Liberty Property Trust

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Liberty Property Trust Announces Second Quarter 2013 Results

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 jleonard@libertyproperty.com.

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

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