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




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##### 



Liberty Property Trust/Liberty Property Limited Partnership
Form 10-Q for the period ended September 30, 2008
 Index
    
    
    
    PagePART I.
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (Unaudited)Condensed consolidated balance sheets of Liberty Property Trust at September
30, 2008 and December 31, 2007
    
    
    4Condensed consolidated statements of operations of Liberty Property Trust for
the three months ended September 30, 2008 and September 30, 2007
    
    
    5Condensed consolidated statements of operations of Liberty Property Trust for
the nine months ended September 30, 2008 and September 30, 2007
    
    
    6Condensed consolidated statements of cash flows of Liberty Property Trust for
the nine months ended September 30, 2008 and September 30, 2007
    
    
    7Notes to condensed consolidated financial statements of Liberty Property Trust
    
    
    8Condensed consolidated balance sheets of Liberty Property Limited Partnership
at September 30, 2008 and December 31, 2007
    
    
    15Condensed consolidated statements of operations of Liberty Property Limited
Partnership for the three months ended September 30, 2008 and September 30,
2007
    
    
    16Condensed consolidated statements of operations of Liberty Property Limited
Partnership for the nine months ended September 30, 2008 and September 30,
2007
    
    
    17Condensed consolidated statements of cash flows of Liberty Property Limited
Partnership for the nine months ended September 30, 2008 and September 30,
2007
    
    
    18Notes to condensed consolidated financial statements of Liberty Property
Limited Partnership
    
    
    19Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    27Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    39Item 4.
    
    Controls and Procedures
    
    
    39PART II.
    
    OTHER INFORMATION
    
    
    40Item 1.
    
    Legal Proceedings
    
    
    40Item 1A.
    
    Risk Factors
    
    
    40Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    40Item 3.
    
    Defaults Upon Senior Securities
    
    
    40Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    40Item 5.
    
    Other Information
    
    
    41Item 6.
    
    Exhibits
    
    
    42Signatures for Liberty Property Trust
    
    
    43Signatures for Liberty Property Limited Partnership
    
    
    44
 2




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##### 



Index
    
    
    
    PageExhibit Index
    
    
    
    
    45STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND RATIO OF EARNINGS TO COMBINED FIXED CHARGESCERTIFICATION OF CEO OF LIBERTY PROPERTY TRUST REQUIRED BY
RULE 13A-14(A)CERTIFICATION OF CFO OF LIBERTY PROPERTY TRUST REQUIRED BY
RULE 13A-14(A)CERTIFICATION OF CEO OF LIBERTY PROPERTY TRUST, IN ITS CAPACITY AS THE GENERAL PARTNER OF LIBERTY PROPERTY
LIMITED PARTNERSHIP, REQUIRED BY RULE 13A-14(A)CERTIFICATION OF CFO OF LIBERTY PROPERTY TRUST, IN ITS CAPACITY AS THE GENERAL PARTNER OF LIBERTY PROPERTY
LIMITED PARTNERSHIP, REQUIRED BY RULE 13A-14(A)CERTIFICATION OF CEO OF LIBERTY PROPERTY TRUST REQUIRED BY RULE 13A-14(B)CERTIFICATION OF CFO OF LIBERTY PROPERTY TRUST REQUIRED BY RULE 13A-14(B)CERTIFICATION OF CEO OF LIBERTY PROPERTY TRUST, IN ITS CAPACITY AS THE GENERAL PARTNER OF LIBERTY PROPERTY
LIMITED PARTNERSHIP, REQUIRED BY RULE 13A-14(B)CERTIFICATION OF CFO OF LIBERTY PROPERTY TRUST, IN ITS CAPACITY AS THE GENERAL PARTNER OF LIBERTY PROPERTY
LIMITED PARTNERSHIP, REQUIRED BY RULE 13A-14(B)
 3




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##### 



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 CONDENSED CONSOLIDATED BALANCE SHEETS OF LIBERTY PROPERTY TRUST
(In thousands, except share amounts)
 September 30, 2008
    
    
    December 31, 2007(Unaudited)ASSETSReal estate:Land and land improvements
    
    $
    805,797
    
    
    $
    795,939Building and improvements
    
    
    4,235,427
    
    
    
    4,432,690Less accumulated depreciation
    
    
    (956,732
    )
    
    
    (863,193
    )Operating real estate
    
    
    4,084,492
    
    
    
    4,365,436Development in progress
    
    
    294,227
    
    
    
    328,138Land held for development
    
    
    227,003
    
    
    
    247,124Net real estate
    
    
    4,605,722
    
    
    
    4,940,698Cash and cash equivalents
    
    
    29,278
    
    
    
    37,989Restricted cash
    
    
    41,638
    
    
    
    34,567Accounts receivable
    
    
    18,782
    
    
    
    17,405Deferred rent receivable
    
    
    82,653
    
    
    
    80,087Deferred financing and leasing costs, net of accumulated
amortization (2008, $136,565; 2007,
$119,721)
    
    
    132,023
    
    
    
    144,684Investments in and advances to unconsolidated joint ventures
    
    
    255,317
    
    
    
    278,383Assets held for sale
    
    
    2,145
    
    
    
    2,192Prepaid expenses and other assets
    
    
    99,139
    
    
    
    107,932Total assets
    
    $
    5,266,697
    
    
    $
    5,643,937LIABILITIESMortgage loans
    
    $
    205,450
    
    
    $
    243,169Unsecured notes
    
    
    2,155,000
    
    
    
    2,155,000Credit facility
    
    
    370,000
    
    
    
    622,960Accounts payable
    
    
    54,302
    
    
    
    44,666Accrued interest
    
    
    38,063
    
    
    
    39,725Dividend and distributions payable
    
    
    60,991
    
    
    
    59,849Other liabilities
    
    
    207,395
    
    
    
    268,926Total liabilities
    
    
    3,091,201
    
    
    
    3,434,295Minority interest
    
    
    369,839
    
    
    
    372,621SHAREHOLDERS EQUITYCommon shares of beneficial interest, $.001 par value,
183,987,000 shares authorized; 94,645,598 (includes
1,249,909 in treasury) and 92,817,879 (includes 1,249,909
in treasury) shares issued and outstanding as of September
30, 2008 and December 31, 2007, respectively
    
    
    94
    
    
    
    93Additional paid-in capital
    
    
    2,037,360
    
    
    
    1,984,141Accumulated other comprehensive income
    
    
    10,750
    
    
    
    21,378Distributions in excess of net income
    
    
    (190,596
    )
    
    
    (116,640
    )Common shares in treasury, at cost, 1,249,909 shares as of
September 30, 2008 and December 31, 2007
    
    
    (51,951
    )
    
    
    (51,951
    )Total shareholders equity
    
    
    1,805,657
    
    
    
    1,837,021Total liabilities and shareholders equity
    
    $
    5,266,697
    
    
    $
    5,643,937
  4




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##### 



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS OF LIBERTY PROPERTY TRUST
(Unaudited and in thousands, except per share amounts)
 Three Months EndedSeptember 30, 2008
    
    
    September 30, 2007OPERATING REVENUERental
    
    $
    131,042
    
    
    $
    122,864Operating expense reimbursement
    
    
    57,935
    
    
    
    52,254Total operating revenue
    
    
    188,977
    
    
    
    175,118OPERATING EXPENSERental property
    
    
    38,468
    
    
    
    36,121Real estate taxes
    
    
    22,305
    
    
    
    19,299General and administrative
    
    
    13,145
    
    
    
    13,142Depreciation and amortization
    
    
    44,695
    
    
    
    40,146Total operating expenses
    
    
    118,613
    
    
    
    108,708Operating income
    
    
    70,364
    
    
    
    66,410OTHER INCOME (EXPENSE)Interest and other income
    
    
    3,333
    
    
    
    2,443Interest expense
    
    
    (38,909
    )
    
    
    (33,043
    )Total other income (expense)
    
    
    (35,576
    )
    
    
    (30,600
    )Income before property dispositions, income taxes,
minority interest and equity in earnings of
unconsolidated joint ventures
    
    
    34,788
    
    
    
    35,810Gain on property dispositions
    
    
    463
    
    
    
    190Income taxes
    
    
    (308
    )
    
    
    1,022Minority interest
    
    
    (6,947
    )
    
    
    (5,671
    )Equity in earnings (loss) of unconsolidated joint ventures
    
    
    470
    
    
    
    (29
    )Income from continuing operations
    
    
    28,466
    
    
    
    31,322Discontinued operations, net of minority interest
(including net gain on property dispositions of $10,232
and $4,145 for the three months ended September 30, 2008
and 2007, respectively)
    
    
    10,088
    
    
    
    5,852Net income
    
    $
    38,554
    
    
    $
    37,174Earnings per common shareBasic:Income from continuing operations
    
    $
    0.30
    
    
    $
    0.35Income from discontinued operations
    
    
    0.11
    
    
    
    0.06Income per common share  basic
    
    $
    0.41
    
    
    $
    0.41Diluted:Income from continuing operations
    
    $
    0.30
    
    
    $
    0.35Income from discontinued operations
    
    
    0.11
    
    
    
    0.06Income per common share  diluted
    
    $
    0.41
    
    
    $
    0.41Distributions per common share
    
    $
    0.625
    
    
    $
    0.625Weighted average number of common shares outstandingBasic
    
    
    92,928
    
    
    
    90,905Diluted
    
    
    93,369
    
    
    
    91,367
  5




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##### 



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS OF LIBERTY PROPERTY TRUST
(Unaudited and in thousands, except per share amounts)
 Nine Months EndedSeptember 30, 2008
    
    
    September 30, 2007OPERATING REVENUERental
    
    $
    392,650
    
    
    $
    352,262Operating expense reimbursement
    
    
    173,337
    
    
    
    152,908Total operating revenue
    
    
    565,987
    
    
    
    505,170OPERATING EXPENSERental property
    
    
    114,717
    
    
    
    106,165Real estate taxes
    
    
    66,615
    
    
    
    53,494General and administrative
    
    
    40,178
    
    
    
    38,866Depreciation and amortization
    
    
    132,021
    
    
    
    112,897Total operating expenses
    
    
    353,531
    
    
    
    311,422Operating income
    
    
    212,456
    
    
    
    193,748OTHER INCOME (EXPENSE)Interest and other income
    
    
    9,459
    
    
    
    7,837Interest expense
    
    
    (118,336
    )
    
    
    (88,641
    )Total other income (expense)
    
    
    (108,877
    )
    
    
    (80,804
    )Income before property dispositions, income taxes,
minority interest and equity in earnings of
unconsolidated joint ventures
    
    
    103,579
    
    
    
