lexandmlp8ka-081707.htm
SECURITIES AND EXCHANGE COMMISSION
Washington, DC  20549
 
Amendment No. 1 to
FORM 8-K

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

Date of report (Date of earliest event reported): June 7, 2007

LEXINGTON REALTY TRUST
(Exact Name of Registrant as Specified in Its Charter)
 
 
 
Maryland
1-12386
13-3717318
(State or Other Jurisdiction
of Incorporation)
(Commission File Number)
(IRS Employer
Identification
Number)
 
 
THE LEXINGTON MASTER LIMITED PARTNERSHIP
(Exact Name of Registrant as Specified in Its Charter)
     
Delaware
0-50268
11-3636084
(State or Other Jurisdiction
of Incorporation)
(Commission File Number)
(IRS Employer
Identification Number)

One Penn Plaza, Suite 4015, New York, New York
10119-4015
(Address of Principal Executive Offices)
(Zip Code)

(212) 692-7200
(Registrant's Telephone Number, Including Area Code)

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions

___           Written communications pursuant to Rule 425 under the Securities Act (17 CFT|R 230.425)

___           Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
___           Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
___           Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 

 
 
Item 9.01    Finacial Statements and Exhibits
 
(b) Pro forma financial information

(1)  
Unaudited pro forma condensed consolidated financial information for Lexington Realty Trust is presented as follows:
a.  
Introduction to Unaudited Pro Forma Condensed Consolidated Financial Statements
b.  
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2007
c.  
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2006
d.  
Unaudited Pro Forma Condensed Consolidated for the three months ended March 31, 2007
e.  
Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited)
f.  
Estimated Twelve Month Pro Forma Statement of Taxable Operating Results for the year ended December 31, 2006 (Unaudited)
(2)  
Unaudited pro forma condensed consolidated financial information for The Lexington Master Limited Partnership is presented as follows:
a.  
Introduction to Unaudited Pro Forma Condensed Consolidated Financial Statements
b.  
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2007
c.  
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2006
d.  
Unaudited Pro Forma Condensed Consolidated for the three months ended March 31, 2007
e.  
Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited)
f.  
Estimated Twelve Month Pro Forma Statement of Taxable Operating Results for the year ended December 31, 2006 (Unaudited)
 
 
 
 
SIGNATURES
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
  Lexington Realty Trust  
       
Date: August 17, 2007
By:
/s/ T. Wilson Eglin  
    T. Wilson Eglin  
    Chief Executive Officer  
       

 
 
LEXINGTON REALTY TRUST
Introduction to Unaduited Pro Forma Condensed Consolidated Financial Statements


The following unaudited pro forma condensed consolidated balance sheet as of March 31, 2007, reflects the financial position of Lexington Realty Trust (the “Trust”) as if the acquisition of a 100% interest in twenty-six properties (the “Properties”) from Lexington Acquiport, LLC and Lexington Acquiport II, LLC had occurred on March 31, 2007. The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2006 and the three months ended March 31, 2007, present the results of operations of the Trust as if the acquisition of the Properties had occurred on January 1, 2006.

These unaudited pro forma condensed consolidated financial statements should be read in connection with the financial statements of the Trust for the year ended December 31, 2006, included in the Trust’s Annual Report on Form 10-K.

These unaudited pro forma financial statements are not necessarily indicative of the excepted results of operations of the Trust for any future period. Differences could result from, among other considerations, future changes in the Trust’s portfolio of investments, changes in interest rates, changes in the capital structure of the Trust, changes in property level operating expenses and changes in property level revenues.
 
             
             
LEXINGTON REALTY TRUST
            
Unaudited Pro Forma Condensed Consolidated Balance Sheet
            
 March  31, 2007
            
(In thousands, except share and per share data)
            
             
   
Historical
  
Properties
    
   
(A)
  
(B)
  
Pro Forma
Assets:
            
Real estate, at cost
$
3,772,745
$
694,973
$
4,467,718
Less: accumulated depreciation
  
305,432
  
24,567
  
329,999
   
3,467,313
  
670,406
  
4,137,719
Properties held for sale – discontinued operations
  
86,540
  
—
  
86,540
Intangible assets
  
434,466
  
175,422
  
609,888
Investment in and advances to non-consolidated entities
  
243,494
  
(66,995)
  
