MALVERN, Pa., Oct. 20 /PRNewswire-FirstCall/ -- Liberty Property Trust
(NYSE: LRY) reported that net income per common share (diluted) was $0.41 per
share for the quarter ended September 30, 2008 compared to $0.41 per share for
the quarter ended September 30, 2007. For the nine-month period ended
September 30, 2008, net income per common share (diluted) was $1.08, compared
to $1.41 per share for the same period in 2007. The primary difference
between net income for the first nine months of 2007 and 2008 is attributable
to a difference in gains on sales of property.
Funds from operations available to common shareholders (diluted) ('FFO')
for the third quarter of 2008 was $0.80 per share, compared to $0.80 per share
for the third quarter of 2007. FFO per share for the nine month period ended
September 30, 2008 was $2.41 per share, compared to $2.39 per share for the
same period in 2007. A reconciliation of GAAP net income to FFO is included
in the financial tables accompanying this press release.
'Office and industrial conditions continued to hold up this quarter in a
very unusual economic and financial environment,' said Bill Hankowsky,
chairman and chief executive officer. 'In spite of the current challenged
economic scene, our multi-product, multi-market, multi-tenant portfolio and
our capital structure are appropriately positioned for relative outperformance
in this difficult market.'
Portfolio Performance
Leasing: At September 30, 2008 Liberty's in-service portfolio of 75.9
million square feet was 92.0% occupied, compared to 92.5% at the end of the
second quarter. During the third quarter, Liberty completed lease
transactions totaling 4.0 million square feet of space.
Same Store Performance: Property level operating income for same store
properties increased by 0.1% on a cash basis and decreased by 1.2% on a
straight line basis for the third quarter of 2008 compared to the same quarter
in 2007, and remained flat on a cash basis and decreased by 0.9% on a straight
line basis for the nine months ended September 30th compared to the same
period in 2007.
Real Estate Investments
Development: During the third quarter, Liberty brought into service six
wholly-owned development properties totaling one million square feet for a
total investment of $62.0 million. These properties are 83.6% leased at a
current yield of 7.1% and a projected stabilized yield of 8.7%. A joint
venture in which Liberty holds a 50% interest brought into service two
development properties for a total investment of $19.1 million. These
properties, totaling 296,000 square feet, are located in Orlando, Florida, and
were 78.2% leased as of September 30.
During the third quarter, Liberty began development of one property for an
expected total investment of $46.3 million. This 211,000 square foot office
building is located in Orlando, and is 50.8% pre-leased. In addition, a joint
venture in which the company holds a 25% interest began construction of a
464,000 square foot industrial building in Aurora, IL.
As of September 30, 2008, Liberty had 5.0 million square feet of
wholly-owned and joint venture properties under development. This activity
represents a total projected investment of $599.8 million, with an expected
yield of 8.0%. The properties were 21.4% leased at September 30.
Acquisitions: Liberty acquired a 107,000 square foot office property in
Sunrise, FL during the quarter for $17.0 million. The property is 100%
leased, with a current yield of 10.9%.
Dispositions: During the third quarter Liberty sold six operating
properties, which contained 254,000 square feet of leasable space for $31.1
million.
Subsequent Events
On October 8, Liberty completed a public offering of 4,750,000 common
shares, generating net proceeds to the company of $149.5 million. The proceeds
from this offering were used to repay borrowings under the Company's unsecured
credit facility and for general corporate purposes.
Earnings Outlook
Liberty expects to report funds from operations for 2008 in the range of
$3.14-$3.16 per share, and for 2009 in the range of $3.00-$3.20 per share. A
reconciliation of FFO to GAAP net income for both 2008 and 2009 is below:
2008 Range 2009 Range
Low High Low High
Projected net income
per share $1.47 $1.49 $1.24 $1.44
Depreciation and
amortization of
unconsolidated
joint ventures 0.18 0.18 0.16 0.18
Depreciation and
amortization 1.85 1.89 1.78 1.81
Gain on property
dispositions (0.29) (0.32) (0.10) (0.15)
Minority interest
share of addbacks (0.07) (0.08) (0.08) (0.08)
Projected funds from
operations per share $3.14 $3.16 $3.00 $3.20
Commenting on this guidance, 'The current economic pressures coupled with
the credit drought yield a very unclear picture for 2009,' said Bill
Hankowsky. 'Therefore we are basing our forward guidance on a set of
assumptions that project the current difficult economic environment to prevail
throughout 2009.'
