Liberty Property Beats Estimates – Analyst Blog

Referenced Stocks: DRE, LRY

Liberty Property Trust ( LRY ), a real estate investment trust (REIT), reported first quarter 2012 FFO (fund from operations) of 68 cents per share compared with 65 cents in the year-earlier quarter. Reported FFO beat the Zacks Consensus Estimate by 5 cents. Fund from operations, 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.

Total revenue for first quarter 2012 stood at $169.9 million compared with $166.1 million in the year-ago quarter. Total revenue in the reported quarter fell short of the Zacks Consensus Estimate of $173 million.

At the end of the reported quarter, the in-service portfolio of Liberty Property, spanning 79.3 million square feet, had occupancy of 90.5% compared with 91.3% in the previous quarter. During the reported quarter, Liberty Property witnessed strong leasing activities with about 4.3 million square feet of leased space. Operating income from same-store properties inched up 0.5% on a cash basis but slipped 0.4% on a straight line basis year over year.

The company continues to reposition its portfolio by sellingsuburban office and high-finish flex properties. During the reported quarter, Liberty Property sold 2 properties (76.6% leased) spanning 105,000 square feet for $6.5 million. There were no acquisitions during the first quarter 2012.

Also during first quarter 2012, Liberty Property began development of a distribution building in Suffolk, Virginia spanning 126,000 square feet for an estimated investment of $7.8 million.

Subsequent to the quarter-end, Liberty Property completed the sale of 49 properties spanning 2.5 million square feet of leasable space in Wisconsin, Maryland, Virginia, North Carolina and New Jersey for approximately $195 million. At the time of sale, the properties were 83% leased.

During the reported quarter, Liberty property 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. At the end of first quarter 2012, the company had $27.6 million in cash and cash equivalents.

For fiscal 2012, Liberty Property revised its FFO guidance from the earlier range of $2.45 - $2.60 per share to $2.50 -$2.65 per share.

We currently have a 'Neutral' recommendation on Liberty Property, which presently has a Zacks #3 Rank that translates into a short-term Hold rating. One of its competitors, Duke Realty Corp. ( DRE ) currently retains a Zacks #3 Rank

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Liberty Property Beats Estimates - Analyst Blog