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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2022.
or
☐Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from _________________ to ________________
Commission File Number 1-12386
 LXP INDUSTRIAL TRUST
(Exact name of registrant as specified in its charter)
Maryland13-3717318
(State or other jurisdiction of
incorporation of organization)		(I.R.S. Employer
Identification No.)
One Penn Plaza, Suite 4015, New York, NY 10119-4015
(Address of principal executive offices) (zip code)
(212) 692-7200
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Shares of beneficial interest, par value $0.0001 per share, classified as Common StockLXPNew York Stock Exchange
6.50% Series C Cumulative Convertible Preferred Stock, par value $0.0001 per share
LXPPRCNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer☒Accelerated filer☐Non-accelerated filer☐Smaller reporting company☐Emerging growth
company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: 275,723,255 common shares of beneficial interest, par value $0.0001 per share, as of November 2, 2022.


TABLE OF CONTENTS
PART I. — FINANCIAL INFORMATION  
 
 
 
 
PART II — OTHER INFORMATION  
 
 
 
 
 
 
 

WHERE YOU CAN FIND MORE INFORMATION:
We file and furnish annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission, which we refer to as the SEC. You may read and copy any materials that we file or furnish with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. We file and furnish information electronically with the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file or furnish electronically with the SEC. The address of the SEC's Internet site is http://www.sec.gov. We also maintain a web site at http://www.lxp.com through which you can obtain copies of documents that we file or furnish with the SEC. The contents of that web site are not incorporated by reference in or otherwise a part of this Quarterly Report on Form 10-Q or any other document that we file or furnish with the SEC.

2
PART I. - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands, except share and per share data)
September 30, 2022December 31, 2021
Assets: 
Real estate, at cost$3,642,114 $3,583,978 
Real estate - intangible assets332,646 341,403 
Land held for development108,379 104,160 
Investments in real estate under construction368,483 161,165 
Real estate, gross4,451,622 4,190,706 
Less: accumulated depreciation and amortization747,535 655,740 
Real estate, net3,704,087 3,534,966 
Assets held for sale73,761 82,586 
Right-of-use assets, net24,994 27,966 
Cash and cash equivalents 29,407 190,926 
Restricted cash113 101 
Investments in non-consolidated entities55,415 74,559 
Deferred expenses, net25,564 18,861 
Rent receivable – current 2,426 3,526 
Rent receivable – deferred 69,419 63,283 
Other assets 26,062 8,784 
Total assets$4,011,248 $4,005,558 
Liabilities and Equity:  
Liabilities:  
Mortgages and notes payable, net $74,891 $83,092 
Revolving credit facility borrowings130,000 — 
Term loan payable, net298,834 298,446 
Senior notes payable, net988,954 987,931 
Trust preferred securities, net127,669 127,595 
Dividends payable34,778 37,425 
Liabilities held for sale2,815 3,468 
Operating lease liabilities26,062 29,094 
Accounts payable and other liabilities 88,028 77,607 
Accrued interest payable10,278 8,481 
Deferred revenue - including below-market leases, net11,734 14,474 
Prepaid rent14,693 14,717 
Total liabilities1,808,736 1,682,330 
Commitments and contingencies
Equity:  
Preferred shares, par value $0.0001 per share; authorized 100,000,000 shares:
  
Series C Cumulative Convertible Preferred, liquidation preference $96,770; 1,935,400 shares issued and outstanding
94,016 94,016 
Common shares, par value $0.0001 per share; authorized 600,000,000 shares, 276,100,331 and 283,752,726 shares issued and outstanding in 2022 and 2021, respectively
28 28 
Additional paid-in-capital3,134,739 3,252,506 
Accumulated distributions in excess of net income(1,079,407)(1,049,434)
Accumulated other comprehensive income (loss)17,768 (6,258)
Total shareholders’ equity2,167,144 2,290,858 
Noncontrolling interests35,368 32,370 
Total equity2,202,512 2,323,228 
Total liabilities and equity$4,011,248 $4,005,558 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited and in thousands, except share and per share data)
Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Gross revenues:    
Rental revenue$78,274 $82,353 $234,749 $254,570 
Other revenue1,814 1,064 5,392 2,945 
Total gross revenues80,088 83,417 240,141 257,515 
Expense applicable to revenues:    
Depreciation and amortization(44,946)(45,359)(134,645)(130,579)
Property operating(13,961)(11,406)(42,279)(33,966)
General and administrative(9,060)(8,363)(29,093)(24,695)
Non-operating income242 472 353 953 
Interest and amortization expense(11,255)(12,210)(32,758)(35,170)
Debt satisfaction losses, net(119)(13,222)(119)(13,222)
Impairment charges(628)(2,048)(2,457)(2,048)
Gains on sales of properties24,841 16,122 52,951 104,767 
Selling profit from sales-type lease— — 9,314 — 
Income before provision for income taxes and equity in earnings (losses) of non-consolidated entities25,202 7,403 61,408 123,555 
Provision for income taxes(271)(270)(951)(986)
Equity in earnings (losses) of non-consolidated entities(1,340)(75)15,580 (249)
Net income23,591 7,058 76,037 122,320 
Less net income attributable to noncontrolling interests
(201)(420)(727)(1,962)
Net income attributable to LXP Industrial Trust shareholders23,390 6,638 75,310 120,358 
Dividends attributable to preferred shares – Series C(1,573)(1,573)(4,718)(4,718)
Allocation to participating securities(41)(37)(151)(170)
Net income attributable to common shareholders$21,776 $5,028 $70,441 $115,470 
    
Net income attributable to common shareholders - per common share basic
$0.08 $0.02 $0.25 $0.42 
Weighted-average common shares outstanding – basic277,535,717 278,124,204 281,559,058 276,379,718 
Net income attributable to common shareholders - per common share diluted
$0.08 $0.02 $0.25 $0.41 
Weighted-average common shares outstanding – diluted
278,521,946 282,048,458 284,609,950 278,581,849 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited and in thousands)
Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Net income$23,591 $7,058 $76,037 $122,320 
Other comprehensive income:    
Change in unrealized income on interest rate swaps, net7,028 1,150 22,844 7,072 
Company's share of other comprehensive income of non-consolidated entities
1,182 — 1,182 — 
Other comprehensive income8,210 1,150 24,026 7,072 
Comprehensive income31,801 8,208 100,063 129,392 
Comprehensive income attributable to noncontrolling interests
(201)(420)(727)(1,962)
Comprehensive income attributable to LXP Industrial Trust shareholders$31,600 $7,788 $99,336 $127,430 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited and in thousands, except share and per share data)
Three Months Ended September 30, 2022LXP Industrial Trust Shareholders
TotalNumber of Preferred SharesPreferred SharesNumber of Common SharesCommon SharesAdditional Paid-in-CapitalAccumulated Distributions in Excess of Net IncomeAccumulated Other Comprehensive Income/(Loss)Noncontrolling Interests
Balance June 30, 2022$2,259,650 1,935,400 $94,016 281,670,437 $28 $3,189,713 $(1,068,408)$9,558 $34,743 
Issuance of partnership interest in real estate663 — — — — — — — 663 
Redemption of noncontrolling OP units for common shares— — — 13,146 — 68 — — (68)
Issuance of common shares and deferred compensation amortization, net1,916 — — 22,516 — 1,916 — — — 
Repurchase of common shares (56,958)— — (5,604,048)— (56,958)— — — 
Forfeiture of employee common shares1 — — (1,720)— — 1 — — 
Dividends/distributions ($0.12 per common share)
(34,561)— — — — — (34,390)— (171)
Net income23,591 — — — — — 23,390 — 201 
Other comprehensive income7,028 — — — — — — 7,028 — 
Company's share of other comprehensive income of non-consolidated entities1,182 — — — — — — 1,182 — 
Balance September 30, 2022$2,202,512 1,935,400 $94,016 276,100,331 $28 $3,134,739 $(1,079,407)$17,768 $35,368 

Three Months Ended September 30, 2021
Balance June 30, 2021$2,051,369 1,935,400 $94,016 277,660,102 $28 $3,195,040 $(1,250,735)$(12,041)$25,061 
Issuance of partnership interest in real estate5,965 — — — — — — — 5,965 
Redemption of noncontrolling OP units for common shares— — — 38,790 — 202 — — (202)
Redemption of noncontrolling OP units for real estate(22,305)— — — — (12,919)— — (9,386)
Issuance of common shares and deferred compensation amortization, net57,527 — — 4,939,815 — 57,527 — — — 
Dividends/distributions ($0.1075 per common share)
(32,402)— — — — — (32,037)— (365)
Net income7,058 — — — — — 6,638 — 420 
Other comprehensive income1,150 — — — — — — 1,150 — 
Balance September 30, 2021$2,068,362 1,935,400 $94,016 282,638,707 $28 $3,239,850 $(1,276,134)$(10,891)$21,493 
LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited and in thousands, except share and per share data)
Nine Months Ended September 30, 2022LXP Industrial Trust Shareholders
TotalNumber of Preferred SharesPreferred SharesNumber of Common SharesCommon SharesAdditional Paid-in-CapitalAccumulated Distributions in Excess of Net IncomeAccumulated Other Comprehensive Income/(Loss)Noncontrolling Interests
Balance December 31, 2021$2,323,228 1,935,400 $94,016 283,752,726 $28 $3,252,506 $(1,049,434)(6,258)32,370 
Issuance of partnership interest in real estate6,444 — — — — — — — 6,444 
Redemption of noncontrolling OP units for common shares— — — 33,378 — 177 — — (177)
Purchase of noncontrolling interest in consolidated joint venture(27,958)— — — — (25,058)— — (2,900)
Issuance of common shares and deferred compensation amortization, net44,075 — — 4,557,892 1 44,074 — — — 
Repurchase of common shares (130,676)— — (11,702,074)(1)(130,675)— — — 
Repurchase of common shares to settle tax obligations(6,285)— — (410,958)— (6,285)— — — 
Forfeiture of employee common shares9 — — (130,633)— — 9 — — 
Dividends/distributions ($0.36 per common share)
(106,388)— — — — — (105,292)— (1,096)
Net income76,037 — — — — — 75,310 — 727 
Other comprehensive income22,844 — — — — — — 22,844 — 
Company's share of other comprehensive income of non-consolidated entities1,182 — — — — — — 1,182 — 
Balance September 30, 20222,202,512 1,935,400 $94,016 276,100,331 $28 $3,134,739 $(1,079,407)$17,768 $35,368 

