UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q/A
                                (Amendment No. 1)

(Mark One)

[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
        EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2005

[ ]     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

                      LEXINGTON CORPORATE PROPERTIES TRUST
             (Exact name of registrant as specified in its charter)

                Maryland                                     13-3717318
    (State or other jurisdiction of                       (I.R.S. Employer
     incorporation or organization)                      Identification No.)

       One Penn Plaza, Suite 4015
              New York, NY                                      10119
(Address of principal executive offices)                     (Zip code)


                                 (212) 692-7200
              (Registrant's telephone number, including area code)

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 x . No    .
                                      ---     ---

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined by Rule 12b-2 of the Act). Yes x . No    .
                                      ---     ---

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes x . No    .
                                      ---     ---

Indicate the number of shares outstanding of each of the registrant's classes of
common shares, as of the latest practicable date:  51,978,259 common shares, par
value $.0001 per share on November 10, 2005.








Explanatory Note
----------------

This  Amendment No. 1 on Form 10-Q/A amends the  Company's  Quarterly  Report on
Form 10-Q for the period ended  September 30, 2005, as initially  filed with the
Securities and Exchange Commission (the "SEC") on November 9, 2005, and is being
filed to correct the  following:  (1) the amount of interest paid by the Company
in  2005  under  Note 12  Supplemental  Disclosure  of  Statement  of Cash  Flow
Information because the mathematical  calculation used to derive that number was
not  correct,  and  (2)  the  amount  of  cash  dividends  paid  to  the  common
shareholders  for the nine months ended September 30, 2005 and 2004 under Item 2
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations  under the  heading  "Liquidity  and Capital  Resources -  Dividends"
because of two typographical errors. The amount for interest paid by the Company
in 2005 should be revised to $49,882 from $44,540.  The cash  dividends  paid to
common  shareholders  for the nine  months  ended  September  30, 2005 should be
revised to $53.9 million from $35.3 million,  and the comparative figure for the
nine months  ended  September  30, 2004 should be revised to $48.1  million from
$31.2 million.  Item 1 Financial  Statements and Item 2 Management's  Discussion
and Analysis of Financial  Condition  and Results of Operations of Part I of the
Quarterly Report as revised are restated in their entirety.

                                       2





                         PART 1. - FINANCIAL INFORMATION
                         -------------------------------

                          ITEM 1. FINANCIAL STATEMENTS
                          ----------------------------

       LEXINGTON CORPORATE PROPERTIES TRUST AND CONSOLIDATED SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

              September 30, 2005 (Unaudited) and December 31, 2004
                 (in thousands, except share and per share data)

                                                                        September 30,      December 31,
                                                                             2005              2004
                                                                        ---------------   ---------------
                                                                                     
   Assets:

   Real estate, at cost                                                  $   1,932,746     $   1,407,872
   Less: accumulated depreciation and amortization                             225,225           180,610
                                                                        ---------------   ---------------
                                                                             1,707,521         1,227,262
   Properties held for sale - discontinued operations                           48,222            13,216
   Cash and cash equivalents                                                    61,115           146,957
   Investment in non-consolidated entities                                     168,159           132,738
   Deferred expenses, net                                                       13,209             7,860
   Notes receivable from affiliate                                                   -            45,800
   Rent receivable - current                                                     2,717             4,123
   Rent receivable - deferred                                                   25,688            23,923
   Intangible assets, net                                                      137,101            54,736
   Notes receivable                                                             11,050                 -
   Other assets, net                                                            38,819            40,471
                                                                        ---------------   ---------------
                                                                         $   2,213,601     $   1,697,086
                                                                        ===============   ===============
   Liabilities and Shareholders' Equity:

   Mortgages and notes payable                                           $   1,186,907      $    765,144
   Liabilities - discontinued operations                                        26,748             1,688
   Accounts payable and other liabilities                                       13,030            12,406
   Accrued interest payable                                                      3,137             5,808
   Deferred revenue                                                              5,811             4,173
   Prepaid rent                                                                 10,015             3,818
                                                                        ---------------   ---------------
                                                                             1,245,648           793,037
   Minority interests                                                           56,401            56,759
                                                                        ---------------   ---------------
                                                                             1,302,049           849,796
                                                                        ---------------   ---------------
   Commitments and contingencies (note 11)

   Shareholders' equity:
   Preferred  shares,  par value $0.0001 per share; authorized
        10,000,000 shares,Series B Cumulative Redeemable Preferred,
        liquidation preference $79,000, 3,160,000 shares issued and
        outstanding                                                             76,315            76,315
        Series C Cumulative Convertible Preferred, liquidation
        preference $155,000 and $135,000 in 2005 and 2004, respectively,
        3,100,000 and 2,700,000 shares issued and outstanding in 2005
        and 2004, respectively                                                 150,588           131,126
   Common shares, par value $0.0001 per share; authorized 160,000,000
        and 80,000,000 shares in 2005 and 2004, respectively,
        51,974,639, and 48,621,273 shares issued and outstanding in
        2005 and 2004, respectively                                                  5                 5
   Additional paid-in-capital                                                  845,341           766,882
   Deferred compensation, net                                                  (12,505)           (8,692)
   Accumulated distributions in excess of net income                          (148,192)         (118,346)
                                                                        ---------------   ---------------
        Total shareholders' equity                                             911,552           847,290
                                                                        ---------------   ---------------
                                                                         $   2,213,601     $   1,697,086
                                                                        ===============   ===============


    The accompanying notes are an integral part of these unaudited condensed
                       consolidated financial statements.

                                       3




       LEXINGTON CORPORATE PROPERTIES TRUST AND CONSOLIDATED SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME

             Three and nine months ended September 30, 2005 and 2004

          (Unaudited and in thousands, except share and per share data)



                                                     Three Months ended              Nine Months ended
                                                        September 30,                  September 30,
                                                     2005           2004            2005           2004
                                                 -----------    ------------    ------------   ------------
                                                                                   
Gross revenues:
   Rental                                        $  51,023      $   35,066      $  133,309     $   99,925
   Advisory fees                                       995           1,448           4,186          3,174
   Tenant reimbursements                             4,213           1,293           7,207          3,958
                                                 -----------    ------------    ------------   ------------
      Total gross revenues                          56,231          37,807         144,702        107,057

Expense applicable to revenues:
   Depreciation and amortization                   (20,600)        (10,909)        (50,322)       (27,411)
   Property operating                               (7,929)         (2,906)        (15,978)        (7,704)
General and administrative                          (4,164)         (3,987)        (13,175)        (9,997)
Non-operating income                                   337           1,807           1,189          2,563
Interest and amortization expense                  (18,597)        (12,344)        (47,264)       (33,550)
Debt satisfaction gains, net                             -               -           4,632              -
                                                 -----------    ------------    ------------   ------------

Income before benefit (provision) for income taxes,
   minority interests, equity in earnings of
   non-consolidated entities and discontinued
   operations                                        5,278           9,468          23,784         30,958
Benefit (provision) for income taxes                   111            (350)             44         (1,817)
Minority interests                                    (791)           (673)         (3,002)        (2,740)
Equity in earnings of non-consolidated entities      2,328           1,862           5,087          5,383
                                                 -----------    ------------    ------------   ------------
Income from continuing operations                    6,926          10,307          25,913         31,784
                                                 -----------    ------------    ------------   ------------
Discontinued operations, net of minority interest:
   Income from discontinued operations                 656           1,418           2,676          4,684
   Impairment charges                                 (207)          (562)            (800)        (2,775)
   Gains on sales of properties                      1,595               -           6,656          4,065
                                                 -----------    ------------    ------------   ------------
   Total discontinued operations                     2,044             856           8,532          5,974
                                                 -----------    ------------    ------------   ------------
Net income                                           8,970          11,163          34,445         37,758
Dividends attributable to preferred shares -
Series B                                            (1,590)         (1,590)         (4,770)        (4,770)
Dividends attributable to preferred shares -
Series C                                            (2,519)              -          (7,556)              -
                                                 -----------    ------------    ------------   ------------
Net income allocable to common shareholders      $   4,861      $    9,573      $   22,119     $   32,988
                                                 ===========    ============    ============   ============

Income per common share-basic:
   Income from continuing operations             $    0.06      $     0.18       $    0.28      $    0.59
   Income from discontinued operations           $    0.04      $     0.02       $    0.17      $    0.13
                                                 -----------    ------------    ------------   ------------
   Net income                                    $    0.10      $     0.20       $    0.45      $    0.72
                                                 ===========    ============    ============   ============

   Weighted average common shares
   outstanding-basic                             50,837,178     47,901,818      49,269,497     46,033,992
                                                 ===========    ============    ============   ============

Income per common share-diluted:
   Income from continuing operations             $    0.04      $     0.17       $    0.26      $    0.58
   Income from discontinued operations           $    0.04      $     0.02       $    0.15      $    0.13
                                                 -----------    ------------    ------------   ------------
   Net income                                    $    0.08      $     0.19       $    0.41      $    0.71
                                                 ===========    ============    ============   ============

   Weighted average common shares
   outstanding-diluted                           57,764,659     53,349,746      56,197,314     51,521,655
                                                 ===========    ============    ============   ============



    The accompanying notes are an integral part of these unaudited condensed
                       consolidated financial statements.

