Liberty Property Trust Announces Third Quarter Results
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MALVERN, Pa., Oct. 26 /PRNewswire-FirstCall/ -- Liberty Property Trust (NYSE: LRY) reported that net income per common share (diluted) was $0.39 per share for the quarter ended September 30, 2009, compared to $0.41 per share (diluted) for the quarter ended September 30, 2008. For the nine-month period ended September 30, 2009, net income per common share (diluted) was $1.02, compared to $1.08 per share for the same period in 2008.
Funds from operations available to common shareholders (diluted) ("FFO") for the third quarter of 2009 was $0.72 per share, compared to $0.80 per share for the third quarter of 2008. FFO per share for the nine-month period ended September 30, 2009 was $2.16, compared to $2.41 per share for the same period in 2008. 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 termination fees of $6.2 million, and an impairment charge of $4.8 million.
"During the third quarter we saw Liberty's portfolio occupancy stabilize, and while competitive market occupancies continue to erode, we may be seeing the first signs of what will, with no doubt, be a slow market recovery," said Bill Hankowsky, chief executive officer. "The industrial sector is poised to begin recovery ahead of the office markets, which continue to await positive news on the employment front. We expect that Liberty's outstanding financial position and customer-centric operations will continue to allow us to outperform our markets and provide us with fuel to grow when the opportunity arises in 2010 and beyond."
Portfolio Performance
Leasing: At September 30, 2009, Liberty's in-service portfolio of 77.4 million square feet was 89.3% occupied, compared to 89.4% at the end of the second quarter. During the quarter, Liberty completed lease transactions totaling 3.5 million square feet of space.
Same Store Performance: Property level operating income for same store properties increased by 0.4% on a cash basis and by 2.0% on a straight line basis for the third quarter of 2009 compared to the same quarter in 2008.
Capital Activities and Balance Sheet Management
Common Share Sales: During the third quarter of 2009, Liberty completed its continuous equity offering program, selling 2.8 million shares, which generated net proceeds of $69.2 million.
Senior Note Obligations: During the quarter, Liberty purchased $3.5 million of its October 2017 Senior Notes. These notes were purchased at a $0.5 million discount. This discount is included in FFO as a debt extinguishment gain.
Property Sales: Liberty sold six operating properties, which contained 982,000 square feet of leaseable space, and three acres of land, for $63.1 million.
Real Estate Investments
Development: During the third quarter, Liberty brought into service seven development properties totaling 501,000 square feet for a total investment of $89.2 million. These properties were 22.4% occupied as of September 30, 2009. The current yield on this investment is 1.1%, and the projected stabilized yield is 6.9%. Leases have been signed for an additional 29% of the space.
A joint venture in which the company holds a 50% interest brought into service a 500,000 square foot build-to-suit development property during the quarter. This property is 100% leased, and the current yield on the $24.0 million investment is 11.5%.
No development commenced during the quarter.
As of September 30, 2009, Liberty had 2.4 million square feet of wholly-owned and joint venture properties under development. This activity represents a total projected investment of $372.4 million, with an expected yield of 7.5%. The properties were 63.1% leased at September 30.
Acquisitions: Liberty acquired no properties during the quarter.
Earnings Outlook
Liberty expects to report funds from operations for 2009 in the range of $2.81 - $2.83 per share, and for 2010 in the range of $2.60 - $2.80 per share. A reconciliation of FFO to GAAP net income for both 2009 and 2010 is below:
2009 Range 2010 Range
Low High Low High
Projected net income
per share $1.32 $1.37 $1.12 $1.33
Depreciation and
amortization of
unconsolidated
joint ventures
0.15 0.15 0.13 0.15
Depreciation and
amortization 1.59 1.59 1.50 1.52
Gain on property
dispositions (0.20) (0.23) (0.10) (0.15)
Minority interest
share of addbacks (0.05) (0.05) (0.05) (0.05)
Projected funds from
operations per share $2.81 $2.83 $2.60 $2.80
Commenting on this guidance, Bill Hankowsky said: "The change in Liberty's earnings guidance from 2009 to 2010 is primarily due to a full-year's dilution from capital activity in 2009, and, to a lesser extent, continued pressure on real estate fundamentals, principally rental rates. While we have begun to see the first signs of stabilization taking root in our portfolio, it will take time for the economy to recover enough to reverse current declines in rents."
