CapLease Announces Second Quarter 2013 Results

  CapLease Announces Second Quarter 2013 Results

Business Wire

NEW YORK -- August 6, 2013

CapLease, Inc. (NYSE: LSE), a real estate investment trust (REIT) focused on
owning and managing single-tenant commercial real estate properties, today
announced its results for the second quarter ended June 30, 2013. Net loss to
common stockholders for the second quarter 2013 was $(2.8) million, and funds
from operations, or FFO, as adjusted for comparability was $12.4 million.

Second Quarter 2013 Highlights:

  *Merger Agreement with American Realty Capital Properties, Inc.

       *CapLease Common Stockholders to Receive $8.50 per Share in Cash

       *CapLease Preferred Stockholders to Receive $25.00 per Share in Cash

Paul McDowell, Chairman and Chief Executive Officer, stated, “The clear
highlight for the second quarter is the announced merger transaction with
American Realty Capital Properties, Inc. (“ARCP”). The transaction provides
immediate, certain and compelling value for our common stockholders. The
combination of CapLease’s primarily investment grade portfolio and team of
experienced net lease experts with ARCP will create a stronger and more
diversified company that will be well positioned to grow even further in the
years ahead. As we move to complete this transaction, the CapLease team
continues to be focused on pursuing acquisition opportunities in its deal
pipeline.”

Second Quarter 2013 Results:

                                                     For the Three Months

                                                     Ended June 30,
(Amounts in thousands, except per share amounts)     2013      2012     
Funds from operations                                $ 9,815   $ 18,566 
Per Share                                            $ 0.11    $ 0.28   
Items that affect comparability (income) expense:
Gain on derivatives                                    (5     )   –
Gain on extinguishment of debt, net                    –          (9,000 )
Property acquisition costs                             208        300
Merger related costs                                  2,421    –      
Funds from operations, as adjusted for comparability $ 12,439  $ 9,866  
Per Share                                            $ 0.14    $ 0.15   

For the quarter ended June 30, 2013, the Company grew total revenues 14% to
$45.1 million. The increase in total revenues reflects growth in the owned
property portfolio. Rental revenue was up 11% for the 2013 period, reflecting
the new properties acquired.

FFO adjusted for items that affect comparability was $12.4 million, or $0.14
per share, for the second quarter of 2013, compared to $9.9 million, or $0.15
per share, in the 2012 period. Strong growth in the owned property portfolio
largely offset the impact of rent roll-downs at two warehouses properties in
Breinigsville, PA and Lathrop, CA and downtime and property expenses
associated with the Fort Wayne, IN property.

Net loss to common stockholders for the second quarter of 2013 was $(2.8)
million, or $(0.03) per share, compared to net loss of $(8.9) million, or
$(0.13) per share, in the comparable period in 2012. Second quarter 2012 net
loss to common stockholders includes net non-recurring losses of $6.2 million,
including the loss of $15.2 million on the sale of a property offset in part
by $9.0 million of gain related to the repurchase of the certain mortgage debt
at a discount.

Pending Merger:

During the second quarter, the Company entered into a definitive merger
agreement with ARCP. Under the terms of the merger agreement, ARCP will
acquire the Company, and common stockholders of the Company will receive $8.50
in cash for each share they own, plus any dividends declared by our Board
through the merger closing date. The $8.50 per share price represents a
premium to the recent trading price of the common stock, including a 19.7%
premium over the closing price of $7.10 per share on May 24, 2013, the last
trading day prior to the public announcement of the merger agreement, a 20.6%
premium over the 30-day average trading price prior to May 24, 2013, and a
120.8% premium over the 52-week low trading price prior to May 24, 2013. The
Company’s 40-day “go shop” period related to the merger concluded on July 7,
2013 without receipt of an alternative proposal to acquire the Company.

Preferred stockholders of the Company will receive the sum of $25.00 in cash
plus an amount equal to any accrued and unpaid dividends up to but excluding
the closing date, for each share they own. The merger transaction is expected
to close during the third quarter of 2013, although closing is subject to
various conditions, including the approval of the merger by the Company’s
common stockholders.

