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Liberty Property (LPT) Beats Q4 FFO Estimates by a Penny

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Liberty Property TrustLPT reported fourth-quarter 2015 funds from operations ("FFO") of 65 cents per share, which beat the Zacks Consensus Estimate by a penny. However, the figure fell shy of the prior-year tally of 67 cents.

Total operating revenue of around $199.4 million was down 2.1% year over year but came in line with the Zacks Consensus Estimate.

For full year 2015, FFO per share came in at $2.69, up from $2.48 for 2014. Also, total operating revenue increased 2.0% from the prior year to $808.8 million.

The company's shares fell 1.92% following its earnings release on Tuesday.

Quarter in Detail

During the reported quarter, Liberty Property accomplished lease deals for 7.0 million square feet of space. As of Dec 31, 2015, occupancy at the company's in-service portfolio - spanning 104 million square feet - rose 50 basis points (bps) sequentially to 93.7%.

Same-store properties' operating income increased 0.9% on a cash basis and 2.6% on a straight-line basis, year over year. Industrial distribution rents climbed 8.8%. Moreover, Liberty began development of 5 properties aggregating 806,000 square feet of leasable space at a projected investment of $107.6 million. This included 311,000 square feet of office space, which is 79% pre-leased, as well as 496,000 square feet of industrial buildings for inventory.

Five development properties were brought into service during the fourth quarter for a total investment of $75.3 million. Comprising 678,000 square feet of leasable space, the properties were 98.6% occupied as of the quarter-end.

Liberty acquired one industrial property in Shakopee, MN, for $11.0 million. On the other hand, the company sold 45 operating properties, containing 3.2 million square feet of leasable space and 20.4 acres of land, for $300.3 million.

Liberty Property exited fourth-quarter 2015 with cash and cash equivalents of nearly $35.4 million, down from $69.3 million at the end of the prior year. The company also repurchased 197,000 common shares for $6.3 million at an average price of $32.18 per share.

Our Take

Liberty Property's efforts toward leveraging development opportunities and strategic dispositions are expected to enhance its overall portfolio quality. Yet, adverse near-term impact on earnings from dispositions and an anticipated rise in interest rates remain as concerns.

Currently, Liberty Property carries a Zacks Rank #3 (Hold).

Investors interested in the REIT industry may consider stocks like Prologis, Inc. PLD , Extra Space Storage Inc. EXR and Sovran Self Storage Inc. SSS . All these stocks hold a Zacks Rank #2 (Buy).

Note: FFO, 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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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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