Exhibit 99.1
![]() | Press Release |
For Immediate Release | Inquiries: | Jeanne A. Leonard | ||
Liberty Property Trust 610/648-1704 |
LIBERTY PROPERTY TRUST ANNOUNCES
THIRD QUARTER RESULTS
THIRD QUARTER RESULTS
Malvern, PA, October 26, 2009 — Liberty Property Trust (NYSE:LRY) reported that net income per common share (diluted) was $0.39 per share for the quarter ended September 30, 2009, compared to $0.41 per share (diluted) for the quarter ended September 30, 2008. For the nine-month period ended September 30, 2009, net income per common share (diluted) was $1.02, compared to $1.08 per share for the same period in 2008.
Funds from operations available to common shareholders (diluted) (“FFO”) for the third quarter of 2009 was $0.72 per share, compared to $0.80 per share for the third quarter of 2008. FFO per share for the nine-month period ended September 30, 2009 was $2.16, compared to $2.41 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 third quarter include termination fees of $6.2 million, and an impairment charge of $4.8 million.
“During the third quarter we saw Liberty’s portfolio occupancy stabilize, and while competitive market occupancies continue to erode, we may be seeing the first signs of what will, with no doubt, be a slow market recovery,” said Bill Hankowsky, chief executive officer. “The industrial sector is poised to begin recovery ahead of the office markets, which continue to await positive news on the employment front. We expect that Liberty’s outstanding financial position and customer-centric operations will continue to allow us to outperform our markets and provide us with fuel to grow when the opportunity arises in 2010 and beyond.”
Portfolio Performance
Leasing:At September 30, 2009, Liberty’s in-service portfolio of 77.4 million square feet was 89.3% occupied, compared to 89.4% at the end of the second quarter. During the quarter, Liberty completed lease transactions totaling 3.5 million square feet of space.
Same Store Performance:Property level operating income for same store properties increased by 0.4% on a cash basis and by 2.0% on a straight line basis for the third quarter of 2009 compared to the same quarter in 2008.
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Liberty Property Trust Third Quarter 2009 Earnings -2-
Capital Activities and Balance Sheet Management
Common Share Sales:During the third quarter of 2009, Liberty completed its continuous equity offering program, selling 2.8 million shares, which generated net proceeds of $69.2 million.
Senior Note Obligations:During the quarter, Liberty purchased $3.5 million of its October 2017 Senior Notes. These notes were purchased at a $0.5 million discount. This discount is included in FFO as a debt extinguishment gain.
Property Sales:Liberty sold six operating properties, which contained 982,000 square feet of leaseable space, and three acres of land, for $63.1 million.
Real Estate Investments
Development:During the third quarter, Liberty brought into service seven development properties totaling 501,000 square feet for a total investment of $89.2 million. These properties were 22.4% occupied as of September 30, 2009. The current yield on this investment is 1.1%, and the projected stabilized yield is 6.9%. Leases have been signed for an additional 29% of the space.
A joint venture in which the company holds a 50% interest brought into service a 500,000 square foot build-to-suit development property during the quarter. This property is 100% leased, and the current yield on the $24.0 million investment is 11.5%.
No development commenced during the quarter.
As of September 30, 2009, Liberty had 2.4 million square feet of wholly-owned and joint venture properties under development. This activity represents a total projected investment of $372.4 million, with an expected yield of 7.5%. The properties were 63.1% leased at September 30.
Acquisitions:Liberty acquired no properties during the quarter.
