EX-99.1 2 a14-17330_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

News Release

 

Inquiries: Jeanne Leonard, Liberty Property Trust, 610.648.1704

 

Liberty Property Trust Announces Second Quarter 2014 Results and Revised

Full-Year Financial Projections

 

Malvern, PA — July 22, 2014 - Liberty Property Trust reported that funds from operations available to common shareholders (diluted) (“FFO”) for the second quarter of 2014 was $0.59 per share, compared to $0.66 per share for the second quarter of 2013. FFO per share for the six-month period ended June 30, 2014 was $1.17, compared to $1.31 per share for the same period in 2013.

 

Net income per common share (diluted) was $0.20 for the quarter ended June 30, 2014, compared to $0.33 for the quarter ended June 30, 2013. Net income per common share (diluted) for the six-month period ended June 30, 2014 was $0.69, compared to $0.93 for the same period in 2013.

 

Results for the first half of 2014 reflect the sale of 6.6 million square feet of suburban office and flex properties which closed in two installments during December 2013 and January 2014. Year-over-year results are reflective of strategic portfolio transformation activities that have increased Liberty’s industrial portfolio and decreased its office exposure.

 

Funds from Operations Guidance

 

Liberty now expects to report 2014 FFO per share in the range of $2.42 - $2.48. Previous guidance was $2.45-$2.55 per share. The revised guidance reflects reduced acquisition volumes for the year, minor delays in expected development starts, and slower than budgeted occupancy increases in the core portfolio.

 

Commenting on the quarter and revised projections, chairman and chief executive officer Bill Hankowsky said, “We continued to see good activity in the industrial markets, with solid demand and rent increases. The thin and pricey industrial transaction market is offering few acquisition opportunities that meet our investment criteria, therefore it has taken longer than expected to deploy the capital on our balance sheet in a manner that creates value. We believe that the delays in leasing and development starts that have contributed to our revised projections are somewhat situational and that they are not indicative of negative market trends.”

 

Portfolio Performance

 

Leasing: At June 30, 2014, Liberty’s in-service portfolio of 102.5 million square feet was 91.7% occupied, compared to 91.0% at the end of the first quarter of 2014. During the quarter, Liberty completed lease transactions totaling 7.2 million square feet of space.

 

- more -

 


 

Same Store Performance: Property level operating income for same store properties decreased by 2.3% on a cash basis and by 0.6% on a straight line basis for the second quarter of 2014 compared to the same quarter in 2013.

 

Real Estate Investments

 

Development: In the second quarter, Liberty brought into service one development property for a total investment of $12.4 million. The property contains 227,000 square feet of leasable space and was 100% occupied as of June 30, 2014. The current yield on this property is 8.8%.

 

Also during the quarter, Liberty began development on three properties for a projected investment of $69.2 million. The properties consist of an 800,000 square foot distribution building in Bethlehem, PA and a 130,000 square foot multi-tenant industrial building in Richmond, Virginia, both for inventory, and a fully-leased 76,000 square foot flex building in Philadelphia.

 

In addition, Liberty announced that agreements were executed to develop, in a joint venture with Comcast Corporation, a $933 million office and hotel property in Philadelphia. The project will include 1.334 million square feet of rentable office space and a 222-room Four Seasons Hotel.  Construction began earlier this month. The joint venture is 20% owned by Liberty and Liberty’s investment in the project is expected to be approximately $185 million.

 

Acquisitions: Liberty acquired six properties for $53.2 million during the second quarter. They consist of five industrial properties which contain 705,000 square feet in Durham, North Carolina and an 85,000 square foot distribution building in Garden Grove, California. The properties are 100% leased.

 

Real Estate Dispositions

 

Liberty sold three distribution buildings in southern New Jersey for $32.2 million into a joint venture in which Liberty holds a 25% interest. The properties total 603,000 square feet.

