##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

(Mark One)

|      |  |                                                        
|----- |  | -------------------------------------------------------
|[ X ] |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|      |  | SECURITIES EXCHANGE ACT OF 1934                        

For the quarterly period ended June 30, 2003

OR

|     |  |                                                         
|---- |  | --------------------------------------------------------
|[  ] |  | 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)



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LIBERTY PROPERTY TRUST
LIBERTY PROPERTY LIMITED PARTNERSHIP





(Exact name of registrants as specified in their governing documents)

|                                                   |  |                       
|-------------------------------------------------- |  | ----------------------
|MARYLAND(Liberty Property Trust)                   |  | 23-7768996            
|PENNSYLVANIA(Liberty Property Limited Partnership) |  | 23-2766549            
|                                                   |  |                       
|(State or other jurisdiction                       |  | (I.R.S.Employer       
|of incorporation or organization)                  |  | Identification Number)

|                                                   |  |               
|-------------------------------------------------- |  | --------------
|65 Valley Stream Parkway, Suite 100,               |  |               
|Malvern, Pennsylvania                              |  | 19355         
|                                                   |  |               
|(Address of Principal Executive Offices)           |  | (Zip Code)    
|                                                   |  |               
|Registrants Telephone Number, Including Area Code |  | (610) 648-1700

Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve (12) months (or for such shorter period that
the registrants were required to file such reports) and (2) have been subject
to such filing requirements for the past ninety (90) days.          Yes  ü NO

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

Yes  ü  NO


On August 6, 2003, 79,254,820 Common Shares of Beneficial Interest, par value
$.001 per share, of Liberty Property Trust were outstanding.





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##### 



Liberty Property Trust/Liberty Property Limited Partnership
Form 10-Q for the period ended June 30, 2003

|                                                    |  |                                                                                       |    |                                                                                                                                          |    |  |    | 
|--------------------------------------------------- |  | ------------------------------------------------------------------------------------- | -- | ---------------------------------------------------------------------------------------------------------------------------------------- | -- |  | -- | 
|Index                                               |  |                                                                                       |    | Page                                                                                                                                    
|                                                    |  |                                                                                       |    |                                                                                                                                         
|Part I.                                             |  | Financial Information                                                                 |    |                                                                                                                                          |    | 
|Item 1.                                             |  | Financial Statements (unaudited)                                                      |    |                                                                                                                                          |    | 
|                                                    |  |                                                                                       |    | Consolidated
balance sheets of Liberty Property Trust at June 30, 2003 and
December 31, 2002                                             |    |  | 3  | 
|                                                    |  |                                                                                       |    | Consolidated statements of operations of Liberty Property Trust for the three months
ended June 30, 2003 and June 30, 2002               |    |  | 4  | 
|                                                    |  |                                                                                       |    | Consolidated statements of operations of Liberty Property Trust for the six months
ended June 30, 2003 and June 30, 2002                 |    |  | 5  | 
|                                                    |  |                                                                                       |    | Consolidated statements of cash flows of Liberty Property Trust for the six months
ended June 30, 2003 and June 30, 2002                 |    |  | 6  | 
|                                                    |  |                                                                                       |    | Notes to Consolidated Financial Statements for Liberty Property Trust                                                                    |    |  | 7  | 
|                                                    |  |                                                                                       |    | Consolidated balance sheets of Liberty Property Limited Partnership at June 30, 2003
and December 31, 2002                               |    |  | 11 | 
|                                                    |  |                                                                                       |    | Consolidated statements of operations of Liberty Property Limited Partnership for
the three months ended June 30, 2003 and June 30, 2002 |    |  | 12 | 
|                                                    |  |                                                                                       |    | Consolidated statements of operations of Liberty Property Limited Partnership for
the six months ended June 30, 2003 and June 30, 2002   |    |  | 13 | 
|                                                    |  |                                                                                       |    | Consolidated statements of cash flows of Liberty Property Limited Partnership for
the six months ended June 30, 2003 and June 30, 2002   |    |  | 14 | 
|                                                    |  |                                                                                       |    | Notes to Consolidated Financial Statements for Liberty Property Limited Partnership                                                      |    |  | 15 | 
|Item 2.                                             |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |    |                                                                                                                                          | 19 | 
|Item 3.                                             |  | Quantitative and Qualitative Disclosures about Market Risks                           |    |                                                                                                                                          | 26 | 
|Item 4.                                             |  | Controls and Procedures                                                               |    |                                                                                                                                          | 26 | 
|Part II.                                            |  | Other Information                                                                     |    |                                                                                                                                          | 27 | 
|Signatures for Liberty Property Trust               |  |                                                                                       | 29 |                                                                                                                                         
|Signatures for Liberty Property Limited Partnership |  |                                                                                       | 30 |                                                                                                                                         
|Exhibit Index                                       |  |                                                                                       | 31 |                                                                                                                                         

2



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##### 



CONSOLIDATED BALANCE SHEETS OF LIBERTY PROPERTY TRUST
(In thousands, except share amounts)

|                                                                                                                                                                                                                                                                  |                               |   |               |           |                   |   |           |           |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------- | - | ------------- | --------- | ----------------- | - | --------- | --------- | -
|                                                                                                                                                                                                                                                                  |                               |   | June 30, 2003 |           | December 31, 2002
|                                                                                                                                                                                                                                                                  |                               |   |               |           |                  
|                                                                                                                                                                                                                                                                  |                               |   | (Unaudited)   |           |                   |   |          
|ASSETS                                                                                                                                                                                                                                                            |                               |   |               |           |                   |   |           |          
|Real estate:                                                                                                                                                                                                                                                      |                               |   |               |           |                   |   |           |          
|                                                                                                                                                                                                                                                                  | Land and land improvements    |   | $             | 525,050   |                   |   | $         | 504,808   |  
|                                                                                                                                                                                                                                                                  | Buildings and improvements    |   |               | 3,181,224 |                   |   |           | 3,048,676 |  
|                                                                                                                                                                                                                                                                  | Less accumulated depreciation |   |               | (533,806  | )                 |   |           | (485,206  | )
|                                                                                                                                                                                                                                                                  |                               |   |               |           |                   |   |           |          
|Operating real estate                                                                                                                                                                                                                                             |                               |   | 3,172,468     |           |                   |   | 3,068,278 |          
|Development in progress                                                                                                                                                                                                                                           |                               |   | 46,136        |           |                   |   | 163,379   |          
|Land held for development                                                                                                                                                                                                                                         |                               |   | 164,303       |           |                   |   | 163,142   |          
|                                                                                                                                                                                                                                                                  |                               |   |               |           |                   |   |           |          
|Net real estate                                                                                                                                                                                                                                                   |                               |   | 3,382,907     |           |                   |   | 3,394,799 |          
|Cash and cash equivalents                                                                                                                                                                                                                                         |                               |   | 26,268        |           |                   |   | 11,071    |          
|Accounts receivable                                                                                                                                                                                                                                               |                               |   | 11,327        |           |                   |   | 14,349    |          
|Deferred financing and leasing costs, net of accumulated
amortization
(2003, $80,419; 2002, $75,833)                                                                                                                                                              |                               |   | 80,813        |           |                   |   | 71,544    |          
|Investment in unconsolidated joint ventures                                                                                                                                                                                                                       |                               |   | 16,793        |           |                   |   | 14,963    |          
|Prepaid expenses and other assets                                                                                                                                                                                                                                 |                               |   | 119,022       |           |                   |   | 120,335   |          
|                                                                                                                                                                                                                                                                  |                               |   |               |           |                   |   |           |          
|Total assets                                                                                                                                                                                                                                                      |                               | $ | 3,637,130     |           |                   | $ | 3,627,061 |          
|                                                                                                                                                                                                                                                                  |                               |   |               |           |                   |   |           |          
|LIABILITIES                                                                                                                                                                                                                                                       |                               |   |               |           |                   |   |           |          
|Mortgage loans                                                                                                                                                                                                                                                    |                               | $ | 310,670       |           |                   | $ | 315,263   |          
|Unsecured notes                                                                                                                                                                                                                                                   |                               |   | 1,405,000     |           |                   |   | 1,418,924 |          
|Credit facility                                                                                                                                                                                                                                                   |                               |   | 121,000       |           |                   |   | 132,000   |          
|Accounts payable                                                                                                                                                                                                                                                  |                               |   | 22,776        |           |                   |   | 24,116    |          
|Accrued interest                                                                                                                                                                                                                                                  |                               |   | 32,548        |           |                   |   | 32,571    |          
|Dividend payable                                                                                                                                                                                                                                                  |                               |   | 49,308        |           |                   |   | 48,040    |          
|Other liabilities                                                                                                                                                                                                                                                 |                               |   | 88,852        |           |                   |   | 96,119    |          
|                                                                                                                                                                                                                                                                  |                               |   |               |           |                   |   |           |          
|Total liabilities                                                                                                                                                                                                                                                 |                               |   | 2,030,154     |           |                   |   | 2,067,033 |          
|                                                                                                                                                                                                                                                                 
|Minority interest                                                                                                                                                                                                                                                 |                               |   | 204,247       |           |                   |   | 208,439   |          
|                                                                                                                                                                                                                                                                 
|SHAREHOLDERS EQUITY                                                                                                                                                                                                                                              |                               |   |               |           |                   |   |           |          
|Common shares of beneficial interest, $.001 par value, 191,200,000
shares authorized, 78,702,032 (includes 59,100 in treasury) and
76,484,612 (includes 59,100 in treasury) shares issued and
outstanding as of June 30, 2003 and December 31, 2002,
respectively |                               |   | 79            |           |                   |   | 76        |          
|Additional paid-in capital                                                                                                                                                                                                                                        |                               |   | 1,471,073     |           |                   |   | 1,410,900 |          
|Unearned compensation                                                                                                                                                                                                                                             |                               |   | (4,007        | )         |                   |   | (1,750    | )        
|Distributions in excess of net income                                                                                                                                                                                                                             |                               |   | (63,089       | )         |                   |   | (56,310   | )        
|Common shares in treasury, at cost, 59,100 shares as of June 30,
2003 and December 31, 2002                                                                                                                                                                       |                               |   | (1,327        | )         |                   |   | (1,327    | )        
|                                                                                                                                                                                                                                                                  |                               |   |               |           |                   |   |           |          
|Total shareholders equity                                                                                                                                                                                                                                        |                               |   | 1,402,729     |           |                   |   | 1,351,589 |          
|                                                                                                                                                                                                                                                                  |                               |   |               |           |                   |   |           |          
|Total liabilities and shareholders equity                                                                                                                                                                                                                        |                               | $ | 3,637,130     |           |                   | $ | 3,627,061 |          
|                                                                                                                                                                                                                                                                  |                               |   |               |           |                   |   |           |          

See accompanying notes.

3



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##### 



CONSOLIDATED STATEMENTS OF OPERATIONS OF LIBERTY PROPERTY TRUST
(Unaudited and in thousands, except per share amounts)

|                                                                                                                                                                                             |                                     |   |                    |        |               |   |         |        | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------- | - | ------------------ | ------ | ------------- | - | ------- | ------ | 
|                                                                                                                                                                                             |                                     |   | Three Months Ended
|                                                                                                                                                                                             |                                     |   |                   
|                                                                                                                                                                                             |                                     |   | June 30, 2003      |        | June 30, 2002
|                                                                                                                                                                                             |                                     |   |                    |        |              
|REVENUE                                                                                                                                                                                      |                                     |   |                    |        |               |   |         |       
|Rental                                                                                                                                                                                       |                                     | $ | 109,411            |        |               | $ | 106,402 |       
|Operating expense reimbursement                                                                                                                                                              |                                     |   | 40,647             |        |               |   | 39,095  |       
|Equity in earnings of unconsolidated joint ventures                                                                                                                                          |                                     |   | 473                |        |               |   |        |       
|Interest and other                                                                                                                                                                           |                                     |   | 2,260              |        |               |   | 2,025   |       
|                                                                                                                                                                                             |                                     |   |                    |        |               |   |         |       
|Total revenue                                                                                                                                                                                |                                     |   | 152,791            |        |               |   | 147,522 |       
|                                                                                                                                                                                             |                                     |   |                    |        |               |   |         |       
|EXPENSES                                                                                                                                                                                     |                                     |   |                    |        |               |   |         |       
|Rental property                                                                                                                                                                              |                                     |   | 28,135             |        |               |   | 27,460  |       
|Real estate taxes                                                                                                                                                                            |                                     |   | 15,488             |        |               |   | 14,546  |       
|Interest                                                                                                                                                                                     |                                     |   | 31,089             |        |               |   | 28,287  |       
|General and administrative                                                                                                                                                                   |                                     |   | 8,840              |        |               |   | 5,634   |       
|Depreciation and amortization                                                                                                                                                                |                                     |   | 31,188             |        |               |   | 27,428  |       
|                                                                                                                                                                                             |                                     |   |                    |        |               |   |         |       
|Total expenses                                                                                                                                                                               |                                     |   | 114,740            |        |               |   | 103,355 |       
|                                                                                                                                                                                             |                                     |   |                    |        |               |   |         |       
|Income before property dispositions and minority interest                                                                                                                                    |                                     |   | 38,051             |        |               |   | 44,167  |       
|Gain on property dispositions                                                                                                                                                                |                                     |   |                   |        |               |   | 1,760   |       
|Minority interest                                                                                                                                                                            |                                     |   | (4,673             | )      |               |   | (5,902  | )     
|                                                                                                                                                                                             |                                     |   |                    |        |               |   |         |       
|Income from continuing operations                                                                                                                                                            |                                     |   | 33,378             |        |               |   | 40,025  |       
|Discontinued operations net of minority interest (including net gain
on
property dispositions of $11,093 for the quarter ended June 30, 2003
and $4,280 for the quarter ended June 30, 2002) |                                     |   | 11,651             |        |               |   | 4,479   |       
|                                                                                                                                                                                             |                                     |   |                    |        |               |   |         |       
|Net income                                                                                                                                                                                   |                                     |   | 45,029             |        |               |   | 44,504  |       
|Preferred share distributions                                                                                                                                                                |                                     |   |                   |        |               |   | 2,750   |       
|                                                                                                                                                                                             |                                     |   |                    |        |               |   |         |       
|Income available to common shareholders                                                                                                                                                      |                                     | $ | 45,029             |        |               | $ | 41,754  |       
|                                                                                                                                                                                             |                                     |   |                    |        |               |   |         |       
|Earnings per share                                                                                                                                                                           |                                     |   |                    |        |               |   |         |       
|                                                                                                                                                                                             | Basic:                              |   |                    |        |               |   |         |        | 
|                                                                                                                                                                                             | Income from continuing operations   |   | $                  | 0.43   |               |   | $       | 0.50   | 
|                                                                                                                                                                                             | Income from discontinued operations |   |                    | 0.15   |               |   |         | 0.06   | 
|                                                                                                                                                                                             |                                     |   |                    |        |               |   |         |       
|                                                                                                                                                                                             | Income per common share  basic     |   | $                  | 0.58   |               |   | $       | 0.56   | 
|                                                                                                                                                                                             |                                     |   |                    |        |               |   |         |       
|                                                                                                                                                                                             | Diluted:                            |   |                    |        |               |   |         |        | 
|                                                                                                                                                                                             | Income from continuing operations   |   | $                  | 0.42   |               |   | $       | 0.49   | 
|                                                                                                                                                                                             | Income from discontinued operations |   |                    | 0.15   |               |   |         | 0.06   | 
|                                                                                                                                                                                             |                                     |   |                    |        |               |   |         |       
|                                                                                                                                                                                             | Income per common share  diluted   |   | $                  | 0.57   |               |   | $       | 0.55   | 
|                                                                                                                                                                                             |                                     |   |                    |        |               |   |         |       
|Distributions per common share                                                                                                                                                               |                                     | $ | 0.60               |        |               | $ | 0.59    |       
|                                                                                                                                                                                             |                                     |   |                    |        |               |   |         |       
|Weighted average number of common shares outstanding                                                                                                                                         |                                     |   |                    |        |               |   |         |       
|                                                                                                                                                                                             | Basic                               |   |                    | 78,030 |               |   |         | 74,622 | 
|                                                                                                                                                                                             | Diluted                             |   |                    | 79,282 |               |   |         | 76,187 | 
|                                                                                                                                                                                             |                                     |   |                    |        |               |   |         |       

See accompanying notes.

