Good morning and welcome to the Lexington Realty Trust Fourth Quarter 2012 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation. Today’s conference is being recorded. It is now my pleasure to turn the floor over to your host Gabriela Reyes, Investor Relations for Lexington Realty Trust. Please go ahead, ma’am.

Hello, and welcome to the Lexington Realty Trust fourth 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 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 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 attained. Factors and the 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; Robert Roskind, Chairman; Richard Rouse, Chief Investment Officer; Patrick Carroll, Chief Financial Officer and other members of management.

Thanks Gabby, and welcome everyone and thank you for joining the call today. As usual, I would like to begin by discussing our operating results and accomplishments for the fourth quarter. For the quarter, our company funds from operations as adjusted were $0.25 per share, and we executed well in all areas that impact our business. This strong quarterly result led us to reach the top end of our guidance for the full year. The quarter was characterized by very strong leasing activity of approximately 2.4 million square feet of new and renewal leases signed, leading to an overall portfolio occupancy rate of approximately 97.3% at quarter end, which reduced our 2013 rollover to just 3.6% of our single-tenant revenue. Overall, leasing volume was a record 7.4 million square feet for the year. In addition, we had good execution on the investment front with property investments closed totaling $114.9 million and we funded $27.1 million on ongoing build-to-suit projects, bringing total investment volume for the year to $247 million, and we believe our pipeline of similar opportunities remains robust. We also had continuing success on the capital recycling front was $30 million of non-core disposition, bringing our total for the year to $181.4 million at a weighted average cap rate of 7.2%. Furthermore, we continue to drive down our cost of capital, as we continue to take advantage of the significant refinancing opportunities in our portfolio. In the fourth quarter of 2012, we expanded our 7-year secured term loan by $40 million, and swapped the floating LIBOR rate into a fixed LIBOR rate of 1.06% for seven years, so that the interest rate today is fixed at 3.3% on such borrowings. We also issued 4.5 million common shares in connection with the conversion of $31.1 million of our 6% note.…

Thanks, Will. During the quarter, Lexington net gross revenues of $95.5 million, comprised primarily of lease trends and tenant reimbursement. The increase compared to the fourth quarter of 2011 of $16 million relates primarily to built-to-suit projects coming online, the acquisition of NLS, and increased occupancy. In the quarter, GAAP rents were in excess of cash rents by approximately $7.5 million, including the effect of above and below market leases. At the year ended December 31, 2012, GAAP rents were in excess of cash rents by $9.6 million. On page 41 of the supplement, we have included our estimates of both cash and GAAP rents for 2013 through 2017 for leases in place at December 31, 2012. We’ve also included same-store NOI data and the weighted average lease term of our portfolio as of December 31, 2012 and 2011. In the fourth quarter, we recorded $4.3 million at the income sales of properties and an $8.6 million debt satisfaction charge, primarily relating to a non-cash charge required under GAAP relating to the retirement and conversion of our 6% notes. On page 38 of the supplement, we’ve disclosed selective 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 year ended December 31, 2012 on page 39 of the supplement. In the fourth quarter of 2012 compared to the fourth quarter of 2011, interest expense decreased by $900,000 primarily due to refinancing our debt at lower rate. This has resulted in an interest coverage of approximately 2.7 times, fixed charge coverage of approximately 1.9 times, and net debt-to-EBITDA of approximately six times on a pro forma basis. Non-operating income decreased $2.7 million primarily due to the payoff of mortgages receivable in 2012 and 2011 and a…

Thanks, Pat. In summary, we had a great quarter, strong year and we believe we are off to a good start in 2013. We expect to continue to execute proactively on leasing opportunities in order to maintain high levels of occupancy, and address lease rollover risk; two, realize values on non-core properties and certain fully valued properties. Third capitalized on our substantial refinancing opportunities, helping us drive down our cost of capital, and finally we’re going to continue to focus on investing build-to-suit properties in other accretive investment opportunities. With opportunities to refinance our debt at considerably lower rate acquisition that improve cash flow and upgrade the quality of our portfolio, a conservative dividend payout ratio, and moderate levels of debt, we believe we are very well positioned to create meaningful value for our shareholders and grow our dividend. Today, we announced guidance for 2013 company funds from operations as adjusted within a range of $1.01 to a $1.04 per share reflecting our most significant annual growth to financial crisis of 2008 and 2009. Our guidance is forward-looking and reflects the comments that we’ve made on today’s call and a diluted share count of roughly $205 million, which includes $7.1 million shares underlying our 6% convertible guarantee notes. We also believe that 2013 will be another successful year for Lexington. We believe we have a good pipeline of acquisition opportunities, very active discussions with numerous tenants with respect to lease extensions and a lot of debt maturing with above market interest rate at a time when market conditions are favorable and we believe, we can currently obtain 5 to 10 year financing of rates between 3% and 4%. Operator, I have no further comments at this time, so, we’re ready for you to conduct the question-and-answer portion of the call.

