LIBERTY PROPERTY TRUST - FORM 10-Q

Attached files

file	filename
EXCEL - IDEA: XBRL DOCUMENT - LIBERTY PROPERTY TRUST	Financial_Report.xls
EX-31.2 - CERTIFICATION OF CFO OF LIBERTY PROPERTY TRUST REQUIRED BY RULE 13A-14(A) - LIBERTY PROPERTY TRUST	c15655exv31w2.htm
EX-32.4 - 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) - LIBERTY PROPERTY TRUST	c15655exv32w4.htm
EX-12.1 - STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO COMBINED FIXED CHARGES - LIBERTY PROPERTY TRUST	c15655exv12w1.htm
EX-31.4 - 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) - LIBERTY PROPERTY TRUST	c15655exv31w4.htm
EX-32.2 - CERTIFICATION OF CFO OF LIBERTY PROPERTY TRUST REQUIRED BY RULE 13A-14(B) - LIBERTY PROPERTY TRUST	c15655exv32w2.htm
EX-31.1 - CERTIFICATION OF CEO OF LIBERTY PROPERTY TRUST REQUIRED BY RULE 13A-14(A) - LIBERTY PROPERTY TRUST	c15655exv31w1.htm
EX-32.1 - CERTIFICATION OF CEO OF LIBERTY PROPERTY TRUST REQUIRED BY RULE 13A-14(B) - LIBERTY PROPERTY TRUST	c15655exv32w1.htm
EX-31.3 - 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) - LIBERTY PROPERTY TRUST	c15655exv31w3.htm
EX-32.3 - 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) - LIBERTY PROPERTY TRUST	c15655exv32w3.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2011


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)		23-7768996
PENNSYLVANIA (Liberty Property Limited Partnership)		23-2766549

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

500 Chesterfield Parkway
Malvern, Pennsylvania		19355

(Address of Principal Executive Offices)		(Zip Code)

Registrants’ Telephone Number, Including Area Code (610) 648-1700

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. (See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act). (Check one):


Large Accelerated Filer þ	Accelerated Filer o	Non-Accelerated Filer o	Smaller Reporting Company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

On May 2, 2011, 115,245,733 Common Shares of Beneficial Interest, par value $0.001 per share, of Liberty Property Trust were outstanding.

Liberty Property Trust/Liberty Property Limited Partnership
Form 10-Q for the period ended March 31, 2011


Index	Page

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Consolidated balance sheets of Liberty Property Trust at March 31, 2011 and December 31, 2010		4

Consolidated statements of operations of Liberty Property Trust for the three months ended March 31, 2011 and March 31, 2010		5

Consolidated statement of equity of Liberty Property Trust for the three months ended March 31, 2011		6

Consolidated statements of cash flows of Liberty Property Trust for the three months ended March 31, 2011 and March 31, 2010		7

Notes to consolidated financial statements of Liberty Property Trust		8

Consolidated balance sheets of Liberty Property Limited Partnership at March 31, 2011 and December 31, 2010		15

Consolidated statements of operations of Liberty Property Limited Partnership for the three months ended March 31, 2011 and March 31, 2010		16

Consolidated statement of equity of Liberty Property Limited Partnership for the three months ended March 31, 2011		17

Consolidated statements of cash flows of Liberty Property Limited Partnership for the three months ended March 31, 2011 and March 31, 2010		18

Notes to consolidated financial statements of Liberty Property Limited Partnership		19

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		26

Item 3. Quantitative and Qualitative Disclosures about Market Risk		36

Item 4. Controls and Procedures		36

PART II. OTHER INFORMATION		37

Item 1. Legal Proceedings		37

Item 1A. Risk Factors		37

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		37

Item 3. Defaults Upon Senior Securities		37

STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO COMBINED FIXED CHARGES
CERTIFICATION 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)
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT


Index	Page

Item 4. Removed and Reserved		37

Item 5. Other Information		37

Item 6. Exhibits		38

Signatures for Liberty Property Trust		40

Signatures for Liberty Property Limited Partnership		41

Exhibit Index		42

PART I. FINANCIAL INFORMATION


Item 1.		Financial Statements

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


	March 31, 2011			December 31, 2010
	(Unaudited)
ASSETS
Real estate:
Land and land improvements	$	837,039		$	837,566
Building and improvements		4,192,100			4,180,811
Less accumulated depreciation		(1,042,574	)		(1,011,743	)

Operating real estate		3,986,565			4,006,634

Development in progress		4,843			—
Land held for development		207,457			209,253

Net real estate		4,198,865			4,215,887

Cash and cash equivalents		32,711			108,409
Restricted cash		54,882			49,526
Accounts receivable		11,675			6,898
Deferred rent receivable		106,662			104,076
Deferred financing and leasing costs, net of accumulated amortization (2011, $116,429; 2010, $116,285)		134,413			135,893
Investments in and advances to unconsolidated joint ventures		176,617			171,916
Assets held for sale		198,631			198,569
Prepaid expenses and other assets		70,213			73,625

Total assets	$	4,984,669		$	5,064,799


LIABILITIES
Mortgage loans	$	295,120		$	320,679
Unsecured notes		1,792,643			2,039,143
Credit facility		200,000			—
Accounts payable		26,850			23,652
Accrued interest		33,477			29,821
Dividend and distributions payable		56,428			56,149
Other liabilities		149,605			156,803

Total liabilities		2,554,123			2,626,247


EQUITY
Liberty Property Trust shareholders’ equity
Common shares of beneficial interest, $.001 par value, 183,987,000 shares authorized; 116,117,404 (includes 1,249,909 in treasury) and 115,530,608 (includes 1,249,909 in treasury) shares issued and outstanding as of March 31, 2011 and December 31, 2010, respectively		116			116
Additional paid-in capital		2,576,783			2,560,193
Accumulated other comprehensive income (loss)		1,918			(155	)
Distributions in excess of net income		(451,672	)		(426,017	)
Common shares in treasury, at cost, 1,249,909 shares as of March 31, 2011 and December 31, 2010		(51,951	)		(51,951	)

Total Liberty Property Trust shareholders’ equity		2,075,194			2,082,186

Noncontrolling interest — operating partnership
3,928,733 common units outstanding as of March 31, 2011 and December 31, 2010		66,808			67,621
9,740,000 preferred units outstanding as of March 31, 2011 and December 31, 2010		287,959			287,959
Noncontrolling interest — consolidated joint ventures		585			786

Total equity		2,430,546			2,438,552

Total liabilities and equity	$	4,984,669		$	5,064,799

See accompanying notes.

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


	Three Months Ended
	March 31, 2011			March 31, 2010
OPERATING REVENUE
Rental	$	122,588		$	122,963
Operating expense reimbursement		56,020			55,103

Total operating revenue		178,608			178,066


OPERATING EXPENSE
Rental property		35,862			37,422
Real estate taxes		21,020			21,341
General and administrative		15,965			14,867
Depreciation and amortization		42,242			40,560

Total operating expenses		115,089			114,190


Operating income		63,519			63,876

OTHER INCOME (EXPENSE)
Interest and other income		2,676			2,774
Interest expense		(34,778	)		(36,260	)


Total other income (expense)		(32,102	)		(33,486	)


Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures		31,417			30,390

Gain on property dispositions		1,161			768
Income taxes		(550	)		(452	)
Equity in earnings of unconsolidated joint ventures		534			394


Income from continuing operations		32,562			31,100

Discontinued operations (including net gain on property dispositions of $470 and $2,862 for the three months ended March 31, 2011 and 2010, respectively)		2,381			4,722


Net income		34,943			35,822
Noncontrolling interest — operating partnership		(6,235	)		(6,283	)
Noncontrolling interest — consolidated joint ventures		201			12


Net income available to common shareholders	$	28,909		$	29,551


Earnings per common share
Basic:
Income from continuing operations	$	0.23		$	0.22
Income from discontinued operations		0.02			0.04


Income per common share — basic	$	0.25		$	0.26


Diluted:
Income from continuing operations	$	0.23		$	0.22
Income from discontinued operations		0.02			0.04


Income per common share — diluted	$	0.25		$	0.26


Distributions per common share	$	0.475		$	0.475


Weighted average number of common shares outstanding
Basic		114,013			112,341
Diluted		114,766			112,955

Amounts attributable to common shareholders
Income from continuing operations	$	26,607		$	24,988
Discontinued operations		2,302			4,563

Net income available to common shareholders	$	28,909		$	29,551

See accompanying notes.

