EX-99 2 w23462exv99.htm PRESS RELEASE exv99
 

(LIBERTY LOGO)   Press Release
         
For Immediate Release
  Inquiries:   Jeanne A. Leonard
July 24, 2006
      Liberty Property Trust
 
      610/648-1704
LIBERTY PROPERTY TRUST ANNOUNCES
SECOND QUARTER RESULTS
Malvern, PA — Liberty Property Trust (NYSE:LRY) reported that net income per common share (diluted) was $0.76 per share for the quarter ended June 30, 2006, compared to $0.51 per share (diluted) for the quarter ended June 30, 2005. For the six-month period ended June 30, 2006, net income per common share (diluted) was $1.76, compared to $1.03 for the same period in 2005.
Funds from operations available to common shareholders (diluted) (“FFO”) for the second quarter of 2006 was $0.80 per share, compared to $0.84 per share for the second quarter of 2005. Operating results for the second quarter of 2006 included lease termination fees of $3.8 million, or approximately $0.04 per share diluted FFO. FFO per share for the six-month period ended June 30, 2006 was $1.57 per share compared to $1.65 for the same period in 2005. A reconciliation of GAAP net income to FFO is included in the financial tables accompanying this press release.
“We are very pleased with our results across all fronts during the second quarter,” said Bill Hankowsky, Liberty’s chairman and chief executive officer. “Our teams leased more than six million square feet of space, resulting in a significant occupancy increase. Rents on new and renewal leases signed in the quarter increased over previous rents, consistent with the growing strength we are seeing in most of our markets. We continue to increase the value of our development pipeline, which is generating new product at returns approaching double-digits. We also continued to sell properties into a strong market, reaping meaningful gains while capitalizing on the opportunity to upgrade and reposition our portfolio. And finally, we executed two major recapitalization transactions of Comcast Center and of Liberty’s Chicago portfolio.”
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LRY Second Quarter 2006 Results
Page 2
Real Estate Investments
Dispositions and Joint Venture Activity: During the second quarter, Liberty sold 14 operating properties containing 942,000 square feet for $101.7 million. The properties sold consist of seven flex buildings totaling 192,000 square feet in suburban Detroit; four office buildings totaling 263,000 square feet in Greensboro, North Carolina; one 65,000 square foot flex building in Mt. Laurel, New Jersey; and two office buildings totaling 421,000 square feet in Greenville, South Carolina.
The company also sold six operating properties totaling 2.1 million square feet and 104 acres of land to a newly-formed joint venture in which Liberty holds a 25% interest, for $125.0 million. These properties represent Liberty’s entire Chicago portfolio. New York State Common Retirement Fund holds the remaining 75% interest in the joint venture, called Liberty Illinois, LP.
In addition, Liberty Venture I, LLC, a joint venture of Liberty’s southern New Jersey industrial properties in which Liberty holds a 25% interest, sold two operating properties containing 143,000 square feet for $9.0 million.
During the quarter Liberty entered into a joint venture with a subsidiary of Commerzbank AG, selling an 80% interest in Comcast Center upon its completion and stabilization. The transaction values the property at $505 million, and in addition allocates approximately $10 million for closing costs and for future refurbishment costs. In connection with the transaction, the joint venture has obtained a $324 million forward loan commitment.
Development: During the second quarter, Liberty brought into service seven development properties totaling 566,000 square feet. At quarter-end the properties were 97.1% leased at a yield of 9.9% on the company’s investment of $77.3 million.
During the second quarter, Liberty began development of seven properties totaling 953,000 square feet, with an expected total investment of $145.2 million. The properties consist of a 450,000 square foot headquarters for GMAC Mortgage Corporation in Fort Washington, Pennsylvania; a 120,000 square foot office project 100% leased to Reed Technology and Information Services, Inc. in Horsham, Pennsylvania; a 168,000 square foot distribution building and a 76,000 square foot office project in Hampton Roads, Virginia; two flex buildings totaling 83,000 square feet in Tampa, Florida; and a 56,000 square foot office building in Eden Prairie, Minnesota.
In addition, Liberty Illinois, LP began construction on two distribution buildings totaling 796,000 square feet in Aurora, Illinois. The total investment in these projects, which are 26% pre-leased, is expected to be $39.8 million.
As of June 30, Liberty had 6.2 million square feet of wholly-owned and joint venture properties under development. This activity represents a total investment of $924.9 million, with an expected yield of 8.9%. The properties were 41.1% leased at quarter-end.
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LRY Second Quarter 2006 Results
Page 3
Acquisitions: During the second quarter, Liberty acquired 1100 Virginia Drive, also known as the Fort Washington Expo Center, in Fort Washington, Pennsylvania. The property is an 850,000 square foot building, of which 297,000 square feet is occupied by two tenants. Of the remaining square feet, a portion will be demolished, and 450,000 square feet will be redeveloped for the above-referenced headquarters for GMAC Mortgage Corporation. The 297,000 square feet remaining in operation represents a total investment of $27.6 million, and is yielding 10.2%.
Portfolio Performance
Leasing: At June 30, 2006, Liberty’s in-service portfolio of 63.6 million square feet was 92.8% occupied, compared to 91.6% at March 31, 2006 and 89.9% at June 30, 2005.
Same Store Performance: Property level operating income for same store properties increased by 1.0% on a cash basis and 0.3% on a straight line basis for the second quarter of 2006 compared to the same quarter in 2005. For the six-month period ended June 30, 2006, property level operating income increased 1.0% on a cash basis and 0.6% on a straight line basis compared to the same period in 2005.
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 64 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 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 25, 2006, 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: 1792193. 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 2006 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
Statement of Operations
June 30, 2006
(Unaudited and in thousands, except per share amounts)
                                 