                                       4




       LEXINGTON CORPORATE PROPERTIES TRUST AND CONSOLIDATED SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                  Nine months ended September 30, 2005 and 2004

                          (Unaudited and in thousands)


                                                                        2005                  2004
                                                                  ------------------    -----------------
                                                                                     
   Net cash provided by operating activities                          $      84,732        $      70,024
                                                                  ------------------    -----------------

   Cash flows from investing activities:
        Investment in convertible mortgage note                                   -             (19,800)
        Investment in real estate properties, including
          intangibles                                                     (700,921)            (137,758)
        Collection of notes receivable from affiliate                        45,800                    -
        Net proceeds from sale/transfer of properties                        42,130               90,220
        Net sale proceeds/distributions - non-consolidated
          entity                                                              3,541                    -
        Collection of note receivable - non-affiliate                         3,488                    -
        Real estate deposits, net                                             1,449                1,325
        Investment in and advances to non-consolidated
          entities, net                                                    (38,990)             (53,586)
        Distribution of loan proceeds from non-consolidated
          entities                                                                -               15,629
        Increase in leasing costs                                           (2,727)                (197)
        Increase in escrow deposits                                         (2,434)              (2,022)
                                                                  ------------------    -----------------
             Net cash used in investing activities                        (648,664)            (106,189)
                                                                  ------------------    -----------------

   Cash flows from financing activities:
        Dividends to common and preferred shareholders                     (64,291)             (52,891)
        Principal payments on debt, excluding normal
          amortization                                                     (16,844)              (1,264)
        Dividend reinvestment plan proceeds                                  10,509                7,641
        Change in credit facility borrowings, net                                 -             (94,000)
        Principal amortization payments                                    (19,012)             (13,980)
        Debt deposits                                                           852                (972)
        Proceeds of mortgages and notes payable                             495,645              145,240
        Contribution from minority partner                                    1,692                    -
        Increase in deferred costs, net                                     (5,682)                (688)
        Cash distributions to minority partners                             (5,251)              (7,271)
        Proceeds from the sale of common and preferred shares,
          net                                                                80,554              144,579
        Origination fee amortization payments                                     -                 (29)
        Common shares/partnership units repurchased                            (82)                    -
                                                                  ------------------    -----------------
             Net cash provided by financing activities                      478,090              126,365
                                                                  ------------------    -----------------

   Change in cash and cash equivalents                                     (85,842)               90,200
   Cash and cash equivalents, at beginning of period                        146,957               15,923
                                                                  ------------------    -----------------
        Cash and cash equivalents, at end of period                   $      61,115        $     106,123
                                                                  ==================    =================



    The accompanying notes are an integral part of these unaudited condensed
                       consolidated financial statements.


                                       5




       LEXINGTON CORPORATE PROPERTIES TRUST AND CONSOLIDATED SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                               September 30, 2005
           (Unaudited and dollars in thousands, except per share data)

(1)     The Company
        -----------

        Lexington  Corporate  Properties Trust (the "Company") is a self-managed
        and  self-administered   real  estate  investment  trust  ("REIT")  that
        acquires, owns and manages a geographically diversified portfolio of net
        leased  office,  industrial and retail  properties.  As of September 30,
        2005,  the  Company had an  ownership  interest  in 187  properties  and
        managed an additional two properties.  The real properties  owned by the
        Company are generally subject to triple net leases to corporate tenants.
        Of the Company's 187 properties, 14 provide for operating expense stops,
        one is a modified gross lease and three are not leased.

        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 will be subject to
        federal income taxes on the income from these activities.

        The unaudited financial  statements reflect all adjustments,  which are,
        in the opinion of  management,  necessary to present a fair statement of
        the  financial  condition  and  results of  operations  for the  interim
        periods.  For a more complete  understanding of the Company's operations
        and financial  position,  reference is made to the financial  statements
        (including the notes thereto)  previously  filed with the Securities and
        Exchange  Commission  with the Company's  Annual Report on Form 10-K for
        the year ended December 31, 2004.

(2)     Summary of Significant Accounting Policies
        ------------------------------------------

        Basis of  Presentation  and  Consolidation.  The Company's  consolidated
        financial  statements  are prepared on the accrual basis of  accounting.
        The  financial  statements  reflect the  accounts of the Company and its
        controlled  subsidiaries,  including  Lepercq Corporate Income Fund L.P.
        ("LCIF"),  Lepercq  Corporate  Income Fund II L.P.  ("LCIF  II"),  Net 3
        Acquisition L.P. ("Net 3"),  Lexington Realty  Advisors,  Inc.  ("LRA"),
        Lexington Contributions, Inc. ("LCI"), Six Penn Center L.P and Lexington
        Strategic  Asset  Corp.  ("LSAC").  LRA,  LCI and LSAC are wholly  owned
        taxable REIT subsidiaries, and the Company is the sole unitholder of the
        general  partner and the majority  limited partner of each of LCIF, LCIF
        II, Net 3 and Six Penn Center L.P.  The  Company  determines  whether an
        entity for which it holds an interest should be consolidated pursuant to
        Financial  Accounting  Standards Board ("FASB")  Interpretation  No. 46,
        Consolidation of Variable Interest Entities ("FIN 46R"). If not, and the
        Company  controls the entity's  voting  shares and similar  rights,  the
        entity is consolidated. FIN 46R requires the Company to evaluate whether
        it has a controlling financial interest in an entity through means other
        than voting rights.

        Recently  Issued  Accounting  Pronouncements.  FASB  Statement  No. 150,
        Accounting for Certain  Financial  Instruments with  Characteristics  of
        both  Liabilities and Equity ("SFAS 150"),  was issued in May 2003. SFAS
        150  establishes  standards for the  classification  and  measurement of
        certain financial  instruments with  characteristics of both liabilities
        and equity.  SFAS 150 also includes  required  disclosures for financial
        instruments  within its scope.  For the Company,  SFAS 150 was effective
        for  instruments  entered  into  or  modified  after  May 31,  2003  and
        otherwise  was effective as of January 1, 2004,  except for  mandatorily
        redeemable  financial  instruments.  For certain mandatorily  redeemable
        financial instruments, SFAS 150 was effective for the Company on January
        1, 2005. The effective date has been deferred  indefinitely  for certain
        other types of mandatorily redeemable financial instruments. The Company
        currently  does not have any financial  instruments  that are within the
        scope of SFAS 150.

        In December  2004,  the FASB issued  Statement of  Financial  Accounting
        Standards  ("SFAS") No. 123, (revised 2004)  Share-Based  Payment ("SFAS
        No. 123R"), which supersedes Accounting Principals Board ("APB") Opinion
        No.  25,  Accounting  for Stock  Issued to  Employees,  and its  related
        implementation  guidance.  SFAS No. 123R  establishes  standards for the
        accounting  for  transactions  in which an entity  exchanges  its equity
        instruments  for goods or services.  It also addresses  transactions  in
        which an entity  incurs  liabilities  in exchange  for goods or services
        that are based on the fair value of the entity's  equity  instruments or
        that may be settled by the  issuance of those equity  instruments.  SFAS
        No. 123R focuses  primarily on accounting for  transactions  in which an
        entity obtains employee  services in share-based  payment  transactions.
        SFAS No. 123R  requires a public  entity to measure the cost of employee
        services  received in exchange for an award of equity  instruments based
        on the grant date fair value of the award.  The cost will be  recognized
        over the period in which an employee is required to provide  services in
        exchange  for the award.  SFAS No. 123R is  effective  for fiscal  years
        beginning  after  January



                                       6


        1,  2006,  based on new rules  issued  by the  Securities  and  Exchange
        Commission.  The impact of adopting  this  statement  is not expected to
        have a material impact on the Company's financial position or results of
        operations.

        In  December  2004,  the FASB  issued  Statement  No.  153,  Exchange of
        Non-monetary  Assets - an  amendment  of APB  Opinion  No. 29 ("SFAS No.
        153").  The guidance in APB Opinion No. 29,  Accounting for Non-monetary
        Transactions,  is based on the principle that exchanges of  non-monetary
        assets  should  be  measured  based  on the  fair  value  of the  assets
        exchanged.  The  guidance in that  opinion,  however,  included  certain
        exceptions to that principle.  SFAS No. 153 amends APB Opinion No. 29 to
        eliminate  the  exception  for  non-monetary  assets  that  do not  have
        commercial  substance.  A non-monetary exchange has commercial substance
        if  the  future  cash  flows  of  the  entity  are  expected  to  change
        significantly as a result of the exchange. SFAS No. 153 is effective for
        non-monetary  asset  exchanges,  occurring in fiscal  periods  beginning
        after  June 15,  2005.  The impact of  adopting  this  statement  is not
        expected to have a material impact on the Company's  financial  position
        or results of operations.

        In March 2005,  the FASB issued  Interpretation  No. 47,  Accounting for
        Conditional  Asset Retirement  Obligations - an  Interpretation  of SFAS
        Statement  No. 143 ("FIN 47").  FIN 47 clarifies the timing of liability
        recognition  for legal  obligations  associated with the retirement of a
        tangible  long-lived  asset when the timing  and/or method of settlement
        are conditional on a future event.  FIN 47 is effective for fiscal years
        ending  after  December  15,  2005.  The  application  of  FIN 47 is not
        expected  to  have  a  material  impact  on the  Company's  consolidated
        financial position or results of operations.

        In May 2005, the FASB issued SFAS No. 154,  Accounting Changes and Error
        Corrections  ("SFAS 154") which  replaces APB Opinions No. 20 Accounting
        Changes  and  SFAS  No.  3,  Reporting  Accounting  Changes  in  Interim
        Financial  Statements--An  Amendment  of APB  Opinion  No. 28.  SFAS 154
        provides  guidance on the  accounting  for and  reporting of  accounting
        changes and error corrections.  It establishes retrospective application
        as the required  method for reporting a change in  accounting  principle
        and the reporting of a correction of an error. SFAS 154 is effective for
        accounting  changes  and  corrections  of errors  made in  fiscal  years
        beginning after December 15, 2005. The impact of adopting this statement
        is not  expected to have a material  impact on the  Company's  financial
        position or results of operations.

        In June  2005,  the FASB  ratified  the  Emerging  Issues  Task  Force's
        ("EITF") consensus on EITF 04-05, Determining Whether a General Partner,
        or the General  Partners as a Group,  Controls a Limited  Partnership or
        Similar Entity When the Limited Partners Have Certain Rights. EITF 04-05
        provides a framework for determining whether a general partner controls,
        and should  consolidate,  a limited  partnership or a similar entity. It
        was  effective  after  June  29,  2005,  for all  newly  formed  limited
        partnerships and for any pre-existing  limited  partnerships that modify
        their  partnership  agreements after that date.  General partners of all
        other  limited  partnerships  will apply the consensus no later than the
        beginning of the first reporting  period in fiscal years beginning after
        December  15,  2005.  The  impact of the  adoption  of EITF 04-05 is not
        expected to have a material impact on the Company's  financial  position
        or results of operations.

