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Liberty (LPT) Q3 FFO & Revenues Top, View Raised, Stock Up

Liberty Property Trust LPT reported third-quarter 2017 funds from operations (FFO) per share of 66 cents, which surpassed the Zacks Consensus Estimate of 63 cents. Total operating revenues of around $193.7 million for the quarter also outpaced the Zacks Consensus Estimate of $167.9 million.

On a year-over-year basis, the company’s FFO per share remained unchanged, while total operating revenues inched up 1.5% year over year.

During the reported quarter, Liberty Property accomplished lease deals for 5.9 million square feet of space. As of Sep 30, 2017, occupancy at the company’s in-service portfolio, spanning 100 million square feet, expanded 30 basis points (bps) sequentially to 95.9%.

Amid these, shares of Liberty Property climbed 2% to $42.38 during regular trading session on Oct 24.

Quarter in Detail

Liberty Property’s industrial portfolio, spanning 93.4 million square feet, enjoyed occupancy of 96.3% at the end of the quarter, marking an expansion of 40 bps from the prior quarter. Industrial distribution rents escalated 14.8% on renewal and replacement leases signed during the quarter.  

On the other hand, the office portfolio, comprising 6.7 million square feet of space, had occupancy of 91.0%, down 50 bps from the prior quarter. Office rents were up 12.6% on renewal and replacement leases.

Same-store properties’ operating income increased 3.0% year over year on a cash basis and 2.6% on a straight-line basis. Additionally, same-store operating income for the industrial portfolio climbed 5.2% on a cash basis and 4.3% on a straight-line basis. However, same-store operating income for office portfolio descended 7.7% on a cash basis and 5.3% on a straight-line basis.

Balance Sheet Position

Liberty Property exited third-quarter 2017 with cash and cash equivalents of around $47.7 million, up from $43.6 million recorded at the end of the prior year.

Notably, during the reported quarter, the company’s share repurchase authorization was renewed by its board of trustees to purchase up to $250 million of its outstanding common shares. This authorization is valid through Sep 28, 2019.

Following the quarter end, Liberty Property’s existing $800-million unsecured revolving credit facility that was set to mature in March 2018 was amended and restated with a new $900-million unsecured facility. The new facility matures in October 2021 and the company enjoys rights for an additional year of extension.


Liberty Property raised its guidance and now projects full-year 2017 FFO per share in the range of $2.54-$2.57, against $2.49-$2.55 guided earlier. The Zacks Consensus Estimate for the same is currently pegged at $2.52.

Further, the company revised its 2017 industrial same-store NOI guidance range to 3-3.5% from the prior range of 2-3%.

Our Take

The better-than-expected performance of Liberty Property in third quarter is encouraging. The company’s premium quality industrial properties, situated in key locations, are likely to help it leverage on the increasing demand amid an e-commerce boom and supply-chain strategy transformations. It is poised for growth as fundamentals of the industrial real estate market remain robust, resulting in solid rent growth, enhanced occupancy and development opportunities. Liberty Property plans to fund investments in industrial assets through proceeds from dispositions of office properties. Nevertheless, adverse near-term impact on earnings from dispositions and rise in interest rates remain concerns.

Currently, Liberty Property carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Liberty Property Trust Price, Consensus and EPS Surprise

Liberty Property Trust Price, Consensus and EPS Surprise | Liberty Property Trust Quote

We now look forward to the earnings releases of Simon Property Group, Inc. SPG, Apartment Investment and Management Company AIV, and Ventas Inc. VTR, all of which are expected to report their numbers 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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