 

2


 

FFO Guidance Reconciliation

 

As stated above, Liberty expects to report 2014 funds from operations (“FFO”) per share in the range of $2.42 - $2.48. A reconciliation of projected FFO to projected GAAP net income for 2014 is below (all amounts projected):

 

 

 

2014 Range (original)

 

2014 Range (revised)

 

 

 

Low

 

High

 

Low

 

High

 

Net income per share

 

$

1.30

 

$

1.40

 

$

1.42

 

$

1.51

 

Depreciation and amortization of unconsolidated joint ventures

 

0.09

 

0.11

 

0.09

 

0.11

 

Depreciation and amortization

 

1.53

 

1.61

 

1.52

 

1.56

 

Gain on property dispositions

 

(0.44

)

(0.54

)

(0.58

)

(0.68

)

Noncontrolling interest share of addbacks

 

(0.03

)

(0.02

)

(0.03

)

(0.02

)

 

 

 

 

 

 

 

 

 

 

Funds from operations per share

 

$

2.45

 

$

2.55

 

$

2.42

 

$

2.48

 

 

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 103 million square foot portfolio includes more than 750 properties which provide office, distribution and light manufacturing facilities to 1,800 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 second quarter results, on Tuesday, July 22, 2014, at 1:00 p.m. Eastern Time. To access the conference call, please dial 855-277-7530. The passcode needed for access is 72369583. A replay of the call will be available until August 22, 2014, by dialing 1-855-859-2056 using the same passcode as above. The call can also be accessed in the Investors section of Liberty’s web site at www.libertyproperty.com.

 

3


 

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, the timing of leasing, development and acquisition activity, expectations for our operating results, business and financial condition, our joint venture with Comcast, the impact of our strategic transformation activities on our portfolio and 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”  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 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, including without limitation the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.  The company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

 

# # #

 

4


 

Liberty Property Trust

Statement of Operations

June 30, 2014

(Unaudited and in thousands, except per share amounts)

 

 

 

Quarter Ended

 

Six months ended

 

 

 

June 30, 2014

 

June 30, 2013

 

June 30, 2014

 

June 30, 2013

 

 

 

 

 

 

 

 

 

 

 

Operating Revenue

 

 

 

 

 

 

 

 

 

Rental

 

$

139,377

 

$

106,955

 

$

278,311

 

$

207,788

 

Operating expense reimbursement

 

53,582

 

44,069

 

112,263

 

90,362

 

Total operating revenue

 

192,959

 

151,024

 

390,574

 

298,150

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

Rental property

 

31,928

 

26,684

 

70,489

 

51,913

 

Real estate taxes

 

25,716

 

18,906

 

50,217

 

36,863

 

General and administrative

 

14,973

 

16,455

 

33,334

 

36,248

 

Depreciation and amortization

 

57,872

 

37,527

 

114,606

 

74,748

 

Total operating expenses

 

130,489

 

99,572

 

268,646

 

199,772

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

62,470

 

51,452

 

121,928

 

98,378

 

 

 

 

 

 

 

 

 

 

 

Other Income/Expense

 

 

 

 

 

 

 

 

 

Interest and other

 

3,117

 

5,352

 

5,570

 

9,732

 

Interest

 

(38,470

)

(28,133

)

(77,677

)

(55,872

)

Total other income/expense

 

(35,353

)

(22,781

)

(72,107

)

(46,140

)

 

 

 

 

 

 

 

 

 

 

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

 

27,117

 

28,671

 

49,821

 

52,238

 

Gain on property dispositions

 

1,896

 

—

 

1,896

 

—

 

Income taxes

 

(693

)

(660

)

(1,224

)

(1,151

)

Equity in earnings of unconsolidated joint ventures

 

1,546

 

1,566

 

5,705

 

3,323

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

29,866

 

29,577

 

56,198

 

54,410

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations (including net gains on property dispositions of $140 and $7,625 for the quarters ended June 30, 2014 and 2013, respectively and $46,256 and $49,338 for the six month periods ended June 30, 2014 and 2013, respectively)

 

241

 

13,666

 

48,015

 

63,489

 

Net Income

 

30,107

 

43,243

 

104,213

 

117,899

 

Noncontrolling interest - operating partnerships

 

(821

)

(3,134

)

(2,674

)

(6,551

)

Noncontrolling interest - consolidated joint ventures

 

(37

)

—

 

(390

)

—

 

Net Income available to common shareholders

 

$

29,249

 

$

40,109

 