A special meeting of the Company’s common stockholders will be held at 10:00
a.m., local time, on Tuesday, September 10, 2013, to consider and vote upon
the merger and other related proposals. The close of business on July 12, 2013
has been fixed as the record date for determination of the Company’s common
stockholders entitled to notice of, and to vote at, the special meeting of
common stockholders.

New Property Investments:

During the second quarter, the Company closed on the acquisition of two
previously announced real estate acquisitions for an aggregate purchase price
exceeding $90 million. The Company purchased an approximately 188,000 square
foot Class A office building located in Malvern, PA for a purchase price of
$49.7 million. The property is leased entirely to Teva Pharmaceuticals U.S.A.,
Inc. as its corporate headquarters. The lease, which is scheduled to mature in
October 2022, is guaranteed by the tenant’s Israeli parent company, Teva
Pharmaceuticals Industries Limited, one of the top 10 pharmaceutical companies
in the world. The Israeli parent company is rated A-/A3 by Standard &
Poor’s/Moody’s.

The Company also purchased an approximately 196,000 square foot Class A office
building located in Ann Arbor, MI for a purchase price of $43.9 million. The
property is leased primarily to Con-Way Freight, Inc. as its corporate
headquarters. The Con-Way lease is scheduled to mature in May 2023. Con-Way
Freight, Inc. is a major subsidiary of Con-Way, Inc., an industry leading
transportation, logistics and supply chain management company rated BBB-/Baa3
by Standard & Poor’s/Moody’s.

After substantially completing the Cimarex Energy Co. project in the first
quarter, the Company continued to show strong momentum in its build-to-suit
business during the second quarter. The Company entered into a new over $20
million project during the second quarter. The new 450,000 distribution
warehouse will be located in Columbia, SC, and is being built for one of the
largest private companies in the United States. The 10.5 year lease term will
commence upon substantial completion of the building, which is scheduled for
the first quarter of 2014.

Also during the second quarter, the Company substantially completed the
previously announced Vitamin Shoppe build-to-suit project. The 312,000 square
foot distribution facility located in Ashland, VA was substantially completed
and the tenant commenced paying rent during June 2013. The lease with Vitamin
Shoppe is for 15 years.

At June 30, 2013, the Company’s investment portfolio included $2.0 billion of
primarily single tenant commercial real estate properties. The weighted
average tenant credit rating across the owned property portfolio is A- from
Standard & Poor’s, and the average remaining lease term is approximately seven
years.

The property portfolio comprises 13.1 million square feet and includes a
variety of office, warehouse, retail and other property types. The Company
owns 74 properties in 27 states with 44 different tenants. As of June 30,
2013, the occupancy rate across the owned property portfolio was 91.1%.

New Leases:

During the second quarter, we continued to make steady progress on the
lease-up of vacancies in the portfolio, highlighted by the lease up of the
Fort Wayne, IN property earlier this month.

The Company completed a new lease with The Procter & Gamble Manufacturing
Company for the 764,177 distribution warehouse during August 2013. The lease
is for one year commencing on November 1, 2013, and also includes a tenant
option to extend the term for an additional five years. The annual rental rate
during the one year term is $2.75 per square foot.

During July, the Company entered into a multi-year lease of 19,345 square feet
at the multi-tenant office building at 1299 Farnam Street in Omaha, NE.

Financing Activity:

During the second quarter, the Company expanded the size of its revolving
credit agreement in order to provide it with additional liquidity to continue
to grow the portfolio pending the completion of the merger with ARCP. The
Company increased the borrowing capacity under the revolver to $150 million.
The additional $50 million in borrowing capacity will remain available for a
period of six months until December 21, 2013, but may be extended for an
additional six months upon payment of an extension fee by the Company and the
satisfaction of certain other routine conditions. As of the date hereof, the
Company has total available borrowing capacity of approximately $50 million
under the revolving credit agreement, plus cash on hand of $17 million.

