EX-99 2 w41282exv99.htm PRESS RELEASE exv99
 

Exhibit 99
(LIBERTY PROPERTY TRUST)
         
For Immediate Release
  Inquiries:   Jeanne A. Leonard
 
      Liberty Property Trust
 
      610/648-1704
LIBERTY PROPERTY TRUST ANNOUNCES
THIRD QUARTER RESULTS
Malvern, PA, October 22, 2007— Liberty Property Trust (NYSE:LRY) reported that net income per common share (diluted) was $0.41 for the quarter ended September 30, 2007, compared to $0.52 per share for the quarter ended September 30, 2006. For the nine-month period ended September 30, 2007, net income per common share (diluted) was $1.41, compared to $2.28 per share for the same period in 2006.
Funds from operations available to common shareholders (diluted) (“FFO”) for the third quarter of 2007 was $0.80 per share, compared to $0.79 per share for the third quarter of 2006. Operating results for the third quarter of 2007 include lease termination fees of $1.9 million or approximately $0.02 per share. FFO per share for the nine-month period ended September 30, 2007 was $2.39, compared to $2.36 per share for the same period in 2006. A reconciliation of GAAP net income to FFO is included in the financial tables accompanying this press release.
“Liberty’s significant activity in the last 120 days is reflective of the conclusion of our three-year portfolio repositioning effort,” said Bill Hankowsky, Liberty’s chief executive officer. “We established an outstanding growth platform in the Washington and Northern Virginia markets, continued our expansion in Phoenix and Chicago, and increased our platform in the United Kingdom through a joint venture with excellent future growth prospects. Our exit of the Detroit market is proceeding according to plan. We’ve had strong performance on the leasing and development fronts, we raised the dividend for the 12th straight year, and in an unsettled credit environment, our outstanding execution on the capital front is indicative of our strong financial position.”
Portfolio Performance
Leasing: At September 30, 2007 Liberty’s in-service portfolio of 70.2 million square feet was 92.9% occupied, compared to 91.1% at the end of the second quarter of 2007.
Same Store Performance: Property level operating income for same store properties increased by 1.3% on a cash basis and by 0.5% on a straight line basis for the third quarter of 2007 compared to the same quarter in 2006. Same store results for the third quarter of 2006 reflected the positive impact of a $2 million bankruptcy settlement.
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Liberty Property Trust Third Quarter 2007 Earnings -2-
Real Estate Investments
Development: During the third quarter, Liberty brought into service four development properties for a total investment of $73.0 million. These properties, which contain 878,000 square feet of leaseable space, were 79.5% occupied as of September 30, 2007. Additionally, 351,000 square feet of the 1.25 million square foot Comcast Center development came into service during the third quarter. The current yield on these investments is 7.4% and the projected stabilized yield is 8.2%.
During the third quarter, Liberty began development of five properties totaling 1.3 million square feet, with an expected total investment of $87.8 million. The properties consist of a 100% pre-leased, 149,000 square foot distribution building and a 59% pre-leased, 78,000 square foot office building, both in Richmond; a 73,000 square foot office building in Chesapeake, VA; a 64,000 square foot distribution center in Houston; and a 920,000 square foot distribution center in the Lehigh Valley, PA.
As of September 30, 2007, Liberty had 5.9 million square feet of wholly-owned and joint venture properties under development. This activity represents a total investment of $822.6 million, with an expected yield of 8.7%. The properties were 41.0% leased at quarter-end.
Acquisitions: During the third quarter, Liberty acquired five properties totaling 428,000 square feet at Allred Cotton Center in Phoenix. These properties are 92.9% leased and have a current yield of 6.9% on a total investment of $88.9 million. A joint venture in which the company holds a 25% interest acquired two distribution buildings in Aurora, IL and Pleasant Prairie, WI. The properties total 745,000 square feet and are 100% leased. In addition, a newly-formed joint venture in which Liberty holds a 20% interest acquired Blythe Valley Park near Birmingham, UK for $325 million. The park consists of 491,000 square feet of existing office space and 98 acres of developable land with planning consent for development of an additional 1.6 million square feet.
Dispositions: During the third quarter, Liberty sold eight properties containing 1.1 million square feet, and two acres of land, for $94.6 million.
Financing and Balance Sheet Management
During the quarter, Liberty satisfied a $100 million 7.25% senior unsecured note and issued a $300 million ten year, 6.625% senior unsecured note.
Also during the quarter, Liberty raised $100 million through the placement of 7.40% Series H Cumulative Redeemable Preferred Units.
On June 25, 2007, Liberty initiated a $50 million accelerated share repurchase program. Under this program, the company repurchased 1.2 million shares between the dates of June 27 and August 20.
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Liberty Property Trust Third Quarter 2007 Earnings -3-
During the quarter Liberty raised the quarterly dividend from $0.62 per share to $0.625 per share.
Subsequent Events
On October 4, Liberty completed its purchase of Republic Property Trust. The acquisition of Republic was completed through the merger of Republic with a wholly owned subsidiary of Liberty and the merger of Republic’s operating partnership with Liberty’s operating partnership. In the mergers, each of the former common shares of Republic and partnership units of its operating partnership was converted into the right to receive $14.70 in cash, without interest.
Concurrently, Liberty formed a joint venture with New York State Common Retirement Fund to own and manage the Republic portfolio. The joint venture, in which Liberty holds a 25% interest, is originally valued at $900 million, and is expected to grow to approximately $2.2 billion through the acquisition and development of additional properties in the Washington, DC and Northern Virginia markets.
The cost of the Republic transaction to Liberty, including the merger consideration and related transaction expenses, is expected to exceed the purchase price of $900 million that the joint venture paid for the Republic properties by $20-$25 million, which Liberty expects to recognize as a one-time charge to net income and funds from operations in the fourth quarter of 2007.
Earnings Outlook
Liberty expects to report funds from operations for 2007 in the range of $2.90-$2.97 per share (including the above-referenced impairment due to the Republic transaction), and for 2008 in the range of $3.10-$3.25 per share. A reconciliation of FFO to GAAP net income for both 2007 and 2008 is below:
                                 
