EX-99 2 w29933exv99.htm PRESS RELEASE BY THE REGISTRANTS exv99
 

     
(LIBERTY LOGO)  
  Press Release
         
For Immediate Release
  Inquiries:   Jeanne A. Leonard
February 5, 2007
      Liberty Property Trust
 
      610/648-1704
LIBERTY PROPERTY TRUST ANNOUNCES
FOURTH QUARTER AND FULL YEAR RESULTS
Malvern, PA — Liberty Property Trust (NYSE:LRY) reported that net income per common share (diluted) was $0.67 per share for the quarter ended December 31, 2006, compared to $1.20 per share (diluted) for the quarter ended December 31, 2005, and $2.95 per share (diluted) for the full year 2006 compared to $2.82 per share (diluted) for 2005. Net income for the fourth quarter of 2006 includes gains on the sale of properties of $0.28 per share, net of tax, compared with $0.88 per share in gains for the same period in 2005.
Funds from operations available to common shareholders (diluted) (“FFO”) for the fourth quarter of 2006 was $0.76 per share, compared to $0.77 per share for the fourth quarter of 2005. For the year ended December 31, 2006, FFO per share was $3.12, compared to $3.20 per share for 2005. Operating results for the fourth quarter of 2006 include termination fees of $0.8 million or approximately $0.01 per share and impairment charges of $4.2 million or approximately $0.04 per share. A reconciliation of GAAP net income to FFO is included in the financial tables accompanying this press release.
“The fourth quarter of 2006 capped a year of rising confidence, solid execution, and strengthening results” said Bill Hankowsky, Liberty’s chairman and chief executive officer. “During 2006 we increased occupancy by 200 basis points, rents continue to rise, and the result is that same store NOI growth is increasing. Our development pipeline is at an all-time high in terms of investment, and is exceptionally well leased. And we continue to take advantage of the market’s appetite for real estate to sell properties at very attractive prices, constantly repositioning the portfolio for added value.”
Portfolio Performance
Leasing: At December 31, 2006 Liberty’s in-service portfolio of 65.3 million square feet was 94.2% occupied, compared to 93.1% at the end of the third quarter. During the quarter, Liberty completed lease transactions totaling five million square feet of space.
Same Store Performance: Property level operating income for same store properties increased by 6.9% on a cash basis and by 5.7% on a straight line basis for the fourth quarter of 2006 compared to the same quarter in 2005, and increased by 3.4% on a cash basis and 2.8% on a straight line basis for the full year 2006 compared to 2005.
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Liberty Property Trust Fourth Quarter 2006 Results -2-
Real Estate Investments
Development: During the fourth quarter, Liberty brought into service four development properties totaling 625,000 square feet. At quarter-end the properties were 93.9% leased at a yield of 8.8% on the company’s investment of $51.2 million.
During the fourth quarter, Liberty began development of eight properties totaling one million square feet, with an expected total investment of $62 million. The properties consist of:
  •   in the Lehigh Valley, Pennsylvania; a 188,000 square foot distribution center, 100% leased to Uline, Inc.;
 
  •   in Orlando, Florida, three flex properties totaling 116,000 square feet for Liberty’s wholly-owned portfolio, and two distribution properties totaling 296,000 square feet at Airport Industrial Park of Orlando, a project in which Liberty holds a 50% interest;
 
  •   a 75,000 square foot flex building in Bloomington, Minnesota, a market in which significant leasing gains during the past three quarters have resulted in virtually no vacancy in Liberty’s portfolio; and
 
  •   a 341,000 square foot distribution building in Greensboro, North Carolina.
As of December 31, 2006, Liberty had 7.4 million square feet of wholly-owned and joint venture properties under development. This activity represents a total investment of $1.0 billion, with an expected yield of 8.7%. The properties were 50.1% leased at year-end.
Acquisitions: During the fourth quarter, Liberty acquired seven properties for $117.5 million. The properties include six office properties in Tampa, Florida totaling 551,000 square feet and a 74,000 square foot distribution building in Houston, Texas.
Dispositions: During the fourth quarter, Liberty sold four properties containing 685,000 square feet, for $107 million. The properties sold consist of a 252,000 square foot office building in Allentown, Pennsylvania; a 315,000 square foot distribution building, also in Allentown; a 108,000 square foot office building in Overland Park, Kansas and a small flex building in Madison Heights, Michigan.
Subsequent Events: Subsequent to the end of the fourth quarter, Liberty purchased 115 acres of land for industrial development in Phoenix, Arizona, and will be opening a full service office to service this new market in the company’s portfolio. Liberty completed its first development in Arizona, a 123,000 square foot office building, in 2006.
Liberty sold 18 properties in Michigan in January, and the company anticipates that the majority of its portfolio in this market will be sold during the next five quarters, and Liberty will discontinue operations in this market. Liberty’s Michigan sales activity was the primary contributor to the $0.04 per share impairment charge recognized in the fourth quarter.
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Liberty Property Trust Fourth Quarter 2006 Results -3-
Financing and Balance Sheet Management
During the fourth quarter, Liberty took advantage of its superior balance sheet to access attractive financing opportunities. The proceeds of these transactions were used to repay borrowings under the company’s unsecured credit facility and for general corporate purposes. The company:
  •   satisfied a $100 million 6.95% medium term note and issued a $300 million ten year, 5.50% senior unsecured note; and
 