Nine Months Ended September 30, 2021
Balance December 31, 2020$1,991,137 1,935,400 $94,016 277,152,450 $28 $3,196,315 $(1,301,726)$(17,963)$20,467 
Issuance of partnership interest in real estate11,050 — — — — — — — 11,050 
Redemption of noncontrolling OP units for common shares— — — 129,397 — 670 — — (670)
Redemption of noncontrolling OP units for real estate(22,305)— — — — (12,919)— — (9,386)
Issuance of common shares and deferred compensation amortization, net60,469 — — 5,866,762 — 60,469 — — — 
Repurchase of common shares to settle tax obligations(5,120)— — (499,638)— (5,120)— — — 
Forfeiture of employee common shares2 — — (10,264)— — 2 — — 
Dividends/distributions ($0.3225 per common share)
(96,263)— — — — — (94,768)— (1,495)
Net income122,320 — — — — — 120,358 — 1,962 
Other comprehensive income7,072 — — — — — — 7,072 — 
Reallocation of noncontrolling interests— — — — — 435 — — (435)
Balance September 30, 2021$2,068,362 1,935,400 $94,016 282,638,707 $28 $3,239,850 $(1,276,134)$(10,891)$21,493 
6
LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)
Nine Months Ended September 30,
 20222021
Net cash provided by operating activities:$154,113 $167,405 
Cash flows from investing activities:  
Acquisition of real estate, including intangible assets(132,026)(392,586)
Investment in real estate under construction(209,862)(119,885)
Capital expenditures(25,593)(9,371)
Net proceeds from sale of properties145,906 181,242 
Investments in loans receivable — (1,497)
Principal payments on loans receivable 20 — 
Investments in non-consolidated entities(307)(975)
Distributions from non-consolidated entities in excess of accumulated earnings19,250 6,170 
Deferred leasing costs(4,017)(5,546)
Change in real estate deposits, net(1,524)(1,658)
Net cash used in investing activities(208,153)(344,106)
Cash flows from financing activities:  
Dividends to common and preferred shareholders(107,939)(95,885)
Proceeds from mortgage loans — 11,610 
Principal amortization payments(8,416)(10,571)
Principal payments on debt, excluding normal amortization— (10,567)
Revolving credit facility borrowings210,000 215,000 
Revolving credit facility payments(80,000)(215,000)
Proceeds from issuance of senior notes— 399,032 
Repurchase of senior notes— (188,756)
Deferred financing costs(3,626)(3,977)
Payments for early extinguishment of debt— (12,217)
Cash contributions from noncontrolling interests6,444 10,560 
Cash distributions to noncontrolling interests(1,096)(1,495)
Repurchases to settle tax obligations(6,285)(5,120)
Purchase of noncontrolling interest(27,958)— 
Issuance of common shares, net38,436 55,116 
Repurchase of common shares(127,027)— 
Net cash (used in) provided by financing activities(107,467)147,730 
Change in cash, cash equivalents and restricted cash(161,507)(28,971)
Cash, cash equivalents and restricted cash, at beginning of period191,027 179,421 
Cash, cash equivalents and restricted cash, at end of period$29,520 $150,450 
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents at beginning of period$190,926 $178,795 
Restricted cash at beginning of period101 626 
Cash, cash equivalents and restricted cash at beginning of period$191,027 $179,421 
Cash and cash equivalents at end of period$29,407 $150,077 
Restricted cash at end of period113 373 
Cash, cash equivalents and restricted cash at end of period$29,520 $150,450 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 and 2021
(Unaudited and dollars in thousands, except share/unit and per share/unit data)
(1) The Company and Financial Statement Presentation
LXP Industrial Trust (together with its consolidated subsidiaries, except when the context only applies to the parent entity, the “Company”) is a Maryland real estate investment trust (“REIT”) that owns a portfolio of equity investments focused on single-tenant industrial properties.
As of September 30, 2022, the Company had ownership interests in approximately 118 consolidated real estate properties, located in 21 states. The properties in which the Company has an interest are primarily net leased to tenants in various industries.
The Company believes it has qualified as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”). Accordingly, the Company will not be subject to federal income tax, provided that distributions to its shareholders equal at least the amount of its REIT taxable income as defined under the Code. The Company is permitted to participate in certain activities from which it was previously precluded in order to maintain its qualification as a REIT, so long as these activities are conducted in entities which elect to be treated as taxable REIT subsidiaries (“TRS”) under the Code. As such, the TRS are subject to federal income taxes on the income from these activities.
The Company conducts its operations indirectly through (1) property owner subsidiaries, which are single purpose entities, (2) a wholly-owned TRS, Lexington Realty Advisors, Inc. (“LRA”), and (3) joint ventures. Property owner subsidiaries are landlords under leases for properties in which the Company has an interest and/or borrowers under loan agreements secured by properties in which the Company has an interest and lender subsidiaries are lenders under loan agreements where the Company made an investment in a loan asset, but in all cases are separate and distinct legal entities. Each property owner subsidiary is a separate legal entity that maintains separate books and records. The assets and credit of each property owner subsidiary with a property subject to a mortgage loan are not available to creditors to satisfy the debt and other obligations of any other person, including any other property owner subsidiary or any other affiliate. Consolidated entities that are not property owner subsidiaries do not directly own any of the assets of a property owner subsidiary (or the general partner, member or managing member of such property owner subsidiary), but merely hold partnership, membership or beneficial interests therein, which interests are subordinate to the claims of such property owner subsidiary's (or its general partner's, member's or managing member's) creditors.
The financial statements contained in this Quarterly Report on Form 10-Q (this “Quarterly Report”) for the three and nine months ended September 30, 2022 have been prepared by the Company in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all information and footnotes required by GAAP for complete financial statements. However, in the opinion of management, the interim financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results of the periods presented. Interim results are not necessarily indicative of the results that may be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 24, 2022 (“Annual Report”).
Basis of Presentation and Consolidation. The Company's unaudited condensed consolidated financial statements are prepared on the accrual basis of accounting in accordance with GAAP. The financial statements reflect the accounts of the Company and its consolidated subsidiaries. The Company consolidates the wholly-owned subsidiaries, partnerships and joint ventures which it controls (i) through voting rights or similar rights or (ii) by means other than voting rights if the Company is the primary beneficiary of a variable interest entity ("VIE"). Entities which the Company does not control and entities which are VIEs in which the Company is not a primary beneficiary are accounted for under appropriate GAAP.
8

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 and 2021
(Unaudited and dollars in thousands, except share/unit and per share/unit data)
As of September 30, 2022, the Company had interests in seven consolidated joint ventures with developers, consisting of five ongoing development projects and two land joint ventures with ownership interests ranging from 80% to 95.5%. Each joint venture owns land parcels with the intention of developing industrial properties. The Company determined that the joint ventures are variable interest entities in accordance with the applicable accounting guidance. The Company concluded that it is the primary beneficiary in each of the joint ventures and as such, the joint ventures' operations are consolidated in the Company’s financial statements.
In addition, the Company is the primary beneficiary of certain other VIEs as it has a controlling financial interest in these entities. Lepercq Corporate Income Fund L.P. ("LCIF") is a consolidated VIE and the Company, as of September 30, 2022, had an approximate 99% ownership interest.
The assets of each VIE are only available to satisfy such VIE's respective liabilities. Below is a summary of selected financial data of the consolidated VIEs for which the Company is the primary beneficiary included in the unaudited condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021:
September 30, 2022December 31, 2021
Real estate, net$985,808 $810,087 
Total assets$1,038,913 $952,611 
Total liabilities$58,796 $47,011 
In addition, the Company acquires, from time to time, properties using a reverse like-kind exchange structure pursuant to Section 1031 of the Internal Revenue Code (a "reverse 1031 exchange") and, as such, the properties are in the possession of an Exchange Accommodation Titleholder ("EAT") until the reverse 1031 exchange is completed. The EAT is classified as a VIE as it is a “thinly capitalized” entity. The Company consolidates the EAT because it is the primary beneficiary as it has the ability to control the activities that most significantly impact the EAT's economic performance and can collapse the 1031 exchange structure at any time. The assets of the EAT primarily consist of leased property (net real estate and intangibles).
Revenue Recognition. The Company recognizes lease revenue on a straight-line basis over the term of the lease unless another systematic and rational basis is more representative of the time pattern in which the use benefit is derived from the leased property. Revenue is recognized on a contractual basis for leases with escalations tied to a consumer price index with no floor. The Company evaluates the collectability of its rental payments and recognizes revenue on a cash basis when the Company believes it is no longer probable that it will receive substantially all of the remaining lease payments. Renewal options in leases are excluded from the calculation of straight-line rent if the renewals are not reasonably certain. If the Company funds tenant improvements and the improvements are deemed to be owned by the Company, revenue recognition will commence when the improvements are substantially completed and possession or control of the space is turned over to the tenant. If the Company determines that the tenant allowances are lease incentives, the Company commences revenue recognition when possession or control of the space is turned over to the tenant for tenant work to begin. The lease incentive is recorded as a deferred expense and amortized as a reduction of revenue on a straight-line basis over the respective lease term. The Company recognizes lease termination fees as rental revenue in the period received and writes off unamortized lease-related intangible and other lease-related account balances, provided there are no further Company obligations under the lease. Otherwise, such fees and balances are recognized on a straight-line basis over the remaining obligation period with the termination payments being recorded as a component of rent receivable-deferred on the unaudited condensed consolidated balance sheets.
Use of Estimates. Management has made a number of significant estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses to prepare these unaudited condensed consolidated financial statements in conformity with GAAP. These estimates and assumptions are based on management's best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment. Management adjusts such estimates when facts and circumstances dictate. The most significant estimates made include the recoverability of current and deferred accounts receivable and, allocation of property purchase price to tangible and intangible assets acquired and liabilities assumed, the determination of VIEs
9

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 and 2021
(Unaudited and dollars in thousands, except share/unit and per share/unit data)
and which entities should be consolidated, the determination of impairment of long-lived assets and equity method investments, valuation of derivative financial instruments, valuation of awards granted under compensation plans, the determination of the incremental borrowing rate for leases where the Company is the lessee and the useful lives of long-lived assets. Actual results could differ materially from those estimates.
Restricted Cash. Restricted cash is comprised primarily of cash balances held by lenders.
Fair Value Measurements. The Company follows the guidance in the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurements and Disclosures ("Topic 820"), to determine the fair value of financial and non-financial instruments. Topic 820 defines fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. Topic 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 - quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 - observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and Level 3 - unobservable inputs, which are used when little or no market data is available. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as considering counterparty credit risk. The Company has formally elected to apply the portfolio exception within Topic 820 with respect to measuring counterparty risk for all of its derivative transactions subject to master netting arrangements.
The Company estimates the fair value of its real estate assets, including non-consolidated real estate assets, by using income and market valuation techniques. The Company may estimate fair values using market information such as recent sale contracts (Level 2 inputs) or recent sale offers or discounted cash flow models, which primarily rely on Level 3 inputs. The cash flow models include estimated cash inflows and outflows over a specified holding period. These cash flows may include contractual rental revenues, projected future rental revenues and expenses and forecasted tenant improvements and lease commissions based upon market conditions determined through discussion with local real estate professionals, experience the Company has with its other owned properties in such markets and expectations for growth. Capitalization rates and discount rates utilized in these models are estimated by management based upon rates that management believes to be within a reasonable range of current market rates for the respective properties based upon an analysis of factors such as property and tenant quality, geographical location and local supply and demand observations. To the extent the Company under-estimates forecasted cash out flows (tenant improvements, lease commissions and operating costs) or over-estimates forecasted cash inflows (rental revenue rates), the estimated fair value of its real estate assets could be overstated.
Cost Capitalization. The Company capitalizes interest and direct and indirect project costs associated with the initial construction of a property up to the time the property is substantially complete and ready for its intended use within investments in real estate under construction in the unaudited condensed consolidated balance sheets. If costs and activities incurred to ready the vacant space cease, then cost capitalization is also discontinued until such activities are resumed. Once construction has been completed on a vacant space, project costs are no longer capitalized.
Recently Issued Accounting Guidance. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts that reference the London Interbank Offered Rate, or LIBOR, or another reference rate expected to be discontinued because of reference rate reform. The guidance in ASU 2020-04 is optional, applies for a limited period of time to ease the potential burden in accounting for (or recognizing the effect of) reference rate reform on financial reporting, in response to concerns about structural risks of interbank offered rates, and, particularly, the risk of cessation of LIBOR and may be elected over time as reference rate reform activities occur. As of March 31, 2020, the Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation.

10

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 and 2021
(Unaudited and dollars in thousands, except share/unit and per share/unit data)
On July 5, 2022, the Company transitioned its benchmark interest rate for its term loan from LIBOR to the Secured Overnight Financing Rate, or SOFR. The Company adopted ASU 2020-04 and the adoption of this standard did not have an impact on the Company's unaudited condensed consolidated financial statements.

(2)Earnings Per Share
A portion of the Company's non-vested share-based payment awards are considered participating securities and as such, the Company is required to use the two-class method for the computation of basic and diluted earnings per share. Under the two-class computation method, net losses are not allocated to participating securities unless the holder of the security has a contractual obligation to share in the losses. The non-vested share-based payment awards are not allocated losses as the awards do not have a contractual obligation to share in losses of the Company.
The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for the three and nine months ended September 30, 2022 and 2021:
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
BASIC  
Net income attributable to common shareholders
$21,776 $5,028 $70,441 $115,470 
Weighted-average number of common shares outstanding - basic
277,535,717 278,124,204 281,559,058 276,379,718 
 
Net income attributable to common shareholders - per common share basic
$0.08 $0.02 $0.25 $0.42 
DILUTED
Net income attributable to common shareholders - basic
$21,776 $5,028 $70,441 $115,470 
Impact of assumed conversions
11 — 147 — 
Net income attributable to common shareholders
$21,787 $5,028 $70,588 $115,470 
Weighted-average common shares outstanding - basic
277,535,717 278,124,204 281,559,058 276,379,718 
Effect of dilutive securities:
Shares issuable under forward sales agreements
— 2,765,030 1,699,789 1,290,968 
Unvested share-based payment awards139,371 1,159,224 491,877 911,163 
Operating partnership units846,858 — 859,226 — 
Weighted-average common shares outstanding - diluted
278,521,946 282,048,458 284,609,950 278,581,849 
Net income attributable to common shareholders - per common share diluted
$0.08 $0.02 $0.25 $0.41 
For per common share amounts, all incremental shares are considered anti-dilutive for periods that have a loss from continuing operations attributable to common shareholders. In addition, other common share equivalents may be anti-dilutive in certain periods.
11