    2007 Range     2008 Range  
    Low     High     Low     High  
Projected net income per share
   $ 1.58     $ 1.66     $ 1.86     $ 1.99  
Depreciation and amortization of unconsolidated joint ventures
     0.06       0.06       0.10       0.12  
Depreciation and amortization
     1.65       1.67       1.60       1.70  
Gain on property dispositions
     (0.33 )     (0.36 )     (0.40 )     (0.50 )
Minority interest share of addbacks
     (0.06 )     (0.06 )     (0.06 )     (0.06 )
 
                                
 
                        
 
                                
Projected funds from operations per share
   $ 2.90     $ 2.97     $ 3.10     $ 3.25  
Commenting on this guidance, Bill Hankowsky said: “Looking forward to 2008, while we continue to be pleased with the performance of our portfolio and our positioning, it is clear that the economic picture is unsettled. Therefore, we are basing our guidance for 2008 on an assumption of modest growth in the overall economy.”
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Liberty Property Trust Third Quarter 2007 Earnings -4-
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 70 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 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.
Liberty will host a conference call during which management will discuss third quarter results, on Tuesday, October 23, 2007, at 1:00 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: 19660622. The call can also be accessed via the Internet on the Investors page of Liberty’s web site at www.libertyproperty.com for two weeks 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
September 30, 2007
(Unaudited and in thousands, except per share amounts)
                                 
    Quarter Ended     Year to Date  
    September 30, 2007     September 30, 2006     September 30, 2007     September 30, 2006  
Operating Revenue
                                
Rental
   $ 124,698     $ 108,800     $ 357,605     $ 322,721  
Operating expense reimbursement
     53,127       46,942       155,386       134,664  
 
                        
Total operating revenue
     177,825       155,742       512,991       457,385  
 
                        
 
                                
Operating Expenses
                                
Rental property
     36,813       30,726       108,294       91,378  
Real estate taxes
     19,627       16,292       54,459       48,183  
General and administrative
     13,144       12,016       38,872       33,579  
Depreciation and amortization
     40,720       34,330       114,566       100,276  
 
                        
Total operating expenses
     110,304       93,364       316,191       273,416  
 
                        
 
                                
Operating Income
     67,521       62,378       196,800       183,969  
 
                                
Other Income/Expense
                                
Interest and other
     2,536       2,945       8,125       6,497  
Interest
     (33,521 )     (28,380 )     (89,882 )     (83,502 )
 
                        
Total other income/expense
     (30,985 )     (25,435 )     (81,757 )     (77,005 )
 
                        
Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures
     36,536       36,943       115,043       106,964  
Gain (loss) on property dispositions
     190       (104 )     1,641       17,257  
Income taxes
     1,022       625       508       15  
Minority interest
     (5,703 )     (4,935 )     (17,244 )     (14,957 )
Equity in (loss) earnings of unconsolidated joint ventures
     (29 )     334       1,026       1,250  
 
                        
 
                                
Income from continuing operations
     32,016       32,863       100,974       110,529  
 
                                
Discontinued operations net of minority interest (including net gain on property dispositions of $4,145 and $11,386 for the quarters ended September 30, 2007 and 2006 and $24,376 and $87,588 for the nine month periods ended September 30, 2007 and 2006)
     5,158       14,022       28,325       95,233  
 
                        
Net Income
   $ 37,174     $ 46,885     $ 129,299     $ 205,762  
 
                        
 
                                
Basic income per common share
                                
Continuing operations
   $ 0.35     $ 0.36     $ 1.11     $ 1.24  
 
                        
Discontinued operations
   $ 0.06     $ 0.16     $ 0.31     $ 1.07  
 
                        
Total basic income per common share
   $ 0.41     $ 0.52     $ 1.42     $ 2.31  
 
                        
 
                                
Diluted income per common share
                                
Continuing operations
   $ 0.35     $ 0.36     $ 1.10     $ 1.22  
 
                        
Discontinued operations
   $ 0.06     $ 0.16     $ 0.31     $ 1.06  
 
                        
Total diluted income per common share
   $ 0.41     $ 0.52     $ 1.41     $ 2.28  
 
                        
 
