Good morning, and welcome to the Lexington Realty Trust First Quarter 2012 Earnings Conference Call. [Operator Instructions] Today’s conference is being recorded. It is now my pleasure to turn the conference over to your host, Gabby Reyes, Investor Relations for Lexington Realty Trust. Please go ahead, ma’am.

Hello, and welcome to the Lexington Reality Trust first 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 and supplemental disclosure package, Lexington has reconciled all historical non-GAAP financial measures to the most directly comparable GAAP measure in accordance with the Reg G requirements. If you did not receive a copy, these documents are available on Lexington’s website 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, we would like 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 expectations reflected in any forward-looking statements are based on reasonable assumptions, Lexington can give no assurance that its expectations will be obtained. 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 statements. Joining me today from management are Will Eglin, Chief Executive Officer; Rick Rouse, Chief Investment Officer; Patrick Carroll, Chief Financial Officer; and Joseph Bonventre, Executive Vice President and other members of management.

Thanks, Gabby, and welcome to everyone. Thank you for joining the call today. As usual, I’d like to begin by discussing our operating results and accomplishments for the first quarter. For the first quarter, our company funds from operations were $0.24 per share and we executed well in all areas. The quarter was characterized by continued strong leasing activity of approximately 3 million square feet of new and renewal leases signed leading to an overall portfolio occupancy rate of approximately 97.4% at quarter-end, leaving just approximately 1 million square feet subject to expiring leases this year. We made further progress on the investment front in the quarter with 2 build-to-suit projects completed and closed totaling $17.7 million and we believe our pipeline has similar opportunities continues to be robust. We also had further success on the capital-recycling front with $9.6 million of non-core dispositions and in addition, we’ve reduced our consolidated leverage by $13.7 million including the repurchase of Preferred C Shares. And finally, we began taking advantage of significant refinancing opportunities. In the first quarter of 2012, we closed a 7-year term loan and swapped the LIBOR rate on $161 million of LIBOR borrowings into a fixed LIBOR rate of 1.58% for 7 years, so that the interest rate today has picked to 3.83%. we retired $177.3 million of debt, which had an average interest rate of 5.44% and extended our debt maturities. We plan on drawing down the balance of the term loan facility over the course of this year and used the proceeds to retire on mortgages as they mature. Turning to leasing. As of March 31 2012, we had 2 million square feet of space subject to leases that expire in 2012 or which are currently vacant. Significant accomplishments in the first quarter of 2012 included…

Thanks, Will. During the quarter, Lexington had gross revenues of $82.7 million comprised primarily of lease rents and tenant reimbursements. Under GAAP, we're required to recognize revenue on a straight-line basis over the non-cancelable lease term plus any periods covered by a bargain renewal option. In addition, the amortization of above and below market leases are included directly rental revenue. In the quarter, cash rents were in excess of GAAP rent by about $8.7 million including the effect of above and below market leases. We have also included on page 42 of the supplement, our estimates of both cash and GAAP rents for the remainder of 2012 through 2016, the leases in place at March 31, 2012. Also on page 42, we disclosed same-store revenue NOI data. In the first quarter of 2012, we recorded $2.6 million in the non-cash impairment charge and a $1.7 million in debt satisfaction gains relating to properties disposed of. On page 39 of the supplement, we have disclosed selected income statement data for our consolidated but non wholly-owned properties and our joint venture investments. we also have included non-cash interest charges recognized in the quarter ended March 31, 2012 on page 40 of the supplement. Interest expense decreased $2.2 million due to the deleveraging of the balance sheet and refinancing at lower rates. This has resulted in interest coverage of approximately 3x, fixed charge coverage of approximately 1.8x, and debt-to-EBITDA of approximately 6x. Equity in earnings and joint ventures increased $3.4 million primarily due to $700,000 distribution from Concord in the quarter, an increase of about $1.4 million was relating to our equity investment in NLS, which should in the joint venture and the rest related to an impairment charge incurred in the first quarter of 2011 on an investment acquired in the Newkirk…

