Attached files
| file | filename |
|---|---|
| 8-K - 8-K - LIBERTY PROPERTY TRUST | a14-10859_18k.htm |
Exhibit 99.1
News Release
Inquiries: Jeanne Leonard, Liberty Property Trust, 610.648.1704
Liberty Property Trust Announces First Quarter 2014 Results
Malvern, PA — April 22, 2014 - Liberty Property Trust reported that funds from operations available to common shareholders (diluted) (“FFO”) for the first quarter of 2014 was $0.58 per share, compared to $0.65 per share for the first quarter of 2013. Funds from operations for the first quarter of 2014 and 2013 include $3.9 million and $3.8 million, respectively, of additional compensation expense due to the accelerated vesting of long-term compensation due to the years of service and ages of certain employees.
Net income per common share (diluted) was $0.49 for the quarter ended March 31, 2014, compared to $0.60 for the quarter ended March 31, 2013. Net income for the quarter ended March 31, 2014 included net gains on property dispositions of $46.0 million ($0.31 per share) versus $43.5 million ($0.36 per share) for the corresponding quarter in 2013.
Results for the first quarter of 2014 reflect the sale of 6.6 million square feet of suburban office and flex properties which closed in two installments during December 2013 and January 2014. Year-over-year results are reflective of strategic portfolio transformation activities that have increased Liberty’s industrial portfolio and decreased its office exposure.
“In the first quarter, Liberty finalized our transformational sale of suburban office and flex properties, we announced the largest office build-to-suit development in the company’s history, and we lowered our cost of borrowing with a new, expanded line of credit,” said Bill Hankowsky, chairman and chief executive officer. “With the exception of the effects of the winter’s unusually harsh weather conditions, our portfolio performed as expected and budgeted in the first quarter. We continue to see strong activity in our industrial markets and anticipate accelerating growth in earnings in the second half of 2014 consistent with our previously announced earnings guidance.”
Portfolio Performance
Leasing: At March 31, 2014, Liberty’s in-service portfolio of 101.5 million square feet was 91.0% occupied, compared to 91.6% at the end of the fourth quarter of 2013. During the quarter, Liberty completed lease transactions totaling 5.3 million square feet of space.
- more -
Same Store Performance: Property level operating income for same store properties decreased by 1.4% on a cash basis and by 1.8% on a straight line basis for the first quarter of 2014 compared to the same quarter in 2013.
Real Estate Investments
Development: In the first quarter, Liberty brought into service three development properties for a total investment of $30.5 million. The properties contain 502,000 square feet of leasable space and were 86.4% occupied as of March 31, 2014. The current yield on these properties is 7.4% and the projected stabilized yield is 8.4%.
Also during the quarter, Liberty began development on two properties for a projected investment of $61.0 million. The properties consist of two distribution properties for inventory in Texas: a 199,000 square foot distribution facility in Coppell and a 207,000 square foot office building in Houston.
In addition, Liberty announced preliminary terms to develop, in a joint venture with Comcast Corporation, a 1.5 million square foot office and hotel property in Philadelphia, for $900 million. The joint venture will be 20% owned by Liberty and will be managed by Liberty. Development is expected to commence in summer 2014.
Acquisitions: Liberty acquired two properties for $37.6 million during the quarter: a vacant 523,000 square foot distribution facility in California’s Inland Empire, and a fully-leased, 90,000 square foot distribution facility in Greenville, South Carolina.
Real Estate Dispositions
In December 2013, Liberty entered into an agreement to sell 159 acres of land and 97 operating properties totaling 6.6 million square feet of leasable space. In December, the company closed on the first installment of the sale for $367.7 million. This installment comprised 140 acres of land and 49 properties totaling 4.0 million square feet of leasable space. In January 2014, the remaining 19 acres of land and 48 properties totaling 2.6 million square feet of leasable space were sold for $329.6 million. At the time of sale the combined percentage leased for the 97 properties was 88.2%.
Liberty sold one additional operating property during the quarter, a vacant 60,000 square foot distribution building in southern California for $5.0 million.
Capital Activities and Balance Sheet Management
Liberty replaced its existing $500 million credit facility which was due November 2015 with a new, $800 million facility. The new facility matures in March 2018 and the company has options to extend the maturity date for up to one additional year. Based upon the company’s current credit ratings, borrowings under the new facility bear interest at LIBOR plus 105 basis points.
