##### Table of Contents



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



Liberty Property Trust/Liberty Property Limited Partnership
Form 10-Q for the period ended September 30, 2009
 Index
    
    PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Condensed consolidated balance sheets of Liberty Property Trust at September
30, 2009 and December 31, 2008
    
    
    4Condensed consolidated statements of operations of Liberty Property Trust for
the three months ended September 30, 2009 and September 30, 2008
    
    
    5Condensed consolidated statements of operations of Liberty Property Trust for
the nine months ended September 30, 2009 and September 30, 2008
    
    
    6Condensed consolidated statement of equity of Liberty Property Trust for the
nine months ended September 30, 2009
    
    
    7Condensed consolidated statements of cash flows of Liberty Property Trust for
the nine months ended September 30, 2009 and September 30, 2008
    
    
    8Notes to condensed consolidated financial statements of Liberty Property Trust
    
    
    9Condensed consolidated balance sheets of Liberty Property Limited Partnership
at September 30, 2009 and December 31, 2008
    
    
    19Condensed consolidated statements of operations of Liberty Property Limited
Partnership for the three months ended September 30, 2009 and
September 30, 2008
    
    
    20Condensed consolidated statements of operations of Liberty Property Limited
Partnership for the nine months ended September 30, 2009 and
September 30, 2008
    
    
    21Condensed consolidated statement of equity of Liberty Property Limited
Partnership for the nine months ended September 30, 2009
    
    
    22Condensed consolidated statements of cash flows of Liberty Property Limited
Partnership for the nine months ended September 30, 2008 and
September 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
    
    
    46PART 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
    
    
    47
  2




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Index
    
    PageItem 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
    
    
    52STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO COMBINED FIXED CHARGESCERTIFICATION OF CEO OF LIBERTY PROPERTY TRUST REQUIRED BY RULE 13A-14(A)CERTIFICATION OF CFO OF LIBERTY PROPERTY TRUST REQUIRED BY RULE 13A-14(A)CERTIFICATION OF CEO OF LIBERTY PROPERTY TRUST, IN ITS CAPACITY AS THE GENERAL PARTNER OF LIBERTY PROPERTY LIMITED PARTNERSHIP, REQUIRED BY RULE 13A-14(A)CERTIFICATION OF CFO OF LIBERTY PROPERTY TRUST, IN ITS CAPACITY AS THE GENERAL PARTNER OF LIBERTY PROPERTY LIMITED PARTNERSHIP, REQUIRED BY RULE 13A-14(A)CERTIFICATION OF CEO OF LIBERTY PROPERTY TRUST REQUIRED BY RULE 13A-14(B)CERTIFICATION OF CFO OF LIBERTY PROPERTY TRUST REQUIRED BY RULE 13A-14(B)CERTIFICATION OF CEO OF LIBERTY PROPERTY TRUST, IN ITS CAPACITY AS THE GENERAL PARTNER OF LIBERTY PROPERTY LIMITED PARTNERSHIP, REQUIRED BY RULE 13A-14(B)CERTIFICATION OF CFO OF LIBERTY PROPERTY TRUST, IN ITS CAPACITY AS THE GENERAL PARTNER OF LIBERTY PROPERTY LIMITED PARTNERSHIP, REQUIRED BY RULE 13A-14(B)
   3




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PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 CONDENSED CONSOLIDATED BALANCE SHEETS OF LIBERTY PROPERTY TRUST
(In thousands, except share amounts)
 September 30, 2009
    
    
    December 31, 2008(Unaudited)ASSETSReal estate:Land and land improvements
    
    $
    835,075
    
    
    $
    801,763Building and improvements
    
    
    4,305,128
    
    
    
    4,191,361Less accumulated depreciation
    
    
    (1,060,885
    )
    
    
    (963,043
    )Operating real estate
    
    
    4,079,318
    
    
    
    4,030,081Development in progress
    
    
    169,926
    
    
    
    245,463Land held for development
    
    
    219,440
    
    
    
    209,551Net real estate
    
    
    4,468,684
    
    
    
    4,485,095Cash and cash equivalents
    
    
    219,402
    
    
    
    15,794Restricted cash
    
    
    34,273
    
    
    
    39,726Accounts receivable
    
    
    7,356
    
    
    
    12,985Deferred rent receivable
    
    
    93,046
    
    
    
    83,033Deferred financing and leasing costs, net of accumulated amortization
(2009, $132,099; 2008, $139,078)
    
    
    133,426
    
    
    
    132,627Investments in unconsolidated joint ventures
    
    
    255,191
    
    
    
    266,602Assets held for sale
    
    
    22,520
    
    
    
    98,706Prepaid expenses and other assets
    
    
    91,988
    
    
    
    82,467Total assets
    
    $
    5,325,886
    
    
    $
    5,217,035LIABILITIESMortgage loans
    
    $
    462,700
    
    
    $
    198,560Unsecured notes
    
    
    1,842,882
    
    
    
    2,131,607Credit facility
    
    
    140,000
    
    
    
    260,000Accounts payable
    
    
    47,865
    
    
    
    32,481Accrued interest
    
    
    27,794
    
    
    
    36,474Dividend and distributions payable
    
    
    55,394
    
    
    
    48,858Other liabilities
    
    
    160,134
    
    
    
    182,549Total liabilities
    
    
    2,736,769
    
    
    
    2,890,529EQUITYLiberty Property Trust shareholders equityCommon shares of beneficial interest, $.001 par value, 183,987,000 shares
authorized; 113,850,578 (includes 1,249,909 in treasury) and 100,034,404
(includes 1,249,909 in treasury) shares issued and outstanding as of
September 30, 2009 and December 31, 2008, respectively
    
    
    114
    
    
    
    101Additional paid-in capital
    
    
    2,452,479
    
    
    
    2,162,820Accumulated other comprehensive income (loss)
    
    
    1,420
    
    
    
    (5,378
    )Distributions in excess of net income
    
    
    (232,323
    )
    
    
    (185,721
    )Common shares in treasury, at cost, 1,249,909 shares as of September 30,
2009 and December 31, 2008
    
    
    (51,951
    )
    
    
    (51,951
    )Total Liberty Property Trust shareholders equity
    
    
    2,169,739
    
    
    
    1,919,871Noncontrolling interest  operating partnership4,017,354 and 4,074,967 common units outstanding as of September 30, 2009
and December 31, 2008, respectively
December 31, 2008, respectively
    
    
    130,686
    
    
    
    117,5469,740,000 preferred units outstanding as of September 30, 2009 and
December 31, 2008
    
    
    287,959
    
    
    
    287,959Noncontrolling interest  consolidated joint ventures
    
    
    733
    
    
    
    1,130Total equity
    
    
    2,589,117
    
    
    
    2,326,506Total liabilities and equity
    
    $
    5,325,886
    
    
    $
    5,217,035
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS OF LIBERTY PROPERTY TRUST
(Unaudited and in thousands, except per share amounts)
 Three Months EndedSeptember 30, 2009
    
    
    September 30, 2008OPERATING REVENUERental
    
    $
    130,643
    
    
    $
    126,422Operating expense reimbursement
    
    
    56,850
    
    
    
    56,009Total operating revenue
    
    
    187,493
    
    
    
    182,431OPERATING EXPENSERental property
    
    
    36,224
    
    
    
    37,078Real estate taxes
    
    
    23,061
    
    
    
    21,527General and administrative
    
    
    11,248
    
    
    
    13,180Depreciation and amortization
    
    
    43,268
    
    
    
    43,196Total operating expenses
    
    
    113,801
    
    
    
    114,981Operating income
    
    
    73,692
    
    
    
    67,450OTHER INCOME (EXPENSE)Interest and other income
    
    
    2,635
    
    
    
    3,313Debt extinguishment gain
    
    
    455
    
    
    
    Interest expense
    
    
    (36,735
    )
    
    
    (37,587
    )Total other income (expense)
    
    
    (33,645
    )
    
    
    (34,274
    )Income before property dispositions, income taxes
and equity in earnings of unconsolidated joint
ventures
    
    
    40,047
    
    
    
    33,176Gain on property dispositions
    
    
    100
    
    
    
    463Income taxes
    
    
    (86
    )
    
    
    (308
    )Equity in earnings of unconsolidated joint ventures
    
    
    515
    
    
    
    470Income from continuing operations
    
    
    40,576
    
    
    
    33,801Discontinued operations (including net gain on
property dispositions of $5,131 and $10,232 for the
three months ended September 30, 2009 and 2008,
respectively)
    
    
    10,168
    
    
    
    12,152Net income
    
    
    50,744
    
    
    
    45,953Noncontrolling interest  operating partnership
    
    
    (6,818
    )
    
    
    (6,999
    )Noncontrolling interest  consolidated joint ventures
    
    
    (23
    )
    
    
    (400
    )Net income available to common shareholders
    
    $
    43,903
    
    
    $
    38,554Earnings per common shareBasic:Income from continuing operations
    
    $
    0.30
    
    
    $
    0.29Income from discontinued operations
    
    
    0.09
    
    
    
    0.12Income per common share  basic
    
    $
    0.39
    
    
    $
    0.41Diluted:Income from continuing operations
    
    $
    0.30
    
    
    $
    0.29Income from discontinued operations
    
    
    0.09
    
    
    
    0.12Income per common share  diluted
    
    $
    0.39
    
    
    $
    0.41Distributions per common share
    
    $
    0.475
    
    
    $
    0.625Weighted average number of common shares outstandingBasic
    
    
    111,351
    
    
    
    92,955Diluted
    
    
    111,926
    
    
    
    93,369Amounts attributable to common shareholdersIncome from continuing operations
    
    $
    34,085
    
    
    $
    26,923Discontinued operations
    
    
    9,818
    
    
    
    11,631Net income available to common shareholders
    
    $
    43,903
    
    
    $
    38,554
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS OF LIBERTY PROPERTY TRUST
(Unaudited and in thousands, except per share amounts)
 Nine Months EndedSeptember 30, 2009
    
    
    September 30, 2008OPERATING REVENUERental
    
    $
    388,446
    
    
    $
    379,345Operating expense reimbursement
    
    
    168,699
    
    
    
    167,694Total operating revenue
    
    
    557,145
    
    
    
    547,039OPERATING EXPENSERental property
    
    
    109,903
    
    
    
    110,582Real estate taxes
    
    
    66,857
    
    
    
    64,245General and administrative
    
    
    38,470
    
    
    
