EX-99 2 w99471exv99.htm PRESS RELEASE DATED JULY 26, 2004 exv99
 

(LIBERTY LOGO)   Press Release       
         
For immediate release
  Inquiries:   Jeanne A. Leonard
July 26, 2004
      Liberty Property Trust
      610/648-1704

LIBERTY PROPERTY TRUST ANNOUNCES
SECOND QUARTER 2004 RESULTS

Malvern, PA — Liberty Property Trust (NYSE:LRY) reported that net income per common share (diluted) was $.44 per share for the quarter ended June 30, 2004, compared to $.57 per share (diluted) for the quarter ended June 30, 2003. Net income for the second quarter of 2003 included $11.7 million related to gains on property dispositions included in discontinued operations, with no comparable item in the second quarter of this year. For the six month period ending June 30, 2004, net income per common share (diluted) was $.89, compared to $1.10 for the same period in 2003.

Funds from operations available to common shareholders (“FFO”) (diluted) for the second quarter of 2004 was $.82 per share, compared to $.81 per share for the second quarter of 2003. FFO per share for the six month period ended June 30, 2004 was $1.62 per share compared to $1.69 per share for the same period last year. A reconciliation of GAAP net income to FFO is included in the financial tables accompanying this press release.

Operating results for the second quarter of 2004 include lease termination fees of $4.4 million.

“Although we are seeing encouraging signs of recovery, our results continue to reflect the facts that this is a very slow upward trend, and real estate is a lagging indicator,” said Bill Hankowsky, chief executive officer. “We are achieving modest gains in occupancy, but these gains continue to be offset by rent roll-downs, a condition we expect to continue at least for the rest of the year.”

Real Estate Investments

Development: During the second quarter, Liberty brought into service three development properties totaling 142,000 square feet. The properties were 98 percent leased as of June 30, 2004, and were producing a return of 11.5 percent on the company’s investment of $17.3 million.

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LRY Second Quarter Results
Page 2

During the quarter, Liberty commenced development of eight development projects representing a total investment of $36.4 million. The projects include a 60,000 square foot flex building for Clinton Harley Corporation in Orlando, Florida; a 50,000 square foot office building in Mt. Laurel, New Jersey for Marlin Leasing; a 17,560 square foot office building in Horsham, Pennsylvania for NCO Group, Inc.; a 64,800 square foot distribution facility in Houston, Texas for TJX Companies; two flex buildings totaling 118,200 square feet in Tampa, Florida; a 104,000 square foot distribution building in High Point, North Carolina; and a 25,000 square foot office building in Mt. Laurel, New Jersey. As of quarter end, Liberty had 1.8 million square feet under development, representing a total investment of $147.2 million. These properties were 55.1 percent leased at June 30, 2004.

Acquisitions: During the second quarter, Liberty acquired two vacant properties in Odenton, Maryland for $23.2 million. The projected stabilized yield upon leasing of these properties is 9.0 percent.

Portfolio Performance

Leasing: At June 30, 2004, Liberty’s in-service portfolio of 58 million square feet was 91.2 percent occupied. During the quarter, Liberty completed lease transactions totaling 3.1 million square feet of space.

Same Store Performance: Property level operating income for same store properties decreased by 1.9 percent on a cash basis and on a straight line basis for the second quarter of 2004 compared to the same quarter in 2003. For the six month period ended June 30, 2004, property level operating income decreased by 0.8 percent on a cash basis and by 1.1 percent on a straight line basis, compared to the first six months of 2003.

Subsequent Events

On July 5, the Pennsylvania legislature took steps toward enacting legislation that may impact Liberty’s proposed 1.3 million square foot office development, One Pennsylvania Plaza in Philadelphia. A bill was pending in the Pennsylvania Senate that would have designated the One Pennsylvania Plaza site a “Keystone Opportunity Improvement Zone.” Such a designation confers certain tax advantages to eligible companies leasing space in the property. The Senate instead passed a revised bill creating a First Class Cities Economic Development District, which contains modifications to the KOIZ program with limitations on the benefits and eligibility. In order to be enacted, this revised bill must also be passed by the Pennsylvania House of Representatives, which reconvenes in September. Liberty and the project’s prospective lead tenant, Comcast Corporation, are currently reviewing the bill, the resultant timing impact and other factors to determine the project’s structure and feasibility.

