EX-99 2 w71212exv99.htm EX-99 exv99
Exhibit 99
     
(LIBERTY PROPERTY TRUST LOGO)  
Press Release
         
For Immediate Release
  Inquiries:   Jeanne A. Leonard
Liberty Property Trust
610/648-1704
LIBERTY PROPERTY TRUST ANNOUNCES
THIRD QUARTER RESULTS
Malvern, PA, October 20, 2008 — Liberty Property Trust (NYSE:LRY) reported that net income per common share (diluted) was $.41 per share for the quarter ended September 30, 2008 compared to $.41 per share for the quarter ended September 30, 2007. For the nine-month period ended September 30, 2008, net income per common share (diluted) was $1.08, compared to $1.41 per share for the same period in 2007. The primary difference between net income for the first nine months of 2007 and 2008 is attributable to a difference in gains on sales of property.
Funds from operations available to common shareholders (diluted) (“FFO”) for the third quarter of 2008 was $0.80 per share, compared to $0.80 per share for the third quarter of 2007. FFO per share for the nine month period ended September 30, 2008 was $2.41 per share, compared to $2.39 per share for the same period in 2007. A reconciliation of GAAP net income to FFO is included in the financial tables accompanying this press release.
“Office and industrial conditions continued to hold up this quarter in a very unusual economic and financial environment,” said Bill Hankowsky, chairman and chief executive officer. “In spite of the current challenged economic scene, our multi-product, multi-market, multi-tenant portfolio and our capital structure are appropriately positioned for relative outperformance in this difficult market.”
Portfolio Performance
Leasing: At September 30, 2008 Liberty’s in-service portfolio of 75.9 million square feet was 92.0% occupied, compared to 92.5% at the end of the second quarter. During the third quarter, Liberty completed lease transactions totaling 4.0 million square feet of space.
Same Store Performance: Property level operating income for same store properties increased by 0.1% on a cash basis and decreased by 1.2% on a straight line basis for the third quarter of 2008 compared to the same quarter in 2007, and remained flat on a cash basis and decreased by 0.9% on a straight line basis for the nine months ended September 30th compared to the same period in 2007.
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Liberty Property Trust Third Quarter 2008 Results -2-
Real Estate Investments
Development: During the third quarter, Liberty brought into service six wholly-owned development properties totaling one million square feet for a total investment of $62.0 million. These properties are 83.6% leased at a current yield of 7.1% and a projected stabilized yield of 8.7%. A joint venture in which Liberty holds a 50% interest brought into service two development properties for a total investment of $19.1 million. These properties, totaling 296,000 square feet, are located in Orlando, Florida, and were 78.2% leased as of September 30.
During the third quarter, Liberty began development of one property for an expected total investment of $46.3 million. This 211,000 square foot office building is located in Orlando, and is 50.8% pre-leased. In addition, a joint venture in which the company holds a 25% interest began construction of a 464,000 square foot industrial building in Aurora, IL.
As of September 30, 2008, Liberty had 5.0 million square feet of wholly-owned and joint venture properties under development. This activity represents a total projected investment of $599.8 million, with an expected yield of 8.0%. The properties were 21.4% leased at September 30.
Acquisitions: Liberty acquired a 107,000 square foot office property in Sunrise, FL during the quarter for $17.0 million. The property is 100% leased, with a current yield of 10.9%.
Dispositions: During the third quarter Liberty sold six operating properties, which contained 254,000 square feet of leasable space for $31.1 million.
Subsequent Events
On October 8, Liberty completed a public offering of 4,750,000 common shares, generating net proceeds to the company of $149.5 million. The proceeds from this offering were used to repay borrowings under the Company’s unsecured credit facility and for general corporate purposes.
Earnings Outlook
Liberty expects to report funds from operations for 2008 in the range of $3.14-$3.16 per share, and for 2009 in the range of $3.00-$3.20 per share. A reconciliation of FFO to GAAP net income for both 2008 and 2009 is below:
                                 
    2008 Range   2009 Range
    Low   High   Low   High
Projected net income per share
  $ 1.47     $ 1.49     $ 1.24     $ 1.44  
Depreciation and amortization of unconsolidated joint ventures
    0.18       0.18       0.16       0.18  
Depreciation and amortization
    1.85       1.89       1.78       1.81  
Gain on property dispositions
    (0.29 )     (0.32 )     (0.10 )     (0.15 )
Minority interest share of addbacks
    (0.07 )     (0.08 )     (0.08 )     (0.08 )
 
