Registration No. 333-155634

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM S-4

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

 

LEXINGTON REALTY TRUST

(Exact name of Registrant as specified in its governing instruments)

Maryland		6784		13-371318
(State or Other Jurisdiction of Incorporation or Organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification No.)

One Penn Plaza
Suite 4015
New York, New York 10119-4015
(212) 692-7200
(Address, including zip code, and telephone number, including area code,
of Registrant’s principal executive offices)
T. Wilson Eglin
Chief Executive Officer and President
Lexington Realty Trust
One Penn Plaza
Suite 4015
New York, New York 10119-4015
(212) 692-7200
(Name, address, including zip code, and telephone
number, including area code, of agent for service)

With copies to:
Mark Schonberger, Esq.
Paul, Hastings, Janofsky & Walker LLP
75 East 55^th Street
New York, New York 10022
(212) 318-6000

     Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective and all other conditions of the proposed merger described herein have been satisfied or waived.

     If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. o

     If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

     If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer   o (Do not check if a smaller reporting company)		Smaller reporting company o

CALCULATION OF REGISTRATION FEE

Proposed Maximum

Title of each class of securities

Amount to Be

Aggregate

Amount of

to be registered

Registered

Offering Price (1)(2)

Registration Fee (3)

Shares of beneficial interest classified as common stock, par value $0.0001 per share

6,393,266

$

21,289,575.78

$

836.68

(1)

This number is based on 6,393,266 units of limited partner interests of The Lexington Master Limited Partnership outstanding as of November 24, 2008 and not held by Lexington Realty Trust.

(2)

The registration fee has been computed pursuant to Rule 457(c) and Rule 457(f)(1) under the Securities Act of 1933, as amended, solely for the purpose of calculating the registration fee based on the average high and low prices for shares of Lexington Realty Trust’s common shares as reported on the New York Stock Exchange on November 21, 2008 ($3.33 per share) multiplied by the maximum number of units of limited partner interests of The Lexington Master Limited Partnership that may be exchanged for the securities being registered.

(3)		Calculated in accordance with Rule 457(o) under the Securities Act of 1933, as amended. Fee previously paid.

     The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant will file a further amendment which specifically states that this Registration Statement will thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement will become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

LEXINGTON REALTY TRUST

 

SPECIAL MEETING OF LIMITED PARTNERS OF

THE LEXINGTON MASTER LIMITED PARTNERSHIP

 

To be held on December 29, 2008

 

This proxy statement/prospectus and the enclosed proxy card are being furnished in connection with the solicitation of proxies by The Lexington Master Limited Partnership, which we refer to as the Partnership, to be voted at a special meeting of limited partners to be held at the offices of Paul, Hastings, Janofsky & Walker LLP, 75 East 55th Street, New York, NY 10119-4015, on Monday, December 29, 2008, at 10:00 A.M., New York City Time, and at any adjournments for the purposes set forth in the accompanying Notice of Special Meeting of Limited Partners and in this proxy statement/prospectus.

 

A proxy, in the accompanying form, which is properly executed, duly returned to the Partnership and not revoked, will be voted in accordance with the instructions contained therein and, in the absence of specific instructions, will be voted FOR each of the proposals, including FOR the merger of the Partnership with and into Lexington Realty Trust, which we refer to as the MLP merger, pursuant to the Agreement and Plan of Merger by and between Lexington Realty Trust and the Partnership, dated as of November 24, 2008, which we refer to as the merger agreement. Each proxy granted may be revoked at any time thereafter by writing to the Partnership prior to the meeting, or by execution and delivery prior to the meeting of a subsequent proxy or by attendance and voting in person at the meeting.

 

Lex GP-1 Trust, a wholly-owned subsidiary of Lexington Realty Trust, which we refer to as the General Partner, in its capacity as general partner of the Partnership, has approved the MLP merger. The General Partner has determined in its business judgment that the MLP merger is in the best interest of the Partnership and its partners.

 

Under Delaware law and the Second Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of December 31, 2006, which we refer to as the Partnership Agreement, the MLP merger may be approved by at least 50% of each class of units of limited partner interests in the Partnership, which we refer to as MLP Units, but the General Partner does not believe such approval is required for the MLP Merger. We have two classes of MLP Units outstanding: (1) Special Voting Partnership Units, which we refer to as Special Voting Units, and (2) Class A Partnership Common Units, which we refer to as Class A Units. Approval of a majority of each class is a condition to the consummation of the MLP merger under the merger agreement.

 

Holders of record of MLP Units at the close of business on November 24, 2008, which we refer to as the Record Date, are entitled to notice of, and to vote at, the special meeting or any adjournment. As of the record date, 72,027,245 MLP Units were issued and outstanding, including 15,535,535 Class A Units and 56,491,710 Special Voting Units.

 

As of the Record Date, Lex LP-1 Trust, a wholly-owned subsidiary of Lexington Realty Trust, holds 15,500,000 Class A Units, or 99.8% of the Class A Units outstanding, and 50,133,979 Special Voting Units, or 88.8% of the Special Voting Units outstanding. Lex LP-1 Trust currently intends to vote its 65,633,979 MLP Units in favor of the proposals. Accordingly, unless Lex GP-1 Trust, a wholly-owned subsidiary of Lexington Realty Trust and the General Partner withdraws its recommendation of, and votes against, the MLP merger, approval of the proposals is assured.

 

Approval of the shareholders of Lexington Realty Trust is not required for the approval of the MLP merger. The MLP merger is only subject to the approval of the limited partners, as discussed above.

 

In the MLP merger, you will be entitled to receive, for (1) each whole MLP Unit, one share of beneficial interest classified as common stock of Lexington Realty Trust, par value $0.0001 per share, which is referred to herein as “Common Shares,” and (2) any fractional MLP Unit, cash in an amount equal to the product of (i) such fractional part of an MLP Unit multiplied by (ii) the average closing price of Common Shares quoted on the New York Stock Exchange for the 20 trading day period immediately preceding the third trading day immediately prior to the closing date of the MLP merger.

 

If the closing of the MLP merger occurs on or prior to December 31, 2008, as expected, no distributions will be made on your existing MLP Units. However, you will be entitled to receive dividends on the Common Shares you receive in the MLP merger, when and if authorized by Lexington Realty Trust’s board of trustees.

 

In general, under applicable U.S. federal income tax laws and regulations, you will recognize gain or loss for federal income tax purposes when you receive Common Shares in exchange for your existing MLP Units. We urge you to consult your own tax advisor for a full understanding of the tax consequences of the MLP merger to you.

 

Questions may be directed to the Partnership at the address set forth above.

 

More information about Lexington Realty Trust, the Partnership and the MLP merger is contained in this proxy statement/prospectus. We urge you to read this proxy statement/prospectus carefully, including “Risk Factors” on page 8 of this proxy statement/prospectus for a discussion of the risks relating to the MLP merger.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

 

This proxy statement/prospectus is first being mailed to limited partners on or about          , 2008.

THE LEXINGTON MASTER LIMITED PARTNERSHIP

TO BE HELD ON DECEMBER 29, 2008

     NOTICE IS HEREBY GIVEN that a special meeting of limited partners of The Lexington Master Limited Partnership, a Delaware limited partnership, will be held at the offices of Paul, Hastings, Janofsky & Walker LLP, 75 East 55^th Street, New York, NY 10022, on Monday, December 29, 2008, at 10:00 A.M., New York City Time, to consider and act upon the following:

	(1)		To consider and vote on the approval of the Agreement and Plan of Merger, dated as of November 24, 2008, by and among Lexington Realty Trust and The Lexington Master Limited Partnership, a copy of which is attached as Annex A to the accompanying proxy statement/prospectus and the transactions contemplated thereby, including the merger of The Lexington Master Limited Partnership with and into Lexington Realty Trust; and
	(2)		To transact such other business as may properly come before the special meeting or any adjournments or postponements of the special meeting.

     Limited partners of record at the close of business on November 24, 2008 are entitled to receive notice of, and to vote at, the meeting and at any adjournments.

     All limited partners are cordially invited to attend the meeting. Whether or not you plan to attend the meeting, please complete, date and sign the enclosed proxy, which is solicited by our general partner, and mail it promptly in the enclosed envelope to make sure that the limited partner interests are represented at the meeting. In the event you decide to attend the meeting in person, you may, if you desire, revoke your proxy and vote your interests in person.

     Approval of the shareholders of Lexington Realty Trust is not required for the consummation of the merger of The Lexington Master Limited Partnership with and into Lexington Realty Trust.

     Lex GP-1 Trust, a wholly-owned subsidiary of Lexington Realty Trust and our general partner, has approved and recommends the merger. Lex LP-1 Trust, a wholly-owned subsidiary of Lexington Realty Trust and the holder of approximately 91.1% of the outstanding units of limited partner interest (including a majority of both classes of units limited partner interests) intends to vote its units of limited partner interest in favor of the proposals. Accordingly, unless Lex GP-1 Trust, as our general partner, withdraws its recommendation to approve, and votes against, the merger, approval of the proposals is assured.

Very truly yours,

THE LEXINGTON MASTER LIMITED PARTNERSHIP

By: Lex GP-1 Trust, General Partner

/s/ Joseph S. Bonventre

By: Joseph S. Bonventre
       Secretary

New York, NY

, 2008

IMPORTANT: The prompt return of proxies will ensure that the limited partner interests will be voted. A
self-addressed envelope is enclosed for your convenience. No postage is required if mailed within the United
States.

TABLE OF CONTENTS

QUESTIONS AND ANSWERS ABOUT THE MLP MERGER AND THE SPECIAL MEETING			I
About the MLP Merger			i
About the Special Meeting		ii
How to Get More Information		iv
SUMMARY			1
Special Meeting			1
Parties to the MLP Merger			1
MLP Merger			1
MLP Merger Approval Requirement			1
Record Date			2
MLP Merger Consideration			2
Distributions			2
Conflicts of Interest			2
Recommendation of the General Partner			2
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA			3
For Lexington Trust:			3
For the Partnership:			4
SELECTED UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL AND OTHER DATA			5
COMPARATIVE PER SHARE/UNIT DATA			6
MARKET PRICES AND DIVIDEND INFORMATION			6
DIVIDEND POLICY			6
RISK FACTORS			8
BACKGROUND OF THE ACTIONS			9
Background of Lexington Trust’s Acquisition of MLP Units			9
Background of the MLP Merger			10
PROPOSAL NO. 1 MLP MERGER			11
Parties to the MLP Merger			11
MLP Merger Approval Requirement			11
Record Date			11
MLP Merger Consideration			11
Distributions			12
Conditions to the MLP Merger			12
Reasons for and Consequences of the MLP Merger			12
Alternatives Considered			13
Appraisal Rights			13
Terms of the Merger Agreement			14
EX-23.1: CONSENTS OF KPMG LLP
EX-23.2: CONSENT OF DELOITTE & TOUCHE LLP

Material Tax Consequences of the MLP Merger			15
Regulatory Approvals			15
Conduct of Lexington Trust and the Partnership’s Businesses in the Event the MLP Merger is not Consummated			15
Accounting Treatment			15
Restrictions on Resale of Lexington Common Shares Issued in the Merger			16
Trustees and Executive Officers of the Combined Company			16
Who Can Answer Other Questions			16
THE GENERAL PARTNER RECOMMENDS A VOTE FOR THE APPROVAL OF THE MERGER AGREEMENT, THE MLP MERGER AND THE RELATED TRANSACTIONS			16
INTERESTS OF LEXINGTON TRUST			16
DESCRIPTION OF LEXINGTON TRUST’S COMMON SHARES			17
General			17
Terms			17
Restrictions on Ownership			18
Transfer Agent			18
CERTAIN PROVISIONS OF MARYLAND LAW AND OF THE LXP DECLARATION AND BYLAWS			18
Restrictions Relating To REIT Status			18
Maryland Law			19
THE PARTNERSHIP’S SECOND AMENDED AND RESTATED PARTNERSHIP AGREEMENT; EXCHANGE OF MLP UNITS			22
Management			22
Transferability of Interests			22
Capital Contributions and Borrowings			22
Redemption Rights Under the Partnership Agreement			23
Tax Treatment of Exchange of MLP Units in the MLP Merger			23
Operations of the MLP			24
Allocations			24
Distributions			24
Funding Agreement			24
Amendments			25
Exculpation and Indemnification of the General Partner			25
Term			26
Tax Matters Partner			26
COMPARISON OF OWNERSHIP OF MLP UNITS AND COMMON SHARES			26
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS			33
Tax Treatment of Redemption of MLP Units			33
Federal Income Tax Considerations Relating to the REIT			34

Taxation of the Company			35
Taxation of Shareholders			44
Taxation of Taxable U.S. Shareholders			44
Taxation of Non-U.S. Shareholders			45
Taxation of Tax-Exempt Shareholders			47
Information Reporting and Backup Withholding			48
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			48
SECTION 16 COMPLIANCE			51
EXPENSES			51
WHERE YOU CAN FIND MORE INFORMATION			51
LEGAL MATTERS			52
EXPERTS			52
SUBMISSION OF LIMITED PARTNER PROPOSALS			52
WARNING ABOUT FORWARD LOOKING STATEMENTS			52
WHAT INFORMATION YOU SHOULD RELY ON			53
LEXINGTON REALTY TRUST INDEX TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS			F-1
ANNEX A — MERGER AGREEMENT			A-1
ANNEX B — INFORMATION REGARDING LEXINGTON TRUST			B-1
ANNEX C — INFORMATION REGARDING THE PARTNERSHIP			C-1

QUESTIONS AND ANSWERS ABOUT THE MLP MERGER AND THE SPECIAL MEETING

About the MLP Merger

Q: Why am I receiving this proxy statement/prospectus?

A: The General Partner and the board of trustees (including all of the independent trustees) of Lexington Realty Trust, which we refer to as Lexington Trust, have each approved an agreement and plan of merger, or merger agreement, between Lexington Trust and the Partnership. The merger agreement provides for the merger of the Partnership with and into Lexington Trust, or the MLP merger.

     The Lexington Trust shares of beneficial interest classified as common stock, or Common Shares, to be issued in the MLP merger can be issued without the approval of the shareholders of Lexington Trust pursuant to a registration statement, which this proxy statement/prospectus is a part of, on Form S-4 filed with the Securities and Exchange Commission, which we refer to as the SEC.

     This proxy statement/prospectus is being furnished to the limited partners of record as of November 24, 2008, or the Record Date, for the purpose of voting on the following proposals:

	(1)		To consider and vote on the approval of the merger agreement and the transactions contemplated thereby, including the MLP merger; and
	(2)		To transact such other business as may properly come before the special meeting or any adjournments or postponements of the special meeting.

     As of the Record Date, Lex LP-1 Trust holds 15,500,000 Class A Units, or 99.8% of the Class A Units outstanding, and 50,133,979 Special Voting Units, or 88.8% of the Special Voting Units outstanding. Lex LP-1 Trust currently intends to vote its 65,633,979 MLP Units in favor of the proposals. Accordingly, unless the General Partner withdraws its recommendation of, and votes against, the MLP merger, approval of the proposals is assured.

     This proxy statement/prospectus contains important information about the proposed MLP merger and the special meeting, and you should read it carefully.

Q: Why has the MLP merger been proposed?

A: The General Partner and Lexington Trust’s board of trustees, which we refer to as the LXP board, have each proposed the MLP merger and determined in their respective business judgment that the MLP merger is advisable and in the best interests of the Partnership, the holders of MLP Units, Lexington Trust and the holders of Common Shares. For a description of factors considered by the General Partner and the LXP board, please see “Proposal No. 1 — Reasons for the MLP Merger,” below.

Q: Are there any conflicts of interest related to the MLP merger?

A: Lexington Trust may have interests in the MLP merger that may be different from, or in addition to, the interests of other holders of MLP Units generally. These interests are discussed under “Interests of Lexington Trust,” below.

Q: What will I receive in the MLP merger?

A: In the MLP merger, you will be entitled to receive, for (1) each whole MLP Unit, one Common Share, and (2) any fractional MLP Unit, cash in an amount equal to the product of (i) such fractional part of an MLP Unit multiplied by (ii) the average closing price of Common Shares quoted on the New York Stock Exchange for the 20 trading day period immediately preceding the third trading day immediately prior to the closing date of the MLP merger. As promptly as practicable after the determination of the amount of cash, if any, to be paid to holders of fractional interests, Lexington Trust will forward payments to such holders of fractional interests.

Q: What will holders of Lexington Trust Common Shares receive in the MLP merger?

A: Holders of Lexington Trust Common Shares will not receive any additional shares or other consideration in connection with the MLP merger. Each Common Share will continue to represent one Common Share after the consummation of the MLP merger.

Q: Will I continue to receive distributions prior to the MLP merger?

A: If the MLP merger closes, as expected, on December 31, 2008, no distributions will be made on your existing MLP Units. However, you will be entitled to receive dividends made on the Common Shares you receive in exchange for your MLP Units beginning with the dividend expected to be paid on January 15, 2009 with a record date of December 31, 2008. If the MLP merger does not close prior to December 31, 2008, the Partnership expects to make a distribution on January 14, 2009 to holders of MLP Units as of December 31, 2008. The timing and amount of any dividend and/or distribution is subject to the approval of the LXP board and the General Partner, as applicable.

Q: What will happen to the Partnership if the MLP merger is not completed?

A: If Lexington Trust determines that it is no longer advisable to complete the MLP merger, the merger agreement will terminate and the MLP merger will not be completed. In such event, you will remain a holder of MLP Units entitled to the rights and benefits under the Partnership Agreement.

Q: Do I have appraisal rights in connection with the MLP merger?

A: No. The Partnership was formed under Delaware law. Under Delaware law, a partnership agreement or an agreement of merger or consolidation may provide that contractual appraisal rights with respect to a partnership interest or another interest in a limited partnership will be available for any class or group or series of partners or partnership interests in connection with any merger or consolidation in which the limited partnership is a party to the merger or consolidation. Neither the Partnership Agreement, nor the merger agreement, provides for contractual appraisal rights.

Q: Will I recognize taxable gain or loss for U.S. federal income tax purposes as a result of the MLP merger?

A: Yes. In general, applicable U.S. federal income tax laws and regulations, you will recognize a gain or loss for federal income tax purposes upon exchange of your MLP Units for Common Shares. We urge you to consult your own tax advisor for a full understanding of the tax consequences of the MLP merger to you.

About the Special Meeting

Q: Where and when is the special meeting?

A: The special meeting will take place at the New York offices of Paul, Hastings, Janofsky & Walker LLP, located at 75 East 55th Street, New York, New York 10022, on Monday, December 29, 2008, at 10:00 a.m. local time.

Q: Who is entitled to vote?

A: Holders of record of MLP Units at the close of business on November 24, 2008, the Record Date, are entitled to vote at the special meeting. As of the Record Date, there were 15,535,535 Class A Units outstanding and 56,491,710 Special Voting Units outstanding. Lex LP-1 Trust held a majority of both classes and intends to vote in favor of all proposals. Accordingly, unless the General Partner withdraws its recommendation of, and votes against, the MLP merger, approval of the proposals is assured.

Q: How do I cast my vote?

A: You may vote as follows:

Mail: Vote, sign, date your proxy card and mail it in the postage-paid envelope.

In Person: Vote at the Annual Meeting.

By Telephone: Call toll-free 1-866-540-5760 and follow the instructions. You will be prompted for certain information that can be found on your proxy card.

Via Internet: Log on to www.proxyvoting.com/lxp and follow the on-screen instructions. You will be prompted for certain information that can be found on your proxy card.

Q: What vote is required?

A: Under Delaware law, unless otherwise provided in the partnership agreement, a merger or consolidation must be approved (1) by all general partners and (2) by the limited partners or, if there is more than one class or group of limited partners, then by each class or group of limited partners, in either case, by limited partners who own more than 50 percent of the then current percentage or other interest in the profits of the limited partnership owned by all of the limited partners or by the limited partners in each class or group, as appropriate.

     The Partnership Agreement provides the General Partner with full power and authority to merge the Partnership into another entity, but the General Partner may not permit the Partnership to be a party to a merger pursuant to which the MLP Units are converted or changed into or exchanged for securities of another operating partnership in an UPREIT or similar structure without the affirmative vote of the holders of at least a majority-in-interest of the limited partners, unless upon consummation of such merger, the holders of MLP Units will receive shares of stock or beneficial interest or other equity securities of the parent REIT of such operating partnership with preferences, rights and privileges not materially inferior to the preferences, rights and privileges of Common Shares. In the MLP merger, the holders of MLP Units will receive Common Shares; therefore, we do not believe that approval by the limited partners is required under the Partnership Agreement or Delaware law.

     Nonetheless, the General Partner is soliciting your vote because the merger agreement requires that the General Partner obtain the approval of the holders of at least a majority of each class of the MLP Units.

     As of the Record Date, Lex LP-1 Trust holds 15,500,000 Class A Units, or 99.8% of the Class A Units outstanding, and 50,133,979 Special Voting Units, or 88.8% of the Special Voting Units outstanding. Lex LP-1 Trust currently intends to vote its 65,633,979 MLP Units in favor of the proposals. Accordingly, unless the General Partner publicly withdraws its recommendation of the MLP merger, approval of the proposals is assured.

Q: Can I change my vote after I have granted my proxy?

A: Yes. You may revoke your proxy and change your vote at any time before your proxy is voted at the special meeting. To revoke your proxy instructions, you must: (i) so advise the General Partner’s Secretary, Joseph S. Bonventre, c/o The Lexington Master Limited Partnership, One Penn Plaza, Suite 4015, New York, NY 10119-4015 in writing before your MLP Units have been voted by the proxy holders at the meeting; (ii) execute and deliver a subsequently dated proxy; or (iii) attend the meeting and vote your MLP Units in person.

Q: What happens if I hold MLP Units and I do not indicate how I want to vote, do not vote or abstain from voting on the proposals?

