LXP Industrial Trust (LXP)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Introduction

Unless stated otherwise or the context otherwise requires, the “Company,” the “Trust,” “LXP,” “we,” “our,” and “us” refer collectively to LXP Industrial Trust and its consolidated subsidiaries. All of the Company's interests in properties are held in, and all property operating activities are conducted, through special purpose entities, which we refer to as property owner subsidiaries or lender subsidiaries and are separate and distinct legal entities, but in some instances are consolidated for financial statement purposes and/or disregarded for income tax purposes. References herein to this “Quarterly Report” are to this Quarterly Report on Form 10-Q for the three and six months ended June 30, 2026. The results of operations contained herein for the three and six months ended June 30, 2026 and 2025 are not necessarily indicative of the results that may be expected for a full year.

When we use the term “REIT,” we mean an entity that has elected to be qualified as a real estate investment trust under the Internal Revenue Code of 1986, as amended (the "Code"). All references to 2026 and 2025 refer to the periods ending June 30, 2026 and 2025, respectively, and our fiscal year ended December 31, 2025.

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

When we use the term “common shares,” we mean our shares of beneficial interest par value $0.0001, classified as common stock. Effective as of 5:00 p.m. ET on November 10, 2025, each outstanding common share automatically reclassified into 1/5th of a common share, which we refer to as the "Reverse Split." All common share amounts are presented on a reclassified basis. When we use the term “Series C Preferred Shares,” we mean our beneficial interest classified as 6.50% Series C Convertible Preferred Stock.

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

When we use “Stabilized Portfolio,” we mean all real estate properties that have achieved 90% occupancy of the property or, if earlier, where it has been one-year from the cessation of major construction activities. Non-stabilized, substantially completed development projects are classified within investments in real estate under construction.

The terms “FFO,” “Adjusted Company FFO,” and “NOI” are defined in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part I, Item 2 of this Quarterly Report.

The following is a discussion and analysis of the unaudited Condensed Consolidated Financial condition and results of operations of LXP Industrial Trust for the three and six months ended June 30, 2026 and 2025, and significant factors that could affect its prospective financial condition and results of operations. This discussion should be read together with the accompanying unaudited Condensed Consolidated Financial Statements of the Company included herein and notes thereto and with the consolidated financial statements and notes thereto included in the Company's most recent Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission, or SEC, on February 12, 2026, which we refer to as the Annual Report. Historical results may not be indicative of future performance.

Forward-Looking Statements. This Quarterly Report, together with other statements and information publicly disseminated by us, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “believes,” “expects,” “intends,” “anticipates,” “estimates,” “projects,” “may,” “plans,” “predicts,” “will,” “will likely result” or similar expressions. Readers should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could materially affect actual results, performances or achievements. In particular, among the factors that could cause actual results, performances or achievements to differ materially from current expectations, strategies or plans include, among others, risks associated with our ability to obtain consummate the Merger (defined below), including obtaining the requisite shareholder approval, and the timing of the closing, including the risks that a condition to closing will not be satisfied within the expected timeframe or at all or that the closing will not occur; the outcome of any legal proceedings that may be instituted against the parties to, and others related to, the Merger Agreement (defined below), including timing and expenses risks; operational risks related to the Merger, including time demands on management, employee retentions and transaction costs that are not contingent on closing; and those risks discussed below in “Management's Discussion and Analysis of Financial Condition and Results of Operations,” and under the headings “Risk Factors” in this Quarterly Report and under

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“Risk Factors” in Part I, Item A and “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Annual Report and other periodic reports filed by the Company with the SEC. Except as required by law, we undertake no obligation to publicly release any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Accordingly, there is no assurance that our expectations will be realized.

Overview

As of June 30, 2026, we had equity ownership interests in approximately 109 consolidated real estate properties, located in 14 states and containing approximately 53.3 million square feet of rentable space, which were approximately 97.4% leased based upon net rentable square feet.

