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Liberty Property (LPT) Declines on Q3 FFO Estimate Miss
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Shares of Liberty Property Trust declined 1% during Tuesday’s regular trading session as the company reported lower-than expected earnings in the third quarter.
The company reported funds from operations (“FFO”) of 66 cents per share, which missed both the Zacks Consensus Estimate and the prior-year quarter figure by a penny. Results reflected a decrease in total operating revenue in the quarter.
Total operating revenue of around $190.9 million was down 4.1% year over year and missed the Zacks Consensus Estimate of $193 million.
Quarter in Detail
During the reported quarter, Liberty Property accomplished lease deals for 9.1 million square feet of space. As of Sep 30, 2016, occupancy at the company’s in-service portfolio – spanning 104 million square feet – expanded 120 basis points (bps) sequentially to 95.5%.
Same-store properties’ operating income increased 2.9% year over year on a cash basis and 2.6% on a straight-line basis. Industrial distribution rents climbed 12.4% while same-store operating income for the industrial distribution portfolio was up 3.1%.
Liberty Property exited third-quarter 2016 with cash and cash equivalents of around $42.3 million, up from $35.4 million at the end of the prior year.
Outlook
Liberty Property has narrowed its outlook for FFO per share to $2.36–$2.38 from $2.30–$2.40 guided earlier. This includes a charge of 18 cents per share relating to the early extinguishment of debt. The Zacks Consensus Estimate is currently pegged at $2.35 per share.
Our Take
We are discouraged with a lower-than-expected result at Liberty Property. Going forward, Liberty Property has the capacity to turnaround, backed by solid portfolio of metro-office, multi-tenant industrial and flex properties, divestiture of non-core assets, decent balance sheet and rising demand for quality industrial spaces.
Notably, following the end of the quarter, Liberty accomplished the sale of a portfolio of non-core suburban properties for $969 million. The move comes as part of the company’s strategy of shedding its non-core suburban properties. However, earnings dilutive effects of divestiture, operational risks associated with huge construction pipeline and any rise in interest rates remain concerns.
Currently, Liberty Property carries a Zacks Rank #4 (Sell).
We now look forward to the earnings releases of Essex Property Trust Inc. (ESS - Free Report) , Apartment Investment and Management Company (AIV - Free Report) and The Macerich Company (MAC - Free Report) , which are all scheduled to report on Oct 27.
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) Declines on Q3 FFO Estimate Miss
Shares of Liberty Property Trust declined 1% during Tuesday’s regular trading session as the company reported lower-than expected earnings in the third quarter.
The company reported funds from operations (“FFO”) of 66 cents per share, which missed both the Zacks Consensus Estimate and the prior-year quarter figure by a penny. Results reflected a decrease in total operating revenue in the quarter.
Total operating revenue of around $190.9 million was down 4.1% year over year and missed the Zacks Consensus Estimate of $193 million.
Quarter in Detail
During the reported quarter, Liberty Property accomplished lease deals for 9.1 million square feet of space. As of Sep 30, 2016, occupancy at the company’s in-service portfolio – spanning 104 million square feet – expanded 120 basis points (bps) sequentially to 95.5%.
Same-store properties’ operating income increased 2.9% year over year on a cash basis and 2.6% on a straight-line basis. Industrial distribution rents climbed 12.4% while same-store operating income for the industrial distribution portfolio was up 3.1%.
Liberty Property exited third-quarter 2016 with cash and cash equivalents of around $42.3 million, up from $35.4 million at the end of the prior year.
Outlook
Liberty Property has narrowed its outlook for FFO per share to $2.36–$2.38 from $2.30–$2.40 guided earlier. This includes a charge of 18 cents per share relating to the early extinguishment of debt. The Zacks Consensus Estimate is currently pegged at $2.35 per share.
Our Take
We are discouraged with a lower-than-expected result at Liberty Property. Going forward, Liberty Property has the capacity to turnaround, backed by solid portfolio of metro-office, multi-tenant industrial and flex properties, divestiture of non-core assets, decent balance sheet and rising demand for quality industrial spaces.
Notably, following the end of the quarter, Liberty accomplished the sale of a portfolio of non-core suburban properties for $969 million. The move comes as part of the company’s strategy of shedding its non-core suburban properties. However, earnings dilutive effects of divestiture, operational risks associated with huge construction pipeline and any rise in interest rates remain concerns.
Currently, Liberty Property carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
LIBERTY PPTY TR Price, Consensus and EPS Surprise
LIBERTY PPTY TR Price, Consensus and EPS Surprise | LIBERTY PPTY TR Quote
We now look forward to the earnings releases of Essex Property Trust Inc. (ESS - Free Report) , Apartment Investment and Management Company (AIV - Free Report) and The Macerich Company (MAC - Free Report) , which are all scheduled to report on Oct 27.
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.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>