##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2009
 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 TRUSTLIBERTY PROPERTY LIMITED PARTNERSHIP
 (Exact name of registrants as specified in their governing documents)
 MARYLAND (Liberty Property Trust)PENNSYLVANIA(Liberty Property Limited Partnership)
    
    23-7768996
23-2766549(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification Number)500 Chesterfield ParkwayMalvern, Pennsylvania
    
    19355(Address of Principal Executive Offices)
    
    (Zip Code)
  þ o
 o o
  Large Accelerated Filer þ
    
    Accelerated Filer o
    
    Non-Accelerated Filer o
    
    Smaller Reporting Company o(Do not check if a smaller reporting company)
 o þ




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##### Table of Contents



Liberty Property Trust/Liberty Property Limited Partnership
Form 10-Q for the period ended June 30, 2009
 Index
    
    PagePART I. FINANCIAL INFORMATION
    
    
    4Item 1. Financial Statements (Unaudited)
    
    
    4Condensed consolidated balance sheets of Liberty Property Trust at June 30,
2009 and December 31, 2008
    
    
    4Condensed consolidated statements of operations of Liberty Property Trust for
the three months ended June 30, 2009 and June 30, 2008
    
    
    5Condensed consolidated statements of operations of Liberty Property Trust for
the six months ended June 30, 2009 and June 30, 2008
    
    
    6Condensed consolidated statement of equity of Liberty Property Trust for the
six months ended June 30, 2009
    
    
    7Condensed consolidated statements of cash flows of Liberty Property Trust for
the six months ended June 30, 2009 and June 30, 2008
    
    
    8Notes to condensed consolidated financial statements of Liberty Property Trust
    
    
    9Condensed consolidated balance sheets of Liberty Property Limited Partnership
at June 30, 2009 and December 31, 2008
    
    
    19Condensed consolidated statements of operations of Liberty Property Limited
Partnership for the three months ended June 30, 2009 and June 30, 2008
    
    
    20Condensed consolidated statements of operations of Liberty Property Limited
Partnership for the six months ended June 30, 2009 and June 30, 2008
    
    
    21Condensed consolidated statement of equity of Liberty Property Limited
Partnership for the six months ended June 30, 2009
    
    
    22Condensed consolidated statements of cash flows of Liberty Property Limited
Partnership for the six months ended June 30, 2008 and June 30, 2008
    
    
    23Notes to condensed consolidated financial statements of Liberty Property
Limited Partnership
    
    
    24Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    34Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    46Item 4. Controls and Procedures
    
    
    46
  2




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##### Table of Contents



Index
    
    PagePART II. OTHER INFORMATION
    
    
    47Item 1. Legal Proceedings
    
    
    47Item 1A. Risk Factors
    
    
    47Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    47Item 3. Defaults Upon Senior Securities
    
    
    48Item 4. Submission of Matters to a Vote of Security Holders
    
    
    48Item 5. Other Information
    
    
    48Item 6. Exhibits
    
    
    49Signatures for Liberty Property Trust
    
    
    50Signatures for Liberty Property Limited Partnership
    
    
    51Exhibit Index
    
    
    52Exhibit 10.2Exhibit 12.1Exhibit 31.1Exhibit 31.2Exhibit 31.3Exhibit 31.4Exhibit 32.1Exhibit 32.2Exhibit 32.3Exhibit 32.4
   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)
 June 30, 2009
    
    
    December 31, 2008(Unaudited)ASSETSReal estate:Land and land improvements
    
    $
    824,906
    
    
    $
    806,122Building and improvements
    
    
    4,301,270
    
    
    
    4,218,839Less accumulated depreciation
    
    
    (1,040,218
    )
    
    
    (972,831
    )Operating real estate
    
    
    4,085,958
    
    
    
    4,052,130Development in progress
    
    
    215,155
    
    
    
    245,463Land held for development
    
    
    222,324
    
    
    
    209,551Net real estate
    
    
    4,523,437
    
    
    
    4,507,144Cash and cash equivalents
    
    
    124,536
    
    
    
    15,794Restricted cash
    
    
    40,351
    
    
    
    39,726Accounts receivable
    
    
    6,636
    
    
    
    12,985Deferred rent receivable
    
    
    89,291
    
    
    
    83,498Deferred financing and leasing costs, net of accumulated amortization
(2009, $149,723; 2008, $139,346)
    
    
    134,700
    
    
    
    133,293Investments in unconsolidated joint ventures
    
    
    255,419
    
    
    
    266,602Assets held for sale
    
    
    25,750
    
    
    
    75,526Prepaid expenses and other assets
    
    
    74,369
    
    
    
    82,467Total assets
    
    $
    5,274,489
    
    
    $
    5,217,035LIABILITIESMortgage loans
    
    $
    471,820
    
    
    $
    198,560Unsecured notes
    
    
    1,846,339
    
    
    
    2,131,607Credit facility
    
    
    140,000
    
    
    
    260,000Accounts payable
    
    
    35,262
    
    
    
    32,481Accrued interest
    
    
    31,315
    
    
    
    36,474Dividend and distributions payable
    
    
    54,057
    
    
    
    48,858Other liabilities
    
    
    169,880
    
    
    
    182,549Total liabilities
    
    
    2,748,673
    
    
    
    2,890,529EQUITYLiberty Property Trust shareholders equityCommon shares of beneficial interest, $.001 par value, 183,987,000 shares
authorized; 110,847,466 (includes 1,249,909 in treasury) and 100,034,404
(includes 1,249,909 in treasury) shares issued and outstanding as of June
30, 2009 and December 31, 2008, respectively
    
    
    111
    
    
    
    101Additional paid-in capital
    
    
    2,391,615
    
    
    
    2,162,820Accumulated other comprehensive income (loss)
    
    
    4,120
    
    
    
    (5,378
    )Distributions in excess of net income
    
    
    (222,739
    )
    
    
    (185,721
    )Common shares in treasury, at cost, 1,249,909 shares as of June 30, 2009 and
December 31, 2008
    
    
    (51,951
    )
    
    
    (51,951
    )Total Liberty Property Trust shareholders equity
    
    
    2,121,156
    
    
    
    1,919,871Noncontrolling interest  operating partnership4,017,354 and 4,074,967 common units outstanding as of June 30, 2009 and
December 31, 2008, respectively
    
    
    115,991
    
    
    
    117,5469,740,000 preferred units outstanding as of June 30, 2009 and December 31,
2008
    
    
    287,959
    
    
    
    287,959Noncontrolling interest  consolidated joint ventures
    
    
    710
    
    
    
    1,130Total equity
    
    
    2,525,816
    
    
    
    2,326,506Total liabilities and equity
    
    $
    5,274,489
    
    
    $
    5,217,035
   4




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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS OF LIBERTY PROPERTY TRUST
(Unaudited and in thousands, except per share amounts)
 Three Months EndedJune 30, 2009
    
    
    June 30, 2008OPERATING REVENUERental
    
    $
    130,846
    
    
    $
    123,557Operating expense reimbursement
    
    
    54,818
    
    
    
    56,438Total operating revenue
    
    
    185,664
    
    
    
    179,995OPERATING EXPENSERental property
    
    
    35,368
    
    
    
    35,534Real estate taxes
    
    
    22,119
    
    
    
    22,961General and administrative
    
    
    11,659
    
    
    
    13,047Depreciation and amortization
    
    
    42,571
    
    
    
    42,508Total operating expenses
    
    
    111,717
    
    
    
    114,050Operating income
    
    
    73,947
    
    
    
    65,945OTHER INCOME (EXPENSE)Interest and other income
    
    
    2,520
    
    
    
    3,009Debt extinguishment gain
    
    
    563
    
    
    
    Interest expense
    
    
    (37,300
    )
    
    
    (36,330
    )Total other income (expense)
    
    
    (34,217
    )
    
    
    (33,321
    )Income before property dispositions, income taxes
and equity in earnings of unconsolidated joint
ventures
    
    
    39,730
    
    
    
    32,624(Loss) gain on property dispositions
    
    
    (2,050
    )
    
    
    835Income taxes
    
    
    (127
    )
    
    
    (580
    )Equity in earnings of unconsolidated joint ventures
    
    
    1,192
    
    
    
    1,010Income from continuing operations
    
    
    38,745
    
    
    
    33,889Discontinued operations (including net gain on
property dispositions of $3,670 and $2,793 for the
three months ended June 30, 2009 and 2008,
respectively)
    
    
    4,467
    
    
    
    4,489Net income
    
    
    43,212
    
    
    
    38,378Noncontrolling interest  operating partnership
    
    
    (6,597
    )
    
    
    (6,681
    )Noncontrolling interest  consolidated joint ventures
    
    
    56
    
    
    
    (68
    )Net income available to common shareholders
    
    $
    36,671
    
    
    $
    31,629Earnings per common shareBasic:Income from continuing operations
    
    $
    0.31
    
    
    $
    0.29Income from discontinued operations
    
    
    0.04
    
    
    
    0.05Income per common share  basic
    
    $
    0.35
    
    
    $
    0.34Diluted:Income from continuing operations
    
    $
    0.31
    
    
    $
    0.29Income from discontinued operations
    
    
    0.04
    
    
    
    0.05Income per common share  diluted
    
    $
    0.35
    
    
    $
    0.34Distributions per common share
    
    $
    0.475
    
    
    $
    0.625Weighted average number of common shares outstandingBasic
    
    
    105,768
    
    
    
    92,322Diluted
    
    
    106,245
    
    
    
    92,701Amounts attributable to common shareholdersIncome from continuing operations
    
    $
    32,362
    
    
    $
    27,333Discontinued operations
    
    
    4,309
    
    
    
    4,296Net income available to common shareholders
    
    $
    36,671
    
    
    $
    31,629
   5




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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS OF LIBERTY PROPERTY TRUST
(Unaudited and in thousands, except per share amounts)
 Six Months EndedJune 30, 2009
    
    
    June 30, 2008OPERATING REVENUERental
    
    $
    260,045
    
    
    $
    254,847Operating expense reimbursement
    
    
    112,773
    
    
    
    112,513Total operating revenue
    
    
    372,818
    
    
    
    367,360OPERATING EXPENSERental property
    
    
    74,515
    
    
    
    74,219Real estate taxes
    
    
    44,244
    
    
    
    43,104General and administrative
    
    
    27,222
    
    
    
    27,083Depreciation and amortization
    
    
    85,705
    
    
    
    85,174Total operating expenses
    
    
    231,686
    
    
    
    229,580Operating income
    
    
    141,132
    
    
    
    137,780OTHER INCOME (EXPENSE)Interest and other income
    
    
    5,624
    
    
    
    6,096Debt extinguishment gain
    
    
    1,092
    
    
    
    Interest expense
    
    
    (75,420
    )
    
    
    (77,679
    )Total other income (expense)
    
    
    (68,704
    )
    
    
    (71,583
    )Income before property dispositions, income taxes
and equity in earnings of unconsolidated joint
ventures
    
    
    72,428
    
    
    
    66,197(Loss) gain on property dispositions
    
    
    (2,344
    )
    
    
    1,476Income taxes
    
    
    (344
    )
    
    
    (1,064
    )Equity in earnings of unconsolidated joint ventures
    
    
    1,609
    
    
    
    1,387Income from continuing operations
    
    
    71,349
    
    
    
