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Press release from PR Newswire

Liberty Property Trust Announces First Quarter 2012 Results

Tuesday, April 24, 2012

Liberty Property Trust Announces First Quarter 2012 Results08:00 EDT Tuesday, April 24, 2012MALVERN, Pa., April 24, 2012 /PRNewswire/ -- Liberty Property Trust (NYSE: LRY) reported that funds from operations available to common shareholders (diluted) ("FFO") for the first quarter of 2012 was $0.68 per share, compared to $0.65 per share for the first quarter of 2011. Funds from operations for the first quarter of 2012 include termination fees of $2.2 million, a $3.7 million net discount realized on the redemption of certain preferred units, and $3.2 million of additional compensation expense due to the accelerated vesting of long-term incentive compensation due to the years of service and ages of certain employees.Net income per common share (diluted) was $0.32 per share for the quarter ended March 31, 2012, compared to $0.25 per share (diluted) for the quarter ended March 31, 2011.  "Liberty has done very well so far in 2012," commented Bill Hankowsky, chief executive officer. "We had strong first quarter, leasing 4.3 million square feet and redeeming high-dividend preferred securities, and we have subsequently advanced our repositioning strategy with the execution of a significant sale of suburban office and high-finish flex properties. All of this was accomplished in an environment of slow recovery in the real estate markets."Portfolio PerformanceLeasing: At March 31, 2012, Liberty's in-service portfolio of 79.3 million square feet was 90.5% occupied, compared to 91.3% at the end of the fourth quarter, an anticipated decrease. During the quarter, Liberty completed lease transactions totaling 4.3 million square feet of space. Same Store Performance: Property level operating income for same store properties increased by 0.5% on a cash basis and decreased by 0.4% on a straight line basis for the first quarter of 2012 compared to the same quarter in 2011.Capital Activities and Balance Sheet ManagementPreferred Unit Redemptions: During the first quarter, Liberty redeemed $32.5 million of its outstanding 6.65% Series F Cumulative Redeemable Preferred Units for $26.0 million, and redeemed the entire $95.0 million of 7.45% Series B Cumulative Redeemable Preferred Units at par.  The $6.5 million discount net of the write off of $2.8 million of origination costs is included in FFO.Property Sales: During the first quarter, Liberty sold two operating properties, which contained 105,000 square feet of leasable space for $6.5 million. The properties were 76.6% leased at the time of the sale. Real Estate InvestmentsDevelopment: Liberty began development of a 126,000 square foot distribution building in Suffolk, Virginia, for a projected investment of $7.8 million. The property is 100% preleased.  Acquisitions: Liberty acquired no properties during the quarter. Subsequent EventsOn April 3, Liberty completed the sale of 49 properties totaling 2.5 million square feet of leasable space in Wisconsin, Maryland, Virginia, North Carolina and New Jersey for approximately $195 million. The properties consist primarily of single-story and mid-rise office buildings and high-finish flex properties. The properties were 83% leased when the transaction closed. Earnings OutlookLiberty had previously announced the expectation for 2012 funds from operations in the range of $2.45 - $2.60 per diluted share. Liberty is revising this guidance to reflect the redemption of the preferred units during the first quarter, and we now expect 2012 funds from operations in the range of $2.50 - $2.65 per diluted share. A reconciliation of FFO to GAAP net income is below:2012 RangeLowHighProjected net income per share$ 1.03$ 1.17Depreciation and amortization of unconsolidated joint ventures0.120.14Depreciation and amortization1.451.47Gain on property dispositions(0.10)(0.13)Projected funds from operations per share$    2.50$   2.65About the CompanyLiberty Property Trust (NYSE: LRY) is a leader in commercial real estate, serving customers in the United States and United Kingdom, through the development, acquisition, ownership and management of superior office and industrial properties. Liberty's 79 million square foot portfolio includes approximately 650 properties which provide office, distribution and light manufacturing facilities to 1,700 tenants.  Additional information about the Company, including Liberty's Quarterly Supplemental Package with detailed financial information is available in the Investors section of the Company's web site at www.libertyproperty.com. If you are unable to access the web site, a copy of the supplemental package may be obtained by contacting Liberty by phone at 610-648-1704, or by e-mail to jleonard@libertyproperty.com.Liberty will host a conference call during which management will discuss first quarter results on Tuesday, April 24, 2012, at 1 p.m. Eastern Time.  