A: If you sign and send in your proxy but do not indicate how you want to vote on the proposals, your proxy will be voted in favor of all of the proposals on which a vote will take place at the special meeting. If you do not submit your proxy and do not attend the special meeting, your MLP Units will count as a vote against the proposals.

Q: Will anyone contact me regarding this vote?

A: In addition to the solicitation of proxies by use of the mails, the General Partner and officers and regular employees of Lexington Trust may solicit proxies by telephone, facsimile, e-mail, or personal interviews without additional compensation. We reserve the right to engage solicitors and pay compensation to them for the solicitation of proxies.

Q: Who has paid for this proxy solicitation?

A: The Partnership and Lexington Trust will share the cost of preparing, printing, assembling and mailing the proxy card, the proxy statement/prospectus and other materials that may be sent to limited partners in connection with this solicitation.

How to Get More Information

Q: Who can answer my questions?

A: If you have questions about the MLP merger or want additional copies of this proxy statement/prospectus or additional proxy cards should contact: Investor Relations, The Lexington Master Limited Partnership, One Penn Plaza, Suite 4015, New York, NY 10119-4015, Telephone (212) 692-7200.

1

2

3

(1)		Adjusted to reflect the 7.5801 to 1 unit split of the outstanding units on November 7, 2005.
(2)		Adjusted to reflect the 0.80 to 1 unit split of outstanding units on December 31, 2006.

4

5

(1)		Represents final distribution by the Partnership (then known as The Newkirk Master Limited Partnership) prior to Lexington Trust’s merger with Newkirk Realty Trust, Inc.

6

7

RISK FACTORS

     The MLP merger involves certain risks and other adverse factors. You are urged to read this proxy statement/prospectus carefully in its entirety, including all annexes and supplements hereto and including the matters addressed in “Warning About Forward-Looking Statements,” and should carefully consider the following risk factors in evaluating the MLP merger.

     The risks below relate primarily to the MLP merger and the combined company resulting from the MLP merger. This section does not review risks relating to the existing businesses of Lexington Trust, which risks will also affect the combined entity, and which are set forth in Lexington Trust’s Current Report on Form 8-K filed with the SEC on June 25, 2008 and Quarterly Report on Form 10-Q filed with the SEC on November 10, 2008, both of which are included as part of Annex B to this proxy statement/prospectus.

After the MLP merger is completed, holders of MLP Units will become shareholders of Lexington Trust and will have different rights that may be less advantageous than their current rights.

     After the closing of the MLP merger, holders of MLP Units will become holders of Common Shares. Lexington Trust is a Maryland real estate investment trust and the Partnership is a Delaware limited partnership. Differences in Lexington Trust’s Amended and Restated Declaration of Trust, which we refer to as the LXP declaration, and Lexington Trust’s By-laws, which we refer to as the LXP bylaws, and the Partnership’s Partnership Agreement and Certificate of Limited Partnership will result in changes to the rights of holders of MLP Units when they become holders of Common Shares. A holder of MLP Units may conclude that its current rights under the Partnership’s Partnership Agreement and Certificate of Limited Partnership are more advantageous than the rights they may have under the LXP declaration and the LXP bylaws. See “Comparison of Ownership of MLP Units and Common Shares,” below.

You generally will recognize taxable gain or loss for U.S. federal income tax purposes as a result of the MLP merger.

     In general, under applicable U.S. federal income tax laws and regulations, you will recognize a gain or loss for federal income tax purposes upon exchange of your MLP Units for Common Shares. We urge you to consult your own tax advisor for a full understanding of the tax consequences of the MLP merger to you.

Lexington Trust has interests in the merger that may be different from, or in addition to, the interests of other holders of MLP Units generally.

     Lexington Trust may have interests in the MLP merger that may be different from, or in addition to, the interests of other holders of MLP Units generally. The General Partner and the LXP board were aware of these interests and considered them, among other matters, in approving the MLP merger. These interests are discussed under “Interests of Lexington Trust,” below.

     Lex LP-1 Trust, a wholly-owned subsidiary of Lexington Trust and the holder of approximately 91.1% of the outstanding MLP Units (including a majority of the Class A Units and the Special Voting Units) intends to vote its MLP Units in favor of the proposals.

BACKGROUND OF THE ACTIONS

Background of Lexington Trust’s Acquisition of MLP Units

     The Partnership was formed in October 2001 and commenced operations on January 1, 2002 following the completion of a transaction that we refer to as the exchange, involving the merger into the Partnership’s wholly-owned subsidiaries of 90 limited partnerships, each of which owned commercial properties, and the acquisition by the Partnership of various assets, including those related to the management or capital structure of those partnerships. In connection with the exchange, limited partners of the merged partnerships and equity owners of the entities that contributed other assets in the exchange received MLP Units in consideration of the merger and contributions. From January 1, 2002 to November 7, 2005, the General Partner was MLP GP LLC, an entity effectively controlled by affiliates of Apollo Real Estate Fund III, L.P., Winthrop Realty Partners L.P. (formerly known as Winthrop Financial Associates), executive officers, and affiliates of Vornado Realty Trust.

     In connection with the exchange and because there were existing “tax protection” agreements with respect to certain of the 90 limited partnerships, MLP GP LLC agreed not to sell any of the Partnership’s properties prior to January 15, 2004 (the latest expiration date of the existing “tax protection” agreements) or, if earlier, the expiration of the initial lease term, unless (1) the property was sold pursuant to an exercise of a purchase option, an economic discontinuance right by a tenant under an existing lease or a lease termination, or (2) MLP GP LLC determined that a sale is necessary in order to avoid the loss of the Partnership’s investment in a property. No “tax protection” agreements were entered into between the Partnership or the General Partner, on the one hand, and any limited partner on the other hand, that expired after January 15, 2004.

     Effective November 7, 2005, (1) Newkirk Realty Trust, Inc., or Newkirk, became the General Partner and, in connection with its initial public offering, or the Newkirk IPO, acquired MLP Units in exchange for a contribution to the Partnership of cash and certain exclusivity rights with respect to net-lease business opportunities and (2) NKT Advisors LLC was retained as the Partnership’s external advisor pursuant to an Advisory Agreement among Newkirk, the Partnership and NKT Advisors LLC. Upon completion of the Newkirk IPO and related transactions, Newkirk held 30.1% of the then total outstanding MLP Units.

     Effective December 31, 2006, Newkirk was merged into Lexington Corporate Properties Trust. In connection with this merger, (1) the Advisory Agreement was terminated, (2) Lexington Corporate Properties Trust changed its name to Lexington Realty Trust, or Lexington Trust, (3) Lex GP-1 Trust became the Partnership’s sole general partner and Lex LP-1 Trust acquired 31.0% of the then outstanding MLP Units, and (4) the Partnership effected a reverse MLP Unit split in which each MLP Unit then outstanding was converted into 0.8 MLP Units.

     In June 2007, the Partnership entered into purchase agreements with Lexington Trust and the Common Retirement Fund of the State of New York, which we refer to as NYCRF, Lexington Trust’s 66.67% partner in one of its co-investment programs, whereby, after certain assets were distributed to Lexington Trust and NYCRF, the Partnership acquired 100% of the interests in the co-investment program. Accordingly, the Partnership became the owner of ten primarily single tenant net leased real estate properties. The Partnership acquired the properties through (1) a cash payment of approximately $117.8 million, (2) an issuance of approximately 3.1 million MLP Units to Lexington Trust, and (3) the assumption of approximately $169.2 million in non-recourse mortgage debt.

     Also in June 2007, the Partnership entered into a transaction with Lexington Trust and affiliates of Clarion Lion Properties Fund, Lexington Trust’s 70% partner in another one of its co-investment programs, whereby the Partnership acquired a 100% interest in six primarily single tenant net leased real estate properties held by the co-investment program. The acquisition was effected through (1) a cash payment of $6.6 million, (2) an issuance of 4.1 million MLP Units to Lexington Trust, and (3) the assumption of approximately $94.2 million of non-recourse mortgage debt.

     On December 20, 2007, in connection with the formation of Net Lease Strategic Assets Fund L.P., one of the Partnership’s co-investment programs which we refer to as NLS, Lexington Trust contributed eight properties to the Partnership in exchange for approximately 5.1 million MLP Units and the assumption of approximately $77.3 million in non-recourse mortgage debt. Following this transaction, the eight properties were immediately contributed to NLS.

     On December 31, 2007, Lexington Trust also contributed two properties to the Partnership in exchange for approximately 4.6 million MLP Units and the assumption of $136.3 million in non-recourse mortgage debt.

     On March 25, 2008, Lexington Trust contributed four properties to the Partnership in exchange for approximately 3.6 million MLP Units and the assumption of $51.0 million in non-recourse mortgage debt. These properties were immediately contributed to NLS.

     During October 2008, the Partnership’s then three largest MLP Unitholders (other than Lexington Trust) redeemed a total of approximately 27.6 million MLP Units for Common Shares pursuant to the redemption right under the Partnership Agreement.

     As a result of these contributions and redemptions and the redemptions of MLP Units by other limited partners, Lexington Trust, through Lex LP-1 Trust, holds 65,633,979 MLP Units, representing 91.1% of the MLP Units outstanding as of the date of this proxy statement/prospectus.

Background of the MLP Merger

     At a meeting of the LXP board on May 20, 2008, the LXP board and Lexington Trust’s management discussed the costs associated with maintaining the Partnership, including the costs related to the Partnership’s status as a public reporting entity. The LXP board requested that Lexington Trust’s management explore ways to reduce the costs associated with maintaining the MLP.

     After reviewing alternatives, on October 14, 2008, Paul, Hastings, Janofsky & Walker LLP, as counsel for the Partnership and Lexington Trust, made an application on behalf of the Partnership and Lexington Trust with the SEC for (1) an exemption for the Partnership from certain reporting requirements or, in the alternative, (2) confirmation from the staff of the Division of Corporation Finance of the SEC that it will not recommend to the SEC any enforcement action if the Partnership does not comply with certain reporting requirements.

     After discussions with the staff of the Division of Corporation Finance of the SEC regarding the likelihood of receiving such exemption or confirmation, the Partnership and Lexington Trust withdrew the application.

     Following the redemptions during October 2008, Lexington Trust, through Lex LP-1 Trust, obtained approximately 91.1% of the MLP Units outstanding.

     At a meeting of the LXP board on November 11, 2008, management of Lexington Trust proposed the MLP merger to the LXP board and reported to the LXP board on the estimated cost savings. The LXP board authorized Lexington Trust’s management to explore the feasibility of the MLP merger.

     Over the next two weeks, Lexington Trust’s management explored the feasibility of the MLP merger and prepared the merger agreement and this proxy statement/prospectus. On November 24, 2008, the LXP Board and the General Partner approved the merger agreement, the MLP merger and the related transactions.

PROPOSAL NO. 1 MLP MERGER

Parties to the MLP Merger

     Lexington Realty Trust. Lexington Trust is a self-managed and self-administered real estate investment trust, or a REIT, formed under the laws of the State of Maryland. Lexington Trust’s primary business is the acquisition, ownership and management of a geographically diverse portfolio of net leased office and industrial properties. As of September 30, 2008, Lexington Trust owned or had interests in approximately 240 consolidated properties in 42 states and the Netherlands.

     In addition to its Common Shares, Lexington Trust has four outstanding series of shares of beneficial interest classified as preferred stock, which we refer to as its preferred shares: its 8.05% Series B Cumulative Redeemable Preferred Stock, or “Series B Preferred Shares,” its 6.50% Series C Cumulative Convertible Preferred Stock, or “Series C Preferred Shares,” its 7.55% Series D Cumulative Redeemable Preferred Stock, or “Series D Preferred Shares,” and its special voting preferred stock. Lexington Trust’s common shares, Series B Preferred Shares, Series C Preferred Shares and Series D Preferred Shares are traded on the New York Stock Exchange, which we refer to as the NYSE, under the symbols “LXP”, “LXP_pb”, “LXP_pc”, and “LXP_pd”, respectively. See Annex B for more information concerning Lexington Trust and its business and assets.

     For information with respect to Lexington Trust please see the pages of this proxy statement/prospectus or annex to this proxy statement/prospectus set forth opposite the applicable item in the table below for the relevant period.

Item		As of December 31, 2007		As of September 30, 2008
Description of Business		B-1 — B-89		B-131 (The Company); B-136 - B-137 (Investments in Real Estate and Intangibles); B-137 - B-140 (Investments in Non-Consolidated Entities); B-146 (Subsequent Events); and B-147 - B-152 (Management’s Discussion and Analysis of Financial Condition and Results of Operations)
Description of Property		B-21 — B-33		B-198 — B-208
Legal Proceedings		B-34		B-154
Market Price of and Dividends on Common Shares		6		6
Securities Authorized for Issuance Under Equity Compensation Plans		B-38		B-38
Financial Statements and Supplementary Financial Data		B-60 — B-111		B-127 — B-146
Selected Financial Data		3 — 4		3 — 4
Management’s Discussion and Analysis of Financial Condition and Results of Operations		B-40 — B-58		B-147 — B-152
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		N/A		N/A
Quantitative and Qualitative Disclosures about Market Risk		B-58		B-153
Executive Officers who are not Trustees		B-35		B-35
Trustees		B-254 - B-255		B-254 - B-255
Executive Compensation		B-263 - B-286		B-263 - B-286
Related Party Transactions		B-261		B-143
Corporate Governance		B-256 - B-261		B-256 - B-261

     The Lexington Master Limited Partnership. The Partnership was organized in October 2001 as a Delaware limited partnership to facilitate the January 2002 exchange transaction in which 90 limited partnerships were merged into the Partnership and the Partnership acquired various other assets related to its management and capital structure.

     Lex GP-1 Trust, a wholly-owned subsidiary of Lexington Trust, is the General Partner, and Lex LP-1 Trust, a wholly-owned subsidiary of Lexington Trust, owns 65,633,979 MLP Units, representing approximately 91.1% of the outstanding MLP Units as of the date of this proxy statement/prospectus.

     The Partnership owns commercial properties, most of which are leased to investment grade corporate tenants, as well as other real estate assets. As of September 30, 2008, the Partnership owned interests in approximately 130 consolidated properties located in 33 states. See Annex C for more information concerning the Partnership and its business and assets.

     For information with respect to the Partnership please see the pages of this proxy statement/prospectus or annex to this proxy statement/prospectus set forth opposite the applicable item in the table below for the relevant period.

Item		As of December 31, 2007		As of September 30, 2008
Description of Business		C-3 — C-9		C-103 (Organization and Business); C-106 - C-107 (Real Estate Investments and Lease Intangibles); C-108 - C-111 (Investments in Non-Consolidated Entities); C-116 (Subsequent Events); and C-117 - C-124 (Management’s Discussion and Analysis of Financial Condition and Results of Operations)
Description of Property		C-20 — C-24		C-179 — C-181
Legal Proceedings		C-24		C-127
Market Price of and Distributions on MLP Units		6		6
Financial Statements and Supplementary Financial Data		C-49 — C-84		C-99 — C-116
Selected Financial Data		4		4
Management’s Discussion and Analysis of Financial Condition and Results of Operations		C-26 — C-43		C-117 — C-124
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		C-44		N/A
Quantitative and Qualitative Disclosures about Market Risk		C-43 — C-44		C-124 — C-125

MLP Merger Approval Requirement

     The merger agreement requires that the Partnership obtain the approval of the holders of at least a majority of each class of MLP Units.

     As of the Record Date, Lex LP-1 Trust holds 15,500,000 Class A Units, or 99.8% of the Class A Units outstanding, and 50,133,979 Special Voting Units, or 88.8% of the Special Voting Units outstanding. Lex LP-1 Trust currently intends to vote its 65,633,979 MLP Units in favor of the proposals. Accordingly, unless the General Partner withdraws its recommendation of, or votes against, the MLP merger, approval of the proposals is assured.

Record Date

     The General Partner has set the close of business on November 24, 2008 as the Record Date for limited partners who are entitled to notice of the action to be taken at the special meeting.

MLP Merger Consideration

     In the MLP merger, you will be entitled to receive, for (1) each whole MLP Unit, one Common Share and (2) any fractional MLP Unit, cash in an amount equal to the product of (i) such fractional part of an MLP Unit multiplied by (ii) the average closing price of Common Shares quoted on the New York Stock Exchange for the 20 trading day period immediately preceding the third trading day immediately prior to the closing date of the MLP merger. As promptly as practicable after the determination of the amount of cash, if any, to be paid to holders of fractional interests, Lexington Trust will forward payments to such holders of fractional interests.

Distributions

     If the MLP merger closes, as expected, on December 31, 2008, no distributions will be made on your existing MLP Units. However, you will be entitled to receive dividends made on the Common Shares you receive in exchange for your MLP Units beginning with the dividend expected to be paid on January 15, 2009 with a record date of December 31, 2008. If the MLP merger does not close prior to December 31, 2008, the Partnership expects to make a distribution on January 14, 2009 to holders of MLP Units as of December 31, 2008. The timing and amount of any dividend and/or distribution is subject to the approval of LXP’s board and the General Partner, as applicable.

Conditions to the MLP Merger

     The consummation of the MLP merger is subject to the approval of the limited partners as described in this proxy statement/prospectus. This condition is in favor of, and may be waived by, Lexington Trust.

Reasons for and Consequences of the MLP Merger

     In deciding to approve the MLP merger and the merger agreement, the General Partner and Lexington Trust considered a number of factors, both potentially positive and potentially negative, with respect to the MLP merger:

	•		Administrative Cost Savings — The MLP merger is expected to result in administrative and operational economies of scale and cost savings for the benefit of both holders of MLP Units and holders of Common Shares. The Partnership is required to file periodic reports with the SEC because of the number of holders of MLP Units and the value of the Partnership’s assets. As a result, the Partnership has separate financial and tax accounting, reporting and disclosure requirements, which are estimated to cost in excess of $1.0 million annually. These requirements are different from and in addition to those required for Lexington Trust and its other subsidiaries, including its three other operating partnerships.
	•		Tax Consequences — The MLP merger will be a taxable transaction for the holders of MLP Units. No “tax protection” agreements were entered into between the Partnership or the General Partner, on the one hand, and any limited partner on the other hand, that expired after January 15, 2004. Section 7.6.B of the Partnership Agreement provides that the General Partner is under no obligation to give priority to the separate interests of the limited partners (including, without limitation, the tax consequences to limited partners) in deciding whether to cause the Partnership to take (or decline to take) any actions. The General Partner believes that the tax consequences to the limited partners will be mitigated by Common Shares trading at historic lows. In addition, U.S. federal tax rates on capital gains are currently scheduled to increase for taxable years beginning after December 31, 2010. It is possible that Congress could increase such rates sooner.
	•		Liquidity for Limited Partners — Except for certain transfers to family members and charitable organizations, holders of MLP Units may not transfer their MLP Units without the General Partner’s consent. However, holders of MLP Units have the right to tender their MLP Units for redemption by the MLP at certain times, as specified in the Partnership Agreement. Lexington Trust’s Common Shares issued in exchange for MLP Units upon a redemption or pursuant to the MLP merger will be freely transferable as registered securities under the Securities Act. Lexington Trust’s Common Shares are listed on the NYSE under the symbol “LXP”. Therefore, when a holder of MLP Units receives Common Shares upon a redemption or in the MLP merger he or she will have the same liquidity.
	•		Avoidance of Conflicts of Interest — Lexington Trust and its other operating partnerships conduct businesses similar to that of the Partnership. The conduct of these businesses and the allocation of business opportunities and investments between the Partnership and Lexington Trust’s other subsidiaries, may give rise to conflicts of interests. In addition, there are complexities in allocating resources and costs for overhead, personnel and other matters between the Partnership and Lexington Trust and its other subsidiaries. These conflict situations will be eliminated through the MLP merger.

	•		Greater Capital Resources — While the General Partner believes that cash flows from operations will continue to provide adequate capital to fund the Partnership’s operating and administrative expenses, regular debt service obligations and all distribution payments in accordance with Lexington Trust’s REIT requirements in both the short-term and long-term, Lexington Trust, as a publicly traded company, has access to greater capital resources.
	•		Future Investment Opportunities — Lexington Trust’s greater capital resources will also enable it to take advantage of investment opportunities, which will further diversify the investment risk.
	•		Elimination of dependency on Lexington Trust and its personnel — The Partnership is not self-administered or self-managed and is dependent upon Lexington Trust and its personnel whose continued service is not guaranteed. The Partnership’s inability to continue to retain the services of Lexington Trust and its personnel or the Partnership’s loss of any of their services could adversely impact the Partnership’s operations. The MLP merger would ensure the continued service of Lexington Trust and its personnel because Lexington Trust is a self-administered and self-managed real estate investment trust.

     In view of the wide variety of factors considered by the Partnership and Lexington Trust, neither the Partnership nor Lexington Trust found it practicable to quantify or otherwise attempt to assign relative weights to the specific factors considered.

Alternatives Considered

     Lexington Trust considered several alternatives to the MLP merger, including the contribution of its other operating partnerships to the Partnership and relief from certain reporting requirements. However, none of the alternatives considered would have resulted in the cost savings described above or been as efficient as the MLP merger.

Appraisal Rights

     The Partnership was formed under Delaware law. Under Delaware law, a partnership agreement or an agreement of merger or consolidation may provide that contractual appraisal rights with respect to a partnership interest or another interest in a limited partnership will be available for any class or group or series of partners or partnership interests in connection with any merger or consolidation in which the limited partnership is a constituent party to the merger or consolidation. Neither the Partnership Agreement nor the merger agreement provides for contractual appraisal rights.

Terms of the Merger Agreement

     Structure of the Merger. The merger agreement provides for the merger of the Partnership with and into Lexington Trust, with Lexington Trust as the surviving company.

     Merger Consideration. At the effective time of the MLP merger, each issued and outstanding MLP Unit (other than units held by Lex LP-1 Trust) shall be exchanged for one Common Share and each fractional MLP Unit will be exchanged for cash as described below.

     Closing and Effective Time of the Merger. The closing of the MLP merger is expected to occur on or about December 31, 2008 and the effective time of the MLP merger will be 11:59 p.m. on December 31, 2008.

