Liberty Property Trust Announces Second Quarter Results

MALVERN, Pa., July 24, 2012 /PRNewswire/ -- Liberty Property Trust (NYSE: LRY) reported that funds from operations available to common shareholders (diluted) ("FFO") for the second quarter of 2012 was $0.63 per share, compared to $0.69 per share for the same period in 2011. Funds from operations for the second quarter of 2012 include lease termination fees of $0.7 million.

FFO per share for the six-month period ended June 30, 2012 was $1.31, compared to $1.34 per share for the same period in 2011. 

Net income per common share (diluted) was $0.29 per share for the quarter ended June 30, 2012, compared to $0.74 per share (diluted) for the quarter ended June 30, 2011. Net income for the six-month period ended June 30, 2012 was $0.61 per share, compared with $0.99 per share for the same period in 2011. Net income for the three months ended June 30, 2012 and June 30, 2011 includes net gains on property dispositions of $3.3 million ($0.03 per share) and $50.5 million ($0.44 per share) respectively, and net income for the six months ended June 30, 2012 and June 30, 2011 includes net gains on property dispositions of $4.9 million ($0.04 per share) and $52.1 million ($0.45 per share), respectively.

"Liberty's execution in the second quarter was exceptional on all fronts," said Bill Hankowsky, chairman and chief executive officer. "We took steps to enhance the future profitability of our portfolio through the sale of a significant amount of commodity office space, we leased over five million square feet of space, and we enhanced our already outstanding balance sheet with well-timed capital events."

Portfolio Performance

Leasing: At June 30, 2012 Liberty's in-service portfolio of 77 million square feet was 90.7% occupied, compared to 90.5% at the end of the first quarter. During the second quarter, Liberty completed lease transactions totaling 5.5 million square feet of space. 

Same Store Performance: Property level operating income for same store properties decreased by 0.6% on a cash basis and decreased by 1.0% on a straight line basis for the second quarter of 2012 compared to the same quarter in 2011.

Portfolio Activity

During the second quarter, Liberty furthered the execution of its portfolio repositioning strategy through property sales and acquisitions.

Dispositions: During the quarter, Liberty sold 54 operating properties containing 2.7 million square feet, and 58 acres of land for $208.6 million. The properties were 82.3% leased, and consisted primarily of single-story and mid-rise suburban office and high-finish flex product in Wisconsin, Maryland, Virginia, North Carolina and New Jersey. 

Acquisitions: Liberty acquired four properties during the quarter for a purchase price of $29.3 million. The properties total 603,000 square feet of leasable space and are 58% leased. The current yield on these properties is 2.9%, and the projected stabilized yield is 8.2%.

The properties acquired consist of a fully leased, 128,000 square foot multi-tenant industrial building in Eagan, Minnesota; a 219,225 square foot distribution building in Tolleson, Arizona that is 39% leased; a 184,096 square foot distribution building, also in Tolleson, that is 74% leased; and a 71,550 square foot office building in Phoenix, which was 0% leased at purchase but for which Liberty has since secured a tenant for 41% of the building.

Development: Liberty brought into service one development property representing a total investment of $6.6 million. The 128,000 square foot industrial property in Houston is 100% leased. The current yield on this investment is 12.1%.

Liberty commenced development of three properties totaling 246,000 square feet at a projected investment of $23.5 million. The new development properties include two industrial buildings in Houston, Texas totaling 199,000 square feet, of which 74% of the space is pre-leased, and 46,000 square foot build-to-suit office building in Jacksonville, Florida.

Balance Sheet and Capital Management

During the quarter, Liberty:

  • Redeemed $100 million of its outstanding 7.40% Series H Cumulative Redeemable Preferred Units at par.
  • Issued $400 million of ten-year 4.125% Senior Unsecured Notes.

