![]() | Press Release |
For Immediate Release | Inquiries: | Jeanne A. Leonard | ||
July 24, 2006 | Liberty Property Trust | |||
610/648-1704 |
LIBERTY PROPERTY TRUST ANNOUNCES
SECOND QUARTER RESULTS
SECOND QUARTER RESULTS
Malvern, PA — Liberty Property Trust (NYSE:LRY) reported that net income per common share (diluted) was $0.76 per share for the quarter ended June 30, 2006, compared to $0.51 per share (diluted) for the quarter ended June 30, 2005. For the six-month period ended June 30, 2006, net income per common share (diluted) was $1.76, compared to $1.03 for the same period in 2005.
Funds from operations available to common shareholders (diluted) (“FFO”) for the second quarter of 2006 was $0.80 per share, compared to $0.84 per share for the second quarter of 2005. Operating results for the second quarter of 2006 included lease termination fees of $3.8 million, or approximately $0.04 per share diluted FFO. FFO per share for the six-month period ended June 30, 2006 was $1.57 per share compared to $1.65 for the same period in 2005. A reconciliation of GAAP net income to FFO is included in the financial tables accompanying this press release.
“We are very pleased with our results across all fronts during the second quarter,” said Bill Hankowsky, Liberty’s chairman and chief executive officer. “Our teams leased more than six million square feet of space, resulting in a significant occupancy increase. Rents on new and renewal leases signed in the quarter increased over previous rents, consistent with the growing strength we are seeing in most of our markets. We continue to increase the value of our development pipeline, which is generating new product at returns approaching double-digits. We also continued to sell properties into a strong market, reaping meaningful gains while capitalizing on the opportunity to upgrade and reposition our portfolio. And finally, we executed two major recapitalization transactions of Comcast Center and of Liberty’s Chicago portfolio.”
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LRY Second Quarter 2006 Results
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Real Estate Investments
Dispositions and Joint Venture Activity: During the second quarter, Liberty sold 14 operating properties containing 942,000 square feet for $101.7 million. The properties sold consist of seven flex buildings totaling 192,000 square feet in suburban Detroit; four office buildings totaling 263,000 square feet in Greensboro, North Carolina; one 65,000 square foot flex building in Mt. Laurel, New Jersey; and two office buildings totaling 421,000 square feet in Greenville, South Carolina.
The company also sold six operating properties totaling 2.1 million square feet and 104 acres of land to a newly-formed joint venture in which Liberty holds a 25% interest, for $125.0 million. These properties represent Liberty’s entire Chicago portfolio. New York State Common Retirement Fund holds the remaining 75% interest in the joint venture, called Liberty Illinois, LP.
In addition, Liberty Venture I, LLC, a joint venture of Liberty’s southern New Jersey industrial properties in which Liberty holds a 25% interest, sold two operating properties containing 143,000 square feet for $9.0 million.
During the quarter Liberty entered into a joint venture with a subsidiary of Commerzbank AG, selling an 80% interest in Comcast Center upon its completion and stabilization. The transaction values the property at $505 million, and in addition allocates approximately $10 million for closing costs and for future refurbishment costs. In connection with the transaction, the joint venture has obtained a $324 million forward loan commitment.
Development:During the second quarter, Liberty brought into service seven development properties totaling 566,000 square feet. At quarter-end the properties were 97.1% leased at a yield of 9.9% on the company’s investment of $77.3 million.
During the second quarter, Liberty began development of seven properties totaling 953,000 square feet, with an expected total investment of $145.2 million. The properties consist of a 450,000 square foot headquarters for GMAC Mortgage Corporation in Fort Washington, Pennsylvania; a 120,000 square foot office project 100% leased to Reed Technology and Information Services, Inc. in Horsham, Pennsylvania; a 168,000 square foot distribution building and a 76,000 square foot office project in Hampton Roads, Virginia; two flex buildings totaling 83,000 square feet in Tampa, Florida; and a 56,000 square foot office building in Eden Prairie, Minnesota.