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 76 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 610-648-1704, 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 21, 2008, at 1:00 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: 67954423. 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 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.
Liberty Property Trust
Statement of Operations
September 30, 2008
(Unaudited and in thousands, except per share amounts)
Quarter Ended Nine Months Ended
September September September September
30, 2008 30, 2007 30, 2008 30, 2007
Operating Revenue
Rental $131,042 $122,864 $392,650 $352,262
Operating expense reimbursement 57,935 52,254 173,337 152,908
Total operating revenue 188,977 175,118 565,987 505,170
Operating Expenses
Rental property 38,468 36,121 114,717 106,433
Real estate taxes 22,305 19,299 66,615 53,494
General and administrative 13,145 13,142 40,178 38,866
Depreciation and amortization 44,695 40,146 132,021 112,897
Total operating expenses 118,613 108,708 353,531 311,690
Operating Income 70,364 66,410 212,456 193,480
Other Income/Expense
Interest and other 3,333 2,443 9,459 8,105
Interest (38,909) (33,043) (118,336) (88,641)
Total other income/expense (35,576) (30,600) (108,877) (80,536)
Income before property
dispositions, income taxes,
minority interest
and equity in earnings of
unconsolidated joint ventures 34,788 35,810 103,579 112,944
Gain on property dispositions 463 190 1,939 1,641
Income taxes (308) 1,022 (1,372) 508
Minority interest (6,947) (5,671) (19,948) (17,154)
Equity in earnings of
unconsolidated joint ventures 470 (29) 1,857 1,026
Income from continuing operations 28,466 31,322 86,055 98,965
Discontinued operations net of
minority interest (including net
gain on property dispositions of
$10,232 and $4,145 for the quarters
ended September 30, 2008 and 2007 and
$13,635 and $24,376 for the nine
month periods ended September 30,
2008 and 2007) 10,088 5,852 14,089 30,334
Net Income $38,554 $37,174 $100,144 $129,299
Basic income per common share
Continuing operations $0.30 $0.35 $0.93 $1.09
Discontinued operations $0.11 $0.06 $0.15 $0.33
Total basic income per common share $0.41 $0.41 $1.08 $1.42
Diluted income per common share
Continuing operations $0.30 $0.35 $0.93 $1.08
Discontinued operations $0.11 $0.06 $0.15 $0.33
Total diluted income per common
share $0.41 $0.41 $1.08 $1.41
Weighted average shares
Basic 92,928 90,905 92,324 91,179
Diluted 93,369 91,367 92,626 91,905
Liberty Property Trust
Statement of Funds From Operations
September 30, 2008
(Unaudited and in thousands, except per share amounts)
Quarter Ended
September 30, 2008 September 30, 2007
Per Per
Weighted Weighted
Average Average
Dollars Share Dollars Share
Reconciliation of net income to
FFO - basic:
Basic - income available to common
shareholders $38,554 $0.41 $37,174 $0.41
Adjustments:
Depreciation and amortization of
unconsolidated joint ventures 4,331 1,134
Depreciation and amortization 44,173 41,715
Gain on property dispositions (10,542) (5,302)
Minority interest share in addback
for depreciation and amortization
and gain on property dispositions (1,629) (1,648)
Funds from operations available to
common shareholders - basic $74,887 $0.81 $73,073 $0.80
Reconciliation of net income to
FFO - diluted:
Diluted - income available to common
shareholders $38,554 $0.41 $37,174 $0.41
Adjustments:
Depreciation and amortization of
unconsolidated joint ventures 4,331 1,134
Depreciation and amortization 44,173 41,715
Gain on property dispositions (10,542) (5,302)
Minority interest excluding
preferred unit distributions 1,746 1,705
Funds from operations available to
common shareholders - diluted $78,262 $0.80 $76,426 $0.80