Our portfolio primarily consists of Class A warehouse and distribution real estate investments in our 12 target markets within the Sunbelt and lower Midwest. We expect to grow in these markets by executing on our development pipeline, including through build-to-suits, and opportunistically acquiring facilities in these markets, primarily through tax-deferred exchanges related to capital recycling. The current key drivers to growth in our revenues are leasing our vacant, operating, redevelopment and development properties and mark-to-market of our lease rollover. As we continue to build out our development pipeline on our owned-land parcels, we continue to seek investments in additional land to develop for warehouse and distribution facilities, including through covered land investments where a tenant leases the improvements that will be demolished for a redevelopment of the property. These covered land investments may consist of office assets.

Proposed Merger

On July 19, 2026, the Company, Leopard REIT LLC, a Delaware limited liability company (“Parent”), and Leopard Merger Sub LLC, a Maryland limited liability company and a wholly owned indirect subsidiary of Parent (“Merger Sub” and, together with Parent, the “Parent Parties”), entered into an Agreement and Plan of Merger (the “Merger Agreement”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, the Company will merge with and into Merger Sub, with Merger Sub surviving the merger (the “Surviving Entity” and such merger, the “Merger”). Upon completion of the Merger, the Surviving Entity will be wholly-owned by Parent (other than in respect of the outstanding Series C Preferred shares). The Merger and the other transactions contemplated by the Merger Agreement were unanimously approved and declared advisable by the Company’s Board of Trustees.

Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each common share of the Company issued and outstanding as of immediately prior to the Effective Time (other than certain excluded shares described in the Merger Agreement) will be automatically cancelled and converted into the right to receive an amount in cash equal to $61.20 per share, without interest. At the Effective Time, each 6.50% Series C Preferred share issued and outstanding as of immediately prior to the Effective Time will automatically be cancelled and converted into the right to receive one Surviving Entity Series C preferred unit.

During the period beginning on the date of the Merger Agreement and continuing until August 28, 2026 (the “Go-Shop Period”), the Company has the right to solicit competing proposals subject to the restrictions set forth in the Merger Agreement. If any third party submits a written competing proposal that the Company’s Board of Trustees determines in good faith constitutes or could reasonably be expected to lead to a superior proposal prior to the end of the Go-Shop Period and the Company terminates the Merger Agreement, all in accordance with the provisions of the Merger Agreement, then the termination fee payable by the Company to Parent would be approximately $54.1 million. Additional restrictions on the Company’s ability to solicit or engage on other proposals is set forth in the Merger Agreement.

The Parent Parties have secured committed financing, consisting of a combination of (i) equity financing to be provided affiliates of Parent on the terms and subject to the conditions set forth in an equity commitment letter provided by such affiliates, and (ii) debt financing to be provided by certain lenders on the terms and subject to the conditions set forth in a debt commitment letter, the aggregate proceeds of which will be sufficient for the Parent Parties to pay all amounts the Parent Parties may be obligated to pay pursuant to the Merger Agreement or the Merger.

The consummation of the Merger is subject to certain customary closing conditions, including shareholder approval.

Pursuant to the terms of the Merger Agreement, the Company has agreed to suspend payment of its regular common share quarterly dividend, effective immediately, subject to certain exceptions set forth in the Merger Agreement. The Merger Agreement permits the Company to make regular quarterly dividends on the Series C Preferred shares.

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Second Quarter 2026 Transaction Summary.

The following summarizes our transactions during the three months ended June 30, 2026:

Acquisition Activity.

•Acquired Phoenix covered land investment, for $103.2 million at an initial cash yield of 15.7%. The 37-acre infill industrial redevelopment site is located in Phoenix, Arizona, and is subject to a lease with a remaining lease term of approximately 4.9 years.

Leasing Activity.

•Pre-leased the approximately 1.2 million square foot Phoenix development project securing a five-year lease with 3.5% annual rent escalations and an expected initial annual cash base rent of approximately $9.8 million.

•Completed an additional 2.3 million square feet of new second-generation leases and second-generation lease extensions, increasing base and cash base rents by 43.1% and 26.2%, respectively, excluding leases with fixed-rate renewals.

Development Activity.

