WAYNE, Pa., July 30, 2019 (GLOBE NEWSWIRE) -- Liberty Property Trust (NYSE: LPT) announced financial and operating results for the second quarter of 2019.

Financial Results
Net Income: Net income available to common shareholders was $0.67 per diluted share for the second quarter of 2019, compared to $0.13 per diluted share for the same period in 2018. For the six months ended June 30, 2019, net income available to common shareholders was $1.04 per diluted share, compared to $1.08 per diluted share for the same period in 2018.

Net income for the second quarter and first six months of 2019 reflects gain on property dispositions net of impairments (including the Company’s share of impairment in unconsolidated joint ventures) of $50.2 million and $59.5 million, respectively, as compared to $48.3 million and $142.5 million for the comparative periods in 2018. Net income for the second quarter of 2018 and for the first six months of 2018 also includes $86.0 million in charges for the Comcast and Camden projects.

NAREIT FFO* available to common shareholders was $0.68 per diluted share for the second quarter of 2019, compared to $0.12 per diluted share for the same period in 2018. NAREIT FFO available to common shareholders for the six months ended June 30, 2019 was $1.30 per diluted share, compared to $0.77 per diluted share for the first six months of 2018.

FFO for the second quarter of 2019 reflects gain on sales of non-depreciable assets and recognition of insurance proceeds offset by a loss on early extinguishment of debt and severance expenses of $1.2 million in the aggregate, or $0.01 per diluted share.  FFO for the second quarter of 2018 includes the $86.0 million, or $0.57 per diluted share, in charges for the Comcast and Camden projects discussed above.

Industrial Operating Performance          
“Liberty’s second quarter activity was characterized by high leasing volume coupled with very attractive lease economics,” said Bill Hankowsky, chairman and chief executive officer. “This execution reflects the enduring strength of this remarkable industrial market, which provides unprecedented opportunity to achieve high retention rates while at the same time drive rents, minimize leasing costs, and lock in longer lease terms with contractual rent increases on every lease.”

Occupancy: At June 30, 2019, Liberty’s in-service operating portfolio of 104.0 million square feet was 95.2% occupied, compared to 95.6% at the end of the first quarter of 2019. The decrease is attributable to the previously announced vacating of space by Sears on May 1.

Leasing Activity: During the quarter, Liberty completed core lease transactions totaling 8.6 million square feet.  Rents on retention and replacement leases commenced during the quarter increased 2.9% on a cash basis (11.9% GAAP). Notable leases include:

  • 476,200 square foot 11-year lease signed in Indianapolis eliminating significant vacancy, bringing occupancy in that market to 98.8% as of June 30, 2019
  • 1.0 million square foot renewal of 2021 expiration in Lehigh Valley
  • 1.2 million square foot renewal of 2022 expiration in Lehigh Valley

Liberty entered 2019 with a smaller-than-usual lease expiration schedule for the year. After the first six months of the year, the company’s lease expirations on a square footage basis have been reduced by 72% for 2019 and 26% for 2020.

Same Store Performance: Property level operating income for same store properties increased by 2.9% on a cash basis (0.2% GAAP) for the second quarter of 2019, compared to the same quarter in 2018.

Real Estate Investments
Acquisitions: Liberty acquired a fully leased industrial property in Northern New Jersey totaling 218,000 square feet for $26.5 million.

Subsequent to quarter end, Liberty acquired one industrial property in Southern California totaling 203,300 square feet for $55.5 million.

Development Deliveries: Liberty brought into service two industrial properties for a total investment of $79.3 million. The properties contain 823,600 square feet and were 95.0% occupied as of the end of the quarter.

Development Starts: Development commenced on two industrial properties totaling 236,000 square feet at a projected investment of $17.0 million.

Real Estate Dispositions
Liberty sold four office properties totaling 227,400 square feet for $103.1 million. The properties sold included a 153,200 square foot medical office building in Philadelphia, which sold for $99.25 million. A portion of the proceeds of this sale was used to prepay $35.9 million of mortgage debt encumbering the property, and Liberty realized a loss of $7.6 million on early extinguishment of debt.  The secured loan had carried an interest rate of 4.84% and was scheduled to mature in 2033.

Subsequent to quarter end, Liberty sold three industrial properties totaling approximately 316,200 square feet for $44.1 million.

*Funds from Operations: Liberty uses the National Association of Real Estate Investment Trusts’ (“NAREIT”) definition of Funds from Operations (“FFO”) as an operating measure of the company’s financial performance.  A reconciliation of U.S. GAAP (“GAAP”) net income to NAREIT FFO is included in the financial data tables accompanying this press release.

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 logistics, warehouse, manufacturing, and R&D facilities in key markets. Liberty's 109 million square foot operating portfolio provides productive work environments to 1,200 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 30, 2019, at 1 p.m. Eastern Time.  To access the conference call, please dial 888-870-2815. The passcode needed for access is 5296806. A replay of the call will be available until August 30, 2019, by dialing 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.

