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Liberty Property Trust Announces First Quarter 2012 Results

MALVERN, Pa., April 24, 2012 /PRNewswire via COMTEX/ --Liberty Property Trust (NYSE: LRY) reported that funds from operations available to common shareholders (diluted) ("FFO") for the first quarter of 2012 was $0.68 per share, compared to $0.65 per share for the first quarter of 2011. Funds from operations for the first quarter of 2012 include termination fees of $2.2 million, a $3.7 million net discount realized on the redemption of certain preferred units, and $3.2 million of additional compensation expense due to the accelerated vesting of long-term incentive compensation due to the years of service and ages of certain employees.

Net income per common share (diluted) was $0.32 per share for the quarter ended March 31, 2012, compared to $0.25 per share (diluted) for the quarter ended March 31, 2011.

"Liberty has done very well so far in 2012," commented Bill Hankowsky, chief executive officer. "We had strong first quarter, leasing 4.3 million square feet and redeeming high-dividend preferred securities, and we have subsequently advanced our repositioning strategy with the execution of a significant sale of suburban office and high-finish flex properties. All of this was accomplished in an environment of slow recovery in the real estate markets."

Portfolio Performance

Leasing: At March 31, 2012, Liberty's in-service portfolio of 79.3 million square feet was 90.5% occupied, compared to 91.3% at the end of the fourth quarter, an anticipated decrease. During the quarter, Liberty completed lease transactions totaling 4.3 million square feet of space.

Same Store Performance: Property level operating income for same store properties increased by 0.5% on a cash basis and decreased by 0.4% on a straight line basis for the first quarter of 2012 compared to the same quarter in 2011.

Capital Activities and Balance Sheet Management

Preferred Unit Redemptions: During the first quarter, Liberty redeemed $32.5 million of its outstanding 6.65% Series F Cumulative Redeemable Preferred Units for $26.0 million, and redeemed the entire $95.0 million of 7.45% Series B Cumulative Redeemable Preferred Units at par. The $6.5 million discount net of the write off of $2.8 million of origination costs is included in FFO.

Property Sales: During the first quarter, Liberty sold two operating properties, which contained 105,000 square feet of leasable space for $6.5 million. The properties were 76.6% leased at the time of the sale.

Real Estate Investments

Development: Liberty began development of a 126,000 square foot distribution building in Suffolk, Virginia, for a projected investment of $7.8 million. The property is 100% preleased.

Acquisitions: Liberty acquired no properties during the quarter.

Subsequent Events

On April 3, Liberty completed the sale of 49 properties totaling 2.5 million square feet of leasable space in Wisconsin, Maryland, Virginia, North Carolina and New Jersey for approximately $195 million. The properties consist primarily of single-story and mid-rise office buildings and high-finish flex properties. The properties were 83% leased when the transaction closed.

Earnings Outlook

Liberty had previously announced the expectation for 2012 funds from operations in the range of $2.45 - $2.60 per diluted share. Liberty is revising this guidance to reflect the redemption of the preferred units during the first quarter, and we now expect 2012 funds from operations in the range of $2.50 - $2.65 per diluted share. A reconciliation of FFO to GAAP net income is below:


2012 Range


Low

High

Projected net income per share

$ 1.03

$ 1.17

Depreciation and amortization of unconsolidated joint ventures

0.12

0.14

Depreciation and amortization

1.45

1.47

Gain on property dispositions

(0.10)

(0.13)




Projected funds from operations per share

$ 2.50

$ 2.65

About the Company

Liberty Property Trust (NYSE: LRY) is a leader in commercial real estate, serving customers in the United States and United Kingdom, through the development, acquisition, ownership and management of superior office and industrial properties. Liberty's 79 million square foot portfolio includes approximately 650 properties which provide office, distribution and light manufacturing facilities to 1,700 tenants.

Additional information about the Company, including Liberty's Quarterly Supplemental Package with detailed financial information is available in the Investors section of the Company's web site at www.libertyproperty.com. If you are unable to access the web site, a copy of the supplemental package may be obtained by contacting Liberty by phone at 610-648-1704, or by e-mail to jleonard@libertyproperty.com.

Liberty will host a conference call during which management will discuss first quarter results on Tuesday, April 24, 2012, at 1 p.m. Eastern Time. To access the conference call, please dial 1-888-870-2815. The passcode needed for access is 68152370. A replay of the call will be available until May 8, 2012, by dialing 1-855-859-2056 using the same passcode as above. The call can also be accessed via the Internet on the Investors page of Liberty's web site at www.libertyproperty.com.

