Exhibit 99.1
| | Press Release |
| Inquiries: | Jeanne A. Leonard |
| | Liberty Property Trust |
| | 610/648-1704 |
LIBERTY PROPERTY TRUST ANNOUNCES
THIRD QUARTER 2013 RESULTS
Malvern, PA, October 22, 2013 -- Liberty Property Trust reported that funds from operations available to common shareholders (diluted) (“FFO”) for the third quarter of 2013 was $0.57 per share, compared to $0.64 per share for the third quarter of 2012. Funds from operations for the third quarter of 2013 include termination fees of $1.1 million. Third quarter results also include the effects of transactions related to the acquisition of Cabot Industrial Value Fund III Operating Partnership, L.P, including $2.7 million ($0.02 per share) of acquisition expenses and $4.2 million ($0.03 per share) of financing fees. Furthermore, the August 7, 2013 issuance of 24.2 million common shares reduced third quarter 2013 FFO on a per share basis by $0.07.
FFO per share for the nine-month period ended September 30, 2013 was $1.86, compared to $1.94 per share for the same period in 2012.
Net income per common share (diluted) was $0.21 for the quarter ended September 30, 2013, compared to $0.24 for the quarter ended September 30, 2012. Net income per common share (diluted) for the nine-month period ended September 30, 2013 was $1.11, compared with $0.84 for the same period in 2012. Net income per common share (diluted) for the nine month period ended September 30, 2013 includes $0.45 in gains on property dispositions compared to $0.05 in the same period in 2012.
Commenting on the company’s activities, Liberty’s chairman and chief executive officer, Bill Hankowsky, said:
“Liberty took a significant step in the third quarter in the advancement of our strategy to increase our industrial footprint, with the announcement of our intent to purchase a 23 million square foot industrial portfolio, a transaction that closed shortly after the quarter ended. We are pleased with this deepening of fourteen of our existing markets and the increase of our national footprint. This transaction enhances our ability to serve our industrial tenants in both our new and existing markets.”
“During the quarter we also set new company records for leasing, particularly in our industrial portfolio and development pipeline, as pent-up demand resulted in numerous large signed leases. We are encouraged by the industrial landscape, and see continuing opportunities for development and increased occupancy and rental rates across our broader and deeper platform.”
“Consistent with our portfolio repositioning strategy, we expect to continue to decrease our exposure to suburban office properties. To this end, we are actively seeking the disposition of
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Liberty Property Trust 3Q 2013 Results -2
approximately six-to-seven million square feet of suburban office and flex properties at a value of $650-$750 million, which may occur over the next one-to-three quarters.”
Portfolio Performance
Leasing: At September 30, 2013, Liberty’s in-service portfolio of 83.7 million square feet was 90.6% occupied, compared to 92.8% at the end of the second quarter. The drop in occupancy is the result of the timing of commencement of certain significant leases. The portfolio is 92.4% leased on a signed basis. During the quarter, Liberty completed lease transactions totaling a company record 8.7 million square feet of space.
Same Store Performance: Property level operating income for same store properties increased by 1.8% on a cash basis and 1.0% on a straight line basis for the third quarter of 2013 compared to the same quarter in 2012.
Real Estate Investments
Acquisitions: Liberty acquired one property during the quarter, an industrial building in Phoenix, AZ, for $27.9 million. The property contains 593,600 square feet of leasable space and was unleased at acquisition.
Development Pipeline: In the third quarter, Liberty brought four development properties into service for a total investment of $163.2 million. The properties contain 2.5 million square feet of leasable space and, as of September 30, 2013, were 35% occupied at a current yield of 5.1% and a stabilized yield of 8.9%. A signed lease for 1.2 million square feet of this space will commence on January 1, 2014, bringing occupancy on these properties to 83.2% on a signed basis.
During the quarter, Liberty began development of one property for a projected investment of $50.3 million. The property is a 945,720 square foot distribution building in Aberdeen, MD and is 100% pre-leased to a high-credit tenant.
Purchase of Cabot Industrial Value Fund III Operating Partnership, L.P.