        In 2005, the EITF released Issue No. 05-6,  Determining the Amortization
        Period for Leasehold  Improvements  ("EITF 05-6"),  which  clarifies the
        period over which leasehold improvements should be amortized.  EITF 05-6
        requires all leasehold  improvements to be amortized over the shorter of
        the useful life of the assets, or the applicable lease term, as defined.
        The  applicable  lease  term is  determined  on the date  the  leasehold
        improvements  are  acquired  and  includes  renewal  periods  for  which
        exercise is reasonably  assured.  EITF 05-06 was effective for leasehold
        improvements  acquired in  reporting  periods  beginning  after June 29,
        2005.  The impact of the adoption of EITF 05-6 is not expected to have a
        material  impact on the  Company's  financial  position  or  results  of
        operations.

        Use  of  Estimates.  Management  has  made a  number  of  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  consolidated  financial
        statements in conformity with generally accepted accounting  principles.
        The most  significant  estimates  made  include  the  recoverability  of
        accounts   receivable   (primarily  related  to  straight-line   rents),
        allocation of property purchase price to tangible and intangible assets,
        the  determination  of impairment  of  long-lived  assets and the useful
        lives of  long-lived  assets.  Actual  results  could  differ from those
        estimates.

        Purchase  Accounting for  Acquisition of Real Estate.  The fair value of
        the real estate  acquired,  which includes the impact of  mark-to-market
        adjustments for assumed mortgage debt related to property  acquisitions,
        is  allocated  to the  acquired  tangible  assets,  consisting  of land,
        building  and  improvements,   fixtures  and  equipment  and  identified
        intangible   assets  and   liabilities,   consisting  of  the  value  of
        above-market and below-market leases, other value of in-place leases and
        value of tenant relationships, based in each case on their fair values.

        The fair value of the  tangible  assets of an acquired  property  (which
        includes land,  building and improvements and fixtures and equipment) is
        determined  by  valuing  the  property  as if it  were  vacant,  and the
        "as-if-vacant"   value  is  then   allocated   to  land,   building  and
        improvements,   and  fixtures  and  equipment   based  on   management's
        determination   of  relative  fair  values  of  these  assets.   Factors
        considered  by  management  in  performing  these  analyses  include  an
        estimate  of  carrying  costs  during  the  expected   lease-up  periods
        considering  current  market  conditions  and costs to  execute  similar
        leases. In estimating  carrying costs,  management  includes real estate
        taxes,  insurance  and other  operating  expenses and  estimates of lost
        rental  revenue



                                       7




        during the expected  lease-up  periods based on current  market  demand.
        Management  also estimates  costs to execute  similar  leases  including
        leasing commissions.

        In allocating  the fair value of the  identified  intangible  assets and
        liabilities  of an  acquired  property,  above-market  and  below-market
        in-place lease values are recorded  based on the difference  between the
        current in-place lease rent and a management  estimate of current market
        rents.  Below-market  lease intangibles are recorded as part of deferred
        revenue  and  amortized  into  rental  revenue  over the  non-cancelable
        periods of the respective  leases.  Above-market  leases are recorded as
        part of  intangible  assets and  amortized  as a direct  charge  against
        rental revenue over the non-cancelable portion of the respective leases.

        The aggregate value of other acquired  intangible assets,  consisting of
        in-place leases and tenant  relationships,  is measured by the excess of
        (i) the purchase  price paid for a property over (ii) the estimated fair
        value of the property as if vacant,  determined as set forth above. This
        aggregate  value is allocated  between  in-place lease values and tenant
        relationships   based  on   management's   evaluation  of  the  specific
        characteristics of each tenant's lease. The value of in-place leases and
        customer  relationships  are  amortized  to expense  over the  remaining
        non-cancelable periods of the respective leases.

        Revenue  Recognition.  The Company recognizes revenue in accordance with
        Statement  of  Financial  Accounting  Standards  No. 13  Accounting  for
        Leases,  as  amended  ("SFAS  13").  SFAS 13  requires  that  revenue be
        recognized  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.
        Rentals  provided for during  renewal  option  periods  where the rental
        terms are lower than those in the  primary  term are  excluded  from the
        calculation  of straight line rent if they do not meet the criteria of a
        bargain renewal option.

        Gains on sales of real estate are recognized  pursuant to the provisions
        of Statement of Financial  Accounting  Standards No. 66  Accounting  for
        Sales of Real Estate, as amended ("SFAS 66"). The specific timing of the
        sale is  measured  against  various  criteria  in SFAS 66 related to the
        terms of the transactions and any continuing  involvement in the form of
        management or financial  assistance  associated with the properties.  If
        the sales  criteria  are not met,  the gain is deferred and the finance,
        installment or cost recovery  method,  as appropriate,  is applied until
        the sales criteria are met.

        Accounts Receivable.  The Company continuously monitors collections from
        its tenants and would make a provision for  estimated  losses based upon
        historical experience and any specific tenant collection issues that the
        Company has identified.  As of September 30, 2005 and December 31, 2004,
        the Company did not record an allowance for doubtful accounts.

        Impairment of Real Estate.  The Company  evaluates the carrying value of
        all real  estate  held  when a  triggering  event  under  SFAS No.  144,
        Accounting  for the  Impairment  or Disposal of  Long-Lived  Assets,  as
        amended  ("SFAS 144") has occurred to  determine  if an  impairment  has
        occurred  which would require the  recognition of a loss. The evaluation
        includes  reviewing  anticipated  cash flows of the  property,  based on
        current leases in place,  and an estimate of what lease rents will be if
        the  property  is vacant  coupled  with an  estimate  of  proceeds to be
        realized upon sale.  However,  estimating  market lease rents and future
        sale  proceeds is highly  subjective  and such  estimates  could  differ
        materially from actual results.

        Depreciation  is  determined  by  the  straight-line   method  over  the
        remaining estimated economic useful lives of the properties.

        Tax  Status.  The  Company  and  certain  of  its  subsidiaries  file  a
        consolidated federal income tax return. The Company has made an election
        to qualify, and believes it is operating so as to qualify, as a REIT for
        federal income tax purposes. Accordingly, the Company generally 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 Sections 856 through 860 of the Internal  Revenue Code, as
        amended (the "Code").

        The Company is now 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  under the Code.  LRA,
        LCI and LSAC are  taxable  REIT  subsidiaries.  As such,  the Company is
        subject  to federal  and state  income  taxes on the  income  from these
        activities.

        Income taxes are  accounted  for under the asset and  liability  method.
        Deferred tax assets and  liabilities  are  recognized  for the estimated
        future  tax  consequences   attributable  to  differences   between  the
        financial  statement carrying amounts of existing assets and liabilities
        and  their  respective  tax  basis  and  operating  loss and tax  credit
        carry-forwards.  Deferred tax assets and  liabilities are measured using
        enacted  tax  rates in  effect  for the year in  which  those  temporary
        differences are expected to be recovered or settled.

        Properties  Held For Sale. The Company  accounts for properties held for
        sale in accordance  with SFAS 144. SFAS 144 requires that the assets and
        liabilities of properties that meet various  criteria in SFAS No. 144 be
        presented separately in the statement of financial position, with assets
        and liabilities being separately  stated. The operating results of these
        properties  are  reflected  as  discontinued  operations  in the  income
        statement.  Properties  that do not meet the held for sale  criteria  of
        SFAS No. 144 are accounted for as operating properties.



                                       8




        Earnings  Per Share.  Basic net income per share is computed by dividing
        net income reduced by preferred dividends by the weighted average number
        of common shares outstanding  during the period.  Diluted net income per
        share  amounts are  similarly  computed  but  include  the effect,  when
        dilutive, of in-the-money common share options, convertible interests of
        non-consolidated  entities,  operating  partnership  units,  convertible
        preferred shares and potentially convertible securities.

        Common Share Options. The Company has elected to continue to account for
        its option plan under the  recognition  provision of APB Opinion No. 25,
        Accounting for Stock Issued to Employees.  Accordingly,  no compensation
        cost has been recognized with regard to options granted in the condensed
        consolidated statements of income.

        Common share  options  granted  generally  vest ratably over a four-year
        term and expire five years from the date of grant.  The following  table
        illustrates  the effect on net income and earnings per share if the fair
        value based  method had been  applied to all  outstanding  share  option
        awards in each period:



                                                         Three Months Ended            Nine Months Ended
                                                            September 30,                September 30,
                                                         2005           2004          2005           2004
                                                         ----           ----          ----           ----
                                                                                       
        Net income allocable to common shareholders,
         as reported                                   $   4,861       $  9,573      $ 22,119      $  32,988
           Add: Stock based employee compensation
           expense included in reported net income             -              -             -              -
           Deduct: Total stock based employee
           compensation expense determined under
           fair value based method for all awards              1             64             5            191
                                                      -----------    -----------   -----------    -----------
        Pro forma net income - basic                   $   4,860       $  9,509      $ 22,114      $  32,797
                                                      ===========    ===========   ===========    ===========

        Net income per share - basic
           Basic - as reported                         $    0.10       $   0.20      $   0.45       $   0.72
                                                      ===========    ===========   ===========    ===========
           Basic - pro forma                           $    0.10       $   0.20      $   0.45       $   0.71
                                                      ===========    ===========   ===========    ===========

        Net income allocable to common shareholders
          for diluted earnings per share               $   4,813       $ 10,345      $ 22,814      $  36,559
           Add: Stock based employee compensation
           expense included in reported net income             -              -             -              -
           Deduct: Total stock based employee
           compensation expense determined under
           fair value based method for all awards              1             64             5            191
                                                      -----------    -----------   -----------    -----------
        Pro forma net income - diluted                 $   4,812       $ 10,281      $ 22,809      $  36,368
                                                      ===========    ===========   ===========    ===========

        Net income per share - diluted
           Diluted - as reported                       $    0.08       $   0.19      $   0.41       $   0.71
                                                      ===========    ===========   ===========    ===========
           Diluted - pro forma                         $    0.08       $   0.19      $   0.41       $   0.71
                                                      ===========    ===========   ===========    ===========


Reclassification.  Certain  amounts  included in 2004 financial  statements have
been reclassified to conform with the 2005 presentation.















