Greetings and welcome to the Lexington Realty Trust Second Quarter Earnings Conference Call. At this time all participants are in listen-only mode. (Operator instructions) It is now my pleasure to introduce your host, Lisa Soares. Thank you. You may begin.

Thanks, Brian. Hello and welcome to the Lexington Realty Trust second quarter conference call. The earnings press release was distributed over the wire this morning and the release and supplemental disclosure package will be furnished on a Form 8-K. In the press release in supplemental disclosure package, Lexington has reconciled all non-GAAP financial measure to the most directly comparable GAAP measure in accordance with Regulation G requirements. If you do not receive a copy, these documents are available on Lexington's Web site at www.lxp.com in the Investor Relations section. Additionally, we are hosting a live webcast of today's call which you can access in the same section. At this time, management would like me to inform you that certain statements made during this conference call which are not historical may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although Lexington believes that expectations reflected in any forward-looking statements are based on reasonable assumptions, Lexington can give no assurance that its expectations will be attained. Factors and risks that could cause actual results to differ materially from those expressed or implied by forward-looking statements are detailed in today's press release and from time to time in Lexington's filings with the SEC. Lexington does not undertake a duty to update any forward-looking statement. With us today from management are Will Eglin, CEO and President, Patrick Carroll, Chief Financial Officer, Natasha Roberts, Executive Vice President and Director of Real Estate Operations, and other members of management. I'd like to turn the call over to Will for his opening remarks.

Thanks, Lisa, and welcome to all of you. Thank you for listening in to our second quarter conference call. We are pleased to report that our results for the second quarter of 2008 showed good progress on a number of our key initiatives during a time of continuing uncertainty in the capital markets. For the quarter, our reported funds from operations were $0.73 per share. However, we believe it is more appropriate to focus on the adjusted funds from operations per share of $0.40, which excludes about $0.33 per diluted share of one-time items. These items are detailed in the earnings release, and Pat Carroll, our CFO will walk through them in detail in his remarks. From an investment standpoint, it was a quiet quarter, with activity limited to capitalizing on conditions in the debt markets by repurchasing $121 million face value of our senior securities at a 28.8% discount. That being said, we see some good opportunities in our acquisition pipeline compared to last quarter and believe that attractive investment opportunities will continue to arise over the balance of the year. We hope to capitalize on these opportunities by selectively growing our portfolio and leveraging our capital through joint venture, including our existing co-investment program with Inland and two other joint venture programs that we are working on. Last month we completed the sale leaseback of the newly constructed headquarters of Applebee's restaurants at roughly a 9% cap rate on a 15-year lease with annual 1.5% escalation. And we have two other transactions in our pipeline totaling about $67 million at cap rate north of 8.5%, each with escalations of 2% to 3% per year. But we can give no assurance that we will complete either of these transactions. We continue to improve the company's financial flexibility, as we…

Thanks Will. The results of operations in the second quarter of '08 include the impact of the acquisition of our four co-investment programs in the second quarter of '07 and the formation of our co-investment program with Inland in the fourth quarter of '07. These are significant drivers of fluctuations between comparable periods. During the quarter, Lexington had gross revenues of $128.7 million, comprised primarily of base primes and tenant reimbursements. The increase in rental revenue in the second quarter of '08 over second quarter of '07 in addition to the acquisition of our former co-investment programs, the establishing of Inland's co-investment program, relates to the receipt of $28.7 million in lease termination payments, offset by $4.1 million accelerated amortization of above and below market leases and deferred rent receivables in the second quarter of '08 relating to two terminated leases. Reduction in advisory fees relates to incentive fees earned in the second quarter of '07, relating to the acquisition of two co-investment programs. Non-operating income increased $16.3 million in the second quarter of '08, compared with the second quarter of '07, relating primarily to the receipt of land in connection with our lease termination in Baltimore, Maryland. Debt satisfaction gains of $27 million related to satisfying a portion of our exchangeable notes and our trust-preferred securities at a discount to the original principal. Gains on sales of affiliates of $8.6 million is a gain we've recognized on the sale of an asset to our newly formed Inland co-investment program. Equity in earnings of loss of non-consolidated entities was a loss of $27.2 million in the second quarter of '08, which relates primarily to our share of the impairment charge reported by Concord. The income of $38.4 million in the second quarter of '07 related primarily to the gain realized…

