![]() | Press Release |
For Immediate Release | Inquiries: | Jeanne A. Leonard | ||
February 7, 2005 | Liberty Property Trust 610/648-1704 |
LIBERTY PROPERTY TRUST ANNOUNCES
FOURTH QUARTER AND FULL YEAR RESULTS
Malvern, PA — Liberty Property Trust (NYSE:LRY) reported that net income per common share (diluted) was $.53 per share for the quarter ended December 31, 2004, compared to $.46 per share (diluted) for the quarter ended December 31, 2003, and $1.88 per share (diluted) for the full year 2004 compared to $2.05 per share (diluted) for 2003.
Funds from operations available to common shareholders (diluted) (“FFO”) for the fourth quarter of 2004 was $.81 per share, compared to $.83 per share for the fourth quarter of 2003. For the year ended December 31, 2004, FFO per share was $3.25, compared to $3.36 per share for 2003. A reconciliation of GAAP net income to FFO is included in the financial tables accompanying this press release.
Operating results for the fourth quarter of 2004 include lease termination fees of $1.9 million.
“We are pleased with our results in the fourth quarter and for 2004, as throughout the year, we achieved our leasing, development, and acquisition goals,” said Bill Hankowsky, Liberty’s chairman and chief executive officer. “Although the economy is giving us more room for optimism, we have a long way to go before we see strength across all of our markets and consistent, meaningful rent growth. Until we do, our progress, though steady, will continue to be measured.”
Real Estate Investments
Development: During the fourth quarter, Liberty brought into service four development properties totaling 538,000 square feet. The properties are fully leased and are currently yielding 9.7 percent on the company’s $41.0 million investment. For the full year, Liberty brought into service 15 development properties totaling 1.4 million square feet. These properties are 99.4% leased and are currently yielding 10.3 percent on the company’s $104.2 million investment.
During the fourth quarter, Liberty commenced two new development projects representing a total investment of $34.3 million. These projects include a 607,758 square foot distribution facility in Aurora, Illinois and a 64,515 square foot office project in Columbia, Maryland.
As of year end, Liberty had 1.7 million square feet under development, representing a total investment of $143.9 million. These properties were 14.4 percent leased at December 31, 2004.
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LRY Fourth Quarter 2004 Results
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Acquisitions:During the fourth quarter, Liberty acquired seven properties for $84.1 million. These properties, which contain 1.3 million square feet, are 62.5 percent leased, with a current yield of 4.7 percent and a projected stabilized yield of 9.1 percent.
Acquisitions for the full year totaled 20 properties containing 3.9 million square feet, for $235.8 million. These properties were 68.6 percent leased at year end, yielding 6.1 percent, and are expected to produce a stabilized yield of 9.0 percent.
Dispositions:During the fourth quarter, Liberty sold five properties containing 521,000 square feet, and 8.7 acres of land for $44.1 million. For the full year, Liberty sold ten operating properties containing 761,000 square feet, and 70.1 acres of land for $59.6 million.
Portfolio Performance
Leasing:At December 31, 2004, Liberty’s in-service portfolio of 62 million square feet was 91.9 percent occupied. During the year, Liberty completed lease transactions totaling 13 million square feet of space.
Same Store Performance:Property level operating income for same store properties decreased by 1.8 percent on a cash basis and on a straight line basis for the fourth quarter of 2004 compared to the same quarter in 2003, and decreased by 1.1 percent on a cash basis and 1.2 percent on a straight line basis for the full year 2004 compared to 2003.
Financing and Balance Sheet Management
During the fourth quarter of 2004, Liberty exercised the accordion feature on its credit facility, increasing the maximum amount available under the credit facility from $350 to $450 million.
Dividends
In the third quarter, Liberty increased its quarterly dividend by 0.8 percent, from $0.605 to $0.61 per share. This equates to an annualized dividend of $2.44.
Subsequent Events
In January, 2005, Liberty began construction of Comcast Center, a $435 million, 1.2 million square foot office tower in Center City, Philadelphia. The project will provide a new headquarters for Comcast Corporation, which has signed a 151/2 year lease for 534,000 square feet.
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 62 million square foot portfolio includes more than 700 properties which provide office, distribution and light manufacturing facilities to 2,100 tenants.
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LRY Fourth Quarter 2004 Results
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Additional information about the Company, including Liberty’s Quarterly Supplemental Package with detailed financial information is available in the Investor section of the Company’s web site atwww.libertyproperty.com. The fourth quarter supplemental package will be available on-line the evening of February 7, 2005. If you are unable to access the web site, a copy of the supplemental package may be obtained by contacting Liberty by phone at 610-648-1708, or by e-mail toeshoemaker@libertyproperty.com.
Liberty will host a conference call during which management will discuss fourth quarter results, on Tuesday, February 8, 2005, at 2:00 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: 3118385. The call can also be accessed live via the Internet on the Investor Relations page of Liberty’s web site atwww.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.
