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Liberty (LPT) to Build Industrial Building for Intralox

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Liberty Property Trust has been experiencing solid demand for industrial space from its existing tenants. The company recently announced that it would develop a 220,000 square foot industrial building for global conveyance solutions leader – Intralox, LLC – at 7157 Ridge Road, in Hanover, MD. This move would enable Intralox to expand its business and consolidate three locations.

Known as Liberty Ridge, this new build-to-suit project is located at an advantageous location in the BWI Corridor close to the Baltimore-Washington Thurgood Marshall International Airport. The location provides immediate access to major transport routes including I-95, I-295 and Route 100.

For this new Class A building in Hanover, ground breaking has already taken place and its completion is slated in spring 2018. It would complement Liberty's present 4 million square foot industrial portfolio in the region beside I-95 spanning from Harford County to Prince George's County.

Notably, Liberty has been making concerted efforts to expand its industrial portfolio amid the improving fundamentals in this real estate category. Going by numbers, per a study by the commercial real estate services’ firm – CBRE Group Inc. – the overall U.S. industrial real estate market remained upbeat in the second quarter, with the industrial availability rate contracting 10 basis points to 7.8%.

This not only marked the market’s 27th decline over the past 28 quarters, but also the lowest level since first-quarter 2001. Obviously, the recovering economy and job market gains aided this improvement, but specifically, e-commerce boom and a healthy manufacturing environment were the chief drivers. Also, lesser-than-expected completions of construction kept a check on the supply numbers. Such healthy fundamentals are creating scope for industrial REITs like Prologis Inc. (PLD - Free Report) , DCT Industrial Trust Inc. , STAG Industrial, Inc. (STAG - Free Report) and Liberty to flourish.  

In fact, Liberty’s industrial portfolio, spanning 92.3 million square feet, was 95.9% leased at the end of the second quarter. Industrial distribution rents escalated 11.9% on renewal and replacement leases signed during the quarter. Additionally, same-store operating income for the industrial portfolio climbed 2.1% on a cash basis and 2.7% on a straight-line basis.

Currently Liberty currently carries a Zacks Rank #2 (Buy). Also, its shares have outperformed the industry it belongs to, year to date.

In fact, the company’s shares logged in a gain of 6.4% against the 3.0% return booked by the industry. It witnessed an impressive performance in second-quarter 2017, with both funds from operations (“FFO”) per share and revenues surpassing estimates. Given its progress on fundamentals and a decent Zacks Rank, the stock is likely to keep performing well in the quarters ahead.



Note: 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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