Thanks, Pat. In summary, we’re off to a very good start this year. We’ve continued to execute on leasing opportunities in order to maintain high levels of occupancy, realized values on non-core properties, capitalized on substantial refinancing opportunities that we have, continued to steadily work down our leverage and invest in build-to-suit properties. We believe Lexington continues to offer compelling value and total returns potential for investors based on our current dividend yield. Our conservative payout ratio, the refinancing opportunities we have to further lower our debt service, acquisition opportunities that improve our cash flow and upgrade the quality of our portfolio and declining levels of debt. Given all this, we would expect our multiple to expand and our value to grow over time. As previously discussed, we believe the company’s current debt profile provides us with an opportunity to both reduce our leverage and refinance on advantageous terms. Over the next few years, our target based on current assumptions is to reduce our current secured debt by roughly $200 million through dispositions in regular principal amortization. And from the standpoint of refinancing through 2015, Lexington has roughly $819.4 million of balloon mortgage debt maturing, all of which is non-recourse at a weighted average interest rate of 5.6% with current annual payments of $72.9 million including principal amortization. Having just locked into fixed rate financing at less than 4% for 7-years, it is worth observing that refinancing our maturities at that rate through 2015 would reduce our annual debt service obligations by about $39.6 million or $0.22 per share and that’s a substantial sum for a company with the current annual dividend of $0.50 per share. We continue to be very excited about our growth opportunities in the build-to-suit area. We currently have $162.5 million projects under contract of which we have invested $43.6 million and we have a promising pipeline of opportunities that we are working on. We believe the addition of newly constructed properties with long-term leases will have a desirable impact on our portfolio in 2012 and beyond as we extend our weighted-average lease term and build more durable cash flow. And due to the progress we have made today, we increased our guidance for 2012 Company Funds from Operations by $0.02 per share to a range of $0.92 to $0.95 per share. Our guidance reflects comments we have made on today’s call and it’s diluted share count of roughly 180 million, which includes 16.4 million shares underlying our 6% convertible guaranteed notes. Operator, I have no further comments at this time. So we are ready for you to conduct the question-and-answer portion of the call.

[Operator Instructions] We’ll take our first question from Sheila McGrath from Keefe, Bruyette & Woods.

Zooming in on leasing a little bit, we noticed that your leasing spreads on renewal, while still negative, have been improving, any sense when that metric might turn positive?

Yes, we still have a little bit of a negative mark-to-market over the balance of this year. But our projection for next year in the aggregate is that things will turn positive. So we’ve got fairly good visibility on that at this point.

So probably for the balance of 2012 that will remain negative and then next year positive?

Yes. And in the aggregate 2013 combined with 2012, we think should be marginally positive overall. In other words, we would be up more next year than we would be down over the balance of this year.

Got it. And then Will, a little more on discussion on Inland. Could you talk about the reasons behind the delay in closing? Also you’ve mentioned that you’re getting 2 assets, just wondering a little bit more detail on that. And finally, that transaction does happen there will be a gain, I’m just wondering if that would prompt a special dividend?

Yes. Sure. Moving the closing day back further into the year accompanies a few things, I think from our partner standpoint, it gives them a little bit longer period of time to market the portfolio for sale, which we think it was important from the standpoint of being able to manage maximize value and also provide from the orderly closing, given that mortgages on those properties have to be assumed by the buyer. From our standpoint, that investment generates roughly $18 million a year funds from operations. So keeping our capital invested further into the year, is one of the reasons why we raised guidance today, and we’re obviously very interested in having some time to read to find options to reallocating that capital. We are expecting to get 2 properties distributed to us, which has some tax benefits to us in terms of where our basis in those buildings are. And we will have a fairly sizable gain on the transaction, but we have losses in the Concord entity that we can use to offset the gain. So we don’t see any need for special distribution.

We’ll take the next question from Anthony Paolone from JPMorgan.

Will, in agreeing to push back the NOS monetization to you, in my understanding what you guys had put rights that kind of put rights that kind of put you guys in the driver seat decent amount, do you give up any of those or if you really want, again this things starts to push you out even further, can you kind of say, no we just we want to do this there and kind of inject yourself into this or how is that work?

It will come to an end October 1, Tony. So we don’t think it’s going to slide any further than that.

Okay. And outside of that, what does the disposition pipeline look like?

