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Liberty Property Trust Announces 2016 Fourth Quarter and Full Year Results
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Fourth quarter highlights include:

  • Net income available to common shareholders $1.33 per diluted share
  • NAREIT Funds from Operations $0.41 per diluted share
  • Net income and NAREIT Funds from Operations per diluted share include $0.16 charge relating to early extinguishment of debt
  • 8.3 million square feet of wholly-owned properties and 32 acres of land sold for $1.1 billion
  • Same store operating income increased by 0.9%
  • Same store operating income for the industrial distribution portfolio increased by 1.9%
  • $297.8 million in developments delivered at a yield of 8.1%
  • Industrial distribution rents increased 11.4%
  • $228.1 million in new developments started at a projected stabilized yield of 7.6%
  • Prepaid $296.5 million of 6.625% senior notes, and $100 million of 7.5% medium term notes


Full year highlights include:

  • Net income available to common shareholders $2.43 per diluted share
  • NAREIT Funds from Operations $2.37 per diluted share
  • Net income and NAREIT Funds from Operations per diluted share include $0.18 charge relating to early extinguishment of debt
  • 9.5 million square feet of wholly-owned properties and 35 acres of land sold for $1.2 billion
  • $621.7 million in developments delivered at a current yield of 7.3% and a projected stabilized yield of 8.3%
  • $402.5 million in new developments started at a projected stabilized yield of 7.3%
  • Same store operating income increased by 2.8%
  • Same store operating income for the industrial distribution portfolio increased by 4.0%
  • Industrial distribution rents increased by 11.7%

MALVERN, Pa., Feb. 07, 2017 (GLOBE NEWSWIRE) -- Liberty Property Trust reported that net income available to common shareholders for the fourth quarter of 2016 was $195.4 million, or $1.33 per diluted share, compared to $81.7 million, or $0.55 per diluted share, for the fourth quarter of 2015.

For the year ended December 31, 2016, net income available to common shareholders was $356.8 million, or $2.43 per diluted share, compared to $239.5 million, or $1.61 per diluted share, for the previous year.

Net income for the fourth quarter and full year 2016 reflects gains on sale, net of impairments, of $189.7 million and $215.4 million, respectively, compared to $41.9 million and $82.1 million, respectively for the same periods in 2015.

Funds from Operations
The company uses the National Association of Real Estate Investment Trusts (“NAREIT”) definition of Funds from Operations (“FFO”) as an operating measure of the company’s financial performance.  A reconciliation of FFO to GAAP net income is included in the financial data tables accompanying this press release.

NAREIT FFO available to common shareholders for the fourth quarter of 2016 was $62.0 million, or $0.41 per diluted share, compared to $99.3 million, or $0.66 per diluted share, for the fourth quarter of 2015. 

NAREIT FFO available to common shareholders for the year ended December 31, 2016 was $356.9 million, or $2.37 per diluted share, compared to $411.0 million, or $2.70 per diluted share, for the previous year.

Net income and FFO for the fourth quarter and the full year 2016 were impacted by a loss on debt extinguishment related to the prepayment of senior and medium term notes of $23.6 million ($0.16 per share) and $27.1 million ($0.18 per share), respectively.

“We could not be more pleased with what we achieved in 2016, both in terms of our strategic execution, and the performance of our real estate,” said Bill Hankowsky, chairman, president, and chief executive officer. “As we enter 2017 we are encouraged by the continued strength in the industrial markets, with the resultant rising market rents and outstanding development opportunities, supported by the stability of a well-leased portfolio and a strong balance sheet.”

Portfolio Performance 
Occupancy: At December 31, 2016, Liberty’s in-service portfolio of 99 million square feet was 96.0% occupied, compared to 95.5% at the end of the third quarter of 2016. During the quarter, Liberty completed lease transactions totaling 6.2 million square feet of space. Liberty leased 26.1 million square feet of space in 2016.

Liberty’s 75.3 million square foot wholly-owned industrial distribution portfolio was 97.0% leased, compared to 97.0% at the end of the third quarter.

Same Store Performance: Property level operating income for same store properties increased by 2.4% on a cash basis and by 0.9% on a straight line basis for the fourth quarter of 2016 compared to the same quarter in 2015. For the full year ended December 31, 2016, property level operating income for same store properties increased by 3.4% on a cash basis and by 2.8% on a straight line basis, compared to the full year ended December 31, 2015.

