LIBERTY PROPERTY TRUST MALVERN, Pa., Oct. 21, 2014 /PRNewswire/ -- Liberty Property Trust reported that funds from operations available to common shareholders (diluted) ("FFO") for the third quarter of 2014 was $0.64 per share, compared to $0.57 per share for the third quarter of 2013. FFO per share was $1.80 for the nine-month period ended September 30, 2014 and $1.86 per share for the same period in 2013.
Net income per common share (diluted) was $0.23 for the quarter ended September 30, 2014, compared to $0.21 for the quarter ended September 30, 2013. Net income per common share (diluted) for the nine-month period ended September 30, 2014 was $0.92, compared to $1.11 for the same period in 2013.
Results for the first nine months of 2014 reflect the sale of 6.6 million square feet of suburban office and flex properties which closed in two installments during December 2013 and January 2014. Year-over-year results are reflective of strategic portfolio transformation activities that have increased Liberty's industrial portfolio and decreased its suburban office exposure.
Chairman and chief executive officer Bill Hankowsky said, "As we anticipated, the industrial markets are providing fertile ground to ramp up our development pipeline, and we continue to take advantage of positive supply/demand dynamics in our industrial markets. Office markets are firming, and we are seeing increased demand, particularly for space in Class-A properties."
Portfolio Performance
Occupancy: At September 30, 2014, Liberty's in-service portfolio of 105 million square feet was 92.3% occupied, compared to 91.7% at the end of the second quarter of 2014.
Same Store Performance: Property level operating income for same store properties decreased by 0.4% on a cash basis and by 0.9% on a straight line basis for the third quarter of 2014 compared to the same quarter in 2013.
Significant same store leases signed since June 30 include:
-- 456 International Parkway in Minooka, IL, a 456,479 square foot
distribution building, has been leased in its entirety and will commence
late in the fourth quarter.
-- Liberty has leased the remaining 421,200 square feet of space at 40
Logistics Drive, Carlisle PA, to fine chocolate manufacturer, Lindt and
Sprungli (USA), Inc. The lease is expected to commence first quarter
2015.
-- 151 South Warner Road, King of Prussia, PA, an 89,914 square foot office
building vacant at September 30, has been leased in its entirety,
commencing late in the fourth quarter.
Real Estate Investments
Development Deliveries: In the third quarter, Liberty brought into service three development properties for a total investment of $200 million. The properties contain 2.8 million square feet of leasable space and are 100% leased. The current yield on these properties is 8.2%.
Development Starts: During the quarter, Liberty began development of eight wholly-owned properties for a projected investment of $157.9 million. The properties consist of:
-- 11835 Newgate Boulevard, Hagerstown, MD, a 616,000 square foot
distribution facility, 100% pre-leased.
-- 140 Caliber Ridge, Greer, SC, a 156,000 square foot distribution
building 100% pre-leased to Bosch Security Systems.
-- 120 Caliber Ridge, Greer, SC, a 156,000 square foot multi-tenant
distribution building, 27% preleased.
-- 10020 South Reinhart Drive, Oak Creek, WI, a 171,000 square foot
multi-tenant industrial building.
-- 333 Howard Street, Des Plaines, IL, a 236,000 square foot distribution
building.
-- 11460 NW 122(nd) Street (Miami International Tradeport Building B),
Medley, FL a 148,000 square foot multi-tenant industrial building.
-- 11020 Holly Lane, Dayton, MN, a 247,000 square foot multi-tenant
industrial building.
-- 1910 W. Rio Salado Parkway, Tempe, AZ, a 154,000 square foot office
building.
In addition to the wholly-owned starts, Liberty began development of two joint venture properties.
-- 1800 Arch Street, Philadelphia, PA, a 1.3 million square foot office and
hotel property for $921.2 million. Comcast Corporation has signed a
lease for 73.4% of the property's office space. This project is being
developed by joint ventures between Comcast and Liberty in which Liberty
holds a 20% interest.