    67,996Discontinued operations (including net gain on
property dispositions of $3,869 and $3,403 for the
six months ended June 30, 2009 and 2008,
respectively)
    
    
    5,705
    
    
    
    6,778Net income
    
    
    77,054
    
    
    
    74,774Noncontrolling interest  operating partnership
    
    
    (12,914
    )
    
    
    (13,286
    )Noncontrolling interest  consolidated joint ventures
    
    
    420
    
    
    
    102Net income available to common shareholders
    
    $
    64,560
    
    
    $
    61,590Earnings per common shareBasic:Income from continuing operations
    
    $
    0.58
    
    
    $
    0.60Income from discontinued operations
    
    
    0.05
    
    
    
    0.07Income per common share  basic
    
    $
    0.63
    
    
    $
    0.67Diluted:Income from continuing operations
    
    $
    0.57
    
    
    $
    0.60Income from discontinued operations
    
    
    0.05
    
    
    
    0.07Income per common share  diluted
    
    $
    0.62
    
    
    $
    0.67Distributions per common share
    
    $
    0.95
    
    
    $
    1.25Weighted average number of common shares outstandingBasic
    
    
    103,244
    
    
    
    92,001Diluted
    
    
    103,625
    
    
    
    92,248Amounts attributable to common shareholdersIncome from continuing operations
    
    $
    59,062
    
    
    $
    55,105Discontinued operations
    
    
    5,498
    
    
    
    6,485Net income available to common shareholders
    
    $
    64,560
    
    
    $
    61,590
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CONDENSED CONSOLIDATED STATEMENT OF EQUITY OF LIBERTY PROPERTY TRUST
(UNAUDITED AND IN THOUSANDS)
 Common
    
    
    
    
    
    
    Accumulated
    
    
    
    
    
    
    
    
    
    
    Total Liberty
    
    
    Noncontrolling
    
    
    NoncontrollingShares of
    
    
    Additional
    
    
    Other
    
    
    Distributions
    
    
    Common
    
    
    Property Trust
    
    
    Interest 
    
    
    Interest Beneficial
    
    
    Paid-In
    
    
    Comprehensive
    
    
    in Excess of
    
    
    Shares Held
    
    
    Shareholders
    
    
    Operating
    
    
    ConsolidatedInterest
    
    
    Capital
    
    
    Income (Loss)
    
    
    Net Income
    
    
    in Treasury
    
    
    Equity
    
    
    Partnership
    
    
    Joint Ventures
    
    
    Total EquityBalance at December 31, 2008
    
    $
    101
    
    
    $
    2,162,820
    
    
    $
    (5,378
    )
    
    $
    (185,721
    )
    
    $
    (51,951
    )
    
    $
    1,919,871
    
    
    $
    405,505
    
    
    $
    1,130
    
    
    $
    2,326,506Net proceeds from the issuance of
common shares
    
    
    10
    
    
    
    221,505
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    221,515
    
    
    
    
    
    
    
    
    
    
    
    221,515Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,560
    
    
    
    
    
    
    
    64,560
    
    
    
    12,914
    
    
    
    (420
    )
    
    
    77,054Distributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (101,578
    )
    
    
    
    
    
    
    (101,578
    )
    
    
    (14,469
    )
    
    
    
    
    
    
    (116,047
    )Noncash compensation
    
    
    
    
    
    
    7,290
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,290
    
    
    
    
    
    
    
    
    
    
    
    7,290Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    9,498
    
    
    
    
    
    
    
    
    
    
    
    9,498
    
    
    
    
    
    
    
    
    
    
    
    9,498Balance at June 30, 2009
    
    $
    111
    
    
    $
    2,391,615
    
    
    $
    4,120
    
    
    $
    (222,739
    )
    
    $
    (51,951
    )
    
    $
    2,121,156
    
    
    $
    403,950
    
    
    $
    710
    
    
    $
    2,525,816
   7




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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS OF LIBERTY PROPERTY TRUST
(Unaudited and in thousands)
 Six Months EndedJune 30, 2009
    
    
    June 30, 2008OPERATING ACTIVITIESNet income
    
    $
    77,054
    
    
    $
    74,774Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    86,306
    
    
    
    87,374Amortization of deferred financing costs
    
    
    2,439
    
    
    
    2,227Equity in earnings of unconsolidated joint ventures
    
    
    (1,607
    )
    
    
    (1,387
    )Distributions from unconsolidated joint ventures
    
    
    663
    
    
    
    Gain on property dispositions
    
    
    (1,526
    )
    
    
    (4,879
    )Noncash compensation
    
    
    9,790
    
    
    
    5,603Changes in operating assets and liabilities:Restricted cash
    
    
    970
    
    
    
    (19,818
    )Accounts receivable
    
    
    6,208
    
    
    
    (248
    )Deferred rent receivable
    
    
    (5,677
    )
    
    
    (7,195
    )Prepaid expenses and other assets
    
    
    8,958
    
    
    
    (10,831
    )Accounts payable
    
    
    2,979
    
    
    
    5,800Accrued interest
    
    
    (5,159
    )
    
    
    (1,909
    )Other liabilities
    
    
    (15,795
    )
    
    
    (15,979
    )Net cash provided by operating activities
    
    
    165,603
    
    
    
    113,532INVESTING ACTIVITIESInvestment in properties
    
    
    (37,318
    )
    
    
    (37,752
    )Investments in unconsolidated joint ventures
    
    
    (4,017
    )
    
    
    (7,506
    )Distributions from unconsolidated joint ventures
    
    
    18,379
    
    
    
    3,161Net proceeds from disposition of properties/land
    
    
    80,333
    
    
    
    304,563Investment in development in progress
    
    
    (48,774
    )
    
    
    (138,035
    )Investment in land held for development
    
    
    (26,980
    )
    
    
    (18,717
    )Investment in deferred leasing costs
    
    
    (12,125
    )
    
    
    (14,271
    )Net cash (used in) provided by investing activities
    
    
    (30,502
    )
    
    
    91,443FINANCING ACTIVITIESNet proceeds from issuance of common shares
    
    
    218,970
    
    
    
    32,124Repayments of unsecured notes
    
    
    (285,268
    )
    
    
    Proceeds from mortgage loans
    
    
    317,213
    
    
    
    Repayments of mortgage loans
    
    
    (44,121
    )
    
    
    (35,673
    )Proceeds from credit facility
    
    
    199,150
    
    
    
    344,150Repayments on credit facility
    
    
    (319,150
    )
    
    
    (439,150
    )Increase in deferred financing costs
    
    
    (5,743
    )
    
    
    Distribution paid on common shares
    
    
    (96,350
    )
    
    
    (114,867
    )Distribution paid on units
    
    
    (14,452
    )
    
    
    (15,941
    )Net cash used in financing activities
    
    
    (29,751
    )
    
    
    (229,357
    )Net increase (decrease) in cash and cash equivalents
    
    
    105,350
    
    
    
    (24,382
    )Increase (decrease) in cash and cash equivalents related to foreign currency
translation
    
    
    3,392
    
    
    
    (28
    )Cash and cash equivalents at beginning of period
    
    
    15,794
    
    
    
    37,989Cash and cash equivalents at end of period
    
    $
    124,536
    
    
    $
    13,579
   8




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Liberty Property Trust
 
 Notes to Condensed Consolidated Financial Statements (Unaudited)
June 30, 2009
 Note 1: Organization and Basis of Presentation
 Organization
  Basis of Presentation
    9




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Income per Common Share
  For the Three Months Ended June 30, 2009
    
    
    For the Three Months Ended June 30, 2008Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    
    
    
    
    AverageIncome
    
    
    Shares
    
    
    
    
    
    
    Income
    
    
    Shares(Numerator)
    
    
    (Denominator)
    
    
    Per Share
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    Per ShareBasic income from continuing operationsIncome from continuing operations net of
noncontrolling interest
    
    $
    32,362
    
    
    
    105,768
    
    
    $
    0.31
    
    
    $
    27,333
    
    
    
    92,322
    
    
    $
    0.29Dilutive shares for long-term compensation
plans
    
    
    
    
    
    
    477
    
    
    
    
    
    
    
    
    
    
    
    379Diluted income from continuing operationsIncome from continuing operations net of
noncontrolling interest and assumed
conversions
    
    
    32,362
    
    
    
    106,245
    
    
    $
    0.31
    
    
    
    27,333
    
    
    
    92,701
    
    
    $
    0.29Basic income from discontinued operationsDiscontinued operations net of
noncontrolling interest
    
    
    4,309
    
    
    
    105,768
    
    
    $
    0.04
    
    
    
    4,296
    
    
    
    92,322
    
    
    $
    0.05Dilutive shares for long-term compensation
plans
    
    
    
    
    
    
    477
    
    
    
    
    
    
    
    
    
    
    
    379Diluted income from discontinued operationsDiscontinued operations net of
noncontrolling interest
    
    
    4,309
    
    
    
    106,245
    
    
    $
    0.04
    
    
    
    4,296
    
    
    
    92,701
    
    
    $
    0.05Basic income per common shareNet income available to common shareholders
    
    
    36,671
    
    
    
    105,768
    
    
    $
    0.35
    
    
    
    31,629
    
    
    
    92,322
    
    
    $
    0.34Dilutive shares for long-term compensation
plans
    
    
    
    
    
    
    477
    
    
    
    
    
    
    
    
    
    
    
    379Diluted income per common shareNet income available to common
shareholders and assumed conversions
    
    $
    36,671
    
    
    
    106,245
    
    
    $
    0.35
    
    
    $
    31,629
    
    
    
    92,701
    
    
    $
    0.34
  10




---



##### Table of Contents



For the Six Months Ended June 30, 2009
    
    
    For the Six Months Ended June 30, 2008Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    
    
    
    
    AverageIncome
    
    
    Shares
    
    
    
    
    
    
    Income
    
    
    Shares(Numerator)
    
    
    (Denominator)
    
    
    Per Share
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    Per ShareBasic income from continuing operationsIncome from continuing operations net of
noncontrolling interest
    
    $
    59,062
    
    
    
    103,244
    
    
    $
    0.58
    
    
    $
    55,105
    
    
    
    92,001
    
    
    $
    0.60Dilutive shares for long-term compensation
plans
    
    
    
    
    
    
    381
    
    
    
    
    
    
    
    
    
    
    
    247Diluted income from continuing operationsIncome from continuing operations net of
noncontrolling interest and assumed
conversions
    
    
    59,062
    
    
    
    103,625
    
    
    $
    0.57
    
    
    
    55,105
    
    
    
    92,248
    
    
    $
    0.60Basic income from discontinued operationsDiscontinued operations net of
noncontrolling interest
    
    
    5,498
    
    
    
    103,244
    
    
    $
    0.05
    
    
    
    6,485
    
    
    
    92,001
    
    
    $
    0.07Dilutive shares for long-term compensation
plans
    
    
    
    
    
    
    381
    
    
    
    
    
    
    
    
    
    
    
    247Diluted income from discontinued operationsDiscontinued operations net of
noncontrolling interest
    
    
    5,498
    
    
    
    103,625
    
    
    $
    0.05
    
    
    
    6,485
    
    
    
    92,248
    
    
    $
    0.07Basic income per common shareNet income available to common shareholders
    
    
    64,560
    
    
    
    103,244
    
    
    $
    0.63
    
    
    