CONSOLIDATED STATEMENT OF EQUITY OF LIBERTY PROPERTY TRUST
(UNAUDITED AND IN THOUSANDS)


					Accumulated									Total			Noncontrolling			Noncontrolling
	Common				Other									Liberty			interest-			interest-			Noncontrolling
	Shares of		Additional		Comprehensive			Distributions			Common			Property Trust			operating			operating			Interest-
	Beneficial		Paid-In		Income			in Excess of			Shares Held			Shareholders’			partnership-			partnership-			consolidated
	Interest		Capital		(loss)			Net Income			in Treasury			Equity			Common			Preferred			joint ventures			Total Equity

Balance at January 1, 2011	$	116	$	2,560,193	$	(155	)	$	(426,017	)	$	(51,951	)	$	2,082,186		$	67,621		$	287,959		$	786		$	2,438,552
Net proceeds from the issuance of Common Shares		—		12,096		—			—			—			12,096			—			—			—			12,096
Net income		—		—		—			28,909			—			28,909			982			5,253			(201	)		34,943
Distributions		—		—		—			(54,564	)		—			(54,564	)		(1,866	)		(5,253	)		—			(61,683	)
Noncash compensation		—		4,494		—			—			—			4,494			—			—			—			4,494
Foreign currency translation adjustment		—		—		2,073			—			—			2,073			71			—			—			2,144


Balance at March 31, 2011	$	116	$	2,576,783	$	1,918		$	(451,672	)	$	(51,951	)	$	2,075,194		$	66,808		$	287,959		$	585		$	2,430,546

See accompanying notes.

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


	Three Months Ended
	March 31, 2011			March 31, 2010
OPERATING ACTIVITIES
Net income	$	34,943		$	35,822
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		44,764			42,986
Amortization of deferred financing costs		1,521			1,271
Equity in earnings of unconsolidated joint ventures		(534	)		(394	)
Distributions from unconsolidated joint ventures		305			—
Gain on property dispositions		(1,631	)		(3,630	)
Noncash compensation		4,494			5,853
Changes in operating assets and liabilities:
Restricted cash		(5,196	)		3,401
Accounts receivable		(4,804	)		(2,840	)
Deferred rent receivable		(2,678	)		(3,765	)
Prepaid expenses and other assets		4,216			(240	)
Accounts payable		3,177			495
Accrued interest		3,656			(3,530	)
Other liabilities		(4,204	)		(11,816	)

Net cash provided by operating activities		78,029			63,613


INVESTING ACTIVITIES
Investment in properties		(19,058	)		(13,067	)
Investments in and advances to unconsolidated joint ventures		(6,507	)		(172	)
Distributions from unconsolidated joint ventures		2,258			1,586
Net proceeds from disposition of properties/land		3,451			6,136
Net (advances on) proceeds from grant receivable/escrow		(631	)		22,759
Investment in development in progress		(6,135	)		(4,127	)
Investment in land held for development		(1,410	)		(732	)
Investment in deferred leasing costs		(5,790	)		(4,941	)

Net cash (used in) provided by investing activities		(33,822	)		7,442


FINANCING ACTIVITIES

Net proceeds from issuance of Common Shares		12,085			2,862
Repayments of unsecured notes		(246,500	)		—
Proceeds from mortgage loans		—			285
Repayments of mortgage loans		(25,558	)		(1,596	)
Proceeds from credit facility		200,000			—
Repayments on credit facility		—			(105,000	)
Increase in deferred financing costs		(12	)		(4	)
Distribution paid on Common Shares		(54,284	)		(53,496	)
Distribution paid on units		(7,108	)		(7,337	)

Net cash used in financing activities		(121,377	)		(164,286	)


Net decrease in cash and cash equivalents		(77,170	)		(93,231	)
Increase (decrease) in cash and cash equivalents related to foreign currency translation		1,472			(2,680	)
Cash and cash equivalents at beginning of period		108,409			237,446

Cash and cash equivalents at end of period	$	32,711		$	141,535

See accompanying notes.

Liberty Property Trust

Notes to Consolidated Financial Statements (Unaudited)
March 31, 2011

Note 1: Organization and Basis of Presentation

Organization

Liberty Property Trust (the “Trust”) is a self-administered and self-managed Maryland real estate investment trust (a “REIT”). Substantially all of the Trust’s assets are owned directly or indirectly, and substantially all of the Trust’s operations are conducted directly or indirectly, by its subsidiary, Liberty Property Limited Partnership, a Pennsylvania limited partnership (the “Operating Partnership” and, together with the Trust and their consolidated subsidiaries, the “Company”). The Trust is the sole general partner and also a limited partner of the Operating Partnership, owning 96.7% of the common equity of the Operating Partnership at March 31, 2011. The Company provides leasing, property management, development, acquisition, and other tenant-related services for a portfolio of industrial and office properties which are located principally within the Mid-Atlantic, Southeastern, Midwestern and Southwestern United States and the United Kingdom.

Basis of Presentation

The accompanying unaudited consolidated financial statements of the Trust and its subsidiaries, including the Operating Partnership, have been prepared in accordance with United States generally accepted accounting principles (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K of the Trust and the Operating Partnership for the year ended December 31, 2010. In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the financial statements for these interim periods have been included. The results of interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. Certain amounts from prior periods have been reclassified to conform to the current period presentation.

Income per Common Share

The following table sets forth the computation of basic and diluted income per common share (in thousands except per share amounts):


	For the Three Months Ended						For the Three Months Ended
	March 31, 2011						March 31, 2010
			Weighted						Weighted
			Average						Average
	Income		Shares				Income		Shares
	(Numerator)		(Denominator)		Per Share		(Numerator)		(Denominator)		Per Share
Basic income from continuing operations
Income from continuing operations net of noncontrolling interest	$	26,607		114,013	$	0.23	$	24,988		112,341	$	0.22

Dilutive shares for long-term compensation plans		—		753				—		614


Diluted income from continuing operations
Income from continuing operations net of noncontrolling interest and assumed conversions		26,607		114,766	$	0.23		24,988		112,955	$	0.22


Basic income from discontinued operations
Discontinued operations net of noncontrolling interest		2,302		114,013	$	0.02		4,563		112,341	$	0.04

Dilutive shares for long-term compensation plans		—		753				—		614


Diluted income from discontinued operations
Discontinued operations net of noncontrolling interest		2,302		114,766	$	0.02		4,563		112,955	$	0.04


Basic income per common share
Net income available to common shareholders		28,909		114,013	$	0.25		29,551		112,341	$	0.26

Dilutive shares for long-term compensation plans		—		753				—		614


Diluted income per common share
Net income available to common shareholders and assumed conversions	$	28,909		114,766	$	0.25	$	29,551		112,955	$	0.26

Dilutive shares for long-term compensation plans represent the unvested common shares outstanding during the year as well as the dilutive effect of outstanding options. The amounts of anti-dilutive options that were excluded from the computation of diluted income per common share for the three months ended March 31, 2011 and 2010 were 1,219,000 and 1,010,000, respectively.

During the three months ended March 31, 2011, 123,000 common shares were issued upon the exercise of options. During the year ended December 31, 2010, 315,000 common shares were issued upon the exercise of options.

Foreign Currency Translation

The functional currency of the Company’s United Kingdom operations is pounds sterling. The Company translates the financial statements for the United Kingdom operations into US dollars. Gains and losses resulting from this translation do not impact the results of operations and are included in accumulated other comprehensive income (loss) as a separate component of shareholders’ equity. A proportionate amount of gain or loss is allocated to noncontrolling interest-common units. Accumulated other comprehensive income (loss) consists solely of the foreign currency translation adjustments described above. Other comprehensive income for the three months ended March 31, 2011 was $2.1 million as compared to other comprehensive loss of $4.6 million for the same period in 2010. Upon sale or upon complete or substantially complete liquidation of the Company’s foreign investment, the gain or loss on the sale will include the cumulative translation adjustments that have been previously recorded in accumulated other comprehensive income (loss) and noncontrolling interest-common units.