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Liberty Property Trust Third Quarter 2009 Earnings -3-
Earnings Outlook
Liberty expects to report funds from operations for 2009 in the range of $2.81 — $2.83 per share, and for 2010 in the range of $2.60 — $2.80 per share. A reconciliation of FFO to GAAP net income for both 2009 and 2010 is below:
2009 Range | 2010 Range | |||||||||||||||
Low | High | Low | High | |||||||||||||
Projected net income per share | $ | 1.32 | $ | 1.37 | $ | 1.12 | $ | 1.33 | ||||||||
Depreciation and amortization of unconsolidated joint ventures | 0.15 | 0.15 | 0.13 | 0.15 | ||||||||||||
Depreciation and amortization | 1.59 | 1.59 | 1.50 | 1.52 | ||||||||||||
Gain on property dispositions | (0.20 | ) | (0.23 | ) | (0.10 | ) | (0.15 | ) | ||||||||
Minority interest share of addbacks | (0.05 | ) | (0.05 | ) | (0.05 | ) | (0.05 | ) | ||||||||
Projected funds from operations per share | $ | 2.81 | $ | 2.83 | $ | 2.60 | $ | 2.80 |
Commenting on this guidance, Bill Hankowsky said: “The change in Liberty’s earnings guidance from 2009 to 2010 is primarily due to a full-year’s dilution from capital activity in 2009, and, to a lesser extent, continued pressure on real estate fundamentals, principally rental rates. While we have begun to see the first signs of stabilization taking root in our portfolio, it will take time for the economy to recover enough to reverse current declines in rents.”
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 atwww.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 tojleonard@libertyproperty.com.
Liberty will host a conference call during which management will discuss third quarter results, on Tuesday, October 27, 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: 33769240. The call can also be accessed via the Internet on the Investors page of Liberty’s web site atwww.libertyproperty.com for two weeks following the call.
Liberty Property Trust Third Quarter 2009 Earnings -4-
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.
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Liberty Property Trust
Statement of Operations
September 30, 2009
(Unaudited and in thousands, except per share amounts)
Statement of Operations
September 30, 2009
(Unaudited and in thousands, except per share amounts)
Quarter Ended | Nine Months Ended | |||||||||||||||
September 30, 2009 | September 30, 2008 | September 30, 2009 | September 30, 2008 | |||||||||||||
Operating Revenue | ||||||||||||||||
Rental | $ | 130,643 | $ | 126,422 | $ | 388,446 | $ | 379,345 | ||||||||
Operating expense reimbursement | 56,850 | 56,009 | 168,699 | 167,694 | ||||||||||||
Total operating revenue | 187,493 | 182,431 | 557,145 | 547,039 | ||||||||||||
Operating Expenses | ||||||||||||||||
Rental property | 36,224 | 37,078 | 109,903 | 110,582 | ||||||||||||
Real estate taxes | 23,061 | 21,527 | 66,857 | 64,245 | ||||||||||||
General and administrative | 11,248 | 13,180 | 38,470 | 40,340 | ||||||||||||
Depreciation and amortization | 43,268 | 43,196 | 128,140 | 127,637 | ||||||||||||
Total operating expenses | 113,801 | 114,981 | 343,370 | 342,804 | ||||||||||||
Operating Income | 73,692 | 67,450 | 213,775 | 204,235 | ||||||||||||
Other Income/Expense | ||||||||||||||||
Interest and other | 2,635 | 3,313 | 8,245 | 9,399 | ||||||||||||
Debt extinguishment gain | 455 | — | 1,547 | — | ||||||||||||
Interest | (36,735 | ) | (37,587 | ) | (111,464 | ) | (114,559 | ) | ||||||||
Total other income/expense | (33,645 | ) | (34,274 | ) | (101,672 | ) | (105,160 | ) | ||||||||
Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures | 40,047 | 33,176 | 112,103 | 99,075 | ||||||||||||
Gain (loss) on property dispositions | 100 | 463 | (2,244 | ) | 1,939 | |||||||||||
Income taxes | (86 | ) | (308 | ) | (430 | ) | (1,372 | ) | ||||||||
