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Liberty Property Sheds Office Asset - Analyst Blog

By: Zacks.com
Posted: 3/25/2013 5:31:00 PM
Referenced Stocks: BDN;CBG;LRY;PNC

Liberty Property Trust (LRY) - a real estate investment trust (REIT) - divested a Philadelphia-based office property to an affiliate of Cole Real Estate Investments for roughly $74.7 million. The transaction is in line with the company's ongoing portfolio repositioning program.

The sold facility, which spans 441,000 square foot, is located at 8800 Tinicum Boulevard. The property is occupied by PNC Bank of The PNC Financial Services Group, Inc. (PNC) . Notably, Liberty Property constructed the office facility for PNC Bank in two stages, completed in 1997 and 2000, respectively.

The abovementioned transaction was represented by CBRE Group Inc. (CBG) .  We expect the divesture to facilitate Liberty Property to focus on higher growth markets characterized by better job and rent growth prospects. Also, this is expected to boost the company's portfolio and strengthen its top line.

Liberty Property specifically focuses on metro office, multi-tenant industrial, and flex properties and markets that have strong demographic and economic fundamentals, which ensure a steady revenue stream. In Feb, in order to boost its portfolio restructuring initiative, Liberty Property unveiled its plan to construct an office building for The Vanguard Group in Malvern, Pa.

Last month, Liberty Property reported fourth-quarter 2012 results with FFO (funds from operations) of 63 cents per share, in line with the Zacks Consensus Estimate as well as the prior-year quarter. The result was attributable to the strong acquisitions and development activities, slightly impacted by uncertain economic conditions.

Liberty Property currently holds a Zacks Rank #3 (Hold). Brandywine Realty Trust (BDN) , another REIT, is performing better than Liberty and holds a Zacks Rank #2 (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 net income.



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