Thank you, sir. (Operator instructions) We’ll take our first question from Sheila McGrath with Evercore. Sheila McGrath – Evercore: Yes, good morning. Well, over the last year or two years really, your emphasis has really been focused on some of the forward commitment build-to-suit opportunities. Your commentary seems to indicate much more optimistic on acquisition volume. So I’m just wondering is that going to be a mix of the build-to-suit and traditional acquisitions?

Yeah, I think it will be Sheila. Last year, the mix between build-to-suit and other tax and adjustments was about two thirds in favor of build-to-suit. Looking ahead that mix might be 50% build-to-suit as that reflects the fact that our cost of capital has come down considerably and we can find some accretive investment opportunities and sale lease back, which we’ve sort of stayed away from over the last few years. So I do think that we can be more active in sale lease back which will make it easier for us to act on growth opportunities. Sheila McGrath – Evercore: With – and you close on over I think $200 million of investments last year. Can you give us a sense of what’s doable on this year?

Well, I knew it – excluding the NLS acquisition, new transaction activity was about $247 million last year. That was a 50% increase compared to 2011. And we’d like to do 50% more this year and we think we have a pretty good visibility on that type of opportunity. Sheila McGrath – Evercore: Okay. And could you remind us what the necessary steps for LXP to pursue? What’s left for you to kind of pursue an investment grade rating? And if that’s the strategy, your thoughts on timing?

Yeah. It’s definitely the strategy. I think the main gaining item for us is to continue to unencumbered assets as our debt comes due and obviously, acquiring properties on a free and clear basis would speed that process along. Once we utilize our credit facilities to retire our March 1st debts, we have a lot of less debt maturing in the next 12 months obviously. So, I think that we’d certainly like to make sure we’ve got the range in place that we want, and prior to addressing our 2014 maturities. And we would really like to have a favorable rating so that we can access the perpetual preferred market and retire a Series D preferred, which currently has a coupon of 7.55%, so that would be an obvious refinancing opportunity for us. Sheila McGrath – Evercore: Okay. Last question. Could you tell us if you happen to look at the portfolio, the net lease portfolio that we repurchased? And if you did, why it wasn’t necessarily a good fit, and also if there’s any other portfolio opportunities on the horizon?

Yeah. We did look at the call portfolio and we’re absolutely thrilled that the market has reacted well to the Spirit’s purchase. The net lease sector is getting bigger and bigger and all the companies seem to be having good amount of success. So I think that bodes well for everyone in the space. From our standpoint, even that’s in our mind the weighted average lease term in that portfolio was maybe around nine years. We’re very focused on longer-term leases to try to extend our weighted average lease term. And given the amount of secured debt in that portfolio that that would have been I think a step away from what we’re trying to accomplish. So it wasn’t a good fit for us, but it seems to fit with Spirit very well. So that’s good news for Spirit shareholders and everybody who invested in the net lease sector as well. Sheila McGrath – Evercore: And then, Will, are there any other portfolios that you’re looking at? Or that you think are coming to market this year?

We’re not looking at that anything of size that the large transactions that have been in the market in the last 12 months. We’ve looked at periodically. We’re showing portfolio acquisitions, but there is nothing that we’re actively working on. Sheila McGrath – Evercore: Okay, all right. Thank you.

Thank you. We will take our next question from Tayo Okusanya with Jefferies. Omotayo Okusanya – Jefferies: Yes, good morning everyone. Couple of questions. First of all the investment outlook of $275 million. Could you talk about the timing related to that stuff, when you expect it to actually hit your numbers and just how much of that is actually built into your 2013 guidance?

Well, I guess for modeling purposes, I would show it’s coming in ratably over the course of the year and our numbers assuming that we’ll reach that volume objective. I do want to point out sort of the built-to-suit doesn’t really show up from an accretion standpoint until – later until projects are finished. Omotayo Okusanya – Jefferies: Yeah, okay.