4



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##### 



CONSOLIDATED STATEMENTS OF OPERATIONS OF LIBERTY PROPERTY TRUST
(Unaudited and in thousands, except per share amounts)

|                                                                                                                                                                                                   |                                     |   |                  |        |               |   |         |        | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------- | - | ---------------- | ------ | ------------- | - | ------- | ------ | 
|                                                                                                                                                                                                   |                                     |   | Six Months Ended
|                                                                                                                                                                                                   |                                     |   |                 
|                                                                                                                                                                                                   |                                     |   | June 30, 2003    |        | June 30, 2002
|                                                                                                                                                                                                   |                                     |   |                  |        |              
|REVENUE                                                                                                                                                                                            |                                     |   |                  |        |               |   |         |       
|Rental                                                                                                                                                                                             |                                     | $ | 222,068          |        |               | $ | 211,826 |       
|Operating expense reimbursement                                                                                                                                                                    |                                     |   | 84,502           |        |               |   | 79,097  |       
|Equity in earnings of unconsolidated joint ventures                                                                                                                                                |                                     |   | 915              |        |               |   |        |       
|Interest and other                                                                                                                                                                                 |                                     |   | 4,152            |        |               |   | 3,598   |       
|                                                                                                                                                                                                   |                                     |   |                  |        |               |   |         |       
|Total revenue                                                                                                                                                                                      |                                     |   | 311,637          |        |               |   | 294,521 |       
|                                                                                                                                                                                                   |                                     |   |                  |        |               |   |         |       
|EXPENSES                                                                                                                                                                                           |                                     |   |                  |        |               |   |         |       
|Rental property                                                                                                                                                                                    |                                     |   | 60,444           |        |               |   | 54,913  |       
|Real estate taxes                                                                                                                                                                                  |                                     |   | 30,224           |        |               |   | 28,805  |       
|Interest                                                                                                                                                                                           |                                     |   | 61,506           |        |               |   | 56,086  |       
|General and administrative                                                                                                                                                                         |                                     |   | 15,268           |        |               |   | 11,604  |       
|Depreciation and amortization                                                                                                                                                                      |                                     |   | 59,942           |        |               |   | 53,602  |       
|                                                                                                                                                                                                   |                                     |   |                  |        |               |   |         |       
|Total expenses                                                                                                                                                                                     |                                     |   | 227,384          |        |               |   | 205,010 |       
|                                                                                                                                                                                                   |                                     |   |                  |        |               |   |         |       
|Income before property dispositions and minority interest                                                                                                                                          |                                     |   | 84,253           |        |               |   | 89,511  |       
|Gain on property dispositions                                                                                                                                                                      |                                     |   | 598              |        |               |   | 1,242   |       
|Minority interest                                                                                                                                                                                  |                                     |   | (10,268          | )      |               |   | (10,528 | )     
|                                                                                                                                                                                                   |                                     |   |                  |        |               |   |         |       
|Income from continuing operations                                                                                                                                                                  |                                     |   | 74,583           |        |               |   | 80,225  |       
|Discontinued operations net of minority interest (including net
gain on
property dispositions of $11,256 for the six months ended June 30,
2003 and $5,669 for the six months ended June 30, 2002) |                                     |   | 12,033           |        |               |   | 6,479   |       
|                                                                                                                                                                                                   |                                     |   |                  |        |               |   |         |       
|Net income                                                                                                                                                                                         |                                     |   | 86,616           |        |               |   | 86,704  |       
|Preferred share distributions                                                                                                                                                                      |                                     |   |                 |        |               |   | (5,500  | )     
|                                                                                                                                                                                                   |                                     |   |                  |        |               |   |         |       
|Income available to common shareholders                                                                                                                                                            |                                     | $ | 86,616           |        |               | $ | 81,204  |       
|                                                                                                                                                                                                   |                                     |   |                  |        |               |   |         |       
|Earnings per share                                                                                                                                                                                 |                                     |   |                  |        |               |   |         |       
|                                                                                                                                                                                                   | Basic:                              |   |                  |        |               |   |         |        | 
|                                                                                                                                                                                                   | Income from continuing operations   |   | $                | 0.96   |               |   | $       | 1.00   | 
|                                                                                                                                                                                                   | Income from discontinued operations |   |                  | 0.16   |               |   |         | 0.09   | 
|                                                                                                                                                                                                   |                                     |   |                  |        |               |   |         |       
|                                                                                                                                                                                                   | Income per common share  basic     |   | $                | 1.12   |               |   | $       | 1.09   | 
|                                                                                                                                                                                                   |                                     |   |                  |        |               |   |         |       
|                                                                                                                                                                                                   | Diluted:                            |   |                  |        |               |   |         |        | 
|                                                                                                                                                                                                   | Income from continuing operations   |   | $                | 0.95   |               |   | $       | 0.98   | 
|                                                                                                                                                                                                   | Income from discontinued operations |   |                  | 0.15   |               |   |         | 0.09   | 
|                                                                                                                                                                                                   |                                     |   |                  |        |               |   |         |       
|                                                                                                                                                                                                   | Income per common share  diluted   |   | $                | 1.10   |               |   | $       | 1.07   | 
|                                                                                                                                                                                                   |                                     |   |                  |        |               |   |         |       
|Distributions per common share                                                                                                                                                                     |                                     | $ | 1.20             |        |               | $ | 1.18    |       
|                                                                                                                                                                                                   |                                     |   |                  |        |               |   |         |       
|Weighted average number of common shares outstanding                                                                                                                                               |                                     |   |                  |        |               |   |         |       
|                                                                                                                                                                                                   | Basic                               |   |                  | 77,425 |               |   |         | 74,263 | 
|                                                                                                                                                                                                   | Diluted                             |   |                  | 78,576 |               |   |         | 75,664 | 
|                                                                                                                                                                                                   |                                     |   |                  |        |               |   |         |       

See accompanying notes.

5



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##### 



CONSOLIDATED STATEMENTS OF CASH FLOWS OF LIBERTY PROPERTY TRUST
(Unaudited and in thousands)

|                                                                                  |                                                     |   |                  |         |               |   |          |         |  
|--------------------------------------------------------------------------------- | --------------------------------------------------- | - | ---------------- | ------- | ------------- | - | -------- | ------- | -
|                                                                                  |                                                     |   | Six Months Ended
|                                                                                  |                                                     |   |                 
|                                                                                  |                                                     |   | June 30, 2003    |         | June 30, 2002
|                                                                                  |                                                     |   |                  |         |              
|OPERATING ACTIVITIES                                                              |                                                     |   |                  |         |               |   |          |        
|Net income                                                                        |                                                     | $ | 86,616           |         |               | $ | 86,704   |        
|Adjustments to reconcile net income to net cash provided by operating activities: |                                                     |   |                  |         |               |   |          |        
|                                                                                  | Depreciation and amortization                       |   |                  | 60,331  |               |   |          | 54,189  |  
|                                                                                  | Amortization of deferred financing costs            |   |                  | 1,885   |               |   |          | 1,810   |  
|                                                                                  | Equity in earnings of unconsolidated joint ventures |   |                  | (915    | )             |   |          |        |  
|                                                                                  | Minority interest in net income                     |   |                  | 10,836  |               |   |          | 10,865  |  
|                                                                                  | Gain on property dispositions                       |   |                  | (11,854 | )             |   |          | (6,911  | )
|                                                                                  | Noncash compensation                                |   |                  | 2,195   |               |   |          | 1,464   |  
|Changes in operating assets and liabilities:                                      |                                                     |   |                  |         |               |   |          |        
|                                                                                  | Accounts receivable                                 |   |                  | 3,022   |               |   |          | 6,684   |  
|                                                                                  | Prepaid expenses and other assets                   |   |                  | 572     |               |   |          | (15,248 | )
|                                                                                  | Accounts payable                                    |   |                  | (1,340  | )             |   |          | 1,428   |  
|                                                                                  | Accrued interest                                    |   |                  | (23     | )             |   |          | (2,135  | )
|                                                                                  | Other liabilities                                   |   |                  | (7,267  | )             |   |          | 6,831   |  
|                                                                                  |                                                     |   |                  |         |               |   |          |        
|Net cash provided by operating activities                                         |                                                     |   | 144,058          |         |               |   | 145,681  |        
|                                                                                  |                                                     |   |                  |         |               |   |          |        
|INVESTING ACTIVITIES                                                              |                                                     |   |                  |         |               |   |          |        
|Investment in properties                                                          |                                                     |   | (36,651          | )       |               |   | (27,805  | )      
|Investment in unconsolidated joint ventures                                       |                                                     |   | (1,932           | )       |               |   |         |        
|Distributions from unconsolidated joint ventures                                  |                                                     |   | 2,168            |         |               |   |         |        
|Proceeds from disposition of properties/land                                      |                                                     |   | 41,100           |         |               |   | 56,470   |        
|Investment in development in progress                                             |                                                     |   | (24,603          | )       |               |   | (88,904  | )      
|Investment in land held for development                                           |                                                     |   | (6,693           | )       |               |   | (18,161  | )      
|Increase in deferred leasing costs                                                |                                                     |   | (10,609          | )       |               |   | (7,791   | )      
|                                                                                  |                                                     |   |                  |         |               |   |          |        
|Net cash used in investing activities                                             |                                                     |   | (37,220          | )       |               |   | (86,191  | )      
|                                                                                  |                                                     |   |                  |         |               |   |          |        
|FINANCING ACTIVITIES                                                              |                                                     |   |                  |         |               |   |          |        
|Net proceeds from issuance of common shares                                       |                                                     |   | 55,247           |         |               |   | 31,884   |        
|Proceeds from issuance of preferred units                                         |                                                     |   |                 |         |               |   | 22,979   |        
|Proceeds from issuance of unsecured notes                                         |                                                     |   | 3,683            |         |               |   |         |        
|Repayments of unsecured notes                                                     |                                                     |   | (23,739          | )       |               |   | (100,000 | )      
|Proceeds from mortgage loans                                                      |                                                     |   | 1,212            |         |               |   | 5,733    |        
|Repayments of mortgage loans                                                      |                                                     |   | (6,675           | )       |               |   | (3,830   | )      
|Proceeds from credit facility                                                     |                                                     |   | 237,050          |         |               |   | 185,100  |        
|Repayments on credit facility                                                     |                                                     |   | (248,050         | )       |               |   | (87,100  | )      
|(Increase) decrease in deferred financing costs                                   |                                                     |   | (2,540           | )       |               |   | 2        |        
|Distributions paid on common shares                                               |                                                     |   | (92,095          | )       |               |   | (87,248  | )      
|Distributions paid on preferred shares                                            |                                                     |   |                 |         |               |   | (5,500   | )      
|Distributions paid on units                                                       |                                                     |   | (15,734          | )       |               |   | (10,158  | )      
|                                                                                  |                                                     |   |                  |         |               |   |          |        
|Net cash used in financing activities                                             |                                                     |   | (91,641          | )       |               |   | (48,138  | )      
|                                                                                  |                                                     |   |                  |         |               |   |          |        
|Increase in cash and cash equivalents                                             |                                                     |   | 15,197           |         |               |   | 11,352   |        
|Cash and cash equivalents at beginning of year                                    |                                                     |   | 11,071           |         |               |   | 19,390   |        
|                                                                                  |                                                     |   |                  |         |               |   |          |        
|Cash and cash equivalents at end of year                                          |                                                     | $ | 26,268           |         |               | $ | 30,742   |        
|                                                                                  |                                                     |   |                  |         |               |   |          |        
|SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS                                   |                                                     |   |                  |         |               |   |          |        
|Write-off of fully depreciated property and deferred costs                        |                                                     | $ | 8,851            |         |               | $ | 2,701    |        
|Acquisition of properties                                                         |                                                     |   | (870             | )       |               |   |         |        
|Assumption of mortgage loans                                                      |                                                     |   | 870              |         |               |   |         |        
|Issuance of operating partnership units for property acquisition                  |                                                     |   | 1,151            |         |               |   |         |        
|                                                                                  |                                                     |   |                  |         |               |   |          |        

See accompanying notes.

6



---



##### 



Liberty Property Trust

Notes to Consolidated Financial Statements (Unaudited)

June 30, 2003

Note 1: Basis of Presentation

The accompanying unaudited consolidated financial statements of Liberty
Property Trust (the Trust) and its subsidiaries, including Liberty Property
Limited Partnership (the Operating Partnership) (the Trust, Operating
Partnership and their respective subsidiaries referred to collectively as the
Company), have been prepared in accordance with accounting principles
generally accepted in the United States (US GAAP) for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by US GAAP for complete financial statements and should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Annual Report on Form 10-K of the Trust and the Operating
Partnership for the year ended December 31, 2002. In the opinion of management,
all adjustments (consisting solely of normal recurring adjustments) necessary
for a fair presentation of the financial statements for these interim periods
have been included. The results of interim periods are not necessarily
indicative of the results to be obtained for a full fiscal year. Certain
amounts from prior periods have been reclassified to conform to current period
presentation.

Income per Share

The following table sets forth the computation of basic and diluted income per
common share for the three and six months ended June 30, 2003 and 2002 (in
thousands except per share amounts):


|                                                                |  |                                          |        |                                          |  |           |        |             |  |               |      |           |  |   |        |          |  |  |        |  |  |   |      | 
|--------------------------------------------------------------- |  | ---------------------------------------- | ------ | ---------------------------------------- |  | --------- | ------ | ----------- |  | ------------- | ---- | --------- |  | - | ------ | -------- |  |  | ------ |  |  | - | ---- | 
|                                                                |  | For the Three Months Ended June 30, 2003 |        | For the Three Months Ended June 30, 2002
|                                                                |  |                                          |        |                                         
|                                                                |  |                                          |        |                                          |  | Weighted  |        |             |  |               |      |           |  |   |        | Weighted |  |  |        | 
|                                                                |  |                                          |        |                                          |  | Average   |        |             |  |               |      |           |  |   |        | Average  |  |  |        | 
|                                                                |  | Income                                   |        | Shares                                   |  | Per Share |        | Income      |  | Shares        |      | Per Share
|                                                                |  | (Numerator)                              |        | (Denominator)                            |  | Amount    |        | (Numerator) |  | (Denominator) |      | Amount   
|                                                                |  |                                          |        |                                          |  |           |        |             |  |               |      |          
|Net income                                                      |  | $                                        | 45,029 |                                          |  |           |        |             |  |               |      |           |  | $ | 44,504 |          |  |  |        |  |  |   |      | 
|Less: Preferred share distributions                             |  |                                          |       |                                          |  |           |        |             |  |               |      |           |  |   | (2,750 | )        |  |  |        |  |  |   |      | 
|                                                                |  |                                          |        |                                          |  |           |        |             |  |               |      |           |  |   |        |          |  |  |        |  |  |   |      | 
|Basic income per common share                                   |  |                                          |        |                                          |  |           |        |             |  |               |      |           |  |   |        |          |  |  |        |  |  |   |      | 
|Income available to common
shareholders                         |  |                                          | 45,029 |                                          |  |           | 78,030 |             |  | $             | 0.58 |           |  |   | 41,754 |          |  |  | 74,622 |  |  | $ | 0.56 | 
|                                                                |  |                                          |        |                                          |  |           |        |             |  |               |      |           |  |   |        |          |  |  |        |  |  |   |      | 
|Dilutive shares for long-term
compensation plans                |  |                                          |       |                                          |  |           | 1,252  |             |  |               |      |           |  |   |       |          |  |  | 1,565  |  |  |   |      | 
|                                                                |  |                                          |        |                                          |  |           |        |             |  |               |      |           |  |   |        |          |  |  |        |  |  |   |      | 
|Diluted income per common share                                 |  |                                          |        |                                          |  |           |        |             |  |               |      |           |  |   |        |          |  |  |        |  |  |   |      | 
|Income available to common
shareholders
and assumed conversions |  | $                                        | 45,029 |                                          |  |           | 79,282 |             |  | $             | 0.57 |           |  | $ | 41,754 |          |  |  | 76,187 |  |  | $ | 0.55 | 
|                                                                |  |                                          |        |                                          |  |           |        |             |  |               |      |           |  |   |        |          |  |  |        |  |  |   |      | 

|                                                                |  |                                        |        |                                        |  |           |        |             |  |               |      |           |  |   |        |          |  |  |        |  |  |   |      | 
|--------------------------------------------------------------- |  | -------------------------------------- | ------ | -------------------------------------- |  | --------- | ------ | ----------- |  | ------------- | ---- | --------- |  | - | ------ | -------- |  |  | ------ |  |  | - | ---- | 
|                                                                |  | For the Six Months Ended June 30, 2003 |        | For the Six Months Ended June 30, 2002
|                                                                |  |                                        |        |                                       
|                                                                |  |                                        |        |                                        |  | Weighted  |        |             |  |               |      |           |  |   |        | Weighted |  |  |        | 
|                                                                |  |                                        |        |                                        |  | Average   |        |             |  |               |      |           |  |   |        | Average  |  |  |        | 
|                                                                |  | Income                                 |        | Shares                                 |  | Per Share |        | Income      |  | Shares        |      | Per Share
|                                                                |  | (Numerator)                            |        | (Denominator)                          |  | Amount    |        | (Numerator) |  | (Denominator) |      | Amount   
|                                                                |  |                                        |        |                                        |  |           |        |             |  |               |      |          
|Net income                                                      |  | $                                      | 86,616 |                                        |  |           |        |             |  |               |      |           |  | $ | 86,704 |          |  |  |        |  |  |   |      | 
|Less: Preferred share distributions                             |  |                                        |       |                                        |  |           |        |             |  |               |      |           |  |   | (5,500 | )        |  |  |        |  |  |   |      | 
|                                                                |  |                                        |        |                                        |  |           |        |             |  |               |      |           |  |   |        |          |  |  |        |  |  |   |      | 
|Basic income per common share                                   |  |                                        |        |                                        |  |           |        |             |  |               |      |           |  |   |        |          |  |  |        |  |  |   |      | 
|Income available to common
shareholders                         |  |                                        | 86,616 |                                        |  |           | 77,425 |             |  | $             | 1.12 |           |  |   | 81,204 |          |  |  | 74,263 |  |  | $ | 1.09 | 
|                                                                |  |                                        |        |                                        |  |           |        |             |  |               |      |           |  |   |        |          |  |  |        |  |  |   |      | 
|Dilutive shares for long-term
compensation plans                |  |                                        |       |                                        |  |           | 1,151  |             |  |               |      |           |  |   |       |          |  |  | 1,401  |  |  |   |      | 
|                                                                |  |                                        |        |                                        |  |           |        |             |  |               |      |           |  |   |        |          |  |  |        |  |  |   |      | 
|Diluted income per common share                                 |  |                                        |        |                                        |  |           |        |             |  |               |      |           |  |   |        |          |  |  |        |  |  |   |      | 
|Income available to common
shareholders
and assumed conversions |  | $                                      | 86,616 |                                        |  |           | 78,576 |             |  | $             | 1.10 |           |  | $ | 81,204 |          |  |  | 75,664 |  |  | $ | 1.07 | 
|                                                                |  |                                        |        |                                        |  |           |        |             |  |               |      |           |  |   |        |          |  |  |        |  |  |   |      | 

