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Liberty Property (LPT) Beats Q2 FFO Estimates, Up Y/Y
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Liberty Property Trust reported second-quarter 2016 funds from operations (“FFO”) of 68 cents per share, which beat the Zacks Consensus Estimate of 64 cents. The prior-year quarter figure was 67 cents. Results reflect growth in same-store operating income for the industrial distribution portfolio.
Total operating revenue of around $186.7 million was down 8.3% year over year and missed the Zacks Consensus Estimate of $194 million.
Quarter in Detail
During the reported quarter, Liberty Property accomplished lease deals for 5.4 million square feet. As of Jun 30, 2016, occupancy at the company’s in-service portfolio – spanning 104 million square feet – rose 50 basis points (bps) sequentially to 93.8%.
Same-store properties’ operating income increased 2.6% year over year on a cash basis and 2.2% on a straight-line basis. Industrial distribution rents climbed 10.9% while same-store operating income for the industrial distribution portfolio increased 4.4%.
Liberty Property exited second-quarter 2016 with cash and cash equivalents of nearly $29.3 million, down from $35.4 million at the end of the prior year.
Portfolio Activity
During the quarter, Liberty began development of five distribution properties, aggregating 1.6 million square feet of leasable space at a projected investment of $116.3 million.
Four development properties were brought into service during the quarter for a total investment of $77.6 million. Comprising 795,000 square feet of leasable space, the properties were 52.2% occupied at the quarter end.
Further, during the second quarter, Liberty sold one property, comprising 198,000 square feet of leasable space for $12 million. Further, the company transferred its interest in two properties owned in a joint venture.
Liberty inked a deal to sell a portfolio of non-core suburban properties. This includes 108 buildings totaling around 7.6 million square feet of leasable space in five markets. The sale is likely to close in third-quarter 2016.
Outlook
Liberty Property lowered its FFO estimate for 2016 from $2.35–$2.55 to $2.30–$2.40. The revised range includes an anticipated charge of 20 cents per share related to the early extinguishment of debt through using the proceeds generated from forthcoming portfolio sale.
Our Take
Liberty Property’s efforts toward leveraging development opportunities and strategic dispositions are expected to enhance its overall portfolio quality. However, adverse near-term impact on earnings from dispositions and any rise in interest rate remain as concerns.
Currently, Liberty Property carries a Zacks Rank #3 (Hold).
We now look forward to the earnings releases of Duke Realty Corporation , Kimco Realty Corporation (KIM - Free Report) and Public Storage (PSA - Free Report) which are scheduled this week.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. 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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Liberty Property (LPT) Beats Q2 FFO Estimates, Up Y/Y
Liberty Property Trust reported second-quarter 2016 funds from operations (“FFO”) of 68 cents per share, which beat the Zacks Consensus Estimate of 64 cents. The prior-year quarter figure was 67 cents. Results reflect growth in same-store operating income for the industrial distribution portfolio.
Total operating revenue of around $186.7 million was down 8.3% year over year and missed the Zacks Consensus Estimate of $194 million.
Quarter in Detail
During the reported quarter, Liberty Property accomplished lease deals for 5.4 million square feet. As of Jun 30, 2016, occupancy at the company’s in-service portfolio – spanning 104 million square feet – rose 50 basis points (bps) sequentially to 93.8%.
Same-store properties’ operating income increased 2.6% year over year on a cash basis and 2.2% on a straight-line basis. Industrial distribution rents climbed 10.9% while same-store operating income for the industrial distribution portfolio increased 4.4%.
Liberty Property exited second-quarter 2016 with cash and cash equivalents of nearly $29.3 million, down from $35.4 million at the end of the prior year.
Portfolio Activity
During the quarter, Liberty began development of five distribution properties, aggregating 1.6 million square feet of leasable space at a projected investment of $116.3 million.
Four development properties were brought into service during the quarter for a total investment of $77.6 million. Comprising 795,000 square feet of leasable space, the properties were 52.2% occupied at the quarter end.
Further, during the second quarter, Liberty sold one property, comprising 198,000 square feet of leasable space for $12 million. Further, the company transferred its interest in two properties owned in a joint venture.
Liberty inked a deal to sell a portfolio of non-core suburban properties. This includes 108 buildings totaling around 7.6 million square feet of leasable space in five markets. The sale is likely to close in third-quarter 2016.
Outlook
Liberty Property lowered its FFO estimate for 2016 from $2.35–$2.55 to $2.30–$2.40. The revised range includes an anticipated charge of 20 cents per share related to the early extinguishment of debt through using the proceeds generated from forthcoming portfolio sale.
Our Take
Liberty Property’s efforts toward leveraging development opportunities and strategic dispositions are expected to enhance its overall portfolio quality. However, adverse near-term impact on earnings from dispositions and any rise in interest rate remain as concerns.
LIBERTY PPTY TR Price, Consensus and EPS Surprise
LIBERTY PPTY TR Price, Consensus and EPS Surprise | LIBERTY PPTY TR Quote
Currently, Liberty Property carries a Zacks Rank #3 (Hold).
We now look forward to the earnings releases of Duke Realty Corporation , Kimco Realty Corporation (KIM - Free Report) and Public Storage (PSA - Free Report) which are scheduled this week.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. 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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>