    61,590
    
    
    
    92,001
    
    
    $
    0.67Dilutive shares for long-term compensation
plans
    
    
    
    
    
    
    381
    
    
    
    
    
    
    
    
    
    
    
    247Diluted income per common shareNet income available to common
shareholders and assumed conversions
    
    $
    64,560
    
    
    
    103,625
    
    
    $
    0.62
    
    
    $
    61,590
    
    
    
    92,248
    
    
    $
    0.67
  Foreign Currency Translation
  SFAS No. 160
 Accounting for Noncontrolling Interests Classification and Measurement of Redeemable Securities.
  11




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##### Table of Contents



Note 2: Segment Information
  Reportable Segments
    
    MarketsNortheast
    
    Southeastern PA; Lehigh/Central PA; New JerseyMidwest
    
    Minnesota; Milwaukee; ChicagoMid-Atlantic
    
    Maryland; Carolinas; Richmond; Virginia BeachSouth
    
    Jacksonville; Orlando; Boca Raton; Tampa; Texas; ArizonaPhiladelphia
    
    Philadelphia; Northern Virginia/Washington, D.C.United Kingdom
    
    County of Kent; West Midlands
   FOR THE THREE MONTHS ENDED JUNE 30, 2009
 NortheastLehigh/Southeastern
    
    
    Central
    
    
    New
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Phila-
    
    
    UnitedPA
    
    
    PA
    
    
    Jersey
    
    
    Midwest
    
    
    Mid-Atlantic
    
    
    South
    
    
    delphia
    
    
    Kingdom
    
    
    TotalOperating revenue
    
    $
    45,729
    
    
    $
    24,683
    
    
    $
    7,808
    
    
    $
    21,056
    
    
    $
    33,651
    
    
    $
    46,554
    
    
    $
    5,048
    
    
    $
    1,135
    
    
    $
    185,664Rental property expenses and real
estate taxes
    
    
    14,169
    
    
    
    6,440
    
    
    
    2,941
    
    
    
    7,908
    
    
    
    9,343
    
    
    
    15,233
    
    
    
    1,193
    
    
    
    260
    
    
    
    57,487Property level operating income
    
    $
    31,560
    
    
    $
    18,243
    
    
    $
    4,867
    
    
    $
    13,148
    
    
    $
    24,308
    
    
    $
    31,321
    
    
    $
    3,855
    
    
    $
    875
    
    
    
    128,177Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,520Debt extinguishment gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    563Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37,300
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,659
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (42,571
    )Income before property
dispositions, income taxes
and equity in earnings of
unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,730Loss on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,050
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (127
    )Equity in earnings of
unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,192Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,467Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    43,212
  12




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##### Table of Contents



FOR THE THREE MONTHS ENDED JUNE 30, 2008
 NortheastLehigh/Southeastern
    
    
    Central
    
    
    New
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Phila-
    
    
    UnitedPA
    
    
    PA
    
    
    Jersey
    
    
    Midwest
    
    
    Mid-Atlantic
    
    
    South
    
    
    delphia
    
    
    Kingdom
    
    
    TotalOperating revenue
    
    $
    43,265
    
    
    $
    24,767
    
    
    $
    7,939
    
    
    $
    20,969
    
    
    $
    34,467
    
    
    $
    42,435
    
    
    $
    4,745
    
    
    $
    1,408
    
    
    $
    179,995Rental property expenses and real
estate taxes
    
    
    13,763
    
    
    
    7,311
    
    
    
    3,166
    
    
    
    7,974
    
    
    
    9,566
    
    
    
    15,011
    
    
    
    1,447
    
    
    
    257
    
    
    
    58,495Property level operating income
    
    $
    29,502
    
    
    $
    17,456
    
    
    $
    4,773
    
    
    $
    12,995
    
    
    $
    24,901
    
    
    $
    27,424
    
    
    $
    3,298
    
    
    $
    1,151
    
    
    
    121,500Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,009Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36,330
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,047
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (42,508
    )Income before property dispositions,
income taxes and equity in earnings
of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,624Gain on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    835Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (580
    )Equity in earnings of
unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,010Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,489Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    38,378
 FOR THE SIX MONTHS ENDED JUNE 30, 2009
 NortheastLehigh/Southeastern
    
    
    Central
    
    
    New
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Phila-
    
    
    UnitedPA
    
    
    PA
    
    
    Jersey
    
    
    Midwest
    
    
    Mid-Atlantic
    
    
    South
    
    
    delphia
    
    
    Kingdom
    
    
    TotalOperating revenue
    
    $
    93,095
    
    
    $
    49,845
    
    
    $
    15,857
    
    
    $
    42,046
    
    
    $
    67,903
    
    
    $
    92,053
    
    
    $
    9,783
    
    
    $
    2,236
    
    
    $
    372,818Rental property
expenses and real
estate taxes
    
    
    29,996
    
    
    
    14,060
    
    
    
    6,340
    
    
    
    15,764
    
    
    
    20,148
    
    
    
    29,588
    
    
    
    2,373
    
    
    
    490
    
    
    
    118,759Property level
operating income
    
    $
    63,099
    
    
    $
    35,785
    
    
    $
    9,517
    
    
    $
    26,282
    
    
    $
    47,755
    
    
    $
    62,465
    
    
    $
    7,410
    
    
    $
    1,746
    
    
    
    254,059Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,624Debt extinguishment gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,092Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (75,420
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27,222
    )Depreciation and
amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (85,705
    )Income before property
dispositions, income
taxes and equity in
earnings of
unconsolidated
joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72,428Loss on property
dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,344
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (344
    )Equity in earnings of
unconsolidated joint
ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,609Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,705Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    77,054
  13




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##### Table of Contents



FOR THE SIX MONTHS ENDED JUNE 30, 2008
 NortheastLehigh/Southeastern
    
    
    Central
    
    
    New
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Phila-
    
    
    UnitedPA
    
    
    PA
    
    
    Jersey
    
    
    Midwest
    
    
    Mid-Atlantic
    
    
    South
    
    
    delphia
    
    
    Kingdom
    
    
    TotalOperating revenue
    
    $
    87,392
    
    
    $
    48,976
    
    
    $
    15,705
    
    
    $
    41,157
    
    
    $
    69,127
    
    
    $
    82,418
    
    
    $
    20,133
    
    
    $
    2,452
    
    
    $
    367,360Rental property
expenses and real
estate taxes
    
    
    28,111
    
    
    
    13,846
    
    
    
    6,076
    
    
    
    15,553
    
    
    
    19,536
    
    
    
    28,113
    
    
    
    5,470
    
    
    
    618
    
    
    
    117,323Property level
operating income
    
    $
    59,281
    
    
    $
    35,130
    
    
    $
    9,629
    
    
    $
    25,604
    
    
    $
    49,591
    
    
    $
    54,305
    
    
    $
    14,663
    
    
    $
    1,834
    
    
    
    250,037Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,096Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (77,679
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27,083
    )Depreciation and
amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (85,174
    )Income before property
dispositions, income taxes
and equity in earnings of
unconsolidated joint
ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66,197Gain on property
dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,476Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,064
    )Equity in earnings of
unconsolidated joint
ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,387Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,778Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    74,774
 Note 3: SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets
   Three Months Ended
    
    
    Six Months EndedJune 30, 2009
    
    
    June 30, 2008
    
    
    June 30, 2009
    
    
    June 30, 2008Revenues
    
    $
    1,875
    
    
    $
    6,512
    
    
    $
    5,052
    
    
    $
    12,703Operating expenses
    
    
    (333
    )
    
    
    (2,408
    )
    
    
    (1,349
    )
    
    
    (4,456
    )Interest expense
    
    
    (300
    )
    
    
    (996
    )
    
    
    (863
    )
    
    
    (2,109
    )Depreciation and amortization
    
    
    (445
    )
    
    
    (1,412
    )
    
    
    (1,004
    )
    
    
    (2,763
    )Income before property dispositions
    
    $
    797
    
    
    $
    1,696
    
    
    $
    1,836
    
    
    $
    3,375
  Allocation of Interest to Discontinued Operations
  14




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##### Table of Contents



Asset Impairment
  Note 4: Joint Ventures
  Liberty/Commerz 1701 JFK Boulevard, LP
 Accounting for the Sales of Real Estate
    Note 5: Indebtedness
 Mortgage Loans
   Unsecured Notes
   15




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##### Table of Contents



Note 6: Noncontrolling interests
  Common units
  Preferred units
  Date of
    
    
    
    
    
    
    
    
    
    
    
    
    
    Liquidation
    
    
    Dividend
    
    
    RedeemableIssue
    
    Issue
    
    Amount
    
    
    Units
    
    
    Preference
    
    
    Rate
    
    
    As of
    
    
    Exchangeable after(in 000s)7/28/99
    
    Series B
    
    $
    95,000
    
    
    
    3,800
    
    
    $
    25
    
    
    
    7.45
    %
    
    
    8/31/09
    
    
    8/31/13 into Series B Cumulative Redeemable Preferred Shares of the Trust6/16/05
    
    Series E
    
    $
    20,000
    
    
    
    400
    
    
    $
    50
    
    
    
    7.00
    %
    
    
    6/16/10
    
    
    6/16/15 into Series E Cumulative Redeemable Preferred Shares of the Trust6/30/05
    
    Series F
    
    $
    44,000
    
    
    
    880
    
    
    $
    50
    
    
    
    6.65
    %
    
    
    6/30/10
    
    
    12/12/15 into Series F Cumulative Redeemable Preferred Shares of the Trust8/23/05
    
    Series F
    
    $
    6,000
    
    
    
    120
    
    
    $
    50
    
    
    
    6.65
    %
    
    
    6/30/10
    
    
    12/12/15 into Series F Cumulative Redeemable Preferred Shares of the Trust12/15/06
    
    Series G
    
    $
    27,000
    
    
    
    540
    
    
    $
    50
    
    
    
    6.70
    %
    
    
    12/12/11
    
    
    12/12/16 into Series G Cumulative Redeemable Preferred Shares of the Trust8/21/07
    
    Series H
    
    $
    100,000
    
    
    
    4,000
    
    
    $
    25
    
    
    
    7.40
    %
    
    
    8/21/12
    
    
    8/21/17 into Series H Cumulative Redeemable Preferred Shares of the Trust
   16




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##### Table of Contents



Note 7: Continuous Equity Offering
  Note 8: Disclosure of Fair Value of Financial Instruments
     Note 9: Recently Issued Accounting Standards
 SFAS No. 141(R)
 Applying the Acquisition Method
 FSP EITF 03-6-1
 Determining Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities
  17




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##### Table of Contents



Note 10: Supplemental Disclosure to Statements of Cash Flows
  Non-cash activity
    
    2009
    
    
    2008Write-off of fully depreciated property and deferred costs
    
    $
    17,476
    
    
    $
    6,578Increase in investments in unconsolidated joint ventures
    
    
    
    
    
    
    (35,172
    )Disposition of properties/development in progress
    
    
    
    
    
    
    173,624Disposition of deferred leasing/financing costs
    
    
    
    
    
    
    12,526Reduction of accounts receivable
    
    
    
    
    
    
    7,854Reduction of deferred rent receivable
    
    
    
    
    
    
    6,580Reduction of prepaid and other assets
    
    
    
    
    
    
    38,486Reduction of credit facility
    
    
    
