MALVERN, Pa., Feb. 2 /PRNewswire-FirstCall/ -- Liberty Property Trust (NYSE: LRY) reported that net income per common share (diluted) was $0.53 per share for the quarter ended December 31, 2008 compared to $0.39 per share for the quarter ended December 31, 2007, and $1.62 per common share for the full year 2008 compared with $1.80 per share for 2007.
Funds from operations available to common shareholders (diluted) ('FFO') for the fourth quarter of 2008 was $0.80 per share, compared to $0.79 per share for the fourth quarter of 2007. For the year ended December 31, 2008, FFO per share was $3.20, compared to $3.18 per share for 2007.
A reconciliation of GAAP net income to FFO is included in the financial tables accompanying this press release.
Fourth quarter FFO was impacted by the following items:
- Termination fees of $0.7 million, or approximately $.01 per share
- Impairment charges of $3.1 million or approximately ($.03) per share
- Discount in conjunction with the repurchase of Liberty senior notes: $2.5 million or approximately $.02 per share
- Approximately $.02 in forfeited buyer deposits related to the cancelled sale of land
'Liberty's performance in the fourth quarter, and into the beginning of 2009, demonstrates the resiliency of our business model and positive effect of bracing for the economic storm early. Despite the weakening economy, we have maintained occupancy, increased leasing in the development pipeline, and executed adroitly in the capital markets,' said Bill Hankowsky, chairman and chief executive officer. 'We are also seeing the benefits of our business model in increased tenant attraction and retention, as tenants place even greater value on the stability and commitment of customer-centric landlords.'
Portfolio Performance
Leasing: At December 31, 2008, Liberty's in-service portfolio of 76.9 million square feet was 91.3% occupied, compared to 92.0% at the end of the third quarter. During the quarter, Liberty completed lease transactions totaling 5.8 million square feet of space.
Same Store Performance: Property level operating income for same store properties decreased by 0.7% on a cash basis and increased by 0.2% on a straight line basis for the fourth quarter of 2008 compared to the same quarter in 2007 and decreased by 0.2% on a cash basis and 0.6% on a straight line basis for the full year 2008 compared to 2007.
Real Estate Investments
Development: During the fourth quarter, Liberty brought into service four development properties totaling 1.1 million square feet for a total investment of $84.9 million. At quarter-end the properties were 16.1% leased. The current yield on the investments is 3.0%, and the projected stabilized yield is 8.0%.
Also during the fourth quarter, Liberty began development of a 72,000 square foot, build-to-suit expansion of an existing office property in Minnesota for a projected investment of $13.2 million; and a joint venture in which Liberty holds a 50% interest began construction of a 500,000 square foot distribution center in Orlando, Florida. This property is 100% pre-leased, with a projected investment of $24.2 million.
As of December 31, 2008, Liberty had 4.5 million square feet of wholly-owned and joint venture properties under development. This activity represents a total projected investment of $560.0 million, with an expected yield of 7.9%. The properties were 55.5% leased at year-end.
Acquisitions: Liberty acquired no properties during the fourth quarter.
Dispositions: During the fourth quarter, Liberty sold five properties containing 306,000 square feet, and 14 acres of land for $40.8 million.
Capital Activities and Balance Sheet Management
Common Share Sales: On October 8, Liberty closed on the sale of 4.75 million common shares. Net proceeds from the offering were $149.5 million. In December, Liberty commenced the sale of common shares pursuant to a continuous equity offering program. Through December 31, 2008, the company sold 495,000 shares as part of this program. Net proceeds from the offering were $10.8 million. Proceeds from these offerings were used to repay borrowings under Liberty's unsecured credit facility and for general corporate purposes.
Senior Note Repurchases: During the fourth quarter of 2008, Liberty purchased $23.4 million of its August 2010 Senior Notes. These notes were purchased at a $2.5 million (approximately $.02 per share) discount. This discount is included in FFO as a debt extinguishment gain as noted above.
Dividend Adjustment: The quarterly dividend was decreased from $0.625 for the October 2008 dividend to $0.475 for the January 2009 dividend.
Subsequent Events
To date in 2009, Liberty has sold six properties totaling 301,000 square feet, for $34.8 million and has raised $22 million from its continuous equity offering program.