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 and 2021
(Unaudited and dollars in thousands, except share/unit and per share/unit data)
(3)Investments in Real Estate
The Company acquired the following warehouse/distribution facilities during the nine months ended September 30, 2022(1):
MarketAcquisition DateInitial
Cost
Basis		Primary
Lease
Expiration at Acquisition Date		LandBuilding and ImprovementsLease in-place Intangible
Cincinnati/Dayton, OH(2)
February 2022$23,382 N/A$2,010 $21,372 $— 
Cincinnati/Dayton, OHFebruary 202248,660 04/20324,197 40,944 3,519 
Phoenix, AZApril 202259,140 05/20375,366 50,281 3,493 
$131,182 $11,573 $112,597 $7,012 
(1)    A land parcel located in Hebron, OH was also purchased for $747.
(2)    Subsequent to acquisition, property was fully leased for approximately nine years.
In 2022, the Company purchased the remaining 13% of equity owned by a noncontrolling interest in the Fairburn, Georgia warehouse/distribution facility for $27,958. As the Company previously consolidated its interest in the joint venture which owned the property, the acquisition of the noncontrolling ownership interest was recorded as an equity transaction with the difference between the purchase price and carrying balance of $25,058 recorded as a reduction in additional paid-in-capital.
As of September 30, 2022, the details of the warehouse/distribution real estate under construction are as follows (in $000's, except square feet):
Project (% owned)# of BuildingsMarketEstimated Sq. Ft.
Estimated Project Cost(1)
GAAP Investment Balance as of 9/30/2022
LXP Amount Funded as of 9/30/2022(2)
Estimated Building Completion Date
% Leased as of 9/30/2022
The Cubes at Etna East (95%)(3)
1Columbus, OH1,074,840 $72,100 $59,713 $53,095 3Q 2022— %
Ocala (80%)
1Central Florida1,085,280 83,100 66,556 54,866 4Q 2022— %
Mt. Comfort (80%)
1Indianapolis, IN1,053,360 65,500 48,354 38,278 4Q 2022— %
Smith Farms (90%)(4)
3Greenville-Spartanburg, SC2,194,820 170,400 123,582 97,906 4Q 2022 - 2Q 202336 %
Cotton 303 (93%)(5)
2Phoenix, AZ880,678 84,200 56,554 49,000 1Q 202345 %
South Shore (100%)
2Central Florida270,885 40,500 13,724 10,435 2Q 2023— %
$515,800 $368,483 $303,580 
(1)    Estimated project cost includes estimated tenant improvements and leasing costs and excludes potential developer partner promote, if any.
(2)    Excludes noncontrolling interests' share.
(3)     Base building achieved substantial completion on September 30, 2022. Property not in service as of September 30, 2022.
(4)    Pre-leased 797,936 square foot facility subject to a 12-year lease commencing upon substantial completion of the facility.
(5)    Pre-leased 392,278 square foot facility subject to a 10-year lease commencing upon substantial completion of the facility.

As of September 30, 2022, the Company's aggregate investment in the development arrangements was $368,483, which included capitalized interest of $4,888 for the nine months ended September 30, 2022 and is presented as investments in real estate under construction in the accompanying unaudited condensed consolidated balance sheet. For the nine months ended September 30, 2021, capitalized interest for development arrangements was $1,806.
12

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 and 2021
(Unaudited and dollars in thousands, except share/unit and per share/unit data)
As of September 30, 2022, the details of the land held for development are as follows (in $000's, except acres):
Project (% owned)Market
Approx. Developable Acres
GAAP Investment Balance as of
 9/30/2022
LXP Amount Funded
as of
9/30/2022 (1)
Consolidated:
Reems & Olive (95.5%)
Phoenix, AZ420$101,412 $96,961 
Mt. Comfort Phase II (80%)
Indianapolis, IN1165,236 4,165 
ATL Fairburn JV (100%)
Atlanta, GA14$1,731 $1,728 
550$108,379 $102,854 
(1)    Excludes noncontrolling interests' share.

(4)Dispositions and Impairment
During the nine months ended September 30, 2022 and 2021, the Company disposed of its interests in various properties for an aggregate gross disposition price of $147,345 and $218,796, respectively, and recognized aggregate gains on sales of properties of $52,951 and $104,767, respectively.
Included in the 2021 dispositions are three non-industrial properties with an aggregate disposition price of $35,369, which was satisfied through (i) the redemption of 1,598,906 operating partnership units ("OP units"), (ii) the assumption of $11,610 of third party mortgage financing that encumbered two of the properties and (iii) $1,497 of seller financing. The seller financing note receivable has a fixed interest rate of 6.0% per annum and matures on August 1, 2025. There are no past due payments outstanding related to the seller financing as of September 30, 2022 and 2021.
The Company had six and eight properties classified as held for sale at September 30, 2022 and December 31, 2021, respectively. Assets and liabilities of the held for sale properties consisted of the following:

September 30, 2022December 31, 2021
Assets:
Real estate, at cost$159,963 $170,117 
Real estate, intangible assets8,572 9,454 
Accumulated depreciation and amortization(97,251)(99,659)
Deferred expenses, net1,629 1,759 
Other848 915 
$73,761 $82,586 
Liabilities:
Accounts payable and liabilities$1,630 $1,908 
Deferred revenue362 483 
Prepaid rent823 1,077 
$2,815 $3,468 
The Company assesses on a regular basis whether there are any indicators that the carrying value of its real estate assets may be impaired. Potential indicators may include an increase in vacancy at a property, tenant financial instability, change in the estimated holding period of the asset, the potential sale or transfer of the property in the near future and changes in economic conditions. An asset is determined to be impaired if the asset's carrying value is in excess of its estimated fair value and the Company estimates that its cost will not be recovered. During the nine months ended September 30, 2022, the Company recognized an impairment charge on real estate of $2,457 due to vacancy at the property. During the nine months ended September 30, 2021, the Company recognized impairment charges on real estate of $2,048 related to a vacant office property.

13

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 and 2021
(Unaudited and dollars in thousands, except share/unit and per share/unit data)
(5)Fair Value Measurements
The following tables present the Company's assets and liabilities measured at fair value on a recurring and non-recurring basis as of September 30, 2022 and December 31, 2021, aggregated by the level in the fair value hierarchy within which those measurements fall:
 BalanceFair Value Measurements Using
DescriptionSeptember 30, 2022(Level 1)(Level 2)(Level 3)
Interest rate swap assets$16,586 $— $16,586 $— 
Impaired real estate assets(1)
$1,056 $— $1,056 $— 
BalanceFair Value Measurements Using
DescriptionDecember 31, 2021(Level 1)(Level 2)(Level 3)
Interest rate swap liabilities$(6,258)$— $(6,258)$— 
Impaired real estate assets(2)
$12,735 $— $— $12,735 
(1)    Represents non-recurring fair value measurement. The fair value is calculated as of the impairment date. $1,056 was based on an observable contract and the Company determined that the fair value of the property falls within Level 2 of the fair value reporting hierarchy.
(2)    Represents non-recurring fair value measurement. The Company measured a $12,735 fair value of real estate assets based on a discounted cash flow analysis using a discount rate ranging from 8.0% to 10.0% and a residual capitalization rate ranging from 7.5% to 8.0%. As significant inputs to the models are unobservable, the Company determined that the value determined for these properties falls within Level 3 of the fair value reporting hierarchy.

The majority of the inputs used to value the Company's interest rate swaps fell within Level 2 of the fair value hierarchy, such as observable market interest rate curves; however, the credit valuation associated with the interest rate swaps utilized Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. As of September 30, 2022 and December 31, 2021, the Company determined that the credit valuation adjustment relative to the overall fair value of the interest rate swaps was not significant. As a result, the interest rate swaps were classified in Level 2 of the fair value hierarchy.
The table below sets forth the carrying amounts and estimated fair values of the Company's financial instruments, excluding held for sale assets, as of September 30, 2022 and December 31, 2021:
 As of September 30, 2022As of December 31, 2021
 Carrying
Amount		Fair ValueCarrying
Amount		Fair Value
Liabilities    
Debt$1,620,348 $1,399,498 $1,497,064 $1,491,868 

The fair value of the Company's debt is primarily estimated utilizing Level 3 inputs by using a discounted cash flow analysis, based upon estimates of market interest rates, except for the Company's senior notes payable. The Company determines the fair value of its senior notes payable using market prices. The inputs used in determining the fair value of these notes are categorized as Level 1 due to the fact that the Company uses quoted market rates to value these instruments. However, the inputs used in determining the fair value could be categorized as Level 2 if trading volumes are low.
Fair values cannot be determined with precision, may not be substantiated by comparison to quoted prices in active markets and may not be realized upon sale. Additionally, there are inherent uncertainties in any fair value measurement technique, and changes in the underlying assumptions used, including discount rates, liquidity risks and estimates of future cash flows, could significantly affect the fair value measurement amounts.
Cash Equivalents, Restricted Cash, Accounts Receivable and Accounts Payable. The Company estimates that the fair value of cash equivalents, restricted cash, accounts receivable and accounts payable approximates carrying value due to the relatively short maturity of the instruments.

14

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 and 2021
(Unaudited and dollars in thousands, except share/unit and per share/unit data)
(6)Investments in Non-Consolidated Entities
Below is a schedule of the Company's investments in non-consolidated entities:
Percentage Ownership atInvestment Balance as of
InvestmentSeptember 30, 2022September 30, 2022December 31, 2021
NNN MFG Cold JV L.P. ("MFG Cold JV")(1)20%$27,890 $30,752 
NNN Office JV L.P. ("NNN JV")(2)20%8,836 24,112 
Etna Park 70 LLC(3)90%12,959 12,874 
Etna Park East LLC (4)90%2,124 2,797 
BSH Lessee L.P. (5)25%3,606 4,024 
$55,415 $74,559 
(1)    MFG Cold JV is a joint venture formed in 2021 that owns special purpose industrial properties formerly owned by the Company.
(2)    NNN JV is a joint venture formed in 2018 that owns office properties formerly owned by the Company.
(3)    Joint venture formed in 2017 with a developer entity to acquire a parcel of land. The Company determined that it is not the primary beneficiary.
(4)    Joint venture formed in 2019 with a developer entity to acquire a parcel of land. The Company determined that it is not the primary beneficiary.
(5)    A joint venture investment, which owns a single-tenant, net-leased asset.
During the nine months ended September 30, 2022, NNN JV sold three assets and recognized aggregate gains of $114,481 and the Company recognized its share of the aggregate gains on the transactions of $22,896 within equity in earnings (losses) of non-consolidated entities in its unaudited condensed consolidated statement of operations. In conjunction with these property sales, NNN JV received net proceeds of $141,050 after the satisfaction of an aggregate of $166,450 of its non-recourse mortgage indebtedness. NNN JV distributed $28,147 of net proceeds to the Company as a result of the property sales.

(7)Debt
The Company had the following mortgages and notes payable outstanding as of September 30, 2022 and December 31, 2021:
September 30, 2022December 31, 2021
Mortgages and notes payable$76,013 $84,429 
Unamortized debt issuance costs(1,122)(1,337)
Mortgages and notes payable, net$74,891 $83,092 
Interest rates, including imputed rates on mortgages and notes payable, ranged from 3.5% to 4.3%, at September 30, 2022 and December 31, 2021 and all mortgages and notes payables mature between 2023 and 2031 as of September 30, 2022. The weighted-average interest rate was approximately 4.0% at September 30, 2022 and December 31, 2021.
On July 12, 2021, LCIF encumbered two of its properties with mortgage debt in the amount of $11,610. Subsequently, on July 12, 2021, certain operating partnership unitholders assumed the mortgages upon purchasing the properties. See Note 4, Dispositions and Impairment.
15

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 and 2021
(Unaudited and dollars in thousands, except share/unit and per share/unit data)
The Company had the following senior notes outstanding as of September 30, 2022 and December 31, 2021:
Issue DateSeptember 30, 2022December 31, 2021Interest RateMaturity DateIssue Price
August 2021$400,000 $400,000 2.375 %October 203199.758 %
August 2020400,000 400,000 2.70 %September 203099.233 %
May 2014198,932 198,932 4.40 %June 202499.883 %
998,932 998,932 
Unamortized debt discount(3,335)(3,655)
Unamortized debt issuance costs(6,643)(7,346)
Senior notes payable, net$988,954 $987,931 
Each series of the senior notes is unsecured and requires payment of interest semi-annually in arrears. The Company may redeem the notes at its option at any time prior to maturity in whole or in part by paying the principal amount of the notes being redeemed plus a make-whole premium.
In August 2021, the Company issued $400,000 aggregate principal amount of 2.375% Senior Notes due 2031 (“2031 Senior Notes”) at an issuance price of 99.758% of the principal amount. The Company issued the 2031 Senior Notes at an initial discount of $968 which is being recognized as additional interest expense over the term of the 2031 Senior Notes.
During the three months ended September 30, 2021, the Company used a portion of the net proceeds from the offering of the 2031 Senior Notes to redeem the $188,756 aggregate principal balance of its outstanding 4.25% Senior Notes due 2023 ("2023 Senior Notes"). The consideration paid included the make-whole premium of $12,191 and $2,028 of accrued and unpaid interest. The Company recognized a $12,948 debt satisfaction loss related to the aggregate redemptions.                                                     
The Company has an unsecured credit agreement with KeyBank National Association, as agent. The maturity dates and interest rates as of September 30, 2022, are as follows:

Maturity Date		Current
Interest Rate
$600,000 Revolving Credit Facility(1)
July 2026
SOFR + 0.85%
$300,000 Term Loan(1)(2)
January 2025
Term SOFR + 1.00%
(1)    In July 2022, the Company amended its revolving credit facility and the 2025 term loan with a new revolving credit facility and the continuation of the 2025 term loan (the "2022 Credit Agreement"). The 2022 Credit Agreement, among other things: (i) extended the maturity date of the revolving portion from February 2023 to July 2026, with two six-month extension options, subject to certain conditions, (ii) reduced the applicable margin for the revolving portion of the credit facility by five basis points to a range from 0.725% to 1.40%, and allows for further reductions upon the achievement of to-be-determined sustainability metrics, (iii) amended the debt covenants by reducing the capitalization rate for determining asset value and (iv) transitioned the facility to SOFR. Simultaneously, the Company converted its interest rate swap agreements to Term SOFR, which resulted in a new fixed interest rate of 2.722% on the Company's 2025 term loan. At September 30, 2022, the Company had $130,000 borrowings outstanding and availability of $470,000, subject to covenant compliance. The Company recognized $119 of debt satisfaction losses in connection with the transaction.
(2)    The aggregate unamortized debt issuance costs for the term loan was $1,166 and $1,554 as of September 30, 2022 and December 31, 2021, respectively.