     Exchange of Securities; No Fractional Shares; Withholding Rights.

     Exchange of Securities. Lexington Trust will deposit with BNY Mellon Shareowner Services, cash and certificates evidencing Common Shares to be paid or issued to the holders of MLP Units under and as contemplated by the merger agreement. Promptly after the MLP merger, each record holder of MLP Units will receive a certificate or certificates evidencing the number of full Common Shares for which the aggregate number of MLP Units owned by such holder have been exchanged pursuant to the merger agreement, plus any cash that such holder is entitled to in lieu of fractional MLP Units.

     No Fractional Shares. Each holder of a fractional MLP Unit exchanged in the merger will receive cash in an amount equal to the product of (i) such fractional part of an MLP Unit multiplied by (ii) the average closing price of Common Shares quoted on the NYSE for the 20 trading day period immediately preceding the third trading day immediately prior to the closing date of the MLP merger. As promptly as practicable after the determination of the amount of cash, if any, to be paid to holders of fractional interests, the exchange agent will so notify Lexington Trust, and Lexington Trust will cause the exchange agent to forward payments to such holders of fractional interests.

     Withholding Rights. Lexington Trust will be entitled to deduct and withhold from the consideration otherwise payable pursuant to the merger agreement to any holder of MLP Units such amounts as they are required to deduct and withhold with respect to the making of such payment under the Code and the rules and regulations promulgated thereunder, or any provision of state, local or foreign tax law.

     Representations and Warranties. The merger agreement contains limited customary representations and warranties made by Lexington Trust to the Partnership and the Partnership to Lexington Trust. These representations and warranties relate to, among other things:

	•		existence, good standing, authority and compliance with law;
	•		authority to enter into the MLP merger agreement and related agreements and to consummate the MLP merger;
	•		no conflicts, required filings or consents;
	•		neither the merger agreement nor the consummation of the MLP merger will breach organizational documents or material agreements;
	•		neither the merger agreement nor the consummation of the MLP merger requires any governmental consents;
	•		no material undisclosed liabilities;
	•		compliance with requirements of governmental authorities; and
	•		tax matters, including qualification as a REIT and tax protection agreements.

     Certain of these representations and warranties are qualified as to “materiality” or “material adverse effect.” For purposes of the merger agreement, “material adverse effect” means any event, circumstance, change or effect that is materially adverse to the financial condition or results of operations of Lexington Trust and its subsidiaries, taken as a whole, or the Partnership and its subsidiaries, taken as a whole, as applicable.

     The representations and warranties in the merger agreement do not survive the effective time of the merger and if the agreement is validly terminated, neither party will have any liability or obligation for its representations and warranties, or otherwise under the merger agreement, unless the party has willfully breached any representation, warranty or covenant contained therein.

     Conditions to the Merger. The completion of the MLP merger is only subject to the approval of the holders of at least a majority of each class of MLP Units. Lex LP-1 Trust, holder of approximately 91.1% of the MLP Units has indicated its intention to approve the MLP merger.

     Termination of the Merger Agreement. The merger agreement may be terminated at any time prior to the effective time of the merger in writing by the mutual written consent of the Partnership and Lexington Trust.

     Effect of Termination. If the merger agreement is terminated, the merger agreement will be void and have no effect, and there will be no liability or obligation of the Partnership or Lexington Trust, or their respective officers, directors, trustees, subsidiaries or partners, as applicable, except for willful breaches of the merger agreement.

     Termination Fee and Expenses.

     Expenses. The merger agreement provides that each party will pay its own costs and expenses incurred in connection with the merger agreement and the transactions contemplated by the merger agreement, whether or not the transactions contemplated by the merger agreement are consummated.

     Termination Fee. There is no termination fee payable by any party if the merger agreement is terminated.

     The foregoing summary of the merger agreement is qualified in its entirety by the merger agreement, a copy of which is attached as Annex A to this proxy statement/prospectus and incorporated into this proxy statement/prospectus.

Material Tax Consequences of the MLP Merger

     The MLP merger will have tax consequences for holders of MLP Units. The receipt of Common Shares in exchange for existing MLP Units and cash in exchange for fractional MLP Units generally will be taxable for federal income tax purposes. See “United States Federal Income Tax Considerations,” below. Your tax consequences will depend on your personal situation. You are urged to consult your own tax advisor for a full understanding of the tax consequences of the MLP merger to you.

Regulatory Approvals

     No material federal or state regulatory approvals are required to be obtained by Lexington Trust or the Partnership in connection with the MLP merger.

Conduct of Lexington Trust and the Partnership’s Businesses in the Event the MLP Merger is not Consummated

     In the event that the MLP merger is not consummated for any reason, the General Partner will continue to operate the Partnership’s business in accordance with Lexington Trust’s strategic business plan.

Accounting Treatment

     The MLP merger will be accounted for as a redemption of the minority interest’s MLP Units in the MLP merger using the carrying value of the MLP Units.

Restrictions on Resale of Lexington Common Shares Issued in the Merger

     Common Shares issued in the MLP merger will be freely transferable under the Securities Act of 1933, as amended, referred to herein as the Securities Act, except for shares issued to any person who may be deemed to be an “affiliate” of the Partnership within the meaning of Rule 145 under the Securities Act or who will become an “affiliate” of Lexington Trust within the meaning of Rule 144 under the Securities Act after the MLP merger. Common Shares received by persons who are deemed to be Partnership affiliates or who will become Lexington Trust affiliates may be resold by these persons only in transactions permitted by the limited resale provisions of Rule 145 or as otherwise permitted under the Securities Act. Persons who may be deemed to be affiliates of the Partnership generally include individuals or entities that, directly or indirectly through one or more intermediaries, control, are controlled by or are under common control with the Partnership and may include certain partnerships in which the Partnership controls the general partner.

Trustees and Executive Officers of the Combined Company

     The composition of Lexington Trust’s board will remain the same after the effective time of the MLP merger, until Lexington Trust’s next annual meeting of shareholders or a trustee’s earlier resignation or removal.

     Lexington Trust’s current executive officers are expected to continue to hold office after the effective time of the MLP merger in their current capacities, until their successors are duly elected and qualified or until their earlier resignations or removals.

Who Can Answer Other Questions

     If you have any questions about the MLP merger or would like additional copies of this proxy statement/prospectus, you should contact:

The Lexington Master Limited Partnership
One Penn Plaza, Suite 4015
New York, NY 10119-4015
212-692-7200
Attention: Investor Relations

THE GENERAL PARTNER RECOMMENDS A VOTE FOR THE APPROVAL OF THE MERGER
AGREEMENT, THE MLP MERGER AND THE RELATED TRANSACTIONS

     It is important that proxies be returned promptly. Limited partners are, therefore, urged to fill in, date, sign and return the enclosed proxy card immediately. No postage need be affixed if mailed in the enclosed envelope in the United States.

INTERESTS OF LEXINGTON TRUST

     Lexington Trust may have interests in the MLP merger that may be different from, or in addition to, the interests of other limited partners generally. The General Partner and the LXP board were aware of these interests and considered them, among other matters, in approving the MLP merger. These interests include:

	•		Stepped up basis. Upon consummation of the MLP merger, Lexington Trust will receive a stepped-up tax basis on its additional investment in the Partnership’s assets to the extent of the MLP Units it acquires in the MLP merger.
	•		Intercompany advances. The Partnership advanced $39.4 million, net, to Lexington Trust as of September 30, 2008. The advances are payable on demand and bear interest at the rate charged by KeyBank N.A. under the Partnership’s $225.0 million original principal amount secured term loan

			originated in June 2007. This inter-company advance will be extinguished upon the consummation of the MLP merger, but Lexington Trust will assume all of the Partnership’s indebtedness, including the KeyBank N.A. secured term loan.
	•		Reimbursement to Lexington Trust. Lexington Trust pays for certain general, administrative and other costs on the Partnership’s behalf from time to time. These costs are reimbursable by the Partnership. These costs were approximately $8.7 million for the nine months ended September 30, 2008. The Partnership owed $3.1 million of these costs to Lexington Trust as of September 30, 2008. The reimbursement obligation will be extinguished upon consummation of the MLP merger.
	•		Management fees. Lexington Realty Advisors, Inc., a taxable REIT subsidiary of Lexington Trust, earned management fees of approximately $0.2 million during the nine months ended September 30, 2008 for managing four consolidated properties. Lexington Realty Advisors, Inc. also earned a fee of $0.6 million during the nine months ended September 30, 2008 under the management agreement with NLS.

DESCRIPTION OF LEXINGTON TRUST’S COMMON SHARES

     The following summary of the material terms and provisions of Lexington Trust’s Common Shares does not purport to be complete and is subject to the detailed provisions of the LXP declaration and the LXP bylaws, each as supplemented, amended or restated, copies of which are attached to this proxy statement/prospectus as part of Annex B. You should carefully read each of these documents in order to fully understand the terms and provisions of Lexington Trust’s Common shares. For information on incorporation by reference, and how to obtain copies of these documents, see the section entitled “Where You Can Find More Information,” below.

General

     Under the LXP declaration, Lexington Trust has the authority to issue up to 1,000,000,000 shares of beneficial interest, par value $0.0001 per share, of which 400,000,000 shares are classified as Common Shares, 500,000,000 are classified as excess stock, or excess shares, and 100,000,000 shares are classified as preferred shares.

Terms

     Subject to the preferential rights of any other shares or series of equity securities and to the provisions of the LXP declaration regarding excess shares, holders of Common Shares are entitled to receive dividends on Common Shares if, as and when authorized by the LXP board and declared by Lexington Trust out of assets legally available therefor and to share ratably in those of Lexington Trust’s assets legally available for distribution to its shareholders in the event that it liquidates, dissolves or winds up, after payment of, or adequate provision for, all of its known debts and liabilities and the amount to which holders of any class of shares classified or reclassified or having a preference on distributions in liquidation, dissolution or winding up have a right.

     Subject to the provisions of the LXP declaration regarding excess shares, each outstanding Common Share entitles the holder to one vote on all matters submitted to a vote of shareholders, including the election of trustees and, except as otherwise required by law or except as otherwise provided in the LXP declaration with respect to any other class or series of shares, the holders of Common Shares will possess exclusive voting power. There is no cumulative voting in the election of trustees, which means that the holders of a majority of outstanding Common Shares can elect all of the trustees then standing for election, and the holders of the remaining Common Shares will not be able to elect any trustees.

     Holders of Common Shares have no conversion, sinking fund, redemption rights or preemptive rights to subscribe for any of Lexington Trust’s securities.

     Lexington Trust furnishes its shareholders with annual reports containing audited consolidated financial statements and an opinion thereon expressed by an independent public accounting firm.

     Subject to the provisions of the LXP declaration regarding excess shares, all Common Shares will have equal dividend, distribution, liquidation and other rights and will generally have no preference, appraisal or exchange rights.

     Pursuant to Maryland statutory law governing real estate investment trusts organized under Maryland law, a real estate investment trust generally cannot amend its declaration of trust or merge unless approved by the affirmative vote of shareholders holding at least two-thirds of the shares entitled to vote on the matter unless a lesser percentage (but not less than a majority of all of the votes entitled to be cast on the matter) is set forth in the LXP declaration. The LXP declaration provides that those actions, with the exception of certain amendments to the LXP declaration for which a higher vote requirement has been set, will be valid and effective if authorized by holders of a majority of the total number of shares of all classes outstanding and entitled to vote thereon.

Restrictions on Ownership

     For Lexington Trust to qualify as a REIT under the Code, not more than 50% in value of its outstanding capital shares may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities) during the last half of a taxable year. To assist Lexington Trust in meeting this requirement, Lexington Trust may take certain actions to limit the beneficial ownership, directly or indirectly, by a single person of Lexington Trust’s outstanding equity securities. See “Certain Provisions of Maryland Law and of the LXP Declaration and Bylaws,” below.

Transfer Agent

     The transfer agent and registrar for the Partnership’s common shares is BNY Mellon Shareowner Services.

CERTAIN PROVISIONS OF MARYLAND LAW AND OF THE LXP DECLARATION AND BYLAWS

Restrictions Relating To REIT Status

     For Lexington Trust to qualify as a REIT under the Code, among other things, not more than 50% in value of Lexington Trust’s outstanding capital shares may be owned, directly or indirectly, by five or fewer individuals (defined in the Code to include certain entities) during the last half of a taxable year, and such capital shares must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable year (in each case, other than the first such year). The LXP declaration, subject to certain exceptions, provides that no holder may own, or be deemed to own by virtue of the attribution provisions of the Code, more than 9.8% of Lexington Trust’s equity shares, defined as Common Shares or preferred shares. We refer to this restriction as the Ownership Limit. The LXP board may exempt a person from the Ownership Limit if evidence satisfactory to the LXP board is presented that the changes in ownership will not then or in the future jeopardize Lexington Trust’s status as a REIT. The LXP board has granted waivers of the Ownership Limit to certain holders of the Partnership’s capital stock, including Vornado Realty, L.P. Any transfer of equity shares or any security convertible into equity shares that would create a direct or indirect ownership of equity shares in excess of the Ownership Limit or that would result in the Partnership’s disqualification as a REIT, including any transfer that results in the equity shares being owned by fewer than 100 persons or results in Lexington Trust being “closely held” within the meaning of Section 856(h) of the Code, will be null and void, and the intended transferee will acquire no rights to such equity shares. The foregoing restrictions on transferability and ownership will not apply if the LXP board determines that it is no longer in Lexington Trust’s best interests to attempt to qualify, or to continue to qualify, as a REIT.

     Equity shares owned, or deemed to be owned, or transferred to a shareholder in excess of the Ownership Limit, or that would result in Lexington Trust being “closely held” (within the meaning of Section 856(h) of the Code), will automatically be exchanged for an equal number of shares of beneficial interest classified as excess stock, which we refer to as excess shares, that will be transferred, by operation of law, to the Partnership as trustee of a trust for the exclusive benefit of the transferees to whom such capital shares may be ultimately transferred without violating the Ownership Limit. The excess shares are not entitled to be voted, be considered for purposes of any shareholder vote or the determination of a quorum for such vote and, except upon liquidation, entitled to participate in dividends or other distributions. Any dividend or distribution paid to a proposed transferee of excess shares prior to Lexington Trust’s discovery that equity shares have been transferred in violation of the provisions of the LXP declaration will be repaid to Lexington Trust upon demand. The excess shares are not treasury shares, but

rather constitute a separate class of Lexington Trust’s issued and outstanding shares. The original transferee-shareholder may, at any time the excess shares are held by Lexington Trust in trust, transfer the interest in the trust representing the excess shares to any individual whose ownership of the equity shares exchanged into such excess shares would be permitted under the LXP declaration, at a price not in excess of the price paid by the original transferee-shareholder for the equity shares that were exchanged into excess shares, or, if the transferee-shareholder did not give value for such shares, a price not in excess of the market price (as determined in the manner set forth in the LXP declaration) on the date of the purported transfer. Immediately upon the transfer to the permitted transferee, the excess shares will automatically be exchanged for equity shares of the class from which they were converted. If the foregoing transfer restrictions are determined to be void or invalid by virtue of any legal decision, statute, rule or regulation, then the intended transferee of any excess shares may be deemed, at Lexington Trust’s option, to have acted as an agent on Lexington Trust’s behalf in acquiring the excess shares and to hold the excess shares on Lexington Trust’s behalf.

     In addition to the foregoing transfer restrictions, Lexington Trust will have the right, for a period of 90 days, after the later of the day Lexington Trust receives written notice of a transfer or other event, or the LXP board determines in good faith that a transfer or other event has occurred, resulting in excess shares, to purchase all or any portion of the excess shares from the original transferee-shareholder for the lesser of the price paid for the equity shares by the original transferee-shareholder or the market price (as determined in the manner set forth in the LXP declaration) of the equity shares on the date Lexington Trust exercises its option to purchase. The 90-day period begins on the date on which we receive written notice of the transfer or other event resulting in the exchange of equity shares for excess shares.

     Each shareholder will be required, upon demand, to disclose to Lexington Trust in writing any information with respect to the direct, indirect and constructive ownership of capital shares as the LXP board deems necessary to comply with the provisions of the Code applicable to REITs, to comply with the requirements of any taxing authority or governmental agency or to determine any such compliance.

     This Ownership Limit may have the effect of precluding an acquisition of control unless the LXP board determines that maintenance of REIT status is no longer in Lexington Trust’s best interest.

Maryland Law

     Business Combinations. Under Maryland law, “business combinations” between a Maryland real estate investment trust and an interested shareholder or an affiliate of an interested shareholder are prohibited for five years after the most recent date on which the interested shareholder becomes an interested shareholder. These business combinations include a merger, consolidation, share exchange, or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities. An interested shareholder is defined as:

	•		any person who beneficially owns ten percent or more of the voting power of the trust’s shares; or
	•		an affiliate or associate of the trust who, at any time within the two-year period prior to the date in question, was the beneficial owner of ten percent or more of the voting power of the then outstanding voting shares of the trust.

     A person is not an interested shareholder under the statute if the board of trustees approved in advance the transaction by which he otherwise would have become an interested shareholder. However, in approving a transaction, the board of trustees may provide that its approval is subject to compliance, at or after the time of approval, with any terms or conditions determined by the board.

     After the five-year prohibition, any business combination between the Maryland real estate investment trust and an interested shareholder generally must be recommended by the board of trustees of the trust and approved by the affirmative vote of at least:

	•		eighty percent of the votes entitled to be cast by holders of outstanding voting shares of the trust; and
	•		two-thirds of the votes entitled to be cast by holders of voting shares of the trust other than shares held by the interested shareholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested shareholder.

     These super-majority vote requirements do not apply if the trust’s common shareholders receive a minimum price, as defined under Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested shareholder for its shares.

     The statute permits various exemptions from its provisions, including business combinations that are exempted by the board of trustees prior to the time that the interested shareholder becomes an interested shareholder.

     In connection with its approval of the December 31, 2006 merger with Newkirk, the LXP board has exempted from these restrictions, to a limited extent, certain holders of Newkirk stock and MLP Units who received Common Shares in that merger.

     The business combination statute may discourage others from trying to acquire control of Lexington Trust and increase the difficulty of consummating any offer.

     Control Share Acquisitions. Maryland law provides that control shares of a Maryland real estate investment trust acquired in a control share acquisition have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter. Shares owned by the acquiror, by officers or by employees who are trustees of the trust are excluded from shares entitled to vote on the matter. Control Shares are voting shares which, if aggregated with all other shares owned by the acquiror or in respect of which the acquiror is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquiror to exercise voting power in electing trustees within one of the following ranges of voting power:

	•		one-tenth or more but less than one-third;
	•		one-third or more but less than a majority; or
	•		a majority or more of all voting power.

Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained shareholder approval. A control share acquisition means the acquisition of control shares, subject to certain exceptions.

     A person who has made or proposes to make a control share acquisition may compel the board of trustees of the trust to call a special meeting of shareholders to be held within 50 days of demand to consider the voting rights of the shares. The right to compel the calling of a special meeting is subject to the satisfaction of certain conditions, including an undertaking to pay the expenses of the meeting. If no request for a meeting is made, the trust may itself present the question at any shareholders meeting.

     If voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as required by the statute, then the trust may redeem for fair value any or all of the control shares, except those for which voting rights have previously been approved. The right of the trust to redeem control shares is subject to certain conditions and limitations. Fair value is determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquiror or of any meeting of shareholders at which the voting rights of the shares are considered and not approved. If voting rights for control shares are approved at a shareholders meeting and the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other shareholders may exercise appraisal rights. The fair value of the shares as determined for purposes of appraisal rights may not be less than the highest price per share paid by the acquiror in the control share acquisition.

     The control share acquisition statute does not apply (a) to shares acquired in a merger, consolidation or share exchange if the trust is a party to the transaction or (b) to acquisitions approved or exempted by the declaration of trust or by-laws of the trust.

     The LXP bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of Lexington Trust’s shares. There can be no assurance that this provision will not be amended or eliminated at any time in the future.

     Certain Elective Provisions of Maryland Law. Publicly-held Maryland statutory real estate investment trusts (“Maryland REITs”) may elect to be governed by all or any part of Maryland law provisions relating to extraordinary actions and unsolicited takeovers. The election to be governed by one or more of these provisions can be made by a Maryland REIT in its declaration of trust or bylaws (“charter documents”) or by resolution adopted by its board of trustees so long as the Maryland REIT has at least three trustees who, at the time of electing to be subject to the provisions, are not:

	•		officers or employees of the Maryland REIT;
	•		persons seeking to acquire control of the Maryland REIT;
	•		trustees, officers, affiliates or associates of any person seeking to acquire control; or
	•		nominated or designated as trustees by a person seeking to acquire control.

     Articles supplementary must be filed with the Maryland State Department of Assessments and Taxation if a Maryland REIT elects to be subject to any or all of the provisions by board resolution or bylaw amendment. Shareholder approval is not required for the filing of these articles supplementary.

     The Maryland law provides that a Maryland REIT can elect to be subject to all or any portion of the following provisions, notwithstanding any contrary provisions contained in that Maryland REIT’s existing charter documents:

     Classified Board: The Maryland REIT may divide its board into three classes which, to the extent possible, will have the same number of trustees, the terms of which will expire at the third annual meeting of shareholders after the election of each class;

     Two-thirds Shareholder Vote to Remove Trustees: The shareholders may remove any trustee only by the affirmative vote of at least two-thirds of all votes entitled to be cast by the shareholders generally in the election of trustees;

     Size of Board Fixed by Vote of Board: The number of trustees will be fixed only by resolution of the board;

     Board Vacancies Filled by the Board for the Remaining Term: Vacancies that result from an increase in the size of the board, or the death, resignation, or removal of a trustee, may be filled only by the affirmative vote of a majority of the remaining trustees even if they do not constitute a quorum. Trustees elected to fill vacancies will hold office for the remainder of the full term of the class of trustees in which the vacancy occurred, as opposed to until the next annual meeting of shareholders, and until a successor is elected and qualified; and

     Shareholder Calls of Special Meetings: Special meetings of shareholders may be called by the secretary of the Maryland REIT only upon the written request of shareholders entitled to cast at least a majority of all votes entitled to be cast at the meeting and only in accordance with procedures set out in the Maryland General Corporation Law.

