Liberty Property Trust Announces 2007 Second Quarter Results 
MALVERN, PA (REIT Media) July 23, 2007 - Liberty Property Trust (NYSE:LRY) reported that net income per common share (diluted) was $0.57 for the quarter ended June 30, 2007, compared to $0.76 per share for the quarter ended June 30, 2006. For the six-month period ended June 30, 2007, net income per common share (diluted) was $1.00, compared to $1.76 per share for the same period in 2006.
Funds from operations available to common shareholders (diluted) ("FFO") for the second quarter of 2007 was $0.79 per share, compared to $0.80 per share for the second quarter of 2006. Operating results for the second quarter of 2007 include lease termination fees of $0.6 million or approximately $0.01 per share, and preferred unit redemption costs of $0.7 million or approximately $0.01 per share. FFO per share for the six month period ended June 30, 2007 was $1.59, compared to $1.57 per share for the same period in 2006. A reconciliation of GAAP net income to FFO is included in the financial tables accompanying this press release.
"Liberty continues to execute on our 2007 strategic plan to reposition the company for enhanced growth in dynamic markets," said Bill Hankowsky, Liberty's chief executive officer. "During the second quarter, we increased our position in Phoenix and moved well forward with our exit from the Detroit market. Our robust development pipeline continues to add quality, well-leased properties to the portfolio every quarter, and our existing portfolio has now produced five straight quarters of positive same store growth. We are experiencing steady improvement in virtually all of our markets and property types."
Portfolio Performance
Leasing: At June 30, 2007 Liberty's in-service portfolio of 68.4 million square feet was 91.1% occupied, compared to 92.1% at the end of the first quarter of 2007. This decrease in occupancy is primarily due to the timing of certain tenant expansions and re-leasing activities.
Same Store Performance: Property level operating income for same store properties increased by 3.1% on a cash basis and by 2.2% on a straight line basis for the second quarter of 2007 compared to the same quarter in 2006.
Real Estate Investments
Development: During the second quarter, Liberty brought into service 11 development properties totaling 2.2 million square feet. At quarter-end the properties were 93.5% leased at a yield of 8.1% on the company's investment of $164.0 million. The expected stabilized yield on these developments is 9.6%. In addition, a joint venture in which the company holds a 25% interest brought into service one development property totaling 593,000 square feet. At quarter-end this property was 100% leased at a yield of 7.7% on the joint venture's investment of $27.4 million.
During the second quarter, Liberty began development of four properties totaling 269,000 square feet, with an expected total investment of $34.7 million. The properties consist of a 26,000 square foot operations center at the Philadelphia Navy Yard for The Philadelphia Stock Exchange, a 126,000 square foot distribution building in South Carolina, a 36,000 square foot office building in Tampa, Florida and an 81,000 square foot office building in Jacksonville, Florida. In addition, a joint venture in which Liberty holds a 50% interest began construction of a 340,000 square foot distribution building in Orlando, Florida.
As of June 30, 2007, Liberty had 5.8 million square feet of wholly-owned and joint venture properties under development. This activity represents a total investment of $944 million, with an expected yield of 8.6%. The properties were 50.9% leased at quarter-end.
Acquisitions: During the second quarter, Liberty acquired five properties totaling 363,000 square feet. These properties are 66.0% leased, have a current yield of 6.1% and a projected stabilized yield of 8.2% on a total investment of $69.4 million. The properties include three office buildings totaling 139,000 square feet at Allred Cotton Center in Phoenix, Arizona; a 107,000 square foot office building in Exton, Pennsylvania; and a 117,000 square foot office building in Greenville, South Carolina. In addition, a joint venture in which the company holds a 25% interest acquired two distribution buildings in Aurora, Illinois. The properties total 501,000 square feet, are 53.4% leased, have a current yield of 3.2% and a projected stabilized yield of 7.4%.
Dispositions: During the second quarter, Liberty sold ten properties containing 1.8 million square feet, and 149 acres of land, for $111.0 million. These properties were 91.1% leased when sold, and include six distribution and flex properties in Michigan totaling 1.4 million square feet, two distribution buildings in Chesterfield, Virginia totaling 302,000 square feet, a 39,000 square foot office building in Greenville, South Carolina and a 50,000 square foot flex building in Minnetonka, Minnesota.
Financing and Balance Sheet Management
During the quarter, Liberty redeemed for $23.7 million its outstanding 7.63% Series D Cumulative Redeemable Preferred Units.
Also during the quarter, Liberty initiated a $50 million accelerated share repurchase program.
Subsequent Events
On July 10, Liberty purchased five office buildings totaling 428,000 square feet at Allred Cotton Center in Phoenix, Arizona for approximately $89.5 million.
