2014

Liberty Property Trust Announces Third Quarter Results

MALVERN, Pa., Oct. 23, 2012 /PRNewswire/ -- Liberty Property Trust (NYSE: LRY) reported that funds from operations available to common shareholders (diluted) ("FFO") for the third quarter of 2012 was $0.64 per share, compared to $0.64 per share for the same period in 2011. Funds from operations for the third quarter of 2012 include lease termination fees of $0.9 million.

FFO per share for the nine-month period ended September 30, 2012 was $1.94, compared to $1.98 per share for the same period in 2011. 

Net income per common share (diluted) was $0.24 per share for the quarter ended September 30, 2012, compared to $0.31 per share for the quarter ended September 30, 2011. Net income for the nine-month period ended September 30, 2012 was $0.84 per share, compared with $1.29 per share for the same period in 2011. Net income per common share (diluted) for the nine months ended September 30, 2012 and September 30, 2011 includes net gains on property dispositions of $5.4 million ($0.05 per share) and $58.1 million ($0.50 per share), respectively.

"The economy continues to improve at a very slow pace, resulting in occupancy gains in the industrial portfolio offset by decreases in rental rates on signed leases in certain office markets," said Bill Hankowsky, chairman and chief executive officer. "As far as external growth is concerned, we continue to see solid demand for high-quality industrial space from large corporate users and build-to suit opportunities for both industrial and office users. Our growing development pipeline is now delivering new product into service at solid returns."

Portfolio Performance

Leasing: At September 30, 2012, Liberty's in-service portfolio of 78 million square feet was 91.8% occupied, compared to 90.7% at the end of the second quarter. During the third quarter, Liberty completed lease transactions totaling 3.8 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 decreased by 0.3% on a straight line basis for the third quarter of 2012 compared to the same quarter in 2011.

Portfolio Activity

Development: Liberty brought into service two development properties representing a total investment of $15.7 million. These two build-to-suit developments total 282,000 square feet and were completed at current yield of 8.6%.

Liberty commenced development of three properties totaling 530,000 square feet at a projected investment of $55.5 million. The new development properties include a 100% pre-leased, 139,000 square foot office building in Phoenix, AZ, and two industrial distribution buildings in Houston, TX and Rogers, MN totaling 391,000 square feet which are being developed for inventory.

Acquisitions: Liberty purchased one distribution building totaling 232,000 square feet in Phoenix, AZ for $6.4 million. The property was 18% leased at purchase with an in-place yield of 3.2%. Liberty has subsequently leased an additional 20% of the property, and will also be commencing a significant renovation to provide cross-docking capabilities and truck storage. The expected stabilized yield is 8.3%.

Dispositions: During the quarter, Liberty sold 49 acres of land for $2.7 million

Balance Sheet and Capital Management

During the quarter, Liberty repaid its 6.375% Senior Notes due August 2012 in the amount of $230.1 million.

Earnings Outlook

Liberty expects to report funds from operations for the fourth quarter of 2012 in the range of $0.62 - $0.64, and for the full year 2012 in the range of $2.57 - $2.59 share. Guidance assumes that $167 million in acquisitions will be completed in the fourth quarter. A reconciliation of FFO to GAAP net income for the respective periods is below:

 


4Q 2012 Range

FY 2012 Range


Low

High

Low

High

Projected net income per share

$ 0.35

$ 0.36

$ 1.19

$ 1.20

Depreciation and amortization of unconsolidated joint ventures

 

0.03

 

0.03

 

0.12

 

0.13

Depreciation and amortization

0.34

0.35

1.39

1.40

Gain on property dispositions

(0.09)

(0.09)

(0.09)

(0.10)

Minority interest share of addbacks

(0.01)

(0.01)

(0.04)

(0.04)




Projected funds from operations per share

$ 0.62

$ 0.64

$ 2.57

$ 2.59






Earnings Guidance for 2013 will be provided on December 11, 2012.

