Fourth quarter highlights include:

  • Net income available to common shareholders $1.33 per diluted share
  • NAREIT Funds from Operations $0.41 per diluted share
  • Net income and NAREIT Funds from Operations per diluted share include $0.16 charge relating to early extinguishment of debt
  • 8.3 million square feet of wholly-owned properties and 32 acres of land sold for $1.1 billion
  • Same store operating income increased by 0.9%
  • Same store operating income for the industrial distribution portfolio increased by 1.9%
  • $297.8 million in developments delivered at a yield of 8.1%
  • Industrial distribution rents increased 11.4%
  • $228.1 million in new developments started at a projected stabilized yield of 7.6%
  • Prepaid $296.5 million of 6.625% senior notes, and $100 million of 7.5% medium term notes


Full year highlights include:

  • Net income available to common shareholders $2.43 per diluted share
  • NAREIT Funds from Operations $2.37 per diluted share
  • Net income and NAREIT Funds from Operations per diluted share include $0.18 charge relating to early extinguishment of debt
  • 9.5 million square feet of wholly-owned properties and 35 acres of land sold for $1.2 billion
  • $621.7 million in developments delivered at a current yield of 7.3% and a projected stabilized yield of 8.3%
  • $402.5 million in new developments started at a projected stabilized yield of 7.3%
  • Same store operating income increased by 2.8%
  • Same store operating income for the industrial distribution portfolio increased by 4.0%
  • Industrial distribution rents increased by 11.7%

MALVERN, Pa., Feb. 07, 2017 (GLOBE NEWSWIRE) -- Liberty Property Trust reported that net income available to common shareholders for the fourth quarter of 2016 was $195.4 million, or $1.33 per diluted share, compared to $81.7 million, or $0.55 per diluted share, for the fourth quarter of 2015.

For the year ended December 31, 2016, net income available to common shareholders was $356.8 million, or $2.43 per diluted share, compared to $239.5 million, or $1.61 per diluted share, for the previous year.

Net income for the fourth quarter and full year 2016 reflects gains on sale, net of impairments, of $189.7 million and $215.4 million, respectively, compared to $41.9 million and $82.1 million, respectively for the same periods in 2015.

Funds from Operations
The company uses the National Association of Real Estate Investment Trusts (“NAREIT”) definition of Funds from Operations (“FFO”) as an operating measure of the company’s financial performance.  A reconciliation of FFO to GAAP net income is included in the financial data tables accompanying this press release.

NAREIT FFO available to common shareholders for the fourth quarter of 2016 was $62.0 million, or $0.41 per diluted share, compared to $99.3 million, or $0.66 per diluted share, for the fourth quarter of 2015. 

NAREIT FFO available to common shareholders for the year ended December 31, 2016 was $356.9 million, or $2.37 per diluted share, compared to $411.0 million, or $2.70 per diluted share, for the previous year.

Net income and FFO for the fourth quarter and the full year 2016 were impacted by a loss on debt extinguishment related to the prepayment of senior and medium term notes of $23.6 million ($0.16 per share) and $27.1 million ($0.18 per share), respectively.

“We could not be more pleased with what we achieved in 2016, both in terms of our strategic execution, and the performance of our real estate,” said Bill Hankowsky, chairman, president, and chief executive officer. “As we enter 2017 we are encouraged by the continued strength in the industrial markets, with the resultant rising market rents and outstanding development opportunities, supported by the stability of a well-leased portfolio and a strong balance sheet.”

Portfolio Performance 
Occupancy: At December 31, 2016, Liberty’s in-service portfolio of 99 million square feet was 96.0% occupied, compared to 95.5% at the end of the third quarter of 2016. During the quarter, Liberty completed lease transactions totaling 6.2 million square feet of space. Liberty leased 26.1 million square feet of space in 2016.

Liberty’s 75.3 million square foot wholly-owned industrial distribution portfolio was 97.0% leased, compared to 97.0% at the end of the third quarter.

