[LIBERTY PROPERTY TRUST LOGO] Press Release
For Immediate Release Inquiries: Jeanne A. Leonard
February 9, 2004 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 $.46 per share for the quarter ended December 31,
2003, compared to $.43 per share (diluted) for the quarter ended December 31,
2002, and $2.05 per share (diluted) for the full year 2003 compared to $1.97 per
share (diluted) for 2002.
Funds from operations available to common shareholders (diluted) ("FFO") for the
fourth quarter of 2003 was $.83 per share, compared to $.77 per share for the
fourth quarter of 2002. For the year ended December 31, 2003, FFO per share was
$3.36, compared to $3.26 per share for 2002. 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 2003 include lease termination fees
of $1.8 million (approximately $.02 per share). Results for full year 2003
include lease termination fees of $14.1 million, or approximately $.17 per
share, compared with $8.4 million or $.10 per share of lease termination fees in
2002.
The 2002 results outlined above reflect the Securities and Exchange Commission's
July 31, 2003 clarification of certain issues surrounding FASB-EITF Topic D-42,
"The Effect on the Calculation of Earnings per Share for the Redemption or
Induced Conversion of Preferred Stock," which requires the excess of preferred
share redemption over carrying amount to be classified as a reduction in income
available to common shareholders. Liberty redeemed its Series A Preferred Shares
during the third quarter of 2002, and recorded the redemption in accordance with
GAAP at that time. The application of guidance has resulted in a $.05 decrease
in both net income per common share (diluted) and FFO per share from amounts
previously reported for the full year ended December 31, 2002.
In addition, on October 1, 2003, the National Association of Real Estate
Investment Trusts published new guidance requiring impairment write-downs to be
included in FFO. This clarification resulted in a decrease of $.06 per share in
FFO for the fourth quarter of 2002, and a decrease of $0.14 per share from
amounts previously reported for the full year ended December 31, 2002.
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LRY Fourth Quarter Results
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"In the fourth quarter our leasing productivity was excellent, we increased
occupancy, and were able to execute well on the acquisition and development
fronts," said Bill Hankowsky, chief executive officer. "We are very pleased with
these results, which complete a solid 2003 for Liberty in a tough environment.
We fully expect to be facing the same tough environment throughout 2004, as
space availability in the marketplace will more than offset any modest demand
gains, which will continue to depress rental rates."
REAL ESTATE INVESTMENTS
DEVELOPMENT: During the fourth quarter, Liberty brought into service one
development property totaling 262,000 square feet. The property is fully leased
and is currently yielding 10.2 percent. For the full year, Liberty brought into
service ten development properties totaling 1.3 million square feet. These
properties are currently yielding 9.5 percent and are expected to produce a
stabilized return of 10.7 percent on the company's $204.7 million investment.
During the quarter, Liberty commenced seven new development projects
representing a total investment of $59.9 million. These projects include a
16,000 square foot expansion for Viewpoint Studios in Greensboro, NC; a 58,000
square foot office for C.H. Robinson Worldwide in Eden Prairie, MN; a 28,000
square foot educational facility in Greenville, SC; an 80,000 square foot office
for Cendant Mortgage Corp. in Mount Laurel, NJ; and a 36,000 square foot
property in Liberty's Kings Hill project in West Malling, UK. Liberty also
commenced two distribution projects in the Lehigh Valley, PA: a 363,000 square
foot distribution facility for Uline, Inc., and another 347,000 square foot
distribution facility.
As of year end, Liberty had 1.5 million square feet under development,
representing a total investment of $132.4 million. These properties were 62.1
percent leased at December 31, 2003.
ACQUISITIONS: During the fourth quarter, Liberty acquired eleven properties for
$73.5 million. These properties, which contain 731,000 square feet, are 81.3
percent leased, with a current yield of 9.4 percent and a projected stabilized
yield of 10.7 percent.
Acquisitions for the full year totaled 16 properties containing 1.6 million
square feet, for $110.4 million. These properties are 88.5 percent leased at
year end, were currently yielding 9.0 percent, and are expected to produce a
stabilized yield of 10.4 percent.
DISPOSITIONS: During the fourth quarter, Liberty sold two properties containing
102,000 square feet, and 40 acres of land for $9.0 million. For the full year,
Liberty sold 10 operating properties, one development property and 138 acres of
land for $52.4 million.