Note 2: Segment Information

The Company operates its portfolio of properties primarily throughout the Mid-Atlantic, Southeastern, Midwestern and Southwestern United States. Additionally, the Company owns certain assets in the United Kingdom. The Company reviews the performance of the portfolio on a geographical basis. During the three months ended March 31, 2011, the Company realigned the reportable segments due to changes in internal reporting responsibilities. As such, the following are considered the Company’s reportable segments:


Regions		Markets

Northeast		Southeastern PA; Lehigh/Central PA; New Jersey; Maryland
Central		Minnesota; Milwaukee; Chicago; Texas; Arizona
South		Richmond; Virginia Beach; Carolinas; Jacksonville; Orlando; Boca Raton; Tampa
Metro		Philadelphia; Northern Virginia/Washington, D.C.
United Kingdom		County of Kent; West Midlands

The following lists the Company’s reportable segments as characterized in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010:


Regions
(Before 2011 Changes)		Markets (Before 2011 Changes)

Northeast		Southeastern PA; Lehigh/Central PA; New Jersey
Midwest		Minnesota; Milwaukee; Chicago
Mid-Atlantic		Maryland; Carolinas; Richmond; Virginia Beach
South		Jacksonville; Orlando; Boca Raton; Tampa; Texas; Arizona
Philadelphia/D.C.		Philadelphia; Northern Virginia/Washington, D.C.
United Kingdom		County of Kent; West Midlands

As required by FASB ASC 280, “Segment Reporting,” consolidated financial statements issued by the Company in the future will reflect modifications to the Company’s reportable segments resulting from the change described above, including reclassification of all comparative prior period segment information.

Gross investment in operating real estate decreased by $117.3 million for the Lehigh/Central PA segment and decreased by $118.7 million for the segments within the South region from December 31, 2010 (as reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010) as compared to March 31, 2011 due to properties that were included in Assets Held for Sale in the March 31, 2011 consolidated balance sheet (see note 3 below).

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

The operating information by segment is as follows (in thousands):

FOR THE THREE MONTHS ENDED MARCH 31, 2011


	Northeast
	Southeastern		Lehigh/		Northeast								United
	PA		Central PA		- Other		Central		South		Metro		Kingdom		Total
Operating revenue	$	45,265	$	22,886	$	18,044	$	31,070	$	53,063	$	7,149	$	1,131	$	178,608
Rental property expenses and real estate taxes		16,642		5,643		6,683		11,081		15,735		845		253		56,882


Property level operating income	$	28,623	$	17,243	$	11,361	$	19,989	$	37,328	$	6,304	$	878		121,726


Interest and other income																2,676
Interest expense																(34,778	)
General and administrative																(15,965	)
Depreciation and amortization																(42,242	)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures																31,417
Gain on property dispositions																1,161
Income taxes																(550	)
Equity in earnings of unconsolidated joint ventures																534
Discontinued operations																2,381

Net income															$	34,943


FOR THE THREE MONTHS ENDED MARCH 31, 2010

	Northeast
	Southeastern		Lehigh/		Northeast								United
	PA		Central PA		- Other		Central		South		Metro		Kingdom		Total
Operating revenue	$	46,254	$	20,458	$	19,278	$	30,386	$	53,682	$	6,973	$	1,035	$	178,066
Rental property expenses and real estate taxes		15,877		5,083		7,476		11,329		17,256		1,512		230		58,763


Property level operating income	$	30,377	$	15,375	$	11,802	$	19,057	$	36,426	$	5,461	$	805		119,303


Interest and other income																2,774
Interest expense																(36,260	)
General and administrative																(14,867	)
Depreciation and amortization																(40,560	)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures																30,390
Gain on property dispositions																768
Income taxes																(452	)
Equity in earnings of unconsolidated joint ventures																394
Discontinued operations																4,722

Net income															$	35,822

Note 3: Accounting for the Impairment or Disposal of Long-Lived Assets

The operating results and gain/(loss) on disposition of real estate for properties sold and held for sale are reflected in the consolidated statements of operations as discontinued operations. Prior period financial statements have been adjusted for discontinued operations. The proceeds from dispositions of operating properties with no continuing involvement for the three months ended March 31, 2011 were $3.6 million as compared to $6.4 million for the same period in 2010.

Below is a summary of the results of operations for the properties held for sale and disposed of through the respective disposition dates (in thousands):


	Three Months Ended
	March 31, 2011			March 31, 2010

Revenues	$	9,495		$	11,265
Operating expenses		(3,896	)		(4,549	)
Interest expense		(1,391	)		(2,390	)
Depreciation and amortization		(2,297	)		(2,466	)

Income before property dispositions	$	1,911		$	1,860

32 properties totaling 1.4 million square feet in the Company’s Lehigh/Central PA segment, 14 properties totaling 919,000 square feet in the Company’s segments within the South region, one property totaling 62,000 square feet in a segment in the Company’s Northeast region and one property totaling 552,000 square feet in a segment in the Company’s Central region were considered to be held for sale as of March 31, 2011. These properties had an aggregate cost basis of $198.6 million as of March 31, 2011 and are subject to contracts for sale for an aggregate of approximately $250 million. One held for sale property was sold subsequent to March 31, 2011 for proceeds of $23.7 million. The Company expects that the remaining properties will be sold during the three months ending June 30, 2011.

Interest expense is allocated to discontinued operations. The allocation of interest expense to discontinued operations was based on the ratio of net assets sold and held for sale (without continuing involvement) to the sum of total net assets plus consolidated debt.

Asset Impairment

During the three months ended March 31, 2011, the Company recognized impairment charges of $550,000 related to a property in the Central segment. This impairment was included in discontinued operations in the Company’s statement operations. The Company determined this impairment through a comparison of the aggregate future cash flows (including quoted offer prices) to be generated by the property to the carrying value of the property. The Company has evaluated each of the properties and land held for development and has determined that there are no additional valuation adjustments necessary at March 31, 2011. During the three months ended March 31, 2010, the Company did not recognize any impairments.

Note 4: Noncontrolling interests

Noncontrolling interests in the accompanying financial statements represent the interests of the common and preferred units in Liberty Property Limited Partnership not held by the Trust. In addition, noncontrolling interests include third-party ownership interests in consolidated joint venture investments.

Common units

The common units outstanding as of March 31, 2011 have the same economic characteristics as common shares of the Trust. The 3,928,733 outstanding common units share proportionately in the net income or loss and in any distributions of the Operating Partnership. The common units of the Operating Partnership not held by the Trust are redeemable at any time at the option of the holder. The Trust, as the sole general partner of the Operating Partnership, may at its option elect to settle the redemption in cash or through the exchange on a one-for-one basis with unregistered common shares of the Trust. The market value of the 3,928,733 outstanding common units based on the closing price of the common shares of the Company at March 31, 2011 was $129.3 million.

Preferred units

The Company has outstanding the following cumulative redeemable preferred units of the Operating Partnership (the “Preferred Units”):


					Liquidation		Dividend			Redeemable
Issue	Amount		Units		Preference		Rate			As of	Exchangeable after
	(in 000’s)
Series B	$	95,000		3,800	$	25		7.45	%	8/31/09	8/31/13 into Series B Cumulative Redeemable Preferred Shares of the Trust

Series E	$	20,000		400	$	50		7.00	%	6/16/10	6/16/15 into Series E Cumulative Redeemable Preferred Shares of the Trust

Series F	$	50,000		1,000	$	50		6.65	%	6/30/10	12/12/15 into Series F Cumulative Redeemable Preferred Shares of the Trust

Series G	$	27,000		540	$	50		6.70	%	12/15/11	12/15/16 into Series G Cumulative Redeemable Preferred Shares of the Trust

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

The Preferred Units are callable at the Operating Partnership’s option after a stated period of time. The Trust as the sole general partner of the Operating Partnership may at its option elect to settle the redemption for cash or through the exchange on a one-for-one basis with unregistered preferred shares of the Trust.

Note 5: Indebtedness

Senior Notes

In March 2011, the Company used proceeds from its unsecured credit facility together with available cash on hand to repay $246.5 million principal value of 7.25% senior notes.

Note 6: Disclosure of Fair Value of Financial Instruments

The following disclosure of estimated fair value was determined by management using available market information and appropriate valuation methodologies. However, considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the following estimates are not necessarily indicative of the amounts the Company could have realized on disposition of the financial instruments at March 31, 2011 and December 31, 2010. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

The carrying value of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued interest, dividends and distributions payable and other liabilities are reasonable estimates of fair value because of the short-term nature of these instruments. The fair value of the Company’s long-term debt was greater than the aggregate carrying value by approximately $146.3 million and $189.0 million at March 31, 2011 and December 31, 2010, respectively. The fair value of the Company’s long-term debt is estimated using actual trading prices (where available) and using discounted cash flow analysis based on the borrowing rates currently available to the Company for loans with similar terms and maturities where actual trading prices are not available.