    40,340Depreciation and amortization
    
    
    128,140
    
    
    
    127,637Total operating expenses
    
    
    343,370
    
    
    
    342,804Operating income
    
    
    213,775
    
    
    
    204,235OTHER INCOME (EXPENSE)Interest and other income
    
    
    8,245
    
    
    
    9,399Debt extinguishment gain
    
    
    1,547
    
    
    
    Interest expense
    
    
    (111,464
    )
    
    
    (114,559
    )Total other income (expense)
    
    
    (101,672
    )
    
    
    (105,160
    )Income before property dispositions, income taxes
and equity in earnings of unconsolidated joint
ventures
    
    
    112,103
    
    
    
    99,075(Loss) gain on property dispositions
    
    
    (2,244
    )
    
    
    1,939Income taxes
    
    
    (430
    )
    
    
    (1,372
    )Equity in earnings of unconsolidated joint ventures
    
    
    2,124
    
    
    
    1,857Income from continuing operations
    
    
    111,553
    
    
    
    101,499Discontinued operations (including net gain on
property dispositions of $9,000 and $13,635 for the
nine months ended September 30, 2009 and 2008,
respectively)
    
    
    16,245
    
    
    
    19,228Net income
    
    
    127,798
    
    
    
    120,727Noncontrolling interest  operating partnership
    
    
    (19,732
    )
    
    
    (20,285
    )Noncontrolling interest  consolidated joint ventures
    
    
    397
    
    
    
    (298
    )Net income available to common shareholders
    
    $
    108,463
    
    
    $
    100,144Earnings per common shareBasic:Income from continuing operations
    
    $
    0.87
    
    
    $
    0.88Income from discontinued operations
    
    
    0.15
    
    
    
    0.20Income per common share  basic
    
    $
    1.02
    
    
    $
    1.08Diluted:Income from continuing operations
    
    $
    0.87
    
    
    $
    0.88Income from discontinued operations
    
    
    0.15
    
    
    
    0.20Income per common share  diluted
    
    $
    1.02
    
    
    $
    1.08Distributions per common share
    
    $
    1.425
    
    
    $
    1.875Weighted average number of common shares outstandingBasic
    
    
    105,989
    
    
    
    92,328Diluted
    
    
    106,441
    
    
    
    92,626Amounts attributable to common shareholdersIncome from continuing operations
    
    $
    92,808
    
    
    $
    81,745Discontinued operations
    
    
    15,655
    
    
    
    18,399Net income available to common shareholders
    
    $
    108,463
    
    
    $
    100,144
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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
    
    
    13
    
    
    
    295,874
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    295,887
    
    
    
    
    
    
    
    
    
    
    
    295,887Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    108,463
    
    
    
    
    
    
    
    108,463
    
    
    
    19,732
    
    
    
    (397
    )
    
    
    127,798Distributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (155,065
    )
    
    
    
    
    
    
    (155,065
    )
    
    
    (21,557
    )
    
    
    
    
    
    
    (176,622
    )Noncash compensation
    
    
    
    
    
    
    8,498
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,498
    
    
    
    
    
    
    
    
    
    
    
    8,498Redemption of noncontrolling
interests for common shares
    
    
    
    
    
    
    (14,713
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,713
    )
    
    
    14,713
    
    
    
    
    
    
    
    Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    6,798
    
    
    
    
    
    
    
    
    
    
    
    6,798
    
    
    
    252
    
    
    
    
    
    
    
    7,050Balance at September 30, 2009
    
    $
    114
    
    
    $
    2,452,479
    
    
    $
    1,420
    
    
    $
    (232,323
    )
    
    $
    (51,951
    )
    
    $
    2,169,739
    
    
    $
    418,645
    
    
    $
    733
    
    
    $
    2,589,117
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS OF LIBERTY PROPERTY TRUST
(Unaudited and in thousands)
 Nine Months EndedSeptember 30, 2009
    
    
    September 30, 2008OPERATING ACTIVITIESNet income
    
    $
    127,798
    
    
    $
    120,727Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    129,745
    
    
    
    132,106Amortization of deferred financing costs
    
    
    3,685
    
    
    
    3,327Equity in earnings of unconsolidated joint ventures
    
    
    (2,122
    )
    
    
    (1,857
    )Distributions from unconsolidated joint ventures
    
    
    663
    
    
    
    700Gain on property dispositions
    
    
    (6,757
    )
    
    
    (15,574
    )Noncash compensation
    
    
    11,027
    
    
    
    7,793Changes in operating assets and liabilities:Restricted cash
    
    
    6,635
    
    
    
    (9,755
    )Accounts receivable
    
    
    5,461
    
    
    
    (7,763
    )Deferred rent receivable
    
    
    (10,499
    )
    
    
    (9,627
    )Prepaid expenses and other assets
    
    
    (9,839
    )
    
    
    (28,533
    )Accounts payable
    
    
    15,264
    
    
    
    10,512Accrued interest
    
    
    (8,680
    )
    
    
    (1,662
    )Other liabilities
    
    
    (24,106
    )
    
    
    (7,546
    )Net cash provided by operating activities
    
    
    238,275
    
    
    
    192,848INVESTING ACTIVITIESInvestment in properties
    
    
    (51,111
    )
    
    
    (87,245
    )Investments in unconsolidated joint ventures
    
    
    (4,021
    )
    
    
    (5,580
    )Distributions from unconsolidated joint ventures
    
    
    18,549
    
    
    
    64,321Net proceeds from disposition of properties/land
    
    
    144,431
    
    
    
    347,360Investment in development in progress
    
    
    (72,776
    )
    
    
    (166,718
    )Investment in land held for development
    
    
    (28,074
    )
    
    
    (38,370
    )Investment in deferred leasing costs
    
    
    (18,083
    )
    
    
    (23,610
    )Net cash (used in) provided by investing activities
    
    
    (11,085
    )
    
    
    90,158FINANCING ACTIVITIESNet proceeds from issuance of common shares
    
    
    293,324
    
    
    
    45,690Repayments of unsecured notes
    
    
    (288,725
    )
    
    
    Proceeds from mortgage loans
    
    
    317,378
    
    
    
    Repayments of mortgage loans
    
    
    (53,285
    )
    
    
    (37,437
    )Proceeds from credit facility
    
    
    199,150
    
    
    
    438,700Repayments on credit facility
    
    
    (319,150
    )
    
    
    (538,700
    )Increase in deferred financing costs
    
    
    (4,651
    )
    
    
    (25
    )Distribution paid on common shares
    
    
    (148,499
    )
    
    
    (172,953
    )Distribution paid on units
    
    
    (21,554
    )
    
    
    (23,628
    )Net cash used in financing activities
    
    
    (26,012
    )
    
    
    (288,353
    )Net increase (decrease) in cash and cash equivalents
    
    
    201,178
    
    
    
    (5,347
    )Increase (decrease) in cash and cash equivalents related to foreign currency
translation
    
    
    2,430
    
    
    
    (3,364
    )Cash and cash equivalents at beginning of period
    
    
    15,794
    
    
    
    37,989Cash and cash equivalents at end of period
    
    $
    219,402
    
    
    $
    29,278
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Liberty Property Trust
 
 Notes to Condensed Consolidated Financial Statements (Unaudited)  September 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
    
    
    For the Three Months EndedSeptember 30, 2009
    
    
    September 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
    
    $
    34,085
    
    
    
    111,351
    
    
    $
    0.30
    
    
    $
    26,923
    
    
    
    92,955
    
    
    $
    0.29Dilutive shares for long-term compensation
plans
    
    
    
    
    
    
    575
    
    
    
    
    
    
    
    
    
    
    
    414Diluted income from continuing operationsIncome from continuing operations net of
noncontrolling interest and assumed
conversions
    
    
    34,085
    
    
    
    111,926
    
    
    $
    0.30
    
    
    
    26,923
    
    
    
    93,369
    
    
    $
    0.29Basic income from discontinued operationsDiscontinued operations net of
noncontrolling interest
    
    
    9,818
    
    
    
    111,351
    
    
    $
    0.09
    
    
    
    11,631
    
    
    
    92,955
    
    
    $
    0.12Dilutive shares for long-term compensation
plans
    
    
    
    
    
    
    575
    
    
    
    
    
    
    
    
    
    
    
    414Diluted income from discontinued operationsDiscontinued operations net of
noncontrolling interest
    
    
    9,818
    
    
    
    111,926
    
    
    $
    0.09
    
    
    
    11,631
    
    
    
    93,369
    
    
    $
    0.12Basic income per common shareNet income available to common shareholders
    
    
    43,903
    
    
    
    111,351
    
    
    $
    0.39
    
    
    
    38,554
    
    
    
    92,955
    
    
    $
    0.41Dilutive shares for long-term compensation
plans
    
    
    
    
    
    
    575
    
    
    
    
    
    
    
    
    
    
    
    414Diluted income per common shareNet income available to common
shareholders and assumed conversions
    
    $
    43,903
    
    
    
    111,926
    
    
    $
    0.39
    
    
    $
    38,554
    
    
    
    93,369
    
    
    $
    0.41
  10




---



##### Table of Contents



For the Nine Months Ended
    
    
    For the Nine Months EndedSeptember 30, 2009
    
    
    September 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
    
    $
    92,808
    
    
    
    105,989
    
    
    $
    0.87
    
    
    $
    81,745
    
    
    
    92,328
    
    
    $
    0.88Dilutive shares for long-term compensation
plans
    
    
    
    
    
    
    452
    
    
    
    
    
    
    
    
    
    
    
    298Diluted income from continuing operationsIncome from continuing operations net of
noncontrolling interest and assumed
conversions
    
    
    92,808
    
    
    
    106,441
    
    
    $
    0.87
    
    
    
    81,745
    
    
    
    92,626
    
    
    $
    0.88Basic income from discontinued operationsDiscontinued operations net of
noncontrolling interest
    
    
    15,655
    
    
    
    105,989
    
    
    $
    0.15
    
    
    
    18,399
    
    
    
    92,328
    
    
    $
    0.20Dilutive shares for long-term compensation
plans
    
    
    
    
    
    
    452
    
    
    
    
    
    
    
    
    
    
    
    298Diluted income from discontinued operationsDiscontinued operations net of
noncontrolling interest
    
    
    15,655
    
    
    
    106,441
    
    
    $
    0.15
    
    
    
    18,399
    
    
    
    92,626
    
    
    $
    0.20Basic income per common shareNet income available to common shareholders
    