    112,944Gain on property dispositions
    
    
    1,939
    
    
    
    1,641Income taxes
    
    
    (1,372
    )
    
    
    508Minority interest
    
    
    (19,948
    )
    
    
    (17,154
    )Equity in earnings of unconsolidated joint ventures
    
    
    1,857
    
    
    
    1,026Income from continuing operations
    
    
    86,055
    
    
    
    98,965Discontinued operations, net of minority interest
(including net gain on property dispositions of
$13,635 and $24,376 for the nine months ended
September 30, 2008 and 2007, respectively)
    
    
    14,089
    
    
    
    30,334Net income
    
    $
    100,144
    
    
    $
    129,299Earnings per common shareBasic:Income from continuing operations
    
    $
    0.93
    
    
    $
    1.09Income from discontinued operations
    
    
    0.15
    
    
    
    0.33Income per common share  basic
    
    $
    1.08
    
    
    $
    1.42Diluted:Income from continuing operations
    
    $
    0.93
    
    
    $
    1.08Income from discontinued operations
    
    
    0.15
    
    
    
    0.33Income per common share  diluted
    
    $
    1.08
    
    
    $
    1.41Distributions per common share
    
    $
    1.875
    
    
    $
    1.865Weighted average number of common shares outstandingBasic
    
    
    92,324
    
    
    
    91,179Diluted
    
    
    92,626
    
    
    
    91,905
  6




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##### 



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS OF LIBERTY PROPERTY TRUST
(Unaudited and in thousands)
 Nine Months EndedSeptember 30, 2008
    
    
    September 30, 2007OPERATING ACTIVITIESNet income
    
    $
    100,144
    
    
    $
    129,299Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    132,106
    
    
    
    119,378Amortization of deferred financing costs
    
    
    3,327
    
    
    
    3,002Equity in earnings of unconsolidated joint ventures
    
    
    (1,857
    )
    
    
    (1,026
    )Distributions from unconsolidated joint ventures
    
    
    700
    
    
    
    Minority interest in net income
    
    
    20,583
    
    
    
    18,542Gain on property dispositions
    
    
    (15,574
    )
    
    
    (26,017
    )Noncash compensation
    
    
    7,793
    
    
    
    6,691Changes in operating assets and liabilities:Restricted cash
    
    
    (9,755
    )
    
    
    25,861Accounts receivable
    
    
    (7,763
    )
    
    
    (2,770
    )Deferred rent receivable
    
    
    (9,627
    )
    
    
    (5,140
    )Prepaid expenses and other assets
    
    
    (28,533
    )
    
    
    (25,736
    )Accounts payable
    
    
    10,512
    
    
    
    28,004Accrued interest
    
    
    (1,662
    )
    
    
    (6,474
    )Other liabilities
    
    
    (7,546
    )
    
    
    10,616Net cash provided by operating activities
    
    
    192,848
    
    
    
    274,230INVESTING ACTIVITIESInvestment in properties
    
    
    (87,245
    )
    
    
    (265,150
    )Investments in and advances to unconsolidated joint ventures
    
    
    (5,580
    )
    
    
    (22,854
    )Distributions from unconsolidated joint ventures
    
    
    64,321
    
    
    
    1,934Net proceeds from disposition of properties/land
    
    
    347,360
    
    
    
    284,616Investment in development in progress
    
    
    (166,718
    )
    
    
    (354,841
    )Investment in land held for development
    
    
    (38,370
    )
    
    
    (104,336
    )Investment in deferred leasing costs
    
    
    (23,610
    )
    
    
    (36,095
    )Net cash provided by (used in) investing activities
    
    
    90,158
    
    
    
    (496,726
    )FINANCING ACTIVITIESNet proceeds from issuance of common shares
    
    
    45,690
    
    
    
    53,754Purchase of treasury shares
    
    
    
    
    
    
    (50,624
    )Net proceeds from issuance of preferred units
    
    
    
    
    
    
    99,957Redemption of preferred units
    
    
    
    
    
    
    (23,650
    )Net proceeds from issuance of unsecured notes
    
    
    
    
    
    
    446,205Repayments of unsecured notes
    
    
    
    
    
    
    (250,000
    )Repayments of mortgage loans
    
    
    (37,437
    )
    
    
    (8,118
    )Proceeds from credit facility
    
    
    438,700
    
    
    
    917,750Repayments on credit facility
    
    
    (538,700
    )
    
    
    (791,750
    )Increase in deferred financing costs
    
    
    (25
    )
    
    
    (967
    )Distribution paid on common shares
    
    
    (172,953
    )
    
    
    (169,745
    )Distribution paid on units
    
    
    (23,628
    )
    
    
    (19,838
    )Net cash (used in) provided by financing activities
    
    
    (288,353
    )
    
    
    202,974Net decrease in cash and cash equivalents
    
    
    (5,347
    )
    
    
    (19,522
    )(Decrease) increase in cash and cash equivalents related to foreign currency
translation
    
    
    (3,364
    )
    
    
    1,816Cash and cash equivalents at beginning of period
    
    
    37,989
    
    
    
    53,737Cash and cash equivalents at end of period
    
    $
    29,278
    
    
    $
    36,031
  7




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##### 



Liberty Property Trust
Notes to Condensed Consolidated Financial Statements (Unaudited)
September 30, 2008
 Note 1: Organization and Basis of Presentation
 Organization
  Basis of Presentation
  Income per Common Share
  For the Three Months Ended September 30, 2008
    
    
    For the Three Months Ended September 30, 2007Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    
    
    
    
    AverageIncome
    
    
    Shares
    
    
    
    
    
    
    Income
    
    
    Shares(Numerator)
    
    
    (Denominator)
    
    
    Per Share
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    Per ShareBasic income from continuing operationsIncome from continuing operations
    
    $
    28,466
    
    
    
    92,928
    
    
    $
    0.30
    
    
    $
    31,322
    
    
    
    90,905
    
    
    $
    0.35Diluted shares for long-term compensation plans
    
    
    
    
    
    
    441
    
    
    
    
    
    
    
    
    
    
    
    462Diluted income from continuing operationsIncome from continuing operations and assumed
conversions
    
    
    28,466
    
    
    
    93,369
    
    
    $
    0.30
    
    
    
    31,322
    
    
    
    91,367
    
    
    $
    0.35Basic income from discontinued operationsDiscontinued operations net of minority interest
    
    
    10,088
    
    
    
    92,928
    
    
    $
    0.11
    
    
    
    5,852
    
    
    
    90,905
    
    
    $
    0.06Dilutive shares for long-term compensation plans
    
    
    
    
    
    
    441
    
    
    
    
    
    
    
    
    
    
    
    462Diluted income from discontinued operationsDiscontinued operations net of minority interest
    
    
    10,088
    
    
    
    93,369
    
    
    $
    0.11
    
    
    
    5,852
    
    
    
    91,367
    
    
    $
    0.06Basic income per common shareNet income
    
    
    38,554
    
    
    
    92,928
    
    
    $
    0.41
    
    
    
    37,174
    
    
    
    90,905
    
    
    $
    0.41Dilutive shares for long-term compensation plans
    
    
    
    
    
    
    441
    
    
    
    
    
    
    
    
    
    
    
    462Diluted income per common shareNet income and assumed conversions
    
    $
    38,554
    
    
    
    93,369
    
    
    $
    0.41
    
    
    $
    37,174
    
    
    
    91,367
    
    
    $
    0.41
 8




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##### 



For the Nine Months Ended September 30, 2008
    
    
    For the Nine Months Ended September 30, 2007Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    
    
    
    
    AverageIncome
    
    
    Shares
    
    
    
    
    
    
    Income
    
    
    Shares(Numerator)
    
    
    (Denominator)
    
    
    Per Share
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    Per ShareBasic income from continuing operationsIncome from continuing operations
    
    $
    86,055
    
    
    
    92,324
    
    
    $
    0.93
    
    
    $
    98,965
    
    
    
    91,179
    
    
    $
    1.09Diluted shares for long-term compensation plans
    
    
    
    
    
    
    302
    
    
    
    
    
    
    
    
    
    
    
    726Diluted income from continuing operationsIncome from continuing operations and assumed
conversions
    
    
    86,055
    
    
    
    92,626
    
    
    $
    0.93
    
    
    
    98,965
    
    
    
    91,905
    
    
    $
    1.08Basic income from discontinued operationsDiscontinued operations net of minority interest
    
    
    14,089
    
    
    
    92,324
    
    
    $
    0.15
    
    
    
    30,334
    
    
    
    91,179
    
    
    $
    0.33Dilutive shares for long-term compensation plans
    
    
    
    
    
    
    302
    
    
    
    
    
    
    
    
    
    
    
    726Diluted income from discontinued operationsDiscontinued operations net of minority interest
    
    
    14,089
    
    
    
    92,626
    
    
    $
    0.15
    
    
    
    30,334
    
    
    
    91,905
    
    
    $
    0.33Basic income per common shareNet income
    
    
    100,144
    
    
    
    92,324
    
    
    $
    1.08
    
    
    
    129,299
    
    
    
    91,179
    
    
    $
    1.42Dilutive shares for long-term compensation plans
    
    
    
    
    
    
    302
    
    
    
    
    
    
    
    
    
    
    
    726Diluted income per common shareNet income and assumed conversions
    
    $
    100,144
    
    
    
    92,626
    
    
    $
    1.08
    
    
    $
    129,299
    
    
    
    91,905
    
    
    $
    1.41
 Foreign Currency Translation
  Note 2: Segment Information
  Reportable Segments
    
    MarketsDelaware Valley
    
    Southeastern Pennsylvania; New JerseyMidwest
    
    Lehigh/Central PA; Minnesota; Milwaukee; ChicagoMid-Atlantic
    
    Maryland; Carolinas; Richmond; Virginia BeachSouth
    
    Jacksonville; Orlando; Boca Raton; Tampa; Texas; ArizonaPhiladelphia
    
    Comcast Center; Northern Virginia/Washington, D.C.United Kingdom
    
    County of Kent; West Midlands
 Disclosure about Segments of an Enterprise and Related Information,
 9




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##### 



FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2008
 delaware valley
    
    
    midwestsoutheastern
    
    
    
    
    
    
    lehigh /
    
    
    
    
    
    

    mid-
    
    
    
    
    
    
    phila-
    
    
    unitedpennsylvania
    
    
    other
    
    
    central pa
    
    
    other
    
    
    atlantic
    
    
    South
    
    
    delphia
    
    
    kingdom
    
    
    totalOperating revenue
    
    $
    44,425
    
    
    $
    14,581
    
    
    $
    24,362
    
    
    $
    21,338
    
    
    $
    37,938
    
    
    $
    45,298
    
    
    $
    7
    
    
    $
    1,028
    
    
    $
    188,977Rental property
expenses and real
estate taxes
    
    
    14,534
    
    
    
