MALVERN, Pa., July 27 /PRNewswire-FirstCall/ -- Liberty Property Trust (NYSE: LRY) reported that net income per common share (diluted) was $0.35 per share for the quarter ended June 30, 2009, compared to $0.34 per share (diluted) for the quarter ended June 30, 2008. For the six-month period ended June 30, 2009, net income per common share (diluted) was $0.62, compared to $.67 per share for the same period in 2008.
Funds from operations available to common shareholders (diluted) ("FFO") for the second quarter of 2009 was $0.72 per share, compared to $0.80 per share for the second quarter of 2008. FFO per share for the six-month period ended June 30, 2009 was $1.44, compared to $1.60 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 second quarter include termination fees of $1.1 million, and an impairment charge of $3.8 million.
"Liberty's solid performance during the second quarter on both the operational and capital fronts is a reflection of the resiliency of the company's operating strategy and balance sheet, despite the pressures of a very tough economic environment," said Bill Hankowsky, chief executive officer. "Liberty's tenants understand the value of our high-quality, well-managed portfolio, and they are confident in our ability and dedication to making their workplaces work for them in a time of uncertainty."
Portfolio Performance
Leasing: At June 30, 2009 Liberty's in-service portfolio of 77.3 million square feet was 89.4% occupied, compared to 90.1% at the end of the first quarter. The decrease in occupancy was primarily driven by two large industrial distribution leases. During the quarter, Liberty completed lease transactions totaling 4.5 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 by 1.2% on a straight line basis for the second quarter of 2009 compared to the same quarter in 2008.
Capital Activities and Balance Sheet Management
Common Share Sales: During the second quarter of 2009, Liberty sold 5.5 million shares pursuant to a continuous offering program, generating net proceeds of $122.2 million.
Senior Note Obligations: During the quarter, Liberty purchased $3.5 million of its March 2011 Senior Notes and $4.9 million of its August 2012 Senior Notes. These notes were purchased at a $0.6 million discount. This discount is included in FFO as a debt extinguishment gain. Liberty repaid $238.6 million of 7.75% medium term notes which matured on April 15, 2009.
Property Sales: Liberty sold 10 operating properties, which contained 461,000 square feet of leaseable space, for $34.7 million.
Real Estate Investments
Development: During the second quarter, Liberty brought into service three development properties totaling 1.1 million square feet for a total investment of $73.6 million. These properties were 52.6% occupied at June 30(th ). Leases have been signed for an additional 126,000 square feet in these properties, and these leases will commence during the third and fourth quarters.
During the second quarter Liberty commenced development on a $12.3 million, 75,000 square foot build-to-suit expansion for an existing tenant at 180 South Warner Road in King of Prussia, PA.
As of June 30, 2009, Liberty had 3.4 million square feet of wholly-owned and joint venture properties under development. This activity represents a total projected investment of $487.7 million, with an expected yield of 7.4%. The properties were 61.1% leased at June 30.
Acquisitions: Liberty acquired no properties during the quarter.
