Liberty Property Trust Announces Second Quarter 2013 Results

News provided by

Liberty Property Trust

Jul 23, 2013, 08:00 ET

MALVERN, Pa., July 23, 2013 /PRNewswire/ -- Liberty Property Trust reported that funds from operations available to common shareholders (diluted) ("FFO") for the second quarter of 2013 was $0.66 per share, compared to $0.63 per share for the second quarter of 2012. Funds from operations for the second quarter of 2013 include termination fees of $777,000. Second quarter results also include $2.3 million of acquisition-related expenses and the write-off of $1.2 million of preferred unit origination costs.

FFO per share for the six-month period ended June 30, 2013 was $1.31, compared to $1.31 per share for the same period in 2012. 

Net income per common share (diluted) was $0.33 per share for the quarter ended June 30, 2013, compared to $0.29 per share (diluted) for the quarter ended June 30, 2012. Net income for the six-month period ended June 30, 2013 was $0.93 per share, compared with $0.61 per share for the same period in 2012. Net income for the six month period ended June 30, 2013 includes $0.45 per share in gains in property dispositions compared to $0.04 per share in the same period in 2012.

"Going into 2013, we noted that markets were firming very slowly, but we expected pent-up demand to put positive pressure on our markets as the year progressed. In the second quarter we saw this begin to happen, as some of the opportunities we have been working on for months became signed deals," said Bill Hankowsky, chairman and chief executive officer. "In addition, we are encouraged to see market fundamentals, including occupancy and rents, continue to strengthen."

Portfolio Performance

Leasing: At June 30, 2013, Liberty's in-service portfolio of 80.6 million square feet was 92.8% occupied, compared to 92.6% at the end of the first quarter. During the quarter, Liberty completed lease transactions totaling a company record 7.1 million square feet of space.

Same Store Performance: Property level operating income for same store properties increased by 1.7% on a cash basis and 0.4% on a straight line basis for the second quarter of 2013 compared to the same quarter in 2012.

Real Estate Investments

Acquisitions: Liberty acquired one property during the quarter, an office building in Washington DC, for $133.5 million.  The property contains 291,000 square feet of leasable space and is 77.4% leased at a current yield of 5.9% and a stabilized yield of 6.2%.

Subsequent to quarter-end, Liberty purchased a 594,000 square foot distribution building in Phoenix, AZ for $27.9 million. The property is newly-built and is currently vacant.

Development Pipeline: In the second quarter, Liberty brought one development property into service for a total investment of $28.1 million. The property contains 139,000 square feet of leasable space and is 100% occupied at a yield of 7.5%.  

During the quarter, Liberty began development of five properties for a projected investment of $139.2 million. The properties include:

  • Shippensburg, PA: a $92.7 million, 1.7 million square foot build-to-suit distribution facility, which is 100% pre-leased;
  • Miami, FL: a  $13.8 million, 148,000 square foot distribution building;
  • Hanover, MD: two distribution buildings totaling 244,000 square feet for $24.8 million
  • Greer, SC: a 156,000 square foot distribution building for $8.0 million, which is 33% pre-leased.

Subsequent to quarter-end, Liberty executed a lease for 550,800 square feet at 40 Logistics Drive in Carlisle, PA, a 972,000 square foot building currently under construction and scheduled to be delivered in the third quarter of this year. The lease commences August 15, 2013.

Capital Activities and Balance Sheet Management

Property Sales: During the second quarter, Liberty sold six operating properties, which contained 498,000 square feet of leasable space for $51.4 million. The properties were 34.3% leased at the time of the sale.

Common Share Sales: During the second quarter of 2013, Liberty sold 1.2 million shares under the company's continuous equity program. Proceeds of $50.4 million were used to repay borrowings under the Company's unsecured credit facility and for general corporate purposes.

Preferred Unit Redemption: Liberty redeemed Preferred Units as follows: $20.0 million of its outstanding 7.00% Series E Cumulative Redeemable Preferred Units at par, $17.5 million of its 6.65% Series F Cumulative Redeemable Preferred Units at par and $27.0 million of its outstanding 6.70% Series G Cumulative Redeemable Preferred Units at par.

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 662 properties which provide 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 [email protected].