    5,155
    
    
    
    5,944
    
    
    
    8,007
    
    
    
    11,870
    
    
    
    14,952
    
    
    
    (10
    )
    
    
    321
    
    
    
    60,773Property level
operating income
    
    $
    29,891
    
    
    $
    9,426
    
    
    $
    18,418
    
    
    $
    13,331
    
    
    $
    26,068
    
    
    $
    30,346
    
    
    $
    17
    
    
    $
    707
    
    
    
    128,204
 Interest and other income
    
    
    3,333Interest expense
    
    
    (38,909
    )General and 
administrative
    
    
    (13,145
    )Depreciation and 
amortization
    
    
    (44,695
    )Income before property 
dispositions, income 
taxes, minority 
interest
and equity in 
earnings of 
unconsolidated joint 
ventures
    
    
    34,788Gain on property 
dispositions
    
    
    463Income taxes
    
    
    (308
    )Minority interest
    
    
    (6,947
    )Equity in earnings of 
unconsolidated joint 
ventures
    
    
    470Discontinued operations
    
    
    10,088Net income
    
    $
    38,554
 10




---



##### 



FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2007
 delaware valley
    
    
    midwestsoutheastern
    
    
    
    
    
    
    lehigh /
    
    
    
    
    
    
    mid-
    
    
    
    
    
    
    phila-
    
    
    unitedpennsylvania
    
    
    other
    
    
    central pa
    
    
    Other
    
    
    atlantic
    
    
    South
    
    
    delphia
    
    
    kingdom
    
    
    totalOperating revenue
    
    $
    42,546
    
    
    $
    13,356
    
    
    $
    23,373
    
    
    $
    21,621
    
    
    $
    33,765
    
    
    $
    39,117
    
    
    $
    382
    
    
    $
    958
    
    
    $
    175,118Rental property
expenses and real
estate taxes
    
    
    13,962
    
    
    
    4,383
    
    
    
    5,915
    
    
    
    7,134
    
    
    
    9,939
    
    
    
    13,800
    
    
    
    83
    
    
    
    204
    
    
    
    55,420Property level
operating income
    
    $
    28,584
    
    
    $
    8,973
    
    
    $
    17,458
    
    
    $
    14,487
    
    
    $
    23,826
    
    
    $
    25,317
    
    
    $
    299
    
    
    $
    754
    
    
    
    119,698Interest and other
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,443Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33,043
    )General and
administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,142
    )Depreciation and
amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40,146
    )Income before property
dispositions, income
taxes, minority
interest
and equity in
loss of unconsolidated
joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35,810Gain on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    190Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,022Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,671
    )Equity in loss of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (29
    )Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,852Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    37,174
 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008
 delaware valley
    
    
    midwestsoutheastern
    
    
    
    
    
    
    lehigh /
    
    
    
    
    
    
    mid-
    
    
    
    
    
    
    phila-
    
    
    unitedpennsylvania
    
    
    other
    
    
    central pa
    
    
    other
    
    
    atlantic
    
    
    South
    
    
    delphia
    
    
    kingdom
    
    
    totalOperating revenue
    
    $
    132,915
    
    
    $
    42,379
    
    
    $
    74,436
    
    
    $
    62,938
    
    
    $
    111,059
    
    
    $
    128,093
    
    
    $
    10,687
    
    
    $
    3,480
    
    
    $
    565,987Rental property
expenses and real
estate taxes
    
    
    43,092
    
    
    
    14,493
    
    
    
    20,165
    
    
    
    23,877
    
    
    
    32,826
    
    
    
    43,171
    
    
    
    2,769
    
    
    
    939
    
    
    
    181,332Property level
operating income
    
    $
    89,823
    
    
    $
    27,886
    
    
    $
    54,271
    
    
    $
    39,061
    
    
    $
    78,233
    
    
    $
    84,922
    
    
    $
    7,918
    
    
    $
    2,541
    
    
    
    384,655Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,459Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (118,336
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40,178
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (132,021
    )Income before property
dispositions, income
taxes, minority
interest
and equity in earnings of
unconsolidated joint
ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    103,579Gain on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,939Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,372
    )Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,948
    )Equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,857Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,089Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    100,144
 11




---



##### 



FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007
 delaware valley
    
    
    midwestsoutheastern
    
    
    
    
    
    
    lehigh /
    
    
    
    
    
    
    mid-
    
    
    
    
    
    
    phila-
    
    
    unitedpennsylvania
    
    
    other
    
    
    central pa
    
    
    other
    
    
    atlantic
    
    
    South
    
    
    delphia
    
    
    kingdom
    
    
    totalOperating revenue
    
    $
    127,690
    
    
    $
    39,691
    
    
    $
    67,114
    
    
    $
    60,436
    
    
    $
    97,341
    
    
    $
    110,571
    
    
    $
    382
    
    
    $
    1,945
    
    
    $
    505,170Rental property
expenses and real
estate taxes
    
    
    42,811
    
    
    
    12,669
    
    
    
    17,280
    
    
    
    20,630
    
    
    
    29,334
    
    
    
    36,320
    
    
    
    85
    
    
    
    530
    
    
    
    159,659Property level
operating income
(loss)
    
    $
    84,879
    
    
    $
    27,022
    
    
    $
    49,834
    
    
    $
    39,806
    
    
    $
    68,007
    
    
    $
    74,251
    
    
    $
    297
    
    
    $
    1,415
    
    
    
    345,511Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,837Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (88,641
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38,866
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (112,897
    )Income before property dispositions, income taxes, minority interest
and equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    112,944Gain on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,641Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    508Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,154
    )Equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,026Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,334Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    129,299
 Note 3: SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets
   Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2008
    
    
    September 30, 2007
    
    
    September 30, 2008
    
    
    September 20, 2007Revenues
    
    $
    1,236
    
    
    $
    9,290
    
    
    $
    4,259
    
    
    $
    33,438Operating expenses
    
    
    (577
    )
    
    
    (3,920
    )
    
    
    (1,847
    )
    
    
    (13,524
    )Interest expense
    
    
    (96
    )
    
    
    (1,214
    )
    
    
    (457
    )
    
    
    (4,930
    )Depreciation and amortization
    
    
    (255
    )
    
    
    (2,180
    )
    
    
    (866
    )
    
    
    (7,638
    )Income before property dispositions and minority interest
    
    $
    308
    
    
    $
    1,976
    
    
    $
    1,089
    
    
    $
    7,346
  Allocation of Interest to Discontinued Operations
 12




---



##### 



Note 4: Joint Ventures
 Form 10-K.
 Liberty/Commerz 1701 JFK Boulevard, LP
 Accounting for the Sales of Real Estate
    Liberty Washington, LP
   Blythe Valley JV Sarl
  Note 5: Recently Issued Accounting Standards
 SFAS No. 157
 Fair
Value Measurements
 13




---



##### 



SFAS No. 159
 The Fair Value Option for Financial Assets and
Financial Liabilities
 SFAS No. 141(R)
 Applying the Acquisition Method
 SFAS No. 160
 Accounting for Noncontrolling Interests
 FSP EITF 03-6-1
 Determining Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities.
 Note 6: Supplemental Disclosure to Statements of Cash Flows
  Non-cash activity
    
    2008
    
    2007Write-off of fully depreciated property and deferred costs
    
    $
    20,692
    
    
    $
    71,305Increase in investment in unconsolidated joint ventures
    
    
    (35,172
    )
    
    
    Disposition of properties/development in progress
    
    
    173,624
    
    
    
    Disposition of deferred leasing/financing costs
    
    
    12,526
    
    
    
    Reduction of accounts receivable
    
    
    7,854
    
    
    
    Reduction of deferred rent receivable
    
    
    6,580
    
    
    
    Reduction of prepaid and other assets
    
    
    38,486
    
    
    
    Reduction of Credit Facility
    
    
    (152,960
    )
    
    
    Reduction of other liabilities
    
    
    (50,938
    )
    
    
    Assumption of mortgage loans
    
    
    
    
    
    
    54,126
 Note 7:  Subsequent Events
  14




---



##### 



CONDENSED CONSOLIDATED BALANCE SHEETS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(In thousands)
 September 30, 2008
    
    
    December 31, 2007(Unaudited)ASSETSReal estate:Land and land improvements
    
    $
    805,797
    
    
    $
    795,939Building and improvements
    
    
    4,235,427
    
    
    
    4,432,690Less accumulated depreciation
    
    
    (956,732
    )
    
    
    (863,193
    )Operating real estate
    
    
    4,084,492
    
    
    
    4,365,436Development in progress
    
    
    294,227
    
    
    
    328,138Land held for development
    
    
    227,003
    
    
    
    247,124Net real estate
    
    
    4,605,722
    
    
    
    4,940,698Cash and cash equivalents
    
    
    29,278
    
    
    
    37,989Restricted cash
    
    
    41,638
    
    
    
    34,567Accounts receivable
    
    
    18,782
    
    
    
    17,405Deferred rent receivable
    
    
    82,653
    
    
    
    80,087Deferred financing and leasing costs, net of accumulated
amortization (2008, $136,565; 2007, 
$119,721)
    
    
    132,023
    
    
    
    144,684Investments in and advances to unconsolidated joint ventures
    
    
    255,317
    
    
    
    278,383Assets held for sale
    
    
    2,145
    
    
    
    2,192Prepaid expenses and other assets
    
    
    99,139
    
    
    
    107,932Total assets
    
    $
    5,266,697
    
    
    $
    5,643,937LIABILITIESMortgage loans
    
    $
    205,450
    
    
    $
    243,169Unsecured notes
    
    
    2,155,000
    
    
    
    2,155,000Credit facility
    
    
    370,000
    
    
    
    622,960Accounts payable
    
    
    54,302
    
    
    
    44,666Accrued interest
    
    
    38,063
    
    
    
    39,725Distributions payable
    
    
    60,991
    
    
    
    59,849Other liabilities
    
    
    207,395
    
    
    
    268,926Total liabilities
    
    
    3,091,201
    
    
    
    3,434,295Minority interest
    
    
    944
    
    
    
    517OWNERS EQUITYGeneral partners equity  common units
    
    
    1,805,657
    
    
    
    1,837,021Limited partners equity  preferred units
    
    
    287,960
    
    
    
    287,960 common units
    
    
    80,935
    
    
    
    84,144Total owners equity
    
    
    2,174,552
    
    
    
