CapLease Announces Third Quarter 2007 Results.

NEW YORK -- CapLease, Inc. (NYSE: LSE), a real estate investment trust (REIT) focused on single-tenant commercial real estate investments, today announced its results for the third quarter ended September 30, 2007.

Third Quarter 2007 Highlights:

* Revenues Increased 51%, to $46.6 Million, from the Third Quarter of 2006

* Funds from Operations of $13.3 Million,1 or $0.29 Per Share

* Renewed Warehouse Facility for One-Year

* Added $30 Million Three Year Revolving Credit Agreement 

* Financed Nestle Properties with $117 Million First Mortgage

* Retired EntreCap Portfolio Bridge Facility

Subsequent Events:

* Issued $75 Million of 7.50% Convertible Senior Notes due 2027

* Repurchased $15 Million in Company Stock

Third Quarter 2007 Results:

For the quarter ended September 30, 2007, the Company's total revenues increased 51%, to $46.6 million, compared to $30.9 million in the comparable period in 2006. Net (loss) to common stockholders for the third quarter of 2007 was $(0.1) million, rounding to $0.00 per share, compared to net income of $0.8 million, or $0.02 per share, in the comparable period of 2006. Funds from operations (FFO) increased 81%, to $13.3 million, compared to $7.4 million in the comparable period in 2006. On a per share basis, FFO of $0.29 for the third quarter of 2007 increased 32%, from $0.22 per share in the comparable period of 2006.

Paul McDowell, Chief Executive Officer, stated, "The strength of our business model was evident in the third quarter. All of our high credit quality commercial real estate assets performed as expected. The transparency of our assets with their stable, predictable cash flows enabled us to continue to execute well on our financing strategy, including adding attractively priced five-year match funded mortgage financing on our Nestle properties and retiring the EntreCap bridge debt. In the face of a challenging credit market environment, we also took a number of steps to solidify our balance sheet, including renewing our warehouse line for another year, adding a $30 million revolver available for general corporate purposes and, in October, raising $75 million of convertible debt. These actions will afford us significant financial flexibility as we resume our investment activity as markets begin to stabilize and review a variety of options for long-term financing of the assets currently securing our warehouse line."

Nine Month Results:

For the nine months ended September 30, 2007, the Company reported total revenues of $125.4 million, reflecting growth of 40% compared to total revenues of $89.5 million in the comparable period of 2006. FFO for the nine months 2007 was $29.9 million, or $0.75 per share, compared to FFO of $21.6 million, or $0.69 per share, in the comparable period of 2006. Net (loss) to common stockholders for the nine months ended September 30, 2007 was $(4.2) million, or $(0.11) per share, compared to net income of $3.2 million, or $0.10 per share, in the comparable period of 2006.

Investment Portfolio and Balance Sheet:

As of September 30, 2007, the Company's portfolio before depreciation and amortization was approximately $2.1 billion, with 78% invested in owned properties. Approximately 94% of the Company's owned properties are leased to investment grade rated tenants. 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. The Company's weighted average remaining lease term on its owned property portfolio is approximately 10 years, and is 19 years on the leases underlying its loan portfolio.

At September 30, 2007, the Company had total assets of $2.1 billion, including $1.6 billion in net real estate investments, $266.6 million in loan investments, and $204.9 million in securities available for sale. The Company's portfolio was financed with long-term fixed rate mortgage and CDO debt of $1.3 billion and $386.5 million of short-term warehouse borrowings hedged in anticipation of long-term financing. The Company repaid $26.3 million of warehouse debt in October.

As of September 30, 2007, approximately 80% of the Company's portfolio is financed with long-term fixed rate debt, including approximately 88% of our owned property portfolio.

Dividends:

In the third quarter of 2007, the Company declared a cash dividend on its common stock in the amount of $0.20 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.

2007 Guidance:

CapLease is affirming its full year 2007 guidance. CapLease expects full year 2007 FFO per share and earnings per share (EPS) to be in the range of $1.01 to $1.03, and $(0.15) to $(0.13), respectively. This guidance includes the impact of the convertible note offering we completed in October and does not include any material impact from gain on sale activity in the loan portfolio or otherwise.

These full year guidance ranges equate to FFO per share and EPS for the fourth quarter of 2007 in the range of $0.26 to $0.28, and $(0.04) to $(0.02), respectively.

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

The factors described in the Forward-Looking and Cautionary Statements section of this release represent continuing risks to the Company's guidance.

Conference Call:

CapLease will hold a conference call and webcast to discuss the Company's third quarter 2007 results at 11:00 a.m. (Eastern Time) today. Hosting the call will be Paul H. McDowell, Chief Executive Officer, and Shawn P. Seale, Senior Vice President and Chief Financial Officer.

Interested parties may listen to the conference call by dialing [phone] or [phone] for international participants. A simultaneous webcast of the conference call may be accessed by logging onto the Company's website at www.caplease.com under the Investor Relations section. Institutional investors can access the webcast via the password-protected event management site www.streetevents.com. The webcast is also available to individual investors at www.fulldisclosure.com.

A replay of the conference call will be available on the Internet at www.streetevents.com and the Company's website for approximately fourteen days following the call. A recording of the call also will be available beginning after 2:00 p.m. (Eastern Time) today by dialing [phone] or [phone] for international participants and entering passcode 9640907. The replay will be available until midnight November 21, 2007.

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 or non-recurring 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, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.

The Company calculates CAD by further adjusting FFO to exclude straight-line rent adjustments, above or below market rent amortization and stock-based compensation, 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, in 2007, CAD is adjusted to exclude the expenses associated with the EntreCap Portfolio bridge facility and the non-cash gains associated with the retirement of the EntreCap Portfolio debt.

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.

* our ability to make additional investments in a timely manner or on acceptable terms;

* our ability to obtain long-term financing for our asset investments at the spread levels we project when we invest in the asset;

* adverse changes in the financial condition of the tenants underlying our investments;

* increases in our financing costs, our general and administrative costs and/or our property expenses;

* changes in our industry, the industries of our tenants, interest rates or the general economy;

* the success of our hedging strategy;

* our ability to raise additional capital;

* impairments in the value of the collateral underlying our investments; and

* the degree and nature of our competition.

In addition, we may be required to defer revenue recognition on real properties we acquire if the property is under construction or is not yet ready for occupancy.

Developments in any of those areas could cause actual results to differ materially from results that have been or may be projected. For a more detailed discussion of the trends, risks and uncertainties that may affect our operating and financial results and our ability to achieve the financial objectives discussed in this press release, readers should review 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 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.

About the Company:

CapLease, Inc. is a real estate investment trust, or REIT, that invests primarily in single tenant commercial real estate assets subject to long-term leases to high credit quality tenants.

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1 Funds from operations, or FFO, is a non-GAAP financial measure. For a reconciliation of FFO to net income, the most directly comparable GAAP measure, see the schedules attached to this press release.