FFO Guidance
Liberty expects to report 2014 funds from operations (“FFO”) per share in the range of $2.45 - $2.55. A reconciliation of projected FFO to projected GAAP net income for 2014 is below (all amounts projected):
|
|
|
2014 Range |
| ||||
|
|
|
Low |
|
High |
| ||
|
Net income per share |
|
$ |
1.30 |
|
$ |
1.40 |
|
|
Depreciation and amortization of unconsolidated joint ventures |
|
0.09 |
|
0.11 |
| ||
|
Depreciation and amortization |
|
1.53 |
|
1.61 |
| ||
|
Gain on property dispositions |
|
(0.44 |
) |
(0.54 |
) | ||
|
Noncontrolling interest share of addbacks |
|
(0.03 |
) |
(0.03 |
) | ||
|
|
|
|
|
|
| ||
|
Funds from operations per share |
|
$ |
2.45 |
|
$ |
2.55 |
|
About the Company
Liberty Property Trust (NYSE:LPT) 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 101 million square foot portfolio includes more than 700 properties which provide office, distribution and light manufacturing facilities to 1,800 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 first quarter results, on Tuesday, April 22, 2014, at 1:00 p.m. Eastern Time. To access the conference call, please dial 855-277-7530. The passcode needed for access is 24534109. A replay of the call will be available until May 22, 2014, by dialing 1-855-859-2056 using the same passcode as above. The call can also be accessed in the Investors section 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. These forward-looking statements include statements relating to, among others things, future asset dispositions, expectations for our operating results, business and financial condition, the impact of the Cabot acquisition on our portfolio and 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” 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 the integration of the operations of entities that we have acquired or may acquire, risks relating to financing arrangements and sales of securities, 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, including without limitation litigation involving entities that we have a acquired or may acquire, 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, including without limitation the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. 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, 2014
(Unaudited and in thousands, except per share amounts)
|
|
|
Quarter Ended |
| ||||
|
|
|
March 31, 2014 |
|
March 31, 2013 |
| ||
|
|
|
|
|
|
| ||
|
Operating Revenue |
|
|
|
|
| ||
|
Rental |
|
$ |
138,934 |
|
$ |
104,716 |
|
|
Operating expense reimbursement |
|
58,681 |
|
42,411 |
| ||
|
Total operating revenue |
|
197,615 |
|
147,127 |
| ||
|
|
|
|
|
|
| ||
|
Operating Expenses |
|
|
|
|
| ||
|
Rental property |
|
38,561 |
|
25,229 |
| ||
|
Real estate taxes |
|
24,501 |
|
17,957 |
| ||
|
General and administrative |
|
18,361 |
|
19,793 |
| ||
|
Depreciation and amortization |
|
56,734 |
|
37,220 |
| ||
|
Total operating expenses |
|
138,157 |
|
100,199 |
| ||
|
|
|
|
|
|
| ||
|
Operating Income |
|
59,458 |
|
46,928 |
| ||
|
|
|
|
|
|
| ||
|
Other Income/Expense |
|
|
|
|
| ||
|
Interest and other |
|
2,535 |
|
2,573 |
| ||
|
Interest |
|
(39,207 |
) |
(27,739 |
) | ||
|
Total other income/expense |
|
(36,672 |
) |
(25,166 |
) | ||
|
|
|
|
|
|
| ||
|
Income before property dispositions, income taxes, noncontrolling interest and equity in earnings of unconsolidated joint ventures |
|
22,786 |
|
21,762 |
| ||
|
(Loss) gain on property dispositions |
|
(83 |
) |
1,800 |
| ||
|
Income taxes |
|
(531 |
) |
(491 |
) | ||
|
Equity in earnings of unconsolidated joint ventures |
|
4,159 |
|
1,757 |
| ||
|
|
|
|
|
|
| ||
|
Income from continuing operations |
|
26,331 |
|
24,828 |
| ||
|
|
|
|
|
|
| ||
|
Discontinued operations (including net gains on property dispositions of $46,117 and $41,713 for the quarters ended March 31, 2014 and 2013, respectively) |