                                
Weighted average shares
                                
Basic
     90,905       89,675       91,179       88,923  
 
                        
Diluted
     91,367       90,808       91,905       90,184  
 
                        

 

 

Liberty Property Trust
Statement of Funds From Operations
September 30, 2007
(Unaudited and in thousands, except per share amounts)
                                                                 
    Quarter Ended   Year to Date
    September 30, 2007   September 30, 2006   September 30, 2007   September 30, 2006
            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
   $ 37,174     $ 0.41     $ 46,885     $ 0.52     $ 129,299     $ 1.42     $ 205,762     $ 2.31  
 
                                                                
 
Adjustments:
                                                                
Depreciation and amortization of unconsolidated joint ventures
     1,134               792               2,819               2,108          
Depreciation and amortization
     41,715               37,404               118,704               111,804          
Gain on property dispositions
     (5,302 )             (12,192 )             (27,238 )             (106,487 )        
Minority interest share in addback for depreciation and amortization and gain on property dispositions
     (1,648 )             (1,160 )             (4,132 )             (479 )        
                 
Funds from operations available to common shareholders — basic
   $ 73,073     $ 0.80     $ 71,729     $ 0.80     $ 219,452     $ 2.41     $ 212,708     $ 2.39  
                 
 
Reconciliation of net income to FFO — diluted:
                                                                
Diluted — income available to common shareholders
   $ 37,174     $ 0.41     $ 46,885     $ 0.52     $ 129,299     $ 1.41     $ 205,762     $ 2.28  
 
                                                                
 
Adjustments:
                                                                
Depreciation and amortization of unconsolidated joint ventures
     1,134               792               2,819               2,108          
Depreciation and amortization
     41,715               37,404               118,704               111,804          
Gain on property dispositions
     (5,302 )             (12,192 )             (27,238 )             (106,487 )        
Minority interest excluding preferred unit distributions and excess of preferred unit redemption over carrying amount
     1,705               2,189               5,927               8,981          
                 
Funds from operations available to common shareholders — diluted
   $ 76,426     $ 0.80     $ 75,078     $ 0.79     $ 229,511     $ 2.39     $ 222,168     $ 2.36  
                 
 
Reconciliation of weighted average shares:
                                                                
Weighted average common shares — all basic calculations
     90,905               89,675               91,179               88,923          
Dilutive shares for long term compensation plans
     462               1,133               726               1,261          
 
                                                                
Diluted shares for net income calculations
     91,367               90,808               91,905               90,184          
Weighted average common units
     4,190               4,202               4,190               3,794          
 
                                                                
Diluted shares for funds from operations calculations
     95,557               95,010               96,095               93,978          
 
                                                                

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
September 30, 2007
(In thousands, except share amounts)
                 
    September 30, 2007     December 31, 2006  
Assets   (Unaudited)          
               
Real estate:
                
Land and land improvements
   $ 751,765     $ 666,588  
Building and improvements
     4,114,484       3,735,583  
Less: accumulated depreciation
     (834,385 )     (786,778 )
 
            
 
                
Operating real estate
     4,031,864       3,615,393  
 
                
Development in progress
     572,606       538,521  
Land held for development
     246,870       195,332  
 
            
 
                
Net real estate
     4,851,340       4,349,246  
 
                
Cash and cash equivalents
     36,031       53,737  
Restricted cash
     31,200       55,671  
Accounts receivable
     26,708       23,809  
Deferred rent receivable
     73,010       71,894  
Deferred financing and leasing costs, net of accumulated amortization (2007, $115,802; 2006, $100,406)
     144,549       127,902  
Investment in unconsolidated joint ventures
     77,666       54,723  
Assets held for sale
     60,033       113,150  
Prepaid expenses and other assets
     83,518       60,779  
 
            
Total assets
   $ 5,384,055     $ 4,910,911  
 
            
 
                
Liabilities
                
Mortgage loans
   $ 231,986     $ 185,978  
Unsecured notes
     2,155,000       1,955,000  
Credit facility
     372,960       246,960  
Accounts payable
     68,604       40,633  
Accrued interest
     29,823       36,297  
Dividend and distributions payable
     59,592       58,961  
Other liabilities
     249,019       217,751  
 
            
 
                
Total liabilities
     3,166,984       2,741,580  
 
            
Minority interest
     373,145       297,727  
 
                
Shareholders’ Equity
                
Common shares of beneficial interest, $.001 par value, 187,987,000 shares authorized, 92,407,112 (includes 1,249,909 in treasury) and 90,972,979 (includes 59,100 in treasury) shares issued and outstanding as of September 30, 2007 and December 31, 2006, respectively
     92       91  
Additional paid-in capital
     1,966,419       1,906,403  
Accumulated other comprehensive income
     24,311       20,323  
Distributions in excess of net income
     (94,945 )     (53,886 )
Common shares in treasury, at cost, 1,249,909 and 59,100 shares as of September 30, 2007 and December 31, 2006, respectively
     (51,951 )     (1,327 )
 
            
Total shareholders’ equity
     1,843,926       1,871,604  
 
                
Total liabilities & shareholders’ equity
   $ 5,384,055     $ 4,910,911