##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission
file numbers:         1-13130
(Liberty Property Trust)1-13132
(Liberty Property Limited Partnership)
 
 LIBERTY PROPERTY TRUST
LIBERTY PROPERTY LIMITED PARTNERSHIP
 
 (Exact name of registrants as specified in their governing documents)
 MARYLAND(Liberty Property Trust)PENNSYLVANIA(Liberty Property Limited Partnership)
    
    23-7768996
23-2766549(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification Number)500 Chesterfield Parkway 
Malvern, Pennsylvania
    
    19355(Address of Principal Executive Offices)
    
    (Zip Code)Registrants Telephone Number, Including Area Code (610) 648-1700
 þ o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



Liberty Property Trust/Liberty Property Limited Partnership
Form 10-Q for the period ended June 30, 2008
  
 Index
    
    
    
    PagePART I.
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (Unaudited)Condensed consolidated balance sheets of Liberty Property Trust at June 30,
2008 and December 31, 2007
    
    
    4Condensed consolidated statements of operations of Liberty Property Trust for
the three months ended June 30, 2008 and June 30, 2007
    
    
    5Condensed consolidated statements of operations of Liberty Property Trust for
the six months ended June 30, 2008 and June 30, 2007
    
    
    6Condensed consolidated statements of cash flows of Liberty Property Trust for
the six months ended June 30, 2008 and June 30, 2007
    
    
    7Notes to condensed consolidated financial statements of Liberty Property Trust
    
    
    8Condensed consolidated balance sheets of Liberty Property Limited Partnership
at June 30, 2008 and December 31, 2007
    
    
    15Condensed consolidated statements of operations of Liberty Property Limited
Partnership for the three months ended June 30, 2008 and June 30, 2007
    
    
    16Condensed consolidated statements of operations of Liberty Property Limited
Partnership for the six months ended June 30, 2008 and June 30, 2007
    
    
    17Condensed consolidated statements of cash flows of Liberty Property Limited
Partnership for the six months ended June 30, 2008 and June 30, 2007
    
    
    18Notes to condensed consolidated financial statements of Liberty Property
Limited Partnership
    
    
    19Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    27Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    38Item 4.
    
    Controls and Procedures
    
    
    38PART II.
    
    OTHER INFORMATION
    
    
    39Item 1.
    
    Legal Proceedings
    
    
    39Item 1A.
    
    Risk Factors
    
    
    40Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    40Item 3.
    
    Defaults Upon Senior Securities
    
    
    40Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    40Item 5.
    
    Other Information
    
    
    40Item 6.
    
    Exhibits
    
    
    41Signatures for Liberty Property Trust
    
    
    42Signatures for Liberty Property Limited Partnership
    
    
    43
  2




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##### Table of Contents



Index
    
    
    
    PageExhibit Index
    
    
    
    
    44STATEMENT
RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF
EARNINGS TO COMBINED FIXED CHARGESCERTIFICATIONS OF CEO OF LIBERTY PROPERTY TRUST REQUIRED BY RULE 13A-14(A)CERTIFICATIONS OF CFO OF LIBERTY PROPERTY TRUST REQUIRED BY RULE 13A-14(A)CERTIFICATIONS
OF CEO OF LIBERTY PROPERTY TRUST, IN ITS CAPACITY AS THE GENERAL
PARTNER OF LIBERTY PROPERTY LIMITED PARTNERSHIP, REQUIRED BY RULE
13A-14(A)CERTIFICATIONS
OF CFO OF LIBERTY PROPERTY TRUST, IN ITS CAPACITY AS THE GENERAL
PARTNER OF LIBERTY PROPERTY LIMITED PARTNERSHIP, REQUIRED BY RULE
13A-14(A)CERTIFICATIONS OF CEO OF LIBERTY PROPERTY TRUST REQUIRED BY RULE 13A-14(B)CERTIFICATIONS OF CFO OF LIBERTY PROPERTY TRUST REQUIRED BY RULE 13A-14(B)CERTIFICATIONS
OF CEO OF LIBERTY PROPERTY TRUST, IN ITS CAPACITY AS THE GENERAL
PARTNER OF LIBERTY PROPERTY LIMITED PARTNERSHIP, REQUIRED BY RULE
13A-14(B)CERTIFICATIONS
OF CFO OF LIBERTY PROPERTY TRUST, IN ITS CAPACITY AS THE GENERAL
PARTNER OF LIBERTY PROPERTY LIMITED PARTNERSHIP, REQUIRED BY RULE
13A-14(B)
 3




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 CONDENSED CONSOLIDATED BALANCE SHEETS OF LIBERTY PROPERTY TRUST
(In thousands, except share amounts)
 June
30, 2008
    
    

December
31, 2007(Unaudited)ASSETSReal estate:Land and land improvements
    
    $
    792,067
    
    
    $
    796,501Building and improvements
    
    
    4,184,851
    
    
    
    4,434,731Less accumulated depreciation
    
    
    (927,575
    )
    
    
    (863,609
    )Operating real estate
    
    
    4,049,343
    
    
    
    4,367,623Development in progress
    
    
    316,369
    
    
    
    328,138Land held for development
    
    
    221,775
    
    
    
    247,124Net real estate
    
    
    4,587,487
    
    
    
    4,942,885Cash and cash equivalents
    
    
    13,579
    
    
    
    37,989Restricted cash
    
    
    54,535
    
    
    
    34,567Accounts receivable
    
    
    10,797
    
    
    
    12,217Deferred rent receivable
    
    
    80,644
    
    
    
    80,087Deferred financing and leasing costs, net of accumulated
amortization (2008, $134,547; 2007, $119,721)
    
    
    131,490
    
    
    
    144,689Investments in and advances to unconsolidated joint ventures
    
    
    319,622
    
    
    
    278,383Prepaid expenses and other assets
    
    
    78,842
    
    
    
    107,932Total assets
    
    $
    5,276,996
    
    
    $
    5,638,749LIABILITIESMortgage loans
    
    $
    207,496
    
    
    $
    243,169Unsecured notes
    
    
    2,155,000
    
    
    
    2,155,000Credit facility
    
    
    375,000
    
    
    
    622,960Accounts payable
    
    
    50,443
    
    
    
    44,666Accrued interest
    
    
    37,816
    
    
    
    39,725Dividend and distributions payable
    
    
    60,705
    
    
    
    59,849Other liabilities
    
    
    199,732
    
    
    
    263,738Total liabilities
    
    
    3,086,192
    
    
    
    3,429,107Minority interest
    
    
    370,362
    
    
    
    372,621SHAREHOLDERS EQUITYCommon shares of beneficial interest, $.001 par value,
183,987,000 shares authorized; 94,186,521 (includes
1,249,909 in treasury) and 92,817,879 (includes 1,249,909
in treasury) shares issued and outstanding as of June 30,
2008 and December 31, 2007, respectively
    
    
    94
    
    
    
    93Additional paid-in capital
    
    
    2,021,368
    
    
    
    1,984,141Accumulated other comprehensive income
    
    
    21,707
    
    
    
    21,378Distributions in excess of net income
    
    
    (170,776
    )
    
    
    (116,640
    )Common shares in treasury, at cost, 1,249,909 shares as of
June 30, 2008 and December 31, 2007
    
    
    (51,951
    )
    
    
    (51,951
    )Total shareholders equity
    
    
    1,820,442
    
    
    
    1,837,021Total liabilities and shareholders equity
    
    $
    5,276,996
    
    
    $
    5,638,749See accompanying notes.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS OF LIBERTY PROPERTY TRUST
(Unaudited and in thousands, except per share amounts)
 Three Months EndedJune
30, 2008
    
    

June
30, 2007OPERATING REVENUERental
    
    $
    127,923
    
    
    $
    116,785Operating expense reimbursement
    
    
    58,458
    
    
    
    51,465Total operating revenue
    
    
    186,381
    
    
    
    168,250OPERATING EXPENSERental property
    
    
    36,992
    
    
    
    35,307Real estate taxes
    
    
    23,804
    
    
    
    18,405General and administrative
    
    
    13,070
    
    
    
    12,643Depreciation and amortization
    
    
    43,892
    
    
    
    37,396Total operating expenses
    
    
    117,758
    
    
    
    103,751Operating income
    
    
    68,623
    
    
    
    64,499OTHER INCOME (EXPENSE)Interest and other income
    
    
    3,034
    
    
    
    2,884Interest expense
    
    
    (37,316
    )
    
    
    (28,877
    )Total other income (expense)
    
    
    (34,282
    )
    
    
    (25,993
    )Income before property dispositions, income taxes,
minority interest and equity in earnings of
unconsolidated joint ventures
    
    
    34,341
    
    
    
    38,506Gain on property dispositions
    
    
    835
    
    
    
    1,299Income taxes
    
    
    (580
    )
    
    
    (213
    )Minority interest
    
    
    (6,630
    )
    
    
    (6,045
    )Equity in earnings of unconsolidated joint ventures
    
    
    1,010
    
    
    
    326Income from continuing operations
    
    
    28,976
    
    
    
    33,873Discontinued operations, net of minority interest
(including net gain on property dispositions of
$2,793 and $17,430 for the three months ended June
30, 2008 and 2007, respectively)
    
    
    2,653
    
    
    
    18,554Net income
    
    $
    31,629
    
    
    $
    52,427Earnings per common shareBasic:Income from continuing operations
    
    $
    0.31
    
    
    $
    0.37Income from discontinued operations
    
    
    0.03
    
    
    
    0.20Income per common share  basic
    
    $
    0.34
    
    
    $
    0.57Diluted:Income from continuing operations
    
    $
    0.31
    
    
    $
    0.37Income from discontinued operations
    
    
    0.03
    
    
    
    0.20Income per common share  diluted
    
    $
    0.34
    
    
    $
    0.57Distributions per common share
    
    $
    0.625
    
    
    $
    0.62Weighted average number of common shares outstandingBasic
    
    
    92,323
    
    
    
    91,597Diluted
    
    
    92,701
    
    
    
    92,328See accompanying notes.
 5




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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS OF LIBERTY PROPERTY TRUST
(Unaudited and in thousands, except per share amounts)
 Six Months EndedJune 30, 2008
    
    
    June 30, 2007OPERATING REVENUERental
    
    $
    263,436
    
    
    $
    231,282Operating expense reimbursement
    
    
    116,319
    
    
    
    101,641Total operating revenue
    
    
    379,755
    
    
    
    332,923OPERATING EXPENSERental property
    
    
    77,057
    
    
    
    70,886Real estate taxes
    
    
    44,630
    
    
    
    34,481General and administrative
    
    
    27,037
    
    
    
    25,726Depreciation and amortization
    
    
    87,866
    
    
    