Thanks, Pat. As of June 30, 2008, after selling five properties at $46.1 million during the second quarter, and including the 47 properties that are held in joint ventures, our portfolio totaled approximately 49 million square feet. 37 leases were either executed or extended in the second quarter. This led to an occupancy level of approximately 95% at quarter end, and tenant interest in renewing expiring leases remains solid and is largely unchanged from last quarter. We expect to remain at or above our current occupancy level through year-end. Let me now provide some additional detail on the 37 leases we signed in the second quarter, representing approximately 1.5 million square feet. Out of the 37 leases, 14 were new and accounted for about 450,000 square feet. 23 were renewals or extensions which accounted for about 1.1 million square feet. We lost approximately 8,000 square feet of occupancy due to lease expirations during the quarter, and 25,000 square feet of occupancy due to the termination of the Citigroup lease for Irvine, California. Subsequent to the close of the quarter on June 30, 2008, we executed four leases totaling approximately 365,000 square feet and are currently negotiating ten new leases and three lease extensions totaling approximately 1.1 million square feet. We are currently working on expansion totaling approximately 145,000 square feet at three locations, and we have one other potential expansion project in discussion, estimated at 60,000 square feet. During the quarter, we terminated our lease with Citigroup in the Associates First Building in Irvine, California. We have a 64% limited partnership interest in the building. The Citigroup lease was to expire September 8, 2008. This 136,000 square foot office and data center was mostly subleased, and we've been able to negotiate direct deals in approximately 50% of the building. In…

Thanks, Natasha. Overall, we believe Lexington is well-positioned strategically and from a capital perspective. Leasing continues to be our greatest area of focus, and we are making good progress each quarter. We believe that our balance sheet is solid with acceptable leverage, limited near-term refinancing exposure, and sufficient liquidity, and we also have a strong financial capacity to act on investment opportunities which consists of our cash balances, our uncapped $200 million credit facility, our joint venture equity commitment from Inland, sales in our retail property portfolio, and we are amortizing about $170 million of mortgage debt over the next four to five years, which will help us deleverage the balance sheet. Over the balance of the year, we expect to become a more active acquirer of properties mainly through joint ventures. We believe our joint venture capital and our own financial resources puts us in a strong position relative to our competition. We have an established joint venture with Inland and are optimistic that we can begin another program later this year with another institutional investor. Our current expectation on guidance is for funds from operations per share to be in the range of $1.56 to $1.64 in 2008, and this is unchanged from last quarter and from the beginning of the year when we gave our guidance. This range does not include items that should be considered nonrecurring, such as lease termination revenue and gains on discharge of indebtedness as detailed in today's press release. Operator, that concludes our formal remarks, and we'll turn it over to you to conduct the question-and-answer session.

(Operator instructions) Our first question comes from the line of John Guinee with Stifel Nicolaus. John Guinee – Stifel Nicolaus: John Guinee here. Pat, just to clarify, looks to me like you've got $28 million of lease termination offset by $4.1 million of accelerated amortization so that gives you a net of $24.6 million. What's the rest of difference to get to $34.9 million?

John, you're cutting in and out. I can't hear you. John Guinee – Stifel Nicolaus: Your lease termination and amortization of above market leases shows up as $34.9 million. But then on the previous page it looks to us as if its $28.7 million with a $4.1 million offset, for $24.6 million, which leaves about a $10 million gap.

That was deferred rent receivables. John Guinee – Stifel Nicolaus: On your equity and earnings from joint venture, you went from 5.5 positive in the first quarter to 27.2 negative in the second quarter. 16.9 of that negative was Concord. What was the rest of the $32.2 million swing?

The second quarter impairment charge was – our share of it was $27.3 million. That's our share of Concord and a small write-off on the Lex-Win investment. And the NLS joint venture due to depreciation generate losses at that level. We have to pick up our share of those losses. John Guinee – Stifel Nicolaus: So what's left in Lex-Win?

Lex-Win, they sold their investment in Wells and it's winding down. There'll be nothing left in Lex-Win by this quarter, third quarter. John Guinee – Stifel Nicolaus: Where does Lex-Win show up on your balance sheet?