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 68 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 24, 2007, 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: 7026688. The call can also be accessed via the Internet on the Investors page of Liberty's web site at www.libertyproperty.com for one week 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, 2007
(Unaudited and in thousands, except per share amounts)
Quarter Ended Year to Date
------------------- -------------------
June 30, June 30, June 30, June 30,
2007 2006 2007 2006
--------- --------- --------- ---------
Operating Revenue
Rental $121,843 $113,322 $241,306 $223,069
Operating expense
reimbursement 54,495 46,455 107,658 93,194
--------- --------- --------- ---------
Total operating revenue 176,338 159,777 348,964 316,263
--------- --------- --------- ---------
Operating Expenses
Rental property 37,886 32,014 76,030 64,951
Real estate taxes 19,490 17,296 36,637 33,722
General and administrative 12,799 11,558 26,138 21,588
Depreciation and amortization 39,266 35,299 76,982 69,102
--------- --------- --------- ---------
Total operating expenses 109,441 96,167 215,787 189,363
--------- --------- --------- ---------
Operating Income 66,897 63,610 133,177 126,900
Other Income/Expense
Interest and other 3,298 2,064 6,304 3,815
Interest (30,137) (28,045) (58,315) (57,350)
--------- --------- --------- ---------
Total other income/expense (26,839) (25,981) (52,011) (53,535)
--------- --------- --------- ---------
Income before property
dispositions, income taxes,
minority interest and equity
in earnings of unconsolidated
joint ventures 40,058 37,629 81,166 73,365
Gain on property dispositions 1,299 17,438 1,451 17,483
Income taxes (213) (235) (514) (610)
Minority interest (6,113) (5,738) (11,657) (10,223)
Equity in earnings of
unconsolidated joint ventures 326 741 1,055 916
--------- --------- --------- ---------
Income from continuing
operations 35,357 49,835 71,501 80,931
Discontinued operations net of
minority interest (including
net gain on property
dispositions of $17,430 and
$16,550 for the quarters
ended June 30, 2007 and 2006
and $20,231 and $76,080 for
the six month periods ended
June 30, 2007 and 2006) 17,070 18,615 20,624 77,946
--------- --------- --------- ---------
Net Income $ 52,427 $ 68,450 $ 92,125 $158,877
========= ========= ========= =========
Basic income per common share
Continuing operations $ 0.38 $ 0.56 $ 0.78 $ 0.91
========= ========= ========= =========
Discontinued operations $ 0.19 $ 0.21 $ 0.23 $ 0.88
========= ========= ========= =========
Total basic income per common
share $ 0.57 $ 0.77 $ 1.01 $ 1.79
========= ========= ========= =========
Diluted income per common
share
Continuing operations $ 0.38 $ 0.55 $ 0.78 $ 0.89
========= ========= ========= =========
Discontinued operations $ 0.19 $ 0.21 $ 0.22 $ 0.87
========= ========= ========= =========
Total diluted income per
common share $ 0.57 $ 0.76 $ 1.00 $ 1.76
========= ========= ========= =========
Weighted average shares
Basic 91,597 88,934 91,318 88,587
========= ========= ========= =========
Diluted 92,328 90,324 92,168 90,101
========= ========= ========= =========
Liberty Property Trust
Statement of Funds From Operations
June 30, 2007
(Unaudited and in thousands, except per share amounts)
Quarter Ended
-------------------------------------
June 30, 2007 June 30, 2006
------------------ ------------------
Per Per
Weighted Weighted
Average Average
Dollars Share Dollars Share
------------------ ------------------
Reconciliation of net income to
FFO - basic:
Basic - income available to
common shareholders $ 52,427 $ 0.57 $ 68,450 $ 0.77
======== ========
Adjustments:
Depreciation and amortization
of unconsolidated joint
ventures 844 763
Depreciation and amortization 39,062 37,809
Gain on property dispositions (18,549) (34,649)
Minority interest share in
addback for depreciation and
amortization and gain on
property dispositions (938) (176)
------------------ ------------------
Funds from operations
available to common
shareholders - basic $ 72,846 $ 0.80 $ 72,197 $ 0.81
================== ==================
Reconciliation of net income to
FFO - diluted:
Diluted - income available to
common shareholders $ 52,427 $ 0.57 $ 68,450 $ 0.76
======== ========
Adjustments:
Depreciation and amortization
of unconsolidated joint
ventures 844 763
Depreciation and amortization 39,062 37,809
Gain on property dispositions (18,549) (34,649)
Minority interest excluding
preferred unit distributions
and excess of preferred unit
redemption over carrying
amount 2,407 3,210
------------------ ------------------
Funds from operations