Disclosure about fair value of financial instruments is based on pertinent information available to management as of March 31, 2011 and December 31, 2010. Although as of the date of this report, management is not aware of any factors that would significantly affect the fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since March 31, 2011 and current estimates of fair value may differ significantly from the amounts presented herein.

Note 7: Commitments and Contingencies

Environmental Matters

Substantially all of the Properties and land were subject to Phase I Environmental Assessments and when appropriate Phase II Environmental Assessments (collectively, the “Environmental Assessments”) obtained in contemplation of their acquisition by the Company. The Environmental Assessments did not reveal, nor is the Company aware of, any non-compliance with environmental laws, environmental liability or other environmental claim that the Company believes would likely have a material adverse effect on the Company.

Operating Ground Lease Agreements

Future minimum rental payments under the terms of all non-cancelable operating ground leases under which the Company is the lessee, as of March 31, 2011, were as follows (in thousands):


Year	Amount
2011	$	205
2012		279
2013		282
2014		279
2015		276
2016 through 2070		10,243

Total	$	11,564

Operating ground lease expense during the three months ended March 31, 2011 and 2010 was $77,000 and $134,000, respectively.

Legal Matters

From time to time, the Company is a party to a variety of legal proceedings, claims and assessments arising in the normal course of business. The Company believes that as of March 31, 2011 there were no legal proceedings, claims or assessments expected to have a material adverse effect on the Company’s business or financial statements.

Other

The Company is obligated to make additional capital contributions to unconsolidated joint ventures of $4.2 million. The Company has other miscellaneous guarantees related to its unconsolidated joint ventures for up to a maximum of $1.6 million.

The Company has letter of credit obligations of $934,000 related to development requirements. The Company believes that it is remote that there will be a draw upon these letter of credit obligations.

The Company has started the development, on a speculative basis, of two industrial-flex buildings and has signed leases (one of which is subject to certain approvals) committing it to the development of two 100% leased office buildings. The industrial-flex buildings are expected to contain a total of 103,000 square feet of leasable space and represent an anticipated aggregate investment of $15 million. The office buildings are expected to contain a total of 360,000 square feet of leasable space and represent an anticipated aggregate investment of $130 million.

The Company is obligated to pay tenants for allowances for tenant improvements not yet completed for a maximum of $42.7 million.

The Company maintains cash and cash equivalents at financial institutions. The combined account balances at each institution typically exceed FDIC insurance coverage and, as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. The Company believes the risk is not significant.

Note 8: Supplemental Disclosure to Statements of Cash Flows

The following are supplemental disclosures to the statements of cash flows for the three months ended March 31, 2011 and 2010 (amounts in thousands):


Non-cash activity	2011		2010

Write-off of fully depreciated property and deferred costs	$	14,125	$	5,518

CONSOLIDATED BALANCE SHEETS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP

(In thousands, except unit amounts)


	March 31, 2011			December 31, 2010
	(Unaudited)
ASSETS
Real estate:
Land and land improvements	$	837,039		$	837,566
Building and improvements		4,192,100			4,180,811
Less accumulated depreciation		(1,042,574	)		(1,011,743	)


Operating real estate		3,986,565			4,006,634

Development in progress		4,843			—
Land held for development		207,457			209,253


Net real estate		4,198,865			4,215,887

Cash and cash equivalents		32,711			108,409
Restricted cash		54,882			49,526
Accounts receivable		11,675			6,898
Deferred rent receivable		106,662			104,076
Deferred financing and leasing costs, net of accumulated amortization (2011, $116,429; 2010, $116,285)		134,413			135,893
Investments in and advances to unconsolidated joint ventures		176,617			171,916
Assets held for sale		198,631			198,569
Prepaid expenses and other assets		70,213			73,625


Total assets	$	4,984,669		$	5,064,799


LIABILITIES
Mortgage loans	$	295,120		$	320,679
Unsecured notes		1,792,643			2,039,143
Credit facility		200,000			—
Accounts payable		26,850			23,652
Accrued interest		33,477			29,821
Distributions payable		56,428			56,149
Other liabilities		149,605			156,803


Total liabilities		2,554,123			2,626,247


OWNERS’ EQUITY
General partner’s equity — common units, 116,117,404 and 115,530,608 units outstanding as of March 31, 2011 and December 31, 2010, respectively		2,075,194			2,082,186

Limited partners’ equity — 3,928,733 common units outstanding as of March 31, 2011 and December 31, 2010		66,808			67,621
— 9,740,000 preferred units outstanding as of March 31, 2011 and December 31, 2010		287,959			287,959
Noncontrolling interest — consolidated joint ventures		585			786


Total owners’ equity		2,430,546			2,438,552


Total liabilities and owners’ equity	$	4,984,669		$	5,064,799

See accompanying notes.

CONSOLIDATED STATEMENTS OF OPERATIONS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP

(Unaudited and in thousands, except per unit amounts)


	Three Months Ended
	March 31, 2011			March 31, 2010
OPERATING REVENUE
Rental	$	122,588		$	122,963
Operating expense reimbursement		56,020			55,103

Total operating revenue		178,608			178,066


OPERATING EXPENSE
Rental property		35,862			37,422
Real estate taxes		21,020			21,341
General and administrative		15,965			14,867
Depreciation and amortization		42,242			40,560


Total operating expenses		115,089			114,190


Operating income		63,519			63,876

OTHER INCOME (EXPENSE)
Interest and other income		2,676			2,774
Interest expense		(34,778	)		(36,260	)

Total other income (expense)		(32,102	)		(33,486	)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures		31,417			30,390
Gain on property dispositions		1,161			768
Income taxes		(550	)		(452	)
Equity in earnings of unconsolidated joint ventures		534			394


Income from continuing operations		32,562			31,100

Discontinued operations (including net gain on property dispositions of $470 and $2,862 for the three months ended March 31, 2011 and 2010, respectively)		2,381			4,722


Net income		34,943			35,822

Noncontrolling interest — consolidated joint ventures		201			12
Preferred unit distributions		(5,253	)		(5,253	)


Income available to common unitholders	$	29,891		$	30,581


Earnings per common unit
Basic:
Income from continuing operations	$	0.23		$	0.22
Income from discontinued operations		0.02			0.04


Income per common unit — basic	$	0.25		$	0.26


Diluted:
Income from continuing operations	$	0.23		$	0.22
Income from discontinued operations		0.02			0.04


Income per common unit — diluted	$	0.25		$	0.26


Distributions per common unit	$	0.475		$	0.475


Weighted average number of common units outstanding
Basic		117,942			116,302
Diluted		118,695			116,916

Net income allocated to general partners	$	28,909		$	29,551
Net income allocated to limited partners		6,235			6,283

See accompanying notes.

CONSOLIDATED STATEMENT OF OWNERS’ EQUITY OF LIBERTY PROPERTY LIMITED PARTNERSHIP

(UNAUDITED AND IN THOUSANDS)


				Limited			Limited
				Partners’			Partners’			Noncontrolling
	General			Equity -			Equity -			Interest -			Total
	Partner’s			Common			Preferred			Consolidated			Owners’
	Equity			Units			Units			Joint Ventures			Equity

Balance at January 1, 2011	$	2,082,186		$	67,621		$	287,959		$	786		$	2,438,552

Contributions from partners		16,590			—			—			—			16,590
Distributions to partners		(54,564	)		(1,866	)		(5,253	)		—			(61,683	)
Foreign currency translation adjustment		2,073			71			—			—			2,144
Net income		28,909			982			5,253			(201	)		34,943


Balance at March 31, 2011	$	2,075,194		$	66,808		$	287,959		$	585		$	2,430,546

See accompanying notes.

