##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
 For the transition period from to
 Commission file numbers: 1-13130 (Liberty Property Trust)
1-13132 (Liberty Property Limited Partnership)
 
 LIBERTY PROPERTY TRUST
 LIBERTY PROPERTY LIMITED PARTNERSHIP
 
 (Exact name of registrants as specified in their governing documents)
 MARYLAND(Liberty Property Trust)PENNSYLVANIA(Liberty Property Limited Partnership)
    
    23-7768996
23-2766549(State or other jurisdiction 
of incorporation or organization)
    
    (I.R.S. Employer
Identification Number)500 Chesterfield ParkwayMalvern, Pennsylvania
    
    19355(Address of Principal Executive Offices)
    
    (Zip Code)
  þ o
  þ o o
 o þ




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##### 



Liberty Property Trust/Liberty Property Limited Partnership
Form 10-Q for the period ended March 31, 2007
 Index
    
    PagePART I. FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed consolidated balance sheets of Liberty Property Trust at March 31, 2007
and December 31, 2006
    
    
    3Condensed consolidated statements of operations of Liberty Property Trust for the
three months ended March 31, 2007 and March 31, 2006
    
    
    4Condensed consolidated statements of cash flows of Liberty Property Trust for the
three months ended March 31, 2007 and March 31, 2006
    
    
    5Notes to condensed consolidated financial statements of Liberty Property Trust
    
    
    6Condensed consolidated balance sheets of Liberty Property Limited Partnership at
March 31, 2007 and December 31, 2006
    
    
    11Condensed consolidated statements of operations of Liberty Property Limited
Partnership for the three months ended March 31, 2007 and March 31, 2006
    
    
    12Condensed consolidated statements of cash flows of Liberty Property Limited
Partnership for the three months ended March 31, 2007 and March 31, 2006
    
    
    13Notes to condensed consolidated financial statements of Liberty Property Limited
Partnership
    
    
    14Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    19Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    27Item 4. Controls and Procedures
    
    
    27PART II. OTHER INFORMATION
    
    
    28Signatures for Liberty Property Trust
    
    
    30Signatures for Liberty Property Limited Partnership
    
    
    31Exhibit Index
    
    
    32Statement Re: Computation of Ratio of Earnings to Fixed ChargesCertification of the Chief Executive OfficerCertification of the Chief Financial OfficerCertification of the Chief Executive Officer, in its capacity as the general partnerCertification of the Chief Financial Officer, in its capacity as the general partnerCertification of the Chief Executive Officer required under Rule 13a-14(b)Certification of the Chief Financial Officer required under Rule 13a-14(b)Certification of the Chief Executive Officer, in its capacity as the general partner, required by Rule 13a-14(b)Certification of the Chief Financial Officer, in its capacity as the general partner, required by Rule 13a-14(b)
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 CONDENSED CONSOLIDATED BALANCE SHEETS OF LIBERTY PROPERTY TRUST
(In thousands, except share amounts)
 March 31, 2007
    
    
    December 31, 2006(Unaudited)ASSETSReal estate:Land and land improvements
    
    $
    706,318
    
    
    $
    677,081Building and improvements
    
    
    3,872,496
    
    
    
    3,803,148Less accumulated depreciation
    
    
    (824,213
    )
    
    
    (804,025
    )Operating real estate
    
    
    3,754,601
    
    
    
    3,676,204Development in progress
    
    
    650,879
    
    
    
    538,303Land held for development
    
    
    241,169
    
    
    
    195,332Net real estate
    
    
    4,646,649
    
    
    
    4,409,839Cash and cash equivalents
    
    
    37,859
    
    
    
    53,737Restricted cash
    
    
    30,233
    
    
    
    55,671Accounts receivable
    
    
    26,412
    
    
    
    23,809Deferred rent receivable
    
    
    73,027
    
    
    
    71,894Deferred financing and leasing costs, net of accumulated amortization
(2007, $105,438; 2006, $100,406)
    
    
    134,817
    
    
    
    129,375Investments in unconsolidated joint ventures
    
    
    48,146
    
    
    
    47,196Assets held for sale
    
    
    10,291
    
    
    
    51,084Prepaid expenses and other assets
    
    
    64,792
    
    
    
    68,306Total assets
    
    $
    5,072,226
    
    
    $
    4,910,911LIABILITIESMortgage loans
    
    $
    183,867
    
    
    $
    185,978Unsecured notes
    
    
    1,955,000
    
    
    
    1,955,000Credit facility
    
    
    397,960
    
    
    
    246,960Accounts payable
    
    
    44,470
    
    
    
    40,633Accrued interest
    
    
    28,945
    
    
    
    36,297Dividend and distributions payable
    
    
    59,414
    
    
    
    58,961Other liabilities
    
    
    223,995
    
    
    
    217,751Total liabilities
    
    
    2,893,651
    
    
    
    2,741,580Minority interest
    
    
    297,321
    
    
    
    297,727SHAREHOLDERS EQUITYCommon shares of beneficial interest, $.001 par value, 187,987,000
shares authorized, 91,698,386 (includes 59,100 in treasury) and
90,972,979 (includes 59,100 in treasury) shares issued and
outstanding as of March 31, 2007 and December 31, 2006, respectively
    
    
    92
    
    
    
    91Additional paid-in capital
    
    
    1,932,737
    
    
    
    1,906,403Accumulated other comprehensive income
    
    
    20,757
    
    
    
    20,323Distributions in excess of net income
    
    
    (71,005
    )
    
    
    (53,886
    )Common shares in treasury, at cost, 59,100 shares as of March 31, 2007
and December 31, 2006
    
    
    (1,327
    )
    
    
    (1,327
    )Total shareholders equity
    
    
    1,881,254
    
    
    
    1,871,604Total liabilities and shareholders equity
    
    $
    5,072,226
    
    
    $
    4,910,911
  3




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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS OF LIBERTY PROPERTY TRUST
(Unaudited and in thousands, except per share amounts)
 Three Months EndedMarch 31, 2007
    
    
    March 31, 2006OPERATING REVENUERental
    
    $
    121,374
    
    
    $
    110,859Operating expense reimbursement
    
    
    54,513
    
    
    
    47,588Total operating revenue
    
    
    175,887
    
    
    