On July 31, 2013, Liberty announced it would acquire the operating partnership of Cabot Industrial Fund III Operating Partnership, L.P., for a purchase price of $1.475 billion. This transaction closed on October 8, 2013, and certain items connected with the transaction had an impact on the third quarter:
· On August 7, Liberty issued 24.2 million common shares for net proceeds of $834.1 million.
· On September 27, Liberty issued $450 million of 4.40% senior unsecured notes due 2024 for net proceeds of $444.8 million.
· The Company incurred $2.7 million in acquisition expenses (included in general and administrative expenses on Liberty’s Statement of Operations) and $4.2 million in fees (included in interest expense on the Statement of Operations).
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Liberty Property Trust 3Q 2013 Results -3
Earnings Outlook
Liberty expects to report funds from operations for the fourth quarter of 2013 in the range of $0.62 - $0.64 per share, and for the full year 2013 in the range of $2.48 - $2.50 per share. Included in the fourth quarter 2013 guidance is $5.4 million ($0.04 per share) of Cabot-related acquisition expenses and $0.01 per share of earnings dilution associated with the August 7, 2013 equity offering. The guidance for full-year 2013 includes $12.3 million ($0.09 per share) of Cabot acquisition and fee-related expenses and $0.08 per share of earnings dilution associated with the August 7, 2013 equity issuance. This guidance does not reflect the above-mentioned intention to seek disposition of $650-$750 million in suburban office and flex assets. A reconciliation of FFO to GAAP net income for the respective periods is below:
| | 4Q 2013 Range | | FY 2013 Range | |
| | Low | | High | | Low | | High | |
Projected net income per share | | $ 0.21 | | $ 0.23 | | $ 1.32 | | $ 1.34 | |
Depreciation and amortization of unconsolidated joint ventures | | 0.03 | | 0.03 | | 0.12 | | 0.12 | |
Depreciation and amortization | | 0.40 | | 0.40 | | 1.48 | | 1.48 | |
Gain on property dispositions | | (0.01) | | (0.01) | | (0.40) | | (0.40) | |
Minority interest share of addbacks | | (0.01) | | (0.01) | | (0.04) | | (0.04) | |
| | | | | | | | | |
Projected funds from operations per share | | $ 0.62 | | $ 0.64 | | $ 2.48 | | $ 2.50 | |
Earnings Guidance for 2014 will be provided on December 17, 2013.
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 106 million square foot portfolio includes 843 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.
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Liberty Property Trust 3Q 2013 Results -4
Liberty will host a conference call during which management will discuss third quarter results, on Tuesday, October 22, 2013, at 1 p.m. Eastern Time. To access the conference call, please dial 855-277-7530. The passcode needed for access is 86875018. A replay of the call will be available until November 22, 2013, by dialing 1-855-859-2056 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.
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. 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, 2013
(Unaudited and in thousands, except per share amounts)
| | Quarter Ended | | | Nine Months Ended | |
| | September 30, 2013 | | | September 30, 2012 | | | September 30, 2013 | | | September 30, 2012 | |
| | | | | | | | | | | | |
Operating Revenue | | | | | | | | | | | | |
Rental | | $ | 128,044 | | | $ | 116,666 | | | $ | 375,702 | | | $ | 348,955 | |
Operating expense reimbursement | | 55,342 | | | 51,017 | | | 160,476 | | | 148,187 | |