    
    
    
    (152,960
    )Reduction of other liabilities
    
    
    
    
    
    
    (50,938
    )
 Note 11: Subsequent Events
   18




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##### Table of Contents



CONDENSED CONSOLIDATED BALANCE SHEETS OF
 LIBERTY PROPERTY LIMITED PARTNERSHIP
 (In thousands)
 June 30, 2009
    
    
    December 31, 2008(Unaudited)ASSETSReal estate:Land and land improvements
    
    $
    824,906
    
    
    $
    806,122Building and improvements
    
    
    4,301,270
    
    
    
    4,218,839Less accumulated depreciation
    
    
    (1,040,218
    )
    
    
    (972,831
    )Operating real estate
    
    
    4,085,958
    
    
    
    4,052,130Development in progress
    
    
    215,155
    
    
    
    245,463Land held for development
    
    
    222,324
    
    
    
    209,551Net real estate
    
    
    4,523,437
    
    
    
    4,507,144Cash and cash equivalents
    
    
    124,536
    
    
    
    15,794Restricted cash
    
    
    40,351
    
    
    
    39,726Accounts receivable
    
    
    6,636
    
    
    
    12,985Deferred rent receivable
    
    
    89,291
    
    
    
    83,498Deferred financing and leasing costs, net of accumulated amortization
(2009, $149,723; 2008, $139,346)
    
    
    134,700
    
    
    
    133,293Investments in unconsolidated joint ventures
    
    
    255,419
    
    
    
    266,602Assets held for sale
    
    
    25,750
    
    
    
    75,526Prepaid expenses and other assets
    
    
    74,369
    
    
    
    82,467Total assets
    
    $
    5,274,489
    
    
    $
    5,217,035LIABILITIESMortgage loans
    
    $
    471,820
    
    
    $
    198,560Unsecured notes
    
    
    1,846,339
    
    
    
    2,131,607Credit facility
    
    
    140,000
    
    
    
    260,000Accounts payable
    
    
    35,262
    
    
    
    32,481Accrued interest
    
    
    31,315
    
    
    
    36,474Distributions payable
    
    
    54,057
    
    
    
    48,858Other liabilities
    
    
    169,880
    
    
    
    182,549Total liabilities
    
    
    2,748,673
    
    
    
    2,890,529Limited partners equity  preferred units, 9,740,000 preferred units
outstanding as of June 30, 2009
and
December 31, 2008
    
    
    287,959
    
    
    
    287,959 common units, 4,017,354 and 4,074,967
common units outstanding as of
June 30, 2009 and December 31,
2008,
respectively
    
    
    115,991
    
    
    
    117,546EQUITYGeneral partners equity  common units, 110,847,466 and
100,034,404 units outstanding as of June 30, 2009 and
December 31, 2008, respectively
    
    
    2,121,156
    
    
    
    1,919,871Noncontrolling interest  consolidated joint ventures
    
    
    710
    
    
    
    1,130Total equity
    
    
    2,121,866
    
    
    
    1,921,001Total liabilities, limited partners equity and
equity
    
    $
    5,274,489
    
    
    $
    5,217,035
   19




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##### Table of Contents



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Unaudited and in thousands, except per unit amounts)
 Three Months EndedJune 30, 2009
    
    
    June 30, 2008OPERATING REVENUERental
    
    $
    130,846
    
    
    $
    123,557Operating expense reimbursement
    
    
    54,818
    
    
    
    56,438Total operating revenue
    
    
    185,664
    
    
    
    179,995OPERATING EXPENSERental property
    
    
    35,368
    
    
    
    35,534Real estate taxes
    
    
    22,119
    
    
    
    22,961General and administrative
    
    
    11,659
    
    
    
    13,047Depreciation and amortization
    
    
    42,571
    
    
    
    42,508Total operating expenses
    
    
    111,717
    
    
    
    114,050Operating income
    
    
    73,947
    
    
    
    65,945OTHER INCOME (EXPENSE)Interest and other income
    
    
    2,520
    
    
    
    3,009Debt extinguishment gain
    
    
    563
    
    
    
    Interest expense
    
    
    (37,300
    )
    
    
    (36,330
    )Total other income (expense)
    
    
    (34,217
    )
    
    
    (33,321
    )Income before property dispositions, income taxes and
equity in earnings of unconsolidated joint ventures
    
    
    39,730
    
    
    
    32,624(Loss) gain on property dispositions
    
    
    (2,050
    )
    
    
    835Income taxes
    
    
    (127
    )
    
    
    (580
    )Equity in earnings of unconsolidated joint ventures
    
    
    1,192
    
    
    
    1,010Income from continuing operations
    
    
    38,745
    
    
    
    33,889Discontinued operations (including net gain on
property dispositions of $3,670 and $2,793 for the
three months ended June 30, 2009 and 2008,
respectively)
    
    
    4,467
    
    
    
    4,489Net income
    
    
    43,212
    
    
    
    38,378Noncontrolling interest  consolidated joint ventures
    
    
    56
    
    
    
    (68
    )Preferred unit distributions
    
    
    (5,253
    )
    
    
    (5,253
    )Income available to common unitholders
    
    $
    38,015
    
    
    $
    33,057Earnings per common unitBasic:Income from continuing operations
    
    $
    0.31
    
    
    $
    0.29Income from discontinued operations
    
    
    0.04
    
    
    
    0.05Income per common unit  basic
    
    $
    0.35
    
    
    $
    0.34Diluted:Income from continuing operations
    
    $
    0.31
    
    
    $
    0.29Income from discontinued operations
    
    
    0.04
    
    
    
    0.05Income per common unit  diluted
    
    $
    0.35
    
    
    $
    0.34Distributions per common unit
    
    $
    0.475
    
    
    $
    0.625Weighted average number of common units outstandingBasic
    
    
    109,785
    
    
    
    96,512Diluted
    
    
    110,262
    
    
    
    96,891
   20




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##### Table of Contents



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Unaudited and in thousands, except per unit amounts)
 Six Months EndedJune 30, 2009
    
    
    June 30, 2008OPERATING REVENUERental
    
    $
    260,045
    
    
    $
    254,847Operating expense reimbursement
    
    
    112,773
    
    
    
    112,513Total operating revenue
    
    
    372,818
    
    
    
    367,360OPERATING EXPENSERental property
    
    
    74,515
    
    
    
    74,219Real estate taxes
    
    
    44,244
    
    
    
    43,104General and administrative
    
    
    27,222
    
    
    
    27,083Depreciation and amortization
    
    
    85,705
    
    
    
    85,174Total operating expenses
    
    
    231,686
    
    
    
    229,580Operating income
    
    
    141,132
    
    
    
    137,780OTHER INCOME (EXPENSE)Interest and other income
    
    
    5,624
    
    
    
    6,096Debt extinguishment gain
    
    
    1,092
    
    
    
    Interest expense
    
    
    (75,420
    )
    
    
    (77,679
    )Total other income (expense)
    
    
    (68,704
    )
    
    
    (71,583
    )Income before property dispositions, income taxes and
equity in earnings of unconsolidated joint ventures
    
    
    72,428
    
    
    
    66,197(Loss) gain on property dispositions
    
    
    (2,344
    )
    
    
    1,476Income taxes
    
    
    (344
    )
    
    
    (1,064
    )Equity in earnings of unconsolidated joint ventures
    
    
    1,609
    
    
    
    1,387Income from continuing operations
    
    
    71,349
    
    
    
    67,996Discontinued operations (including net gain on
property dispositions of $3,869 and $3,403 for the
six months ended June 30, 2009 and 2008,
respectively)
    
    
    5,705
    
    
    
    6,778Net income
    
    
    77,054
    
    
    
    74,774Noncontrolling interest  consolidated joint ventures
    
    
    420
    
    
    
    102Preferred unit distributions
    
    
    (10,506
    )
    
    
    (10,506
    )Income available to common unitholders
    
    $
    66,968
    
    
    $
    64,370Earnings per common unitBasic:Income from continuing operations
    
    $
    0.58
    
    
    $
    0.60Income from discontinued operations
    
    
    0.05
    
    
    
    0.07Income per common unit  basic
    
    $
    0.63
    
    
    $
    0.67Diluted:Income from continuing operations
    
    $
    0.57
    
    
    $
    0.60Income from discontinued operations
    
    
    0.05
    
    
    
    0.07Income per common unit  diluted
    
    $
    0.62
    
    
    $
    0.67Distributions per common unit
    
    $
    0.95
    
    
    $
    1.25Weighted average number of common units outstandingBasic
    
    
    107,263
    
    
    
    96,191Diluted
    
    
    107,644
    
    
    
    96,438
   21




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##### Table of Contents



CONDENSED CONSOLIDATED STATEMENT OF EQUITY OF LIBERTY PROPERTY LIMITED PARTNERSHIP
(UNAUDITED AND IN THOUSANDS)
 GeneralPartners
    
    
    NoncontrollingEquity
    
    
    Interest
    
    
    Total EquityBalance at December 31, 2008
    
    $
    1,919,871
    
    
    $
    1,130
    
    
    $
    1,921,001Contributions from partners
    
    
    228,805
    
    
    
    
    
    
    
    228,805Distributions to partners
    
    
    (101,578
    )
    
    
    
    
    
    
    (101,578
    )Foreign currency translation adjustment
    
    
    9,498
    
    
    
    
    
    
    
    9,498Net income (does not include $12,914 related to limited partners equity)
    
    
    64,560
    
    
    
    (420
    )
    
    
    64,140Balance at June 30, 2009
    
    $
    2,121,156
    
    
    $
    710
    
    
    $
    2,121,866
   22




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##### Table of Contents



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Unaudited and in thousands)
 Six Months EndedJune 30, 2009
    
    
    June 30, 2008OPERATING ACTIVITIESNet income
    
    $
    77,054
    
    
    $
    74,774Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    86,306
    
    
    
    87,374Amortization of deferred financing costs
    
    
    2,439
    
    
    
    2,227Equity in earnings of unconsolidated joint ventures
    
    
    (1,607
    )
    
    
    (1,387
    )Distributions from unconsolidated joint ventures
    
    
    663
    
    
    
    Gain on property dispositions
    
    
    (1,526
    )
    
    
    (4,879
    )Noncash compensation
    
    
    9,790
    
    
    
    5,603Changes in operating assets and liabilities:Restricted cash
    
    
    970
    
    
    
    (19,818
    )Accounts receivable
    
    
    6,208
    
    
    
    (248
    )Deferred rent receivable
    
    
    (5,677
    )
    
    
    (7,195
    )Prepaid expenses and other assets
    
    
    8,958
    
    
    
    (10,831
    )Accounts payable
    
    
    2,979
    
    
    
    5,800Accrued interest
    
    
    (5,159
    )
    
    
    (1,909
    )Other liabilities
    
    
    (15,795
    )
    
    
    (15,979
    )Net cash provided by operating activities
    
    
    165,603
    
    
    
    113,532INVESTING ACTIVITIESInvestment in properties
    
    
    (37,318
    )
    
    
    (37,752
    )Investments in and advances to unconsolidated joint ventures
    
    
    (4,017
    )
    
    
    (7,506
    )Distributions from unconsolidated joint ventures
    
    
    18,379
    
    
    
    3,161Net proceeds from disposition of properties/land
    
    
    80,333
    
    
    