CONSOLIDATED STATEMENTS OF CASH FLOWS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP

(Unaudited and in thousands)


	Three Months Ended
	March 31, 2011			March 31, 2010
OPERATING ACTIVITIES
Net income	$	34,943		$	35,822
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		44,764			42,986
Amortization of deferred financing costs		1,521			1,271
Equity in earnings of unconsolidated joint ventures		(534	)		(394	)
Distributions from unconsolidated joint ventures		305			—
Gain on property dispositions		(1,631	)		(3,630	)
Noncash compensation		4,494			5,853
Changes in operating assets and liabilities:
Restricted cash		(5,196	)		3,401
Accounts receivable		(4,804	)		(2,840	)
Deferred rent receivable		(2,678	)		(3,765	)
Prepaid expenses and other assets		4,216			(240	)
Accounts payable		3,177			495
Accrued interest		3,656			(3,530	)
Other liabilities		(4,204	)		(11,816	)

Net cash provided by operating activities		78,029			63,613


INVESTING ACTIVITIES

Investment in properties		(19,058	)		(13,067	)
Investments in and advances to unconsolidated joint ventures		(6,507	)		(172	)
Distributions from unconsolidated joint ventures		2,258			1,586
Net proceeds from disposition of properties/land		3,451			6,136
Net (advances on) proceeds from grant receivable/escrow		(631	)		22,759
Investment in development in progress		(6,135	)		(4,127	)
Investment in land held for development		(1,410	)		(732	)
Investment in deferred leasing costs		(5,790	)		(4,941	)

Net cash (used in) provided by investing activities		(33,822	)		7,442


FINANCING ACTIVITIES

Repayments of unsecured notes		(246,500	)		—
Proceeds from mortgage loans		—			285
Repayments of mortgage loans		(25,558	)		(1,596	)
Proceeds from credit facility		200,000			—
Repayments on credit facility		—			(105,000	)
Increase in deferred financing costs		(12	)		(4	)
Capital contributions		12,085			2,862
Distributions to partners		(61,392	)		(60,833	)

Net cash used in financing activities		(121,377	)		(164,286	)


Net decrease in cash and cash equivalents		(77,170	)		(93,231	)
Increase (decrease) in cash and cash equivalents related to foreign currency translation		1,472			(2,680	)
Cash and cash equivalents at beginning of period		108,409			237,446

Cash and cash equivalents at end of period	$	32,711		$	141,535

See accompanying notes.

Liberty Property Limited Partnership

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2011

Note 1: Organization and Basis of Presentation

Organization

Liberty Property Trust (the “Trust”) is a self-administered and self-managed Maryland real estate investment trust (a “REIT”). Substantially all of the Trust’s assets are owned directly or indirectly, and substantially all of the Trust’s operations are conducted directly or indirectly, by Liberty Property Limited Partnership (the “Operating Partnership” and, collectively with the Trust and their consolidated subsidiaries, the “Company”). The Trust is the sole general partner and also a limited partner of the Operating Partnership, owning 96.7% of the common equity of the Operating Partnership at March 31, 2011. The Company provides leasing, property management, development, acquisition and other tenant-related services for a portfolio of industrial and office properties which are located principally within the Mid-Atlantic, Southeastern, Midwestern and Southwestern United States and the United Kingdom.

Basis of Presentation

The accompanying unaudited consolidated financial statements of the Operating Partnership and its subsidiaries have been prepared in accordance with United States generally accepted accounting principles (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K of the Trust and the Operating Partnership for the year ended December 31, 2010. In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the financial statements for these interim periods have been included. The results of interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. Certain amounts from prior periods have been reclassified to conform to the current period presentation.

Income per Common Unit

The following table sets forth the computation of basic and diluted income per common unit (in thousands, except per unit amounts):


	For the Three Months Ended							For the Three Months Ended
	March 31, 2011							March 31, 2010
				Weighted							Weighted
	Income			Average Units				Income			Average Units
	(Numerator)			(Denominator)		Per Unit		(Numerator)			(Denominator)		Per Unit
Income from continuing operations net of noncontrolling interest	$	32,763						$	31,112
Less: Preferred unit distributions		(5,253	)						(5,253	)


Basic income from continuing operations
Income from continuing operations available to common unitholders		27,510			117,942	$	0.23		25,859			116,302	$	0.22

Dilutive units for long-term compensation plans		—			753				—			614


Diluted income from continuing operations
Income from continuing operations available to common unitholders and assumed conversions		27,510			118,695	$	0.23		25,859			116,916	$	0.22


Basic income from discontinued operations
Discontinued operations		2,381			117,942	$	0.02		4,722			116,302	$	0.04

Dilutive units for long-term compensation plans		—			753				—			614


Diluted income from discontinued operations
Discontinued operations		2,381			118,695	$	0.02		4,722			116,916	$	0.04


Basic income per common unit
Income available to common unitholders		29,891			117,942	$	0.25		30,581			116,302	$	0.26

Diluted units for long-term compensation plans		—			753				—			614


Diluted income per common unit
Income available to common unitholders and assumed conversions	$	29,891			118,695	$	0.25	$	30,581			116,916	$	0.26

Dilutive units for long-term compensation plans represent the unvested common units outstanding during the year as well as the dilutive effect of outstanding options. The amounts of anti-dilutive options that were excluded from the computation of diluted income per common unit for the three months ended March 31, 2011 and 2010 was 1,219,000 and 1,010,000, respectively.

During the three months ended March 31, 2011, 123,000 common units were issued upon the exercise of options. During the year ended December 31, 2010, 315,000 common units were issued upon the exercise of options.

Foreign Currency Translation

The functional currency of the Company’s United Kingdom operations is pounds sterling. The Company translates the financial statements for the United Kingdom operations into US dollars. Gains and losses resulting from this translation do not impact the results of operations and are included in general partner’s equity — common units and limited partners’ equity-common units. Other comprehensive income for the three months ended March 31, 2011 was $2.1 million as compared to other comprehensive loss of $4.6 million for the same period in 2010. Upon sale or upon complete or substantially complete liquidation of a foreign investment, the gain or loss on the sale will include the cumulative translation adjustments that have been previously recorded in general partner’s equity-common units and limited partners’ equity — common units.

Note 2: Segment Information


Regions		Markets

Northeast		Southeastern PA; Lehigh/Central PA; New Jersey; Maryland
Central		Minnesota; Milwaukee; Chicago; Texas; Arizona
South		Richmond; Virginia Beach; Carolinas; Jacksonville; Orlando; Boca Raton; Tampa
Metro		Philadelphia; Northern Virginia/Washington, D.C.
United Kingdom		County of Kent; West Midlands

The following lists the Company’s reportable segments as characterized in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010:


Regions
(Before 2011 Changes)		Markets (Before 2011 Changes)

Northeast		Southeastern PA; Lehigh/Central PA; New Jersey
Midwest		Minnesota; Milwaukee; Chicago
Mid-Atlantic		Maryland; Carolinas; Richmond; Virginia Beach
South		Jacksonville; Orlando; Boca Raton; Tampa; Texas; Arizona
Philadelphia/D.C.		Philadelphia; Northern Virginia/Washington, D.C.
United Kingdom		County of Kent; West Midlands

The operating information by segment is as follows (in thousands):

FOR THE THREE MONTHS ENDED MARCH 31, 2011


	Northeast
	Southeastern		Lehigh/		Northeast								United
	PA		Central PA		- Other		Central		South		Metro		Kingdom		Total
Operating revenue	$	45,265	$	22,886	$	18,044	$	31,070	$	53,063	$	7,149	$	1,131	$	178,608
Rental property expenses and real estate taxes		16,642		5,643		6,683		11,081		15,735		845		253		56,882


Property level operating income	$	28,623	$	17,243	$	11,361	$	19,989	$	37,328	$	6,304	$	878		121,726


Interest and other income																2,676
Interest expense																(34,778	)
General and administrative																(15,965	)
Depreciation and amortization																(42,242	)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures																31,417
Gain on property dispositions																1,161
Income taxes																(550	)
Equity in earnings of unconsolidated joint ventures																534
Discontinued operations																2,381

Net income															$	34,943


FOR THE THREE MONTHS ENDED MARCH 31, 2010

	Northeast
	Southeastern		Lehigh/		Northeast								United
	PA		Central PA		- Other		Central		South		Metro		Kingdom		Total
Operating revenue	$	46,254	$	20,458	$	19,278	$	30,386	$	53,682	$	6,973	$	1,035	$	178,066
Rental property expenses and real estate taxes		15,877		5,083		7,476		11,329		17,256		1,512		230		58,763


Property level operating income	$	30,377	$	15,375	$	11,802	$	19,057	$	36,426	$	5,461	$	805		119,303


Interest and other income																2,774
Interest expense																(36,260	)
General and administrative																(14,867	)
Depreciation and amortization																(40,560	)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures																30,390
Gain on property dispositions																768
Income taxes																(452	)
Equity in earnings of unconsolidated joint ventures																394
Discontinued operations																4,722