    158,447OPERATING EXPENSERental property
    
    
    39,375
    
    
    
    33,794Real estate taxes
    
    
    17,359
    
    
    
    16,547General and administrative
    
    
    13,339
    
    
    
    9,978Depreciation and amortization
    
    
    38,277
    
    
    
    34,055Total operating expenses
    
    
    108,350
    
    
    
    94,374Operating income
    
    
    67,537
    
    
    
    64,073OTHER INCOME (EXPENSE)Interest and other income
    
    
    2,949
    
    
    
    1,823Interest expense
    
    
    (28,156
    )
    
    
    (29,413
    )Total other income (expense)
    
    
    (25,207
    )
    
    
    (27,590
    )Income before property dispositions, income taxes, minority interest
and equity in earnings of unconsolidated joint ventures
    
    
    42,330
    
    
    
    36,483Gain on property dispositions
    
    
    152
    
    
    
    45Income taxes
    
    
    (301
    )
    
    
    (375
    )Minority interest
    
    
    (5,596
    )
    
    
    (4,656
    )Equity in earnings of unconsolidated joint ventures
    
    
    729
    
    
    
    175Income from continuing operations
    
    
    37,314
    
    
    
    31,672Discontinued operations, net of minority interest (including net gain on
property dispositions of $2,801 and $59,530 for the three months ended
March 31, 2007 and 2006, respectively)
    
    
    2,384
    
    
    
    58,755Net income
    
    $
    39,698
    
    
    $
    90,427Earnings per common shareBasic:Income from continuing operations
    
    $
    0.41
    
    
    $
    0.36Income from discontinued operations
    
    
    0.03
    
    
    
    0.66Income per common share  basic
    
    $
    0.44
    
    
    $
    1.02Diluted:Income from continuing operations
    
    $
    0.40
    
    
    $
    0.36Income from discontinued operations
    
    
    0.03
    
    
    
    0.65Income per common share  diluted
    
    $
    0.43
    
    
    $
    1.01Distributions per common share
    
    $
    0.62
    
    
    $
    0.615Weighted average number of common shares outstandingBasic
    
    
    91,036
    
    
    
    88,326Diluted
    
    
    92,018
    
    
    
    89,876
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS OF LIBERTY PROPERTY TRUST
(Unaudited and in thousands)
 Three Months EndedMarch 31, 2007
    
    
    March 31, 2006OPERATING ACTIVITIESNet income
    
    $
    39,698
    
    
    $
    90,427Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    38,167
    
    
    
    37,384Amortization of deferred financing costs
    
    
    993
    
    
    
    1,083Equity in earnings of unconsolidated joint ventures
    
    
    (729
    )
    
    
    (175
    )Distributions from unconsolidated joint ventures
    
    
    405
    
    
    
    366Minority interest in net income
    
    
    5,705
    
    
    
    6,983Gain on property dispositions
    
    
    (2,953
    )
    
    
    (59,575
    )Noncash compensation
    
    
    3,881
    
    
    
    2,311Changes in operating assets and liabilities:Restricted cash
    
    
    25,703
    
    
    
    10,125Accounts receivable
    
    
    (2,542
    )
    
    
    (13,295
    )Deferred rent receivable
    
    
    (2,304
    )
    
    
    2,674Prepaid expenses and other assets
    
    
    2,550
    
    
    
    (15,627
    )Accounts payable
    
    
    3,802
    
    
    
    2,787Accrued interest
    
    
    (7,352
    )
    
    
    (8,126
    )Other liabilities
    
    
    5,877
    
    
    
    (14,281
    )Net cash provided by operating activities
    
    
    110,901
    
    
    
    43,061INVESTING ACTIVITIESInvestment in properties
    
    
    (125,343
    )
    
    
    (47,753
    )Investments in unconsolidated joint ventures
    
    
    (185
    )
    
    
    (673
    )Net proceeds from disposition of properties/land
    
    
    82,776
    
    
    
    148,531Investment in development in progress
    
    
    (114,812
    )
    
    
    (68,772
    )Investment in land held for development
    
    
    (66,963
    )
    
    
    (11,198
    )Increase in deferred leasing costs
    
    
    (11,301
    )
    
    
    (5,244
    )Net cash (used in) provided by investing activities
    
    
    (235,828
    )
    
    
    14,891FINANCING ACTIVITIESNet proceeds from issuance of common shares
    
    
    22,953
    
    
    
    14,855Net proceeds from the issuance of preferred units
    
    
    (4
    )
    
    
    Repayments of mortgage loans
    
    
    (2,111
    )
    
    
    (21,034
    )Proceeds from credit facility
    
    
    330,950
    
    
    
    86,050Repayments on credit facility
    
    
    (179,950
    )
    
    
    (96,500
    )Increase in deferred financing costs
    
    
    (36
    )
    
    
    (213
    )Distributions paid on common shares
    
    
    (56,364
    )
    
    
    (54,326
    )Distributions paid on units
    
    
    (6,606
    )
    
    
    (5,797
    )Net cash provided by (used in) provided by financing activities
    
    
    108,832
    
    
    
    (76,965
    )Decrease in cash and cash equivalents
    
    
    (16,095
    )
    
    
    (19,013
    )Increase in cash and cash equivalents related to foreign currency translation
    
    
    217
    
    
    
    517Cash and cash equivalents at beginning of period
    
    
    53,737
    
    
    
    61,629Cash and cash equivalents at end of period
    
    $
    37,859
    
    
    $
    43,133SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONSWrite-off of fully depreciated property and deferred costs
    
    $
    24,443
    
    
    $
    17,432
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Liberty Property Trust
 
 Notes to Condensed Consolidated Financial Statements (Unaudited)
March 31, 2007
 Note 1: Organization and Basis of Presentation
 Organization
  Basis of Presentation
  Income per Common Share
  For the Three Months Ended March 31, 2007
    
    
    For the Three Months Ended March 31, 2006Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    
    
    
    
    AverageIncome
    
    
    Shares
    
    
    Per
    
    
    Income
    
    
    Shares
    
    
    Per(Numerator)
    
    
    (Denominator)
    
    
    Share
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    ShareBasic income from continuing operationsIncome from continuing operations
    
    $
    37,314
    
    
    
    91,036
    
    
    $
    0.41
    
    
    $
    31,672
    
    
    