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 77 million square foot portfolio includes more than 700 properties which provide office, distribution and light manufacturing facilities to 2,100 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 third quarter results, on Tuesday, October 27, 2009, 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. No password or code is needed. 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. A passcode is needed for the replay: 33769240. 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, 2009
(Unaudited and in thousands, except per share amounts)
Quarter Ended Nine Months Ended
------------- -------------------
September September September September
30, 2009 30, 2008 30, 2009 30, 2008
-------- -------- -------- --------
Operating Revenue
Rental $130,643 $126,422 $388,446 $379,345
Operating expense
reimbursement 56,850 56,009 168,699 167,694
------ ------ ------- -------
Total operating
revenue 187,493 182,431 557,145 547,039
------- ------- ------- -------
Operating Expenses
Rental property 36,224 37,078 109,903 110,582
Real estate taxes 23,061 21,527 66,857 64,245
General and
administrative 11,248 13,180 38,470 40,340
Depreciation and
amortization 43,268 43,196 128,140 127,637
------ ------ ------- -------
Total operating
expenses 113,801 114,981 343,370 342,804
------- ------- ------- -------
Operating Income 73,692 67,450 213,775 204,235
Other Income/Expense
Interest and other 2,635 3,313 8,245 9,399
Debt extinguishment
gain 455 - 1,547 -
Interest (36,735) (37,587) (111,464) (114,559)
------- ------- -------- --------
Total other income/
expense (33,645) (34,274) (101,672) (105,160)
------- ------- -------- --------
Income before property
dispositions, income
taxes, minority interest
and equity in earnings
of unconsolidated joint
ventures 40,047 33,176 112,103 99,075
Gain (loss) on property
dispositions 100 463 (2,244) 1,939
Income taxes (86) (308) (430) (1,372)
Equity in earnings of
unconsolidated joint
ventures 515 470 2,124 1,857
--- --- ----- -----
Income from continuing
operations 40,576 33,801 111,553 101,499
Discontinued operations
(including net gain on
property dispositions of
$5,131 and $10,232 for
the quarters ended
September 30, 2009 and
2008 and $9,000 and
$13,635 for the nine
month periods ended
September 30, 2009 and
2008) 10,168 12,152 16,245 19,228
------ ------ ------ ------
Net Income 50,744 45,953 127,798 120,727
Less: Net income
attributable to
minority interest (6,841) (7,399) (19,335) (20,583)
------ ------ ------- -------
Net Income available to
common
shareholders $43,903 $38,554 $108,463 $100,144
======= ======= ======== ========
Basic income per common share
Continuing operations $0.30 $0.29 $0.87 $0.88
===== ===== ===== =====
Discontinued operations $0.09 $0.12 $0.15 $0.20
===== ===== ===== =====
Total basic income per
common share $0.39 $0.41 $1.02 $1.08
===== ===== ===== =====
Diluted income per common share
Continuing operations $0.30 $0.29 $0.87 $0.88
===== ===== ===== =====
Discontinued operations $0.09 $0.12 $0.15 $0.20
===== ===== ===== =====
Total diluted income per
common share $0.39 $0.41 $1.02 $1.08
===== ===== ===== =====
Weighted average shares
Basic 111,351 92,955 105,989 92,328
======= ====== ======= ======
Diluted 111,926 93,369 106,441 92,626
======= ====== ======= ======
Amounts attributable to
common shareholders
Income from continuing
operations $34,085 $26,923 $92,808 $81,745
Discontinued operations 9,818 11,631 15,655 18,399
----- ------ ------ ------
Net income $43,903 $38,554 $108,463 $100,144
======= ======= ======== ========
Liberty Property Trust
Statement of Funds From Operations
September 30, 2009
(Unaudited and in thousands, except per share amounts)
Quarter Ended
-------------
September 30, 2009 September 30, 2008
------------------ ------------------
Per Per
Weighted Weighted
Average Average
Dollars Share Dollars Share
------- ----- ------- -----
Reconciliation of net
income to FFO - basic:
Basic - income available
to common shareholders $43,903 $0.39 $38,554 $0.41
===== =====
Adjustments:
Depreciation and
amortization of
unconsolidated joint
ventures 3,991 4,331
Depreciation and
amortization 43,041 44,173
Gain on property
dispositions (9,442) (10,542)
Minority interest share
in addback for
depreciation and
amortization and gain
on property dispositions (1,293) (1,629)
------ ------
Funds from operations
available to common
shareholders - basic $80,200 $0.72 $74,887 $0.81
======= ===== ======= =====
Reconciliation of net income
to FFO - diluted:
Diluted - income
available to common
shareholders $43,903 $0.39 $38,554 $0.41
===== =====
Adjustments:
Depreciation and
amortization of