Because while were funding projects does have a modest drag on earnings. Omotayo Okusanya – Jefferies: Okay, that’s helpful.

So we’re – but with visibility on that much volume, we are much, much more confident about our earnings growth prospects looking at 2014 than we otherwise would have been. Omotayo Okusanya – Jefferies: Yeah, that’s helpful. And then on the mark-to-market and the portfolio, just talk a little bit about the large negative mark on the Kelsey-Hayes as well as the (inaudible) building, kind of what – there is something unique to those two assets.

Well, I mean the Kelsey-Hayes is, obviously for – there is a lot more value in getting a 10 year lease than a five year lease. So getting a 10 year extension and also that reflects the fact that those are suburban Detroit properties. The Schlumberger lease really reflects the fact that that was at the end of very long lease term that was written when interest rates were very high. But again that the value there in getting a long-term extension would show up with very favorable financing terms and one of the things that we’re looking at is financing that asset. So those were a little bit unique, but the value of getting that 10 year term Schlumberger properties was of a great value to us. Omotayo Okusanya – Jefferies: Okay.

We still are in a market cycle where we have marketing rents down on suburban office properties has been... Omotayo Okusanya – Jefferies: How much would you estimate of the markdown.

Sorry, Omotayo Okusanya – Jefferies: Typically how much would you estimate of the markdown at this point in your portfolio excluding this kind of unique situations?

Well, we’ve said that our suburban office rents are above market through 2015. And our focus is on, what kind of yield can we sustain in relation to original cost as we mark rents down and our base assumption is that we mark, as we mark rents in suburban office, we’ll end up with an unlevered deals on original cost of about 7.25. Omotayo Okusanya – Jefferies: Okay.

And we think we can refinance the underlying debt at rate of 3.5 to 4. So from our standpoint, the real question is what kind of yield on equity can we sustain as we go through that process and we don’t view that as a bad outcome. Omotayo Okusanya – Jefferies: Okay, that’s very helpful and the markdown and planned analysis what like roughly about a 5% number?

For the whole portfolio? Omotayo Okusanya – Jefferies: Yeah.

Yeah, that sounds about right. Omotayo Okusanya – Jefferies: Okay, that’s helpful. And then the debt refinancing in the first quarter of 2013 to $138 million, could you let us know what the interest rate effect of that is, is that a 5.5% average for your portfolio, but is it always a little bit higher or lower?

What’s the March 1 maturities?

Yes.

The March 1 maturity is up 5.5% Omotayo Okusanya – Jefferies: Is up 5.5%, okay. Thank you, very much.

Thank you, we’ll take our next question from John Guinee with Stifel Nicolaus. John Guinee – Stifel Nicolaus: Hi, couple – bunch of questions but just a quick follow-up, first the somebody did ask the question and you’ve said that the new leases on original cost would yield about a 7.5 and...

It’s safe to say, our base assumption looking at 14 and 15 well over John is about 7.25 yield on original cost, it’s given where cap rates have gone, isn’t a bad outcome for us. John Guinee – Stifel Nicolaus: But if you did the deal, let’s say you did those deals, Pat in a different environment as a 10 yield on original cost.

Yeah, but we weren’t and there might have been eight John without going into great detail, but it might have been eight with the mortgage of six. So I think we’re actually generating a wider spread between rents and interest expense that we were before. John Guinee – Stifel Nicolaus: Yes that’s sort of – that’s sort of the old game of coding leverage of a gross book value because if your original cost at a 20% step up for TIs and leasing commissions isn’t a relevant number?

I think the relevant number is what is rent and interest expense. John Guinee – Stifel Nicolaus: Okay. Second, how are you handling Palo Alto? What’s happening there as you’ve got a basically a fully amortizing loan to match the lease term and then the – and my understanding is the building goes back to the tenant? So it’s a cash neutral transaction, but what are you able to generate in terms of GAAP FFO per annum on Palo Alto?

We did that lease in the third quarter. John, we did that lease in the third quarter. It was disclosed in that supplement – in the third quarter supplement, I don’t have in front of me, to be perfectly honest with you. John Guinee – Stifel Nicolaus: But is the day, basically if the cash neutral financing, but are you going to be able to book FFO any GAAP income off of that asset over the next 10 years?

Yes, because we still own the assets, we still collect the rent, which get straight line and we recognized the interest expense from the amortizing mortgage. So yes, it does generate FFO. John Guinee – Stifel Nicolaus: Okay. Any idea how much?