     Lexington Trust has not elected to be governed by these specific provisions. However, the LXP declaration and/or the LXP bylaws, as applicable, already provide for an 80% shareholder vote to remove trustees and then only for cause, and that the number of trustees may be determined by a resolution of the LXP board, subject to a minimum number. In addition, Lexington Trust can elect to be governed by any or all of the provisions of the Maryland law at any time in the future.

THE PARTNERSHIP’S SECOND AMENDED AND RESTATED PARTNERSHIP AGREEMENT;
EXCHANGE OF MLP UNITS

     The following summary of the material terms and provisions of the Partnership Agreement does not purport to be complete and is subject to the detailed provisions of the Partnership Agreement, each as supplemented, amended or restated, a copy of which is attached to this proxy statement/prospectus as part of Annex C.

Management

     Pursuant to the Partnership Agreement, the General Partner generally has full, exclusive and complete responsibility and discretion in the management, operation and control of the Partnership, including the ability to cause the Partnership to enter into certain major transactions, including mergers and consolidations, acquisitions and dispositions of loans and other assets and refinancings of existing indebtedness. No limited partner may take part in the operation, management or control of the business of the Partnership by virtue of being a holder of MLP Units.

     Lex GP-1 Trust may not be removed as general partner of the Partnership, except that upon its bankruptcy or dissolution, the limited partners may elect a successor general partner to continue the partnership.

Transferability of Interests

     General Partner

     The Partnership Agreement provides that Lex GP-1 Trust may not sell, assign, transfer, pledge or otherwise dispose of its general partner interest without the consent of the holders of a majority of the MLP Units, except for transfers to a subsidiary of Lexington Trust.

     Limited Partners

     Except for certain transfers and assignments to family members of individual limited partners, the Partnership Agreement prohibits the sale, assignment, transfer, pledge or disposition of all or any portion of the limited partners’ MLP Units without the general partner’s consent, which consent may be withheld in the general partner’s sole and absolute discretion. The Partnership Agreement also contains restrictions on transfers of MLP Units if, among other things, the general partner determines that such transfer:

	•		may require registration of the MLP Units under federal or state securities laws,
	•		may cause Lexington Trust to fail to comply with the REIT rules under the Code, or
	•		may cause the Partnership to be treated as a publicly traded partnership under the Code.

Capital Contributions and Borrowings

     The Partnership Agreement provides that the General Partner may determine that the Partnership requires additional funds and that the general partner may:

	•		on the Partnership’s behalf, accept additional capital contributions from existing partners or other persons,
	•		cause the Partnership to borrow funds from a financial institution or other person,
	•		borrow such funds from a lending institution or other person and subsequently lend such funds to the Partnership, or
	•		directly lend funds to the Partnership.

     While the limited partners have no preemptive right to make additional capital contributions, the Partnership Agreement provides that subject to certain limitations Lexington Trust, through the general partner, may make additional capital contributions to the Partnership, in exchange for additional MLP Units or additional assets, as the general partner determines in good faith to be desirable to further the Partnership’s purposes or business. If Lexington Trust contributes additional capital to the Partnership and receives additional MLP Units for such capital contribution, Lexington Trust’s percentage interests will be increased on a proportionate basis based on the amount of such additional capital contributions and the Partnership’s value at the time of such contributions. Conversely, the percentage interests of the other limited partners will be decreased on a proportionate basis. In addition, if Lexington Trust contributes additional capital to the Partnership and receives additional MLP Units for such capital contribution, the general partner may revalue the Partnership’s assets to their fair market value (as determined by the general partner) and the capital accounts of the partners will be adjusted to reflect the manner in which the unrealized gain or loss inherent in such assets (that has not been reflected in the capital accounts previously) would be allocated among the partners under the terms of the Partnership Agreement if there were a disposition of such assets for such fair market value on the date of the revaluation. The Partnership could also issue MLP Units to Lexington Trust’s affiliates or third parties, in exchange for assets contributed to or services provided for the Partnership. Such transactions may give rise to a revaluation of the Partnership’s assets and an adjustment to partners’ capital accounts.

     The Partnership could also issue preferred MLP Units in connection with acquisitions of assets or otherwise. Any such preferred MLP Units would have priority over common MLP Units with respect to distributions from the Partnership, including the MLP Units that Lexington Trust owns directly or through subsidiaries. As of the date of this proxy statement/prospectus, there are two classes of MLP Units outstanding: the Class A Units and the Special Voting Units.

Redemption Rights under the Partnership Agreement

     Each holder of MLP Units has the right under the Partnership Agreement to redeem its MLP Units. This right may be exercised at the election of holders of MLP Units by giving written notice, subject to some limitations. The purchase price for each of the MLP Units to be redeemed under the Partnership Agreement will equal the fair market value of a Common Share, calculated as the average of the daily closing prices on the New York Stock Exchange for the twenty consecutive business days immediately preceding the date of determination or, if no closing price is available, as provided in the Partnership Agreement. The purchase price for MLP Units may be paid in cash or, in the general partner’s discretion, by the issuance of a number of Common Shares equal to the number of MLP Units with respect to which the rights are being exercised, subject to adjustment based on share splits, mergers, consolidations or similar pro rata transactions.

     No holder of MLP Units may exercise its redemption rights under the Partnership Agreement if Lexington Trust could not issue Common Shares to the redeeming partner in satisfaction of the redemption (regardless of whether Lexington Trust would in fact do so instead of paying cash) because of the ownership limitations contained in the LXP declaration, or if the redemption would cause Lexington Trust to violate the REIT requirements. See “Certain Provisions of Maryland Law and of the LXP Declaration and Bylaws—Restrictions Relating to REIT Status” above. In addition, no holder of MLP Units may exercise the redemption right under the Partnership Agreement:

	•		for fewer than 500 MLP Units or, if a limited partner holds fewer than 500 MLP Units, all of the MLP Units held by such limited partner; or
	•		if the general partner determines that allowing such redemption may cause the Partnership to be treated as a publicly traded partnership.

     Lexington Trust guaranteed the performance of the redemption obligations of the Partnership under the Partnership Agreement.

Tax Treatment of Exchange of MLP Units in the MLP Merger

     See United States Federal Income Tax Considerations for a summary of certain federal income tax considerations that may be relevant to a holder who exchanges its MLP Units for Common Shares and its fractional MLP Units, if any, for cash in the MLP merger.

     Each holder of MLP Units should consult its own tax advisor regarding the tax consequences to you of the exchange of your units in the MLP merger, including the federal, state, local and foreign tax consequences of the exchange of units in the MLP merger in your particular circumstances and potential changes in applicable laws.

Operations of the MLP

     The Partnership Agreement allows Lexington Trust to operate the Partnership in a manner that permits Lexington Trust to qualify as a REIT at all times and to cause the Partnership not to take any action that would cause Lexington Trust to incur additional federal income or excise tax liability under the Code or that would cause the Partnership to be treated as a corporation for federal income tax purposes.

     The Partnership must reimburse Lexington Trust for all amounts Lexington Trust spends in connection with the Partnership’s business, including:

	•		expenses relating to Lexington Trust’s ownership and management of the Partnership;
	•		the management fees owing to any advisors, and the fees or compensation owing to directors, officers and employees; and
	•		the expense of the Partnership’s being a public company.

For the nine months ended September 30, 2008, these expenses equaled approximately $8.7 million.

Allocations

     The Partnership’s profits and losses (including depreciation and amortization deductions) for each fiscal year generally are allocated to Lexington Trust and the other limited partners in accordance with the respective percentage interests of the Partnership’s partners. The number of MLP Units that Lexington Trust holds, together with the units that Lexington Trust holds in its three other operating partnerships, generally corresponds to the number of Common Shares outstanding. All of the foregoing allocations are subject to compliance with the provisions of Code sections 704(b) and 704(c) and the Treasury regulations promulgated thereunder, which may require allocations that are not in accordance with percentage interests in various circumstances.

Distributions

     The Partnership Agreement provides that the Partnership will make cash distributions in amounts determined by the general partner in its sole discretion, to Lexington Trust and other limited partners generally in accordance with the respective percentage interests of the Partnership’s partners.

     Upon the Partnership’s liquidation, after payment of, or adequate provisions for, the Partnership’s debts and obligations, including any partner loans, any of the Partnership’s remaining assets will be distributed to Lexington Trust and the other limited partners with positive capital accounts in accordance with the respective positive capital account balances of the partners.

Funding Agreement

     In connection with the Newkirk Merger, Lexington Trust and its four operating partnerships, including the Partnership, entered into a funding agreement. Pursuant to the funding agreement, the parties agreed, jointly and severally, that, if any of the four operating partnerships does not have sufficient cash available to make a quarterly distribution to its limited partners in an amount equal to whichever is applicable of (i) a specified distribution set forth in its partnership agreement or (ii) the cash dividend payable with respect to a whole or fractional Common Shares into which such partnership’s common units would be converted if they were redeemed for Common Shares in accordance with its partnership agreement, Lexington Trust and its four operating partnerships, including the Partnership, each a “funding partnership”, will fund their pro rata share of the shortfall. The pro rata share of each funding partnership and Lexington Trust’s pro rata share, respectively, will be determined based on the number of units in each funding partnership and, for Lexington Trust, by the amount by which its total outstanding Common Shares exceeds the number of units in each funding partnership not owned by Lexington Trust, with appropriate adjustments being made if units are not redeemable on a one-for-one basis. Payments under the agreement will be

made in the form of loans to the partnership experiencing a shortfall and will bear interest at prevailing rates as determined by Lexington Trust in its discretion but no less than the applicable federal rate. The Partnership’s right to receive these loans will expire if Lexington Trust contributes to the Partnership all of its economic interests in the other operating partnerships, Lexington Trust’s other subsidiaries that are partnerships, joint ventures or limited liability companies. However, thereafter the Partnership will remain obligated to continue to make these loans until there are no remaining units outstanding in the other operating partnerships and all loans have been repaid.

Amendments

     Generally, the General Partner may not amend the Partnership Agreement without the consent of the holders of the majority of the MLP Units, except that without the consent of any limited partner the General Partner may amend the agreement to:

	•		add to its obligations or surrender its rights, as general partner, under the Partnership Agreement for the benefit of the limited partners;
	•		reflect the issuance of additional MLP Units or the admission, substitution, termination or withdrawal of partners in accordance with the Partnership Agreement;
	•		reflect inconsequential changes, cure any ambiguity, correct or supplement any provision not inconsistent with law or another provision of the Partnership Agreement, or make other changes concerning matters under the Partnership Agreement not otherwise inconsistent with the law or the Partnership Agreement;
	•		satisfy requirements or guidelines under federal or state law;
	•		reflect changes that are reasonably necessary for Lexington Trust, as parent of the general partner, to satisfy the REIT requirements or reflect the transfer of partnership interests from it, as the parent of the general partner, to its subsidiary;
	•		modify the manner in which capital accounts are computed but only to the extent set forth in the Partnership Agreement in order to comply with the requirements of the Code and the Treasury regulations promulgated thereunder; or
	•		issue additional MLP Units.

     The General Partner may not, without the consent of each limited partner adversely affected, make any amendment to Partnership Agreement that would (1) convert a limited partner interest into a general partner interest or modify the limited liability of a limited partner, (2) alter the distribution rights or the allocations described in the Partnership Agreement or (3) modify the redemption rights.

Exculpation and Indemnification of the General Partner

     The Partnership Agreement provides that neither the General Partner nor any of its trustees or officers are liable to the Partnership or to any of the Partnership’s partners as a result of errors in judgment or mistakes of fact or law or of any act or omission, if the General Partner, its trustees or its officer acted in good faith.

     In addition, the Partnership Agreement requires the Partnership to indemnify and hold harmless the General Partner, its trustees, officers and any other persons it designates, from and against any and all claims arising from the Partnership’s operations in which any such indemnitee may be involved, or is threatened to be involved, as a party or otherwise, unless it is established that:

	•		the act or omission of the indemnitee was material to the matter giving rise to the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty,
	•		the indemnitee actually received an improper personal benefit in money, property or services, or

•

in the case of any criminal proceeding, the indemnitee had reasonable cause to believe that the act or omission was unlawful.

     No indemnitee may subject any of the Partnership’s partners to personal liability with respect to this indemnification obligation.

Term

     The Partnership will continue until dissolved upon:

	•		the General Partner’s bankruptcy or dissolution or withdrawal (unless the limited partners elect to continue the Partnership) or a decree of judicial dissolution under Delaware law;
	•		the sale or other disposition of all or substantially all of the Partnership’s assets; or
	•		the redemption of all MLP Units (other than those held by Lexington Trust or its subsidiaries).

Tax Matters Partner

     The General Partner is the Partnership’s tax matters partner, and it has the authority to make tax elections under the Code on the Partnership’s behalf.

COMPARISON OF OWNERSHIP OF MLP UNITS AND COMMON SHARES

     The information below highlights a number of the significant differences between the Partnership and Lexington Trust relating to, among other things, form of organization, permitted investments, policies and restrictions, management structure, compensation and fees, investor rights and federal income taxation, and compares certain legal rights associated with the ownership of MLP Units and Common Shares, respectively. These comparisons are intended to assist unitholders in understanding how their investment will be changed in the MLP merger when their MLP Units are exchanged for Common Shares. This discussion is summary in nature and does not constitute a complete discussion of these matters, and unitholders should carefully review the balance of this proxy statement/prospectus, the Partnership Agreement, the LXP declaration and the LXP bylaws for additional important information about the Partnership and/or Lexington Trust.

THE PARTNERSHIP		LEXINGTON TRUST
FORM OF ORGANIZATION AND ASSETS OWNED
The Partnership is organized as a Delaware limited partnership. The Partnership owns interests (directly and indirectly through subsidiaries) in properties and assets.		Lexington Trust is a Maryland statutory real estate investment trust. Lexington Trust believes that it has operated so as to qualify as a REIT under the Code, commencing with the Partnership’s taxable year ended December 31, 1993, and intends to continue to so operate. Lexington Trust’s indirect interest in its operating partnerships, including the Partnership, gives Lexington Trust an indirect investment in the properties owned by its operating partnerships. In addition, Lexington Trust owns (either directly or indirectly through interests in subsidiaries other than its operating partnerships) interests in other properties and assets.

THE PARTNERSHIP		LEXINGTON TRUST
LENGTH OF INVESTMENT
The Partnership has a perpetual term, unless sooner dissolved and terminated.		Lexington Trust has a perpetual term and intends to continue its operations for an indefinite time period.

PURPOSE AND PERMITTED INVESTMENTS
The Partnership’s purpose is to conduct any business that may be lawfully conducted by a limited partnership organized pursuant to the Delaware Act, provided that such business is to be conducted in such a manner that permits Lexington Trust to be qualified as a REIT unless Lexington Trust ceases to qualify as a REIT for reasons other than the conduct of the Partnership’s business. The Partnership may not take, or refrain from taking, any action which, in the judgment of Lexington Trust, in its sole and absolute discretion, (i) could adversely affect Lexington Trust’s ability to continue to qualify as a REIT, (ii) could subject Lexington Trust to any additional taxes under any Section 857 or Section 4981, or any other section of the Code, or (iii) could violate any law or regulation of any governmental body (unless such action, or inaction, is specifically consented to by Lexington Trust in writing).		Lexington Trust’s purposes are to engage in the real estate business and lawful activities incidental thereto, and to engage in any lawful act or activity for which real estate investment trusts may be organized under the applicable laws of the State of Maryland. Lexington Trust is permitted by the Partnership Agreement to engage in activities not related to the Partnership’s business, including activities in direct or indirect competition with the Partnership, and may own assets other than its interests in the Partnership, and such other assets necessary to carry out the Partnership’s responsibilities under the Partnership Agreement, and the LXP declaration. In addition, Lexington Trust has no obligation to present opportunities to the Partnership and the holders of MLP Units have no rights by virtue of the Partnership Agreement in any of Lexington Trust’s outside business ventures.

ADDITIONAL EQUITY
The Partnership is authorized to issue MLP Units and other partnership interests (including partnership interests of different series or classes that may be senior to MLP Units) as determined by the General Partner in its sole discretion.		The LXP board may cause Lexington Trust to issue, in its discretion, additional equity securities consisting of Common Shares and/or preferred shares. However, the total number of shares issued may not exceed the authorized number of capital shares set forth in the LXP declaration. The proceeds of equity capital raised by Lexington Trust are not required to be contributed to the Partnership; provided, however, that if Lexington Trust desires to increase its ownership of MLP Units, it may only do so by contributing the proceeds of equity capital raised by it.

BORROWING POLICIES
The Partnership has no restrictions on borrowings, and the General Partner has full power and authority to borrow money on the Partnership’s behalf.		Neither the LXP declaration nor the LXP bylaws impose any restrictions on its ability to borrow money. Lexington Trust is not required to incur its indebtedness through the Partnership.

THE PARTNERSHIP		LEXINGTON TRUST
OTHER INVESTMENT RESTRICTIONS
Other than restrictions precluding investments by the Partnership that would adversely affect Lexington Trust’s qualification as a REIT, there are no restrictions upon the Partnership’s authority to enter into certain transactions, including among others, making investments, lending the Partnership’s funds, or reinvesting the Partnership’s cash flow and net sale or refinancing proceeds, except that, without the consent of the holders of a majority of the outstanding MLP Units (other than the MLP Units held by Lexington Trust), the General Partner may not utilize any of the Partnership’s asset except (i) to reimburse Lexington Trust under the Partnership Agreement, (ii) to make distributions under the Partnership Agreement, or (iii) to acquire assets or make loans for the Partnership’s exclusive benefit, with certain exceptions.		Neither the LXP declaration nor the LXP bylaws impose any restrictions upon the types of investments made by Lexington Trust. However, contractual obligations may inhibit Lexington Trust’s ability to invest in certain asset types.

MANAGEMENT CONTROL
All management powers over the Partnership’s business and affairs are vested in the General Partner, and no limited partner has any right to participate in or exercise control or management power over the Partnership’s business and affairs. See “—Voting Rights —Vote Required to Dissolve The Partnership or Lexington Trust” below. The General Partner may not be removed by the limited partners with or without cause.		The LXP board has exclusive control over Lexington Trust’s business and affairs subject only to the restrictions in the LXP declaration and the LXP bylaws. The LXP board consists of 10 trustees, which number may be increased or decreased by vote of at least a majority of the entire LXP board pursuant to the LXP bylaws. The trustees are elected at each annual meeting of Lexington Trust’s shareholders. The policies adopted by the LXP board may be altered or eliminated without a vote of the shareholders. Accordingly, except for their vote in the elections of trustees, shareholders have no control over Lexington Trust’s ordinary business policies.

DUTIES
Under Delaware law, except as provided in the Partnership Agreement, the General Partner is accountable to the Partnership as a fiduciary and, consequently, is required to exercise good faith and integrity in all of its dealings with respect to the Partnership’s affairs. The General Partner has agreed to use reasonable efforts to allocate “excess non-recourse liabilities” in a manner that will avoid or minimize any potential recapture tax liability of the partners.		Under Maryland law, Lexington Trust’s trustees must perform their duties in good faith, in a manner that they reasonably believe to be in Lexington Trust’s best interests and with the care that an ordinarily prudent person in a like position would use under similar circumstances. Trustees who act in such a manner generally will not be liable to Lexington Trust for monetary damages arising from their activities.

THE PARTNERSHIP		LEXINGTON TRUST
MANAGEMENT LIABILITY AND INDEMNIFICATION
Under Delaware law, the General Partner has liability for the payment of the Partnership’s obligations and debts unless limitations upon such liability are stated in the document or instrument evidencing the obligation. Under the Partnership Agreement, the Partnership agreed to indemnify the General Partner and Lexington Trust, and any director, trustee or officer of the Partnership, Lexington Trust or the majority limited partner, to the fullest extent permitted under the Delaware Act. The reasonable expenses incurred by an indemnitee may be reimbursed by the Partnership in advance of the final disposition of the proceeding upon receipt by the Partnership of a written affirmation by such indemnitee of his, her or its good faith belief that the standard of conduct necessary for indemnification has been met and a written undertaking by such indemnitee to repay the amount if it is ultimately determined that such standard was not met.		Under the LXP declaration, the liability of Lexington Trust’s trustees and officers to Lexington Trust and its shareholders for money damages is limited to the fullest extent permitted under Maryland law. Under the LXP declaration, Lexington Trust is required to indemnify its trustees and officers to the fullest extent permitted under Maryland law and to indemnify its other employees and agents to such extent as authorized by the LXP board or the LXP bylaws, but only to the extent permitted under applicable law.
ANTI-TAKEOVER PROVISIONS
Except in limited circumstances (see “—Voting Rights” below), the General Partner has exclusive management power over the Partnership’s business and affairs. The General Partner may not be removed by the limited partners. Without the consent of the General Partner, a transferee will not be (i) admitted to the Partnership as a substituted limited partner or (ii) entitled to the same rights as a substituted limited partner.		The LXP declaration and the LXP bylaws contain a number of provisions that may have the effect of delaying or discouraging an unsolicited proposal for the acquisition of Lexington Trust or the removal of incumbent management. These provisions include, among others: (1) authorized capital shares that may be issued as preferred shares in the discretion of the LXP board, with superior voting rights to the common shares; (2) a requirement that trustees may be removed only for cause and then only by the affirmative vote of the holders of at least 80% of the combined voting power of all classes of shares of beneficial interest entitled to vote in the election of trustees; and (3) provisions designed to, among other things, avoid concentration of share ownership in a manner that would jeopardize Lexington Trust’s status as a REIT under the Code.
		Furthermore, under Maryland law, “business combinations” between a Maryland real estate investment trust and an interested shareholder or an affiliate of an interested shareholder are prohibited for five years after the most recent date on which the interested shareholder becomes an interested shareholder. See “Certain Provisions of Maryland Law and the LXP Declaration and the LXP Bylaws – Maryland Law,” elsewhere in this proxy statement/prospectus.