In addition, Liberty Illinois, LP began construction on two distribution buildings totaling 796,000 square feet in Aurora, Illinois. The total investment in these projects, which are 26% pre-leased, is expected to be $39.8 million.
As of June 30, Liberty had 6.2 million square feet of wholly-owned and joint venture properties under development. This activity represents a total investment of $924.9 million, with an expected yield of 8.9%. The properties were 41.1% leased at quarter-end.
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LRY Second Quarter 2006 Results
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Acquisitions:During the second quarter, Liberty acquired 1100 Virginia Drive, also known as the Fort Washington Expo Center, in Fort Washington, Pennsylvania. The property is an 850,000 square foot building, of which 297,000 square feet is occupied by two tenants. Of the remaining square feet, a portion will be demolished, and 450,000 square feet will be redeveloped for the above-referenced headquarters for GMAC Mortgage Corporation. The 297,000 square feet remaining in operation represents a total investment of $27.6 million, and is yielding 10.2%.
Portfolio Performance
Leasing:At June 30, 2006, Liberty’s in-service portfolio of 63.6 million square feet was 92.8% occupied, compared to 91.6% at March 31, 2006 and 89.9% at June 30, 2005.
Same Store Performance:Property level operating income for same store properties increased by 1.0% on a cash basis and 0.3% on a straight line basis for the second quarter of 2006 compared to the same quarter in 2005. For the six-month period ended June 30, 2006, property level operating income increased 1.0% on a cash basis and 0.6% on a straight line basis compared to the same period in 2005.
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 64 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 Investor 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 610-648-1708, or by e-mail toeshoemaker@libertyproperty.com.
Liberty will host a conference call during which management will discuss second quarter results, on Tuesday, July 25, 2006, 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: 1792193. 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.
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LRY Second Quarter 2006 Results
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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
June 30, 2006
(Unaudited and in thousands, except per share amounts)
Statement of Operations
June 30, 2006
(Unaudited and in thousands, except per share amounts)
Quarter Ended | Year to Date | |||||||||||||||
June 30, 2006 | June 30, 2005 | June 30, 2006 | June 30, 2005 | |||||||||||||
Operating Revenue | ||||||||||||||||
Rental | $ | 119,519 | $ | 122,623 | $ | 235,096 | $ | 233,871 | ||||||||
Operating expense reimbursement | 49,446 | 45,168 | 99,113 | 91,200 | ||||||||||||
Total operating revenue | 168,965 | 167,791 | 334,209 | 325,071 | ||||||||||||
Operating Expenses | ||||||||||||||||
Rental property | 34,694 | 32,037 | 70,786 | 67,147 | ||||||||||||
Real estate taxes | 18,152 | 16,254 | 35,338 | 31,384 | ||||||||||||
General and administrative | 11,501 | 9,559 | 21,517 | 18,001 | ||||||||||||
Depreciation and amortization | 37,323 | 35,226 | 73,041 | 67,553 | ||||||||||||
Total operating expenses | 101,670 | 93,076 | 200,682 | 184,085 | ||||||||||||
Operating Income | 67,295 | 74,715 | 133,527 | 140,986 | ||||||||||||
Other Income/Expense | ||||||||||||||||
Interest and other | 2,222 | 2,616 | 4,418 | 4,745 | ||||||||||||