    88,326
    
    
    $
    0.36Dilutive shares for long-term
compensation plans
    
    
    
    
    
    
    982
    
    
    
    
    
    
    
    
    
    
    
    1,550Diluted income from continuing operationsIncome from continuing operations and
assumed conversions
    
    
    37,314
    
    
    
    92,018
    
    
    $
    0.40
    
    
    
    31,672
    
    
    
    89,876
    
    
    $
    0.36Basic income from discontinued operationsDiscontinued operations net of minority interest
    
    
    2,384
    
    
    
    91,036
    
    
    $
    0.03
    
    
    
    58,755
    
    
    
    88,326
    
    
    $
    0.66Dilutive shares for long-term compensation
plans
    
    
    
    
    
    
    982
    
    
    
    
    
    
    
    
    
    
    
    1,550Diluted income from discontinued operationsDiscontinued operations net of minority interest
    
    
    2,384
    
    
    
    92,018
    
    
    $
    0.03
    
    
    
    58,755
    
    
    
    89,876
    
    
    $
    0.65Basic income per common shareNet income
    
    
    39,698
    
    
    
    91,036
    
    
    $
    0.44
    
    
    
    90,427
    
    
    
    88,326
    
    
    $
    1.02Dilutive shares for long-term compensation
plans
    
    
    
    
    
    
    982
    
    
    
    
    
    
    
    
    
    
    
    1,550Diluted income per common shareNet income and assumed conversions
    
    $
    39,698
    
    
    
    92,018
    
    
    $
    0.43
    
    
    $
    90,427
    
    
    
    89,876
    
    
    $
    1.01
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##### Table of Contents



Share Based Compensation
 Share-Based Payment
    Foreign Currency Translation
 Note 2: Segment Information
  Reportable Segments
    
    MarketsDelaware Valley
    
    Southeastern Pennsylvania; New JerseyMidwest
    
    Lehigh Valley, Pennsylvania; Michigan; Minnesota; Milwaukee; ChicagoMid-Atlantic
    
    Maryland; Piedmont Triad, NC; Greenville, SC; Richmond; Virginia BeachFlorida
    
    Jacksonville; Orlando; Boca Raton; Tampa; TexasArizona
    
    PhoenixUnited Kingdom
    
    County of Kent
 Disclosures about
Segments of an Enterprise and Related Information,
   7




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For the Three Months Ended March 31, 2007Delaware Valley
    
    
    MidwestSoutheastern
    
    
    
    
    
    
    Lehigh
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    UnitedPennsylvania
    
    
    Other
    
    
    Valley
    
    
    Other
    
    
    Mid-Atlantic
    
    
    Florida
    
    
    Arizona
    
    
    Kingdom
    
    
    TotalOperating revenue
    
    $
    43,777
    
    
    $
    13,913
    
    
    $
    21,077
    
    
    $
    27,812
    
    
    $
    32,413
    
    
    $
    34,535
    
    
    $
    1,015
    
    
    $
    1,345
    
    
    $
    175,887Rental property expenses
and real estate taxes
    
    
    15,003
    
    
    
    4,342
    
    
    
    4,884
    
    
    
    10,515
    
    
    
    10,215
    
    
    
    10,578
    
    
    
    177
    
    
    
    1,020
    
    
    
    56,734Property level operating
income
    
    $
    28,774
    
    
    $
    9,571
    
    
    $
    16,193
    
    
    $
    17,297
    
    
    $
    22,198
    
    
    $
    23,957
    
    
    $
    838
    
    
    $
    325
    
    
    
    119,153Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,949Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (28,156
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,339
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38,277
    )Income before property dispositions, income taxes, minority interest
and equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,330Gain on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    152Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (301
    )Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,596
    )Equity in earnings of unconsolidated joint ventures

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    729Discontinued operations, net of minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,384Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    39,698
 For the Three Months Ended March 31, 2006Delaware Valley
    
    
    MidwestSoutheastern
    
    
    
    
    
    
    Lehigh
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    UnitedPennsylvania
    
    
    Other
    
    
    Valley
    
    
    Other
    
    
    Mid-Atlantic
    
    
    Florida
    
    
    Arizona
    
    
    Kingdom
    
    
    TotalOperating revenue
    
    $
    41,645
    
    
    $
    12,895
    
    
    $
    21,801
    
    
    $
    28,210
    
    
    $
    27,961
    
    
    $
    25,070
    
    
    $
    
    
    
    $
    865
    
    
    $
    158,447Rental property expenses
and real estate taxes
    
    
    13,500
    
    
    
    3,857
    
    
    
    5,227
    
    
    
    10,269
    
    
    
    8,694
    
    
    
    8,043
    
    
    
    
    
    
    
    751
    
    
    
    50,341Property level operating
income
    
    $
    28,145
    
    
    $
    9,038
    
    
    $
    16,574
    
    
    $
    17,941
    
    
    $
    19,267
    
    
    $
    17,027
    
    
    $
    
    
    
    $
    114
    
    
    
    108,106Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,823Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (29,413
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,978
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34,055
    )Income before property dispositions, income taxes, minority interest
and
 equity in earnings of unconsolidated joint ventures


    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,483Gain on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (375
    )Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,656
    )Equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    175Discontinued operations, net of minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58,755Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    90,427
 8




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##### Table of Contents



Note 3: SFAS No. 144, Accounting For the Impairment or Disposal of Long-Lived Assets
   Three Months EndedMarch 31, 2007
    
    
    March 31, 2006Revenues
    
    $
    1,288
    
    
    $
    12,183Operating expenses
    
    
    (567
    )
    
    
    (4,505
    )Interest expense
    
    
    (771
    )
    
    
    (3,002
    )Depreciation and amortization
    
    
    (258
    )
    
    
    (3,124
    )(Loss) income before property dispositions and minority interest
    
    $
    (308
    )
    
    $
    1,552
  Allocation of Interest to Discontinued Operations
 Note 4: Joint Ventures
 Liberty/Commerz 1701 JFK Boulevard, LP
  Accounting for the Sale of Real Estate
 Liberty Illinois, LP
   9