In connection with its acquisition of the Con-Way Freight property described
above, the Company assumed approximately $30 million of non-recourse mortgage
debt during the second quarter. The debt has a coupon of 4.0% and is scheduled
to mature in September 2022.

Capital Activity:

During April 2013, the Company raised over $50 million of net proceeds through
the sale of common stock. The proceeds were used to fund new portfolio
acquisitions and repay maturing mortgage debt.

Six Month Results:

                                                     For the Six Months

                                                     Ended June 30,
(Amounts in thousands, except per share amounts)     2013      2012      
Funds from operations                                $ 20,341  $ 31,140  
Per Share                                            $ 0.25    $ 0.47    
Items that affect comparability (income) expense:
Gain on derivatives                                    (5     )   –
Gain on investments other than real property, net      –          (709    )
Gain on extinguishment of debt, net                    –          (11,012 )
Property acquisition costs                             208        308
Merger related costs                                  2,421    –       
Funds from operations, as adjusted for comparability $ 22,965  $ 19,727  
Per Share                                            $ 0.28    $ 0.30    

For the six months ended June 30, 2013, the Company reported total revenues of
$88.5 million, compared to total revenues of $78.7 million in the comparable
period of 2012. Rental revenue was up 9% for the 2013 period, reflecting the
new properties acquired. FFO adjusted for items that affect comparability was
$23.0 million, or $0.28 per share, compared to $19.7 million, or $0.30 per
share, in the comparable period in 2012.

Net loss to common stockholders for the six months ended June 30, 2013 was
$(4.3) million, or $(0.05) per share, compared to net loss of $(8.4) million,
or $(0.13) per share, in the comparable period in 2012.

Dividends:

During the second quarter of 2013, the Company declared a cash dividend on its
common stock in the amount of $0.0775 per share. The level of CapLease’s
common dividend is determined by the Company’s operating results, economic
conditions, capital requirements, and other operating trends.

The Company also declared a cash dividend of $0.5078125 on its 8.125% Series A
Cumulative Redeemable Preferred Stock, $0.5234375 on its 8.375% Series B
Cumulative Redeemable Preferred Stock, and $0.453125 on its 7.25% Series C
Cumulative Redeemable Preferred Stock.

Under the merger agreement with ARCP, the Company is permitted to continue to
pay dividends on its outstanding stock through the merger closing date,
provided that the dividend on its common stock may not exceed an annual rate
of $0.31 per share.

Guidance:

Given the pending merger transaction with ARCP, the Company will no longer
provide 2013 earnings guidance.

Conference Call:

Given the pending merger transaction with ARCP, the Company will not be
conducting an earnings call regarding today’s earnings announcement.

Non-GAAP Financial Measures:

Funds from operations (FFO) and cash available for distribution (CAD) are
non-GAAP financial measures. The Company believes FFO and CAD are useful
additional measures of the Company’s financial performance, as these measures
are commonly used by the investment community in evaluating the performance of
an equity REIT. The Company also believes that these measures are useful
because they adjust for a variety of non-cash items (like depreciation and
amortization, in the case of FFO, and depreciation and amortization,
stock-based compensation and straight-line rent adjustments, in the case of
CAD). FFO and CAD should not be considered as alternatives to net income or
earnings per share determined in accordance with GAAP as an indicator of the
Company’s operating performance or as an alternative to cash flow as a measure
of liquidity. Since all companies and analysts do not calculate FFO and CAD in
a similar fashion, the Company’s calculation of FFO and CAD may not be
comparable to similarly titled measures reported by other companies.

The Company calculates FFO consistent with the NAREIT definition, or net
income (computed in accordance with GAAP), excluding gains (or losses) from
sales of property and impairment losses on depreciable real estate, plus real
estate-related depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. Real estate-related
depreciation includes amortization of capitalized leasing expenses, tenant
allowances or improvements, and excludes amortization of deferred financing
costs.