                                       9




(3)     Earnings per Share

        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, 2005 and 2004:



                                                           Three Months ended          Nine Months ended
                                                             September 30,               September 30,
                                                          2005           2004          2005          2004
                                                        ----------    -----------   -----------    ----------
                                                                                       
        BASIC

        Income from continuing operations
                                                        $   6,926     $   10,307     $  25,913     $  31,784
        Less: preferred dividends                         (4,109)        (1,590)      (12,326)       (4,770)
                                                        ----------    -----------   -----------    ----------
        Income allocable to common shareholders from        2,817          8,717        13,587        27,014
        continuing operations
        Total income from discontinued operations           2,044            856         8,532         5,974
                                                        ----------    -----------   -----------    ----------
        Net income allocable to common shareholders     $   4,861     $    9,573     $  22,119     $  32,988
                                                        ==========    ===========   ===========    ==========

        Weighted average number of common shares
        outstanding                                     50,837,178    47,901,818    49,269,497     46,033,992
                                                        ==========    ===========   ===========    ==========
        Income per common share - basic:
        Income from continuing operations               $    0.06     $     0.18     $    0.28     $    0.59
        Income from discontinued operations
                                                             0.04           0.02          0.17          0.13
                                                        ----------    -----------   -----------    ----------
        Net income                                      $    0.10     $     0.20     $    0.45     $    0.72
                                                        ==========    ===========   ===========    ==========

        DILUTED

        Income allocable to common shareholders from
        continuing operations - basic                   $   2,817     $    8,717     $  13,587     $  27,014
        Adjustments:
            Incremental (loss) income attributed to
              assumed conversion of dilutive
              securities                                     (48)            673           695         2,740
                                                        ----------    -----------   -----------    ----------
        Income allocable to common shareholders from        2,769          9,390        14,282        29,754
        continuing operations - diluted
        Total income from discontinued operations -
        diluted                                             2,044            955         8,532         6,805
                                                        ----------    -----------   -----------    ----------
        Net income allocable to common shareholders -   $   4,813       $ 10,345      $ 22,814      $ 36,559
                                                        ==========    ===========   ===========    ==========

        Weighted average number of common shares used
        in  calculation of basic earnings per share     50,837,178    47,901,818    49,269,497     46,033,992
        Add incremental shares representing:
            Shares issuable upon exercise of employee
            share options                                   78,046       118,533        78,382        129,695
            Shares issuable upon conversion of
              dilutive interests                         6,849,435     5,329,395     6,849,435      5,357,968
                                                        ----------    -----------   -----------    ----------
        Weighted average number of shares used in       57,764,659    53,349,746    56,197,314     51,521,655
        calculation of diluted earnings per common
        share
                                                        ==========    ===========   ===========    ==========
        Income per common share - diluted:
        Income from continuing operations               $    0.04     $     0.17     $    0.26     $    0.58
        Income from discontinued operations
                                                             0.04           0.02          0.15          0.13
                                                        ----------    -----------   -----------    ----------
        Net income                                      $    0.08     $     0.19     $    0.41     $    0.71
                                                        ==========    ===========   ===========    ==========


        In  2005,  the  common  shares  issuable  upon  conversion  of  dilutive
        interests  relates  to the put  option a partner  in a  non-consolidated
        entity has whereby  the partner can elect to put its equity  position to
        the  Company.  The Company has the option of issuing  common  shares for
        their fair market value of the partner's equity position (as defined) or
        cash for 100% of the fair market value of the partner's equity position.
        In  2004,  the  common  shares  issuable  upon  conversion  of  dilutive
        interests relate to the operating partnership units.



                                       10




(4)     Investments in Real Estate
        --------------------------

        During the third  quarter of 2005,  the Company  made two  acquisitions,
        excluding  acquisitions made directly by non-consolidated  entities, for
        an aggregate  capitalized cost of $34,140.  The Company allocated $3,648
        of the  capitalized  costs of this property to  intangibles.  One of the
        properties  is  economically  owned through the holding of an industrial
        revenue bond and related  ground lease.  The other property was sold, at
        cost, to a non-consolidated entity.

        During  the second  quarter of 2005,  the  Company  made 27 real  estate
        acquisitions,  excluding  acquisitions made directly by non-consolidated
        entities  and  including  properties  held for  sale,  for an  aggregate
        capitalized  cost of  $642,296.  The  Company  allocated  $95,791 of the
        capitalized  costs  of these  properties  to  intangibles.  Two of these
        properties  are  economically  owned  through the holding of  industrial
        revenue bonds and related ground leases.

        During the second quarter of 2005,  one property was acquired  through a
        newly  formed  limited  partnership  in  which  the  Company  has  a 92%
        interest.  This  partnership  acquired  an  87.5%  interest  in a second
        partnership which owns the property.  The Company has an effective 80.5%
        controlling ownership in the property.

        Also, during the second quarter of 2005, the Company sold, at cost which
        approximates  fair market value, a 60% tenancy in common interest in one
        of the properties  acquired during the second quarter of 2005 for $3,961
        in cash and the assumption of $8,849 in mortgage debt.  During the first
        quarter of 2005,  the Company  acquired one  property for a  capitalized
        cost of $12,012 and allocated  $725 of the purchase  price to intangible
        assets.

(5)     Discontinued Operations
        --------------------------

        As of September 30, 2005, the Company had five  properties held for sale
        and recorded  impairment charges of $207 and $800 for the three and nine
        months  ended  September  30,  2005,   respectively,   relating  to  the
        difference between the basis for one of the properties and the estimated
        net  proceeds  expected  to be  realized  upon  sale.  The  Company  has
        determined  that two properties held for sale at June 30, 2005 no longer
        meet  the  criteria  as  held  for  sale  and  accordingly,   have  been
        reclassified as operating properties.

        During the third  quarter of 2005,  the Company sold one property for an
        aggregate sales price of $14,500 resulting in a net gain of $1,595.  The
        Company provided $11,050 in secured  financing,  to the buyer, at a rate
        of 5.46%  which  matures  on  August 1, 2035 and  requires  annual  debt
        service payments of $750, plus real estate taxes and insurance escrows.

        During the second  quarter of 2005, the Company sold one property for an
        aggregate  sales  price of  $11,599  resulting  in a net gain of $4,317.
        During the first quarter of 2005, the Company sold two properties for an
        aggregate sales price of $4,250 resulting in a gain of $744.

        During the nine months ended  September  30, 2004,  the Company sold six
        properties for aggregate net proceeds of $30,971.

        The following presents the operating results for the properties sold and
        properties held for sale for the applicable periods:



                                                  Three Months ended           Nine Months ended
                                                    September 30,                 September 30,
                                                  2005          2004          2005          2004
                                               -----------   -----------    ----------   ------------
                                                                               
        Rental revenues                          $  1,263      $  2,071      $  4,319      $   7,053
        Pre-tax  income,  including  gains on
          sale                                   $  2,044      $    856      $  8,532      $   5,974



 (6)    Investment in Non-Consolidated Entities
        ---------------------------------------

        As  of  September  30,  2005,  the  Company  has  investments  in  seven
        non-consolidated entities. The entities are Lexington Acquiport Company,
        LLC ("LAC") (33 1/3% ownership  interest),  Lexington  Acquiport Company
        II, LLC ("LAC II") (25% ownership interest),  Lexington/Lion  Venture LP
        ("LION") (30% ownership  interest),  Lexington Columbia LLC ("Columbia")
        (40% ownership  interest),  Lexington Durham Limited Partnership ("DLP")
        (33 1/3% ownership interest),  Triple Net Investment Company LLC ("TNI")
        (30% ownership  interest) and Lexington Oklahoma City, LP ("TIC") (which
        owns a 40% tenancy in common interest in a real property).

        During the third quarter of 2005, LION made one real estate  acquisition
        for an aggregate capitalized cost of $36,905.



                                       11




        During  the  third  quarter  of  2005,  LAC  II  made  two  real  estate
        acquisitions for an aggregate  capitalized cost of $33,805. One of these
        properties was acquired from the Company for $19,761, which approximated
        cost.  These  acquisitions  were funded through  non-recourse  mortgages
        aggregating  $23,175,  which bear interest at a weighted average rate of
        5.54%.

        During the third quarter of 2005, LAC sold one property for an aggregate
        sales price of $23,496  resulting  in a net gain of $5,219.  The Company
        also defeased a loan  associated  with this property and recorded a debt
        satisfaction charge of $1,953.

        During  the  second   quarter  of  2005,   LION  made  two  real  estate
        acquisitions  for  an  aggregate  capitalized  cost  of  $55,477.  These
        acquisitions  were funded  through  non-recourse  mortgages  aggregating
        $32,700, which bear interest at a weighted average rate of 5.05%.

        During  the  second   quarter  of  2005,  TNI  made  three  real  estate
        acquisitions  for an  aggregate  capitalized  cost  of  $126,781.  These
        acquisitions  were funded  through  non-recourse  mortgages  aggregating
        $83,327, which bear interest at a weighted average rate of 5.17%.

        During  the  second  quarter  of  2005,  LAC II  made  one  real  estate
        acquisition  for  an  aggregate   capitalized  cost  of  $121,075.   The
        acquisition was funded through a non-recourse  mortgage of $80,182 which
        bears interest at 5.33%.

        During the second  quarter of 2005,  the Company  sold,  at cost,  a 60%
        tenancy in common interest in one of the properties  acquired during the
        second  quarter of 2005 for $3,961 in cash and the  assumption of $8,849
        in mortgage debt.

        During  the first  quarter of 2005,  LAC II  obtained  two  non-recourse
        mortgages aggregating $45,800 and bearing interest at a weighted average
        rate of 5.05%.  Also,  during the first  quarter of 2005,  LAC II repaid
        $45,800 in advances made by the Company.