Interest | (29,628 | ) | (31,095 | ) | (60,449 | ) | (60,572 | ) | ||||||||
Total other income/expense | (27,406 | ) | (28,479 | ) | (56,031 | ) | (55,827 | ) | ||||||||
Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures | 39,889 | 46,236 | 77,496 | 85,159 | ||||||||||||
Gain/(loss) on property dispositions, including impairment | 17,438 | (4,524 | ) | 17,483 | (4,929 | ) | ||||||||||
Income taxes | (235 | ) | (911 | ) | (610 | ) | (1,445 | ) | ||||||||
Minority interest | (5,839 | ) | (4,995 | ) | (10,396 | ) | (9,118 | ) | ||||||||
Equity in earnings of unconsolidated joint ventures | 741 | 182 | 916 | 2,202 | ||||||||||||
Income from continuing operations | 51,994 | 35,988 | 84,889 | 71,869 | ||||||||||||
Discontinued operations net of minority interest (including net gain on property dispositions of $16,550 and $7,244 for the quarters ended June 30, 2006 and 2005 and $76,080 and $14,420 for the six month periods ended June 30, 2006 and 2005) | 16,456 | 8,569 | 73,988 | 18,289 | ||||||||||||
Net Income | $ | 68,450 | $ | 44,557 | $ | 158,877 | $ | 90,158 | ||||||||
Basic income per common share | ||||||||||||||||
Continuing operations | $ | 0.58 | $ | 0.41 | $ | 0.95 | $ | 0.83 | ||||||||
Discontinued operations | $ | 0.19 | $ | 0.10 | $ | 0.84 | $ | 0.21 | ||||||||
Total basic income per common share | $ | 0.77 | $ | 0.51 | $ | 1.79 | $ | 1.04 | ||||||||
Diluted income per common share | ||||||||||||||||
Continuing operations | $ | 0.58 | $ | 0.41 | $ | 0.94 | $ | 0.82 | ||||||||
Discontinued operations | $ | 0.18 | $ | 0.10 | $ | 0.82 | $ | 0.21 | ||||||||
Total diluted income per common share | $ | 0.76 | $ | 0.51 | $ | 1.76 | $ | 1.03 | ||||||||
Weighted average shares | ||||||||||||||||
Basic | 88,934 | 86,685 | 88,587 | 86,278 | ||||||||||||
Diluted | 90,324 | 88,134 | 90,101 | 87,716 | ||||||||||||
Liberty Property Trust
Statement of Funds From Operations
June 30, 2006
(Unaudited and in thousands, except per share amounts)
Statement of Funds From Operations
June 30, 2006
(Unaudited and in thousands, except per share amounts)
Quarter Ended | Year to Date | |||||||||||||||||||||||||||||||
June 30, 2006 | June 30, 2005 | June 30, 2006 | June 30, 2005 | |||||||||||||||||||||||||||||
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 | $ | 68,450 | $ | 0.77 | $ | 44,557 | $ | 0.51 | $ | 158,877 | $ | 1.79 | $ | 90,158 | $ | 1.04 | ||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||
Depreciation and amortization of unconsolidated joint ventures | 763 | 286 | 1,316 | 652 | ||||||||||||||||||||||||||||
Depreciation and amortization | 37,809 | 37,085 | 74,400 | 71,783 | ||||||||||||||||||||||||||||
Gain on property dispositions | (34,649 | ) | (6,740 | ) | (94,295 | ) | (15,607 | ) | ||||||||||||||||||||||||
Minority interest share in addback for depreciation and amortization and gain on property dispositions | (176 | ) | (1,185 | ) | 681 | (2,211 | ) | |||||||||||||||||||||||||
Funds from operations available to common shareholders — basic | $ | 72,197 | $ | 0.81 | $ | 74,003 | $ | 0.85 | $ | 140,979 | $ | 1.59 | $ | 144,775 | $ | 1.68 | ||||||||||||||||
Reconciliation of net income to FFO — diluted: | ||||||||||||||||||||||||||||||||
Diluted — income available to common shareholders | $ | 68,450 | $ | 0.76 | $ | 44,557 | $ | 0.51 | $ | 158,877 | $ | 1.76 | $ | 90,158 | $ | 1.03 | ||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||
Depreciation and amortization of unconsolidated joint ventures | 763 | 286 | 1,316 | 652 | ||||||||||||||||||||||||||||
Depreciation and amortization | 37,809 | 37,085 | 74,400 | 71,783 | ||||||||||||||||||||||||||||