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##### Table of Contents



Note 5: Recently Issued Accounting Standards
 SFAS No. 157
 Fair Value Measurements
 SFAS No. 159
 The Fair Value Option for Financial Assets
and Financial Liabilities
 FIN 48
 Accounting for Uncertainty in
Income Taxes Accounting for
Income Taxes
   Note 6: Commitments and Contingencies
  10




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##### Table of Contents



CONDENSED CONSOLIDATED BALANCE SHEETS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(In thousands)
 March 31, 2007
    
    
    December 31, 2006(Unaudited)ASSETSReal estate:Land and land improvements
    
    $
    706,318
    
    
    $
    677,081Building and improvements
    
    
    3,872,496
    
    
    
    3,803,148Less accumulated depreciation
    
    
    (824,213
    )
    
    
    (804,025
    )Operating real estate
    
    
    3,754,601
    
    
    
    3,676,204Development in progress
    
    
    650,879
    
    
    
    538,303Land held for development
    
    
    241,169
    
    
    
    195,332Net real estate
    
    
    4,646,649
    
    
    
    4,409,839Cash and cash equivalents
    
    
    37,859
    
    
    
    53,737Restricted cash
    
    
    30,233
    
    
    
    55,671Accounts receivable
    
    
    26,412
    
    
    
    23,809Deferred rent receivable
    
    
    73,027
    
    
    
    71,894Deferred financing and leasing costs, net of accumulated amortization
(2007, $105,438; 2006, $100,406)
    
    
    134,817
    
    
    
    129,375Investments in unconsolidated joint ventures
    
    
    48,146
    
    
    
    47,196Assets held for sale
    
    
    10,291
    
    
    
    51,084Prepaid expenses and other assets
    
    
    64,792
    
    
    
    68,306Total assets
    
    $
    5,072,226
    
    
    $
    4,910,911LIABILITIESMortgage loans
    
    $
    183,867
    
    
    $
    185,978Unsecured notes
    
    
    1,955,000
    
    
    
    1,955,000Credit facility
    
    
    397,960
    
    
    
    246,960Accounts payable
    
    
    44,470
    
    
    
    40,633Accrued interest
    
    
    28,945
    
    
    
    36,297Dividend and distributions payable
    
    
    59,414
    
    
    
    58,961Other liabilities
    
    
    223,995
    
    
    
    217,751Total liabilities
    
    
    2,893,651
    
    
    
    2,741,580Minority interest
    
    
    422
    
    
    
    419OWNERS EQUITYGeneral partners equity  common units
    
    
    1,881,254
    
    
    
    1,871,604Limited partners equity  preferred units
    
    
    210,955
    
    
    
    210,960 common units
    
    
    85,944
    
    
    
    86,348Total owners equity
    
    
    2,178,153
    
    
    
    2,168,912Total liabilities and owners equity
    
    $
    5,072,226
    
    
    $
    4,910,911
  11




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##### Table of Contents



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Unaudited and in thousands, except per unit amounts)
 Three Months EndedMarch 31, 2007
    
    
    March 31, 2006OPERATING REVENUERental
    
    $
    121,374
    
    
    $
    110,859Operating expense reimbursement
    
    
    54,513
    
    
    
    47,588Total operating revenue
    
    
    175,887
    
    
    
    158,447OPERATING EXPENSERental property
    
    
    39,375
    
    
    
    33,794Real estate taxes
    
    
    17,359
    
    
    
    16,547General and administrative
    
    
    13,339
    
    
    
    9,978Depreciation and amortization
    
    
    38,277
    
    
    
    34,055Total operating expenses
    
    
    108,350
    
    
    
    94,374Operating income
    
    
    67,537
    
    
    
    64,073OTHER INCOME (EXPENSE)Interest and other income
    
    
    2,949
    
    
    
    1,823Interest expense
    
    
    (28,156
    )
    
    
    (29,413
    )Total other income (expense)
    
    
    (25,207
    )
    
    
    (27,590
    )Income before property dispositions, income taxes, minority interest
and equity in earnings of unconsolidated joint ventures
    
    
    42,330
    
    
    
    36,483Gain on property dispositions
    
    
    152
    
    
    
    45Income taxes
    
    
    (301
    )
    
    
    (375
    )Minority interest
    
    
    (36
    )
    
    
    Equity in earnings of unconsolidated joint ventures
    
    
    729
    
    
    
    175Income from continuing operations
    
    
    42,874
    
    
    
    36,328Discontinued operations (including net gain on property dispositions of
$2,801 and $59,530 for the three months ended March 31, 2007 and
2006, respectively)
    
    
    2,493
    
    
    
    61,082Net income
    
    
    45,367
    
    
    
    97,410Preferred unit distributions
    
    
    (3,854
    )
    
    
    (3,401
    )Income available to common unitholders
    
    $
    41,513
    
    
    $
    94,009Earnings per common unitBasic:Income from continuing operations
    
    $
    0.41
    
    
    $
    0.36Income from discontinued operations
    
    
    0.03
    
    
    
    0.66Income per common unit  basic
    
    $
    0.44
    
    
    $
    1.02Diluted:Income from continuing operations
    
    $
    0.40
    
    
    $
    0.36Income from discontinued operations
    
    
    0.03
    
    
    
    0.65Income per common unit  diluted
    
    $
    0.43
    
    
    $
    1.01Distributions per common unit
    
    $
    0.62
    
    
    $
    0.615Weighted average number of common units outstandingBasic
    
    
    95,226
    
    
    
    91,844Diluted
    
    
    96,208
    
    
    
    93,394
  12




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##### Table of Contents



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Unaudited and in thousands)
 Three Months EndedMarch 31, 2007
    
    
    March 31, 2006OPERATING ACTIVITIESNet income
    
    $
    45,367
    
    
    $
    97,410Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    38,167
    
    
    
    37,384Amortization of deferred financing costs
    
    
    993
    
    
    
    1,083Equity in earnings of unconsolidated joint ventures
    
    
    (729
    )
    
    
    (175
    )Distributions from unconsolidated joint ventures
    
    
    405
    
    
    
    366Minority interest in net income
    
    
    36
    
    
    
    Gain on property dispositions
    
    
    (2,953
    )
    
    
    (59,575
    )Noncash compensation
    
    
    3,881
    
    
    
    2,311Changes in operating assets and liabilities:Restricted cash
    
    
    25,703
    
    
    
