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Liberty Property Soars to New 52-Week High

Zacks Equity Research

Shares of Liberty Property Trust (LRY) touched a 52-week high of $41.45 on Tuesday, Apr 2, 2013, as it gained momentum from decent fourth-quarter 2012 results. The closing price of this office real estate investment trust (:REIT) on Apr 2, 2013 was $40.64, representing a solid year-to-date return of 14%. The average trading volume over the last 3 months was 2.05 million shares.

Despite hitting its 52-week high, this Zacks Rank #3 (Hold) stock has plenty of upside left given its strong fundamentals and strategic portfolio repositioning efforts.

Growth Drivers

Liberty Property reported improved fourth-quarter 2012 results with core FFO (funds from operations) in line with and revenues beating the Zacks Consensus Estimate. Even in the backdrop of uneven economic conditions, the results were benefited by portfolio repositioning activity.

The company’s recent efforts to boost its portfolio restructuring initiatives are also encouraging. Last month, it divested a Philadelphia-based office property and in Feb it unveiled its plan to construct an office building for The Vanguard Group in Malvern, Pa. We expect these activities to facilitate Liberty Property to focus on high-end markets characterized by better job and rent growth prospects and boost the company’s top-line growth.

On Feb 5, Liberty Property reported fourth-quarter 2012 FFO of 63 cents per share, in line with the Zacks Consensus Estimate as well as the prior-year quarter. The results were attributable to the strong acquisitions and development activities, slightly affected by uncertain economic conditions. For full year 2012, Liberty Property reported FFO of $2.58 per share, well ahead of the Zacks Consensus Estimate of $2.52. Yet, it was slightly below the prior-year FFO of $2.61 per share.

Estimate Revisions

Over the last 30 days, the Zacks Consensus Estimate for full-year 2013 and 2014 have remained unchanged at $2.65 and $2.80 per share, respectively.

On Apr 2, a number of other REITs also crafted 52-week highs. These include DDR Corp. (DDR), Kimco Realty Corp. (KIM) and Duke Realty Corp. (DRE).

Note: Funds from operations, a widely accepted and reported measure of REITs performance, are derived by adding depreciation, amortization and other non-cash expenses to net income.

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