176,499
Cash and cash equivalents
  
200,120
  
(39,785)
  
160,335
Investment in marketable equity securities
  
24,792
  
—
  
24,792
Deferred expenses
  
30,901
  
2,453
  
33,354
Rent receivable, current and deferred
  
52,516
  
4,328
  
56,844
Notes receivable
  
49,382
  
—
  
49,382
Other assets, net
  
81,444
  
5,757
  
87,201
 
$
4,670,968
$
751,586
$
5,422,544
             
             
             
Liabilities and Shareholders’ Equity:
            
Liabilities:
            
Mortgages and notes payable
$
1,526,813
$
740,811
$
2,267,624
Exchangeable notes payable
  
450,000
  
—
  
450,000
Trust notes payable
  
200,000
  
—
  
200,000
Contracts rights payable
  
12,527
  
—
  
12,527
Liabilities – discontinued operations
  
48,316
  
—
  
48,316
Accounts payable and other liabilities
  
24,621
  
997
  
25,618
Accrued interest payable
  
10,147
  
1,057
  
11,204
Dividends Payable
  
30,412
  
—
  
30,412
Prepaid rent
  
17,215
  
2,225
  
19,440
Deferred revenue
  
325,500
  
6,496
  
331,996
   
2,645,551
  
751,586
  
3,397,137
Minority Interests
  
839,144
  
—
  
839,144
             
Shareholder's equity
  
1,186,273
  
—
  
1,186,273
   
4,670,968
  
751,586
  
5,422,554
             
See accompanying noted to unaudited pro forma condensed consolidated financial statements
        
             
 
 
LEXINGTON REALTY TRUST       
    
Unaudited Pro Forma Condensed Consolidated Statement of Operations     
    
for the year ended December 31, 2006       
    
(In thousands, except share and per share data)       
    
                       
     
Historical  (AA)
  
Pro Forma Adjustments of the Properties
 
  

Pro Forma as Adjusted 
  
Revenues:
                    
 
Rental
  
$
185,312
  
$
78,282
(BB)
$
263,594
  
 
Advisory fees
  
4,555
    
(1,459)
(BB)
  
3,096
  
 
Tenant reimbursements
  
17,524
    
7,225
(BB)
  
24,749
  
   
Total gross revenues
  
207,391
    
84,048
    
291,439
  
                       
Expense applicable to revenues:
                  
 
Depreciation and amortization
  
(80,688)
    
(39,013)
(CC)
  
(119,701)
  
 
Property operating
  
(32,167)
    
(10,228)
(BB)
  
(42,395)
  
General and administrative
  
(35,530)
    
—
    
(35,530)
  
Impairment charges
  
(7,221)
    
—
    
(7,221)
  
Non-operating income
  
8,913
    
—
    
8,913
  
Interest and amortization expense
  
(71,402)
    
(43,749)
(DD)
  
(115,151)
  
Debt satisfaction gains
  
7,228
    
—
    
7,228
  
                       
Loss before benefit for income taxes, minority interests, equity in earnings of non-consolidated entities and discontinued operations
(3,476)
    
(8,942)
    
(12,418)
  
Benefit for income taxes
  
238
    
583
(EE)
  
821
  
Minority interests
  
(1,611)
    
4,764
(FF)
  
3,153
  
Equity in earnings of non-consolidated entities
  
4,186
    
(2,981)
(GG)
  
1,205
  
Loss from continuing operations
 $
(663)
  
 $
(6,576)
  
 $
(7,239)
  
                       
Basic EPS - Loss from continuing operations
$
(0.33)
        
$
(0.45)
  
Diluted EPS - Loss from continuing operations
$
(0.33)
        
$
(0.45)
  
                       
Basic weighted average common shares outstanding
  
52,163,569
          
52,163,569
  
Diluted weighted average common shares outstanding
  
52,163,569
          
52,163,569
  
                       
                       
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
      
 
 
LEXINGTON REALTY TRUST      
      
Unaudited Pro Forma Condensed Consolidated Statement of Operations    
      
For the Three Months Ended March 31, 2007      
      
(In thousands, except share and per share data)      
      
                       
     
Historical  (AA)
  

Pro Forma Adjustments
of the Properties
 
  


Pro Forma as Adjusted 
  
Revenues:
                    