    2,209,125Total liabilities and owners equity
    
    $
    5,266,697
    
    
    $
    5,643,937
  15




---



##### 



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Unaudited and in thousands, except per unit amounts)
 Three Months EndedSeptember 30, 2008
    
    
    September 30, 2007OPERATING REVENUERental
    
    $
    131,042
    
    
    $
    122,864Operating expense reimbursement
    
    
    57,935
    
    
    
    52,254Total operating revenue
    
    
    188,977
    
    
    
    175,118OPERATING EXPENSERental property
    
    
    38,468
    
    
    
    36,121Real estate taxes
    
    
    22,305
    
    
    
    19,299General and administrative
    
    
    13,145
    
    
    
    13,142Depreciation and amortization
    
    
    44,695
    
    
    
    40,146Total operating expenses
    
    
    118,613
    
    
    
    108,708Operating income
    
    
    70,364
    
    
    
    66,410OTHER INCOME (EXPENSE)Interest and other income
    
    
    3,333
    
    
    
    2,443Interest expense
    
    
    (38,909
    )
    
    
    (33,043
    )Total other income (expense)
    
    
    (35,576
    )
    
    
    (30,600
    )Income before property dispositions, income taxes,
minority interest and equity in earnings (loss) of
unconsolidated joint ventures
    
    
    34,788
    
    
    
    35,810Gain on property dispositions
    
    
    463
    
    
    
    190Income taxes
    
    
    (308
    )
    
    
    1,022Minority interest
    
    
    (400
    )
    
    
    11Equity in earnings (loss) of unconsolidated joint ventures
    
    
    470
    
    
    
    (29
    )Income from continuing operations
    
    
    35,013
    
    
    
    37,004Discontinued operations (including net gain on property
dispositions of $10,232 and $4,145 for the three months
ended September 30, 2008 and 2007, respectively)
    
    
    10,540
    
    
    
    6,121Net income
    
    
    45,553
    
    
    
    43,125Preferred unit distributions
    
    
    (5,253
    )
    
    
    (4,246
    )Income available to common unitholders
    
    $
    40,300
    
    
    $
    38,879Earnings per common unitBasic:Income from continuing operations
    
    $
    0.30
    
    
    $
    0.35Income from discontinued operations
    
    
    0.11
    
    
    
    0.06Income per common unit  basic
    
    $
    0.41
    
    
    $
    0.41Diluted:Income from continuing operations
    
    $
    0.30
    
    
    $
    0.35Income from discontinued operations
    
    
    0.11
    
    
    
    0.06Income per common unit  diluted
    
    $
    0.41
    
    
    $
    0.41Distributions per common unit
    
    $
    0.625
    
    
    $
    0.625Weighted average number of common units outstandingBasic
    
    
    97,118
    
    
    
    95,095Diluted
    
    
    97,559
    
    
    
    95,557
  16




---



##### 



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Unaudited and in thousands, except per unit amounts)
 Nine Months EndedSeptember 30, 2008
    
    
    September 30, 2007OPERATING REVENUERental
    
    $
    392,650
    
    
    $
    352,262Operating expense reimbursement
    
    
    173,337
    
    
    
    152,908Total operating revenue
    
    
    565,987
    
    
    
    505,170OPERATING EXPENSERental property
    
    
    114,717
    
    
    
    106,165Real estate taxes
    
    
    66,615
    
    
    
    53,494General and administrative
    
    
    40,178
    
    
    
    38,866Depreciation and amortization
    
    
    132,021
    
    
    
    112,897Total operating expenses
    
    
    353,531
    
    
    
    311,422Operating income
    
    
    212,456
    
    
    
    193,748OTHER INCOME (EXPENSE)Interest and other income
    
    
    9,459
    
    
    
    7,837Interest expense
    
    
    (118,336
    )
    
    
    (88,641
    )Total other income (expense)
    
    
    (108,877
    )
    
    
    (80,804
    )Income before property dispositions, income taxes,
minority interest and equity in earnings of
unconsolidated joint ventures
    
    
    103,579
    
    
    
    112,944Gain on property dispositions
    
    
    1,939
    
    
    
    1,641Income taxes
    
    
    (1,372
    )
    
    
    508Minority interest
    
    
    (298
    )
    
    
    (45
    )Equity in earnings of unconsolidated joint ventures
    
    
    1,857
    
    
    
    1,026Income from continuing operations
    
    
    105,705
    
    
    
    116,074Discontinued operations (including net gain on property
dispositions of $13,635 and $24,376 for the nine months
ended September 30, 2008 and 2007, respectively)
    
    
    14,724
    
    
    
    31,722Net income
    
    
    120,429
    
    
    
    147,796Preferred unit distributions
    
    
    (15,759
    )
    
    
    (11,874
    )Excess of preferred unit redemption over carrying amount
    
    
    
    
    
    
    (696
    )Income available to common unitholders
    
    $
    104,670
    
    
    $
    135,226Earnings per common unitBasic:Income from continuing operations
    
    $
    0.93
    
    
    $
    1.09Income from discontinued operations
    
    
    0.15
    
    
    
    0.33Income per common unit  basic
    
    $
    1.08
    
    
    $
    1.42Diluted:Income from continuing operations
    
    $
    0.93
    
    
    $
    1.08Income from discontinued operations
    
    
    0.15
    
    
    
    0.33`Income per common unit  diluted
    
    $
    1.08
    
    
    $
    1.41Distributions per common unit
    
    $
    1.875
    
    
    $
    1.865Weighted average number of common units outstandingBasic
    
    
    96,514
    
    
    
    95,369Diluted
    
    
    96,816
    
    
    
    96,095
  17




---



##### 



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Unaudited and in thousands)
 Nine Months EndedSeptember 30, 2008
    
    
    September 30, 2007OPERATING ACTIVITIESNet income
    
    $
    120,429
    
    
    $
    147,796Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    132,106
    
    
    
    119,378Amortization of deferred financing costs
    
    
    3,327
    
    
    
    3,002Equity in earnings of unconsolidated joint ventures
    
    
    (1,857
    )
    
    
    (1,026
    )Distributions from unconsolidated joint ventures
    
    
    700
    
    
    
    Minority interest in net income
    
    
    298
    
    
    
    45Gain on property dispositions
    
    
    (15,574
    )
    
    
    (26,017
    )Noncash compensation
    
    
    7,793
    
    
    
    6,691Changes in operating assets and liabilities:Restricted cash
    
    
    (9,755
    )
    
    
    25,861Accounts receivable
    
    
    (7,763
    )
    
    
    (2,770
    )Deferred rent receivable
    
    
    (9,627
    )
    
    
    (5,140
    )Prepaid expenses and other assets
    
    
    (28,533
    )
    
    
    (25,736
    )Accounts payable
    
    
    10,512
    
    
    
    28,004Accrued interest
    
    
    (1,662
    )
    
    
    (6,474
    )Other liabilities
    
    
    (7,546
    )
    
    
    10,616Net cash provided by operating activities
    
    
    192,848
    
    
    
    274,230INVESTING ACTIVITIESInvestment in properties
    
    
    (87,245
    )
    
    
    (265,150
    )Investments in and advances to unconsolidated joint ventures
    
    
    (5,580
    )
    
    
    (22,854
    )Distributions from unconsolidated joint ventures
    
    
    64,321
    
    
    
    1,934Net proceeds from disposition of properties/land
    
    
    347,360
    
    
    
    284,616Investment in development in progress
    
    
    (166,718
    )
    
    
    (354,841
    )Investment in land held for development
    
    
    (38,370
    )
    
    
    (104,336
    )Investment in deferred leasing costs
    
    
    (23,610
    )
    
    
    (36,095
    )Net cash provided by (used in) investing activities
    
    
    90,158
    
    
    
    (496,726
    )FINANCING ACTIVITIESNet proceeds from issuance of preferred units
    
    
    
    
    
    
    99,957Redemption of preferred units
    
    
    
    
    
    
    (23,650
    )Net proceeds from issuance of unsecured notes
    
    
    
    
    
    
    446,205Repayments of unsecured notes
    
    
    
    
    
    
    (250,000
    )Repayments of mortgage loans
    
    
    (37,437
    )
    
    
    (8,118
    )Proceeds from credit facility
    
    
    438,700
    
    
    
    917,750Repayments on credit facility
    
    
    (538,700
    )
    
    
    (791,750
    )Increase in deferred financing costs
    
    
    (25
    )
    
    
    (967
    )Capital contributions
    
    
    45,690
    
    
    
    53,754Distribution to partners
    
    
    (196,581
    )
    
    
    (240,207
    )Net cash (used in) provided by financing activities
    
    
    (288,353
    )
    
    
    202,974Net decrease in cash and cash equivalents
    
    
    (5,347
    )
    
    
    (19,522
    )(Decrease) increase in cash and cash equivalents related to foreign currency
translation
    
    
    (3,364
    )
    
    
    1,816Cash and cash equivalents at beginning of period
    
    
    37,989
    
    
    
    53,737Cash and cash equivalents at end of period
    
    $
    29,278
    
    
    $
    36,031
  18




---



##### 



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




---



##### 



Income per Common Unit
 For the Three Months Ended September 30, 2008
    
    
    For the Three Months Ended September 30, 2007Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedIncome
    
    
    Average Units
    
    
    
    
    
    
    Income
    
    
    Average Units(Numerator)
    
    
    (Denominator)
    
    
    Per Unit
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    Per UnitIncome from continuing operations
    
    $
    35,013
    
    
    
    
    
    
    
    
    
    
    $
    37,004Less: Preferred unit distributions
    
    
    (5,253
    )
    
    
    
    
    
    
    
    
    
    
    (4,246
    )Basic income from continuing operationsIncome from continuing operations available to
common unitholders
    
    
    29,760
    
    
    
    97,118
    
    
    $
    0.30
    
    
    
    32,758
    
    
    
    95,095
    
    
    $
    0.35Dilutive units for long-term compensation plans
    
    
    
    
    
    
    441
    
    
    
    
    
    
    
    
    
    
    
    462Diluted income from continuing operationsIncome from continuing operations available to
common unitholders and assumed conversions
    
    
    29,760
    
    
    
    97,559
    
    
    $
    0.30
    
    
    
    32,758
    
    
    
    95,557
    
    
    $
    0.35Basic income from discontinued operationsDiscontinued operations
    
    
    10,540
    
    
    
    97,118
    
    
    $
    0.11
    
    
    
    6,121
    
    
    
    95,095
    
    
    $
    0.06Dilutive units for long-term compensation plans
    
    
    
    
    
    
    441
    
    
    
    
    
    
    
    
    
    
    
