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Liberty Property (LPT) Issues Investment Activity Updates

Zacks Equity Research
Updated

Liberty Property Trust LPT recently provided insights on its capital-recycling activities executed so far this year. The company announced transaction details pertaining to office property disposal, industrial acquisitions and development starts.

Liberty Property has been gradually repositioning its portfolio toward industrial properties, owing to strong fundamentals of this real estate asset class. In fact, this reinforces the company’s capital-recycling program undertaken in 2017 to achieve a favorable portfolio mix.

Thus, so far, the company has completed asset sales amounting to $576 million and redeployed proceeds worth $436 million for industrial acquisitions in key growth markets. Further, it is actively initiating development projects to drive value accretion. Liberty Property’s $139-million investment in development starts has increased its pipeline to $367 million for 2018.   

Notable Dispositions

On Sep 26, the company shed its Arizona office portfolio for $255 million. This 806,000-square-foot portfolio consisted of five properties — 1850 W. Rio Salado Parkway spanning 154,029 square feet, the 156,583-square-foot 1910 W. Rio Salado Parkway property, 1870 W. Rio Salado Parkway encompassing 236,131 square feet of space, 1930 W. Rio Salado Parkway consisting of 135,663 square feet of space and another 123,340-square-foot property — 8501 E. Raintree Drive.

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These asset sales represent Liberty Property’s attempts to rotate out capital from its office portfolio and inject funds into the company’s growing industrial platform through opportunistic acquisitions and developments.

Accretive Acquisitions

Liberty Property is keen on growing its industrial portfolio with value-additive properties in target U.S. markets. In fact, the company has purchased three such properties for an aggregate of $102.7 million. With this, its portfolio in Meadowlands now totals 440,000 square feet of space. Also, it offers an opportunity to improve lease-up or upon lease roll value.

Also, the company is fortifying its international presence. It has acquired a portfolio of seven industrial properties, spanning 1.1 million square feet of space, for £111 million. This is a strategic fit for the company as these properties are 100% leased, and expand its U.K. industrial platform to more than three million square feet.

Expanding Development Pipeline

Liberty Property announced ground breaking on seven industrial properties to support growth of its industrial platform. These projects in seven separate markets, aggregate 1.7 million square feet of area and reflect an investment of $138.5 million. Encouragingly, the properties are witnessing solid demand and are 60% pre-leased.

Our Take

Industrial real estate investment trusts (REITs) are definitely scaling new heights, with a recovering economy and job-market gains, as well as elevated consumption levels. Moreover, with a healthy manufacturing environment and high business inventories, robust demand for warehouse and logistics real estate is significant backing industrial REITs like Terreno Realty Corporation TRNO, Duke Realty Corporation DRE and Prologis Inc. PLD.

As for Liberty Property, efforts to refine its portfolio and capitalize on value-creation opportunities will likely stoke the company’s long-term growth. Additionally, its strategy of using dry powder from sale proceeds to acquire preferred properties is anticipated to alleviate pressure from the company’s balance sheet.

Also, shares of this Zacks Rank #2 (Buy) company have outperformed its industry over the past year. In fact, its shares have inched up 0.4%, as against the industry’s decline of 3.5% during the same time period.


 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Duke Realty Corporation (DRE) : Free Stock Analysis Report
 
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Liberty Property Trust (LPT) : Free Stock Analysis Report
 
Prologis, Inc. (PLD) : Free Stock Analysis Report
 
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