noncontrolling interest in the Fairburn, Georgia warehouse/distribution facility for $27,958. As the Company previously consolidated its interest in the joint venture which owned the property, the acquisition of the noncontrolling ownership interest was recorded as an equity transaction with the difference between the purchase price and carrying balance of $25,058 recorded as a reduction in additional paid-in-capital.
As of September 30, 2022, the details of the warehouse/distribution real estate under construction are as follows (in $000's, except square feet):
Project (% owned)# of BuildingsMarketEstimated Sq. Ft.
Estimated Project Cost(1)
GAAP Investment Balance as of 9/30/2022
LXP Amount Funded as of 9/30/2022(2)
Estimated Building Completion Date
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