7



---



##### 



Stock Based Compensation

At June 30, 2003, the Company had a share-based employee compensation plan.
Prior to 2003, the Company accounted for the plan under the recognition and
measurement provisions of APB Opinion No. 25, Accounting for Stock Issued to
Employees, and related Interpretations. No share-based employee compensation
cost is reflected in 2002 net income, as all options granted under this plan
had an exercise price equal to the market value of the underlying common share
on the date of grant. Effective January 1, 2003, the Company adopted the fair
value recognition provisions of the Financial Accounting Standards Boards
(the FASB) Statement of Financial Standards (SFAS) No. 123, Accounting for
Stock-Based Compensation, prospectively to all employee awards granted,
modified, or settled after January 1, 2003. Option awards under the Companys
plan vest over three years. Therefore, the cost related to share-based
employee compensation included in the determination of net income for 2002 and
2003 is less than that which would have been recognized if the fair value based
method had been applied to all awards since the original effective date of SFAS
No. 123. The following table illustrates the effect on net income and earnings
per share if the fair value based method had been applied to all outstanding
and unvested awards in each period.


|                                                                                                                |                       |   |                    |      |                  |   |               |      |               |   |        |      |  |   |        |      | 
|--------------------------------------------------------------------------------------------------------------- | --------------------- | - | ------------------ | ---- | ---------------- | - | ------------- | ---- | ------------- | - | ------ | ---- |  | - | ------ | ---- | 
|                                                                                                                |                       |   | Three Months Ended |      | Six Months Ended
|                                                                                                                |                       |   |                    |      |                 
|                                                                                                                |                       |   | June 30, 2003      |      | June 30, 2002    |   | June 30, 2003 |      | June 30, 2002
|                                                                                                                |                       |   |                    |      |                  |   |               |      |              
|Income available to common shareholders                                                                         |                       | $ | 45,029             |      |                  | $ | 41,754        |      |               | $ | 86,616 |      |  | $ | 81,204 |     
|Add: Share-based employee compensation expense included in
reported net income                                  |                       |   | 340                |      |                  |   |              |      |               |   | 349    |      |  |   |       |     
|Deduct: Total share-based employee compensation expense
determined
under fair value based method for all awards |                       |   | (340               | )    |                  |   | (556          | )    |               |   | (840   | )    |  |   | (1,018 | )   
|                                                                                                                |                       |   |                    |      |                  |   |               |      |               |   |        |      |  |   |        |     
|Pro forma net income                                                                                            |                       | $ | 45,029             |      |                  | $ | 41,198        |      |               | $ | 86,125 |      |  | $ | 80,186 |     
|                                                                                                                |                       |   |                    |      |                  |   |               |      |               |   |        |      |  |   |        |     
|Earnings per share:                                                                                             |                       |   |                    |      |                  |   |               |      |               |   |        |      |  |   |        |     
|                                                                                                                | Basic
- as reported   |   | $                  | 0.58 |                  |   | $             | 0.56 |               |   | $      | 1.12 |  |   | $      | 1.09 | 
|                                                                                                                | Basic
- pro forma     |   | $                  | 0.58 |                  |   | $             | 0.55 |               |   | $      | 1.11 |  |   | $      | 1.08 | 
|                                                                                                                | Diluted
- as reported |   | $                  | 0.57 |                  |   | $             | 0.55 |               |   | $      | 1.10 |  |   | $      | 1.07 | 
|                                                                                                                | Diluted
- pro forma   |   | $                  | 0.57 |                  |   | $             | 0.54 |               |   | $      | 1.10 |  |   | $      | 1.06 | 

Note 2: Organization

The Trust is a self-administered and self-managed Maryland real estate
investment trust (a REIT). Substantially all of the Trusts assets are owned
directly or indirectly, and substantially all of the Trusts operations are
conducted directly or indirectly, by the Operating Partnership. The Trust is
the sole general partner and also a limited partner of the Operating
Partnership, owning 95.5% of the common equity of the Operating Partnership at
June 30, 2003. The Company provides leasing, property management, development,
acquisition, and other tenant-related services for a portfolio of industrial
and office properties which are located principally within the Southeastern,
Mid-Atlantic and Midwestern United States.

Note 3: Segment Information

The Company reviews the performance of the portfolio on a geographical basis.
The following regions are considered the Companys reportable segments:
Southeastern Pennsylvania; New Jersey; Lehigh Valley, Pennsylvania; Virginia;
the Carolinas; Jacksonville, Florida; Minneapolis, Minnesota; Detroit,
Michigan; and all others combined (including Maryland; Tampa, Florida; South
Florida; and the United Kingdom). The Companys reportable segments are
distinct business units which are each managed separately in order to
concentrate market knowledge within a geographical area. Within these
reportable segments, the Company derives its revenues from its two product
types: industrial properties and office properties.

The Company evaluates the performance of the reportable segments based on
property level operating income, which is calculated as rental revenue and
operating expense reimbursement less rental property expenses and real estate
taxes. The accounting policies of the reportable segments are the same as those
for the Company on a consolidated basis. The operating information by segment
is as follows (in thousands):

8



---



##### 



For the Three Months Ended June 30,
2003

|                                                          |  |             |        |            |  |               |       |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |        |  |   |        |  |  |   |         |  
|--------------------------------------------------------- |  | ----------- | ------ | ---------- |  | ------------- | ----- | -------- |  | ------------- | ------ | ------------ |  | --------- | ------ | -------- |  | ---------- | ----- | ----- |  | - | ------ |  |  | - | ------ |  |  | - | ------ | ------ |  | - | ------ |  |  | - | ------- | -
|                                                          |  | SE Pennsyl. |        | New Jersey |  | Lehigh Valley |       | Virginia |  | The Carolinas |        | Jacksonville |  | Minnesota |        | Michigan |  | All Others |       | Total
|                                                          |  |             |        |            |  |               |       |          |  |               |        |              |  |           |        |          |  |            |       |      
|Real estate related
revenues                              |  | $           | 43,842 |            |  | $             | 8,419 |          |  | $             | 17,014 |              |  | $         | 12,927 |          |  | $          | 8,976 |       |  | $ | 12,263 |  |  | $ | 13,019 |  |  | $ | 16,094 |        |  | $ | 17,504 |  |  | $ | 150,058 |  
|Rental property
expenses and real
estate taxes            |  |             | 12,385 |            |  |               | 2,552 |          |  |               | 4,181  |              |  |           | 3,482  |          |  |            | 2,623 |       |  |   | 3,143  |  |  |   | 4,856  |  |  |   | 5,564  |        |  |   | 4,837  |  |  |   | 43,623  |  
|                                                          |  |             |        |            |  |               |       |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |        |  |   |        |  |  |   |         |  
|Property level
operating income                           |  | $           | 31,457 |            |  | $             | 5,867 |          |  | $             | 12,833 |              |  | $         | 9,445  |          |  | $          | 6,353 |       |  | $ | 9,120  |  |  | $ | 8,163  |  |  | $ | 10,530 |        |  | $ | 12,667 |  |  |   | 106,435 |  
|                                                          |  |             |        |            |  |               |       |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |        |  |   |        |  |  |   |         |  
|Other income/expenses, net                                |  |             |        |            |  |               |       |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |        |  |   |        |  |  |   | 68,384  |  
|                                                          |  |             |        |            |  |               |       |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |        |  |   |        |  |  |   |         |  
|Income before property dispositions and minority interest |  |             |        |            |  |               |       |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        | 38,051 | 
|Gain on disposition of properties                         |  |             |        |            |  |               |       |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |       | 
|Minority interest                                         |  |             |        |            |  |               |       |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |        |  |   |        |  |  |   | (4,673  | )
|Discontinued operations net of minority interest          |  |             |        |            |  |               |       |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        | 11,651 | 
|                                                          |  |             |        |            |  |               |       |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |        |  |   |        |  |  |   |         |  
|Income available to common shareholders                   |  |             |        |            |  |               |       |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   | $      | 45,029 | 
|                                                          |  |             |        |            |  |               |       |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |        |  |   |        |  |  |   |         |  

For the
Three Months Ended June 30, 2002

|                                                          |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |        |   |   |        |  |  |   |         |  
|--------------------------------------------------------- |  | ----------- | ------ | ---------- |  | ------------- | ------ | -------- |  | ------------- | ------ | ------------ |  | --------- | ------ | -------- |  | ---------- | ----- | ----- |  | - | ------ |  |  | - | ------ |  |  | - | ------ | ------ | - | - | ------ |  |  | - | ------- | -
|                                                          |  | SE Pennsyl. |        | New Jersey |  | Lehigh Valley |        | Virginia |  | The Carolinas |        | Jacksonville |  | Minnesota |        | Michigan |  | All Others |       | Total
|                                                          |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |       |      
|Real estate related
revenues                              |  | $           | 44,142 |            |  | $             | 11,231 |          |  | $             | 14,885 |              |  | $         | 12,285 |          |  | $          | 8,416 |       |  | $ | 11,335 |  |  | $ | 12,710 |  |  | $ | 15,777 |        |   | $ | 14,716 |  |  | $ | 145,497 |  
|Rental property
expenses and real
estate taxes            |  |             | 12,115 |            |  |               | 3,482  |          |  |               | 3,297  |              |  |           | 3,012  |          |  |            | 2,452 |       |  |   | 2,955  |  |  |   | 4,891  |  |  |   | 5,291  |        |   |   | 4,511  |  |  |   | 42,006  |  
|                                                          |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |        |   |   |        |  |  |   |         |  
|Property level
operating income                           |  | $           | 32,027 |            |  | $             | 7,749  |          |  | $             | 11,588 |              |  | $         | 9,273  |          |  | $          | 5,964 |       |  | $ | 8,380  |  |  | $ | 7,819  |  |  | $ | 10,486 |        |   | $ | 10,205 |  |  |   | 103,491 |  
|                                                          |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |        |   |   |        |  |  |   |         |  
|Other income/expenses, net                                |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |        |   |   |        |  |  |   | 59,324  |  
|                                                          |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |        |   |   |        |  |  |   |         |  
|Income before property dispositions and minority interest |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        | 44,167 |  
|Gain on dispositions of properties                        |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        | 1,760  |  
|Minority interest                                         |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |        |   |   |        |  |  |   | (5,902  | )
|Discontinued operations net of minority interest          |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        | 4,479  |  
|Preferred share distributions                             |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        | (2,750 | )
|                                                          |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |        |   |   |        |  |  |   |         |  
|Income available to common shareholders                   |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   | $      | 41,754 |  
|                                                          |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |        |   |   |        |  |  |   |         |  

For the Six Months Ended June 30, 2003

|                                                          |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |        |  |   |        |  |  |   |         |  
|--------------------------------------------------------- |  | ----------- | ------ | ---------- |  | ------------- | ------ | -------- |  | ------------- | ------ | ------------ |  | --------- | ------ | -------- |  | ---------- | ------ | ----- |  | - | ------ |  |  | - | ------ |  |  | - | ------ | ------ |  | - | ------ |  |  | - | ------- | -
|                                                          |  | SE Pennsyl. |        | New Jersey |  | Lehigh Valley |        | Virginia |  | The Carolinas |        | Jacksonville |  | Minnesota |        | Michigan |  | All Others |        | Total
|                                                          |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |      
|Real estate related
revenues                              |  | $           | 97,111 |            |  | $             | 17,141 |          |  | $             | 32,108 |              |  | $         | 25,568 |          |  | $          | 17,752 |       |  | $ | 24,354 |  |  | $ | 25,555 |  |  | $ | 32,115 |        |  | $ | 34,866 |  |  | $ | 306,570 |  
|Rental property
expenses and real
estate taxes            |  |             | 27,704 |            |  |               | 5,876  |          |  |               | 8,571  |              |  |           | 6,922  |          |  |            | 5,107  |       |  |   | 6,427  |  |  |   | 9,531  |  |  |   | 10,581 |        |  |   | 9,949  |  |  |   | 90,668  |  
|                                                          |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |        |  |   |        |  |  |   |         |  
|Property level
operating income                           |  | $           | 69,407 |            |  | $             | 11,265 |          |  | $             | 23,537 |              |  | $         | 18,646 |          |  | $          | 12,645 |       |  | $ | 17,927 |  |  | $ | 16,024 |  |  | $ | 21,534 |        |  | $ | 24,917 |  |  |   | 215,902 |  
|                                                          |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |        |  |   |        |  |  |   |         |  
|Other income/expenses, net                                |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |        |  |   |        |  |  |   | 131,649 |  
|                                                          |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |        |  |   |        |  |  |   |         |  
|Income before property dispositions and minority interest |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        | 84,253 | 
|Gain on disposition of properties                         |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        | 598    | 
|Minority interest                                         |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |        |  |   |        |  |  |   | (10,268 | )
|Discontinued operations net of minority interest          |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        | 12,033 | 
|                                                          |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |        |  |   |        |  |  |   |         |  
|Income available to common shareholders                   |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   | $      | 86,616 | 
|                                                          |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |        |  |   |        |  |  |   |         |  

For the Six Months Ended June 30,
2002

|                                                          |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |        |  |   |        |        |  |   |         |  
|--------------------------------------------------------- |  | ----------- | ------ | ---------- |  | ------------- | ------ | -------- |  | ------------- | ------ | ------------ |  | --------- | ------ | -------- |  | ---------- | ------ | ----- |  | - | ------ |  |  | - | ------ |  |  | - | ------ | ------ |  | - | ------ | ------ |  | - | ------- | -
|                                                          |  | SE Pennsyl. |        | New Jersey |  | Lehigh Valley |        | Virginia |  | The Carolinas |        | Jacksonville |  | Minnesota |        | Michigan |  | All Others |        | Total
|                                                          |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |      
|Real estate related
revenues                              |  | $           | 88,585 |            |  | $             | 22,770 |          |  | $             | 29,521 |              |  | $         | 24,715 |          |  | $          | 16,834 |       |  | $ | 22,674 |  |  | $ | 25,064 |  |  | $ | 31,358 |        |  | $ | 29,402 |        |  | $ | 290,923 |  
|Rental property
expenses and real
estate taxes            |  |             | 24,791 |            |  |               | 7,172  |          |  |               | 6,535  |              |  |           | 6,164  |          |  |            | 4,925  |       |  |   | 5,562  |  |  |   | 9,421  |  |  |   | 10,387 |        |  |   | 8,761  |        |  |   | 83,718  |  
|                                                          |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |        |  |   |        |        |  |   |         |  
|Property level
operating income                           |  | $           | 63,794 |            |  | $             | 15,598 |          |  | $             | 22,986 |              |  | $         | 18,551 |          |  | $          | 11,909 |       |  | $ | 17,112 |  |  | $ | 15,643 |  |  | $ | 20,971 |        |  | $ | 20,641 |        |  |   | 207,205 |  
|                                                          |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |        |  |   |        |        |  |   |         |  
|Other income/expenses, net                                |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |        |  |   |        |        |  |   | 117,694 |  
|                                                          |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |        |  |   |        |        |  |   |         |  
|Income before property dispositions and minority interest |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        | 89,511 | 
|Gain on dispositions of properties                        |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |        |  |   |        |        |  |   | 1,242   |  
|Minority interest                                         |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |        |  |   |        |        |  |   | (10,528 | )
|Discontinued operations net of minority interest          |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |        |  |   |        | 6,479  | 
|Preferred share distributions                             |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |        |  |   |        |        |  |   | (5,500  | )
|                                                          |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |        |  |   |        |        |  |   |         |  
|Income available to common shareholders                   |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |        |  |   | $      | 81,204 | 
|                                                          |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |        |  |   |        |        |  |   |         |  

Note 4: SFAS No. 144, Accounting For The Impairment Or Disposal Of Long-Lived Assets

In accordance with SFAS No. 144, which the Company adopted on January 1, 2002,
net income and gain/(loss) on the disposition of real estate for properties
sold subsequent to December 31, 2001 are reflected in the consolidated

9



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##### 



statements of operations as discontinued operations. The proceeds from the
disposition of properties for the three and six months ended June 30, 2003 were
$34.8 million and $38.5 million as compared to $11.0 million and $23.8 million
for the same period in 2002. Below is a summary of the results of operations of
the properties disposed of through the respective disposition dates (in
thousands):

|                              |  |                    |       |                  |  |               |       |               |  |   |       |   |  |   |       |  
|----------------------------- |  | ------------------ | ----- | ---------------- |  | ------------- | ----- | ------------- |  | - | ----- | - |  | - | ----- | -
|                              |  | Three Months Ended |       | Six Months Ended
|                              |  |                    |       |                 
|                              |  | June 30, 2003      |       | June 30, 2002    |  | June 30, 2003 |       | June 30, 2002
|                              |  |                    |       |                  |  |               |       |              
|Revenues                      |  | $                  | 1,433 |                  |  | $             | 1,097 |               |  | $ | 2,390 |   |  | $ | 2,677 |  
|Operating expenses            |  |                    | (125  | )                |  |               | (242  | )             |  |   | (363  | ) |  |   | (513  | )
|Interest expense              |  |                    | (88   | )                |  |               | (172  | )             |  |   | (293  | ) |  |   | (430  | )
|Depreciation and amortization |  |                    | (114  | )                |  |               | (255  | )             |  |   | (389  | ) |  |   | (587  | )
|                              |  |                    |       |                  |  |               |       |               |  |   |       |   |  |   |       |  
|Income from operations        |  | $                  | 1,106 |                  |  | $             | 428   |               |  | $ | 1,345 |   |  | $ | 1,147 |  
|                              |  |                    |       |                  |  |               |       |               |  |   |       |   |  |   |       |  

Gain or loss on disposition on sales of land and development properties
continue to be reflected as a component of income from continuing operations.