$

101,149

 

$

111,348

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

30,107

 

$

43,243

 

$

104,213

 

$

117,899

 

Other comprehensive income (loss) - foreign currency translation

 

6,464

 

40

 

7,811

 

(4,812

)

Other comprehensive loss - change in net unrealized gain on derivative instruments

 

(1,145

)

—

 

(1,656

)

—

 

Comprehensive income

 

35,426

 

43,283

 

110,368

 

113,087

 

Less: comprehensive income attributable to noncontrolling interest

 

(983

)

(3,135

)

(3,209

)

(6,406

)

Comprehensive income attributable to common shareholders

 

$

34,443

 

$

40,148

 

$

107,159

 

$

106,681

 

 

 

 

 

 

 

 

 

 

 

Basic income per common share

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.20

 

$

0.22

 

$

0.37

 

$

0.42

 

Discontinued operations

 

$

—

 

$

0.11

 

$

0.32

 

$

0.51

 

Total basic income per common share

 

$

0.20

 

$

0.33

 

$

0.69

 

$

0.93

 

 

 

 

 

 

 

 

 

 

 

Diluted income per common share

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.20

 

$

0.22

 

$

0.37

 

$

0.42

 

Discontinued operations

 

$

—

 

$

0.11

 

$

0.32

 

$

0.51

 

Total diluted income per common share

 

$

0.20

 

$

0.33

 

$

0.69

 

$

0.93

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares

 

 

 

 

 

 

 

 

 

Basic

 

147,012

 

120,081

 

146,749

 

119,416

 

Diluted

 

147,774

 

120,911

 

147,444

 

120,229

 

 

 

 

 

 

 

 

 

 

 

Amounts attributable to common shareholders

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

29,014

 

$

26,848

 

$

54,262

 

$

49,751

 

Discontinued operations

 

235

 

13,261

 

46,887

 

61,597

 

Net income

 

$

29,249

 

$

40,109

 

$

101,149

 

$

111,348

 

 


 

Liberty Property Trust

Statement of Funds From Operations

June 30, 2014

(Unaudited and in thousands, except per share amounts)

 

 

 

Quarter Ended

 

Six months ended

 

 

 

June 30, 2014

 

June 30, 2013

 

June 30, 2014

 

June 30, 2013

 

 

 

 

 

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

 

$

29,249

 

$

0.20

 

$

40,109

 

$

0.33

 

$

101,149

 

$

0.69

 

$

111,348

 

$

0.93

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization of unconsolidated joint ventures

 

3,341

 

 

 

3,301

 

 

 

6,632

 

 

 

6,698

 

 

 

Depreciation and amortization

 

57,509

 

 

 

44,804

 

 

 

113,616

 

 

 

89,776

 

 

 

Gain on property dispositions

 

(2,085

)

 

 

(7,658

)

 

 

(47,611

)

 

 

(49,364

)

 

 

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

 

(1,380

)

 

 

(1,199

)

 

 

(1,707

)

 

 

(1,399

)

 

 

Funds from operations available to common shareholders - basic

 

$

86,634

 

$

0.59

 

$

79,357

 

$

0.66

 

$

172,079

 

$

1.17

 

$

157,059

 

$

1.32

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of net income to FFO - diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted - income available to common shareholders

 

$

29,249

 

$

0.20

 

$

40,109

 

$

0.33

 

$

101,149

 

$

0.69

 

$

111,348

 

$

0.93

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization of unconsolidated joint ventures

 

3,341

 

 

 

3,301

 

 

 

6,632

 

 

 

6,698

 

 

 

Depreciation and amortization

 

57,509

 

 

 

44,804

 

 

 

113,616

 

 

 

89,776

 

 

 

Gain on property dispositions

 

(2,085

)

 

 

(7,658

)

 

 

(47,611

)

 

 

(49,364

)

 

 

Noncontrolling interest excluding preferred unit distributions

 

703

 

 

 

1,226

 

 

 

2,438

 

 

 

3,432

 

 

 

Funds from operations available to common shareholders - diluted

 

$

88,717

 

$

0.59

 

$

81,782

 

$

0.66

 

$

176,224

 

$

1.17

 