    Quarter Ended     Year to Date  
    June 30, 2006     June 30, 2005     June 30, 2006     June 30, 2005  
Operating Revenue
                                
Rental
   $ 119,519     $ 122,623     $ 235,096     $ 233,871  
Operating expense reimbursement
     49,446       45,168       99,113       91,200  
 
                        
Total operating revenue
     168,965       167,791       334,209       325,071  
 
                        
 
                                
Operating Expenses
                                
Rental property
     34,694       32,037       70,786       67,147  
Real estate taxes
     18,152       16,254       35,338       31,384  
General and administrative
     11,501       9,559       21,517       18,001  
Depreciation and amortization
     37,323       35,226       73,041       67,553  
 
                        
Total operating expenses
     101,670       93,076       200,682       184,085  
 
                        
 
                                
Operating Income
     67,295       74,715       133,527       140,986  
 
                                
Other Income/Expense
                                
Interest and other
     2,222       2,616       4,418       4,745  
Interest
     (29,628 )     (31,095 )     (60,449 )     (60,572 )
 
                        
Total other income/expense
     (27,406 )     (28,479 )     (56,031 )     (55,827 )
 
                        
 
                                
Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures
     39,889       46,236       77,496       85,159  
Gain/(loss) on property dispositions, including impairment
     17,438       (4,524 )     17,483       (4,929 )
Income taxes
     (235 )     (911 )     (610 )     (1,445 )
Minority interest
     (5,839 )     (4,995 )     (10,396 )     (9,118 )
Equity in earnings of unconsolidated joint ventures
     741       182       916       2,202  
 
                        
 
                                
Income from continuing operations
     51,994       35,988       84,889       71,869  
 
                                
Discontinued operations net of minority interest (including net gain on property dispositions of $16,550 and $7,244 for the quarters ended June 30, 2006 and 2005 and $76,080 and $14,420 for the six month periods ended June 30, 2006 and 2005)
     16,456       8,569       73,988       18,289  
 
                        
Net Income
   $ 68,450     $ 44,557     $ 158,877     $ 90,158  
 
                        
 
                                
Basic income per common share
                                
Continuing operations
   $ 0.58     $ 0.41     $ 0.95     $ 0.83  
 
                        
Discontinued operations
   $ 0.19     $ 0.10     $ 0.84     $ 0.21  
 
                        
Total basic income per common share
   $ 0.77     $ 0.51     $ 1.79     $ 1.04  
 
                        
 
                                
Diluted income per common share
                                
Continuing operations
   $ 0.58     $ 0.41     $ 0.94     $ 0.82  
 
                        
Discontinued operations
   $ 0.18     $ 0.10     $ 0.82     $ 0.21  
 
                        
Total diluted income per common share
   $ 0.76     $ 0.51     $ 1.76     $ 1.03  
 
                        
 
                                
Weighted average shares
                                
Basic
     88,934       86,685       88,587       86,278  
 
                        
Diluted
     90,324       88,134       90,101       87,716  
 
                        

 

 

Liberty Property Trust
Statement of Funds From Operations
June 30, 2006
(Unaudited and in thousands, except per share amounts)
                                                                 
    Quarter Ended     Year to Date  
    June 30, 2006     June 30, 2005     June 30, 2006     June 30, 2005  
            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
   $ 68,450     $ 0.77     $ 44,557     $ 0.51     $ 158,877     $ 1.79     $ 90,158     $ 1.04  
 
                                                        
 