2009 Guidance
Liberty affirms its previously-announced guidance range for 2009 funds from operations of $3.00 - $3.20 per share. A reconciliation of FFO to GAAP net income is below:
2009 Range
Low High
Projected net income per share $1.24 $1.44
Depreciation and amortization of
unconsolidated joint ventures 0.16 0.18
Depreciation and amortization 1.78 1.81
Gain on property dispositions (0.10) (0.15)
Minority interest share of addbacks (0.08) (0.08)
Projected funds from operations per share $3.00 $3.20
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 77 million square foot portfolio includes more than 700 properties which provide office, distribution and light manufacturing facilities to 2,000 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 fourth quarter results, on Tuesday, February 3, 2009, 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: 82309390. 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
December 31, 2008
(In thousands, except per share amounts)
Quarter Ended Year Ended
------------- ----------
December December December December
31, 2008 31, 2007 31, 2008 31, 2007
-------- -------- -------- --------
(Unaudited)
Operating Revenue
Rental $131,919 $130,062 $520,301 $480,107
Operating expense
reimbursement 57,283 55,074 228,219 206,724
------ ------ ------- -------
Total operating
revenue 189,202 185,136 748,520 686,831
------- ------- ------- -------
Operating Expenses
Rental property 40,099 38,576 152,786 143,646
Real estate taxes 20,325 19,503 86,320 72,563
General and administrative 14,157 15,260 54,378 54,249
Depreciation and amortization 42,775 43,759 173,097 155,616
------ ------ ------- -------
Total operating
expenses 117,356 117,098 466,581 426,074
------- ------- ------- -------
Operating Income 71,846 68,038 281,939 260,757
Other Income/Expense
Interest and other 4,069 3,895 13,508 11,727
Debt extinguishment gain 2,521 - 2,521 -
Interest (38,712) (39,433) (155,675) (127,058)
------- ------- -------- --------
Total other
income/expense (32,122) (35,538) (139,646) (115,331)
------- ------- -------- --------
Income before property
dispositions, income taxes,
minority interest and equity
in earnings of unconsolidated
joint ventures 39,724 32,500 142,293 145,426
Gain (loss) on property
dispositions 8,633 (176) 10,572 1,463
Income taxes (273) 201 (1,645) 709
Minority interest (7,171) (6,447) (27,062) (23,598)
Equity in earnings of
unconsolidated joint
ventures 948 (1,252) 2,805 (226)
--- ------ ----- ----
Income from
continuing operations 41,861 24,826 126,963 123,774
Discontinued operations
net of minority interest
(including net gain on
property dispositions of
$9,884 and $9,233 for the
quarters ended December
31, 2008 and 2007 and
$23,519 and $33,611 for
the years ended
December 31, 2008 and
2007) 9,937 10,706 24,979 41,057
----- ------ ------ ------
Net Income $51,798 $35,532 $151,942 $164,831
======= ======= ======== ========
Basic income per common share
Continuing operations $0.43 $0.27 $1.35 $1.36
===== ===== ===== =====
Discontinued operations $0.10 $0.12 $0.27 $0.45
===== ===== ===== =====
Total basic income per
common share $0.53 $0.39 $1.62 $1.81
===== ===== ===== =====
Diluted income per common share
Continuing operations $0.43 $0.27 $1.35 $1.35
===== ===== ===== =====
Discontinued operations $0.10 $0.12 $0.27 $0.45
===== ===== ===== ===== Total diluted income per
common share $0.53 $0.39 $1.62 $1.80
===== ===== ===== =====
Weighted average shares
Basic 97,493 91,206 93,624 91,185
====== ====== ====== ======
Diluted 97,493 91,495 93,804 91,803
====== ====== ====== ======
Liberty Property Trust
Statement of Funds From Operations
December 31, 2008
(Unaudited and in thousands, except per share amounts)
Quarter Ended
-------------
December 31, 2008 December 31, 2007
----------------- -----------------
Per Per
Weighted Weighted
Average Average
Dollars Share Dollars Share
------- ----- ------- -----
Reconciliation of net income to
FFO - basic:
Basic - income available to common
shareholders $51,798 $0.53 $35,532 $0.39
===== =====
Adjustments:
Depreciation and amortization of
unconsolidated joint ventures 4,027 3,675
Depreciation and amortization 42,597 44,129
Gain on property dispositions (19,662) (9,260)
Minority interest share in addback
for depreciation and amortization
and gain on property dispositions (1,068) (1,688)
------ ----- ------ -----
Funds from operations available
to common shareholders - basic $77,692 $0.80 $72,388 $0.79
======= ===== ======= =====
Reconciliation of net income to
FFO - diluted:
Diluted - income available to
common shareholders $51,798 $0.53 $35,532 $0.39
