Good morning and welcome to the Lexington Realty Trust's third quarter 2012 earnings conference call. (Operator Instructions) It is now my pleasure to turn the floor over to your host Ms. Gabriela Reyes, Investor Relations for Lexington Realty Trust.

Hi, and welcome to the Lexington Realty Trust third 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 on this conference, which are not historical, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although Lexington believes the 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. Joining me today from management are, Will Eglin, Chief Executive Officer; Robert Roskind, Chairman; Patrick Carroll, Chief Financial Officer; and other members of management.

Thank Gabby, and welcome everyone and thank you for joining the call today. As usual, I'd like to begin by discussing our operating results and accomplishments for the quarter. For the third quarter, our company funds from operations as adjusted were $0.25 per share and we executed well in all areas that impact our business. The quarter was characterized by continued solid leasing activity of approximately 1.4 million square feet of new and renewal leases singed, leading to an overall portfolio occupancy rate of approximately 97.6% at quarter end. In addition, we made progress on the investment front, with property investments closed totaling $51.2 million, brining total investment volume for the year to $140.6 million, and we believe our pipeline of similar opportunities remains robust. We also had further success on the capital recycling front with $68.1 million of non-core dispositions, including the sale of one property in the NLS portfolio following the acquisition in early September. In addition, we continue to drive down our cost of capital as we took advantage of the significant refinancing opportunities in our portfolio. In the third quarter of 2012, withdrew $9 million on our seven-year secured term loan and swapped the LIBOR rate into a fixed rate of 3.36% on such borrowings for seven-years. We retired $75.1 million of secured debt, which had a weighted average interest rate of 6.4%. Subsequent to quarter end, we expanded the seven-year term facility by $40 million to $255 million. Next year we have $228.1 million of non-recourse debt maturing at a weighted average interest rate of 5.5%, of which we believe that roughly $60 million will require lender concessions for us to use any of our financial resources to support these maturities. We believe the remaining maturities can be refinanced on attractive terms in the term…

Thanks Will. During the quarter, Lexington had gross revenues of $87.7 million comprised primarily of lease rents and tenant reimbursement. The increase compared to the third quarter of 2011 relates primarily to focusing projects coming online and the acquisition of NLS. Under GAAP, we are 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 in the rental revenue. In the quarter, GAAP rents were in excess of cash rents by approximately $4.2 million, including the effect of above and below market leases. For the nine months ended September 30, 2012, GAAP rents were in excess of cash rents by about $2.1 million. We have also included on Page 41, our estimates of both cash and GAAP rents for the remainder of 2012, through 2016, for leases in place at September 30. Page 41 also contains same-store NOI data. In the third quarter of 2012, we recorded a $168 million non-cash gain related to the NLS acquisition. We gain represents the fair value at net office acquired in excess of our investment basis. In addition, we recognized $6.3 million of gain from several properties, $4.3 in non-cash impairment charges and $1.2 million in debt satisfaction charges incurred on debt satisfied in connection with an asset sale. On Page 38 of the supplement, we have disclosed selective income statement data for our consolidated and non-wholly owned properties and our joint venture investments. We have also included non-cash interest charges recognized in the nine months ended September 30, 2012, on Page 39 of the supplement. Interest expense decreased $2 million, primarily due to the refinancing of our debt at lower rates. This has resulted in an interest…

Thanks, Pat. In summary, we had a great quarter and we had a strong year so far. We continue to: one, execute on leasing opportunities in order to maintain high levels of occupancy; two, realize values on non-core properties and certain full value properties; three, capitalize on our substantial refinancing opportunities, helping us drive down our cost of capital; and four, invest in build-to-suit properties and other accretive investment opportunities. With opportunities to refinance our debt at considerably lower rates, acquisitions that improve cash flow and upgrade the quality of our portfolio, a conservative payout ratio and levels of debt that will come down over time, we believe we are very well positioned to create meaningful value for our shareholders. In view of the progress we have made during the quarter, we previously increased our guidance for 2012 company funds from operation as adjusted by $0.02 per share to a range of $0.95 to $0.98 per share, and today we're guiding that range by $0.01, to $0.96 to $0.98 per share. Our guidance is forward-looking and reflects the comments we have made on today's call. And a diluted share count of roughly 198 million, which includes 13.7 million shares underlying, our 6% convertible guaranteed notes and our recent common share offering. We also believe that 2013 will be another successful year for Lexington. 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 rates at a time when market conditions are favorable and we believe that we can currently obtain five to 10-year financing at fixed rates between 2.75% and 4%. 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 with Evercore Partners.

Will, on Page 40 of the supplement, it looks like the adjusted EBITDA is about 5.6 times after the adjustments for fourth quarter. I am just wondering, if you could give us an idea of what your long-term goals there on that metric, and how long you think it will take to get there?