Total operating revenue | | 183,386 | | | 167,683 | | | 536,178 | | | 497,142 | |
| | | | | | | | | | | | |
Operating Expenses | | | | | | | | | | | | |
Rental property | | 35,213 | | | 33,934 | | | 99,746 | | | 93,840 | |
Real estate taxes | | 22,107 | | | 19,517 | | | 65,007 | | | 59,167 | |
General and administrative | | 17,231 | | | 14,610 | | | 53,552 | | | 46,391 | |
Depreciation and amortization | | 46,036 | | | 40,149 | | | 135,560 | | | 120,337 | |
Total operating expenses | | 120,587 | | | 108,210 | | | 353,865 | | | 319,735 | |
| | | | | | | | | | | | |
Operating Income | | 62,799 | | | 59,473 | | | 182,313 | | | 177,407 | |
| | | | | | | | | | | | |
Other Income/Expense | | | | | | | | | | | | |
Interest and other | | 2,620 | | | 2,340 | | | 7,612 | | | 7,055 | |
Interest | | (37,412 | ) | | (30,772 | ) | | (101,141 | ) | | (88,941 | ) |
Total other income/expense | | (34,792 | ) | | (28,432 | ) | | (93,529 | ) | | (81,886 | ) |
| | | | | | | | | | | | |
Income before property dispositions, income taxes, noncontrolling interest and equity in earnings of unconsolidated joint ventures | | 28,007 | | | 31,041 | | | 88,784 | | | 95,521 | |
Gain on property dispositions | | 1,958 | | | 2,001 | | | 6,829 | | | 2,859 | |
Income taxes | | (629 | ) | | (321 | ) | | (1,780 | ) | | (645 | ) |
Equity in earnings (loss) of unconsolidated joint ventures | | 650 | | | (3,082 | ) | | 3,973 | | | (1,397 | ) |
| | | | | | | | | | | | |
Income from continuing operations | | 29,986 | | | 29,639 | | | 97,806 | | | 96,338 | |
| | | | | | | | | | | | |
Discontinued operations (including net gain on property dispositions of $29 for the quarter ended September 30, 2013 and net loss of $1,540 for the quarter ended September 30, 2012 and net gains of $49,367 and $2,505 for the nine month periods ended September 30, 2013 and 2012, respectively) | | (38 | ) | | 259 | | | 50,041 | | | 10,842 | |
Net Income | | 29,948 | | | 29,898 | | | 147,847 | | | 107,180 | |
Noncontrolling interest - operating partnerships | | (843 | ) | | (2,092 | ) | | (7,394 | ) | | (8,174 | ) |
Noncontrolling interest - consolidated joint ventures | | (406 | ) | | - | | | (406 | ) | | - | |
Net Income available to common shareholders | | $ | 28,699 | | | $ | 27,806 | | | $ | 140,047 | | | $ | 99,006 | |
| | | | | | | | | | | | |
Net income | | $ | 29,948 | | | $ | 29,898 | | | $ | 147,847 | | | $ | 107,180 | |
Other comprehensive income | | 4,927 | | | 2,245 | | | 115 | | | 3,047 | |
Comprehensive income | | 34,875 | | | 32,143 | | | 147,962 | | | 110,227 | |
Less: comprehensive income attributable to noncontrolling interest | | (1,370 | ) | | (2,161 | ) | | (7,777 | ) | | (8,269 | ) |
Comprehensive income attributable to common shareholders | | $ | 33,505 | | | $ | 29,982 | | | $ | 140,185 | | | $ | 101,958 | |
| | | | | | | | | | | | |
Basic income per common share | | | | | | | | | | | | |
Continuing operations | | $ | 0.21 | | | $ | 0.24 | | | $ | 0.73 | | | $ | 0.76 | |
Discontinued operations | | $ | - | | | $ | - | | | $ | 0.39 | | | $ | 0.09 | |
Total basic income per common share | | $ | 0.21 | | | $ | 0.24 | | | $ | 1.12 | | | $ | 0.85 | |
| | | | | | | | | | | | |
Diluted income per common share | | | | | | | | | | | | |
Continuing operations | | $ | 0.21 | | | $ | 0.24 | | | $ | 0.72 | | | $ | 0.75 | |
Discontinued operations | | $ | - | | | $ | - | | | $ | 0.39 | | | $ | 0.09 | |
Total diluted income per common share | | $ | 0.21 | | | $ | 0.24 | | | $ | 1.11 | | | $ | 0.84 | |
| | | | | | | | | | | | |
Weighted average shares | | | | | | | | | | | | |
Basic | | 135,628 | | | 117,141 | | | 124,889 | | | 116,625 | |