    
    108,463
    
    
    
    105,989
    
    
    $
    1.02
    
    
    
    100,144
    
    
    
    92,328
    
    
    $
    1.08Dilutive shares for long-term compensation
plans
    
    
    
    
    
    
    452
    
    
    
    
    
    
    
    
    
    
    
    298Diluted income per common shareNet income available to common
shareholders and assumed conversions
    
    $
    108,463
    
    
    
    106,441
    
    
    $
    1.02
    
    
    $
    100,144
    
    
    
    92,626
    
    
    $
    1.08
   Foreign Currency Translation
  Noncontrolling Interests
 Consolidation
  11




---



##### Table of Contents



Distinguishing Liabilities from Equity.
 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 SEPTEMBER 30, 2009
 NortheastLehigh/Southeastern
    
    
    Central
    
    
    New
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Phila-
    
    
    UnitedPA
    
    
    PA
    
    
    Jersey
    
    
    Midwest
    
    
    Mid-Atlantic
    
    
    South
    
    
    delphia
    
    
    Kingdom
    
    
    TotalOperating revenue
    
    $
    45,287
    
    
    $
    25,258
    
    
    $
    7,870
    
    
    $
    20,898
    
    
    $
    34,738
    
    
    $
    46,919
    
    
    $
    5,437
    
    
    $
    1,086
    
    
    $
    187,493Rental property expenses and real estate taxes
    
    
    14,457
    
    
    
    5,493
    
    
    
    3,359
    
    
    
    8,405
    
    
    
    10,062
    
    
    
    15,910
    
    
    
    1,382
    
    
    
    217
    
    
    
    59,285Property level operating income
    
    $
    30,830
    
    
    $
    19,765
    
    
    $
    4,511
    
    
    $
    12,493
    
    
    $
    24,676
    
    
    $
    31,009
    
    
    $
    4,055
    
    
    $
    869
    
    
    
    128,208Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,635Debt extinguishment gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    455Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36,735
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,248
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (43,268
    )Income
before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,047Gain on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (86
    )Equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    515Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,168Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    50,744
  12




---



##### Table of Contents



FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2008
 NortheastLehigh/Southeastern
    
    
    Central
    
    
    New
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Phila-
    
    
    UnitedPA
    
    
    PA
    
    
    Jersey
    
    
    Midwest
    
    
    Mid-Atlantic
    
    
    South
    
    
    delphia
    
    
    Kingdom
    
    
    TotalOperating revenue
    
    $
    43,328
    
    
    $
    23,743
    
    
    $
    8,527
    
    
    $
    20,834
    
    
    $
    35,484
    
    
    $
    44,751
    
    
    $
    4,736
    
    
    $
    1,028
    
    
    $
    182,431Rental property expenses and real estate taxes
    
    
    14,189
    
    
    
    5,792
    
    
    
    3,755
    
    
    
    7,644
    
    
    
    11,053
    
    
    
    14,748
    
    
    
    1,103
    
    
    
    321
    
    
    
    58,605Property level operating income
    
    $
    29,139
    
    
    $
    17,951
    
    
    $
    4,772
    
    
    $
    13,190
    
    
    $
    24,431
    
    
    $
    30,003
    
    
    $
    3,633
    
    
    $
    707
    
    
    
    123,826Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,313Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37,587
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,180
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (43,196
    )Income
before property dispositions, income taxes and equity in earnings of
unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,176Gain on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    463Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (308
    )Equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    470Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,152Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    45,953
 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009
 NortheastLehigh/Southeastern
    
    
    Central
    
    
    New
    
    
    
    
    
    
    Mid-
    
    
    
    
    
    
    Phila-
    
    
    UnitedPA
    
    
    PA
    
    
    Jersey
    
    
    Midwest
    
    
    Atlantic
    
    
    South
    
    
    delphia
    
    
    Kingdom
    
    
    TotalOperating revenue
    
    $
    137,539
    
    
    $
    75,103
    
    
    $
    23,727
    
    
    $
    62,287
    
    
    $
    101,913
    
    
    $
    138,034
    
    
    $
    15,220
    
    
    $
    3,322
    
    
    $
    557,145Rental property expenses and real estate taxes
    
    
    44,260
    
    
    
    19,553
    
    
    
    9,699
    
    
    
    23,663
    
    
    
    30,039
    
    
    
    45,084
    
    
    
    3,755
    
    
    
    707
    
    
    
    176,760Property level operating income
    
    $
    93,279
    
    
    $
    55,550
    
    
    $
    14,028
    
    
    $
    38,624
    
    
    $
    71,874
    
    
    $
    92,950
    
    
    $
    11,465
    
    
    $
    2,615
    
    
    
    380,385Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,245Debt extinguishment gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,547Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (111,464
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38,470
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (128,140
    )Income before property dispositions, income taxes
and equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    112,103Loss on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,244
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (430
    )Equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,124Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,245Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    127,798
  13




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##### Table of Contents



FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008
 NortheastLehigh/Southeastern
    
    
    Central
    
    
    New
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Phila-
    
    
    UnitedPA
    
    
    PA
    
    
    Jersey
    
    
    Midwest
    
    
    Mid-Atlantic
    
    
    South
    
    
    delphia
    
    
    Kingdom
    
    
    TotalOperating revenue
    
    $
    129,889
    
    
    $
    72,719
    
    
    $
    24,232
    
    
    $
    61,385
    
    
    $
    103,880
    
    
    $
    126,585
    
    
    $
    24,869
    
    
    $
    3,480
    
    
    $
    547,039Rental property expenses and real estate taxes
    
    
    42,119
    
    
    
    19,638
    
    
    
    9,832
    
    
    
    22,706
    
    
    
    30,427
    
    
    
    42,593
    
    
    
    6,573
    
    
    
    939
    
    
    
    174,827Property level operating income
    
    $
    87,770
    
    
    $
    53,081
    
    
    $
    14,400
    
    
    $
    38,679
    
    
    $
    73,453
    
    
    $
    83,992
    
    
    $
    18,296
    
    
    $
    2,541
    
    
    
    372,212Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,399Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (114,559
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40,340
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (127,637
    )Income
before property dispositions, income taxes and equity in earnings of
unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99,075Gain on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,939Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,372
    )Equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,857Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,228Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    120,727
 Note 3: Accounting for the Impairment or Disposal of Long-Lived Assets
   Three Months Ended
    
    
    Nine months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues
    
    $
    6,494
    
    
    $
    7,802
    
    
    $
    14,726
    
    
    $
    23,267Operating expenses
    
    
    (665
    )
    
    
    (2,710
    )
    
    
    (3,298
    )
    
    
    (8,190
    )Interest expense
    
    
    (354
    )
    
    
    (1,418
    )
    
    
    (1,908
    )
    
    
    (4,234
    )Depreciation and amortization
    
    
    (438
    )
    
    
    (1,754
    )
    
    
    (2,275
    )
    
    
    (5,250
    )Income before property dispositions
    
    $
    5,037
    
    
    $
    1,920
    
    
    $
    7,245
    
    
    $
    5,593
    14




---



##### Table of Contents



Asset Impairment
  Note 4: Joint Ventures
  Liberty/Commerz 1701 JFK Boulevard, LP
     Note 5: Indebtedness
 Mortgage Loans
   Unsecured Notes
   15




---



##### Table of Contents



Credit Facility
  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
    %
    
    
    12/15/11
    
    
    12/15/16 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
 Financial Instruments
    Note 9: Recently Issued Accounting Standards
 Generally Accepted Accounting Principles
 Business Combinations
 Business Combinations
 Earnings Per Share
 Earnings Per Share
  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
    
    $
    56,171
    
    
    $
    20,692Increase 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
    )
  18




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##### Table of Contents



CONDENSED CONSOLIDATED BALANCE SHEETS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(In thousands, except unit amounts)
 September 30, 2009
    
    
    December 31, 2008(Unaudited)ASSETSReal estate:Land and land improvements
    
    $
    835,075
    
    
    $
    801,763Building and improvements
    
    
    4,305,128
    
    
    
    4,191,361Less accumulated depreciation
    
    
    (1,060,885
    )
    
    
    (963,043
    )Operating real estate
    
    
    4,079,318
    
    
    
    4,030,081Development in progress
    
    
    169,926
    
    
    
    245,463Land held for development
    
    
    219,440
    
    
    
    209,551Net real estate
    
    
    4,468,684
    
    
    
    4,485,095Cash and cash equivalents
    
    
    219,402
    
    
    
    15,794Restricted cash
    
    
    34,273
    
    
    
    39,726Accounts receivable
    
    
    7,356
    
    
    
    12,985Deferred rent receivable
    
    
    93,046
    
    
    
    83,033Deferred financing and leasing costs, net of accumulated amortization (2009, $132,099; 2008, $139,078)
    
    
    133,426
    
    
    
    132,627Investments in unconsolidated joint ventures
    
    
    255,191
    
    
    
    266,602Assets held for sale
    
    
    22,520
    
    
    
    98,706Prepaid expenses and other assets
    
    
    91,988
    
    
    
    82,467Total assets
    
    $
    5,325,886
    
    
    $
    5,217,035LIABILITIESMortgage loans
    
    $
    462,700
    
    
    $
    198,560Unsecured notes
    
    
    1,842,882
    
    
    
    2,131,607Credit facility
    
    
    140,000
    
    
    
    260,000Accounts payable
    
    
    47,865
    
    
    
    32,481Accrued interest
    
    
    27,794
    
    
    
    36,474Distributions payable
    
    
    55,394
    
    
    
    48,858Other liabilities
    
    
    160,134
    
    
    
    182,549Total liabilities
    
    
    2,736,769
    
    
    
    2,890,529Limited partners equity  preferred units, 9,740,000 preferred units
outstanding as of September 30, 2009
and December 31, 2008
    
    
    287,959
    
    
    
    287,959 common units, 4,017,354 and 4,074,967
common units outstanding as of
September 30, 2009 and December 31,
2008, respectively
    
    
    130,686
    
    
    
    117,546EQUITYGeneral partners equity  common units, 113,850,578 and
100,034,404 units outstanding as of September 30, 2009 and
December 31, 2008, respectively
    
    
    2,169,739
    
    
    
    1,919,871Noncontrolling interest  consolidated joint ventures
    
    
    733
    
    
    
    1,130Total equity
    
    
    2,170,472
    
    
    