The Company was compliant with all applicable financial covenants contained in its corporate-level debt agreements at September 30, 2022.
During 2007, the Company issued $200,000 original principal amount of Trust Preferred Securities. The Trust Preferred Securities, which are classified as debt, are due in 2037, are open for redemption at the Company's option and bear interest at a variable rate of three-month LIBOR plus 170 basis points through maturity. The interest rate at September 30, 2022 was 4.482%. As of September 30, 2022 and December 31, 2021, there was $129,120 original principal amount of Trust Preferred Securities outstanding and $1,451 and $1,525, respectively, of unamortized debt issuance costs.
16

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 and 2021
(Unaudited and dollars in thousands, except share/unit and per share/unit data)
Capitalized interest recorded during the nine months ended September 30, 2022 and 2021 was $4,927 and $2,124, respectively.

(8)    Derivatives and Hedging Activities
Risk Management Objective of Using Derivatives. The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the type, amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company's derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company's known or expected cash receipts and its known or expected cash payments principally related to the Company's investments and borrowings.
Cash Flow Hedges of Interest Rate Risk. The Company's objectives in using interest rate derivatives are to add stability to interest expense, to manage its exposure to interest rate movements and therefore manage its cash outflows as it relates to the underlying debt instruments. To accomplish these objectives, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy relating to certain of its variable rate debt instruments. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
The changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (loss) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The Company did not incur any ineffectiveness during the nine months ended September 30, 2022 and 2021.
During July 2022, the Company transitioned its four interest rate swap agreements with its counterparties to a benchmark rate of Term SOFR. The swaps were designated as cash flow hedges of the risk in variability attributable to changes in the Term SOFR swap rates on its $300,000 SOFR-indexed variable rate unsecured term loan. Accordingly, changes in fair value of the swaps are recorded in other comprehensive income (loss) and reclassified to earnings as interest becomes receivable or payable. The swaps expire coterminous with the maturity of the term loan in January 2025. During the next 12 months, the Company estimates that an additional $7,543 will be reclassified as a decrease in interest expense if the swaps remain outstanding.
Interest Rate DerivativeNumber of InstrumentsNotional
Interest Rate Swaps4$300,000
17

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 and 2021
(Unaudited and dollars in thousands, except share/unit and per share/unit data)
The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the unaudited condensed consolidated balance sheets:
 As of September 30, 2022As of December 31, 2021
 Balance Sheet LocationFair ValueBalance Sheet LocationFair Value
Derivatives designated as hedging instruments
Interest Rate SwapsOther Assets$16,586 Other Liabilities$(6,258)
The table below presents the effect of the Company's derivative financial instruments on the unaudited condensed consolidated statements of operations for the nine months ended September 30, 2022 and 2021.
Derivatives in Cash FlowAmount of Gain
Recognized in OCI on Derivatives
September 30,
Amount of Loss
Reclassified from Accumulated OCI into Income(1)
September 30,
Hedging Relationships2022202120222021
Interest Rate Swaps$21,316 $3,381 $1,528 $3,691 
(1)    Amounts reclassified from accumulated other comprehensive income (loss) to interest expense within the unaudited condensed consolidated statement of operations.
Total interest expense presented in the unaudited condensed consolidated statements of operations, which includes the effects of cash flow hedges, was $32,758 and $35,170 for the nine months ended September 30, 2022 and 2021, respectively.
The Company's agreements with swap derivatives counterparties contain provisions whereby if the Company defaults on the underlying indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default of the swap derivative obligation. As of September 30, 2022, the Company had not posted any collateral related to the agreements.

(9)    Lease Accounting
Lessor
The Company’s lease portfolio as a lessor primarily includes general purpose, single-tenant net-leased real estate assets. Most of the Company’s leases require tenants to pay fixed annual rental payments that escalate on an annual basis and variable payments for other operating expenses, such as real estate taxes, insurance, common area maintenance ("CAM"), and utilities, that are based on the actual expenses incurred.
Certain leases allow for the tenant to renew the lease term upon expiration or earlier. Periods covered by a renewal option are included within the lease term only when renewals are deemed to be reasonably certain. Certain leases allow for the tenant to terminate the lease before the expiration of lease term and certain leases provide the tenant with the right to purchase the leased property at fair market value or a stipulated price upon expiration of the lease term or before.
Accounting guidance under Topic 842 requires the Company to make certain assumptions and judgments in applying the guidance, including determining whether an arrangement includes a lease and determining the lease term when the contract has renewal, purchase or early termination provisions.
18

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 and 2021
(Unaudited and dollars in thousands, except share/unit and per share/unit data)
The Company analyzes its accounts receivable, customer creditworthiness and current economic trends when evaluating the adequacy of the collectability of the lessee's total accounts receivable balance on a lease by lease basis. In addition, tenants in bankruptcy are analyzed and considerations are made in connection with the expected pre-petition and post-petition claims. If a lessee's accounts receivable balance is considered uncollectible, the Company will write-off the receivable balances associated with the lease to rental revenue and cease to recognize lease income, including straight-line rent, unless cash is received. If the Company subsequently determines that it is probable it will collect substantially all of the lessee's remaining lease payments under the lease term; the Company will reinstate the straight-line balance adjusting for the amount related to the period when the lease was accounted for on a cash basis.
Certain tenants have been experiencing financial difficulties as a result of the current economic conditions. During the nine months ended September 30, 2022 and 2021, the Company wrote off an aggregate of $316 and $463, respectively, accounts receivable relating to certain tenants suffering from the current economic conditions.
The Company elected that the lease and non-lease components in its leases are a single lease component, which is, therefore, being recognized as rental revenue in its unaudited condensed consolidated statements of operations. The primary non-lease service included within rental revenue is CAM services provided as part of the Company’s real estate leases. Topic 842 requires that the Company capitalize, as initial direct costs, only those costs that are incurred due to the execution of a lease. For the nine months ended September 30, 2022, the Company incurred $30 of costs that were not incremental to the execution of leases, which are included in property operating expenses on its unaudited condensed consolidated statements of operations. The Company incurred no costs that were not incremental to the execution of leases in 2021.
The Company manages the risk associated with the residual value of its leased properties by including contract clauses that make tenants responsible for surrendering the space in good condition upon lease termination, holding a diversified portfolio, and other activities. The Company does not have residual value guarantees on specific properties.
The following table presents the Company’s classification of rental revenue for its operating leases for the three and nine months ended September 30, 2022 and 2021:
Three Months Ended September 30,Nine Months Ended September 30,
Classification 2022202120222021
Fixed$66,956 $71,357 $200,965 $213,929 
Variable(1)(2)
11,318 10,996 33,784 40,641 
Total$78,274 $82,353 $234,749 $254,570 
(1)    Primarily comprised of tenant reimbursements.
(2)    Variable income contains termination income of $238 and $14,105 for the nine months ended September 30, 2022 and 2021, respectively. The 2021 termination income is primarily related to a tenant that terminated its lease at the Company's Durham, New Hampshire industrial property.

In May 2022, one of the Company's tenants exercised the purchase option for $28,000 in its operating lease with a sale date of July 2022. The purchase option was not reasonably certain to be exercised at lease inception, resulting in a modification of the operating lease. As a result of this modification to the lease, the Company re-evaluated the lease classification and classified the lease as a sales-type lease. The Company recorded $28,000 in Investment in a sales-type lease and derecognized $17,292 from Real estate, net, $619 from Deferred expenses and $775 from Rent receivable-deferred on its unaudited condensed consolidated balance sheet. The Company recognized $9,314 in Selling profit from sales-type leases in its unaudited condensed consolidated statements of operations for the nine months ended September 30, 2022. In July, the tenant completed the purchase of the property, resulting in the derecognition of the $28,000 investment in a sales-type lease.

19

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 and 2021
(Unaudited and dollars in thousands, except share/unit and per share/unit data)
Future fixed rental receipts for operating leases, assuming no new or re-negotiated leases as of September 30, 2022 were as follows:
Nine months ended September 30,Total
2022 - remainder$64,707 
2023260,818 
2024233,959 
2025213,892 
2026193,909 
2027158,445 
Thereafter591,832 
Total$1,717,562 

The above minimum lease payments do not include reimbursements to be received from tenants for certain operating expenses and real estate taxes and do not include early termination payments provided for in certain leases, unless such payments are reasonably certain to be received.
Lessee
The Company, as lessee, has ground leases, corporate leases for office space, and office equipment leases. All leases were classified as operating leases as of September 30, 2022. The leases have remaining lease terms of up to 38 years. Renewal periods are included in the lease term only when renewal is deemed to be reasonably certain. The lease term also includes periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise the termination option. The Company measures its lease payments by including fixed rental payments and variable rental payments that tie to an index or a rate, such as CPI. The Company recognizes lease expense for its operating leases on a straight-line basis over the lease term and variable lease expense not included in the lease payment measurement as incurred.
The accounting guidance under Topic 842 requires the Company to make certain assumptions and judgments in applying the guidance, including determining whether an arrangement includes a lease, determining the term of a lease when the contract has renewal or termination provisions and determining the discount rate.
The Company determines whether an arrangement is or includes a lease at contract inception by evaluating whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. If the Company has the right to obtain substantially all of the economic benefits from and can direct the use of, the identified asset for a period of time, the Company accounts for the contract as a lease.
The Company uses the information available at the lease commencement date to determine the discount rate for any new leases. The Company used a portfolio approach to determine its incremental borrowing rate. Lease contracts were grouped based on similar lease terms and economic environments in a manner in which the Company reasonably expects that the outcome from applying a portfolio approach does not differ materially from an individual lease approach. The Company estimated a collateralized discount rate for each portfolio of leases.
20

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 and 2021
(Unaudited and dollars in thousands, except share/unit and per share/unit data)
Supplemental information related to operating leases is as follows:
Nine Months Ended
September 30, 2022September 30, 2021
Weighted-average remaining lease term
Operating leases (years)9.411.3
Weighted-average discount rate
Operating leases4.0 %4.1 %

The components of lease expense for the nine months ended September 30, 2022 and 2021 were as follows:

Income Statement Classification FixedVariableTotal
2022:
Property operating$2,657 $— $2,657 
General and administrative1,144 81 1,225 
Total$3,801 $81 $3,882 
2021:
Property operating$2,734 $2 $2,736 
General and administrative1,037 24 1,061 
Total$3,771 $26 $3,797 
The Company recognized sublease income of $2,490 and $2,569 for the nine months ended September 30, 2022 and 2021, respectively.
The following table shows the Company's maturity analysis of its operating lease liabilities as of September 30, 2022:
Operating Leases
2022 - remainder$1,198 
20235,290 
20245,199 
20255,204 
20264,174 
20273,673 
Thereafter7,501 
Total lease payments$32,239 
Less: Imputed interest(6,177)
Present value of operating lease liabilities$26,062 

(10)Concentration of Risk
The Company seeks to reduce its operating and leasing risks through the geographic diversification of its properties, tenant industry diversification, avoidance of dependency on a single asset and the creditworthiness of its tenants. For the nine months ended September 30, 2022 and 2021, no single tenant represented greater than 10% of rental revenues.
Cash and cash equivalent balances at certain institutions may exceed insurable amounts. The Company believes it mitigates this risk by investing in or through major financial institutions.
21

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 and 2021
(Unaudited and dollars in thousands, except share/unit and per share/unit data)

(11)Equity
Shareholders' Equity:
At-The-Market Offering Program. The Company maintains an At-The-Market offering program ("ATM program") under which the Company can issue common shares, including through forward sales contracts.
During the nine months ended September 30, 2021, the Company sold 1,052,800 shares under the ATM Program for net proceeds of $13,574. The Company did not sell shares under the ATM program during the nine months ended September 30, 2022.
During the nine months ended September 30, 2022, the Company issued 3,649,023 common shares previously sold on a forward basis in the first quarter of 2021 on the maturity date of the contracts and received $38,492 of net proceeds. During the nine months ended September 30, 2021, the Company settled 3,875,751 common shares previously sold on a forward basis on the maturity date of the contract and received $41,933 of net proceeds.

