Liberty Property Trust Announces Third Quarter Results
MALVERN, Pa., Oct. 26 /PRNewswire-FirstCall/ -- Liberty Property Trust (NYSE: LRY) reported that net income per common share (diluted) was $0.30 per share for the quarter ended September 30, 2010, compared to $0.39 per share (diluted) for the quarter ended September 30, 2009. For the nine-month period ended September 30, 2010, net income per common share (diluted) was $0.86, compared to $1.02 per share for the same period in 2009.
Funds from operations available to common shareholders (diluted) ("FFO") for the third quarter of 2010 was $0.69 per share, compared to $0.72 per share for the third quarter of 2009. A reconciliation of GAAP net income to FFO is included in the financial tables accompanying this press release. Funds from operations for the third quarter include lease termination fees of $2.0 million. FFO per share for the nine-month period ended September 30, 2010 was $2.00, compared to $2.16 per share for the same period in 2009.
"In the third quarter we achieved solid execution across all of our disciplines - strong leasing volumes and tenant retention; acquisition of nearly one million square feet of value-add real estate; and adroit financial execution," said Bill Hankowsky, chairman and chief executive officer. "The consistency of Liberty's performance is in stark contrast to the inconsistency of the economic recovery."
Portfolio Performance
Leasing: At September 30, 2010 Liberty's in-service portfolio of 79.8 million square feet was 89.0% occupied, compared to 88.7% at the end of the second quarter. During the quarter, Liberty completed lease transactions totaling 6.3 million square feet of space.
Same Store Performance: Property level operating income for same store properties decreased by 2.1% on a cash basis and decreased by 3.8% on a straight line basis for the third quarter of 2010 compared to the same quarter in 2009. Occupancy of the same store portfolio was 90.3% as of September 30, 2010, as compared to 90.8% as of June 30, 2010.
Capital and Balance Sheet Management
During the third quarter, Liberty repaid $169.7 million of August 2010, 8.5% senior unsecured notes and issued $350 million of ten-year, 4.75% senior unsecured notes. The net proceeds from this issuance were used to repay borrowings under the company's unsecured credit facility and for general corporate purposes.
Also during the quarter, Liberty replaced its existing $600 million credit facility which was due in January 2011 with a new, $500 million facility which matures in 2013. Based upon Liberty's current credit ratings, borrowings under this facility will bear interest at LIBOR plus 230 basis points.
Real Estate Investments
Development: During the third quarter, Liberty brought into service one development property totaling 75,000 square feet for a total investment of $10.5 million. This property is 100% occupied at a current yield of 12.5%. A joint venture in which the company holds a 25% interest brought into service one development property for a total investment of $134.0 million. This 176,000 square foot property is currently 39.0% leased. The projected stabilized yield is 4.7%. No development projects were commenced during the quarter, and Liberty is not currently developing any properties.
Acquisitions: Liberty acquired three properties during the quarter, for $38.4 million. These properties include two distribution buildings in Houston, TX, totaling 227,800 square feet. These two properties were vacant when purchased, but Liberty has since leased 46,400 square feet, which will commence in the fourth quarter of 2010. The third property is a 714,000 square foot distribution property in Orlando, FL. This property is 100% leased. The projected stabilized yield on the three properties is 8.7%.
Dispositions: Liberty sold one operating property, a 220,000 square foot industrial building in High Point, North Carolina, and five acres of land, for $3.9 million.