Like I said John, it is disclosed in the third quarter supplement. I just don’t have it in front of me. John Guinee – Stifel Nicolaus: Okay, great. Then so the last, well, a few more questions up. Taxable income I think bounced up against your dividend in 2012, what exactly was your taxable income in 2012? And what do you expect it to be in 2013?

Taxable income was the same as the dividend in 2012, and we expect a slight increase in 2013. John Guinee – Stifel Nicolaus: Okey-dokey. And then also is there any unusual accounting with the Palm Beach Gardens, where you had a short-term lease, short-term loan...

No. John Guinee – Stifel Nicolaus: And lots, okay.

No, no. That loan was made at closing. So, it was only outstanding couple of weeks. John Guinee – Stifel Nicolaus: Yeah, okay. And then looking at page 17, Foxboro, Mass has 252,000 square feet, zero cash income and just a little bit of gap. What’s going on at Foxboro?

Which one is this John? John Guinee – Stifel Nicolaus: It’s Invensys Systems.

Invensys was analyst property, it had odd lease payments. So, we only show the cash rents that we acquire – what we – that we have collected at Lexington, since the NLS acquisition. So the rent gets paid I believe in the first and January and either June 30 or the July 1, so it’s an odd payment, so that’s why you’ll see zero cash rent. John Guinee – Stifel Nicolaus: All right. Okay, thank you very much. Nice job guys.

Thank you.

Thank you. We’ll take our follow-up question from Tayo. Omotayo Okusanya – Jefferies: Hi, yes. Just another – if you do end up with another kind of $275 million of investments. How do you kind of think about long-term financing associated with that volume of acquisitions? Or that...

We’re assuming roughly 40% leverage and the balance would be financed through a mix of disposition proceeds and potentially equity. We did run our ATM program earlier this quarter. So we got a good a chunk of that out of the way, but our view is that we would utilize the mix of sale proceeds and equity if market conditions are favorable and we always have a plan to recycle more capital from sales in case the equity market isn’t accessible and favorable terms. Omotayo Okusanya – Jefferies: Okay, that is helpful. And then just from a CapEx perspective because of the elevated levels, this quarter your FAD was actually below your quarterly dividend. I am just kind of curious what your outlook is for kind of CapEx spend in 2013 and whether that continues to put a lot of pressure on FAD relative to FFO?

We project that on a per share basis 2013 would be about $0.21. Omotayo Okusanya – Jefferies: $0.21, okay.

But that’s about the same. We do have good visibility on those expenditures declining in 2014. The things that are impacting our cash flow favorably as we look forward are reduced debt service obligations, less money going out the door on occupancy related costs, and accretion from new acquisitions. Omotayo Okusanya – Jefferies: Great, thank you.

Thank you. We’ll take our last question today from Bill Siegel with Development Associates. Bill Siegel – Development Associates: Thank you, gentlemen. Two questions. You have been continuing to drive FFO by doing the job of lowering your cost capital you’re borrowing, that all made come to an end here, your orders have, how are rents trending for your renewals and on your new properties? You touched a little on suburban office rents, but across the portfolio?

Well rents in retail and industrial are essentially flat in sort of that market right now. So, we don’t view ourselves having real exposure from a downward mark-to-market on that. But we are marking suburban office rents down as we’ve said, we think that is still two to three year process for most suburban office landlords and the economy is growing and jobs are being created but corporations are still focused on generating efficiencies from the real estate, and that’s still in on line to several year – several year process. Bill Siegel – Development Associates: Very good. Secondly, you for the first time, I may have misunderstood, but I think you mentioned some first mortgage lending opportunities, I traditionally then thought that was equity REIT, are you going to be originating loans out of the portfolio?

We’ve been originating loans in a relatively small number for several years, it’s not a big part of our business, but it is a part of our business and we do see some opportunity in that space. Bill Siegel – Development Associates: Very good, thank you.

Thank you, ladies and gentlemen this does conclude our question-and-answer session for today. At this time, I would like to turn the conference back over to Mr. Will Eglin for closing comments.

Well, thank you all again for joining us this morning. We are very excited about our prospects for 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 Gabriela Reyes or you can find additional information on our Company at our website www.lxp.com, and in addition as always you may contact me or the other members of senior management with any questions. Thanks again.

Thank you, ladies and gentlemen this does conclude today’s presentation. You may now disconnect.