Liberty Property Trust Announces Fourth Quarter And Full Year Results

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Liberty Property Trust

Feb 05, 2013, 08:00 ET

MALVERN, Pa., Feb. 5, 2013 /PRNewswire/ -- Liberty Property Trust reported that funds from operations available to common shareholders (diluted) ("FFO") for the fourth quarter of 2012 was $0.63 per share, compared to $0.63 per share for the fourth quarter of 2011.

For the year ended December 31, 2012, FFO per share was $2.58, and included $5.0 million in termination fees.  This compares to FFO of $2.61 per share for 2011, which included $4.1 million in termination fees.

Net income per common share (diluted) was $0.32 per share for the quarter ended December 31, 2012, compared to $0.30 per share (diluted) for the quarter ended December 31, 2011.  Net income for the full year 2012 was $1.17 per common share, compared with $1.59 per share for 2011. 

"Over the past two years, Liberty has made great strides in enhancing our portfolio quality and market position, and our portfolio continues to perform well in an unpredictable market," said Bill Hankowsky, chairman and chief executive officer. "Although economic uncertainty continues to constrain decision making, there is pent-up demand in the marketplace, and we expect this demand could more positively affect occupancies and development opportunities as the year goes on."

Portfolio Performance

Leasing: At December 31, 2012, Liberty's in-service portfolio of 81.3 million square feet was 92.1% occupied, compared to 91.8% at the end of the third quarter. During the quarter, Liberty completed lease transactions totaling 4.9 million square feet of space. Liberty leased 18.5 million square feet in 2012.

Same Store Performance: Property level operating income for same store properties decreased by 0.2% on a cash basis and decreased by 0.3% on a straight line basis for the fourth quarter of 2012 compared to the same quarter in 2011 and decreased by 0.3% on a cash basis and decreased by 0.8% on a straight line basis for the full year 2012 compared to 2011.

Capital Activities and Balance Sheet Management

Property Sales: During the fourth quarter, Liberty sold two operating properties, which contained 257,000 square feet of leasable space for $17.7 million. The properties were 61.9% leased at the time of the sale.

Senior Unsecured Notes: During the fourth quarter, Liberty issued $300 million of 10 ½ year 3.375% Senior Unsecured Notes. The net proceeds were used to repay borrowings under the company's unsecured credit facility and for general corporate purposes.

Real Estate Investments

Acquisitions: During the quarter, Liberty acquired 22 industrial properties for $176.3 million. The properties total 3.5 million square feet of leasable space, and are 92.5% leased at a current yield of 6.8%.

Development: In the fourth quarter, Liberty brought into service five development properties for a total investment of $44.1 million. The properties contain 290,000 square feet of leasable space and were 77.0% occupied and 97.7% leased as of December 31, 2012. The current yield on these properties is 8.5% and the projected stabilized yield is 10.5%.

Also during the quarter, Liberty began development on one property for a projected investment of $11.6 million. The property is a 181,000 square foot industrial build-to-suit for GAC Industries in Houston, TX.

Subsequent Events

Liberty has announced that it will begin development during the first quarter of 3 Quarry Ridge, a 200,000 square foot office building in Malvern, Pennsylvania. The property is 100% leased to the Vanguard Group and represents an investment of $55 million.

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 680 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 [email protected].

Liberty will host a conference call during which management will discuss fourth quarter results, on Tuesday, February 5, 2013, at 1 p.m. Eastern Time.  To access the conference call, please dial 855-277-7530. The passcode needed for access is 91553147. A replay of the call will be available until March 5, 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 

December 31, 2012

 (Unaudited and in thousands, except per share amounts) 