    462Diluted income from discontinued operationsDiscontinued operations
    
    
    10,540
    
    
    
    97,559
    
    
    $
    0.11
    
    
    
    6,121
    
    
    
    95,557
    
    
    $
    0.06Basic income per common unitIncome available to common unitholders
    
    
    40,300
    
    
    
    97,118
    
    
    $
    0.41
    
    
    
    38,879
    
    
    
    95,095
    
    
    $
    0.41Diluted units for long-term compensation plans
    
    
    
    
    
    
    441
    
    
    
    
    
    
    
    
    
    
    
    462Diluted income per common unitIncome available to common unitholders and
assumed conversions
    
    $
    40,300
    
    
    
    97,559
    
    
    $
    0.41
    
    
    $
    38,879
    
    
    
    95,557
    
    
    $
    0.41
 20




---



##### 



For the Nine Months Ended September 30, 2008
    
    
    For the Nine Months Ended September 30, 2007Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedIncome
    
    
    Average Units
    
    
    
    
    
    
    Income
    
    
    Average Units(Numerator)
    
    
    (Denominator)
    
    
    Per Unit
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    Per UnitIncome from continuing operations
    
    $
    105,705
    
    
    
    
    
    
    
    
    
    
    $
    116,074Less: Preferred unit distributions
    
    
    (15,759
    )
    
    
    
    
    
    
    
    
    
    
    (11,874
    )Less: Excess of preferred unit redemption over
carrying amount
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (696
    )Basic income from continuing operationsIncome from continuing operations available to
common unitholders
    
    
    89,946
    
    
    
    96,514
    
    
    $
    0.93
    
    
    
    103,504
    
    
    
    95,369
    
    
    $
    1.09Dilutive units for long-term compensation plans
    
    
    
    
    
    
    302
    
    
    
    
    
    
    
    
    
    
    
    726Diluted income from continuing operationsIncome from continuing operations available to
common unitholders and assumed conversions
    
    
    89,946
    
    
    
    96,816
    
    
    $
    0.93
    
    
    
    103,504
    
    
    
    96,095
    
    
    $
    1.08Basic income from discontinued operationsDiscontinued operations
    
    
    14,724
    
    
    
    96,514
    
    
    $
    0.15
    
    
    
    31,722
    
    
    
    95,369
    
    
    $
    0.33Dilutive units for long-term compensation plans
    
    
    
    
    
    
    302
    
    
    
    
    
    
    
    
    
    
    
    726Diluted income from discontinued operationsDiscontinued operations
    
    
    14,724
    
    
    
    96,816
    
    
    $
    0.15
    
    
    
    31,722
    
    
    
    96,095
    
    
    $
    0.33Basic income per common unitIncome available to common unitholders
    
    
    104,670
    
    
    
    96,514
    
    
    $
    1.08
    
    
    
    135,226
    
    
    
    95,369
    
    
    $
    1.42Diluted units for long-term compensation plans
    
    
    
    
    
    
    302
    
    
    
    
    
    
    
    
    
    
    
    726Diluted income per common unitIncome available to common unitholders and
assumed conversions
    
    $
    104,670
    
    
    
    96,816
    
    
    $
    1.08
    
    
    $
    135,226
    
    
    
    96,095
    
    
    $
    1.41
 Foreign Currency Translation
  Note 2: Segment Information
  Reportable Segments
    
    MarketsDelaware Valley
    
    Southeastern Pennsylvania; New JerseyMidwest
    
    Lehigh/Central PA; Minnesota; Milwaukee; ChicagoMid-Atlantic
    
    Maryland; Carolinas; Richmond; Virginia BeachSouth
    
    Jacksonville; Orlando; Boca Raton; Tampa; Texas; ArizonaPhiladelphia
    
    Comcast Center; Northern Virginia/Washington, D.C.United Kingdom
    
    County of Kent; West Midlands
  21




---



##### 



Disclosure about Segments of an Enterprise and Related Information,
    FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2008
 delaware valley
    
    
    midwestsoutheastern
    
    
    
    
    
    
    lehigh /
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    phila-
    
    
    unitedpennsylvania
    
    
    other
    
    
    central pa
    
    
    other
    
    
    mid-atlantic
    
    
    South
    
    
    delphia
    
    
    kingdom
    
    
    totalOperating revenue
    
    $
    44,425
    
    
    $
    14,581
    
    
    $
    24,362
    
    
    $
    21,338
    
    
    $
    37,938
    
    
    $
    45,298
    
    
    $
    7
    
    
    $
    1,028
    
    
    $
    188,977Rental property
expenses and real
estate taxes
    
    
    14,534
    
    
    
    5,155
    
    
    
    5,944
    
    
    
    8,007
    
    
    
    11,870
    
    
    
    14,952
    
    
    
    (10
    )
    
    
    321
    
    
    
    60,773Property level
operating income
    
    $
    29,891
    
    
    $
    9,426
    
    
    $
    18,418
    
    
    $
    13,331
    
    
    $
    26,068
    
    
    $
    30,346
    
    
    $
    17
    
    
    $
    707
    
    
    
    128,204Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,333Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38,909
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,145
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (44,695
    )Income before property dispositions, income taxes, minority interest
and equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,788Gain on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    463Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (308
    )Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (400
    )Equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    470Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,540Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    45,553
 22




---



##### 



FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2007
 delaware valley
    
    
    midwestsoutheastern
    
    
    
    
    
    
    lehigh /
    
    
    
    
    
    
    mid-
    
    
    
    
    
    
    phila-
    
    
    unitedpennsylvania
    
    
    other
    
    
    central pa
    
    
    Other
    
    
    atlantic
    
    
    South
    
    
    delphia
    
    
    kingdom
    
    
    totalOperating revenue
    
    $
    42,546
    
    
    $
    13,356
    
    
    $
    23,373
    
    
    $
    21,621
    
    
    $
    33,765
    
    
    $
    39,117
    
    
    $
    382
    
    
    $
    958
    
    
    $
    175,118Rental property
expenses and real
estate taxes
    
    
    13,962
    
    
    
    4,383
    
    
    
    5,915
    
    
    
    7,134
    
    
    
    9,939
    
    
    
    13,800
    
    
    
    83
    
    
    
    204
    
    
    
    55,420Property level operating income
    
    $
    28,584
    
    
    $
    8,973
    
    
    $
    17,458
    
    
    $
    14,487
    
    
    $
    23,826
    
    
    $
    25,317
    
    
    $
    299
    
    
    $
    754
    
    
    
    119,698Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,443Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33,043
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,142
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40,146
    )Income before property dispositions, income taxes, minority interest
and equity in loss of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35,810Gain on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    190Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,022Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11Equity in loss of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (29
    )Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,121Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    43,125
 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008
 delaware valley
    
    
    midwestsoutheastern
    
    
    
    
    
    
    lehigh /
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    phila-
    
    
    unitedpennsylvania
    
    
    other
    
    
    central pa
    
    
    other
    
    
    mid-atlantic
    
    
    South
    
    
    delphia
    
    
    kingdom
    
    
    totalOperating revenue
    
    $
    132,915
    
    
    $
    42,379
    
    
    $
    74,436
    
    
    $
    62,938
    
    
    $
    111,059
    
    
    $
    128,093
    
    
    $
    10,687
    
    
    $
    3,480
    
    
    $
    565,987Rental property
expenses and real
estate taxes
    
    
    43,092
    
    
    
    14,493
    
    
    
    20,165
    
    
    
    23,877
    
    
    
    32,826
    
    
    
    43,171
    
    
    
    2,769
    
    
    
    939
    
    
    
    181,332Property level
operating income
    
    $
    89,823
    
    
    $
    27,886
    
    
    $
    54,271
    
    
    $
    39,061
    
    
    $
    78,233
    
    
    $
    84,922
    
    
    $
    7,918
    
    
    $
    2,541
    
    
    
    384,655Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,459Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (118,336
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40,178
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (132,021
    )Income before property dispositions, income taxes, minority interest
and equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    103,579Gain on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,939Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,372
    )Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (298
    )Equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,857Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,724Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    120,429
 23




---



##### 



FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007
 delaware valley
    
    
    midwestsoutheastern
    
    
    
    
    
    
    lehigh /
    
    
    
    
    
    
    mid-
    
    
    
    
    
    
    phila-
    
    
    unitedpennsylvania
    
    
    other
    
    
    central pa
    
    
    other
    
    
    atlantic
    
    
    South
    
    
    delphia
    
    
    kingdom
    
    
    totalOperating revenue
    
    $
    127,690
    
    
    $
    39,691
    
    
    $
    67,114
    
    
    $
    60,436
    
    
    $
    97,341
    
    
    $
    110,571
    
    
    $
    382
    
    
    $
    1,945
    
    
    $
    505,170Rental property
expenses and real
estate taxes
    
    
    42,811
    
    
    
    12,669
    
    
    
    17,280
    
    
    
    20,630
    
    
    
    29,334
    
    
    
    36,320
    
    
    
    85
    
    
    
    530
    
    
    
    159,659Property level operating income
    
    $
    84,879
    
    
    $
    27,022
    
    
    $
    49,834
    
    
    $
    39,806
    
    
    $
    68,007
    
    
    $
    74,251
    
    
    $
    297
    
    
    $
    1,415
    
    
    
    345,511Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,837Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (88,641
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38,866
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (112,897
    )Income before property dispositions, income taxes, minority interest
and equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    112,944Gain on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,641Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    508Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (45
    )Equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,026Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,722Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    147,796
 Note 3: SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets
   Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2008
    
    
    September 30, 2007
    
    
    September 30, 2008
    
    
    September 30, 2007Revenues
    
    $
    1,236
    
    
    $
    9,290
    
    
    $
    4,259
    
    
    $
    33,438Operating expenses
    
    
    (577
    )
    
    
    (3,920
    )
    
    
    (1,847
    )
    
    
    (13,524
    )Interest expense
    
    
    (96
    )
    
    
    (1,214
    )
    
    
    (457
    )
    
    
    (4,930
    )Depreciation and amortization
    
    
    (255
    )
    
    
    (2,180
    )
    
    
    (866
    )
    
    
    (7,638
    )Income before property dispositions and 
minority interest
    
    $
    308
    
    
    $
    1,976
    
    
    $
    1,089
    
    
    $
    7,346
  Allocation of Interest to Discontinued Operations
 24




---



##### 



Note 4: Joint Ventures
 Form 10-K.
 Liberty/Commerz 1701 JFK Boulevard, LP
 Accounting for the Sales of Real Estate
    Liberty Washington, LP
   Blythe Valley JV Sarl
  Note 5: Recently Issued Accounting Standards
 SFAS No. 157
 Fair
Value Measurements
 25