    304,563Investment in development in progress
    
    
    (48,774
    )
    
    
    (138,035
    )Investment in land held for development
    
    
    (26,980
    )
    
    
    (18,717
    )Investment in deferred leasing costs
    
    
    (12,125
    )
    
    
    (14,271
    )Net cash (used in) provided by investing activities
    
    
    (30,502
    )
    
    
    91,443FINANCING ACTIVITIESRepayments of unsecured notes
    
    
    (285,268
    )
    
    
    Proceeds from mortgage loans
    
    
    317,213
    
    
    
    Repayments of mortgage loans
    
    
    (44,121
    )
    
    
    (35,673
    )Proceeds from credit facility
    
    
    199,150
    
    
    
    344,150Repayments on credit facility
    
    
    (319,150
    )
    
    
    (439,150
    )Increase in deferred financing costs
    
    
    (5,743
    )
    
    
    Capital contributions
    
    
    218,970
    
    
    
    32,124Distribution to partners
    
    
    (110,802
    )
    
    
    (130,808
    )Net cash used in financing activities
    
    
    (29,751
    )
    
    
    (229,357
    )Net increase (decrease) in cash and cash equivalents
    
    
    105,350
    
    
    
    (24,382
    )Decrease in cash and cash equivalents related to foreign currency translation
    
    
    3,392
    
    
    
    (28
    )Cash and cash equivalents at beginning of period
    
    
    15,794
    
    
    
    37,989Cash and cash equivalents at end of period
    
    $
    124,536
    
    
    $
    13,579
   23




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##### Table of Contents



Liberty Property Limited Partnership
 
 Notes to Condensed Consolidated Financial Statements (Unaudited)
 June 30, 2009
 Note 1: Organization and Basis of Presentation
 Organization
  Basis of Presentation
    24




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##### Table of Contents



Income per Common Unit
  For the Three Months Ended June 30, 2009
    
    
    For the Three Months Ended June 30, 2008Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedIncome
    
    
    Average Units
    
    
    
    
    
    
    Income
    
    
    Average Units(Numerator)
    
    
    (Denominator)
    
    
    Per Unit
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    Per UnitIncome from continuing operations
    
    $
    38,745
    
    
    
    
    
    
    
    
    
    
    $
    33,889Add: Noncontrolling interest  consolidated
joint ventures
    
    
    56
    
    
    
    
    
    
    
    
    
    
    
    (68
    )Less: Preferred unit distributions
    
    
    (5,253
    )
    
    
    
    
    
    
    
    
    
    
    (5,253
    )Basic income from continuing operationsIncome from continuing operations available to
common unitholders
    
    
    33,548
    
    
    
    109,785
    
    
    $
    0.31
    
    
    
    28,568
    
    
    
    96,512
    
    
    $
    0.29Dilutive units for long-term compensation plans
    
    
    
    
    
    
    477
    
    
    
    
    
    
    
    
    
    
    
    379Diluted income from continuing operationsIncome from continuing operations available to
common unitholders and assumed conversions
    
    
    33,548
    
    
    
    110,262
    
    
    $
    0.31
    
    
    
    28,568
    
    
    
    96,891
    
    
    $
    0.29Basic income from discontinued operationsDiscontinued operations
    
    
    4,467
    
    
    
    109,785
    
    
    $
    0.04
    
    
    
    4,489
    
    
    
    96,512
    
    
    $
    0.05Dilutive units for long-term compensation plans
    
    
    
    
    
    
    477
    
    
    
    
    
    
    
    
    
    
    
    379Diluted income from discontinued operationsDiscontinued operations
    
    
    4,467
    
    
    
    110,262
    
    
    $
    0.04
    
    
    
    4,489
    
    
    
    96,891
    
    
    $
    0.05Basic income per common unitIncome available to common unitholders
    
    
    38,015
    
    
    
    109,785
    
    
    $
    0.35
    
    
    
    33,057
    
    
    
    96,512
    
    
    $
    0.34Diluted units for long-term compensation plans
    
    
    
    
    
    
    477
    
    
    
    
    
    
    
    
    
    
    
    379Diluted income per common unitIncome available to common unitholders and
assumed conversions
    
    $
    38,015
    
    
    
    110,262
    
    
    $
    0.35
    
    
    $
    33,057
    
    
    
    96,891
    
    
    $
    0.34
  25




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##### Table of Contents



For the Six Months Ended June 30, 2009
    
    
    For the Six Months Ended June 30, 2008Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedIncome
    
    
    Average Units
    
    
    
    
    
    
    Income
    
    
    Average Units(Numerator)
    
    
    (Denominator)
    
    
    Per Unit
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    Per UnitIncome from continuing operations
    
    $
    71,349
    
    
    
    
    
    
    
    
    
    
    $
    67,996Add: Noncontrolling interest  consolidated
joint ventures
    
    
    420
    
    
    
    
    
    
    
    
    
    
    
    102Less: Preferred unit distributions
    
    
    (10,506
    )
    
    
    
    
    
    
    
    
    
    
    (10,506
    )Basic income from continuing operationsIncome from continuing operations available to
common unitholders
    
    
    61,263
    
    
    
    107,263
    
    
    $
    0.58
    
    
    
    57,592
    
    
    
    96,191
    
    
    $
    0.60Dilutive units for long-term compensation plans
    
    
    
    
    
    
    381
    
    
    
    
    
    
    
    
    
    
    
    247Diluted income from continuing operationsIncome from continuing operations available to
common unitholders and assumed conversions
    
    
    61,263
    
    
    
    107,644
    
    
    $
    0.57
    
    
    
    57,592
    
    
    
    96,438
    
    
    $
    0.60Basic income from discontinued operationsDiscontinued operations
    
    
    5,705
    
    
    
    107,263
    
    
    $
    0.05
    
    
    
    6,778
    
    
    
    96,191
    
    
    $
    0.07Dilutive units for long-term compensation plans
    
    
    
    
    
    
    381
    
    
    
    
    
    
    
    
    
    
    
    247Diluted income from discontinued operationsDiscontinued operations
    
    
    5,705
    
    
    
    107,644
    
    
    $
    0.05
    
    
    
    6,778
    
    
    
    96,438
    
    
    $
    0.07Basic income per common unitIncome available to common unitholders
    
    
    66,968
    
    
    
    107,263
    
    
    $
    0.63
    
    
    
    64,370
    
    
    
    96,191
    
    
    $
    0.67Diluted units for long-term compensation plans
    
    
    
    
    
    
    381
    
    
    
    
    
    
    
    
    
    
    
    247Diluted income per common unitIncome available to common unitholders and
assumed conversions
    
    $
    66,968
    
    
    
    107,644
    
    
    $
    0.62
    
    
    $
    64,370
    
    
    
    96,438
    
    
    $
    0.67
 Foreign Currency Translation
  SFAS No. 160
 Accounting for Noncontrolling Interests Classification and Measurement of Redeemable Securities.
  26




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##### Table of Contents



Note 2: Segment Information
  Reportable Segments
    
    MarketsNortheast
    
    Southeastern PA; Lehigh/Central PA; New JerseyMidwest
    
    Minnesota; Milwaukee; ChicagoMid-Atlantic
    
    Maryland; Carolinas; Richmond; Virginia BeachSouth
    
    Jacksonville; Orlando; Boca Raton; Tampa; Texas; ArizonaPhiladelphia
    
    Philadelphia; Northern Virginia/Washington, D.C.United Kingdom
    
    County of Kent; West Midlands
   FOR THE THREE MONTHS ENDED JUNE 30, 2009
 NortheastLehigh/Southeastern
    
    
    Central
    
    
    New
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Phila-
    
    
    UnitedPA
    
    
    PA
    
    
    Jersey
    
    
    Midwest
    
    
    Mid-Atlantic
    
    
    South
    
    
    delphia
    
    
    Kingdom
    
    
    TotalOperating revenue
    
    $
    45,729
    
    
    $
    24,683
    
    
    $
    7,808
    
    
    $
    21,056
    
    
    $
    33,651
    
    
    $
    46,554
    
    
    $
    5,048
    
    
    $
    1,135
    
    
    $
    185,664Rental property
expenses and real
estate taxes
    
    
    14,169
    
    
    
    6,440
    
    
    
    2,941
    
    
    
    7,908
    
    
    
    9,343
    
    
    
    15,233
    
    
    
    1,193
    
    
    
    260
    
    
    
    57,487Property level
operating income
    
    $
    31,560
    
    
    $
    18,243
    
    
    $
    4,867
    
    
    $
    13,148
    
    
    $
    24,308
    
    
    $
    31,321
    
    
    $
    3,855
    
    
    $
    875
    
    
    
    128,177Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,520Debt extinguishment gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    563Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37,300
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,659
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (42,571
    )Income before property
dispositions, income taxes
and equity in earnings of
unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,730Loss on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,050
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (127
    )Equity in earnings of
unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,192Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,467Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    43,212
  27




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##### Table of Contents



FOR THE THREE MONTHS ENDED JUNE 30, 2008
 NortheastLehigh/Southeastern
    
    
    Central
    
    
    New
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Phila-
    
    
    UnitedPA
    
    
    PA
    
    
    Jersey
    
    
    Midwest
    
    
    Mid-Atlantic
    
    
    South
    
    
    delphia
    
    
    Kingdom
    
    
    TotalOperating revenue
    
    $
    43,265
    
    
    $
    24,767
    
    
    $
    7,939
    
    
    $
    20,969
    
    
    $
    34,467
    
    
    $
    42,435
    
    
    $
    4,745
    
    
    $
    1,408
    
    
    $
    179,995Rental property
expenses and real
estate taxes
    
    
    13,763
    
    
    
    7,311
    
    
    
    3,166
    
    
    
    7,974
    
    
    
    9,566
    
    
    
    15,011
    
    
    
    1,447
    
    
    
    257
    
    
    
    58,495Property level
operating income
    
    $
    29,502
    
    
    $
    17,456
    
    
    $
    4,773
    
    
    $
    12,995
    
    
    $
    24,901
    
    
    $
    27,424
    
    
    $
    3,298
    
    
    $
    1,151
    
    
    
    121,500Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,009Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36,330
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,047
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (42,508
    )Income before property
dispositions, income taxes
and equity in earnings of
unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,624Gain on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    835Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (580
    )Equity in earnings of
unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,010Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,489Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    38,378
 FOR THE SIX MONTHS ENDED JUNE 30, 2009
 NortheastLehigh/Southeastern
    
    
    Central
    
    
    New
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Phila-
    
    
    UnitedPA
    
    
    PA
    
    
    Jersey
    
    
    Midwest
    
    
    Mid-Atlantic
    
    
    South
    
    
    delphia
    
    
    Kingdom
    
    
    TotalOperating revenue
    
    $
    93,095
    
    
    $
    49,845
    
    
    $
    15,857
    
    
    $
    42,046
    
    
    $
    67,903
    
    
    $
    92,053
    
    
    $
    9,783
    
    
    $
    2,236
    
    
    $
    372,818Rental property
expenses and real
estate taxes
    
    
    29,996
    
    
    
    14,060
    
    
    
    6,340
    
    
    
    15,764
    
    
    
    20,148
    
    
    
    29,588
    
    
    
    2,373
    
    
    
    490
    
    
    