Forward-Looking Statements

The statements contained in this press release may include forward-looking statements within the meaning of the federal securities law.  These forward-looking statements include statements relating to, among other things, achievement of strategic targets, expectations for our operating results, business and financial condition, business and our growth prospects, as well as statements that are generally accompanied by words such as “believes,” “anticipates,” “expects,” “estimates,” “should,” “seeks,” “intends,” “proposed,” “planned,” “outlook,” “remain confident,” and “goal” or similar expressions. 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 risks, uncertainties and other factors include, without limitation, uncertainties affecting real estate business 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, risks relating to the continued repositioning of the Company's portfolio, risks relating to construction and development activities, risks relating to acquisition and disposition activities, risks relating to the integration of the operations of entities that we have acquired or may acquire, risks relating to joint venture relationships and any possible need to perform under certain guarantees that we have issued or may issue in connection with such relationships, risks related to properties developed by the Company on a fee basis, risks associated with tax abatement, tax credit programs, or other government incentives, possible environmental liabilities, risks relating to leverage and debt service (including availability of financing terms acceptable to the Company and sensitivity of the Company's operations and financing arrangements to fluctuations in interest rates), dependence on the primary markets in which the Company's properties are located, the existence of complex regulations relating to status as a REIT and the adverse consequences of the failure to qualify as a REIT, risks relating to litigation and the potential adverse impact of market interest rates on the market price for the Company's securities, 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.

Inquiries: Jeanne Leonard, Liberty Property Trust, 610.648.1704

Liberty Property Trust
Balance Sheet 
June 30, 2019
(Unaudited and in thousands)
 
 June 30, 2019 December 31, 2018
Assets   
  Real estate:   
  Land and land improvements$  1,339,483  $  1,236,514 
  Building and improvements 4,612,859   4,397,049 
  Less: accumulated depreciation (1,004,624)  (941,299)
    
  Operating real estate 4,947,718   4,692,264 
    
  Development in progress 416,035   462,572 
  Land held for development 303,135   296,244 
    
  Net real estate 5,666,888   5,451,080 
    
  Cash and cash equivalents 21,039   84,923 
  Restricted cash 17,392   10,899 
  Accounts receivable 12,458   14,109 
  Deferred rent receivable 118,230   111,372 
  Deferred financing and leasing costs, net 163,566   157,823 
  Investments in and advances to unconsolidated joint ventures 350,768   350,981 
  Assets held for sale 386,726   502,207 
  Right of use asset 17,931    
  Prepaid expenses and other assets 127,261   251,000 
    
  Total assets$  6,882,259  $  6,934,394 
    
Liabilities   
    
  Mortgage loans, net$  351,493  $  395,202 
  Unsecured notes, net 2,632,881   2,285,698 
  Credit facilities 100,000   411,846 
  Accounts payable 46,405   62,943 
  Accrued interest 28,021   22,309 
  Dividend and distributions payable 62,241   60,560 
  Lease liability 18,617    
  Other liabilities 200,867   270,396 
  Liabilities held for sale 19,033   21,131 
  Total liabilities 3,459,558   3,530,085 
    
  Noncontrolling interest 5,337   7,537 
    
Equity   
  Shareholders' equity   
  Common shares of beneficial interest 148   148 
  Additional paid-in capital 3,687,085   3,691,778 
  Accumulated other comprehensive loss (57,674)  (55,243)
  Distributions in excess of net income (274,311)  (306,822)
  Total shareholders' equity 3,355,248   3,329,861 
    
  Noncontrolling interest - operating partnership 61,839   61,471 
  Noncontrolling interest - consolidated joint ventures 277   5,440 
    
  Total equity 3,417,364   3,396,772 
    
  Total liabilities, noncontrolling interest - operating partnership and equity$  6,882,259  $  6,934,394 
    

 

Liberty Property Trust
Statement of Operations
June 30, 2019
(Unaudited and in thousands, except per share amounts)
  
 Quarter Ended Six Months Ended
 June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
Revenue       
  Rental revenue$  160,359  $  146,107  $  316,732  $  291,482 
  Development service fee income 978   19,824   1,842   46,176 
  Total revenue 161,337   165,931   318,574   337,658 
        
Expenses       
  Rental property 14,104   13,247   27,768   26,464 
  Real estate taxes 23,487   21,793   45,860   43,295 
  General and administrative 9,693   8,832   25,298   23,159 
  Leasing expense 3,318   2,767   6,526   5,579 
  Other operating expenses 3,256   1,577   5,524   4,079 
  Interest expense 25,406   21,454   50,903   42,944 
  Depreciation and amortization 43,032   40,076   86,430   79,582 
  Development service fee expense 847   79,808   1,680   107,875 
  Impairment charges - real estate assets    26,000   99   26,000 
  Total expenses 123,143   215,554   250,088   358,977 
        
Interest and other income 7,998   2,700   11,256   5,220 
Gain on property dispositions 5,462   48,584   5,957   52,742 
Equity in earnings of unconsolidated joint ventures 2,181   7,428   9,190   14,192 
Income from continuing operations before income taxes 53,835   9,089   94,889   50,835 
        
Income taxes 261   (911)  (571)  (1,440)
        
