The office and industrial real estate investment trust (REIT),
Liberty Property Trust
), reported fourth-quarter 2013 funds from operations (FFO) of 63
cents per share. This was in line with the Zacks Consensus
Estimate as well as the prior-year quarter figure. Also, this was
within the company's 2014 FFO per share guidance range of 62-64
The decent results were attributable to year-over-year revenue
gains, strong leasing and portfolio restructuring activity. Total
operating revenue during the quarter came in at $192.4 million,
up 33.2% year over year but fell short of the Zacks Consensus
Estimate of $200 million.
For full-year 2013, Liberty Property reported FFO per share of
$2.49, down from $2.58 in 2012. However, the operating revenues
of $645.9 million in 2013 came above $560.3 million reported in
Inside the Headlines
Liberty Property continued notable leasing activity in the
fourth quarter, with about 5.7 million square feet of leased
space. As of Dec 31, 2013, the occupancy at the in-service
portfolio of Liberty Property - spanning 103 million square feet
- increased 100 basis points (bps) to 91.6% from 90.6%
On the other hand, in fourth-quarter 2013, same-store
properties' operating income upped 1.6% on a cash basis and 1.2%
on a straight-line basis from the year-ago quarter.
Portfolio Restructuring Activity in Q4
Liberty Property sealed the buyout of 100% ownership stake in
177 operating properties of Cabot Industrial Value Fund III for
$1.469 billion. In addition, the company bought 2 operating
assets worth $39.8 million and 184 acres land for $30.5 million
during the said quarter.
Liberty Property also brought 1 development asset into
operation with a total investment of $9.2 million. Moreover, the
company commenced construction at 4 properties with an estimated
cost of $91.9 million during the quarter.
Additionally, a joint venture (JV) by Liberty Property started
construction at an inventory distribution facility on 2277 Center
Square Road in Logan Township. The estimated cost of the project
is $11.8 million.
Also, Liberty Property inked a deal to sell 159 acres of land
and 97 operating properties during the quarter. Of these, the
company completed the disposition of 49 properties and 140 acres
of land in Dec 2013 for $367.7 million. The remaining 48
properties and 19 acres of land were sold in Jan 2014 for $329.6
The company divested two other operating assets for $14.0
million. Alongside, Liberty Property's JV offloaded 4 operating
properties for $31.5 million and another JV divested 1
operating asset for $9.6 million in the quarter.
Subsequent to the quarter end, Liberty Property collaborated
) to build a 59-story, 1.5 million square foot tower in
Philadelphia. The joint venture, in which Liberty Property has a
20% stake and the rest is owned by Comcast, will develop this
tower with a projected investment of $900 million.
As of Dec 31, 2013, Liberty Property had cash and cash
equivalents of $163.4 million, up from $38.4 million as of Dec
Liberty Property has previously issued the guidance for 2014
FFO per share and expected it to be in the range between $2.45
and $2.55. The outlook is in line with the Zacks Consensus
Estimate of $2.50.
Although the revenue miss is disappointing, we believe the
strong leasing and notable operating portfolio performance helped
Liberty Property sail over the tides. The Cabot buyout
accomplishment and Comcast deal also promises huge growth
prospects for the company. Going forward, we believe that the
repositioning efforts by the company through strategic
acquisitions, JV investments and dispositions would help it ride
on the growth trajectory. While the dispositions result in a
near-term drag to profitability, we believe these provide the
wherewithal to be invested in acquiring and developing premium
assets that go a long way in enhancing the top line.
Liberty Property currently carries a Zacks Rank #3 (Hold).
However, some better-ranked REIT stocks include
Sabra Health Care REIT Inc
WP Carey Inc
). Both carry a Zacks Rank #1 (Strong Buy).
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
COMCAST CORP A (CMCSA): Free Stock Analysis
LIBERTY PPTY TR (LRY): Free Stock Analysis
SABRA HEALTHCR (SBRA): Free Stock Analysis
WP CAREY INC (WPC): Free Stock Analysis
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