Well, the big one obviously is Hughes Way that’s under contract. And after that we’re working on the retail portfolio fairly actively and we have a handful of other fairly modest size sales honestly. So our energy is going to be focused really on the sale of Net Lease Strategic Assets Fund in the most part. So there will be some -- maybe there will be $30 million to $40 million of disposition activity over the balance of the year after Hughes Way, but it will be fairly modest compared to last year.

Okay. And then any thoughts on calling to your Preferred Ds?

Not at this time. We thought calling the Bs which had coupon of roughly 50 basis points higher would be a good opportunity for us and would be with using the loan proceeds from Transamerica Tower primarily, essentially it’s a leverage neutral transaction that should free up over $2.5 million of cash flow from that trade. But right now we would plan to use the liquidity coming out of Net Lease Strategic Assets Fund primarily to fund the acquisition pipeline. And at this time, we don’t think that we could be an issuer for preferred stock of the coupon lower than what is the Series D, so it might be something we revisit next year, but wouldn’t be in our pipeline for this year.

Okay. On the build-to-suit pipeline beyond what’s announced you said you still have a pretty good one there, can you put some numbers round that, and also how much can you step on the gas if you wanted to do more of those like what the deal flow look like?

I would say deal flow is continues to get stronger every quarter, when we talk about deals in our pipeline that we’re optimistic about, we’re truly optimistic about those, those are transactions that we have very good visibility on and fully expect to turn into contract, and there is many other transactions that we’re working on and we look at and choose not to participate in, and so right now we are very confident that it’s a $200 million a year business, and hopeful it will continue to improve. So I would say it’s deal flow is a little bit better than it was last quarter, and we have with the liquidity we have coming in from NLS et cetera. We’ve got the ability to finance about $300 million of deals without having to raise any external capital.

Okay. And then last question, I know it is small, but the charter school investments just would like to get the rationale for that?

It’s a few things, every once in a while; we do investment in non-traditional asset. We want to be mindful of being able to provide capital to builders. In the case of the charter school, we also think that could potentially work well for EB5 financing, so we could bring an expensive offshore capital to bear to investments like that. It could be a nice accretive investment opportunity for us. In that case, we are choosing to structure of the investment as the first mortgage, so our investment has about $2.7 million of equity behind it, so we think it’s secure, and it’s a 17 year lease, where our position, there's about 9.2% dead yield to us in year one, so it’s viewed as a good investment and an opportunity to potentially make it very successful be a access in EB5 capital.

The EB5 capital would take you guys out, or would you stay in it?

It would essentially take us out, Tony, and we would obviously there would be a spread between the rates that we are earning and the rates that we would be paying on the EB5.

Okay, so maybe that should take you out of some premium.

Yes, in essence it would be fee-based to us going forward.

And the next question comes from John Guinee from Stifel.

John Guinee here. I would just ask sort of the basic question of you raise the guidance to $0.94 at the midpoint, you had a very clean $0.24 for the first quarter, so that implies a $0.23 to $0.24 run rate for quarters 2, 3 and 4 of 2012. At the same time your occupancy is going up, you got a positive spread investing to the tune of $150 million or $200 million plus your debt costs are coming down, that all seems to apply an increase in FFO on a quarterly run rate. So what’s the offset that we are missing on that causes your FFO run rate actually go down slightly between now and the end of the year.

Well, just a couple of things John. We still have some negative leasing spreads over the balance of the year, sustaining 97.4% occupancy could potentially be difficult over the balance of the year, and the build-to-suit pipeline is very, very good and we’re making very good investments there, but until the transactions are finished, they actually don’t generate return. So that’s it, but having said that, we do aspire to revisit the upper end of our guidance as the year progress.

Have you release 2013 guidance yet?

We have not.

And the next question comes from Todd Stender from Wells Fargo Securities.

Can you release any information with the loan potentially Transamerica tower, may be just loan to value and kind of the cap rate the banks are looking at?

Yes, we view that as roughly a 50% loan to value financing and we are very pleased to get a 11 year financing on the asset. That means if we revisit selling the asset in 2 or 3 years, we still have 8 or 9 years of very attractively priced debt, that the new buyer could assume.

And timing of that, because that the expected call it the next 6 weeks?

Yes, we think it should be closed in second quarter.

Okay, thanks and just based on you’ve done several build-to-suit over the last few years, what do you find changing in the agreements I guess since you’ve first started, how is the capital availability for developers right now?