Well, we like to consistently run the company with less than 5.5 times, Sheila. I think ideally we trend down from there. I think the two kinds of metrics that we're probably most focused on over the next 18 to 24 months. One, we'd like to get our core non-mortgaged assets up to over half of our total assets, and that will happen as we work through our maturity schedule in 2013 and probably 2014 by unencumberring the assets as our secured debt matures. So that's I guess one thing to keep our eye on. The other thing is we want to work down our secured debt relative to our gross assets to close to 25%. And I think that that probably will have an additional capacity to time and debt maturities that we would like to in this March, some time in 2014.

So would it be feasible, in 2014 you think to pursue an investment grade strategy?

I do. I think that especially the two gating items that I see being the ones you have to focus and most on, and making sure that we have more than half of the portfolio unencumbered. And like I said, getting the secured debt down in relation to gross asset is other focus.

And then on the built-to-suit market, could you give us an idea of what you've been seeing comp rates on the forward commitment market. And it looks like there has been a little bit of compression in topic since you started. And I'm just wondering if those increased competition and how comfortable you are on potential volume you'll be able to achieve in that kind of niche?

There is no question that cap rates have compressed, but at the same time financing cost of compressed scale, so there is still we think very good margin. This year we will find a little bit less than $200 million of new transaction activity. And as we look at next year, we're pretty confident right now, that we've got visibility on being able to invest a little more capital, as comparables graduating relative to financing cost. So that will mean that we're actually getting new transaction, closer to an 8% cap rate, whereas 12 or 15 months ago, might have been 9%, but we're also refinancing on a less expensive basis.

Last question, can you just remind us on the Xerox lease why that was such a big mark-up, what are the circumstances there?

It was simply a long term lease that came to maturity in a market where rents have had an explosive upside. So in that case, actually I guess, one way to look at is encumbered value, and obviously Palo Alto is the market where you've seen a very dramatic rent growth, so that one doesn't work out very well for us.

We'll take our next question from Anthony Paolone with JP Morgan.

I guess, I'll start with Xerox since, as you had brought that one. What do you do with the building like that now that you've bumped the lease up to market, and it isn't such a hard place at the moment when cap rates are low, do you keep something like that or do you think about using it as cash or something?

I think the best way to maximize the value of the asset, Tony, is to probably monetize the entire rent stream in a credit tenant lease financing, and if you'll recall it's subject to the land rates and we don't control the ground after this lease turn term is up. So we could probably monetize the whole stream at a discount rate of roughly three and three quarters to date. We could pull a magnitude of $58 million or $59 million of the asset probably, and I think that that's the best way to maximize the value of the asset right now, given that we don't control the asset long term because of the ground situation.

And then just looking at some of these build-to-suit deals where you've now brought with 15 year leases and cap rates were in the nines, how do you think about maximizing value, as such we considering the idea of moving forward towards an investment grade rating which, you may or may not want to just try to pull cash out with secured financing and then how do you think about maximizing value in some of these situations where it seems like you've achieved some pretty strong cap rates?

I think until we're trying to stay away from the secured market until we reach a couple of those metrics that I mentioned, i.e. how much in the portfolio is encumbered and how much secure debt we have in relation to those assets. My expectation is that most of what we take down, that we held on a clean and clear basis. There will be a couple of others secured financings that we did, sort of having in the next year where we have long term leases from credit tenants. But my expectation is that almost everything that we're originating new that we're going to hold free and clear to support where we're going to get the balance sheet over 18 to 24 month basis. We do think that as we look at some of these leases, there will be an opportunity till after sort of 3 to 5 year hold, look at recycling some capital out of them. Our expectation is that there's going be a very good story on capital recycling, a different way we've been able to originate these new leases from a CapEx standpoint.

What is your sense as to what market value is or market cap rates would be for some of these recent deals that you wrapped up, like the 15 year leases in place that you guys achieved?

I think in a lot of cases we've had sort of the resell in the 7.5% to 8% range. So our view is that there has been in many cases, sort of 150 basis point year premium, so for that we're taking that forward commitment risks. I do think we've been able to create a lot of value by being active in the core market.

And last question on the NLS portfolio, can you be a little bit more specific in terms of maybe through 2013, some other things you might want to do there? How much it might cost you and what the incremental pickup perhaps might be from an earnings point of view?

Well, there has not been that much debt maturity in NLS next year, but there is a little bit. The average financing cost for that portfolio is 5.2%. So our expectation is that we'll be able to work that down over time. We do have a significant asset sale out of NLS that we hope to close by yearend, which is going to add at roughly 7% cap rate. So since we close, so that means we will recovered about $50 million through distributions and brought our basis down at what we think, a pretty good disposition prices. And we do believe that we'll able to in the next six months expand a lot of the leases that are maturing next year and 2014 and so. We are pretty optimistic that we can accurately manage that portfolio as successfully as we have managed on up till now.