 
Rental
  
$
88,792
  
$
19,571
(BB)
$
108,363
  
 
Advisory fees
  
719
    
(347)
(BB)
  
372
  
 
Tenant reimbursements
  
5,651
    
2,001
(BB)
  
7,652
  
   
Total gross revenues
  
95,162
    
21,225
    
116,387
  
                       
Expense applicable to revenues:
                  
 
Depreciation and amortization
  
(54,302)
    
(9,753)
(CC)
  
(64,055)
  
 
Property operating
  
(11,475)
    
(2,811)
(BB)
  
(14,286)
  
General and administrative
  
(8,816)
    
—
    
(8,816)
  
Non-operating income
  
2,560
    
—
    
2,560
  
Interest and amortization expense
  
(32,978)
    
(10,937)
(DD)
  
(43,915)
  
                       
Loss before (provision) benefit for income taxes, minority interests, equity in earnings of non-consolidated entities and discontinued operations
(9,849)
    
(2,276)
    
(12,125)
  
Provision (benefit) for income taxes
  
(543)
    
139
(EE)
  
(404)
  
Minority interests
  
7,522
    
1,200
(FF)
  
8,722
  
Equity in earnings of non-consolidated entities
  
3,508
    
(844)
(GG)
  
2,664
  
Income (loss) from continuing operations
$
638
  
$
(1,781)
  
$
(1,143)
  
                       
Basic EPS - Loss from continuing operations
$
(0.07)
        
$
(0.10)
  
Diluted EPS - Loss from continuing operations
$
(0.07)
        
$
(0.10)
  
                       
Basic weighted average common shares outstanding
  
68,538,404
          
68,538,404
  
Diluted weighted average common shares outstanding
  
68,538,404
          
68,538,404
  
                       
                       
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
      



 

LEXINGTON REALTY TRUST
Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited)
($ 000’s)

Adjustments to Pro Forma Condensed Consolidated Balance Sheet

The adjustments to the pro forma condensed consolidated balance sheet as of March 31, 2007 are as follows:

(A)  
Reflects the Trust’s historical condensed consolidated balance sheet as of March 31, 2007.
 
(B)  
Reflects the pro forma acquisition of the Properties as follows:
 

         
Asset acquired:
    
 
Real estate
$
694,973
 
Accumulated depreciation
  
(24,567)
 
Intangible assets
  
175,422
 
Deferred expenses, net
  
2,453
 
Cash acquired
  
13,698
 
Rent receivable, current and deferred
  
4,328
 
Other Assets
  
5,757
         
Less liabilities:
    
 
Mortgages assumed
$
515,811
 
New borrowings
  
225,000
 
Accounts payable and other liabilities
  
997
 
Accrued interest payable
  
1,057
 
Prepaid rent
  
2,225
 
Deferred revenue
  
6,496
       
120,478
 
Investment in non-consolidated entities
  
66,995
 
Cash paid, net debt assumed and new borrowings
53,483
 
Less cash acquired
  
13,698
 
Cash adjustment, net
  
39,785
         


Adjustments to Pro Forma Condensed Consolidated Statement of Operations

The adjustments to the pro forma condensed consolidated statement of operations for the year ended December 31, 2006 are as follows:

(AA)
Reflects the Trust’s historical condensed consolidated statement of operations for the year ended December 31, 2006 and three months ended March 31, 2007.

(BB)
Reflects the pro forma acquisition of the Properties as follows:
 
Increase in rental revenues reflects (i) the recalculation of straight-line rents and (ii) the amortization of above and below market leases on a straight-line basis over the remaining term of in-place leases.
 

Decrease in advisory fees reflects acquisition, financing and asset management fees related to Properties purchased from non-consolidated entities.

Increase in property operating expenses and tenant reimbursements reflect operating activities of the Properties.

(CC)  
Depreciation has been adjusted to reflect the Properties total capitalized cost depreciated on a straight line basis over the estimated economic useful life of the real estate. Amortization includes the pro forma effect of amortization of intangibles on a straight-line basis over the remaining term of the respective leases.
 
(DD)  
The pro forma adjustment to interest expense reflects additional interest expense as a result of mortgages assumed in the transaction and the $225,000 term loan obtained to partially fund the acquisitions.
 
(EE)  
Represents the tax impact related to the reduction in advisory fees.
 
(FF)  
 Represents the minority interest impact of the pro forma adjustments.
 