===== =====
Adjustments:
Depreciation and amortization of
unconsolidated joint ventures 4,027 3,675
Depreciation and amortization 42,597 44,129
Gain on property dispositions (19,662) (9,260)
Minority interest excluding
preferred unit distributions 2,143 1,629
----- ----- ----- -----
Funds from operations available to
common shareholders - diluted $80,903 $0.80 $75,705 $0.79
======= ===== ======= =====
Reconciliation of weighted average
shares:
Weighted average common shares -
all basic calculations 97,493 91,206
Dilutive shares for long term
compensation plans - 289
- ---
Diluted shares for net income
calculations 97,493 91,495
Weighted average common units 4,189 4,190
----- -----
Diluted shares for funds from
operations calculations 101,682 95,685
======= ======
Year Ended
----------
December 31, 2008 December 31, 2007
----------------- -----------------
Per Per
Weighted Weighted
Average Average
Dollars Share Dollars Share
------- ----- ------- -----
Reconciliation of net income to
FFO - basic:
Basic - income available to common
shareholders $151,942 $1.62 $164,831 $1.81
===== =====
Adjustments:
Depreciation and amortization of
unconsolidated joint ventures 16,235 6,494
Depreciation and amortization 173,400 162,833
Gain on property dispositions (34,336) (36,498)
Minority interest share in addback
for depreciation and amortization
and gain on property dispositions (6,606) (5,820)
------ ----- ------ -----
Funds from operations available
to common shareholders - basic $300,635 $3.21 $291,840 $3.20
======== ===== ======== =====
Reconciliation of net income to
FFO - diluted:
Diluted - income available to
common shareholders $151,942 $1.62 $164,831 $1.80
===== =====
Adjustments:
Depreciation and amortization of
unconsolidated joint ventures 16,235 6,494
Depreciation and amortization 173,400 162,833
Gain on property dispositions (34,336) (36,498)
Minority interest excluding
preferred unit distributions 6,669 7,556
----- ----- ----- -----
Funds from operations available to
common shareholders - diluted $313,910 $3.20 $305,216 $3.18
======== ===== ======== =====
Reconciliation of weighted average
shares:
Weighted average common shares -
all basic calculations 93,624 91,185
Dilutive shares for long term
compensation plans 180 618
--- ---
Diluted shares for net income
calculations 93,804 91,803
Weighted average common units 4,190 4,190
----- -----
Diluted shares for funds from
operations calculations 97,994 95,993
====== ======
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
December 31, 2008
(In thousands, except share amounts)
December 31, 2008 December 31, 2007
----------------- -----------------
Assets
Real estate:
Land and land improvements $813,397 $792,991
Building and improvements 4,261,770 4,408,309
Less: accumulated depreciation (982,114) (858,671)
-------- --------
Operating real estate 4,093,053 4,342,629
Development in progress 245,463 316,985
Land held for development 209,551 247,124
------- -------
Net real estate 4,548,067 4,906,738
Cash and cash equivalents 15,794 37,989
Restricted cash 39,726 34,567
Accounts receivable 12,985 15,908
Deferred rent receivable 85,352 79,720
Deferred financing and leasing costs,
net of accumulated amortization
(2008, $140,345; 2007, $119,210) 134,029 144,295
Investment in unconsolidated joint
ventures 251,520 278,383
Assets held for sale 33,662 36,908
Prepaid expenses and other assets 97,549 109,429
------ -------
Total assets $5,218,684 $5,643,937
========== ==========
Liabilities
Mortgage loans $198,560 $243,169
Unsecured notes 2,131,607 2,155,000
Credit facility 260,000 622,960
Accounts payable 32,481 44,666
Accrued interest 36,474 39,725
Dividend and distributions payable 48,858 59,849
Other liabilities 184,198 268,926
------- -------
Total liabilities 2,892,178 3,434,295
--------- ---------
Minority interest 369,771 372,621
Shareholders' Equity
Common shares of beneficial interest,
$.001 par value, 183,987,000 shares
authorized, 100,034,404 (includes
1,249,909 in treasury) and 92,817,879
(includes 1,249,909 in treasury) shares
issued and outstanding as of
December 31, 2008 and December
31, 2007, respectively 101 93
Additional paid-in capital 2,199,684 1,984,141
Accumulated other comprehensive income (5,378) 21,378
Distributions in excess of net income (185,721) (116,640)
Common shares in treasury, at cost,
1,249,909 shares as of
December 31, 2008 and December
31, 2007 (51,951) (51,951)
------- -------
Total shareholders' equity 1,956,735 1,837,021
Total liabilities & shareholders' equity $5,218,684 $5,643,937
========== ==========
SOURCE Liberty Property Trust