-- 300 North Mitchell Road, North Aurora, IL, a 430,000 square foot
distribution building. Liberty holds a 25% interest in this $24.4
million property.
Significant leasing in the development pipeline during and subsequent to the quarter included the entirety of 10 Emery Street, an 800,000 square foot distribution building in Bethlehem, PA, and the entirety of 7462 New Ridge Road, a 126,000 square foot multi-tenant industrial building in Hanover, MD.
Acquisitions: Liberty acquired one property for $6.8 million during the third quarter. 5039 Sirona Drive in Charlotte, NC is a 152,000 square foot distribution building, 100% leased at a current yield of 9.2%.
Capital Activities and Balance Sheet Management
The Company repaid its 5.65% Senior Notes due August 2014 in the amount of $200 million.
FFO Guidance Reconciliation
As previously stated, Liberty expects to report the fourth quarter 2014 funds from operations ("FFO") per share in the range of $0.63 - $0.66. A reconciliation of projected FFO to projected GAAP net income for the fourth quarter of 2014 is below (all amounts projected):
Q4-2014 Range
Low High
Net income per share $0.56 $0.57
Depreciation and amortization of
unconsolidated joint ventures 0.01 0.03
Depreciation and amortization 0.39 0.40
Gain on property dispositions (0.33) (0.32)
Noncontrolling interest share of
addbacks (0.00) (0.02)
===== =====
Funds from operations per share $0.63 $0.66
About the Company
Liberty Property Trust (NYSE:LPT) 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 105 million square foot portfolio includes more than 750 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 jleonard@libertyproperty.com.
Liberty will host a conference call during which management will discuss third quarter results, on Tuesday, October 21, 2014, at 1:00 p.m. Eastern Time. To access the conference call, please dial 855-277-7530. The passcode needed for access is 7918450. A replay of the call will be available until November 21, 2014, by dialing 1-855-859-2056 using the same passcode as above. The call can also be accessed in the Investors section 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. These forward-looking statements include statements relating to, among others things, the timing of leasing, development and acquisition activity, expectations for our operating results, business and financial condition, our joint venture with Comcast, the impact of our
strategic transformation activities on our portfolio and business and our growth prospects, as well as statements that are generally accompanied by words such as "believes," "anticipates," "expects," "estimates," "should," "seeks," "intends," "proposed," "planned," "outlook" and "goal" or similar expressions. 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 risks, uncertainties and other factors include, without limitation, uncertainties affecting real estate business generally (such as entry into new leases, renewals of leases and dependence on tenants' business operations), risks relating to the integration of the operations of entities that we have acquired or may acquire, risks relating to financing arrangements and sales of securities, possible environmental liabilities, risks relating to leverage and debt service (including availability of financing terms acceptable to the company and sensitivity of the company's operations and financing arrangements to fluctuations in interest rates), dependence on the primary markets in which the company's properties are located, the existence of complex regulations relating to status as a REIT and the adverse consequences of the failure to qualify as a REIT, risks relating to litigation, including without limitation litigation involving entities that we have a acquired or may acquire, and the potential adverse impact of market interest rates on the market price for the company's securities, and other risks and
uncertainties detailed in the company's filings with the Securities and Exchange Commission, including without limitation the Company's Annual Report on Form 10-K for the year ended December 31, 2013. 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, 2014