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 2,100 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 second quarter results, on Tuesday, July 28, 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: 16828993. 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
June 30, 2009
(Unaudited and in thousands, except per share amounts)
Quarter Six Months
Ended Ended
------------ -------------
June 30, June 30, June 30, June 30,
2009 2008 2009 2008
--------- --------- --------- ---------
Operating Revenue
Rental $130,846 $123,557 $260,045 $254,847
Operating expense
reimbursement 54,818 56,438 112,773 112,513
------ ------ ------- -------
Total operating revenue 185,664 179,995 372,818 367,360
------- ------- ------- -------
Operating Expenses
Rental property 35,368 35,534 74,515 74,219
Real estate taxes 22,119 22,961 44,244 43,104
General and administrative 11,659 13,047 27,222 27,083
Depreciation and
amortization 42,571 42,508 85,705 85,174
------ ------ ------ ------
Total operating
expenses 111,717 114,050 231,686 229,580
------- ------- ------- -------
Operating Income 73,947 65,945 141,132 137,780
Other Income/Expense
Interest and other 2,520 3,009 5,624 6,096
Debt extinguishment gain 563 - 1,092 -
Interest (37,300) (36,330) (75,420) (77,679)
------- ------- ------- -------
Total other income/
expense (34,217) (33,321) (68,704) (71,583)
------- ------- ------- -------
Income before property
dispositions, income
taxes, minority interest
and equity in earnings of
unconsolidated joint
ventures 39,730 32,624 72,428 66,197
(Loss) gain on property
dispositions (2,050) 835 (2,344) 1,476
Income taxes (127) (580) (344) (1,064)
Equity in earnings of
unconsolidated joint
ventures 1,192 1,010 1,609 1,387
----- ----- ----- -----
Income from continuing
operations 38,745 33,889 71,349 67,996
Discontinued operations
(including net gain on
property dispositions
of $3,670 and $2,793 for
the quarters ended June
30, 2009 and 2008 and
$3,869 and $3,403 for
the six month periods
ended June 30, 2009 and
2008) 4,467 4,489 5,705 6,778
----- ----- ----- -----
Net Income 43,212 38,378 77,054 74,774
Less: Net income
attributable to minority
interest (6,541) (6,749) (12,494) (13,184)
------ ------ ------- -------
Net Income available to
common shareholders $36,671 $31,629 $64,560 $61,590
======= ======= ======= =======
Basic income per common share
Continuing operations $0.31 $0.29 $0.58 $0.60
===== ===== ===== =====
Discontinued operations $0.04 $0.05 $0.05 $0.07
===== ===== ===== =====
Total basic income per
common share $0.35 $0.34 $0.63 $0.67
===== ===== ===== =====
Diluted income per common share
Continuing operations $0.31 $0.29 $0.57 $0.60
===== ===== ===== =====
Discontinued operations $0.04 $0.05 $0.05 $0.07
===== ===== ===== =====
Total diluted income per
common share $0.35 $0.34 $0.62 $0.67
===== ===== ===== =====
Weighted average shares
Basic 105,768 92,322 103,244 92,001
======= ====== ======= ======
Diluted 106,245 92,701 103,625 92,248
======= ====== ======= ======
Amounts attributable to
common shareholders
Income from continuing
operations $32,362 $27,333 $59,062 $55,105
Discontinued operations 4,309 4,296 5,498 6,485
----- ----- ----- -----
Net income $36,671 $31,629 $64,560 $61,590
======= ======= ======= =======
Liberty Property Trust
Statement of Funds From Operations
June 30, 2009
(Unaudited and in thousands, except per share amounts)
Quarter Ended
June 30, 2009 June 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 $36,671 $0.35 $31,629 $0.34
===== =====
Adjustments:
Depreciation and
amortization of
unconsolidated joint
ventures 4,132 4,329
Depreciation and
amortization 42,364 43,252
Gain on property
dispositions (5,067) (3,164)
Minority interest
share in addback for
depreciation and
amortization
and gain on property
dispositions (1,467) (1,914)
------ ------
Funds from operations
available to common
shareholders - basic $76,633 $0.72 $74,132 $0.80
======= ===== ======= =====
Reconciliation of net
income to FFO - diluted:
Diluted - income
available to common
shareholders $36,671 $0.35 $31,629 $0.34
===== =====
Adjustments:
Depreciation and
amortization of
unconsolidated joint
ventures 4,132 4,329
Depreciation and
amortization 42,364 43,252
Gain on property
dispositions (5,067) (3,164)
