Liberty Property Trust Announces Third Quarter Results

News provided by

Liberty Property Trust

Oct 23, 2012, 08:15 ET

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 [email protected].

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