 Quarter Ended 

 Year ended 

December 31, 2012

December 31, 2011

December 31, 2012

December 31, 2011





 Operating Revenue 









 Rental  

$                           121,709

$                           118,171

$                           478,835

$                           464,053

  Operating expense reimbursement

54,518

50,533

206,717

199,188

 Total operating revenue 

176,227

168,704

685,552

663,241










 Operating Expenses 









  Rental property

37,704

34,105

133,630

125,761

 Real estate taxes 

18,407

18,336

79,859

76,982

 General and administrative

18,286

16,547

64,730

59,367

 Depreciation and amortization 

42,923

39,994

165,628

156,242

 Total operating expenses 

117,320

108,982

443,847

418,352











 Operating Income 

58,907

59,722

241,705

244,889










 Other Income/Expense 









 Interest and other  

1,320

1,472

9,289

8,389

 Interest  

(29,738)

(29,510)

(119,630)

(120,718)

 Total other income/expense 

(28,418)

(28,038)

(110,341)

(112,329)










 Income before property dispositions, income taxes, noncontrolling interest 









    and equity in earnings of unconsolidated joint ventures 

30,489

31,684

131,364

132,560

 Gain on property dispositions 

1,305

1,664

4,123

5,025

 Income taxes 

(331)

(51)

(976)

(1,020)

 Equity in earnings (loss) of unconsolidated joint ventures 

716

1,026

(681)

3,496










 Income from continuing operations 

32,179

34,323

133,830

140,061










 Discontinued operations (including net gains on property dispositions of 










$8,837 and $5,860 for the quarters ended December 31, 2012 and 2011 and net gains of

$11,383 and $60,582 for the years ended December 31, 2012 and 2011)

8,392

6,922

13,921

70,649

 Net Income 

40,571

41,245

147,751

210,710

 Noncontrolling interest - operating partnerships 

(2,416)

(6,453)

(10,590)

(27,222)

 Noncontrolling interest - consolidated joint ventures 

275

-

275

511

 Net Income available to common shareholders     

$                             38,430

$                             34,792

$                           137,436

$                           183,999











 Net income 

$                             40,571

$                             41,245

$                           147,751

$                           210,710

 Other comprehensive income (loss) 

389

(217)

3,436

(281)

 Comprehensive income 

40,960

41,028

151,187

210,429

 Less: comprehensive income attributable to noncontrolling interest 

(2,153)

(6,446)

(10,422)

(26,705)

 Comprehensive income attributable to common shareholders 

$                             38,807

$                             34,582

$                           140,765

$                           183,724










 Basic income per common share  










 Continuing operations 

$                                 0.26

$                                 0.24

$                                 1.06

$                                 1.00

 Discontinued operations 

$                                 0.07

$                                 0.06

$                                 0.12

$                                 0.60

 Total basic income per common share 

$                                 0.33

$                                 0.30

$                                 1.18

$                                 1.60










 Diluted income per common share 










 Continuing operations 

$                                 0.25

$                                 0.24

$                                 1.06

$                                 1.00

 Discontinued operations 

$                                 0.07

$                                 0.06

$                                 0.11

$                                 0.59

 Total diluted income per common share 

$                                 0.32

$                                 0.30

$                                 1.17

$                                 1.59










 Weighted average shares 










 Basic 

117,556

115,373

116,863

114,755

 Diluted 

118,378

116,090

117,694

115,503










 Amounts attributable to common shareholders     










 Income from continuing operations 

$                             30,293

$                             28,090

$                           123,945

$                           115,653

 Discontinued operations 

8,137

6,702

13,491

68,346

 Net income 

$                             38,430

$                             34,792

$                           137,436

$                           183,999











 Liberty Property Trust 

 Statement of Funds From Operations 

December 31, 2012

 (Unaudited and in thousands, except per share amounts) 

































 Quarter Ended 

 Year ended 




December 31, 2012

December 31, 2011

December 31, 2012

December 31, 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 

$              38,430

$             0.33

$              34,792

$                         0.30

$        137,436

$             1.18

$        183,999

$              1.60

















 Adjustments: 













 Depreciation and amortization of unconsolidated joint ventures 

3,413

3,549

14,152

14,452


 Depreciation and amortization 

42,518

42,123

164,615

168,435


 Gain on property dispositions/impairment 

(8,265)

(6,066)

(7,589)

(61,198)