    73,241Total operating expenses
    
    
    236,590
    
    
    
    204,334Operating income
    
    
    143,165
    
    
    
    128,589OTHER INCOME (EXPENSE)Interest and other income
    
    
    6,128
    
    
    
    5,403Interest expense
    
    
    (79,746
    )
    
    
    (55,884
    )Total other income (expense)
    
    
    (73,618
    )
    
    
    (50,481
    )Income before property dispositions, income taxes,
minority interest and equity in earnings of
unconsolidated joint ventures
    
    
    69,547
    
    
    
    78,108Gain on property dispositions
    
    
    1,476
    
    
    
    1,451Income taxes
    
    
    (1,064
    )
    
    
    (514
    )Minority interest
    
    
    (13,036
    )
    
    
    (11,524
    )Equity in earnings of unconsolidated joint ventures
    
    
    1,387
    
    
    
    1,055Income from continuing operations
    
    
    58,310
    
    
    
    68,576Discontinued operations, net of minority interest
(including net gain on property dispositions of
$3,403 and $20,231 for the six months ended June
30, 2008 and 2007, respectively)
    
    
    3,280
    
    
    
    23,549Net income
    
    $
    61,590
    
    
    $
    92,125Earnings per common shareBasic:Income from continuing operations
    
    $
    0.63
    
    
    $
    0.75Income from discontinued operations
    
    
    0.04
    
    
    
    0.26Income per common share  basic
    
    $
    0.67
    
    
    $
    1.01Diluted:Income from continuing operations
    
    $
    0.63
    
    
    $
    0.74Income from discontinued operations
    
    
    0.04
    
    
    
    0.26Income per common share  diluted
    
    $
    0.67
    
    
    $
    1.00Distributions per common share
    
    $
    1.25
    
    
    $
    1.24Weighted average number of common shares outstandingBasic
    
    
    92,019
    
    
    
    91,318Diluted
    
    
    92,248
    
    
    
    92,168See accompanying notes.
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS OF LIBERTY PROPERTY TRUST
(Unaudited and in thousands)
 Six Months EndedJune
30, 2008
    
    

June
30, 2007OPERATING ACTIVITIESNet income
    
    $
    61,590
    
    
    $
    92,125Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    87,374
    
    
    
    77,483Amortization of deferred financing costs
    
    
    2,227
    
    
    
    1,989Equity in earnings of unconsolidated joint ventures
    
    
    (1,387
    )
    
    
    (1,055
    )Minority interest in net income
    
    
    13,184
    
    
    
    12,602Gain on property dispositions
    
    
    (4,879
    )
    
    
    (21,682
    )Noncash compensation
    
    
    5,603
    
    
    
    5,433Changes in operating assets and liabilities:Restricted cash
    
    
    (19,818
    )
    
    
    21,712Accounts receivable
    
    
    (248
    )
    
    
    (241
    )Deferred rent receivable
    
    
    (7,195
    )
    
    
    (2,113
    )Prepaid expenses and other assets
    
    
    (10,831
    )
    
    
    14,037Accounts payable
    
    
    5,800
    
    
    
    16,772Accrued interest
    
    
    (1,909
    )
    
    
    42Other liabilities
    
    
    (15,979
    )
    
    
    27,194Net cash provided by operating activities
    
    
    113,532
    
    
    
    244,298INVESTING ACTIVITIESInvestment in properties
    
    
    (37,752
    )
    
    
    (207,617
    )Investments in and advances to unconsolidated joint ventures
    
    
    (7,506
    )
    
    
    (17,282
    )Distributions from unconsolidated joint ventures
    
    
    3,161
    
    
    
    1,050Net proceeds from disposition of properties/land
    
    
    304,563
    
    
    
    191,595Investment in development in progress
    
    
    (138,035
    )
    
    
    (265,483
    )Investment in land held for development
    
    
    (18,717
    )
    
    
    (95,590
    )Investment in deferred leasing costs
    
    
    (14,271
    )
    
    
    (21,984
    )Net cash provided by (used in) investing activities
    
    
    91,443
    
    
    
    (415,311
    )FINANCING ACTIVITIESNet proceeds from issuance of common shares
    
    
    32,124
    
    
    
    39,453Purchase of treasury shares
    
    
    
    
    
    
    (50,578
    )Redemption of preferred units
    
    
    
    
    
    
    (23,650
    )Repayments of mortgage loans
    
    
    (35,673
    )
    
    
    (5,798
    )Proceeds from credit facility
    
    
    344,150
    
    
    
    552,200Repayments on credit facility
    
    
    (439,150
    )
    
    
    (256,200
    )Increase in deferred financing costs
    
    
    
    
    
    
    (126
    )Distribution paid on common shares
    
    
    (114,867
    )
    
    
    (113,180
    )Distribution paid on units
    
    
    (15,941
    )
    
    
    (13,048
    )Net cash (used in) provided by financing activities
    
    
    (229,357
    )
    
    
    129,073Net decrease in cash and cash equivalents
    
    
    (24,382
    )
    
    
    (41,940
    )(Decrease) increase in cash and cash equivalents related to foreign currency translation
    
    
    (28
    )
    
    
    944Cash and cash equivalents at beginning of period
    
    
    37,989
    
    
    
    53,737Cash and cash equivalents at end of period
    
    $
    13,579
    
    
    $
    12,741See accompanying notes.
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Liberty Property Trust
Notes to Condensed Consolidated Financial Statements (Unaudited)
June 30, 2008
 Note 1: Organization and Basis of Presentation
 Organization
  Basis
of Presentation
  Income
per Common Share
  For the Three Months Ended June 30, 2008
    
    
    For the Three Months Ended June 30, 2007Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    
    
    
    
    AverageIncome
    
    
    Shares
    
    
    
    
    
    
    Income
    
    
    Shares(Numerator)
    
    
    (Denominator)
    
    
    Per Share
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    Per ShareBasic income from continuing operationsIncome from continuing operations
    
    $
    28,976
    
    
    
    92,323
    
    
    $
    0.31
    
    
    $
    33,873
    
    
    
    91,597
    
    
    $
    0.37Diluted shares for long-term compensation plans
    
    
    
    
    
    
    378
    
    
    
    
    
    
    
    
    
    
    
    731Diluted income from continuing operationsIncome from continuing operations and assumed
conversions
    
    
    28,976
    
    
    
    92,701
    
    
    $
    0.31
    
    
    
    33,873
    
    
    
    92,328
    
    
    $
    0.37Basic income from discontinued operationsDiscontinued operations net of minority interest
    
    
    2,653
    
    
    
    92,323
    
    
    $
    0.03
    
    
    
    18,554
    
    
    
    91,597
    
    
    $
    0.20Dilutive shares for long-term compensation plans
    
    
    
    
    
    
    378
    
    
    
    
    
    
    
    
    
    
    
    731Diluted income from discontinued operationsDiscontinued operations net of minority interest
    
    
    2,653
    
    
    
    92,701
    
    
    $
    0.03
    
    
    
    18,554
    
    
    
    92,328
    
    
    $
    0.20Basic income per common shareNet income
    
    
    31,629
    
    
    
    92,323
    
    
    $
    0.34
    
    
    
    52,427
    
    
    
    91,597
    
    
    $
    0.57Dilutive shares for long-term compensation plans
    
    
    
    
    
    
    378
    
    
    
    
    
    
    
    
    
    
    
    731Diluted income per common shareNet income and assumed conversions
    
    $
    31,629
    
    
    
    92,701
    
    
    $
    0.34
    
    
    $
    52,427
    
    
    
    92,328
    
    
    $
    0.57
 8




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For the Six Months Ended June 30, 2008
    
    
    For the Six Months Ended June 30, 2007Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    
    
    
    
    AverageIncome
    
    
    Shares
    
    
    
    
    
    
    Income
    
    
    Shares(Numerator)
    
    
    (Denominator)
    
    
    Per Share
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    Per ShareBasic income from continuing operationsIncome from continuing operations
    
    $
    58,310
    
    
    
    92,019
    
    
    $
    0.63
    
    
    $
    68,576
    
    
    
    91,318
    
    
    $
    0.75Diluted shares for long-term compensation plans
    
    
    
    
    
    
    229
    
    
    
    
    
    
    
    
    
    
    
    850Diluted income from continuing operationsIncome from continuing operations and assumed
conversions
    
    
    58,310
    
    
    
    92,248
    
    
    $
    0.63
    
    
    
    68,576
    
    
    
    92,168
    
    
    $
    0.74Basic income from discontinued operationsDiscontinued operations net of minority interest
    
    
    3,280
    
    
    
    92,019
    
    
    $
    0.04
    
    
    
    23,549
    
    
    
    91,318
    
    
    $
    0.26Dilutive shares for long-term compensation plans
    
    
    
    
    
    
    229
    
    
    
    
    
    
    
    
    
    
    
    850Diluted income from discontinued operationsDiscontinued operations net of minority interest
    
    
    3,280
    
    
    
    92,248
    
    
    $
    0.04
    
    
    
    23,549
    
    
    
    92,168
    
    
    $
    0.26Basic income per common shareNet income
    
    
    61,590
    
    
    
    92,019
    
    
    $
    0.67
    
    
    
    92,125
    
    
    
    91,318
    
    
    $
    1.01Dilutive shares for long-term compensation plans
    
    
    
    
    
    
    229
    
    
    
    
    
    
    
    
    
    
    
    850Diluted income per common shareNet income and assumed conversions
    
    $
    61,590
    
    
    
    92,248
    
    
    $
    0.67
    
    
    $
    92,125
    
    
    
    92,168
    
    
    $
    1.00
 Foreign
Currency Translation
  Note 2: Segment Information
  Reportable Segments
    
    MarketsDelaware Valley
    
    Southeastern Pennsylvania; New JerseyMidwest
    
    Lehigh/Central PA; Minnesota; Milwaukee; ChicagoMid-Atlantic
    
    Maryland; Carolinas; Richmond; Virginia BeachSouth
    
    Jacksonville; Orlando; Boca Raton; Tampa; Texas; ArizonaPhiladelphia
    
    Comcast Center; Northern Virginia/Washington, D.C.United Kingdom
    
    County of Kent; West Midlands
 Disclosure
about Segments of an Enterprise and Related Information,
 9




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FOR THE THREE MONTHS ENDED JUNE 30, 2008
 delaware valley
    
    
    midwestsoutheastern
    
    
    
    
    
    
    lehigh /
    
    
    
    
    
    
    mid-
    
    
    
    
    
    
    phila-
    
    
    unitedpennsylvania
    
    
    other
    
    
    central pa
    
    
    other
    
    
    atlantic
    
    
    south
    
    
    delphia
    
    
    kingdom
    
    
    totalOperating revenue
    
    $
    44,119
    
    
    $
    14,437
    
    
    $
    25,432
    
    
    $
    21,296
    
    
    $
    37,065
    
    
    $
    42,624
    
    
    $
    
    
    