Investment and joint ventures. Investments and non-consolidated entities. John Guinee – Stifel Nicolaus: So the $227 million investment in non-consolidated entities?

It's in there. John Guinee – Stifel Nicolaus: It shows here on Page 32 – it shows investment in the debt platform of $143 million and investment in net leased partnerships of $83 [ph] million.

83. John Guinee – Stifel Nicolaus: In one of those two numbers?

It's like $9 million of the $80 million. John Guinee – Stifel Nicolaus: And then where does the Inland JV show up?

It shows up in the $80 million also. John Guinee – Stifel Nicolaus: Looks like asset sales – I just looked at a few of these Carteret, New Jersey, Garwood, Walnut Creek. Carteret was a basis of $20.5 million and sold it for $14.3 million basis but well before depreciation. Garwood, $12 million…

John, you're breaking in and out. We can't hear you. John Guinee – Stifel Nicolaus: Three of the five asset sales I could look up. And Carteret at a $20.5 million acquisition cost that you sold for $14.3 million, Garwood at a $12 million acquisition cost that you sold for $4.8 million, and Walnut Creek at an $18 million acquisition cost at you sold at $15 million. Is that an accurate way to look at them?

Assuming that you've checked the reported sale prices against the basis numbers, I don't have those in front of me. But the numbers that we sold them at are absolutely right, yes. John Guinee – Stifel Nicolaus: Going back to the MLP fund, what's your preferred equity account in there now? As of 3/31, it was about $141 million. What's your preferred equity now?

It is a few million dollars more because of the last funding. I don't have my 10-Q in front of me, but it went up a couple of million dollars. John Guinee – Stifel Nicolaus: It looks like you did something with your preferred C convertible.

We repurchased 500 – we redeemed 501,000 shares of preferred C through the issuance of some common shares and some cash, and it generated about a 5.7 – we retired it at about $5.7 million less than what we sold it at. The preferred equity, John, as of the year end is at $162.5 million. John Guinee – Stifel Nicolaus: Preferred C, you're giving your FFO number for the second quarter and guidance for the year. That gain is about $0.05, $0.055 a share.

That gain's not in our FFO, John. John Guinee – Stifel Nicolaus: Back out your preferred C.

Preferred C is not in our FFO. It's treated as it's converted, so it's not in our FFO numbers at all. John Guinee – Stifel Nicolaus: Looking at your GAAP rental number of $118 million in the second quarter, help us what's a good number for the rest of the year for your GAAP rental?

Go to the Page 41 of the supplement and you have the GAAP rental for the remainder of '08. John Guinee – Stifel Nicolaus: Got you.

Anything else? John Guinee – Stifel Nicolaus: How about straight line rent? It sounds like you had reverse straight line rent in the second quarter?

We had cash in excess of GAAP of $9.5 million. The streamline rents were pretty much flat. It was mostly the difference between above and below market leases, but we collected $9.5 million more in cash than we booked as revenue. John Guinee – Stifel Nicolaus: Right. And you're expecting those reverse are to go to regular straight line rents for the rest of the year?

Yes. If you look on the last page of the supplement, you'll see that. Yes. John Guinee – Stifel Nicolaus: CapEx in TI's and LC's for the second quarter were?

As I said on the call, the leasing was $1.1 million, and the CapEx was $6.4 million. John Guinee – Stifel Nicolaus: That last question on 100 Light Street, you came up with a value of about $70 million. Is that as of today, or does that include the garage at its completed state?

No, that (inaudible) spending any more money as of today. John Guinee – Stifel Nicolaus: So, safe to assume – okay. As is where is today. All right. Thanks a lot.

(Operator instructions) Our next question comes from the line of Sabina Bhatia with Basso Capital. Sabina Bhatia – Basso Capital: Hi, this is Sabina Bhatia from Basso Capital. A question about the secure term loan you have at KeyBanc. You have $202.419 million outstanding which is due 06/2009. Is that correct?

Yes, that's correct. We do have a six-month extension option on that term loan, so we can quickly– Sabina Bhatia – Basso Capital: And is that your option?