    10,125Accounts receivable
    
    
    (2,542
    )
    
    
    (13,295
    )Deferred rent receivable
    
    
    (2,304
    )
    
    
    2,674Prepaid expenses and other assets
    
    
    2,550
    
    
    
    (15,627
    )Accounts payable
    
    
    3,802
    
    
    
    2,787Accrued interest
    
    
    (7,352
    )
    
    
    (8,126
    )Other liabilities
    
    
    5,877
    
    
    
    (14,281
    )Net cash provided by operating activities
    
    
    110,901
    
    
    
    43,061INVESTING ACTIVITIESInvestment in properties
    
    
    (125,343
    )
    
    
    (47,753
    )Investment in unconsolidated joint ventures
    
    
    (185
    )
    
    
    (673
    )Net proceeds from disposition of properties/land
    
    
    82,776
    
    
    
    148,531Investment in development in progress
    
    
    (114,812
    )
    
    
    (68,772
    )Investment in land held for development
    
    
    (66,963
    )
    
    
    (11,198
    )Increase in deferred leasing costs
    
    
    (11,301
    )
    
    
    (5,244
    )Net cash (used in) provided by investing activities
    
    
    (235,828
    )
    
    
    14,891FINANCING ACTIVITIESRepayments of mortgage loans
    
    
    (2,111
    )
    
    
    (21,034
    )Proceeds from credit facility
    
    
    330,950
    
    
    
    86,050Repayments on credit facility
    
    
    (179,950
    )
    
    
    (96,500
    )Increase in deferred financing costs
    
    
    (36
    )
    
    
    (213
    )Capital contributions
    
    
    22,949
    
    
    
    14,855Distributions to partners
    
    
    (62,970
    )
    
    
    (60,123
    )Net cash provided by (used in) financing activities
    
    
    108,832
    
    
    
    (76,965
    )Decrease in cash and cash equivalents
    
    
    (16,095
    )
    
    
    (19,013
    )Increase in cash and cash equivalents related to foreign currency translation
    
    
    217
    
    
    
    517Cash and cash equivalents at beginning of period
    
    
    53,737
    
    
    
    61,629Cash and cash equivalents at end of period
    
    $
    37,859
    
    
    $
    43,133SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONSWrite-off of fully depreciated property and deferred costs
    
    $
    24,443
    
    
    $
    17,432
  13




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##### Table of Contents



Liberty Property Limited Partnership
 
 Notes to Condensed Consolidated Financial Statements (Unaudited)
March 31, 2007
 Note 1: Organization and Basis of Presentation
 Organization
  Basis of Presentation
  Income per Common Unit
  For the Three Months Ended March 31, 2007
    
    
    For the Three Months Ended March 31, 2006Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    
    
    
    
    AverageIncome
    
    
    Units
    
    
    Per
    
    
    Income
    
    
    Units
    
    
    Per(Numerator)
    
    
    (Denominator)
    
    
    Unit
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    UnitIncome from continuing operations
    
    $
    42,874
    
    
    
    
    
    
    
    
    
    
    $
    36,328Less: Preferred unit distributions
    
    
    (3,854
    )
    
    
    
    
    
    
    
    
    
    
    (3,401
    )Basic income from continuing operationsIncome from continuing operations
available to common unitholders
    
    
    39,020
    
    
    
    95,226
    
    
    $
    0.41
    
    
    
    32,927
    
    
    
    91,844
    
    
    $
    0.36Dilutive units for long-term
compensation plans
    
    
    
    
    
    
    982
    
    
    
    
    
    
    
    
    
    
    
    1,550Diluted income from continuing operationsIncome from continuing operations available
to common unitholders and assumed
conversions
    
    
    39,020
    
    
    
    96,208
    
    
    $
    0.40
    
    
    
    32,927
    
    
    
    93,394
    
    
    $
    0.36Basic income from discontinued operationsDiscontinued operations
    
    
    2,493
    
    
    
    95,226
    
    
    $
    0.03
    
    
    
    61,082
    
    
    
    91,844
    
    
    $
    0.66Dilutive units for long-term compensation
plans
    
    
    
    
    
    
    982
    
    
    
    
    
    
    
    
    
    
    
    1,550Diluted income from discontinued operationsDiscontinued operations
    
    
    2,493
    
    
    
    96,208
    
    
    $
    0.03
    
    
    
    61,082
    
    
    
    93,394
    
    
    $
    0.65Basic income per common unitIncome available to common unitholders
    
    
    41,513
    
    
    
    95,226
    
    
    $
    0.44
    
    
    
    94,009
    
    
    
    91,844
    
    
    $
    1.02Dilutive units for long-term compensation
plans
    
    
    
    
    
    
    982
    
    
    
    
    
    
    
    
    
    
    
    1,550Diluted income per common unitIncome available to common unitholders
and assumed conversions
    
    $
    41,513
    
    
    
    96,208
    
    
    $
    0.43
    
    
    $
    94,009
    
    
    
    93,394
    
    
    $
    1.01
 14




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##### Table of Contents



Foreign Currency Translation
  Note 2: Segment Information
  Reportable Segments
    
    MarketsDelaware Valley
    
    Southeastern Pennsylvania; New JerseyMidwest
    
    Lehigh Valley, Pennsylvania; Michigan; Minnesota; Milwaukee; ChicagoMid-Atlantic
    
    Maryland; Piedmont Triad, NC; Greenville, SC; Richmond; Virginia BeachFlorida
    
    Jacksonville; Orlando; Boca Raton; Tampa; TexasArizona
    
    PhoenixUnited Kingdom
    
    County of Kent
 Disclosures about
Segments of an Enterprise and Related Information
   For the Three Months Ended March 31, 2007Delaware Valley
    
    
    MidwestSoutheastern
    
    
    
    
    
    
    Lehigh
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    UnitedPennsylvania
    
    
    Other
    
    
    Valley
    
    
    Other
    
    
    Mid-Atlantic
    
    
    Florida
    
    
    Arizona
    
    
    Kingdom
    
    
    TotalOperating revenue
    
    $
    43,777
    
    
    $
    13,913
    
    
    $
    21,077
    
    
    $
    27,812
    
    
    $
    32,413
    
    
    $
    34,535
    
    
    $
    1,015
    
    
    $
    1,345
    
    
    $
    175,887Rental property expenses
and real estate taxes
    
    
    15,003
    
    
    