(GG)  
The pro forma adjustment to equity in earnings of non-consolidated entities reflects the net income statement impact of the Properties purchased from non-consolidated entities.
 

 
Lexington Realty Trust
Estimated Twelve Month Pro Forma Statement of Taxable Operating Results
For the year ended December 31, 2006
(Unaudited)
(Amounts in thousands)
 
The following unaudited statement is a pro forma estimate for a twelve month period of taxable operating results of the Properties. This statement does not purport to forecast actual taxable operating results for any period in the future.

This statement should be read in conjunction with the unaudited pro forma financial statements of Lexington Realty Trust (contained elsewhere in this Form 8-K).

   
December 31, 2006
  
       
Loss from continuing operations
   $ (6,576 )
Estimated net adjustment for tax basis income recognition (Note1)
     (2,279 )
Estimated GAAP depreciation and amortization in excess of tax depreciation and amortization (Note 2)
    
21,414
  
Pro forma estimate of taxable income from continuing operations
   $
12,559
  

Note 1: Represents the net adjustment to reverse the effect of rental revenue recognized on a straight line basis.
Note 2: Tax depreciation is based on the original cost allocated to the buildings, depreciated on a straight line basis over their respective tax lives.
 
 


THE LEXINGTON MASTER LIMITED PARTNERSHIP
Introduction to Unaduited Pro Forma Condensed Consolidated Financial Statements


The following unaudited pro forma condensed consolidated balance sheet as of March 31, 2007, reflects the financial position of The Lexington Master Limited Partnership (the “MLP”) as if the acquisition of a 100% interest in ten properties (the “Properties”) from Lexington Acquiport, LLC had occurred on March 31, 2007. The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2006 and the three months ended March 31, 2007, present the results of operations of the MLP as if the acquisition of the Properties had occurred on January 1, 2006.

These unaudited pro forma condensed consolidated financial statements should be read in connection with the financial statements of the MLP for the year ended December 31, 2006, included in the MLP’s Annual Report on Form 10-K .

These unaudited pro forma financial statements are not necessarily indicative of the excepted results of operations of the MLP for any future period. Differences could result from, among other considerations, future changes in the Trust’s portfolio of investments, changes in interest rates, changes in the capital structure of the MLP, changes in property level operating expenses and changes in property level revenues.
 
 
Unaudited Pro Forma Condensed Consolidated Balance Sheet  
        
 March  31, 2007  
        
(In thousands, except share and per share data)  
        
             
   
Historical
  
Properties
    
   
(A)
  
(B)
  
Pro Forma
Assets:
            
Real estate, at cost
$
1,500,233
$
271,038
$
1,771,271
Less: accumulated depreciation
  
481,072
  
12,403
  
493,475
   
1,019,161
  
258,635
  
1,277,796
Properties held for sale – discontinued operations
  
10,665
  
—
  
10,665
Intangible assets
  
41,462
  
63,709
  
105,171
Investment in and advances to non-consolidated entities
  
101,320
  
—
  
101,320
Cash and cash equivalents
  
37,207
  
111,492
  
148,699
Investment in marketable equity securities
  
20,822
  
—
  
20,822
Deferred expenses
  
18,828
  
1,790
  
20,618
Rent receivable, current and deferred
  
46,439
  
2,544
  
48,983
Notes receivable
  
6,447
  
—
  
6,447
Other assets, net
  
49,785
  
6,090
  
55,875
 
$
1,352,136
$
444,260
$
1,796,396
             
             
             
Liabilities and Shareholders’ Equity:
            
Liabilities:
            
Mortgages and notes payable
$
291,377
$
399,870
$
691,247
Related party note payable
  
50,609
  
—
  
50,609
Exchangeable notes payable
  
427,639
  
—
  
427,639
Embedded derivative financial instrument
  
28,350
  
—
  
28,350
Contracts rights payable
  
12,527
  
—
  
12,527
Liabilities – discontinued operations
  
203
  
—
  
203
Accounts payable and other liabilities
  
10,010
  
44
  
10,054
Accrued interest payable
  
6,324
  
502
  
6,826
Distributions payable
  
19,325
  
—
  
19,325
Prepaid rent
  
2,323
  
678
  
3,001
Deferred revenue
  
11,925
  
1,414
  
13,339
   
860,612
  
402,508
  
1,263,120
Minority interests
  
13,801
  
—
  
13,801
             
   
477,723
  
41,752
  
519,475
Partners’ capital
$
1,352,136
$
444,260
$
1,796,396
             
See accompanying noted to unaudited pro forma condensed consolidated financial statements
        