Note 5: Credit Facility

During the six months ended June 30, 2003, the Company replaced its unsecured
revolving credit facility with a new facility which matures in January 2006.
Capacity under the facility was reduced from $450 million to $350 million.
Based on the Companys present ratings, borrowings under the facility bear
interest at LIBOR plus 70 basis points, reduced from LIBOR plus 105 basis
points for the facility prior to its renewal.

Note 6: Impact of Recently Issued Accounting Standards

In January 2003, the FASB issued Financial Interpretation No. 46 (FIN No.
46), Consolidation of Variable Interest Entities. The consolidation
requirements of FIN No. 46 apply immediately to variable interest entities
created after January 31, 2003 and applies to existing variable interest
entities in the first fiscal year or interim period beginning after June 15,
2003. FIN No. 46 requires that a variable interest entity be consolidated by a
company if that company is subject to a majority of the risk of loss from the
variable interest entitys activities or is entitled to receive a majority of
the entitys residual returns or both. Beginning July 1, 2003, Rouse Kent
Limited (RKL) will be consolidated into the Companys financial statements as
a result of the adoption of the provisions of FIN No. 46. RKL is a full service
real estate development company which, together with its affiliates, owns six
properties comprising 210,000 leasable square feet. The Company does not
expect its financial position or results of operations to be materially
affected by this consolidation.

10



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##### 



CONSOLIDATED BALANCE SHEETS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(In thousands)

|                                                                                                     |                               |                |           |               |        |                   |           |           |        | 
|---------------------------------------------------------------------------------------------------- | ----------------------------- | -------------- | --------- | ------------- | ------ | ----------------- | --------- | --------- | ------ | 
|                                                                                                     |                               |                |           | June 30, 2003 |        | December 31, 2002
|                                                                                                     |                               |                |           |               |        |                  
|                                                                                                     |                               |                |           | (Unaudited)   |        |                   |           |          
|ASSETS                                                                                               |                               |                |           |               |        |                   |           |          
|Real estate:                                                                                         |                               |                |           |               |        |                   |           |          
|                                                                                                     | Land and land improvements    |                | $         | 525,050       |        |                   | $         | 504,808   |       
|                                                                                                     | Buildings and improvements    |                |           | 3,181,224     |        |                   |           | 3,048,676 |       
|                                                                                                     | Less accumulated depreciation |                |           | (533,806      | )      |                   |           | (485,206  | )     
|                                                                                                     |                               |                |           |               |        |                   |           |          
|Operating real estate                                                                                |                               |                | 3,172,468 |               |        |                   | 3,068,278 |          
|Development in progress                                                                              |                               |                | 46,136    |               |        |                   | 163,379   |          
|Land held for development                                                                            |                               |                | 164,303   |               |        |                   | 163,142   |          
|                                                                                                     |                               |                |           |               |        |                   |           |          
|Net real estate                                                                                      |                               |                | 3,382,907 |               |        |                   | 3,394,799 |          
|Cash and cash equivalents                                                                            |                               |                | 26,268    |               |        |                   | 11,071    |          
|Accounts receivable                                                                                  |                               |                | 11,327    |               |        |                   | 14,349    |          
|Deferred financing and leasing costs, net of
accumulated amortization
(2003, $80,419; 2002, $75,833) |                               |                | 80,813    |               |        |                   | 71,544    |          
|Investment in unconsolidated joint ventures                                                          |                               |                | 16,793    |               |        |                   | 14,963    |          
|Prepaid expenses and other assets                                                                    |                               |                | 119,022   |               |        |                   | 120,335   |          
|                                                                                                     |                               |                |           |               |        |                   |           |          
|Total assets                                                                                         |                               | $              | 3,637,130 |               |        | $                 | 3,627,061 |          
|                                                                                                     |                               |                |           |               |        |                   |           |          
|LIABILITIES                                                                                          |                               |                |           |               |        |                   |           |          
|Mortgage loans                                                                                       |                               | $              | 310,670   |               |        | $                 | 315,263   |          
|Unsecured notes                                                                                      |                               |                | 1,405,000 |               |        |                   | 1,418,924 |          
|Credit facility                                                                                      |                               |                | 121,000   |               |        |                   | 132,000   |          
|Accounts payable                                                                                     |                               |                | 22,776    |               |        |                   | 24,116    |          
|Accrued interest                                                                                     |                               |                | 32,548    |               |        |                   | 32,571    |          
|Distribution payable                                                                                 |                               |                | 49,308    |               |        |                   | 48,040    |          
|Other liabilities                                                                                    |                               |                | 88,852    |               |        |                   | 96,119    |          
|                                                                                                     |                               |                |           |               |        |                   |           |          
|Total liabilities                                                                                    |                               |                | 2,030,154 |               |        |                   | 2,067,033 |          
|Minority interest                                                                                    |                               |                | 2,833     |               |        |                   | 7,054     |          
|OWNERS EQUITY                                                                                       |                               |                |           |               |        |                   |           |          
|General partners equity  common units                                                              |                               |                | 1,402,729 |               |        |                   | 1,351,589 |          
|Limited partners equity  preferred units                                                           |                               |                | 135,471   |               |        |                   | 135,471   |          
|                                                                                                     |                               |  common units |           |               | 65,943 |                   |           |           | 65,914 | 
|                                                                                                     |                               |                |           |               |        |                   |           |          
|Total owners equity                                                                                 |                               |                | 1,604,143 |               |        |                   | 1,552,974 |          
|                                                                                                     |                               |                |           |               |        |                   |           |          
|Total liabilities and owners equity                                                                 |                               | $              | 3,637,130 |               |        | $                 | 3,627,061 |          
|                                                                                                     |                               |                |           |               |        |                   |           |          

See accompanying notes.

11



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##### 



CONSOLIDATED STATEMENTS OF OPERATIONS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Unaudited and in thousands, except per unit amounts)

|                                                                                                                                                                    |                                     |   |                    |        |               |   |         |        | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------- | - | ------------------ | ------ | ------------- | - | ------- | ------ | 
|                                                                                                                                                                    |                                     |   | Three Months Ended
|                                                                                                                                                                    |                                     |   |                   
|                                                                                                                                                                    |                                     |   | June 30, 2003      |        | June 30, 2002
|                                                                                                                                                                    |                                     |   |                    |        |              
|REVENUE                                                                                                                                                             |                                     |   |                    |        |               |   |         |       
|Rental                                                                                                                                                              |                                     | $ | 109,411            |        |               | $ | 106,402 |       
|Operating expense reimbursement                                                                                                                                     |                                     |   | 40,647             |        |               |   | 39,095  |       
|Equity in earnings of unconsolidated joint ventures                                                                                                                 |                                     |   | 473                |        |               |   |        |       
|Interest and other                                                                                                                                                  |                                     |   | 2,260              |        |               |   | 2,025   |       
|                                                                                                                                                                    |                                     |   |                    |        |               |   |         |       
|Total revenue                                                                                                                                                       |                                     |   | 152,791            |        |               |   | 147,522 |       
|                                                                                                                                                                    |                                     |   |                    |        |               |   |         |       
|EXPENSES                                                                                                                                                            |                                     |   |                    |        |               |   |         |       
|Rental property                                                                                                                                                     |                                     |   | 28,135             |        |               |   | 27,460  |       
|Real estate taxes                                                                                                                                                   |                                     |   | 15,488             |        |               |   | 14,546  |       
|Interest expense                                                                                                                                                    |                                     |   | 31,089             |        |               |   | 28,287  |       
|General and administrative                                                                                                                                          |                                     |   | 8,840              |        |               |   | 5,634   |       
|Depreciation and amortization                                                                                                                                       |                                     |   | 31,188             |        |               |   | 27,428  |       
|                                                                                                                                                                    |                                     |   |                    |        |               |   |         |       
|Total expenses                                                                                                                                                      |                                     |   | 114,740            |        |               |   | 103,355 |       
|                                                                                                                                                                    |                                     |   |                    |        |               |   |         |       
|Income before property dispositions and minority interest                                                                                                           |                                     |   | 38,051             |        |               |   | 44,167  |       
|Gain on property dispositions                                                                                                                                       |                                     |   |                   |        |               |   | 1,760   |       
|Minority interest                                                                                                                                                   |                                     |   |                   |        |               |   | (1,235  | )     
|                                                                                                                                                                    |                                     |   |                    |        |               |   |         |       
|Income from continuing operations                                                                                                                                   |                                     |   | 38,051             |        |               |   | 44,692  |       
|Discontinued operations (including net gain on property dispositions of
$11,093 for the quarter ended June 30, 2003 and $4,280 for the quarter
ended June 30, 2002) |                                     |   | 12,199             |        |               |   | 4,708   |       
|                                                                                                                                                                    |                                     |   |                    |        |               |   |         |       
|Net income                                                                                                                                                          |                                     |   | 50,250             |        |               |   | 49,400  |       
|Preferred unit distributions                                                                                                                                        |                                     |   | (3,104             | )      |               |   | (5,508  | )     
|                                                                                                                                                                    |                                     |   |                    |        |               |   |         |       
|Income available to common unitholders                                                                                                                              |                                     | $ | 47,146             |        |               | $ | 43,892  |       
|                                                                                                                                                                    |                                     |   |                    |        |               |   |         |       
|Earnings per unit                                                                                                                                                   |                                     |   |                    |        |               |   |         |       
|                                                                                                                                                                    | Basic:                              |   |                    |        |               |   |         |        | 
|                                                                                                                                                                    | Income from continuing operations   |   | $                  | 0.43   |               |   | $       | 0.50   | 
|                                                                                                                                                                    | Income from discontinued operations |   |                    | 0.15   |               |   |         | 0.06   | 
|                                                                                                                                                                    |                                     |   |                    |        |               |   |         |       
|                                                                                                                                                                    | Income per common unit  basic      |   | $                  | 0.58   |               |   | $       | 0.56   | 
|                                                                                                                                                                    |                                     |   |                    |        |               |   |         |       
|                                                                                                                                                                    | Diluted:                            |   |                    |        |               |   |         |        | 
|                                                                                                                                                                    | Income from continuing operations   |   | $                  | 0.42   |               |   | $       | 0.49   | 
|                                                                                                                                                                    | Income from discontinued operations |   |                    | 0.15   |               |   |         | 0.06   | 
|                                                                                                                                                                    |                                     |   |                    |        |               |   |         |       
|                                                                                                                                                                    | Income per common unit  diluted    |   | $                  | 0.57   |               |   | $       | 0.55   | 
|                                                                                                                                                                    |                                     |   |                    |        |               |   |         |       
|Distributions per common unit                                                                                                                                       |                                     | $ | 0.60               |        |               | $ | 0.59    |       
|                                                                                                                                                                    |                                     |   |                    |        |               |   |         |       
|Weighted average number of common units outstanding                                                                                                                 |                                     |   |                    |        |               |   |         |       
|                                                                                                                                                                    | Basic                               |   |                    | 81,695 |               |   |         | 78,483 | 
|                                                                                                                                                                    | Diluted                             |   |                    | 82,947 |               |   |         | 80,048 | 
|                                                                                                                                                                    |                                     |   |                    |        |               |   |         |       

See accompanying notes.

12



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##### 



CONSOLIDATED STATEMENTS OF OPERATIONS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Unaudited and in thousands, except per unit amounts)

|                                                                                                                                                                    |                                     |   |                  |        |               |   |         |        | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------- | - | ---------------- | ------ | ------------- | - | ------- | ------ | 
|                                                                                                                                                                    |                                     |   | Six Months Ended
|                                                                                                                                                                    |                                     |   |                 
|                                                                                                                                                                    |                                     |   | June 30, 2003    |        | June 30, 2002
|                                                                                                                                                                    |                                     |   |                  |        |              
|REVENUE                                                                                                                                                             |                                     |   |                  |        |               |   |         |       
|Rental                                                                                                                                                              |                                     | $ | 222,068          |        |               | $ | 211,826 |       
|Operating expense reimbursement                                                                                                                                     |                                     |   | 84,502           |        |               |   | 79,097  |       
|Equity in earnings of unconsolidated joint ventures                                                                                                                 |                                     |   | 915              |        |               |   |        |       
|Interest and other                                                                                                                                                  |                                     |   | 4,152            |        |               |   | 3,598   |       
|                                                                                                                                                                    |                                     |   |                  |        |               |   |         |       
|Total revenue                                                                                                                                                       |                                     |   | 311,637          |        |               |   | 294,521 |       
|                                                                                                                                                                    |                                     |   |                  |        |               |   |         |       
|EXPENSES                                                                                                                                                            |                                     |   |                  |        |               |   |         |       
|Rental property                                                                                                                                                     |                                     |   | 60,444           |        |               |   | 54,913  |       
|Real estate taxes                                                                                                                                                   |                                     |   | 30,224           |        |               |   | 28,805  |       
|Interest expense                                                                                                                                                    |                                     |   | 61,506           |        |               |   | 56,086  |       
|General and administrative                                                                                                                                          |                                     |   | 15,268           |        |               |   | 11,604  |       
|Depreciation and amortization                                                                                                                                       |                                     |   | 59,942           |        |               |   | 53,602  |       
|                                                                                                                                                                    |                                     |   |                  |        |               |   |         |       
|Total expenses                                                                                                                                                      |                                     |   | 227,384          |        |               |   | 205,010 |       
|                                                                                                                                                                    |                                     |   |                  |        |               |   |         |       
|Income before property dispositions and minority interest                                                                                                           |                                     |   | 84,253           |        |               |   | 89,511  |       
|Gain on property dispositions                                                                                                                                       |                                     |   | 598              |        |               |   | 1,242   |       
|Minority interest                                                                                                                                                   |                                     |   | (518             | )      |               |   | (1,235  | )     
|                                                                                                                                                                    |                                     |   |                  |        |               |   |         |       
|Income from continuing operations                                                                                                                                   |                                     |   | 84,333           |        |               |   | 89,518  |       
|Discontinued operations (including net gain on property dispositions of
$11,256 for the quarter ended June 30, 2003 and $5,669 for the quarter
ended June 30, 2002) |                                     |   | 12,601           |        |               |   | 6,816   |       
|                                                                                                                                                                    |                                     |   |                  |        |               |   |         |       
|Net income                                                                                                                                                          |                                     |   | 96,934           |        |               |   | 96,334  |       
|Preferred unit distributions                                                                                                                                        |                                     |   | (6,208           | )      |               |   | (10,911 | )     
|                                                                                                                                                                    |                                     |   |                  |        |               |   |         |       
|Income available to common unitholders                                                                                                                              |                                     | $ | 90,726           |        |               | $ | 85,423  |       
|                                                                                                                                                                    |                                     |   |                  |        |               |   |         |       
|Earnings per unit                                                                                                                                                   |                                     |   |                  |        |               |   |         |       
|                                                                                                                                                                    | Basic:                              |   |                  |        |               |   |         |        | 
|                                                                                                                                                                    | Income from continuing operations   |   | $                | 0.96   |               |   | $       | 1.00   | 
|                                                                                                                                                                    | Income from discontinued operations |   |                  | 0.16   |               |   |         | 0.09   | 
|                                                                                                                                                                    |                                     |   |                  |        |               |   |         |       
|                                                                                                                                                                    | Income per common unit  basic      |   | $                | 1.12   |               |   | $       | 1.09   | 
|                                                                                                                                                                    |                                     |   |                  |        |               |   |         |       
|                                                                                                                                                                    | Diluted:                            |   |                  |        |               |   |         |        | 
|                                                                                                                                                                    | Income from continuing operations   |   | $                | 0.95   |               |   | $       | 0.98   | 
|                                                                                                                                                                    | Income from discontinued operations |   |                  | 0.15   |               |   |         | 0.09   | 
|                                                                                                                                                                    |                                     |   |                  |        |               |   |         |       
|                                                                                                                                                                    | Income per common unit  diluted    |   | $                | 1.10   |               |   | $       | 1.07   | 
|                                                                                                                                                                    |                                     |   |                  |        |               |   |         |       
|Distributions per common unit                                                                                                                                       |                                     | $ | 1.20             |        |               | $ | 1.18    |       
|                                                                                                                                                                    |                                     |   |                  |        |               |   |         |       
|Weighted average number of common units outstanding                                                                                                                 |                                     |   |                  |        |               |   |         |       
|                                                                                                                                                                    | Basic                               |   |                  | 81,113 |               |   |         | 78,153 | 
|                                                                                                                                                                    | Diluted                             |   |                  | 82,264 |               |   |         | 79,553 | 
|                                                                                                                                                                    |                                     |   |                  |        |               |   |         |       

See accompanying notes.