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LRY Second Quarter Results
Page 3

Earnings Guidance

Liberty expects to report funds from operations for 2004 in the range of $3.20-$3.30, narrowing the previous FFO guidance range of $3.20-$3.35. A reconciliation of FFO to GAAP net income for this range is below:

                 
    2004 Range
    Low   High
Projected net income per share
   $ 1.68     $ 1.78  
Depreciation and amortization
     1.59       1.59  
Minority interest share of addbacks
     (.07 )     (.07 )
 
    
 		      
 		  
Projected funds from operations per share
   $ 3.20     $ 3.30  

About the Company

Liberty Property Trust (NYSE:LRY) is a leading real estate company dedicated to enhancing people’s lives through extraordinary work environments. Liberty’s 58 million square foot portfolio of office and industrial properties offers exceptional locations, flexible design, thoughtful amenities, superior service, and state-of-the-art technology to the company’s 2,000 tenants. Liberty increases the value of this portfolio through expert property management, marketing and development.

Additional information about the Company, including Liberty’s Quarterly Supplemental Package with detailed financial information is available in the Investor 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 610-648-1708, or by e-mail to eshoemaker@libertyproperty.com.

Liberty will host a conference call during which management will discuss second quarter results, on Tuesday, July 27, 2004, at 2:00 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: 8482141. The call can also be accessed live via the Internet on the Investor Relations page of Liberty’s web site at www.libertyproperty.com for one week following the call.

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LRY Second Quarter Results
Page 4

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.

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Liberty Property Trust
Balance Sheet
June 30, 2004
(In thousands, except share amounts)

                 
    June 30, 2004
   December 31, 2003
    (Unaudited)        
Assets
                
Real estate:
                
Land and land improvements
   $ 579,501     $ 564,332  
Building and improvements
     3,437,986       3,363,608  
Less: accumulated depreciation
     (642,051 )     (586,736 )
 
    
 		      
 		  
Operating real estate
     3,375,436       3,341,204  
Development in progress
     87,079       56,869  
Land held for development
     166,888       162,483  
 
    
 		      
 		  
Net real estate
     3,629,403       3,560,556  
Cash and cash equivalents
     39,284       21,809  
Restricted cash
     23,164       15,292  
Accounts receivable
     12,029       10,896  
Deferred rent receivable
     63,270       58,015  
Deferred financing and leasing costs, net of accumulated amortization (2004, $100,676; 2003, $89,650)
     98,187       98,506  
Investment in unconsolidated joint ventures
     20,092       19,631  
Prepaid expenses and other assets
     51,221       49,303  
 
    
 		      
 		  
Total assets
   $ 3,936,650     $ 3,834,008  
 
    
 		      
 		  
Liabilities
                
Mortgage loans
   $ 373,995     $ 363,866  
Unsecured notes
     1,355,000       1,355,000  
Credit facility
     219,000       167,000  
Accounts payable
     29,576       14,685  
Accrued interest
     31,660       31,622  
Dividend payable
     53,481       52,384  
Other liabilities
     92,637       96,887  
 
    
 		      
 		  
Total liabilities
     2,155,349       2,081,444  
 
    
 		      
 		  
Minority interest
     207,023       207,667  
Shareholders’ Equity
                
Common shares of beneficial interest, $.001 par value, 191,200,000 shares authorized, 84,812,508 (includes 59,100 in treasury) and 83,071,491 (includes 59,100 in treasury) shares issued and outstanding as of June 30, 2004 and December 31, 2003, respectively
     85       83  
Additional paid-in capital
     1,675,954       1,623,446  
Accumulated other comprehensive income
     17,896       14,710  
Unearned compensation
     (7,821 )     (3,497 )
Distributions in excess of net income
     (110,509 )     (88,518 )
Common shares in treasury, at cost, 59,100 shares as of June 30, 2004 and December 31, 2003
     (1,327 )     (1,327 )
 
    
 		      
 		  
Total shareholders’ equity
     1,574,278       1,544,897  
Total liabilities & shareholders’ equity
   $ 3,936,650     $ 3,834,008  
 
    
 		      
 		  

 

 

Liberty Property Trust
Statement of Operations
June 30, 2004
(Unaudited and in thousands, except per share amounts)

                                 
    Quarter Ended
   Six Months Ended
    June 30, 2004
   June 30, 2003
   June 30, 2004
   June 30, 2003
Operating Revenue
                                
Rental
   $ 119,471     $ 109,167     $ 235,549     $ 221,580  
Operating expense reimbursement
     43,992       40,565       90,228       84,315  
Total operating revenue
     163,463       149,732       325,777       305,895  
 
    
 		      
 		      
 		      
 		  
Operating Expenses
                                
Rental property
     33,196       28,088       67,957       60,331  
Real estate taxes
     15,599       15,447       31,445       30,143  
General and administrative
     8,063       8,362       16,545       14,207  
Depreciation and amortization
     34,138       31,115       66,902       59,796  
 
    
 		      
 		      
 		      