Equity in earnings of unconsolidated joint ventures | 515 | 470 | 2,124 | 1,857 | ||||||||||||
Income from continuing operations | 40,576 | 33,801 | 111,553 | 101,499 | ||||||||||||
Discontinued operations (including net gain on property dispositions of $5,131 and $10,232 for the quarters ended September 30, 2009 and 2008 and $9,000 and $13,635 for the nine month periods ended September 30, 2009 and 2008) | 10,168 | 12,152 | 16,245 | 19,228 | ||||||||||||
Net Income | 50,744 | 45,953 | 127,798 | 120,727 | ||||||||||||
Less: Net income attributable to minority interest | (6,841 | ) | (7,399 | ) | (19,335 | ) | (20,583 | ) | ||||||||
Net Income available to common shareholders | $ | 43,903 | $ | 38,554 | $ | 108,463 | $ | 100,144 | ||||||||
Basic income per common share | ||||||||||||||||
Continuing operations | $ | 0.30 | $ | 0.29 | $ | 0.87 | $ | 0.88 | ||||||||
Discontinued operations | $ | 0.09 | $ | 0.12 | $ | 0.15 | $ | 0.20 | ||||||||
Total basic income per common share | $ | 0.39 | $ | 0.41 | $ | 1.02 | $ | 1.08 | ||||||||
Diluted income per common share | ||||||||||||||||
Continuing operations | $ | 0.30 | $ | 0.29 | $ | 0.87 | $ | 0.88 | ||||||||
Discontinued operations | $ | 0.09 | $ | 0.12 | $ | 0.15 | $ | 0.20 | ||||||||
Total diluted income per common share | $ | 0.39 | $ | 0.41 | $ | 1.02 | $ | 1.08 | ||||||||
Weighted average shares | ||||||||||||||||
Basic | 111,351 | 92,955 | 105,989 | 92,328 | ||||||||||||
Diluted | 111,926 | 93,369 | 106,441 | 92,626 | ||||||||||||
Amounts attributable to common shareholders | ||||||||||||||||
Income from continuing operations | $ | 34,085 | $ | 26,923 | $ | 92,808 | $ | 81,745 | ||||||||
Discontinued operations | 9,818 | 11,631 | 15,655 | 18,399 | ||||||||||||
Net income | $ | 43,903 | $ | 38,554 | $ | 108,463 | $ | 100,144 | ||||||||
Liberty Property Trust
Statement of Funds From Operations
September 30, 2009
(Unaudited and in thousands, except per share amounts)
Statement of Funds From Operations
September 30, 2009
(Unaudited and in thousands, except per share amounts)
Quarter Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
September 30, 2009 | September 30, 2008 | September 30, 2009 | September 30, 2008 | |||||||||||||||||||||||||||||
Per | Per | Per | Per | |||||||||||||||||||||||||||||
Weighted | Weighted | Weighted | Weighted | |||||||||||||||||||||||||||||
Average | Average | Average | Average | |||||||||||||||||||||||||||||
Dollars | Share | Dollars | Share | Dollars | Share | Dollars | Share | |||||||||||||||||||||||||
Reconciliation of net income to FFO — basic: | ||||||||||||||||||||||||||||||||
Basic — income available to common shareholders | $ | 43,903 | $ | 0.39 | $ | 38,554 | $ | 0.41 | $ | 108,463 | $ | 1.02 | $ | 100,144 | $ | 1.08 | ||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||
Depreciation and amortization of unconsolidated joint ventures | 3,991 | 4,331 | 12,113 | 12,208 | ||||||||||||||||||||||||||||
Depreciation and amortization | 43,041 | 44,173 | 128,427 | 130,803 | ||||||||||||||||||||||||||||
Gain on property dispositions | (9,442 | ) | (10,542 | ) | (14,817 | ) | (14,674 | ) | ||||||||||||||||||||||||
Minority interest share in addback for depreciation and amortization and gain on property dispositions | (1,293 | ) | (1,629 | ) | (4,497 | ) | (5,538 | ) | ||||||||||||||||||||||||
Funds from operations available to common shareholders — basic | $ | 80,200 | $ | 0.72 | $ | 74,887 | $ | 0.81 | $ | 229,689 | $ | 2.17 | $ | 222,943 | $ | 2.41 | ||||||||||||||||
Reconciliation of net income to FFO — diluted: | ||||||||||||||||||||||||||||||||
Diluted — income available to common shareholders | $ | 43,903 | $ | 0.39 | $ | 38,554 | $ | 0.41 | $ | 108,463 | $ | 1.02 | $ | 100,144 | $ | 1.08 | ||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||
Depreciation and amortization of unconsolidated joint ventures | 3,991 | 4,331 | 12,113 | 12,208 | ||||||||||||||||||||||||||||