    1,921,001Total liabilities, limited partners equity and
equity
    
    $
    5,325,886
    
    
    $
    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 EndedSeptember 30, 2009
    
    
    September 30, 2008OPERATING REVENUERental
    
    $
    130,643
    
    
    $
    126,422Operating expense reimbursement
    
    
    56,850
    
    
    
    56,009Total operating revenue
    
    
    187,493
    
    
    
    182,431OPERATING EXPENSERental property
    
    
    36,224
    
    
    
    37,078Real estate taxes
    
    
    23,061
    
    
    
    21,527General and administrative
    
    
    11,248
    
    
    
    13,180Depreciation and amortization
    
    
    43,268
    
    
    
    43,196Total operating expenses
    
    
    113,801
    
    
    
    114,981Operating income
    
    
    73,692
    
    
    
    67,450OTHER INCOME (EXPENSE)Interest and other income
    
    
    2,635
    
    
    
    3,313Debt extinguishment gain
    
    
    455
    
    
    
    Interest expense
    
    
    (36,735
    )
    
    
    (37,587
    )Total other income (expense)
    
    
    (33,645
    )
    
    
    (34,274
    )Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures
    
    
    40,047
    
    
    
    33,176Gain on property dispositions
    
    
    100
    
    
    
    463Income taxes
    
    
    (86
    )
    
    
    (308
    )Equity in earnings of unconsolidated joint ventures
    
    
    515
    
    
    
    470Income from continuing operations
    
    
    40,576
    
    
    
    33,801Discontinued operations (including net gain on property dispositions of $5,131 and $10,232 for the three months ended September 30, 2009 and 2008, respectively)
    
    
    10,168
    
    
    
    12,152Net income
    
    
    50,744
    
    
    
    45,953Noncontrolling interest  consolidated joint ventures
    
    
    (23
    )
    
    
    (400
    )Preferred unit distributions
    
    
    (5,253
    )
    
    
    (5,253
    )Income available to common unitholders
    
    $
    45,468
    
    
    $
    40,300Earnings per common unitBasic:Income from continuing operations
    
    $
    0.30
    
    
    $
    0.29Income from discontinued operations
    
    
    0.09
    
    
    
    0.12Income per common unit  basic
    
    $
    0.39
    
    
    $
    0.41Diluted:Income from continuing operations
    
    $
    0.30
    
    
    $
    0.29Income from discontinued operations
    
    
    0.09
    
    
    
    0.12Income per common unit  diluted
    
    $
    0.39
    
    
    $
    0.41Distributions per common unit
    
    $
    0.475
    
    
    $
    0.625Weighted average number of common units outstandingBasic
    
    
    115,368
    
    
    
    97,145Diluted
    
    
    115,943
    
    
    
    97,559
   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)
 Nine Months EndedSeptember 30, 2009
    
    
    September 30, 2008OPERATING REVENUERental
    
    $
    388,446
    
    
    $
    379,345Operating expense reimbursement
    
    
    168,699
    
    
    
    167,694Total operating revenue
    
    
    557,145
    
    
    
    547,039OPERATING EXPENSERental property
    
    
    109,903
    
    
    
    110,582Real estate taxes
    
    
    66,857
    
    
    
    64,245General and administrative
    
    
    38,470
    
    
    
    40,340Depreciation and amortization
    
    
    128,140
    
    
    
    127,637Total operating expenses
    
    
    343,370
    
    
    
    342,804Operating income
    
    
    213,775
    
    
    
    204,235OTHER INCOME (EXPENSE)Interest and other income
    
    
    8,245
    
    
    
    9,399Debt extinguishment gain
    
    
    1,547
    
    
    
    Interest expense
    
    
    (111,464
    )
    
    
    (114,559
    )Total other income (expense)
    
    
    (101,672
    )
    
    
    (105,160
    )Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures
    
    
    112,103
    
    
    
    99,075(Loss) gain on property dispositions
    
    
    (2,244
    )
    
    
    1,939Income taxes
    
    
    (430
    )
    
    
    (1,372
    )Equity in earnings of unconsolidated joint ventures
    
    
    2,124
    
    
    
    1,857Income from continuing operations
    
    
    111,553
    
    
    
    101,499Discontinued operations (including net gain on property dispositions of $9,000 and $13,635 for the nine months ended September 30, 2009 and 2008, respectively)
    
    
    16,245
    
    
    
    19,228Net income
    
    
    127,798
    
    
    
    120,727Noncontrolling interest  consolidated joint ventures
    
    
    397
    
    
    
    (298
    )Preferred unit distributions
    
    
    (15,759
    )
    
    
    (15,759
    )Income available to common unitholders
    
    $
    112,436
    
    
    $
    104,670Earnings per common unitBasic:Income from continuing operations
    
    $
    0.87
    
    
    $
    0.88Income from discontinued operations
    
    
    0.15
    
    
    
    0.20Income per common unit  basic
    
    $
    1.02
    
    
    $
    1.08Diluted:Income from continuing operations
    
    $
    0.87
    
    
    $
    0.88Income from discontinued operations
    
    
    0.15
    
    
    
    0.20Income per common unit  diluted
    
    $
    1.02
    
    
    $
    1.08Distributions per common unit
    
    $
    1.425
    
    
    $
    1.875Weighted average number of common units outstandingBasic
    
    
    110,007
    
    
    
    96,518Diluted
    
    
    110,459
    
    
    
    96,816
   21




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##### Table of Contents



CONDENSED CONSOLIDATED STATEMENT OF EQUITY OF LIBERTY PROPERTY LIMITED PARTNERSHIP
(UNAUDITED AND IN THOUSANDS)
 General Partners
    
    
    NoncontrollingEquity
    
    
    Interest
    
    
    Total EquityBalance at December 31, 2008
    
    $
    1,919,871
    
    
    $
    1,130
    
    
    $
    1,921,001Contributions from partners
    
    
    304,385
    
    
    
    
    
    
    
    304,385Distributions to partners
    
    
    (155,065
    )
    
    
    
    
    
    
    (155,065
    )Foreign currency translation adjustment
    
    
    6,798
    
    
    
    
    
    
    
    6,798Net income (does not include $19,732 related to limited partners equity)
    
    
    108,463
    
    
    
    (397
    )
    
    
    108,066Redemption of noncontrolling interests for common units
    
    
    (14,713
    )
    
    
    
    
    
    
    (14,713
    )Balance at September 30, 2009
    
    $
    2,169,739
    
    
    $
    733
    
    
    $
    2,170,472
   22




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##### Table of Contents



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Unaudited and in thousands)
 Nine Months EndedSeptember 30, 2009
    
    
    September 30, 2008OPERATING ACTIVITIESNet income
    
    $
    127,798
    
    
    $
    120,727Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    129,745
    
    
    
    132,106Amortization of deferred financing costs
    
    
    3,685
    
    
    
    3,327Equity in earnings of unconsolidated joint ventures
    
    
    (2,122
    )
    
    
    (1,857
    )Distributions from unconsolidated joint ventures
    
    
    663
    
    
    
    700Gain on property dispositions
    
    
    (6,757
    )
    
    
    (15,574
    )Noncash compensation
    
    
    11,027
    
    
    
    7,793Changes in operating assets and liabilities:Restricted cash
    
    
    6,635
    
    
    
    (9,755
    )Accounts receivable
    
    
    5,461
    
    
    
    (7,763
    )Deferred rent receivable
    
    
    (10,499
    )
    
    
    (9,627
    )Prepaid expenses and other assets
    
    
    (9,839
    )
    
    
    (28,533
    )Accounts payable
    
    
    15,264
    
    
    
    10,512Accrued interest
    
    
    (8,680
    )
    
    
    (1,662
    )Other liabilities
    
    
    (24,106
    )
    
    
    (7,546
    )Net cash provided by operating activities
    
    
    238,275
    
    
    
    192,848INVESTING ACTIVITIESInvestment in properties
    
    
    (51,111
    )
    
    
    (87,245
    )Investments in and advances to unconsolidated joint ventures
    
    
    (4,021
    )
    
    
    (5,580
    )Distributions from unconsolidated joint ventures
    
    
    18,549
    
    
    
    64,321Net proceeds from disposition of properties/land
    
    
    144,431
    
    
    
    347,360Investment in development in progress
    
    
    (72,776
    )
    
    
    (166,718
    )Investment in land held for development
    
    
    (28,074
    )
    
    
    (38,370
    )Investment in deferred leasing costs
    
    
    (18,083
    )
    
    
    (23,610
    )Net cash (used in) provided by investing activities
    
    
    (11,085
    )
    
    
    90,158FINANCING ACTIVITIESRepayments of unsecured notes
    
    
    (288,725
    )
    
    
    Proceeds from mortgage loans
    
    
    317,378
    
    
    
    Repayments of mortgage loans
    
    
    (53,285
    )
    
    
    (37,437
    )Proceeds from credit facility
    
    
    199,150
    
    
    
    438,700Repayments on credit facility
    
    
    (319,150
    )
    
    
    (538,700
    )Increase in deferred financing costs
    
    
    (4,651
    )
    
    
    (25
    )Capital contributions
    
    
    293,324
    
    
    
    45,690Distribution to partners
    
    
    (170,053
    )
    
    
    (196,581
    )Net cash used in financing activities
    
    
    (26,012
    )
    
    
    (288,353
    )Net increase (decrease) in cash and cash equivalents
    
    
    201,178
    
    
    
    (5,347
    )Increase (decrease) in cash and cash equivalents related to foreign currency translation
    
    
    2,430
    
    
    
    (3,364
    )Cash and cash equivalents at beginning of period
    
    
    15,794
    
    
    
    37,989Cash and cash equivalents at end of period
    
    $
    219,402
    
    
    $
    29.278
   23




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##### Table of Contents



Liberty Property Limited Partnership
Notes to Condensed Consolidated Financial Statements (Unaudited)
September 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
    
    
    For the Three Months EndedSeptember 30, 2009
    
    
    September 30, 2008Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedIncome
    
    
    Average Units
    
    
    
    
    
    
    Income
    
    
    Average Units(Numerator)
    
    
    (Denominator)
    
    
    Per Unit
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    Per UnitIncome from continuing operations
    
    $
    40,576
    
    
    
    
    
    
    
    
    
    
    $
    33,801Add: Noncontrolling interest  consolidated
joint ventures
    
    
    (23
    )
    
    
    
    
    
    
    
    
    
    
    (400
    )Less: Preferred unit distributions
    
    
    (5,253
    )
    