During 2021, the Company amended the terms of its ATM offering program, under which the Company may, from time to time, sell up to $350,000 of common shares over the term of the program. As of September 30, 2022, common shares with an aggregate value of $294,985 remain available for issuance under the ATM program.

Underwritten equity offerings. During 2021, the Company entered into forward sales contracts for the sale of 16,000,000 common shares at a public offering price of $12.11 per common share in an underwritten equity offering that have not yet settled. The forward sales contracts mature in December 2022, subject to the Company's rights to elect cash or net share settlement. As of September 30, 2022, the forward sales contracts had an aggregate settlement price of $182,141, which is subject to adjustment in accordance with the forward sales contracts.

Stock Based Compensation. During the nine months ended September 30, 2022 and 2021, the Company issued 47,505 and 38,803, respectively, of fully vested common shares to non-management members of the Company's Board of Trustees with a fair value of $616 and $437, respectively.

Share Repurchase Program. In August 2022, the Company's Board of Trustees authorized the repurchase of an additional up to 10,000,000 common shares under the Company's share repurchase program with no expiration date. During the nine months ended September 30, 2022, 11,702,074 common shares were repurchased and retired for an average price of $10.84 per share. There were no common shares repurchased during the nine months ended September 30, 2021. As of September 30, 2022, 7,274,241 common shares remain available for repurchase under this authorization. The Company records a liability for repurchases that have not yet been settled as of the period end. There were $3,649 of unsettled repurchases as of September 30, 2022.

Series C Preferred Stock. The Company had 1,935,400 shares of Series C Cumulative Convertible Preferred Stock (“Series C Preferred”) outstanding at September 30, 2022. The shares have a dividend of $3.25 per share per annum and have a liquidation preference of $96,770. As of September 30, 2022, each share was convertible into 2.4339 common shares. This conversion ratio may increase over time if the Company's common share dividend exceeds certain quarterly thresholds.

If certain fundamental changes occur, holders may require the Company, in certain circumstances, to repurchase all or part of their shares of Series C Preferred. In addition, upon the occurrence of certain fundamental changes, the Company will, under certain circumstances, increase the conversion rate by a number of additional common shares or, in lieu thereof, may in certain circumstances elect to adjust the conversion rate upon the shares of Series C Preferred becoming convertible into shares of the public acquiring or surviving company.
The Company may, at the Company's option, cause shares of Series C Preferred to be automatically converted into that number of common shares that are issuable at the then prevailing conversion rate. The Company may exercise its conversion right only if, at certain times, the closing price of the Company's common shares equals or exceeds 125% of the then prevailing conversion price of the Series C Preferred.
22

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 and 2021
(Unaudited and dollars in thousands, except share/unit and per share/unit data)
Holders of shares of Series C Preferred generally have no voting rights, but will have limited voting rights if the Company fails to pay dividends for six or more quarters and under certain other circumstances. Upon conversion, the Company may choose to deliver the conversion value to investors in cash, common shares, or a combination of cash and common shares.
A summary of the changes in accumulated other comprehensive income (loss) related to the Company's cash flow hedges is as follows:
Nine Months Ended September 30,
20222021
Balance at beginning of period$(6,258)$(17,963)
Other comprehensive income before reclassifications22,469 3,381 
Amounts of loss reclassified from accumulated other comprehensive income to interest expense1,557 3,691 
Balance at end of period$17,768 $(10,891)
Noncontrolling Interests. In conjunction with several of the Company's acquisitions in prior years, sellers were issued limited partner interests in LCIF (“OP units”) as a form of consideration. All OP units, other than OP units owned by the Company, are redeemable for common shares at certain times, at the option of the holders, and are generally not otherwise mandatorily redeemable by the Company. The OP units are classified as a component of permanent equity as the Company has determined that the OP units are not redeemable securities as defined by GAAP. Each OP unit is currently redeemable at the holder's option for approximately 1.13 common shares, subject to future adjustments.
As of September 30, 2022, there were approximately 745,000 OP units outstanding other than OP units owned by the Company. All OP units receive distributions in accordance with the LCIF partnership agreement. To the extent that the Company's dividend per common share is less than the stated distribution per OP unit per the LCIF partnership agreement, the distributions per OP unit are reduced by the percentage reduction in the Company's dividend per common share. No OP units have a liquidation preference.
The following discloses the effects of changes in the Company's ownership interests in its noncontrolling interests:
Net Income Attributable to
Shareholders and Transfers from Noncontrolling Interests
Nine Months Ended September 30,
 20222021
Net income attributable to LXP Industrial Trust shareholders$75,310 $120,358 
Transfers from noncontrolling interests:
Increase in additional paid-in-capital for reallocation of noncontrolling interests— 435 
Increase in additional paid-in-capital for redemption of noncontrolling OP units
177 670 
Change from net income attributable to shareholders and transfers from noncontrolling interests
$75,487 $121,463 


(12)Related Party Transactions
There were no related party transactions other than those disclosed elsewhere in these unaudited condensed consolidated financial statements.

(13)Commitments and Contingencies
In addition to the commitments and contingencies disclosed elsewhere, the Company has the following commitments and contingencies.
23

LXP INDUSTRIAL TRUST AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 and 2021
(Unaudited and dollars in thousands, except share/unit and per share/unit data)
The Company is obligated under certain tenant leases, including its proportionate share for leases for non-consolidated entities, to fund the expansion of the underlying leased properties. The Company, under certain circumstances, may guarantee to tenants the completion of base building improvements and the payment of tenant improvement allowances and lease commissions on behalf of its subsidiaries.
As of September 30, 2022, the Company had six ongoing consolidated development projects and expects to incur approximately $56,400 and $113,300 in the remainder of 2022 and 2023, respectively, excluding noncontrolling interests' share, to substantially complete the construction of the projects. As of September 30, 2022, the Company has interests in various land parcels held for development. The Company is unable to estimate the timing of any required funding for the potential development projects on these parcels.
The Company and LCIF are parties to a funding agreement under which the Company may be required to fund distributions made on account of LCIF's OP units. Pursuant to the funding agreement, the parties agreed that, if LCIF does not have sufficient cash available to make a quarterly distribution to its limited partners in an amount in accordance with the partnership agreement, LXP will fund the shortfall. Payments under the agreement will be made in the form of loans to LCIF and will bear interest at prevailing rates as determined by the Company in its discretion but, no less than the applicable federal rate. LCIF's right to receive these loans will expire if no OP units remain outstanding and all such loans are repaid. No amounts have been advanced under this agreement.
From time to time, the Company is directly or indirectly involved in legal proceedings arising in the ordinary course of business. Management believes, based on currently available information, and after consultation with legal counsel, that although the outcomes of those normal course proceedings are uncertain, the results of such proceedings, in the aggregate, will not have a material adverse effect on the Company's business, financial condition and results of operations.

(14)Supplemental Disclosure of Statement of Cash Flow Information
In addition to disclosures discussed elsewhere, during the nine months ended September 30, 2022 and 2021, the Company paid $33,430 and $35,515, respectively, for interest and $1,218 and $1,273, respectively, for income taxes.
During the nine months ended September 30, 2022 and 2021, the Company accrued additions for capital projects of $52,049 and $20,540, respectively.
During the nine months ended September 30, 2021, the Company exercised extension options on a lease that resulted in a non-cash increase of $438 to the related operating lease liability and right of use asset.
During the nine months ended September 30, 2021, LCIF disposed of three real estate assets. The consideration included the redemption of 1,598,906 OP Units valued at $22,305 and the assumption of the aggregate related non-recourse debt of $11,610.
During the nine months ended September 30, 2021, the acquisition of the interests in RR Ocala 44, LLC joint venture not already owned by the Company included a $489 non-cash increase to investments in real estate under construction and the noncontrolling interest because a member of the joint venture made a non-cash contribution of the land in exchange for its ownership interest in the joint venture.


(15)Subsequent Events
Subsequent to September 30, 2022, the Company:
•leased approximately 100 acres of land in the Phoenix, Arizona market for 20 years;
•repurchased and retired 400,000 common shares for an average price of $9.10 per share; and
•borrowed $55,000 on its revolving credit facility.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Introduction

When we use the terms the “Company,” the “Trust,” “LXP,” “we,” “our,” and “us,” we refer collectively to LXP Industrial Trust and its consolidated subsidiaries. All of the Company's interests are held, and all of the property operating activities are conducted through special purposes entities, which we refer to as property owner subsidiaries or lender subsidiaries and are separate and distinct legal entities, but in some instances are consolidated for financial statement purposes and/or disregarded for income tax purposes. References herein to ‘‘this Quarterly Report” are to this Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2022. The results of operations contained herein for the three and nine months ended September 30, 2022 and 2021 are not necessarily indicative of the results that may be expected for a full year.

When we use the term “REIT,” we mean real estate investment trust. All references to 2022 and 2021, refer to the periods ending September 30, 2022 and 2021, respectively and our fiscal year ended December 31, 2021.

When we use the term “GAAP,” we mean United States generally accepted accounting principles in effect from time to time.

When we use the term “common shares,” we mean our shares of beneficial interest par value $0.0001, classified as common stock. When we use the term “Series C Preferred Shares,” we mean our beneficial interest classified as 6.50% Series C Cumulative Convertible Preferred Stock.

When we use the term “base rent,” we mean GAAP rental revenue and ancillary income, excluding billed tenant reimbursements and lease termination income.

The following is a discussion and analysis of the unaudited condensed consolidated financial condition and results of operations of LXP Industrial Trust for the three and nine months ended September 30, 2022 and 2021, and significant factors that could affect its prospective financial condition and results of operations. This discussion should be read together with the accompanying unaudited condensed consolidated financial statements of the Company included herein and notes thereto and with the consolidated financial statements and notes thereto included in the Company's most recent Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission, or SEC, on February 24, 2022, which we refer to as the Annual Report. Historical results may not be indicative of future performance.

Forward-Looking Statements. This Quarterly Report, together with other statements and information publicly disseminated by us, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “believes,” “expects,” “intends,” “anticipates,” “estimates,” “projects,” “may,” “plans,” “predicts,” “will,” “will likely result” or similar expressions. Readers should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could materially affect actual results, performances or achievements. In particular, among the factors that could cause actual results, performances or achievements to differ materially from current expectations, strategies or plans include, among others, those risks discussed below in “Management's Discussion and Analysis of Financial Condition and Results of Operations,” and under the headings “Risk Factors” in this Quarterly Report and under “Risk Factors” in Part I, Item A and “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Annual Report and other periodic reports filed by the Company with the SEC. Except as required by law, we undertake no obligation to publicly release any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Accordingly, there is no assurance that our expectations will be realized.

