EX-99.1 2 a11-28460_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

 

Inquiries:

Jeanne A. Leonard

 

 

Liberty Property Trust

 

 

610/648-1704

 

LIBERTY PROPERTY TRUST ANNOUNCES THIRD QUARTER RESULTS

 

Malvern, PA, October 25, 2011 — Liberty Property Trust (NYSE:LRY) reported that funds from operations available to common shareholders (diluted) (“FFO”) for the third quarter of 2011 was $0.65 per share, compared to $0.69 per share for the same period in 2010. Funds from operations for the third quarter of 2011 include lease termination fees of $1.1 million, and a $1.0 million gain on the sale of land.

 

FFO per share for the nine-month period ended September 30, 2011 was $1.94, compared to $2.00 per share for the same period in 2010.

 

Net income per common share (diluted) was $0.31 per share for the quarter ended September 30, 2011, compared to $0.30 per share (diluted) for the quarter ended September 30, 2010. Net income for the nine-month period ended September 30, 2011 was $1.29 per share, compared with $0.86 per share for the same period in 2010. Net income for the three months ended September 30, 2011 and 2010 includes net gains on property dispositions of $6.0 million ($0.05 per share) and $0.9 million ($0.01 per share). Net income for the nine months ended September 30, 2011 and 2010 includes net gains on property dispositions of $58.1 million ($0.50 per share) and $9.2 million ($0.8 per share).

 

“Liberty had a very solid quarter with our highest leasing volume this year, increased occupancy and continued successful execution of our repositioning and capital deployment strategies,” said Bill Hankowsky, chairman and chief executive officer. “The economic landscape remains unsettled, but this may present new opportunities to leverage Liberty’s operating platform and capital capacity.”

 

Portfolio Performance

 

Leasing: At September 30, 2011 Liberty’s in-service portfolio of 78 million square feet was 89.9% occupied, compared to 89.5% at the end of the second quarter. During the third quarter, Liberty completed lease transactions totaling 4.5 million square feet of space.

 

Same Store Performance: Property level operating income for same store properties increased by 0.7% on a cash basis and decreased by 1.0% on a straight line basis for the third quarter of 2011 compared to the same quarter in 2010.

 

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Portfolio Activity

 

During the third quarter and subsequently in the fourth quarter, Liberty furthered the execution of its portfolio repositioning strategy through property sales, acquisitions and development starts.

 

Acquisitions: Liberty acquired eight properties during the quarter for a total investment of $104.4 million. These properties, which contain 1.9 million square feet of leaseable space, are 55% leased, have a current yield of 2.5% and a projected stabilized yield of 8.6%. These properties consist of two distribution buildings totaling 1,236,054 square feet in Elwood, Illinois, three distribution buildings in suburban Minneapolis totaling 450,239 square feet, and three office buildings totaling 231,383 square feet in Minnetonka, MN.

 

Dispositions: During the quarter, Liberty sold seven operating properties, containing 654,000 square feet, and 21 acres of land, for $74.6 million. The operating properties sold included four office buildings in Brookfield, Wisconsin, totaling 338,424 square feet, a 117,100 square foot office building in Greenville, South Carolina, a 118,500 square foot industrial building in Orlando, Florida, and an 80,000 square foot flex building in Boca Raton, Florida. These properties were 80% leased at the time of sale.

 

Development: Liberty began construction on four wholly-owned properties containing 1.2 million square feet of leaseable space at a projected investment of $76.3 million. The estimated yield for the 1.5 million square feet of wholly-owned properties under development at September 30, 2011 is 10.2%. The projected cost for these development properties is $171.5 million and there are signed leases for 18.3% of this space as of September 30, 2011. These developments include a 972,000 square foot distribution building in Carlisle, Pennsylvania, two industrial properties totaling 212,000 square feet in Houston, Texas, and a 56,412 square foot build-to-suit office building for Iroko Pharmaceuticals at the Philadelphia Navy Yard.