    $
    1,408
    
    
    $
    186,381Rental property
expenses and real
estate taxes
    
    
    14,019
    
    
    
    5,150
    
    
    
    7,543
    
    
    
    8,171
    
    
    
    10,603
    
    
    
    15,067
    
    
    
    (14
    )
    
    
    257
    
    
    
    60,796Property
level operating income
    
    $
    30,100
    
    
    $
    9,287
    
    
    $
    17,889
    
    
    $
    13,125
    
    
    $
    26,462
    
    
    $
    27,557
    
    
    $
    14
    
    
    $
    1,151
    
    
    
    125,585Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,034Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37,316
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,070
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (43,892
    )Income before property dispositions, income taxes, minority interest
and equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,341Gain on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    835Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (580
    )Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,630
    )Equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,010Discontinued operations, net of minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,653Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    31,629
 10




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##### Table of Contents



FOR THE THREE MONTHS ENDED JUNE 30, 2007
 delaware valley
    
    
    midwestsoutheastern
    
    
    
    
    
    
    lehigh /
    
    
    
    
    
    
    mid-
    
    
    
    
    
    
    phila-
    
    
    unitedpennsylvania
    
    
    other
    
    
    central pa
    
    
    other
    
    
    atlantic
    
    
    south
    
    
    delphia
    
    
    kingdom
    
    
    totalOperating revenue
    
    $
    42,484
    
    
    $
    13,444
    
    
    $
    22,993
    
    
    $
    19,755
    
    
    $
    32,601
    
    
    $
    36,388
    
    
    $
    
    
    
    $
    585
    
    
    $
    168,250Rental property
expenses and real
estate taxes
    
    
    14,113
    
    
    
    4,450
    
    
    
    6,481
    
    
    
    6,668
    
    
    
    9,938
    
    
    
    11,874
    
    
    
    1
    
    
    
    187
    
    
    
    53,712Property level
operating income
(loss)
    
    $
    28,371
    
    
    $
    8,994
    
    
    $
    16,512
    
    
    $
    13,087
    
    
    $
    22,663
    
    
    $
    24,514
    
    
    $
    (1
    )
    
    $
    398
    
    
    
    114,538Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,884Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (28,877
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,643
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37,396
    )Income before property
dispositions, income taxes,
minority interest
and equity in earnings of
unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,506Gain on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,299Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (213
    )Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,045
    )Equity in earnings of
unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    326Discontinued operations, net
of minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,554Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    52,427
 FOR THE SIX MONTHS ENDED JUNE 30, 2008
 delaware Valley
    
    
    midwestsoutheastern
    
    
    
    
    
    
    lehigh /
    
    
    
    
    
    
    mid-
    
    
    
    
    
    
    phila-
    
    
    unitedpennsylvania
    
    
    other
    
    
    central pa
    
    
    other
    
    
    atlantic
    
    
    south
    
    
    delphia
    
    
    kingdom
    
    
    totalOperating revenue
    
    $
    89,047
    
    
    $
    28,684
    
    
    $
    50,074
    
    
    $
    41,765
    
    
    $
    74,258
    
    
    $
    82,795
    
    
    $
    10,680
    
    
    $
    2,452
    
    
    $
    379,755Rental property
expenses and real
estate taxes
    
    
    28,609
    
    
    
    9,800
    
    
    
    14,221
    
    
    
    15,903
    
    
    
    21,538
    
    
    
    28,219
    
    
    
    2,779
    
    
    
    618
    
    
    
    121,687Property level
operating income
    
    $
    60,438
    
    
    $
    18,884
    
    
    $
    35,853
    
    
    $
    25,862
    
    
    $
    52,720
    
    
    $
    54,576
    
    
    $
    7,901
    
    
    $
    1,834
    
    
    
    258,068Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,128Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (79,746
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27,037
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (87,866
    )Income before property dispositions, income taxes, minority interest
and equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69,547Gain on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,476Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,064
    )Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,036
    )Equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,387Discontinued operations, net of minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,280Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    61,590
 11




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##### Table of Contents



FOR THE SIX MONTHS ENDED JUNE 30, 2007
 delaware valley
    
    
    midwestsoutheastern
    
    
    
    
    
    
    lehigh /
    
    
    
    
    
    
    mid-
    
    
    
    
    
    
    phila-
    
    
    unitedpennsylvania
    
    
    other
    
    
    central pa
    
    
    other
    
    
    atlantic
    
    
    South
    
    
    delphia
    
    
    kingdom
    
    
    totalOperating revenue
    
    $
    85,680
    
    
    $
    27,358
    
    
    $
    43,741
    
    
    $
    38,953
    
    
    $
    64,750
    
    
    $
    71,454
    
    
    $
    
    
    
    $
    987
    
    
    $
    332,923Rental property
expenses and real
estate taxes
    
    
    28,902
    
    
    
    8,738
    
    
    
    11,365
    
    
    
    13,502
    
    
    
    20,011
    
    
    
    22,520
    
    
    
    3
    
    
    
    326
    
    
    
    105,367Property level
operating income
(loss)
    
    $
    56,778
    
    
    $
    18,620
    
    
    $
    32,376
    
    
    $
    25,451
    
    
    $
    44,739
    
    
    $
    48,934
    
    
    $
    (3
    )
    
    $
    661
    
    
    
    227,556Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,403Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (55,884
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,726
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (73,241
    )Income before property dispositions, income taxes, minority interest
and equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78,108Gain on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,451Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (514
    )Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,524
    )Equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,055Discontinued operations, net of minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,549Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    92,125
 Note 3: SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets"
   Three Months Ended
    
    
    Six Months EndedJune 30, 2008
    
    
    June 30, 2007
    
    
    June 30, 2008
    
    
    June 20, 2007Revenues
    
    $
    101
    
    
    $
    9,576
    
    
    $
    276
    
    
    $
    21,269Operating expenses
    
    
    (84
    )
    
    
    (3,812
    )
    
    
    (138
    )
    
    
    (8,474
    )Interest expense
    
    
    (10
    )
    
    
    (1,510
    )
    
    
    (42
    )
    
    
    (3,430
    )Depreciation and amortization
    
    
    (28
    )
    
    
    (2,278
    )
    
    
    (71
    )
    
    
    (4,969
    )Income before property dispositions and minority interest
    
    $
    (21
    )
    
    $
    1,976
    
    
    $
    25
    
    
    $
    4,396
 Allocation of Interest to Discontinued Operations
 Note 4: Joint Ventures
  12




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##### Table of Contents



Liberty/Commerz 1701 JFK Boulevard, LP
 Accounting for the Sales of Real Estate
    Liberty Washington, LP
   Blythe Valley JV Sarl
  Note 5: Recently Issued Accounting Standards
 SFAS No. 157
 Fair
Value Measurements
 SFAS
No. 159
 The Fair Value Option for Financial Assets and
Financial Liabilities
 13




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##### Table of Contents



SFAS No. 141(R)
 Applying the Acquisition Method
 SFAS No. 160
 Accounting for Noncontrolling Interests
 Note 6: Supplemental Disclosure to Statements of Cash Flows
  Non-cash activity
    
    2008
    
    2007Write-off of fully depreciated property and deferred costs
    
    $
    6,578
    
    
    $
    35,626Increase in investment in unconsolidated joint ventures
    
    
    (35,172
    )
    
    
    Disposition of properties/development in progress
    
    
    173,624
    
    
    
    Disposition of deferred leasing/financing costs
    
    
    12,526
    
    
    
    Reduction of accounts receivable
    
    
    7,854
    
    
    
    Reduction of deferred rent receivable
    
    
    6,580
    
    
    
    Reduction of prepaid and other assets
    
    
    38,486
    
    
    
    Reduction of Credit Facility
    
    
    (152,960
    )
    
    
    Reduction of other liabilities
    
    
    (50,938
    )
    
    
    Assumption of mortgage loans
    
    
    
    
    
    
    5,634
 14




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##### Table of Contents



CONDENSED CONSOLIDATED BALANCE SHEETS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
 (In thousands)
 June 30, 2008
    
    
    December 31, 2007(Unaudited)ASSETSReal estate:Land and land improvements
    
    $
    792,067
    
    
    $
    796,501Building and improvements
    
    
    4,184,851
    
    
    
    4,434,731Less accumulated depreciation
    
    
    (927,575
    )
    
    
    (863,609
    )Operating real estate
    
    
    4,049,343
    
    
    
    4,367,623Development in progress
    
    
    316,369
    
    
    
    328,138Land held for development
    
    
    221,775
    
    
    
    247,124Net real estate
    
    
    4,587,487
    
    
    
    4,942,885Cash and cash equivalents
    
    
    13,579
    
    
    
    37,989Restricted cash
    
    
    54,535
    
    
    
    34,567Accounts receivable
    
    
    10,797
    
    
    
    12,217Deferred rent receivable
    
    
    80,644
    
    
    
    80,087Deferred financing and leasing costs, net of accumulated
amortization (2008, $134,547; 2007, $119,721)
    
    
    131,490
    
    
    
    144,689Investments in and advances to unconsolidated joint ventures
    
    
    319,622
    
    
    
    278,383Prepaid expenses and other assets
    
    
    78,842
    
    
    
    107,932Total assets
    
    $
    5,276,996
    
    
    $
    5,638,749LIABILITIESMortgage loans
    
    $
    207,496
    
    
    $
    243,169Unsecured notes
    
    
    2,155,000
    
    
    
    2,155,000Credit facility
    
    
    375,000
    
    
    
    622,960Accounts payable
    
    
    50,443
    
    
    
    44,666Accrued interest
    
    
    37,816
    
    
    
    39,725Distributions payable
    
    
    60,705
    
    
    
    59,849Other liabilities
    
    
    199,732
    
    
    
    263,738Total liabilities
    
    
    3,086,192
    
    
    
    3,429,107Minority interest
    
    
    414
    
    
    
    517OWNERS EQUITYGeneral partners equity  common units
    
    
    1,820,442
    
    
    
    1,837,021Limited partners equity  preferred units
    
    
    287,960
    
    
    
    287,960 common units
    
    
    81,988
    
    
    
    84,144Total owners equity
    
    
    2,190,390
    
    
    
    2,209,125Total liabilities and owners equity
    
    $
    5,276,996
    
    
    $
    5,638,749
  15




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##### Table of Contents



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
 (Unaudited and in thousands, except per unit amounts)
 Three Months EndedJune 30, 2008
    
    
    June 30, 2007OPERATING REVENUERental
    
    $
    127,923
    
    
    $
    116,785Operating expense reimbursement
    
    
    58,458
    
    
    