Earnings Outlook
Liberty expects to report funds from operations for 2010 in the range of $2.65 - $2.67 per share, and for 2011 in the range of $2.60 - $2.80 per share. A reconciliation of FFO to GAAP net income for both 2010 and 2011 is below:
2010 Range | 2011 Range | ||||
Low | High | Low | High | ||
Projected net income per share | $ 1.12 | $ 1.14 | $ 1.12 | $ 1.30 | |
Depreciation and amortization of unconsolidated joint ventures | 0.12 | 0.14 | 0.12 | 0.14 | |
Depreciation and amortization | 1.48 | 1.50 | 1.46 | 1.50 | |
Gain on property dispositions | (0.05) | (0.07) | (0.08) | (0.10) | |
Minority interest share of addbacks | (0.02) | (0.04) | (0.02) | (0.04) | |
Projected funds from operations per share | $ 2.65 | $ 2.67 | $ 2.60 | $ 2.80 | |
Commenting on this guidance, Bill Hankowsky said: "In viewing next year's prospects, we assume that the economic recovery will continue at its current pace, which is a very long, slow ramp up. Based on this pace of growth, we will not begin to see significant impact on our results until late in 2011. We have assumed modest acquisition and development investment, but we are armed with an outstanding balance sheet and enormous financial capacity, we will take advantage of investment opportunities should they become available."
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 80 million square foot portfolio includes more than 700 properties which provide office, distribution and light manufacturing facilities to 2,000 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 third quarter results, on Tuesday, October 26, 2010, at 1 p.m. eastern time. To access the conference call in the United States or Canada, please dial 1-888-870-2815. For international access, dial 706-643-7691. The conference identification number is 16649597. A replay of the call will be available by dialing 1-800-642-1687 for US/Canada participants or 706-645-9291 for international participants. The conference identification number 16649597 is needed to access the replay. The call can also be accessed via the Internet on the Investors page of Liberty's web site at www.libertyproperty.com for two weeks following the call.
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, 2010 | |||||||||
(Unaudited and in thousands, except per share amounts) | |||||||||
Quarter Ended | Nine Months Ended | ||||||||
September 30, 2010 | September 30, 2009 | September 30, 2010 | September 30, 2009 | ||||||
Operating Revenue | |||||||||
Rental | $ 131,655 | $ 129,848 | $ 391,574 | $ 386,138 | |||||
Operating expense reimbursement | 57,182 | 56,511 | 170,250 | 167,796 | |||||
Total operating revenue | 188,837 | 186,359 | 561,824 | 553,934 | |||||
Operating Expenses | |||||||||
Rental property | 38,181 | 35,957 | 113,093 | 108,968 | |||||
Real estate taxes | 22,731 | 22,852 | 67,512 | 66,279 | |||||
General and administrative | 12,634 | 11,246 | 40,074 | 38,453 | |||||
Depreciation and amortization | 43,178 | 43,039 | 129,845 | 127,478 | |||||
Total operating expenses | 116,724 | 113,094 | 350,524 | 341,178 | |||||
Operating Income | 72,113 | 73,265 | 211,300 | 212,756 | |||||
Other Income/Expense | |||||||||
Interest and other | 2,487 | 2,624 | 7,956 | 8,227 | |||||
Debt extinguishment gain | - | 455 | - | 1,547 | |||||
Interest | (34,896) | (36,533) | (112,468) | (110,898) | |||||
Total other income/expense | (32,409) | (33,454) | (104,512) | (101,124) | |||||
Income before property dispositions, income taxes, minority interest | |||||||||
and equity in earnings of unconsolidated joint ventures | 39,704 | 39,811 | 106,788 | 111,632 | |||||