Same Store Performance: Property level operating income for same store properties increased by 2.4% on a cash basis and by 0.9% on a straight line basis for the fourth quarter of 2016 compared to the same quarter in 2015. For the full year ended December 31, 2016, property level operating income for same store properties increased by 3.4% on a cash basis and by 2.8% on a straight line basis, compared to the full year ended December 31, 2015.

Real Estate Investments
Development Deliveries: In the fourth quarter, Liberty brought into service seven wholly-owned development properties for a total investment of $273.8 million. The properties contain 3.4 million square feet of leasable space and were 100% occupied as of the end of the quarter. The yield on these properties at December 31, 2016 was 8.3%.

Joint ventures in which Liberty holds an interest brought into service two development properties for a total investment of $24.0 million. These properties, which contain 383,000 square feet of leasable space, were 54.9% occupied at December 31, 2016 at a current yield of 4.8% and a projected stabilized yield of 8.5%.

Development Starts: In the fourth quarter, Liberty began development of seven wholly-owned properties totaling 2.4 million square feet of leasable space at a projected investment of $207.6 million. The properties include an office build-to-suit project and six distribution buildings for inventory:

  • 1870 West Rio Salado Parkway, a 236,000 square foot office build-to-suit in Tempe, AZ, 100% pre-leased
  • 8801 Congdon Hill Drive, a 1.1 million square foot distribution building in the Lehigh Valley, PA region, where Liberty’s 26 million square foot portfolio is 99% leased
  • 1500 South 71st Avenue, a 436,000 square foot distribution building in Phoenix, AZ, 60% pre-leased
  • 3929 Shutterfly Road, a 204,000 square foot distribution building in Charlotte, NC
  • 2988 Green Road, a 172,000 square foot distribution building in Greer, SC
  • Worcester 1 and 2, distribution buildings totaling 216,000 square feet in Worcester, UK

In addition, a joint venture in which Liberty holds an interest began construction on 200 Arlington Boulevard, a 302,000 square foot, $20.5 million distribution property for inventory in Swedesboro, NJ.

Real Estate Dispositions
During the fourth quarter, Liberty sold a portfolio of non-core suburban properties, consisting of 108 buildings totaling approximately 7.6 million square feet of leasable space in five markets and approximately 26.7 acres of land for $969 million. These properties were 88.1% leased at closing. In addition, Liberty completed the sale of seven properties totaling approximately 759,000 square feet and 5.3 acres of land for $91.4 million. These properties were 62.2% leased at the time of sale.

Capital and Balance Sheet Activity
During the fourth quarter, Liberty prepaid its 6.625% Senior Notes due October 2017 in the amount of $296.5 million and its 7.5% medium term notes due January 2018 in the amount of $100.0 million. This resulted in a $23.6 million loss on debt extinguishment ($0.16 per share), which is included in net income and NAREIT FFO.

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 99 million square foot portfolio includes 568 properties which provide office, distribution and light manufacturing facilities to 1,200 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 fourth quarter and full year results, on Tuesday, February 7, 2017, at 12 p.m. Eastern Time.  To access the conference call, please dial 855-277-7530. The passcode needed for access is 46035372. A replay of the call will be available until March 7, 2017, 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.  These forward-looking statements include statements relating to, among others things, achievement of strategic targets, expectations for our operating results, business and financial condition, 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,” “remain confident,” 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 our plans for disposing of certain properties, 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.  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 
December 31, 2016
 (Unaudited and in thousands, except per share amounts) 
           
           
    Quarter Ended   Year Ended  
   December 31, 2016 December 31, 2015 December 31, 2016 December 31, 2015 
                   
 Operating Revenue          
 Rental  $  124,516  $  143,204  $  543,410  $  584,165  
 Operating expense reimbursement     41,600     56,178     190,357     224,608  
 Development service fee income     12,941     -     12,941     -  
  Total operating revenue     179,057     199,382     746,708     808,773  
           
 Operating Expenses          
 Rental property     22,731     33,728     102,481     132,702  
 Real estate taxes     23,303     26,831     99,793     105,410  
 General and administrative    15,428     17,282     68,198     68,710  
 Depreciation and amortization     50,547     55,228     205,090     226,575  
 Development service fee expense     12,165     -     12,165     -  
 Impairment - real estate assets     3,879     1,126     3,879     18,244  
  Total operating expenses     128,053     134,195     491,606     551,641  
  Operating Income     51,004     65,187     255,102     257,132  
           