PORTFOLIO PERFORMANCE
LEASING: At December 31, 2003, Liberty's in-service portfolio of 54 million
square feet was 91.8 percent occupied, up from September 30, 2003 occupancy of
91.2 percent, and from 90.7 percent at the end of 2002. During the year, Liberty
completed lease transactions totaling over 12.5 million square feet of space.
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LRY Fourth Quarter Results
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SAME STORE PERFORMANCE: Property level operating income for same store
properties increased by 0.2 percent on a cash basis and decreased by 0.4 percent
on a straight line basis for the fourth quarter of 2003 compared to the same
quarter in 2002, and decreased by 1.9 percent on a cash basis and 2.1 percent on
a straight line basis for the full year 2003 compared to 2002.
FINANCING AND BALANCE SHEET MANAGEMENT
During the fourth quarter of 2003, Liberty raised approximately $99.5 million
through an issuance of 2.7 million common shares.
During the first quarter of 2003, the company renewed its unsecured revolving
credit facility for three years. Capacity under the facility is $350 million
with an accordion feature to expand the facility to $450 million. Based on the
company's current ratings, borrowings under the facility are priced at LIBOR
plus 70 basis points versus 105 basis points for the expired credit facility.
DIVIDENDS
In the third quarter, Liberty increased its quarterly dividend by 0.8 percent,
from $0.60 to $0.605 per share. This equates to an annualized dividend of $2.42.
ADDITIONAL FINANCIAL ACTIVITIES
During the year, Liberty exercised its option to purchase Rouse Kent Limited,
the operation responsible for Liberty's Kings Hill development in the United
Kingdom, for nominal consideration. As a result of the purchase, Liberty's
assets and liabilities increased by approximately $60 million.
For the year ended December 31, 2003, general and administrative expenses
include a $1.9 million charge due to the accelerated vesting of restricted stock
and options due to the death of Liberty's former chairman and CEO, Willard G.
Rouse III.
ABOUT THE COMPANY
Liberty Property Trust (NYSE:LRY) is a leading real estate company dedicated to
enhancing people's lives through extraordinary work environments. Liberty's 54
million square foot portfolio of office and industrial properties offers
exceptional locations, flexible design, thoughtful amenities, superior service,
and state-of-the-art technology to the company's 2,000 tenants. Liberty
increases the value of this portfolio through expert property management,
marketing and development.
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LRY Fourth Quarter 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 at www.libertyproperty.com. The
fourth quarter supplemental package will be available on-line by 8:00 a.m. on
February 10, 2004. 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 to eshoemaker@libertyproperty.com.
Liberty will host a conference call during which management will discuss fourth
quarter results, on Tuesday, February 10, 2004, 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: 4860414. The call can also be
accessed live via the Internet on the Investor Relations page of Liberty's web
site at www.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
BALANCE SHEET
DECEMBER 31, 2003
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
DECEMBER 31, 2003 DECEMBER 31, 2002
----------------- -----------------
ASSETS
Real estate:
Land and land improvements $ 564,332 $ 504,808
Building and improvements 3,363,608 3,048,676
Less: accumulated depreciation (586,736) (485,206)
------------- -----------
Operating real estate 3,341,204 3,068,278
Development in progress 56,869 163,379
Land held for development 162,483 163,142
------------- -----------
Net real estate 3,560,556 3,394,799
Cash and cash equivalents 37,101 11,071
Accounts receivable 10,896 14,349
Deferred rent receivable 58,015 48,775
Deferred financing and leasing costs, net of accumulated
amortization (2003, $89,560; 2002, $75,833) 98,506 71,544
Investment in unconsolidated joint ventures 19,631 14,963
Prepaid expenses and other assets 49,303 71,560
------------- -----------