Depreciation and amortizaton | 43,041 | 44,173 | 128,427 | 130,803 | ||||||||||||||||||||||||||||
Gain on property dispositions | (9,442 | ) | (10,542 | ) | (14,817 | ) | (14,674 | ) | ||||||||||||||||||||||||
Minority interest excluding preferred unit distributions | 1,565 | 1,746 | 3,974 | 4,526 | ||||||||||||||||||||||||||||
Funds from operations available to common shareholders — diluted | $ | 83,058 | $ | 0.72 | $ | 78,262 | $ | 0.80 | $ | 238,160 | $ | 2.16 | $ | 233,007 | $ | 2.41 | ||||||||||||||||
Reconciliation of weighted average shares: | ||||||||||||||||||||||||||||||||
Weighted average common shares — all basic calculations | 111,351 | 92,955 | 105,989 | 92,328 | ||||||||||||||||||||||||||||
Dilutive shares for long term compensation plans | 575 | 414 | 452 | 298 | ||||||||||||||||||||||||||||
Diluted shares for net income calculations | 111,926 | 93,369 | 106,441 | 92,626 | ||||||||||||||||||||||||||||
Weighted average common units | 4,017 | 4,190 | 4,018 | 4,190 | ||||||||||||||||||||||||||||
Diluted shares for funds from operations calculations | 115,943 | 97,559 | 110,459 | 96,816 | ||||||||||||||||||||||||||||
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
September 30, 2009
(In thousands, except share amounts)
Balance Sheet
September 30, 2009
(In thousands, except share amounts)
September 30, 2009 | December 31, 2008 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Real estate: | ||||||||
Land and land improvements | $ | 835,075 | $ | 801,763 | ||||
Building and improvements | 4,305,128 | 4,191,361 | ||||||
Less: accumulated depreciation | (1,060,885 | ) | (963,043 | ) | ||||
Operating real estate | 4,079,318 | 4,030,081 | ||||||
Development in progress | 169,926 | 245,463 | ||||||
Land held for development | 219,440 | 209,551 | ||||||
Net real estate | 4,468,684 | 4,485,095 | ||||||
Cash and cash equivalents | 219,402 | 15,794 | ||||||
Restricted cash | 34,273 | 39,726 | ||||||
Accounts receivable | 7,356 | 12,985 | ||||||
Deferred rent receivable | 93,046 | 83,033 | ||||||
Deferred financing and leasing costs, net of accumulated amortization (2009, $132,099; 2008, $139,078) | 133,426 | 132,627 | ||||||
Investment in unconsolidated joint ventures | 255,191 | 266,602 | ||||||
Assets held for sale | 22,520 | 98,706 | ||||||
Prepaid expenses and other assets | 91,988 | 82,467 | ||||||
Total assets | $ | 5,325,886 | $ | 5,217,035 | ||||
Liabilities | ||||||||
Mortgage loans | $ | 462,700 | $ | 198,560 | ||||
Unsecured notes | 1,842,882 | 2,131,607 | ||||||
Credit facility | 140,000 | 260,000 | ||||||
Accounts payable | 47,865 | 32,481 | ||||||
Accrued interest | 27,794 | 36,474 | ||||||
Dividend and distributions payable | 55,394 | 48,858 | ||||||
Other liabilities | 160,134 | 182,549 | ||||||
Total liabilities | 2,736,769 | 2,890,529 | ||||||
Equity | ||||||||
Shareholders’ equity: | ||||||||
Common shares of beneficial interest, $.001 par value, 183,987,000 shares authorized, 113,850,578 (includes 1,249,909 in treasury) and 100,034,404 (includes 1,249,909 in treasury) shares issued and outstanding as of September 30, 2009 and December 31, 2008, respectively | 114 | 101 | ||||||
Additional paid-in capital | 2,452,479 | 2,162,820 | ||||||
Accumulated other comprehensive income | 1,420 | (5,378 | ) | |||||
Distributions in excess of net income | (232,323 | ) | (185,721 | ) | ||||
Common shares in treasury, at cost, 1,249,909 shares as of September 30, 2009 and December 31, 2008 | (51,951 | ) | (51,951 | ) | ||||
Total shareholders’ equity | 2,169,739 | 1,919,871 | ||||||
Minority interest — operating partnership | 418,645 | 405,505 | ||||||
Minority interest — consolidated joint ventures | 733 | 1,130 | ||||||
Total equity | 2,589,117 | 2,326,506 | ||||||
Total liabilities & equity | $ | 5,325,886 | $ | 5,217,035 | ||||