    4,342
    
    
    
    4,884
    
    
    
    10,515
    
    
    
    10,215
    
    
    
    10,578
    
    
    
    177
    
    
    
    1,020
    
    
    
    56,734Property level operating
income
    
    $
    28,774
    
    
    $
    9,571
    
    
    $
    16,193
    
    
    $
    17,297
    
    
    $
    22,198
    
    
    $
    23,957
    
    
    $
    838
    
    
    $
    325
    
    
    
    119,153Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,949Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (28,156
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,339
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38,277
    )Income before property dispositions, income taxes, minority interest
and
 equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,330Gain on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    152Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (301
    )Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36
    )Equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    729Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,493Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    45,367
 15




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##### Table of Contents



For the Three Months Ended March 31, 2006Delaware Valley
    
    
    MidwestSoutheastern
    
    
    
    
    
    
    Lehigh
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    UnitedPennsylvania
    
    
    Other
    
    
    Valley
    
    
    Other
    
    
    Mid-Atlantic
    
    
    Florida
    
    
    Arizona
    
    
    Kingdom
    
    
    TotalOperating revenue
    
    $
    41,645
    
    
    $
    12,895
    
    
    $
    21,801
    
    
    $
    28,210
    
    
    $
    27,961
    
    
    $
    25,070
    
    
    $
    
    
    
    $
    865
    
    
    $
    158,447Rental property expenses
and real estate taxes
    
    
    13,500
    
    
    
    3,857
    
    
    
    5,227
    
    
    
    10,269
    
    
    
    8,694
    
    
    
    8,043
    
    
    
    
    
    
    
    751
    
    
    
    50,341Property level operating
income
    
    $
    28,145
    
    
    $
    9,038
    
    
    $
    16,574
    
    
    $
    17,941
    
    
    $
    19,267
    
    
    $
    17,027
    
    
    $
    
    
    
    $
    114
    
    
    
    108,106Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,823Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (29,413
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,978
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34,055
    )Income before property dispositions, income taxes, minority interest
and
 equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,483Gain on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (375
    )Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    175Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61,082Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    97,410
 Note 3: SFAS No. 144, Accounting For the Impairment or Disposal of Long-Lived Assets
   Three Months EndedMarch 31, 2007
    
    
    March 31, 2006Revenues
    
    $
    1,288
    
    
    $
    12,183Operating expenses
    
    
    (567
    )
    
    
    (4,505
    )Interest expense
    
    
    (771
    )
    
    
    (3,002
    )Depreciation and amortization
    
    
    (258
    )
    
    
    (3,124
    )(Loss) income before property dispositions and minority interest
    
    $
    (308
    )
    
    $
    1,552
  Allocation of Interest to Discontinued Operations
 16




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##### Table of Contents



Note 4: Joint Ventures
 Liberty/Commerz 1701 JFK Boulevard, LP
  Accounting for the Sale of Real Estate
 Liberty Illinois, LP
   Note 5: Recently Issued Accounting Standards
 SFAS No. 157
 Fair Value Measurements
 SFAS No. 159
 The Fair Value Option for Financial Assets
and Financial Liabilities
 FIN 48
 Accounting for Uncertainty in
Income Taxes Accounting for
Income Taxes
  17




---



##### Table of Contents



Note 6: Commitments and Contingencies
  18




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Overview
       19




---



##### Table of Contents



Net RentPer Square Foot
    
    
    Total Square Feet
    
    
    Percent OccupiedMarch 31,
    
    
    March 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Industrial-Distribution
    
    $
    4.27
    
    
    $
    4.17
    
    
    
    32,949
    
    
    
    30,967
    
    
    
    92.0
    %
    
    
    92.9
    %Industrial-Flex
    
    $
    9.14
    
    
    $
    8.77
    
    
    
    12,520
    
    
    
    12,545
    
    
    
    92.9
    %
    
    
    92.9
    %Office
    
    $
    13.94
    
    
    $
    14.20
    
    
    
    21,053
    
    
    
    20,351
    
    
    
    91.8
    %
    
    
    88.9
    %$
    8.25
    
    
    $
    8.19
    
    
    
    66,522
    
    
    
    63,863
    
    
    
    92.1
    %
    
    
    91.6
    %
  Forward-Looking Statements
  Critical Accounting Policies and Estimates
  Results of Operations
  20




---



##### Table of Contents



Comparison of Three Months Ended March 31, 2007 to Three Months Ended March 31, 2006
 Overview
   Segments
   Three Months EndedMar. 31, 2007
    
    
    Mar. 31, 2006
    
    
    % inc (dec)Delaware Valley SE Pennsylvania
    
    $
    28,774
    
    
    $
    28,145
    
    
    
    2.2
    % Other
    
    
    9,571
    
    
    
    9,038
    
    
    
    5.9
    %Midwest Lehigh Valley
    
    
    16,193
    
    
    
    16,574
    
    
    
    (2.3
    %) Other
    
    
    17,297
    
    
    
    17,941
    
    
    
    (3.6
    %)Mid-Atlantic
    
    
    22,198
    
    
    
    19,267
    
    
    
    15.2
    %(1)Florida
    
    
    23,957
    
    
    
    17,027
    
    
    
    40.7
    %(2)Arizona
    
    
    838
    
    
    
    
    
    
    
    100.0
    %(3)United Kingdom
    
    
    325
    
    
    
    114
    
    
    
    185.1
    %(3)Totals
    
    $
    119,153
    
    
    $
    108,106
    
    
    
    10.2
    %
 
 (1)
    
    The increase for the quarter ended March 31, 2007 versus the quarter ended March
31, 2006 is primarily due to an increase in average gross investment in operating
real estate and increased occupancy during 2007.(2)
    
    The increase for the quarter ended March 31, 2007 versus the quarter ended March
31, 2006 is primarily due to an increase in average gross investment in operating
real estate and increased occupancy during 2007, excluding the vacant first quarter
acquisitions.(3)
    
    The increase for the quarter ended March 31, 2007 versus the quarter ended March
31, 2006 is due to an increase in average gross investment in operating real estate. Same Store
   21