Diluted | | 136,328 | | | 118,043 | | | 125,655 | | | 117,462 | |
| | | | | | | | | | | | |
Amounts attributable to common shareholders | | | | | | | | | | | | |
Income from continuing operations | | $ | 28,736 | | | $ | 27,555 | | | $ | 91,442 | | | $ | 88,500 | |
Discontinued operations | | (37 | ) | | 251 | | | 48,605 | | | 10,506 | |
Net income | | $ | 28,699 | | | $ | 27,806 | | | $ | 140,047 | | | $ | 99,006 | |
Liberty Property Trust
Statement of Funds From Operations
September 30, 2013
(Unaudited and in thousands, except per share amounts)
| | | Quarter Ended | | | | Nine Months Ended | |
| | | September 30, 2013 | | | | September 30, 2012 | | | | September 30, 2013 | | | | September 30, 2012 | |
| | | | | | 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 | | | $ | 28,699 | | | $ | 0.21 | | | | $ | 27,806 | | | $ | 0.24 | | | | $ | 140,047 | | | $ | 1.12 | | | | $ | 99,006 | | | $ | 0.85 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Depreciation and amortization of unconsolidated joint ventures | | | 4,176 | | | | | | | 3,569 | | | | | | | 10,874 | | | | | | | 10,739 | | | | |
Depreciation and amortization | | | 45,642 | | | | | | | 40,631 | | | | | | | 135,418 | | | | | | | 122,097 | | | | |
Gain on property dispositions | | | (29 | ) | | | | | | 4,759 | | | | | | | (49,393 | ) | | | | | | 676 | | | | |
Noncontrolling interest share in addback for depreciation and amortization and gain on property dispositions | | | (1,226 | ) | | | | | | (1,504 | ) | | | | | | (2,625 | ) | | | | | | (4,141 | ) | | | |
Funds from operations available to common shareholders - basic | | | $ | 77,262 | | | $ | 0.57 | | | | $ | 75,261 | | | $ | 0.64 | | | | $ | 234,321 | | | $ | 1.88 | | | | $ | 228,377 | | | $ | 1.96 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reconciliation of net income to FFO - diluted: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Diluted - income available to common shareholders | | | $ | 28,699 | | | $ | 0.21 | | | | $ | 27,806 | | | $ | 0.24 | | | | $ | 140,047 | | | $ | 1.11 | | | | $ | 99,006 | | | $ | 0.84 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Depreciation and amortization of unconsolidated joint ventures | | | 4,176 | | | | | | | 3,569 | | | | | | | 10,874 | | | | | | | 10,739 | | | | |
Depreciation and amortization | | | 45,642 | | | | | | | 40,631 | | | | | | | 135,418 | | | | | | | 122,097 | | | | |
Gain on property dispositions | | | (29 | ) | | | | | | 4,759 | | | | | | | (49,393 | ) | | | | | | 676 | | | | |
Noncontrolling interest excluding preferred unit distributions | | | 725 | | | | | | | 881 | | | | | | | 4,157 | | | | | | | 3,173 | | | | |
Funds from operations available to common shareholders - diluted | | | $ | 79,213 | | | $ | 0.57 | | | | $ | 77,646 | | | $ | 0.64 | | | | $ | 241,103 | | | $ | 1.86 | | | | $ | 235,691 | | | $ | 1.94 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reconciliation of weighted average shares: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Weighted average common shares - all basic calculations | | | 135,628 | | | | | | | 117,141 | | | | | | | 124,889 | | | | | | | 116,625 | | | | |
Dilutive shares for long term compensation plans | | | 700 | | | | | | | 902 | | | | | | | 766 | | | | | | | 837 | | | | |
Diluted shares for net income calculations | | | 136,328 | | | | | | | 118,043 | | | | | | | 125,655 | | | | | | | 117,462 | | | | |
Weighted average common units | | | 3,692 | | | | | | | 3,739 | | | | | | | 3,706 | | | | | | | 3,771 | | | | |
Diluted shares for Funds from operations calculations | | | 140,020 | | | | | | | 121,782 | | | | | | | 129,361 | | | | | | | 121,233 | | | | |