---



##### 



SFAS No. 159
 The Fair Value Option for Financial Assets and
Financial Liabilities
 SFAS No. 141(R)
 Applying the Acquisition Method
 SFAS No. 160
 Accounting for Noncontrolling Interests
 Note 6: Supplemental Disclosure to Statements of Cash Flows
  Non-cash activity
    
    2008
    
    2007Write-off of fully depreciated property and deferred costs
    
    $
    20,692
    
    
    $
    71,305Increase in investment in unconsolidated joint ventures
    
    
    (35,172
    )
    
    
    Disposition of properties/development in progress
    
    
    173,624
    
    
    
    Disposition of deferred leasing/financing costs
    
    
    12,526
    
    
    
    Reduction of accounts receivable
    
    
    7,854
    
    
    
    Reduction of deferred rent receivable
    
    
    6,580
    
    
    
    Reduction of prepaid and other assets
    
    
    38,486
    
    
    
    Reduction of credit facility
    
    
    (152,960
    )
    
    
    Reduction of other liabilities
    
    
    (50,938
    )
    
    
    Assumption of mortgage loans
    
    
    
    
    
    
    54,126
 Note 7: Subsequent Events
  26




---



##### 



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 OVERVIEW
      GUIDANCE
   Category
    
    2008 Original Guidance
    
    2008 Revised Guidance
    
    2009 GuidanceWholly Owned Acquisitions
    
    $100-$200 million
    
    $17 million
    
    $Wholly Owned Dispositions
    
    $250-$350 million
    
    $104 million
    
    $125-$200 millionWholly Owned Development Deliveries (1)
    
    $200-$300 million
    
    $200 million
    
    $250-$350 millionJoint Venture Acquisitions
    
    $200-$250 million
    
    $
    
    $50-$100 millionJoint Venture Dispositions
    
    $
    
    $
    
    $Joint Venture Development Deliveries (1)
    
    $50-$70 million
    
    $45 million
    
    $100-$175 million
 
 (1)
    
    Excluding Comcast Center 27




---



##### 



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




---



##### 



PROPERTIES IN OPERATION
  Net RentPer Square Foot
    
    
    Total Square Feet
    
    
    Percent OccupiedSeptember 30
    
    
    September 30
    
    
    September 302008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Wholly Owned Properties in Operation:Industrial-Distribution
    
    $
    4.51
    
    
    $
    4.23
    
    
    
    29,809
    
    
    
    27,729
    
    
    
    90.9
    %
    
    
    94.5
    %Industrial-Flex
    
    $
    9.21
    
    
    $
    8.87
    
    
    
    11,520
    
    
    
    12,207
    
    
    
    89.4
    %
    
    
    91.1
    %Office
    
    $
    14.17
    
    
    $
    13.60
    
    
    
    21,548
    
    
    
    21,529
    
    
    
    93.2
    %
    
    
    91.9
    %$
    8.73
    
    
    $
    8.38
    
    
    
    62,877
    
    
    
    61,465
    
    
    
    91.4
    %
    
    
    92.9
    %
 Net RentPer Square Foot
    
    
    Total Square Feet
    
    
    Percent OccupiedSeptember 30
    
    
    September 30
    
    
    September 302008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Joint Venture Properties in Operation:Industrial-Distribution
    
    $
    4.03
    
    
    $
    3.69
    
    
    
    8,316
    
    
    
    7,705
    
    
    
    97.0
    %
    
    
    93.3
    %Industrial-Flex
    
    $
    30.47
    
    
    $
    30.04
    
    
    
    171
    
    
    
    171
    
    
    
    89.5
    %
    
    
    89.4
    %Office
    
    $
    24.68
    
    
    $
    31.04
    
    
    
    4,581
    
    
    
    855
    
    
    
    90.8
    %
    
    
    90.7
    %$
    11.30
    
    
    $
    6.79
    
    
    
    13,068
    
    
    
    8,731
    
    
    
    94.7
    %
    
    
    93.0
    %
 Net RentPer Square Foot
    
    
    Total Square Feet
    
    
    Percent OccupiedSeptember 30
    
    
    September 30
    
    
    September 302008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Properties in Operation:Industrial-Distribution
    
    $
    4.40
    
    
    $
    4.11
    
    
    
    38,125
    
    
    
    35,434
    
    
    
    92.2
    %
    
    
    94.2
    %Industrial-Flex
    
    $
    9.52
    
    
    $
    9.16
    
    
    
    11,691
    
    
    
    12,378
    
    
    
    89.4
    %
    
    
    91.1
    %Office
    
    $
    15.98
    
    
    $
    14.24
    
    
    
    26,129
    
    
    
    22,384
    
    
    
    92.8
    %
    
    
    91.9
    %$
    9.18
    
    
    $
    8.18
    
    
    
    75,945
    
    
    
    70,196
    
    
    
    92.0
    %
    
    
    92.9
    %
  29




---



##### 



Forward-Looking Statements
  Critical Accounting Policies and Estimates
  Results of Operations
   Comparison of Three and Nine Months Ended September 30, 2008 to Three and Nine Months Ended
September 30, 2007
 Overview
   30




---



##### 



Segments
  Property Level Operating Income:
 Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2008
    
    
    September 30, 2007
    
    
    % inc (dec)
    
    
    September 30, 2008
    
    
    September 30, 2007
    
    
    % inc (dec)Delaware Valley- SE Pennsylvania
    
    $
    29,891
    
    
    $
    28,584
    
    
    
    4.6
    %  (1)
    
    $
    89,823
    
    
    $
    84,879
    
    
    
    5.8
    %  (1)- Other
    
    
    9,426
    
    
    
    8,973
    
    
    
    5.0
    %  (2)
    
    
    27,886
    
    
    
    27,022
    
    
    
    3.2
    %  (2)Midwest- Lehigh/Central PA
    
    
    18,418
    
    
    
    17,458
    
    
    
    5.5
    %  (3)
    
    
    54,271
    
    
    
    49,834
    
    
    
    8.9
    %  (3)- Other
    
    
    13,331
    
    
    
    14,487
    
    
    
    (8.0
    %)  (4)
    
    
    39,061
    
    
    
    39,806
    
    
    
    (1.9
    %)  (4)Mid-Atlantic
    
    
    26,068
    
    
    
    23,826
    
    
    
    9.4
    %  (5)
    
    
    78,233
    
    
    
    68,007
    
    
    
    15.0
    %  (5)South
    
    
    30,346
    
    
    
    25,317
    
    
    
    19.9
    %  (5)
    
    
    84,922
    
    
    
    74,251
    
    
    
    14.4
    %  (3)Philadelphia
    
    
    17
    
    
    
    299
    
    
    
    (94.3
    %)  (6)
    
    
    7,918
    
    
    
    297
    
    
    
    2,566.0
    %  (6)United Kingdom
    
    
    707
    
    
    
    754
    
    
    
    (6.2
    %)
    
    
    2,541
    
    
    
    1,415
    
    
    
    79.6
    %  (1)Totals
    
    $
    128,204
    
    
    $
    119,698
    
    
    
    7.1
    %
    
    $
    384,655
    
    
    $
    345,511
    
    
    
    11.3
    %
 
 (1)
    
    The increases for the three and/or nine months ended September 30, 2008
versus the three and/or nine months ended September 30, 2007 were primarily due to
an increase in average gross investment in operating real estate. This
increase was partially offset by a decrease in occupancy and a decrease in
rental rates during 2008.(2)
    
    The increases for the three and nine months ended September 30, 2008
versus the three and nine months ended September 30, 2007 were  primarily due to
an increase in average gross investment in operating real estate, an increase
in rental rates and an increase in occupancy during 2008 compared to 2007.(3)
    
    The increases for the three and/or nine months ended September 30, 2008
versus the three and/or nine months ended September 30, 2007 were primarily due to
an increase in average gross investment in operating real estate and an
increase in rental rates during 2008. The increases were partially offset by a
decrease in occupancy in 2008 compared to 2007.(4)
    
    The decreases for the three and nine months ended September 30, 2008
versus the three and nine months ended September 30, 2007 were primarily due to
a decrease in occupancy during 2008. These decreases were partially offset by
an increase in average gross investment in operating real estate and an
increase in rental rates in 2008 compared to 2007.(5)
    
    The increases for the three and/or nine months ended September 30, 2008
versus the three and/or nine months ended September 30, 2007 were primarily due to
an increase in average gross investment in operating real estate, an increase
in rental rates and an increase in occupancy during 2008 compared to 2007.(6)
    
    Fluctuations for the three-month period and for the nine-month period
were due to the effect of Comcast Center operation during the relevant periods.
Comcast Center was a wholly owned 1,250,000 square foot development property
which came into service incrementally from the third quarter of 2007 through
the first quarter of 2008. On March 31, 2008, the Company recognized the sale
of Comcast Center to an unconsolidated joint venture. Same Store
   31




---



##### 



Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2008
    
    
    September 30, 2007
    
    
    September 30, 2008
    
    
    September 30, 2007Same Store:Rental revenue
    
    $
    111,784
    
    
    $
    112,700
    
    
    $
    335,173
    
    
    $
    336,139Operating expenses:Rental property expense
    
    
    36,273
    
    
    
    35,838
    
    
    
    106,997
    
    
    
    105,916Real estate taxes
    
    
    18,939
    
    
    
    16,776
    
    
    
    57,230
    
    
    
    49,476Operating expense recovery
    
    
    (52,727
    )
    
    
    (50,557
    )
    
    
    (157,361
    )
    
    
    (150,490
    )Unrecovered operating expenses
    
    
    2,485
    
    
    
    2,057
    
    
    
    6,866
    
    
    
    4,902Property level operating income
    
    
    109,299
    
    
    
    110,643
    
    
    
    328,307
    
    
    
    331,237Less straight line rent
    
    
    352
    
    
    
    1,768
    
    
    
    2,469
    
    
    
    5,338Cash basis property level operating income
    
    $
    108,947
    
    
    $
    108,875
    
    
    $
    325,838
    
    
    $
    325,899Reconciliation of non-GAAP financial measure:Property level operating income  Same Store
    
    $
    109,299
    
    
    $
    110,643
    
    
    $
    328,307
    
    
    $
    331,237Property level operating income  properties 
purchased or
developed subsequent to 
January 1,
2007
    
    
    17,655
    
    
    
    7,190
    
    
    
    53,156
    
    
    
    11,124Termination fees
    
    
    1,250
    
    
    
    1,865
    
    
    
    3,192
    
    
    
    3,150General and administrative expense
    
    
    (13,145
    )
    