---



##### Table of Contents



Three Months EndedMarch 31, 2007
    
    
    March 31, 2006Same Store:Rental revenue
    
    $
    110,088
    
    
    $
    106,671Operating expenses:Rental property expense
    
    
    35,522
    
    
    
    32,776Real estate taxes
    
    
    15,929
    
    
    
    15,587Operating expense recovery
    
    
    (49,870
    )
    
    
    (45,997
    )Unrecovered operating expenses
    
    
    1,581
    
    
    
    2,366Property level operating income
    
    
    108,507
    
    
    
    104,305Less straight line rent
    
    
    882
    
    
    
    1,686Cash basis property level operating income
    
    $
    107,625
    
    
    $
    102,619Reconciliation of non-GAAP financial measure:Property level operating income  Same Store
    
    $
    108,507
    
    
    $
    104,305Property level operating income  properties purchased
or developed subsequent to January 1, 2006
    
    
    9,926
    
    
    
    2,713Termination fees
    
    
    720
    
    
    
    1,088General and administrative expense
    
    
    (13,339
    )
    
    
    (9,978
    )Depreciation and amortization expense
    
    
    (38,277
    )
    
    
    (34,055
    )Other income (expense)
    
    
    (25,207
    )
    
    
    (27,590
    )Gain on property dispositions
    
    
    152
    
    
    
    45Income taxes
    
    
    (301
    )
    
    
    (375
    )Minority interest
    
    
    (5,596
    )
    
    
    (4,656
    )Equity in earnings of unconsolidated joint ventures
    
    
    729
    
    
    
    175Discontinued operations, net of minority interest
    
    
    2,384
    
    
    
    58,755Net income
    
    $
    39,698
    
    
    $
    90,427
 General and Administrative
  Depreciation and Amortization
  Interest Expense
  22




---



##### Table of Contents



Other
     Liquidity and Capital Resources
        23




---



##### Table of Contents



MORTGAGES
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    WEIGHTEDPRINCIPAL
    
    
    PRINCIPAL
    
    
    UNSECURED
    
    
    CREDIT
    
    
    
    
    
    
    AVERAGEAMORTIZATION
    
    
    MATURITIES
    
    
    NOTES
    
    
    FACILITY
    
    
    TOTAL
    
    
    INTEREST RATE2007 (9 months)
    
    $
    6,709
    
    
    $
    1,553
    
    
    $
    100,000
    
    
    $
    
    
    
    $
    108,262
    
    
    
    7.23
    %2008
    
    
    7,975
    
    
    
    39,753
    
    
    
    
    
    
    
    152,960
    (1)
    
    
    200,688
    
    
    
    5.92
    %2009
    
    
    5,699
    
    
    
    46,148
    
    
    
    270,000
    
    
    
    
    
    
    
    321,847
    
    
    
    7.77
    %2010
    
    
    4,877
    
    
    
    4,738
    
    
    
    200,000
    
    
    
    245,000
    
    
    
    454,615
    
    
    
    6.86
    %2011
    
    
    4,153
    
    
    
    10,730
    
    
    
    250,000
    
    
    
    
    
    
    
    264,883
    
    
    
    7.26
    %2012
    
    
    3,274
    
    
    
    32,911
    
    
    
    235,000
    
    
    
    
    
    
    
    271,185
    
    
    
    6.47
    %2013
    
    
    2,751
    
    
    
    
    
    
    
    -
    
    
    
    
    
    
    
    2,751
    
    
    
    6.00
    %2014
    
    
    2,894
    
    
    
    2,681
    
    
    
    200,000
    
    
    
    
    
    
    
    205,575
    
    
    
    5.65
    %2015
    
    
    3,033
    
    
    
    
    
    
    
    300,000
    
    
    
    
    
    
    
    303,033
    
    
    
    5.13
    %2016
    
    
    2,220
    
    
    
    
    
    
    
    300,000
    
    
    
    
    
    
    
    302,220
    
    
    
    5.50
    %2017 & thereafter
    
    
    1,768
    
    
    
    
    
    
    
    100,000
    
    
    
    
    
    
    
    101,768
    
    
    
    7.47
    %$
    45,353
    
    
    $
    138,514
    
    
    $
    1,955,000
    
    
    $
    397,960
    
    
    $
    2,536,827
    
    
    
    6.47
    %
 
 (1)
    
    Represents a deposit by the joint venture partner in the Comcast Center (see
Note 4 to the Companys financial statements) which bears interest at the greater of
5% or the current rate on the $600 million Credit Facility until development of the
Comcast Center building is completed.  General
   Industrial-
    
    
    Industrial-Distribution
    
    
    Flex
    
    
    Office
    
    
    TotalSquare
    
    
    Annual
    
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annual
    
    
    Square
    
    
    AnnualFeet
    
    
    Net Rent
    
    
    Feet
    
    
    Net Rent
    
    
    Feet
    
    
    Net Rent
    
    
    Feet
    
    
    Net Rent2007 (9 months)
    
    
    3,084
    
    
    $
    12,553
    
    
    
    1,219
    
    
    $
    11,617
    
    
    
    1,543
    
    
    $
    20,508
    
    
    
    5,846
    
    
    $
    44,6782008
    
    
    4,418
    
    
    
    18,018
    
    
    
    2,383
    
    
    
    22,313
    
    
    
    2,511
    
    
    
    37,261
    
    
    
    9,312
    
    
    
    77,5922009
    
    
    4,787
    
    
    
    21,644
    
    
    
    1,833
    
    
    
    16,876
    
    
    
    2,933
    
    
    
    44,780
    
    
    
    9,553
    
    
    
    83,3002010
    
    
    2,843
    
    
    
    13,954
    
    
    
    1,738
    
    
    
    16,964
    
    
    
    2,687
    
    
    
    40,003
    
    
    
    7,268
    
    
    
    70,9212011
    
    
    3,717
    
    
    
    16,930
    
    
    
    1,250
    
    
    
    12,930
    
    
    
    2,458
    
    
    
    39,553
    
    
    
    7,425
    
    
    
    69,4132012
    
    
    3,345
    
    
    
    16,792
    
    
    
    1,146
    
    
    
    11,152
    
    
    
    2,072
    
    
    
    34,797
    
    
    
    6,563
    
    
    
    62,741Thereafter
    
    
    8,134
    
    
    
    44,472
    
    
    