 
 
THE LEXINGTON MASTER LIMITED PARTNERSHIP     
    
Unaudited Pro Forma Condensed Consolidated Statement of Operations     
    
for the year ended December 31, 2006       
    
(In thousands, except share and per share data)       
    
                         
     

Historical  (AA)
  
Pro Forma Adjustments
of the Properties
  

Pro Forma as Adjusted
  
Revenues:
                      
 
Rental
  
$
190,436
  
$
32,474
(BB)
  
$
222,910
  
 
Advisory fees
  
248
    
—
      
248
  
 
Tenant reimbursements
  
—
    
4,837
(BB)
    
4,837
  
   
Total gross revenues
  
190,684
    
37,311
      
227,995
  
                         
Expense applicable to revenues:
                    
 
Depreciation and amortization
  
(37,095)
    
(15,311)
(CC)
    
(52,406)
  
 
Property operating
  
(9,514)
    
(6,878)
(BB)
    
(16,392)
  
General and administrative
  
(41,393)
    
—
      
(41,393)
  
Impairment charges
  
(1,440)
    
—
      
(1,440)
  
Non-operating income
  
14,539
    
—
      
14,539
  
Interest and amortization expense
  
(55,248)
    
(23,540)
(DD)
    
(78,788)
  
Debt satisfaction charge
  
(1,315)
    
—
      
(1,315)
  
                         
Income (loss) before provision for income taxes, minority interests, equity in earnings of non-consolidated entities, gains on sale of marketable equity securities and discontinued operations
59,218
    
(8,418)
      
50,800
  
Provision for income taxes
  
(2,276)
    
—
      
(2,276)
  
Minority interests
  
(16,451)
    
—
      
(16,451)
  
Equity in earnings of non-consolidated entities
  
3,451
    
—
      
3,451
  
Gains on marketable securities
  
1,650
    
—
      
1,650
  
Income (loss) from continuing operations
$
45,592
  
$
(8,418)
    
$
37,174
  
                         
Basic - Income from continuing operations
$
0.89
          
$
0.68
  
Diluted - Income  from contining operations
$
0.89
          
$
0.68
  
                         
Basic weighted average partnerhsip units outstanding
  
51,519,435
    
3,077,633
(EE)
    
54,597,068
  
Diluted weighted average partnership units outstanding
  
51,519,435
    
3,077,633
(EE)
    
54,597,068
  
                         
                         
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
        
 
 
THE LEXINTON MASTER LIMITED PARTNERSHIP      
    
Unaudited Pro Forma Condensed Consolidated Statement of Operations     
    
For the Three Months Ended March 31, 2007       
    
(In thousands, except share and per share data)       
    
                         
     
Historical  (AA)
  
Pro Forma Adjustments
of the Properties
  
Pro Forma as Adjusted
  
Revenues:
                      
 
Rental
  
$
45,348
  
$
8,119
(BB)
  
$
53,467
  
 
Tenant reimbursements
  
304
    
1,425
(BB)
    
1,729
  
   
Total gross revenues
  
45,652
    
9,544
      
55,196
  
                         
Expense applicable to revenues:
                    
 
Depreciation and amortization
  
(9,688)
    
(3,828)
(CC)
    
(13,516)
  
 
Property operating
  
(3,060)
    
(1,949)
(BB)
    
(5,009)
  
General and administrative
  
(4,230)
    
—
      
(4,230)
  
Non-operating income
  
4,673
    
—
      
4,673
  
Interest and amortization expense
  
(14,171)
    
(5,885)
(DD)
    
(20,056)
  
Debt  satisfaction
  
(2,434)
    
—
      
(2,434)
  
Change in fair value of embedded derivative
  
(5,325)
    
—
      
(5,325)
  
                   
Income before  provision for income taxes, minority interests, equity in earnings of non-consolidated entities,  gains on sale of marketable equity securities and discontinued operations
11,417
    
(2,118)
      
9,299
  
Provisions for income taxes
  
(232)
    
—
      
(232)
  
Minority interests
  
(4,710)
    
—
      
(4,710)
  
