Liberty Property Trust Announces First Quarter 2013 Results

MALVERN, Pa., April 23, 2013 /PRNewswire/ -- Liberty Property Trust reported that funds from operations available to common shareholders (diluted) ("FFO") for the first quarter of 2013 was $0.65 per share, compared to $0.68 per share for the first quarter of 2012. Funds from operations for the first quarter of 2013 and 2012 include $3.9 million and $3.3 million, respectively, of additional compensation expense due to the accelerated vesting of long-term compensation due to the years of service and ages of certain employees. Funds from operations for the first quarter of 2013 include termination fees of $0.5 million.

Net income per common share (diluted) was $0.60 per share for the quarter ended March 31, 2013, compared to $0.32 per share (diluted) for the quarter ended March 31, 2012. Net income for the three months ended March 31, 2013 includes net gains on property dispositions of $43.5 million ($0.36 per share) versus $1.6 million ($0.01 per share) for the corresponding quarter in 2012.

"Liberty had another solid quarter, with strong leasing and tenant retention," said Bill Hankowsky, chairman and chief executive officer. "Industrial markets continue to strengthen, which is reflected in our occupancy increase for the quarter, while office markets remain tepid. Our performance and market activity is consistent with our expectations going into 2013."

Portfolio Performance

Leasing: At March 31, 2013, Liberty's in-service portfolio of 80.6 million square feet was 92.6% occupied, compared to 92.1% at the end of the fourth quarter. During the quarter, Liberty completed lease transactions totaling 5.4 million square feet of space.

Same Store Performance: Property level operating income for same store properties increased by 0.3% on a cash basis and increased by 1.0% on a straight line basis for the first quarter of 2013 compared to the same quarter in 2012.

Capital Activities and Balance Sheet Management

Property Sales: During the first quarter, Liberty sold one operating property, which contained 441,000 square feet of leasable space for $74.7 million. The property was 100% leased at the time of the sale.

Common Share Sales: During the first quarter of 2013, Liberty sold 642,000 shares under the company's continuous equity program, generating net proceeds of $24.3 million.

Real Estate Investments

Acquisitions: Liberty acquired no properties during the quarter.

Development: In the first quarter, Liberty brought one development property into service for a total investment of $80.1 million. The property contains 208,000 square feet of leasable space and is 100% occupied at a yield of 10.8%.

Also during the quarter, Liberty began development on three properties for a projected investment of $69.7 million. The properties include a 201,000 square foot build-to-suit office for The Vanguard Group and two inventory industrial buildings totaling 230,000 square feet in Houston, TX.

Subsequent Events

Liberty has announced that it will begin development during the second quarter of two industrial buildings in Hanover, Maryland. The properties consist of 244,000 square feet of space and represent an investment of $25.0 million.

Liberty has also confirmed that it has contracted to sell Three Franklin Plaza, a 215,000 square foot office property in Philadelphia, PA, for $29.0 million. The sale is contingent on due diligence and should close in the third quarter. This property is currently vacant.

About the Company

Liberty Property Trust (NYSE: LRY) is a leader in commercial real estate, serving customers in the United States and United Kingdom, through the development, acquisition, ownership and management of superior office and industrial properties. Liberty's 81 million square foot portfolio includes 666 properties which provide office, distribution and light manufacturing facilities to 1,800 tenants. 

Additional information about the Company, including Liberty's Quarterly Supplemental Package with detailed financial information is available in the Investors section of the Company's web site at www.libertyproperty.com. If you are unable to access the web site, a copy of the supplemental package may be obtained by contacting Liberty by phone at 610-648-1704, or by e-mail to jleonard@libertyproperty.com.

Liberty will host a conference call during which management will discuss first quarter results, on Tuesday, April 23, 2013, at 1 p.m. Eastern Time.  To access the conference call, please dial 855-277-7530. The passcode needed for access is 37210714. A replay of the call will be available until May 23, 2013, by dialing 1-855-859-2056 using the same passcode as above. The call can also be accessed via the Internet on the Investors page of Liberty's web site at www.libertyproperty.com.

