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Liberty Property Reaps $367.7M from Asset Sale

Zacks Equity Research

Liberty Property Trust ( LRY) has reaped $367.7 million as proceeds by selling 49 properties aggregating around four million square feet of space and 140 acres of land. The move is part of the company’s strategy to reposition its portfolio and support its growth initiatives. 


These 49 properties are among the 97 properties that the company had earlier disclosed of selling. The sale of remaining assets is slated to be accomplished by late Jan 2014. This remaining disposition is expected to fetch $329.6 million as proceeds.


In particular, the divested portfolio of Liberty consists of office properties spanning 1.9 million square feet, flex properties aggregating 1.8 million square feet and industrial properties spread over 274,000 square feet. These comprise the company’s entire Jacksonville, FL portfolio, a part of its Fort Washington, PA assets, and flex properties in Minnesota. 


At present, the U.S. industrial market is benefiting from healthy demand for industrial properties with improving net absorption rate and declining vacancy rates. With a thriving demand for premium-quality industrial space, Liberty Property is repositioning its portfolio and shifting focus to the industrial real estate in growing markets. Consequently, the company has been involved in several deals in the past six months. 


In October, Liberty Property sealed the $1.475 billion buyout of Cabot Industrial Value Fund III that enhanced its industrial platform by 23 million square feet. The company gained 177 properties in 24 new and existing Liberty industrial markets.  Simultaneously, Liberty Property is making concerted efforts to lower its exposure to the suburban office properties market. 


Despite the near-term drag to profitability, we believe that repositioning efforts on the part of Liberty are encouraging. The dispositions provide the wherewithal to be invested in acquiring premium assets and poise the company well for riding on the growth trajectory going forward.


This Pennsylvania-based real estate investment trust (:REIT) – Liberty Property – currently has a Zacks Rank #3 (Hold). Investors interested in the REIT industry may consider stocks like Getty Realty Corp. ( GTY), Alexandria Real Estate Equities Inc. ( ARE) and Chatham Lodging Trust ( CLDT). While Getty Realty carries a Zacks Rank #1 (Strong Buy), Alexandria Real Estate and Chatham Lodging Trust hold a Zacks Rank #2 (Buy).

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