Total assets $ 3,834,008 $ 3,627,061
============= ===========
LIABILITIES
Mortgage loans $ 363,866 $ 315,263
Unsecured notes 1,355,000 1,418,924
Credit facility 167,000 132,000
Accounts payable 14,685 24,116
Accrued interest 31,622 32,571
Dividend payable 52,384 48,040
Other liabilities 96,887 93,277
------------- -----------
Total liabilities 2,081,444 2,064,191
------------- -----------
Minority interest 207,667 208,439
SHAREHOLDERS' EQUITY
Common shares of beneficial interest, $.001 par value, 191,200,000 shares
authorized, 83,071,491 (includes 59,100 in treasury) and 76,484,612 (includes
59,100 in treasury) shares issued and outstanding as of
December 31, 2003 and 2002, respectively 83 76
Additional paid-in capital 1,619,260 1,410,900
Accumulated other comprehensive income 14,710 2,842
Unearned compensation (3,497) (1,750)
Distributions in excess of net income (84,332) (56,310)
Common shares in treasury, at cost, 59,100 shares as of
December 31, 2003 and 2002 (1,327) (1,327)
------------- -----------
Total shareholders' equity 1,544,897 1,354,431
Total liabilities & shareholders' equity $ 3,834,008 $ 3,627,061
============= ===========
LIBERTY PROPERTY TRUST
STATEMENT OF OPERATIONS
DECEMBER 31, 2003
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
QUARTER ENDED YEAR ENDED
---------------------------- ----------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2003 2002 2003 2002
---- ---- ---- ----
(RESTATED)
OPERATING REVENUE
Rental $ 115,524 $ 107,897 $ 451,970 $ 432,411
Operating expense reimbursement 45,616 41,301 173,062 161,033
--------- --------- --------- ---------
Total operating revenue 161,140 149,198 625,032 593,444
--------- --------- --------- ---------
OPERATING EXPENSES
Rental property 33,481 30,072 124,327 112,092
Real estate taxes 15,621 15,312 62,131 59,828
General and administrative 7,653 5,494 28,402 21,907
Depreciation and amortization 32,024 28,240 122,602 109,661
--------- --------- --------- ---------
Total operating expenses 88,779 79,118 337,462 303,488
--------- --------- --------- ---------
Operating Income 72,361 70,080 287,570 289,956
OTHER INCOME/EXPENSE
Interest and other 1,726 2,789 7,388 8,509
Interest (31,362) (30,916) (123,907) (116,025)
--------- --------- --------- ---------
Total other income/expense (29,636) (28,127) (116,519) (107,516)
--------- --------- --------- ---------
Income before property dispositions, income
taxes, minority interest
and income from investments in
unconsolidated joint ventures 42,725 41,953 171,051 182,440
Gain (loss) on property dispositions 155 (5,128) 447 (9,300)
Income taxes (739) (194) (2,326) (656)
Minority interest (4,903) (4,675) (20,138) (20,197)
Equity in earnings of unconsolidated joint ventures 389 255 1,744 255
--------- --------- --------- ---------
Income from continuing operations 37,627 32,211 150,778 152,542
Discontinued operations net of minority interest
(including net gain on property dispositions of
$290 and $762 for the quarters ended December 31,
2003 and 2002, and $11,958 and $6,959 for the
years ended December 31, 2003 and 2002 258 1,110 12,832 9,123
--------- --------- --------- ---------
Net income 37,885 33,321 163,610 161,665
Preferred share distributions -- -- -- (7,242)
Excess of preferred share redemption over
carrying amount -- -- -- (4,186)
--------- --------- --------- ---------
INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 37,885 $ 33,321 $ 163,610 $ 150,237
========= ========= ========= =========
BASIC INCOME PER COMMON SHARE
Continuing operations $ 0.47 $ 0.43 $ 1.92 $ 1.88
========= ========= ========= =========
Discontinued operations $ 0.00 $ 0.01 $ 0.16 $ 0.12
========= ========= ========= =========
TOTAL BASIC INCOME PER COMMON SHARE $ 0.47 $ 0.44 $ 2.08 $ 2.00
========= ========= ========= =========
DILUTED INCOME PER COMMON SHARE
Continuing operations $ 0.46 $ 0.42 $ 1.89 $ 1.85
========= ========= ========= =========
Discontinued operations $ 0.00 $ 0.01 $ 0.16 $ 0.12
========= ========= ========= =========
TOTAL DILUTED INCOME PER COMMON SHARE $ 0.46 $ 0.43 $ 2.05 $ 1.97
========= ========= ========= =========
WEIGHTED AVERAGE SHARES
Basic 80,461 76,163 78,575 75,041
========= ========= ========= =========