    
    (13,142
    )
    
    
    (40,178
    )
    
    
    (38,866
    )Depreciation and amortization expense
    
    
    (44,695
    )
    
    
    (40,146
    )
    
    
    (132,021
    )
    
    
    (112,897
    )Other income (expense)
    
    
    (35,576
    )
    
    
    (30,600
    )
    
    
    (108,877
    )
    
    
    (80,804
    )Gain on property dispositions
    
    
    463
    
    
    
    190
    
    
    
    1,939
    
    
    
    1,641Income taxes
    
    
    (308
    )
    
    
    1,022
    
    
    
    (1,372
    )
    
    
    508Minority interest
    
    
    (6,947
    )
    
    
    (5,671
    )
    
    
    (19,948
    )
    
    
    (17,154
    )Equity in earnings of unconsolidated joint ventures
    
    
    470
    
    
    
    (29
    )
    
    
    1,857
    
    
    
    1,026Discontinued operations, net of minority interest
    
    
    10,088
    
    
    
    5,852
    
    
    
    14,089
    
    
    
    30,334Net income
    
    $
    38,554
    
    
    $
    37,174
    
    
    $
    100,144
    
    
    $
    129,299
 General and Administrative
  32




---



##### 



Depreciation and Amortization
  Interest Expense
   Other
     33




---



##### 



Liquidity and Capital Resources
        34




---



##### 



MORTGAGES
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    WEIGHTEDPRINCIPAL
    
    
    PRINCIPAL
    
    
    UNSECURED
    
    
    CREDIT
    
    
    
    
    
    
    AVERAGEAMORTIZATION
    
    
    MATURITIES
    
    
    NOTES
    
    
    FACILITY
    
    
    TOTAL
    
    
    INTEREST RATE2008 (3 months)
    
    $
    2,049
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    2,049
    
    
    
    6.95
    %2009
    
    
    6,589
    
    
    
    46,314
    
    
    
    270,000
    
    
    
    
    
    
    
    322,903
    
    
    
    7.76
    %2010
    
    
    5,823
    
    
    
    4,736
    
    
    
    200,000
    
    
    
    370,000
    
    
    
    580,559
    
    
    
    5.16
    %2011
    
    
    5,160
    
    
    
    13,765
    
    
    
    250,000
    
    
    
    
    
    
    
    268,925
    
    
    
    7.24
    %2012
    
    
    4,336
    
    
    
    32,875
    
    
    
    235,000
    
    
    
    
    
    
    
    272,211
    
    
    
    6.47
    %2013
    
    
    3,857
    
    
    
    4,510
    
    
    
    
    
    
    
    
    
    
    
    8,367
    
    
    
    5.79
    %2014
    
    
    3,888
    
    
    
    2,684
    
    
    
    200,000
    
    
    
    
    
    
    
    206,572
    
    
    
    5.66
    %2015
    
    
    3,336
    
    
    
    44,469
    
    
    
    300,000
    
    
    
    
    
    
    
    347,805
    
    
    
    5.25
    %2016
    
    
    2,409
    
    
    
    16,880
    
    
    
    300,000
    
    
    
    
    
    
    
    319,289
    
    
    
    5.55
    %2017
    
    
    1,770
    
    
    
    
    
    
    
    300,000
    
    
    
    
    
    
    
    301,770
    
    
    
    6.62
    %2018 & thereafter
    
    
    
    
    
    
    
    
    
    
    100,000
    
    
    
    
    
    
    
    100,000
    
    
    
    7.50
    %$
    39,217
    
    
    $
    166,233
    
    
    $
    2,155,000
    
    
    $
    370,000
    
    
    $
    2,730,450
    
    
    
    6.15
    %
   General
  35




---



##### 



Industrial-
    
    
    Industrial-Distribution
    
    
    Flex
    
    
    Office
    
    
    TotalWholly Owned Properties
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annualin Operation:
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent2008 (3 months)
    
    
    562
    
    
    $
    2,665
    
    
    
    252
    
    
    $
    2,286
    
    
    
    546
    
    
    $
    7,829
    
    
    
    1,360
    
    
    $
    12,7802009
    
    
    3,070
    
    
    
    13,197
    
    
    
    1,652
    
    
    
    15,141
    
    
    
    2,685
    
    
    
    39,225
    
    
    
    7,407
    
    
    
    67,5632010
    
    
    3,313
    
    
    
    16,057
    
    
    
    1,722
    
    
    
    16,649
    
    
    
    2,989
    
    
    
    43,073
    
    
    
    8,024
    
    
    
    75,7792011
    
    
    2,989
    
    
    
    13,666
    
    
    
    1,281
    
    
    
    13,233
    
    
    
    2,313
    
    
    
    35,694
    
    
    
    6,583
    
    
    
    62,5932012
    
    
    4,738
    
    
    
    23,368
    
    
    
    1,522
    
    
    
    15,032
    
    
    
    2,279
    
    
    
    39,982
    
    
    
    8,539
    
    
    
    78,3822013
    
    
    2,011
    
    
    
    10,177
    
    
    
    1,308
    
    
    
    13,813
    
    
    
    2,540
    
    
    
    42,588
    
    
    
    5,859
    
    
    
    66,578Thereafter
    
    
    10,409
    
    
    
    58,265
    
    
    
    2,563
    
    
    
    30,540
    
    
    
    6,740
    
    
    
    115,320
    
    
    
    19,712
    
    
    
    204,125TOTAL
    
    
    27,092
    
    
    $
    137,395
    
    
    
    10,300
    
    
    $
    106,694
    
    
    
    20,092
    
    
    $
    323,711
    
    
    
    57,484
    
    
    $
    567,800
 Industrial-
    
    
    Industrial-Distribution
    
    
    Flex
    
    
    Office
    
    
    TotalJoint Venture Properties
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annualin Operation:
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent2008 (3 months)
    
    
    319
    
    
    $
    1,089
    
    
    
    4
    
    
    $
    132
    
    
    
    124
    
    
    $
    2,976
    
    
    
    447
    
    
    $
    4,1972009
    
    
    1,350
    
    
    
    5,440
    
    
    
    11
    
    
    
    287
    
    
    
    506
    
    
    
    11,533
    
    
    
    1,867
    
    
    
    17,2602010
    
    
    1,073
    
    
    
    4,354
    
    
    
    24
    
    
    
    796
    
    
    
    415
    
    
    
    9,270
    
    
    
    1,512
    
    
    
    14,4202011
    
    
    938
    
    
    
    3,950
    
    
    
    11
    
    
    
    335
    
    
    
    452
    
    
    
    11,112
    
    
    
    1,401
    
    
    
    15,3972012
    
    
    297
    
    
    
    1,454
    
    
    
    63
    
    
    
    1,900
    
    
    
    180
    
    
    
    4,943
    
    
    
    540
    
    
    
    8,2972013
    
    
    534
    
    
    
    2,316
    
    
    
    
    
    
    
    
    
    
    
    248
    
    
    
    6,105
    
    
    
    782
    
    
    
    8,421Thereafter
    
    
    3,557
    
    
    
    18,299
    
    
    
    39
    
    
    
    1,212
    
    
    
    2,236
    
    
    
    75,626
    
    
    
    5,832
    
    
    
    95,137TOTAL
    
    
    8,068
    
    
    $
    36,902
    
    
    
    152
    
    
    $
    4,662
    
    
    
    4,161
    
    
    $
    121,565
    
    
    
    12,381
    
    
    $
    163,129
 Industrial-
    
    
    Industrial-Distribution
    
    
    Flex
    
    
    Office
    
    
    TotalProperties
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annualin Operation:
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent2008 (3 months)
    
    
    881
    
    
    $
    3,754
    
    
    
    256
    
    
    $
    2,418
    
    
    
    670
    
    
    $
    10,805
    
    
    
    1,807
    
    
    $
    16,9772009
    
    
    4,420
    
    
    
    18,637
    
    
    
    1,663
    
    
    
    15,428
    
    
    
    3,191
    
    
    
    50,758
    
    
    
    9,274
    
    
    
    84,8232010
    
    
    4,386
    
    
    
    20,411
    
    
    
    1,746
    
    
    
    17,445
    
    
    
    3,404
    
    
    
    52,343
    
    
    
    9,536
    
    
    
    90,1992011
    
    
    3,927
    
    
    
    17,616
    
    
    
    1,292
    
    
    
    13,568
    
    
    
    2,765
    
    
    
    46,806
    
    
    
    7,984
    
    
    
    77,9902012
    
    
    5,035
    
    
    
    24,822
    
    
    
    1,585
    
    
    
    16,932
    
    
    
    2,459
    
    
    
    44,925
    
    
    
    9,079
    
    
    
    86,6792013
    
    
    2,545
    
    
    
    12,493
    
    
    
    1,308
    
    
    
    13,813
    
    
    
    2,788
    
    
    
    48,693
    
    
    
    6,641
    
    
    
    74,999Thereafter
    
    
    13,966
    
    
    
    76,564
    
    
    
    2,602
    
    
    
    31,752
    
    
    
    8,976
    
    
    
    190,946
    
    
    
    25,544
    
    
    
    299,262TOTAL
    
    
    35,160
    
    
    $
    174,297
    
    
    
    10,452
    
    
    $
    111,356
    
    
    
    24,253
    
    
    $
    445,276
    
    
    
    69,865
    
    
    $
    730,929
 36




---



##### 



Square FeetScheduled
    
    Industrial-
    
    
    Industrial-
    
    
    
    
    
    
    
    
    
    
    Percent
    
    
    TotalIn-Service Date
    
    Distribution
    
    
    Flex
    
    
    Office
    
    
    Total
    
    
    Leased
    
    
    InvestmentWholly Owned 

Properties under

Development
    
    4th Quarter 2008
    
    
    963,540
    
    
    
    
    
    
    
    103,295
    
    
    
    1,066,835
    
    
    
    9.8
    %
    
    $
    66,9801st Quarter 2009
    
    
    
    
    
    
    
    
    
    
    170,427
    
    
    
    170,427
    
    
    
    72.5
    %
    
    
    32,4462nd Quarter 2009
    
    
    920,400
    
    
    
    126,000
    
    
    
    77,708
    
    
    
    1,124,108
    
    
    
    4.8
    %
    
    
    73,1793rd Quarter 2009
    
    
    654,040
    
    
    
    68,700
    
    
    
    333,006
    
    
    
    1,055,746
    
    
    
    24.0
    %
    
    
    118,4294th Quarter 2009
    
    
    345,500
    
    
    
    
    
    
    
    104,494
    
    
    
    449,994
    
    
    