    
    
    
    
    
    
    
    
    
    (5,253
    )Basic income from continuing operationsIncome from continuing operations available to common unitholders
    
    
    35,300
    
    
    
    115,368
    
    
    $
    0.30
    
    
    
    28,148
    
    
    
    97,145
    
    
    $
    0.29Dilutive units for long-term compensation plans
    
    
    
    
    
    
    575
    
    
    
    
    
    
    
    
    
    
    
    414Diluted income from continuing operationsIncome from continuing operations available to common unitholders and assumed conversions
    
    
    35,300
    
    
    
    115,943
    
    
    $
    0.30
    
    
    
    28,148
    
    
    
    97,559
    
    
    $
    0.29Basic income from discontinued operationsDiscontinued operations
    
    
    10,168
    
    
    
    115,368
    
    
    $
    0.09
    
    
    
    12,152
    
    
    
    97,145
    
    
    $
    0.12Dilutive units for long-term compensation plans
    
    
    
    
    
    
    575
    
    
    
    
    
    
    
    
    
    
    
    414Diluted income from discontinued operationsDiscontinued operations
    
    
    10,168
    
    
    
    115,943
    
    
    $
    0.09
    
    
    
    12,152
    
    
    
    97,559
    
    
    $
    0.12Basic income per common unitIncome available to common unitholders
    
    
    45,468
    
    
    
    115,368
    
    
    $
    0.39
    
    
    
    40,300
    
    
    
    97,145
    
    
    $
    0.41Diluted units for long-term compensation plans
    
    
    
    
    
    
    575
    
    
    
    
    
    
    
    
    
    
    
    414Diluted income per common unitIncome available to common unitholders and assumed conversions
    
    $
    45,468
    
    
    
    115,943
    
    
    $
    0.39
    
    
    $
    40,300
    
    
    
    97,559
    
    
    $
    0.41
  25




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##### Table of Contents



For the Nine Months Ended
    
    
    For the Nine Months EndedSeptember 30, 2009
    
    
    September 30, 2008Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedIncome
    
    
    Average Units
    
    
    
    
    
    
    Income
    
    
    Average Units(Numerator)
    
    
    (Denominator)
    
    
    Per Unit
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    Per UnitIncome from continuing operations
    
    $
    111,553
    
    
    
    
    
    
    
    
    
    
    $
    101,499Noncontrolling interest  consolidated
joint ventures
    
    
    397
    
    
    
    
    
    
    
    
    
    
    
    (298
    )Preferred unit distributions
    
    
    (15,759
    )
    
    
    
    
    
    
    
    
    
    
    (15,759
    )Basic income from continuing operationsIncome from continuing operations available to common unitholders
    
    
    96,191
    
    
    
    110,007
    
    
    $
    0.87
    
    
    
    85,442
    
    
    
    96,518
    
    
    $
    0.88Dilutive units for long-term compensation plans
    
    
    
    
    
    
    452
    
    
    
    
    
    
    
    
    
    
    
    298Diluted income from continuing operationsIncome from continuing operations available to common unitholders and assumed conversions
    
    
    96,191
    
    
    
    110,459
    
    
    $
    0.87
    
    
    
    85,442
    
    
    
    96,816
    
    
    $
    0.88Basic income from discontinued operationsDiscontinued operations
    
    
    16,245
    
    
    
    110,007
    
    
    $
    0.15
    
    
    
    19,228
    
    
    
    96,518
    
    
    $
    0.20Dilutive units for long-term compensation plans
    
    
    
    
    
    
    452
    
    
    
    
    
    
    
    
    
    
    
    298Diluted income from discontinued operationsDiscontinued operations
    
    
    16,245
    
    
    
    110,459
    
    
    $
    0.15
    
    
    
    19,228
    
    
    
    96,816
    
    
    $
    0.20Basic income per common unitIncome available to common unitholders
    
    
    112,436
    
    
    
    110,007
    
    
    $
    1.02
    
    
    
    104,670
    
    
    
    96,518
    
    
    $
    1.08Diluted units for long-term compensation plans
    
    
    
    
    
    
    452
    
    
    
    
    
    
    
    
    
    
    
    298Diluted income per common unitIncome available to common unitholders and assumed conversions
    
    $
    112,436
    
    
    
    110,459
    
    
    $
    1.02
    
    
    $
    104,670
    
    
    
    96,816
    
    
    $
    1.08
   Foreign Currency Translation
  Noncontrolling Interests
 Consolidation Distinguishing Liabilities from
Equity
  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 SEPTEMBER 30, 2009
 NortheastLehigh/Southeastern
    
    
    Central
    
    
    New
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Phila-
    
    
    UnitedPA
    
    
    PA
    
    
    Jersey
    
    
    Midwest
    
    
    Mid-Atlantic
    
    
    South
    
    
    delphia
    
    
    Kingdom
    
    
    TotalOperating revenue
    
    $
    45,287
    
    
    $
    25,258
    
    
    $
    7,870
    
    
    $
    20,898
    
    
    $
    34,738
    
    
    $
    46,919
    
    
    $
    5,437
    
    
    $
    1,086
    
    
    $
    187,493Rental property expenses and real estate taxes
    
    
    14,457
    
    
    
    5,493
    
    
    
    3,359
    
    
    
    8,405
    
    
    
    10,062
    
    
    
    15,910
    
    
    
    1,382
    
    
    
    217
    
    
    
    59,285Property level operating income
    
    $
    30,830
    
    
    $
    19,765
    
    
    $
    4,511
    
    
    $
    12,493
    
    
    $
    24,676
    
    
    $
    31,009
    
    
    $
    4,055
    
    
    $
    869
    
    
    
    128,208Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,635Debt extinguishment gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    455Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36,735
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,248
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (43,268
    )Income
before property dispositions, income taxes and equity in earnings of
unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    40,047Gain on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (86
    )Equity in earnings of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    515Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,168Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    50,744
 27




---



##### Table of Contents



FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2008
 NortheastLehigh/Southeastern
    
    
    Central
    
    
    New
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Phila-
    
    
    UnitedPA
    
    
    PA
    
    
    Jersey
    
    
    Midwest
    
    
    Mid-Atlantic
    
    
    South
    
    
    delphia
    
    
    Kingdom
    
    
    TotalOperating revenue
    
    $
    43,328
    
    
    $
    23,743
    
    
    $
    8,527
    
    
    $
    20,834
    
    
    $
    35,484
    
    
    $
    44,751
    
    
    $
    4,736
    
    
    $
    1,028
    
    
    $
    182,431Rental property
expenses and real
estate taxes
    
    
    14,189
    
    
    
    5,792
    
    
    
    3,755
    
    
    
    7,644
    
    
    
    11,053
    
    
    
    14,748
    
    
    
    1,103
    
    
    
    321
    
    
    
    58,605Property level
operating income
    
    $
    29,139
    
    
    $
    17,951
    
    
    $
    4,772
    
    
    $
    13,190
    
    
    $
    24,431
    
    
    $
    30,003
    
    
    $
    3,633
    
    
    $
    707
    
    
    
    123,826Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,313Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37,587
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,180
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (43,196
    )Income before property
dispositions, income taxes
and equity in earnings of
unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,176Gain on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    463Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (308
    )Equity in earnings of
unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    470Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,152Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    45,953
 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009
 NortheastLehigh/Southeastern
    
    
    Central
    
    
    New
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Phila-
    
    
    UnitedPA
    
    
    PA
    
    
    Jersey
    
    
    Midwest
    
    
    Mid-Atlantic
    
    
    South
    
    
    delphia
    
    
    Kingdom
    
    
    TotalOperating revenue
    
    $
    137,539
    
    
    $
    75,103
    
    
    $
    23,727
    
    
    $
    62,287
    
    
    $
    101,913
    
    
    $
    138,034
    
    
    $
    15,220
    
    
    $
    3,322
    
    
    $
    557,145Rental property
expenses and real
estate taxes
    
    
    44,260
    
    
    
    19,553
    
    
    
    9,699
    
    
    
    23,663
    
    
    
    30,039
    
    
    
    45,084
    
    
    
    3,755
    
    
    
    707
    
    
    
    176,760Property level
operating income
    
    $
    93,279
    
    
    $
    55,550
    
    
    $
    14,028
    
    
    $
    38,624
    
    
    $
    71,874
    
    
    $
    92,950
    
    
    $
    11,465
    
    
    $
    2,615
    
    
    
    380,385Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,245Debt extinguishment gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,547Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (111,464
    )General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38,470
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (128,140
    )Income before property
dispositions, income
taxes and equity in
earnings of unconsolidated
joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    112,103Loss on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,244
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (430
    )Equity in earnings of
unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,124Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,245Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    127,798
  28




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##### Table of Contents



FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008
 NortheastLehigh/Southeastern
    
    
    Central
    
    
    New
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Phila-
    
    
    UnitedPA
    
    
    PA
    
    
    Jersey
    
    
    Midwest
    
    
    Mid-Atlantic
    
    
    South
    
    
    delphia
    
    
    Kingdom
    
    
    TotalOperating revenue
    
    $
    129,889
    
    
    $
    72,719
    
    
    $
    24,232
    
    
    $
    61,385
    
    
    $
    103,880
    
    
    $
    126,585
    
    
    $
    24,869
    
    
    $
    3,480
    
    
    $
    547,039Rental property
expenses and real
estate taxes
    
    
    42,119
    
    
    
    19,638
    
    
    
    9,832
    
    
    
    22,706
    
    
    
    30,427
    
    
    
    42,593
    
    
    
    6,573
    
    
    
    939
    
    
    
    174,827Property level
operating income
    
    $
    87,770
    
    
    $
    53,081
    
    
    $
    14,400
    
    
    $
    38,679
    
    
    $
    73,453
    
    
    $
    83,992
    
    
    $
    18,296
    
    
    $
    2,541
    
    
    
    372,212Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,399Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (114,559
    )General and
administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40,340
    )Depreciation and
amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (127,637
    )Income before property
dispositions,
income taxes and equity
in earnings
of unconsolidated joint
ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99,075Gain on property dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,939Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,372
    )Equity in earnings of
unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,857Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,228Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    120,727
 Note 3: Accounting for the Impairment or Disposal of Long-Lived Assets
   Three Months Ended
    
    
    Nine months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues
    
    $
    6,494
    
    
    $
    7,802
    
    
    $
    14,726
    
    
    $
    23,267Operating expenses
    
    
    (665
    )
    