THE PARTNERSHIP		LEXINGTON TRUST
VOTING RIGHTS
All decisions relating to the Partnership’s operation and management are made by the General Partner. See “Description of the MLP Units” elsewhere in this proxy statement/prospectus. As of the date of this proxy statement/prospectus, Lexington Trust held, through Lex GP-1 and Lex LP-1, the General Partner interest and 91.1% of the MLP Units. As MLP Units are redeemed under the Partnership Agreement or exchanged in the MLP merger, Lexington Trust’s percentage ownership in the Partnership will increase.		Lexington Trust is managed and controlled by a board of trustees presently consisting of 10 members. Each trustee is elected by the shareholders at annual meetings of Lexington Trust’s shareholders. Maryland law requires that certain major corporate transactions, including most amendments to the LXP declaration, may not be consummated without the approval of shareholders as set forth below. All Common Shares have one vote, and the LXP declaration permits the LXP board to classify and issue preferred shares in one or more series having voting power which may differ from that of the Common Shares. See “Description of Common Shares” elsewhere in this proxy statement/prospectus.

     The following is a comparison of the voting rights of the limited partners and Lexington Trust’s shareholders as they relate to certain major transactions:

A. AMENDMENT OF THE PARTNERSHIP AGREEMENT OR THE LXP DECLARATION.
Generally, the General Partner may not amend the Partnership Agreement without the consent of the holders of the majority of the MLP Units, except the General Partner may, without the consent of the limited partners, amend the Partnership Agreement as to certain ministerial matters and to cure ambiguities.		Amendments to the LXP declaration must be advised by the LXP board and approved generally by at least a majority of the votes entitled to be cast on that matter at a meeting of shareholders. Amendments to certain provisions on termination require the affirmative vote of two-thirds of the votes entitled to be cast and amendments to certain provisions in the LXP declaration relating to amendments to the LXP declaration or the LXP bylaws, relating to the LXP board or relating to obligations under written instruments, require the affirmative vote of 80% of the votes entitled to be cast. In addition, the LXP declaration may be amended by a two-thirds majority of its trustees, without shareholder approval, in order to preserve its qualification as a REIT under the Code.
B. VOTE REQUIRED TO DISSOLVE OR TERMINATE THE MLP OR THE PARTNERSHIP.
The Partnership may be dissolved upon the occurrence of certain events, none of which require the consent of the limited partners.		Lexington Trust may be terminated only upon the affirmative vote of the holders of two-thirds of the outstanding shares entitled to vote thereon.

THE PARTNERSHIP		LEXINGTON TRUST
C. VOTE REQUIRED TO SELL ASSETS OR MERGE.
Under the Partnership Agreement, the sale, exchange, transfer or other disposition of all or substantially all of the Partnership’s assets does not require the consent the limited partners. However, a merger or consolidation of the Partnership pursuant to which the MLP Units are converted or exchanged for securities of another entity requires the consent of a majority in interest of the limited partners, except under certain circumstances. These circumstances include the MLP merger where MLP Units are being exchanged for securities with preferences, rights and privileges not materially inferior to the preferences, rights and privileges of Common Shares.		Under Maryland law and the LXP declaration, the sale of all or substantially all of Lexington Trust’s assets, or a merger or consolidation of Lexington Trust, requires the approval of the LXP board and generally requires the approval of the holders of a majority of the outstanding shares entitled to vote thereon. No approval of the shareholders is required for the sale of less than all or substantially all of Lexington Trust’s assets.

COMPENSATION, FEES AND DISTRIBUTIONS

The General Partner does not receive any compensation for its services as the General Partner. As partners in the Partnership, however, Lex GP-1 and Lex LP-1 have the same right to allocations and distributions as the Partnership’s other partners. In addition, the Partnership will reimburse the General Partner (and Lexington Trust) for certain expenses incurred relating to the management of the Partnership.		Lexington Trust’s non-employee trustees and officers receive compensation for their services.

LIABILITY OF INVESTORS

Under the Partnership Agreement and applicable state law, the liability of limited partners for the Partnership’s debts and obligations is generally limited to the amount of their investment in the Partnership.		Under Maryland law, Lexington Trust’s shareholders are generally not personally liable for its debts or obligations.

NATURE OF INVESTMENT

The MLP Units constitute equity interests in the Partnership. Generally, unitholders are allocated and distributed amounts in accordance with their respective percentage interest in the Partnership, from time to time, but not less than semi-annually, as determined in the manner provided in the Partnership Agreement and subject to certain restrictions and exceptions for certain limited partners. The Partnership generally intends to retain and reinvest proceeds of the sale of property or excess refinancing proceeds in the Partnership’s business.		Common Shares constitute equity interests in Lexington Trust. Lexington Trust is entitled to receive its pro rata share of distributions made by the Partnership with respect to the MLP Units held by it, and by its other direct subsidiaries. Each holder of Common Shares will be entitled to its pro rata share of any dividends or distributions paid with respect to the Common Shares. The dividends payable to holders of Common Shares are not fixed in amount and are only paid if, when and as authorized by the LXP board and declared by Lexington Trust. In order to continue to qualify as a REIT, Lexington Trust generally must distribute at least 90% of its net taxable income (excluding capital gains), and any taxable income (including capital gains) not distributed will be subject to corporate income tax.

THE PARTNERSHIP		LEXINGTON TRUST
POTENTIAL DILUTION OF RIGHTS
The General Partner is authorized, in its sole discretion and without limited partner approval, to cause the Partnership to issue additional the MLP Units and other equity securities for any partnership purpose at any time to the limited partners or to other persons (including the General Partner or Lexington Trust under certain circumstances set forth in the Partnership Agreement).		The LXP board may authorize Lexington Trust to issue, in its discretion, additional shares, and has the authority to cause Lexington Trust to issue from authorized capital a variety of other equity securities with such powers, preferences and rights as it may designate at the time. The issuance of either additional Common Shares or other similar equity securities may result in the dilution of the interests of the shareholders.

LIQUIDITY

Holders of MLP Units may not transfer their MLP Units without the General Partner’s consent. Without the consent of the General Partner, a transferee will not be (i) admitted to the MLP as a substituted limited partner or (ii) entitled to the same rights as a substituted limited partner. Limited partners have the right to tender their MLP Units for redemption by the Partnership at certain times, as specified in the Partnership Agreement. See “The Partnership’s Second Amended and Restated Partnership Agreement; Redemption Rights Under the Partnership Agreement” elsewhere in this proxy statement/prospectus.		The Common Shares are generally freely transferable as registered securities under the Securities Act. Common Shares are listed on the New York Stock Exchange. The breadth and strength of this secondary market will depend, among other things, upon the number of shares outstanding, Lexington Trust’s financial results and prospects, the general interest in Lexington Trust and other real estate investments, and the Partnership’s dividend yield compared to that of other debt and equity securities.

FEDERAL INCOME TAXATION

The Partnership is not subject to federal income taxes. Instead, each unitholder includes its allocable share of the Partnership’s taxable income or loss in determining its individual federal income tax liability. The maximum federal income tax rate for individuals under current law is 35%. A unitholder’s share of income and loss generated by the Partnership generally is subject to the “passive activity” limitations. Under the “passive activity” rules, income and loss from the Partnership that are considered “passive income” generally can be offset against income and loss from other investments that constitute “passive activities.” Cash distributions from the Partnership are not taxable to a unitholder except to the extent such distributions exceed such unitholder’s basis in its interest in the Partnership (which will include such holder’s allocable share of the Partnership’s taxable income and nonrecourse debt). Each year, unitholders will receive a Schedule K-1 containing detailed tax information for inclusion in preparing their federal income tax returns.		Lexington Trust has elected to be taxed as a REIT. So long as Lexington Trust qualifies as a REIT, it will be permitted to deduct distributions paid to it shareholders, which effectively will reduce the “double taxation” that typically results when a corporation earns income and distributes that income to its shareholders in the form of dividends. A qualified REIT, however, is subject to federal income tax on income that is not distributed and also may be subject to federal income and excise taxes in certain circumstances. The maximum federal income tax rate for corporations under current law is 35%. Dividends paid by Lexington Trust will be treated as “portfolio” income and cannot be offset with losses from “passive activities.” The maximum federal income tax rate for individuals under current law is 35%. Distributions made by Lexington Trust to its taxable domestic shareholders out of current or accumulated earnings and profits will be taken into account by them as ordinary income. Distributions that are designated as capital gain dividends generally will be taxed as long-term capital gain, subject to certain limitations, but generally would not be eligible for certain recently-enacted reduced rates. Distributions in excess of current or accumulated earnings and profits

THE PARTNERSHIP		LEXINGTON TRUST
Unitholders are required, in some cases, to file state income tax returns and/or pay state income taxes in the states in which the Partnership owns property, even if they are not residents of those states.		will be treated as a non-taxable return of basis to the extent of a shareholder’s adjusted basis in its common shares, with the excess taxed as capital gain.
		Each year, shareholders will receive an IRS Form 1099 used by corporations to report dividends paid to their shareholders.
		Shareholders who are individuals generally will not be required to file state income tax returns and/or pay state income taxes outside of their state of residence with respect to Lexington Trust’s operations and distributions. Lexington Trust may be required to pay state income taxes in certain states.
		Please see “United States Federal Income Tax Consolidations,” below.

UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

     The information in this section is based on the Code, existing, temporary and proposed regulations under the Code, the legislative history of the Code, current administrative rulings and practices of the Internal Revenue Service, or IRS, and court decisions, all as of the date hereof. No assurance can be given that future legislation, regulations, administrative interpretations and court decisions will not significantly change current law or adversely affect existing interpretations of current law. Any such change could apply retroactively to transactions preceding the date of the change. In addition, neither Lexington Trust nor the Partnership have received, and neither plan to request, any rulings from the IRS. Thus no assurance can be provided that the statements set forth herein (which do not bind the IRS or the courts) will not be challenged by the IRS or that such statements will be sustained by a court if so challenged.

Tax Treatment of Exchange of MLP Units in the MLP Merger

     The following discussion summarizes certain federal income tax considerations that may be relevant to a holder whose MLP Units are exchanged with Common Shares and, if applicable, cash in connection with the MLP merger.

     As described above, in the MLP merger holders of MLP Units will be entitled to receive (1) for each whole MLP Unit, one Common Share and (2) for any fractional MLP Unit, cash in an amount equal to the product of (i) such fractional MLP Unit multiplied by (ii) the average closing prices of Common Shares quoted on the New York Stock Exchange for the 20 trading day period immediately preceding the third trading day immediately prior to the closing date of the MLP merger. Such exchange of MLP Units and fractional MLP Units, if any, will be treated as a sale of such MLP Units and fractional MLP Units by the exchanging holder to Lexington Trust at the time such MLP Units and fractional MLP Units are exchanged. This sale will be fully taxable to the exchanging holder. The determination of gain or loss from the sale will be based on the difference between the holder’s amount realized for tax purposes and its adjusted tax basis in such MLP Units and fractional MLP Units. The amount realized will be measured by the fair market value of property received (i.e., the Common Shares and cash, if any) plus the portion of the Partnership’s liabilities allocable to the MLP Units and fractional MLP Units sold. The amount of MLP liabilities considered in this calculation will include the Partnership’s share of the liabilities of some entities in which the Partnership owns an interest. In general, a holder’s tax basis is based on the cost of the MLP Units, adjusted for the holder’s allocable share of the Partnership’s income, loss, distributions and liabilities, as applicable. To the extent that the amount realized exceeds the holder’s basis for the MLP Units disposed of, such holder will recognize gain; to the extent that the holder’s basis for the MLP Units disposed of exceeds the amount realized, such holder will recognize loss. It is possible that the amount of gain recognized or even the tax liability resulting from such gain could exceed the fair market value of Common Shares received upon such disposition.

     Each holder of MLP Units should consult its own tax advisor regarding the tax consequences to you of the exchange of your units, including the federal, state, local and foreign tax consequences of the exchange of units in your particular circumstances and potential changes in applicable laws.

     Generally, any gain recognized upon a sale or other disposition of MLP Units will be treated as gain attributable to the sale or disposition of a capital asset. To the extent, however, that the amount realized upon the sale of MLP Units attributable to a unitholder’s share of the Partnership’s “unrealized receivables” (as defined in Section 751 of the Code) exceeds the basis attributable to those assets, such excess will be treated as ordinary income. Unrealized receivables include, to the extent not previously included in the Partnership’s income, any rights to payment for services rendered or to be rendered. Unrealized receivables also include amounts that would be subject to recapture as ordinary income if the Partnership had sold the its assets at their fair market value at the time of the transfer of MLP Units.

     Generally, any loss recognized upon a sale or other disposition of MLP Units will be treated as loss attributable to the sale or disposition of a capital asset. Capital losses in any year are generally deductible only to the extent of capital gains plus, in the case of a non-corporate taxpayer, $3,000 of ordinary income ($1,500 for married individuals filing separately).

     The passive activity loss rules of the Code limit the use of losses by individuals, estates, trusts and certain closely held corporations and personal service corporations derived from certain passive activities, which generally include investments in limited partnership interests such as the MLP Units. Previously-suspended and unused passive losses of a holder of MLP Units generally may be deducted in full in the taxable year when such holder completely disposes of its MLP Units. Each holder of MLP Units subject to the passive activity loss rules should consult its own tax advisor concerning whether, and the extent to which, it has available suspended passive activity losses that may be used to offset the gain, if any, resulting from the exchange of MLP Units in the MLP merger.

     For noncorporate holders, the maximum rate of tax on the net capital gain (i.e., long-term capital gain less short-term capital loss) from a sale or exchange of a long-term capital asset (i.e., a capital asset held for more than 12 months) is 15% (through 2010). The maximum rate for net capital gains attributable to the sale of depreciable real property held for more than 12 months is 25% to the extent of the prior depreciation deductions for “unrecaptured Section 1250 gain” (that is, depreciation deductions not otherwise recaptured as ordinary income under the existing depreciation recapture rules). Treasury Regulations provide that individuals, trusts and estates are subject to a 25% tax to the extent of their allocable share of unrecaptured Section 1250 gain immediately prior to their sale or disposition of the MLP units (the “25% Amount”). Provided that the MLP Units are held as a long-term capital asset, such holders would be subject to a maximum rate of tax of 15% on the difference, if any, between any gain on the sale or disposition of the MLP Units and the 25% Amount.

     It is possible that the exchange by the Partnership in the MLP merger of MLP Units issued in connection with a contribution of property to the Partnership could cause the original transfer of property to the Partnership to be treated as a “disguised sale” of property. Section 707 of the Code and the Treasury Regulations thereunder (the “Disguised Sale Regulations”) generally provide that, unless one of the prescribed exceptions is applicable, a partner’s contribution of property to a partnership and a simultaneous or subsequent transfer of money or other consideration (which may include the assumption of or taking subject to a liability) from the partnership to the partner will be presumed to be a sale, in whole or in part, of such property by the partner to the partnership. Further, the Disguised Sale Regulations provide generally that, in the absence of an applicable exception, if money or other consideration is transferred by a partnership to a partner within two years of the partner’s contribution of property, the transactions are presumed to be a sale of the contributed property unless the facts and circumstances clearly establish that the transfers do not constitute a sale. The Disguised Sale Regulations also provide that if two years have passed between the transfer of money or other consideration and the contribution of property, the transactions will be presumed not to be a sale unless the facts and circumstances clearly establish that the transfers constitute a sale. Given the amount of time that has passed since the original transfers of properties to the Partnership by current holders of MLP Units other than Lexington Trust, it is unlikely, though still possible, that the exchange of MLP Units in connection with the MLP merger would cause such original transfers to be treated as disguised sales of property under the Disguised Sale Regulations.

     Each holder of MLP Units should consult with its own tax advisor to determine whether the exchange of MLP Units could be subject to the Disguised Sale Regulations.

Federal Income Tax Considerations Relating to the REIT

     The following discussion summarizes the material United States federal income tax considerations to you as a prospective holder of Common Shares and assumes that you will hold such shares as capital assets (within the meaning of Section 1221 of the Code). The following discussion is for general information purposes only, is not exhaustive of all possible tax considerations and is not intended to be and should not be construed as tax advice. For example, this summary does not give a detailed discussion of any state, local or foreign tax considerations. In addition, this discussion is intended to address only those federal income tax considerations that are generally applicable to all of Lexington Trust’s shareholders. It does not discuss all of the aspects of federal income taxation that may be relevant to you in light of your particular circumstances or to certain types of shareholders who are subject to special treatment under the federal income tax laws including, without limitation, regulated investment

companies, insurance companies, tax-exempt entities, financial institutions or broker-dealers, expatriates, persons subject to the alternative minimum tax and partnerships or other pass through entities.

     PROSPECTIVE HOLDERS OF COMMON SHARES ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF INVESTING IN COMMON SHARES IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES.

Taxation of the Company

     General. Lexington Trust elected to be taxed as a REIT under Sections 856 through 860 of the Code, commencing with its taxable year ended December 31, 1993. Lexington Trust believes that it has been organized, and has operated, in such a manner so as to qualify for taxation as a REIT under the Code and intends to conduct its operations so as to continue to qualify for taxation as a REIT. No assurance, however, can be given that Lexington Trust has operated in a manner so as to qualify or will be able to operate in such a manner so as to remain qualified as a REIT. Qualification and taxation as a REIT depend upon Lexington Trust’s ability to meet on a continuing basis, through actual annual operating results, the required distribution levels, diversity of share ownership and the various qualification tests imposed under the Code discussed below, the results of which will not be reviewed by counsel. Given the highly complex nature of the rules governing REITs, the ongoing importance of factual determinations, and the possibility of future changes in Lexington Trust’s circumstances, no assurance can be given that the actual results of Lexington Trust’s operations for any one taxable year have satisfied or will continue to satisfy such requirements.

     In the opinion of Paul, Hastings, Janofsky & Walker LLP, based on certain assumptions and factual representations that are described in this section and in officer’s certificates provided by Lexington Trust, Concord Debt Holdings LLC and Concord Debt Funding Trust (both subsidiaries in which we indirectly hold interests), commencing with Lexington Trust’s taxable year ended December 31, 1993, Lexington Trust has been organized and operated in conformity with the requirements for qualification as a REIT and its current and proposed method of operation will enable it to continue to meet the requirements for qualification and taxation as a REIT. It must be emphasized that this opinion is based on various assumptions and is conditioned upon certain representations made by Lexington Trust, Concord Debt Holdings LLC and Concord Debt Funding Trust as to factual matters including, but not limited to, those set forth herein, and those concerning Lexington Trust’s business and properties as set forth in this prospectus. An opinion of counsel is not binding on the IRS or the courts.

     The following is a general summary of the Code provisions that govern the federal income tax treatment of a REIT and its shareholders. These provisions of the Code are highly technical and complex. This summary is qualified in its entirety by the applicable Code provisions, Treasury Regulations and administrative and judicial interpretations thereof, all of which are subject to change prospectively or retroactively.

     If Lexington Trust qualifies for taxation as a REIT, it generally will not be subject to federal corporate income taxes on its net income that is currently distributed to shareholders. This treatment substantially eliminates the “double taxation” (at the corporate and shareholder levels) that generally results from investment in a corporation. However, Lexington Trust will be subject to federal income tax as follows:

	•		First, Lexington Trust will be taxed at regular corporate rates on any undistributed REIT taxable income, including undistributed net capital gains.
	•		Second, under certain circumstances, Lexington Trust may be subject to the “alternative minimum tax” on its items of tax preference.
	•		Third, if Lexington Trust has (a) net income from the sale or other disposition of “foreclosure property,” which is, in general, property acquired on foreclosure or otherwise on default on a loan secured by such real property or a lease of such property, which is held primarily for sale to customers in the ordinary course of business or (b) other nonqualifying income from foreclosure property, it will be subject to tax at the highest corporate rate on such income.

	•		Fourth, if Lexington Trust has net income from prohibited transactions such income will be subject to a 100% tax. Prohibited transactions are, in general, certain sales or other dispositions of property held primarily for sale to customers in the ordinary course of business other than foreclosure property.
	•		Fifth, if Lexington Trust should fail to satisfy the 75% gross income test or the 95% gross income test (as discussed below), but nonetheless maintain its qualification as a REIT because certain other requirements have been met, it will be subject to a 100% tax on an amount equal to (a) the gross income attributable to the greater of the amount by which it fails the 75% gross income test or the amount by which 95% (90% for taxable years ending on or prior to December 31, 2004) of its gross income exceeds the amount of income qualifying under the 95% gross income test multiplied by (b) a fraction intended to reflect its profitability.
	•		Sixth, if Lexington Trust should fail to satisfy the asset tests (as discussed below) but nonetheless maintain its qualification as a REIT because certain other requirements have been met and it does not qualify for a de minimis exception, it may be subject to a tax that would be the greater of (a) $50,000; or (b) an amount determined by multiplying the highest rate of tax for corporations by the net income generated by the assets for the period beginning on the first date of the failure and ending on the day it disposes of the nonqualifying assets (or otherwise satisfies the requirements for maintaining REIT qualification).
	•		Seventh, if Lexington Trust should fail to satisfy one or more requirements for REIT qualification, other than the 95% and 75% gross income tests and other than the asset tests, but nonetheless maintains its qualification as a REIT because certain other requirements have been met, it may be subject to a $50,000 penalty for each failure.
	•		Eighth, if Lexington Trust should fail to distribute during each calendar year at least the sum of (a) 85% of its REIT ordinary income for such year, (b) 95% of its REIT capital gain net income for such year, and (c) any undistributed taxable income from prior periods, Lexington Trust would be subject to a nondeductible 4% excise tax on the excess of such required distribution over the amounts actually distributed.
	•		Ninth, if Lexington Trust acquires any asset from a C corporation (i.e., a corporation generally subject to full corporate level tax) in a transaction in which the basis of the asset in its hands is determined by reference to the basis of the asset (or any other property) in the hands of the C corporation and it does not elect to be taxed at the time of the acquisition, it would be subject to tax at the highest corporate rate if it disposes of such asset during the ten-year period beginning on the date that it acquired that asset, to the extent of such property’s “built-in gain” (the excess of the fair market value of such property at the time of its acquisition over the adjusted basis of such property at such time) (we refer to this tax as the “Built-in Gains Tax”).
	•		Tenth, Lexington Trust will incur a 100% excise tax on transactions with a taxable REIT subsidiary that are not conducted on an arm’s-length basis.
	•		Finally, if Lexington Trust owns a residual interest in a real estate mortgage investment conduit, or “REMIC,” it will be taxable at the highest corporate rate on the portion of any excess inclusion income that it derives from the REMIC residual interests equal to the percentage of its shares that is held in record name by “disqualified organizations.” Similar rules apply if Lexington Trust owns an equity interest in a taxable mortgage pool. A “disqualified organization” includes the United States, any state or political subdivision thereof, any foreign government or international organization, any agency or instrumentality of any of the foregoing, any rural electrical or telephone cooperative and any tax-exempt organization (other than a farmer’s cooperative described in Section 521 of the Code) that is exempt from income taxation and from the unrelated business taxable income provisions of the Code. However, to the extent that Lexington Trust owns a REMIC residual interest or a taxable mortgage pool through a taxable REIT subsidiary, it will not be subject to this tax. See the heading “Requirements for Qualification” below.