13



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##### 



CONSOLIDATED STATEMENTS OF CASH FLOWS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Unaudited and in thousands)

|                                                                                  |                                                     |   |                  |         |               |   |          |         |  
|--------------------------------------------------------------------------------- | --------------------------------------------------- | - | ---------------- | ------- | ------------- | - | -------- | ------- | -
|                                                                                  |                                                     |   | Six Months Ended
|                                                                                  |                                                     |   |                 
|                                                                                  |                                                     |   | June 30, 2003    |         | June 30, 2002
|                                                                                  |                                                     |   |                  |         |              
|OPERATING ACTIVITIES                                                              |                                                     |   |                  |         |               |   |          |        
|Net income                                                                        |                                                     | $ | 96,934           |         |               | $ | 96,334   |        
|Adjustments to reconcile net income to net cash provided by operating activities: |                                                     |   |                  |         |               |   |          |        
|                                                                                  | Depreciation and amortization                       |   |                  | 60,331  |               |   |          | 54,189  |  
|                                                                                  | Amortization of deferred financing costs            |   |                  | 1,885   |               |   |          | 1,810   |  
|                                                                                  | Equity in earnings of unconsolidated joint ventures |   |                  | (915    | )             |   |          |        |  
|                                                                                  | Minority interest in net income                     |   |                  | 518     |               |   |          | 1,235   |  
|                                                                                  | Gain on property dispositions                       |   |                  | (11,854 | )             |   |          | (6,911  | )
|                                                                                  | Noncash compensation                                |   |                  | 2,195   |               |   |          | 1,464   |  
|Changes in operating assets and liabilities:                                      |                                                     |   |                  |         |               |   |          |        
|                                                                                  | Accounts receivable                                 |   |                  | 3,022   |               |   |          | 6,684   |  
|                                                                                  | Prepaid expenses and other assets                   |   |                  | 572     |               |   |          | (15,248 | )
|                                                                                  | Accounts payable                                    |   |                  | (1,340  | )             |   |          | 1,428   |  
|                                                                                  | Accrued interest                                    |   |                  | (23     | )             |   |          | (2,135  | )
|                                                                                  | Other liabilities                                   |   |                  | (7,267  | )             |   |          | 6,831   |  
|                                                                                  |                                                     |   |                  |         |               |   |          |        
|Net cash provided by operating activities                                         |                                                     |   | 144,058          |         |               |   | 145,681  |        
|                                                                                  |                                                     |   |                  |         |               |   |          |        
|INVESTING ACTIVITIES                                                              |                                                     |   |                  |         |               |   |          |        
|Investment in properties                                                          |                                                     |   | (36,651          | )       |               |   | (27,805  | )      
|Investment in unconsolidated joint ventures                                       |                                                     |   | (1,932           | )       |               |   |         |        
|Distributions from unconsolidated joint ventures                                  |                                                     |   | 2,168            |         |               |   |         |        
|Proceeds from disposition of properties/land                                      |                                                     |   | 41,100           |         |               |   | 56,470   |        
|Investment in development in progress                                             |                                                     |   | (24,603          | )       |               |   | (88,904  | )      
|Increase in land held for development                                             |                                                     |   | (6,693           | )       |               |   | (18,161  | )      
|Increase in deferred leasing costs                                                |                                                     |   | (10,609          | )       |               |   | (7,791   | )      
|                                                                                  |                                                     |   |                  |         |               |   |          |        
|Net cash used in investing activities                                             |                                                     |   | (37,220          | )       |               |   | (86,191  | )      
|                                                                                  |                                                     |   |                  |         |               |   |          |        
|FINANCING ACTIVITIES                                                              |                                                     |   |                  |         |               |   |          |        
|Proceeds from issuance of unsecured notes                                         |                                                     |   | 3,683            |         |               |   |         |        
|Repayments of unsecured notes                                                     |                                                     |   | (23,739          | )       |               |   | (100,000 | )      
|Proceeds from mortgage loans                                                      |                                                     |   | 1,212            |         |               |   | 5,733    |        
|Repayments of mortgage loans                                                      |                                                     |   | (6,675           | )       |               |   | (3,830   | )      
|Proceeds from credit facility                                                     |                                                     |   | 237,050          |         |               |   | 185,100  |        
|Repayments on credit facility                                                     |                                                     |   | (248,050         | )       |               |   | (87,100  | )      
|(Increase) decrease in deferred financing costs                                   |                                                     |   | (2,540           | )       |               |   | 2        |        
|Capital contributions                                                             |                                                     |   | 55,247           |         |               |   | 54,863   |        
|Distributions to partners                                                         |                                                     |   | (107,829         | )       |               |   | (102,906 | )      
|                                                                                  |                                                     |   |                  |         |               |   |          |        
|Net cash used in financing activities                                             |                                                     |   | (91,641          | )       |               |   | (48,138  | )      
|                                                                                  |                                                     |   |                  |         |               |   |          |        
|Increase in cash and cash equivalents                                             |                                                     |   | 15,197           |         |               |   | 11,352   |        
|Cash and cash equivalents at beginning of year                                    |                                                     |   | 11,071           |         |               |   | 19,390   |        
|                                                                                  |                                                     |   |                  |         |               |   |          |        
|Cash and cash equivalents at end of year                                          |                                                     | $ | 26,268           |         |               | $ | 30,742   |        
|                                                                                  |                                                     |   |                  |         |               |   |          |        
|SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS                                   |                                                     |   |                  |         |               |   |          |        
|Write-off of fully depreciated property and deferred costs                        |                                                     | $ | 8,851            |         |               | $ | 2,701    |        
|Acquisition of properties                                                         |                                                     |   | (870             | )       |               |   |         |        
|Assumption of mortgage loans                                                      |                                                     |   | 870              |         |               |   |         |        
|Issuance of operating partnership units for property acquisition                  |                                                     |   | 1,151            |         |               |   |         |        
|                                                                                  |                                                     |   |                  |         |               |   |          |        

See accompanying notes.

14



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##### 



Liberty Property Limited Partnership

Notes to Consolidated Financial Statements (Unaudited)

June 30, 2003

Note 1: Basis of Presentation

The accompanying unaudited consolidated financial statements of Liberty
Property Limited Partnership (the Operating Partnership) and its direct and
indirect subsidiaries, have been prepared in accordance with accounting
principles generally accepted in the United States (US GAAP) for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by US GAAP for complete financial statements and should be
read in conjunction with the consolidated financial statements and notes
thereto included in the Annual Report on Form 10-K of the Trust and the
Operating Partnership for the year ended December 31, 2002. In the opinion of
management, all adjustments (consisting solely of normal recurring adjustments)
necessary for a fair presentation of the financial statements for these interim
periods have been included. The results of interim periods are not necessarily
indicative of the results to be obtained for a full fiscal year. Certain
amounts from prior periods have been reclassified to conform to current period
presentation.

Income per Unit
The following table sets forth the computation of basic and diluted income per
common unit for the three and six months ended June 30, 2003 and 2002 (in
thousands except per unit amounts):

|                                                               |  |                                          |        |                                          |  |          |        |             |  |               |      |          |  |   |        |          |  |  |        |  |  |   |      | 
|-------------------------------------------------------------- |  | ---------------------------------------- | ------ | ---------------------------------------- |  | -------- | ------ | ----------- |  | ------------- | ---- | -------- |  | - | ------ | -------- |  |  | ------ |  |  | - | ---- | 
|                                                               |  | For the Three Months Ended June 30, 2003 |        | For the Three Months Ended June 30, 2002
|                                                               |  |                                          |        |                                         
|                                                               |  |                                          |        |                                          |  | Weighted |        |             |  |               |      |          |  |   |        | Weighted |  |  |        | 
|                                                               |  |                                          |        |                                          |  | Average  |        |             |  |               |      |          |  |   |        | Average  |  |  |        | 
|                                                               |  | Income                                   |        | Units                                    |  | Per Unit |        | Income      |  | Units         |      | Per Unit
|                                                               |  | (Numerator)                              |        | (Denominator)                            |  | Amount   |        | (Numerator) |  | (Denominator) |      | Amount  
|                                                               |  |                                          |        |                                          |  |          |        |             |  |               |      |         
|Net income                                                     |  | $                                        | 50,250 |                                          |  |          |        |             |  |               |      |          |  | $ | 49,400 |          |  |  |        |  |  |   |      | 
|Less: Preferred unit distributions                             |  |                                          | (3,104 | )                                        |  |          |        |             |  |               |      |          |  |   | (5,508 | )        |  |  |        |  |  |   |      | 
|                                                               |  |                                          |        |                                          |  |          |        |             |  |               |      |          |  |   |        |          |  |  |        |  |  |   |      | 
|Basic income per common unit                                   |  |                                          |        |                                          |  |          |        |             |  |               |      |          |  |   |        |          |  |  |        |  |  |   |      | 
|Income available to common
unitholders                         |  |                                          | 47,146 |                                          |  |          | 81,695 |             |  | $             | 0.58 |          |  |   | 43,892 |          |  |  | 78,483 |  |  | $ | 0.56 | 
|                                                               |  |                                          |        |                                          |  |          |        |             |  |               |      |          |  |   |        |          |  |  |        |  |  |   |      | 
|Dilutive units for long-term
compensation plans                |  |                                          |       |                                          |  |          | 1,252  |             |  |               |      |          |  |   |       |          |  |  | 1,565  |  |  |   |      | 
|                                                               |  |                                          |        |                                          |  |          |        |             |  |               |      |          |  |   |        |          |  |  |        |  |  |   |      | 
|Diluted income per common unit                                 |  |                                          |        |                                          |  |          |        |             |  |               |      |          |  |   |        |          |  |  |        |  |  |   |      | 
|Income available to common
unitholders
and assumed conversions |  | $                                        | 47,146 |                                          |  |          | 82,947 |             |  | $             | 0.57 |          |  | $ | 43,892 |          |  |  | 80,048 |  |  | $ | 0.55 | 
|                                                               |  |                                          |        |                                          |  |          |        |             |  |               |      |          |  |   |        |          |  |  |        |  |  |   |      | 

|                                                               |  |                                        |        |                                        |  |          |        |             |  |               |      |          |  |   |         |          |  |  |        |  |  |   |      | 
|-------------------------------------------------------------- |  | -------------------------------------- | ------ | -------------------------------------- |  | -------- | ------ | ----------- |  | ------------- | ---- | -------- |  | - | ------- | -------- |  |  | ------ |  |  | - | ---- | 
|                                                               |  | For the Six Months Ended June 30, 2003 |        | For the Six Months Ended June 30, 2002
|                                                               |  |                                        |        |                                       
|                                                               |  |                                        |        |                                        |  | Weighted |        |             |  |               |      |          |  |   |         | Weighted |  |  |        | 
|                                                               |  |                                        |        |                                        |  | Average  |        |             |  |               |      |          |  |   |         | Average  |  |  |        | 
|                                                               |  | Income                                 |        | Units                                  |  | Per Unit |        | Income      |  | Units         |      | Per Unit
|                                                               |  | (Numerator)                            |        | (Denominator)                          |  | Amount   |        | (Numerator) |  | (Denominator) |      | Amount  
|                                                               |  |                                        |        |                                        |  |          |        |             |  |               |      |         
|Net income                                                     |  | $                                      | 96,934 |                                        |  |          |        |             |  |               |      |          |  | $ | 96,334  |          |  |  |        |  |  |   |      | 
|Less: Preferred unit distributions                             |  |                                        | (6,208 | )                                      |  |          |        |             |  |               |      |          |  |   | (10,911 | )        |  |  |        |  |  |   |      | 
|                                                               |  |                                        |        |                                        |  |          |        |             |  |               |      |          |  |   |         |          |  |  |        |  |  |   |      | 
|Basic income per common unit                                   |  |                                        |        |                                        |  |          |        |             |  |               |      |          |  |   |         |          |  |  |        |  |  |   |      | 
|Income available to common
unitholders                         |  |                                        | 90,726 |                                        |  |          | 81,113 |             |  | $             | 1.12 |          |  |   | 85,423  |          |  |  | 78,153 |  |  | $ | 1.09 | 
|                                                               |  |                                        |        |                                        |  |          |        |             |  |               |      |          |  |   |         |          |  |  |        |  |  |   |      | 
|Dilutive units for long-term
compensation plans                |  |                                        |       |                                        |  |          | 1,151  |             |  |               |      |          |  |   |        |          |  |  | 1,400  |  |  |   |      | 
|                                                               |  |                                        |        |                                        |  |          |        |             |  |               |      |          |  |   |         |          |  |  |        |  |  |   |      | 
|Diluted income per common unit                                 |  |                                        |        |                                        |  |          |        |             |  |               |      |          |  |   |         |          |  |  |        |  |  |   |      | 
|Income available to common
unitholders
and assumed conversions |  | $                                      | 90,726 |                                        |  |          | 82,264 |             |  | $             | 1.10 |          |  | $ | 85,423  |          |  |  | 79,553 |  |  | $ | 1.07 | 
|                                                               |  |                                        |        |                                        |  |          |        |             |  |               |      |          |  |   |         |          |  |  |        |  |  |   |      | 

15



---



##### 



Note 2: Organization

Liberty Property Trust (the Trust), the general partner of Liberty Property
Limited Partnership, is a self-administered and self-managed Maryland real
estate investment trust (a REIT). Substantially all of the Trusts assets are
owned directly or indirectly, and substantially all of the Trusts operations
are conducted directly or indirectly, by the Operating Partnership (the Trust,
Operating Partnership and their respective subsidiaries, referred to
collectively as, the Company). The Trust is the sole general partner and also
a limited partner of the Operating Partnership, owning 95.5% of the common
equity of the Operating Partnership at June 30, 2003. The Company provides
leasing, property management, development, acquisition, and other
tenant-related services for a portfolio of industrial and office properties
which are located principally within the Southeastern, Mid-Atlantic and
Midwestern United States.

Note 3: Segment Information

The Company reviews the performance of the portfolio on a geographical basis.
The following regions are considered the Companys reportable segments:
Southeastern Pennsylvania; New Jersey; Lehigh Valley, Pennsylvania; Virginia;
the Carolinas; Jacksonville, Florida; Minneapolis, Minnesota; Detroit,
Michigan; and all others combined (including Maryland; Tampa, Florida; South
Florida; and the United Kingdom). The Companys reportable segments are
distinct business units which are each managed separately in order to
concentrate market knowledge within a geographical area. Within these
reportable segments, the Company derives its revenues from its two product
types: industrial properties and office properties.

The Company evaluates the performance of the reportable segments based on
property level operating income, which is calculated as rental revenue and
operating expense reimbursement less rental property expenses and real estate
taxes. The accounting policies of the reportable segments are the same as those
for the Company on a consolidated basis. The operating information by segment
is as follows (in thousands):

For the Three Months Ended June 30, 2003

---

|                             |  |             |        |            |  |               |       |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |        |  |  |   |         | 
|---------------------------- |  | ----------- | ------ | ---------- |  | ------------- | ----- | -------- |  | ------------- | ------ | ------------ |  | --------- | ------ | -------- |  | ---------- | ----- | ----- |  | - | ------ |  |  | - | ------ |  |  | - | ------ |  |  | - | ------ |  |  | - | ------- | 
|                             |  | SE Pennsyl. |        | New Jersey |  | Lehigh Valley |       | Virginia |  | The Carolinas |        | Jacksonville |  | Minnesota |        | Michigan |  | All Others |       | Total
|                             |  |             |        |            |  |               |       |          |  |               |        |              |  |           |        |          |  |            |       |      
|Real estate related
revenues |  | $           | 43,842 |            |  | $             | 8,419 |          |  | $             | 17,014 |              |  | $         | 12,927 |          |  | $          | 8,976 |       |  | $ | 12,263 |  |  | $ | 13,019 |  |  | $ | 16,094 |  |  | $ | 17,504 |  |  | $ | 150,058 | 
|Rental property
expenses     |  |             |        |            |  |               |       |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |        |  |  |   |         | 
|and real
estate taxes        |  |             | 12,385 |            |  |               | 2,552 |          |  |               | 4,181  |              |  |           | 3,482  |          |  |            | 2,623 |       |  |   | 3,143  |  |  |   | 4,856  |  |  |   | 5,564  |  |  |   | 4,837  |  |  |   | 43,623  | 
|                             |  |             |        |            |  |               |       |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |        |  |  |   |         | 
|Property level
operating     |  |             |        |            |  |               |       |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |        |  |  |   |         | 
|income                       |  | $           | 31,457 |            |  | $             | 5,867 |          |  | $             | 12,833 |              |  | $         | 9,445  |          |  | $          | 6,353 |       |  | $ | 9,120  |  |  | $ | 8,163  |  |  | $ | 10,530 |  |  | $ | 12,667 |  |  |   | 106,435 | 
|                             |  |             |        |            |  |               |       |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |        |  |  |   |         | 
|Other income/expenses, net   |  |             |        |            |  |               |       |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |        |  |  |   | 68,384  | 
|                             |  |             |        |            |  |               |       |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |        |  |  |   |         | 

|                                                         |  |   |        |  
|-------------------------------------------------------- |  | - | ------ | -
|Income
before property disposition and minority interest |  |   | 38,051 |  
|Gain on disposition of properties                        |  |   |       |  
|Minority interest                                        |  |   |       |  
|Discontinued operations                                  |  |   | 12,199 |  
|Preferred unit distributions                             |  |   | (3,104 | )
|                                                         |  |   |        |  
|Income available to common unitholders                   |  | $ | 47,146 |  
|                                                         |  |   |        |  