                               
Projected funds from operations per share
  $ 3.14     $ 3.16     $ 3.00     $ 3.20  

 


 

Liberty Property Trust Third Quarter 2008 Results -3-
Commenting on this guidance, “The current economic pressures coupled with the credit drought yield a very unclear picture for 2009,” said Bill Hankowsky. “Therefore we are basing our forward guidance on a set of assumptions that project the current difficult economic environment to prevail throughout 2009.”
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 76 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 21, 2008, 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: 67954423. 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, 2008
(Unaudited and in thousands, except per share amounts)
                                 
    Quarter Ended     Nine Months Ended  
    September 30, 2008     September 30, 2007     September 30, 2008     September 30, 2007  
Operating Revenue
                               
Rental
  $ 131,042     $ 122,864     $ 392,650     $ 352,262  
Operating expense reimbursement
    57,935       52,254       173,337       152,908  
 
                       
Total operating revenue
    188,977       175,118       565,987       505,170  
 
                       
 
                               
Operating Expenses
                               
Rental property
    38,468       36,121       114,717       106,433  
Real estate taxes
    22,305       19,299       66,615       53,494  
General and administrative
    13,145       13,142       40,178       38,866  
Depreciation and amortization
    44,695       40,146       132,021       112,897  
 
                       
Total operating expenses
    118,613       108,708       353,531       311,690  
 
                       
 
                               
Operating Income
    70,364       66,410       212,456       193,480  
 
                               
Other Income/Expense
                               
Interest and other
    3,333       2,443       9,459       8,105  
Interest
    (38,909 )     (33,043 )     (118,336 )     (88,641 )
 
                       
Total other income/expense
    (35,576 )     (30,600 )     (108,877 )     (80,536 )
 
                       
 
                               
Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures
    34,788       35,810       103,579       112,944  
Gain on property dispositions
    463       190       1,939       1,641  
Income taxes
    (308 )     1,022       (1,372 )     508  
Minority interest
    (6,947 )     (5,671 )     (19,948 )     (17,154 )
Equity in earnings of unconsolidated joint ventures
    470       (29 )     1,857       1,026  
 
                       
 
                               
Income from continuing operations
    28,466       31,322       86,055       98,965  
 
                               
Discontinued operations net of minority interest (including net gain on property dispositions of $10,232 and $4,145 for the quarters ended September 30, 2008 and 2007 and $13,635 and $24,376 for the nine month periods ended September 30, 2008 and 2007)
    10,088       5,852       14,089       30,334  
 
                       
Net Income
  $ 38,554     $ 37,174     $ 100,144     $ 129,299  
 
                       
 
                               
Basic income per common share
                               
Continuing operations
  $ 0.30     $ 0.35     $ 0.93     $ 1.09  
 
                       
Discontinued operations
  $ 0.11     $ 0.06     $ 0.15     $ 0.33  
 
                       
Total basic income per common share
  $ 0.41     $ 0.41     $ 1.08     $ 1.42  
 
                       
 
                               
Diluted income per common share
                               
Continuing operations
  $ 0.30     $ 0.35     $ 0.93     $ 1.08  
 
                       
Discontinued operations
  $ 0.11     $ 0.06     $ 0.15     $ 0.33  
 
                       
Total diluted income per common share
  $ 0.41     $ 0.41     $ 1.08     $ 1.41  
 
                       
 
                               
Weighted average shares
                               
Basic
    92,928       90,905       92,324       91,179  
 
                       
Diluted
    93,369       91,367       92,626       91,905  
 
                       

 


 

Liberty Property Trust
Statement of Funds From Operations
September 30, 2008
(Unaudited and in thousands, except per share amounts)
                                                                 
    Quarter Ended     Nine Months Ended  
    September 30, 2008     September 30, 2007     September 30, 2008     September 30, 2007  
            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
  $ 38,554     $ 0.41     $ 37,174     $ 0.41     $ 100,144     $ 1.08     $ 129,299     $ 1.42  
 
                                                       
 
Adjustments:
                                                               