 

Subsequent Events

 

The following events have occurred subsequent to the end of the third quarter:

 

·      The company replaced its existing $500 million credit facility which was due November, 2013 with a new credit facility. The new facility is for $500 million. It matures in November, 2015 and has a one-year extension option. Based upon Liberty’s current credit ratings, the new facility bears interest at LIBOR plus 107.5 basis points. The interest rate on the previous facility was LIBOR plus 210 basis points.

 

·      Moody’s Investor Service raised the senior unsecured debt rating for Liberty Property Trust to Baa1 from Baa2.

 

·      Liberty acquired Crosspoint Center, a 1.08 million square foot industrial park in Charlotte, North Carolina, for a total investment of $61.4 million. The park is 90% occupied.

 

·      Also in Charlotte, Liberty has signed a lease with American Tire Distributors, for a 179,000 square foot build-to-suit warehouse. Development will begin in November.

 

·      Liberty has begun development of a 153,000 square foot office building in Philadelphia. The

 

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$49.6 million property is 100% preleased to Pennsylvania Medicine.

 

Earnings Outlook

 

Liberty expects to report funds from operations for 2011 in the range of $2.55-$2.58 share. A reconciliation of FFO to GAAP net income for 2011 is below:

 

 

 

2011 Range

 

 

 

Low

 

High

 

Projected net income per share

 

$

1.55

 

$

1.59

 

Depreciation and amortization of unconsolidated joint ventures

 

0.12

 

0.13

 

Depreciation and amortization

 

1.46

 

1.48

 

Gain on property dispositions

 

(0.58

)

(0.62

)

 

 

 

 

 

 

Projected funds from operations per share

 

$

2.55

 

$

2.58

 

 

Earnings Guidance for 2012 will be provided on December 13, 2011.

 

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 78 million square foot portfolio includes nearly 700 properties which provide office, distribution and light manufacturing facilities to 1,900 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 25, 2011, at 1:00 pm 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.  The passcode needed to access the call is 19278319. 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, 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 for two weeks following the call.

 

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

 

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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

September 30, 2011

(Unaudited and in thousands, except per share amounts)

 

 

 

Quarter Ended

 

Nine Months Ended

 

 

 

September 30, 2011

 

September 30, 2010

 

September 30, 2011

 

September 30, 2010

 

 

 

 

 

 

 

 

 

 

 

Operating Revenue

 

 

 

 

 

 

 

 

 

Rental

 

$

121,866

 

$

122,383

 

$

364,007

 

$

363,720

 

Operating expense reimbursement

 

53,313

 

53,073

 

159,959

 

157,539

 

Total operating revenue

 

175,179

 

175,456

 

523,966

 

521,259

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

Rental property

 

35,563

 

34,790

 

102,013

 

102,653

 

Real estate taxes

 

21,039

 

21,306

 

62,528

 

63,253

 

General and administrative

 

13,625

 

12,608

 

42,848

 

40,023

 

Depreciation and amortization

 

41,414

 

39,996

 

123,840

 

119,091

 

Total operating expenses

 

111,641

 

108,700

 

331,229

 

325,020

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

63,538

 

66,756

 

192,737

 

196,239

 

 

 

 

 

 

 

 

 

 

 

Other Income/Expense

 

 

 

 

 

 

 

 

 

Interest and other

 

2,019

 

2,400

 

7,011

 

7,748

 

Interest

 

(31,188

)

(32,410

)

(96,354

)

(103,922

)

Total other income/expense

 

(29,169

)

(30,010

)

(89,343

)

(96,174

)

 

 

 

 

 

 

 

 

 

 

Income before property dispositions, income taxes, noncontrolling interest and equity in earnings of unconsolidated joint ventures

 

34,369

 

36,746

 

103,394

 

100,065

 

Gain on property dispositions

 

1,898

 

691

 

3,361

 

3,701

 

Income taxes

 

(356

)

(475

)

(969

)

(1,430

)

Equity in earnings of unconsolidated joint ventures

 

827

 

385

 

2,470

 

1,562

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

36,738

 

37,347

 

108,256

 

103,898

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations (including net gain on property dispositions of $4,095 and $221 for the quarters ended September 30, 2011 and 2010 and $54,722 and $5,491 for the nine month periods ended September 30, 2011 and 2010)