     Requirements for Qualification. A REIT is a corporation, trust or association (1) that is managed by one or more trustees or directors, (2) the beneficial ownership of which is evidenced by transferable shares, or by transferable certificates of beneficial interest, (3) that would be taxable as a domestic corporation, but for Sections 856 through 859 of the Code, (4) that is neither a financial institution nor an insurance company subject to certain provisions of the Code, (5) that has the calendar year as its taxable year, (6) the beneficial ownership of which is held by 100 or more persons, (7) during the last half of each taxable year, not more than 50% in value of the outstanding stock of which is owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities), and (8) that meets certain other tests, described below, regarding the nature of its income and assets. The Code provides that conditions (1) through (5), inclusive, must be met during the entire taxable year and that condition (6) must be met during at least 335 days of a taxable year of twelve (12) months, or during a proportionate part of a taxable year of less than twelve (12) months.

     Lexington Trust may redeem, at its option, a sufficient number of shares or restrict the transfer thereof to bring or maintain the ownership of the shares in conformity with the requirements of the Code. In addition, the LXP declaration includes restrictions regarding the transfer of Lexington Trust’s shares that are intended to assist it in continuing to satisfy requirements (6) and (7). Moreover, if Lexington Trust complies with regulatory rules pursuant to which it is required to send annual letters to its shareholders requesting information regarding the actual ownership of its shares, and it does not know, or exercising reasonable diligence would not have known, whether it failed to meet requirement (7) above, it will be treated as having met the requirement.

     The Code allows a REIT to own wholly-owned corporate subsidiaries which are “qualified REIT subsidiaries.” The Code provides that a qualified REIT subsidiary is not treated as a separate corporation, and all of its assets, liabilities and items of income, deduction and credit are treated as assets, liabilities and items of income, deduction and credit of the REIT. Thus, in applying the requirements described herein, Lexington Trust’s qualified REIT subsidiaries will be ignored, and all assets, liabilities and items of income, deduction and credit of such subsidiaries will be treated as Lexington Trust’s assets, liabilities and items of income, deduction and credit.

     For taxable years beginning on or after January 1, 2001, a REIT may also hold any direct or indirect interest in a corporation that qualifies as a “taxable REIT subsidiary,” as long as the REIT’s aggregate holdings of taxable REIT subsidiary securities do not exceed 20% of the value of the REIT’s total assets (for taxable years beginning after July 30, 2008, 25% of the value of the REIT’s total assets) at the close of each quarter. A taxable REIT subsidiary is a fully taxable corporation that generally is permitted to engage in businesses (other than certain activities relating to lodging and health care facilities), own assets, and earn income that, if engaged in, owned, or earned by the REIT, might jeopardize REIT status or result in the imposition of penalty taxes on the REIT. To qualify as a taxable REIT subsidiary, the subsidiary and the REIT must make a joint election to treat the subsidiary as a taxable REIT subsidiary. A taxable REIT subsidiary also includes any corporation (other than a REIT or a qualified REIT subsidiary) in which a taxable REIT subsidiary directly or indirectly owns more than 35% of the total voting power or value. See “Asset Tests” below. A taxable REIT subsidiary will pay tax at regular corporate income rates on any taxable income it earns. Moreover, the Code contains rules, including rules requiring the imposition of taxes on a REIT at the rate of 100% on certain reallocated income and expenses, to ensure that contractual arrangements between a taxable REIT subsidiary and its parent REIT are at arm’s-length.

     In the case of a REIT which is a partner in a partnership, Treasury Regulations provide that the REIT will be deemed to own its proportionate share of each of the assets of the partnership and will be deemed to be entitled to the income of the partnership attributable to such share for purposes of satisfying the gross income and assets tests (as discussed below). In addition, the character of the assets and items of gross income of the partnership will retain the same character in the hands of the REIT. Thus, Lexington Trust’s proportionate share (based on equity capital) of the assets, liabilities, and items of gross income of the partnerships in which it owns an interest are treated as its assets, liabilities and items of gross income for purposes of applying the requirements described herein. The treatment described above also applies with respect to the ownership of interests in limited liability companies or other entities that are treated as partnerships for tax purposes.

     A significant number of Lexington Trust’s investments are held through partnerships. If any such partnerships were treated as an association, the entity would be taxable as a corporation and therefore would be subject to an entity level tax on its income. In such a situation, the character of Lexington Trust’s assets and items of gross income would change and might preclude it from qualifying as a REIT. Lexington Trust believes that each partnership in which it holds a material interest (either directly or indirectly) is properly treated as a partnership for tax purposes (and not as an association taxable as a corporation).

     Special rules apply to a REIT, a portion of a REIT, or a qualified REIT subsidiary that is a taxable mortgage pool. An entity or portion thereof may be classified as a taxable mortgage pool under the Code if:

	o		substantially all of the assets consist of debt obligations or interests in debt obligations;
	o		more than 50% of those debt obligations are real estate mortgage loans or interests in real estate mortgage loans as of specified testing dates;
	o		the entity has issued debt obligations that have two or more maturities; and
	o		the payments required to be made by the entity on its debt obligations “bear a relationship” to the payments to be received by the entity on the debt obligations that it holds as assets.

     Under Treasury Regulations, if less than 80% of the assets of an entity (or the portion thereof) consist of debt obligations, these debt obligations are considered not to comprise “substantially all” of its assets, and therefore the entity would not be treated as a taxable mortgage pool.

     An entity or portion thereof that is classified as a taxable mortgage pool is generally treated as a taxable corporation for federal income tax purposes. However, the portion of the REIT’s assets, held directly or through a qualified REIT subsidiary, that qualifies as a taxable mortgage pool is treated as a qualified REIT subsidiary that is not subject to corporate income tax and therefore the taxable mortgage pool classification does not change that treatment. The classification of a REIT, qualified REIT subsidiary or portion thereof as a taxable mortgage pool could, however, result in taxation of a REIT and certain of its shareholders as described below.

     IRS guidance indicates that a portion of income from a taxable mortgage pool arrangement, if any, could be treated as “excess inclusion income.” Excess inclusion income is an amount, with respect to any calendar quarter, equal to the excess, if any, of (i) income allocable to the holder of a REMIC residual interest or taxable mortgage pool interest over (ii) the sum of an amount for each day in the calendar quarter equal to the product of (a) the adjusted issue price at the beginning of the quarter multiplied by (b) 120% of the long-term federal rate (determined on the basis of compounding at the close of each calendar quarter and properly adjusted for the length of such quarter). Under the recent guidance, such income would be allocated among Lexington Trust’s shareholders in proportion to dividends paid and, generally, may not be offset by net operating losses of the shareholder, would be taxable to tax exempt shareholders who are subject to the unrelated business income tax rules of the Code and would subject non-U.S. shareholders to a 30% withholding tax (without exemption or reduction of the withholding rate). To the extent that excess inclusion income is allocated from a taxable mortgage pool to any disqualified organizations that hold our shares, Lexington Trust may be taxable on this income at the highest applicable corporate tax rate (currently 35%). Because this tax would be imposed on the REIT, all of the REIT’s shareholders, including shareholders that are not disqualified organizations, would bear a portion of the tax cost associated with the classification of any portion of Lexington Trust’s assets as a taxable mortgage pool.

     If Lexington Trust owns less than 100% of the ownership interests in a subsidiary that is a taxable mortgage pool, the foregoing rules would not apply. Rather, the subsidiary would be treated as a corporation for federal income tax purposes and would potentially be subject to corporate income tax. In addition, this characterization would affect Lexington Trust’s REIT income and asset test calculations and could adversely affect its ability to qualify as a REIT.

     Lexington Trust has made and in the future intends to make investments or enter into financing and securitization transactions that may give rise to its being considered to own an interest, directly or indirectly, in one or more taxable mortgage pools. Prospective holders are urged to consult their own tax advisors regarding the tax consequences of the taxable mortgage pool rules to them in light of their particular circumstances.

     Income Tests. In order to maintain qualification as a REIT, Lexington Trust must satisfy annually certain gross income requirements. First, at least 75% of Lexington Trust’s gross income (excluding gross income from prohibited transactions) for each taxable year must be derived directly or indirectly from investments relating to real property or mortgages on real property (including “rents from real property;” gain from the sale of real property

other than property held for sale to customers in the ordinary course of business; dividends from, and gain from the sale of shares of, other qualifying REITs; certain interest described further below; and certain income derived from a REMIC) or from certain types of qualified temporary investments. Second, at least 95% of Lexington Trust’s gross income (excluding gross income from prohibited transactions) for each taxable year must be derived from income that qualifies under the foregoing 75% gross income test, other types of dividends and interest, gain from the sale or disposition of stock or securities and certain other specified sources. Any income from a hedging transaction entered into after December 31, 2004 that is clearly and timely identified and hedges indebtedness incurred or to be incurred to acquire or carry real estate assets will not constitute gross income, rather than being treated as qualifying or nonqualifying income, for purposes of the 95% gross income test and, with respect to such hedging transactions entered into after July 30, 2008, for purposes of the 75% gross income test as well. For transactions entered into after July 30, 2008, a hedging transaction also includes a transaction entered into to manage foreign currency risks with respect to items of income and gain (or any property which generates such income or gain) that would be qualifying income under the 75% or 95% gross income tests, but only if such transaction is clearly identified before the close of the day it was acquired, originated or entered into. In addition, certain foreign currency gains recognized after July 30, 2008 will be excluded from gross income for purposes of one or both of the gross income tests.

     Rents received by Lexington Trust will qualify as “rents from real property” in satisfying the gross income requirements for a REIT described above only if several conditions are met. First, the amount of rent must not be based in whole or in part on the income or profits of any person. However, an amount received or accrued generally will not be excluded from the term “rents from real property” solely by reason of being based on a fixed percentage or percentages of receipts or sales. Second, the Code provides that rents received from a tenant will not qualify as “rents from real property” in satisfying the gross income tests if Lexington Trust, or an owner of 10% or more of its shares, actually or constructively owns 10% or more of such tenant. Third, if rent attributable to personal property, leased in connection with a lease of real property, is greater than 15% of the total rent received under the lease, then the portion of rent attributable to such personal property (based on the ratio of fair market value of personal and real property) will not qualify as “rents from real property.” Finally, in order for rents received to qualify as “rents from real property,” Lexington Trust generally must not operate or manage the property (subject to a de minimis exception as described below) or furnish or render services to the tenants of such property, other than through an independent contractor from whom Lexington Trust derives no revenue or through a taxable REIT subsidiary. Lexington Trust may, however, directly perform certain services that are “usually or customarily rendered” in connection with the rental of space for occupancy only and are not otherwise considered “rendered to the occupant” of the property (“Permissible Services”).

     For Lexington Trust’s taxable years commencing on or after January 1, 1998, rents received generally will qualify as rents from real property notwithstanding the fact that it provides services that are not Permissible Services so long as the amount received for such services meets a de minimis standard. The amount received for “impermissible services” with respect to a property (or, if services are available only to certain tenants, possibly with respect to such tenants) cannot exceed one percent of all amounts received, directly or indirectly, by Lexington Trust with respect to such property (or, if services are available only to certain tenants, possibly with respect to such tenants). The amount that Lexington Trust will be deemed to have received for performing “impermissible services” will be the greater of the actual amounts so received or 150% of the direct cost to Lexington Trust of providing those services.

     Lexington Trust believes that substantially all of its rental income will be qualifying income under the gross income tests, and that its provision of services will not cause the rental income to fail to be qualifying income under those tests.

     Generally, interest on debt secured by a mortgage on real property or interests in real property qualifies for purposes of satisfying the 75% gross income test described above. However, if the highest principal amount of a loan outstanding during a taxable year exceeds the fair market value of the real property securing the loan as of the date the REIT agreed to originate or acquire the loan, a proportionate amount of the interest income from such loan will not be qualifying income for purposes of the 75% gross income test, but will be qualifying income for purposes of the 95% gross income test. In addition, any interest amount that is based in whole or in part on the income or profits of any person does not qualify for purposes of the foregoing 75% and 95% income tests except (a) amounts that are based on a fixed percentage or percentages of receipts or sales and (b) amounts that are based on the income

or profits of a debtor, as long as the debtor derives substantially all of its income from the real property securing the debt from leasing substantially all of its interest in the property, and only to the extent that the amounts received by the debtor would be qualifying “rents from real property” if received directly by the REIT.

     If a loan contains a provision that entitles a REIT to a percentage of the borrower’s gain upon the sale of the real property securing the loan or a percentage of the appreciation in the property’s value as of a specific date, income attributable to that loan provision will be treated as gain from the sale of the property securing the loan, which is generally qualifying income for purposes of both gross income tests.

     If Lexington Trust fails to satisfy one or both of the 75% or 95% gross income tests for any taxable year, it may nevertheless qualify as a REIT for such year if such failure was due to reasonable cause and not willful neglect and it files a schedule describing each item of its gross income for such taxable year in accordance with Treasury Regulations (and for taxable years beginning on or before October 22, 2004, any incorrect information on the schedule was not due to fraud with intent to evade tax). It is not possible, however, to state whether in all circumstances Lexington Trust would be entitled to the benefit of this relief provision. Even if this relief provision applied, a 100% penalty tax would be imposed on the amount by which it failed the 75% gross income test or the amount by which 95% (90% for taxable years ending on or prior to December 31, 2004) of its gross income exceeds the amount of income qualifying under the 95% gross income test (whichever amount is greater), multiplied by a fraction intended to reflect its profitability.

     Subject to certain safe harbor exceptions, any gain (including certain foreign currency gain recognized after July 30, 2008) realized by Lexington Trust on the sale of any property held as inventory or other property held primarily for sale to customers in the ordinary course of business will be treated as income from a prohibited transaction that is subject to a 100% penalty tax. Such prohibited transaction income may also have an adverse effect upon Lexington Trust’s ability to qualify as a REIT. In June 2007, Lexington Trust announced a restructuring of its investment strategy, focusing on core and core plus assets. While Lexington Trust believes that the dispositions of our assets pursuant to the restructuring of its investment strategy should not be treated as prohibited transactions, and although it intends to conduct its operations so that it will not be treated as holding its properties for sale, whether a particular sale will be treated as a prohibited transaction depends on all the facts and circumstances with respect to the particular transaction. Lexington Trust has not sought and does not intend to seek a ruling from the IRS regarding any dispositions. Accordingly, there can be no assurance that the IRS will not successfully assert a contrary position with respect to Lexington Trust’s dispositions. If all or a significant portion of Lexington Trust’s dispositions were treated as prohibited transactions, it would incur a significant U.S. federal tax liability, which could have a material adverse effect on its results of operations.

     Lexington Trust will be subject to tax at the maximum corporate rate on any income from foreclosure property (including certain foreign currency gains and related deductions recognized after July 30, 2008), other than income that otherwise would be qualifying income for purposes of the 75% gross income test, less expenses directly connected with the production of that income. However, gross income from foreclosure property will qualify under the 75% and 95% gross income tests. Foreclosure property is any real property, including interests in real property, and any personal property incident to such real property (1) that is acquired by a REIT as the result of the REIT having bid on such property at foreclosure, or having otherwise reduced such property to ownership or possession by agreement or process of law, after there was a default or default was imminent on a lease of such property or on indebtedness that such property secured; (2) for which the related loan was acquired by the REIT at a time when the default was not imminent or anticipated; and (3) for which the REIT makes a proper election to treat the property as foreclosure property. Any gain from the sale of property for which a foreclosure property election has been made will not be subject to the 100% tax on gains from prohibited transactions described above, even if the property would otherwise constitute inventory or dealer property.

     A REIT will not be considered to have foreclosed on a property where the REIT takes control of the property as a mortgagee-in-possession and cannot receive any profit or sustain any loss except as a creditor of the mortgagor. Property generally ceases to be foreclosure property at the end of the third taxable year following the taxable year in which the REIT acquired the property, unless a longer extension is granted by the Secretary of the Treasury or the grace period terminates earlier due to certain nonqualifying income or activities generated with respect to the property.

     Asset Tests. At the close of each quarter of Lexington Trust’s taxable year, it must also satisfy the following tests relating to the nature of its assets. At least 75% of the value of Lexington Trust’s total assets, including its allocable share of assets held by partnerships in which it owns an interest, must be represented by real estate assets, stock or debt instruments held for not more than one year purchased with the proceeds of an offering of equity securities or a long-term (at least five years) public debt offering by it, cash, cash items (including certain receivables) and government securities. For this purpose, real estate assets include interests in real property, such as land, buildings, leasehold interests in real property, stock of other corporations that qualify as REITs, and certain kinds of mortgage-backed securities (including regular or residual interests in a REMIC to the extent provided in the Code) and mortgage loans. In addition, not more than 25% of Lexington Trust’s total assets may be represented by securities other than those in the 75% asset class. Not more than 20% of the value of Lexington Trust’s total assets (for taxable years beginning after July 30, 2008, 25% of the value of our total assets) may be represented by securities of one or more taxable REIT subsidiaries (as defined above under “Requirements for Qualification”). Except for investments included in the 75% asset class, securities in a taxable REIT subsidiary or qualified REIT subsidiary and certain partnership interests and debt obligations, (1) not more than 5% of the value of Lexington Trust’s total assets may be represented by securities of any one issuer (the “5% asset test”), (2) Lexington Trust may not hold securities that possess more than 10% of the total voting power of the outstanding securities of a single issuer (the “10% voting securities test”) and (3) Lexington Trust may not hold securities that have a value of more than 10% of the total value of the outstanding securities of any one issuer (the “10% value test”).

     The following assets are not treated as “securities” held by Lexington Trust for purposes of the 10% value test (i) “straight debt” meeting certain requirements, unless Lexington Trust holds (either directly or through its “controlled” taxable REIT subsidiaries) certain other securities of the same corporate or partnership issuer that have an aggregate value greater than 1% of such issuer’s outstanding securities; (ii) loans to individuals or estates; (iii) certain rental agreements calling for deferred rents or increasing rents that are subject to Section 467 of the Code, other than with certain related persons; (iv) obligations to pay Lexington Trust amounts qualifying as “rents from real property” under the 75% and 95% gross income tests; (v) securities issued by a state or any political subdivision of a state, the District of Columbia, a foreign government, any political subdivision of a foreign government, or the Commonwealth of Puerto Rico, but only if the determination of any payment received or accrued under the security does not depend in whole or in part on the profits of any person not described in this category, or payments on any obligation issued by such an entity; (vi) securities issued by another qualifying REIT; and (vii) other arrangements identified in Treasury Regulations (which have not yet been issued or proposed). In addition, any debt instrument issued by a partnership will not be treated as a “security” under the 10% value test if at least 75% of the partnership’s gross income (excluding gross income from prohibited transactions) is derived from sources meeting the requirements of the 75% gross income test. If the partnership fails to meet the 75% gross income test, then the debt instrument issued by the partnership nevertheless will not be treated as a “security” to the extent of our interest as a partner in the partnership. Also, in looking through any partnership to determine Lexington Trust’s allocable share of any securities owned by the partnership, Lexington Trust’s share of the assets of the partnership, solely for purposes of applying the 10% value test in taxable years beginning on or after January 1, 2005, will correspond not only to its interest as a partner in the partnership but also to its proportionate interest in certain debt securities issued by the partnership.

     Through Lexington Trust’s investment in Concord Debt Holdings LLC, it may hold mezzanine loans that are secured by equity interests in a non-corporate entity that directly or indirectly owns real property. IRS Revenue Procedure 2003-65 provides a safe harbor pursuant to which a mezzanine loan to such a non-corporate entity, if it meets each of the requirements contained in the Revenue Procedure, will be treated by the IRS as a real estate asset for purposes of the REIT asset tests, and interest derived from it will be treated as qualifying mortgage interest for purposes of the 75% gross income test. Although the Revenue Procedure provides a safe harbor on which taxpayers may rely, it does not prescribe rules of substantive tax law. Moreover, not all of the mezzanine loans that Lexington Trust holds meet all of the requirements for reliance on this safe harbor. Lexington Trust has invested, and intends to continue to invest, in mezzanine loans in a manner that will enable it to continue to satisfy the gross income and asset tests.

