Improvements in nearly all markets led to increased occupancy and higher rent rates in the locally based REIT's 64-million-sf portfolio. As of June 30, overall occupancy was 92.8%, versus 89.9% at the same time a year ago. During a conference call, Bill Hankowsky, chairman and CEO, cited an ongoing shift in the portfolio, which includes dispositions and new initiatives that raise the portfolio's overall quality. More green building development and management are in the company's plans.
Two significant recapitalization deals during the quarter, both involving joint ventures, also propelled profits and income, Hankowsky said. One was a sale of 75% of its 2.1-million-sf Chicago portfolio along with 104 acres of land to a JV with New York State Common Retirement Fund. This JV plans $500 million in development over the next five years.
The other was the $505-million sale of an 80% stake in Philadelphia's Comcast Center to a JV with Commerzbank AG. Hankowsky also reported that Comcast has leased an additional three floors in the building, taking its overall tenancy to 42 floors, and the tower is now 78.4% pre-leased.
Over the past four years, Liberty has developed five buildings that have either already been LEEDs certified or are applying for certification. Another nine such buildings are under construction. Furthermore, Hankowsky said, "we're employing green practices in all developments, some at no added cost, and our property management is also incorporating green management techniques." The latter, he said, include efforts as simple as changing to green cleaning products and replacing lighting ballasts to more energy-efficient units.
"The movement has caught on with our tenants," he said. "There's nothing like $3-a-gallon to get people focused on energy costs." Asked if he saw an eventual premium differentiation between green and non-green buildings, he said he expected the market to rule in the ways it does when "pricing opportunities" allow people to move up from class B to class A buildings.
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