        The  following  is a summary of the  combined  balance  sheet data as of
        September 30, 2005 and income  statement  data for the nine months ended
        September 30, 2005 and 2004 for the Company's  non-consolidated entities
        described in the first paragraph of this note:

                                         2005
                                         ----
                 Real estate, net      $1,302,412
                 Intangibles, net      $  143,192
                 Mortgages payable     $  920,848

                                         2005             2004
                                         ----             ----
                 Revenues              $  104,555       $   56,938
                 Expenses                (93,656)         (41,870)
                 Debt satisfaction
                 Gain on sale             (1,953)                -
                                            5,219                -
                                     -------------     ------------
                 Net income            $   14,165       $   15,068
                                     =============     ============

        The Company  earns  advisory  fees from the  non-consolidated  entities.
        During the three and nine month  periods  ended  September  30, 2005 and
        2004 the total  advisory  fees  earned  from  these  entities  was $976,
        $4,129, $1,429 and $3,117, respectively.

(7)     Mortgages and Notes Payable
        ---------------------------

        During the third quarter of 2005,  the Company  obtained an aggregate of
        $82,400  in  non-recourse  notes,  with an  aggregate  weighted  average
        interest rate of 5.05%.  Of this amount,  $5,600 is being held in escrow
        by the lender until the completion of construction  expansions at two of
        the properties.

        During the second quarter of 2005, the Company  obtained an aggregate of
        $418,845 in  non-recourse  notes,  with an  aggregate  weighted  average
        interest  rate of 5.18%.  The Company  satisfied a mortgage  note with a
        principal  balance  of  $20,760  for  $15,500  and  wrote off of $173 in
        unamortized deferred loan costs.

        During the second quarter of 2005,  the Company's  replaced its original
        $100,000 credit facility with a new $200,000  unsecured  credit facility
        which  bears  interest  at a rate of LIBOR  plus  120-170  basis  points
        depending  on the  leverage  (as  defined)  of the  Company.  The credit
        facility contains customary financial  covenants including  restrictions
        on the  level  of  indebtedness,  amount  of  variable  rate  debt to be
        borrowed and net worth maintenance provisions. As of September 30, 2005,
        the Company was in compliance  with all  covenants,  no borrowings  were
        outstanding  on the facility,  $198,770 was available



                                       12




        to be  borrowed  and $1,230 in letters of credit were  outstanding.  The
        Company wrote off the unamortized deferred loan costs of $455 associated
        with the $100,000 credit facility.

(8)     Concentration of Risk
        ---------------------

        The Company  seeks to reduce its  operating  and leasing  risks  through
        diversification   achieved  by  the  geographic   distribution   of  its
        properties,  tenant industry  diversification,  avoiding dependency on a
        single property and the  creditworthiness of its tenants.  For the three
        and nine months  ended  September  30, 2005 and 2004,  no single  tenant
        represented greater than 10% of rental revenues.

        Cash and cash  equivalent  balances may exceed  insurable  amounts.  The
        Company  believes it mitigates  risk by  investing  in or through  major
        financial institutions.

(9)     Minority Interests
        ------------------

        In  conjunction  with  several of the  Company's  acquisitions  in prior
        years,  sellers were given units in LCIF, LCIF II, or Net 3 as a form of
        consideration.  All of such  interests are  redeemable at certain times,
        only at the option of the holders,  for common  shares on a  one-for-one
        basis at  various  dates  through  November  2006 and are not  otherwise
        mandatorily redeemable by the Company.

        As of September 30, 2005,  there were  5,371,163  operating  partnership
        units   outstanding.   All  operating   partnership  units  have  stated
        distributions   in   accordance   with  their   respective   partnership
        agreements.  To the extent that the Company's dividend per share is less
        than the stated  distribution  per unit per the  applicable  partnership
        agreement,  the  distributions  per unit are  reduced by the  percentage
        reduction in the Company's dividend. No operating partnership units have
        a liquidation preference.

(10)    Shareholders' Equity
        --------------------

        During the third  quarter of 2005,  the Company sold 2.5 million  common
        shares, raising net proceeds of $60,723.

        During the first quarter of 2005, the Company  issued 400,000  preferred
        shares raising net proceeds of $19,463. In addition,  the Company issued
        492,402 and 411,177 common shares under its dividend  reinvestment  plan
        raising net  proceeds  of $10,509  and $7,641 for the nine months  ended
        September 30, 2005 and 2004, respectively.

 (11)   Commitments and Contingencies
        -----------------------------

        The Company is obligated under certain tenant leases,  including  leases
        for non-consolidated  entities,  to fund the expansion of the underlying
        leased properties.  Included in other assets is construction in progress
        of $8,936 as of September 30, 2005.

        The Company at times is involved in various legal  actions  occurring in
        the  ordinary  course of  business.  In the opinion of  management,  the
        ultimate  disposition of these matters will not have a material  adverse
        effect on the  Company's  consolidated  financial  position,  results of
        operations or liquidity.

        Certain leases contain  options whereby the tenant can terminate a lease
        if the property becomes obsolete, as defined.

        As of September 30, 2005, the Company entered into a letter of intent to
        purchase,  upon completion of construction and commencement of rent from
        a tenant, a property for an estimated obligation of $14,775.

(12)    Supplemental Disclosure of Statement of Cash Flow Information
        --------------------------------------------------------------

        During  2005  and  2004,   the  Company   paid   $49,882  and   $32,585,
        respectively,  for  interest  and $1,659 and $2,957,  respectively,  for
        income taxes.

        During  the third  quarter  of 2005,  the  Company  provided  $11,050 in
        secured financing related to the sale of a property.

        During the nine months  ended  September  30,  2005 the Company  assumed
        $3,056 in obligations relating to acquisitions of properties.



                                       13




        During  the second  quarter of 2005,  the  Company  sold,  at cost which
        approximates  fair market value, a 60% tenancy in common interest in one
        of the properties  acquired during the second quarter of 2005 for $3,961
        in cash and the  assumption  of $8,849 in mortgage  debt and retained an
        interest of $2,641.

        During 2005 and 2004, the Company issued 276,608 and 201,029  non-vested
        common shares,  respectively,  to certain employees  resulting in $6,253
        and $4,066 of deferred compensation,  respectively.  These common shares
        generally vest over five years.

        During  2005 and 2004,  holders of an  aggregate  of 33,864 and  101,596
        operating partnership units redeemed such units for common shares of the
        Company.  These  redemptions  resulted in an  increase in  shareholders'
        equity and a  corresponding  decrease in  minority  interest of $398 and
        $1,318 in 2005 and 2004, respectively.

(13)    Subsequent Events
        -----------------

        In October 2005, LION entered into a contract to sell  undeveloped  land
        adjacent to a property for $2,490.

        In October  2005,  the Company  entered  into  contracts  to acquire two
        properties,  that are currently being  constructed,  for an aggregate of
        $36,811.

        In October 2005, the Company contributed four properties (three of which
        were  subject to  mortgages)  to LSAC in exchange for  3,319,600  common
        shares of LSAC.  In addition,  LSAC sold  6,738,000  common  shares,  at
        $10.00 per common share,  generating  gross proceeds of $67,380.  Due to
        the  Company's  ownership  percentage  (approximately  32% of the  fully
        diluted  outstanding  shares) in LSAC,  LSAC will be accounted for under
        the equity  method.  LRA earns an  advisory  fee,  including  a promoted
        interest,  for its management of LSAC. Certain executive officers of the
        Company are  entitled  to 40% of all  promoted  interest  earned by LRA.
        Also,  certain officers  purchased  220,000 common shares of LSAC at its
        formation  for $110  and an  additional  100,000  common  shares  in the
        offering for $1,000. In addition,  LSAC obtained a $10,100  non-recourse
        mortgage  note,  secured by one property,  which bears interest at 5.46%
        and matures in 2020.

        In November  2005,  the Company  acquired a property for  $32,000.  This
        property was then sold to LAC II, at cost. The Company  provided $20,800
        as a demand  mortgage  note  related to the sale of this  property.  The
        demand  mortgage  note bears  interest  at 5.27% and matures in December
        2005.

        In November 2005, LION obtained a $22,080 non-recourse  mortgage with an
        interest rate of 5.58%, which matures in 2019.

        In November 2005, the Company issued 352,244 operating partnership units
        for approximately $7,714. The Company used approximately $3,500 of these
        proceeds to purchase a property.




                                       14





            ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS
                       -----------------------------------

Forward-Looking Statements
--------------------------

The  following  is a  discussion  and  analysis  of the  Company's  consolidated
financial  condition  and  results  of  operations  for the three and nine month
periods ended  September 30, 2005 and 2004, and  significant  factors that could
affect the Company's  prospective financial condition and results of operations.
This   discussion   should  be  read  together  with  the  unaudited   condensed
consolidated  financial statements and notes included in the Company's Quarterly
Report  on Form  10-Q for the  quarter  ended  September  30,  2005 and with the
Company's  consolidated financial statements and notes included in the Company's
Annual  Report on Form 10-K for the year ended  December  31,  2004.  Historical
results may not be indicative of future performance.

This  report,   together  with  other   statements  and   information   publicly
disseminated by the Company, contains certain forward-looking  statements within
the  meaning of Section  27A of the  Securities  Act of 1933,  as  amended,  and
Section 21E of the  Securities  Exchange  Act of 1934,  as amended.  The Company
intends  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  the  Company's  future  plans,
strategies  and  expectations,  are generally  identifiable  by use of the words
"believes,"  "expects,"  "intends,"  "anticipates,"  "estimates,"  "projects" 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 the Company's  control and which could materially  affect
actual results,  performances or achievements.  In particular, among the factors
that could cause actual results to differ  materially from current  expectations
include,  but are not  limited  to, (i) the  failure to continue to qualify as a
real estate  investment  trust,  (ii)  changes in general  business and economic
conditions, (iii) competition, (iv) increases in real estate construction costs,
(v) changes in interest rates,  (vi) changes in accessibility of debt and equity
capital markets and other risks inherent in the real estate business, including,
but  not  limited  to,  tenant  defaults,   potential   liability   relating  to
environmental  matters, the availability of suitable  acquisition  opportunities
and illiquidity of real estate  investments,  (vii) changes in governmental laws
and regulations, and (viii) increases in operating costs. The Company undertakes
no  obligation  to  publicly  release  the  results  of 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 the  Company's  expectations  will be
realized.