 

4,943

 

3,659

 

61,209

 

12,944

 

Net Income

 

41,681

 

41,006

 

169,465

 

116,842

 

Noncontrolling interest - operating partnerships

 

(6,414

)

(6,451

)

(20,769

)

(19,155

)

Less: Net income attributable to minority interest

 

 

 

 

 

 

 

 

 

Noncontrolling interest - consolidated joint ventures

 

53

 

89

 

511

 

(47

)

Net Income available to common shareholders

 

$

35,320

 

$

34,644

 

$

149,207

 

$

97,640

 

 

 

 

 

 

 

 

 

 

 

Basic income per common share

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.27

 

$

0.28

 

$

0.78

 

$

0.76

 

Discontinued operations

 

$

0.04

 

$

0.03

 

$

0.52

 

$

0.11

 

Total basic income per common share

 

$

0.31

 

$

0.31

 

$

1.30

 

$

0.87

 

 

 

 

 

 

 

 

 

 

 

Diluted income per common share

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.27

 

$

0.27

 

$

0.78

 

$

0.75

 

Discontinued operations

 

$

0.04

 

$

0.03

 

$

0.51

 

$

0.11

 

Total diluted income per common share

 

$

0.31

 

$

0.30

 

$

1.29

 

$

0.86

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares

 

 

 

 

 

 

 

 

 

Basic

 

115,014

 

113,077

 

114,547

 

112,708

 

Diluted

 

115,780

 

113,773

 

115,329

 

113,388

 

 

 

 

 

 

 

 

 

 

 

Amounts attributable to common shareholders

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

30,535

 

$

31,108

 

$

89,993

 

$

85,131

 

Discontinued operations

 

4,785

 

3,536

 

59,214

 

12,509

 

Net income

 

$

35,320

 

$

34,644

 

$

149,207

 

$

97,640

 

 


 

 

Liberty Property Trust

Statement of Funds From Operations

September 30, 2011

(Unaudited and in thousands, except per share amounts)

 

 

 

Quarter Ended

 

Nine Months Ended

 

 

 

September 30, 2011

 

September 30, 2010

 

September 30, 2011

 

September 30, 2010

 

 

 

 

 

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

 

$

35,320

 

$

0.31

 

$

34,644

 

$

0.31

 

$

149,207

 

$

1.30

 

$

97,640

 

$

0.87

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization of unconsolidated joint ventures

 

3,585

 

 

 

3,799

 

 

 

10,903

 

 

 

11,253

 

 

 

Depreciation and amortization

 

41,147

 

 

 

42,523

 

 

 

126,312

 

 

 

128,243

 

 

 

Gain on property dispositions

 

(4,048

)

 

 

(626

)

 

 

(59,762

)

 

 

(6,036

)

 

 

Noncontrolling interest share in addback for depreciation and amortization and gain on property dispositions

 

(1,297

)

 

 

(1,531

)

 

 

(2,516

)

 

 

(4,485

)

 

 

Funds from operations available to common shareholders - basic

 

$

74,707

 

$

0.65

 

$

78,809

 

$

0.70

 

$

224,144

 

$

1.96

 

$

226,615

 

$

2.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of net income to FFO - diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted - income available to common shareholders

 

$

35,320

 

$

0.31

 

$

34,644

 

$

0.30

 

$

149,207

 

$

1.29

 

$

97,640

 

$

0.86

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization of unconsolidated joint ventures

 

3,585

 

 

 

3,799

 

 

 

10,903

 

 

 

11,253

 

 

 

Depreciation and amortization

 

41,147

 

 

 

42,523

 

 

 

126,312

 

 

 

128,243

 

 

 

Gain on property dispositions

 

(4,048

)

 

 

(626

)

 

 

(59,762

)

 

 

(6,036

)

 

 

Noncontrolling interest excluding preferred unit distributions

 

1,161

 

 

 

1,198

 

 

 

5,010

 

 

 

3,396

 

 

 

Funds from operations available to common shareholders - diluted

 

$

77,165

 

$

0.65

 

$

81,538

 

$

0.69

 