    2,065
    
    
    
    24,533
    
    
    
    5,128
    
    
    
    86,044
    
    
    
    15,327
    
    
    
    155,049TOTAL
    
    
    30,328
    
    
    $
    144,363
    
    
    
    11,634
    
    
    $
    116,385
    
    
    
    19,332
    
    
    $
    302,946
    
    
    
    61,294
    
    
    $
    563,694
  24




---



##### Table of Contents



Square FeetScheduled
    
    Industrial-
    
    
    Industrial-
    
    
    
    
    
    
    
    
    
    
    Percent
    
    
    TotalIn-Service Date
    
    Distribution
    
    
    Flex
    
    
    Office
    
    
    Total
    
    
    Leased
    
    
    Investment2nd Quarter 2007
    
    
    1,656,172
    
    
    
    117,200
    
    
    
    159,638
    
    
    
    1,933,010
    
    
    
    62.0
    %
    
    $
    135,3703rd Quarter 2007
    
    
    551,759
    
    
    
    139,487
    
    
    
    230,000
    
    
    
    921,246
    
    
    
    86.8
    %
    
    
    90,9624th Quarter 2007
    
    
    968,000
    
    
    
    
    
    
    
    450,000
    
    
    
    1,418,000
    
    
    
    60.8
    %
    
    
    126,4201st Quarter 2008
    
    
    120,000
    
    
    
    
    
    
    
    73,583
    
    
    
    193,583
    
    
    
    26.0
    %
    
    
    16,5482nd Quarter 2008
    
    
    447,700
    
    
    
    208,177
    
    
    
    201,344
    
    
    
    857,221
    
    
    
    14.9
    %
    
    
    95,2573rd Quarter 2008
    
    
    189,400
    
    
    
    115,600
    
    
    
    1,356,923
    
    
    
    1,661,923
    
    
    
    68.8
    %
    
    
    535,9764th Quarter 2008
    
    
    837,540
    
    
    
    
    
    
    
    
    
    
    
    837,540
    
    
    
    
    
    
    
    39,3831st Quarter 2009
    
    
    
    
    
    
    
    
    
    
    185,964
    
    
    
    185,964
    
    
    
    
    
    
    
    42,946TOTAL
    
    
    4,770,571
    
    
    
    580,464
    
    
    
    2,657,452
    
    
    
    8,008,487
    
    
    
    52.2
    %
    
    $
    1,082,862
   Calculation of Funds from Operations
   25




---



##### Table of Contents



Three Months EndedMarch 31,2007
    
    
    2006Reconciliation of net income to FFO  basicNet Income
    
    $
    39,698
    
    
    $
    90,427Basic  Income available to common shareholders
    
    
    39,698
    
    
    
    90,427Basic  income available to common shareholders per weighted
average share
    
    $
    0.44
    
    
    $
    1.02Adjustments:Depreciation and amortization of unconsolidated joint ventures
    
    
    841
    
    
    
    553Depreciation and amortization
    
    
    37,927
    
    
    
    36,591Gain on property dispositions
    
    
    (3,387
    )
    
    
    (59,646
    )Minority interest share in addback for depreciation and amortization
and gain on property dispositions
    
    
    (1,546
    )
    
    
    857Funds from operations available to common shareholders   basic
    
    $
    73,533
    
    
    $
    68,782Basic Funds from operations available to common shareholders per
weighted average share
    
    $
    0.81
    
    
    $
    0.78Reconciliation of net income to FFO  diluted:Net Income
    
    $
    39,698
    
    
    $
    90,427Diluted  income available to common shareholders
    
    
    39,698
    
    
    
    90,427Diluted  income available to common shareholders per weighted
average share
    
    $
    0.43
    
    
    $
    1.01Adjustments:Depreciation and amortization of unconsolidated joint ventures
    
    
    841
    
    
    
    553Depreciation and amortization
    
    
    37,927
    
    
    
    36,591Gain on property dispositions
    
    
    (3,387
    )
    
    
    (59,646
    )Minority interest less preferred share distributions
    
    
    1,815
    
    
    
    3,582Funds from operations available to common shareholders  diluted
    
    $
    76,894
    
    
    $
    71,507Diluted Funds from operations available to common shareholders per
weighted average share
    
    $
    0.80
    
    
    $
    0.77Reconciliation of weighted average shares:Weighted average common shares  all basic calculations
    
    
    91,036
    
    
    
    88,326Dilutive shares for long term compensation plans
    
    
    982
    
    
    
    1,550Diluted shares for net income calculations
    
    
    92,018
    
    
    
    89,876Weighted average common units
    
    
    4,190
    
    
    
    3,518Diluted shares for Funds from operations calculations
    
    
    96,208
    
    
    
    93,394
 Inflation
  26




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls
  27




---



##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1.
    
    Legal ProceedingsNone.Item 1A.
    
    Risk FactorsThere have been no material changes to the risk factors disclosed in Item 1A of
Part 1 Risk Factors, in our Form 10-K for the year ended December 31, 2006.Item 2.
    
    Unregistered Sales of Equity Securities and Use of ProceedsNone.Item 3.
    
    Defaults upon Senior SecuritiesNone.Item 4.
    
    Submission of Matters to a Vote of Security HoldersNone.Item 5.
    
    Other InformationNone.
 28




---



##### Table of Contents



Item 6.
    
    Exhibits
 12.1*
    
    Statement Re: Computation of Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed Charges.31.1*
    
    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.)
 
 *
    
    Filed herewith. 29




---



##### Table of Contents



SIGNATURES
  LIBERTY PROPERTY TRUST/s/ WILLIAM P. HANKOWSKY

William P. Hankowsky
    
    
    
    May 7, 2007

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

George J. Alburger, Jr.
    
    
    
    May 7, 2007

DateExecutive Vice President and Chief Financial Officer
 30




---



##### Table of Contents



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

William P. Hankowsky
    
    
    
    May 7, 2007

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

George J. Alburger, Jr.
    
    
    
    May 7, 2007

DateExecutive Vice President and Chief Financial Officer
 31




---



##### Table of Contents



EXHIBIT INDEX
 EXHIBITNO.
    
    DESCRIPTION
 12.1
    
    Statement Re: Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings
to Combined Fixed Charges.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.)
 32