 Noncontrolling interest share in addback for depreciation and amortization 














 and gain on property dispositions/impairment 

(1,145)

(1,258)

(5,286)

(3,926)


 Funds from operations available to common shareholders - basic 

$              74,951

$             0.64

$              73,140

$                         0.63

$        303,328

$             2.60

$        301,762

$              2.63

















 Reconciliation of net income to FFO - diluted: 













 Diluted - income available to common shareholders 

$              38,430

$             0.32

$              34,792

$                         0.30

$        137,436

$             1.17

$        183,999

$              1.59

















 Adjustments: 













 Depreciation and amortization of unconsolidated joint ventures 

3,413

3,549

14,152

14,452


 Depreciation and amortization  

42,518

42,123

164,615

168,435


 Gain on property dispositions/impairment 

(8,265)

(6,066)

(7,589)

(61,198)


 Noncontrolling interest excluding preferred unit distributions  

1,205

1,143

4,378

6,153


 Funds from operations available to common shareholders - diluted 

$              77,301

$             0.63

$              75,541

$                         0.63

$        312,992

$             2.58

$        311,841

$              2.61

















 Reconciliation of weighted average shares: 













 Weighted average common shares - all basic calculations 

117,556

115,373

116,863

114,755


 Dilutive shares for long term compensation plans 

822

717

831

748


 Diluted shares for net income calculations 

118,378

116,090

117,694

115,503


 Weighted average common units 

3,728

3,809

3,760

3,869


 Diluted shares for Funds from operations calculations 

122,106

119,899

121,454

119,372


































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 

December 31, 2012

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
























December 31, 2012

December 31, 2011

Assets






Real estate:







Land and land improvements

$                         900,501

$                         852,785

Building and improvements

4,353,433

4,092,056

Less: accumulated depreciation

(1,170,030)

(1,047,336)










Operating real estate

4,083,904

3,897,505










Development in progress

248,602

88,848

Land held for development

258,324

219,375










Net real estate


4,590,830

4,205,728










Cash and cash equivalents

38,356

18,204

Restricted cash


33,147

63,659

Accounts receivable

8,988

8,192

Deferred rent receivable

108,628

102,613

Deferred financing and leasing costs, net of accumulated





amortization (2012, $136,706; 2011, $123,557)

141,245

129,614

Investments in and advances to unconsolidated joint ventures

169,021

174,687

Assets held for sale  

-

210,790

Prepaid expenses and other assets

87,756

76,186










Total assets


$                      5,177,971

$                      4,989,673










Liabilities






Mortgage loans


$                         302,855

$                         290,819

Unsecured notes


2,262,543

1,792,643

Credit facility


92,000

139,400

Accounts payable 

31,058

23,418

Accrued interest


20,164

24,147

Dividend and distributions payable

58,038

56,958

Other liabilities


185,956

194,995










Total liabilities


2,952,614

2,522,380










Noncontrolling interest - operating partnership - 301,483 preferred units





outstanding as of December 31, 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, 119,720,776 (includes 1,249,909 in treasury) and 117,352,353





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





December 31, 2012 and December 31, 2011, respectively

119

117

Additional paid-in capital

2,687,701

2,617,355

Accumulated other comprehensive income (loss)

2,900

(429)

Distributions in excess of net income

(547,757)

(461,498)

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





December 31, 2012 and December 31, 2011

(51,951)

(51,951)

Total shareholders' equity

2,091,012

2,103,594










Noncontrolling interest - operating partnership






3,713,851 and 3,808,746 common units outstanding as of December 31, 2012 






and December 31, 2011, respectively

60,223

64,428

1,290,000 and 9,740,000 preferred units outstanding as of December 31, 2012 






and December 31, 2011, respectively

63,264

287,959

Noncontrolling interest - consolidated joint ventures

3,321

3,775










Total equity


2,217,820

2,459,756










Total liabilities, noncontrolling interest - operating partnership & equity

$                      5,177,971

$                      4,989,673










SOURCE Liberty Property Trust