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Liberty Property Trust
Statement of Operations
December 31, 2004
(In thousands, except per share amounts)
Quarter Ended | Year Ended | ||||||||||||||||
December 31, 2004 | December 31, 2003 | December 31, 2004 | December 31, 2003 | ||||||||||||||
(Unaudited) | |||||||||||||||||
Operating Revenue | |||||||||||||||||
Rental | $ | 120,228 | $ | 114,576 | $ | 470,755 | $ | 448,304 | |||||||||
Operating expense reimbursement | 47,426 | 45,358 | 184,600 | 171,978 | |||||||||||||
Total operating revenue | 167,654 | 159,934 | 655,355 | 620,282 | |||||||||||||
Operating Expenses | |||||||||||||||||
Rental property | 34,873 | 33,379 | 136,445 | 123,771 | |||||||||||||
Real estate taxes | 16,515 | 15,485 | 64,929 | 61,488 | |||||||||||||
General and administrative | 8,217 | 7,649 | 33,309 | 28,415 | |||||||||||||
Depreciation and amortization | 35,286 | 31,739 | 135,497 | 121,498 | |||||||||||||
Total operating expenses | 94,891 | 88,252 | 370,180 | 335,172 | |||||||||||||
Operating Income | 72,763 | 71,682 | 285,175 | 285,110 | |||||||||||||
Other Income/Expense | |||||||||||||||||
Interest and other | 2,255 | 1,772 | 6,590 | 7,568 | |||||||||||||
Interest | (32,119 | ) | (31,127 | ) | (123,352 | ) | (123,154 | ) | |||||||||
Total other income/expense | (29,864 | ) | (29,355 | ) | (116,762 | ) | (115,586 | ) | |||||||||
Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures | 42,899 | 42,327 | 168,413 | 169,524 | |||||||||||||
Gain on property dispositions, net of impairment | 777 | 155 | 496 | 447 | |||||||||||||
Income taxes | (441 | ) | (739 | ) | (1,820 | ) | (2,326 | ) | |||||||||
Minority interest | (4,168 | ) | (4,886 | ) | (17,617 | ) | (20,071 | ) | |||||||||
Equity in earnings of unconsolidated joint ventures | (102 | ) | 389 | (775 | ) | 1,744 | |||||||||||
Income from continuing operations | 38,965 | 37,246 | 148,697 | 149,318 | |||||||||||||
Discontinued operations net of minority interest (including net gain on property dispositions of $7,339 and $290 for the quarters ended December 31, 2004 and 2003 and $11,603 and $11,958 for the years ended December 31, 2004 and 2003) | 6,974 | 639 | 12,746 | 14,292 | |||||||||||||
Net Income | $ | 45,939 | $ | 37,885 | $ | 161,443 | $ | 163,610 | |||||||||
Basic income per common share | |||||||||||||||||
Continuing operations | $ | 0.46 | $ | 0.46 | $ | 1.76 | $ | 1.90 | |||||||||
Discontinued operations | $ | 0.08 | $ | 0.01 | $ | 0.15 | $ | 0.18 | |||||||||
Total basic income per common share | $ | 0.54 | $ | 0.47 | $ | 1.91 | $ | 2.08 | |||||||||
Diluted income per common share | |||||||||||||||||
Continuing operations | $ | 0.45 | $ | 0.45 | $ | 1.73 | $ | 1.87 | |||||||||
Discontinued operations | $ | 0.08 | $ | 0.01 | $ | 0.15 | $ | 0.18 | |||||||||
Total diluted income per common share | $ | 0.53 | $ | 0.46 | $ | 1.88 | $ | 2.05 | |||||||||
Weighted average shares | |||||||||||||||||
Basic | 85,349 | 80,461 | 84,534 | 78,575 | |||||||||||||
Diluted | 86,845 | 81,958 | 86,024 | 79,868 | |||||||||||||
Liberty Property Trust
Statement of Funds From Operations
December 31, 2004
(Unaudited and in thousands, except per share amounts)
Quarter Ended | Year Ended | |||||||||||||||||||||||||||||||
December 31, 2004 | December 31, 2003 | December 31, 2004 | December 31, 2003 | |||||||||||||||||||||||||||||
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 | $ | 45,939 | $ | 0.54 | $ | 37,885 | $ | 0.47 | $ | 161,443 | $ | 1.91 | $ | 163,610 | $ | 2.08 | ||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||
Depreciation and amortization of unconsolidated joint ventures | 555 | 168 | 2,566 | 663 | ||||||||||||||||||||||||||||
Depreciation and amortization | 34,784 | 31,418 | 133,682 | 120,826 | ||||||||||||||||||||||||||||
Gain on property dispositions | (9,519 | ) | (445 | ) | (13,502 | ) | (11,822 | ) | ||||||||||||||||||||||||
Minority interest share in addback for depreciation and amortization, and gain on property dispositions | (1,061 | ) | (1,327 | ) | (3,788 | ) | (4,858 | ) | ||||||||||||||||||||||||
