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Why Is Liberty Property (LPT) Up 6.5% Since Its Last Earnings Report?

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It has been about a month since the last earnings report for Liberty Property Trust (LPT - Free Report) . Shares have added about 6.5% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is LPT due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Liberty Property Q1 FFO & Revenues Beat Estimates, Guides Up

Liberty Property Trust reported first-quarter 2018 FFO per share of 65 cents, which surpassed the Zacks Consensus Estimate of 62 cents. Total operating revenues of around $190.2 million for the quarter also outpaced the Zacks Consensus Estimate of $169.5 million.

On a year-over-year basis, the company’s FFO per share climbed from 60 cents per share recorded in the year-earlier quarter, while total operating revenues increased 14.7% year over year. The company also raised its guidance for 2018.

During the reported quarter, Liberty Property accomplished lease deals for 6.3 million square feet of space. As of Mar 31, 2018, occupancy at the company’s operating portfolio, spanning 101.3 million square feet, contracted 20 basis points (bps) sequentially to 96.7%.

Quarter in Detail

Liberty Property’s industrial portfolio, spanning 94.4 million square feet of area, enjoyed occupancy of 96.7% at the end of the first quarter, marking a contraction of 30 bps from the prior quarter. Industrial rents escalated 12.4% on retained and replacement leases commenced during the quarter. 

The office portfolio, comprising 6.8 million square feet of space, had occupancy of 95.9%, up 30 bps from the previous quarter. Office rents were up 23.5% on retained and replacement leases.
Same-store operating income for the industrial portfolio jumped 7.0% on a cash and 5.0% on a GAAP basis.

Portfolio Activity

During the first quarter, Liberty acquired a 100% leased building in California, aggregating 400,000 square feet of space, for $90.9 million.

On the other hand, Liberty sold 24 properties, totaling around 1.5 million square feet of area, for $190.8 million. These were mainly office properties in sub-urban Philadelphia.

The company brought into service three wholly-owned development properties, having 519,000 square feet of leasable space and 100% occupied as of the end of the quarter, for a total investment of $85.1 million. Further, Liberty commenced development of six wholly-owned properties during the quarter, aggregating 1.7 million square feet of leasable space, at an estimated investment of $123.5 million.

Balance-Sheet Position

Liberty Property exited first-quarter 2018 with cash and cash equivalents of around $30.4 million, up from $11.9 million recorded at the end of the prior quarter.

Outlook

Liberty Property raised its outlook for 2018. The company now guides FFO per share of $2.55-$2.65 compared to its previous outlook of $2.53-$2.65.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There have been three revisions higher for the current quarter compared to two lower.

Liberty Property Trust Price and Consensus

VGM Scores

At this time, LPT has a subpar Growth Score of D, however its Momentum is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for momentum based on our styles scores.

Outlook

Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising. Notably, LPT has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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