General
-------

The  Company,  which has  elected to qualify as a real estate  investment  trust
("REIT") under the Internal Revenue Code of 1986, as amended, acquires, owns and
manages  net leased  commercial  properties.  The Company  believes  that it has
operated as a REIT since October 1993.

As of September  30, 2005,  the Company  owned,  or had  interests  in, 187 real
estate properties and managed two additional properties.

Critical Accounting Policies
----------------------------

The Company's accompanying unaudited condensed consolidated financial statements
have been prepared in conformity with accounting  principles  generally accepted
in the United States of America, which require management to make estimates that
affect the amounts of revenues,  expenses,  assets and liabilities reported. The
following are critical  accounting policies which are both very important to the
portrayal of the Company's  financial  condition  and results of operations  and
which  require  some of  management's  most  difficult,  subjective  and complex
judgments.  The  accounting  for these matters  involves the making of estimates
based on current facts,  circumstances  and assumptions  which could change in a
manner that would materially affect  management's  future estimates with respect
to such matters.  Accordingly,  future reported financial conditions and results
could differ materially from financial  conditions and results reported based on
management's current estimates.

Purchase  Accounting for Acquisition of Real Estate.  The fair value of the real
estate  acquired,  which includes the impact of  mark-to-market  adjustments for
assumed  mortgage  debt  related to property  acquisitions,  is allocated to the
acquired  tangible  assets,  consisting  of  land,  building  and  improvements,
fixtures  and  equipment  and  identified  intangible  assets  and  liabilities,
consisting of the value of above-market and below-market  leases, other value of
in-place leases and value of tenant  relationships,  based in each case on their
fair values.

The fair value of the tangible  assets of an acquired  property  (which includes
land,  building and  improvements  and fixtures and  equipment) is determined by
valuing the property as if it were vacant, and the "as-if-vacant"  value is then
allocated to land, building and improvements and fixtures and equipment based on
management's  determination  of relative  fair values of these  assets.  Factors
considered by management in  performing  these  analyses  include an estimate of
carrying costs during the expected lease-up periods  considering  current market
conditions and costs to execute  similar leases.  In estimating  carrying costs,
management  includes real



                                       15




estate  taxes,  insurance  and other  operating  expenses and  estimates of lost
rental  revenue  during the expected  lease-up  periods based on current  market
demand.  Management  also estimates  costs to execute  similar leases  including
leasing commissions.

In allocating the fair value of the identified intangible assets and liabilities
of an acquired property, above-market and below-market in-place lease values are
recorded based on the difference  between the current  in-place lease rent and a
management estimate of current market rents.  Below-market lease intangibles are
recorded as part of deferred  revenue and amortized into rental revenue over the
non-cancelable  periods  of  the  respective  leases.  Above-market  leases  are
recorded as part of intangible  assets and amortized as a direct charge  against
rental revenue over the non-cancelable portion of the respective leases.

The aggregate value of other acquired intangible assets,  consisting of in-place
leases and tenant  relationships,  is measured by the excess of (i) the purchase
price paid for a property over (ii) the estimated  fair value of the property as
if vacant,  determined  as set forth above.  This  aggregate  value is allocated
between  in-place lease values and tenant  relationships  based on  management's
evaluation of the specific  characteristics of each tenant's lease. The value of
in-place  leases and customer  relationships  are  amortized to expense over the
remaining non-cancelable periods of the respective leases.

Revenue Recognition. The Company recognizes revenue in accordance with Statement
of Financial  Accounting  Standards No. 13,  Accounting  for Leases,  as amended
("SFAS 13").  SFAS 13 requires  that revenue be  recognized  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.  Rentals provided during renewal option periods where with
rental terms that are lower than those in the primary term are excluded from the
calculation  of straight line rent if they do not meet the criteria of a bargain
renewal option.

Gains on sales of real  estate are  recognized  pursuant  to the  provisions  of
Statement of Financial Accounting Standards No. 66, Accounting for Sales of Real
Estate,  as amended  ("SFAS 66").  The  specific  timing of the sale is measured
against various criteria in SFAS 66 related to the terms of the transactions and
any  continuing  involvement  in the form of management or financial  assistance
associated with the  properties.  If the sales criteria are not met, the gain is
deferred and the finance,  installment or cost recovery method,  as appropriate,
is applied until the sales criteria are met.

Accounts  Receivable.  The Company  continuously  monitors  collections from its
tenants and would make a provision  for estimated  losses based upon  historical
experience  and any  specific  tenant  collection  issues  that the  Company has
identified.  As of September 30, 2005 and December 31, 2004, the Company did not
record an allowance for doubtful accounts.

Impairment of Real Estate.  The Company evaluates the carrying value of all real
estate held when a triggering  event under  Statement  of  Financial  Accounting
Standards  No. 144,  Accounting  for the  Impairment  or Disposal of  Long-Lived
Assets,  as amended  ("SFAS 144") has occurred to determine if an impairment has
occurred which would require the recognition of a loss. The evaluation  includes
reviewing  anticipated  cash flows of the property,  based on current  leases in
place,  and an estimate  of what lease  rents will be if the  property is vacant
coupled  with an  estimate  of  proceeds  to be  realized  upon  sale.  However,
estimating  market lease rents and future sale proceeds is highly subjective and
such estimates could differ materially from actual results.

Depreciation  is  determined  by the  straight-line  method  over the  remaining
estimated economic useful lives of the properties.

Tax Status. The Company and its certain subsidiaries file a consolidated federal
income tax return. The Company has made an election to qualify,  and believes it
is  operating  so as to  qualify,  as a REIT for  Federal  income tax  purposes.
Accordingly,  the Company  generally  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  Sections 856 through 860 of the Internal
Revenue Code, as amended (the "Code").

The Company is now 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  subsidiaries  under  the  Code.  LRA,  LCI and  LSAC are  taxable  REIT
subsidiaries.  As such, the Company is subject to federal and state income taxes
on the income from these activities.

Income taxes are accounted for under the asset and  liability  method.  Deferred
tax  assets  and  liabilities  are  recognized  for  the  estimated  future  tax
consequences   attributable  to  differences  between  the  financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
basis and operating loss and tax credit carry-forwards.  Deferred tax assets and
liabilities are measured using enacted tax rates in effect for the year in which
those temporary differences are expected to be recovered or settled.

Properties  Held For Sale. The Company  accounts for properties held for sale in
accordance with Statement of SFAS No. 144. SFAS 144 requires that the assets and
liabilities  of  properties  that  meet  various  criteria  in SFAS  No.  144 be
presented  separately  in the statement of financial  position,  with assets and
liabilities being separately  stated.  The operating results of these properties
are reflected as  discontinued  operations in the income  statement.  Properties
that do not meet the held for sale  criteria  of SFAS 144 are  accounted  for as
operating properties.

Basis of Consolidation.  The Company  determines  whether an entity for which it
holds an  interest  should be  consolidated  pursuant  to  Financial  Accounting
Standards  Board  Interpretation  No. 46,  Consolidation  of  Variable  Interest
Entities  ("FIN  46R").  If not, and the Company  controls  the entity's  voting
shares and similar  rights,  the entity is  consolidated.  FIN 46R  requires the
Company to evaluate whether it has a controlling financial interest in an entity
through means other than voting rights.



                                       16




Liquidity and Capital Resources
-------------------------------

Real Estate  Assets.  As of September 30, 2005, the Company's real estate assets
were  located in 38 states and  contained an  aggregate  of  approximately  40.2
million square feet of net rentable space. The properties are generally  subject
to triple net leases,  which are generally  characterized as leases in which the
tenant pays all or  substantially  all of the cost and cost  increases  for real
estate  taxes,   capital   expenditures,   insurance,   utilities  and  ordinary
maintenance  of the property.  Of the Company's 187  properties,  14 provide for
operating  expense stops, one is subject to a modified gross lease and three are
not leased. Approximately 97.7% of the total square feet is subject to a lease.

During the nine months  ended  September  30,  2005,  the Company  purchased  38
properties (including through non-consolidated  entities) for a capitalized cost
of $1.0 billion  (including  $395.6 million for  non-consolidated  entities) and
sold four properties to third parties resulting in a net gain of $6.7 million.

The Company's  principal  sources of liquidity are revenues  generated  from the
properties,  interest on cash balances,  amounts  available  under its unsecured
credit facility and amounts that may be raised through the sale of securities in
private or public  offerings.  For the nine months ended September 30, 2005, the
leases on the consolidated  properties  generated $133.3 million in gross rental
revenue compared to $99.9 million during the same period in 2004.

On November 1, 2004, the tenant in the Company's Dallas,  Texas property,  filed
for Chapter 11 bankruptcy  and rejected the lease.  Accordingly,  in addition to
losing base rental revenue,  the Company is responsible  for operating  expenses
until a replacement  tenant can be found.  The Company also has two other vacant
properties located in Phoenix, Arizona and Mansfield, Ohio.

Dividends.  The Company has made  quarterly  distributions  since  October  1986
without interruption.  The Company declared a common dividend of $0.36 per share
to common shareholders of record as of October 31, 2005, payable on November 15,
2005.  The Company's  annualized  common  dividend  rate is currently  $1.44 per
share. The Company also declared a preferred  dividend on its Series C preferred
shares of $0.8125 per share to  preferred  shareholders  of record as of October
31, 2005,  payable on November 15, 2005. The annual  preferred  dividend rate on
the Series C shares is $3.25 per share.  The Company  also  declared a preferred
dividend on its Series B preferred  shares of  $0.503125  per share to preferred
shareholders of record as of October 31, 2005, payable on November 15, 2005. The
annual preferred dividend rate on the Series B shares is $2.0125 per share.

In  connection  with its  intention to continue to qualify as a REIT for federal
income tax purposes,  the Company  expects to continue paying regular common and
preferred dividends to its shareholders. These dividends are expected to be paid
from  operating  cash flows  which are  expected  to  increase  over time due to
property  acquisitions  and growth in rental revenues in the existing  portfolio
and from  other  sources.  Since  cash  used to pay  dividends  reduces  amounts
available for capital  investments,  the Company generally intends to maintain a
conservative  dividend  payout  ratio,  reserving  such  amounts as it considers
necessary for the expansion of properties in its portfolio,  debt reduction, the
acquisition of interests in new properties as suitable  opportunities arise, and
such other factors as the Company's board of trustees considers appropriate.

