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Diversity, Sustainability Key To Liberty Property's Commercial Real Estate Success

12/09/2010 | By Allen Kenney

Bill Hankowsky, chairman, president and chief executive officer of Liberty Property Trust (NYSE: LRY), spoke with during REITWorld 2010: NAREIT's Annual Convention for All Things REIT in New York City in November. Hankowsky discussed the company's recent performance and how it has managed to outperform.

"We have a very traditional business model from a REIT perspective," Hankowsky said. "We operate our own real estate, we have a development expertise. We were never a merchant builder, never a fund of funds. So it's all about our tenants with our base with our people in our markets."

Historically, Hankowsky said that approach has enabled the company to outperform. Liberty operates three property types (office, industrial and flex) across 20 markets.

"We think diversity of product, diversity of market, diversity of tenant mix is a great defensive platform and a great platform for growth," Hankowsky said.

Hankowsky said office and industrial rental rates have bottomed out and occupancy has begun to rise on a national level.

"Over the course of 2011 we will be able to raise occupancy plus or minus 300 basis points and that will be very meaningful for us to move that occupancy from 89 percent to the low 90 percent range," he said, adding that every 1 percent increase of occupancy equals 7 cents of FFO.

Liberty Property has already acquired 1 million square feet of space in 2010, and Hankowsky said the company continues to look for opportunities.

"We think our sweet spot is what we call 'value-add,'" Hankowsky said. "We are very comfortable buying vacancy or under-leased assets. We think this is where our opportunities will be because that is an area where private capital is not playing right now."

Hankowsky said sustainability is another focus for Liberty Property Trust. The company has developed 41 LEED-certified buildings over 7.7 million square feet, and every new development going forward will be LEED certified. The company has also taken steps to enhance the energy efficiency of its existing portfolio.

"Sustainability is one of six premises of our strategic plan," Hankowsky said. "High performance buildings with sustainability are a key to the future."