    87.9
    %
    
    
    75,9352nd Quarter 2010
    
    
    
    
    
    
    
    
    
    
    95,261
    
    
    
    95,261
    
    
    
    38.3
    %
    
    
    24,2363rd Quarter 2010
    
    
    
    
    
    
    
    
    
    
    211,236
    
    
    
    211,236
    
    
    
    50.8
    %
    
    
    46,266TOTAL
    
    
    2,883,480
    
    
    
    194,700
    
    
    
    1,095,427
    
    
    
    4,173,607
    
    
    
    25.8
    %
    
    $
    437,471Joint Venture 

Properties under 

Development
    
    4th Quarter 2009
    
    
    225,000
    
    
    
    
    
    
    
    176,394
    
    
    
    401,394
    
    
    
    1.2
    %
    
    
    138,2751st Quarter 2010
    
    
    463,636
    
    
    
    
    
    
    
    
    
    
    
    463,636
    
    
    
    
    
    
    
    24,008TOTAL
    
    
    688,636
    
    
    
    
    
    
    
    176,394
    
    
    
    865,030
    
    
    
    0.6
    %
    
    $
    162,283Total Properties
under Development
    
    TOTAL
    
    
    3,572,116
    
    
    
    194,700
    
    
    
    1,271,821
    
    
    
    5,038,637
    
    
    
    21.4
    %
    
    $
    599,754
  Calculation of Funds from Operations
  37




---



##### 



Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2008
    
    
    September 30, 2007
    
    
    September 30, 2008
    
    
    September 30, 2007Reconciliation of net income to FFO  basicNet Income
    
    $
    38,554
    
    
    $
    37,174
    
    
    $
    100,144
    
    
    $
    129,299Basic  Income available to common shareholders
    
    
    38,554
    
    
    
    37,174
    
    
    
    100,144
    
    
    
    129,299Basic  income available to common shareholders per
weighted average share
    
    $
    0.41
    
    
    $
    0.41
    
    
    $
    1.08
    
    
    $
    1.42Adjustments:Depreciation and amortization of unconsolidated joint
ventures
    
    
    4,331
    
    
    
    1,134
    
    
    
    12,208
    
    
    
    2,819Depreciation and amortization
    
    
    44,173
    
    
    
    41,715
    
    
    
    130,803
    
    
    
    118,704Gain on property dispositions
    
    
    (10,542
    )
    
    
    (5,302
    )
    
    
    (14,674
    )
    
    
    (27,238
    )Minority interest share in addback for depreciation
and amortization and gain on property dispositions
    
    
    (1,629
    )
    
    
    (1,648
    )
    
    
    (5,538
    )
    
    
    (4,132
    )Funds from operations available to common
shareholders  basic
    
    $
    74,887
    
    
    $
    73,073
    
    
    $
    222,943
    
    
    $
    219,452Basic Funds from operations available to common
shareholders per weighted average share
    
    $
    0.81
    
    
    $
    0.80
    
    
    $
    2.41
    
    
    $
    2.41Reconciliation of net income to FFO - diluted:Net Income
    
    $
    38,554
    
    
    $
    37,174
    
    
    $
    100,144
    
    
    $
    129,299Diluted  income available to common shareholders
    
    
    38,554
    
    
    
    37,174
    
    
    
    100,144
    
    
    
    129,299Diluted  income available to common shareholders
per weighted average share
    
    $
    0.41
    
    
    $
    0.41
    
    
    $
    1.08
    
    
    $
    1.41Adjustments:Depreciation and amortization of unconsolidated joint
ventures
    
    
    4,331
    
    
    
    1,134
    
    
    
    12,208
    
    
    
    2,819Depreciation and amortization
    
    
    44,173
    
    
    
    41,715
    
    
    
    130,803
    
    
    
    118,704Gain on property dispositions
    
    
    (10,542
    )
    
    
    (5,302
    )
    
    
    (14,674
    )
    
    
    (27,238
    )Minority interest less preferred share distributions
and
excess of preferred unit redemption over carrying
amount
    
    
    1,746
    
    
    
    1,705
    
    
    
    4,526
    
    
    
    5,927Funds from operations available to common shareholders
  diluted
    
    $
    78,262
    
    
    $
    76,426
    
    
    $
    233,007
    
    
    $
    229,511Diluted Funds from operations available to common
shareholders per weighted average share
    
    $
    0.80
    
    
    $
    0.80
    
    
    $
    2.41
    
    
    $
    2.39Reconciliation of weighted average shares:Weighted average common shares  all basic calculations
    
    
    92,928
    
    
    
    90,905
    
    
    
    92,324
    
    
    
    91,179Dilutive shares for long term compensation plans
    
    
    441
    
    
    
    462
    
    
    
    302
    
    
    
    726Diluted shares for net income calculations
    
    
    93,369
    
    
    
    91,367
    
    
    
    92,626
    
    
    
    91,905Weighted average common units
    
    
    4,190
    
    
    
    4,190
    
    
    
    4,190
    
    
    
    4,190Diluted shares for Funds from operations calculations
    
    
    97,559
    
    
    
    95,557
    
    
    
    96,816
    
    
    
    96,095
 38




---



##### 



Inflation
  
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
 Changes in Internal Controls
  39




---



##### 



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
    
 Item 1A. Risk Factors
  Recent uncertainty in the global credit markets could adversely affect our business
and financial condition.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  40




---



##### 



Item 5. Other Information
  41




---



##### 



Item 6. Exhibits
 12.1*
    
    Statement Re: Computation of Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed Charges.31.1*
    
    Certification of the Chief Executive Officer of Liberty Property
Trust required by Rule 13a-14(a) under the Securities Exchange Act
of 1934.31.2*
    
    Certification of the Chief Financial Officer of Liberty Property
Trust required by Rule 13a-14(a) under the Securities Exchange Act
of 1934.31.3*
    
    Certification of the Chief Executive Officer of Liberty Property
Trust, in its capacity as the general partner of Liberty Property
Limited Partnership, required by Rule 13a-14(a) under the Securities
Exchange Act of 1934.31.4*
    
    Certification of the Chief Financial Officer of Liberty Property
Trust, in its capacity as the general partner of Liberty Property
Limited Partnership, required by Rule 13a-14(a) under the Securities
Exchange Act of 1934.32.1*
    
    Certification of the Chief Executive Officer of Liberty Property
Trust required under Rule 13a-14(b) of the Securities Exchange Act
of 1934, as amended. (This exhibit shall not be deemed filed for
purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, or otherwise subject to the liability of that section.
Further, this exhibit shall not be deemed to be incorporated by
reference into any filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended.)32.2*
    
    Certification of the Chief Financial Officer of Liberty Property
Trust required by Rule 13a-14(b) under the Securities Exchange Act
of 1934, as amended. (This exhibit shall not be deemed filed for
purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, or otherwise subject to the liability of that section.
Further, this exhibit shall not be deemed to be incorporated by
reference into any filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended.)32.3*
    
    Certification of the Chief Executive Officer of Liberty Property
Trust, in its capacity as the general partner of Liberty Property
Limited Partnership, required by Rule 13a-14(b) under the Securities
Exchange Act of 1934, as amended. (This exhibit shall not be deemed
filed for purposes of Section 18 of the Securities Exchange Act of
1934, as amended, or otherwise subject to the liability of that
section. Further, this exhibit shall not be deemed to be
incorporated by reference into any filing under the Securities Act
of 1933, as amended, or the Securities Exchange Act of 1934, as
amended.)32.4*
    
    Certification of the Chief Financial Officer of Liberty Property
Trust, in its capacity as the general partner of Liberty Property
Limited Partnership, required by Rule 13a-14(b) under the Securities
Exchange Act of 1934, as amended. (This exhibit shall not be deemed
filed for purposes of Section 18 of the Securities Exchange Act of
1934, as amended, or otherwise subject to the liability of that
section. Further, this exhibit shall not be deemed to be
incorporated by reference into any filing under the Securities Act
of 1933, as amended, or the Securities Exchange Act of 1934, as
amended.)
 
 *
    
    Filed herewith. 42




---



##### 



SIGNATURES
  LIBERTY PROPERTY TRUST/s/ WILLIAM P. HANKOWSKY

William P. Hankowsky
    
    November 7, 2008

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

George J. Alburger, Jr.
    
    November 7, 2008

     DateExecutive Vice President and Chief Financial Officer
 43




---



##### 



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

William P. Hankowsky
    
    November 7, 2008

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

George J. Alburger, Jr.
    
    November 7, 2008

     DateExecutive Vice President and Chief Financial Officer
 44




---



##### 



EXHIBIT INDEX
 EXHIBITNO.
    
    DESCRIPTION12.1
    
    Statement Re: Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings
to Combined Fixed Charges.31.1
    
    Certification of the Chief Executive Officer of Liberty Property Trust required by
Rule 13a-14(a) under the Securities Exchange Act of 1934.31.2
    
    Certification of the Chief Financial Officer of Liberty Property Trust required by
Rule 13a-14(a) under the Securities Exchange Act of 1934.31.3
    
    Certification of the Chief Executive Officer of Liberty Property Trust, in its
capacity as the general partner of Liberty Property Limited Partnership, required by
Rule 13a-14(a) under the Securities Exchange Act of 1934.31.4
    
    Certification of the Chief Financial Officer of Liberty Property Trust, in its
capacity as the general partner of Liberty Property Limited Partnership, required by
Rule 13a-14(a) under the Securities Exchange Act of 1934.32.1
    
    Certification of the Chief Executive Officer of Liberty Property Trust required under
Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended. (This exhibit shall
not be deemed filed for purposes of Section 18 of the Securities Exchange Act of
1934, as amended, or otherwise subject to the liability of that section. Further, this
exhibit shall not be deemed to be incorporated by reference into any filing under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended.)32.2
    
    Certification of the Chief Financial Officer of Liberty Property Trust required by
Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit
shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended, or otherwise subject to the liability of that section. Further,
this exhibit shall not be deemed to be incorporated by reference into any filing under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended.)32.3
    
    Certification of the Chief Executive Officer of Liberty Property Trust, in its
capacity as the general partner of Liberty Property Limited Partnership, required by
Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit
shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended, or otherwise subject to the liability of that section. Further,
this exhibit shall not be deemed to be incorporated by reference into any filing under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended.)32.4
    
    Certification of the Chief Financial Officer of Liberty Property Trust, in its
capacity as the general partner of Liberty Property Limited Partnership, required by
Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit
shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended, or otherwise subject to the liability of that section. Further,
this exhibit shall not be deemed to be incorporated by reference into any filing under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended.)
 45