Cash  dividends paid to common  shareholders  increased to $53.9 million for the
nine months  ended  September  30, 2005  compared to $48.1  million for the nine
months ended September 30, 2004.

Although the Company  receives the majority of its rental  payments on a monthly
basis, it intends to continue paying dividends quarterly. Amounts accumulated in
advance of each quarterly distribution are invested by the Company in short-term
money market or other suitable instruments.

The Company anticipates that cash flows from operations will continue to provide
adequate capital to fund its operating and administrative expenses, regular debt
service   obligations  and  all  dividend   payments  in  accordance  with  REIT
requirements  in both the  short-term and  long-term.  In addition,  the Company
anticipates  that cash on hand,  borrowings under its unsecured credit facility,
issuances of equity and debt,  and other capital  raising  alternatives  will be
available to fund the necessary capital required by the Company. Cash flows from
operations  were $84.7  million  and $70.0  million  for the nine  months  ended
September 30, 2005 and 2004, respectively.

Net cash used in investing  activities totaled $648.7 million and $106.2 million
for the nine months ended September 30, 2005 and 2004,  respectively.  Cash used
in investing  activities was primarily  attributable  to the acquisition of real
estate  and the  investment  in  non-consolidated  entities.  Cash  provided  by
investing  activities  relates  primarily  to the  sale  of  properties  and the
collection  of  notes  receivable.   Therefore,  the  fluctuation  in  investing
activities relates primarily to the timing of investments and dispositions.

Net cash  provided by financing  activities  totaled  $478.1  million and $126.4
million for the nine months  ended  September  30, 2005 and 2004,  respectively.
Cash used in financing activities was primarily attributable to repayments under
the Company's credit facility,  dividends (net of proceeds  reinvested under the
Company's dividend reinvestment plan),  distributions to limited partners,  debt
service  payments  and  deferred  financing  costs.  Cash  provided by financing
activities  relates  primarily  to  proceeds  from  equity  offerings  and  debt
financings.

UPREIT  Structure.  The Company's UPREIT structure permits the Company to effect
acquisitions by issuing to a seller,  as a form of  consideration,  interests in
operating  partnerships  controlled  by the Company.  All of such  interests are
redeemable, at the option of the holder, at certain times for common shares on a
one-for-one  basis and all of such interests  require the Company to pay certain



                                       17




distributions to the holders of such interests in accordance with the respective
operating partnership agreements.  The Company accounts for these interests in a
manner similar to a minority  interest holder.  The number of common shares that
will be outstanding  in the future should be expected to increase,  and minority
interest  expense  should be expected to  decrease,  from time to time,  as such
operating  partnership  interests are redeemed for common shares.  The table set
forth  below  provides  certain  information  with  respect  to  such  operating
partnership  interests as of  September  30,  2005,  based on the current  $1.44
annual dividend.



                                                                                      Total
                                                                    Current          Current
                                      Total                       Annualized       Annualized
                                    Number of       Affiliate      Per Unit        Distribution
               Redemption Date        Units           Units       Distribution        ($000)
               ---------------        -----           -----       ------------        ------
                                                                         
            At any time               3,479,572      1,404,015       $    1.44       $    5,011
            At any time               1,199,652         65,874            1.08            1,296
            At any time                 108,724         52,144            1.12              122
            January 2006                171,168            416               -                -
            January 2006                231,763        120,662            1.44              334
            February 2006                28,230          1,743               -                -
            May 2006                      9,368              -            0.29                3
            May 2006                     97,828         27,212            1.44              141
            November 2006                44,858         44,858            1.44               65
                                   -------------    -----------   -------------    -------------
                                      5,371,163      1,716,924       $    1.30       $    6,972
                                   =============    ===========   =============    =============


Affiliate  units  are held by two  executive  officers  of the  Company  and are
included in the total number of units.

Share Repurchase Program
------------------------

The  Company's  board of trustees has  authorized  the  repurchase  of up to 2.0
million common shares/operating partnership units. As of September 30, 2005, 1.4
million common shares/operating partnership units have been repurchased.

Financing
---------

Revolving Credit Facility.  The Company's $200 million unsecured credit facility
bears  interest at a rate of LIBOR plus 120-170  basis  points  depending on the
leverage  (as  defined)  of the  Company  and  matures in June 2008.  The credit
facility contains customary financial  covenants  including  restrictions on the
level of indebtedness, amount of variable rate debt to be borrowed and net worth
maintenance provisions.  As of September 30, 2005, the Company was in compliance
with all  covenants,  no borrowings  were  outstanding  on the facility,  $198.8
million was  available to be borrowed and $1.2 million in letters of credit were
outstanding.  The new credit  facility  replaced an existing  credit facility of
$100  million.  During the second  quarter of 2005,  the  Company  wrote off the
unamortized deferred loan costs of $0.5 million associated with the $100 million
credit facility.

Debt Service  Requirements.  The Company's principal liquidity needs are for the
payment of interest and principal on outstanding  mortgage debt. As of September
30, 2005,  a total of 101 of the  Company's  131  consolidated  properties  were
subject to outstanding  mortgages,  which had an aggregate  principal  amount of
$1.2  billion.  The  weighted  average  interest  rate  on the  Company's  total
consolidated debt on such date was approximately  5.25%. The estimated scheduled
principal  amortization  payments for the remainder of 2005 and for 2006,  2007,
2008 and 2009 are $5.8 million,  $28.8 million, $36.3 million, $31.1 million and
$32.2 million,  respectively.  As of September 30, 2005, the estimated scheduled
balloon payments for the remainder of 2005 and for 2006, 2007, 2008 and 2009 are
$0, $11.9 million, $0, $65.6 million and $47.7 million, respectively.

Lease   Obligations.   Since  the  Company's   tenants  generally  bear  all  or
substantially all of the cost of property  operations,  maintenance and repairs,
the Company does not anticipate  significant needs for cash for these costs. For
15  properties,  the  Company  does have a level of property  operating  expense
responsibility.  The Company generally funds property  expansions with available
cash and additional secured borrowings,  the repayment of which is funded out of
rental  increases  under the leases  covering  the expanded  properties.  To the
extent there is a vacancy in a property,  the Company would be obligated for all
operating expenses,  including real estate taxes and insurance.  As of September
30, 2005, the Company had three properties that were not leased.

The Company's tenants pay the rental obligation on ground leases either directly
to the fee holder or to the Company as increased  rent.  The annual ground lease
rental payment obligation for each of the next five years is $1.3 million.

Capital  Expenditures.  Due to the triple net lease structure,  the Company does
not  incur  significant  expenditures  in the  ordinary  course of  business  to
maintain its properties.  However,  in the future, as leases expire, the Company
expects to incur costs in extending  the existing  tenant lease or  re-tenanting
the  properties.  The  amounts  of these  expenditures  can  vary  significantly
depending on tenant  negotiations,  market  conditions  and rental rates.  These
expenditures  are expected to be funded from  operating cash flows or borrowings
on the credit facility. As of September 30, 2005, the Company has entered into a
letter of intent to purchase upon



                                       18




completion of construction  and commencement of rent from the tenant, a property
for an aggregate estimated obligation of $14.8 million.

Results of Operations
---------------------

Three months ended September 30, 2005 compared with September 30, 2004
----------------------------------------------------------------------

Changes in the results of  operations  for the Company are  primarily due to the
growth of its portfolio and costs  associated with such growth.  Of the increase
in total gross  revenues for the three months ended  September 30, 2005 of $18.4
million,  $15.9  million  is  attributable  to rental  revenue,  which  resulted
primarily  from (i)  properties  purchased  in 2004 and owned  during 2005 ($3.4
million), (ii) properties purchased and expanded in 2005 ($14.6 million), offset
by (iii) an increase in vacancy ($1.0  million),  (iv) an increase in properties
transferred  to   non-consolidated   entities  ($1.1  million)  and  (v)  rental
reductions due to lease extensions  ($0.3 million).  Advisory fees (comprised of
acquisition,  debt placement and asset  management  fees) decreased $0.5 million
due to a decrease in assets purchased by non-consolidated  entities, and related
debt  placement  completed  during the three  months ended  September  30, 2005.
Tenant reimbursements increased $2.9 million due to an increase in properties in
which the Company has operating expense  responsibilities  offset by an increase
in vacancy. The increase in interest and amortization expense of $6.3 million is
due to the growth of the  Company's  portfolio  and has been  offset by interest
savings resulting from scheduled  principal  amortization  payments and mortgage
satisfactions.  The increase in depreciation and amortization of $9.7 million is
due  primarily  to the increase in real estate and  intangibles  due to property
acquisitions. The increase in property operating expenses of $5.0 million is due
primarily to the Company  acquiring  properties  in which it has property  level
operating  expense  responsibility  and an increase  in  vacancy.  Non-operating
income  decreased by $1.5 million  primarily  due to reduced  reimbursements  of
expenses incurred  associated with properties that were owned by the Company and
sold to a joint venture and reduced interest income. The reduction in income tax
provision  of $0.5  million  relates  primarily  to the reduced  earnings of the
taxable  REIT  subsidiaries.  Equity in  earnings of  non-consolidated  entities
increased  $0.5  million due to an  increase  in net income of  non-consolidated
entities  (see below).  Net income  decreased in 2005  primarily  due to the net
impact of items  discussed above offset by an increase of $1.2 million in income
from  discontinued  operations  comprised  of an  increase  in gains on sales of
properties  $1.6  million and a decrease in  impairment  charges of $0.4 million
offset by a decrease of income from discontinued operations of $0.8 million.

Equity in earning of  non-consolidated  entities increased by $0.5 million.  The
Company's non-consolidated entities had aggregate net income of $6.2 million for
the three  months  ended  September  30, 2005  compared  to $5.3  million in the
comparable period in 2004. The increase in net income is primarily  attributable
to (i) an increase in rental revenue and tenant  reimbursements of $16.5 million
in  2005  due to  properties  purchased  in  2004  and  held  in 2005 as well as
properties  purchased  in 2005 and (ii) a gain on the sale of a property of $5.2
million,  offset by (i) an increase in  depreciation  expense of $9.8 million in
2005 due to ownership of more depreciable  assets,  (ii) an increase in interest
expense of $6.5 million in 2005 due to partially  funding  acquisitions with the
use of  non-recourse  mortgage  debt,  (iii) an increase  in property  operating
expenses of $2.3  million due to an increase in the number of  properties  owned
and (iv) a debt satisfaction charge of $2.0 million.