Funds from operations available to common shareholders - basic | $ | 70,698 | $ | 0.83 | $ | 67,699 | $ | 0.84 | $ | 280,401 | $ | 3.32 | $ | 268,419 | $ | 3.42 | ||||||||||||||||
Reconciliation of net income to FFO - diluted: | ||||||||||||||||||||||||||||||||
Diluted - income available to common shareholders | $ | 45,939 | $ | 0.53 | $ | 37,885 | $ | 0.46 | $ | 161,443 | $ | 1.88 | $ | 163,610 | $ | 2.05 | ||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||
Depreciation and amortization of unconsolidated joint ventures | 555 | 168 | 2,566 | 663 | ||||||||||||||||||||||||||||
Depreciation and amortization | 34,784 | 31,418 | 133,682 | 120,826 | ||||||||||||||||||||||||||||
Gain on property dispositions | (9,519 | ) | (445 | ) | (13,502 | ) | (11,822 | ) | ||||||||||||||||||||||||
Minority interest excluding preferred unit distributions | 1,962 | 1,691 | 6,955 | 7,644 | ||||||||||||||||||||||||||||
Funds from operations available to common shareholders - diluted | $ | 73,721 | $ | 0.81 | $ | 70,717 | $ | 0.83 | $ | 291,144 | $ | 3.25 | $ | 280,921 | $ | 3.36 | ||||||||||||||||
Reconciliation of weighted average shares: | ||||||||||||||||||||||||||||||||
Weighted average common shares - all basic calculations | 85,349 | 80,461 | 84,534 | 78,575 | ||||||||||||||||||||||||||||
Dilutive shares for long term compensation plans | 1,496 | 1,497 | 1,490 | 1,293 | ||||||||||||||||||||||||||||
Diluted shares for net income calculations | 86,845 | 81,958 | 86,024 | 79,868 | ||||||||||||||||||||||||||||
Weighted average common units | 3,668 | 3,698 | 3,676 | 3,693 | ||||||||||||||||||||||||||||
Diluted shares for funds from operations calculations | 90,513 | 85,656 | 89,700 | 83,561 | ||||||||||||||||||||||||||||
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
December 31, 2004
(In thousands, except share amounts)
December 31, 2004 | December 31, 2003 | |||||||
Assets | ||||||||
Real estate: | ||||||||
Land and land improvements | $ | 625,035 | $ | 564,332 | ||||
Building and improvements | 3,629,508 | 3,359,996 | ||||||
Less: accumulated depreciation | (695,410 | ) | (586,736 | ) | ||||
Operating real estate | 3,559,133 | 3,337,592 | ||||||
Development in progress | 81,099 | 56,869 | ||||||
Land held for development | 171,122 | 162,483 | ||||||
Net real estate | 3,811,354 | 3,556,944 | ||||||
Cash and cash equivalents | 33,667 | 21,809 | ||||||
Restricted cash | 34,626 | 15,292 | ||||||
Accounts receivable | 21,502 | 13,053 | ||||||
Deferred rent receivable | 66,528 | 58,015 | ||||||
Deferred financing and leasing costs, net of accumulated amortization (2004, $91,117; 2003, $90,098) | 107,148 | 98,506 | ||||||
Investment in unconsolidated joint ventures | 24,372 | 19,631 | ||||||
Prepaid expenses and other assets | 63,630 | 49,303 | ||||||
Total assets | $ | 4,162,827 | $ | 3,832,553 | ||||
Liabilities | ||||||||
Mortgage loans | $ | 366,171 | $ | 363,866 | ||||
Unsecured notes | 1,455,000 | 1,355,000 | ||||||
Credit facility | 312,000 | 167,000 | ||||||
Accounts payable | 24,288 | 15,429 | ||||||
Accrued interest | 34,994 | 32,828 | ||||||
Dividend payable | 54,485 | 52,384 | ||||||
Other liabilities | 111,764 | 93,482 | ||||||
Total liabilities | 2,358,702 | 2,079,989 | ||||||
Minority interest | 207,866 | 207,667 | ||||||
Shareholders’ Equity | ||||||||
Common shares of beneficial interest, $.001 par value, 191,200,000 shares authorized, 85,734,136 (includes 59,100 in treasury) and 83,071,491 (includes 59,100 in treasury) shares issued and outstanding as of December 31, 2004 and 2003, respectively | 86 | 83 | ||||||
Additional paid-in capital | 1,708,573 | 1,623,446 | ||||||
Accumulated other comprehensive income | 25,105 | 14,710 | ||||||
Unearned compensation | (6,846 | ) | (3,497 | ) | ||||
Distributions in excess of net income | (129,332 | ) | (88,518 | ) | ||||
Common shares in treasury, at cost, 59,100 shares as of December 31, 2004 and 2003 | (1,327 | ) | (1,327 | ) | ||||
Total shareholders’ equity | 1,596,259 | 1,544,897 | ||||||
Total liabilities & shareholders’ equity | $ | 4,162,827 | $ | 3,832,553 | ||||