Overview
As of September 30, 2022, we had equity ownership interests in approximately 118 consolidated real estate properties, located in 21 states and containing an aggregate of approximately 54.1 million square feet of space, approximately 99.1% of which was leased.
Since December 31, 2015 through September 30, 2022, we transitioned our portfolio from approximately 16% warehouse/distribution assets to approximately 99% warehouse/distribution assets. As of September 30, 2022, our portfolio consisted of 109 warehouse/distribution facilities and nine other properties.
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On February 8, 2022, we announced that our Board of Trustees initiated a review of our strategic alternatives. On April 8, 2022, we announced that our Board of Trustees suspended the review of strategic alternatives.
Third Quarter 2022 Transaction Summary.
The following summarizes our significant transactions during the three months ended September 30, 2022.
Leasing Activity:
During the third quarter of 2022, we entered into new leases and lease extensions encompassing 0.3 million square feet. The average fixed rent on these extended leases was $7.57 per square foot compared to the average fixed rent on these leases before extension of $5.38 per square foot. The weighted-average cost of tenant improvements and lease commissions was $0.95 per square foot for extended leases and $2.26 per square foot for new first generation leases.
Investments:
•Invested $70.6 million in six ongoing development projects, which amount excludes our joint venture partners' share.
Capital Recycling:
•Disposed of our interest in an industrial warehouse/distribution property and two office/other properties for an aggregate gross sales price of $92.0 million.
Debt:
•Amended our revolving credit facility and the 2025 term loan with a new revolving credit facility and the continuation of the 2025 term loan (the "2022 Credit Agreement"). The 2022 Credit Agreement, among other things: (i) extended the maturity date of the revolving portion from February 2023 to July 2026, with two six-month extension options, subject to certain conditions, (ii) reduced the applicable margin for the revolving portion of the credit facility by five basis points to a range from 0.725% to 1.40%, and allows for further reductions upon the achievement of to-be-determined sustainability metrics, (iii) amended the debt covenants by reducing the capitalization rate for determining asset value and (iv) transitioned the facility to SOFR. Simultaneously, we converted the interest rate swap agreements to Term SOFR, which resulted in a new fixed interest rate of 2.722% on the 2025 term loan.
•Borrowed $10.0 million, net, on our revolving credit facility.
Equity:
•Increased the availability under the repurchase program by 10.0 million shares.
•Repurchased and retired 5.6 million common shares for an average price of $10.16 per share.
Acquisition/Disposition Activity:

During the nine months ended September 30, 2022, we acquired the following warehouse/distribution assets:
MarketSquare FeetInitial Capitalized Cost
(millions)		Date AcquiredApproximate Lease Term
(years)		% Leased at Acquisition
Cincinnati/Dayton, OH(1)
232,500$23.4 February 2022N/A— %
Cincinnati/Dayton, OH544,32048.7 February 202210100 %
Phoenix, AZ268,87259.1 April 202215100 %
1,045,692$131.2 
(1)    Subsequent to acquisition, property was fully leased for approximately nine years.

Our acquisition activity for 2022 compared to our acquisition activity for 2021 has been, and is expected to continue to be,
modest primarily due to current market conditions. In addition, we have been prioritizing development over acquisitions due to the increased yield that development generally provides. We continue to monitor the acquisition market, but price discovery has been occurring in most markets.
During the nine months ended September 30, 2022, we disposed of six properties, inclusive of the dispositions referenced above, for an aggregate gross disposition price of $147.3 million.

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Development Activity:
As of September 30, 2022, we had six consolidated development projects in process with an aggregate estimated total cost of $515.8 million. We anticipate our remaining funding obligation to substantially complete the construction and estimated tenant improvements and leasing costs of these six projects, exclusive of our joint venture partners' share, to be approximately $169.7 million. However, the risks associated with development, including supply chain issues, could adversely impact our estimates.
Critical Accounting Estimates
In preparing the consolidated financial statements we have made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Accounting estimates are deemed critical if they involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. Below is a summary of the critical accounting estimates used in the preparation of our unaudited condensed consolidated financial statements. A summary of our significant accounting policies which are important to the portrayal of our financial condition and results of operations is set forth in (1) Note 2 to our audited consolidated financial statements, which are included in “Financial Statements and Supplementary Data” in Part II, Item 8 of the Annual Report and (2) Note 2 to our unaudited condensed consolidated financial statements contained in this Quarterly Report.
Acquisition of Real Estate. Primarily all of our acquisitions of real estate assets and liabilities are accounted for as asset acquisitions. As such, the purchase prices of acquired tangible and intangible assets and liabilities are recorded and allocated at fair value on a relative basis. The recorded allocations of tangible assets are based on the “as-if-vacant” value using estimated cash flow projections of the properties acquired which incorporates discount, capitalization and interest rates as well as available comparable market information. Allocations of intangible assets includes management’s estimates of current market rents and leasing costs.
We use considerable judgement in our estimates of cash flow projections, discount, capitalization and interest rates, fair market lease rates, carrying costs during hypothetical expected lease-up periods and costs to execute similar leases. While our methodology for purchase price allocation did not change during the nine months ended September 30, 2022, the real estate market is fluid and our assumptions are based on information currently available in the market at the time of acquisition. Significant increases or decreases in these key estimates, particularly with regards to cash flow projections and discount and capitalization rates, would result in a significantly lower or higher fair value measurement of the real estate assets being acquired.
Revenue Recognition. We enter into agreements with tenants that convey the right to control the use of identified space at our properties in exchange for rental revenue. These agreements meet the criteria for recognition as leases under Accounting Standards Codification (“ASC”) 842, Leases. We recognize lease revenue on a straight-line basis over the term of the lease unless another systematic and rational basis is more representative of the time pattern in which the use benefit is derived from the leased property. We commence revenue recognition when possession or control of the space is turned over to the tenant.
We evaluate the collectability of our rental payments and recognize revenue on a cash basis when we believe it is no longer probable that we will receive substantially all of the remaining lease payments. Management exercises judgment in assessing collectability of tenant receivables and considers payment history, current credit status, publicly available information about the financial condition of the tenant and other factors. Our assessment of the collectability of tenant receivables can have a significant impact on the rental revenue recognized in our unaudited condensed consolidated statements of operations.
Impairment of Real Estate. We record impairments of our real estate assets classified as held for use when triggering events dictate that an asset may be impaired. An impairment is recorded when the carrying amount of the asset exceeds the sum of its undiscounted future operating and residual cash flows. The impairment recorded is the difference between estimated fair value of the asset and the carrying amount. We record impairments of our real estate assets classified as held for sale at the lower of the carrying amount or estimated fair value using the estimated or contracted sales price less costs to sell. Any real estate assets recorded at fair value on a non-recurring basis as a result of our impairment analysis are valued using unobservable local and national industry market data such as comparable sales, appraisals, brokers’ opinions of value and/or terms of definitive sales contracts. Additionally, the analysis includes considerable judgment in our estimates of hold periods, projected cash flows and discount and capitalization rates. Significant increases or decreases in any of these inputs, particularly with regards to cash flow projections and discount and capitalization rates, would result in a significantly lower or higher fair value measurement of the real estate assets being assessed.
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We will record an impairment charge related to our investments, including investments in non-consolidated entities, if we determine the fair value of the investments are less than their carrying value and such impairment is other-than-temporary. We evaluate whether events or changes in circumstances indicate that the carrying amount of our investments may not be recoverable. Our evaluation of changes in economic or operating conditions and whether an impairment is other-than-temporary may include developing estimates of fair value, forecasted cash flows or operating income before depreciation and amortization. We estimate undiscounted cash flows and fair value using observable and unobservable data such as operating income, hold periods, estimated capitalization and discount rates, or relevant market multiples, leasing prospects and local market information and whether certain impairments are other-than-temporary.

Liquidity and Capital Resources
Cash Flows. We believe that cash flows from operations will continue to provide adequate capital to fund our operating and administrative expenses, regular debt service obligations and all dividend payments in accordance with applicable REIT requirements in both the short-term and long-term, however, our cash flow from operations may be negatively affected in the near term if we experience tenant defaults as a result of the effects of the current economic condition. In addition, we anticipate that cash on hand, borrowings under our unsecured revolving credit facility, capital recycling proceeds, issuances of equity, mortgage proceeds and other debt, as well as other available alternatives, will provide the necessary capital required by our business.
At September 30, 2022, our property owner subsidiaries do not have mortgage maturities with balloon payments due until 2031. In addition, certain of our subsidiaries are obligated to fund the construction of our development projects and we sometimes guaranty these obligations. We believe our property owner subsidiaries have sufficient sources of liquidity to meet these obligations through future cash flows from operations, the credit markets and, if determined appropriate by us, a capital contribution from us from either cash on hand ($29.4 million at September 30, 2022), property sale proceeds, borrowing capacity under our unsecured revolving credit facility ($470.0 million at September 30, 2022, subject to covenant compliance), unsettled forward common share sale contracts, and future cash flows from operations.
Cash flows from operations were $154.1 million for the nine months ended September 30, 2022 as compared to $167.4 million for the nine months ended September 30, 2021. The decrease was primarily related to property sales and a decrease in termination fee income, partially offset by the impact of cash flow generated from acquiring properties. The underlying drivers that impact our working capital, and therefore cash flows from operations, are the timing of collection of rents, including reimbursements from tenants, payment of interest on mortgage debt and payment of operating and general and administrative costs. We believe the net-lease structure of the leases encumbering a majority of the properties in which we have an interest mitigates the risks of the timing of cash flows from operations since the payment and timing of operating costs related to the properties are generally borne directly by the tenant. The collection and timing of tenant rents are closely monitored by management as part of our cash management program.
Net cash used in investing activities totaled $208.2 million and $344.1 million during the nine months ended September 30, 2022 and 2021, respectively. Cash used in investing activities related primarily to acquisitions of real estate, investments in real estate under construction, capital expenditures, lease costs, investments in non-consolidated entities and changes in real estate deposits, net. Cash provided by investing activities primarily related to net proceeds received from the disposition of real estate and distributions from non-consolidated entities.
Net cash (used in) provided by financing activities totaled $(107.5) million and $147.7 million during the nine months ended September 30, 2022 and 2021, respectively. Cash used in financing activities in 2022 was primarily related to the repurchase of common shares, the purchase of a noncontrolling interest and dividend and debt service payments, offset by credit facility borrowings. Cash provided by financing activities in 2021 was primarily related to the issuance of the 2031 Senior Notes, revolving credit facility borrowings, mortgage proceeds, issuances of common shares and cash contributions from noncontrolling interests, offset by the redemption of the 2023 Senior Notes, dividend and debt service payments.
Common Share Issuances:
At-The-Market Offering Program. We maintain an At-The-Market offering program ("ATM program") under which the Company can issue common shares, including through forward sales contracts.

During the nine months ended September 30, 2021, we sold 1.1 million shares under the ATM Program for net proceeds of $13.6 million. We did not sell shares under the ATM program during the nine months ended September 30, 2022.

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During the nine months ended September 30, 2022, we settled 3.6 million common shares previously sold in 2021 on a forward basis on the maturity date of the contracts and received $38.5 million of net proceeds. During the nine months ended September 30, 2021, we settled 3.9 million common shares previously sold on a forward basis on the maturity date of the contract and received $41.9 million of net proceeds. All forward sales contracts under our ATM program have been settled as of September 30, 2022.

In February 2021, we amended the terms of our ATM offering program, under which we may, from time to time, sell up to $350.0 million common shares over the term of the program. As of September 30, 2022, common shares with an aggregate value of $295.0 million remain available for issuance under the ATM program.

Underwritten Equity Offerings. In May 2021, we entered into forward sales contracts for the sale of 16,000,000 common shares at a public offering price of $12.11 per common share in an underwritten equity offering that have not yet settled. The forward sales contracts mature in December 2022, subject to our right to elect cash or net share settlement. As of September 30, 2022, the forward sales contracts had an aggregate settlement price of $182.1 million, which is subject to adjustment in accordance with the forward sales contracts.

The volatility in the capital markets primarily resulting from the effects of the current economic conditions may negatively affect our ability to access the capital markets through our ATM program and other offerings.
Share Repurchase Program. During 2022, our Board of Trustees authorized the repurchase of an additional 10.0 million common shares under the Company's share repurchase program with no expiration date. During the nine months ended September 30, 2022, we repurchased and retired approximately 11.7 million common shares at an average price of $10.84 per share. We did not repurchase any common shares during the nine months ended September 30, 2021. Approximately 7.3 million common shares remained available for repurchase under the current authorization as of September 30, 2022. We have continued to, and in the future may, repurchase our common shares in the context of our overall capital plan and to the extent we believe market volatility offers prudent investment opportunities based on our common share price versus net asset value per share.

Dividends. Dividends paid to our common and preferred shareholders were $107.9 million and $95.9 million in the nine months ended September 30, 2022 and 2021, respectively.
We declared a quarterly dividend of $0.12 per common share during the three months ended September 30, 2022, which is an increase from the $0.1075 per common share quarterly dividend declared during the three months ended September 30, 2021.
UPREIT Structure. As of September 30, 2022, 0.7 million units of limited partner interests, or OP units, in our operating partnership, LCIF, were outstanding not including OP units held by us. Assuming all outstanding OP units not held by us were redeemed on such date, the estimated fair value of such OP units was $7.7 million based on our closing price of $9.16 per common share as of September 30, 2022 and a redemption factor of approximately 1.13 common shares per OP unit.
Financings. The following senior notes were outstanding as of September 30, 2022:
Issue DateFace Amount ($000)Interest RateMaturity DateIssue Price
August 2021$400,000 2.375 %October 203199.758 %
August 2020400,000 2.70 %September 203099.233 %
May 2014198,932 4.40 %June 202499.883 %
$998,932 
Each series of senior notes is unsecured and requires payment of interest semi-annually in arrears. We may redeem the notes at our option at any time prior to maturity in whole or in part by paying the principal amount of the senior notes being redeemed plus a make-whole premium.
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A summary of the maturity dates and interest rates of our unsecured credit agreement, as of September 30, 2022, are as follows:

Maturity Date		Current
Interest Rate
$600.0 Million Revolving Credit Facility(1)
July 2026SOFR + 0.85%
$300.0 Million Term Loan(2)
January 2025Term SOFR + 1.00%
(1)    Maturity date of the revolving credit facility can be extended to July 2027 at our option. The interest rate ranges from SOFR plus 0.725% to 1.40%. At September 30, 2022, we had $130.0 million borrowings outstanding and availability of $470.0 million, subject to covenant compliance.
(2)    The Term SOFR portion of the interest rate was swapped to obtain a current fixed rate of 2.722%.