The Company calculates CAD by further adjusting FFO to exclude straight-line
rent adjustments, stock-based compensation, above or below market rent
amortization and non-cash interest income and expense, and to include routine
capital expenditures on investments in real property and capitalized interest
expense (if any). The Company will also adjust its CAD computations to exclude
certain non-cash or unusual items. For example, CAD for the 2012 period has
been adjusted to exclude non-recurring gains on investments and gain on
extinguishment of debt.

The Company also discloses FFO as adjusted for items that affect
comparability, as it believes this measure is a useful proxy for existing
portfolio performance and, therefore, provides a meaningful presentation of
operating performance. Items that affect comparability currently include gain
or loss on derivatives, gain or loss on debt extinguishment, property
acquisition costs and merger related costs. FFO as adjusted for items that
affect comparability should not be considered as an alternative to net income
or earnings per share determined in accordance with GAAP as an indicator of
our operating performance or as an alternative to cash flow as a measure of
liquidity. It also differs from the NAREIT’s definition of FFO and may not be
comparable to similarly titled measures reported by other companies.

The Company’s leverage ratios, which are among the financial metrics used by
management to review and analyze CapLease’s debt, are also non-GAAP financial
measures. Leverage ratios are a widely used financial measure by the real
estate investment community, especially for REITs. We measure our leverage
ratios by dividing total debt by total assets, as adjusted. We measure total
assets, as adjusted, at historical cost before depreciation and amortization
on owned properties. Therefore, our leverage ratios do not account for any
fluctuations in value, up or down, that may have occurred since we acquired
our owned properties. Other companies including other REITs may compute
leverage ratios in a different manner and, therefore, our leverage ratios may
not be comparable to similarly titled measures reported by other companies.

Forward-Looking and Cautionary Statements:

This press release contains projections of future results and other
forward-looking statements that involve a number of trends, risks and
uncertainties and are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. The following important
factors could cause actual results to differ materially from those projected
in such forward-looking statements.

  *the possibility that various conditions precedent to the consummation of
    the pending merger transaction with ARCP will not be satisfied or waived;
  *the occurrence of any effect, event, development, change or other
    circumstances that could result in the termination of the merger
    agreement;
  *the inability to complete the proposed merger due to the failure to obtain
    stockholder approval for the merger or the failure to satisfy other
    conditions to completion of the merger;
  *risks related to disruption of management’s attention from the Company’s
    ongoing business operations due to the pending merger;
  *risks that the proposed transaction disrupts the Company’s current plans
    and operations, including potential difficulties in employee retention;
  *the effect of the announcement of the merger on the Company’s
    relationships with its customers, developers, employees, tenants and
    lenders, and on the Company’s operating results and business generally;
  *the outcome of any legal proceedings that have been, or may be, instituted
    against us and others relating to the merger, the merger agreement or the
    transactions contemplated by the merger agreement;
  *risks to consummation of the merger, including the risk that the merger
    will not be consummated within the expected time period or at all;
  *unanticipated difficulties and/or expenditures relating to the merger or
    the failure of the merger to close for any other reason; and
  *restrictions on our ability to operate the business, including to add new
    assets and raise capital, imposed by the merger agreement.

Developments in any of those areas could cause actual results to differ
materially from results that have been or may be projected. Additional factors
that may cause results to differ materially from those described in the
forward-looking statements are set forth in the Company’s most recent Annual
Report on Form 10-K, including the section entitled “Risk Factors,” and the
Company’s other periodic filings with the Securities and Exchange Commission
(the “SEC”). Copies of these documents are available on our web site at
www.caplease.com and on the SEC’s website at www.sec.gov. We caution that the
foregoing list of important factors is not complete and we do not undertake to
update any forward-looking statement.

