MALVERN, Pa., Oct. 26 /PRNewswire-FirstCall/ -- Liberty Property Trust reported that net income per common share (diluted) was $0.39 per share for the quarter ended September 30, 2009, compared to $0.41 per share (diluted) for the quarter ended September 30, 2008. For the nine-month period ended September 30, 2009, net income per common share (diluted) was $1.02, compared to $1.08 per share for the same period in 2008.
Funds from operations available to common shareholders (diluted) ("FFO") for the third quarter of 2009 was $0.72 per share, compared to $0.80 per share for the third quarter of 2008. FFO per share for the nine-month period ended September 30, 2009 was $2.16, compared to $2.41 per share for the same period in 2008. A reconciliation of GAAP net income to FFO is included in the financial tables accompanying this press release. Funds from operations for the third quarter include termination fees of $6.2 million, and an impairment charge of $4.8 million.
"During the third quarter we saw Liberty's portfolio occupancy stabilize, and while competitive market occupancies continue to erode, we may be seeing the first signs of what will, with no doubt, be a slow market recovery," said Bill Hankowsky, chief executive officer. "The industrial sector is poised to begin recovery ahead of the office markets, which continue to await positive news on the employment front. We expect that Liberty's outstanding financial position and customer-centric operations will continue to allow us to outperform our markets and provide us with fuel to grow when the opportunity arises in 2010 and beyond."
Portfolio Performance
Leasing: At September 30, 2009, Liberty's in-service portfolio of 77.4 million square feet was 89.3% occupied, compared to 89.4% at the end of the second quarter. During the quarter, Liberty completed lease transactions totaling 3.5 million square feet of space.
Same Store Performance: Property level operating income for same store properties increased by 0.4% on a cash basis and by 2.0% on a straight line basis for the third quarter of 2009 compared to the same quarter in 2008.
Capital Activities and Balance Sheet Management
Common Share Sales: During the third quarter of 2009, Liberty completed its continuous equity offering program, selling 2.8 million shares, which generated net proceeds of $69.2 million.
Senior Note Obligations: During the quarter, Liberty purchased $3.5 million of its October 2017 Senior Notes. These notes were purchased at a $0.5 million discount. This discount is included in FFO as a debt extinguishment gain.
Property Sales: Liberty sold six operating properties, which contained 982,000 square feet of leaseable space, and three acres of land, for $63.1 million.
Real Estate Investments
Development: During the third quarter, Liberty brought into service seven development properties totaling 501,000 square feet for a total investment of $89.2 million. These properties were 22.4% occupied as of September 30, 2009. The current yield on this investment is 1.1%, and the projected stabilized yield is 6.9%. Leases have been signed for an additional 29% of the space.
A joint venture in which the company holds a 50% interest brought into service a 500,000 square foot build-to-suit development property during the quarter. This property is 100% leased, and the current yield on the $24.0 million investment is 11.5%.
No development commenced during the quarter.
As of September 30, 2009, Liberty had 2.4 million square feet of wholly-owned and joint venture properties under development. This activity represents a total projected investment of $372.4 million, with an expected yield of 7.5%. The properties were 63.1% leased at September 30.
Acquisitions: Liberty acquired no properties during the quarter. Earnings Outlook
Liberty expects to report funds from operations for 2009 in the range of $2.81 - $2.83 per share, and for 2010 in the range of $2.60 - $2.80 per share. A reconciliation of FFO to GAAP net income for both 2009 and 2010 is below:
2009 Range 2010 Range Low High Low High Projected net income per share $1.32 $1.37 $1.12 $1.33 Depreciation and amortization of unconsolidated joint ventures 0.15 0.15 0.13 0.15 Depreciation and amortization 1.59 1.59 1.50 1.52 Gain on property dispositions (0.20) (0.23) (0.10) (0.15) Minority interest share of addbacks (0.05) (0.05) (0.05) (0.05) Projected funds from operations per share $2.81 $2.83 $2.60 $2.80
Commenting on this guidance, Bill Hankowsky said: "The change in Liberty's earnings guidance from 2009 to 2010 is primarily due to a full-year's dilution from capital activity in 2009, and, to a lesser extent, continued pressure on real estate fundamentals, principally rental rates. While we have begun to see the first signs of stabilization taking root in our portfolio, it will take time for the economy to recover enough to reverse current declines in rents."
About the Company
Liberty Property Trust 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 2,100 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 http://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 27, 2009, at 1 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: 33769240. The call can also be accessed via the Internet on the Investors page of Liberty's web site at http://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, 2009 (Unaudited and in thousands, except per share amounts) Quarter Ended Nine Months Ended ------------- ------------------- September September September September 30, 2009 30, 2008 30, 2009 30, 2008 -------- -------- -------- -------- Operating Revenue Rental $130,643 $126,422 $388,446 $379,345 Operating expense reimbursement 56,850 56,009 168,699 167,694 ------ ------ ------- ------- Total operating revenue 187,493 182,431 557,145 547,039 ------- ------- ------- ------- Operating Expenses Rental property 36,224 37,078 109,903 110,582 Real estate taxes 23,061 21,527 66,857 64,245 General and administrative 11,248 13,180 38,470 40,340 Depreciation and amortization 43,268 43,196 128,140 127,637 ------ ------ ------- ------- Total operating expenses 113,801 114,981 343,370 342,804 ------- ------- ------- ------- Operating Income 73,692 67,450 213,775 204,235 Other Income/Expense Interest and other 2,635 3,313 8,245 9,399 Debt extinguishment gain 455 - 1,547 - Interest (36,735) (37,587) (111,464) (114,559) ------- ------- -------- -------- Total other income/ expense (33,645) (34,274) (101,672) (105,160) ------- ------- -------- -------- Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures 40,047 33,176 112,103 99,075 Gain (loss) on property dispositions 100 463 (2,244) 1,939 Income taxes (86) (308) (430) (1,372) Equity in earnings of unconsolidated joint ventures 515 470 2,124 1,857 --- --- ----- ----- Income from continuing operations 40,576 33,801 111,553 101,499 Discontinued operations (including net gain on property dispositions of $5,131 and $10,232 for the quarters ended September 30, 2009 and 2008 and $9,000 and $13,635 for the nine month periods ended September 30, 2009 and 2008) 10,168 12,152 16,245 19,228 ------ ------ ------ ------ Net Income 50,744 45,953 127,798 120,727 Less: Net income attributable to minority interest (6,841) (7,399) (19,335) (20,583) ------ ------ ------- ------- Net Income available to common shareholders $43,903 $38,554 $108,463 $100,144 ======= ======= ======== ======== Basic income per common share Continuing operations $0.30 $0.29 $0.87 $0.88 ===== ===== ===== ===== Discontinued operations $0.09 $0.12 $0.15 $0.20 ===== ===== ===== ===== Total basic income per common share $0.39 $0.41 $1.02 $1.08 ===== ===== ===== ===== Diluted income per common share Continuing operations $0.30 $0.29 $0.87 $0.88 ===== ===== ===== ===== Discontinued operations $0.09 $0.12 $0.15 $0.20 ===== ===== ===== ===== Total diluted income per common share $0.39 $0.41 $1.02 $1.08 ===== ===== ===== ===== Weighted average shares Basic 111,351 92,955 105,989 92,328 ======= ====== ======= ====== Diluted 111,926 93,369 106,441 92,626 ======= ====== ======= ====== Amounts attributable to common shareholders Income from continuing operations $34,085 $26,923 $92,808 $81,745 Discontinued operations 9,818 11,631 15,655 18,399 ----- ------ ------ ------ Net income $43,903 $38,554 $108,463 $100,144 ======= ======= ======== ======== Liberty Property Trust Statement of Funds From Operations September 30, 2009 (Unaudited and in thousands, except per share amounts) Quarter Ended ------------- September 30, 2009 September 30, 2008 ------------------ ------------------ Per Per Weighted Weighted Average Average Dollars Share Dollars Share ------- ----- ------- ----- Reconciliation of net income to FFO - basic: Basic - income available to common shareholders $43,903 $0.39 $38,554 $0.41 ===== ===== Adjustments: Depreciation and amortization of unconsolidated joint ventures 3,991 4,331 Depreciation and amortization 43,041 44,173 Gain on property dispositions (9,442) (10,542) Minority interest share in addback for depreciation and amortization and gain on property dispositions (1,293) (1,629) ------ ------ Funds from operations available to common shareholders - basic $80,200 $0.72 $74,887 $0.81 ======= ===== ======= ===== Reconciliation of net income to FFO - diluted: Diluted - income available to common shareholders $43,903 $0.39 $38,554 $0.41 ===== ===== Adjustments: Depreciation and amortization of unconsolidated joint ventures 3,991 4,331 Depreciation and amortizaton 43,041 44,173 Gain on property dispositions (9,442) (10,542) Minority interest excluding preferred unit distributions 1,565 1,746 ----- ----- Funds from operations available to common shareholders - diluted $83,058 $0.72 $78,262 $0.80 ======= ===== ======= ===== Reconciliation of weighted average shares: Weighted average common shares - all basic calculations 111,351 92,955 Dilutive shares for long term compensation plans 575 414 --- --- Diluted shares for net income calculations 111,926 93,369 Weighted average common units 4,017 4,190 ----- ----- Diluted shares for funds from operations calculations 115,943 97,559 ======= ====== Nine Months Ended ----------------- September 30, 2009 September 30, 2008 ------------------ ------------------ Per Per Weighted Weighted Average Average Dollars Share Dollars Share ------- ----- ------- ----- Reconciliation of net income to FFO - basic: Basic - income available to common shareholders $108,463 $1.02 $100,144 $1.08 ===== ===== Adjustments: Depreciation and amortization of unconsolidated joint ventures 12,113 12,208 Depreciation and amortization 128,427 130,803 Gain on property dispositions (14,817) (14,674) Minority interest share in addback for depreciation and amortization and gain on property dispositions (4,497) (5,538) ------ ------ Funds from operations available to common shareholders - basic $229,689 $2.17 $222,943 $2.41 ======== ===== ======== ===== Reconciliation of net income to FFO - diluted: Diluted - income available to common shareholders $108,463 $1.02 $100,144 $1.08 ===== ===== Adjustments: Depreciation and amortization of unconsolidated joint ventures 12,113 12,208 Depreciation and amortizaton 128,427 130,803 Gain on property dispositions (14,817) (14,674) Minority interest excluding preferred unit distributions 3,974 4,526 ----- ----- Funds from operations available to common shareholders - diluted $238,160 $2.16 $233,007 $2.41 ======== ===== ======== ===== Reconciliation of weighted average shares: Weighted average common shares - all basic calculations 105,989 92,328 Dilutive shares for long term compensation plans 452 298 --- --- Diluted shares for net income calculations 106,441 92,626 Weighted average common units 4,018 4,190 ----- ----- Diluted shares for funds from operations calculations 110,459 96,816 ======= ====== 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, 2009 (In thousands, except share amounts) September 30, December 31, 2009 2008 ---- ---- Assets (unaudited) Real estate: Land and land improvements $835,075 $801,763 Building and improvements 4,305,128 4,191,361 Less: accumulated depreciation (1,060,885) (963,043) ---------- -------- Operating real estate 4,079,318 4,030,081 Development in progress 169,926 245,463 Land held for development 219,440 209,551 ------- ------- Net real estate 4,468,684 4,485,095 Cash and cash equivalents 219,402 15,794 Restricted cash 34,273 39,726 Accounts receivable 7,356 12,985 Deferred rent receivable 93,046 83,033 Deferred financing and leasing costs, net of accumulated amortization (2009, $132,099; 2008, $139,078) 133,426 132,627 Investment in unconsolidated joint ventures 255,191 266,602 Assets held for sale 22,520 98,706 Prepaid expenses and other assets 91,988 82,467 ------ ------ Total assets $5,325,886 $5,217,035 ========== ========== Liabilities Mortgage loans $462,700 $198,560 Unsecured notes 1,842,882 2,131,607 Credit facility 140,000 260,000 Accounts payable 47,865 32,481 Accrued interest 27,794 36,474 Dividend and distributions payable 55,394 48,858 Other liabilities 160,134 182,549 ------- ------- Total liabilities 2,736,769 2,890,529 --------- --------- Equity Shareholders' equity: Common shares of beneficial interest, $.001 par value, 183,987,000 shares authorized, 113,850,578 (includes 1,249,909 in treasury) and 100,034,404 (includes 1,249,909 in treasury) shares issued and outstanding as of September 30, 2009 and December 31, 2008, respectively 114 101 Additional paid-in capital 2,452,479 2,162,820 Accumulated other comprehensive income 1,420 (5,378) Distributions in excess of net income (232,323) (185,721) Common shares in treasury, at cost, 1,249,909 shares as of September 30, 2009 and December 31, 2008 (51,951) (51,951) ------- ------- Total shareholders' equity 2,169,739 1,919,871 Minority interest - operating partnership 418,645 405,505 Minority interest - consolidated joint ventures 733 1,130 --- ----- Total equity 2,589,117 2,326,506 --------- --------- Total liabilities & equity $5,325,886 $5,217,035 ========== ==========
Liberty Property Trust
CONTACT: Jeanne A. Leonard of Liberty Property Trust, +1-610-648-1704
Web Site: http://www.libertyproperty.com/
