Liberty Property Trust
) - a real estate investment trust - is raising capital through
stock offering to fund its recently announced $1.25 billion
acquisition of the operating partnership of Cabot Industrial
Value Fund III. The remaining amount for the acquisition would be
met through debt and property sale.
In particular, Liberty is selling 21 million common shares at
$36.00 each and the underwriters have been granted a 30-day
option to purchase an additional 3.15 common shares. It expects
approximately $725.3 million in net proceeds, and if in case the
acquisition is not carried out, the fund could be used for
meeting its working capital needs and debt payment.
Alongside, banking majors are helping in the execution of this
Goldman, Sachs & Co.
Merrill Lynch (
) acted as the joint book-running managers for the offering.
Though dilution of shares will occur, the capital raise activity
is a strategic fit as the acquisition would help Liberty enhance
its portfolio and scope. It would augment its industrial
portfolio with 23 million square feet and 177 properties in new
and existing Liberty markets.
Going forward, we expect Liberty's ongoing portfolio
repositioning activity, which is aimed at increasing its
dominance in vibrant markets, to bode well for long-term
Recently, Liberty reported its second-quarter 2013 results. The
company's funds from operations (FFO) of 66 cents per share, was
in line with the Zacks Consensus Estimate and ahead of the
prior-year quarter figure of 63 cents.
Total operating revenue came in at $178.1 million, up 8.3%
year over year. The year-over-year increase was attributable to
the strong leasing deals, portfolio-restructuring activities and
improving market fundamentals.
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Liberty Property currently carries a Zacks Rank #3 (Hold). The
other REIT that is performing well and deserves a look is
Extra Space Storage Inc.
) that carries a Zacks Rank #2 (Buy).
Funds from operations, a widely used metric to gauge the
performance of REITs, are obtained after adding depreciation and
amortization and other non-cash expenses to net income.