Gain (loss) on property dispositions | 691 | 100 | 3,701 | (2,244) | |||||
Income taxes | (475) | (86) | (1,430) | (430) | |||||
Equity in earnings of unconsolidated joint ventures | 385 | 515 | 1,562 | 2,124 | |||||
Income from continuing operations | 40,305 | 40,340 | 110,621 | 111,082 | |||||
Discontinued operations (including net gain on property dispositions of $221 and $5,131 for the quarters ended September 30, 2010 and 2009 and $5,491 and $9,000 for the nine month periods ended September 30, 2010 and 2009) | 701 | 10,404 | 6,221 | 16,716 | |||||
Net Income | 41,006 | 50,744 | 116,842 | 127,798 | |||||
Noncontrolling interest - operating partnerships | (6,451) | (6,818) | (19,155) | (19,732) | |||||
Noncontrolling interest - consolidated joint ventures | 89 | (23) | (47) | 397 | |||||
Net Income available to common shareholders | $ 34,644 | $ 43,903 | $ 97,640 | $ 108,463 | |||||
Basic income per common share | |||||||||
Continuing operations | $ 0.30 | $ 0.30 | $ 0.82 | $ 0.87 | |||||
Discontinued operations | $ 0.01 | $ 0.09 | $ 0.05 | $ 0.15 | |||||
Total basic income per common share | $ 0.31 | $ 0.39 | $ 0.87 | $ 1.02 | |||||
Diluted income per common share | |||||||||
Continuing operations | $ 0.29 | $ 0.30 | $ 0.81 | $ 0.87 | |||||
Discontinued operations | $ 0.01 | $ 0.09 | $ 0.05 | $ 0.15 | |||||
Total diluted income per common share | $ 0.30 | $ 0.39 | $ 0.86 | $ 1.02 | |||||
Weighted average shares | |||||||||
Basic | 113,077 | 111,351 | 112,708 | 105,989 | |||||
Diluted | 113,773 | 111,926 | 113,388 | 106,441 | |||||
Amounts attributable to common shareholders | |||||||||
Income from continuing operations | $ 33,966 | $ 33,857 | $ 91,628 | $ 92,354 | |||||
Discontinued operations | 678 | 10,046 | 6,012 | 16,109 | |||||
Net income | $ 34,644 | $ 43,903 | $ 97,640 | $ 108,463 | |||||
Liberty Property Trust | |||||||||||||
Statement of Funds From Operations | |||||||||||||
September 30, 2010 | |||||||||||||
(Unaudited and in thousands, except per share amounts) | |||||||||||||
Quarter Ended | Nine Months Ended | ||||||||||||
September 30, 2010 | September 30, 2009 | September 30, 2010 | September 30, 2009 | ||||||||||
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 | $ 34,644 | $ 0.31 | $ 43,903 | $ 0.39 | $ 97,640 | $ 0.87 | $ 108,463 | $ 1.02 | |||||
Adjustments: | |||||||||||||
Depreciation and amortization of unconsolidated joint ventures | 3,799 | 3,991 | 11,253 | 12,113 | |||||||||
Depreciation and amortization | 42,523 | 43,041 | 128,243 | 128,427 | |||||||||
Gain on property dispositions | (626) | (9,442) | (6,036) | (14,817) | |||||||||
Noncontrolling interest share in addback for depreciation and amortization | |||||||||||||
and gain on property dispositions | (1,531) | (1,293) | (4,485) | (4,497) | |||||||||
Funds from operations available to common shareholders - basic | $ 78,809 | $ 0.70 | $ 80,200 | $ 0.72 | $ 226,615 | $ 2.01 | $ 229,689 | $ 2.17 | |||||
Reconciliation of net income to FFO - diluted: | |||||||||||||
Diluted - income available to common shareholders | $ 34,644 | $ 0.30 | $ 43,903 | $ 0.39 | $ 97,640 | $ 0.86 | $ 108,463 | $ 1.02 | |||||
Adjustments: | |||||||||||||
Depreciation and amortization of unconsolidated joint ventures | 3,799 | 3,991 | 11,253 | 12,113 | |||||||||
Depreciation and amortization | 42,523 | 43,041 | 128,243 | 128,427 | |||||||||
Gain on property dispositions | (626) | (9,442) | (6,036) | (14,817) | |||||||||
Noncontrolling interest excluding preferred unit distributions | 1,198 | 1,565 | 3,396 | 3,974 | |||||||||