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 78 million square foot portfolio consists of 650 properties providing 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 third quarter results on Tuesday, October 23, 2012, at 1 p.m. Eastern Time.  To access the conference call, please dial 1-888-870-2815. The passcode needed for access is 36148768. A replay of the call will be available until November 23, 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 

September 30, 2012

 (Unaudited and in thousands, except per share amounts) 





 Quarter Ended 



 Nine months ended 




September 30,

2012


September 30,

2011



September 30,

2012



September 30,

2011








 Operating Revenue 











 Rental  


$                           119,334


$                           115,760



$                           357,126



$                           345,882

  Operating expense reimbursement


52,392


49,432



152,200



148,655


 Total operating revenue 


171,726


165,192



509,326



494,537













 Operating Expenses 











  Rental property


34,635


31,876



95,926



91,657

 Real estate taxes 


20,292


19,755



61,452



58,646

 General and administrative


14,621


13,617



46,444



42,819

 Depreciation and amortization 


40,929


38,922



122,705



116,247


 Total operating expenses 


110,477


104,170



326,527



309,369














 Operating Income 


61,249


61,022



182,799



185,168













 Other Income/Expense 











 Interest and other  


2,642


1,989



7,969



6,918

 Interest  


(30,704)


(29,173)



(89,892)



(90,198)


 Total other income/expense 


(28,062)


(27,184)



(81,923)



(83,280)













 Income before property dispositions, income taxes, noncontrolling interest 











    and equity in earnings of unconsolidated joint ventures 


33,187


33,838



100,876



101,888

 Gain on property dispositions 


2,001


1,898



2,859



3,361

 Income taxes 


(321)


(356)



(645)



(969)

 Equity in (loss) earnings of unconsolidated joint ventures 


(3,082)


827



(1,397)



2,470













 Income from continuing operations 


31,785


36,207



101,693



106,750













 Discontinued operations (including net loss on property dispositions of 












$1,540 for the quarter ended September 30, 2012 and net gain of $4,095 for the quarter ended September 30, 2011 and net gain of $2,505 and $54,722 for the nine month periods ended September 30, 2012 and 2011)


(1,887)


5,474



5,487



62,715

 Net Income 


29,898


41,681



107,180



169,465


 Noncontrolling interest - operating partnerships 


(2,092)


(6,414)



(8,174)



(20,769)


 Noncontrolling interest - consolidated joint ventures 


-


53



-



511

 Net Income available to common shareholders     


$                             27,806


$                             35,320



$                             99,006



$                           149,207














 Net income 


$                             29,898


$                             41,681



$                           107,180



$                           169,465


 Other comprehensive income (loss) 


2,245


(2,247)



3,047



(64)

 Comprehensive income 


32,143


39,434



110,227



169,401


 Less: comprehensive income attributable to noncontrolling interest 


(2,161)


(6,342)



(8,269)



(20,769)

 Comprehensive income attributable to common shareholders 


$                             29,982


$                             33,092



$                           101,958



$                           148,632













 Basic income per common share  












 Continuing operations 


$                                 0.26


$                                 0.26



$                                 0.80



$                                 0.77


 Discontinued operations 


$                                (0.02)


$                                 0.05



$                                 0.05



$                                 0.53

 Total basic income per common share 


$                                 0.24


$                                 0.31



$                                 0.85



$                                 1.30













 Diluted income per common share 












 Continuing operations 


$                                 0.26


$                                 0.26



$                                 0.79



$                                 0.76


 Discontinued operations 


$                                (0.02)


$                                 0.05



$                                 0.05



$                                 0.53

 Total diluted income per common share 


$                                 0.24


$                                 0.31



$                                 0.84



$                                 1.29













 Weighted average shares 












 Basic 


117,141


115,014



116,625



114,547


 Diluted 


118,043


115,780



117,462



115,329













 Amounts attributable to common shareholders     












 Income from continuing operations 


$                             29,635


$                             30,021



$                             93,689



$                             88,537


 Discontinued operations 


(1,829)


5,299



5,317



60,670


 Net income 


$                             27,806


$                             35,320



$                             99,006



$                           149,207

 

 Liberty Property Trust 

 Statement of Funds From Operations 

September 30, 2012

 (Unaudited and in thousands, except per share amounts) 
































 Quarter Ended 


 Nine months ended 




September 30, 2012


September 30, 2011


September 30, 2012


September 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 


$              27,806

$             0.24


$              35,320

$                         0.31


$          99,006

$             0.85


$        149,207

$              1.30















 Adjustments: 













