WAYNE, Pa., Oct. 23, 2018 (GLOBE NEWSWIRE) -- Liberty Property Trust (NYSE: LPT) announced financial and operating results for the quarter ended September 30, 2018.

Highlights for Third Quarter 2018

• Net income available to common shareholders $1.01 per diluted share
• NAREIT Funds from Operations $0.69 per diluted share
• Same store operating income for the industrial portfolio increased by 3.8% over prior year quarter on a U.S. GAAP basis and 4.1% on a cash basis
• Industrial portfolio occupancy 96.5% at quarter-end
• Industrial rents increased 17.5% on a U.S. GAAP basis and 7.7% on cash basis
• $52.8 million in developments delivered
• $179.0 million in development starts
• $101.1 million in asset acquisitions
• $255.0 million in asset dispositions totaling 806,000 square feet

Earnings Guidance

• Liberty revised U.S. GAAP net income available to common shareholders per diluted share guidance range for 2018 to be $3.17 - $3.33 from a previous range of $3.24 - $3.59
• Liberty increased NAREIT Funds from Operations per diluted share guidance range for 2018 to be $2.07 - $2.09 from a previous range of $2.01 - $2.08

Management Comments:
“Liberty’s strong results reflect the unique landscape in which we are operating and our ability to capitalize on this environment. We continue to benefit from the dynamic and evolving logistics industry and robust demand for quality industrial space from users both large and small,” said Bill Hankowsky, Chairman and Chief Executive Officer. “Consistent with the opportunities we see in the marketplace, we intend to complete our strategic shift by monetizing our remaining, high-quality office assets and focusing our efforts and capital solely on our industrial platform.”

Financial Results
Net income: Net income available to common shareholders for the third quarter of 2018 was $150.1 million, or $1.01 per diluted share, compared to $59.5 million, or $0.40 per diluted share, for the third quarter of 2017. For the nine months ended September 30, 2018, net income available to common shareholders was $309.9 million, or $2.09 per diluted share, compared to $154.0 million, or $1.04 per diluted share, for the first nine months of 2017.

Net income for the third quarter of 2018 includes gains on sale of $96.9 million, or $0.64 per diluted share, compared to $23.8 million, or $0.16 per diluted share, for the same period in 2017. Net income for the nine months ended September 30, 2018 includes gains on sale of $239.4 million, or $1.58 per diluted share, compared to $30.5 million, or $0.20 per diluted share, for the first nine months of 2017.

Net income for the first nine months of 2018 includes $60.0 million in additional development service fee expense relating to the completion of development of Comcast Technology Center, and a $26.0 million non-cash impairment charge associated with the development of a mixed-use project in Camden, New Jersey.

Funds from Operations: The company uses the National Association of Real Estate Investment Trusts (“NAREIT”) definition of Funds from Operations (“FFO”) as an operating measure of the company’s financial performance. A reconciliation of U.S. GAAP net income to NAREIT FFO is included in the financial data tables accompanying this press release.

NAREIT FFO available to common shareholders for the third quarter of 2018 was $105.1 million, or $0.69 per diluted share, compared to $99.2 million, or $0.66 per diluted share, for the third quarter of 2017. FFO available to common shareholders for the nine months ended September 30, 2018 was $221.3 million, or $1.46 per diluted share, compared to $288.1 million, or $1.91 per diluted share, for the first nine months of 2017. FFO for the first nine months of 2018 was impacted by the aforementioned development service fee expenses and non-cash impairment charge totaling $86.0 million, or $0.57 per diluted share.

Operating Performance
Occupancy: At September 30, 2018, Liberty’s in-service portfolio of 103.5 million square feet was 96.6% occupied, compared to 97.0% at the end of the second quarter of 2018. During the quarter, Liberty completed leasing transactions totaling 5.1 million square feet, and occupancy on a signed but not yet commenced basis as of September 30, 2018 was 97.2%.

• Occupancy of Liberty’s 97.5 million square foot industrial portfolio was 96.5% at quarter-end, compared to 97.0% for the previous quarter. Industrial distribution rents increased 17.5% on a U.S. GAAP basis on retention and replacement leases signed during the quarter. Of these leases, 99.5% have built-in rent escalators.
• Occupancy of Liberty’s 6.0 million square foot office portfolio was 96.9% at quarter-end, compared to 96.6% for the previous quarter. Office rents increased 45.8% on a U.S. GAAP basis on retention and replacement leases signed in the office portfolio, and 90.8% of these leases contain built-in rent escalators.

Same Store Performance: Property level operating income for same store industrial properties increased by 4.1% on a cash basis and by 3.8% on a U.S. GAAP basis for the third quarter of 2018, compared to the same quarter in 2017. For the nine months ended September 30, 2018, property level operating income for same store industrial properties increased by 5.4% on a cash basis and by 4.2% on a U.S. GAAP basis, compared to the same period in 2017.

Real Estate InvestmentsDevelopment Deliveries: In the third quarter, Liberty brought into service three industrial development properties for a total investment of $52.8 million. The properties contain 803,000 square feet of leasable space and were 64.7% occupied as of the end of the quarter. The yield on these properties at September 30, 2018 was 4.4% and the projected stabilized yield is 7.5%.

Development Starts: In the third quarter, Liberty began development of eight properties totaling 1.8 million square feet of leasable space at a projected investment of $179.0 million. The properties consist of seven industrial distribution buildings and one build-to-suit office property.

Acquisitions: During the third quarter, Liberty purchased two industrial buildings in New Jersey and one industrial building in Texas totaling 1.3 million square feet for $101.1 million.

Subsequent to quarter end, Liberty purchased seven industrial properties totaling 1.1 million square feet in the United Kingdom for £111 million.

Real Estate Dispositions
During the third quarter Liberty sold five office buildings in Arizona totaling 806,000 square feet for $255.0 million. The company recorded a gain on this sale of $94.9 million in the third quarter of 2018. Liberty also sold 66 acres of land in the Lehigh Valley for proceeds of $9.7 million and recorded a gain of $1.9 million in the third quarter of 2018.

2018 Outlook

• Liberty has revised its guidance range for 2018 net income available to common shareholders to $3.17 - $3.33 per diluted share. This change reflects charges incurred in the second quarter.
• Liberty has revised its guidance range for 2018 NAREIT FFO to $2.07 - $2.09 per diluted share. This change reflects charges incurred in the second quarter. Without charges, the new range would be $2.64 - $2.66 per diluted share.
• Rental increases on renewal and replacement leases in the industrial portfolio during 2018 are expected to range from 13% - 15% on a GAAP basis and from 5% to 6% on a cash basis.
• Projected disposition activity range increased to $800 – $950 million from $700 - $900 million.

A reconciliation of projected U.S. GAAP net income available to common shareholders per share to projected NAREIT FFO per share for 2018 and projected FFO per diluted share before charges is below. Additional information on assumptions underlying this guidance is included in Liberty’s third quarter supplemental financial report on the company’s website.

About the Company
Liberty Property Trust (NYSE:LPT) is a leader in commercial real estate, serving customers in the United States and United Kingdom, through the development, acquisition, ownership and management of industrial and office properties. Liberty's 103.5 million square foot operating portfolio provides productive work environments for 1,200 tenants.