Income from continuing operations 54,096   8,178   94,318   49,395 
Discontinued operations (including gain on asset sales, net of impairments and debt extinguishment loss,
of $41.2 million and $50.1 million for the three and six months ended June 30, 2019, respectively, and a net
loss of $0.2 million and a net gain of $89.8 million and for the three and six months ended June 30, 2018, respectively)
 48,239   12,712   63,766   115,220 
Net Income 102,335   20,890   158,084   164,615 
  Noncontrolling interest - operating partnerships (2,443)  (585)  (3,817)  (4,042)
  Noncontrolling interest - consolidated joint ventures (123)  (691)  (167)  (778)
Net Income available to common shareholders$  99,769  $  19,614  $  154,100  $  159,795 
        
  Net income$  102,335  $  20,890  $  158,084  $  164,615 
  Other comprehensive income - foreign currency translation (5,894)  (14,138)  (518)  (6,206)
  Other comprehensive (loss) income - derivative instruments (116)  102   (1,970)  487 
Comprehensive income 96,325   6,854   155,596   158,896 
  Less: comprehensive income attributable to noncontrolling interest (2,427)  (949)  (3,927)  (4,687)
Comprehensive income attributable to common shareholders$  93,898  $  5,905  $  151,669  $  154,209 
        
Basic income per common share       
  Continuing operations$  0.36  $  0.05  $  0.62  $  0.33 
  Discontinued operations$  0.32  $  0.08  $  0.42  $  0.76 
Basic income per common share$  0.68  $  0.13  $  1.04  $  1.09 
        
Diluted income per common share       
  Continuing operations$  0.35  $  0.05  $  0.62  $  0.32 
  Discontinued operations$  0.32  $  0.08  $  0.42  $  0.76 
Diluted income per common share$  0.67  $  0.13  $  1.04  $  1.08 
        
Weighted average shares       
  Basic 147,805   147,274   147,706   147,184 
  Diluted 148,668   148,333   148,606   148,104 
        

 

Liberty Property Trust
Statement of Funds from Operations
June 30, 2019
(Unaudited and in thousands, except per share amounts)
  
 Quarter Ended Six Months Ended
 June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
NAREIT FFO       
    
Reconciliation of net income available to common shareholders to NAREIT FFO available to common shareholders:       
Net income available to common shareholders$  99,769  $  19,614  $  154,100  $  159,795 
        
Adjustments:       
Depreciation and amortization of unconsolidated joint ventures 3,026   3,236   6,158   6,438 
Depreciation and amortization 42,704   42,682   87,737   87,172 
Loss on property dispositions / impairment - depreciable real estate assets of unconsolidated joint ventures 4,098      4,098    
Loss (gain) on property dispositions / impairment - depreciable real estate assets continuing operations 13   (48,614)  (35)  (51,210)
(Gain) loss on property dispositions / impairment - depreciable real estate assets discontinued operations (48,383)  238   (57,296)  (89,811)
Noncontrolling interest share in addback for depreciation and amortization and gain on property dispositions / impairment - depreciable real estate assets (34)  57   (944)  1,103 
NAREIT FFO available to common shareholders - basic 101,193   17,213   193,818   113,487 
        
Noncontrolling interest share in addback for depreciation and amortization and gain on property dispositions / impairment - depreciable real estate assets 34   (57)  944   (1,103)
Noncontrolling interest excluding preferred unit distributions 2,359   467   3,649   3,806 
NAREIT FFO available to common shareholders - diluted$  103,586  $  17,623  $  198,411  $  116,190 
        
NAREIT FFO available to common shareholders - basic per share$  0.68  $  0.12  $  1.31  $  0.77 
NAREIT FFO available to common shareholders - diluted per share$  0.68  $  0.12  $  1.30  $  0.77 
        
Reconciliation of weighted average shares:       
Weighted average common shares - all basic calculations 147,805   147,274   147,706   147,184 
Dilutive shares for long term compensation plans 863   1,059   900   920 
Diluted shares for net income calculations 148,668   148,333   148,606   148,104 
Weighted average common units 3,514   3,520   3,517   3,520 
Diluted shares for NAREIT FFO calculations 152,182   151,853   152,123   151,624 

NAREIT Funds from Operations available to common shareholders is defined by NAREIT as net income (computed in accordance with U.S. GAAP), excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control, and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity.  The SEC has agreed to the disclosure of this non-GAAP financial measure on a per share basis in its Release No. 34-47226, Conditions for Use of Non-GAAP Financial Measures. The Company has opted to include gains and losses from the sale of assets incidental to its main business as a REIT. The Company believes that the calculation of NAREIT FFO 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 operating property dispositions. As a result, year over year comparison of NAREIT FFO 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 NAREIT FFO provides useful information to the investment community about the Company’s financial performance when compared to other REITs since NAREIT FFO is generally recognized as the standard for reporting the operating performance of a REIT. NAREIT FFO available to common shareholders does not represent net income or cash flows from operations as defined by U.S. 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. NAREIT FFO available to common shareholders also does not represent cash flows generated from operating, investing or financing activities as defined by U.S. GAAP. The Company believes that the line on its consolidated statements of comprehensive income entitled “net income available to common shareholders” is the most directly comparable U.S. GAAP measure to FFO.