 Depreciation and amortization of unconsolidated joint ventures 


3,569



3,585



10,739



10,903


 Depreciation and amortization 


40,631



41,147



122,097



126,312


 Gain on property dispositions/impairment 


4,759



(4,090)



676



(55,132)


 Noncontrolling interest share in addback for depreciation and amortization 














 and gain on property dispositions/impairment 


(1,504)



(1,296)



(4,141)



(2,668)


 Funds from operations available to common shareholders - basic 

$              75,261

$             0.64


$              74,666

$                         0.65


$        228,377

$             1.96


$        228,622

$              2.00















 Reconciliation of net income to FFO - diluted: 













 Diluted - income available to common shareholders 


$              27,806

$             0.24


$              35,320

$                         0.31


$          99,006

$             0.84


$        149,207

$              1.29















 Adjustments: 













 Depreciation and amortization of unconsolidated joint ventures 


3,569



3,585



10,739



10,903


 Depreciation and amortization  


40,631



41,147



122,097



126,312


 Gain on property dispositions/impairment 


4,759



(4,090)



676



(55,132)


 Noncontrolling interest excluding preferred unit distributions  


881



1,161



3,173



5,010


 Funds from operations available to common shareholders - diluted 

$              77,646

$             0.64


$              77,123

$                         0.64


$        235,691

$             1.94


$        236,300

$              1.98















 Reconciliation of weighted average shares: 













 Weighted average common shares - all basic calculations 


117,141



115,014



116,625



114,547


 Dilutive shares for long term compensation plans 


902



766



837



782


 Diluted shares for net income calculations 


118,043



115,780



117,462



115,329


 Weighted average common units 


3,739



3,816



3,771



3,890


 Diluted shares for Funds from operations calculations 


121,782



119,596



121,233



119,219




 

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 

September 30, 2012

(In thousands, except share and unit amounts)



























September 30, 2012


December 31, 2011


Assets

 (unaudited) 




Real estate:






Land and land improvements

$                         865,657


$                         852,785



Building and improvements

4,156,848


4,092,056



Less: accumulated depreciation

(1,135,002)


(1,047,336)







Operating real estate

3,887,503


3,897,505







Development in progress

249,129


88,848


Land held for development

227,469


219,375







Net real estate

4,364,101


4,205,728







Cash and cash equivalents

34,069


18,204


Restricted cash

37,972


63,659


Accounts receivable

6,965


8,192


Deferred rent receivable

107,813


102,613


Deferred financing and leasing costs, net of accumulated






amortization (2012, $131,604; 2011, $123,557)

130,761


129,614


Investments in and advances to unconsolidated joint ventures

169,507


174,687


Assets held for sale  

8,671


210,790


Prepaid expenses and other assets

96,506


76,186







Total assets

$                      4,956,365


$                      4,989,673







Liabilities





Mortgage loans

$                         290,197


$                         290,819


Unsecured notes

1,962,543


1,792,643


Credit facility

150,000


139,400


Accounts payable 

58,804


23,418


Accrued interest

36,177


24,147


Dividend and distributions payable

58,869


56,958


Other liabilities

173,758


194,995







Total liabilities

2,730,348


2,522,380







Noncontrolling interest - operating partnership - 301,483 preferred units






outstanding as of September 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, 119,146,729 (includes 1,249,909 in treasury) and 117,352,353






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






September 30, 2012 and December 31, 2011, respectively

119


117


Additional paid-in capital

2,669,676


2,617,355


Accumulated other comprehensive income (loss)

2,523


(429)


Distributions in excess of net income

(529,913)


(461,498)


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






September 30, 2012 and December 31, 2011

(51,951)


(51,951)


Total shareholders' equity

2,090,454


2,103,594







Noncontrolling interest - operating partnership






3,736,746 and 3,808,746 common units outstanding as of September 30, 2012 






    and December 31, 2011, respectively

60,987


64,428



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






    and December 31, 2011, respectively

63,264


287,959


Noncontrolling interest - consolidated joint ventures

3,775


3,775







Total equity

2,218,480


2,459,756







Total liabilities, noncontrolling interest - operating partnership & equity

$                      4,956,365


$                      4,989,673


 

 

SOURCE Liberty Property Trust



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