$

161,890

 

$

1.31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of weighted average shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares - all basic calculations

 

147,012

 

 

 

120,081

 

 

 

146,749

 

 

 

119,416

 

 

 

Dilutive shares for long term compensation plans

 

762

 

 

 

830

 

 

 

695

 

 

 

813

 

 

 

Diluted shares for net income calculations

 

147,774

 

 

 

120,911

 

 

 

147,444

 

 

 

120,229

 

 

 

Weighted average common units

 

3,551

 

 

 

3,714

 

 

 

3,555

 

 

 

3,714

 

 

 

Diluted shares for Funds from operations calculations

 

151,325

 

 

 

124,625

 

 

 

150,999

 

 

 

123,943

 

 

 

 

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

June 30, 2014

(Unaudited and in thousands, except share and unit amounts)

 

 

 

June 30, 2014

 

December 31, 2013

 

Assets

 

 

 

 

 

Real estate:

 

 

 

 

 

Land and land improvements

 

$

1,162,397

 

$

1,139,455

 

Building and improvements

 

5,244,783

 

5,144,758

 

Less: accumulated depreciation

 

(1,135,864

)

(1,057,680

)

 

 

 

 

 

 

Operating real estate

 

5,271,316

 

5,226,533

 

 

 

 

 

 

 

Development in progress

 

329,685

 

209,187

 

Land held for development

 

241,196

 

233,055

 

 

 

 

 

 

 

Net real estate

 

5,842,197

 

5,668,775

 

 

 

 

 

 

 

Cash and cash equivalents

 

228,678

 

163,414

 

Restricted cash

 

18,980

 

51,456

 

Accounts receivable

 

15,272

 

13,900

 

Deferred rent receivable

 

107,473

 

99,956

 

Deferred financing and leasing costs, net of accumulated amortization (2014, $158,313; 2013, $140,958)

 

221,121

 

226,607

 

Investments in and advances to unconsolidated joint ventures

 

203,876

 

179,655

 

Assets held for sale

 

—

 

275,957

 

Prepaid expenses and other assets

 

94,142

 

95,840

 

 

 

 

 

 

 

Total assets

 

$

6,731,739

 

$

6,775,560

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Mortgage loans

 

$

537,338

 

$

545,306

 

Unsecured notes

 

2,708,668

 

2,708,213

 

Credit facility

 

—

 

—

 

Accounts payable

 

56,073

 

70,406

 

Accrued interest

 

28,530

 

25,777

 

Dividend and distributions payable

 

71,864

 

71,323

 

Other liabilities

 

219,050

 

250,819

 

 

 

 

 

 

 

Total liabilities

 

3,621,523

 

3,671,844

 

 

 

 

 

 

 

Noncontrolling interest - operating partnership - 301,483 preferred units outstanding as of June 30, 2014 and December 31, 2013

 

7,537

 

7,537

 

 

 

 

 

 

 

Equity

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

Common shares of beneficial interest, $.001 par value, 283,987,000 shares authorized, 149,008,030 (includes 1,249,909 in treasury) and 147,846,801 (includes 1,249,909 in treasury) shares issued and outstanding as of June 30, 2014 and December 31, 2013, respectively

 

149

 

148

 

Additional paid-in capital

 

3,709,753

 

3,669,618

 

Accumulated other comprehensive income

 

15,752

 

9,742

 

Distributions in excess of net income

 

(630,706

)

(591,713

)

Common shares in treasury, at cost, 1,249,909 shares as of June 30, 2014 and December 31, 2013

 

(51,951

)

(51,951

)

Total shareholders’ equity

 

3,042,997

 

3,035,844

 

 

 

 

 

 

 

Noncontrolling interest - operating partnership 3,553,566 and 3,556,566 common units outstanding as of June 30, 2014 and December 31, 2013, respectively

 

55,763

 

56,713

 

Noncontrolling interest - consolidated joint ventures

 

3,919

 

3,622

 

 

 

 

 

 

 

Total equity

 

3,102,679

 

3,096,179

 

 

 

 

 

 

 

Total liabilities, noncontrolling interest - operating partnership & equity

 

$

6,731,739

 

$

6,775,560