•Commenced construction of two industria

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

In this discussion, we have included statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts but instead represent only our beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside our control. These statements may relate to our future plans and objectives, among other things. By identifying these statements for you in this manner, we are alerting you to the possibility that our actual results may differ, possibly materially, from the anticipated results indicated in these forward-looking statements. Important factors that could cause our results to differ, possibly materially, from those indicated in the forward-looking statements include, among others, those discussed above in “Risk Factors” in Part I, Item 1A of this Annual Report and “Cautionary Statements Concerning Forward-Looking Statements” in the beginning of this Annual Report.

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Introduction

The following is a discussion and analysis of the consolidated financial condition and results of operations of LXP Industrial Trust for the years ended December 31, 2025 and 2024, and significant factors that could affect our prospective financial condition and results of operations. This discussion should be read together with our accompanying consolidated financial statements included herein and notes thereto.

Summary of 2025 Transactions

The following summarizes certain of our transactions during 2025.

Leasing Activity.

•Entered into new leases and lease extensions encompassing 4.9 million square feet. The average fixed rent on new and extended leases was $5.99 per square foot, compared to the average fixed rent on these leases before extension of $5.23 per square foot. The weighted-average cost of tenant improvements and lease commissions was $1.22 per square foot for new and extended leases.

•Increased stabilized portfolio occupancy to 97.1%.

Investments.

•Acquired one warehouse facility located in the Atlanta, Georgia market for $30.0 million totaling 0.2 million square feet with a weighted-average lease term of 3.9 years.

•Commenced redevelopment of two warehouse facilities located in the Central Florida and Richmond, Virginia markets totaling 0.6 million square feet.

Capital Recycling.

•Sold our interests in 11 warehouse facilities for gross proceeds of $389.1 million. Two of the facilities sold were vacant development projects totaling 2.1 million square feet, located in Ocala, Florida and Indianapolis, Indiana markets for a gross aggregate price of $174.6 million.

Debt.

•Repaid $50.0 million of the $300.0 million term loan.

•Repurchased $28.1 million of the Company's Trust Preferred Securities at a 5.0% discount to par value.

•Completed a cash tender offer and repurchased $140.0 million of the 6.750% Unsecured Senior Notes due 2028.

Equity.

•Completed the Reverse Split.

•Repurchased and retired 0.1 million common shares for an average price of $49.04 per common share.

Investment Trends

General. We focus our investment activity primarily on income producing single-tenant warehouse and distribution assets and build-to-suit and speculative development of warehouse and distribution assets.

In 2025, we acquired a $30.0 million warehouse facility, which is a decrease of $520.5 million compared to 2024 investment activity of $550.5 million. The decrease was primarily due to our prioritizing deleveraging over reinvestment of capital recycling proceeds.

In addition, we may continue to selectively recycle capital out of our non-target markets over time and, as opportunities arise, use the proceeds to reduce indebtedness and invest in our target markets, primarily through our development activities. We do not expect capital recycling to have a material dilutive impact on earnings.

The main drivers of growth in the industrial real estate market have been e-commerce and nearshoring. In addition, certain of our target markets are benefiting from advanced manufacturing investments and business-friendly local and state governments.

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There continues to be competition for the acquisition of industrial properties, specifically warehouse and distribution facilities. While we believe the industrial market will continue to grow, increased costs from international trade policy may continue to cause some tenants to reevaluate expansion and growth plans. As construction starts were reduced in recent years and supply in our markets has decreased, we expect to prioritize development activities, including build-to-suit projects, over acquisitions of leased properties due to the relatively higher yield that development activities generally provide.

Lease Term. As of December 31, 2025, our leases have a weighted average lease term of 4.8 years. We believe we are well positioned to take advantage of market rental growth in our target markets which continue to outperform the coastal industrial real estate markets.

Our industrial investment underwriting focuses more on real estate characteristics such as location and related demographic and local economic trends than it does on tenant credit. This has allowed us to selectively acquire certain short-term leased or vacant warehouse and distribution facilities, which may be acquired with greater total return potential than long-term leased warehouse and distribution facilities and allow for a value-add strategy through the lease renewal, lease up or a multi-tenanting process.

Development. Our development activities have been focused on build-to-suit projects, speculative development and purchasing newly-developed properties with vacancy. In 2026, we expect to continue to focus our development activities on build-to-suit projects and selective speculative development in markets with favorable industrial real estate fundamentals. Due to low construction starts in our target markets in recent years, we believe supply has decreased and demand is increasing, which may provide opportunity for more development investment.

