Liberty Exiting Non-Core Suburban Office

by Steve Lubetkin, Globest.com
Liberty Property Trust will reposition its portfolio through planned sales of approximately 8.5 million square feet of suburban office properties. Liberty CEO Bill Hankowsky says the REIT expects this sale strategy to enable it to report funds from operations for 2016 in the range of $2.35-$2.55, with timing of the sales contributing to the wider range.

The company reaffirmed its previously announced expectation to report FFO per share for 2015 in the range of $2.66-$2.69.

“In 2013, Liberty set in motion a five-year strategic plan for transforming our company to one that can take full advantage of changes in how business utilizes real estate, and fully devote our unique development, leasing and management talents to higher-value opportunities,” says Liberty’s chief executive officer, Bill Hankowsky. “As we approach 2016, we can see the conclusion of this transformation being completed. Our intent is to sell most, if not all, of our remaining non-core suburban office product. The result will be a Liberty footprint comprising our US and UK industrial platform plus a value-add focused office platform in four markets.”

Proceeds from asset sales will be used to fund Liberty’s growing development pipeline and potential acquisitions. Liberty expects to start $500-$700 million in new development projects in 2016. Expected results also reflect occupancy and rental growth in the company’s industrial portfolio, contributing to continuing positive performance in the company’s same store group of properties.

Liberty also reported on several highlights of fourth quarter 2015 activity.

Fourth quarter development starts (wholly owned) comprise five projects for $108 million. The projects total 669,000 square feet and are 49% pre-leased.
Fourth quarter acquisitions are expected to total $11 million and consist of one vacant 198,000 square foot distribution building in Shakopee, MN.
Fourth quarter dispositions to date total $300.3 million of suburban office and non-core industrial properties totaling 4.1 million square feet.
Liberty announced it has leased a 345,000 square foot office building in Eden Prairie, MN, representing the company’s largest single office vacancy.
“We are fortunate to be operating in a very strong environment, particularly for industrial real estate,” says Hankowsky. “We have experienced tremendous activity in nearly every industrial market during the fourth quarter, and we are also seeing remarkable interest by high-quality companies seeking to locate at The Navy Yard in Philadelphia, Rio Salado in Tempe, and our planned Camden Waterfront office project. This activity gives us a great deal of confidence in 2016.”
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