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, 2013
(Unaudited and in thousands, except share and unit amounts)
| | | | September 30, 2013 | | | | December 31, 2012 | |
Assets | | | | | | | | | |
Real estate: | | | | | | | | | |
Land and land improvements | | | | $ | 1,012,247 | | | | $ | 899,801 | |
Building and improvements | | | | 4,564,885 | | | | 4,341,125 | |
Less: accumulated depreciation | | | | (1,224,775 | ) | | | (1,164,756 | ) |
| | | | | | | | | |
Operating real estate | | | | 4,352,357 | | | | 4,076,170 | |
| | | | | | | | | |
Development in progress | | | | 136,165 | | | | 248,602 | |
Land held for development | | | | 233,091 | | | | 258,324 | |
| | | | | | | | | |
Net real estate | | | | 4,721,613 | | | | 4,583,096 | |
| | | | | | | | | |
Cash and cash equivalents | | | | 1,124,570 | | | | 38,356 | |
Restricted cash | | | | 35,705 | | | | 33,147 | |
Accounts receivable | | | | 8,784 | | | | 8,988 | |
Deferred rent receivable | | | | 112,943 | | | | 108,576 | |
Deferred financing and leasing costs, net of accumulated amortization (2013, $145,519; 2012, $132,261) | | | | 149,833 | | | | 137,359 | |
Investments in and advances to unconsolidated joint ventures | | | | 177,344 | | | | 169,021 | |
Assets held for sale | | | | - | | | | 7,880 | |
Prepaid expenses and other assets | | | | 118,700 | | | | 87,756 | |
| | | | | | | | | |
Total assets | | | | $ | 6,449,492 | | | | $ | 5,174,179 | |
| | | | | | | | | |
Liabilities | | | | | | | | | |
Mortgage loans | | | | $ | 309,279 | | | | $ | 302,855 | |
Unsecured notes | | | | 2,707,985 | | | | 2,258,751 | |
Credit facility | | | | - | | | | 92,000 | |
Accounts payable | | | | 46,411 | | | | 31,058 | |
Accrued interest | | | | 39,086 | | | | 20,164 | |
Dividend and distributions payable | | | | 71,113 | | | | 58,038 | |
Other liabilities | | | | 195,907 | | | | 185,956 | |
| | | | | | | | | |
Total liabilities | | | | 3,369,781 | | | | 2,948,822 | |
| | | | | | | | | |
Noncontrolling interest - operating partnership - 301,483 preferred units outstanding as of September 30, 2013 and December 31, 2012 | | | | 7,537 | | | | 7,537 | |
| | | | | | | | | |
Equity | | | | | | | | | |
Shareholders’ equity: | | | | | | | | | |
Common shares of beneficial interest, $.001 par value, 183,987,000 shares authorized, 147,274,747 (includes 1,249,909 in treasury) and 119,720,776 (includes 1,249,909 in treasury) shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively | | | | 147 | | | | 119 | |
Additional paid-in capital | | | | 3,650,766 | | | | 2,687,701 | |
Accumulated other comprehensive income | | | | 3,039 | | | | 2,900 | |
Distributions in excess of net income | | | | (591,764 | ) | | | (547,757 | ) |
Common shares in treasury, at cost, 1,249,909 shares as of September 30, 2013 and December 31,2012 | | | | (51,951 | ) | | | (51,951 | ) |
Total shareholders’ equity | | | | 3,010,237 | | | | 2,091,012 | |
| | | | | | | | | |
Noncontrolling interest - operating partnership | | | | | | | | | |
3,686,609 and 3,713,851 common units outstanding as of September 30, 2013 and December 31, 2012, respectively | | | | 58,513 | | | | 60,223 | |
1,290,000 preferred units outstanding as of December 31, 2012 | | | | - | | | | 63,264 | |
Noncontrolling interest - consolidated joint ventures | | | | 3,424 | | | | 3,321 | |
| | | | | | | | | |
Total equity | | | | 3,072,174 | | | | 2,217,820 | |
| | | | | | | | | |
Total liabilities, noncontrolling interest - operating partnership & equity | | | | $ | 6,449,492 | | | | $ | 5,174,179 | |