    51,465Total operating revenue
    
    
    186,381
    
    
    
    168,250OPERATING EXPENSERental property
    
    
    36,992
    
    
    
    35,307Real estate taxes
    
    
    23,804
    
    
    
    18,405General and administrative
    
    
    13,070
    
    
    
    12,643Depreciation and amortization
    
    
    43,892
    
    
    
    37,396Total operating expenses
    
    
    117,758
    
    
    
    103,751Operating income
    
    
    68,623
    
    
    
    64,499OTHER INCOME (EXPENSE)Interest and other income
    
    
    3,034
    
    
    
    2,884Interest expense
    
    
    (37,316
    )
    
    
    (28,877
    )Total other income (expense)
    
    
    (34,282
    )
    
    
    (25,993
    )Income before property dispositions, income taxes,
minority interest and equity in earnings of
unconsolidated joint ventures
    
    
    34,341
    
    
    
    38,506Gain on property dispositions
    
    
    835
    
    
    
    1,299Income taxes
    
    
    (580
    )
    
    
    (213
    )Minority interest
    
    
    (68
    )
    
    
    (20
    )Equity in earnings of unconsolidated joint ventures
    
    
    1,010
    
    
    
    326Income from continuing operations
    
    
    35,538
    
    
    
    39,898Discontinued operations (including net gain on property
dispositions of $2,793 and $17,430 for the three months
ended June 30, 2008 and 2007, respectively)
    
    
    2,772
    
    
    
    19,406Net income
    
    
    38,310
    
    
    
    59,304Preferred unit distributions
    
    
    (5,253
    )
    
    
    (3,774
    )Excess of preferred unit redemption over carrying amount
    
    
    
    
    
    
    (696
    )Income available to common unitholders
    
    $
    33,057
    
    
    $
    54,834Earnings per common unitBasic:Income from continuing operations
    
    $
    0.31
    
    
    $
    0.37Income from discontinued operations
    
    
    0.03
    
    
    
    0.20Income per common unit  basic
    
    $
    0.34
    
    
    $
    0.57Diluted:Income from continuing operations
    
    $
    0.31
    
    
    $
    0.37Income from discontinued operations
    
    
    0.03
    
    
    
    0.20Income per common unit  diluted
    
    $
    0.34
    
    
    $
    0.57Distributions per common unit
    
    $
    0.625
    
    
    $
    0.62Weighted average number of common units outstandingBasic
    
    
    96,513
    
    
    
    95,787Diluted
    
    
    96,891
    
    
    
    96,518
  16




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##### Table of Contents



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
 (Unaudited and in thousands, except per unit amounts)
 Six Months EndedJune 30, 2008
    
    
    June 30, 2007OPERATING REVENUERental
    
    $
    263,436
    
    
    $
    231,282Operating expense reimbursement
    
    
    116,319
    
    
    
    101,641Total operating revenue
    
    
    379,755
    
    
    
    332,923OPERATING EXPENSERental property
    
    
    77,057
    
    
    
    70,886Real estate taxes
    
    
    44,630
    
    
    
    34,481General and administrative
    
    
    27,037
    
    
    
    25,726Depreciation and amortization
    
    
    87,866
    
    
    
    73,241Total operating expenses
    
    
    236,590
    
    
    
    204,334Operating income
    
    
    143,165
    
    
    
    128,589OTHER INCOME (EXPENSE)Interest and other income
    
    
    6,128
    
    
    
    5,403Interest expense
    
    
    (79,746
    )
    
    
    (55,884
    )Total other income (expense)
    
    
    (73,618
    )
    
    
    (50,481
    )Income before property dispositions, income taxes,
minority interest and equity in earnings of
unconsolidated joint ventures
    
    
    69,547
    
    
    
    78,108Gain on property dispositions
    
    
    1,476
    
    
    
    1,451Income taxes
    
    
    (1,064
    )
    
    
    (514
    )Minority interest
    
    
    102
    
    
    
    (56
    )Equity in earnings of unconsolidated joint ventures
    
    
    1,387
    
    
    
    1,055Income from continuing operations
    
    
    71,448
    
    
    
    80,044Discontinued operations (including net gain on property
dispositions of $3,403 and $20,231 for the six months
ended June 30, 2008 and 2007, respectively)
    
    
    3,428
    
    
    
    24,627Net income
    
    
    74,876
    
    
    
    104,671Preferred unit distributions
    
    
    (10,506
    )
    
    
    (7,628
    )Excess of preferred unit redemption over carrying amount
    
    
    
    
    
    
    (696
    )Income available to common unitholders
    
    $
    64,370
    
    
    $
    96,347Earnings per common unitBasic:Income from continuing operations
    
    $
    0.63
    
    
    $
    0.75Income from discontinued operations
    
    
    0.04
    
    
    
    0.26Income per common unit  basic
    
    $
    0.67
    
    
    $
    1.01Diluted:Income from continuing operations
    
    $
    0.63
    
    
    $
    0.74Income from discontinued operations
    
    
    0.04
    
    
    
    0.26Income per common unit  diluted
    
    $
    0.67
    
    
    $
    1.00Distributions per common unit
    
    $
    1.25
    
    
    $
    1.24Weighted average number of common units outstandingBasic
    
    
    96,209
    
    
    
    95,508Diluted
    
    
    96,438
    
    
    
    96,358
  17




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##### Table of Contents



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
 (Unaudited and in thousands)
 Six Months EndedJune 30, 2008
    
    
    June 30, 2007OPERATING ACTIVITIESNet income
    
    $
    74,876
    
    
    $
    104,671Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    87,374
    
    
    
    77,483Amortization of deferred financing costs
    
    
    2,227
    
    
    
    1,989Equity in earnings of unconsolidated joint ventures
    
    
    (1,387
    )
    
    
    (1,055
    )Minority interest in net income
    
    
    (102
    )
    
    
    56Gain on property dispositions
    
    
    (4,879
    )
    
    
    (21,682
    )Noncash compensation
    
    
    5,603
    
    
    
    5,433Changes in operating assets and liabilities:Restricted cash
    
    
    (19,818
    )
    
    
    21,712Accounts receivable
    
    
    (248
    )
    
    
    (241
    )Deferred rent receivable
    
    
    (7,195
    )
    
    
    (2,113
    )Prepaid expenses and other assets
    
    
    (10,831
    )
    
    
    14,037Accounts payable
    
    
    5,800
    
    
    
    16,772Accrued interest
    
    
    (1,909
    )
    
    
    42Other liabilities
    
    
    (15,979
    )
    
    
    27,194Net cash provided by operating activities
    
    
    113,532
    
    
    
    244,298INVESTING ACTIVITIESInvestment in properties
    
    
    (37,752
    )
    
    
    (207,617
    )Investments in and advances to unconsolidated joint ventures
    
    
    (7,506
    )
    
    
    (17,282
    )Distributions from unconsolidated joint ventures
    
    
    3,161
    
    
    
    1,050Net proceeds from disposition of properties/land
    
    
    304,563
    
    
    
    191,595Investment in development in progress
    
    
    (138,035
    )
    
    
    (265,483
    )Investment in land held for development
    
    
    (18,717
    )
    
    
    (95,590
    )Investment in deferred leasing costs
    
    
    (14,271
    )
    
    
    (21,984
    )Net cash provided by (used in) investing activities
    
    
    91,443
    
    
    
    (415,311
    )FINANCING ACTIVITIESRedemption of preferred units
    
    
    
    
    
    
    (23,650
    )Repayments of mortgage loans
    
    
    (35,673
    )
    
    
    (5,798
    )Proceeds from credit facility
    
    
    344,150
    
    
    
    552,200Repayments on credit facility
    
    
    (439,150
    )
    
    
    (256,200
    )Increase in deferred financing costs
    
    
    
    
    
    
    (126
    )Capital contributions
    
    
    32,124
    
    
    
    39,453Distribution to partners
    
    
    (130,808
    )
    
    
    (176,806
    )Net cash (used in) provided by financing activities
    
    
    (229,357
    )
    
    
    129,073Net decrease in cash and cash equivalents
    
    
    (24,382
    )
    
    
    (41,940
    )(Decrease) increase in cash and cash equivalents related to foreign currency translation
    
    
    (28
    )
    
    
    944Cash and cash equivalents at beginning of period
    
    
    37,989
    
    
    
    53,737Cash and cash equivalents at end of period
    
    $
    13,579
    
    
    $
    12,741
  18




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##### Table of Contents



Liberty Property Limited Partnership
 
 Notes to Condensed Consolidated Financial Statements (Unaudited)
 June 30, 2008
 Note 1: Organization and Basis of Presentation
 Organization
  Basis of Presentation
  19




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##### Table of Contents



Income per Common Unit
  For
the Three Months Ended June 30, 2008
    
    
    For the Three Months Ended June 30, 2007Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedIncome
    
    
    Average Units
    
    
    
    
    
    
    Income
    
    
    Average Units(Numerator)
    
    
    (Denominator)
    
    
    Per Unit
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    Per UnitIncome from continuing operations
    
    $
    35,538
    
    
    
    
    
    
    
    
    
    
    $
    39,898Less: Preferred unit distributions
    
    
    (5,253
    )
    
    
    
    
    
    
    
    
    
    
    (3,774
    )Less: Excess of preferred unit redemption over
carrying amount
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (696
    )Basic income from continuing operationsIncome from continuing operations available to
common unitholders
    
    
    30,285
    
    
    
    96,513
    
    
    $
    0.31
    
    
    
    35,428
    
    
    
    95,787
    
    
    $
    0.37Dilutive units for long-term compensation plans
    
    
    
    
    
    
    378
    
    
    
    
    
    
    
    
    
    
    
    731Diluted income from continuing operationsIncome from continuing operations available to
common unitholders and assumed conversions
    
    
    30,285
    
    
    
    96,891
    
    
    $
    0.31
    
    
    
    35,428
    
    
    
    96,518
    
    
    $
    0.37Basic income from discontinued operationsDiscontinued operations
    
    
    2,772
    
    
    
    96,513
    
    
    $
    0.03
    
    
    
    19,406
    
    
    
    95,787
    
    
    $
    0.20Dilutive units for long-term compensation plans
    
    
    
    
    
    
    378
    
    
    
    
    
    
    
    
    
    
    
    731Diluted income from discontinued operationsDiscontinued operations
    
    
    2,772
    
    
    
    96,891
    
    
    $
    0.03
    
    
    
    19,406
    
    
    
    96,518
    
    
    $
    0.20Basic income per common unitIncome available to common unitholders
    
    
    33,057
    
    
    
    96,513
    
    
    $
    0.34
    
    
    
    54,834
    
    
    
    95,787
    
    
    $
    0.57Diluted units for long-term compensation plans
    
    
    