Gain on property dispositions | (34,649 | ) | (6,740 | ) | (94,295 | ) | (15,607 | ) | ||||||||||||||||||||||||
Minority interest excluding preferred unit distributions and excess of preferred redemption over carrying amount | 3,210 | 1,797 | 6,792 | 3,652 | ||||||||||||||||||||||||||||
Funds from operations available to common shareholders — diluted | $ | 75,583 | $ | 0.80 | $ | 76,985 | $ | 0.84 | $ | 147,090 | $ | 1.57 | $ | 150,638 | $ | 1.65 | ||||||||||||||||
Reconciliation of weighted average shares: | ||||||||||||||||||||||||||||||||
Weighted average common shares — all basic calculations | 88,934 | 86,685 | 88,587 | 86,278 | ||||||||||||||||||||||||||||
Dilutive shares for long term compensation plans | 1,390 | 1,449 | 1,514 | 1,438 | ||||||||||||||||||||||||||||
Diluted shares for net income calculations | 90,324 | 88,134 | 90,101 | 87,716 | ||||||||||||||||||||||||||||
Weighted average common units | 3,653 | 3,517 | 3,586 | 3,592 | ||||||||||||||||||||||||||||
Diluted shares for funds from operations calculations | 93,977 | 91,651 | 93,687 | 91,308 | ||||||||||||||||||||||||||||
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
June 30, 2006
(In thousands, except share amounts)
Balance Sheet
June 30, 2006
(In thousands, except share amounts)
June 30, 2006 | December 31, 2005 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Real estate: | ||||||||
Land and land improvements | $ | 636,896 | $ | 627,914 | ||||
Building and improvements | 3,640,731 | 3,716,958 | ||||||
Less: accumulated depreciation | (767,632 | ) | (743,346 | ) | ||||
Operating real estate | 3,509,995 | 3,601,526 | ||||||
Development in progress | 405,921 | 324,924 | ||||||
Land held for development | 166,429 | 158,653 | ||||||
Net real estate | 4,082,345 | 4,085,103 | ||||||
Cash and cash equivalents | 37,762 | 61,629 | ||||||
Restricted cash | 17,728 | 29,085 | ||||||
Accounts receivable | 29,034 | 14,761 | ||||||
Deferred rent receivable | 69,787 | 72,818 | ||||||
Deferred financing and leasing costs, net of accumulated amortization (2006, $116,701; 2005, $106,752) | 119,184 | 120,904 | ||||||
Investment in unconsolidated joint ventures | 44,663 | 33,522 | ||||||
Assets held for sale | 10,080 | 22,934 | ||||||
Prepaid expenses and other assets | 146,977 | 56,773 | ||||||
Total assets | $ | 4,557,560 | $ | 4,497,529 | ||||
Liabilities | ||||||||
Mortgage loans | $ | 210,057 | $ | 238,728 | ||||
Unsecured notes | 1,755,000 | 1,755,000 | ||||||
Credit facility | 214,480 | 255,450 | ||||||
Accounts payable | 37,695 | 32,919 | ||||||
Accrued interest | 35,312 | 34,892 | ||||||
Dividend payable | 57,313 | 56,490 | ||||||
Other liabilities | 154,566 | 161,735 | ||||||
Total liabilities | 2,464,423 | 2,535,214 | ||||||
Minority interest | 270,601 | 253,133 | ||||||
Shareholders’ Equity | ||||||||
Common shares of beneficial interest, $.001 par value, 191,200,000 shares authorized, 89,610,011 (includes 59,100 in treasury) and 88,415,764 (includes 59,100 in treasury) shares issued and outstanding as of June 30, 2006 and December 31, 2005, respectively | 89 | 88 | ||||||
Additional paid-in capital | 1,857,672 | 1,799,068 | ||||||
Accumulated other comprehensive income | 15,458 | 9,906 | ||||||
Distributions in excess of net income | (49,356 | ) | (98,553 | ) | ||||
Common shares in treasury, at cost, 59,100 shares as of June 30, 2006 and December 31, 2005, respectively | (1,327 | ) | (1,327 | ) | ||||
Total shareholders’ equity | 1,822,536 | 1,709,182 | ||||||
Total liabilities & shareholders’ equity | $ | 4,557,560 | $ | 4,497,529 | ||||