available to common
shareholders - diluted $ 76,191 $ 0.79 $ 75,583 $ 0.80
================== ==================
Reconciliation of weighted
average shares:
Weighted average common shares
- all basic calculations 91,597 88,934
Dilutive shares for long term
compensation plans 731 1,390
--------- ---------
Diluted shares for net income
calculations 92,328 90,324
Weighted average common units 4,190 3,653
--------- ---------
Diluted shares for funds from
operations calculations 96,518 93,977
========= =========
Year to Date
-------------------------------------
June 30, 2007 June 30, 2006
------------------ ------------------
Per Per
Weighted Weighted
Average Average
Dollars Share Dollars Share
------------------ ------------------
Reconciliation of net income
to FFO - basic:
Basic - income available to
common shareholders $ 92,125 $ 1.01 $158,877 $ 1.79
======== ========
Adjustments:
Depreciation and amortization
of unconsolidated joint
ventures 1,685 1,316
Depreciation and amortization 76,989 74,400
Gain on property dispositions (21,936) (94,295)
Minority interest share in
addback for depreciation and
amortization and gain on
property dispositions (2,484) 681
------------------ ------------------
Funds from operations
available to common
shareholders - basic $146,379 $ 1.60 $140,979 $ 1.59
================== ==================
Reconciliation of net income
to FFO - diluted:
Diluted - income available to
common shareholders $ 92,125 $ 1.00 $158,877 $ 1.76
======== ========
Adjustments:
Depreciation and amortization
of unconsolidated joint
ventures 1,685 1,316
Depreciation and amortization 76,989 74,400
Gain on property dispositions (21,936) (94,295)
Minority interest excluding
preferred unit distributions
and excess of preferred unit
redemption over carrying
amount 4,222 6,792
------------------ ------------------
Funds from operations
available to common
shareholders - diluted $153,085 $ 1.59 $147,090 $ 1.57
================== ==================
Reconciliation of weighted
average shares:
Weighted average common shares
- all basic calculations 91,318 88,587
Dilutive shares for long term
compensation plans 850 1,514
--------- ---------
Diluted shares for net income
calculations 92,168 90,101
Weighted average common units 4,190 3,586
--------- ---------
Diluted shares for funds from
operations calculations 96,358 93,687
========= =========
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 REIT's 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, 2007
(In thousands, except share amounts)
June 30, December 31,
2007 2006
----------- ------------
Assets (Unaudited)
Real estate:
Land and land improvements $ 740,003 $ 677,041
Building and improvements 4,008,403 3,802,949
Less: accumulated depreciation (849,996) (803,968)
----------- ------------
Operating real estate 3,898,410 3,676,022
Development in progress 651,283 538,521
Land held for development 255,361 195,332
----------- ------------
Net real estate 4,805,054 4,409,875
Cash and cash equivalents 12,741 53,737
Restricted cash 34,764 55,671
Accounts receivable 24,216 23,809
Deferred rent receivable 72,522 71,894
Deferred financing and leasing costs, net of
accumulated amortization (2007, $111,914;
2006, $100,406) 134,681 129,157
Investment in unconsolidated joint ventures 55,955 47,196
Assets held for sale 180 51,266
Prepaid expenses and other assets 62,128 68,306
----------- ------------
Total assets $5,202,241 $ 4,910,911
=========== ============
Liabilities
Mortgage loans $ 185,814 $ 185,978
Unsecured notes 1,955,000 1,955,000
Credit facility 542,960 246,960
Accounts payable 57,346 40,633
Accrued interest 36,339 36,297
Dividend and distributions payable 59,163 58,961
Other liabilities 245,133 217,751
----------- ------------
Total liabilities 3,081,755 2,741,580
----------- ------------
Minority interest 273,365 297,727
Shareholders' Equity
Common shares of beneficial interest, $.001
par value, 187,987,000 shares authorized,
92,069,183 (includes 835,377 in treasury)
and 90,972,979 (includes 59,100 in treasury)
shares issued and outstanding as of June 30,
2007 and December 31, 2006, respectively 92 91
Additional paid-in capital 1,951,554 1,906,403
Accumulated other comprehensive income 22,525 20,323
Distributions in excess of net income (75,145) (53,886)
Common shares in treasury, at cost, 835,377
and 59,100 shares as of June 30, 2007 and
December 31, 2006, respectively (51,905) (1,327)
----------- ------------
Total shareholders' equity 1,847,121 1,871,604
Total liabilities & shareholders' equity $5,202,241 $ 4,910,911
=========== ============
Source: Liberty Property Trust
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