Real Estate Investments
Development Deliveries: In the fourth quarter, Liberty brought into service seven wholly-owned development properties for a total investment of $273.8 million. The properties contain 3.4 million square feet of leasable space and were 100% occupied as of the end of the quarter. The yield on these properties at December 31, 2016 was 8.3%.

Joint ventures in which Liberty holds an interest brought into service two development properties for a total investment of $24.0 million. These properties, which contain 383,000 square feet of leasable space, were 54.9% occupied at December 31, 2016 at a current yield of 4.8% and a projected stabilized yield of 8.5%.

Development Starts: In the fourth quarter, Liberty began development of seven wholly-owned properties totaling 2.4 million square feet of leasable space at a projected investment of $207.6 million. The properties include an office build-to-suit project and six distribution buildings for inventory:

  • 1870 West Rio Salado Parkway, a 236,000 square foot office build-to-suit in Tempe, AZ, 100% pre-leased
  • 8801 Congdon Hill Drive, a 1.1 million square foot distribution building in the Lehigh Valley, PA region, where Liberty’s 26 million square foot portfolio is 99% leased
  • 1500 South 71st Avenue, a 436,000 square foot distribution building in Phoenix, AZ, 60% pre-leased
  • 3929 Shutterfly Road, a 204,000 square foot distribution building in Charlotte, NC
  • 2988 Green Road, a 172,000 square foot distribution building in Greer, SC
  • Worcester 1 and 2, distribution buildings totaling 216,000 square feet in Worcester, UK

In addition, a joint venture in which Liberty holds an interest began construction on 200 Arlington Boulevard, a 302,000 square foot, $20.5 million distribution property for inventory in Swedesboro, NJ.

Real Estate Dispositions
During the fourth quarter, Liberty sold a portfolio of non-core suburban properties, consisting of 108 buildings totaling approximately 7.6 million square feet of leasable space in five markets and approximately 26.7 acres of land for $969 million. These properties were 88.1% leased at closing. In addition, Liberty completed the sale of seven properties totaling approximately 759,000 square feet and 5.3 acres of land for $91.4 million. These properties were 62.2% leased at the time of sale.

Capital and Balance Sheet Activity
During the fourth quarter, Liberty prepaid its 6.625% Senior Notes due October 2017 in the amount of $296.5 million and its 7.5% medium term notes due January 2018 in the amount of $100.0 million. This resulted in a $23.6 million loss on debt extinguishment ($0.16 per share), which is included in net income and NAREIT FFO.

About the Company
Liberty Property Trust (NYSE:LPT) 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 99 million square foot portfolio includes 568 properties which provide office, distribution and light manufacturing facilities to 1,200 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 fourth quarter and full year results, on Tuesday, February 7, 2017, at 12 p.m. Eastern Time.  To access the conference call, please dial 855-277-7530. The passcode needed for access is 46035372. A replay of the call will be available until March 7, 2017, 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.  These forward-looking statements include statements relating to, among others things, achievement of strategic targets, expectations for our operating results, business and financial condition, business and our growth prospects, as well as statements that are generally accompanied by words such as “believes,” “anticipates,” “expects,” “estimates,” “should,” “seeks,” “intends,” “proposed,” “planned,” “outlook,” “remain confident,” and “goal” or similar expressions. 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 risks, uncertainties and other factors include, without limitation, uncertainties affecting real estate business generally (such as entry into new leases, renewals of leases and dependence on tenants’ business operations), risks relating to the integration of the operations of entities that we have acquired or may acquire, risks relating to our plans for disposing of certain properties, risks relating to financing arrangements and sales of securities, possible environmental liabilities, risks relating to leverage and debt service (including availability of financing terms acceptable to the company and sensitivity of the company’s operations and financing arrangements to fluctuations in interest rates), dependence on the primary markets in which the company’s properties are located, the existence of complex regulations relating to status as a REIT and the adverse consequences of the failure to qualify as a REIT, risks relating to litigation, including without limitation litigation involving entities that we have a acquired or may acquire, and the potential adverse impact of market interest rates on the market price for the company’s securities, 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 
December 31, 2016
 (Unaudited and in thousands, except per share amounts) 
                     
                     
       Quarter Ended     Year Ended   
      December 31, 2016   December 31, 2015   December 31, 2016   December 31, 2015  
                                     
 Operating Revenue                   
 Rental    $   124,516     $   143,204     $   543,410     $   584,165    
 Operating expense reimbursement        41,600         56,178         190,357         224,608    
 Development service fee income        12,941         -         12,941         -    
   Total operating revenue        179,057         199,382         746,708         808,773    
                     