    118,759Property level
operating income
    
    $
    63,099
    
    
    $
    35,785
    
    
    $
    9,517
    
    
    $
    26,282
    
    
    $
    47,755
    
    
    $
    62,465
    
    
    $
    7,410
    
    
    $
    1,746
    
    
    
    254,059Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,624Debt extinguishment gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,092Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (75,420
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27,222
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (85,705
    )Income before property
dispositions, income taxes
and
equity in earnings of
unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72,428Loss on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,344
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (344
    )Equity in earnings of
unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,609Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,705Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    77,054
  28




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##### Table of Contents



FOR THE SIX MONTHS ENDED JUNE 30, 2008
 NortheastLehigh/Southeastern
    
    
    Central
    
    
    New
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Phila-
    
    
    UnitedPA
    
    
    PA
    
    
    Jersey
    
    
    Midwest
    
    
    Mid-Atlantic
    
    
    South
    
    
    delphia
    
    
    Kingdom
    
    
    TotalOperating revenue
    
    $
    87,392
    
    
    $
    48,976
    
    
    $
    15,705
    
    
    $
    41,157
    
    
    $
    69,127
    
    
    $
    82,418
    
    
    $
    20,133
    
    
    $
    2,452
    
    
    $
    367,360Rental property
expenses and real
estate taxes
    
    
    28,111
    
    
    
    13,846
    
    
    
    6,076
    
    
    
    15,553
    
    
    
    19,536
    
    
    
    28,113
    
    
    
    5,470
    
    
    
    618
    
    
    
    117,323Property level
operating income
    
    $
    59,281
    
    
    $
    35,130
    
    
    $
    9,629
    
    
    $
    25,604
    
    
    $
    49,591
    
    
    $
    54,305
    
    
    $
    14,663
    
    
    $
    1,834
    
    
    
    250,037Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,096Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (77,679
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27,083
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (85,174
    )Income before property
dispositions, income taxes
and equity in earnings of
unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66,197Gain on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,476Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,064
    )Equity in earnings of
unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,387Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,778Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    74,774
 Note 3: SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets
   Three Months Ended
    
    
    Six Months EndedJune 30, 2009
    
    
    June 30, 2008
    
    
    June 30, 2009
    
    
    June 30, 2008Revenues
    
    $
    1,875
    
    
    $
    6,512
    
    
    $
    5,052
    
    
    $
    12,703Operating expenses
    
    
    (333
    )
    
    
    (2,408
    )
    
    
    (1,349
    )
    
    
    (4,456
    )Interest expense
    
    
    (300
    )
    
    
    (996
    )
    
    
    (863
    )
    
    
    (2,109
    )Depreciation and amortization
    
    
    (445
    )
    
    
    (1,412
    )
    
    
    (1,004
    )
    
    
    (2,763
    )Income before property dispositions
    
    $
    797
    
    
    $
    1,696
    
    
    $
    1,836
    
    
    $
    3,375
  Allocation of Interest to Discontinued Operations
  29




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##### Table of Contents



Asset Impairment
  Note 4: Joint Ventures
  Liberty/Commerz 1701 JFK Boulevard, LP
 Accounting for the Sales of Real Estate
    Note 5: Indebtedness
 Mortgage Loans
   Unsecured Notes
    30




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##### Table of Contents



Note 6: Limited partnership interests
   Limited
    
    
    Limitedpartners equity
    
    
    partners equity preferred
    
    
     commonunits
    
    
    unitsBalance at December 31, 2008
    
    $
    287,959
    
    
    $
    117,546Net income
    
    
    10,506
    
    
    
    2,408Distributions
    
    
    (10,506
    )
    
    
    (3,963
    )Balance at June 30, 2009
    
    $
    287,959
    
    
    $
    115,991
 Common units
 Preferred units
 Date of
    
    
    
    
    
    
    
    
    
    
    
    Liquidation
    
    
    Dividend
    
    
    RedeemableIssue
    
    Issue
    
    Amount
    
    
    Units
    
    
    Preference
    
    
    Rate
    
    
    As of
    
    
    Exchangeable after(in 000s)7/28/99
    
    Series B
    
    $
    95,000
    
    
    
    3,800
    
    
    $
    25
    
    
    
    7.45
    %
    
    
    8/31/09
    
    
    8/31/13 into Series B Cumulative Redeemable Preferred Shares of the Trust6/16/05
    
    Series E
    
    $
    20,000
    
    
    
    400
    
    
    $
    50
    
    
    
    7.00
    %
    
    
    6/16/10
    
    
    6/16/15 into Series E Cumulative Redeemable Preferred Shares of the Trust6/30/05
    
    Series F
    
    $
    44,000
    
    
    
    880
    
    
    $
    50
    
    
    
    6.65
    %
    
    
    6/30/10
    
    
    12/12/15 into Series F Cumulative Redeemable Preferred Shares of the Trust8/23/05
    
    Series F
    
    $
    6,000
    
    
    
    120
    
    
    $
    50
    
    
    
    6.65
    %
    
    
    6/30/10
    
    
    12/12/15 into Series F Cumulative Redeemable Preferred Shares of the Trust12/15/06
    
    Series G
    
    $
    27,000
    
    
    
    540
    
    
    $
    50
    
    
    
    6.70
    %
    
    
    12/12/11
    
    
    12/12/16 into Series G Cumulative Redeemable Preferred Shares of the Trust8/21/07
    
    Series H
    
    $
    100,000
    
    
    
    4,000
    
    
    $
    25
    
    
    
    7.40
    %
    
    
    8/21/12
    
    
    8/21/17 into Series H Cumulative Redeemable Preferred Shares of the Trust
   31




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##### Table of Contents



Note 7: Continuous Equity Offering
  Note 8: Disclosure of Fair Value of Financial Instruments
     Note 9: Recently Issued Accounting Standards
 SFAS No. 141(R)
 Applying the Acquisition Method
 FSP EITF 03-6-1
   32




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##### Table of Contents



Note 10: Supplemental Disclosure to Statements of Cash Flows
  Non-cash activity
    
    2009
    
    
    2008Write-off of fully depreciated property and deferred costs
    
    $
    17,476
    
    
    $
    6,578Increase in investments in unconsolidated joint ventures
    
    
    
    
    
    
    (35,172
    )Disposition of properties/development in progress
    
    
    
    
    
    
    173,624Disposition of deferred leasing/financing costs
    
    
    
    
    
    
    12,526Reduction of accounts receivable
    
    
    
    
    
    
    7,854Reduction of deferred rent receivable
    
    
    
    
    
    
    6,580Reduction of prepaid and other assets
    
    
    
    
    
    
    38,486Reduction of credit facility
    
    
    
    
    
    
    (152,960
    )Reduction of other liabilities
    
    
    
    
    
    
    (50,938
    )
 Note 11: Subsequent Events
   33




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 OVERVIEW
        34




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##### Table of Contents



WHOLLY OWNED CAPITAL ACTIVITY
 Acquisitions
  Dispositions
  Development
   JOINT VENTURE CAPITAL ACTIVITY
  Acquisitions
  Dispositions
  Development
   35




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##### Table of Contents



PROPERTIES IN OPERATION
  Net RentPer Square Foot
    
    
    Total Square Feet
    
    
    Percent OccupiedJune 30
    
    
    June 30
    
    
    June 302009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Wholly Owned Properties in Operation:Industrial-Distribution
    
    $
    4.34
    
    
    $
    4.48
    
    
    
    31,502
    
    
    
    27,083
    
    
    
    88.5
    %
    
    
    93.6
    %Industrial-Flex
    
    $
    9.18
    
    
    $
    9.37
    
    
    
    11,497
    
    
    
    10,240
    
    
    
    87.9
    %
    
    
    88.6
    %Office
    
    $
    14.35
    
    
    $
    14.18
    
    
    
    21,272
    
    
    
    19,732
    
    
    
    92.1
    %
    
    
    91.6
    %$
    8.60
    
    
    $
    8.71
    
    
    
    64,271
    
    
    
    57,055
    
    
    
    89.6
    %
    
    
    92.0
    %
 Net RentPer Square Foot
    
    
    Total Square Feet
    
    
    Percent OccupiedJune 30
    
    
    June 30
    
    
    June 302009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Joint Venture Properties in Operation:Industrial-Distribution
    
    $
    4.23
    
    
    $
    4.09
    
    
    
    8,316
    
    
    
    7,786
    
    
    
    87.7
    %
    
    
    97.1
    %Industrial-Flex
    
    $
    27.86
    
    
    $
    33.97
    
    
    
    171
    
    
    
    153
    
    
    
    81.3
    %
    
    
    89.5
    %Office
    
    $
    25.00
    
    
    $
    25.26
    
    
    
    4,575
    
    
    
    4,240
    
    
    
    89.9
    %
    
    
    92.6
    %$
    11.91
    
    
    $
    11.83
    
    
    
    13,062
    
    
    
    12,179
    
    
    
    88.4
    %
    
    
    95.4
    %
 Net RentPer Square Foot
    
    
    Total Square Feet
    
    
    Percent OccupiedJune 30
    
    
    June 30
    
    
    June 302009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Properties in Operation:Industrial-Distribution
    
    $
    4.32
    
    
    $
    4.39
    
    
    
    39,818
    
    
    
    34,869
    
    
    
    88.3
    %
    
    
    94.3
    %Industrial-Flex
    
    $
    9.43
    
    
    $
    9.73
    
    
    
    11,668
    
    
    
    10,393
    
    
    
    87.8
    %
    
    
    88.6
    %Office
    
    $
    16.20
    
    
    $
    16.14
    
    
    
    25,847
    
    
    
    23,972
    
    
    
    91.7
    %
    
    
    91.8
    %$
    9.15
    
    
    $
    9.26
    
    
    
    77,333
    
    
    
    69,234
    
    
    
    89.4
    %
    
    
    92.5
    %
  Forward-Looking Statements
   36




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##### Table of Contents



Critical Accounting Policies and Estimates
  Results of Operations
   Comparison of Three and Six Months Ended June 30, 2009 to Three and Six Months Ended June
30, 2008
 Overview
    37




---



##### Table of Contents



Segments
  Property Level Operating Income:
 Three Months Ended
    
    
    Percentage
    
    
    Six Months Ended
    
    
    PercentageJune 30,
    
    
    Increase
    
    
    June 30,
    
    
    Increase2009
    
    
    2008
    
    
    (Decrease)
    
    
    2009
    
    
    2008
    
    
    (Decrease)Northeast Southeastern PA
    
    $
    31,560
    
    
    $
    29,502
    
    
    
    7.0
    %(1)
    
    $
    63,099
    
    
    $
    59,281
    
    
    
    6.4
    %(1) Lehigh/Central PA
    
    
    18,243
    
    
    
    17,456
    
    
    
    4.5
    %(2)
    
    
    35,785
    
    
    
    35,130
    
    
    
    1.9
    % New Jersey
    
    
    4,867
    
    
    
    4,773
    
    
    
    2.0
    %
    
    
    9,517
    
    
    
    9,629
    
    
    
    (1.2
    %)Midwest
    
    
    13,148
    
    
    
    12,995
    
    
    
    1.2
    %
    
    
    26,282
    
    
    
    25,604
    
    
    
    2.6
    %Mid-Atlantic
    
    
    24,308
    
    
    
    24,901
    
    
    
    (2.4
    %)
    
    
    47,755
    
    
    
    49,591
    
    
    