    
    
    
    378
    
    
    
    
    
    
    
    
    
    
    
    731Diluted income per common unitIncome available to common unitholders and
assumed conversions
    
    $
    33,057
    
    
    
    96,891
    
    
    $
    0.34
    
    
    $
    54,834
    
    
    
    96,518
    
    
    $
    0.57
 20




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##### Table of Contents



For the Six Months Ended June 30, 2008
    
    
    For the Six Months Ended June 30, 2007Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedIncome
    
    
    Average Units
    
    
    
    
    
    
Income
    
    
    Average Units(Numerator)
    
    
    (Denominator)
    
    

Per Unit
    
    

(Numerator)
    
    
    (Denominator)
    
    
    Per UnitIncome from continuing operations
    
    $
    71,448
    
    
    
    
    
    
    
    
    
    
    $
    80,044Less: Preferred unit distributions
    
    
    (10,506
    )
    
    
    
    
    
    
    
    
    
    
    (7,628
    )Less: Excess of preferred unit redemption over
carrying amount
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (696
    )Basic income from continuing operationsIncome from continuing operations available to
common unitholders
    
    
    60,942
    
    
    
    96,209
    
    
    $
    0.63
    
    
    
    71,720
    
    
    
    95,508
    
    
    $
    0.75Dilutive units for long-term compensation plans
    
    
    
    
    
    
    229
    
    
    
    
    
    
    
    
    
    
    
    850Diluted income from continuing operationsIncome from continuing operations available to
common unitholders and assumed conversions
    
    
    60,942
    
    
    
    96,438
    
    
    $
    0.63
    
    
    
    71,720
    
    
    
    96,358
    
    
    $
    0.74Basic income from discontinued operationsDiscontinued operations
    
    
    3,428
    
    
    
    96,209
    
    
    $
    0.04
    
    
    
    24,627
    
    
    
    95,508
    
    
    $
    0.26Dilutive units for long-term compensation plans
    
    
    
    
    
    
    229
    
    
    
    
    
    
    
    
    
    
    
    850Diluted income from discontinued operationsDiscontinued operations
    
    
    3,428
    
    
    
    96,438
    
    
    $
    0.04
    
    
    
    24,627
    
    
    
    96,358
    
    
    $
    0.26Basic income per common unitIncome available to common unitholders
    
    
    64,370
    
    
    
    96,209
    
    
    $
    0.67
    
    
    
    96,347
    
    
    
    95,508
    
    
    $
    1.01Diluted units for long-term compensation plans
    
    
    
    
    
    
    229
    
    
    
    
    
    
    
    
    
    
    
    850Diluted income per common unitIncome available to common unitholders and
assumed conversions
    
    $
    64,370
    
    
    
    96,438
    
    
    $
    0.67
    
    
    $
    96,347
    
    
    
    96,358
    
    
    $
    1.00
 Foreign Currency Translation
  Note 2: Segment Information
  Reportable Segments
    
    MarketsDelaware Valley
    
    Southeastern Pennsylvania; New JerseyMidwest
    
    Lehigh/Central PA; Minnesota; Milwaukee; ChicagoMid-Atlantic
    
    Maryland; Carolinas; Richmond; Virginia BeachSouth
    
    Jacksonville; Orlando; Boca Raton; Tampa; Texas; ArizonaPhiladelphia
    
    Comcast Center; Northern Virginia/Washington, D.C.United Kingdom
    
    County of Kent; West Midlands
 21




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##### Table of Contents



Disclosure
about Segments of an Enterprise and Related Information,
    FOR
THE THREE MONTHS ENDED JUNE 30, 2008
 delaware valley
    
    
    midwestsoutheastern
    
    
    
    
    
    
    lehigh/
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    phila-
    
    
    unitedpennsylvania
    
    
    other
    
    
    central pa
    
    
    other
    
    
    mid-atlantic
    
    
    South
    
    
    delphia
    
    
    kingdom
    
    
    totalOperating revenue
    
    $
    44,119
    
    
    $
    14,437
    
    
    $
    25,432
    
    
    $
    21,296
    
    
    $
    37,065
    
    
    $
    42,624
    
    
    $
    
    
    
    $
    1,408
    
    
    $
    186,381Rental property
expenses and real
estate taxes
    
    
    14,019
    
    
    
    5,150
    
    
    
    7,543
    
    
    
    8,171
    
    
    
    10,603
    
    
    
    15,067
    
    
    
    (14
    )
    
    
    257
    
    
    
    60,796Property level
operating income
    
    $
    30,100
    
    
    $
    9,287
    
    
    $
    17,889
    
    
    $
    13,125
    
    
    $
    26,462
    
    
    $
    27,557
    
    
    $
    14
    
    
    $
    1,151
    
    
    
    125,585Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,034Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37,316
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,070
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (43,892
    )Income before property dispositions, income taxes, minority interest
and equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,341Gain on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    835Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (580
    )Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (68
    )Equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,010Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,772Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    38,310
 22




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##### Table of Contents



FOR THE THREE MONTHS ENDED JUNE 30, 2007
 delaware valley
    
    
    midwestsoutheastern
    
    
    
    
    
    
    lehigh /
    
    
    
    
    
    
    mid-
    
    
    
    
    
    
    phila-
    
    
    unitedpennsylvania
    
    
    other
    
    
    central pa
    
    
    Other
    
    
    atlantic
    
    
    South
    
    
    delphia
    
    
    kingdom
    
    
    totalOperating revenue$
    42,484
    
    
    $
    13,444
    
    
    $
    22,993
    
    
    $
    19,755
    
    
    $
    32,601
    
    
    $
    36,388
    
    
    $
    
    
    
    $
    585
    
    
    $
    168,250Rental property
expenses and real
estate taxes
    
    
    14,113
    
    
    
    4,450
    
    
    
    6,481
    
    
    
    6,668
    
    
    
    9,938
    
    
    
    11,874
    
    
    
    1
    
    
    
    187
    
    
    
    53,712Property level
operating income
(loss)
    
    $
    28,371
    
    
    $
    8,994
    
    
    $
    16,512
    
    
    $
    13,087
    
    
    $
    22,663
    
    
    $
    24,514
    
    
    $
    (1
    )
    
    $
    398
    
    
    
    114,538Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,884Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (28,877
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,643
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37,396
    )Income before property dispositions, income taxes, minority interest
and equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,506Gain on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,299Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (213
    )Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20
    )Equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    326Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,406Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    59,304
 FOR THE SIX MONTHS ENDED JUNE 30, 2008
 delaware valley
    
    
    midwestsoutheastern
    
    
    
    
    
    
    lehigh /
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    phila-
    
    
    unitedpennsylvania
    
    
    other
    
    
    central pa
    
    
    other
    
    
    mid-atlantic
    
    
    South
    
    
    delphia
    
    
    kingdom
    
    
    totalOperating revenue$
    89,047
    
    
    $
    28,684
    
    
    $
    50,074
    
    
    $
    41,765
    
    
    $
    74,258
    
    
    $
    82,795
    
    
    $
    10,680
    
    
    $
    2,452
    
    
    $
    379,755Rental property
expenses and real
estate taxes
    
    
    28,609
    
    
    
    9,800
    
    
    
    14,221
    
    
    
    15,903
    
    
    
    21,538
    
    
    
    28,219
    
    
    
    2,779
    
    
    
    618
    
    
    
    121,687Property level
operating income
    
    $
    60,438
    
    
    $
    18,884
    
    
    $
    35,853
    
    
    $
    25,862
    
    
    $
    52,720
    
    
    $
    54,576
    
    
    $
    7,901
    
    
    $
    1,834
    
    
    
    258,068Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,128Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (79,746
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27,037
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (87,866
    )Income before property dispositions, income taxes, minority interest
and equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69,547Gain on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,476Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,064
    )Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    102Equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,387Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,428Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    74,876
 23




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##### Table of Contents



FOR THE SIX MONTHS ENDED JUNE 30, 2007
 delaware valley
    
    
    midwestsoutheastern
    
    
    
    
    
    
    lehigh /
    
    
    
    
    
    
    mid-
    
    
    
    
    
    
    phila-
    
    
    unitedpennsylvania
    
    
    other
    
    
    central pa
    
    
    other
    
    
    atlantic
    
    
    South
    
    
    delphia
    
    
    kingdom
    
    
    totalOperating revenue$
    85,680
    
    
    $
    27,358
    
    
    $
    43,741
    
    
    $
    38,953
    
    
    $
    64,750
    
    
    $
    71,454
    
    
    $
    
    
    
    $
    987
    
    
    $
    332,923Rental property
expenses and real
estate taxes
    
    
    28,902
    
    
    
    8,738
    
    
    
    11,365
    
    
    
    13,502
    
    
    
    20,011
    
    
    
    22,520
    
    
    
    3
    
    
    
    326
    
    
    
    105,367Property level
operating income
(loss)
    
    $
    56,778
    
    
    $
    18,620
    
    
    $
    32,376
    
    
    $
    25,451
    
    
    $
    44,739
    
    
    $
    48,934
    
    
    $
    (3
    )
    
    $
    661
    
    
    
    227,556Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,403Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (55,884
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,726
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (73,241
    )Income before property dispositions, income taxes, minority interest
and equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78,108Gain on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,451Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (514
    )Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (56
    )Equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,055Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,627Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    104,671
 Note 3: SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets
   Three Months Ended
    
    
    Six Months EndedJune 30, 2008
    
    
    June 30, 2007
    
    
    June 30, 2008
    
    
    June 30, 2007Revenues
    
    $
    101
    
    
    $
    9,576
    
    
    $
    276
    
    
    $
    21,269Operating expenses
    
    
    (84
    )
    
    
    (3,812
    )
    
    
    (138
    )
    
    
    (8,474
    )Interest expense
    
    
    (10
    )
    
    
    (1,510
    )
    
    
    (42
    )
    
    
    (3,430
    )Depreciation and amortization
    
    
    (28
    )
    
    
    (2,278
    )
    
    
    (71
    )
    
    
    (4,969
    )Income before property dispositions and minority interest
    
    $
    (21
    )
    
    $
    1,976
    
    
    $
    25
    
    
    $
    4,396
 Allocation of Interest to Discontinued Operations
 24




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##### Table of Contents



Note 4: Joint Ventures
  Liberty/Commerz 1701 JFK Boulevard, LP
 Accounting for the Sales of Real Estate
    Liberty Washington, LP
   Blythe Valley JV Sarl
  Note 5: Recently Issued Accounting Standards
 SFAS No. 157
 Fair
Value Measurements
 25




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##### Table of Contents



SFAS No. 159
 The Fair Value Option for Financial Assets and
Financial Liabilities
 SFAS No. 141(R)
 Applying the Acquisition Method
 SFAS No. 160
 Accounting for Noncontrolling Interests
 Note 6: Supplemental Disclosure to Statements of Cash Flows
  Non-cash activity
    
