Liberty Property Trust ( LRY ) - a real estate
investment trust (REIT) - reported first-quarter 2013 FFO (funds
from operations) of 65 cents per share, beating the Zacks Consensus
Estimate by 2 cents. However, this compared unfavorably with the
prior-year quarter figure of 68 cents. The results were
attributable to consistent performance of the overall portfolio as
well as strong leasing and development activities. However,
increase in operating expenses acted as a headwind.
Following the earnings announcement, shares of Liberty Property
reached a new 52-week high of $42.05, above its previous 52-week
high of $41.45 on Apr 2.
Inside the Headlines Numbers
Total operating revenues during the reported quarter came in at
$176.6 million, up 5.8% from $166.9 million in the prior-year
period. It also came ahead of the Zacks Consensus Estimate of $173
At the end of the quarter, the occupancy at the in-service
portfolio of Liberty Property - spanning 80.6 million square feet -
increased 50 bps (basis points) to 92.6% from 92.1% sequentially.
The company witnessed strong leasing activities in the quarter with
about 5.4 million square feet of leased space.
The operating income from same-store properties jumped 0.3% on a
cash basis and 1.0% on a straight-line basis from the year-ago
Portfolio Restructuring Activity
Liberty Property witnessed a continuous demand for premium
quality industrial space from large corporate users and
build-to-suit opportunities for both industrial and office users.
Although the company acquired no properties during the quarter, it
brought 1 development property into operation. The asset, spanning
208,000 square feet of leasable space was 100% leased as of Mar 31,
2013. In addition, the property generates a current yield of
Moreover, Liberty Property started developing 3 properties in
Houston, Texas for an estimated construction cost of $69.7 million.
The properties under construction include 1 build-to-suit office
(spanning 201,000 square foot) for The Vanguard Group and 2
inventory industrial buildings (spanning 230,000 feet).
Additionally, Liberty Property divested 1 asset, spanning
441,000 square feet of leasable space (100% leased at the time of
the sale) for $74.7 million.
Subsequent to the end of first quarter, Liberty Property
unveiled its plan to begin construction at 2 industrial buildings
(stretching 244,000 square feet) in Hanover, Md. The construction
cost of the asset is estimated to be $25 million.
Moreover, the company declared that it has inked a deal to
offload a Philadelphia-based office property (spanning 215,000
square foot) - Three Franklin Plaza - for $29.0 million. Liberty
Property expects the transaction to close in the third quarter of
As of Mar 31, 2013, Liberty Property had cash and cash
equivalents of $54.4 million compared to $38.4 million in first
quarter of 2013. The company sold 642,000 shares under its equity
program during the quarter and generated net proceeds of $24.3
Management at Liberty Property remains upbeat regarding the
company's performance in 2013, on the back of its strong
performance in the first quarter. Consequently, it reiterated its
guidance for full year 2013 in the range of $2.60-$2.70.
After posting decent fourth-quarter 2012 results, Liberty
Property came up with better-than-expected first-quarter 2013
results. The impressive performance came on the back of the
company's ongoing portfolio repositioning activity to focus on
markets having better job and rent growth prospects. Moreover, the
strengthening of industrial markets fundamentals escalated the
company's occupancy level. In addition, Liberty Property's
relatively healthy balance sheet with adequate liquidity puts the
company at ease. We expect these factors to add to Liberty
Property's growth in the coming quarters.
However, the continuous development activity of Liberty Property
involves significant upfront operating expenses, which remains a
drag on its profitability in the near-term.
Further, we look forward to the results of other REITs that are
scheduled to release their first-quarter 2013 results tomorrow on
25 th April, after the market closes. These include
Duke Realty Corp. ( DRE ), CBRE
Group Inc. ( CBG ) and
Taubman Centers Inc. ( TCO ).
Liberty Property currently carries a Zacks Rank #4 (Sell).
Note: 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.CBRE GROUP INC (CBG): Free Stock Analysis
ReportDUKE REALTY CP (DRE): Free Stock Analysis
ReportLIBERTY PPTY TR (LRY): Free Stock Analysis
ReportTAUBMAN CENTERS (TCO): Free Stock Analysis
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