Liberty Property Trust (LRY) 2012 Earnings Guidance Call December 13, 2011 11:00 a.m. ET Executives Jeanne Leonard - VP, Corporate Communications William Hankowsky - Chairman, President and CEO George Alburger - EVP, CFO and Treasurer Michael Hagan - SVP, Acquisitions and CIO Robert Fenza – EVP and COO Analysts Ki Bin Kim - Macquarie Equities Josh Attie - Citigroup Michael Bilerman - Citigroup Brendan Maiorana - Wells Fargo Securities Sloan Bohlen - Goldman Sachs John Stewart - Green Street Advisors Dan Donlan - Janney Montgomery Scott Presentation Operator
I will also remind you that some of the statements made during this call will include forward-looking statements within the meaning of the Federal Securities law. Although Liberty believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, we can give no assurance that these expectations will be achieved. As forward-looking statements, these statements involve risks, uncertainties, and other factors that could cause actual results to differ materially from the expected results, risks that were detailed in the issued press release, and from time to time the company’s filings with the Securities and Exchange Commission. The company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.Bill, would you like to begin? William Hankowsky Thank you, Jeanne, and good morning, everyone. The purpose of our call today is to share with you our thinking for 2012. I am going to spend a few moments giving you our sense of where the economy and real estate markets will be over the next 12 months. It will set the context for our specific earnings guidance. George will then walk you through the numbers and Mike will discuss our investment activity in 2011 and 2012. The economic situation seems a lot like the movie Groundhog Day. Going into 2012, we’re replaying the same view we had going into 2011 a year ago. The U.S. economy is in a long slow march forward. We think GDP growth in 2012 could be ranged bound in the kind of 2% to 3% area. Unemployment may hover in the high 8% to 9% range and with significant U.S. structural economic issues unresolved in an election year, a sense of uncertainty probably will continue to prevail. Volatility could remain high and the debt risk is ever present. With that said, larger corporate users are cash rich and as evidenced in the last few quarters, prepared to make long and major investment decisions. Smaller firms remain more hesitant in the current environment to hire or expand.
For the real estate market, we think this environment will continue the trends we’ve been seeing in the office and industrial markets this year. On the office front, weak job growth translates to weak demand. Rent should remain flat. There may be built to suit opportunities for larger firms that there will be minimal spec developments.The office markets continue to firm up, we think, over the course of 2012. Industrial markets are more active. Retailers, consumers products, food products and logistics firms are looking for mid to large sized bases. Certain industrial markets have tightened and there is the beginning of select upward rent pressure. In addition, the industrial build-to-suit opportunities, inventory industrial product will be developed in select markets. The investment sales markets which have been a little choppy of late, would see us fairly active in 2012. George and Mike will discuss large urban and flex sales we anticipate closing in the first quarter of 2012. We’re very excited by this future sale and our activity in 2012, which has allowed us to execute our strategy of downsizing our suburban office portfolio and increasing our industrial portfolio. For Liberty, 2012 will be a year where we’ll continue to outperform our markets on the leasing front, where we will continue to build up our development pipeline and where we will continue our portfolio repositioning by the sale of suburban office and flex and the acquisition of industrial assets. 2012 would be an inflection point in the company’s earnings trajectory. And with that, let me turn it over to George. George Alburger Thank you, Bill. The first I’d like to do is cover activity due date for the fourth quarter of 2011 and then I would like to build guidance for 2012 using 2011 projected results as a starting point.
During the third quarter earnings call, we suggested that FFO would be in the $0.61 to $0.64 per share range for the fourth quarter. To date, for the fourth quarter, the core portfolio performance is as expected generally in line with guidance and sales activity for the quarter was modest.Read the rest of this transcript for free on seekingalpha.com