 Operating Expenses                   
 Rental property        22,731         33,728         102,481         132,702    
 Real estate taxes        23,303         26,831         99,793         105,410    
 General and administrative       15,428         17,282         68,198         68,710    
 Depreciation and amortization        50,547         55,228         205,090         226,575    
 Development service fee expense        12,165         -         12,165         -    
 Impairment - real estate assets        3,879         1,126         3,879         18,244    
   Total operating expenses        128,053         134,195         491,606         551,641    
   Operating Income        51,004         65,187         255,102         257,132    
                     
 Other Income/Expense                   
 Interest and other income        1,207         5,870         13,950         23,781    
 Loss on debt extinguishment        (23,605 )       -         (27,099 )       -    
 Interest expense        (24,006 )       (32,484 )       (115,077 )       (135,779 )  
   Total other income/expense        (46,404 )       (26,614 )       (128,226 )       (111,998 )  
                     
 Income before gain on property dispositions, income taxes, noncontrolling interest                   
  and equity in earnings of unconsolidated joint ventures        4,600         38,573         126,876         145,134    
 Gain on property dispositions        193,599         42,984         219,270         100,314    
 Income taxes        (338 )       (60 )       (1,971 )       (2,673 )  
 Equity in earnings of unconsolidated joint ventures        2,430         2,344         21,970         3,149    
                     
 Net Income        200,291         83,841         366,145         245,924    
   Noncontrolling interest - operating partnerships        (4,820 )       (2,075 )       (9,070 )       (6,192 )  
   Noncontrolling interest - consolidated joint ventures        (88 )       (78 )       (258 )       (249 )  
 Net Income available to common shareholders    $   195,383     $   81,688     $   356,817     $   239,483    
                     
   Net income    $   200,291     $   83,841     $   366,145     $   245,924    
   Other comprehensive loss - foreign currency translation        (11,741 )       (6,311 )       (34,744 )       (12,540 )  
   Other comprehensive gain (loss) - derivative instruments        1,542         1,051         410         (488 )  
 Comprehensive income        190,092         78,581         331,811         232,896    
   Less: comprehensive income attributable to noncontrolling interest        (4,668 )       (2,030 )       (8,519 )       (6,135 )  
 Comprehensive income attributable to common shareholders    $   185,424     $   76,551     $   323,292     $   226,761    
                     
 Basic income per common share    $   1.33     $   0.56     $   2.44     $   1.62    
                     
 Diluted income per common share    $   1.33     $   0.55     $   2.43     $   1.61    
                     
 Weighted average shares                   
   Basic        146,419         147,164         146,204         148,243    
   Diluted        147,182         147,730         146,889         148,843    
                     

 

 Liberty Property Trust 
 Statement of Funds From Operations 
December 31, 2016
 (Unaudited and in thousands, except per share amounts) 
                               
                               
       Quarter Ended     Year Ended     
      December 31, 2016   December 31, 2015   December 31, 2016   December 31, 2015    
        Per      Per      Per      Per     
        Weighted     Weighted     Weighted     Weighted    
         Average       Average       Average       Average     
      Dollars Share   Dollars Share   Dollars Share   Dollars Share    
                           
 Reconciliation of net income to NAREIT FFO - basic:                             
 Basic - income available to common shareholders    $   195,383   $   1.33   $   81,688   $   0.56   $   356,817   $   2.44   $   239,483   $   1.62    
                               
 Adjustments:                             
 Depreciation and amortization of unconsolidated joint ventures        2,308           2,747           11,014           11,638        
 Depreciation and amortization        50,155           54,817           203,626           224,917        
 Gain on property dispositions / impairment - real estate assets of unconsolidated joint                             
   ventures        (25 )         (11 )         (7,012 )         11,305        
 Gain on property dispositions / impairment - real estate assets        (190,477 )         (41,858 )         (216,148 )         (82,070 )      
 Noncontrolling interest share in addback for depreciation and amortization                             
   and gain on property dispositions / impairment - real estate assets        3,244           (367 )         192           (3,845 )      
 NAREIT Funds from operations available to common shareholders - basic  $   60,588   $   0.41   $   97,016   $   0.66   $   348,489   $   2.38   $   401,428   $   2.71    
                               