Diluted 81,958 77,164 79,868 76,272
========= ========= ========= =========
LIBERTY PROPERTY TRUST
STATEMENT OF FUNDS FROM OPERATIONS
DECEMBER 31, 2003
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
QUARTER ENDED YEAR ENDED
----------------------------------------- -------------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2003 2002 2003 2002
------------------- ------------------ ------------------- -----------------
PER PER PER PER
WEIGHTED WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE AVERAGE
DOLLARS SHARE DOLLARS SHARE DOLLARS SHARE DOLLARS SHARE
------- ----- ------- ----- ------- ----- ------- -----
(RESTATED) (RESTATED)
RECONCILIATION OF NET INCOME TO FFO - BASIC:
NET INCOME $ 37,885 $ 33,321 $ 163,610 $ 161,665
Preferred share distributions - - - (7,242)
Excess of preferred share redemption over
carrying amount - - - (4,186)
---------- --------- ---------- ---------
BASIC - INCOME AVAILABLE TO COMMON SHAREHOLDERS 37,885 $ 0.47 33,321 $ 0.44 163,610 $2.08 150,237 $2.00
====== ======= ===== =====
Adjustments:
Depreciation and amortization of unconsolidated
joint ventures 168 83 663 83
Depreciation and amortization 31,418 27,912 120,826 109,063
Impairment loss - (5,264) - (11,281)
(Gain) loss on property dispositions (445) 4,366 (11,822) 4,845
Minority interest share in addback for
depreciation and amortization,
(gain) loss on property dispositions, and loss
on impairment (1,327) (1,260) (4,858) (4,930)
---------- --------- ---------- ---------
FUNDS FROM OPERATIONS AVAILABLE TO COMMON
SHAREHOLDERS - BASIC $ 67,699 $ 0.84 $ 59,158 $ 0.78 $ 268,419 $3.42 $ 248,017 $3.31
========== ====== ========= ======= ========== ===== ========= =====
RECONCILIATION OF NET INCOME TO FFO - DILUTED:
NET INCOME $ 37,885 $ 33,321 $ 163,610 $ 161,665
Preferred share distributions - - - (7,242)
Excess of preferred share redemption over
carrying amount - - - (4,186)
---------- --------- ---------- ---------
DILUTED - INCOME AVAILABLE TO COMMON
SHAREHOLDERS 37,885 $ 0.46 33,321 $ 0.43 163,610 $2.05 150,237 $1.97
====== ======= ===== =====
Adjustments:
Depreciation and amortization of unconsolidated
joint ventures 168 83 663 83
Depreciation and amortization 31,418 27,912 120,826 109,063
Impairment loss - (5,264) - (11,281)
(Gain) loss on property dispositions (445) 4,366 (11,822) 4,845
Minority interest excluding preferred share
distributions 1,691 1,625 7,644 7,803
---------- --------- ---------- ---------
FUNDS FROM OPERATIONS AVAILABLE TO COMMON
SHAREHOLDERS - DILUTED $ 70,717 $ 0.83 $ 62,043 $ 0.77 $ 280,921 $3.36 $ 260,750 $3.26
========== ====== ========= ======= ========== ===== ========= =====
RECONCILIATION OF WEIGHTED AVERAGE SHARES:
Weighted average common shares - all basic
calculations 80,461 76,163 78,575 75,041
Dilutive shares for long term compensation plans 1,497 1,001 1,293 1,231
---------- --------- ---------- ---------
Diluted shares for net income calculations 81,958 77,164 79,868 76,272
Weighted average common units 3,698 3,724 3,693 3,824
---------- --------- ---------- ---------
Diluted shares for funds from operations
calculations 85,656 80,888 83,561 80,096
====== ====== ====== ======
Funds from operations 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 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 also does not represent
cash flows generated from operating, investing or financing activities as
defined by GAAP.
LIBERTY PROPERTY TRUST
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
DECEMBER 31, 2003
(IN THOUSANDS)
QUARTER ENDED YEAR ENDED
-------------------- ---------------------
DECEMBER 31, DECEMBER 31,
2003 2002 2003 2002
---- ---- ---- ----
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE:
Property level operating income - same store $94,907 $95,319 $377,578 $385,852
Property level operating income - properties purchased or developed
subsequent to January 1, 2002 15,340 8,244 46,918 27,283
Termination Fees 1,791 251 14,078 8,389
General and administrative expense 7,653 5,494 28,402 21,907
Depreciation and amortization expense 32,024 28,240 122,602 109,661
------- ------- -------- --------
OPERATING INCOME $72,361 $70,080 $287,570 $289,956
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