The statements contained in this press release may include forward-looking statements within the meaning of the federal securities law. Although Liberty believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be achieved. As forward-looking statements, these statements involve risks, uncertainties and other factors that could cause actual results to differ materially from the expected results. These factors include, without limitation, the uncertainties affecting real estate businesses generally (such as entry into new leases, renewals of leases and dependence on tenants' business operations), risks relating to our ability to maintain and increase property occupancy and rental rates, the financial condition of tenants, the uncertainties of real estate development and construction activity, the costs and availability of financing, the effects of local economic and market conditions, regulatory changes, potential liability relative to environmental matters and other risks and uncertainties detailed in the Company's filings with the Securities and Exchange Commission. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

Liberty Property Trust

Statement of Operations

March 31, 2012

(Unaudited and in thousands, except per share amounts)










Quarter Ended




March 31, 2012


March 31, 2011





Operating Revenue





Rental


$ 119,591


$ 114,724

Operating expense reimbursement


50,346


51,410


Total operating revenue


169,937


166,134







Operating Expenses





Rental property


30,440


31,750

Real estate taxes


20,782


19,489

General and administrative


17,204


15,949

Depreciation and amortization


41,367


39,077


Total operating expenses


109,793


106,265








Operating Income


60,144


59,869







Other Income/Expense





Interest and other


2,762


2,589

Interest


(28,476)


(32,889)


Total other income/expense


(25,714)


(30,300)







Income before property dispositions, income taxes, noncontrolling interest





and equity in earnings of unconsolidated joint ventures


34,430


29,569

Gain on property dispositions


523


1,161

Income taxes


(178)


(550)

Equity in earnings of unconsolidated joint ventures


916


534







Income from continuing operations


35,691


30,714







Discontinued operations (including net gain on property dispositions of






$1,064 and $470 for the quarters ended March 31, 2012 and 2011, respectively)


3,911


4,229

Net Income


39,602


34,943


Noncontrolling interest - operating partnerships


(2,513)


(6,235)


Noncontrolling interest - consolidated joint ventures


-


201

Net Income available to common shareholders


$ 37,089


$ 28,909








Net income


$ 39,602


$ 34,943


Other comprehensive income


2,317


2,144

Comprehensive income


41,919


37,087


Less: comprehensive income attributable to noncontrolling interest


(2,586)


(6,306)

Comprehensive income attributable to common shareholders


$ 39,333


$ 30,781







Basic income per common share






Continuing operations


$ 0.29


$ 0.21


Discontinued operations


$ 0.03


$ 0.04

Total basic income per common share


$ 0.32


$ 0.25







Diluted income per common share






Continuing operations


$ 0.29


$ 0.21


Discontinued operations


$ 0.03


$ 0.04

Total diluted income per common share


$ 0.32


$ 0.25







Weighted average shares






Basic


115,972


114,013


Diluted


116,743


114,766







Amounts attributable to common shareholders






Income from continuing operations


$ 33,301


$ 24,820


Discontinued operations


3,788


4,089


Net income


$ 37,089


$ 28,909

Liberty Property Trust

Statement of Funds From Operations

March 31, 2012

(Unaudited and in thousands, except per share amounts)




















Quarter Ended




March 31, 2012


March 31, 2011





Per



Per





Weighted



Weighted





Average



Average




Dollars

Share


Dollars

Share








Reconciliation of net income to FFO - basic:







Basic - income available to common shareholders


$ 37,089

$ 0.32


$ 28,909

$ 0.25









Adjustments:







Depreciation and amortization of unconsolidated joint ventures


3,616



3,649


Depreciation and amortization


41,046



43,971


Gain on property dispositions


(1,104)



(500)


Noncontrolling interest share in addback for depreciation and amortization








and gain on property dispositions


(1,373)



(1,558)


Funds from operations available to common shareholders - basic

$ 79,274

$ 0.68


$ 74,471

$ 0.65









Reconciliation of net income to FFO - diluted:







Diluted - income available to common shareholders


$ 37,089

$ 0.32


$ 28,909

$ 0.25









Adjustments:







Depreciation and amortization of unconsolidated joint ventures


3,616



3,649


Depreciation and amortization


41,046



43,971


Gain on property dispositions


(1,104)