Depreciation and amortization of unconsolidated joint ventures
    4,331               1,134               12,208               2,819          
Depreciation and amortization
    44,173               41,715               130,803               118,704          
Gain on property dispositions
    (10,542 )             (5,302 )             (14,674 )             (27,238 )        
Minority interest share in addback for depreciation and amortization and gain on property dispositions
    (1,629 )             (1,648 )             (5,538 )             (4,132 )        
                 
Funds from operations available to common shareholders — basic
  $ 74,887     $ 0.81     $ 73,073     $ 0.80     $ 222,943     $ 2.41     $ 219,452     $ 2.41  
                 
 
                                                               
Reconciliation of net income to FFO - diluted:
                                                               
Diluted — income available to common shareholders
  $ 38,554     $ 0.41     $ 37,174     $ 0.41     $ 100,144     $ 1.08     $ 129,299     $ 1.41  
 
                                                       
 
                                                               
Adjustments:
                                                               
Depreciation and amortization of unconsolidated joint ventures
    4,331               1,134               12,208               2,819          
Depreciation and amortization
    44,173               41,715               130,803               118,704          
Gain on property dispositions
    (10,542 )             (5,302 )             (14,674 )             (27,238 )        
Minority interest excluding preferred unit distributions
    1,746               1,705               4,526               5,927          
                 
Funds from operations available to
common shareholders — diluted
  $ 78,262     $ 0.80     $ 76,426     $ 0.80     $ 233,007     $ 2.41     $ 229,511     $ 2.39  
                 
 
                                                               
Reconciliation of weighted average shares:
                                                               
Weighted average common shares — all basic calculations
    92,928               90,905               92,324               91,179          
Dilutive shares for long term compensation plans
    441               462               302               726          
 
                                                       
Diluted shares for net income calculations
    93,369               91,367               92,626               91,905          
Weighted average common units
    4,190               4,190               4,190               4,190          
 
                                                       
Diluted shares for funds from operations calculations
    97,559               95,557               96,816               96,095          
 
                                                       

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, 2008
(In thousands, except share amounts)
                 
    September 30, 2008     December 31, 2007  
    (Unaudited)          
Assets
               
Real estate:
               
Land and land improvements
  $ 805,797     $ 795,939  
Building and improvements
    4,235,427       4,432,690  
Less: accumulated depreciation
    (956,732 )     (863,193 )
 
           
 
               
Operating real estate
    4,084,492       4,365,436  
 
               
Development in progress
    294,227       328,138  
Land held for development
    227,003       247,124  
 
           
 
               
Net real estate
    4,605,722       4,940,698  
 
               
Cash and cash equivalents
    29,278       37,989  
Restricted cash
    41,638       34,567  
Accounts receivable
    24,055       17,405  
Deferred rent receivable
    82,653       80,087  
Deferred financing and leasing costs, net of accumulated amortization (2008, $136,565; 2007, $119,721)
    132,023       144,684  
Investment in unconsolidated joint ventures
    255,317       278,383  
Assets held for sale
    2,145       2,192  
Prepaid expenses and other assets
    99,138       107,932  
 
           
 
               
Total assets
  $ 5,271,969     $ 5,643,937  
 
           
 
               
Liabilities
               
Mortgage loans
  $ 205,450     $ 243,169  
Unsecured notes
    2,155,000       2,155,000  
Credit facility
    370,000       622,960  
Accounts payable
    54,302       44,666  
Accrued interest
    38,063       39,725  
Dividend and distributions payable
    60,991       59,849  
Other liabilities
    212,667       268,926  
 
           
 
               
Total liabilities
    3,096,473       3,434,295  
 
           
 
               
Minority interest
    369,839       372,621  
 
               
Shareholders’ Equity
               
Common shares of beneficial interest, $.001 par value, 183,987,000 shares authorized, 94,645,598 (includes 1,249,909 in treasury) and 92,817,879 (includes 1,249,909 in treasury) shares issued and outstanding as of September 30, 2008 and December 31, 2007, respectively
    94       93  
Additional paid-in capital
    2,037,360       1,984,141  
Accumulated other comprehensive income
    10,750       21,378  
Distributions in excess of net income
    (190,596 )     (116,640 )
Common shares in treasury, at cost, 1,249,909 shares as of September 30, 2008 and December 31, 2007
    (51,951 )     (51,951 )
 
           
Total shareholders’ equity
    1,805,657       1,837,021  
 
               
Total liabilities & shareholders’ equity
  $ 5,271,969     $ 5,643,937