Minority interest
excluding preferred unit
distributions 1,345 1,428
----- -----
Funds from operations
available to common
shareholders -
diluted $79,445 $0.72 $77,474 $0.80
======= ===== ======= =====
Reconciliation of weighted
average shares:
Weighted average common
shares - all basic
calculations 105,768 92,322
Dilutive shares for long
term compensation
plans 477 379
--- ---
Diluted shares for net
income calculations 106,245 92,701
Weighted average common
units 4,017 4,190
----- -----
Diluted shares for funds
from operations
calculations 110,262 96,891
======= ======
Six Months Ended
--------------------
June 30, 2009 June 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 $64,560 $0.63 $61,590 $0.67
===== =====
Adjustments:
Depreciation and
amortization of
unconsolidated joint
ventures 8,122 7,877
Depreciation and
amortization 85,386 86,630
Gain on property
dispositions (5,375) (4,132)
Minority interest share
in addback for
depreciation and
amortization and gain
on property
dispositions (3,204) (3,909)
------ ------
Funds from operations
available to common
shareholders - basic $149,489 $1.45 $148,056 $1.61
======== ===== ======== =====
Reconciliation of net
income to FFO - diluted:
Diluted - income
available to common
shareholders $64,560 $0.62 $61,590 $0.67
===== =====
Adjustments:
Depreciation and
amortization of
unconsolidated joint
ventures 8,122 7,877
Depreciation and
amortization 85,386 86,630
Gain on property
dispositions (5,375) (4,132)
Minority interest
excluding preferred unit
distributions 2,409 2,780
----- -----
Funds from operations
available to common
shareholders -
diluted $155,102 $1.44 $154,745 $1.60
======== ===== ======== =====
Reconciliation of
weighted average shares:
Weighted average common
shares - all basic
calculations 103,244 92,001
Dilutive shares for long
term compensation
plans 381 247
--- ---
Diluted shares for net
income calculations 103,625 92,248
Weighted average common
units 4,019 4,190
----- -----
Diluted shares for funds
from operations
calculations 107,644 96,438
======= ======
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, 2009
(In thousands, except share amounts)
June 30, 2009 December 31, 2008
------------- -----------------
Assets (unaudited)
Real estate:
Land and land improvements $824,906 $806,122
Building and improvements 4,301,270 4,218,839
Less: accumulated depreciation (1,040,218) (972,831)
---------- --------
Operating real estate 4,085,958 4,052,130
Development in progress 215,155 245,463
Land held for development 222,324 209,551
------- -------
Net real estate 4,523,437 4,507,144
Cash and cash equivalents 124,536 15,794
Restricted cash 40,351 39,726
Accounts receivable 6,636 12,985
Deferred rent receivable 89,291 83,498
Deferred financing and leasing costs,
net of accumulated
amortization (2009, $149,723;
2008, $139,346) 134,700 133,293
Investment in unconsolidated joint
ventures 255,419 266,602
Assets held for sale 25,750 75,526
Prepaid expenses and other assets 74,369 82,467
------ ------
Total assets $5,274,489 $5,217,035
========== ==========
Liabilities
Mortgage loans $471,820 $198,560
Unsecured notes 1,846,339 2,131,607
Credit facility 140,000 260,000
Accounts payable 35,262 32,481
Accrued interest 31,315 36,474
Dividend and distributions payable 54,057 48,858
Other liabilities 169,880 182,549
------- -------
Total liabilities 2,748,673 2,890,529
--------- ---------
Equity
Shareholders' equity:
Common shares of beneficial interest,
$.001 par value, 183,987,000
shares authorized, 110,847,466
(includes 1,249,909 in treasury)
and 100,034,404 (includes 1,249,909
in treasury) shares issued and
outstanding as of June 30, 2009 and
December 31, 2008, respectively 111 101
Additional paid-in capital 2,391,615 2,162,820
Accumulated other comprehensive
income (loss) 4,120 (5,378)
Distributions in excess of net income (222,739) (185,721)
Common shares in treasury, at cost,
1,249,909 shares as of June 30, 2009
and December 31, 2008 (51,951) (51,951)
------- -------
Total shareholders' equity 2,121,156 1,919,871
Minority interest - operating
partnership 403,950 405,505
Minority interest - consolidated
joint ventures 710 1,130
--- -----
Total equity 2,525,816 2,326,506
--------- ---------
Total liabilities & equity $5,274,489 $5,217,035
========== ==========