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 77 million square foot portfolio consists of 650 properties providing office, distribution and light manufacturing facilities to 1,700 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 second quarter results on Tuesday, July 24, 2012, at 1 p.m. Eastern Time.  To access the conference call, please dial 1-888-870-2815. The passcode needed for access is 98243676. A replay of the call will be available until August 17, 2012, 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 

June 30, 2012

 (Unaudited and in thousands, except per share amounts) 





















 Quarter Ended 


 Six months ended 



June 30, 2012


June 30, 2011


June 30, 2012


June 30, 2011






 Operating Revenue 








 Rental  

$                           119,202


$                           116,193


$                           238,593


$                           230,718

  Operating expense reimbursement

49,997


48,234


100,293


99,595


 Total operating revenue 

169,199


164,427


338,886


330,313










 Operating Expenses 








  Rental property

31,386


28,543


61,791


60,254

 Real estate taxes 

20,569


19,592


41,309


39,039

 General and administrative

14,619


13,255


31,823


29,203

 Depreciation and amortization 

40,733


38,554


82,014


77,546


 Total operating expenses 

107,307


99,944


216,937


206,042











 Operating Income 

61,892


64,483


121,949


124,271










 Other Income/Expense 








 Interest and other  

2,567


2,340


5,328


4,928

 Interest  

(30,834)


(29,358)


(60,109)


(62,200)


 Total other income/expense 

(28,267)


(27,018)


(54,781)


(57,272)










 Income before property dispositions, income taxes, noncontrolling interest 








    and equity in earnings of unconsolidated joint ventures 

33,625


37,465


67,168


66,999

 Gain on property dispositions 

335


302


858


1,463

 Income taxes 

(146)


(63)


(324)


(613)

 Equity in earnings of unconsolidated joint ventures 

769


1,109


1,685


1,643










 Income from continuing operations 

34,583


38,813


69,387


69,492










 Discontinued operations (including net gain on property dispositions of 









$2,981 and $50,157 for the quarters ended June 30, 2012 and 2011 and $4,045 and $50,627 for the six month periods ended June 30, 2012 and 2011)

3,097


54,028


7,895


58,292

 Net Income 

37,680


92,841


77,282


127,784


 Noncontrolling interest - operating partnerships 

(3,569)


(8,120)


(6,082)


(14,355)


 Noncontrolling interest - consolidated joint ventures 

-


257


-


458

 Net Income available to common shareholders     

$                             34,111


$                             84,978


$                             71,200


$                           113,887











 Net income 

$                             37,680


$                             92,841


$                             77,282


$                           127,784


 Other comprehensive income 

(2,327)


39


(11)


2,183

 Comprehensive income 

35,353


92,880


77,271


129,967


 Less: comprehensive income attributable to noncontrolling interest 

(3,497)


(8,121)


(6,083)


(14,427)

 Comprehensive income attributable to common shareholders 

$                             31,856


$                             84,759


$                             71,188


$                           115,540










 Basic income per common share  









 Continuing operations 

$                                 0.26


$                                 0.28


$                                 0.54


$                                 0.51


 Discontinued operations 

$                                 0.03


$                                 0.46


$                                 0.07


$                                 0.49

 Total basic income per common share 

$                                 0.29


$                                 0.74


$                                 0.61


$                                 1.00










 Diluted income per common share 









 Continuing operations 

$                                 0.26


$                                 0.29


$                                 0.54


$                                 0.50


 Discontinued operations 

$                                 0.03


$                                 0.45


$                                 0.07


$                                 0.49

 Total diluted income per common share 

$                                 0.29


$                                 0.74


$                                 0.61


$                                 0.99










 Weighted average shares 









 Basic 

116,683


114,623


116,359


114,285


 Diluted 

117,559


115,406


117,165


115,087










 Amounts attributable to common shareholders     









 Income from continuing operations 

$                             31,110


$                             32,717


$                             63,551


$                             57,513


 Discontinued operations 

3,001


52,261


7,649


56,374


 Net income 

$                             34,111


$                             84,978


$                             71,200


$                           113,887

 

Liberty Property Trust

Statement of Funds From Operations

June 30, 2012

(Unaudited and in thousands, except per share amounts)












Quarter Ended


Six Months Ended



June 30, 2012


June 30, 2011


June 30, 2012


June 30, 2011




Per 



Per 



Per 



Per 




Weighted



Weighted



Weighted



Weighted




 Average  



 Average  



 Average  



 Average  



Dollars

Share


Dollars

Share


Dollars

Share


Dollars

Share












 Reconciliation of net income to FFO - basic: 












 Basic - income available to common shareholders 

$              34,111

$            0.29


$             84,978

$                         0.74


$          71,200

$             0.61


$        113,887

$              1.00














 Adjustments: 