                                                                
Adjustments:
                                                                
Depreciation and amortization of unconsolidated joint ventures
     763               286               1,316               652          
Depreciation and amortization
     37,809               37,085               74,400               71,783          
Gain on property dispositions
     (34,649 )             (6,740 )             (94,295 )             (15,607 )        
Minority interest share in addback for depreciation and amortization and gain on property dispositions
     (176 )             (1,185 )             681               (2,211 )        
                 
Funds from operations available to common shareholders — basic
   $ 72,197     $ 0.81     $ 74,003     $ 0.85     $ 140,979     $ 1.59     $ 144,775     $ 1.68  
                 
 
                                                                
Reconciliation of net income to FFO — diluted:
                                                                
Diluted — income available to common shareholders
   $ 68,450     $ 0.76     $ 44,557     $ 0.51     $ 158,877     $ 1.76     $ 90,158     $ 1.03  
 
                                                        
 
                                                                
Adjustments:
                                                                
Depreciation and amortization of unconsolidated joint ventures
     763               286               1,316               652          
Depreciation and amortization
     37,809               37,085               74,400               71,783          
Gain on property dispositions
     (34,649 )             (6,740 )             (94,295 )             (15,607 )        
Minority interest excluding preferred unit distributions and excess of preferred redemption over carrying amount
     3,210               1,797               6,792               3,652          
                 
Funds from operations available to common shareholders — diluted
   $ 75,583     $ 0.80     $ 76,985     $ 0.84     $ 147,090     $ 1.57     $ 150,638     $ 1.65  
                 
 
                                                                
Reconciliation of weighted average shares:
                                                                
Weighted average common shares — all basic calculations
     88,934               86,685               88,587               86,278          
Dilutive shares for long term compensation plans
     1,390               1,449               1,514               1,438          
 
                                                        
Diluted shares for net income calculations
     90,324               88,134               90,101               87,716          
Weighted average common units
     3,653               3,517               3,586               3,592          
 
                                                
Diluted shares for funds from operations calculations
     93,977               91,651               93,687               91,308          
 
                                                        

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.

 

 

Liberty Property Trust
Balance Sheet
June 30, 2006
(In thousands, except share amounts)
                 
    June 30, 2006     December 31, 2005  
    (Unaudited)          
Assets
                
Real estate:
                
Land and land improvements
   $ 636,896     $ 627,914  
Building and improvements
     3,640,731       3,716,958  
Less: accumulated depreciation
     (767,632 )     (743,346 )
 
            
 
                
Operating real estate
     3,509,995       3,601,526  
 
                
Development in progress
     405,921       324,924  
Land held for development
     166,429       158,653  
 
            
 
                
Net real estate
     4,082,345       4,085,103  
 
                
Cash and cash equivalents
     37,762       61,629  
Restricted cash
     17,728       29,085  
Accounts receivable
     29,034       14,761  
Deferred rent receivable
     69,787       72,818  
Deferred financing and leasing costs, net of accumulated amortization (2006, $116,701; 2005, $106,752)
     119,184       120,904  
Investment in unconsolidated joint ventures
     44,663       33,522  
Assets held for sale
     10,080       22,934  
Prepaid expenses and other assets
     146,977       56,773  
 
            
 
                
Total assets
   $ 4,557,560     $ 4,497,529  
 
            
 
                
Liabilities
                
Mortgage loans
   $ 210,057     $ 238,728  
Unsecured notes
     1,755,000       1,755,000  
Credit facility
     214,480       255,450  
Accounts payable
     37,695       32,919  
Accrued interest
     35,312       34,892  
Dividend payable
     57,313       56,490  
Other liabilities
     154,566       161,735  
 
            
 
                
Total liabilities
     2,464,423       2,535,214  
 
            
 
                
Minority interest
     270,601       253,133  
 
                
Shareholders’ Equity
                
Common shares of beneficial interest, $.001 par value, 191,200,000 shares authorized, 89,610,011 (includes 59,100 in treasury) and 88,415,764 (includes 59,100 in treasury) shares issued and outstanding as of June 30, 2006 and December 31, 2005, respectively
     89       88  
Additional paid-in capital
     1,857,672       1,799,068  
Accumulated other comprehensive income
     15,458       9,906  
Distributions in excess of net income
     (49,356 )     (98,553 )
Common shares in treasury, at cost, 59,100 shares as of June 30, 2006 and December 31, 2005, respectively
     (1,327 )     (1,327 )
 
            
Total shareholders’ equity
     1,822,536       1,709,182  
 
                
Total liabilities & shareholders’ equity
   $ 4,557,560     $ 4,497,529