    (3.7
    %)(3)South
    
    
    31,321
    
    
    
    27,424
    
    
    
    14.2
    %(1)
    
    
    62,465
    
    
    
    54,305
    
    
    
    15.0
    %(1)Philadelphia
    
    
    3,855
    
    
    
    3,298
    
    
    
    16.9
    %(4)
    
    
    7,410
    
    
    
    14,663
    
    
    
    (49.5
    %)(5)United Kingdom
    
    
    875
    
    
    
    1,151
    
    
    
    (24.0
    %)(6)
    
    
    1,746
    
    
    
    1,834
    
    
    
    (4.8
    %)(6)Total property
level operating
income
    
    $
    128,177
    
    
    $
    121,500
    
    
    
    5.5
    %
    
    $
    254,059
    
    
    $
    250,037
    
    
    
    1.6
    %
 (1)
    
    The increase for the three and six months ended June 30, 2009 versus
the three and six months ended June 30, 2008 was primarily due to an increase
in average gross investment in operating real estate, an increase in occupancy
and an increase in rental rates.(2)
    
    The increase for the three months ended June 30, 2009 versus the three
months ended June 30, 2008 was 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 in 2009.(3)
    
    The decrease for the six months ended June 30, 2009 versus the six
months ended June 30, 2008 was primarily due to a decrease in occupancy. This
decrease was partially offset by an increase in average gross investment in
operating real estate and an increase in rental rates in 2009.(4)
    
    The increase for the three months ended June 30, 2009 versus the three
months ended June 30, 2008 was primarily due to an increase in average gross
investment in operating real estate and an increase in rental rates. This
increase was partially offset by a decrease in occupancy in 2009.(5)
    
    The decrease for the six months ended June 30, 2009 versus the six months
ended June 30, 2008 was due to the effect of Comcast Center operation during the
relevant periods. Comcast Center was a wholly owned 1.25 million square foot
property until March 30, 2008 when it was sold into an unconsolidated joint
venture.(6)
    
    The decrease for the three and six months ended June 30, 2009 versus the
three and six months ended June 30, 2008 was primarily due to a decrease in
average gross investment in operating real estate and a decrease in rental rates.
This decrease was partially offset by an increase in occupancy in 2009. Same Store
     38




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30, 2009
    
    
    June 30, 2008
    
    
    June 30, 2009
    
    
    June 30, 2008Same Store:Rental revenue
    
    $
    125,295
    
    
    $
    123,374
    
    
    $
    250,609
    
    
    $
    246,443Operating expenses:Rental property expense
    
    
    35,163
    
    
    
    36,302
    
    
    
    74,071
    
    
    
    73,536Real estate taxes
    
    
    20,955
    
    
    
    22,328
    
    
    
    41,850
    
    
    
    41,582Operating expense recovery
    
    
    (53,652
    )
    
    
    (56,577
    )
    
    
    (110,566
    )
    
    
    (110,085
    )Unrecovered operating expenses
    
    
    2,466
    
    
    
    2,053
    
    
    
    5,355
    
    
    
    5,033Property level operating income
    
    
    122,829
    
    
    
    121,321
    
    
    
    245,254
    
    
    
    241,410Less straight line rent
    
    
    3,436
    
    
    
    2,573
    
    
    
    6,851
    
    
    
    5,769Cash basis property level operating income
    
    $
    119,393
    
    
    $
    118,748
    
    
    $
    238,403
    
    
    $
    235,641Reconciliation of non-GAAP financial measure  Same Store:Cash basis property level operating income
    
    $
    119,393
    
    
    $
    118,748
    
    
    $
    238,403
    
    
    $
    235,641Straight line rent
    
    
    3,436
    
    
    
    2,573
    
    
    
    6,851
    
    
    
    5,769Property level operating income
    
    
    122,829
    
    
    
    121,321
    
    
    
    245,254
    
    
    
    241,410Property level operating income  properties purchased
or developed subsequent to January 1, 2008
    
    
    5,354
    
    
    
    577
    
    
    
    9,569
    
    
    
    8,797Less: Property level operating income  properties held
for sale at June 30, 2009
    
    
    (1,058
    )
    
    
    (1,059
    )
    
    
    (2,116
    )
    
    
    (2,112
    )Termination fees
    
    
    1,052
    
    
    
    661
    
    
    
    1,352
    
    
    
    1,942General and administrative expense
    
    
    (11,659
    )
    
    
    (13,047
    )
    
    
    (27,222
    )
    
    
    (27,083
    )Depreciation and amortization expense
    
    
    (42,571
    )
    
    
    (42,508
    )
    
    
    (85,705
    )
    
    
    (85,174
    )Other income (expense)
    
    
    (34,217
    )
    
    
    (33,321
    )
    
    
    (68,704
    )
    
    
    (71,583
    )(Loss) gain on property dispositions
    
    
    (2,050
    )
    
    
    835
    
    
    
    (2,344
    )
    
    
    1,476Income taxes
    
    
    (127
    )
    
    
    (580
    )
    
    
    (344
    )
    
    
    (1,064
    )Equity in earnings of unconsolidated joint ventures
    
    
    1,192
    
    
    
    1,010
    
    
    
    1,609
    
    
    
    1,387Discontinued operations
    
    
    4,467
    
    
    
    4,489
    
    
    
    5,705
    
    
    
    6,778Net income
    
    $
    43,212
    
    
    $
    38,378
    
    
    $
    77,054
    
    
    $
    74,774
 General and Administrative
   39




---



##### Table of Contents



Depreciation and Amortization
  Interest Expense
   Other
      40




---



##### Table of Contents



Liquidity and Capital Resources
 Overview
  Activity
       41




---



##### Table of Contents



MORTGAGES
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    WEIGHTEDPRINCIPAL
    
    
    PRINCIPAL
    
    
    UNSECURED
    
    
    CREDIT
    
    
    
    
    
    
    AVERAGEAMORTIZATION
    
    
    MATURITIES
    
    
    NOTES
    
    
    FACILITY
    
    
    TOTAL
    
    
    INTEREST RATE2009 (6 months)
    
    $
    3,204
    
    
    $
    42
    
    
    $
    
    
    
    $
    
    
    
    $
    3,246
    
    
    
    6.52
    %2010
    
    
    6,530
    
    
    
    4,736
    
    
    
    169,739
    
    
    
    140,000
    (1)
    
    
    321,005
    
    
    
    4.74
    %2011
    
    
    6,758
    
    
    
    14,873
    
    
    
    246,500
    
    
    
    
    
    
    
    268,131
    
    
    
    7.19
    %2012
    
    
    4,711
    
    
    
    180,612
    (2)
    
    
    230,100
    
    
    
    
    
    
    
    415,423
    
    
    
    6.64
    %2013
    
    
    3,858
    
    
    
    4,510
    
    
    
    
    
    
    
    
    
    
    
    8,368
    
    
    
    6.95
    %2014
    
    
    4,352
    
    
    
    2,684
    
    
    
    200,000
    
    
    
    
    
    
    
    207,036
    
    
    
    5.66
    %2015
    
    
    3,932
    
    
    
    44,469
    
    
    
    300,000
    
    
    
    
    
    
    
    348,401
    
    
    
    5.28
    %2016
    
    
    2,461
    
    
    
    182,318
    
    
    
    300,000
    
    
    
    
    
    
    
    484,779
    
    
    
    4.86
    %2017
    
    
    1,770
    
    
    
    
    
    
    
    300,000
    
    
    
    
    
    
    
    301,770
    
    
    
    6.62
    %2018 & thereafter
    
    
    
    
    
    
    
    
    
    
    100,000
    
    
    
    
    
    
    
    100,000
    
    
    
    7.50
    %$
    37,576
    
    
    $
    434,244
    
    
    $
    1,846,339
    
    
    $
    140,000
    
    
    $
    2,458,159
    
    
    
    6.14
    %
 (1)
    
    The Credit Facility expires on January 16, 2010 and has a one year
renewal option.(2)
    
    There are two one  year extensions for $147,737 of mortgages.  General
   42




---



##### Table of Contents



Industrial-
    
    
    Industrial-Distribution
    
    
    Flex
    
    
    Office
    
    
    TotalWholly Owned Properties
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annualin Operation:
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent2009 (6 months)
    
    
    1,664
    
    
    $
    6,881
    
    
    
    680
    
    
    $
    5,840
    
    
    
    969
    
    
    $
    11,947
    
    
    
    3,313
    
    
    $
    24,6682010
    
    
    3,443
    
    
    
    16,149
    
    
    
    1,767
    
    
    
    16,464
    
    
    
    2,794
    
    
    
    39,295
    
    
    
    8,004
    
    
    
    71,9082011
    
    
    3,178
    
    
    
    14,343
    
    
    
    1,291
    
    
    
    12,392
    
    
    
    2,287
    
    
    
    35,029
    
    
    
    6,756
    
    
    
    61,7642012
    
    
    4,699
    
    
    
    22,885
    
    
    
    1,487
    
    
    
    14,530
    
    
    
    2,224
    
    
    
    37,991
    
    
    
    8,410
    
    
    
    75,4062013
    
    
    2,065
    
    
    
    10,369
    
    
    
    1,495
    
    
    
    15,331
    
    
    
    2,574
    
    
    
    43,142
    
    
    
    6,134
    
    
    
    68,8422014
    
    
    2,510
    
    
    
    12,931
    
    
    
    848
    
    
    
    9,474
    
    
    
    2,607
    
    
    
    40,843
    
    
    
    5,965
    
    
    
    63,248Thereafter
    
    
    10,322
    
    
    
    58,173
    
    
    
    2,541
    
    
    
    30,888
    
    
    
    6,146
    
    
    
    111,403
    
    
    
    19,009
    
    
    
    200,464TOTAL
    
    
    27,881
    
    
    $
    141,731
    
    
    
    10,109
    
    
    $
    104,919
    
    
    
    19,601
    
    
    $
    319,650
    
    
    
    57,591
    
    
    $
    566,300
 Industrial-
    
    
    Industrial-Distribution
    
    
    Flex
    
    
    Office
    
    
    TotalJoint Venture Properties
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annualin Operation:
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent2009 (6 months)
    
    
    414
    
    
    $
    1,563
    
    
    
    
    
    
    $
    
    
    
    
    143
    
    
    $
    3,358
    
    
    
    557
    
    
    $
    4,9212010
    
    
    1,349
    
    
    
    5,331
    
    
    
    24
    
    
    
    759
    
    
    
    425
    
    
    
    9,518
    
    
    
    1,798
    
    
    
    15,6082011
    
    
    1,174
    
    
    
    4,649
    
    
    
    11
    
    
    
    310
    
    
    
    415
    
    
    
    10,431
    
    
    
    1,600
    
    
    
    15,3902012
    
    
    373
    
    
    
    1,788
    
    
    
    63
    
    
    
    1,758
    
    
    
    179
    
    
    
    4,602
    
    
    
    615
    
    
    
    8,1482013
    
    
    303
    
    
    
    1,392
    
    
    
    
    
    
    
    
    
    
    
    242
    
    
    
    5,774
    
    
    
    545
    
    
    
    7,1662014
    
    
    1,103
    
    
    
    5,087
    
    
    
    5
    
    
    
    149
    
    
    
    342
    
    
    
    9,555
    
    
    