Net income															$	35,822

Note 3: Accounting for the Impairment or Disposal of Long-Lived Assets

Below is a summary of the results of operations for the properties held for sale and disposed of through the respective disposition dates (in thousands):


	Three Months Ended
	March 31, 2011			March 31, 2010

Revenues	$	9,495		$	11,265
Operating expenses		(3,896	)		(4,549	)
Interest expense		(1,391	)		(2,390	)
Depreciation and amortization		(2,297	)		(2,466	)

Income before property dispositions	$	1,911		$	1,860

Asset Impairment

Note 4: Limited partners’ equity

Common units

General and limited partners’ equity — common units relates to limited partnership interests of the Operating Partnership issued in connection with the formation of the Company and certain subsequent acquisitions. The common units outstanding as of March 31, 2011 have the same economic characteristics as common shares of the Trust. The 3,928,733 outstanding common units are the limited partners’ equity — common units held by persons and entities other than Liberty Property Trust, the general partner of Liberty Property Limited Partnership, which holds a number of common units equal to the number of outstanding common shares of beneficial interest. Both the common units held by Liberty Property Trust and the common units held by persons and entities other than Liberty Property Trust are counted in the weighted average number of common units outstanding during any given period. The 3,928,733 outstanding common units share proportionately in the net income or loss and in any distributions of the Operating Partnership and are exchangeable into the same number of common shares of the Trust. The market value of the 3,928,733 outstanding common units at March 31, 2011 based on the closing price of the common shares of the Company at March 31, 2011 was $129.3 million.

Preferred units

The Company has outstanding the following cumulative redeemable preferred units of the Operating Partnership (the “Preferred Units”):


					Liquidation		Dividend			Redeemable
Issue	Amount		Units		Preference		Rate			As of	Exchangeable after
	(in 000’s)
Series B	$	95,000		3,800	$	25		7.45	%	8/31/09	8/31/13 into Series B Cumulative Redeemable Preferred Shares of the Trust

Series E	$	20,000		400	$	50		7.00	%	6/16/10	6/16/15 into Series E Cumulative Redeemable Preferred Shares of the Trust

Series F	$	50,000		1,000	$	50		6.65	%	6/30/10	12/12/15 into Series F Cumulative Redeemable Preferred Shares of the Trust

Series G	$	27,000		540	$	50		6.70	%	12/15/11	12/15/16 into Series G Cumulative Redeemable Preferred Shares of the Trust

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

The Preferred Units are callable at the Operating Partnership’s option after a stated period of time. The Trust as the sole general partner of the Operating Partnership may at its option elect to settle the redemption for cash or through the exchange on a one-on-one basis with unregistered preferred shares of the Trust.

Note 5: Indebtedness

Senior Notes

In March 2011, the Company used proceeds from its unsecured credit facility together with available cash on hand to repay $246.5 million principal value of 7.25% senior notes.

Note 6: Disclosure of Fair Value of Financial Instruments

Note 7: Commitments and Contingencies

Environmental Matters

Operating Ground Lease Agreements

Future minimum rental payments under the terms of all non-cancelable operating ground leases under which the Company is the lessee, as of March 31, 2011, were as follows (in thousands):


Year	Amount
2011	$	205
2012		279
2013		282
2014		279
2015		276
2016 through 2070		10,243

Total	$	11,564

Operating ground lease expense during the three months ended March 31, 2011 and 2010 was $77,000 and $134,000, respectively.

Legal Matters

Other

The Company has letter of credit obligations of $934,000 related to development requirements. The Company believes that it is remote that there will be a draw upon these letter of credit obligations.

The Company is obligated to pay tenants for allowances for tenant improvements not yet completed for a maximum of $42.7 million.

Note 8: Supplemental Disclosure to Statements of Cash Flows

The following are supplemental disclosures to the statements of cash flows for the three months ended March 31, 2011 and 2010 (amounts in thousands):


Non-cash activity	2011		2010
Write-off of fully depreciated property and deferred costs	$	14,125	$	5,518


Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations

OVERVIEW

Liberty Property Trust (the “Trust”) is a self-administered and self-managed Maryland real estate investment trust (“REIT”). Substantially all of the Trust’s assets are owned directly or indirectly, and substantially all of the Trust’s operations are conducted directly or indirectly, by its subsidiary, Liberty Property Limited Partnership, a Pennsylvania limited partnership (the “Operating Partnership” and, collectively with the Trust and their consolidated subsidiaries, the “Company”).

The Company operates primarily in the Mid-Atlantic, Southeastern, Midwestern and Southwestern United States. Additionally, the Company owns certain assets in the United Kingdom.

As of March 31, 2011, the Company owned and operated 345 industrial and 291 office properties (the “Wholly Owned Properties in Operation”) totaling 65.2 million square feet. In addition, as of March 31, 2011, the Company owned three properties under development, which when completed are expected to comprise 308,000 square feet (the “Wholly Owned Properties under Development”) and 1,339 acres of developable land, substantially all of which is zoned for commercial use. Additionally, as of March 31, 2011, the Company had an ownership interest, through unconsolidated joint ventures, in 48 industrial and 50 office properties totaling 14.4 million square feet (the “JV Properties in Operation” and, together with the Wholly Owned Properties in Operation, the “Properties in Operation”). The Company also has an ownership interest through unconsolidated joint ventures in 627 acres of developable land, substantially all of which is zoned for commercial use.

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

The Company’s strategy with respect to product and market selection is expected generally to favor metro-office, multi-tenant industrial and industrial-flex properties and markets with strong demographic and economic fundamentals. To the extent deemed consistent with the Company’s strategy the Company intends to reduce its ownership of suburban office properties.

The recent economic disruption continues to adversely impact the Company’s business. Although we have seen some improvement in the general economy, the economy as it impacts our business has not returned to pre-recession levels. Rental demand for the Properties in Operation remained flat for the three months ended March 31, 2011 as compared to the three months ended March 31, 2010. During the three months ended March 31, 2011, the Company successfully leased 3.4 million square feet and attained occupancy of 89.8% for the Wholly Owned Properties in Operation and 83.5% for the JV Properties in Operation for a combined occupancy of 88.7% for the Properties in Operation as of that date. The stagnant level of rental demand for properties was reflected in a decline during the three months ended March 31, 2011 of straight line rents on renewal and replacement leases of 10.1%. At December 31, 2010, occupancy for the Wholly Owned Properties in Operation was 89.9% and for the JV Properties in Operation was 83.0% for a combined occupancy for the Properties in Operation of 88.7%.

GUIDANCE

The Company’s guidance for 2011 is based on assumptions about the economy and real estate market fundamentals. The Company believes that average occupancy for its Properties in Operation will be flat or increase by up to 2% for 2011 compared to 2010. The Company believes the occupancy for industrial-distribution properties will increase by 1% to 3% and this increase will be partially offset by decreases in occupancy of up to 2% for industrial-flex and office properties. Furthermore, the Company believes that straight line rents on renewal and replacement leases for 2011 will on average be 7% to 12% lower than rents on expiring leases.

In the period since the release of the Company’s guidance for 2011 the Company has seen an increased level of activity with respect to the acquisition and disposition of properties as well as with respect to development opportunities. The Company believes that this increase in activity will allow it to accelerate its strategy to dispose of certain suburban office properties that are not consistent with its strategy. It also believes that it will present acquisition and development opportunities.

Therefore, the Company has revised its guidance to reflect a higher level of anticipated disposition and acquisition activity.

The Company’s original and revised guidance for its 2011 capital activity is as follows:


Category	2011 Original Guidance	2011 Revised Guidance
Wholly Owned Acquisitions	$25 - $75 million	$100-$200 million
Wholly Owned Dispositions	$50 - $100 million	$300-$400 million
Wholly Owned Development Deliveries	$—	$—
Joint Venture Acquisitions	$—	$—
Joint Venture Dispositions	$—	$5 - $15 million
Joint Venture Development Deliveries	$—	$—

The Company anticipates that for 2011 it will distribute more in dividends than it receives in net cash provided by operating activities less customary tenant improvement and leasing transaction costs. The increase in disposition activity described above will further reduce the net cash available to fund dividends. The Company believes that this shortfall situation will persist throughout 2011 but it anticipates that net cash supplied by future acquisitions and development opportunities and increases in occupancy and rental rates will offset this shortfall. The Company will continue to evaluate these circumstances opposite its distribution policies.