For the Three Months Ended June 30,
2002

|                             |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |        |  |  |   |         | 
|---------------------------- |  | ----------- | ------ | ---------- |  | ------------- | ------ | -------- |  | ------------- | ------ | ------------ |  | --------- | ------ | -------- |  | ---------- | ----- | ----- |  | - | ------ |  |  | - | ------ |  |  | - | ------ |  |  | - | ------ |  |  | - | ------- | 
|                             |  | SE Pennsyl. |        | New Jersey |  | Lehigh Valley |        | Virginia |  | The Carolinas |        | Jacksonville |  | Minnesota |        | Michigan |  | All Others |       | Total
|                             |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |       |      
|Real estate related revenues |  | $           | 44,142 |            |  | $             | 11,231 |          |  | $             | 14,885 |              |  | $         | 12,285 |          |  | $          | 8,416 |       |  | $ | 11,335 |  |  | $ | 12,710 |  |  | $ | 15,777 |  |  | $ | 14,716 |  |  | $ | 145,497 | 
|Rental
property expenses     |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |        |  |  |   |         | 
|and real estate taxes        |  |             | 12,115 |            |  |               | 3,482  |          |  |               | 3,297  |              |  |           | 3,012  |          |  |            | 2,452 |       |  |   | 2,955  |  |  |   | 4,891  |  |  |   | 5,291  |  |  |   | 4,511  |  |  |   | 42,006  | 
|                             |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |        |  |  |   |         | 
|Property
level operating     |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |        |  |  |   |         | 
|income                       |  | $           | 32,027 |            |  | $             | 7,749  |          |  | $             | 11,588 |              |  | $         | 9,273  |          |  | $          | 5,964 |       |  | $ | 8,380  |  |  | $ | 7,819  |  |  | $ | 10,486 |  |  | $ | 10,205 |  |  |   | 103,491 | 
|                             |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |        |  |  |   |         | 
|Other income/expenses, net   |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |        |  |  |   | 59,324  | 
|                             |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |       |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |        |  |  |   |         | 

|                                                          |  |   |        |  
|--------------------------------------------------------- |  | - | ------ | -
|Income before property dispositions and minority interest |  |   | 44,167 |  
|Gain on disposition of properties                         |  |   | 1,760  |  
|Minority interest                                         |  |   | (1,235 | )
|Discontinued operations                                   |  |   | 4,708  |  
|Preferred unit distributions                              |  |   | (5,508 | )
|                                                          |  |   |        |  
|Income available to common unitholders                    |  | $ | 43,892 |  
|                                                          |  |   |        |  

16



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##### 



For the Six Months Ended June 30, 2003

---

|                             |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |        |  |  |   |         | 
|---------------------------- |  | ----------- | ------ | ---------- |  | ------------- | ------ | -------- |  | ------------- | ------ | ------------ |  | --------- | ------ | -------- |  | ---------- | ------ | ----- |  | - | ------ |  |  | - | ------ |  |  | - | ------ |  |  | - | ------ |  |  | - | ------- | 
|                             |  | SE Pennsyl. |        | New Jersey |  | Lehigh Valley |        | Virginia |  | The Carolinas |        | Jacksonville |  | Minnesota |        | Michigan |  | All Others |        | Total
|                             |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |      
|Real estate related revenues |  | $           | 97,111 |            |  | $             | 17,141 |          |  | $             | 32,108 |              |  | $         | 25,568 |          |  | $          | 17,752 |       |  | $ | 24,354 |  |  | $ | 25,555 |  |  | $ | 32,115 |  |  | $ | 34,866 |  |  | $ | 306,570 | 
|Rental property expenses     |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |        |  |  |   |         | 
|and real
estate taxes        |  |             | 27,704 |            |  |               | 5,876  |          |  |               | 8,571  |              |  |           | 6,922  |          |  |            | 5,107  |       |  |   | 6,427  |  |  |   | 9,531  |  |  |   | 10,581 |  |  |   | 9,949  |  |  |   | 90,668  | 
|                             |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |        |  |  |   |         | 
|Property level operating     |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |        |  |  |   |         | 
|income                       |  | $           | 69,407 |            |  | $             | 11,265 |          |  | $             | 23,537 |              |  | $         | 18,646 |          |  | $          | 12,645 |       |  | $ | 17,927 |  |  | $ | 16,024 |  |  | $ | 21,534 |  |  | $ | 24,917 |  |  |   | 215,902 | 
|                             |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |        |  |  |   |         | 
|Other income/expenses, net   |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |        |  |  |   | 131,649 | 
|                             |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |        |  |  |   |         | 

|                                                         |  |  |   |       
|-------------------------------------------------------- |  |  | - | ------
|Income before property disposition and minority interest |  |  |   | 84,253
|Gain on disposition of properties                        |  |  |   | 598   
|Minority interest                                        |  |  |   | (518  
|Discontinued operations                                  |  |  |   | 12,601
|Preferred unit distributions                             |  |  |   | (6,208
|                                                         |  |  |   |       
|Income available to common unitholders                   |  |  | $ | 90,726
|                                                         |  |  |   |       

For the Six Months Ended June 30,
2002

---

|                             |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |        |  |  |   |         | 
|---------------------------- |  | ----------- | ------ | ---------- |  | ------------- | ------ | -------- |  | ------------- | ------ | ------------ |  | --------- | ------ | -------- |  | ---------- | ------ | ----- |  | - | ------ |  |  | - | ------ |  |  | - | ------ |  |  | - | ------ |  |  | - | ------- | 
|                             |  | SE Pennsyl. |        | New Jersey |  | Lehigh Valley |        | Virginia |  | The Carolinas |        | Jacksonville |  | Minnesota |        | Michigan |  | All Others |        | Total
|                             |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |      
|Real estate related
revenues |  | $           | 88,585 |            |  | $             | 22,770 |          |  | $             | 29,521 |              |  | $         | 24,715 |          |  | $          | 16,834 |       |  | $ | 22,674 |  |  | $ | 25,064 |  |  | $ | 31,358 |  |  | $ | 29,402 |  |  | $ | 290,923 | 
|Rental property
expenses     | 
|and real
estate taxes        |  |             | 24,791 |            |  |               | 7,172  |          |  |               | 6,535  |              |  |           | 6,164  |          |  |            | 4,925  |       |  |   | 5,562  |  |  |   | 9,421  |  |  |   | 10,387 |  |  |   | 8,761  |  |  |   | 83,718  | 
|                             |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |        |  |  |   |         | 
|Property level
operating     | 
|income                       |  | $           | 63,794 |            |  | $             | 15,598 |          |  | $             | 22,986 |              |  | $         | 18,551 |          |  | $          | 11,909 |       |  | $ | 17,112 |  |  | $ | 15,643 |  |  | $ | 20,971 |  |  | $ | 20,641 |  |  |   | 207,205 | 
|                             |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |        |  |  |   |         | 
|Other
income/expenses, net   |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |        |  |  |   | 117,694 | 
|                             |  |             |        |            |  |               |        |          |  |               |        |              |  |           |        |          |  |            |        |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |        |  |  |   |         | 

|                                                          |  |   |         |  
|--------------------------------------------------------- |  | - | ------- | -
|Income before property dispositions and minority interest |  |   | 89,511  |  
|Gain on disposition of properties                         |  |   | 1,242   |  
|Minority interest                                         |  |   | (1,235  | )
|Discontinued operations                                   |  |   | 6,816   |  
|Preferred unit distributions                              |  |   | (10,911 | )
|                                                          |  |   |         |  
|Income available to common unitholders                    |  | $ | 85,423  |  
|                                                          |  |   |         |  

Note 4: SFAS No. 144, Accounting For The Impairment Or Disposal Of Long-Lived Assets

In accordance with SFAS No. 144 which the Company adopted on January 1, 2002,
net income and gain/(loss) on the disposition of real estate for properties
sold subsequent to December 31, 2001 are reflected in the consolidated
statements of operations as discontinued operations. The proceeds from the
disposition of properties for the three and six months ended June 30, 2003 were
$34.8 million and $38.5 million as compared to $11.0 million and $23.8 million
for the same period in 2002. Below is a summary of the results of operations of
the properties disposed of through the respective disposition dates (in
thousands):

|                              |  |                    |       |                  |  |               |       |               |  |   |       |   |  |   |       |  
|----------------------------- |  | ------------------ | ----- | ---------------- |  | ------------- | ----- | ------------- |  | - | ----- | - |  | - | ----- | -
|                              |  | Three Months Ended |       | Six Months Ended
|                              |  |                    |       |                 
|                              |  | June 30, 2003      |       | June 30, 2002    |  | June 30, 2003 |       | June 30, 2002
|                              |  |                    |       |                  |  |               |       |              
|Revenues                      |  | $                  | 1,433 |                  |  | $             | 1,097 |               |  | $ | 2,390 |   |  | $ | 2,677 |  
|Operating expenses            |  |                    | (125  | )                |  |               | (242  | )             |  |   | (363  | ) |  |   | (513  | )
|Interest expense              |  |                    | (88   | )                |  |               | (172  | )             |  |   | (293  | ) |  |   | (430  | )
|Depreciation and amortization |  |                    | (114  | )                |  |               | (255  | )             |  |   | (389  | ) |  |   | (587  | )
|                              |  |                    |       |                  |  |               |       |               |  |   |       |   |  |   |       |  
|Income from operations        |  | $                  | 1,106 |                  |  | $             | 428   |               |  | $ | 1,345 |   |  | $ | 1,147 |  
|                              |  |                    |       |                  |  |               |       |               |  |   |       |   |  |   |       |  

Gain or loss on disposition on sales of land and development properties
continue to be reflected as a component of income from continuing operations.

Note 5: Credit Facility

During the six months ended June 30, 2003, the Company replaced its unsecured
revolving credit facility with a new facility which matures in January 2006.
Capacity under the facility was reduced from $450 million to $350 million.
Based on the Companys present ratings, borrowings under the facility bear
interest at LIBOR plus 70 basis points, reduced from LIBOR plus 105 basis
points for the facility prior to its renewal.

17



---



##### 



Note 6: Impact of Recently Issued Accounting Standards

In January 2003, the Financial Accounting Standards Board issued Financial
Interpretation No. 46 (FIN No. 46), Consolidation of Variable Interest
Entities. The consolidation requirements of FIN No. 46 apply immediately to
variable interest entities created after January 31, 2003 and applies to
existing variable interest entities in the first fiscal year or interim period
beginning after June 15, 2003. FIN No. 46 requires that a variable interest
entity be consolidated by a company if that company is subject to a majority of
the risk of loss from the variable interest entitys activities or is entitled
to receive a majority of the entitys residual returns or both. Beginning July
1, 2003, Rouse Kent Limited (RKL) will be consolidated into the Companys
financial statements as a result of the adoption of the provisions of FIN No.
46. RKL is a full service real estate development company which, together with
its affiliates, owns six properties comprising 210,000 leaseable square feet.
The Company does not expect its financial position or results of operations to
be materially affected by this consolidation.

18



---



##### 



Item 2: Managements Discussion and Analysis of Financial Condition and
Results of Operations

OVERVIEW

The Company owns and operates office and industrial real estate. As of June
30, 2003, the Companys portfolio consisted of 653 industrial and office
properties (the Properties in Operation) totaling approximately 51.6 million
square feet. In addition, the Company had seven properties under development
(the Properties under Development and, together with the Properties in
Operation, the Properties) and owned 879 acres of land, substantially all of
which is zoned for commercial use.

The Company focuses on creating value for shareholders and increasing
profitability and cash flow. With respect to its Properties in Operation, the
Company endeavors to maintain high occupancy levels while increasing rental
rates. The Company pursues development opportunities that it believes will
create value and yield high returns. The Company also acquires properties that
it believes will create long-term value, and disposes of Properties that no
longer fit within the Companys strategic objectives or in situations where it
can optimize cash proceeds. The Companys operating results depend primarily
upon income from rental operations and are substantially influenced by rental
demand for the Properties in Operation.

In 2002 and for the six months ended June 30, 2003, the continued general
slowdown in the economy negatively affected occupancy rates. Additionally, the
imbalance between supply of and demand for rental properties resulted in a
decline in market rental rates. Although the Company has realized increases on
some renewal and replacement leases, the negative occupancy and rental rate
trend has been continuing for several quarters and as a result, property level
operating income from the Same Store group of properties, exclusive of
termination fees, has decreased. Additionally, tenant improvement and lease
transaction costs on renewal and replacement leases have increased.

The continued economic slowdown has also limited the Companys ability to
achieve growth in operating income from its development activity. The decline
in demand for real estate has reduced the amount of development the Company is
undertaking. The size of the development pipeline has continued to decrease as
the Company has curtailed its speculative development activity and build-to-suit
activity has declined.

As noted above, the Company also seeks to acquire and dispose of Properties in
appropriate circumstances. The Company anticipates that it will continue to
pursue select acquisition and disposition opportunities during 2003.

The composition of the Companys Properties in Operation as of June 30, 2003
and 2002 is as follows (in thousands, except dollars and percentages):

|                        |  |                 |       |                   |  |                   |       |                  |  |      |        |            |  |      |        |      |  |  |       |   |  |  |       |   |  |  |      |   |  |  |      |  
|----------------------- |  | --------------- | ----- | ----------------- |  | ----------------- | ----- | ---------------- |  | ---- | ------ | ---------- |  | ---- | ------ | ---- |  |  | ----- | - |  |  | ----- | - |  |  | ---- | - |  |  | ---- | -
|                        |  | Net Rent        |       |                   |  |                   |       |                  |  |      |        | Percent of |  |      |        |      |  |  |       |  
|                        |  | Per Square Foot |       | Total Square Feet |  | Total Square Feet |       | Percent Occupied
|                        |  | June 30,        |       | June 30,          |  | June 30,          |       | June 30,        
|                        |  |                 |       |                   |  |                   |       |                 
|Type                    |  | 2003            |       | 2002              |  | 2003              |       | 2002             |  | 2003 |        | 2002       |  | 2003 |        | 2002
|                        |  |                 |       |                   |  |                   |       |                  |  |      |        |            |  |      |        |     
|Industrial-Distribution |  | $               | 4.50  |                   |  | $                 | 4.54  |                  |  |      | 20,437 |            |  |      | 21,325 |      |  |  | 39.6  | % |  |  | 42.2  | % |  |  | 93.1 | % |  |  | 96.5 | %
|Industrial-Flex         |  | $               | 8.78  |                   |  | $                 | 8.81  |                  |  |      | 13,335 |            |  |      | 13,030 |      |  |  | 25.8  | % |  |  | 25.8  | % |  |  | 90.5 | % |  |  | 89.6 | %
|Office                  |  | $               | 14.21 |                   |  | $                 | 14.10 |                  |  |      | 17,836 |            |  |      | 16,201 |      |  |  | 34.6  | % |  |  | 32.0  | % |  |  | 89.5 | % |  |  | 89.4 | %
|                        |  |                 |       |                   |  |                   |       |                  |  |      |        |            |  |      |        |      |  |  |       |   |  |  |       |   |  |  |      |   |  |  |      |  
|TOTAL                   |  | $               | 8.89  |                   |  | $                 | 8.57  |                  |  |      | 51,608 |            |  |      | 50,556 |      |  |  | 100.0 | % |  |  | 100.0 | % |  |  | 91.2 | % |  |  | 92.5 | %
|                        |  |                 |       |                   |  |                   |       |                  |  |      |        |            |  |      |        |      |  |  |       |   |  |  |       |   |  |  |      |   |  |  |      |  

Geographic segment data for the three and six months ended June 30, 2003 and
2002 is included in Note 3 to the Liberty Property Trust and Liberty Property
Limited Partnership financial statements.

FORWARD-LOOKING STATEMENTS

When used throughout this report, the words believes, anticipates, and
expects and similar expressions are intended to identify forward-looking
statements. Such statements indicate that assumptions have been used that are
subject to a number of risks and uncertainties which could cause actual
financial results or management plans and objectives to differ materially from
those projected or expressed herein, including: the effect of national and
regional economic conditions; rental demand; the Companys ability to identify
and secure additional properties and sites that meet its criteria for
acquisition or development; the availability and cost of capital; and the
effect of prevailing market interest rates; and other risks described from time
to time in the Companys filings with the Securities and

19



---



##### 



Exchange Commission. Given these uncertainties, readers are cautioned not to
place undue reliance on such statements.

CRITICAL ACCOUNTING POLICIES

Refer to the Companys 2002 Annual Report on Form 10-K for a discussion of
critical accounting policies which include capitalized costs, allowances for
doubtful accounts and impairment of real estate. During the three and six
months ended June 30, 2003 and 2002, there were no material changes to these
policies.

RESULTS OF OPERATIONS

The following discussion is based on the consolidated financial statements of
the Company. It compares the results of operations of the Company for the three
and six months ended June 30, 2003 with the results of operations of the
Company for the three and six months ended June 30, 2002. As a result of the
varying level of development, acquisition and disposition activities by the
Company in 2003 and 2002, the overall operating results of the Company during
such periods are not directly comparable. However, certain data, including the
Same Store comparison, do lend themselves to direct comparison.

This information should be read in conjunction with the accompanying
consolidated financial statements and notes included elsewhere in this report.

Comparison of the Three and Six Months Ended June 30, 2003 to the Three and Six
Months Ended June 30, 2002.

Total revenue (principally rental revenue and operating expense reimbursement)
increased to $152.8 million for the three months ended June 30, 2003 from
$147.5 million for the three months ended June 30, 2002 and increased to $311.6
million for the six months ended June 30, 2003 from $294.5 million for the six
months ended June 30, 2002. These increases are primarily due to an increase
in lease termination fees and the net increased investment in properties
developed or acquired, net of dispositions, during the years 2002 and 2003. The
average gross investment in operating real estate owned for the three months
ended June 30, 2003 was $3,680.9 million as compared to $3,420.4 million for
the three months ended June 30, 2002 and for the six months ended June 30, 2003
was $3,638.4 million as compared to $3,394.4 million for the six months ended
June 30, 2002.

The operating expense recovery percentage (the ratio of operating expense
reimbursement to rental property expenses and real estate taxes) increased to
93.2% for the three months ended June 30, 2003 from 93.1% for the three months
ended June 30, 2002, and decreased to 93.2% for the six months ended June 30,
2003 from 94.5% for the six months ended June 30, 2002. While there was a
modest increase in the recovery percentage for the three month period, the
overall trend as seen from the six month percentage is a reduced recovery
percentage. This reduction is consistent with a reduction in occupancy.

Rental property and real estate tax expenses increased to $43.6 million for the
three months ended June 30, 2003 from $42.0 million for the three months ended
June 30, 2002 and increased to $90.7 million for the six months ended June 30,
2003 from $83.7 million for the six months ended June 30, 2002. These increases
are due to the increase in the investment in Properties owned during the
respective periods and because of the increased snow removal and utility costs
relating to 2003s severe winter.