    1,450
    
    
    
    14,791Thereafter
    
    
    2,581
    
    
    
    13,761
    
    
    
    36
    
    
    
    1,049
    
    
    
    2,366
    
    
    
    78,178
    
    
    
    4,983
    
    
    
    92,988TOTAL
    
    
    7,297
    
    
    $
    33,571
    
    
    
    139
    
    
    $
    4,025
    
    
    
    4,112
    
    
    $
    121,416
    
    
    
    11,548
    
    
    $
    159,012
 Industrial-
    
    
    Industrial-Distribution
    
    
    Flex
    
    
    Office
    
    
    TotalProperties
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annualin Operation:
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent2009 (6 months)
    
    
    2,078
    
    
    $
    8,444
    
    
    
    680
    
    
    $
    5,840
    
    
    
    1,112
    
    
    $
    15,305
    
    
    
    3,870
    
    
    $
    29,5892010
    
    
    4,792
    
    
    
    21,480
    
    
    
    1,791
    
    
    
    17,223
    
    
    
    3,219
    
    
    
    48,813
    
    
    
    9,802
    
    
    
    87,5162011
    
    
    4,352
    
    
    
    18,992
    
    
    
    1,302
    
    
    
    12,702
    
    
    
    2,702
    
    
    
    45,460
    
    
    
    8,356
    
    
    
    77,1542012
    
    
    5,072
    
    
    
    24,673
    
    
    
    1,550
    
    
    
    16,288
    
    
    
    2,403
    
    
    
    42,593
    
    
    
    9,025
    
    
    
    83,5542013
    
    
    2,368
    
    
    
    11,761
    
    
    
    1,495
    
    
    
    15,331
    
    
    
    2,816
    
    
    
    48,916
    
    
    
    6,679
    
    
    
    76,0082014
    
    
    3,613
    
    
    
    18,018
    
    
    
    853
    
    
    
    9,623
    
    
    
    2,949
    
    
    
    50,398
    
    
    
    7,415
    
    
    
    78,039Thereafter
    
    
    12,903
    
    
    
    71,934
    
    
    
    2,577
    
    
    
    31,937
    
    
    
    8,512
    
    
    
    189,581
    
    
    
    23,992
    
    
    
    293,452TOTAL
    
    
    35,178
    
    
    $
    175,302
    
    
    
    10,248
    
    
    $
    108,944
    
    
    
    23,713
    
    
    $
    441,066
    
    
    
    69,139
    
    
    $
    725,312
  43




---



##### Table of Contents



Square FeetScheduled
    
    Industrial-
    
    
    Industrial-
    
    
    
    
    
    
    
    
    
    
    Percent
    
    
    TotalIn-Service Date
    
    Distribution
    
    
    Flex
    
    
    Office
    
    
    Total
    
    
    Leased
    
    
    InvestmentWholly Owned Properties under Development
    
    3rd Quarter 2009
    
    
    100,000
    
    
    
    68,700
    
    
    
    332,711
    
    
    
    501,411
    
    
    
    15.4
    %
    
    $
    88,5464th Quarter 2009
    
    
    961,100
    
    
    
    
    
    
    
    176,494
    
    
    
    1,137,594
    
    
    
    96.1
    %
    
    
    125,4172nd Quarter 2010
    
    
    
    
    
    
    
    
    
    
    170,261
    
    
    
    170,261
    
    
    
    90.9
    %
    
    
    36,7644th Quarter 2010
    
    
    
    
    
    
    
    
    
    
    211,236
    
    
    
    211,236
    
    
    
    50.8
    %
    
    
    46,224TOTAL
    
    
    1,061,100
    
    
    
    68,700
    
    
    
    890,702
    
    
    
    2,020,502
    
    
    
    70.9
    %
    
    $
    296,951Joint Venture Properties under Development
    
    3rd Quarter 2009
    
    
    500,000
    
    
    
    
    
    
    
    
    
    
    
    500,000
    
    
    
    100.0
    %
    
    $
    24,1504th Quarter 2009
    
    
    225,000
    
    
    
    
    
    
    
    
    
    
    
    225,000
    
    
    
    40.7
    %
    
    
    11,6752nd Quarter 2010
    
    
    463,636
    
    
    
    
    
    
    
    
    
    
    
    463,636
    
    
    
    
    
    
    
    25,0853rd Quarter 2010
    
    
    
    
    
    
    
    
    
    
    176,058
    
    
    
    176,058
    
    
    
    26.0
    %
    
    
    129,815TOTAL
    
    
    1,188,636
    
    
    
    
    
    
    
    176,058
    
    
    
    1,364,694
    
    
    
    46.7
    %
    
    $
    190,725Total Properties under Development
    
    TOTAL
    
    
    2,249,736
    
    
    
    68,700
    
    
    
    1,066,760
    
    
    
    3,385,196
    
    
    
    61.1
    %
    
    $
    487,676
  Calculation of Funds from Operations
   44




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30, 2009
    
    
    June 30, 2008
    
    
    June 30, 2009
    
    
    June 30, 2008Reconciliation of net income to FFO  basicNet Income available to common shareholders
    
    $
    36,671
    
    
    $
    31,629
    
    
    $
    64,560
    
    
    $
    61,590Basic  Income available to common shareholders
    
    
    36,671
    
    
    
    31,629
    
    
    
    64,560
    
    
    
    61,590Basic  income available to common shareholders per weighted
average share
    
    $
    0.35
    
    
    $
    0.34
    
    
    $
    0.63
    
    
    $
    0.67Adjustments:Depreciation and amortization of unconsolidated joint ventures
    
    
    4,132
    
    
    
    4,329
    
    
    
    8,122
    
    
    
    7,877Depreciation and amortization
    
    
    42,364
    
    
    
    43,252
    
    
    
    85,386
    
    
    
    86,630Gain on property dispositions
    
    
    (5,067
    )
    
    
    (3,164
    )
    
    
    (5,375
    )
    
    
    (4,132
    )Noncontrolling interest share in addback for depreciation and
amortization and gain on property dispositions
    
    
    (1,467
    )
    
    
    (1,914
    )
    
    
    (3,204
    )
    
    
    (3,909
    )Funds from operations available to common
shareholders  basic
    
    $
    76,633
    
    
    $
    74,132
    
    
    $
    149,489
    
    
    $
    148,056Basic Funds from operations available to common shareholders
per weighted average share
    
    $
    0.72
    
    
    $
    0.80
    
    
    $
    1.45
    
    
    $
    1.61Reconciliation of net income to FFO  diluted:Net Income
    
    $
    36,671
    
    
    $
    31,629
    
    
    $
    64,560
    
    
    $
    61,590Diluted  income available to common shareholders
    
    
    36,671
    
    
    
    31,629
    
    
    
    64,560
    
    
    
    61,590Diluted  income available to common shareholders per
weighted average share
    
    $
    0.35
    
    
    $
    0.34
    
    
    $
    0.62
    
    
    $
    0.67Adjustments:Depreciation and amortization of unconsolidated joint ventures
    
    
    4,132
    
    
    
    4,329
    
    
    
    8,122
    
    
    
    7,877Depreciation and amortization
    
    
    42,364
    
    
    
    43,252
    
    
    
    85,386
    
    
    
    86,630Gain on property dispositions
    
    
    (5,067
    )
    
    
    (3,164
    )
    
    
    (5,375
    )
    
    
    (4,132
    )Noncontrolling interest less preferred share distributions
    
    
    1,345
    
    
    
    1,428
    
    
    
    2,409
    
    
    
    2,780Funds from operations available to common shareholders  diluted
    
    $
    79,445
    
    
    $
    77,474
    
    
    $
    155,102
    
    
    $
    154,745Diluted Funds from operations available to common
shareholders per weighted average share
    
    $
    0.72
    
    
    $
    0.80
    
    
    $
    1.44
    
    
    $
    1.60Reconciliation of weighted average shares:Weighted average common shares  all basic calculations
    
    
    105,768
    
    
    
    92,322
    
    
    
    103,244
    
    
    
    92,001Dilutive shares for long term compensation plans
    
    
    477
    
    
    
    379
    
    
    
    381
    
    
    
    247Diluted shares for net income calculations
    
    
    106,245
    
    
    
    92,701
    
    
    
    103,625
    
    
    
    92,248Weighted average common units
    
    
    4,017
    
    
    
    4,190
    
    
    
    4,019
    
    
    
    4,190Diluted shares for Funds from operations calculations
    
    
    110,262
    
    
    
    96,891
    
    
    
    107,644
    
    
    
    96,438
  45




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##### Table of Contents



Inflation
  
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls
   46




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
      
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   47




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##### Table of Contents



Item 3. Defaults upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  1.
    
    Managements nominees, William P. Hankowsky, David L.
Lingerfelt and Jose Mejia, were elected to fill the three available
positions as Class II trustees. Voting (expressed in number of shares)
was as follows: Mr. Hankowsky: 81,615,868 for, 802,177 against or withheld
and no abstentions or broker non-votes; Mr. Lingerfelt: 82,162,967 for,
255,170 against or withheld and no abstentions or broker non-votes; and
Mr. Mejia: 82,239,816 for, 178,230 against or withheld and no abstentions
or broker non-votes.
 2.
    
    The shareholders approved a proposal to ratify the selection
of Ernst & Young LLP as the Trusts independent registered public
accounting firm for 2009. Voting (expressed in number of shares) was as
follows: 83,527,816 for, 291,722 against and 49,093 abstentions or broker
non-votes.
 3.
    
    The shareholders approved a proposal to amend and restate
the Liberty Property Trust Amended and Restated Share Incentive Plan (the
Share Incentive Plan) to increase the 865,431 shares currently remaining
available for issuance under the Share Incentive Plan by 8,300,000 shares,
and to make other specified changes. Voting (expressed in number of
 shares) was as follows: 68,919,798 for; 8,870,897 against and 126,294
abstentions or broker non-votes.
 
 Item 5. Other Information
   48




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##### Table of Contents



Item 6. Exhibits
 10.1
    
    
    Liberty Property Trust Amended and Restated Share Incentive Plan as
amended effective May 21, 2009 (Incorporated by reference to
Appendix B to the Registrants Definitive Proxy Statement for the
Annual Meeting of Shareholders held on May 21, 2009, filed with the
Commission on April 17, 2009.10.2*
    
    
    Form of 2009 Long Term Incentive Plan Target Unit Award Agreement.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.  49




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##### Table of Contents



SIGNATURES
  LIBERTY PROPERTY TRUST
 /s/ WILLIAM P. HANKOWSKY

William P. Hankowsky
President and Chief Executive Officer
    
    August 7, 2009

Date/s/ GEORGE J. ALBURGER, JR.

George J. Alburger, Jr.
Executive Vice President and Chief
Financial Officer
    
    August 7, 2009

Date
  50




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##### Table of Contents



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

William P. Hankowsky 
President and Chief Executive Officer
    
    August 7, 2009

Date/s/ GEORGE J. ALBURGER, JR.

George J. Alburger, Jr.
Executive Vice President and
Chief Financial Officer
    
    August 7, 2009

Date
  51




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##### Table of Contents



EXHIBIT INDEX
 EXHIBITNO.
    
    DESCRIPTION10.2
    
    
    Form of 2009 Long Term Incentive Plan Target Unit Award Agreement.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.)
  52