Funds from operations available to common shareholders - diluted | $ 81,538 | $ 0.69 | $ 83,058 | $ 0.72 | $ 234,496 | $ 2.00 | $ 238,160 | $ 2.16 | |||||
Reconciliation of weighted average shares: | |||||||||||||
Weighted average common shares - all basic calculations | 113,077 | 111,351 | 112,708 | 105,989 | |||||||||
Dilutive shares for long term compensation plans | 696 | 575 | 680 | 452 | |||||||||
Diluted shares for net income calculations | 113,773 | 111,926 | 113,388 | 106,441 | |||||||||
Weighted average common units | 3,943 | 4,017 | 3,949 | 4,018 | |||||||||
Diluted shares for funds from operations calculations | 117,716 | 115,943 | 117,337 | 110,459 | |||||||||
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, 2010 | ||||||
(In thousands, except share amounts) | ||||||
September 30, 2010 | December 31, 2009 | |||||
Assets | (unaudited) | |||||
Real estate: | ||||||
Land and land improvements | $ 863,143 | $ 848,988 | ||||
Building and improvements | 4,406,194 | 4,283,250 | ||||
Less: accumulated depreciation | (1,064,018) | (970,935) | ||||
Operating real estate | 4,205,319 | 4,161,303 | ||||
Development in progress | - | 66,714 | ||||
Land held for development | 209,668 | 218,633 | ||||
Net real estate | 4,414,987 | 4,446,650 | ||||
Cash and cash equivalents | 111,941 | 237,446 | ||||
Restricted cash | 41,163 | 42,232 | ||||
Accounts receivable | 9,600 | 6,057 | ||||
Deferred rent receivable | 106,540 | 95,527 | ||||
Deferred financing and leasing costs, net of accumulated | ||||||
amortization (2010, $118,298; 2009, $108,390) | 142,218 | 134,309 | ||||
Investments in and advances to unconsolidated joint ventures | 172,936 | 175,584 | ||||
Assets held for sale | 5,457 | 5,564 | ||||
Prepaid expenses and other assets | 81,197 | 85,574 | ||||
Total assets | $ 5,086,039 | $ 5,228,943 | ||||
Liabilities | ||||||
Mortgage loans | $ 338,405 | $ 473,993 | ||||
Unsecured notes | 2,023,143 | 1,842,882 | ||||
Credit facility | - | 140,000 | ||||
Accounts payable | 42,735 | 31,195 | ||||
Accrued interest | 25,915 | 31,251 | ||||
Dividend and distributions payable | 55,913 | 55,402 | ||||
Other liabilities | 152,952 | 171,051 | ||||
Total liabilities | 2,639,063 | 2,745,774 | ||||
Equity | ||||||
Shareholders' equity: | ||||||
Common shares of beneficial interest, $.001 par value, 183,987,000 shares | ||||||
authorized, 115,017,633 (includes 1,249,909 in treasury) and 113,875,211 | ||||||
(includes 1,249,909 in treasury) shares issued and outstanding as of | ||||||
September 30, 2010 and December 31, 2009, respectively | 115 | 114 | ||||
Additional paid-in capital | 2,543,049 | 2,509,704 | ||||
Accumulated other comprehensive (loss) income | 364 | 2,339 | ||||
Distributions in excess of net income | (401,857) | (337,911) | ||||
Common shares in treasury, at cost, 1,249,909 shares as of | ||||||
September 30, 2010 and December 31, 2009 | (51,951) | (51,951) | ||||
Total shareholders' equity | 2,089,720 | 2,122,295 | ||||
Noncontrolling interest - operating partnership | ||||||
3,943,224 and 4,011,354 common units outstanding as of | ||||||
September 30, 2010 and December 31, 2009, respectively | 68,629 | 72,294 | ||||
9,740,000 preferred units outstanding as of September 30, 2010 and December 31, 2009 | 287,959 | 287,959 | ||||
Noncontrolling interest - consolidated joint ventures | 668 | 621 | ||||
Total equity | 2,446,976 | 2,483,169 | ||||
Total liabilities & equity | $ 5,086,039 | $ 5,228,943 | ||||
SOURCE Liberty Property Trust
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