Liberty Property Stays Neutral - Analyst Blog
28 Junho 2013 - 12:00PM
Zacks
On Jun 27, 2013, we reiterated our long-term recommendation on
Liberty Property Trust (LRY), a Pa.-based
industrial real estate investment trust (REIT) at Neutral. The move
reflects the company’s solid operating platform, ongoing portfolio
repositioning activity amid uneven economic conditions, to focus on
markets having better job and rent growth prospects.
Why Neutral?
Liberty Property Trust reported first-quarter 2013 FFO (funds from
operations) of 65 cents per share, beating the Zacks Consensus
Estimate by 2 cents. However, this compared unfavorably with the
prior-year quarter figure of 68 cents. The results were
attributable to consistent performance of the overall portfolio as
well as strong leasing and development activities. Yet, increase in
operating expenses acted as a headwind.
Liberty Property boasts a strong portfolio of multi-tenant
industrial and office properties located in multiple prime U.S.
markets that enable the mitigation of geographical concentration
risk.
The company recently acquired a property in Washington, D.C. for
$133.5 million. The deal brings in leasable space to Liberty
Property, whose current downtown properties are mostly occupied.
This property has retail tenants like The UPS Store of
United Parcel Service Inc. (UPS) and M Street
Store. Moreover, its office tenants are The Urban Institute, George
Washington University, Stewart & Stewart, GSA-SSA.
Nevertheless, the company generates significant revenue from its
office portfolio. Office demand is highly correlated to job growth.
Given the current economic environment and the volatility in the
job market, demand for Liberty Property’s office portfolio is
likely to suffer.
For Liberty Property, the Zacks Consensus Estimates for 2013 FFO
per share remained stable at $2.65, while for 2014 the estimate has
moved up by a cent to $2.76 per share, over the last 30 days.
Hence, the stock carries a Zacks Rank #3 (Hold).
Other REITs to Consider
A number of REITs that are worth considering include
CommonWealth REIT (CWH) and Winthrop
Realty Trust (FUR), both carrying a Zacks Rank # 1(Strong
Buy).
Note: Funds from operations, a widely used metric to gauge
the performance of REITs, are obtained after adding depreciation
and amortization and other non-cash expenses to net
income.
COMMONWEALTH RE (CWH): Free Stock Analysis Report
WINTHROP REALTY (FUR): Free Stock Analysis Report
LIBERTY PPTY TR (LRY): Free Stock Analysis Report
UTD PARCEL SRVC (UPS): Free Stock Analysis Report
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