 Other Income/Expense          
 Interest and other income     1,207     5,870     13,950     23,781  
 Loss on debt extinguishment     (23,605)    -     (27,099)    -  
 Interest expense     (24,006)    (32,484)    (115,077)    (135,779) 
  Total other income/expense     (46,404)    (26,614)    (128,226)    (111,998) 
           
 Income before gain on property dispositions, income taxes, noncontrolling interest          
  and equity in earnings of unconsolidated joint ventures     4,600     38,573     126,876     145,134  
 Gain on property dispositions     193,599     42,984     219,270     100,314  
 Income taxes     (338)    (60)    (1,971)    (2,673) 
 Equity in earnings of unconsolidated joint ventures     2,430     2,344     21,970     3,149  
           
 Net Income     200,291     83,841     366,145     245,924  
  Noncontrolling interest - operating partnerships     (4,820)    (2,075)    (9,070)    (6,192) 
  Noncontrolling interest - consolidated joint ventures     (88)    (78)    (258)    (249) 
 Net Income available to common shareholders  $  195,383  $  81,688  $  356,817  $  239,483  
           
  Net income  $  200,291  $  83,841  $  366,145  $  245,924  
  Other comprehensive loss - foreign currency translation     (11,741)    (6,311)    (34,744)    (12,540) 
  Other comprehensive gain (loss) - derivative instruments     1,542     1,051     410     (488) 
 Comprehensive income     190,092     78,581     331,811     232,896  
  Less: comprehensive income attributable to noncontrolling interest     (4,668)    (2,030)    (8,519)    (6,135) 
 Comprehensive income attributable to common shareholders  $  185,424  $  76,551  $  323,292  $  226,761  
           
 Basic income per common share  $  1.33  $  0.56  $  2.44  $  1.62  
           
 Diluted income per common share  $  1.33  $  0.55  $  2.43  $  1.61  
           
 Weighted average shares          
  Basic     146,419     147,164     146,204     148,243  
  Diluted     147,182     147,730     146,889     148,843  
           

 

 Liberty Property Trust 
 Statement of Funds From Operations 
December 31, 2016
 (Unaudited and in thousands, except per share amounts) 
                
                
    Quarter Ended   Year Ended   
   December 31, 2016 December 31, 2015 December 31, 2016 December 31, 2015  
    Per   Per   Per   Per   
    Weighted  Weighted  Weighted  Weighted  
     Average    Average    Average    Average   
   DollarsShare DollarsShare DollarsShare DollarsShare  
              
 Reconciliation of net income to NAREIT FFO - basic:               
 Basic - income available to common shareholders  $  195,383 $  1.33 $  81,688 $  0.56 $  356,817 $  2.44 $  239,483 $  1.62  
                
 Adjustments:               
 Depreciation and amortization of unconsolidated joint ventures     2,308      2,747      11,014      11,638    
 Depreciation and amortization     50,155      54,817      203,626      224,917    
 Gain on property dispositions / impairment - real estate assets of unconsolidated joint               
  ventures     (25)     (11)     (7,012)     11,305    
 Gain on property dispositions / impairment - real estate assets     (190,477)     (41,858)     (216,148)     (82,070)   
 Noncontrolling interest share in addback for depreciation and amortization               
  and gain on property dispositions / impairment - real estate assets     3,244      (367)     192      (3,845)   
 NAREIT Funds from operations available to common shareholders - basic $  60,588 $  0.41 $  97,016 $  0.66 $  348,489 $  2.38 $  401,428 $  2.71  
                
 Reconciliation of net income to NAREIT FFO - diluted:               
 Diluted - income available to common shareholders  $  195,383 $  1.33 $  81,688 $  0.55 $  356,817 $  2.43 $  239,483 $  1.61  
                