WHOLLY OWNED CAPITAL ACTIVITY

Acquisitions

During the three months ended March 31, 2011, the Company did not acquire any properties. For 2011, the Company believes that certain of its acquired properties will be either vacant or underleased.

Dispositions

Disposition activity allows the Company to, among other things, (1) reduce its holdings in certain markets and product types within a market; (2) lower the average age of the portfolio; (3) optimize the cash proceeds from the sale of certain assets; and (4) obtain funds for investment activities. During the three months ended March 31, 2011, the Company realized proceeds of $3.6 million from the sale of one operating property representing 30,000 square feet.

Development

During the three months ended March 31, 2011, the Company did not bring any Wholly Owned Properties under Development into service and initiated $95.7 million in real estate development. As of March 31, 2011, the Company had three Wholly Owned Properties under Development with a projected Total Investment of $95.7 million. The Company continues to pursue development opportunities.

“Total Investment” for a property is defined as the property’s purchase price plus closing costs (in the case of acquisitions if vacant) and management’s estimate, as determined at the time of acquisition, of the cost of necessary building improvements in the case of acquisitions, or land costs and land and building improvement costs in the case of development projects, and, where appropriate, other development costs and carrying costs.

JOINT VENTURE CAPITAL ACTIVITY

The Company periodically enters into joint venture relationships in connection with the execution of its real estate operating strategy.

Acquisitions

During the three months March 31, 2011, none of the unconsolidated joint ventures in which the Company held an interest acquired any properties.

Dispositions

During the three months March 31, 2011, none of the unconsolidated joint ventures in which the Company held an interest disposed of any properties.

Development

During the three months ended March 31, 2011, none of the unconsolidated joint ventures in which the Company held an interest brought any properties into service or began development activities.

PROPERTIES IN OPERATION

The composition of the Company’s Properties in Operation as of March 31, 2011 and 2010 was as follows (square feet in thousands):


	Net Rent
	Per Square Foot				Total Square Feet				Percent Occupied
	March 31,				March 31,				March 31,
	2011		2010		2011		2010		2011			2010
Wholly Owned Properties in Operation:
Industrial-Distribution	$	4.51	$	4.38		32,308		31,572		91.2	%		87.9	%
Industrial-Flex	$	9.00	$	9.14		11,125		11,266		87.1	%		88.2	%
Office	$	14.28	$	14.26		21,779		21,562		89.2	%		90.0	%

	$	8.49	$	8.57		65,212		64,400		89.8	%		88.7	%


Joint Venture Properties in Operation:
Industrial-Distribution	$	3.84	$	3.98		9,500		9,041		80.7	%		84.3	%
Industrial-Flex	$	27.79	$	22.57		171		171		81.9	%		84.8	%
Office	$	23.37	$	23.65		4,746		4,574		89.1	%		89.5	%

	$	10.98	$	11.00		14,417		13,786		83.5	%		86.0	%


Properties in Operation:
Industrial-Distribution	$	4.37	$	4.29		41,808		40,613		88.8	%		87.1	%
Industrial-Flex	$	9.27	$	9.34		11,296		11,437		87.1	%		88.2	%
Office	$	15.90	$	15.90		26,525		26,136		89.2	%		89.9	%

	$	8.92	$	8.99		79,629		78,186		88.7	%		88.2	%

Geographic segment data for the three months ended March 31, 2011 and 2010 are included in Note 2 to the Company’s financial statements.

Forward-Looking Statements

When used throughout this report, the words “believes,” “anticipates,” “estimates” and “expects” and similar expressions are intended to identify forward-looking statements. Such statements indicate that assumptions have been used that are subject to a number of risks and uncertainties that could cause actual financial results or management plans and objectives to differ materially from those projected or expressed herein, including: the effect of global, national and regional economic conditions; rental demand; the Company’s ability to identify, and enter into agreements with suitable joint venture partners in situations where it believes such arrangements are advantageous; the Company’s ability to identify and secure additional properties and sites, both for itself and the joint ventures to which it is a party, that meet its criteria for acquisition or development; the effect of prevailing market interest rates; risks related to the integration of the operations of entities that we have acquired or may acquire; risks related to litigation; and other risks described from time to time in the Company’s filings with the SEC. Given these uncertainties, readers are cautioned not to place undue reliance on such statements.

Critical Accounting Policies and Estimates

Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 for a discussion of critical accounting policies which include capitalized costs, revenue recognition, allowance for doubtful accounts, impairment of real estate, intangibles and investments in unconsolidated joint ventures. During the three months ended March 31, 2011, there were no material changes to these policies.

Results of Operations

The following discussion is based on the consolidated financial statements of the Company. It compares the results of operations of the Company for the three months ended March 31, 2011 with the results of operations of the Company for the three months ended March 31, 2010. As a result of the varying levels of development, acquisition and disposition activities by the Company in 2011 and 2010, the overall operating results of the Company during such periods are not directly comparable. However, certain data, including the Same Store comparison, do lend themselves to direct comparison.

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

Comparison of Three Months Ended March 31, 2011 to Three Months Ended March 31, 2010

Overview

The Company’s average gross investment in operating real estate owned for the three months ended March 31, 2011 increased to $5,022.2 million from $4,837.1 million for the three months ended March 31, 2010. This increase in operating real estate resulted in increases in operating expense reimbursement and depreciation and amortization expense. Despite the increase in operating real estate, real estate taxes decreased due to favorable tax reassessments on certain properties in the Company’s segments within the South region and rental property expenses decreased due to one-time reductions in certain operating expense items.

Total operating revenue increased to $178.6 million for the three months ended March 31, 2011 from $178.1 million for the three months ended March 31, 2010. The $0.5 million increase was primarily due to increased reimbursements for operating expenses and the increase in average gross investment in operating real estate. These increases were partially offset by a decrease in termination fees, which were $0.3 million for the three months ended March 31, 2011 compared to $1.8 million for the three months ended March 31, 2010. Termination Fees are fees that the Company agrees to accept in consideration for permitting certain tenants to terminate their leases prior to the contractual expiration date. Termination Fees are included in rental revenue and if a property is sold, related termination fees are included in discontinued operations. See “Other,” below.

Segments

The Company evaluates the performance of the Wholly Owned Properties in Operation in terms of property level operating income by reportable segment (see Note 2 to the Company’s financial statements for a reconciliation of this measure to net income). The following table identifies changes in reportable segments (dollars in thousands):

Property Level Operating Income:


	Three Months Ended				Percentage
	March 31,				Increase
	2011		2010		(Decrease)
Northeast
— Southeastern PA	$	28,623	$	30,377		(5.8	%)
— Lehigh/Central PA		17,243		15,375		12.1	%(1)
— Other		11,361		11,802		(3.7	%)
Central		19,989		19,057		4.9	%
South		37,328		36,426		2.5	%

Metro		6,304		5,461		15.4	%(2)
United Kingdom		878		805		9.1	%

Total property level operating income	$	121,726	$	119,303		2.0	%


(1)		The change was primarily due to an increase in occupancy, rental rates, and an increase in average gross investment in operating real estate in 2011.

(2)		The change was primarily due to an increase in average gross investment in operating real estate and a decrease in operating expenses due to one-time reductions in certain operating expense items.

Same Store

Property level operating income, exclusive of Termination Fees, for the Same Store properties increased to $124.4 million for the three months ended March 31, 2011 from $122.6 million for the three months ended March 31, 2010, on a straight line basis (which recognizes rental revenue evenly over the life of the lease), and increased to $122.9 million for the three months ended March 31, 2011 from $118.9 million for the three months ended March 31, 2010 on a cash basis. These increases of 1.4% and 3.4%, respectively, are primarily due to one-time reductions in certain operating expense items.

Management generally considers the performance of the Same Store properties to be a useful financial performance measure because the results are directly comparable from period to period. Management further believes that the performance comparison should exclude Termination Fees since they are more event-specific and are not representative of ordinary performance results. In addition, Same Store property level operating income and Same Store cash basis property level operating income exclusive of Termination Fees is considered by management to be a more reliable indicator of the portfolio’s baseline performance. The Same Store properties consist of the 628 properties totaling approximately 63.7 million square feet owned on January 1, 2010, excluding properties sold through March 31, 2011.