Yes. Sabina Bhatia – Basso Capital: So there are no restrictions on that. But otherwise, the $202 million is due 06/09, right?

That's right. Sabina Bhatia – Basso Capital: And your credit facility, does that also have a one-year extension option?

We've exercised that one-year extension option so that matures in June. But we don't presently have any outstanding under the credit line. Sabina Bhatia – Basso Capital: Any plans as far as the secure line is concerned? Are you guys going to try and renegotiate it? Anything on that end?

It's something that we'll start working on. As Pat mentioned, that loan is supported by a collateral pool with EBITDA of about $49 million. Sabina Bhatia – Basso Capital: Yes.

We think we have a lot of collateral there, and we have other collateral that Pat went through as well that facilitate any refinancing. So we think it's a quite thoroughly collateralized loan. We're always interested in refinancing and extending maturities whenever we can especially in the times that we're in right now. But we don't necessarily think that right now is the best time to go out to the market to try to refinance that. Sabina Bhatia – Basso Capital: What sort of rates are you seeing right now in the market? I'm sure you have some kind of color from banks, so you kind of feedback from banks?

Well, I will say that that loan, we timed the market very well and locked in to a LIBOR plus 60 basis point spread. If I were guessing the term loan market spread, they're probably wide and closer to like L plus 200 or so. In the mortgage market, we're sort of modeling expected ten year fixed rates of about 6.5% right now. Yes, 6.5% to 7%, which is certainly a big change compared to a year, year and a half ago from a spread standpoint. Sabina Bhatia – Basso Capital: Of course. Yes. I'll just take a look out – keep a look out for this one. Okay. Thanks a lot.

Our next question comes from the line of Anthony Paolone with JP Morgan Chase. Anthony Paolone – JP Morgan Chase: Hi, thanks. Good morning. Will, can you talk a little bit about just cap rates? And a few quarters ago it seemed like you thought they would still have room to move up, and now it sounds like maybe you're ready to make some acquisitions. So can you give a sense as to where you're at the moment that makes sense here?

Yes. There is a handful of situations. One that we moved on quickly, and a couple of others. Everything that sort of interest to us is in the 8.5% to 9% area, and 18 months ago that was probably at least 100 basis points lower, probably 150. So we expected the cap rates would move up, and there are a handful of transactions that we think are worth doing. There's not a whole lot of volume of opportunities on the market. But we do think that the market is actually becoming quite inefficient. And if there are opportunities for us to sell assets like we have in second quarter of roughly 7.5% cap, and make a spread on recycling the capital, we think we're in that kind of market environment now. Anthony Paolone – JP Morgan Chase: And the deals that you had 8.5% to 9%, these will be financed I think you mentioned in a prior question, like in the 6.5% to 7% range? Is that where mortgage financing is for this type of stuff?

That's correct. Anthony Paolone – JP Morgan Chase: And what kind of LTV do you think you can get on that?

60 is what we're modeling currently. Anthony Paolone – JP Morgan Chase: All right. And then on Concord, in terms of Inland's investment there, is it fair to assume with where you're at, so they're just another equity investor in the mix, or is it in a different part of the capital stock?

No. On operating cash flow, they have a priority above us and Winthrop, but on a return to capital, we have the priority over them. And probably get down to the $100 million threshold of our investment. Anthony Paolone – JP Morgan Chase: And your $100 million, is that based on originally contributed capital or–?

Yes. Yes. Anthony Paolone – JP Morgan Chase: And are there any – can you give us a bit of a picture as to within Concord what might – did it have any lines of credit, covenants, networks, requirements, anything that can cause, like a liquidity issue in the near-term?

I mean, they do have warehouse facilities. There are covenants in each one of them. They are currently in compliance with the covenants and looking at the pro forma before the Inland deal, we got comfortable that there would be continuing compliance during the term. Anthony Paolone – JP Morgan Chase: And once you get to $100 million, say, what happens then? Do you see yourselves wanting to still have the $100 million in there, or would you look to further reduce that as well in some way?