$

231,670

 

$

1.94

 

$

234,496

 

$

2.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of weighted average shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares - all basic calculations

 

115,014

 

 

 

113,077

 

 

 

114,547

 

 

 

112,708

 

 

 

Dilutive shares for long term compensation plans

 

766

 

 

 

696

 

 

 

782

 

 

 

680

 

 

 

Diluted shares for net income calculations

 

115,780

 

 

 

113,773

 

 

 

115,329

 

 

 

113,388

 

 

 

Weighted average common units

 

3,816

 

 

 

3,943

 

 

 

3,890

 

 

 

3,949

 

 

 

Diluted shares for funds from operations calculations

 

119,596

 

 

 

117,716

 

 

 

119,219

 

 

 

117,337

 

 

 

 

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, 2011

(In thousands, except share amounts)

 

 

 

September 30, 2011

 

December 31, 2010

 

 

 

(unaudited)

 

 

 

Assets

 

 

 

 

 

Real estate:

 

 

 

 

 

Land and land improvements

 

$

857,917

 

$

831,740

 

Building and improvements

 

4,223,817

 

4,120,456

 

Less: accumulated depreciation

 

(1,097,115

)

(999,263

)

 

 

 

 

 

 

Operating real estate

 

3,984,619

 

3,952,933

 

 

 

 

 

 

 

Development in progress

 

41,907

 

—

 

Land held for development

 

208,431

 

209,253

 

 

 

 

 

 

 

Net real estate

 

4,234,957

 

4,162,186

 

 

 

 

 

 

 

Cash and cash equivalents

 

24,416

 

108,409

 

Restricted cash

 

66,350

 

49,526

 

Accounts receivable

 

9,243

 

6,898

 

Deferred rent receivable

 

105,406

 

102,924

 

Deferred financing and leasing costs, net of accumulated amortization (2011, $125,626; 2010, $115,124)

 

128,884

 

134,236

 

Investments in and advances to unconsolidated joint ventures

 

176,101

 

171,916

 

Assets held for sale

 

15,529

 

255,079

 

Prepaid expenses and other assets

 

94,742

 

73,625

 

 

 

 

 

 

 

Total assets

 

$

4,855,628

 

$

5,064,799

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Mortgage loans

 

$

292,272

 

$

320,679

 

Unsecured notes

 

1,792,643

 

2,039,143

 

Credit facility

 

—

 

—

 

Accounts payable

 

40,257

 

23,652

 

Accrued interest

 

33,057

 

29,821

 

Dividend and distributions payable

 

56,763

 

56,149

 

Other liabilities

 

176,825

 

156,803

 

 

 

 

 

 

 

Total liabilities

 

2,391,817

 

2,626,247

 

 

 

 

 

 

 

Equity

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

Common shares of beneficial interest, $.001 par value, 183,987,000 shares authorized, 116,955,528 (includes 1,249,909 in treasury) and 115,530,608 (includes 1,249,909 in treasury) shares issued and outstanding as of September 30, 2011 and December 31, 2010, respectively

 

117

 

116

 

Additional paid-in capital

 

2,603,700

 

2,560,193

 

Accumulated other comprehensive income (loss)

 

(219

)

(155

)

Distributions in excess of net income

 

(441,142

)

(426,017

)

Common shares in treasury, at cost, 1,249,909 shares as of September 30, 2011 and December 31, 2010

 

(51,951

)

(51,951

)

Total shareholders’ equity

 

2,110,505

 

2,082,186

 

 

 

 

 

 

 

Noncontrolling interest - operating partnership

 

 

 

 

 

3,808,746 and 3,928,733 common units outstanding as of September 30, 2011 and December 31, 2010, respectively

 

65,072

 

67,621

 

9,740,000 preferred units outstanding as of September 30, 2011 and December 31, 2010

 

287,959

 

287,959

 

Noncontrolling interest - consolidated joint ventures

 

275

 

786

 

 

 

 

 

 

 

Total equity

 

2,463,811

 

2,438,552

 

 

 

 

 

 

 

Total liabilities & equity

 

$

4,855,628

 

$

5,064,799