    2008
    
    2007Write-off of fully depreciated property and deferred costs
    
    $
    6,578
    
    
    $
    35,626Increase in investment in unconsolidated joint ventures
    
    
    (35,172
    )
    
    
    Disposition of properties/development in progress
    
    
    173,624
    
    
    
    Disposition of deferred leasing/financing costs
    
    
    12,526
    
    
    
    Reduction of accounts receivable
    
    
    7,854
    
    
    
    Reduction of deferred rent receivable
    
    
    6,580
    
    
    
    Reduction of prepaid and other assets
    
    
    38,486
    
    
    
    Reduction of credit facility
    
    
    (152,960
    )
    
    
    Reduction of other liabilities
    
    
    (50,938
    )
    
    
    Assumption of mortgage loans
    
    
    
    
    
    
    5,634
 26




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 OVERVIEW
      WHOLLY OWNED CAPITAL ACTIVITY
 Acquisitions
  Dispositions
  27




---



##### Table of Contents



Development
  JOINT VENTURE CAPITAL ACTIVITY
  Acquisitions
  Dispositions
  Development
  Liberty/Commerz 1701 JFK Boulevard, LP
 Accounting for the Sale of Real Estate
    28




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##### Table of Contents



PROPERTIES IN OPERATION
  Net RentPer Square Foot
    
    
    Total Square Feet
    
    
    Percent OccupiedJune 30
    
    
    June 30
    
    
    June 302008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Wholly Owned Properties in Operation:Industrial-Distribution
    
    $
    4.48
    
    
    $
    4.34
    
    
    
    27,083
    
    
    
    27,296
    
    
    
    93.6
    %
    
    
    90.2
    %Industrial-Flex
    
    $
    9.37
    
    
    $
    8.81
    
    
    
    10,240
    
    
    
    12,405
    
    
    
    88.6
    %
    
    
    92.3
    %Office
    
    $
    14.18
    
    
    $
    13.82
    
    
    
    19,732
    
    
    
    21,215
    
    
    
    91.6
    %
    
    
    90.9
    %$
    8.71
    
    
    $
    8.56
    
    
    
    57,055
    
    
    
    60,916
    
    
    
    92.0
    %
    
    
    90.9
    %
 Net RentPer Square Foot
    
    
    Total Square Feet
    
    
    Percent OccupiedJune 30
    
    
    June 30
    
    
    June 302008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Joint Venture Properties in Operation:Industrial-Distribution
    
    $
    4.09
    
    
    $
    3.60
    
    
    
    7,786
    
    
    
    6,934
    
    
    
    97.1
    %
    
    
    92.2
    %Industrial-Flex
    
    $
    33.97
    
    
    $
    28.64
    
    
    
    153
    
    
    
    171
    
    
    
    89.5
    %
    
    
    100.0
    %Office
    
    $
    25.26
    
    
    $
    36.56
    
    
    
    4,240
    
    
    
    364
    
    
    
    92.6
    %
    
    
    94.7
    %$
    11.83
    
    
    $
    5.86
    
    
    
    12,179
    
    
    
    7,469
    
    
    
    95.4
    %
    
    
    92.5
    %
 Net RentPer Square Foot
    
    
    Total Square Feet
    
    
    Percent OccupiedJune 30
    
    
    June 30
    
    
    June 302008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Properties in Operation:Industrial-Distribution
    
    $
    4.39
    
    
    $
    4.19
    
    
    
    34,869
    
    
    
    34,230
    
    
    
    94.3
    %
    
    
    90.6
    %Industrial-Flex
    
    $
    9.73
    
    
    $
    9.10
    
    
    
    10,393
    
    
    
    12,576
    
    
    
    88.6
    %
    
    
    92.4
    %Office
    
    $
    16.14
    
    
    $
    14.22
    
    
    
    23,972
    
    
    
    21,579
    
    
    
    91.8
    %
    
    
    91.0
    %$
    9.26
    
    
    $
    8.27
    
    
    
    69,234
    
    
    
    68,385
    
    
    
    92.5
    %
    
    
    91.1
    %
  Forward-Looking Statements
  29




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##### Table of Contents



Critical Accounting Policies and Estimates
  Results of Operations
   Comparison of Three and Six Months Ended June 30, 2008 to Three and Six Months Ended June
30, 2007
 Overview
   30




---



##### Table of Contents



Segments
  Property Level Operating Income:
 Three Months Ended
    
    
    
    
    Six Months EndedJune 30, 2008
    
    
    June 30, 2007
    
    
    % inc (dec)
    
    
    
    
    June 30, 2008
    
    
    June 30, 2007
    
    
    % inc (dec)Delaware Valley- SE Pennsylvania
    
    $
    30,100
    
    
    $
    28,371
    
    
    
    6.1
    %
    (1
    )
    
    $
    60,438
    
    
    $
    56,778
    
    
    
    6.4
    %
    (1
    )- Other
    
    
    9,287
    
    
    
    8,994
    
    
    
    3.3
    %
    
    
    
    
    18,884
    
    
    
    18,620
    
    
    
    1.4
    %Midwest- Lehigh/Central PA
    
    
    17,889
    
    
    
    16,512
    
    
    
    8.3
    %
    (1
    )
    
    
    35,853
    
    
    
    32,376
    
    
    
    10.7
    %
    (1
    )- Other
    
    
    13,125
    
    
    
    13,087
    
    
    
    0.3
    %
    
    
    
    
    25,862
    
    
    
    25,451
    
    
    
    1.6
    %Mid-Atlantic
    
    
    26,462
    
    
    
    22,663
    
    
    
    16.8
    %
    (2
    )
    
    
    52,720
    
    
    
    44,739
    
    
    
    17.8
    %
    (2
    )South
    
    
    27,557
    
    
    
    24,514
    
    
    
    12.4
    %
    (1
    )
    
    
    54,576
    
    
    
    48,934
    
    
    
    11.5
    %
    (1
    )Philadelphia
    
    
    14
    
    
    
    (1
    )
    
    
    N/A
    
    
    
    
    
    7,901
    
    
    
    (3
    )
    
    
    N/A
    
    (3
    )United Kingdom
    
    
    1,151
    
    
    
    398
    
    
    
    189.2
    %
    (1
    )
    
    
    1,834
    
    
    
    661
    
    
    
    177.5
    %
    (1
    )Totals
    
    $
    125,585
    
    
    $
    114,538
    
    
    
    9.6
    %
    
    
    
    $
    258,068
    
    
    $
    227,556
    
    
    
    13.4
    %
 
 (1)
    
    The increases for the three and six months ended June 30, 2008 versus
the three and six months ended June 30, 2007 were primarily due to an increase
in average gross investment in operating real estate and an increase in rental
rates during 2008. The increases were partially offset by a decrease in
occupancy in 2008 compared to 2007.(2)
    
    The increases for the three and six months ended June 30, 2008 versus
the three and six months ended June 30, 2007 were primarily due to an increase
in average gross investment in operating real estate, an increase in rental
rates and increased occupancy during 2008 compared to 2007.(3)
    
    The increase for the six months ended June 30, 2008 versus the six
months ended June 30, 2007 was due to the operations of Comcast Center in 2008.
Comcast Center was a development project during the six months ended June 30,
2007 but was partially in service during the three months ended March 31, 2008.
On March 31, 2008 all conditions for sale treatment as outlined in SFAS No. 66
were satisfied and the Company recognized the sale of Comcast Center to an
unconsolidated joint venture. Same Store
     31




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30, 2008
    
    
    June 30, 2007
    
    
    June 30, 2008
    
    
    June 30, 2007Same Store:Rental revenue
    
    $
    112,134
    
    
    $
    112,453
    
    
    $
    225,088
    
    
    $
    225,205Operating expenses:Rental property expense
    
    
    35,311
    
    
    
    35,277
    
    
    
    71,492
    
    
    
    70,812Real estate taxes
    
    
    20,799
    
    
    
    17,431
    
    
    
    38,586
    
    
    
    32,986Operating expense recovery
    
    
    (54,251
    )
    
    
    (50,835
    )
    
    
    (105,500
    )
    
    
    (100,901
    )Unrecovered operating expenses
    
    
    1,859
    
    
    
    1,873
    
    
    
    4,578
    
    
    
    2,897Property level operating income
    
    
    110,275
    
    
    
    110,580
    
    
    
    220,510
    
    
    
    222,308Less straight line rent
    
    
    662
    
    
    
    1,642
    
    
    
    2,098
    
    
    
    3,553Cash basis property level operating income
    
    $
    109,613
    
    
    $
    108,938
    
    
    $
    218,412
    
    
    $
    218,755Reconciliation of non-GAAP financial measure:Property level operating income  Same Store
    
    $
    110,275
    
    
    $
    110,580
    
    
    $
    220,510
    
    
    $
    222,308Property level operating income  properties
purchased or developed subsequent to January 1,
2007
    
    
    14,649
    
    
    
    3,392
    
    
    
    35,616
    
    
    
    3,962Termination fees
    
    
    661
    
    
    
    566
    
    
    
    1,942
    
    
    
    1,286General and administrative expense
    
    
    (13,070
    )
    
    
    (12,643
    )
    
    
    (27,037
    )
    
    
    (25,726
    )Depreciation and amortization expense
    
    
    (43,892
    )
    
    
    (37,396
    )
    
    
    (87,866
    )
    
    
    (73,241
    )Other income (expense)
    
    
    (34,282
    )
    
    
    (25,993
    )
    
    
    (73,618
    )
    
    
    (50,481
    )Gain on property dispositions
    
    
    835
    
    
    
    1,299
    
    
    
    1,476
    
    
    
    1,451Income taxes
    
    
    (580
    )
    
    
    (213
    )
    
    
    (1,064
    )
    
    
    (514
    )Minority interest
    
    
    (6,630
    )
    
    
    (6,045
    )
    
    
    (13,036
    )
    
    
    (11,524
    )Equity in earnings of unconsolidated joint ventures
    
    
    1,010
    
    
    
    326
    
    
    
    1,387
    
    
    
    1,055Discontinued operations, net of minority interest
    
    
    2,653
    
    
    
    18,554
    
    
    
    3,280
    
    
    
    23,549Net income
    
    $
    31,629
    
    
    $
    52,427
    
    
    $
    61,590
    
    
    $
    92,125
 General and Administrative
  Depreciation and Amortization
  Interest Expense
  32




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##### Table of Contents



Other
     Liquidity and Capital Resources
    33




---



##### Table of Contents



MORTGAGES
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    WEIGHTEDPRINCIPAL
    