Additional Information about the Proposed Merger and Where to Find It

In connection with the proposed merger, the Company filed a definitive proxy
statement on Schedule 14A with the SEC on July 31, 2013. THE COMPANY’S COMMON
STOCKHOLDERS ARE URGED TO CAREFULLY READ THE PROXY STATEMENT AND THE OTHER
RELEVANT MATERIALS BEFORE MAKING ANY VOTING OR INVESTMENT DECISION WITH
RESPECT TO THE PROPOSED MERGER BECAUSE THESE MATERIALS CONTAIN IMPORTANT
INFORMATION ABOUT THE COMPANY, THE PROPOSED MERGER AND RELATED MATTERS. The
proxy statement and other relevant materials, and any and all documents filed
by the Company with the SEC may be obtained free of charge at the SEC’s
website at www.sec.gov. In addition, investors may obtain a free copy of the
Company’s filings with the SEC from the Company’s website at www.caplease.com
under Investors—SEC Filings—Filings or by directing a request to: CapLease,
Inc., 1065 Avenue of the Americas, New York, New York 10018, Attn: Investor
Relations, (212)217-6300.

Participants in Solicitation

This press release is neither a solicitation of proxy, an offer to purchase
nor a solicitation of an offer to sell shares of the Company. The Company, its
executive officers and directors may be deemed to be participants in the
solicitation of proxies from the common stockholders of the Company in
connection with the proposed merger. Information about those executive
officers and directors of the Company and their ownership of the Company’s
common stock is set forth in the Company’s proxy statement for its 2013 annual
meeting of stockholders, which was filed with the SEC on April 19, 2013, and
its Annual Report on Form 10-K for the year ended December 31, 2012, which was
filed with the SEC on February 21, 2013. These documents may be obtained free
of charge at the SEC’s website at www.sec.gov, on the Company’s website at
www.caplease.com under Investors—SEC Filings—Filings and from the Company by
directing a request to: CapLease, Inc., 1065 Avenue of the Americas, New York,
New York 10018, Attn: Investor Relations, (212)217-6300. Additional
information regarding the interests of participants in the solicitation of
proxies in connection with the merger was included in the definitive proxy
statement on Schedule 14A, which the Company filed with the SEC on July 31,
2013, and may be updated or supplemented in other documents that the Company
intends to file with the SEC.

About the Company:

CapLease, Inc. is a real estate investment trust, or REIT, that primarily owns
and manages a diversified portfolio of single tenant commercial real estate
properties subject to long-term leases to high credit quality tenants.

CapLease, Inc. and Subsidiaries

Consolidated Statements of Operations

For the three and six months ended June 30, 2013 and June 30, 2012
                             For the Three Months      For the Six Months
                                                     
                             Ended June 30,            Ended June 30,
(Amounts in thousands,       2013       2012        2013       2012      
except per share amounts)
Revenues:
Rental revenue               $ 37,237    $ 33,697      $ 72,536    $ 66,678
Interest income from loans     1,481       2,091         3,392       4,106
and securities
Tenant reimbursements          6,249       3,556         12,239      7,387
Other revenue                 159       352        311       511     
Total revenues                45,126    39,696     88,478    78,682  
Expenses:
Interest expense               16,210      16,965        32,507      33,943
Property expenses              9,266       6,615         18,340      13,032
Gain on derivatives            (5      )   –             (5      )   –
General and administrative     3,170       2,863         6,313       5,851
expenses
General and administrative
expenses-stock based           995         907           1,770       1,611
compensation
Merger-related costs           2,421       –             2,421       –
Depreciation and
amortization expense on real   12,607      11,898        24,633      23,712
property
Other expenses                –         16         –         32      
Total expenses                44,664    39,264     85,979    78,181  
Other gains:
Gain on investment             –           –             –           709
Gain on extinguishment of     –         9,000      –         11,012  
debt, net
Total other gains             –         9,000      –         11,721  
Income from continuing         462         9,432         2,499       12,222
operations
Discontinued operations:
Loss from discontinued         –           (634    )     –           (1,366  )
operations
Loss on investment            –         (15,229 )   –         (15,229 )
Total discontinued            –         (15,863 )   –         (16,595 )
operations
Net income (loss) before
non-controlling interest in    462         (6,431  )     2,499       (4,373  )
consolidated subsidiaries
Non-controlling interest in   5         18         8         17      
consolidated subsidiaries
Net income (loss)              467         (6,413  )     2,507       (4,356  )
Dividends allocable to        (3,254  )  (2,453  )   (6,791  )  (4,081  )
preferred shares
Net loss allocable to common $ (2,787  ) $ (8,866  )  $ (4,284  ) $ (8,437  )
stockholders
                                                                   