     Lexington Trust may also hold through its investment in Concord Debt Holdings LLC certain participation interests, or “B-Notes,” in mortgage loans and mezzanine loans originated by other lenders. A B-Note is an interest created in an underlying loan by virtue of a participation or similar agreement, to which the originator of the loan is a party, along with one or more participants. The borrower on the underlying loan is typically not a party to the

participation agreement. The performance of a participant’s investment depends upon the performance of the underlying loan, and if the underlying borrower defaults, the participant typically has no recourse against the originator of the loan. The originator often retains a senior position in the underlying loan, and grants junior participations, which will be a first loss position in the event of a default by the borrower. The appropriate treatment of participation interests for federal income tax purposes is not entirely certain. Lexington Trust believes that it has invested, and intends to continue to invest, in participation interests that qualify as real estate assets for purposes of the asset tests, and that generate interest that will be treated as qualifying mortgage interest for purposes of the 75% gross income test, but no assurance can be given that the IRS will not challenge our treatment of these participation interests.

     Lexington Trust believes that substantially all of its assets consist of (1) real properties, (2) stock or debt investments that earn qualified temporary investment income, (3) other qualified real estate assets, including qualifying REITs, and (4) cash, cash items and government securities. Lexington Trust also believes that the value of its securities in its taxable REIT subsidiaries will not exceed 20% of the value of its total assets (or, beginning with its 2009 taxable year, 25% of the value of its total assets). Lexington Trust may also invest in securities of other entities, provided that such investments will not prevent Lexington Trust from satisfying the asset and income tests for REIT qualification set forth above. If any interest Lexington Trust holds in any REIT (including Concord Debt Funding Trust) or other category of permissible investment described above does not qualify as such, Lexington Trust would be subject to the 5% asset test and the 10% voting securities and value tests with respect to such investment.

     After initially meeting the asset tests at the close of any quarter, Lexington Trust will not lose its status as a REIT for failure to satisfy the asset tests at the end of a later quarter solely by reason of changes in asset values (including, for taxable years beginning after July 30, 2008, discrepancies caused solely by a change in the foreign currency exchange rate used to value a foreign asset). If Lexington Trust inadvertently fails one or more of the asset tests at the end of a calendar quarter because it acquires securities or other property during the quarter, it can cure this failure by disposing of sufficient nonqualifying assets within 30 days after the close of the calendar quarter in which it arose. If Lexington Trust were to fail any of the asset tests at the end of any quarter without curing such failure within 30 days after the end of such quarter, it would fail to qualify as a REIT, unless it were to qualify under certain relief provisions enacted in 2004. Under one of these relief provisions, if Lexington Trust were to fail the 5% asset test, the 10% voting securities test, or the 10% value test, it nevertheless would continue to qualify as a REIT if the failure was due to the ownership of assets having a total value not exceeding the lesser of 1% of its assets at the end of the relevant quarter or $10,000,000, and it were to dispose of such assets (or otherwise meet such asset tests) within six months after the end of the quarter in which the failure was identified. If Lexington Trust were to fail to meet any of the REIT asset tests for a particular quarter, but it did not qualify for the relief for de minimis failures that is described in the preceding sentence, then it would be deemed to have satisfied the relevant asset test if: (i) following its identification of the failure, it was to file a schedule with a description of each asset that caused the failure; (ii) the failure was due to reasonable cause and not due to willful neglect; (iii) it was to dispose of the non-qualifying asset (or otherwise meet the relevant asset test) within six months after the last day of the quarter in which the failure was identified, and (iv) it was to pay a penalty tax equal to the greater of $50,000, or the highest corporate tax rate multiplied by the net income generated by the non-qualifying asset during the period beginning on the first date of the failure and ending on the date it disposes of the asset (or otherwise cures the asset test failure). These relief provisions will be available to Lexington Trust in its taxable years beginning on or after January 1, 2005, although it is not possible to predict whether in all circumstances it would be entitled to the benefit of these relief provisions.

     Annual Distribution Requirement. With respect to each taxable year, Lexington Trust must distribute to its shareholders as dividends (other than capital gain dividends) at least 90% of its taxable income. Specifically, Lexington Trust must distribute an amount equal to (1) 90% of the sum of its “REIT taxable income” (determined without regard to the deduction for dividends paid and by excluding any net capital gain), and any after-tax net income from foreclosure property, minus (2) the sum of certain items of “excess noncash income” such as income attributable to leveled stepped rents, cancellation of indebtedness and original issue discount. REIT taxable income is generally computed in the same manner as taxable income of ordinary corporations, with several adjustments, such as a deduction allowed for dividends paid, but not for dividends received.

     Lexington Trust will be subject to tax on amounts not distributed at regular United States federal corporate income tax rates. In addition, a nondeductible 4% excise tax is imposed on the excess of (1) 85% of Lexington Trust’s ordinary income for the year plus 95% of capital gain net income for the year and the undistributed portion of the required distribution for the prior year over (2) the actual distribution to shareholders during the year (if any). Net operating losses generated by Lexington Trust may be carried forward but not carried back and used by it for 15 years (or 20 years in the case of net operating losses generated in its tax years commencing on or after January 1, 1998) to reduce REIT taxable income and the amount that it will be required to distribute in order to remain qualified as a REIT. As a REIT, Lexington Trust’s net capital losses may be carried forward for five years (but not carried back) and used to reduce capital gains.

     In general, a distribution must be made during the taxable year to which it relates to satisfy the distribution test and to be deducted in computing REIT taxable income. However, Lexington Trust may elect to treat a dividend declared and paid after the end of the year (a “subsequent declared dividend”) as paid during such year for purposes of complying with the distribution test and computing REIT taxable income, if the dividend is (1) declared before the regular or extended due date of Lexington Trust’s tax return for such year and (2) paid not later than the date of the first regular dividend payment made after the declaration, but in no case later than 12 months after the end of the year. For purposes of computing the nondeductible 4% excise tax, a subsequent declared dividend is considered paid when actually distributed. Furthermore, any dividend that is declared by Lexington Trust in October, November or December of a calendar year, and payable to shareholders of record as of a specified date in such quarter of such year will be deemed to have been paid by it (and received by shareholders) on December 31 of such calendar year, but only if such dividend is actually paid by it in January of the following calendar year.

     For purposes of complying with the distribution test for a taxable year as a result of an adjustment in certain of our items of income, gain or deduction by the IRS or Lexington Trust, Lexington Trust may be permitted to remedy such failure by paying a “deficiency dividend” in a later year together with interest. Such deficiency dividend may be included in Lexington Trust’s deduction of dividends paid for the earlier year for purposes of satisfying the distribution test. For purposes of the nondeductible 4% excise tax, the deficiency dividend is taken into account when paid, and any income giving rise to the deficiency adjustment is treated as arising when the deficiency dividend is paid.

     Lexington Trust believes that it has distributed and intends to continue to distribute to its shareholders in a timely manner such amounts sufficient to satisfy the annual distribution requirements. However, it is possible that timing differences between the accrual of income and its actual collection, and the need to make nondeductible expenditures (such as capital improvements or principal payments on debt) may cause Lexington Trust to recognize taxable income in excess of its net cash receipts, thus increasing the difficulty of compliance with the distribution requirement. In addition, excess inclusion income might be non-cash accrued income, or “phantom” taxable income, which could therefore adversely affect Lexington Trust’s ability to satisfy its distribution requirements. In order to meet the distribution requirement, Lexington Trust might find it necessary to arrange for short-term, or possibly long-term, borrowings.

     Failure to Qualify. Commencing with Lexington Trust’s taxable year beginning January 1, 2005, if it were to fail to satisfy one or more requirements for REIT qualification, other than an asset or income test violation of a type for which relief is otherwise available as described above, it would retain our REIT qualification if the failure was due to reasonable cause and not willful neglect, and if it were to pay a penalty of $50,000 for each such failure. It is not possible to predict whether in all circumstances Lexington Trust would be entitled to the benefit of this relief provision. If Lexington Trust fails to qualify as a REIT for any taxable year, and if certain relief provisions of the Code do not apply, Lexington Trust would be subject to federal income tax (including applicable alternative minimum tax) on its taxable income at regular corporate rates. Distributions to shareholders in any year in which Lexington Trust fails to qualify will not be deductible from its taxable income nor will they be required to be made. As a result, Lexington Trust’s failure to qualify as a REIT would reduce the cash available for distribution by it to its shareholders. In addition, if Lexington Trust fails to qualify as a REIT, all distributions to shareholders will be taxable as ordinary income, to the extent of Lexington Trust’s current and accumulated earnings and profits. Subject to certain limitations of the Code, corporate distributees may be eligible for the dividends-received deduction and shareholders taxed as individuals may be eligible for a reduced tax rate on “qualified dividend income” from regular C corporations.

     If Lexington Trust’s failure to qualify as a REIT is not due to reasonable cause but results from willful neglect, it would not be permitted to elect REIT status for the four taxable years after the taxable year for which such disqualification is effective. In the event Lexington Trust was to fail to qualify as a REIT in one year and subsequently requalify in a later year, it may elect to recognize taxable income based on the net appreciation in value of its assets as a condition to requalification. In the alternative, Lexington Trust may be taxed on the net appreciation in value of its assets if it sells properties within ten years of the date it requalifies as a REIT under federal income tax laws.

Taxation of Shareholders

     As used herein, the term “U.S. shareholder” means a beneficial owner of Common Shares who (for United States federal income tax purposes) (1) is a citizen or resident of the United States, (2) is a corporation or other entity treated as a corporation for federal income tax purposes created or organized in or under the laws of the United States or of any political subdivision thereof, (3) is an estate the income of which is subject to United States federal income taxation regardless of its source or (4) is a trust whose administration is subject to the primary supervision of a United States court and which has one or more United States persons who have the authority to control all substantial decisions of the trust or a trust that has a valid election to be treated as a U.S. person pursuant to applicable Treasury Regulations. As used herein, the term “non U.S. shareholder” means a beneficial owner of Common Shares who is not a U.S. shareholder or a partnership.

     If a partnership (including any entity treated as a partnership for U.S. federal income tax purposes) is a shareholder, the tax treatment of a partner in the partnership generally will depend upon the status of the partner and the activities of the partnership. A shareholder that is a partnership and the partners in such partnership should consult their own tax advisors concerning the U.S. federal income tax consequences of acquiring, owning and disposing of our common shares.

Taxation of Taxable U.S. Shareholders.

     As long as Lexington Trust qualifies as a REIT, distributions made to its U.S. shareholders out of current or accumulated earnings and profits (and not designated as capital gain dividends) will be taken into account by them as ordinary income and corporate shareholders will not be eligible for the dividends-received deduction as to such amounts. For purposes of computing Lexington Trust’s earnings and profits, depreciation for depreciable real estate will be computed on a straight-line basis over a 40-year period. For purposes of determining whether distributions on the shares constitute dividends for tax purposes, Lexington Trust’s earnings and profits will be allocated first to distributions with respect to the Series B Preferred Shares, Series C Preferred Shares, Series D Preferred Shares and all other series of preferred shares that are equal in rank as to distributions and upon liquidation with the Series B Preferred Shares, Series C Preferred Shares and Series D Preferred Shares, and second to distributions with respect to Common Shares. There can be no assurance that Lexington Trust will have sufficient earnings and profits to cover distributions on any Common Shares. Certain “qualified dividend income” received by domestic non-corporate shareholders in taxable years prior to 2011 is subject to tax at the same tax rates as long-term capital gain (generally a maximum rate of 15% for such taxable years). Dividends paid by a REIT generally do not qualify as “qualified dividend income” because a REIT is not generally subject to federal income tax on the portion of its REIT taxable income distributed to its shareholders. Therefore, Lexington Trust’s dividends will continue to be subject to tax at ordinary income rates, subject to two narrow exceptions. Under the first exception, dividends received from a REIT may be treated as “qualified dividend income” eligible for the reduced tax rates to the extent that the REIT itself has received qualified dividend income from other corporations (such as taxable REIT subsidiaries) in which the REIT has invested. Under the second exception, dividends paid by a REIT in a taxable year may be treated as qualified dividend income in an amount equal to the sum of (i) the excess of the REIT’s “REIT taxable income” for the preceding taxable year over the corporate-level federal income tax payable by the REIT for such preceding taxable year and (ii) the excess of the REIT’s income that was subject to the Built-in Gains Tax (as described above) in the preceding taxable year over the tax payable by the REIT on such income for such preceding taxable year. Lexington Trust does not expect to distribute a material amount of qualified dividend income, if any.

     Distributions that are properly designated as capital gain dividends will be taxed as gains from the sale or exchange of a capital asset held for more than one year (to the extent they do not exceed our actual net capital gain for the taxable year) without regard to the period for which the shareholder has held its shares. However, corporate shareholders may be required to treat up to 20% of certain capital gain dividends as ordinary income under the

Code. Capital gain dividends, if any, will be allocated among different classes of shares in proportion to the allocation of earnings and profits discussed above.

     Distributions in excess of Lexington Trust’s current and accumulated earnings and profits will constitute a non-taxable return of capital to a shareholder to the extent that such distributions do not exceed the adjusted basis of the shareholder’s shares, and will result in a corresponding reduction in the shareholder’s basis in the shares. Any reduction in a shareholder’s tax basis for its shares will increase the amount of taxable gain or decrease the deductible loss that will be realized upon the eventual disposition of the shares. Lexington Trust will notify shareholders at the end of each year as to the portions of the distributions which constitute ordinary income, capital gain or a return of capital. Any portion of such distributions that exceeds the adjusted basis of a U.S. shareholder’s shares will be taxed as capital gain from the disposition of shares, provided that the shares are held as capital assets in the hands of the U.S. shareholder.

     Aside from the different income tax rates applicable to ordinary income and capital gain dividends for noncorporate taxpayers, regular and capital gain dividends from Lexington Trust will be treated as dividend income for most other federal income tax purposes. In particular, such dividends will be treated as “portfolio” income for purposes of the passive activity loss limitation and shareholders generally will not be able to offset any “passive losses” against such dividends. Capital gain dividends and qualified dividend income may be treated as investment income for purposes of the investment interest limitation contained in Section 163(d) of the Code, which limits the deductibility of interest expense incurred by noncorporate taxpayers with respect to indebtedness attributable to certain investment assets.

     In general, dividends paid by Lexington Trust will be taxable to shareholders in the year in which they are received, except in the case of dividends declared at the end of the year, but paid in the following January, as discussed above.

     In general, a U.S. shareholder will realize capital gain or loss on the disposition of shares equal to the difference between (1) the amount of cash and the fair market value of any property received on such disposition and (2) the shareholder’s adjusted basis of such shares. Such gain or loss will generally be short-term capital gain or loss if the shareholder has not held such shares for more than one year and will be long-term capital gain or loss if such shares have been held for more than one year. Loss upon the sale or exchange of shares by a shareholder who has held such shares for six months or less (after applying certain holding period rules) will be treated as long-term capital loss to the extent of distributions from us required to be treated by such shareholder as long-term capital gain.

     Lexington Trust may elect to retain and pay income tax on net long-term capital gains. If Lexington Trust makes such an election, you, as a holder of shares, will (1) include in your income as long-term capital gains your proportionate share of such undistributed capital gains (2) be deemed to have paid your proportionate share of the tax paid by Lexington Trust on such undistributed capital gains and thereby receive a credit or refund for such amount and (3) in the case of a U.S. shareholder that is a corporation, appropriately adjust its earnings and profits for the retained capital gains in accordance with Treasury Regulations to be promulgated by the IRS. As a holder of shares you will increase the basis in your shares by the difference between the amount of capital gain included in your income and the amount of tax you are deemed to have paid. Lexington Trust’s earnings and profits will be adjusted appropriately.

Taxation of Non-U.S. Shareholders.

     The following discussion is only a summary of the rules governing United States federal income taxation of non-U.S. shareholders such as nonresident alien individuals and foreign corporations. Prospective non-U.S. shareholders should consult with their own tax advisors to determine the impact of federal, state and local income tax laws with regard to an investment in shares, including any reporting requirements.

     Distributions. Distributions that are not attributable to gain from sales or exchanges by Lexington Trust of “United States real property interests” or otherwise effectively connected with the non-U.S. shareholder’s conduct of a U.S. trade or business and that are not designated by Lexington Trust as capital gain dividends will be treated as dividends of ordinary income to the extent that they are made out of Lexington Trust’s current or accumulated earnings and profits. Such distributions ordinarily will be subject to a withholding tax equal to 30% of the gross

amount of the distribution unless an applicable tax treaty reduces or eliminates that tax. Certain tax treaties limit the extent to which dividends paid by a REIT can qualify for a reduction of the withholding tax on dividends. Lexington Trust’s dividends that are attributable to excess inclusion income will be subject to 30% U.S. withholding tax without reduction under any otherwise applicable tax treaty. See “—Taxation of the Company—Requirements for Qualification” above. Distributions in excess of Lexington Trust’s current and accumulated earnings and profits will not be taxable to a non-U.S. shareholder to the extent that they do not exceed the adjusted basis of the shareholder’s shares, but rather will reduce the adjusted basis of such shares. To the extent that such distributions exceed the adjusted basis of a non-U.S. shareholder’s shares, they will give rise to tax liability if the non-U.S. shareholder would otherwise be subject to tax on any gain from the sale or disposition of his shares, as described below. If a distribution is treated as effectively connected with the non-U.S. shareholder’s conduct of a U.S. trade or business, the non-U.S. shareholder generally will be subject to federal income tax on the distribution at graduated rates, in the same manner as U.S. shareholders are taxed with respect to such distribution, and a non-U.S. shareholder that is a corporation also may be subject to the 30% branch profits tax with respect to the distribution.

     For withholding tax purposes, Lexington Trust is generally required to treat all distributions as if made out of its current or accumulated earnings and profits and thus intend to withhold at the rate of 30% (or a reduced treaty rate if applicable) on the amount of any distribution (other than distributions designated as capital gain dividends) made to a non-U.S. shareholder. Lexington Trust would not be required to withhold at the 30% rate on distributions it reasonably estimates to be in excess of our current and accumulated earnings and profits. If it cannot be determined at the time a distribution is made whether such distribution will be in excess of current and accumulated earnings and profits, the distribution will be subject to withholding at the rate applicable to ordinary dividends. However, the non-U.S. shareholder may seek a refund of such amounts from the IRS if it is subsequently determined that such distribution was, in fact, in excess of Lexington Trust’s current or accumulated earnings and profits, and the amount withheld exceeded the non-U.S. shareholder’s United States tax liability, if any, with respect to the distribution.

     For any year in which Lexington Trust qualifies as a REIT, distributions to non-U.S. shareholders who own more than 5% of its shares and that are attributable to gain from sales or exchanges by us of United States real property interests will be taxed under the provisions of the Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”). Under FIRPTA, a non-U.S. shareholder is taxed as if such gain were effectively connected with a United States business. Non-U.S. shareholders who own more than 5% of Lexington Trust’s shares would thus be taxed at the normal capital gain rates applicable to U.S. shareholders (subject to applicable alternative minimum tax and a special alternative minimum tax in the case of non-resident alien individuals). Also, distributions made to non-U.S. shareholders who own more than 5% of our shares may be subject to a 30% branch profits tax in the hands of a corporate non-U.S. shareholder not entitled to treaty relief or exemption. Lexington Trust is required by applicable regulations to withhold 35% of any distribution that could be designated by it as a capital gain dividend regardless of the amount actually designated as a capital gain dividend. This amount is creditable against the non-U.S. shareholder’s FIRPTA tax liability.

     Under the Tax Increase Prevention and Reconciliation Act of 2005 (“TIPRA”), enacted on May 17, 2006, distributions, made to REIT or regulated investment company (“RIC”) shareholders, that are attributable to gain from sales or exchanges of United States real property interests will retain their character as gain subject to the rules of FIRPTA discussed above when distributed by such REIT or RIC shareholders to their respective shareholders. This provision is effective for taxable years beginning after December 31, 2005.

     If a non-U.S. shareholder does not own more than 5% of Lexington Trust’s shares during the one-year period prior to a distribution attributable to gain from sales or exchanges by Lexington Trust of United States real property interests, such distribution will not be considered to be gain effectively connected with a U.S. business as long as the class of shares continues to be regularly traded on an established securities market in the United States. As such, a non-U.S. shareholder who does not own more than 5% of Lexington Trust’s shares would not be required to file a U.S. Federal income tax return by reason of receiving such a distribution. In this case, the distribution will be treated as a REIT dividend to that non-U.S. shareholder and taxed as a REIT dividend that is not a capital gain distribution as described above. In addition, the branch profits tax will not apply to such distributions. If Common Shares cease to be regularly traded on an established securities market in the United States, all non-U.S. shareholders of Common Shares would be subject to taxation under FIRPTA with respect to capital gain distributions attributable to gain from the sale or exchange of United States real property interests.

     Dispositions. Gain recognized by a non-U.S. shareholder upon a sale or disposition of Common Shares generally will not be taxed under FIRPTA if Lexington Trust is a “domestically controlled REIT,” defined generally as a REIT in which at all times during a specified testing period less than 50% in value of our shares was held directly or indirectly by non-U.S. persons. Lexington Trust believes, but cannot guarantee, that it has been a “domestically controlled REIT.” However, because Lexington Trust’s shares are publicly traded, no assurance can be given that it will continue to be a “domestically controlled REIT.”

     Notwithstanding the general FIRPTA exception for sales of domestically controlled REIT stock discussed above, a disposition of domestically controlled REIT stock will be taxable if the disposition occurs in a wash sale transaction relating to a distribution on such stock. In addition, FIRPTA taxation will apply to substitute dividend payments received in securities lending transactions or sale-repurchase transactions of domestically controlled REIT stock to the extent such payments are made to shareholders in lieu of distributions that would have otherwise been subject to FIRPTA taxation. The foregoing rules regarding wash sales and substitute dividend payments with respect to domestically controlled REIT stock will not apply to stock that is regularly traded on an established securities market within the United States and held by a non-U.S. shareholder that held five percent or less of such stock during the one-year period prior to the related distribution. These rules are effective for distributions on and after June 16, 2006. Prospective purchasers are urged to consult their own tax advisors regarding the applicability of the new rules enacted under TIPRA to their particular circumstances.