As of September 30, 2022, we were compliant with all applicable financial covenants contained in our corporate-level debt agreements.

Contractual Obligations

As of September 30, 2022, we had six ongoing consolidated development projects and expect to incur approximately $56.4 million and $113.3 million of costs in the remainder of 2022 and 2023, respectively, excluding noncontrolling interests' share, to substantially complete the construction of such projects and estimated tenant improvement and leasing costs. As of September 30, 2022, we had interests in various land parcels held for development. We are unable to estimate the timing of any required funding for potential development projects on these parcels.
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Results of Operations
Three months ended September 30, 2022 compared with three months ended September 30, 2021. The increase in net income attributable to common shareholders of $16.7 million was primarily due to the items discussed below.
The decrease in total gross revenues of $3.3 million was primarily due to property sales, including the recapitalization of our special purpose industrial portfolio now owned by MFG Cold JV, which was partially offset by revenue from recently acquired properties and an increase in advisory fees during the three months ended September 30, 2022.
The increase in property operating expense of $2.6 million was primarily due to an increase in operating expense responsibilities at certain properties.
The increase in general and administrative expenses of $0.7 million was primarily due to an increase in costs related to shareholder activism and trustee fees.
The decrease in interest and amortization expense of $1.0 million related primarily to a $1.4 million increase in capitalized interest related to increased development. The decrease was partially offset by increased interest rates on our variable-rate unsecured debt during the three months ended September 30, 2022 compared to the three months ended September 30, 2021.
The decrease in debt satisfaction losses, net of $13.1 million was primarily related to the redemption of the 2023 Senior Notes in the third quarter of 2021.
The decrease in impairment charges of $1.4 million was related to the timing of impairment charges recognized on certain properties. The impairments in each period were primarily due to a potential sale, vacancy and lack of leasing prospects.
The increase in gains on sales of properties of $8.7 million was related to the timing of property dispositions.
The decrease in equity in earnings (losses) of non-consolidated entities of $1.3 million was primarily due to property sales and recognizing our share of impairment charges related to NNN JV in 2022 that resulted in a decrease in equity in earnings of $0.7 million. Additionally, we incurred $0.6 million of net losses from MFG Cold JV, which was formed subsequent to September 30, 2021.
Nine months ended September 30, 2022 compared with nine months ended September 30, 2021. The decrease in net income attributable to common shareholders of $45.0 million was primarily due to the items discussed below.
The decrease in total gross revenues of $17.4 million was primarily due to a decrease in termination income of $13.9 million recognized during the nine months ended September 30, 2021. In addition, property sales, including the recapitalization of our special purpose industrial portfolio now owned by MFG Cold JV, contributed to the decrease, which was partially offset by revenue from recently acquired properties and an increase in advisory fees.
The increase in depreciation and amortization expense of $4.1 million was primarily due to acquisition activity.
The increase in property operating expense of $8.3 million was primarily due to an increase in operating expense responsibilities at certain properties.
The increase in general and administrative expenses of $4.4 million was primarily due to an increase of $2.6 million in costs incurred related to the Board of Trustees' strategic alternatives review and costs related to shareholder activism. The remaining $1.8 million increase is primarily due to an increase in payroll expense, trustee fees, legal and other consulting costs.
The decrease in non-operating income of $0.6 million was primarily due to funds received for land easements at two of our properties in 2021 with no comparable income in 2022.
The decrease in interest and amortization expense of $2.4 million related primarily to the satisfaction of secured debt in 2021 and a $2.8 million increase in capitalized interest mostly related to increased development. The decrease was partially offset by an increase in interest expense related to increased unsecured debt outstanding and increased interest rates on our variable-rate unsecured debt during the nine months ended September 30, 2022 compared to the September 30, 2021.
The decrease in debt satisfaction losses, net of $13.1 million was primarily related to the redemption of the 2023 Senior Notes during the nine months ended September 30, 2021.
The decrease in gains on sales of properties of $51.8 million was related to the timing of property dispositions.
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The increase in selling profit from sales-type lease of $9.3 million is due to a tenant exercising its purchase option resulting in a change in lease classification from an operating lease to a sales-type lease in 2022 with no comparable transaction in 2021.
The increase in equity in earnings (losses) of non-consolidated entities of $15.8 million was primarily due to recognizing our share of gains on sale of three properties from NNN JV in 2022 in the amount of $22.9 million with no property sales at our non-consolidated entities in 2021. The increase was primarily offset by recognizing our share of impairment charges and losses on debt satisfaction related to NNN JV in 2022 in the amount of $4.8 million and $1.5 million, respectively.
The decrease in net income attributable to noncontrolling interests of $1.2 million was primarily attributable to a decrease in third-party OP unitholders and the timing of gains recognized on sales of properties by LCIF.
Same-Store Results
Same-store net operating income, or NOI, which is a non-GAAP measure, represents the NOI for consolidated properties that were owned, stabilized and included in our portfolio for two comparable reporting periods. We define NOI as operating revenues (rental income (less GAAP rent adjustments and lease termination income, net), and other property income) less property operating expenses. As same-store NOI excludes the change in NOI from acquired and disposed of properties, it highlights operating trends such as occupancy levels, rental rates and operating costs on properties. Other REITs may use different methodologies for calculating same-store NOI, and accordingly same-store NOI may not be comparable to other REITs. Management believes that same-store NOI is a useful supplemental measure of our operating performance. However, same-store NOI should not be viewed as an alternative measure of our financial performance since it does not reflect the operations of our entire portfolio, nor does it reflect the impact of general and administrative expenses, acquisition-related expenses, interest expense, depreciation and amortization costs, other nonproperty income and losses, the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, or trends in development and construction activities which are significant economic costs and activities that could materially impact our results from operations. We believe that net income is the most directly comparable GAAP measure to same-store NOI.
The following presents our consolidated same-store NOI, for the three and nine months ended September 30, 2022 and 2021 ($000's):
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Total cash base rent$55,508 $52,858 $158,298 $152,005 
Tenant reimbursements10,063 8,283 27,291 24,736 
Property operating expenses(11,646)(9,317)(32,135)(28,060)
Same-store NOI$53,925 $51,824 $153,454 $148,681 

Our reported same-store NOI increased for the three and nine months of 2021 compared to the three and nine months of 2022 by 4.1% and 3.2%, respectively, primarily due to an increase in cash base rents. As of September 30, 2022 and 2021, our historical same-store square footage leased was 99.5% and 99.9%, respectively.

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Below is a reconciliation of net income to same-store NOI for periods presented ($000's):

Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Net income$23,591 $7,058 $76,037 $122,320 
Interest and amortization expense11,255 12,210 32,758 35,170 
Provision for income taxes271 270 951 986 
Depreciation and amortization44,946 45,359 134,645 130,579 
General and administrative9,060 8,363 29,093 24,695 
Transaction costs1 64 56 205 
Non-operating/advisory fee income(1,630)(1,265)(4,616)(3,239)
Gains on sales of properties(24,841)(16,122)(52,951)(104,767)
Impairment charges628 2,048 2,457 2,048 
Debt satisfaction (gains) losses, net119 13,222 119 13,222 
Selling profit from sales-type lease— — (9,314)— 
Equity in (earnings) losses of non-consolidated entities1,340 75 (15,580)249 
Lease termination income, net(238)(1,960)(238)(13,787)
Straight-line adjustments(2,078)(3,196)(8,893)(8,146)
Lease incentives128 192 391 605 
Amortization of above/below market leases(455)(314)(1,416)(1,211)
Sales-type lease interest income13 — — — 
NOI62,110 66,004 183,499 198,929 
Less NOI:
Acquisitions, development and dispositions(8,185)(14,180)(30,045)(50,248)
Same-Store NOI$53,925 $51,824 $153,454 $148,681 


Funds From Operations
We believe that Funds from Operations, or FFO, which is a non-GAAP measure, is a widely recognized and appropriate measure of the performance of an equity REIT. We believe FFO is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. As a result, FFO provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities, interest costs and other matters without the inclusion of depreciation and amortization, providing perspective that may not necessarily be apparent from net income.
The National Association of Real Estate Investment Trusts, or NAREIT, defines FFO as “net income (calculated in accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from the sales of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. The reconciling items include amounts to adjust earnings from consolidated partially-owned entities and equity in earnings of unconsolidated affiliates to FFO.” FFO does not represent cash generated from operating activities in accordance with GAAP and is not indicative of cash available to fund cash needs.
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We present FFO available to common shareholders and unitholders - basic and also present FFO available to all equityholders and unitholders - diluted on a company-wide basis as if all securities that are convertible, at the holder's option, into our common shares, are converted at the beginning of the period. We also present Adjusted Company FFO available to all equityholders and unitholders - diluted which adjusts FFO available to all equityholders and unitholders - diluted for certain items which we believe are not indicative of the operating results of our real estate portfolio. We believe this is an appropriate presentation as it is frequently requested by security analysts, investors and other interested parties. Since others do not calculate these measures in a similar fashion, these measures may not be comparable to similarly titled measures as reported by others. These measures should not be considered as an alternative to net income as an indicator of our operating performance or as an alternative to cash flow as a measure of liquidity.
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The following presents a reconciliation of net income attributable to common shareholders to FFO available to common shareholders and unitholders and Adjusted Company FFO available to all equityholders and unitholders for the three and nine months ended September 30, 2022 and 2021 (unaudited and dollars in thousands, except share and per share amounts):
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
FUNDS FROM OPERATIONS:
Basic and Diluted:
Net income attributable to common shareholders$21,776 $5,028 $70,441 $115,470 
Adjustments:
Depreciation and amortization44,227 44,652 132,600 128,442 
Impairment charges - real estate, including our share of non-consolidated entities1,256 2,048 7,299 2,048 
Noncontrolling interests - OP units11 240 147 1,391 
Amortization of leasing commissions719 707 2,045 2,137 
Joint venture and noncontrolling interest adjustment2,612 2,115 8,585 6,344 
Gains on sales of properties, including our share of non-consolidated entities, net of tax(24,842)(16,122)(75,803)(104,767)
FFO available to common shareholders and unitholders - basic45,759 38,668 145,314 151,065 
Preferred dividends1,573 1,573 4,718 4,718 
Amount allocated to participating securities41 37 151 170 
FFO available to all equityholders and unitholders - diluted47,373 40,278 150,183 155,953 
Selling profit from sales-type lease(1)
— — (9,314)— 
Non-recurring costs(2)
640 64 2,629 205 
Debt satisfaction losses, net, including our share of non-consolidated entities119 13,222 1,614 13,222 
Adjusted Company FFO available to all equityholders and unitholders - diluted$48,132 $53,564 $145,112 $169,380 
Per Common Share and Unit Amounts
Basic:
FFO$0.16 $0.14 $0.51 $0.54 
Diluted:
FFO
$0.17 $0.14 $0.52 $0.55 
Adjusted Company FFO
$0.17 $0.19 $0.50 $0.59 
Weighted-Average Common Shares:
Basic:
Weighted-average common shares outstanding - basic EPS277,535,717 278,124,204 281,559,058 276,379,718 
Operating partnership units(3)
846,858 1,161,757 859,226 2,263,105 
Weighted-average common shares outstanding - basic FFO278,382,575 279,285,961 282,418,284 278,642,823 
Diluted:
Weighted-average common shares outstanding - diluted EPS278,521,946 282,048,458 284,609,950 278,581,849 
Operating partnership units(3)
— 1,161,757 — 2,263,105 
Unvested share-based payment awards— 53,320 23,175 35,645 
Preferred shares - Series C4,710,570 4,710,570 4,710,570 4,710,570 
Weighted-average common shares outstanding - diluted FFO283,232,516 287,974,105 289,343,695 285,591,169 
(1)    Gain recognized upon exercise of the tenant's purchase option in the lease.
(2)    Includes transaction, strategic alternatives and costs related to shareholder activism.
(3)    Includes all OP units other than OP units held by us.
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Off-Balance Sheet Arrangements
As of September 30, 2022, we had investments in various real estate entities with varying structures. The real estate investments owned by these entities are generally financed with non-recourse debt. Non-recourse debt is generally defined as debt whereby the lenders' sole recourse with respect to borrower defaults is limited to the value of the assets collateralized by the debt. The lender generally does not have recourse against any other assets owned by the borrower or any of the members or partners of the borrower, except for certain specified exceptions listed in the particular loan documents. These exceptions generally relate to "bad boy" acts, including fraud, prohibited transfers and breaches of material representations. We have guaranteed such obligations for certain of our non-consolidated entities with respect to $608.7 million of such non-recourse debt. We believe the likelihood of making any payments under such guaranties is remote and we generally have an agreement from each partner to reimburse us for its proportionate share of any liability related to a guarantee trigger unless such trigger is caused solely by us.
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ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk relates primarily to our variable-rate indebtedness not subject to interest rate swaps and our fixed-rate debt. Our consolidated aggregate principal variable-rate indebtedness not subject to interest rate swaps was $259.1 million and $129.1 million at each of September 30, 2022 and 2021, which represented 15.9% and 8.4%, respectively, of our aggregate principal consolidated indebtedness. During the three months ended September 30, 2022 and 2021, our variable-rate indebtedness had a weighted-average interest rate of 3.5% and 1.4%, respectively. Had the weighted-average interest rate been 100 basis points higher, our interest expense for the three months ended September 30, 2022 and 2021 would have increased by $0.6 million in each period. During the nine months ended September 30, 2022 and 2021, our weighted-average variable-rate interest rate was 2.7% and 1.7%, respectively. Had the weighted-average interest rate been 100 basis points higher, our interest expense for the nine months ended September 30, 2022 and 2021 would have increased by $1.5 million and $1.3 million, respectively. At each of September 30, 2022 and 2021, our aggregate principal consolidated fixed-rate debt was $1.4 billion, which represented 84.1% and 91.6%, respectively, of our aggregate principal indebtedness.