The  increase in net income in future  periods will be closely tied to the level
of acquisitions made by the Company. Without acquisitions,  which in addition to
generating  rental  revenue,  generate  acquisition,  debt  placement  and asset
management  fees from  non-consolidated  entities,  the sources of growth in net
income are limited to index  adjusted  rents (such as the consumer price index),
percentage  rents,  reduced  interest  expense on  amortizing  mortgages  and by
controlling  other  variable  overhead  costs.  However,  there are many factors
beyond  management's  control that could offset these items  including,  without
limitation,  increased  interest  rates on variable  debt  ($12.3  million as of
September 30, 2005 at an interest rate of 7.7%) and tenant monetary defaults.

Nine months ended September 30, 2005 compared with September 30, 2004
---------------------------------------------------------------------

Changes in the results of  operations  for the Company are  primarily due to the
growth of its portfolio and costs  associated with such growth.  Of the increase
in total gross revenues in 2005 of $37.6 million,  $33.4 million is attributable
to rental revenue which resulted primarily from (i) properties purchased in 2004
and owned during 2005 ($18.6 million), (ii) properties purchased and expanded in
2005 ($24.1  million),  offset by (iii) an increase in vacancy  ($3.1  million),
(iv) properties transferred to non-consolidated  entities ($5.7 million) and (v)
rental  reductions  due  to  lease  extensions  ($0.5  million).  Advisory  fees
(comprised of acquisition,  debt placement and asset  management fees) increased
$1.0 million due to an increase in assets purchased by non-consolidated entities
and related debt placement  completed during the nine months ended September 30,
2005.  Tenant  reimbursements  increased  $3.2  million  due to an  increase  in
properties in which the Company has operating expense responsibilities offset by
an increase in vacancy.  The  increase in interest and  amortization  expense of
$13.7  million  is due to the  growth of the  Company's  portfolio  and has been
partially  offset  by  interest  savings  resulting  from  scheduled   principal
amortization payments and mortgage  satisfactions.  The increase in depreciation
and  amortization  of $22.9  million is due  primarily  to the  increase in real
estate and intangibles due to property  acquisitions.  The Company's general and
administrative  expenses  increased by $3.2  million due  primarily to increased
personnel costs,  including employee benefits ($1.3 million),  professional fees
($0.7 million),  terminated deal costs ($0.3 million) and technology costs ($0.3
million).  The  increase in property  operating  expenses of $8.3 million is due
primarily to incurring property level operating expenses for properties in which
the Company has  operating  expense  responsibility  and an increase in vacancy.
Debt satisfaction  gains, net of $4.6 million,  relates to the satisfaction of a
mortgage  note that  resulted in a gain offset by the  write-off of  unamortized
deferred



                                       19




financing   costs.  The  provision  for  income  taxes  decreased  $1.9  million
predominantly  due to a reduction in the earnings  from real estate  investments
held  by  the  Company's  taxable  REIT  subsidiaries.  Equity  in  earnings  of
non-consolidated  entities  decreased $0.3 million due to the expensing of a fee
paid by the Company and a decrease  of net income of  non-consolidated  entities
(see below).  Net income  decreased in 2005  primarily  due to the net impact of
items  discussed  above,  offset by an increase  of $2.6  million in income from
discontinued  operations  comprised  of an increase of $2.6  million in gains on
sale of properties  and a decrease in impairment  charges of $2.0 million offset
by a decrease of income from discontinued operations of $2.0 million.

Equity in earnings of non-consolidated  entities decreased by $0.3 million.  The
Company's  non-consolidated  entities had  aggregate net income of $14.2 million
for the nine months ended  September  30, 2005  compared to $15.1 million in the
comparable period in 2004. The decrease in net income is primarily  attributable
to (i) an  increase  in  depreciation  expense  of $26.3  million in 2005 due to
ownership of more  depreciable  assets,  (ii) an increase in interest expense of
$18.9  million in 2005 due to  partially  funding  acquisitions  with the use of
non-recourse  mortgage debt, (iii) an increase in property operating expenses of
$6.1 million due to an increase in the number of properties  owned,  (iv) a debt
satisfaction  charge of $2.0  million and (v) an  increase  in  non-reimbursable
operating  expenses of $0.3 million.  These expenses were partially offset by an
increase (i) in rental  revenue and tenant  reimbursements  of $47.6  million in
2005  attributable  to the acquisition of properties in 2004 and 2005 and (ii) a
gain on the sale of a property of $5.2 million.

Funds From Operations
---------------------

The Company  believes that Funds From Operations  ("FFO") enhances an investor's
understanding of the Company's  financial  condition,  results of operations and
cash flows.  The  Company  believes  that FFO is an  appropriate,  but  limited,
measure of the  performance  of an equity REIT. FFO is defined in the April 2002
"White  Paper",  issued by the National  Association  of Real Estate  Investment
Trusts,  Inc. as "net income  (computed in accordance  with  generally  accepted
accounting principles), excluding gains (or losses) from sales of property, plus
depreciation  and  amortization,   and  after  adjustments  for   unconsolidated
partnerships and joint ventures. Adjustments for unconsolidated partnerships and
joint  ventures will be calculated to reflect funds from  operations on the same
basis." Impairment charges recorded are not added back to net income in arriving
at FFO.  FFO  should  not be  considered  an  alternative  to net  income  as an
indicator of operating performance or to cash flows from operating activities as
determined in accordance with generally accepted accounting principles,  or as a
measure of liquidity to other consolidated income or cash flow statement data as
determined in accordance with generally accepted accounting principles.

The following table  reconciles net income  allocable to common  shareholders to
the  Company's  FFO for the  nine  months  ended  September  30,  2005  and 2004
($000's):



                                                                   2005              2004
                                                               --------------     ------------
                                                                              
            Net income allocable to common shareholders         $     22,119       $   32,988
            Adjustments:
                Depreciation and amortization                         50,251           27,874
                Minority interest's share of net income                3,055            2,880
                Amortization of leasing commissions                      395              549
                Gains on sale of properties                          (6,656)          (4,065)
                Joint venture adjustment - depreciation               12,374            4,902
                Joint  venture  adjustment  - gain on sale of
                  properties                                         (1,740)                -
                Preferred share dividend - Series C                    7,556                -
                                                               --------------     ------------
                    Funds From Operations                       $     87,354       $   65,128
                                                               ==============     ============

            Cash flows from operating activities                $     84,732       $   70,024
            Cash flows from investing activities                $  (648,664)       $(106,189)
            Cash flows from financing activities                $    478,090       $  126,365


Off-Balance Sheet Arrangements


Non-Consolidated Real Estate Entities. As of September 30, 2005, the Company has
investments  in various  real estate  entities  with varying  structures.  These
investments include the Company's 33 1/3% non-controlling  interest in Lexington
Acquiport Company, LLC; its 25% non-controlling  interest in Lexington Acquiport
Company II, LLC; its 40% non-controlling interest in Lexington Columbia LLC; its
30%   non-controlling   interest  in   Lexington/Lion   Venture  L.P.;  its  30%
non-controlling  interest  in Triple Net  Investment  Company  LLC;  its 33 1/3%
non-controlling  interest in Lexington  Durham Limited  Partnership  and through
Lexington Oklahoma City, LP its 40%  non-controlling  tenancy in common interest
in a real  property.  The  properties  owned by the entities  are financed  with
individual non-recourse mortgage loans.  Non-recourse mortgage debt is generally
defined as debt  whereby the  lender's  sole  recourse  with respect to borrower
defaults is limited to the value of the property collateralized by the mortgage.
The lender  generally  does not have recourse  against any other assets owned by
the borrower or any of the members of the borrower, except for



                                       20




certain specified  expectations  listed in the particular loan documents.  These
exceptions  generally  relate to limited  circumstances  including  breaches  of
material representations.


The  Company  invests in  entities  with third  parties  to  increase  portfolio
diversification, reduce the amount of equity invested in any one property and to
increase returns on equity due to the realization of advisory fees. See footnote
6 to the unaudited  condensed  consolidated  financial  statements  for combined
summary balance sheet and income statement data relating to these entities.





                                       21




                           PART II - OTHER INFORMATION




ITEM 6.        Exhibits

               31.1   Certification of Chief Executive  Officer pursuant to rule
                      13a-14(a)/15d-14(a)  of  the  Securities  Exchange  Act of
                      1934,   as  adopted   pursuant   to  Section  302  of  the
                      Sarbanes-Oxley Act of 2002 (filed herewith).

               31.2   Certification of Chief Financial  Officer pursuant to rule
                      13a-14(a)/15d-14(a)  of  the  Securities  Exchange  Act of
                      1934,   as  adopted   pursuant   to  Section  302  of  the
                      Sarbanes-Oxley Act of 2002 (filed herewith).

               32.1   Certification  of Chief Executive  Officer  pursuant to 18
                      U.S.C. Section 1350, as adopted pursuant to Section 906 of
                      the Sarbanes-Oxley Act of 2002 (furnished herewith).

               32.2   Certification  of Chief Financial  Officer  pursuant to 18
                      U.S.C. Section 1350, as adopted pursuant to Section 906 of
                      the Sarbanes-Oxley Act of 2002 (furnished herewith).






                                       22






                                   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.


                                            Lexington Corporate Properties Trust




Date: November 15, 2005                     By: /s/ T. Wilson Eglin
                                               ----------------------------
                                            T. Wilson Eglin
                                            Chief Executive Officer, 
                                            President and Chief Operating 
                                            Officer





Date: November 15, 2005                     By: /s/ Patrick Carroll
                                               ----------------------------
                                            Patrick Carroll
                                            Chief Financial Officer, 
                                            Executive Vice President and 
                                            Treasurer






                                       23