(500)


Noncontrolling interest excluding preferred unit distributions


1,207



982


Funds from operations available to common shareholders - diluted

$ 81,854

$ 0.68


$ 77,011

$ 0.65









Reconciliation of weighted average shares:







Weighted average common shares - all basic calculations


115,972



114,013


Dilutive shares for long term compensation plans


771



753


Diluted shares for net income calculations


116,743



114,766


Weighted average common units


3,809



3,929


Diluted shares for Funds from operations calculations


120,552



118,695


























The Company believes that the calculation of Funds from operations is helpful to investors and management as it is a measure of the Company's operating performance that excludes depreciation and amortization and gains and losses from property dispositions. As a result, year over year comparison of Funds from operations reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, development activities, general and administrative expenses, and interest costs, providing perspective not immediately apparent from net income. In addition, management believes that Funds from operations provides useful information to the investment community about the Company's financial performance when compared to other REITs since Funds from operations is generally recognized as the standard for reporting the operating performance of a REIT. Funds from operations available to common shareholders is defined by NAREIT as net income (computed in accordance with generally accepted accounting principles ("GAAP")), excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Funds from operations available to common shareholders does not represent net income or cash flows from operations as defined by GAAP and does not necessarily indicate that cash flows will be sufficient to fund cash needs. It should not be considered as an alternative to net income as an indicator of the Company's operating performance or to cash flows as a measure of liquidity. Funds from operations available to common shareholders also does not represent cash flows generated from operating, investing or financing activities as defined by GAAP.

Liberty Property Trust

Balance Sheet

March 31, 2012

(In thousands, except share and unit amounts)



























March 31, 2012


December 31, 2011


Assets




(unaudited)




Real estate:









Land and land improvements



$ 854,972


$ 855,213



Building and improvements



4,117,093


4,109,783



Less: accumulated depreciation



(1,088,301)


(1,058,283)












Operating real estate



3,883,764


3,906,713












Development in progress



138,634


88,848


Land held for development



218,926


219,375












Net real estate




4,241,324


4,214,936












Cash and cash equivalents



27,650


18,204


Restricted cash




39,188


63,659


Accounts receivable



9,210


8,192


Deferred rent receivable



104,502


103,002


Deferred financing and leasing costs, net of accumulated







amortization (2012, $128,303; 2011, $123,822)


130,843


130,160


Investments in and advances to unconsolidated joint ventures


174,651


174,687


Assets held for sale



197,737


200,647


Prepaid expenses and other assets



90,189


76,186












Total assets




$ 5,015,294


$ 4,989,673












Liabilities








Mortgage loans




$ 282,716


$ 290,819


Unsecured notes




1,792,643


1,792,643


Credit facility




293,300


139,400


Accounts payable



32,310


23,418


Accrued interest




33,036


24,147


Dividend and distributions payable



57,393


56,958


Other liabilities




177,590


194,995












Total liabilities




2,668,988


2,522,380












Noncontrolling interest - operating partnership - 301,483 preferred units







outstanding as of March 31, 2012 and December 31, 2011


7,537


7,537












Equity








Shareholders' equity:







Common shares of beneficial interest, $.001 par value, 183,987,000 shares







authorized, 118,264,957 (includes 1,249,909 in treasury) and 117,352,353







(includes 1,249,909 in treasury) shares issued and outstanding as of







March 31, 2012 and December 31, 2011, respectively


118


117


Additional paid-in capital



2,637,861


2,617,355


Accumulated other comprehensive loss



1,814


(429)


Distributions in excess of net income



(479,994)


(461,498)


Common shares in treasury, at cost, 1,249,909 shares as of







March 31, 2012 and December 31, 2011



(51,951)


(51,951)


Total shareholders' equity



2,107,848


2,103,594












Noncontrolling interest - operating partnership








3,808,746 common units outstanding as of March 31, 2012







and December 31, 2011


63,920


64,428



5,290,000 and 9,740,000 preferred units outstanding as of March 31, 2012







and December 31, 2011, respectively



163,226


287,959


Noncontrolling interest - consolidated joint ventures



3,775


3,775












Total equity




2,338,769


2,459,756












Total liabilities, noncontrolling interest - operating partnership & equity


$ 5,015,294


$ 4,989,673


SOURCE Liberty Property Trust