Liberty Property Trust (NYSE:LPT) is classified as mixed between an industrial and an office REIT by FTSE NAREIT All REITs Index. This dual characteristic has helped this $5 billion market capitalization company to focus on industrials over the past seven years. The results of thoughtful, strategic management have borne fruit, but the question is whether the effort was sufficient to make Liberty Property stand out in its subgroup.
The company has transitioned from a suburban office REIT to one in industrial distribution. In 2007, the two parts accounted for 54 and 24 percent of their rent respectively. Liberty Trust estimates that this year, those percentages will be 20 and 64 percent. A significant portion of its leasable square area is in Pennsylvania.
It appears the shift is paying off. Liberty Trust believed that value in industrial properties would be favorable while that in office properties would not be that good — which seems to be happening, at least in their portfolio. Most of the occupancy increase during Q1 2015 from Q1 2014 occurred in industrial, where new rentals and lease renewals also advanced more. The total portfolio occupancy advanced from 91.0 to 92.3 percent.
The best news from Liberty Trust in Q1 2015, in comparison with Q1 2014, was probably that FFO per share grew 21 percent from $0.58 to $0.70. In Q1, the company acquired no properties to keep FFO growing rapidly, but the good results and reasonable leverage have enabled them to line up 21 properties under development, adding nearly 4 million square feet to their 105 million of property portfolio.
In its mixed industrial and commercial sector, the company is trading slightly higher, at 13.1×, the sector median price-to-FFO being 12.1×. Their dividend yield is 5.7 percent, which is attractive and equal to the sector median. Despite the strong numbers, the stock is not an outright buy, but worth the consideration.
Source: Liberty Property Trust, Fast Graphs
Written by Heli Brecailo
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