    
    PRINCIPAL
    
    
    UNSECURED
    
    
    CREDIT
    
    
    
    
    
    
    AVERAGEAMORTIZATION
    
    
    MATURITIES
    
    
    NOTES
    
    
    FACILITY
    
    
    TOTAL
    
    
    INTEREST RATE2008 (6 months)
    
    $
    4,058
    
    
    $
    446
    
    
    $
    
    
    
    $
    
    
    
    $
    4,504
    
    
    
    7.12
    %2009
    
    
    6,589
    
    
    
    46,314
    
    
    
    270,000
    
    
    
    
    
    
    
    322,903
    
    
    
    7.76
    %2010
    
    
    5,823
    
    
    
    4,736
    
    
    
    200,000
    
    
    
    375,000
    
    
    
    585,559
    
    
    
    5.00
    %2011
    
    
    5,160
    
    
    
    13,356
    
    
    
    250,000
    
    
    
    
    
    
    
    268,516
    
    
    
    7.24
    %2012
    
    
    4,336
    
    
    
    32,875
    
    
    
    235,000
    
    
    
    
    
    
    
    272,211
    
    
    
    6.47
    %2013
    
    
    3,857
    
    
    
    4,510
    
    
    
    
    
    
    
    
    
    
    
    8,367
    
    
    
    5.79
    %2014
    
    
    3,888
    
    
    
    2,684
    
    
    
    200,000
    
    
    
    
    
    
    
    206,572
    
    
    
    5.66
    %2015
    
    
    3,336
    
    
    
    44,469
    
    
    
    300,000
    
    
    
    
    
    
    
    347,805
    
    
    
    5.25
    %2016
    
    
    2,409
    
    
    
    16,880
    
    
    
    300,000
    
    
    
    
    
    
    
    319,289
    
    
    
    5.55
    %2017
    
    
    1,770
    
    
    
    
    
    
    
    300,000
    
    
    
    
    
    
    
    301,770
    
    
    
    6.62
    %2018 & thereafter
    
    
    
    
    
    
    
    
    
    
    100,000
    
    
    
    
    
    
    
    100,000
    
    
    
    7.50
    %$
    41,226
    
    
    $
    166,270
    
    
    $
    2,155,000
    
    
    $
    375,000
    
    
    $
    2,737,496
    
    
    
    6.11
    %
 34




---



##### Table of Contents



General
   Industrial-
    
    
    Industrial-Distribution
    
    
    Flex
    
    
    Office
    
    
    TotalWholly Owned Properties
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annualin Operation:
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent2008 (6 months)
    
    
    1,562
    
    
    $
    6,512
    
    
    
    529
    
    
    $
    5,182
    
    
    
    891
    
    
    $
    12,667
    
    
    
    2,982
    
    
    $
    24,3612009
    
    
    3,495
    
    
    
    15,930
    
    
    
    1,761
    
    
    
    16,415
    
    
    
    2,705
    
    
    
    39,476
    
    
    
    7,961
    
    
    
    71,8212010
    
    
    3,366
    
    
    
    16,238
    
    
    
    1,740
    
    
    
    16,910
    
    
    
    2,983
    
    
    
    43,228
    
    
    
    8,089
    
    
    
    76,3762011
    
    
    2,815
    
    
    
    12,895
    
    
    
    1,155
    
    
    
    11,573
    
    
    
    2,095
    
    
    
    32,543
    
    
    
    6,065
    
    
    
    57,0112012
    
    
    4,701
    
    
    
    23,535
    
    
    
    1,485
    
    
    
    14,519
    
    
    
    2,411
    
    
    
    41,921
    
    
    
    8,597
    
    
    
    79,9752013
    
    
    1,704
    
    
    
    8,911
    
    
    
    1,311
    
    
    
    13,620
    
    
    
    2,364
    
    
    
    39,220
    
    
    
    5,379
    
    
    
    61,751Thereafter
    
    
    9,441
    
    
    
    51,496
    
    
    
    2,259
    
    
    
    27,837
    
    
    
    6,283
    
    
    
    107,081
    
    
    
    17,983
    
    
    
    186,414TOTAL
    
    
    27,084
    
    
    $
    135,517
    
    
    
    10,240
    
    
    $
    106,056
    
    
    
    19,732
    
    
    $
    316,136
    
    
    
    57,056
    
    
    $
    557,709
 Industrial-
    
    
    Industrial-Distribution
    
    
    Flex
    
    
    Office
    
    
    TotalJoint Venture Properties
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annualin Operation:
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent2008 (6 months)
    
    
    264
    
    
    $
    1,060
    
    
    
    5
    
    
    $
    148
    
    
    
    252
    
    
    $
    4,851
    
    
    
    521
    
    
    $
    6,0592009
    
    
    1,445
    
    
    
    5,720
    
    
    
    11
    
    
    
    321
    
    
    
    549
    
    
    
    12,612
    
    
    
    2,005
    
    
    
    18,6532010
    
    
    1,073
    
    
    
    4,354
    
    
    
    24
    
    
    
    893
    
    
    
    348
    
    
    
    8,379
    
    
    
    1,445
    
    
    
    13,6262011
    
    
    692
    
    
    
    2,942
    
    
    
    11
    
    
    
    375
    
    
    
    452
    
    
    
    11,535
    
    
    
    1,155
    
    
    
    14,8522012
    
    
    438
    
    
    
    1,891
    
    
    
    63
    
    
    
    2,128
    
    
    
    180
    
    
    
    5,329
    
    
    
    681
    
    
    
    9,3482013
    
    
    492
    
    
    
    2,040
    
    
    
    
    
    
    
    
    
    
    
    248
    
    
    
    6,138
    
    
    
    740
    
    
    
    8,178Thereafter
    
    
    3,382
    
    
    
    16,960
    
    
    
    39
    
    
    
    1,358
    
    
    
    2,211
    
    
    
    76,827
    
    
    
    5,632
    
    
    
    95,145TOTAL
    
    
    7,786
    
    
    $
    34,967
    
    
    
    153
    
    
    $
    5,223
    
    
    
    4,240
    
    
    $
    125,671
    
    
    
    12,179
    
    
    $
    165,861
 Industrial-
    
    
    Industrial-Distribution
    
    
    Flex
    
    
    Office
    
    
    TotalProperties
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annualin Operation:
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent2008 (6 months)
    
    
    1,826
    
    
    $
    7,572
    
    
    
    534
    
    
    $
    5,330
    
    
    
    1,143
    
    
    $
    17,518
    
    
    
    3,503
    
    
    $
    30,4202009
    
    
    4,940
    
    
    
    21,650
    
    
    
    1,772
    
    
    
    16,736
    
    
    
    3,254
    
    
    
    52,088
    
    
    
    9,966
    
    
    
    90,4742010
    
    
    4,439
    
    
    
    20,592
    
    
    
    1,764
    
    
    
    17,803
    
    
    
    3,331
    
    
    
    51,607
    
    
    
    9,534
    
    
    
    90,0022011
    
    
    3,507
    
    
    
    15,837
    
    
    
    1,166
    
    
    
    11,948
    
    
    
    2,547
    
    
    
    44,078
    
    
    
    7,220
    
    
    
    71,8632012
    
    
    5,139
    
    
    
    25,426
    
    
    
    1,548
    
    
    
    16,647
    
    
    
    2,591
    
    
    
    47,250
    
    
    
    9,278
    
    
    
    89,3232013
    
    
    2,196
    
    
    
    10,951
    
    
    
    1,311
    
    
    
    13,620
    
    
    
    2,612
    
    
    
    45,358
    
    
    
    6,119
    
    
    
    69,929Thereafter
    
    
    12,823
    
    
    
    68,456
    
    
    
    2,298
    
    
    
    29,195
    
    
    
    8,494
    
    
    
    183,908
    
    
    
    23,615
    
    
    
    281,559TOTAL
    
    
    34,870
    
    
    $
    170,484
    
    
    
    10,393
    
    
    $
    111,279
    
    
    
    23,972
    
    
    $
    441,807
    
    
    
    69,235
    
    
    $
    723,570
 35




---



##### Table of Contents



Square FeetScheduled
    
    Industrial-
    
    
    Industrial-
    
    
    
    
    
    
    
    
    
    
    Percent
    
    
    TotalIn-Service Date
    
    Distribution
    
    
    Flex
    
    
    Office
    
    
    Total
    
    
    Leased
    
    
    InvestmentWholly Owned
Properties under
Development
    
    3rd Quarter 2008
    
    
    918,375
    
    
    
    115,600
    
    
    
    
    
    
    
    1,033,975
    
    
    
    83.6
    %
    
    $
    62,4004th Quarter 2008
    
    
    963,540
    
    
    
    
    
    
    
    103,700
    
    
    
    1,067,240
    
    
    
    9.8
    %
    
    
    66,9821st Quarter 2009
    
    
    
    
    
    
    
    
    
    
    90,472
    
    
    
    90,472
    
    
    
    46.2
    %
    
    
    16,5892nd Quarter 2009
    
    
    920,400
    
    
    
    126,000
    
    
    
    158,708
    
    
    
    1,205,108
    
    
    
    3.9
    %
    
    
    88,8383rd Quarter 2009
    
    
    654,040
    
    
    
    68,500
    
    
    
    437,236
    
    
    
    1,159,776
    
    
    
    26.1
    %
    
    
    143,7124th Quarter 2009
    
    
    345,500
    
    
    
    
    
    
    
    
    
    
    
    345,500
    
    
    
    100.0
    %
    
    
    50,4522nd Quarter 2010
    
    
    
    
    
    
    
    
    
    
    95,261
    
    
    
    95,261
    
    
    
    38.3
    %
    
    
    24,249TOTAL
    
    
    3,801,855
    
    
    
    310,100
    
    
    
    885,377
    
    
    
    4,997,332
    
    
    
    34.9
    %
    
    $
    453,222Joint Venture
Properties under
Development
    
    3rd Quarter 2008
    
    
    296,100
    
    
    
    
    
    
    
    
    
    
    
    296,100
    
    
    
    63.2
    %
    
    
    18,8043rd Quarter 2009
    
    
    225,000
    
    
    
    
    
    
    
    
    
    
    
    225,000
    
    
    
    
    
    
    
    11,6754th Quarter 2009
    
    
    
    
    
    
    
    
    
    
    176,394
    
    
    
    176,394
    
    
    
    2.8
    %
    
    
    126,599TOTAL
    
    
    521,100
    
    
    
    
    
    
    
    176,394
    
    
    
    697,494
    
    
    
    27.5
    %
    
    $
    157,078Total Properties
under Development
    
    TOTAL
    
    
    4,322,955
    
    
    
    310,100
    
    
    
    1,061,771
    
    
    
    5,694,826
    
    
    
