Liberty (LPT) Sheds Office Assets, Boosts Industrial Portfolio

Liberty Property Trust (NYSE:LPT) has been focused on disposing its non-core properties, and using the dry powder for gaining the preferred properties across the United States. Specifically, the company is aimed at growth of its industrial platform in top tier markets and financing the same through disposition of office assets.

In sync with such efforts, the company disposed five office properties comprising 335,866 square feet in Malvern, PA, for $45.8 million, according to a recently-announced 2018 capital activity update.

The properties which have been sold off, included 100 Chesterfield Parkway, 600 Chesterfield Parkway, 700 Chesterfield Parkway, 14 Lee Boulevard, and 12-16 Great Valley Parkway. With these transactions, the company has executed $795.2 million in sales in the current year.

On the other hand, Liberty Property acquired two industrial properties, totaling 447,570 square feet in Southern (NYSE:SO) California for $60.2 million. One of these is 15025 Proctor Avenue, a fully-occupied, 128,581 square foot property in City of Industry. The other is 520 E. Orange Show Road in San Bernardino. It is a 318,989-square-foot development property acquired vacant at shell completion for inventory. Notably, the company has acquired $496.7 million in industrial properties in aggregate in the current year.

Moreover, Liberty Property has financed a portfolio of 13 industrial properties situated in the U.K., with a £129.5 million, 10-year, interest-only loan at 2.64%. This was in association with the company’s prior-announced £111-million purchase of a 1.1 million square foot industrial portfolio in October. The loan supported repayment of short-term borrowings that were used to finance seven of those 13 properties, in addition to parts of the company’s existing U.K. industrial portfolio.

This expansion of the industrial real estate portfolio is a strategic fit for Liberty Property. This is because fundamentals of the industrial market remain solid, backed by growing demand for industrial properties amid economic recovery, job-market improvements and high-consumer spending, which has led to strong rent growth, high occupancy and development opportunities. Therefore, given its premium quality industrial portfolio located in upscale locations, pro-business environment and continued e-commerce demand, Liberty Property is poised to gain.

In addition to Liberty Property, other REITs, including Prologis Inc. (NYSE:PLD) , Duke Realty (NYSE:DRE) and Terreno Realty Corp. (NYSE:TRNO) , are expected to benefit from the same.

Nevertheless, there is rising supply of industrial real estate space and this will partly dampen the robust growth momentum in rents. Also, trade tensions and rate hike add to REITs’ woes.

Liberty Property currently has a Zacks Rank #3 (Hold). The company’s shares have lost 3.4% of its value in the past three months compared with its industry’s decline of 7.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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