     In addition, a non-U.S. shareholder that owns, actually or constructively, 5% or less of a class of Lexington Trust’s shares through a specified testing period, whether or not Lexington Trust’s shares are domestically controlled, will not be subject to tax on the sale of its shares under FIRPTA if the shares are regularly traded on an established securities market. If the gain on the sale of shares were to be subject to taxation under FIRPTA, the non-U.S. shareholder would be subject to the same treatment as U.S. shareholders with respect to such gain (subject to applicable alternative minimum tax, special alternative minimum tax in the case of nonresident alien individuals and possible application of the 30% branch profits tax in the case of foreign corporations) and the purchaser would be required to withhold and remit to the IRS 10% of the purchase price.

     Gain not subject to FIRPTA will be taxable to a non-U.S. shareholder if (1) investment in the shares is effectively connected with the non-U.S. shareholder’s U.S. trade or business, in which case the non-U.S. shareholder will be subject to the same treatment as U.S. shareholders with respect to such gain, or (2) the non-U.S. shareholder is a nonresident alien individual who was present in the United States for 183 days or more during the taxable year and such nonresident alien individual has a “tax home” in the United States, in which case the nonresident alien individual will be subject to a 30% tax on the individual’s capital gain.

Taxation of Tax-Exempt Shareholders.

     Tax-exempt entities, including qualified employee pension and profit sharing trusts and individual retirement accounts (“Exempt Organizations”), generally are exempt from federal income taxation. However, they are subject to taxation on their unrelated business taxable income (“UBTI”). While investments in real estate may generate UBTI, the IRS has issued a published ruling to the effect that dividend distributions by a REIT to an exempt employee pension trust do not constitute UBTI, provided that the shares of the REIT are not otherwise used in an unrelated trade or business of the exempt employee pension trust. Based on that ruling, amounts distributed by us to Exempt Organizations generally should not constitute UBTI. However, if an Exempt Organization finances its acquisition of Lexington Trust shares with debt, a portion of its income from Lexington Trust, if any, will constitute UBTI pursuant to the “debt-financed property” rules under the Code. In addition, our dividends that are attributable to excess inclusion income will constitute UBTI for most Exempt Organizations. See “—Taxation of the Company—Requirements for Qualification” above. Furthermore, social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts, and qualified group legal services plans that are exempt from taxation under specified provisions of the Code are subject to different UBTI rules, which generally will require them to characterize distributions from Lexington Trust as UBTI.

     In addition, a pension trust that owns more than 10% of Lexington Trust’s shares is required to treat a percentage of the dividends from us as UBTI (the “UBTI Percentage”) in certain circumstances. The UBTI Percentage is Lexington Trust’s gross income derived from an unrelated trade or business (determined as if Lexington Trust were a pension trust) divided by Lexington Trust’s total gross income for the year in which the

dividends are paid. The UBTI rule applies only if (i) the UBTI Percentage is at least 5%, (ii) Lexington Trust qualifies as a REIT by reason of the modification of the 5/50 Rule that allows the beneficiaries of the pension trust to be treated as holding Lexington Trust’s shares in proportion to their actuarial interests in the pension trust, and (iii) either (A) one pension trust owns more than 25% of the value of Lexington Trust’s shares or (B) a group of pension trusts individually holding more than 10% of the value of Lexington Trust’s capital shares collectively owns more than 50% of the value of Lexington Trust’s capital shares.

Information Reporting and Backup Withholding

     U.S. Shareholders.

     Lexington Trust will report to U.S. shareholders and the IRS the amount of dividends paid during each calendar year, and the amount of tax withheld, if any, with respect thereto. Under the backup withholding rules, a U.S. shareholder may be subject to backup withholding, currently at a rate of 28%, with respect to dividends paid unless such holder (a) is a corporation or comes within certain other exempt categories and, when required, demonstrates this fact, or (b) provides a taxpayer identification number, certifies as to no loss of exemption from backup withholding and otherwise complies with the applicable requirements of the backup withholding rules. A U.S. shareholder who does not provide Lexington Trust with its correct taxpayer identification number also may be subject to penalties imposed by the IRS. Amounts withheld as backup withholding will be creditable against the shareholder’s income tax liability if proper documentation is supplied. In addition, Lexington Trust may be required to withhold a portion of capital gain distributions made to any shareholders who fail to certify their non-foreign status to us.

     Non-U.S. Shareholders.

     Generally, Lexington Trust must report annually to the IRS the amount of dividends paid to a non-U.S. shareholder, such holder’s name and address, and the amount of tax withheld, if any. A similar report is sent to the non-U.S. shareholder. Pursuant to tax treaties or other agreements, the IRS may make its reports available to tax authorities in the non-U.S. shareholder’s country of residence. Payments of dividends or of proceeds from the disposition of stock made to a non-U.S. shareholder may be subject to information reporting and backup withholding unless such holder establishes an exemption, for example, by properly certifying its non-United States status on an IRS Form W-8BEN or another appropriate version of IRS Form W-8. Notwithstanding the foregoing, backup withholding and information reporting may apply if either Lexington Trust has or its paying agent has actual knowledge, or reason to know, that a non-U.S. shareholder is a United States person.

     Backup withholding is not an additional tax. Rather, the United States income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund or credit may be obtained, provided that the required information is furnished to the IRS.

     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth the number of units held as of November 24, 2008 by each person that, to the Partnership’s knowledge, beneficially owns more than 5% of the total number of MLP Units. No officer or trustee of Lexington Trust or the General Partner owns any MLP Units.

						Percent of
Name and Address of Beneficial Owner		Number of Units				Total Units
Lexington Realty Trust (1)			65,633,979				91.1	%

     The following table indicates, as of November 24, 2008, (a) the number of Common Shares beneficially owned by each person known by Lexington Trust to own in excess of five percent of the outstanding Common Shares, and (b) the percentage such shares represent of the total outstanding Common Shares. All shares were owned directly on such date with sole voting and investment power unless otherwise indicated, calculated as set forth in footnotes 1 and 2 to the table.

		Beneficial Ownership of
Name of Beneficial Owner		Common Shares (1)				Percentage of Class (2)
Vornado Realty Trust (3)			16,149,592	(3)			17.19	%
Barclays Global Investors (Deutschland) AG (4)			4,786,072	(3)			5.09	%

     The following table indicates, as of November 24, 2008, (a) the number of Common Shares beneficially owned by each trustee and each executive officer of Lexington Trust, and by all trustees and executive officers of Lexington Trust as a group, and (b) the percentage such shares represent of the total outstanding Common Shares. All shares were owned directly on such date with sole voting and investment power unless otherwise indicated, calculated as set forth in footnotes 1 and 2 to the table. The address for each trustee and executive officer listed below is c/o Lexington Realty Trust, One Penn Plaza, Suite 4015, New York, NY 10119-4015.

		Beneficial Ownership of
Name of Beneficial Owner		Shares (1)				Percentage of Class (2)
E. Robert Roskind			2,407,427	(3)			2.52	%
Richard J. Rouse			512,753	(4)			*
T. Wilson Eglin			470,117	(5)			*
Patrick Carroll			294,676	(6)			*
Paul R. Wood			31,245	(7)			*
Clifford Broser			9,526				*
Geoffrey Dohrmann			32,544				*
Harold First			7,463				*
Richard Frary			18,762				*
Carl D. Glickman			202,410				*
James Grosfeld			25,924				*
Kevin W. Lynch			34,987				*
All trustees and executive officers as a group (12 persons)			4,047,834				4.24	%

SECTION 16 COMPLIANCE

     Based solely upon a review of the filings furnished to your Partnership pursuant to Rule 16a-3(e) promulgated under the Exchange Act and written representations from its executive officers, general partner and persons who own beneficially more than 10% of outstanding units, all filing requirements of Section 16(a) of the Exchange Act were timely complied with through the date hereof.

EXPENSES

     The Partnership and Lexington Trust will bear the cost of preparing, printing, assembling and mailing the proxy card, proxy statement/prospectus and other materials that may be sent to Shareholders in connection with this solicitation.

WHERE YOU CAN FIND MORE INFORMATION

     The Partnership and Lexington Trust file periodic reports, proxy statements and other information with the SEC under the Securities Exchange Act of 1934, as amended. You may read and copy that information at the SEC’s public reference room at the following location:

Public Reference Room
100 F Street, N.E., Room 1580
Washington, D.C. 20549
1-800-732-0330

     You may also obtain copies of this information by mail from the Public Reference Section of the Securities and Exchange Commission, 100 F Street, N.E., Room 1580, Washington, D.C. 20549, at prescribed rates. Please call the SEC at 1-800-732-0330 for information on the operation of the public reference room.

     The SEC also maintains an Internet world wide website that contains periodic reports, proxy statements and other information about issuers, including the Partnership and Lexington Trust, which file electronically with the SEC. The address of that site is http://www.sec.gov.

     In addition, Lexington Trust’s and the Partnership’s SEC filings are available to the public on Lexington Trust’s website, www.lxp.com. Information contained on Lexington Trust’s website or the website of any other person is not incorporated by reference into this proxy statement/prospectus, and you should not consider information contained on those websites as part of this proxy statement/prospectus.

     The following documents were previously filed or furnished with the SEC and are annexed to, and included in this proxy statement/prospectus (except for certain furnished portions). These documents contain important information about the Partnership and the Partnership’s financial condition and Lexington Trust and its financial condition.

Description		Period		Annex Page Number
Lexington Trust Filings (File No. 1-12386):
Annual Report on Form 10-K		Year ended December 31, 2007,		B-1
Quarterly Reports on Form 10-Q		Quarter ended September 30, 2008		B-127
Current Reports on Form 8-K		June 25, 2008		B-166
		September 30, 2008		B-181
Definitive Proxy Statement on Schedule 14A		May 20, 2008		B-246
The LXP Declaration		—		B-293
The LXP Bylaws		—		B-344
Partnership Filings (File No. 0-50268):
Annual Report on Form 10-K		Year ended December 31, 2007,		C-1
Quarterly Reports on Form 10-Q		Quarter ended September 30, 2008		C-99
The Partnership Agreement		—		C-136
Description of Partnership Property		Quarter ended September 30, 2008		C-179

     The Partnership and Lexington Trust will provide you with copies of any filings with the SEC relating to the Partnership and Lexington Trust, without charge, if you request them in writing or by telephone from:

Lexington Realty Trust
One Penn Plaza, Suite 4015
New York, New York 10119-4015
Attention: Investor Relations
Telephone: (212) 692-7200

     If you would like to request documents, please do so by December 22, 2008, in order to receive them before the anticipated date for taking action with respect to the MLP merger.

     Lexington Trust has supplied all information contained in or incorporated by reference in this proxy statement/prospectus relating to Lexington Trust, and the Partnership has supplied all information contained in this proxy statement/prospectus relating to the Partnership.

LEGAL MATTERS

     The validity of the Common Shares to be issued in the MLP merger will be opined upon for Lexington Trust by Venable LLP. Paul, Hastings, Janofsky & Walker LLP will deliver its opinion to Lexington Trust as to certain federal income tax matters.

EXPERTS

     The consolidated financial statements and related financial statement schedule of Lexington Realty Trust and subsidiaries included in Lexington Trust’s Annual Report on Form 10-K as of December 31, 2007 and 2006, and for each of the years in the three-year period ended December 31, 2007, and Management’s Annual Report on Internal Controls over Financial Reporting as of December 31, 2007, have been included herein and in the registration statement in reliance upon the reports of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

     The consolidated financial statements and related financial statement schedule of The Lexington Master Limited Partnership and subsidiaries included in the Partnership’s Annual Report on Form 10-K as of December 31, 2007 and for the year then ended, have been included herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

     The consolidated financial statements of The Lexington Master Limited Partnership as of December 31, 2006 and for the years ended December 31, 2006 and 2005 and related financial statement schedule included in this proxy statement/prospectus as part of Annex C and in the registration statement have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein. Such consolidated financial statements and financial statement schedule have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

SUBMISSION OF LIMITED PARTNER PROPOSALS

     The Partnership does not hold annual meetings of limited partners. Management is not aware of any other matters to be brought before the special meeting.

WARNING ABOUT FORWARD LOOKING STATEMENTS

     Lexington Trust and the Partnership have made forward-looking statements in this proxy statement/prospectus and in the documents annexed to this proxy statement/prospectus, which are subject to risks and uncertainties. These statements are based on the beliefs and assumptions of Lexington Trust and the Partnership, as the case may be, and on the information currently available to them.

     When used or referred to in this proxy statement/prospectus or the documents annexed to this proxy statement/prospectus, these forward-looking statements may be preceded by, followed by or otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “projects” or similar expressions, or statements that certain events or conditions “will” or “may” occur. Forward-looking statements in this joint proxy statement/prospectus also include:

	•		statements relating to the anticipated cost savings expected to result from the MLP merger;
	•		statements regarding other perceived benefits expected to result from the MLP merger;
	•		statements with respect to various actions to be taken or requirements to be met in connection with completing the MLP merger; and
	•		statements relating to revenue, income and operations of the combined company after the MLP merger is completed.

     These forward-looking statements are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The following factors, among others, including those discussed in the section of this joint proxy statement/prospectus entitled “Risk Factors,” could cause actual results to differ materially from those described in the forward-looking statements:

	•		cost savings expected from the MLP merger may not be fully realized;
	•		revenue of the combined company following the MLP merger may be lower than expected;
	•		general economic conditions, either internationally or nationally or in the jurisdictions in which Lexington Trust or the Partnership are doing business, may be less favorable than expected;
	•		legislative or regulatory changes, including changes in environmental regulation, may adversely affect the businesses in which Lexington Trust and the Partnership are engaged;
	•		there may be environmental risks and liability under federal, state and foreign environmental laws and regulations; and
	•		changes may occur in the securities or capital markets.

     Except for its ongoing obligations to disclose material information as required by the federal securities laws, neither Lexington Trust nor the Partnership has any intention or obligation to update these forward-looking statements after it distributes this proxy statement/prospectus.

WHAT INFORMATION YOU SHOULD RELY ON

     No person has been authorized to give any information or to make any representation that differs from, or adds to, the information discussed in this proxy statement/prospectus or in the annexes attached hereto which are specifically incorporated into this proxy statement/prospectus. Therefore, if anyone gives you different or additional information, you should not rely on it.

     This proxy statement/prospectus is dated      , 2008. The information contained in this proxy statement/prospectus speaks only as of its date unless the information specifically indicates that another date applies. This proxy statement/prospectus does not constitute an offer to exchange or sell, or a solicitation of an offer to exchange or purchase, Common Shares or to ask for proxies, to or from any person to whom it is unlawful to direct these activities.

LEXINGTON REALTY TRUST
INDEX TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

		Page
Introduction			F-2
Unaudited Pro Forma Condensed Consolidated Balance Sheet at September 30, 2008			F-3
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet at September 30, 2008			F-5
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2007			F-6
Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2007			F-7
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the nine months ended September 30, 2008			F-8
Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations for the nine months ended September 30, 2008			F-9

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

     The unaudited pro forma condensed consolidated financial statements were prepared in accordance with Article 11 of SEC Regulation S-X to reflect the MLP merger. The MLP merger will be accounted for as a redemption of the minority interest’s MLP Units in the MLP merger using the carrying value of the MLP Units. The Partnership is currently consolidated into Lexington Trust on Lexington Trust’s stepped-up basis from its acquisition of the Partnership in December 2006 in the merger of Newkirk Realty Trust, Inc. with and into Lexington Trust. The Partnership’s historical financial statements, while presented in Annex C for informational purposes, are on a different (historical) basis.

     The unaudited pro forma condensed consolidated balance sheet at September 30, 2008 has been prepared to reflect the MLP merger as if the MLP merger occurred on September 30, 2008. The unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2007 and the nine months ended September 30, 2008 have been prepared assuming the MLP merger occurred on January 1, 2007. The adjustments made in the pro forma condensed consolidated balance sheet have been made to reflect the MLP merger. The adjustments made to the pro forma condensed consolidated statements of operations have been made to reflect the effect of the MLP merger. The following unaudited pro forma condensed consolidated statements of operations do not purport to represent what Lexington Trust’s results of operations would actually have been if the MLP merger had in fact occurred as of January 1, 2007 or to project Lexington Trust’s results of operations for any future date or period.

     The pro forma adjustments are based on available information and on certain assumptions as set forth in the notes to the pro forma condensed consolidated financial statements that we believe are reasonable in the circumstances. The pro forma condensed consolidated financial statements and accompanying notes should be read in conjunction with the historical financial statements and related notes of Lexington Trust and the Partnership, which are each annexed to this joint proxy statement/prospectus, and other documents filed by Lexington and the Partnership with the SEC from time to time. See “Where You Can Find More Information.”

     In the opinion of Lexington Trust, all significant adjustments necessary to reflect the effects of the MLP merger that can be factually supported within the SEC regulations covering the preparation of unaudited pro forma financial statements have been made. The pro forma adjustments as presented are based on estimates and certain information that is currently available to management. No estimated overhead savings relating to the MLP merger are reflected in the unaudited pro forma condensed consolidated statements of operations.

Lexington Realty Trust
Unaudited Pro Forma Condensed Consolidated Balance Sheet
September 30, 2008
(dollars in thousands)

		Lexington				Pro Forma
		Trust				Merger				Pro Forma
		(historical)				Adjustments				Adjusted
Assets
Real estate at cost, net		$	3,396,790			$	—			$	3,396,790
Properties held for sale – discontinued operations			8,408				—				8,408
Intangible assets, net			375,212				—				375,212
Cash and cash equivalents			108,039				—				108,039
Investment in non-consolidated entities			205,021				—				205,021
Deferred expenses, net			37,329				—				37,329
Notes receivable			68,631				—				68,631
Restricted cash			27,481				—				27,481
Rent receivable – current			16,630				—				16,630
Rent receivable – deferred			16,967				—				16,967
Other assets			33,824				—				33,824
Total assets		$	4,294,332			$	—			$	4,294,332

See accompanying notes to unaudited pro forma condensed consolidated balance sheet.

Lexington Realty Trust
Unaudited Pro Forma Condensed Consolidated Balance Sheet (continued)
September 30, 2008
(dollars in thousands)

		Lexington				Pro Forma
		Trust				Merger				Pro Forma
		(historical)				Adjustments				Adjusted
Liabilities and Shareholders’ Equity
Mortgages and notes payable		$	2,052,955			$	—			$	2,052,955
Exchangeable notes payable			299,500				—				299,500
Trust preferred securities			129,120				—				129,120
Contract rights payable			14,435				—				14,435
Dividends payable			28,297				—				28,297
Liabilities — discontinued operations			902				—				902
Accounts payable and other liabilities			33,974				—				33,974
Accrued interest payable			10,822				—				10,822
Deferred revenue – below market leases, net			155,134				—				155,134
Prepaid rent			20,352				—				20,352
Total liabilities			2,745,491				—				2,745,491
Minority interests			624,839				(529,092	) (B)			95,747
Shareholders’ equity (C)			924,002				529,092	(A)			1,453,094
Total liabilities and shareholders’ equity		$	4,294,332			$	—			$	4,294,332

See accompanying notes to unaudited pro forma condensed consolidated balance sheet.

Lexington Realty Trust
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet
September 30, 2008
(dollars in thousands, except share data)

In the proposed merger, each holder of a MLP Unit will receive a Common Share of Lexington Trust for each MLP Unit that the unitholder owns immediately prior to the effective date of the MLP merger. Lexington Trust will exchange cash in lieu of any partial shares resulting from the MLP merger. For purposes of the unaudited pro forma condensed consolidated balance sheet, it is assumed that no cash is paid for fractional shares and there are no issuance costs, as they are deemed immaterial.

(A)		Shareholders’ equity
		Minority interest related to MLP Units – book value		$	529,092
(B)		Minority interests
		Minority interest related to MLP Units – book value		$	(529,092	)
(C)		Common Shares issued and outstanding

Lexington Trust		Pro Forma Merger				Pro Forma
(historical)		Adjustments				Adjusted
65,666,569			34,043,454				99,710,023

     The pro forma merger adjustment amount of 34,043,454 represents the Partnership’s minority interest units outstanding as of September 30, 2008. Subsequent to September 30, 2008, and prior to the date of this proxy statement/prospectus, 27,650,188 of those MLP Units were redeemed by the holders for Common Shares.

Lexington Realty Trust
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Year ended December 31, 2007
(dollars in thousands, except share and per share data)

		Lexington				Pro Forma
		Trust				Merger				Pro Forma
		(historical)				Adjustments				Adjusted
Gross revenues:
Rental		$	385,898			$	—			$	385,898
Advisory and incentive fees			13,567				—				13,567
Tenant reimbursements			32,282				—				32,282
Total gross revenues			431,747				—				431,747
Expenses applicable to revenues:
Depreciation and amortization			(236,044	)			—				(236,044	)
Property operating			(61,095	)			—				(61,095	)
General and administrative			(39,389	)			—				(39,389	)
Impairment charges			(15,500	)			—				(15,500	)
Non-operating income			10,726				—				10,726
Interest and amortization expense			(163,628	)			—				(163,628	)
Debt satisfaction charges, net			(1,209	)			—				(1,209	)
Loss before provision for income taxes, minority interests, equity in earnings of non-consolidated entities, gains on sale of properties-affiliates and discontinued operations			(74,392	)			—				(74,392	)
Provision for income taxes			(3,374	)			—				(3,374	)
Minority interests			2,652				(2,593	) (A)			59
Equity in earnings of non-consolidated entities			46,467				—				46,467
Gains on sale of properties-affiliates			17,864				—				17,864
Loss from continuing operations		$	(10,783	)		$	(2,593	)		$	(13,376	)
Loss from continuing operations per common share — basic		$	(0.58	)		$	—			$	(0.40	)
Loss from continuing operations per common share — diluted		$	(0.58	)		$	—			$	(0.40	)
Weighted average shares outstanding — basic			64,910,123				34,530,028	(B)			99,440,151
Weighted average shares outstanding — diluted			64,910,123				34,530,028	(B)			99,440,151