Liberty will host a conference call during which management will discuss second quarter results, on Tuesday, July 23, 2013, at 1 p.m. Eastern Time.  To access the conference call, please dial 855-277-7530. The passcode needed for access is 18466039. A replay of the call will be available until August 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 

June 30, 2013

 (Unaudited and in thousands, except per share amounts) 

























 Quarter Ended 

 Six Months Ended 

June 30, 2013

June 30, 2012

June 30, 2013

June 30, 2012





 Operating Revenue 









 Rental  

$                           124,883

$                           116,068

$                           247,658

$                           232,289

 Operating expense reimbursement

53,221

48,426

105,134

97,169

 Total operating revenue 

178,104

164,494

352,792

329,458










 Operating Expenses 









 Rental property

32,985

30,369

64,533

59,906

 Real estate taxes 

21,776

19,740

42,900

39,651

 General and administrative

16,491

14,589

36,321

31,781

 Depreciation and amortization 

44,907

39,821

89,524

80,187

 Total operating expenses 

116,159

104,519

233,278

211,525











 Operating Income 

61,945

59,975

119,514

117,933










 Other Income/Expense 









 Interest and other  

2,371

2,265

4,993

4,715

 Interest  

(32,003)

(30,328)

(63,729)

(58,334)

 Total other income/expense 

(29,632)

(28,063)

(58,736)

(53,619)










 Income before property dispositions, income taxes, noncontrolling interest 









    and equity in earnings of unconsolidated joint ventures 

32,313

31,912

60,778

64,314

 Gain on property dispositions 

3,071

335

4,871

858

 Income taxes 

(660)

(146)

(1,151)

(324)

 Equity in earnings of unconsolidated joint ventures 

1,566

769

3,323

1,685










 Income from continuing operations 

36,290

32,870

67,821

66,533










 Discontinued operations (including net gains on property dispositions of 










$7,625 and $2,981 for the quarters ended June 30, 2013 and 2012, respectively and $49,338 and $4,045 for the six month periods ended June 30, 2013 and 2012, respectively)

6,953

4,810

50,078

10,749

 Net Income 

43,243

37,680

117,899

77,282

 Noncontrolling interest - operating partnerships 

(3,134)

(3,569)

(6,551)

(6,082)

 Noncontrolling interest - consolidated joint ventures 

-

-

-

-

 Net Income available to common shareholders     

$                             40,109

$                             34,111

$                           111,348

$                             71,200











 Net income 

$                             43,243

$                             37,680

$                           117,899

$                             77,282

 Other comprehensive income (loss) 

40

(1,515)

(4,812)

802

 Comprehensive income 

43,283

36,165

113,087

78,084

 Less: comprehensive income attributable to noncontrolling interest 

(3,135)

(3,522)

(6,406)

(6,108)

 Comprehensive income attributable to common shareholders 

$                             40,148

$                             32,643

$                           106,681

$                             71,976










 Basic income per common share  










 Continuing operations 

$                                 0.27

$                                 0.25

$                                 0.52

$                                 0.52

 Discontinued operations 

$                                 0.06

$                                 0.04

$                                 0.41

$                                 0.09

 Total basic income per common share 

$                                 0.33

$                                 0.29

$                                 0.93

$                                 0.61










 Diluted income per common share 










 Continuing operations 

$                                 0.27

$                                 0.25

$                                 0.53

$                                 0.52

 Discontinued operations 

$                                 0.06

$                                 0.04

$                                 0.40

$                                 0.09

 Total diluted income per common share 

$                                 0.33

$                                 0.29

$                                 0.93

$                                 0.61










 Weighted average shares 










 Basic 

120,081

116,683

119,416

116,359

 Diluted 

120,911

117,559

120,229

117,165










 Amounts attributable to common shareholders     










 Income from continuing operations 

$                             33,362

$                             29,449

$                             62,762

$                             60,786

 Discontinued operations 

6,747

4,662

48,586

10,414

 Net income 

$                             40,109

$                             34,111

$                           111,348

$                             71,200

 Liberty Property Trust 

 Statement of Funds From Operations 

June 30, 2013

 (Unaudited and in thousands, except per share amounts) 





























