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Liberty (LPT) Stock Down on Revenue Decline in Q4 Earnings

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Shares of Liberty Property TrustLPT edged down 1.25%, during Tuesday's regular trading session, after the company reported lower-than expected revenue numbers for the fourth quarter.

The company reported funds from operations ("FFO") per share of 41 cents, which were in line with the Zacks Consensus Estimate, but fell from the prior-year quarter figure of 66 cents. Results reflected a decrease in total operating revenue in the quarter.

In fact, total operating revenue of around $179.1 million was down 10.2% year over year and missed the Zacks Consensus Estimate of $186.1 million.

For full-year 2016, Liberty Property came up with FFO per share of $2.37, down from $2.70 reported a year ago. The results came amid a 7.7% year-over-year decline in revenues to $746.7 million.

Quarter in Detail

During the reported quarter, Liberty Property accomplished lease deals for 6.2 million square feet of space. As of Dec 31, 2016, occupancy at the company's in-service portfolio - spanning 99 million square feet - expanded 50 basis points (bps) sequentially to 96.0%.

Same-store properties' operating income increased 2.4% year over year on a cash basis and 0.9% on a straight-line basis. Industrial distribution rents climbed 11.4%, while same-store operating income for the industrial distribution portfolio was up 1.9%.

Liberty Property exited fourth-quarter 2016 with cash and cash equivalents of around $43.6 million, up from $35.4 million at the end of the prior year.

Portfolio Activity

During the fourth quarter, seven wholly-owned development properties were brought into service by Liberty Property for an aggregate investment of $273.8 million. These properties comprised 3.4 million square feet of leasable space and were fully occupied as of the end of the quarter.

On the other hand, the company began development of seven wholly-owned properties which included an office build-to-suit project and six distribution buildings for inventory. These properties aggregate 2.4 million square feet of leasable space and involve projected investment of $207.6 million.

Our Take

Although, Liberty Property's fourth-quarter FFO per share matched expectations, the lower-than-expected revenue numbers in the quarter were discouraging. However, the company is shifting its focus toward industrial properties and enhancing its portfolio mix through continued divestitures of office properties which have near-term dilutive effects on earnings and adverse impact on top-line growth.

However, going forward, Liberty Property is poised to gain as fundamentals of the industrial market remain robust backed by growing demand for industrial properties amid limited supply, resulting in solid rent growth, increased occupancy and development opportunities.

Currently, Liberty Property carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Liberty Property Trust Price, Consensus and EPS Surprise

Liberty Property Trust Price, Consensus and EPS Surprise | Liberty Property Trust Quote

We now look forward to the earnings releases of HCP Inc. HCP , Vornado Realty Trust VNO and Federal Realty Investment Trust FRT which are expected to report early next week.

Note: All EPS numbers presented in this write up represent funds from operations ("FFO") per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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