For certain of our financial instruments, fair values are not readily available since there are no active trading markets as characterized by current exchanges between willing parties. Accordingly, we derive or estimate fair values using various valuation techniques, such as computing the present value of estimated future cash flows using discount rates commensurate with the risks involved. However, the determination of estimated cash flows may be subjective and imprecise. Changes in assumptions or estimation methodologies can have a material effect on these estimated fair values, especially given the volatility of the current economic environment. The following fair value was determined using the interest rates that we believe our outstanding fixed-rate indebtedness would warrant as of September 30, 2022. We believe the fair value is indicative of the interest rate environment as of September 30, 2022, but this amount does not take into consideration the effects of subsequent interest rate fluctuations. Accordingly, we estimate that the fair value of our fixed-rate indebtedness was $1.2 billion as of September 30, 2022.

Our interest rate risk objectives are to limit the impact of interest rate fluctuations on earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, we manage our exposure to fluctuations in market interest rates through the use of fixed-rate debt instruments to the extent that reasonably favorable rates are obtainable with such arrangements. We may enter into derivative financial instruments such as interest rate swaps or caps to mitigate our interest rate risk on a related financial instrument or to effectively lock the interest rate on a portion of our variable-rate debt. As of September 30, 2022, we had four interest rate swap agreements (see note 8 to our unaudited condensed consolidated financial statements contained in this Quarterly Report).

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as such terms are defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report to determine if such controls and procedures were effective to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that information required to be disclosed by us in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management, including each of our Chief Executive Officer and Chief Financial Officer, has concluded that our disclosure controls and procedures were effective as of September 30, 2022.
Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this Quarterly Report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Controls. Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
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PART II - OTHER INFORMATION
ITEM 1.Legal Proceedings.
From time to time, we are directly and indirectly involved in legal proceedings arising in the ordinary course of our business, including claims by lenders under non-recourse carve-out guarantees. We believe, based on currently available information, and after consultation with legal counsel, that although the outcomes of those normal course proceedings are uncertain, the results of such proceedings, in the aggregate, will not have a material adverse effect on our business, financial condition and results of operations.

ITEM 1A.Risk Factors.
There have been no material changes in our risk factors from those disclosed in the Annual Report other than the following:

Recent inflationary pressures could result in higher interest rates, which would have a negative impact on our business.

Rising inflation and elevated U.S. budget deficits and overall debt levels, including as a result of federal pandemic relief and stimulus legislation and/or economic or market and supply chain conditions, can put upward pressure on interest rates and could be among the factors that could lead to higher interest rates in the future. Higher interest rates could adversely affect our overall business, income, and our ability to pay dividends, including by reducing the fair value of many of our assets and adversely affecting our ability to obtain financing on favorable terms or at all, and negatively impacting the value of properties and the ability of prospective buyers to obtain financing for properties we intend to sell. This may affect our earnings results, reduce our ability to sell our assets, or reduce our liquidity. Furthermore, our business and financial results may be harmed by our inability to accurately anticipate developments associated with changes in, or the outlook for, interest rates.

Disruptions in the financial markets and uncertain economic conditions could adversely affect the value of our real estate investments.

Disruptions in the financial markets could adversely affect the value of our real estate investments. Concerns over economic recession, the COVID-19 pandemic, interest rate increases, policy priorities of the U.S. presidential administration, trade wars, labor shortages, or inflation may contribute to increased volatility and diminished expectations for the economy and markets. Additionally, concern over geopolitical issues may also contribute to prolonged market volatility and instability. For example, the conflict between Russia and Ukraine has led to disruption, instability and volatility in global markets and industries. The U.S. government and other governments in jurisdictions have imposed severe economic sanctions, export controls and other against Russia and Russian interests, and have threatened additional sanctions and controls. The full impact of these measures, as well as potential responses to them by Russia, is unknown. Such conditions could impact real estate fundamentals and result in lower occupancy, lower rental rates, and declining values in our real estate portfolio and in the real estate collateral securing any indebtedness. As a result, the value of our property investments could decrease below the amounts paid for such investments, the value of real estate collateral securing any indebtedness could decrease below the outstanding principal amounts of such indebtedness, and revenues from our properties could decrease due to fewer and/or delinquent tenants or lower rental rates. This could significantly harm our revenues, results of operations, financial condition, business prospects and our ability to make distributions to our shareholders.

The LIBOR index rate may not be available in the future.

In July 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. On March 5, 2021, the Financial Conduct Authority further announced that it intends to stop compelling banks to submit rates for the calculation of one, three and six month LIBOR after June 30, 2023. It is unclear whether new methods of calculating such LIBOR periods will be established such that they continue to exist after June 30, 2023. It is not possible to predict the effect of these changes, other reforms or the establishment of alternative reference rates in the United States or elsewhere. The Alternative Reference Rates Committee (or ARRC) has proposed that the Secured Overnight Financing Rate (or SOFR) is the rate that represents best practice as the alternative to USD-LIBOR for use in derivatives and other financial contracts that are currently indexed to USD-LIBOR. ARRC has proposed a paced market transition plan to SOFR from USD-LIBOR and organizations are currently working on industry wide and company specific transition plans as it relates to derivatives and cash markets exposed to USD-LIBOR. Our trust preferred securities do not provide for a clear alternative to USD-LIBOR.

The transition from LIBOR to an alternative reference rate could result in higher all-in interest costs and could hinder our ability to maintain effective hedges, which could impact our financial performance. Further, the impact or potential impact of LIBOR transition could incentivize us to prepay debt and/or unwind hedge positions earlier than we anticipated when closing the debt facility and/or entering into the hedge position. If we prepay debt, we may owe prepayment penalties or other breakage costs. If we unwind hedge positions, we could owe unwind payments to our counterparties, which could be significant.
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ITEM 2.Unregistered Sales of Equity Securities and Use of Proceeds.
The following table summarizes repurchases of our common shares/OP units during the three months ended September 30, 2022 pursuant to publicly announced repurchase plans (1):
Period(a)
Total Number of Shares/Units Purchased		(b)
Average Price Paid for Share/Unit
(c)
Total Number of Shares/Units Purchased as Part of Publicly Announced Plans or Programs (1)
(d)
Maximum Number of Shares/Units That May Yet Be Purchased Under the Plans or Programs (1)
July 1 - 31, 20221,800,000 $10.65 1,800,000 1,078,289 
August 1 - 31, 2022615,641 $10.59 615,641 10,462,648 
September 1 - 30, 2022(2)
3,188,407 $9.80 3,188,407 7,274,241 
Third quarter 20225,604,048 $10.16 5,604,048 7,274,241 

(1)    Share repurchase authorization of an additional 10.0 million common shares announced on August 4, 2022, which has no expiration date.
(2)    Excludes 400,000 common shares that were purchased in September 2022 that were settled in October 2022.
ITEM 3.Defaults Upon Senior Securities - not applicable.
ITEM 4.Mine Safety Disclosures - not applicable.
ITEM 5.Other Information.
Effective November 2, 2022, our Board of Trustees adopted the Second Amended and Restated By-laws of LXP Industrial Trust, which amended and restated our Amended and Restated By-laws. Among other things, the Second and Amended Restated By-laws:

•Enhance the procedural mechanics and disclosure requirements in connection with shareholder nominations of trustees and submissions of proposals regarding other business at shareholder meetings (other than nominations pursuant to the existing proxy access provision in Section 1.13 of the Second Amended and Restated By-laws and proposals to be included in the our proxy materials pursuant to Rule 14a-8 under the Exchange Act) or by means of written or electronic consent, including by requiring:
–additional background information and disclosures regarding proposing shareholders, the proposed nominees and business, and certain related parties pertaining to a shareholder’s solicitation of proxies, including additional disclosures with respect to the nature of the interests held by such persons in us and other potentially interested parties, and the existence of agreements, arrangements or understandings with third parties that may be material to the shareholder’s solicitation of proxies;
–any shareholder submitting a nomination notice make an undertaking to solicit proxies from holders of at least 67% of the voting power of all of our shares of beneficial interest entitled to vote generally in the election of trustees;
–compliance with the requirements of Regulation 14A under the Exchange Act (including the newly effective “universal proxy rules”) in order for shareholder nominations and proposals for other business to be deemed properly given under the Second Amended and Restated By-laws; and
–any nominee proposed by a shareholder deliver a written questionnaire with respect to the nominee’s background and qualification and a written certification representing that the nominee is not and will not become party to any commitment with any third party with respect to the nominee’s actions as a trustee, or which could limit or interfere with the nominee’s ability to comply with their fiduciary duties.
•Provide that any shareholder soliciting proxies from other shareholder must use a proxy card color other than white;
•Remove the requirement to provide a list of all shareholders entitled to vote at meetings of shareholders; and
•Make various other updates, including ministerial, clarifying and conforming changes and changes in furtherance of gender neutrality.
This description of the Second Amended and Restated By-laws is qualified in its entirety by reference to the complete text of the Second Amended and Restated By-laws, a copy of which is filed herewith as Exhibit 3.6 and incorporated herein by reference.
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ITEM 6.Exhibits.
Exhibit No.   Description
     
 — 
 — 
—
—
 — 
 — 
 — 
—
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
 — 
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—
—
—
—
—
—
—
—
—
—
—
 — 
 — 
 — 
 — 
101.INS—XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document (2, 5)
101.SCH—Inline XBRL Taxonomy Extension Schema (2, 5)
101.CAL—Inline XBRL Taxonomy Extension Calculation Linkbase (2, 5)
101.DEF—Inline XBRL Taxonomy Extension Definition Linkbase Document (2, 5)
101.LAB—Inline XBRL Taxonomy Extension Label Linkbase Document (2, 5)
101.PRE—Inline XBRL Taxonomy Extension Presentation Linkbase Document (2, 5)

41
(1)    Incorporated by reference.
(2)    Filed herewith.
(3)    Furnished herewith. This exhibit shall not be deemed "filed" for purposes of Section 11 or 12 of the Securities Act of 1933, as amended (the "Securities Act"), or Section 18 of the Securities Exchanges Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of those sections, and shall not be part of any registration statement to which it may relate, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act or the Exchange Act, except as set forth by specific reference in such filing or document.
(4)    Management contract or compensatory plan or arrangement.
(5)    The following materials from this Quarterly Report on Form 10-Q for the period ended September 30, 2022 are formatted in Inline XBRL (Extensible Business Reporting Language): (i) Unaudited Condensed Consolidated Balance Sheets of the Company; (ii) Unaudited Condensed Consolidated Statements of Operations of the Company; (iii) Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) of the Company; (iv) Unaudited Condensed Consolidated Statements of Changes in Equity of the Company; (v) Unaudited Condensed Consolidated Statements of Cash Flows of the Company; and (vi) Notes to Unaudited Condensed Consolidated Financial Statements of the Company, detailed tagged.
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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 thereunto duly authorized.
 LXP Industrial Trust
   
Date:November 3, 2022By:/s/ T. Wilson Eglin
  T. Wilson Eglin
  
Chief Executive Officer and President
(principal executive officer)
   
Date:November 3, 2022By:/s/ Beth Boulerice
  Beth Boulerice
  
Chief Financial Officer, Executive Vice President and Treasurer
(principal financial officer)




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