I think when we get to that moment, we'll consider our options, and we're hopeful that Concord has continued to be a successful platform for this type of investing. We would have an interest perhaps in selling our position to another investor either in whole or in part at that time. So we'll cross that bridge when we come to it based upon market conditions at the time. Anthony Paolone – JP Morgan Chase: And then, Pat, on Northwest pipeline – well, I guess first question – on Northwest pipeline, I think it's an '09 expiration. What is the prospect of them renewing versus leaving that space?

Northwest exercised their renewal option. And that was in the 365,000 square feet that we've extended this quarter. Anthony Paolone – JP Morgan Chase: All right. And their renewal option in the dropdown there, will that reduce rent flow through FFO? I think that was probably even before Newkirk so the accounting might be different?

No. I mean, it'll be less rent, Tony, but the debt will be burned off, so the cash flow is really not a significant change. Anthony Paolone – JP Morgan Chase: All right, that's all I have. Thanks.

(Operator instructions) Our next question comes from the line of Bob Hodakowski with Beacon Hill Advisors. Bob Hodakowski – Beacon Hill Advisors: Yes. Question is with regard to your recent common equity offering, could you give us your thinking behind a capital raise at this point in time, please?

Yes. We felt like we had a unique opportunity to retire big chunk of our debt at a significant discount. We were not happy with the price that we sold equity at, but we had an opportunity to deleverage the balance sheet significantly and earn an unleveraged return of about 11%, which is far above what we can earn when we buy real estate. So we felt like it was a unique opportunity to capitalize on the trouble in the debt market versus being penalized or suffering from it. And we do think that if the company can deleverage and earn a high rate of return – most times when companies deleverage it's dilutive, and in this case it wasn't. So that was a unique situation, and we did sell a small amount of equity to take advantage of that. And that also allowed us to preserve all the cash in our balance sheet to maintain our financial flexibility. Bob Hodakowski – Beacon Hill Advisors: Thank you.

We have a follow-up question from the line of John Guinee with Stifel Nicolaus. John Guinee – Stifel Nicolaus: Yes, one more question. Of the $157 million of cash and $20 million of restricted cash, how much of that pretty much has to go into acquisitions to avoid any taxable gains? And then how much is available for TI's, commissions, et cetera?

It's just a restricted cash account, John.

The restricted cash is what's sitting in the 1031 account, like $19 million. That's the one that we're obligated to buy property for to defer the tax gains. John Guinee – Stifel Nicolaus: Where would you expect the $157 million to go between now and the end of the year? Share buyback, new acquisitions–

No, not a share buyback. We bought back a lot of stock last year and de-equitized the balance sheet enough for this environment, John. Yes, we'll look opportunistically at other areas of the capital stack to see if there's more opportunity there. There's a couple of acquisitions that we're working on, obviously, and we have some CapEx and leasing costs coming up. So, if I were to hazard a guess right now without thinking that investment activity is going to be too heavy, maybe that number works down to, say, $100 million at the end of the year. John Guinee – Stifel Nicolaus: It seems a little counterintuitive to be not happy with the price you got when you raised common and then still have $157 million of cash later.

Well, we weren't – yes, we weren't particularly happy with the issue price, but we were very, very happy with the price that we bought the debt at, and that was really the trade. So overall, like I said, we earned a high rate of return; we got to wipe out $67 million of debt by writing a check for $42 million. So that was one we quickly wanted to capitalize on. John Guinee – Stifel Nicolaus: But why write a check for $42 million? Why issue 40-odd million of common at a price you don't like when you've got $157 million of cash on your balance sheet?

Well, we still have the same cash that we had before, and I guess the question about looking at the future, John, is it can always get worse and it can always get better. If our share price were higher down the road, that would be fantastic, but that doesn't necessarily mean that the same opportunity would be there to retire the liability. So that was our thinking. I think there's a value to maintaining financial flexibility right now. John Guinee – Stifel Nicolaus: Thanks.

Seeing as there are no further questions, I'd like to turn the call back to management for any concluding remarks.

Thank you all again for joining us this morning. We're very excited about our prospects for 2008, and as always, we appreciate your participation and support. If you would like to receive our quarterly supplemental package, please contact Lisa Soares or you can find additional information on our company on our Web site, www.lxp.com. And in addition, as always, you may contact me or any of the other members of senior management with any questions that you may have. Thank you, and good day, everyone.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation.