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Liberty Property Trust Announces First Quarter 2012 Results


MALVERN, Pa., April 24, 2012 /PRNewswire/ -- Liberty Property Trust (NYSE: LRY) reported that funds from operations available to common shareholders (diluted) ("FFO") for the first quarter of 2012 was $0.68 per share, compared to $0.65 per share for the first quarter of 2011. Funds from operations for the first quarter of 2012 include termination fees of $2.2 million, a $3.7 million net discount realized on the redemption of certain preferred units, and $3.2 million of additional compensation expense due to the accelerated vesting of long-term incentive compensation due to the years of service and ages of certain employees.

Net income per common share (diluted) was $0.32 per share for the quarter ended March 31, 2012, compared to $0.25 per share (diluted) for the quarter ended March 31, 2011. 

"Liberty has done very well so far in 2012," commented Bill Hankowsky, chief executive officer. "We had strong first quarter, leasing 4.3 million square feet and redeeming high-dividend preferred securities, and we have subsequently advanced our repositioning strategy with the execution of a significant sale of suburban office and high-finish flex properties. All of this was accomplished in an environment of slow recovery in the real estate markets."

Portfolio Performance

Leasing: At March 31, 2012, Liberty's in-service portfolio of 79.3 million square feet was 90.5% occupied, compared to 91.3% at the end of the fourth quarter, an anticipated decrease. During the quarter, Liberty completed lease transactions totaling 4.3 million square feet of space.

Same Store Performance: Property level operating income for same store properties increased by 0.5% on a cash basis and decreased by 0.4% on a straight line basis for the first quarter of 2012 compared to the same quarter in 2011.

Capital Activities and Balance Sheet Management

Preferred Unit Redemptions: During the first quarter, Liberty redeemed $32.5 million of its outstanding 6.65% Series F Cumulative Redeemable Preferred Units for $26.0 million, and redeemed the entire $95.0 million of 7.45% Series B Cumulative Redeemable Preferred Units at par.  The $6.5 million discount net of the write off of $2.8 million of origination costs is included in FFO.

Property Sales: During the first quarter, Liberty sold two operating properties, which contained 105,000 square feet of leasable space for $6.5 million. The properties were 76.6% leased at the time of the sale.

Real Estate Investments

Development: Liberty began development of a 126,000 square foot distribution building in Suffolk, Virginia, for a projected investment of $7.8 million. The property is 100% preleased. 

Acquisitions: Liberty acquired no properties during the quarter.

Subsequent Events

On April 3, Liberty completed the sale of 49 properties totaling 2.5 million square feet of leasable space in Wisconsin, Maryland, Virginia, North Carolina and New Jersey for approximately $195 million. The properties consist primarily of single-story and mid-rise office buildings and high-finish flex properties. The properties were 83% leased when the transaction closed.

Earnings Outlook

Liberty had previously announced the expectation for 2012 funds from operations in the range of $2.45 - $2.60 per diluted share. Liberty is revising this guidance to reflect the redemption of the preferred units during the first quarter, and we now expect 2012 funds from operations in the range of $2.50 - $2.65 per diluted share. A reconciliation of FFO to GAAP net income is below:



2012 Range



Low

High

Projected net income per share

$ 1.03

$ 1.17

Depreciation and amortization of unconsolidated joint ventures

0.12

0.14

Depreciation and amortization

1.45

1.47

Gain on property dispositions

(0.10)

(0.13)







Projected funds from operations per share

$    2.50

$   2.65

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 79 million square foot portfolio includes approximately 650 properties which provide office, distribution and light manufacturing facilities to 1,700 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 This e-mail address is being protected from spambots. You need JavaScript enabled to view it. .

Liberty will host a conference call during which management will discuss first quarter results on Tuesday, April 24, 2012, at 1 p.m. Eastern Time.  To access the conference call, please dial 1-888-870-2815. The passcode needed for access is 68152370. A replay of the call will be available until May 8, 2012, by dialing 1-855-859-2056 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.

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 

March 31, 2012

 (Unaudited and in thousands, except per share amounts) 



















 Quarter Ended 







March 31, 2012



March 31, 2011









 Operating Revenue 









 Rental  



$                           119,591



$                           114,724

  Operating expense reimbursement



50,346



51,410



 Total operating revenue 



169,937



166,134













 Operating Expenses 









  Rental property



30,440



31,750

 Real estate taxes 



20,782



19,489

 General and administrative



17,204



15,949

 Depreciation and amortization 



41,367



39,077



 Total operating expenses 



109,793



106,265















 Operating Income 



60,144



59,869













 Other Income/Expense 









 Interest and other  



2,762



2,589

 Interest  



(28,476)



(32,889)



 Total other income/expense 



(25,714)



(30,300)













 Income before property dispositions, income taxes, noncontrolling interest 









    and equity in earnings of unconsolidated joint ventures 



34,430



29,569

 Gain on property dispositions 



523



1,161

 Income taxes 



(178)



(550)

 Equity in earnings of unconsolidated joint ventures 



916



534













 Income from continuing operations 



35,691



30,714













 Discontinued operations (including net gain on property dispositions of 











$1,064 and $470 for the quarters ended March 31, 2012 and 2011, respectively)



3,911



4,229

 Net Income 



39,602



34,943



 Noncontrolling interest - operating partnerships 



(2,513)



(6,235)



 Noncontrolling interest - consolidated joint ventures 



-



201

 Net Income available to common shareholders     



$                             37,089



$                             28,909















 Net income 



$                             39,602



$                             34,943



 Other comprehensive income 



2,317



2,144

 Comprehensive income 



41,919



37,087



 Less: comprehensive income attributable to noncontrolling interest 



(2,586)



(6,306)

 Comprehensive income attributable to common shareholders 



$                             39,333



$                             30,781













 Basic income per common share  











 Continuing operations 



$                                 0.29



$                                 0.21



 Discontinued operations 



$                                 0.03



$                                 0.04

 Total basic income per common share 



$                                 0.32



$                                 0.25













 Diluted income per common share 











 Continuing operations 



$                                 0.29



$                                 0.21



 Discontinued operations 



$                                 0.03



$                                 0.04

 Total diluted income per common share 



$                                 0.32



$                                 0.25













 Weighted average shares 











 Basic 



115,972



114,013



 Diluted 



116,743



114,766













 Amounts attributable to common shareholders     











 Income from continuing operations 



$                             33,301



$                             24,820



 Discontinued operations 



3,788



4,089



 Net income 



$                             37,089



$                             28,909

 

 Liberty Property Trust 

 Statement of Funds From Operations 

March 31, 2012

 (Unaudited and in thousands, except per share amounts) 







































 Quarter Ended 







March 31, 2012



March 31, 2011









Per 





Per 









Weighted





Weighted









 Average  





 Average  







Dollars

Share



Dollars

Share















 Reconciliation of net income to FFO - basic: 













 Basic - income available to common shareholders 



$              37,089

$             0.32



$              28,909

$                         0.25

















 Adjustments: 













 Depreciation and amortization of unconsolidated joint ventures 



3,616





3,649



 Depreciation and amortization 



41,046





43,971



 Gain on property dispositions 



(1,104)





(500)



 Noncontrolling interest share in addback for depreciation and amortization 















 and gain on property dispositions 



(1,373)





(1,558)



 Funds from operations available to common shareholders - basic 

$              79,274

$             0.68



$              74,471

$                         0.65

















 Reconciliation of net income to FFO - diluted: 













 Diluted - income available to common shareholders 



$              37,089

$             0.32



$              28,909

$                         0.25

















 Adjustments: 













 Depreciation and amortization of unconsolidated joint ventures 



3,616





3,649



 Depreciation and amortization  



41,046





43,971



 Gain on property dispositions 



(1,104)





(500)



 Noncontrolling interest excluding preferred unit distributions  



1,207





982



 Funds from operations available to common shareholders - diluted 

$              81,854

$             0.68



$              77,011

$                         0.65

















 Reconciliation of weighted average shares: 













 Weighted average common shares - all basic calculations 



115,972





114,013



 Dilutive shares for long term compensation plans 



771





753



 Diluted shares for net income calculations 



116,743





114,766



 Weighted average common units 



3,809





3,929



 Diluted shares for Funds from operations calculations 



120,552





118,695



















































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 

March 31, 2012

(In thousands, except share and unit amounts)





















































March 31, 2012



December 31, 2011



Assets







 (unaudited) 







Real estate:

















Land and land improvements





$                         854,972



$                         855,213





Building and improvements





4,117,093



4,109,783





Less: accumulated depreciation





(1,088,301)



(1,058,283)























Operating real estate





3,883,764



3,906,713























Development in progress





138,634



88,848



Land held for development





218,926



219,375























Net real estate







4,241,324



4,214,936























Cash and cash equivalents





27,650



18,204



Restricted cash







39,188



63,659



Accounts receivable





9,210



8,192



Deferred rent receivable





104,502



103,002



Deferred financing and leasing costs, net of accumulated













amortization (2012, $128,303; 2011, $123,822)



130,843



130,160



Investments in and advances to unconsolidated joint ventures



174,651



174,687



Assets held for sale  





197,737



200,647



Prepaid expenses and other assets





90,189



76,186























Total assets







$                      5,015,294



$                      4,989,673























Liabilities















Mortgage loans







$                         282,716



$                         290,819



Unsecured notes







1,792,643



1,792,643



Credit facility







293,300



139,400



Accounts payable 





32,310



23,418



Accrued interest







33,036



24,147



Dividend and distributions payable





57,393



56,958



Other liabilities







177,590



194,995























Total liabilities







2,668,988



2,522,380























Noncontrolling interest - operating partnership - 301,483 preferred units













outstanding as of March 31, 2012 and December 31, 2011



7,537



7,537























Equity















Shareholders' equity:













Common shares of beneficial interest, $.001 par value, 183,987,000 shares













authorized, 118,264,957 (includes 1,249,909 in treasury) and 117,352,353













(includes 1,249,909 in treasury) shares issued and outstanding as of 













March 31, 2012 and December 31, 2011, respectively



118



117



Additional paid-in capital





2,637,861



2,617,355



Accumulated other comprehensive loss





1,814



(429)



Distributions in excess of net income





(479,994)



(461,498)



Common shares in treasury, at cost, 1,249,909 shares as of













March 31, 2012 and December 31, 2011





(51,951)



(51,951)



Total shareholders' equity





2,107,848



2,103,594























Noncontrolling interest - operating partnership















3,808,746 common units outstanding as of March 31, 2012 













  and December 31, 2011



63,920



64,428





5,290,000 and 9,740,000 preferred units outstanding as of March 31, 2012 













  and December 31, 2011, respectively





163,226



287,959



Noncontrolling interest - consolidated joint ventures





3,775



3,775























Total equity







2,338,769



2,459,756























Total liabilities, noncontrolling interest - operating partnership & equity



$                      5,015,294



$                      4,989,673



 

SOURCE Liberty Property Trust

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