The statements contained in this press release may include forward-looking statements within the meaning of the federal securities law.  Although Liberty believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be achieved.  As forward-looking statements, these statements involve risks, uncertainties and other factors that could cause actual results to differ materially from the expected results.  These factors include, without limitation, the uncertainties affecting real estate businesses generally (such as entry into new leases, renewals of leases and dependence on tenants' business operations), risks relating to our ability to maintain and increase property occupancy and rental rates, the financial condition of tenants, the uncertainties of real estate development and construction activity, the costs and availability of financing, the effects of local economic and market conditions, regulatory changes, potential liability relative to environmental matters and other risks and uncertainties detailed in the company's filings with the Securities and Exchange Commission.  The company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

 

 Liberty Property Trust 

 Statement of Operations 

March 31, 2013

 (Unaudited and in thousands, except per share amounts) 








 Quarter Ended 



March 31, 2013


March 31, 2012




 Operating Revenue 




 Rental  

$                           123,912


$                           117,369

  Operating expense reimbursement

52,661


49,573


 Total operating revenue 

176,573


166,942






 Operating Expenses 




  Rental property

31,916


30,018

 Real estate taxes 

21,552


20,311

 General and administrative

19,833


17,201

 Depreciation and amortization 

44,973


40,725


 Total operating expenses 

118,274


108,255







 Operating Income 

58,299


58,687






 Other Income/Expense 




 Interest and other  

2,632


2,460

 Interest  

(31,934)


(28,193)


 Total other income/expense 

(29,302)


(25,733)






 Income before property dispositions, income taxes, noncontrolling interest 




    and equity in earnings of unconsolidated joint ventures 

28,997


32,954

 Gain on property dispositions 

1,800


523

 Income taxes 

(491)


(178)

 Equity in earnings of unconsolidated joint ventures 

1,757


916






 Income from continuing operations 

32,063


34,215






 Discontinued operations (including net gains on property dispositions of 





$41,713 and $1,064 for the quarters ended March 31, 2013 and 2012, respectively)

42,593


5,387

 Net Income 

74,656


39,602


 Noncontrolling interest - operating partnerships 

(3,417)


(2,513)


 Noncontrolling interest - consolidated joint ventures 

-


-

 Net Income available to common shareholders     

$                             71,239


$                             37,089







 Net income 

$                             74,656


$                             39,602


 Other comprehensive (loss) income 

(4,851)


2,317

 Comprehensive income 

69,805


41,919


 Less: comprehensive income attributable to noncontrolling interest 

(3,271)


(2,586)

 Comprehensive income attributable to common shareholders 

$                             66,534


$                             39,333






 Basic income per common share  





 Continuing operations 

$                                 0.25


$                                 0.28


 Discontinued operations 

$                                 0.35


$                                 0.04

 Total basic income per common share 

$                                 0.60


$                                 0.32






 Diluted income per common share 





 Continuing operations 

$                                 0.25


$                                 0.28


 Discontinued operations 

$                                 0.35


$                                 0.04

 Total diluted income per common share 

$                                 0.60


$                                 0.32






 Weighted average shares 





 Basic 

118,688


115,972


 Diluted 

119,532


116,743






 Amounts attributable to common shareholders     





 Income from continuing operations 

$                             29,925


$                             31,872


 Discontinued operations 

41,314


5,217


 Net income 

$                             71,239


$                             37,089

 Liberty Property Trust 

 Statement of Funds From Operations 

March 31, 2013

 (Unaudited and in thousands, except per share amounts) 






















 Quarter Ended 





March 31, 2013


March 31, 2012






Per 



Per 






Weighted



Weighted






 Average  



 Average  





Dollars

Share


Dollars

Share










 Reconciliation of net income to FFO - basic: 








 Basic - income available to common shareholders 


$              71,239

$             0.60


$              37,089

$                         0.32











 Adjustments: 








 Depreciation and amortization of unconsolidated joint ventures 


3,397



3,616



 Depreciation and amortization 


44,972



41,046



 Gain on property dispositions/impairment 


(41,706)



(1,104)



 Noncontrolling interest share in addback for depreciation and amortization 









 and gain on property dispositions/impairment 


(200)



(1,373)



 Funds from operations available to common shareholders - basic 

$              77,702

$             0.65


$              79,274

$                         0.68











 Reconciliation of net income to FFO - diluted: 








 Diluted - income available to common shareholders 


$              71,239

$             0.60


$              37,089

$                         0.32











 Adjustments: 








 Depreciation and amortization of unconsolidated joint ventures 


3,397



3,616



 Depreciation and amortization  


44,972



41,046



 Gain on property dispositions/impairment 


(41,706)