Property level operating income, exclusive of lease termination fees, for the
Same Store properties (properties owned since January 1, 2002) decreased by
$1.4 million for the three months ended June 30, 2003 as compared to the three
months ended June 30, 2002, on a straight line basis (which recognizes rental
revenue evenly over the life of the lease), and decreased by $1.3 million for
the three months ended June 30, 2003 as compared to the three months ended June
30, 2002, on a cash basis. These decreases of 1.4%, are primarily due to
decreases in occupancy.

Property level operating income, exclusive of lease termination fees, for the
Same Store properties decreased by $6.2 million for the six months ended June
30, 2003 as compared to the six months ended June 30, 2002, on a straight line
basis, and decreased by $5.8 million for the six months ended June 30, 2003 as
compared to the six months ended June 30, 2002, on a cash basis. These
decreases of 3.2% and 3.0%, respectively, are primarily due to

20



---



##### 



decreases in occupancy. At June 30, 2003, the occupancy of the Same Store
portfolio was 92.2% as compared to 93.1% at June 30, 2002.

Set forth below is a schedule comparing the property level operating income, on
a straight line basis and on a cash basis, for the Same Store properties for
the three and six months ended June 30, 2003 and 2002 (in thousands):

|                                |                            |   |                     |         |                    |   |               |         |               |   |        |         |   |   |        |         |  
|------------------------------- | -------------------------- | - | ------------------- | ------- | ------------------ | - | ------------- | ------- | ------------- | - | ------ | ------- | - | - | ------ | ------- | -
|                                |                            |   | Straight Line Basis |         | Cash Basis (1)    
|                                |                            |   |                     |         |                   
|                                |                            |   | Three Months Ended  |         | Three Months Ended
|                                |                            |   |                     |         |                   
|                                |                            |   | June 30, 2003       |         | June 30, 2002      |   | June 30, 2003 |         | June 30, 2002
|                                |                            |   |                     |         |                    |   |               |         |              
|Rental revenue                  |                            | $ | 97,136              |         |                    | $ | 98,401        |         |               | $ | 95,169 |         |   | $ | 96,362 |        
|Operating expenses:             |                            |   |                     |         |                    |   |               |         |               |   |        |         |   |   |        |        
|                                | Rental property expense    |   |                     | 26,070  |                    |   |               | 26,019  |               |   |        | 26,070  |   |   |        | 26,019  |  
|                                | Real estate taxes          |   |                     | 13,748  |                    |   |               | 13,044  |               |   |        | 13,748  |   |   |        | 13,044  |  
|                                | Operating expense recovery |   |                     | (37,491 | )                  |   |               | (36,865 | )             |   |        | (37,491 | ) |   |        | (36,865 | )
|                                |                            |   |                     |         |                    |   |               |         |               |   |        |         |   |   |        |        
|Unrecovered operating expenses  |                            |   | 2,327               |         |                    |   | 2,198         |         |               |   | 2,327  |         |   |   | 2,198  |        
|                                |                            |   |                     |         |                    |   |               |         |               |   |        |         |   |   |        |        
|Property level operating income |                            | $ | 94,809              |         |                    | $ | 96,203        |         |               | $ | 92,842 |         |   | $ | 94,164 |        
|                                |                            |   |                     |         |                    |   |               |         |               |   |        |         |   |   |        |        

|                                |                            |   |                     |         |                  |   |               |         |               |   |         |         |   |   |         |         |  
|------------------------------- | -------------------------- | - | ------------------- | ------- | ---------------- | - | ------------- | ------- | ------------- | - | ------- | ------- | - | - | ------- | ------- | -
|                                |                            |   | Straight Line Basis |         | Cash Basis (1)  
|                                |                            |   |                     |         |                 
|                                |                            |   | Six Months Ended    |         | Six Months Ended
|                                |                            |   |                     |         |                 
|                                |                            |   | June 30, 2003       |         | June 30, 2002    |   | June 30, 2003 |         | June 30, 2002
|                                |                            |   |                     |         |                  |   |               |         |              
|Rental revenue                  |                            | $ | 194,316             |         |                  | $ | 198,329       |         |               | $ | 190,332 |         |   | $ | 193,939 |        
|Operating expenses:             |                            |   |                     |         |                  |   |               |         |               |   |         |         |   |   |         |        
|                                | Rental property expense    |   |                     | 57,022  |                  |   |               | 52,353  |               |   |         | 57,022  |   |   |         | 52,353  |  
|                                | Real estate taxes          |   |                     | 26,963  |                  |   |               | 25,994  |               |   |         | 26,963  |   |   |         | 25,994  |  
|                                | Operating expense recovery |   |                     | (78,411 | )                |   |               | (74,949 | )             |   |         | (78,411 | ) |   |         | (74,949 | )
|                                |                            |   |                     |         |                  |   |               |         |               |   |         |         |   |   |         |        
|Unrecovered operating expenses  |                            |   | 5,574               |         |                  |   | 3,398         |         |               |   | 5,574   |         |   |   | 3,398   |        
|                                |                            |   |                     |         |                  |   |               |         |               |   |         |         |   |   |         |        
|Property level operating income |                            | $ | 188,742             |         |                  | $ | 194,931       |         |               | $ | 184,758 |         |   | $ | 190,541 |        
|                                |                            |   |                     |         |                  |   |               |         |               |   |         |         |   |   |         |        

(1)  Property level operating income on a cash basis is a non-GAAP measurement.
Management generally considers property level operating income on a cash basis
a useful financial performance measure of the operating performance of the Same
Store portfolio.

General and administrative expenses increased to $8.8 million for the three
months ended June 30, 2003 from $5.6 million for the three months ended June
30, 2002 and increased to $15.3 million for the six months ended June 30, 2003
from $11.6 million for the six months ended June 30, 2002. These increases are
primarily due to the accelerated vesting of restricted stock and options
related to the death of former Chairman Willard G. Rouse III totaling
approximately $1.9 million and due to costs related to the Companys enterprise
resource planning initiative totaling approximately $406,000.

Depreciation and amortization expenses increased to $31.2 million for the three
months ended June 30, 2003 from $27.4 million for the three months ended June
30, 2002 and increased to $59.9 million for the six months ended June 30, 2003
from $53.6 million for the six months ended June 30, 2002. These increases are
due to the increase in the investment in Properties owned during the respective
periods.

Interest expense increased to $31.1 million for the three months ended June 30,
2003 from $28.3 million for the three months ended June 30, 2002 and increased
to $61.5 million for the six months ended June 30, 2003 from $56.1 million
for the six months ended June 30, 2002. These increases are due to the
increases in the average debt outstanding for the respective periods, which
were $1,868.9 million for the three months ended June 30, 2003 as compared to
$1,772.0 million for the three months ended June 30, 2002 and $1,868.0 million
for the six months ended June 30, 2003 as compared to $1,765.7 million for the
same period in 2002. These increases were partially offset by decreases in the
weighted average interest rates for the periods, which were 6.95% for the three
months ended June 30, 2003 compared to 7.12% for the three months ended June
30, 2002 and 6.98% for the six months

21



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ended June 30, 2003 compared to 7.17% for the same period in 2002. Interest
expense also increased because, as noted below, less interest was capitalized
during the three and six months ended June 30, 2003 compared to the same period
in 2002 due to the decrease in development in progress.

Costs directly related to the development of rental properties and land being
readied for development are capitalized. Capitalized development costs include
interest, salaries, property taxes, insurance and other directly identifiable
costs during the period of development. Capitalized interest for the three
months ended June 30, 2003 decreased to $2.4 million from $4.4 million for the
three months ended June 30, 2002 and decreased to $5.6 million for the six
months ended June 30, 2003 from $9.4 million for the six months ended June 30,
2002. Included in capitalized interest costs are the interest costs relating
to the Companys $60.7 million investment (as of June 30, 2003) in its proposed
downtown Philadelphia office tower. Capitalized salaries and benefits
historically represent approximately 1% of the cost of developed properties
brought into service. These amounts are not included in general and
administrative expenses as discussed above.

Implementation of SFAS No. 144 Accounting for the Impairment or Disposal of
Long-Lived Assets requires that the operating results for real estate sold
after December 31, 2001 should be reflected as discontinued operations. Sales
occurring before December 31, 2001, as well as sales of land and development
properties, continue to be reflected as a component of income from continuing
operations.

There were no properties sold during the three months ended June 30, 2003. For
the six months ended June 30, 2003, the Company realized a net gain on property
dispositions of $598,000, due to the sale of two parcels of land and additional
proceeds from a 2002 property disposition. For the three months ended June 30,
2002, the Company realized a gain on property dispositions of $1.8 million due
to the sale of two parcels of land and the sale of a property. For the six
months ended June 30, 2002, the Company realized a gain on property
dispositions of $1.2 million due to the sale of five parcels of land and the
sale of a property. The property sold was developed for sale through the
Companys merchant building program.

In accordance with SFAS No. 144, net income and gain/(loss) on dispositions of
real estate for properties sold subsequent to December 31, 2001 are reflected
in the consolidated statements of operations as discontinued operations for all
periods presented. The increase in income from discontinued operations of $7.2
million and $5.6 million, for the three and six months ended June 30, 2003, as
compared to the same period in 2002, is primarily due to the larger gain on the
disposition of the properties sold in the three and six months ended June 30,
2003 as compared to the three and six months ended June 30, 2002.

As a result of the foregoing, the Companys net income increased to $45.0
million for the three months ended June 30, 2003 from $41.8 million for the
three months ended June 30, 2002 and net income increased to $86.6 million for
the six months ended June 30, 2003 from $81.2 million for the six months ended
June 30, 2002.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2003, the Company had cash and cash equivalents of $26.3
million, including $4.3 million in cash held in escrow for the payment of real
estate taxes.

Net cash flow provided by operating activities decreased to $144.1 million for
the six months ended June 30, 2003 from $145.7 million for the six months ended
June 30, 2002. This $1.6 million decrease is primarily due to fluctuations in
operating assets and liabilities during the respective periods. Net cash flow
provided by operations is the primary source of liquidity to fund distributions
to shareholders and for the recurring capital expenditures and leasing
transaction costs for the Companys Properties in Operation.

Net cash used in investing activities decreased to $37.2 million for the six
months ended June 30, 2003 from $86.2 million for the six months ended June 30,
2002. This decrease primarily resulted from a decrease in investment in
development in progress and land held for development in 2003, which is
consistent with the diminished opportunity to develop property due to the
general slowdown in the economy. These decreases are partially offset by the
reduced level of disposition activity during 2003.

Net cash used in financing activities increased to $91.6 million for the six
months ended June 30, 2003 as compared to $48.1 million for the six months
ended June 30, 2002. This $43.5 million increase was primarily due to a reduced

22



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level of net borrowings under mortgage, unsecured notes obligations and the
Companys credit facility. Net cash provided by or used in financing activities
includes proceeds from the issuance of equity and debt net of debt repayments
and shareholder distributions. Cash provided by financing activities is a
source of capital utilized by the Company to fund investment activities and the
decrease in such funding activities for 2003 is consistent with the decrease in
the level of the Companys investment activities as described above.

The Company funds its development and acquisitions with long-term capital
sources including proceeds from the disposition of Properties. For the year
ended December 31, 2002, these activities were funded through a $450 million
unsecured credit facility (the $450 million Credit Facility), which was
replaced in January 2003, with the $350 million Credit Facility. The interest
rate on borrowings under the $350 million Credit Facility fluctuates based upon
ratings from Moodys Investors Service, Inc. (Moodys), Standard and Poors
Ratings Group (S&P) and Fitch, Inc. (Fitch). The current ratings for the
Companys senior unsecured debt are Baa2, BBB and BBB from Moodys, S&P and
Fitch, respectively. At these ratings, the interest rate for borrowings under
the $350 million Credit Facility is 70 basis points over LIBOR. The $350
million Credit Facility expires in January 2006.

The Company uses debt financing to lower its overall cost of capital in an
attempt to increase the return to shareholders. The Company staggers its debt
maturities and maintains debt levels it considers to be prudent. In determining
its debt levels, the Company considers various financial measures including the
debt to gross assets ratio and the earnings to fixed charge coverage ratio. As
of June 30, 2003 the Companys debt to gross assets ratio was 44.0%, and the
earnings to fixed charge coverage ratio was 2.8x. Debt to gross assets equals
total long-term debt and borrowings under the $350 million Credit Facility
divided by total assets plus accumulated depreciation. Earnings to fixed
charges equals income before property dispositions and minority interest,
including operating activity from discontinued operations, plus interest
expense and depreciation and amortization divided by interest expense,
including capitalized interest, plus distributions on preferred shares and
units.

As of June 30, 2003, $310.7 million in mortgage loans and $1,405.0 million in
unsecured notes were outstanding with a weighted average interest rate of 7.4%.
The interest rates on $1,691.0 million of mortgage loans and unsecured notes
are fixed and range up to 8.8%. Interest rates on $24.7 million of mortgage
loans float with the base rate of the respective lending bank or a municipal
bond index. The weighted average remaining term for the mortgage loans and
unsecured notes is 6.2 years.

The scheduled maturities and principal amortization of the Companys mortgage
loans, unsecured notes and borrowings under the $350 million Credit Facility
and the related weighted average interest rates as of June 30, 2003 are as
follows (in thousands, except percentages):

|                |  |              |        |            |  |           |         |          |  |       |           |               |  |         |         |          |  |   |           |  |  |  |     |  
|--------------- |  | ------------ | ------ | ---------- |  | --------- | ------- | -------- |  | ----- | --------- | ------------- |  | ------- | ------- | -------- |  | - | --------- |  |  |  | --- | -
|                |  | Mortgages    |        |            |  |           |         |          |  |       |           |               |  |         |         |         
|                |  |              |        |            |  |           |         |          |  |       |           |               |  |         |         | Weighted
|                |  | Principal    |        | Principal  |  | Unsecured |         | Credit   |  |       |           |               |  | Average
|                |  | Amortization |        | Maturities |  | Notes     |         | Facility |  | Total |           | Interest Rate
|                |  |              |        |            |  |           |         |          |  |       |           |              
|2003 (6 months) |  | $            | 3,861  |            |  | $         | 970     |          |  | $     | 50,000    |               |  | $       |        |          |  | $ | 54,831    |  |  |  | 6.9 | %
|2004            |  |              | 8,176  |            |  |           | 34,370  |          |  |       | 100,000   |               |  |         |        |          |  |   | 142,546   |  |  |  | 7.0 | %
|2005            |  |              | 7,099  |            |  |           | 115,039 |          |  |       |          |               |  |         |        |          |  |   | 122,138   |  |  |  | 7.6 | %
|2006            |  |              | 5,010  |            |  |           | 30,098  |          |  |       | 100,000   |               |  |         | 121,000 |          |  |   | 256,108   |  |  |  | 4.6 | %
|2007            |  |              | 4,552  |            |  |           |        |          |  |       | 100,000   |               |  |         |        |          |  |   | 104,552   |  |  |  | 7.3 | %
|2008            |  |              | 4,248  |            |  |           | 29,268  |          |  |       |          |               |  |         |        |          |  |   | 33,516    |  |  |  | 7.2 | %
|2009            |  |              | 2,015  |            |  |           | 42,119  |          |  |       | 270,000   |               |  |         |        |          |  |   | 314,134   |  |  |  | 7.8 | %
|2010            |  |              | 1,348  |            |  |           |        |          |  |       | 200,000   |               |  |         |        |          |  |   | 201,348   |  |  |  | 8.5 | %
|2011            |  |              | 1,098  |            |  |           | 3,533   |          |  |       | 250,000   |               |  |         |        |          |  |   | 254,631   |  |  |  | 7.3 | %
|2012            |  |              | 192    |            |  |           | 17,674  |          |  |       | 235,000   |               |  |         |        |          |  |   | 252,866   |  |  |  | 6.5 | %
|2018            |  |              |       |            |  |           |        |          |  |       | 100,000   |               |  |         |        |          |  |   | 100,000   |  |  |  | 7.5 | %
|                |  |              |        |            |  |           |         |          |  |       |           |               |  |         |         |          |  |   |           |  |  |  |     |  
|                |  | $            | 37,599 |            |  | $         | 273,071 |          |  | $     | 1,405,000 |               |  | $       | 121,000 |          |  | $ | 1,836,670 |  |  |  | 7.0 | %
|                |  |              |        |            |  |           |         |          |  |       |           |               |  |         |         |          |  |   |           |  |  |  |     |  

The Company anticipates that it will refinance or retire these maturities
through its available sources of capital.

23



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##### 



General

The Company has continued to focus on the performance of the Same Store
portfolio. In addition, the Company has continued to pursue development and
acquisition opportunities and the strategic disposition of certain properties.
The Company attempts to outperform in its markets by maintaining higher than
market occupancy levels and obtaining higher than market rental rates.