 Reconciliation of net income to NAREIT FFO - diluted:                             
 Diluted - income available to common shareholders    $   195,383   $   1.33   $   81,688   $   0.55   $   356,817   $   2.43   $   239,483   $   1.61    
                               
 Adjustments:                             
 Depreciation and amortization of unconsolidated joint ventures        2,308           2,747           11,014           11,638        
 Depreciation and amortization        50,155           54,817           203,626           224,917        
 Gain on property dispositions / impairment - real estate assets of unconsolidated joint                             
   ventures        (25 )         (11 )         (7,012 )         11,305        
 Gain on property dispositions / impairment - real estate assets        (190,477 )         (41,858 )         (216,148 )         (82,070 )      
 Noncontrolling interest excluding preferred unit distributions        4,702           1,957           8,598           5,720        
 NAREIT Funds from operations available to common shareholders - diluted  $   62,046   $   0.41   $   99,340   $   0.66   $   356,895   $   2.37   $   410,993   $   2.70    
                               
 Reconciliation of weighted average shares:                             
 Weighted average common shares - all basic calculations        146,419           147,164           146,204           148,243        
 Dilutive shares for long term compensation plans        763           566           685           600        
 Diluted shares for net income calculations        147,182           147,730           146,889           148,843        
 Weighted average common units        3,530           3,539           3,536           3,540        
 Diluted shares for NAREIT Funds from operations calculations        150,712           151,269           150,425           152,383        
                               
                               
                               
The Company believes that the calculation of NAREIT 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 dispositions of depreciable property.  As a result, year over year comparison of NAREIT 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 NAREIT Funds from operations provides useful information to the investment community about the Company’s financial performance when compared to other REITs since NAREIT Funds from operations is generally recognized as the standard for reporting the operating performance of a REIT.  NAREIT 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 depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. NAREIT 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. NAREIT 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 
December 31, 2016
(Unaudited and in thousands, except share and unit amounts)
       
  December 31, 2016   December 31, 2015
Assets      
Real estate:      
  Land and land improvements $   1,094,470     $   1,184,927  
  Building and improvements     4,501,921         5,131,648  
  Less: accumulated depreciation     (940,115 )       (1,148,928 )
       
Operating real estate     4,656,276         5,167,647  
       
Development in progress     267,450         360,948  
Land held for development     333,703         336,967  
       
Net real estate     5,257,429         5,865,562  
       
Cash and cash equivalents     43,642         35,353  
Restricted cash     12,383         9,018  
Accounts receivable     14,433         14,343  
Deferred rent receivable     109,245         118,787  
Deferred financing and leasing costs, net of accumulated      
  amortization (2016, $152,308; 2015, $175,798)     153,393         192,109  
Investments in and advances to unconsolidated joint ventures     242,208         218,454  
Assets held for sale     4,548         4,954  
Prepaid expenses and other assets     153,106         99,049  
       
Total assets $   5,990,387     $   6,557,629  
       
Liabilities      
Mortgage loans, net $   276,650     $   307,908  
Unsecured notes, net     2,280,286         2,580,108  
Credit facility   -         259,000  
Accounts payable     65,915         51,382  
Accrued interest     21,878         26,154  
Dividend and distributions payable     71,501         71,787  
Other liabilities     203,697         223,499  
Total liabilities     2,919,927         3,519,838  
       
Noncontrolling interest - operating partnership - 301,483 preferred units      
  outstanding as of December 31, 2016 and 2015     7,537         7,537  
       
Equity      
Shareholders' equity      
Common shares of beneficial interest, $.001 par value, 283,987,000 shares      
  authorized, 146,993,018 and 147,577,984 shares issued and outstanding as of      
  December 31, 2016 and 2015, respectively     147         148  
Additional paid-in capital     3,657,592         3,669,627  
Accumulated other comprehensive loss     (56,031 )       (22,506 )
Distributions in excess of net income     (598,317 )       (674,688 )
Total shareholders' equity     3,003,391         2,972,581  
       
Noncontrolling interest - operating partnership      
  3,530,031 and 3,539,075 common units outstanding as of December 31, 2016      
  and 2015, respectively     54,631         53,754  
Noncontrolling interest - consolidated joint ventures     4,901         3,919  
       
Total equity     3,062,923         3,030,254  
       
Total liabilities, noncontrolling interest - operating partnership and equity $   5,990,387     $   6,557,629  
       

 

Inquiries: Jeanne Leonard, Liberty Property Trust, 610.648.1704

Liberty Property Trust