 Quarter Ended 

 Six Months Ended 

June 30, 2013

June 30, 2012

June 30, 2013

June 30, 2012


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 

$              40,109

$             0.33

$              34,111

$                         0.29

$        111,348

$             0.93

$          71,200

$              0.61












 Adjustments: 











 Depreciation and amortization of unconsolidated joint ventures 

3,301

3,554

6,698

7,170

 Depreciation and amortization 

44,804

40,420

89,776

81,466

 Gain on property dispositions 

(7,658)

(2,979)

(49,364)

(4,083)

 Noncontrolling interest share in addback for depreciation and amortization 











    and gain on property dispositions 

(1,199)

(1,264)

(1,399)

(2,637)

     Funds from operations available to common shareholders - basic 

$              79,357

$             0.66

$              73,842

$                         0.63

$        157,059

$             1.32

$        153,116

$              1.32












 Reconciliation of net income to FFO - diluted: 











 Diluted - income available to common shareholders 

$              40,109

$             0.33

$              34,111

$                         0.29

$        111,348

$             0.93

$          71,200

$              0.61












 Adjustments: 











 Depreciation and amortization of unconsolidated joint ventures 

3,301

3,554

6,698

7,170

 Depreciation and amortization  

44,804

40,420

89,776

81,466

 Gain on property dispositions 

(7,658)

(2,979)

(49,364)

(4,083)

 Noncontrolling interest excluding preferred unit distributions  

1,226

1,085

3,432

2,292

        Funds from operations available to common shareholders - diluted 

$              81,782

$             0.66

$              76,191

$                         0.63

$        161,890

$             1.31

$        158,045

$              1.31












 Reconciliation of weighted average shares: 











 Weighted average common shares - all basic calculations 

120,081

116,683

119,416

116,359

 Dilutive shares for long term compensation plans 

830

876

813

806

 Diluted shares for net income calculations 

120,911

117,559

120,229

117,165

 Weighted average common units 

3,714

3,767

3,714

3,788

 Diluted shares for Funds from operations calculations 

124,625

121,326

123,943

120,953

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, 2013

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
























June 30, 2013

December 31, 2012

Assets






Real estate:







Land and land improvements

$                         978,101

$                         899,801

Building and improvements

4,407,799

4,341,125

Less: accumulated depreciation

(1,190,670)

(1,164,756)










Operating real estate

4,195,230

4,076,170










Development in progress

229,570

248,602

Land held for development

226,399

258,324










Net real estate


4,651,199

4,583,096










Cash and cash equivalents

61,679

38,356

Restricted cash


27,376

33,147

Accounts receivable

8,122

8,988

Deferred rent receivable

110,966

108,576

Deferred financing and leasing costs, net of accumulated





amortization (2013, $137,652; 2012, $132,261)

142,442

137,359

Investments in and advances to unconsolidated joint ventures

175,314

169,021

Assets held for sale  

-

7,880

Prepaid expenses and other assets

70,694

87,756










Total assets


$                      5,247,792

$                      5,174,179










Liabilities






Mortgage loans


$                         307,087

$                         302,855

Unsecured notes


2,259,142

2,258,751

Credit facility


145,000

92,000

Accounts payable 

32,177

31,058

Accrued interest


20,006

20,164

Dividend and distributions payable

59,493

58,038

Other liabilities


156,356

185,956










Total liabilities


2,979,261

2,948,822










Noncontrolling interest - operating partnership - 301,483 preferred units





outstanding as of June 30, 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, 122,783,015 (includes 1,249,909 in treasury) and 119,720,776





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





June 30, 2013 and December 31, 2012, respectively

123

119

Additional paid-in capital

2,802,908

2,687,701

Accumulated other comprehensive (loss) income

(1,767)

2,900

Distributions in excess of net income

(551,102)

(547,757)

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





June 30, 2013 and December 31,2012

(51,951)

(51,951)

Total shareholders' equity

2,198,211

2,091,012










Noncontrolling interest - operating partnership






3,713,851 common units outstanding as of June 30, 2013 and December 31, 2012 

59,765

60,223

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

-

63,264

Noncontrolling interest - consolidated joint ventures

3,018

3,321










Total equity


2,260,994

2,217,820










Total liabilities, noncontrolling interest - operating partnership & equity

$                      5,247,792

$                      5,174,179

SOURCE Liberty Property Trust