 		  
Total operating expenses
     90,996       83,012       182,849       164,477  
 
    
 		      
 		      
 		      
 		  
Operating Income
     72,467       66,720       142,928       141,418  
Other Income/Expense
                                
Interest and other
     536       2,280       3,133       4,189  
Interest
     (30,438 )     (31,021 )     (61,137 )     (61,508 )
 
    
 		      
 		      
 		      
 		  
Total other income/expense
     (29,902 )     (28,741 )     (58,004 )     (57,319 )
 
    
 		      
 		      
 		      
 		  
Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures
     42,565       37,979       84,924       84,099  
(Loss) gain on property dispositions
     (78 )     —       (408 )     598  
Income taxes
     (458 )     (478 )     (847 )     (1,061 )
Minority interest
     (4,548 )     (4,670 )     (9,127 )     (10,254 )
Equity in earnings of unconsolidated joint ventures
     (125 )     473       (530 )     915  
 
    
 		      
 		      
 		      
 		  
Income from continuing operations
     37,356       33,304       74,012       74,297  
Discontinued operations net of minority interest (including net gain on property dispositions of $290 and $762 for the quarters ended December 31, 2003 and dispositions of $0 and $11,093 for the quarters ended June 30, 2004 and 2003 and $2,097 and $11,256 for the six month periods ended June 30, 2004 and 2003)
     —       11,725       2,015       12,319  
 
    
 		      
 		      
 		      
 		  
Net Income
   $ 37,356     $ 45,029     $ 76,027     $ 86,616  
 
    
 		      
 		      
 		      
 		  
Total basic income per common share
   $ 0.44     $ 0.58     $ 0.91     $ 1.12  
 
    
 		      
 		      
 		      
 		  
Total diluted income per common share
   $ 0.44     $ 0.57     $ 0.89     $ 1.10  
 
    
 		      
 		      
 		      
 		  
Weighted average shares
                                
Basic
     84,411       78,030       83,947       77,425  
 
    
 		      
 		      
 		      
 		  
Diluted
     85,805       79,282       85,454       78,576  
 
    
 		      
 		      
 		      
 		  

 

 

Liberty Property Trust
Statement of Funds From Operations
June 30, 2004
(Unaudited and in thousands, except per share amounts)

                                                                 
    Quarter Ended
   Six Months Ended
    June 30, 2004
   June 30, 2003
   June 30, 2004
   June 30, 2003
            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
   $ 37,356     $ 0.44     $ 45,029     $ 0.58       76,027     $ 0.91       86,616     $ 1.12  
 
            
 		              
 		              
 		              
 		  
Adjustments:
                                                                
Depreciation and amortization of unconsolidated joint ventures
     558               161               1,444               327          
Depreciation and amortization
     33,474               30,783               65,486               59,246          
Loss (gain) on property dispositions
     78               (11,093 )             (1,689 )             (11,271 )        
Minority interest share in addback for depreciation and amortization, and gain on property dispositions
     (1,416 )             (891 )             (2,727 )             (2,177 )        
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Funds from operations available to common shareholders — basic
   $ 70,050     $ 0.83     $ 63,989     $ 0.82     $ 138,541     $ 1.65     $ 132,741     $ 1.71  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Reconciliation of net income to FFO — diluted:
                                                                
Diluted — income available to common shareholders
   $ 37,356     $ 0.44     $ 45,029     $ 0.57       76,027     $ 0.89       86,616     $ 1.10  
 
            
 		              
 		              
 		              
 		  
Adjustments:
                                                                
Depreciation and amortization of unconsolidated joint ventures
     558               161               1,444               327          
Depreciation and amortization
     33,474               30,783               65,486               59,246          
Loss (gain) on property dispositions
     78               (11,093 )             (1,689 )             (11,271 )        
Minority interest excluding preferred share distributions
     1,610               2,117               3,304               4,110          
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Funds from operations available to common shareholders — diluted
   $ 73,076     $ 0.82     $ 66,997     $ 0.81     $ 144,572     $ 1.62     $ 139,028     $ 1.69  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Reconciliation of weighted average shares:
                                                                
Weighted average common shares — all basic calculations
     84,411               78,030               83,947               77,425          
Dilutive shares for long term compensation plans
     1,394               1,252               1,508               1,151          
 
    
 		              
 		              
 		              
 		          
Diluted shares for net income calculations
     85,805               79,282               85,455               78,576          
Weighted average common units
     3,671               3,665               3,684               3,688          
 
    
 		              
 		              
 		              
 		          
Diluted shares for funds from operations calculations
     89,476               82,947               89,139               82,264          
 
    
 		              
 		              
 		              
 		          

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 REIT’s 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.