  •   raised $27 million through the placement of 6.70% Series G Cumulative Redeemable Preferred Units.
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 65 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 610-648-1708, or by e-mail to jleonard@libertyproperty.com.
Liberty will host a conference call during which management will discuss fourth quarter results, on Tuesday, February 6, 2007, 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: 4395176. The call can also be accessed via the Internet on the Investors page of Liberty’s web site at www.libertyproperty.com for one week following the call.
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Liberty Property Trust Fourth Quarter 2006 Results -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
    December 31, 2006
    (In thousands, except per share amounts)
                                 
    Quarter Ended     Year Ended  
    December 31, 2006     December 31, 2005     December 31, 2006     December 31, 2005  
    (Unaudited)                  
Operating Revenue
                                
Rental
   $ 120,686     $ 113,269     $ 464,714     $ 451,608  
Operating expense reimbursement
     55,016       47,248       202,005       181,886  
 
                        
Total operating revenue
     175,702       160,517       666,719       633,494  
 
                        
 
                                
Operating Expenses
                                
Rental property
     37,406       34,107       139,055       130,353  
Real estate taxes
     19,451       17,930       71,652       64,879  
General and administrative
     12,558       10,809       45,991       38,099  
Depreciation and amortization
     37,433       36,384       144,692       135,846  
 
                        
Total operating expenses
     106,848       99,230       401,390       369,177  
 
                        
 
                                
Operating Income
     68,854       61,287       265,329       264,317  
 
                                
Other Income/Expense
                                
Interest and other
     2,628       2,293       9,591       8,008  
Interest
     (30,456 )     (30,373 )     (119,584 )     (119,614 )
 
                        
Total other income/expense
     (27,828 )     (28,080 )     (109,993 )     (111,606 )
 
                        
 
                                
Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures
     41,026       33,207       155,336       152,711  
Gain on property dispositions
     371       89,204       17,628       85,593  
Income taxes
     (303 )     (12,586 )     (288 )     (14,827 )
Minority interest
     (5,146 )     (7,468 )     (20,411 )     (21,176 )
Equity in earnings of unconsolidated joint ventures
     182       108       1,432       2,540  
 
                        
 
                                
Income from continuing operations
     36,130       102,465       153,697       204,841  
 
                                
Discontinued operations net of minority interest (including net gain on property dispositions of $25,032 and $3,965 for the quarters ended December 31, 2006 and 2005 and $112,620 and $36,617 for the twelve month periods ended December 31, 2006 and 2005)
     24,684       4,851       112,877       44,510  
 
                        
Net Income
   $ 60,814     $ 107,316     $ 266,574     $ 249,351  
 
                        
 
                                
Basic income per common share
                                
Continuing operations
   $ 0.40     $ 1.16     $ 1.72     $ 2.36  
 
                        
Discontinued operations
   $ 0.27     $ 0.06     $ 1.26     $ 0.51  
 
                        
Total basic income per common share
   $ 0.67     $ 1.22     $ 2.98     $ 2.87  
 
                        
 
                                
Diluted income per common share
                                
Continuing operations
   $ 0.40     $ 1.15     $ 1.70     $ 2.32  
 
                        
Discontinued operations
   $ 0.27     $ 0.05     $ 1.25     $ 0.50  
 
                        
Total diluted income per common share
   $ 0.67     $ 1.20     $ 2.95     $ 2.82  
 
                        
 
                                
Weighted average shares
                                
Basic
     90,272       87,922       89,313       86,986  
 
                        
Diluted
     91,386       89,302       90,492       88,376  
 
                        

 

Liberty Property Trust
Statement of Funds From Operations
December 31, 2006
(Unaudited and in thousands, except per share amounts)
                                                                 
    Quarter Ended     Year Ended  
    December 31, 2006     December 31, 2005     December 31, 2006     December 31, 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
   $ 60,814     $ 0.67     $ 107,316     $ 1.22     $ 266,574     $ 2.98     $ 249,351     $ 2.87  
 