    
    (2,710
    )
    
    
    (3,298
    )
    
    
    (8,190
    )Interest expense
    
    
    (354
    )
    
    
    (1,418
    )
    
    
    (1,908
    )
    
    
    (4,234
    )Depreciation and amortization
    
    
    (438
    )
    
    
    (1,754
    )
    
    
    (2,275
    )
    
    
    (5,250
    )Income before property dispositions
    
    $
    5,037
    
    
    $
    1,920
    
    
    $
    7,245
    
    
    $
    5,593
    29




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##### Table of Contents



Asset Impairment
  Note 4: Joint Ventures
  Liberty/Commerz 1701 JFK Boulevard, LP
     Note 5: Indebtedness
 Mortgage Loans
   Unsecured Notes
   30




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##### Table of Contents



Credit Facility
  Note 6: Limited partners equity
   Limited
    
    
    Limitedpartners equity
    
    
    partners equity preferred
    
    
     commonunits
    
    
    unitsBalance at December 31, 2008
    
    $
    287,959
    
    
    $
    117,546Net income
    
    
    15,759
    
    
    
    3,973Distributions
    
    
    (15,759
    )
    
    
    (5,798
    )Foreign currency translation adjustment
    
    
    
    
    
    
    252Redemption of noncontrolling interests for common units
    
    
    
    
    
    
    14,713Balance at September 30, 2009
    
    $
    287,959
    
    
    $
    130,686
 Common units
   31




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##### Table of Contents



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
    %
    
    
    12/15/11
    
    
    12/15/16 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
  Note 7: Continuous Equity Offering
  Note 8: Disclosure of Fair Value of Financial Instruments
 Financial Instruments
    32




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##### Table of Contents



Note 9: Recently Issued Accounting Standards
 Generally Accepted Accounting Principles
 Business Combinations
 Business Combinations
 Earnings Per Share
 Earnings Per Share
 Note 10: Supplemental Disclosure to Statements of Cash Flows
  Non-cash activity
    
    2009
    
    
    2008Write-off of fully depreciated property and deferred costs
    
    $
    56,171
    
    
    $
    20,692Increase 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
    )
  33




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##### Table of Contents



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




---



##### Table of Contents



Category
    
    2009 Guidance
    
    2009 Revised Guidance
    
    2010 GuidanceWholly Owned Acquisitions
    
    $
    
    $
    
    $25 - $75 millionWholly Owned Dispositions
    
    $125 - $200 million
    
    $175 million
    
    $75 - $150 millionWholly Owned Development Deliveries
    
    $250 - $350 million
    
    $300 million
    
    $75 - $100 millionJoint Venture Acquisitions
    
    $50 - $100 million
    
    $
    
    $Joint Venture Dispositions
    
    $
    
    $
    
    $Joint Venture Development Deliveries
    
    $0 - $50 million
    
    $35 million
    
    $125 - $175 million
 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 OccupiedSeptember 30,
    
    
    September 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Wholly Owned Properties in Operation:Industrial-Distribution
    
    $
    4.37
    
    
    $
    4.51
    
    
    
    30,961
    
    
    
    29,809
    
    
    
    88.8
    %
    
    
    90.9
    %Industrial-Flex
    
    $
    9.08
    
    
    $
    9.21
    
    
    
    11,403
    
    
    
    11,520
    
    
    
    89.2
    %
    
    
    89.4
    %Office
    
    $
    14.40
    
    
    $
    14.17
    
    
    
    21,427
    
    
    
    21,548
    
    
    
    90.5
    %
    
    
    93.2
    %$
    8.62
    
    
    $
    8.73
    
    
    
    63,791
    
    
    
    62,877
    
    
    
    89.4
    %
    
    
    91.4
    %
 Net RentPer Square Foot
    
    
    Total Square Feet
    
    
    Percent OccupiedSeptember 30,
    
    
    September 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Joint Venture Properties in Operation:Industrial-Distribution
    
    $
    4.28
    
    
    $
    4.03
    
    
    
    8,816
    
    
    
    8,316
    
    
    
    87.7
    %
    
    
    97.0
    %Industrial-Flex
    
    $
    24.41
    
    
    $
    30.47
    
    
    
    171
    
    
    
    171
    
    
    
    93.6
    %
    
    
    89.5
    %Office
    
    $
    24.72
    
    
    $
    24.68
    
    
    
    4,575
    
    
    
    4,581
    
    
    
    90.8
    %
    
    
    90.8
    %$
    11.60
    
    
    $
    11.30
    
    
    
    13,562
    
    
    
    13,068
    
    
    
    88.8
    %
    
    
    94.7
    %
 Net RentPer Square Foot
    
    
    Total Square Feet
    
    
    Percent OccupiedSeptember 30,
    
    
    September 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Properties in Operation:Industrial-Distribution
    
    $
    4.35
    
    
    $
    4.40
    
    
    
    39,777
    
    
    
    38,125
    
    
    
    88.5
    %
    
    
    92.2
    %Industrial-Flex
    
    $
    9.32
    
    
    $
    9.52
    
    
    
    11,574
    
    
    
    11,691
    
    
    
    89.2
    %
    
    
    89.4
    %Office
    
    $
    16.22
    
    
    $
    15.98
    
    
    
    26,002
    
    
    
    26,129
    
    
    
    90.6
    %
    
    
    92.8
    %$
    9.14
    
    
    $
    9.18
    
    
    
    77,353
    
    
    
    75,945
    
    
    
    89.3
    %
    
    
    92.0
    %
  Forward-Looking Statements
   36




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##### Table of Contents



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




---



##### Table of Contents



Segments
  Property Level Operating Income:
 Three Months      Ended
    
    
    Percentage
    
    
    Nine months  Ended
    
    
    PercentageSeptember 30,
    
    
    Increase
    
    
    September 30,
    
    
    Increase2009
    
    
    2008
    
    
    (Decrease)
    
    
    2009
    
    
    2008
    
    
    (Decrease)Northeast Southeastern PA
    
    $
    30,830
    
    
    $
    29,139
    
    
    
    5.8%
    (1)
    
    $
    93,279
    
    
    $
    87,770
    
    
    
    6.3%
    (1) Lehigh/Central PA
    
    
    19,765
    
    
    
    17,951
    
    
    
    10.1%
    (2)
    
    
    55,550
    
    
    
    53,081
    
    
    
    4.7
    % New Jersey
    
    
    4,511
    
    
    
    4,772
    
    
    
    (5.5%)
    (3)
    
    
    14,028
    
    
    
    14,400
    
    
    
    (2.6
    %)Midwest
    
    
    12,493
    
    
    
    13,190
    
    
    
    (5.3%)
    (3)
    
    
    38,624
    
    
    
    38,679
    
    
    
    (0.1
    %)Mid-Atlantic
    
    
    24,676
    
    
    
    24,431
    
    
    
    1.0
    %
    
    
    71,874
    
    
    
    73,453
    
    
    
    (2.1
    %)South
    
    
    31,009
    
    
    
    30,003
    
    
    
    3.4
    %
    
    
    92,950
    
    
    
    83,992
    
    
    
    10.7%
    (1)Philadelphia
    
    
    4,055
    
    
    
    3,633
    
    
    
    11.6%
    (4)
    
    
    11,465
    
    
    
    18,296
    
    
    
    (37.3%)
    (5)United Kingdom
    
    
    869
    
    
    
    707
    
    
    
    22.9
    %
    
    
    2,615
    
    
    
    2,541
    
    
    
    2.9
    %Total
property level operating
income
    
    $
    128,208
    
    
    $
    123,826
    
    
    
    3.5
    %
    
    $
    380,385
    
    
    $
    372,212
    
    
    
    2.2
    %
 (1)
    
    The change 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 change was primarily due to an increase in average gross investment in
operating real estate and an increase in occupancy. This increase was partially
offset by a decrease in rental rates in 2009.(3)
    
    The change was primarily due to a decrease in occupancy and a decrease in
rental rates. This decrease was partially offset by an increase in average gross
investment in operating real estate in 2009.(4)
    
    The change 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 change was primarily due to the effect of Comcast Center operation during
the relevant periods. Comcast Center was a wholly owned 1,250,000 square foot
development property until March 30, 2008 when it was sold into an unconsolidated
joint venture. Same Store
     38




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##### Table of Contents



Three Months Ended
    
    
    Nine months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Same Store:Rental revenue
    
    $
    123,605
    
    
    $
    122,519
    
    
    $
    371,430
    
    
    $
    366,215Operating expenses:Rental property expense
    
    
    35,567
    
    
    
    37,755
    
    
    
    109,273
    
    
    
    110,909Real estate taxes
    
    
    20,898
    
    
    
    20,384
    
    
    
    62,089
    
    
    
    61,317Operating expense recovery
    
    
    (55,038
    )
    
    
    (55,397
    )
    
    
    (164,834
    )
    
    
    (164,722
    )Unrecovered operating expenses
    
    
    1,427
    
    
    
    2,742
    
    
    
    6,528
    
    
    
    7,504Property level operating income
    
    
    122,178
    
    
    
    119,777
    
    
    
    364,902
    
    
    
    358,711Less straight line rent
    
    
    3,840
    
    
    
    1,948
    
    
    
    10,859
    
    
    
    7,827Cash basis property level operating income
    
    $
    118,338
    
    
    $
    117,829
    
    
    $
    354,043
    
    
    $
    350,884Reconciliation of non-GAAP financial measure  Same Store:Cash basis property level operating income
    
    $
    118,338
    
    
    $
    117,829
    
    
    $
    354,043
    
    
    $
    350,884Straight line rent
    
    
    3,840
    
    
    
    1,948
    
    
    
    10,859
    
    
    
    7,827Property level operating income
    
    
    122,178
    
    
    
    119,777
    
    
    
    364,902
    
    
    
    358,711Property level operating income  properties purchased
or developed subsequent to January 1, 2008
    
    
    4,902
    
    
    
    3,479
    
    
    
    14,403
    
    
    
    12,340Less: Property level operating income  properties held
for sale at September 30, 2009
    
    
    (470
    )
    
    
    (652
    )
    
    
    (1,643
    )
    
    
    (1,973
    )Termination fees
    
    
    1,598
    
    
    
    1,222
    
    
    
    2,723
    
    
    
    3,134General and administrative expense
    
    
    (11,248
    )
    
    
    (13,180
    )
    
    
    (38,470
    )
    