The expiring square feet and annual net rent by year for the Properties in
Operation as of June 30, 2003 are as follows (in thousands):

|                |  |              |        |             |  |        |        |          |  |        |        |          |  |        |         |          |  |  |        |  |  |   |         |  |  |  |        |  |  |   |         | 
|--------------- |  | ------------ | ------ | ----------- |  | ------ | ------ | -------- |  | ------ | ------ | -------- |  | ------ | ------- | -------- |  |  | ------ |  |  | - | ------- |  |  |  | ------ |  |  | - | ------- | 
|                |  | Industrial-  |        | Industrial- |  |        |        |          |  |        |        |          |  |        |         |          |  |  |        | 
|                |  | Distribution |        | Flex        |  | Office |        | Total   
|                |  |              |        |             |  |        |        |         
|                |  | Square       |        | Annual      |  | Square |        | Annual   |  | Square |        | Annual   |  | Square |         | Annual  
|                |  | Feet         |        | Net Rent    |  | Feet   |        | Net Rent |  | Feet   |        | Net Rent |  | Feet   |         | Net Rent
|                |  |              |        |             |  |        |        |          |  |        |        |          |  |        |         |         
|2003 (6 months) |  |              | 1,068  |             |  | $      | 4,630  |          |  |        | 1,209  |          |  | $      | 9,949   |          |  |  | 1,121  |  |  | $ | 14,815  |  |  |  | 3,398  |  |  | $ | 29,394  | 
|2004            |  |              | 1,991  |             |  |        | 9,375  |          |  |        | 2,096  |          |  |        | 18,012  |          |  |  | 1,922  |  |  |   | 28,301  |  |  |  | 6,009  |  |  |   | 55,688  | 
|2005            |  |              | 2,264  |             |  |        | 11,649 |          |  |        | 1,747  |          |  |        | 15,557  |          |  |  | 2,924  |  |  |   | 42,590  |  |  |  | 6,935  |  |  |   | 69,796  | 
|2006            |  |              | 2,350  |             |  |        | 10,712 |          |  |        | 1,895  |          |  |        | 20,136  |          |  |  | 1,164  |  |  |   | 17,247  |  |  |  | 5,409  |  |  |   | 48,095  | 
|2007            |  |              | 2,441  |             |  |        | 10,875 |          |  |        | 1,296  |          |  |        | 12,573  |          |  |  | 1,665  |  |  |   | 25,103  |  |  |  | 5,402  |  |  |   | 48,551  | 
|2008            |  |              | 2,418  |             |  |        | 10,598 |          |  |        | 1,907  |          |  |        | 18,639  |          |  |  | 1,943  |  |  |   | 29,813  |  |  |  | 6,268  |  |  |   | 59,050  | 
|Thereafter      |  |              | 6,499  |             |  |        | 37,180 |          |  |        | 1,916  |          |  |        | 20,331  |          |  |  | 5,233  |  |  |   | 97,347  |  |  |  | 13,648 |  |  |   | 154,858 | 
|                |  |              |        |             |  |        |        |          |  |        |        |          |  |        |         |          |  |  |        |  |  |   |         |  |  |  |        |  |  |   |         | 
|TOTAL           |  |              | 19,031 |             |  | $      | 95,019 |          |  |        | 12,066 |          |  | $      | 115,197 |          |  |  | 15,972 |  |  | $ | 255,216 |  |  |  | 47,069 |  |  | $ | 465,432 | 
|                |  |              |        |             |  |        |        |          |  |        |        |          |  |        |         |          |  |  |        |  |  |   |         |  |  |  |        |  |  |   |         | 

The Company believes that its existing sources of capital will provide
sufficient funds to finance its continued development and acquisition
activities. The scheduled deliveries of the 732,000 square feet of Properties
under Development as of June 30, 2003 are as follows (in thousands, except
percentages):

|                 |  |              |     |             |  |        |    |       |  |               |     |            |  |           |     |       |  |         |       |   |  |   |        |  | 
|---------------- |  | ------------ | --- | ----------- |  | ------ | -- | ----- |  | ------------- | --- | ---------- |  | --------- | --- | ----- |  | ------- | ----- | - |  | - | ------ |  | 
|                 |  | Square Feet  |     |             |  |        |    |       |  |              
|                 |  |              |     |             |  |        |    |       |  |              
|                 |  |              |     |             |  |        |    |       |  |               |     |            |  |           |     |       |  | Percent |       |   |  |  
|Scheduled        |  | Industrial-  |     | Industrial- |  |        |    |       |  |               |     |            |  | Leased at |     | Total
|In-Service Date  |  | Distribution |     | Flex        |  | Office |    | Total |  | June 30, 2003 |     | Investment
|                 |  |              |     |             |  |        |    |       |  |               |     |           
|3rd Quarter 2003 |  |              | 134 |             |  |        |   |       |  |               | 68  |            |  |           | 202 |       |  |         | 66.5  | % |  | $ | 41,775 | 
|1st Quarter 2004 |  |              | 262 |             |  |        | 75 |       |  |               |    |            |  |           | 337 |       |  |         | 100.0 | % |  |   | 14,962 | 
|3rd Quarter 2004 |  |              |    |             |  |        |   |       |  |               | 31  |            |  |           | 31  |       |  |         | 63.6  | % |  |   | 4,869  | 
|1st Quarter 2005 |  |              |    |             |  |        |   |       |  |               | 88  |            |  |           | 88  |       |  |         | 68.6  | % |  |   | 9,773  | 
|2nd Quarter 2005 |  |              |    |             |  |        |   |       |  |               | 74  |            |  |           | 74  |       |  |         | 56.6  | % |  |   | 9,461  | 
|                 |  |              |     |             |  |        |    |       |  |               |     |            |  |           |     |       |  |         |       |   |  |   |        | 
|TOTAL            |  |              | 396 |             |  |        | 75 |       |  |               | 261 |            |  |           | 732 |       |  |         | 81.1  | % |  | $ | 80,840 | 
|                 |  |              |     |             |  |        |    |       |  |               |     |            |  |           |     |       |  |         |       |   |  |   |        | 

The Companys existing sources of capital include the public debt and equity
markets, proceeds from Property dispositions and net cash provided by
operating activities. Additionally, the Company expects to incur variable rate
debt, including borrowings under the $350 million Credit Facility from time to
time.

The Board of Trustees has authorized a share repurchase program under which the
Company may purchase up to $100 million of the Companys Common Shares,
preferred shares or convertible debentures. Through June 30, 2003, the Company
purchased 59,100 Common Shares and purchased convertible debentures
exchangeable into 877,950 Common Shares. The total cost for the purchase of the
Common Shares and convertible debentures was approximately $21.9 million. The
convertible debentures matured in 2001.

The Company has an effective S-3 shelf registration statement on file with the
Securities and Exchange Commission (the Shelf Registration Statement). As of
August 6, 2003, pursuant to the Shelf Registration Statement, the Trust had the
capacity to issue up to $688.4 million in equity securities and the Operating
Partnership had the capacity to issue up to $324.3 million in debt securities.

Related Party Transactions

Pursuant to agreements, the Company provides management services with respect
to RKL (see Note 6 to the Liberty Property Trust and Liberty Property Limited
Partnership Financial Statements), which is currently owned by certain

24



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##### 



affiliates of the Company. For the six months ended June 30, 2003, the fees for
these services were $150,000 per quarter. The Company pays a fee to RKL for
management services which it provides for the Companys properties owned in the
United Kingdom. For the three and six months ended June 30, 2003, the fees for
these services were $104,000 and $223,000. The Company had accounts receivable
and loans receivable from RKL and affiliates with balances of $1.2 million and
$25.9 million, respectively, as of June 30, 2003. The Company recognized
interest income on notes receivable from RKL of $1.1 million and $1.9 million
for the three and six months ended June 30, 2003.

Beginning July 1, 2003, RKL will be consolidated into the Companys financial
statements as a result of the adoption of the provisions of FIN No. 46. The
Company does not expect its financial position or results of operations to be
materially affected by this consolidation.

Investment in Unconsolidated Joint Ventures

In 2002 the Company partnered with the Public Employees Retirement Association
of Colorado on a $123 million joint venture consisting of the Companys
southern New Jersey industrial portfolio. The Company sold or contributed 28
industrial distribution Properties totaling approximately 3.1 million leaseable
square feet and approximately 43 acres of developable land. The Company
retained a 25% ownership interest in the venture, and realized proceeds of
approximately $109 million from the transaction. The Company will receive
development, leasing and property management fees, and may receive a promoted
interest if certain return thresholds are met. The venture is financed with
approximately 60% leverage.

During the three months ended June 30, 2003 the Company contributed to the
venture one additional industrial distribution property totaling approximately
374,000 leaseable square feet for a Total Investment, as defined below, of
$15.6 million. Total Investment for a Property is defined as the Propertys
purchase price plus closing costs and managements estimate, as determined at
the time of acquisition, of the cost of necessary improvements in the case of
acquisitions, or land costs and land and building improvement costs in the case
of development projects, and when appropriate, other development costs and
carrying costs.

Calculation of Funds from Operations

Management generally considers Funds from operations (as defined below) a
useful financial performance measure of the operating performance of an equity
REIT. Funds from operations is defined by NAREIT as net income (computed in
accordance with generally accepted accounting principles (GAAP)), excluding
gains (or losses) from sales of property, plus depreciation and amortization,
and after adjustments for unconsolidated partnerships and joint ventures. Funds
from operations does not represent net income or cash flows from operations as
defined by GAAP and does not necessarily indicate that cash flows will be
sufficient to fund cash needs. It should not be considered as an alternative to
net income as an indicator of the Companys operating performance or to cash
flows as a measure of liquidity. Funds from operations also does not represent
cash flows generated from operating, investing or financing activities as
defined by GAAP. Funds from operations for the three and six months ended June
30, 2003 and 2002 are as follows:

|                                        |                                                                |   |                    |         |                  |   |               |        |               |   |         |         |   |   |         |        |  
|--------------------------------------- | -------------------------------------------------------------- | - | ------------------ | ------- | ---------------- | - | ------------- | ------ | ------------- | - | ------- | ------- | - | - | ------- | ------ | -
|                                        |                                                                |   | Three Months Ended |         | Six Months Ended
|                                        |                                                                |   |                    |         |                 
|                                        |                                                                |   | June 30, 2003      |         | June 30, 2002    |   | June 30, 2003 |        | June 30, 2002
|                                        |                                                                |   |                    |         |                  |   |               |        |              
|Income available to common shareholders |                                                                | $ | 45,029             |         |                  | $ | 41,754        |        |               | $ | 86,616  |         |   | $ | 81,204  |       
|Adjustments:                            |                                                                |   |                    |         |                  |   |               |        |               |   |         |         |   |   |         |       
|                                        | Minority interest less preferred
unit distributions            |   |                    | 2,117   |                  |   |               | 2,138  |               |   |         | 4,110   |   |   |         | 4,219  |  
|                                        | Depreciation and amortization                                  |   |                    | 30,783  |                  |   |               | 27,286 |               |   |         | 59,246  |   |   |         | 53,364 |  
|                                        | Depreciation and amortization of
unconsolidated joint ventures |   |                    | 161     |                  |   |               |       |               |   |         | 327     |   |   |         |       |  
|                                        | Gain on disposition of properties                              |   |                    | (11,093 | )                |   |               | (3,536 | )             |   |         | (11,271 | ) |   |         | (4,407 | )
|                                        |                                                                |   |                    |         |                  |   |               |        |               |   |         |         |   |   |         |       
|Funds from operations                   |                                                                | $ | 66,997             |         |                  | $ | 67,642        |        |               | $ | 139,028 |         |   | $ | 134,380 |       
|                                        |                                                                |   |                    |         |                  |   |               |        |               |   |         |         |   |   |         |       

25



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##### 



Inflation

Inflation has remained relatively low during the last three years, and as a
result, it has not had a significant impact on the Company during this period.
The $350 million Credit Facility bears interest at a variable rate; therefore,
the amount of interest payable under the $350 million Credit Facility will be
influenced by changes in short-term interest rates, which tend to be sensitive
to inflation. To the extent an increase in inflation would result in increased
operating costs, such as in insurance, real estate taxes and utilities,
substantially all of the tenants leases require the tenants to absorb these
costs as part of their rental obligations. In addition, inflation also may have
the effect of increasing market rental rates.

Item 3: Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes to the Companys exposure to market risk
since its Annual Report on Form 10-K for the year ended December 31, 2002.

Item 4: Controls and Procedures



|(a) |  | Evaluation of Disclosure Controls and Procedures
|--- |  | ------------------------------------------------

The Companys management, with the participation of the Chief Executive Officer
and Chief Financial Officer, evaluated the effectiveness of the Companys
disclosure controls and procedures as of the end of the period covered by this
report. Based on that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that the Companys disclosure controls and
procedures as of the end of the period covered by this report are functioning
effectively to provide reasonable assurance that the information required to be
disclosed by the Company in reports filed under the Securities Exchange Act of
1934 is recorded, processed, summarized and reported within the time periods
specified in the Securities Exchange Commissions rules and forms. A controls
system, no matter how well designed and operated, cannot provide absolute
assurance that the objectives of the controls system are met, and no evaluation
of controls can provide absolute assurance that all control issues and
instances of fraud, if any, within a company have been detected.



|(b) |  | Changes in Internal Control Over Financial Reporting
|--- |  | ----------------------------------------------------

No change in the Companys internal control over financial reporting occurred
during the most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the internal control over financial
reporting.

26



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##### 



Part II: Other Information

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Item 1. |  | Legal Proceedings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        |  | None.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Item 2. |  | Changes in Securities and Use of Proceeds                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        |  | On June 30, 2003, the Operating Partnership issued 33,682 Units of
Limited Partnership Interest (the Units). The aggregate sale price of
the Units was $1,150,896. The Units were sold to an accredited investor
in a private placement in reliance on the exemption from registration
under Section 4(2) of the Securities Act of 1933, as a portion of the
purchase price for the acquisition of a property. The Units are
convertible on a one-for-one basis into the Common Shares of Beneficial
Interest of the Trust (the Common Shares). The holders of the Units
have certain rights to cause the Trust to register the Common Shares
issuable upon conversion of such units pursuant to the terms of a
registration rights agreement entered into in connection with this
private placement.
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Item 3. |  | Defaults upon Senior Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        |  | None.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Item 4. |  | Submission of Matters to a Vote of Security Holders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       
|        |  | At the 2003 Annual Meeting of Shareholders of the Trust, held on May 29,
2003, the following matter was approved by the requisite vote of the
shareholders, as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

| |                                                                                                                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Managements nominees, William P. Hankowsky, David L. Lingerfelt
and John A. Miller, were elected to fill the three available
positions as Class III trustees. Voting (expressed in number of
shares) was as follows: Mr. Hankowsky: 65,828,075 for and 634,789
abstaining; Mr. Lingerfelt: 65,831,352 for and 631,512 abstaining;
and Mr. Miller: 65,462,587 for and 1,000,277 abstaining.

|        |  |                                 
|------- |  | --------------------------------
|Item 5. |  | Other Information               
|        |  |                                 
|        |  | None.                           
|        |  |                                 
|Item 6. |  | Exhibits and Reports on Form 8-K

|   |  |         
|-- |  | --------
|a. |  | Exhibits

| |  |       |  |                                                                                                                                                                                                                                                                          
| |  | ----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 31.1* |  | Certifications of the Chief Executive Officer of
Liberty Property Trust required by Rule 13a-14(a) under the
Securities Exchange Act of 1934.                                                                                                                            
| |  |       |  |                                                                                                                                                                                                                                                                          
| |  | 31.2* |  | Certifications of the Chief Financial Officer of
Liberty Property Trust required by Rule 13a-14(a) under the
Securities Exchange Act of 1934.                                                                                                                            
| |  |       |  |                                                                                                                                                                                                                                                                          
| |  | 31.3* |  | Certifications 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* |  | Certifications 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* |  | Certifications 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

27



---



##### 



| |  |       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | ----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |       |  | 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* |  | Certifications 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* |  | Certifications 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* |  | Certifications 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.)

|   |  |                                                                                                      
|-- |  | -----------------------------------------------------------------------------------------------------
|b. |  | Reports of Form 8-K                                                                                  
|   |  |                                                                                                      
|   |  | During the quarter ended June 30, 2003 the Registrant filed
the following Current Report on Form 8-K:

| |  |                                                                                                                                                                                                                       
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                                                                                                                                                                                                       
| |  | Current Report on Form 8-K dated April 22, 2003 reporting
items 7 and 9 and containing as an Exhibit the Press Release
dated April 21, 2003 issued by Liberty Property Trust and
Liberty Property Limited Partnership.



---

|* |  | Filed herewith
|- |  | --------------

28



---



##### 



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

LIBERTY PROPERTY TRUST

|                                                     |  |                
|---------------------------------------------------- |  | ---------------
|/s/ WILLIAM P. HANKOWSKY                             |  | August 11, 2003
|                                                     |  |                
|William P. Hankowsky                                 |  | Date           
|President and Chief Executive Officer                |  |                
|                                                     |  |                
|/s/ GEORGE J. ALBURGER, JR.                          |  | August 11, 2003
|                                                     |  |                
|George J. Alburger, Jr.                              |  | Date           
|Executive Vice President and Chief Financial Officer |  |                

29



---



##### 



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

LIBERTY PROPERTY LIMITED PARTNERSHIP

BY: Liberty Property Trust
      General Partner

|                                                                                                          |  |                      
|--------------------------------------------------------------------------------------------------------- |  | ---------------------
|/s/ WILLIAM P. HANKOWSKY

William P. Hankowsky
President and Chief Executive Officer                      |  | August 11, 2003

Date
|                                                                                                          |  |                      
|/s/ GEORGE J. ALBURGER, JR.

George J. Alburger, Jr.
Executive Vice President and Chief Financial Officer |  | August 11, 2003

Date

30



---



##### 



EXHIBIT INDEX

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT NO. |  | DESCRIPTION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|31.1*       |  | Certifications of the Chief Executive Officer of Liberty Property Trust
required by Rule 13a-14(a) under the Securities Exchange Act of 1934.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|31.2*       |  | Certifications of the Chief Financial Officer of Liberty Property Trust
required by Rule 13a-14(a) under the Securities Exchange Act of 1934.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|31.3*       |  | Certifications 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*       |  | Certifications 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*       |  | Certifications 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*       |  | Certifications 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*       |  | Certifications 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*       |  | Certifications 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.)

31