 Adjustments:               
 Depreciation and amortization of unconsolidated joint ventures     2,308      2,747      11,014      11,638    
 Depreciation and amortization     50,155      54,817      203,626      224,917    
 Gain on property dispositions / impairment - real estate assets of unconsolidated joint               
  ventures     (25)     (11)     (7,012)     11,305    
 Gain on property dispositions / impairment - real estate assets     (190,477)     (41,858)     (216,148)     (82,070)   
 Noncontrolling interest excluding preferred unit distributions     4,702      1,957      8,598      5,720    
 NAREIT Funds from operations available to common shareholders - diluted $  62,046 $  0.41 $  99,340 $  0.66 $  356,895 $  2.37 $  410,993 $  2.70  
                
 Reconciliation of weighted average shares:               
 Weighted average common shares - all basic calculations     146,419      147,164      146,204      148,243    
 Dilutive shares for long term compensation plans     763      566      685      600    
 Diluted shares for net income calculations     147,182      147,730      146,889      148,843    
 Weighted average common units     3,530      3,539      3,536      3,540    
 Diluted shares for NAREIT Funds from operations calculations     150,712      151,269      150,425      152,383    
                
                
                
The Company believes that the calculation of NAREIT 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 dispositions of depreciable property.  As a result, year over year comparison of NAREIT 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 NAREIT Funds from operations provides useful information to the investment community about the Company’s financial performance when compared to other REITs since NAREIT Funds from operations is generally recognized as the standard for reporting the operating performance of a REIT.  NAREIT 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 depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. NAREIT 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. NAREIT 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 
December 31, 2016
(Unaudited and in thousands, except share and unit amounts)
    
 December 31, 2016 December 31, 2015
Assets   
Real estate:   
  Land and land improvements$  1,094,470  $  1,184,927 
  Building and improvements   4,501,921     5,131,648 
  Less: accumulated depreciation   (940,115)    (1,148,928)
    
Operating real estate   4,656,276     5,167,647 
    
Development in progress   267,450     360,948 
Land held for development   333,703     336,967 
    
Net real estate   5,257,429     5,865,562 
    
Cash and cash equivalents   43,642     35,353 
Restricted cash   12,383     9,018 
Accounts receivable   14,433     14,343 
Deferred rent receivable   109,245     118,787 
Deferred financing and leasing costs, net of accumulated   
  amortization (2016, $152,308; 2015, $175,798)   153,393     192,109 
Investments in and advances to unconsolidated joint ventures   242,208     218,454 
Assets held for sale   4,548     4,954 
Prepaid expenses and other assets   153,106     99,049 
    
Total assets$  5,990,387  $  6,557,629 
    
Liabilities   
Mortgage loans, net$  276,650  $  307,908 
Unsecured notes, net   2,280,286     2,580,108 
Credit facility -     259,000 
Accounts payable   65,915     51,382 
Accrued interest   21,878     26,154 
Dividend and distributions payable   71,501     71,787 
Other liabilities   203,697     223,499 
Total liabilities   2,919,927     3,519,838 
    
Noncontrolling interest - operating partnership - 301,483 preferred units   
  outstanding as of December 31, 2016 and 2015   7,537     7,537 
    
Equity   
Shareholders' equity   
Common shares of beneficial interest, $.001 par value, 283,987,000 shares   
  authorized, 146,993,018 and 147,577,984 shares issued and outstanding as of   
  December 31, 2016 and 2015, respectively   147     148 
Additional paid-in capital   3,657,592     3,669,627 
Accumulated other comprehensive loss   (56,031)    (22,506)
Distributions in excess of net income   (598,317)    (674,688)
Total shareholders' equity   3,003,391     2,972,581 
    
Noncontrolling interest - operating partnership   
  3,530,031 and 3,539,075 common units outstanding as of December 31, 2016   
  and 2015, respectively   54,631     53,754 
Noncontrolling interest - consolidated joint ventures   4,901     3,919 
    
Total equity   3,062,923     3,030,254 
    
Total liabilities, noncontrolling interest - operating partnership and equity$  5,990,387  $  6,557,629 
    

 

Inquiries: Jeanne Leonard, Liberty Property Trust, 610.648.1704