Income (loss) per common
share, basic:
Income (loss) from           $ (0.03   ) $ 0.11        $ (0.05   ) $ 0.12
continuing operations
Loss from discontinued        –         (0.24   )   –         (0.25   )
operations
Net loss per common share,   $ (0.03   ) $ (0.13   )  $ (0.05   ) $ (0.13   )
basic
Weighted average common       87,975    66,767     82,111    66,540  
shares outstanding, basic
Income (loss) per common
share, diluted:
Income (loss) from           $ (0.03   ) $ 0.11        $ (0.05   ) $ 0.12
continuing operations
Loss from discontinued        –         (0.24   )   –         (0.25   )
operations
Net loss per common share,   $ (0.03   ) $ (0.13   )  $ (0.05   ) $ (0.13   )
diluted
Weighted average common       88,104    66,767     82,240    66,540  
shares outstanding, diluted
Dividends declared per       $ 0.0775    $ 0.065       $ 0.155     $ 0.130
common share
Dividends declared per       $ 0.50781   $ 0.50781     $ 1.01563   $ 1.01563
preferred A share
Dividends declared per       $ 0.52344   $ 0.50017     $ 1.04688   $ 0.50017
preferred B share
Dividends declared per       $ 0.45313   $ –           $ 0.85590   $ –
preferred C share

CapLease, Inc. and Subsidiaries

Consolidated Balance Sheets

As of June 30, 2013 and December 31, 2012
                                                   As Of         As Of
(Amounts in thousands, except share and per share
amounts)                                           June 30,      December 31,

                                                   2013          2012
Assets
Real estate investments, net                       $ 1,628,482   $ 1,541,416
Loans held for investment, net                       24,061        26,972
Commercial mortgage-backed securities                58,859        62,318
Cash and cash equivalents                            24,618        30,177
Other assets                                        86,000      89,560    
Total Assets                                       $ 1,822,020  $ 1,750,443 
Liabilities and Equity
Mortgages on real estate investments               $ 991,483     $ 1,012,075
Credit agreements                                    99,457        67,655
Secured term loan                                    63,045        72,417
Convertible senior notes                             19,210        19,210
Other long-term debt                                30,930      30,930    
Total Debt Obligations                              1,204,125   1,202,287 
Intangible liabilities on real estate investments    32,887        33,032
Accounts payable and other liabilities               27,113        27,926
Dividends and distributions payable                 10,138      8,826     
Total Liabilities                                   1,274,263   1,272,071 
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value, 100,000,000
shares authorized:                                              
Series A cumulative redeemable preferred,
liquidation preference $25.00 per share, 1,832,000
and 3,447,182 shares issued and outstanding,       39,363        79,776
respectively
Series B cumulative redeemable preferred,
liquidation preference $25.00 per share, 2,941,073   71,665        71,665
shares issued and outstanding
Series C cumulative redeemable preferred,
liquidation preference $25.00 per share, 1,700,000   39,689        –
and 0 shares issued and outstanding, respectively
Common stock, $0.01 par value, 500,000,000 shares
authorized, 88,845,604 and 73,658,045 shares         888           737
issued and outstanding, respectively
Additional paid in capital                           395,445       325,824
Accumulated other comprehensive loss                (297      )  (666      )
Total Stockholders' Equity                          546,753     477,336   
Non-controlling interest in consolidated            1,004       1,036     
subsidiaries
Total Equity                                        547,757     478,372   
Total Liabilities and Equity                       $ 1,822,020  $ 1,750,443 

CapLease, Inc. and Subsidiaries

Reconciliation of Net Income
(Loss) to Funds from Operations
and Cash Available for                                
Distribution (unaudited)