Equity in earnings of non-consolidated entities
  
2,029
    
—
      
2,029
  
Gain on sale of marketable equity securities
  
766
    
—
      
766
  
Income  from continuing operations
$
9,270
  
$
(2,118)
    
$
7,152
  
                         
Basic - Income from continuing operations
$
0.18
          
$
0.13
  
Diluted - Income from contining operations
$
0.18
          
$
0.13
  
                         
Basic weighted average partnership units outstanding
  
51,533,504
    
2,051,755
      
53,585,259
  
Diluted weighted average partnership units outstanding
  
51,533,504
    
2,051,755
      
53,585,259
  
                         
                         
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
        





THE LEXINGTON MASTER LIMITED PARTNERSHIP
Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited)
($ 000’s)

Adjustments to Pro Forma Condensed Consolidated Balance Sheet

The adjustments to the pro forma condensed consolidated balance sheet as of March 31, 2007 are as follows:

(A)  
Reflects the MLP’s historical condensed consolidated balance sheet as of March 31, 2007.
 
(B)  
Reflects the pro forma acquisition of the Properties as follows:
 

         
Asset acquired:
    
 
Real estate
$
271,038
 
Accumulated depreciation
  
(12,403)
 
Intangible assets
  
63,709
 
Deferred expenses, net
  
665
 
Cash acquired
  
5,449
 
Rent receivable, current and deferred
  
2,544
 
Other Assets
  
6,090
         
Less liabilities:
    
 
Mortgages assumed
$
174,870
 
Accounts payable and other liabilities
  
44
 
Accrued interest payable
  
502
 
Prepaid rent
  
678
 
Deferred revenue
  
1,414
 
Net asset acquired
  
159,584
 
Partnership units issued
  
(41,752)
 
Cash paid
  
117,832

Change in cash and cash equivalents
       
New borrowings
  
$
225,000
Costs incurred
    
(1,125)
Cash acquired
    
5,449
Cash paid to acquired interests
    
 (117,832)
   
$
111,492

Adjustments to Pro Forma Condensed Consolidated Statement of Operations
 
The adjustments to the pro forma condensed consolidated statement of operations for the year ended December 31, 2006 are as follows:
 
(AA)  
Reflects the MLP’s historical condensed consolidated statement of operations for the year ended December 31, 2006 and three months ended March 31, 2007.
  
(BB)   
Reflects the pro forma acquisition of the Properties as follows:
                
  
Increase in rental revenues reflects (i) the recalculation of straight-line rents and (ii) the amortization of above and below market leases on a straight-line basis over the remaining term of in-place leases.

  
Increase in property operating expenses and tenant reimbursement income reflects operating activities of the Properties.
 
(CC)  
Depreciation has been adjusted to reflect the Properties total acquisition cost depreciated on a straight line basis over the estimated economic useful life of the real estate. Amortization includes the pro forma effect of amortization of intangibles on a straight-line basis over the remaining term of the respective leases.
 
(DD)  
The pro forma adjustment to interest expense reflects additional interest expense as a result of mortgages assumed  in the transaction and the $225,000 term loan obtained to partially fund the acquisitions.
 
(EE)  
Represents the units issued to acquire the Properties on a weighted average basis.
 




 
THE LEXINGTON MASTER LIMITED PARTNERSHIP
 
Estimated Twelve Month Pro Forma Statement of Taxable Operating Results
 
For the year ended December 31, 2006
 
(Unaudited)
 
(Amounts in thousands)


The following unaudited statement is a pro forma estimate for a twelve month period of taxable operating results of the Properties. This statement does not purport to forecast actual taxable operating results for any period in the future.

This statement should be read in conjunction with the unaudited pro forma financial statements of the MLP (contained elsewhere in this Form 8-K).

     
December 31, 2006
       
Loss from continuing operations
  
$
(8,418)
Estimated net adjustment for tax basis income recognition (Note 1)
    
2,364
Estimated GAAP depreciation and amortization in excess of tax
depreciation and amortization (Note 2)
8,358
Pro forma estimate of taxable income from continuing operations
  
$
2,304

Note 1: Represents the net adjustment to reverse the effect of rental revenue recognized on a straight line basis.
Note 2: Tax depreciation is based on the original cost allocated to the buildings, depreciated on a straight line basis over their respective tax lives.