    
    (40,340
    )Depreciation and amortization expense
    
    
    (43,268
    )
    
    
    (43,196
    )
    
    
    (128,140
    )
    
    
    (127,637
    )Other income (expense)
    
    
    (33,645
    )
    
    
    (34,274
    )
    
    
    (101,672
    )
    
    
    (105,160
    )Gain (loss) on property dispositions
    
    
    100
    
    
    
    463
    
    
    
    (2,244
    )
    
    
    1,939Income taxes
    
    
    (86
    )
    
    
    (308
    )
    
    
    (430
    )
    
    
    (1,372
    )Equity in earnings of unconsolidated joint ventures
    
    
    515
    
    
    
    470
    
    
    
    2,124
    
    
    
    1,857Discontinued operations
    
    
    10,168
    
    
    
    12,152
    
    
    
    16,245
    
    
    
    19,228Net income
    
    $
    50,744
    
    
    $
    45,953
    
    
    $
    127,798
    
    
    $
    120,727
 General and Administrative
  Depreciation and Amortization
  Interest Expense
   39




---



##### Table of Contents



Other
     Liquidity and Capital Resources
 Overview
  Activity
   40




---



##### Table of Contents



41




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##### Table of Contents



MORTGAGES
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    WEIGHTEDPRINCIPAL
    
    
    PRINCIPAL
    
    
    UNSECURED
    
    
    CREDIT
    
    
    
    
    
    
    AVERAGEAMORTIZATION
    
    
    MATURITIES
    
    
    NOTES
    
    
    FACILITY
    
    
    TOTAL
    
    
    INTEREST RATE2009 (3 months)
    
    $
    1,552
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,552
    
    
    
    6.46
    %2010
    
    
    6,423
    
    
    
    4,736
    
    
    
    169,739
    
    
    
    140,000
    (1)
    
    
    320,898
    
    
    
    4.70
    %2011
    
    
    6,644
    
    
    
    10,741
    
    
    
    246,500
    
    
    
    
    
    
    
    263,885
    
    
    
    7.25
    %2012
    
    
    4,620
    
    
    
    177,630
    (2)
    
    
    230,100
    
    
    
    
    
    
    
    412,350
    
    
    
    6.64
    %2013
    
    
    3,858
    
    
    
    4,510
    
    
    
    
    
    
    
    
    
    
    
    8,368
    
    
    
    5.79
    %2014
    
    
    4,352
    
    
    
    2,684
    
    
    
    200,000
    
    
    
    
    
    
    
    207,036
    
    
    
    5.67
    %2015
    
    
    3,932
    
    
    
    44,469
    
    
    
    300,000
    
    
    
    
    
    
    
    348,401
    
    
    
    5.25
    %2016
    
    
    2,461
    
    
    
    182,318
    
    
    
    300,000
    
    
    
    
    
    
    
    484,779
    
    
    
    6.11
    %2017
    
    
    1,770
    
    
    
    
    
    
    
    296,543
    
    
    
    
    
    
    
    298,313
    
    
    
    6.62
    %2018 & thereafter
    
    
    
    
    
    
    
    
    
    
    100,000
    
    
    
    
    
    
    
    100,000
    
    
    
    7.50
    %$
    35,612
    
    
    $
    427,088
    
    
    $
    1,842,882
    
    
    $
    140,000
    
    
    $
    2,445,582
    
    
    
    6.15
    %
 (1)
    
    The Company has exercised its one year renewal option and the Credit
Facility now expires in January 2011.(2)
    
    There are two one  year extensions for $147,737 of mortgages. General
   42




---



##### Table of Contents



Wholly Owned Properties
in Operation:
 Industrial-
    
    
    Industrial-Distribution
    
    
    Flex
    
    
    Office
    
    
    TotalSquare
    
    
    Annual
    
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annual
    
    
    Square
    
    
    AnnualFeet
    
    
    Rent
    
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent2009 (3 months)
    
    
    1,189
    
    
    $
    4,926
    
    
    
    335
    
    
    $
    2,238
    
    
    
    544
    
    
    $
    6,570
    
    
    
    2,068
    
    
    $
    13,7342010
    
    
    3,138
    
    
    
    14,338
    
    
    
    1,818
    
    
    
    16,676
    
    
    
    2,691
    
    
    
    37,501
    
    
    
    7,647
    
    
    
    68,5152011
    
    
    2,827
    
    
    
    13,165
    
    
    
    1,314
    
    
    
    12,333
    
    
    
    2,128
    
    
    
    31,244
    
    
    
    6,269
    
    
    
    56,7422012
    
    
    4,845
    
    
    
    23,231
    
    
    
    1,531
    
    
    
    14,815
    
    
    
    2,267
    
    
    
    38,410
    
    
    
    8,643
    
    
    
    76,4562013
    
    
    2,069
    
    
    
    10,402
    
    
    
    1,520
    
    
    
    15,430
    
    
    
    2,441
    
    
    
    40,002
    
    
    
    6,030
    
    
    
    65,8342014
    
    
    2,638
    
    
    
    13,541
    
    
    
    912
    
    
    
    9,882
    
    
    
    2,738
    
    
    
    42,563
    
    
    
    6,288
    
    
    
    65,986Thereafter
    
    
    10,774
    
    
    
    59,768
    
    
    
    2,737
    
    
    
    32,578
    
    
    
    6,590
    
    
    
    118,882
    
    
    
    20,101
    
    
    
    211,228TOTAL
    
    
    27,480
    
    
    $
    139,371
    
    
    
    10,167
    
    
    $
    103,952
    
    
    
    19,399
    
    
    $
    315,172
    
    
    
    57,046
    
    
    $
    558,495
 Joint Venture Properties
in Operation:
 Industrial-
    
    
    Industrial-Distribution
    
    
    Flex
    
    
    Office
    
    
    TotalSquare
    
    
    Annual
    
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annual
    
    
    Square
    
    
    AnnualFeet
    
    
    Rent
    
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent2009 (3 months)
    
    
    347
    
    
    $
    1,271
    
    
    
    
    
    
    $
    
    
    
    
    132
    
    
    $
    2,904
    
    
    
    479
    
    
    $
    4,1752010
    
    
    1,241
    
    
    
    4,953
    
    
    
    24
    
    
    
    715
    
    
    
    375
    
    
    
    8,405
    
    
    
    1,640
    
    
    
    14,0732011
    
    
    1,282
    
    
    
    5,017
    
    
    
    11
    
    
    
    301
    
    
    
    426
    
    
    
    10,629
    
    
    
    1,719
    
    
    
    15,9472012
    
    
    373
    
    
    
    1,788
    
    
    
    63
    
    
    
    1,707
    
    
    
    179
    
    
    
    4,527
    
    
    
    615
    
    
    
    8,0222013
    
    
    303
    
    
    
    1,392
    
    
    
    
    
    
    
    
    
    
    
    259
    
    
    
    6,001
    
    
    
    562
    
    
    
    7,3932014
    
    
    1,103
    
    
    
    5,087
    
    
    
    25
    
    
    
    721
    
    
    
    382
    
    
    
    10,299
    
    
    
    1,510
    
    
    
    16,107Thereafter
    
    
    3,081
    
    
    
    16,912
    
    
    
    36
    
    
    
    1,019
    
    
    
    2,399
    
    
    
    78,519
    
    
    
    5,516
    
    
    
    96,450TOTAL
    
    
    7,730
    
    
    $
    36,420
    
    
    
    159
    
    
    $
    4,463
    
    
    
    4,152
    
    
    $
    121,284
    
    
    
    12,041
    
    
    $
    162,167
 Properties
in Operation:
 Industrial-
    
    
    Industrial-Distribution
    
    
    Flex
    
    
    Office
    
    
    TotalSquare
    
    
    Annual
    
    
    Square
    
    
    Annual
    
    
    Square
    
    
    Annual
    
    
    Square
    
    
    AnnualFeet
    
    
    Rent
    
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent
    
    
    Feet
    
    
    Rent2009 (3 months)
    
    
    1,536
    
    
    $
    6,197
    
    
    
    335
    
    
    $
    2,238
    
    
    
    676
    
    
    $
    9,474
    
    
    
    2,547
    
    
    $
    17,9092010
    
    
    4,379
    
    
    
    19,291
    
    
    
    1,842
    
    
    
    17,391
    
    
    
    3,066
    
    
    
    45,906
    
    
    
    9,287
    
    
    
    82,5882011
    
    
    4,109
    
    
    
    18,182
    
    
    
    1,325
    
    
    
    12,634
    
    
    
    2,554
    
    
    
    41,873
    
    
    
    7,988
    
    
    
    72,6892012
    
    
    5,218
    
    
    
    25,019
    
    
    
    1,594
    
    
    
    16,522
    
    
    
    2,446
    
    
    
    42,937
    
    
    
    9,258
    
    
    
    84,4782013
    
    
    2,372
    
    
    
    11,794
    
    
    
    1,520
    
    
    
    15,430
    
    
    
    2,700
    
    
    
    46,003
    
    
    
    6,592
    
    
    
    73,2272014
    
    
    3,741
    
    
    
    18,628
    
    
    
    937
    
    
    
    10,603
    
    
    
    3,120
    
    
    
    52,862
    
    
    
    7,798
    
    
    
    82,093Thereafter
    
    
    13,855
    
    
    
    76,680
    
    
    
    2,773
    
    
    
    33,597
    
    
    
    8,989
    
    
    
    197,401
    
    
    
    25,617
    
    
    
    307,678TOTAL
    
    
    35,210
    
    
    $
    175,791
    
    
    
    10,326
    
    
    $
    108,415
    
    
    
    23,551
    
    
    $
    436,456
    
    
    
    69,087
    
    
    $
    720,662
  43




---



##### Table of Contents



Square FeetScheduled
    
    Industrial-
    
    
    Industrial-
    
    
    
    
    
    
    
    
    
    
    Percent
    
    
    TotalIn-Service Date
    
    Distribution
    
    
    Flex
    
    
    Office
    
    
    Total
    
    
    Leased
    
    
    InvestmentWholly
Owned Properties under Development4th Quarter 2009
    
    
    961,100
    
    
    
    
    
    
    
    176,494
    
    
    
    1,137,594
    
    
    
    96.3
    %
    
    $
    122,3992nd Quarter 2010
    
    
    
    
    
    
    
    
    
    
    170,261
    
    
    
    170,261
    
    
    
    93.5
    %
    
    
    36,8874th Quarter 2010
    
    
    