I don’t think -- it hasn’t changed that much. I mean, we are still fielding many, many unbalanced phone calls. In many cases there might be 4 or 5 builders competing for a project and we’re backing 3 or 4 of them. So we feel like this is a very good opportunity for us that’s driven the difficulty of a range in construction financing in many cases. So I think our deal flow is probably stronger than it was a year ago, but we haven’t felt like there has been a whole lot of new competition that’s coming to our space.

And just finally can we get some more details on the tenant profile, the industrial building you purchased in Missouri City, the credit profile on a square footage of the building.

The credit profile was Balkan which is a BB rated company. And there are improvements on the property, but the main asset there is that it’s a 152 acres, which over time we think will be really valuable for us.

Just for the opportunity for additional uses on that?

Ultimately, but Balkan controls the site via their renewals for 50 years.

Okay, how big is the facility?

152 acres.

[Operator Instructions] And we’ll move next to Bill Siegel [ph] from Development Associates Incorporated.

John Guinee -- your answer to John Guinee helped on FFO unless the rest of the year is just 2 short ones. You mentioned something about the Russell 500 and you talked about the Concord disposition, can you elaborate on that?

It’s actually the Russell II, Russell they reconstitute their indices every year, it happens in May of this year, one of the rules at Russell instituted any company that generate UBTI will no longer be included in their indices. So…

Disposition you can get back in that or?

Well with the disposition we’re no longer exposed to UBTI, but we’ve done it before the May 31 deadline.

Right. The charter school investment and I think you have one for-profit college in your portfolio, curious of your thoughts on them as a tenant profile going forward, some people a little concerned about the business model?

Well, with the right school in the right location and the right operator, we view them as can be quite safe investments especially in a lending capacity where there is real equity behind us, but it is a nontraditional asset class, so you’re right to point out the underwriting is a little bit different, so for us I think a first mortgage position is…

Are you trying to actively pursue this line of business, this type of tenant or just something more or less came your way?

No, we’ll continue to look at opportunities in the space. We’re not, I wouldn’t say there is a whole lot of visibility in terms of ramping up that business in much greater scale, but we’ll continue to look at similar opportunities.

And we have a follow-up from Sheila McGrath.

Pat, a quick modeling question. On the build-to-suites that you closed during first quarter where they mid quarter, what was the timing of those closings?

The Amazon was at the beginning of the quarter and the other one was mid quarter. Mid-February.

Okay and one more big picture question Will, could you update us on your thoughts of pursuing an investment grade rating? How much more unencumbered assets would you need and how long you think it might take you to get there?

Well, the company right now has about $1.4 billion of non-mortgaged assets, once that steps up to$ 1.70 that would mean that about half of our portfolio was unencumbered, that would come naturally from acquiring our build-to-suit projects on a frequent basis and then in addition would be un-encumbering assets as they mature over the balance of this year and next. The company should be in a position to obtain a rating over a couple of year period, given how it’s credit statistics are trending. And as we look at sort of 2014 and 2015, that’s when we have another wave of secured debt maturities, which would allow us to reduce our secured debt further. So there’s no need for it now, I think it would be something that we would like to have 2 years out to give us additional flexibility with respect to how we refinance our maturities.

And we’ll take a follow-up from John Guinee.

Just a quick one, can you tell us your 2012-2013 maturities, if there’s any currently vacant guaranteed to not renew tenant even in the office or the industrial portfolio?

Yes, this year John, we have the Southern Connecticut and Sewanee, Georgia properties where we expect vacancies, and next year, we expect a vacancy, Fort Myers, Florida and a property would lease to Gartner. so those are 3 buildings where we think we have certain vacancy with fairly sizeable non-recourse obligations maturing.

And it appears there are no further questions at this time. Mr. Eglin, I’d like to turn the conference back over to you for any closing remarks.

Thank you all again for joining us this morning. We’re very excited about our prospects for the balance of this year and beyond. And as always we appreciate your participation and support. If you would like to receive our quarterly supplemental package, please contact Gabriel Reyes or you can find additional information on the company on our website at www.lxp.com. In addition, you may contact me or the other members of senior management team with any questions. Thank you again.

That does conclude today’s presentation. Thank you for your participation.