 Depreciation and amortization of unconsolidated joint ventures 

3,554



3,669



7,170



7,318


 Depreciation and amortization 

40,420



41,194



81,466



85,165


 Gain on property dispositions 

(2,979)



(50,542)



(4,083)



(51,042)


 Noncontrolling interest share in addback for depreciation and amortization 













 and gain on property dispositions 

(1,264)



186



(2,637)



(1,372)


 Funds from operations available to common shareholders - basic 

$              73,842

$             0.63


$              79,485

$                         0.69


$        153,116

$             1.32


$        153,956

$              1.35














 Reconciliation of net income to FFO - diluted: 












 Diluted - income available to common shareholders 

$              34,111

$             0.29


$              84,978

$                         0.74


$          71,200

$             0.61


$        113,887

$              0.99














 Adjustments: 












 Depreciation and amortization of unconsolidated joint ventures 

3,554



3,669



7,170



7,318


 Depreciation and amortization  

40,420



41,194



81,466



85,165


 Gain on property dispositions 

(2,979)



(50,542)



(4,083)



(51,042)


 Noncontrolling interest excluding preferred unit distributions  

1,085



2,867



2,292



3,849


 Funds from operations available to common shareholders - diluted 

$              76,191

$             0.63


$              82,166

$                         0.69


$        158,045

$             1.31


$        159,177

$              1.34














 Reconciliation of weighted average shares: 












 Weighted average common shares - all basic calculations 

116,683



114,623



116,359



114,285


 Dilutive shares for long term compensation plans 

876



783



806



802


 Diluted shares for net income calculations 

117,559



115,406



117,165



115,087


 Weighted average common units 

3,767



3,926



3,788



3,927


 Diluted shares for Funds from operations calculations 

121,326



119,332



120,953



119,014









































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 

June 30, 2012

(In thousands, except share and unit amounts)















June 30, 2012


December 31, 2011


Assets

 (unaudited) 




Real estate:






Land and land improvements

$                         861,373


$                         855,213



Building and improvements

4,146,819


4,109,783



Less: accumulated depreciation

(1,116,593)


(1,058,283)








Operating real estate

3,891,599


3,906,713








Development in progress

198,472


88,848


Land held for development

222,090


219,375








Net real estate

4,312,161


4,214,936








Cash and cash equivalents

154,122


18,204


Restricted cash

39,604


63,659


Accounts receivable

12,424


8,192


Deferred rent receivable

106,243


103,002


Deferred financing and leasing costs, net of accumulated






amortization (2012, $133,448; 2011, $123,822)

133,150


130,160


Investments in and advances to unconsolidated joint ventures

173,336


174,687


Assets held for sale  

-


200,647


Prepaid expenses and other assets

77,272


76,186








Total assets

$                      5,008,312


$                      4,989,673








Liabilities





Mortgage loans

$                         281,170


$                         290,819


Unsecured notes

2,192,643


1,792,643


Credit facility

-


139,400


Accounts payable 

35,600


23,418


Accrued interest

25,196


24,147


Dividend and distributions payable

57,610


56,958


Other liabilities

176,656


194,995








Total liabilities

2,768,875


2,522,380








Noncontrolling interest - operating partnership - 301,483 preferred units






outstanding as of June 30, 2012 and December 31, 2011

7,537


7,537








Equity





Shareholders' equity:





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






authorized, 118,794,699 (includes 1,249,909 in treasury) and 117,352,353






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






June 30, 2012 and December 31, 2011, respectively

119


117


Additional paid-in capital

2,656,174


2,617,355


Accumulated other comprehensive loss

(441)


(429)


Distributions in excess of net income

(501,719)


(461,498)


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






June 30, 2012 and December 31, 2011

(51,951)


(51,951)


Total shareholders' equity

2,102,182


2,103,594








Noncontrolling interest - operating partnership






3,740,246 and 3,808,746 common units outstanding as of June 30, 2012 







61,866


64,428



1,290,000 and 9,740,000 preferred units outstanding as of June 30, 2012 







64,077


287,959


Noncontrolling interest - consolidated joint ventures

3,775


3,775








Total equity

2,231,900


2,459,756








Total liabilities, noncontrolling interest - operating partnership & equity

$                      5,008,312


$                      4,989,673








 

SOURCE Liberty Property Trust



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