(Unaudited and in thousands, except per share amounts)
Quarter Ended Nine months ended
------------- -----------------
September 30, 2014 September 30, 2013 September 30, 2014 September 30, 2013
------------------ ------------------ ------------------ ------------------
Operating Revenue
Rental $143,294 $110,260 $421,620 $321,932
Operating expense reimbursement 55,062 45,088 167,326 131,566
Total operating revenue 198,356 155,348 588,946 453,498
Operating Expenses
Rental property 33,105 27,634 103,728 79,547
Real estate taxes 25,595 18,925 75,812 55,788
General and administrative 14,748 17,217 48,077 53,466
Depreciation and amortization 58,578 39,159 173,184 113,906
Total operating expenses 132,026 102,935 400,801 302,707
Operating Income 66,330 52,413 188,145 150,791
Other Income/Expense
Interest and other 6,230 4,512 11,785 14,269
Interest (37,958) (33,542) (115,635) (89,414)
Total other income/expense (31,728) (29,030) (103,850) (75,145)
Income before property dispositions, income taxes, noncontrolling interest
and equity in earnings of unconsolidated joint ventures 34,602 23,383 84,295 75,646
(Loss) gain on property dispositions (20) - 1,879 -
Income taxes (859) (629) (2,083) (1,780)
Equity in earnings of unconsolidated joint ventures 1,592 650 7,297 3,973
----- --- ----- -----
Income from continuing operations 35,315 23,404 91,388 77,839
Discontinued operations (including net gains on property dispositions of
$38 and $29 for the quarters ended September 30, 2014 and 2013, respectively and $46,291 and $49,367 for the nine month periods ended September 30, 2014 and 2013, respectively) 136 6,544 48,276 70,008
Net Income 35,451 29,948 139,664 147,847
Noncontrolling interest - operating partnerships (944) (843) (3,618) (7,394)
Noncontrolling interest - consolidated joint ventures (84) (406) (474) (406)
Net Income available to common shareholders $34,423 $28,699 $135,572 $140,047
======= ======= ======== ========
Net income $35,451 $29,948 $139,664 $147,847
Other comprehensive (loss) income - foreign currency translation (13,000) 4,927 (5,189) 115
Other comprehensive income (loss) - change in net unrealized gain on derivative instruments 666 - (990) -
Comprehensive income 23,117 34,875 133,485 147,962
Less: comprehensive income attributable to noncontrolling interest (739) (1,370) (3,948) (7,777)
Comprehensive income attributable to common shareholders $22,378 $33,505 $129,537 $140,185
======= ======= ======== ========
Basic income per common share
Continuing operations $0.23 $0.16 $0.60 $0.58
Discontinued operations $ - $0.05 $0.32 $0.54
Total basic income per common share $0.23 $0.21 $0.92 $1.12
===== ===== ===== =====
Diluted income per common share
Continuing operations $0.23 $0.16 $0.60 $0.58
Discontinued operations $ - $0.05 $0.32 $0.53
Total diluted income per common share $0.23 $0.21 $0.92 $1.11
===== ===== ===== =====
Weighted average shares
Basic 147,422 135,628 146,987 124,889
Diluted 148,088 136,328 147,661 125,655
Amounts attributable to common shareholders
Income from continuing operations $34,290 $22,316 $88,430 $72,048
Discontinued operations 133 6,383 47,142 67,999
Net income $34,423 $28,699 $135,572 $140,047
Liberty Property Trust
Statement of Funds From Operations
September 30, 2014
(Unaudited and in thousands, except per share amounts)
Quarter Ended Nine months ended
------------- -----------------
September 30, 2014 September 30, 2013 September 30, 2014 September 30, 2013
------------------ ------------------ ------------------ ------------------
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 $34,423 $0.23 $28,699 $0.21 $135,572 $0.92 $140,047 $1.12
===== ===== ===== =====
Adjustments:
Depreciation and amortization of unconsolidated joint ventures 3,334 4,176 9,966 10,874
Depreciation and amortization 58,114 45,642 171,730 135,418
Gain on property dispositions (18) (29) (47,629) (49,393)