So do you see any significant CapEx sort of projects that you see inherited these some of thing?

There is a lease in Arlington, Texas, a building that's leased to Siemens where we think we have good chance of bringing a new tenant there that may require some CapEx in 2014, but I don't see anything very, very significant in 2013.

We will take our next question from Todd Stender from Wells Fargo Securities.

It looks like your tenant improvements and leasing costs on a per square basis pick up a bit in the quarter, was that broad based or was it driven by one particular asset like Xerox, and do you expect that trend to continue?

Actually what we've spend in the quarter on TI given $11.1 million. There was a couple of projects, one was a redevelopment in Lenexa, Kansas, the tenant Applebee's reported out a lease and the (inaudible) coming in. There is some money that needs to be put to that the lease termination tenant to somewhat $19 million that received year and a half ago. So we're putting some of that money back into the building. And the rest of the TIs were additional money that was spent on the Light Street property, about $2.7 million and then $2.7 million we spent on the releasing of our Orlando property in Florida. So really, the $11.1 million that was spent in the quarter, (inaudible) and $5 million was on those three properties. So there is not a lot of fee has been spent over this portfolio, but they are being spent to 10 specific lease ups. And then when you look at the properties, when you look at new leases that we incurred this quarter, so the average TI leasing commission on new leases is about $16.75 a square foot, and on extension it's about $5.60 per square foot. And so our expectation next year, we'll start to spend less money on CapEx and leasing and we think it trends down further from that. We do think that the trend is fairly healthy. It's really $4.1 million spend or $4.2 million on leasing, $3.1 million was the Xerox property.

(Operator Instructions) We will take our next question from Arthur Winston of Pilot Advisors.

I understand that you really can't be specific to answer this question, but maybe you can do it just generally, if we knock out, forget about Xerox gain, would we'll be in the same trajectory in calendar 2013, more or less to have the same net income reported to the common shareholders which is very important for the dividend, as we go in 2012 or there are other circumstances involved that would change the trajectory of the comp?

As we said, our dividends what we thought was equivalent to taxable income in terms of the common holders. We based that on our projections are for releasing and acquisitions with the builds-to-suits coming on. So we said that's $0.50, so we always look comfortable with that.

And so basically that reference is predicated upon it and the changes should be that dramatic, is that what you're suggesting?

Well, we renew while we do the projection that Xerox is doubled. So we're comfortable with $0.50 dividend which we think approximates taxable income.

And we will take our next question from John Guinee with Stifel.

Just a few clarifications, first, well did you say that 220 of leased maturities between now and 2014, was at $60 million which lender concessions are required were 60%?

I think that's correct, $60 million.

Second, what was the impairment charge and which asset would be up?

Probably, (inaudible)

With the $168 million of non-cash gain, has that effect taxable income in '13 and '14 or not?

No.

Tony had mentioned the Xerox lease subject to a land lease, so this means that 10 years from now, the asset just goes away at the disposition of the balance sheet and goes back to the ground.

As it stand right now, John, that's correct. There has been some discussions that might lead to us being able to control the ground beyond that, but right now there is nothing certain.

And then what's gong to happen, Pat to your equity earnings and non-consolidated equities, just give us a good run rate going forward now, that strategic net lease is on the box?

If you look at the quarter, John, we had about $3.8 million in the quarter and up 3.5, 3.6 (inaudible) the rest of it has driven smaller one off currently.

And then looking at Page 17, a couple of things stuck out interesting, for example, possible math of run rate and the income used to be about $6.4 million a year, and it shows up at zero, and $204,000 for GAAP rent on this schedule, the same thing to a lesser extended tool on performing initiative. What's going on there?

Those are NLS rents and those are properties that we took over from NLS, and that fellow has a funky payment, that's why there are a few properties that pay rent in the first quarter at different rates. For the GAAP rent and straight line, the cash rents will be choppy like a lot in the first quarter, none in the second, a little more on the third and then none in the fourth. So that's kind of a choppy rent. That's why when we disclose in the supplement for cash and GAAP rents for the following year, you can get a feel for it on an annual basis. But the cash and GAAP rents on certain properties are choppy, and these numbers here as of September 30, of any property that came over in NLS, obviously has one month of revenue in it.

And it appears there are no further questions at this time, Mr. Eglin, I'll gladly turn the call over back to you for any additional or closing remarks.

Well, thanks to all of you again for joining us this morning. We're very excited about our prospects for the rest 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 Gabriela 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 our senior management team with any questions. Thanks again, and have a good day, everyone.

That does conclude today's conference. We thank you for your participation. You may now disconnect.