For the three and six months
ended June 30, 2013 and June
30, 2012
                                For the Three Months    For the Six Months

                                Ended June 30,          Ended June 30,
(Amounts in thousands, except   2013      2012       2013      2012      
per share amounts)
Net income (loss) allocable to  $ (2,787 ) $ (8,866 )   $ (4,284 ) $ (8,437  )
common stockholders
Add (deduct):
Non-controlling interest in       (5     )   (18    )     (8     )   (17     )
consolidated subsidiaries
Depreciation and amortization     12,607     11,898       24,633     23,712
expense on real property
Depreciation and amortization
expense on discontinued           –          323          –          653
operations
Loss on property sale on         –        15,229    –        15,229  
discontinued operations
Funds from operations            9,815    18,566    20,341   31,140  
Add (deduct):
Straight-lining of rents          (1,383 )   (5,046 )     1,738      8,051
General and administrative
expenses-stock based              995        907          1,770      1,611
compensation
Amortization of above and below   (434   )   (199   )     (903   )   (385    )
market leases
Non-cash interest income and      298        419          253        721
expenses
Routine capital expenditures on   (296   )   (109   )     (567   )   (530    )
real estate investments
Gain on investments other than    –          –            –          (709    )
real property
Gain on extinguishment of debt,  –        (9,000 )   –        (11,012 )
net
Cash available for distribution $ 8,995   $ 5,538    $ 22,632  $ 28,887  
                                                                   
Weighted average number of
common shares outstanding,        88,104     66,767       82,240     66,540
diluted
Weighted average number of OP    156      156       156      156     
units outstanding
Weighted average number of
common shares and OP units       88,260   66,923    82,396   66,696  
outstanding, diluted
Net loss per common share,      $ (0.03  ) $ (0.13  )   $ (0.05  ) $ (0.13   )
basic and diluted
Funds from operations per share $ 0.11     $ 0.28       $ 0.25     $ 0.47
Cash available for distribution $ 0.10     $ 0.08       $ 0.27     $ 0.43
per share

CapLease, Inc. and Subsidiaries

Overall Company Leverage (unaudited)

As of June 30, 2013 and December 31, 2012
                                                Jun 30, 2013   Dec 31, 2012
Debt                                             Unaudited     
   Mortgages on real estate investments          $ 991,483       $ 1,012,075
   Credit agreements                               99,457          67,655
   Secured term loan                               63,045          72,417
   Convertible senior notes                        19,210          19,210
  Other long-term debt                           30,930       30,930    
Total Debt                                       $ 1,204,125   $ 1,202,287 
                                                                 
Assets
   Total assets                                  $ 1,822,020     $ 1,750,443
   Accumulated depreciation and amortization on    322,983         297,675
   owned properties
   Intangible liabilities on real estate           (32,887   )     (33,032   )
   investments
   Prepaid expenses and deposits                   (1,418    )     (1,798    )
   Accrued rental income                           (33,405   )     (35,144   )
   Debt issuance costs, net                        (5,474    )     (5,775    )
  Other                                          (787      )   (398      )
Total Assets, as adjusted                        $ 2,071,033   $ 1,971,971 
                                                                 
Leverage (Total Debt/Total Assets, as adjusted)    58        %     61        %

CapLease, Inc. and Subsidiaries

Leverage by Asset Type (unaudited)

As of June 30, 2013
                                                                           
(in           Mortgage     Secured     Credit                     Investment
thousands)    Debt         Term        Agreement   Total Debt     (1)            Leverage
                           Loan Debt   Debt
Owned         $ 991,483    $ 12,899    $ 96,277    $ 1,100,659    $ 1,965,462       56  %
Properties
Debt            –            50,146      3,180       53,326         83,477          64  %
Investments

            Represents our carry value for financial reporting purposes before
    (1) depreciation and amortization on owned properties. The carry value
            of our debt investments has been adjusted to exclude a $500
            general loss reserve.

Contact:

Investor Relations/Media Contact:
ICR, LLC
Brad Cohen, 212-217-6393
bcohen@icrinc.com
 
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