unconsolidated joint
ventures 3,991 4,331
Depreciation and
amortizaton 43,041 44,173
Gain on property
dispositions (9,442) (10,542)
Minority interest excluding
preferred unit
distributions 1,565 1,746
----- -----
Funds from operations
available to common
shareholders - diluted $83,058 $0.72 $78,262 $0.80
======= ===== ======= =====
Reconciliation of weighted
average shares:
Weighted average common
shares - all basic
calculations 111,351 92,955
Dilutive shares for long
term compensation plans 575 414
--- ---
Diluted shares for net
income calculations 111,926 93,369
Weighted average common
units 4,017 4,190
----- -----
Diluted shares for funds
from operations
calculations 115,943 97,559
======= ======
Nine Months Ended
-----------------
September 30, 2009 September 30, 2008
------------------ ------------------
Per Per
Weighted Weighted
Average Average
Dollars Share Dollars Share
------- ----- ------- -----
Reconciliation of net income
to FFO - basic:
Basic - income available
to common shareholders $108,463 $1.02 $100,144 $1.08
===== =====
Adjustments:
Depreciation and
amortization of
unconsolidated joint
ventures 12,113 12,208
Depreciation and
amortization 128,427 130,803
Gain on property
dispositions (14,817) (14,674)
Minority interest share
in addback for
depreciation and
amortization and gain on
property dispositions (4,497) (5,538)
------ ------
Funds from operations
available to common
shareholders - basic $229,689 $2.17 $222,943 $2.41
======== ===== ======== =====
Reconciliation of net
income to FFO - diluted:
Diluted - income
available to common
shareholders $108,463 $1.02 $100,144 $1.08
===== =====
Adjustments:
Depreciation and
amortization of
unconsolidated joint
ventures 12,113 12,208
Depreciation and
amortizaton 128,427 130,803
Gain on property
dispositions (14,817) (14,674)
Minority interest
excluding preferred unit
distributions 3,974 4,526
----- -----
Funds from operations
available to common
shareholders - diluted $238,160 $2.16 $233,007 $2.41
======== ===== ======== =====
Reconciliation of weighted
average shares:
Weighted average common
shares - all basic
calculations 105,989 92,328
Dilutive shares for long
term compensation
plans 452 298
--- ---
Diluted shares for net
income calculations 106,441 92,626
Weighted average common
units 4,018 4,190
----- -----
Diluted shares for funds
from operations
calculations 110,459 96,816
======= ======
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, 2009
(In thousands, except share amounts)
September 30, December 31,
2009 2008
---- ----
Assets (unaudited)
Real estate:
Land and land improvements $835,075 $801,763
Building and improvements 4,305,128 4,191,361
Less: accumulated depreciation (1,060,885) (963,043)
---------- --------
Operating real estate 4,079,318 4,030,081
Development in progress 169,926 245,463
Land held for development 219,440 209,551
------- -------
Net real estate 4,468,684 4,485,095
Cash and cash equivalents 219,402 15,794
Restricted cash 34,273 39,726
Accounts receivable 7,356 12,985
Deferred rent receivable 93,046 83,033
Deferred financing and leasing costs,
net of accumulated amortization
(2009, $132,099; 2008, $139,078) 133,426 132,627
Investment in unconsolidated joint
ventures 255,191 266,602
Assets held for sale 22,520 98,706
Prepaid expenses and other assets 91,988 82,467
------ ------
Total assets $5,325,886 $5,217,035
========== ==========
Liabilities
Mortgage loans $462,700 $198,560
Unsecured notes 1,842,882 2,131,607
Credit facility 140,000 260,000
Accounts payable 47,865 32,481
Accrued interest 27,794 36,474
Dividend and distributions payable 55,394 48,858
Other liabilities 160,134 182,549
------- -------
Total liabilities 2,736,769 2,890,529
--------- ---------
Equity
Shareholders' equity:
Common shares of beneficial interest,
$.001 par value, 183,987,000 shares
authorized, 113,850,578 (includes 1,249,909
in treasury) and 100,034,404 (includes
1,249,909 in treasury) shares issued and
outstanding as of September 30, 2009 and
December 31, 2008, respectively 114 101
Additional paid-in capital 2,452,479 2,162,820
Accumulated other comprehensive income 1,420 (5,378)
Distributions in excess of net income (232,323) (185,721)
Common shares in treasury, at cost,
1,249,909 shares as of September 30, 2009
and December 31, 2008 (51,951) (51,951)
------- -------
Total shareholders' equity 2,169,739 1,919,871
Minority interest - operating partnership 418,645 405,505
Minority interest - consolidated joint
ventures 733 1,130
--- -----
Total equity 2,589,117 2,326,506
--------- ---------
Total liabilities & equity $5,325,886 $5,217,035
========== ==========
SOURCE Liberty Property Trust
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