Reconciliation of weighted average
shares:
Weighted average common shares - all
basic calculations 92,928 90,905
Dilutive shares for long term
compensation plans 441 462
Diluted shares for net income
calculations 93,369 91,367
Weighted average common units 4,190 4,190
Diluted shares for funds from
operations calculations 97,559 95,557
Nine Months Ended
September 30, 2008 September 30, 2007
Per Per
Weighted Weighted
Average Average
Dollars Share Dollars Share
Reconciliation of net income to
FFO - basic:
Basic - income available to common
shareholders $100,144 $1.08 $129,299 $1.42
Adjustments:
Depreciation and amortization of
unconsolidated joint ventures 12,208 2,819
Depreciation and amortization 130,803 118,704
Gain on property dispositions (14,674) (27,238)
Minority interest share in addback
for depreciation and amortization
and gain on property dispositions (5,538) (4,132)
Funds from operations available to
common shareholders - basic $222,943 $2.41 $219,452 $2.41
Reconciliation of net income to FFO
- diluted:
Diluted - income available to
common shareholders $100,144 $1.08 $129,299 $1.41
Adjustments:
Depreciation and amortization of
unconsolidated joint ventures 12,208 2,819
Depreciation and amortization 130,803 118,704
Gain on property dispositions (14,674) (27,238)
Minority interest excluding
preferred unit distributions 4,526 5,927
Funds from operations available to
common shareholders - diluted $233,007 $2.41 $229,511 $2.39
Reconciliation of weighted average
shares:
Weighted average common shares -
all basic calculations 92,324 91,179
Dilutive shares for long term
compensation plans 302 726
Diluted shares for net income
calculations 92,626 91,905
Weighted average common units 4,190 4,190
Diluted shares for funds from
operations calculations 96,816 96,095
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, 2008
(In thousands, except share amounts)
September 30, December 31,
2008 2007
Assets (Unaudited)
Real estate:
Land and land improvements $805,797 $795,939
Building and improvements 4,235,427 4,432,690
Less: accumulated depreciation (956,732) (863,193)
Operating real estate 4,084,492 4,365,436
Development in progress 294,227 328,138
Land held for development 227,003 247,124
Net real estate 4,605,722 4,940,698
Cash and cash equivalents 29,278 37,989
Restricted cash 41,638 34,567
Accounts receivable 24,055 17,405
Deferred rent receivable 82,653 80,087
Deferred financing and leasing costs,
net of accumulated amortization
(2008, $136,565; 2007, $119,721) 132,023 144,684
Investment in unconsolidated joint
ventures 255,317 278,383
Assets held for sale 2,145 2,192
Prepaid expenses and other assets 99,138 107,932
Total assets $5,271,969 $5,643,937
Liabilities
Mortgage loans $205,450 $243,169
Unsecured notes 2,155,000 2,155,000
Credit facility 370,000 622,960
Accounts payable 54,302 44,666
Accrued interest 38,063 39,725
Dividend and distributions payable 60,991 59,849
Other liabilities 212,667 268,926
Total liabilities 3,096,473 3,434,295
Minority interest 369,839 372,621
Shareholders' Equity
Common shares of beneficial interest,
$.001 par value, 183,987,000 shares
authorized, 94,645,598 (includes
1,249,909 in treasury) and
92,817,879 (includes 1,249,909
in treasury) shares issued and outstanding
as of September 30, 2008 and December 31,
2007, respectively 94 93
Additional paid-in capital 2,037,360 1,984,141
Accumulated other comprehensive income 10,750 21,378
Distributions in excess of net income (190,596) (116,640)
Common shares in treasury, at cost,
1,249,909 shares as of September 30,
2008 and December 31, 2007 (51,951) (51,951)
Total shareholders' equity 1,805,657 1,837,021
Total liabilities & shareholders' equity $5,271,969 $5,643,937
SOURCE Liberty Property Trust