|
47,775 |
|
49,828 |
| ||
|
Net Income |
|
74,106 |
|
74,656 |
| ||
|
Noncontrolling interest - operating partnerships |
|
(1,853 |
) |
(3,417 |
) | ||
|
Noncontrolling interest - consolidated joint ventures |
|
(353 |
) |
— |
| ||
|
Net Income available to common shareholders |
|
$ |
71,900 |
|
$ |
71,239 |
|
|
|
|
|
|
|
| ||
|
Net income |
|
$ |
74,106 |
|
$ |
74,656 |
|
|
Other comprehensive income (loss) - foreign currency translation |
|
1,346 |
|
(4,851 |
) | ||
|
Other comprehensive loss - change in net unrealized gain on derivative instruments |
|
(511 |
) |
— |
| ||
|
Comprehensive income |
|
74,941 |
|
69,805 |
| ||
|
Less: comprehensive income attributable to noncontrolling interest |
|
(2,226 |
) |
(3,271 |
) | ||
|
Comprehensive income attributable to common shareholders |
|
$ |
72,715 |
|
$ |
66,534 |
|
|
|
|
|
|
|
| ||
|
Basic income per common share |
|
|
|
|
| ||
|
Continuing operations |
|
$ |
0.17 |
|
$ |
0.19 |
|
|
Discontinued operations |
|
$ |
0.32 |
|
$ |
0.41 |
|
|
Total basic income per common share |
|
$ |
0.49 |
|
$ |
0.60 |
|
|
|
|
|
|
|
| ||
|
Diluted income per common share |
|
|
|
|
| ||
|
Continuing operations |
|
$ |
0.17 |
|
$ |
0.19 |
|
|
Discontinued operations |
|
$ |
0.32 |
|
$ |
0.41 |
|
|
Total diluted income per common share |
|
$ |
0.49 |
|
$ |
0.60 |
|
|
|
|
|
|
|
| ||
|
Weighted average shares |
|
|
|
|
| ||
|
Basic |
|
146,425 |
|
118,688 |
| ||
|
Diluted |
|
147,095 |
|
119,532 |
| ||
|
|
|
|
|
|
| ||
|
Amounts attributable to common shareholders |
|
|
|
|
| ||
|
Income from continuing operations |
|
$ |
25,250 |
|
$ |
22,908 |
|
|
Discontinued operations |
|
46,650 |
|
48,331 |
| ||
|
Net income |
|
$ |
71,900 |
|
$ |
71,239 |
|
Liberty Property Trust
Balance Sheet
March 31, 2014
(Unaudited and in thousands, except share and unit amounts)
|
|
|
March 31, 2014 |
|
December 31, 2013 |
| ||
|
Assets |
|
|
|
|
| ||
|
Real estate: |
|
|
|
|
| ||
|
Land and land improvements |
|
$ |
1,149,233 |
|
$ |
1,139,455 |
|
|
Building and improvements |
|
5,206,349 |
|
5,144,758 |
| ||
|
Less: accumulated depreciation |
|
(1,094,397 |
) |
(1,057,680 |
) | ||
|
|
|
|
|
|
| ||
|
Operating real estate |
|
5,261,185 |
|
5,226,533 |
| ||
|
|
|
|
|
|
| ||
|
Development in progress |
|
242,771 |
|
209,187 |
| ||
|
Land held for development |
|
239,755 |
|
233,055 |
| ||
|
|
|
|
|
|
| ||
|
Net real estate |
|
5,743,711 |
|
5,668,775 |
| ||
|
|
|
|
|
|
| ||
|
Cash and cash equivalents |
|
370,553 |
|
163,414 |
| ||
|
Restricted cash |
|
20,041 |
|
51,456 |
| ||
|
Accounts receivable |
|
17,963 |
|
13,900 |
| ||
|
Deferred rent receivable |
|
102,729 |
|
99,956 |
| ||
|
Deferred financing and leasing costs, net of accumulated amortization (2014, $150,476; 2013, $140,958) |
|
222,832 |
|
226,607 |
| ||
|
Investments in and advances to unconsolidated joint ventures |
|
181,249 |
|
179,655 |
| ||
|
Assets held for sale |
|
— |
|
275,957 |
| ||
|
Prepaid expenses and other assets |
|
103,587 |
|
95,840 |
| ||
|
|
|
|
|
|
| ||
|
Total assets |
|
$ |
6,762,665 |
|
$ |
6,775,560 |
|
|
|
|
|
|
|
| ||
|
Liabilities |
|
|
|
|
| ||
|
Mortgage loans |
|
$ |
542,809 |
|
$ |
545,306 |
|
|
Unsecured notes |
|
2,708,440 |
|
2,708,213 |
| ||
|
Credit facility |
|
— |
|
— |
| ||
|
Accounts payable |
|
53,458 |
|
70,406 |
| ||
|
Accrued interest |
|
42,218 |
|
25,777 |
| ||
|
Dividend and distributions payable |
|
71,653 |
|
71,323 |
| ||
|
Other liabilities |
|
215,253 |
|
250,819 |
| ||
|
|
|
|
|
|
| ||
|
Total liabilities |
|
3,633,831 |
|
3,671,844 |
| ||
|
|
|
|
|
|
| ||
|
Noncontrolling interest - operating partnership - 301,483 preferred units outstanding as of March 31, 2014 and December 31, 2013 |
|
7,537 |
|
7,537 |
| ||
|
|
|
|
|
|
| ||
|
Equity |
|
|
|
|
| ||
|
Shareholders’ equity: |