Noncontrolling interest share in addback for depreciation and amortization
and gain on property dispositions (1,439) (1,226) (3,146) (2,625)
Funds from operations available to common shareholders - basic $94,414 $0.64 $77,262 $0.57 $266,493 $1.81 $234,321 $1.88
======= ===== ======= ===== ======== ===== ======== =====
Reconciliation of net income to FFO - diluted:
Diluted - income available to common shareholders $34,423 $0.23 $28,699 $0.21 $135,572 $0.92 $140,047 $1.11
===== ===== ===== =====
Adjustments:
Depreciation and amortization of unconsolidated joint ventures 3,334 4,176 9,966 10,874
Depreciation and amortization 58,114 45,642 171,730 135,418
Gain on property dispositions (18) (29) (47,629) (49,393)
Noncontrolling interest excluding preferred unit distributions 826 725 3,264 4,157
Funds from operations available to common shareholders - diluted $96,679 $0.64 $79,213 $0.57 $272,903 $1.80 $241,103 $1.86
======= ===== ======= ===== ======== ===== ======== =====
Reconciliation of weighted average shares:
Weighted average common shares - all basic calculations 147,422 135,628 146,987 124,889
Dilutive shares for long term compensation plans 666 700 674 766
--- --- --- ---
Diluted shares for net income calculations 148,088 136,328 147,661 125,655
Weighted average common units 3,554 3,692 3,554 3,706
Diluted shares for Funds from operations calculations 151,642 140,020 151,215 129,361
======= ======= ======= =======
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, 2014
(Unaudited and in thousands, except share and unit amounts)
September 30, 2014 December 31, 2013
------------------ -----------------
Assets
Real estate:
Land and land improvements $1,195,924 $1,138,922
Building and improvements 5,413,512 5,142,480
Less: accumulated depreciation (1,177,726) (1,057,644)
Operating real estate 5,431,710 5,223,758
Development in progress 250,506 209,187
Land held for development 265,864 233,055
------- -------
Net real estate 5,948,080 5,666,000
Cash and cash equivalents 39,086 163,414
Restricted cash 22,918 51,456
Accounts receivable 18,571 13,900
Deferred rent receivable 111,823 99,956
Deferred financing and leasing costs, net of accumulated
amortization (2014, $167,045; 2013, $140,933) 217,261 226,377
Investments in and advances to unconsolidated joint ventures 202,570 179,655
Assets held for sale 2,895 278,962
Prepaid expenses and other assets 97,638 95,840
------ ------
Total assets $6,660,842 $6,775,560
========== ==========
Liabilities
Mortgage loans $534,547 $545,306
Unsecured notes 2,508,886 2,708,213
Credit facility 140,950 -
Accounts payable 65,668 70,406
Accrued interest 41,277 25,777
Dividend and distributions payable 72,046 71,323
Other liabilities 221,943 250,819
------- -------
Total liabilities 3,585,317 3,671,844
--------- ---------
Noncontrolling interest - operating partnership - 301,483 preferred units
outstanding as of September 30, 2014 and December 31, 2013 7,537 7,537
Equity
Shareholders' equity:
Common shares of beneficial interest, $.001 par value, 283,987,000 shares
authorized, 149,354,294 (includes 1,249,909 in treasury) and
147,846,801
(includes 1,249,909 in treasury) shares issued and outstanding
as of
September 30, 2014 and December 31, 2013, respectively 149 148
Additional paid-in capital 3,724,184 3,669,618
Accumulated other comprehensive income 3,707 9,742
Distributions in excess of net income (666,646) (591,713)
Common shares in treasury, at cost, 1,249,909 shares as of
September 30, 2014 and December 31, 2013 (51,951) (51,951)
Total shareholders' equity 3,009,443 3,035,844
Noncontrolling interest - operating partnership
3,553,566 and 3,556,566 common units outstanding as of
September 30, 2014 and December 31, 2013, respectively 54,626 56,713
Noncontrolling interest - consolidated joint ventures 3,919 3,622
----- -----
Total equity 3,067,988 3,096,179
--------- ---------
Total liabilities, noncontrolling interest - operating partnership & equity $6,660,842 $6,775,560
========== ==========
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SOURCE Liberty Property Trust
