Liberty Property (LPT) Q2 FFO & Revenues Surpass Estimates

Liberty Property Trust (NYSE:LPT) reported second-quarter 2019 NAREIT funds from operations (FFO) per share of 68 cents, which surpassed the Zacks Consensus Estimate of 65 cents.

Results reflect 2.9% increase in cash same-store operating income. Amid healthy demand from users for industrial space, the company witnessed solid leasing activity.

However, revenues were down 2.8% from the prior-year quarter to $161.3 million. Nevertheless, the top line surpassed the Zacks Consensus Estimate of $160 million.

Quarter in Detail

For its industrial portfolio, during the reported quarter, Liberty Property accomplished lease deals for 8.6 million square feet of space. As of Jun 30, 2019, occupancy at the company’s in-service operating portfolio, spanning 104.0 million square feet, shrunk 40 basis points sequentially to 95.2%. Rents increased 2.9% on a cash basis (11.9% GAAP) on retention and replacement leases commenced during the quarter.

Property level operating income for same-store properties were up 2.9% on a cash basis (0.2% GAAP) year over year.

Portfolio Activity

During the June-ended quarter, Liberty Property acquired one industrial properties, aggregating 218,000 square feet, for $26.5 million. At the same time, the company sold four operating properties, totaling 227,400 square feet, for $103.1 million.

The company brought into service two industrial properties, comprising 823,600 square feet of space for a total investment of $79.3 million. These properties were 95% occupied as of the end of the second quarter.

Balance-Sheet Position

Liberty Property exited the second quarter with cash and cash equivalents of around $21 million, down from $84.9 million recorded at the end of December 2018.

Our Take

Banking on the strong fundamentals of the industrial real estate market, Liberty Property is focusing to expand its portfolio through strategic acquisitions and development. Also, it is disposing non-core office properties to pursue such expansion opportunities. Further, it has a decent balance sheet, superior access to capital, strategic asset sales activity and ample liquidity position that lends financial flexibility to invest in its growth endeavors.

However, large scale dispositions are likely to have a dilutive impact on the company’s earnings in the near term. In addition, with rising supply of industrial real estate space, there is lesser scope for robust rent and occupancy growth.

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

Performance of Other REITs

Cousins Properties Incorporated (NYSE:CUZ) reported second-quarter FFO per share (before TIER transaction costs) of 71 cents, missing the Zacks Consensus Estimate by a whisker. Nonetheless, the bottom line came in higher than the prior-year quarter’s reported figure of 60 cents.

SL Green Realty Corp. (NYSE:SLG) reported second-quarter 2019 FFO of $1.82 per share, surpassing the Zacks Consensus Estimate of $1.73. The bottom line includes promote income from the sale of 521 Fifth Avenue of $3.4 million or 4 cents per share. Results also compared favorably with the year-ago quarter’s tally of $1.69.

Crown Castle International Corp. (NYSE:CCI) posted second-quarter adjusted AFFO per share of $1.48, up from the prior-year figure of $1.31. Further, the bottom line outpaced the Zacks Consensus Estimate of $1.43.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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