LRY Misses Q3 Ests.; Cuts 2013 Guidance

The office and industrial real estate investment trust (:REIT), Liberty Property Trust (LRY), reported third-quarter 2013 funds from operations (:FFO) of 57 cents per share. This missed the Zacks Consensus Estimate of 61 cents as well as the prior-year quarter figure of 64 cents.

The quarterly results were affected by costs related to the buyout of Cabot Industrial Value Fund III Operating Partnership, L.P, share dilutions and higher termination fees.

However, total operating revenue during the quarter came in at $183.4 million, up 9.4% from $167.7 million in the prior-year period but fell short of the Zacks Consensus Estimate of $186 million.

Inside the Headlines

Liberty Property continued strong leasing activity in the third quarter, with about 8.7 million square feet of leased space. With this, the company set a new leasing record.

As of Sep 30, 2013, the occupancy at the in-service portfolio of Liberty Property spanning 83.7 million square feet declined 220 basis points (bps) to 90.6% from 92.8% sequentially. This was due to the timing of the initiation of some lease agreements. Nevertheless, on a signed basis, the in-service portfolio was 92.4% leased at the end of the quarter.

On the other hand, in third-quarter 2013, same-store properties operating income upped 1.8% on a cash basis and 1.0% on a straight-line basis from the year-ago quarter.

Portfolio Restructuring Activity

During the said quarter, Liberty Property acquired a Phoenix, Ariz.-based industrial building for $27.9 million. The untenanted property (at the time of acquisition) spans 593,600 square feet of leasable space.

The company also brought 4 development assets (35% occupied as of Sep 30, 2013) into operation with a total investment of $163.2 million. The asset, spanning 2.5 million square feet of leasable space, generates a current yield of 5.1% and a stabilized yield of 8.9%.

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LRY Misses Q3 Ests.; Cuts 2013 Guidance