    34.0
    %
    
    $
    610,300
   Calculation of Funds from Operations
   36




---



##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30, 2008
    
    
    June 30, 2007
    
    
    June 30, 2008
    
    
    June 30, 2007Reconciliation of net income to FFO  basicNet Income
    
    $
    31,629
    
    
    $
    52,427
    
    
    $
    61,590
    
    
    $
    92,125Basic  Income available to common
shareholders
    
    
    31,629
    
    
    
    52,427
    
    
    
    61,590
    
    
    
    92,125Basic  income available to common
shareholders per weighted average share
    
    $
    0.34
    
    
    $
    0.57
    
    
    $
    0.67
    
    
    $
    1.01Adjustments:Depreciation and amortization of
unconsolidated joint ventures
    
    
    4,329
    
    
    
    844
    
    
    
    7,877
    
    
    
    1,685Depreciation and amortization
    
    
    43,252
    
    
    
    39,062
    
    
    
    86,630
    
    
    
    76,989Gain on property dispositions
    
    
    (3,164
    )
    
    
    (18,549
    )
    
    
    (4,132
    )
    
    
    (21,936
    )Minority interest share in addback for
depreciation and amortization and gain on
property dispositions
    
    
    (1,914
    )
    
    
    (938
    )
    
    
    (3,909
    )
    
    
    (2,484
    )Funds from operations available to common
shareholders  basic
    
    $
    74,132
    
    
    $
    72,846
    
    
    $
    148,056
    
    
    $
    146,379Basic Funds from operations available
to common shareholders per weighted
average share
    
    $
    0.80
    
    
    $
    0.80
    
    
    $
    1.61
    
    
    $
    1.60Reconciliation of net income to FFO -
diluted:Net Income
    
    $
    31,629
    
    
    $
    52,427
    
    
    $
    61,590
    
    
    $
    92,125Diluted  income available to common
shareholders
    
    
    31,629
    
    
    
    52,427
    
    
    
    61,590
    
    
    
    92,125Diluted  income available to common
shareholders per weighted average share
    
    $
    0.34
    
    
    $
    0.57
    
    
    $
    0.67
    
    
    $
    1.00Adjustments:Depreciation and amortization of
unconsolidated joint ventures
    
    
    4,329
    
    
    
    844
    
    
    
    7,877
    
    
    
    1,685Depreciation and amortization
    
    
    43,252
    
    
    
    39,062
    
    
    
    86,630
    
    
    
    76,989Gain on property dispositions
    
    
    (3,164
    )
    
    
    (18,549
    )
    
    
    (4,132
    )
    
    
    (21,936
    )Minority interest less preferred share
distributions and excess of preferred unit
redemption over carrying amount
    
    
    1,428
    
    
    
    2,407
    
    
    
    2,780
    
    
    
    4,222Funds from operations available to common
shareholders  diluted
    
    $
    77,474
    
    
    $
    76,191
    
    
    $
    154,745
    
    
    $
    153,085Diluted Funds from operations available
to common shareholders per weighted
average share
    
    $
    0.80
    
    
    $
    0.79
    
    
    $
    1.60
    
    
    $
    1.59Reconciliation of weighted average shares:Weighted average common shares  all basic
calculations
    
    
    92,323
    
    
    
    91,597
    
    
    
    92,019
    
    
    
    91,318Dilutive shares for long term compensation
plans
    
    
    378
    
    
    
    731
    
    
    
    229
    
    
    
    850Diluted shares for net income calculations
    
    
    92,701
    
    
    
    92,328
    
    
    
    92,248
    
    
    
    92,168Weighted average common units
    
    
    4,190
    
    
    
    4,190
    
    
    
    4,190
    
    
    
    4,190Diluted shares for Funds from operations
calculations
    
    
    96,891
    
    
    
    96,518
    
    
    
    96,438
    
    
    
    96,358
 37




---



##### Table of Contents



Inflation
  
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4. Controls and Procedures
 Evaluation
of Disclosure Controls and Procedures
  Changes in Internal Controls
  38




---



##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
     39




---



##### Table of Contents



Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  1.
    
    Managements nominees, Frederick F. Buchholz, Thomas C.
DeLoach, Jr., Daniel P. Garton and Stephen B. Siegel, were elected to fill
the four available positions as Class II trustees. Voting (expressed in
number of shares) was as follows: Mr. Buchholz: 77,020,114 for, 3,286,895
against or withheld and no abstentions or broker non-votes; Mr. DeLoach:
79,632,553 for, 674,456 against or withheld and no abstentions or broker
non-votes; Mr. Garton: 72,002,167 for, 8,304,841 against or withheld and
no abstentions or broker non-votes; and Mr. Siegel: 79,092,201 for,
614,877 against or withheld and no abstentions or broker non-votes.2.
    
    The shareholders approved a proposal to ratify the
selection of Ernst & Young LLP as the Trusts independent registered
public accounting firm for 2008. Voting (expressed in number of shares)
was as follows: 79,995,856 for, 264,863 against and 46,290 abstentions or
brokers non-votes.
 
 Item 5. Other Information
  40




---



##### Table of Contents



Item 6. Exhibits
 12.1*
    
    Statement Re: Computation of Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed Charges.31.1*
    
    Certification of the Chief Executive Officer of Liberty Property
Trust required by Rule 13a-14(a) under the Securities Exchange Act
of 1934.31.2*
    
    Certification of the Chief Financial Officer of Liberty Property
Trust required by Rule 13a-14(a) under the Securities Exchange Act
of 1934.31.3*
    
    Certification of the Chief Executive Officer of Liberty Property
Trust, in its capacity as the general partner of Liberty Property
Limited Partnership, required by Rule 13a-14(a) under the Securities
Exchange Act of 1934.31.4*
    
    Certification of the Chief Financial Officer of Liberty Property
Trust, in its capacity as the general partner of Liberty Property
Limited Partnership, required by Rule 13a-14(a) under the Securities
Exchange Act of 1934.32.1*
    
    Certification of the Chief Executive Officer of Liberty Property
Trust required under Rule 13a-14(b) of the Securities Exchange Act
of 1934, as amended. (This exhibit shall not be deemed filed for
purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, or otherwise subject to the liability of that section.
Further, this exhibit shall not be deemed to be incorporated by
reference into any filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended.)32.2*
    
    Certification of the Chief Financial Officer of Liberty Property
Trust required by Rule 13a-14(b) under the Securities Exchange Act
of 1934, as amended. (This exhibit shall not be deemed filed for
purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, or otherwise subject to the liability of that section.
Further, this exhibit shall not be deemed to be incorporated by
reference into any filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended.)32.3*
    
    Certification of the Chief Executive Officer of Liberty Property
Trust, in its capacity as the general partner of Liberty Property
Limited Partnership, required by Rule 13a-14(b) under the Securities
Exchange Act of 1934, as amended. (This exhibit shall not be deemed
filed for purposes of Section 18 of the Securities Exchange Act of
1934, as amended, or otherwise subject to the liability of that
section. Further, this exhibit shall not be deemed to be
incorporated by reference into any filing under the Securities Act
of 1933, as amended, or the Securities Exchange Act of 1934, as
amended.)32.4*
    
    Certification of the Chief Financial Officer of Liberty Property
Trust, in its capacity as the general partner of Liberty Property
Limited Partnership, required by Rule 13a-14(b) under the Securities
Exchange Act of 1934, as amended. (This exhibit shall not be deemed
filed for purposes of Section 18 of the Securities Exchange Act of
1934, as amended, or otherwise subject to the liability of that
section. Further, this exhibit shall not be deemed to be
incorporated by reference into any filing under the Securities Act
of 1933, as amended, or the Securities Exchange Act of 1934, as
amended.)
 
 *
    
    Filed herewith. 41




---



##### Table of Contents



SIGNATURES
  LIBERTY PROPERTY TRUST
 /s/ WILLIAM P. HANKOWSKY

William P. Hankowsky
    
    August 7, 2008

   DatePresident and Chief Executive Officer/s/ GEORGE J. ALBURGER, JR

George J. Alburger, Jr.
    
    August 7, 2008

    DateExecutive Vice President and Chief Financial Officer
 42




---



##### Table of Contents



SIGNATURES
  LIBERTY PROPERTY LIMITED PARTNERSHIP
 BY:
    
    Liberty Property TrustGeneral Partner/s/ WILLIAM P. HANKOWSKY

William P. Hankowsky
    
    
    
    August 7, 2008

    DatePresident and Chief Executive Officer/s/ GEORGE J. ALBURGER, JR.

George J. Alburger, Jr.
    
    
    
    August 7, 2008

    DateExecutive Vice President and Chief Financial Officer
 43




---



##### Table of Contents



EXHIBIT INDEX
 EXHIBITNO.
    
    DESCRIPTION12.1
    
    Statement Re: Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings
to Combined Fixed Charges.31.1
    
    Certification of the Chief Executive Officer of Liberty Property Trust required by
Rule 13a-14(a) under the Securities Exchange Act of 1934.31.2
    
    Certification of the Chief Financial Officer of Liberty Property Trust required by
Rule 13a-14(a) under the Securities Exchange Act of 1934.31.3
    
    Certification of the Chief Executive Officer of Liberty Property Trust, in its
capacity as the general partner of Liberty Property Limited Partnership, required by
Rule 13a-14(a) under the Securities Exchange Act of 1934.31.4
    
    Certification of the Chief Financial Officer of Liberty Property Trust, in its
capacity as the general partner of Liberty Property Limited Partnership, required by
Rule 13a-14(a) under the Securities Exchange Act of 1934.32.1
    
    Certification of the Chief Executive Officer of Liberty Property Trust required under
Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended. (This exhibit shall
not be deemed filed for purposes of Section 18 of the Securities Exchange Act of
1934, as amended, or otherwise subject to the liability of that section. Further, this
exhibit shall not be deemed to be incorporated by reference into any filing under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended.)32.2
    
    Certification of the Chief Financial Officer of Liberty Property Trust required by
Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit
shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended, or otherwise subject to the liability of that section. Further,
this exhibit shall not be deemed to be incorporated by reference into any filing under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended.)32.3
    
    Certification of the Chief Executive Officer of Liberty Property Trust, in its
capacity as the general partner of Liberty Property Limited Partnership, required by
Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit
shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended, or otherwise subject to the liability of that section. Further,
this exhibit shall not be deemed to be incorporated by reference into any filing under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended.)32.4
    
    Certification of the Chief Financial Officer of Liberty Property Trust, in its
capacity as the general partner of Liberty Property Limited Partnership, required by
Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit
shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended, or otherwise subject to the liability of that section. Further,
this exhibit shall not be deemed to be incorporated by reference into any filing under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended.)
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