    
    
    
    
    
    
    
    211,236
    
    
    
    211,236
    
    
    
    50.8
    %
    
    
    46,187TOTAL
    
    
    961,100
    
    
    
    
    
    
    
    557,991
    
    
    
    1,519,091
    
    
    
    89.7
    %
    
    $
    205,473Joint
Venture Properties under Development4th Quarter 2009
    
    
    225,000
    
    
    
    
    
    
    
    
    
    
    
    225,000
    
    
    
    40.7
    %
    
    $
    12,0302nd Quarter 2010
    
    
    463,636
    
    
    
    
    
    
    
    
    
    
    
    463,636
    
    
    
    
    
    
    
    25,0853rd Quarter 2010
    
    
    
    
    
    
    
    
    
    
    176,058
    
    
    
    176,058
    
    
    
    29.3
    %
    
    
    129,815TOTAL
    
    
    688,636
    
    
    
    
    
    
    
    176,058
    
    
    
    864,694
    
    
    
    16.6
    %
    
    $
    166,930Total
Properties under DevelopmentTOTAL
    
    
    1,649,736
    
    
    
    
    
    
    
    734,049
    
    
    
    2,383,785
    
    
    
    63.1
    %
    
    $
    372,403
  Calculation of Funds from Operations
   44




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##### Table of Contents



Three Months Ended
    
    
    Nine months EndedSeptember 30, 2009
    
    
    September 30, 2008
    
    
    September 30, 2009
    
    
    September 30, 2008Reconciliation of net income to FFO  basicNet Income available to common shareholders
    
    $
    43,903
    
    
    $
    38,554
    
    
    $
    108,463
    
    
    $
    100,144Basic  Income available to common shareholders
    
    
    43,903
    
    
    
    38,554
    
    
    
    108,463
    
    
    
    100,144Basic  income available to common shareholders per
weighted average share
    
    $
    0.39
    
    
    $
    0.41
    
    
    $
    1.02
    
    
    $
    1.08Adjustments:Depreciation and amortization of unconsolidated joint
ventures
    
    
    3,991
    
    
    
    4,331
    
    
    
    12,113
    
    
    
    12,208Depreciation and amortization
    
    
    43,041
    
    
    
    44,173
    
    
    
    128,427
    
    
    
    130,803Gain on property dispositions
    
    
    (9,442
    )
    
    
    (10,542
    )
    
    
    (14,817
    )
    
    
    (14,674
    )Noncontrolling interest share in addback for depreciation
and amortization and gain on property dispositions
    
    
    (1,293
    )
    
    
    (1,629
    )
    
    
    (4,497
    )
    
    
    (5,538
    )Funds from operations available to common
shareholders  basic
    
    $
    80,200
    
    
    $
    74,887
    
    
    $
    229,689
    
    
    $
    222,943Basic Funds from operations available to common
shareholders per weighted average share
    
    $
    0.72
    
    
    $
    0.81
    
    
    $
    2.17
    
    
    $
    2.41Reconciliation of net income to FFO  diluted:Net Income
    
    $
    43,903
    
    
    $
    38,554
    
    
    $
    108,463
    
    
    $
    100,144Diluted  income available to common shareholders
    
    
    43,903
    
    
    
    38,554
    
    
    
    108,463
    
    
    
    100,144Diluted  income available to common shareholders per
weighted average share
    
    $
    0.39
    
    
    $
    0.41
    
    
    $
    1.02
    
    
    $
    1.08Adjustments:Depreciation and amortization of unconsolidated joint
ventures
    
    
    3,991
    
    
    
    4,331
    
    
    
    12,113
    
    
    
    12,208Depreciation and amortization
    
    
    43,041
    
    
    
    44,173
    
    
    
    128,427
    
    
    
    130,803Gain on property dispositions
    
    
    (9,442
    )
    
    
    (10,542
    )
    
    
    (14,817
    )
    
    
    (14,674
    )Noncontrolling interest less preferred share distributions
    
    
    1,565
    
    
    
    1,746
    
    
    
    3,974
    
    
    
    4,526Funds from operations available to common shareholders 
diluted
    
    $
    83,058
    
    
    $
    78,262
    
    
    $
    238,160
    
    
    $
    233,007Diluted Funds from operations available to common
shareholders per weighted average share
    
    $
    0.72
    
    
    $
    0.80
    
    
    $
    2.16
    
    
    $
    2.41Reconciliation of weighted average shares:Weighted average common shares  all basic calculations
    
    
    111,351
    
    
    
    92,955
    
    
    
    105,989
    
    
    
    92,328Dilutive shares for long term compensation plans
    
    
    575
    
    
    
    414
    
    
    
    452
    
    
    
    298Diluted shares for net income calculations
    
    
    111,926
    
    
    
    93,369
    
    
    
    106,441
    
    
    
    92,626Weighted average common units
    
    
    4,017
    
    
    
    4,190
    
    
    
    4,018
    
    
    
    4,190Diluted shares for Funds from operations calculations
    
    
    115,943
    
    
    
    97,559
    
    
    
    110,459
    
    
    
    96,816
  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
  
 Item 3. Defaults upon Senior Securities
   47




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
   48




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##### Table of Contents



Item 6. Exhibits
 12.1
    *
    Statement Re: Computation of Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed Charges.31.1
    *
    Certification of the Chief Executive Officer of Liberty Property
Trust required by Rule 13a-14(a) under the Securities Exchange Act
of 1934.31.2
    *
    Certification of the Chief Financial Officer of Liberty Property
Trust required by Rule 13a-14(a) under the Securities Exchange Act
of 1934.31.3
    *
    Certification of the Chief Executive Officer of Liberty Property
Trust, in its capacity as the general partner of Liberty Property
Limited Partnership, required by Rule 13a-14(a) under the Securities
Exchange Act of 1934.31.4
    *
    Certification of the Chief Financial Officer of Liberty Property
Trust, in its capacity as the general partner of Liberty Property
Limited Partnership, required by Rule 13a-14(a) under the Securities
Exchange Act of 1934.32.1
    *
    Certification of the Chief Executive Officer of Liberty Property
Trust required under Rule 13a-14(b) of the Securities Exchange Act
of 1934, as amended. (This exhibit shall not be deemed filed for
purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, or otherwise subject to the liability of that section.
Further, this exhibit shall not be deemed to be incorporated by
reference into any filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended.)32.2
    *
    Certification of the Chief Financial Officer of Liberty Property
Trust required by Rule 13a-14(b) under the Securities Exchange Act
of 1934, as amended. (This exhibit shall not be deemed filed for
purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, or otherwise subject to the liability of that section.
Further, this exhibit shall not be deemed to be incorporated by
reference into any filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended.)32.3
    *
    Certification of the Chief Executive Officer of Liberty Property
Trust, in its capacity as the general partner of Liberty Property
Limited Partnership, required by Rule 13a-14(b) under the Securities
Exchange Act of 1934, as amended. (This exhibit shall not be deemed
filed for purposes of Section 18 of the Securities Exchange Act of
1934, as amended, or otherwise subject to the liability of that
section. Further, this exhibit shall not be deemed to be
incorporated by reference into any filing under the Securities Act
of 1933, as amended, or the Securities Exchange Act of 1934, as
amended.)32.4
    *
    Certification of the Chief Financial Officer of Liberty Property
Trust, in its capacity as the general partner of Liberty Property
Limited Partnership, required by Rule 13a-14(b) under the Securities
Exchange Act of 1934, as amended. (This exhibit shall not be deemed
filed for purposes of Section 18 of the Securities Exchange Act of
1934, as amended, or otherwise subject to the liability of that
section. Further, this exhibit shall not be deemed to be
incorporated by reference into any filing under the Securities Act
of 1933, as amended, or the Securities Exchange Act of 1934, as
amended.)
 
 *
    
    Filed herewith.  49




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##### Table of Contents



SIGNATURES
  LIBERTY PROPERTY TRUST/s/ WILLIAM P. HANKOWSKY

William P. Hankowsky
    
    November 6, 2009

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

George J. Alburger, Jr.
    
    November 6, 2009

DateExecutive Vice President and Chief Financial Officer
  50




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##### Table of Contents



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

William P. Hankowsky
    
    November 6, 2009

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

George J. Alburger, Jr.
    
    November 6, 2009

DateExecutive Vice President and Chief Financial Officer
  51




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##### Table of Contents



EXHIBIT INDEX
 EXHIBITNO.
    
    DESCRIPTION12.1
    
    Statement Re: Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings
to Combined Fixed Charges.31.1
    
    Certification of the Chief Executive Officer of Liberty Property Trust required by
Rule 13a-14(a) under the Securities Exchange Act of 1934.31.2
    
    Certification of the Chief Financial Officer of Liberty Property Trust required by
Rule 13a-14(a) under the Securities Exchange Act of 1934.31.3
    
    Certification of the Chief Executive Officer of Liberty Property Trust, in its
capacity as the general partner of Liberty Property Limited Partnership, required by
Rule 13a-14(a) under the Securities Exchange Act of 1934.31.4
    
    Certification of the Chief Financial Officer of Liberty Property Trust, in its
capacity as the general partner of Liberty Property Limited Partnership, required by
Rule 13a-14(a) under the Securities Exchange Act of 1934.32.1
    
    Certification of the Chief Executive Officer of Liberty Property Trust required under
Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended. (This exhibit shall
not be deemed filed for purposes of Section 18 of the Securities Exchange Act of
1934, as amended, or otherwise subject to the liability of that section. Further, this
exhibit shall not be deemed to be incorporated by reference into any filing under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended.)32.2
    
    Certification of the Chief Financial Officer of Liberty Property Trust required by
Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit
shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended, or otherwise subject to the liability of that section. Further,
this exhibit shall not be deemed to be incorporated by reference into any filing under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended.)32.3
    
    Certification of the Chief Executive Officer of Liberty Property Trust, in its
capacity as the general partner of Liberty Property Limited Partnership, required by
Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit
shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended, or otherwise subject to the liability of that section. Further,
this exhibit shall not be deemed to be incorporated by reference into any filing under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended.)32.4
    
    Certification of the Chief Financial Officer of Liberty Property Trust, in its
capacity as the general partner of Liberty Property Limited Partnership, required by
Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit
shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended, or otherwise subject to the liability of that section. Further,
this exhibit shall not be deemed to be incorporated by reference into any filing under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended.)
  52