(1,104)



 Noncontrolling interest excluding preferred unit distributions  


2,206



1,207



 Funds from operations available to common shareholders - diluted 

$              80,108

$             0.65


$              81,854

$                         0.68











 Reconciliation of weighted average shares: 








 Weighted average common shares - all basic calculations 


118,688



115,972



 Dilutive shares for long term compensation plans 


844



771



 Diluted shares for net income calculations 


119,532



116,743



 Weighted average common units 


3,714



3,809



 Diluted shares for Funds from operations calculations 


123,246



120,552






























The Company believes that the calculation of Funds from operations is helpful to investors and management as it is a measure of the Company's operating performance that excludes depreciation and amortization and gains and losses from property dispositions.  As a result, year over year comparison of Funds from operations reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, development activities, general and administrative expenses, and interest costs, providing perspective not immediately apparent from net income.  In addition, management believes that Funds from operations provides useful information to the investment community about the Company's financial performance when compared to other REITs since Funds from operations is generally recognized as the standard for reporting the operating performance of a REIT.  Funds from operations available to common shareholders is defined by NAREIT as net income (computed in accordance with generally accepted accounting principles ("GAAP")), excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Funds from operations available to common shareholders does not represent net income or cash flows from operations as defined by GAAP and does not necessarily indicate that cash flows will be sufficient to fund cash needs. It should not be considered as an alternative to net income as an indicator of the Company's operating performance or to cash flows as a measure of liquidity. Funds from operations available to common shareholders also does not represent cash flows generated from operating, investing or financing activities as defined by GAAP.




















Liberty Property Trust

Balance Sheet 

March 31, 2013

(Unaudited and in thousands, except share and unit amounts)


















March 31, 2013


December 31, 2012


Assets





Real estate:






Land and land improvements

$                         900,963


$                         899,801



Building and improvements

4,374,877


4,341,125



Less: accumulated depreciation

(1,178,309)


(1,164,756)









Operating real estate

4,097,531


4,076,170









Development in progress

209,690


248,602


Land held for development

246,572


258,324









Net real estate

4,553,793


4,583,096









Cash and cash equivalents

54,434


38,356


Restricted cash

28,212


33,147


Accounts receivable

8,355


8,988


Deferred rent receivable

110,078


108,576


Deferred financing and leasing costs, net of accumulated






amortization (2013, $134,299; 2012, $132,261)

134,316


137,359


Investments in and advances to unconsolidated joint ventures

175,285


169,021


Assets held for sale  

7,829


7,880


Prepaid expenses and other assets

74,371


87,756









Total assets

$                      5,146,673


$                      5,174,179









Liabilities





Mortgage loans

$                         304,867


$                         302,855


Unsecured notes

2,258,946


2,258,751


Credit facility

-


92,000


Accounts payable 

32,152


31,058


Accrued interest

39,031


20,164


Dividend and distributions payable

59,813


58,038


Other liabilities

167,337


185,956









Total liabilities

2,862,146


2,948,822









Noncontrolling interest - operating partnership - 301,483 preferred units






outstanding as of March 31, 2013 and December 31, 2012

7,537


7,537









Equity





Shareholders' equity:





Common shares of beneficial interest, $.001 par value, 183,987,000 shares






authorized, 121,181,984 (includes 1,249,909 in treasury) and 119,720,776






(includes 1,249,909 in treasury) shares issued and outstanding as of 






March 31, 2013 and December 31, 2012, respectively

121


119


Additional paid-in capital

2,737,071


2,687,701


Accumulated other comprehensive (loss) income

(1,805)


2,900


Distributions in excess of net income

(533,471)


(547,757)


Common shares in treasury, at cost, 1,249,909 shares as of






March 31, 2013 and December 31, 2012

(51,951)


(51,951)


Total shareholders' equity

2,149,965


2,091,012









Noncontrolling interest - operating partnership






3,713,851 common units outstanding as of March 31, 2013 and December 31, 2012 

60,440


60,223



1,290,000 preferred units outstanding as of March 31, 2013 and December 31, 2012 

63,264


63,264


Noncontrolling interest - consolidated joint ventures

3,321


3,321









Total equity

2,276,990


2,217,820









Total liabilities, noncontrolling interest - operating partnership & equity

$                      5,146,673


$                      5,174,179









 

SOURCE Liberty Property Trust



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