Credit: Shutterstock photoWe have updated our research report on Liberty Property TrustLPT on Feb 10, 2017.
Last week, Liberty Property 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 decline 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.
Although, Liberty Property's fourth-quarter FFO per share matched expectations, the lower-than-expected revenue numbers in the quarter were discouraging.
Notably, the company is gradually shifting its focus toward industrial properties due to favorable demand supply conditions. As part of that, the company has been enhancing its portfolio mix through continued divestitures of office properties.
In fact, during the fourth quarter, the company accomplished the sale of a portfolio of non-core suburban properties, comprising 108 buildings aggregating around 7.6 million square feet of leasable space in five markets and approximately 26.7 acres of land for $969 million. Majority of them were suburban offices and flex non-core assets. Moreover, in full-year 2016, 9.5 million square feet of wholly owned properties and 35 acres of land were sold by the company for $1.2 billion. However, the near-term dilution impact of such moves on earnings is also unavoidable.
Nevertheless, going forward, Liberty Property is poised to gain as fundamentals of the industrial market remain robust backed by growing demand amid limited supply, resulting in solid rent growth, increased occupancy and development opportunities.
Further, Liberty Property's decent balance sheet and superior access to capital, lends it a financial flexibility. In fact, the company exited fourth-quarter 2016 with cash and cash equivalents of around $43.6 million, up from $35.4 million at the end of 2015.
Also, over the past one year, shares of Liberty Property outperformed the Zacks categorized REIT - Equity Trust - Other industry. Liberty shares recorded a gain of 39.7%, whereas the industry improved 19.8% over the same time period. Further, in the past 30 days, estimates for 2017 FFO per share remained unchanged.
The stock currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the REIT industry include The GEO Group, Inc. GEO , Host Hotels & Resorts, Inc. HST and Urban Edge Properties UE . All these three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .
The GEO Group' 2017 estimates climbed 2.0% to $2.99 per share, over the past 30 days.
Hotels & Resorts, currently, has a long-term growth rate of 5.0%.
For Urban Edge Properties, the projected growth rate for FFO per share is 38.7% for 2016 and 5.4% for 2017.
Note: Funds from operations ("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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Host Hotels & Resorts, Inc. (HST): Free Stock Analysis Report
Geo Group Inc (The) (GEO): Free Stock Analysis Report
Urban Edge Properties (UE): Free Stock Analysis Report
Liberty Property Trust (LPT): Free Stock Analysis Report
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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.