                                                        
 
                                                                
Adjustments:
                                                                
Depreciation and amortization of unconsolidated joint ventures
     763               373               2,871               1,316          
Depreciation and amortization
     37,802               38,889               149,606               147,669          
Gain on property dispositions
     (29,549 )             (79,224 )             (136,036 )             (114,381 )        
Minority interest share in addback for depreciation and amortization and gain on property dispositions
     (398 )             1,531               (877 )             (1,363 )        
                 
Funds from operations available to common shareholders — basic
   $ 69,432     $ 0.77     $ 68,885     $ 0.78     $ 282,138     $ 3.16     $ 282,592     $ 3.25  
                 
 
                                                                
Reconciliation of net income to FFO — diluted:
                                                                
Diluted — income available to common shareholders
   $ 60,814     $ 0.67     $ 107,316     $ 1.20     $ 266,574     $ 2.95     $ 249,351     $ 2.82  
 
                                                        
 
                                                                
Adjustments:
                                                                
Depreciation and amortization of unconsolidated joint ventures
     763               373               2,871               1,316          
Depreciation and amortization
     37,802               38,889               149,606               147,669          
Gain on property dispositions
     (29,549 )             (79,224 )             (136,036 )             (114,381 )        
Minority interest excluding preferred unit distributions and excess of preferred redemption over carrying amount
     2,805               4,273               11,786               10,018          
                 
Funds from operations available to common shareholders — diluted
   $ 72,635     $ 0.76     $ 71,627     $ 0.77     $ 294,801     $ 3.12     $ 293,973     $ 3.20  
                 
 
                                                                
Reconciliation of weighted average shares:
                                                                
Weighted average common shares — all basic calculations
     90,272               87,922               89,313               86,986          
Dilutive shares for long term compensation plans
     1,114               1,380               1,179               1,390          
 
                                                        
Diluted shares for net income calculations
     91,386               89,302               90,492               88,376          
Weighted average common units
     4,195               3,518               3,895               3,555          
 
                                                        
Diluted shares for funds from operations calculations
     95,581               92,820               94,387               91,931          
 
                                                        

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
December 31, 2006
(In thousands, except share amounts)
                 
    December 31, 2006     December 31, 2005  
Assets
                
Real estate:
                
Land and land improvements
   $ 678,075     $ 620,355  
Building and improvements
     3,814,437       3,664,036  
Less: accumulated depreciation
     (806,309 )     (732,439 )
 
            
 
                
Operating real estate
     3,686,203       3,551,952  
 
                
Development in progress
     538,303       324,924  
Land held for development
     195,332       158,653  
 
            
 
                
Net real estate
     4,419,838       4,035,529  
 
                
Cash and cash equivalents
     53,737       61,629  
Restricted cash
     55,671       29,085  
Accounts receivable
     23,189       14,761  
Deferred rent receivable
     71,894       72,818  
Deferred financing and leasing costs, net of accumulated amortization (2006, $100,406; 2005, $108,103)
     129,745       122,994  
Investment in unconsolidated joint ventures
     47,196       33,522  
Assets held for sale
     40,715       73,211  
Prepaid expenses and other assets
     68,306       56,773  
 
            
 
                
Total assets
   $ 4,910,291     $ 4,500,322  
 
            
 
                
Liabilities
                
Mortgage loans
   $ 185,978     $ 238,728  
Unsecured notes
     1,955,000       1,755,000  
Credit facility
     246,960       255,450  
Accounts payable
     40,633       32,919  
Accrued interest
     36,297       34,892  
Dividend payable
     58,961       56,490  
Other liabilities
     217,131       164,528  
 
            
 
                
Total liabilities
     2,740,960       2,538,007  
 
            
 
                
Minority interest
     297,727       253,133  
 
                
Shareholders’ Equity
                
Common shares of beneficial interest, $.001 par value, 193,787,000 shares authorized, 90,972,979 (includes 59,100 in treasury) and 88,415,764 (includes 59,100 in treasury) shares issued and outstanding as of December 31, 2006 and December 31, 2005, respectively
     91       88  
Additional paid-in capital
     1,906,403       1,799,068  
Accumulated other comprehensive income
     20,323       9,906  
Distributions in excess of net income
     (53,886 )     (98,553 )
Common shares in treasury, at cost, 59,100 shares as of December 31, 2006 and December 31, 2005, respectively
     (1,327 )     (1,327 )
 
            
Total shareholders’ equity
     1,871,604       1,709,182  
 
                
Total liabilities & shareholders’ equity
   $ 4,910,291     $ 4,500,322