Third Quarter 2009 Highlights:

FFO of $0.28 Per Share Before Items Affecting Comparability, or $0.17 Per Share Including Such Items

Raising 2009 Guidance

Reduced Credit Facility Balance To $129 Million, Extended Maturity Date Until April 2011

Stable Revenues of $45.1 Million

Increased Financial Flexibility And Liquidity, With Cash of $41 Million at Quarter-End

Third Quarter 2009 Results:

                                                        For the Three Months Ended September 30 
 (Amounts in thousands, except per share amounts)       2009           2008                     
 Funds from operations                                  $  8,499       $  11,478                
 Per Share                                              $  0.17        $  0.25                  
 Items that affect comparability (income) expense:                                              
 Gain on derivatives                                       --             (444    )             
 Loss on investments                                       5,912          1,025                 
 Gain on extinguishment of debt                            (415    )      --                    
 Funds from operations, as adjusted for comparability   $  13,996      $  12,059                
 Per Share                                              $  0.28        $  0.26                  


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For the quarter ended September 30, 2009, the Company's total revenues were $45.1 million, compared to $45.5 million in the comparable period in 2008. Net (loss) to common stockholders for the third quarter of 2009 was $(4.1) million, or $(0.08) per share, compared to net (loss) of $(2.2) million, or $(0.05) per share in the 2008 period. FFO for the third quarter of 2009 was $8.5 million, or $0.17 per share, compared to $11.5 million, or $0.25 per share, in the 2008 period. Third quarter results included $5.9 million of loss on investments sold in connection with recourse debt reduction. FFO adjusted for items that affect comparability was $14.0 million, or $0.28 per share, compared to $12.1 million, or $0.26 per share, in the 2008 period.

Continued Debt Reduction:

During the quarter we lowered overall debt by an additional $37 million, for a total of $116 million since the beginning of 2009. As of September 30, 2009, the Company lowered borrowings on its recourse credit facility to $129 million, which allowed us to extend the maturity of the debt by an additional year, to April 2011. The Company is in continued discussions with the lender on a new facility that will extend the maturity further.

Paul McDowell, Chairman and Chief Executive Officer, stated, "We had a strong quarter. We continued to execute well on strengthening our balance sheet through debt reduction and continued delivery of stable and predictable cash flows from our portfolio of assets. We have reduced our total debt by $116 million in 2009, increased our cash on hand to $41 million at the end of the third quarter, and extended the maturity date of our credit facility until 2011."

Mr. McDowell continued, "The high credit quality of our portfolio of properties and debt investments along with our proactive approach to strengthening our balance sheet have allowed us to weather the intense storm of the past two years. Furthermore, they position us well to resume our growth as capital and activity flow back into the commercial real estate and net lease markets."

Investment Portfolio:

At September 30, 2009, the Company's portfolio before depreciation and amortization was approximately $2.0 billion, with 81% invested in owned properties. The weighted average underlying tenant credit rating on the Company's entire portfolio is A- from Standard & Poor's, with an average tenant rating on the owned property portfolio of A. Approximately 90% of the overall portfolio is invested in owned properties and loans on properties where the underlying tenant is rated investment grade and in investment grade rated real estate securities, with about 94% of the owned property portfolio leased to investment grade tenants. The weighted average remaining lease term on the Company's entire portfolio is approximately 9 years, including approximately 7 years on the owned property portfolio and approximately 17 years on the leases underlying the loan portfolio. Our loan portfolio is primarily comprised of seasoned fully amortizing first mortgage loans on properties leased to investment grade tenants.

Nine Month Results:

For the nine months ended September 30, 2009, the Company reported total revenues of $134.9 million, compared to total revenues of $137.2 million in the comparable period of 2008. Net (loss) to common stockholders for the nine months ended September 30, 2009 was $(2.8) million, or $(0.06) per share, compared to net (loss) of $(6.0) million, or $(0.13) per share, in the comparable period of 2008. FFO for the nine months 2009 was $36.6 million, or $0.75 per share, compared to FFO of $34.5 million, or $0.76 per share, in the comparable period of 2008. FFO adjusted for items that affect comparability was $40.5 million, or $0.83 per share, compared to $37.0 million, or $0.82 per share, in the 2008 period.

                                                        For the Nine Months Ended September 30 
 (Amounts in thousands, except per share amounts)       2009           2008                    
 Funds from operations                                  $  36,601      $  34,535               
 Per Share                                              $  0.75        $  0.76                 
 Items that affect comparability (income) expense:                                             
 Loss on derivatives                                       --             1,418                
 Loss on investments                                       13,739         1,025                
 Gain on extinguishment of debt                            (9,829  )      --                   
 Funds from operations, as adjusted for comparability   $  40,511      $  36,978               
 Per Share                                              $  0.83        $  0.82                 


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Balance Sheet:

At September 30, 2009, the Company's assets included $1.6 billion in owned real property investments before depreciation and amortization, $224 million in loan investments, and $152 million in commercial mortgage-backed securities. Most of the Company's debt is long-term amortizing non-recourse fixed rate debt. Only 12% of the Company's debt is recourse and must be refinanced through 2012. That debt is comprised of the term credit facility with $129 million currently outstanding maturing in April 2011 and the Company's convertible senior notes with $52 million currently outstanding maturing in October 2012.

Dividends:

In the third quarter of 2009, the Company declared a cash dividend on its common stock in the amount of $0.05 per share. The level of CapLease's common dividend will continue to be determined by the operating results of each quarter, 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.

2009 Guidance:

CapLease is raising its full year 2009 guidance range to $0.99 to $1.01 of FFO per share, from $0.91 to $0.96 per share, and $(0.08) to $(0.06) of earnings per share (EPS), from $(0.16) to $(0.11) per share. CapLease is also raising its full year 2009 guidance range to $1.03 to $1.05 of cash available for distribution (CAD) per share, from $0.96 to $1.01 per share.

The Company's guidance estimates exclude the gain on debt extinguishment in the first nine months of 2009, other than approximately $0.06 of gain on the convertible debt the Company repurchased in January of 2009, and assume no gains or losses associated with debt extinguishment for the remainder of 2009. In addition, guidance estimates exclude the loss on investments in the first nine months of 2009 and assume no asset investment or disposition activity in 2009. Our guidance estimates also exclude tenant holdover rents and assume no capital raising activities, no portfolio impairments or losses, and no other gains or charges that may occur during the remainder of the year, and include assumptions with respect to interest rate levels on our floating rate facility, the level of property operating expenses and general and administrative expenses.

The difference between FFO and EPS is primarily depreciation and amortization expense on real property.

The factors described in the Forward-Looking and Cautionary Statements section of this release could cause actual results to differ materially from our guidance.

Conference Call:

CapLease will hold a conference call and webcast to discuss the Company's third quarter 2009 results at 10:00 a.m. (Eastern Time) today. Hosting the call will be Paul H. McDowell, Chairman and Chief Executive Officer, and Shawn P. Seale, Senior Vice President and Chief Financial Officer.

Interested parties may listen to the conference call by dialing (877) 407-0789 or (201) 689-8562 for international participants.