|
|
|
|
| ||
|
Common shares of beneficial interest, $.001 par value, 183,987,000 shares authorized, 148,541,749 (includes 1,249,909 in treasury) and 147,846,801 (includes 1,249,909 in treasury) shares issued and outstanding as of March 31, 2014 and December 31, 2013, respectively |
|
149 |
|
148 |
| ||
|
Additional paid-in capital |
|
3,691,717 |
|
3,669,618 |
| ||
|
Accumulated other comprehensive income |
|
10,558 |
|
9,742 |
| ||
|
Distributions in excess of net income |
|
(589,775 |
) |
(591,713 |
) | ||
|
Common shares in treasury, at cost, 1,249,909 shares as of March 31, 2014 and December 31, 2013 |
|
(51,951 |
) |
(51,951 |
) | ||
|
Total shareholders’ equity |
|
3,060,698 |
|
3,035,844 |
| ||
|
|
|
|
|
|
| ||
|
Noncontrolling interest - operating partnership 3,553,566 and 3,556,566 common units outstanding as of March 31, 2014 and December 31, 2013, respectively |
|
56,681 |
|
56,713 |
| ||
|
Noncontrolling interest - consolidated joint ventures |
|
3,918 |
|
3,622 |
| ||
|
|
|
|
|
|
| ||
|
Total equity |
|
3,121,297 |
|
3,096,179 |
| ||
|
|
|
|
|
|
| ||
|
Total liabilities, noncontrolling interest - operating partnership & equity |
|
$ |
6,762,665 |
|
$ |
6,775,560 |
|
Liberty Property Trust
Statement of Funds From Operations
March 31, 2014
(Unaudited and in thousands, except per share amounts)
|
|
|
Quarter Ended |
| ||||||||||
|
|
|
March 31, 2014 |
|
March 31, 2013 |
| ||||||||
|
|
|
|
|
Per |
|
|
|
Per |
| ||||
|
|
|
|
|
Weighted |
|
|
|
Weighted |
| ||||
|
|
|
|
|
Average |
|
|
|
Average |
| ||||
|
|
|
Dollars |
|
Share |
|
Dollars |
|
Share |
| ||||
|
Reconciliation of net income to FFO - basic: |
|
|
|
|
|
|
|
|
| ||||
|
Basic - income available to common shareholders |
|
$ |
71,900 |
|
$ |
0.49 |
|
$ |
71,239 |
|
$ |
0.60 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Adjustments: |
|
|
|
|
|
|
|
|
| ||||
|
Depreciation and amortization of unconsolidated joint ventures |
|
3,291 |
|
|
|
3,397 |
|
|
| ||||
|
Depreciation and amortization |
|
56,107 |
|
|
|
44,972 |
|
|
| ||||
|
Gain on property dispositions |
|
(45,526 |
) |
|
|
(41,706 |
) |
|
| ||||
|
Noncontrolling interest share in addback for depreciation and amortization and gain on property dispositions |
|
(327 |
) |
|
|
(200 |
) |
|
| ||||
|
Funds from operations available to common shareholders - basic |
|
$ |
85,445 |
|
$ |
0.58 |
|
$ |
77,702 |
|
$ |
0.65 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Reconciliation of net income to FFO - diluted: |
|
|
|
|
|
|
|
|
| ||||
|
Diluted - income available to common shareholders |
|
$ |
71,900 |
|
$ |
0.49 |
|
$ |
71,239 |
|
$ |
0.60 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Adjustments: |
|
|
|
|
|
|
|
|
| ||||
|
Depreciation and amortization of unconsolidated joint ventures |
|
3,291 |
|
|
|
3,397 |
|
|
| ||||
|
Depreciation and amortization |
|
56,107 |
|
|
|
44,972 |
|
|
| ||||
|
Gain on property dispositions |
|
(45,526 |
) |
|
|
(41,706 |
) |
|
| ||||
|
Noncontrolling interest excluding preferred unit distributions |
|
1,735 |
|
|
|
2,206 |
|
|
| ||||
|
Funds from operations available to common shareholders - diluted |
|
$ |
87,507 |
|
$ |
0.58 |
|
$ |
80,108 |
|
$ |
0.65 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Reconciliation of weighted average shares: |
|
|
|
|
|
|
|
|
| ||||
|
Weighted average common shares - all basic calculations |
|
146,425 |
|
|
|
118,688 |
|
|
| ||||
|
Dilutive shares for long term compensation plans |
|
670 |
|
|
|
844 |
|
|
| ||||
|
Diluted shares for net income calculations |
|
147,095 |
|
|
|
119,532 |
|
|
| ||||
|
Weighted average common units |
|
3,556 |
|
|
|
3,714 |
|
|
| ||||
|
Diluted shares for Funds from operations calculations |
|
150,651 |
|
|
|
123,246 |
|
|
| ||||
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.