Leasing

General. Re-leasing properties that are currently vacant or become vacant as leases expire at favorable effective rates is a primary area of focus for our asset management strategy. Renewals of industrial leases, particularly for warehouse and distribution facilities, are generally dependent on location and occupancy alternatives for our tenants. Uncertainty from international trade policy has caused some tenants to reevaluate their space needs and consolidate into other spaces or move to facilities with lower rental rates.

If a property cannot be re-let to a single user and the property can be adapted to multi-tenant use, we determine whether the costs of adapting the property to multi-tenant use outweigh the benefit of funding operating costs while searching for a single-tenant and whether selling a vacant property, which limits operating costs and allows us to redeploy capital, is in the best interest of our shareholders.

A majority of our leases require tenants to pay operating expenses, including maintenance, real estate taxes, insurance and utilities, thereby reducing our exposure to increases in costs and operating expenses. However, certain of our leases provide for some level of landlord responsibility for capital repairs and replacements, the cost of which is generally factored into the rental rate and our underwriting. Our motivation to release vacant space requires us to meet market demands with respect to rental rates, tenant concessions and landlord responsibilities. Developers may be similarly motivated when signing leases with tenants due to the significant competition in the industrial space. As a result, the obligations of our property owner subsidiaries on new leases and newly renewed or extended leases may increase to include, among other items, some form of responsibility for operating expenses and/or capital repairs and replacements.

During the year ended December 31, 2025, we completed 4.9 million square feet of new leases and extended leases, raising base and cash base rents by 29.7% and 27.7%, respectively, excluding two fixed-rate renewals, an additional two-year extension to 2030 at a 0.6 million square foot facility completed in the first quarter of 2025 and a first-generation lease at a 1.1 million square foot facility completed in the second quarter of 2025.

Inherent Growth. As of December 31, 2025, 99.3% of our leases had scheduled rent increases. The average escalation rate of these leases based on the next rent step was 2.8% as of December 31, 2025.

As of December 31, 2025, we had 1.5 million square feet of vacancy in the consolidated portfolio, which upon lease up is expected to add revenue to the portfolio and decrease operating expenses. In addition, as of December 31, 2025, approximately 73.8% of our ABR was from leases scheduled to expire during 2026 through 2031. We believe a portion of these leases have below-market rents and we expect to mark the expiring rents to market, which should further increase our revenues.

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Tenant Credit. We continue to monitor the credit of tenants of properties in which we have an interest by (1) subscribing to rating agency information, so that we can monitor changes in the ratings of our rated tenants, (2) reviewing financial statements that are publicly available or that are required to be delivered to us under the applicable lease, (3) monitoring news reports regarding our tenants and their respective businesses, (4) monitoring the timeliness of rent collections and (5) meeting with our tenants and observing their use of our facilities.

Impairment Charges

We did not incur any impairment charges during the years ended December 31, 2025 and 2024.

Critical Accounting Estimates

In preparing the consolidated financial statements we have made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Accounting estimates are deemed critical if they involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. Below is a summary of the critical accounting estimates used in the preparation of our consolidated financial statements. A summary of our significant accounting policies which are important to the portrayal of our financial condition and results of operations is set forth in Note 2 to the Consolidated Financial Statements, which are included in “Financial Statements and Supplementary Data” in Part II, Item 8 of this Annual Report.

Acquisition and Development of Real Estate. Substantially all of our acquisitions of real estate assets and liabilities are accounted for as asset acquisitions. As such, the purchase prices of acquired tangible and intangible assets and liabilities are recorded and allocated at fair value on a relative basis. The recorded allocations of tangible assets are based on the “as-if-vacant” value using estimated cash flow projections of the properties acquired which incorporates discount, capitalization and interest rates as well as available comparable market information. Allocations of intangible assets includes management’s estimates of current market rents and leasing costs.

We use considerable judgment in our estimates of cash flow projections, discount, capitalization and interest rates, fair market lease rates, carrying costs during hypothetical expected lease-up periods and costs to execute similar leases. While our methodology for purchase price allocation did not change during the year ended December 31, 2025, the real estate

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