To access the conference call, please dial 1-888-870-2815. The passcode needed for access is 68152370. A replay of the call will be available until May 8, 2012, by dialing 1-855-859-2056 using the same passcode as above. The call can also be accessed via the Internet on the Investors page of Liberty's web site at www.libertyproperty.com.The statements contained in this press release may include forward-looking statements within the meaning of the federal securities law.  Although Liberty believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be achieved.  As forward-looking statements, these statements involve risks, uncertainties and other factors that could cause actual results to differ materially from the expected results.  These factors include, without limitation, the uncertainties affecting real estate businesses generally (such as entry into new leases, renewals of leases and dependence on tenants' business operations), risks relating to our ability to maintain and increase property occupancy and rental rates, the financial condition of tenants, the uncertainties of real estate development and construction activity, the costs and availability of financing, the effects of local economic and market conditions, regulatory changes, potential liability relative to environmental matters and other risks and uncertainties detailed in the Company's filings with the Securities and Exchange Commission.  The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. Liberty Property Trust  Statement of Operations March 31, 2012 (Unaudited and in thousands, except per share amounts)  Quarter Ended March 31, 2012March 31, 2011 Operating Revenue  Rental  $                           119,591$                           114,724  Operating expense reimbursement50,34651,410 Total operating revenue 169,937166,134 Operating Expenses   Rental property30,44031,750 Real estate taxes 20,78219,489 General and administrative17,20415,949 Depreciation and amortization 41,36739,077 Total operating expenses 109,793106,265 Operating Income 60,14459,869 Other Income/Expense  Interest and other  2,7622,589 Interest  (28,476)(32,889) Total other income/expense (25,714)(30,300) Income before property dispositions, income taxes, noncontrolling interest     and equity in earnings of unconsolidated joint ventures 34,43029,569 Gain on property dispositions 5231,161 Income taxes (178)(550) Equity in earnings of unconsolidated joint ventures 916534 Income from continuing operations 35,69130,714 Discontinued operations (including net gain on property dispositions of $1,064 and $470 for the quarters ended March 31, 2012 and 2011, respectively)3,9114,229 Net Income 39,60234,943 Noncontrolling interest - operating partnerships (2,513)(6,235) Noncontrolling interest - consolidated joint ventures -201 Net Income available to common shareholders     $                             37,089$                             28,909 Net income $                             39,602$                             34,943 Other comprehensive income 2,3172,144 Comprehensive income 41,91937,087 Less: comprehensive income attributable to noncontrolling interest (2,586)(6,306) Comprehensive income attributable to common shareholders $                             39,333$                             30,781 Basic income per common share   Continuing operations $                                 0.29$                                 0.21 Discontinued operations $                                 0.03$                                 0.04 Total basic income per common share $                                 0.32$                                 0.25 Diluted income per common share  Continuing operations $                                 0.29$                                 0.21 Discontinued operations $                                 0.03$                                 0.04 Total diluted income per common share $                                 0.32$                                 0.25 Weighted average shares  Basic 115,972114,013 Diluted 116,743114,766 Amounts attributable to common shareholders      Income from continuing operations $                             33,301$                             24,820 Discontinued operations 3,7884,089 Net income $                             37,089$                             28,909  Liberty Property Trust  Statement of Funds From Operations March 31, 2012 (Unaudited and in thousands, except per share amounts)  Quarter Ended March 31, 2012March 31, 2011Per Per WeightedWeighted Average   Average  DollarsShareDollarsShare Reconciliation of net income to FFO - basic:  Basic - income available to common shareholders $              37,089$             0.32$              28,909$                         0.25 Adjustments:  Depreciation and amortization of unconsolidated joint ventures 3,6163,649 Depreciation and amortization 41,04643,971 Gain on property dispositions (1,104)(500) Noncontrolling interest share in addback for depreciation and amortization  and gain on property dispositions (1,373)(1,558) Funds from operations available to common shareholders - basic $              79,274$             0.68$              74,471$                         0.65 Reconciliation of net income to FFO - diluted:  Diluted - income available to common shareholders $              37,089$             0.32$              28,909$                         0.25 Adjustments:  Depreciation and amortization of unconsolidated joint ventures 3,6163,649 Depreciation and amortization  41,04643,971 Gain on property dispositions (1,104)(500) Noncontrolling interest excluding preferred unit distributions  1,207982 Funds from operations available to common shareholders - diluted $              81,854$             0.68$              77,011$                         0.65 Reconciliation of weighted average shares:  Weighted average common shares - all basic calculations 115,972114,013 Dilutive shares for long term compensation plans 771753 Diluted shares for net income calculations 116,743114,766 Weighted average common units 3,8093,929 Diluted shares for Funds from operations calculations 120,552118,695The Company believes that the calculation of Funds from operations is helpful to investors and management as it is a measure of the Company's operating performance that excludes depreciation and amortization and gains and losses from property dispositions.  As a result, year over year comparison of Funds from operations reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, development activities, general and administrative expenses, and interest costs, providing perspective not immediately apparent from net income.  In addition, management believes that Funds from operations provides useful information to the investment community about the Company's financial performance when compared to other REITs since Funds from operations is generally recognized as the standard for reporting the operating performance of a REIT.  Funds from operations available to common shareholders is defined by NAREIT as net income (computed in accordance with generally accepted accounting principles ("GAAP")), excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Funds from operations available to common shareholders does not represent net income or cash flows from operations as defined by GAAP and does not necessarily indicate that cash flows will be sufficient to fund cash needs. It should not be considered as an alternative to net income as an indicator of the Company's operating performance or to cash flows as a measure of liquidity. Funds from operations available to common shareholders also does not represent cash flows generated from operating, investing or financing activities as defined by GAAP. Liberty Property TrustBalance Sheet March 31, 2012(In thousands, except share and unit amounts)March 31, 2012December 31, 2011Assets (unaudited) Real estate:Land and land improvements$                         854,972$                         855,213Building and improvements4,117,0934,109,783Less: accumulated depreciation(1,088,301)(1,058,283)Operating real estate3,883,7643,906,713Development in progress138,63488,848Land held for development218,926219,375Net real estate4,241,3244,214,936Cash and cash equivalents27,65018,204Restricted cash39,18863,659Accounts receivable9,2108,192Deferred rent receivable104,502103,002Deferred financing and leasing costs, net of accumulatedamortization (2012, $128,303; 2011, $123,822)130,843130,160Investments in and advances to unconsolidated joint ventures174,651174,687Assets held for sale  197,737200,647Prepaid expenses and other assets90,18976,186Total assets$                      5,015,294$                      4,989,673LiabilitiesMortgage loans$                         282,716$                         290,819Unsecured notes1,792,6431,792,643Credit facility293,300139,400Accounts payable 32,31023,418Accrued interest33,03624,147Dividend and distributions payable57,39356,958Other liabilities177,590194,995Total liabilities2,668,9882,522,380Noncontrolling interest - operating partnership - 301,483 preferred unitsoutstanding as of March 31, 2012 and December 31, 20117,5377,537EquityShareholders' equity:Common shares of beneficial interest, $.001 par value, 183,987,000 sharesauthorized, 118,264,957 (includes 1,249,909 in treasury) and 117,352,353(includes 1,249,909 in treasury) shares issued and outstanding as of March 31, 2012 and December 31, 2011, respectively118117Additional paid-in capital2,637,8612,617,355Accumulated other comprehensive loss1,814(429)Distributions in excess of net income(479,994)(461,498)Common shares in treasury, at cost, 1,249,909 shares as ofMarch 31, 2012 and December 31, 2011(51,951)(51,951)Total shareholders' equity2,107,8482,103,594Noncontrolling interest - operating partnership3,808,746 common units outstanding as of March 31, 2012   and December 31, 201163,92064,4285,290,000 and 9,740,000 preferred units outstanding as of March 31, 2012   and December 31, 2011, respectively163,226287,959Noncontrolling interest - consolidated joint ventures3,7753,775Total equity2,338,7692,459,756Total liabilities, noncontrolling interest - operating partnership & equity$                      5,015,294$                      4,989,673 SOURCE Liberty Property TrustFor further information: Jeanne A. Leonard, Liberty Property Trust, +1-610-648-1704