Set forth below is a schedule comparing the property level operating income, on a straight line basis and on a cash basis, for the Same Store properties for the three months ended March 31, 2011 and 2010. Same Store property level operating income and cash basis property level operating income are non-GAAP measures and do not represent income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures because they do not reflect the consolidated operations of the Company. Investors should review Same Store results, along with Funds from operations (see “Liquidity and Capital Resources” section), GAAP net income and cash flow from operating activities, investing activities and financing activities when considering the Company’s operating performance. Also set forth below is a reconciliation of Same Store property level operating income and cash basis property level operating income to net income (in thousands).


	Three Months Ended
	March 31, 2011			March 31, 2010
Same Store:
Rental revenue	$	125,756		$	126,566
Operating expenses:
Rental property expense		38,514			40,449
Real estate taxes		21,353			21,806
Operating expense recovery		(58,503	)		(58,308	)

Unrecovered operating expenses		1,364			3,947


Property level operating income		124,392			122,619
Less straight line rent		1,472			3,698


Cash basis property level operating income	$	122,920		$	118,921


Reconciliation of non-GAAP financial measure — Same Store:
Cash basis property level operating income	$	122,920		$	118,921
Straight line rent		1,472			3,698

Property level operating income		124,392			122,619
Property level operating income — properties purchased or developed subsequent to January 1, 2010		3,368			543
Less: Property level operating income — properties held for sale at March 31, 2011		(6,272	)		(5,617	)
Termination fees		238			1,758
General and administrative expense		(15,965	)		(14,867	)
Depreciation and amortization expense		(42,242	)		(40,560	)
Other income (expense)		(32,102	)		(33,486	)
Gain on property dispositions		1,161			768
Income taxes		(550	)		(452	)
Equity in earnings of unconsolidated joint ventures		534			394
Discontinued operations		2,381			4,722


Net income	$	34,943		$	35,822

General and Administrative

General and administrative expenses increased to $16.0 million for the three months ended March 31, 2011 compared to $14.9 million for the three months ended March 31, 2010. The increase was primarily due to the accelerated vesting of long term incentive compensation due to the years of service and age of certain employees as well as an increase in expenses related to cancelled projects.

Depreciation and Amortization

Depreciation and amortization increased to $42.2 million for the three months ended March 31, 2011 from $40.6 million for the three months ended March 31, 2010. This increase was primarily due to the increased investment in operating real estate.

Interest Expense

Interest expense decreased to $34.8 million for the three months ended March 31, 2011 from $36.3 million for the three months ended March 31, 2010. The decrease was primarily due to the decrease in the average debt outstanding to $2,323.8 million for the three months ended March 31, 2011 from $2,403.7 million for the three months ended March 31, 2010 as well as a decrease in the weighted average interest rate to 5.8% for the three months ended March 31, 2011 from 6.3% for the three months ended March 31, 2010. The decrease was also partially due to an increase in interest capitalized during the three months ended March 31, 2011 due to an increase in development activity.

Interest expense allocated to discontinued operations for the three months ended March 31, 2011 and 2010 was $1.4 million and $2.4 million, respectively. This decrease was due to the decrease in the level of dispositions in 2011 compared to 2010.

Other

Gain on property dispositions increased to $1.2 million for the three months ended March 31, 2011 from $768,000 for the three months ended March 31, 2010.

Income from discontinued operations decreased to $2.4 million for the three months ended March 31, 2011 from $4.7 million for the three months ended March 31, 2010. The decrease for the three month periods was due to a decrease in gains recognized on sales, net of an impairment charge, which were $470,000 for the three months ended March 31, 2011 and $2.9 million for the three months ended March 31, 2010.

As a result of the foregoing, the Company’s net income decreased to $34.9 million for the three months ended March 31, 2011 from $35.8 million for the three months ended March 31, 2010.

Liquidity and Capital Resources

Overview

The Company has increased its expected investment in development properties for 2011 and anticipates that it will need approximately $100 million to $150 million to fund this activity. The Company’s remaining 2011 debt maturities total approximately $4 million. The Company has increased its expected investment in acquisition properties and anticipates that it will invest $100 million to $200 million in acquisitions in 2011. The Company believes that proceeds from asset sales, its available cash, borrowing capacity from its Credit Facility (as defined below) and its other sources of capital including the public debt and equity markets will provide it with sufficient funds to satisfy these obligations. The Company has increased its expected level of property dispositions and expects to realize approximately $300 million to $400 million in proceeds from asset sales in 2011.

Activity

As of March 31, 2011, the Company had cash and cash equivalents of $87.6 million, including $54.9 million in restricted cash.

Net cash flow provided by operating activities increased to $78.0 million for the three months ended March 31, 2011 from $63.6 million for the three months ended March 31, 2010. This $14.4 million increase was primarily due to the fluctuation in restricted cash related to a cash escrow for the purchase of a parcel of land and the fluctuation in other liabilities. Net cash flow provided by operating activities is the primary source of liquidity to fund distributions to shareholders and for recurring capital expenditures and leasing transaction costs for the Company’s Wholly Owned Properties in Operation.

Net cash used in investing activities was $33.8 million for the three months ended March 31, 2011 compared to net cash provided by investing activities of $7.4 million for the three months ended March 31, 2010. This $41.2 million change primarily resulted from a decrease in proceeds from a grant receivable/escrow.

Net cash used in financing activities was $121.4 million for the three months ended March 31, 2011 compared to $164.3 million for the three months ended March 31, 2010. This $42.9 million decrease was primarily due to the net changes in the Company’s debt during the respective periods. Net cash used in financing activities includes proceeds from the issuance of equity and debt, net of debt repayments, equity repurchases and shareholder distributions.

The Company funds its development activities and acquisitions with long-term capital sources and proceeds from the disposition of properties. For the three months ended March 31, 2011, a portion of these activities were funded through a $500 million Credit Facility (the “Credit Facility”). The interest rate on borrowings under the Credit Facility fluctuates based upon ratings from Moody’s Investors Service, Inc., Standard and Poor’s Ratings Group and Fitch, Inc. Based on the Company’s present ratings, the interest rate for borrowings under the Credit Facility is LIBOR plus 230 basis points.

Additionally, the Company has entered into an agreement to fund its planned improvements for the Kings Hill Phase 2 land development project. At March 31, 2011, the Company had not drawn any of a £7 million revolving credit facility. The facility expires on November 22, 2011.

The Company uses debt financing to lower its overall cost of capital in an attempt to increase the return to shareholders. The Company staggers its debt maturities and maintains debt levels it considers to be prudent. In determining its debt levels, the Company considers various financial measures including the debt to gross assets ratio and the fixed charge coverage ratio. As of March 31, 2011 the Company’s debt to gross assets ratio was 37.5% and for the three months ended March 31, 2011 the fixed charge coverage ratio was 2.7x. Debt to gross assets equals total long-term debt, borrowings under the Credit Facility divided by total assets plus accumulated depreciation. The fixed charge coverage ratio equals income from continuing operations before property dispositions, including operating activity from discontinued operations, plus interest expense and depreciation and amortization, divided by interest expense, including capitalized interest, plus distributions on preferred units.

As of March 31, 2011, $295.1 million in mortgage loans and $1,792.6 million in unsecured notes were outstanding with a weighted average interest rate of 5.86%. The interest rates on $2,071.8 million of mortgage loans and unsecured notes are fixed and range from 4.5% to 8.8%. The weighted average remaining term for the mortgage loans and unsecured notes is 5.5 years.

The scheduled principal amortization and maturities of the Company’s mortgage loans, unsecured notes and the Credit Facility and the related weighted average interest rates as of March 31, 2011 are as follows (in thousands, except percentages):


	MORTGAGES										WEIGHTED
	PRINCIPAL		PRINCIPAL		UNSECURED		CREDIT				AVERAGE
	AMORTIZATION		MATURITIES		NOTES		FACILITY		TOTAL		INTEREST RATE
2011	$	4,296	$	—	$	—	$	—	$	4,296		6.28	%
2012		4,934		30,116		230,100		—		265,150		6.47	%
2013		4,582		4,510		—		200,000		209,092		2.69	%
2014		4,965		2,684		200,000		—		207,649		5.66	%
2015		4,511		44,469		316,000		—		364,980		5.17	%
2016		3,068		182,318		300,000		—		485,386		6.10	%
2017		2,317		2,350		296,543		—		301,210		6.61	%
2018		—		—		100,000		—		100,000		7.50	%
2019		—		—		—		—		—		—
2020		—		—		350,000		—		350,000		4.75	%

	$	28,673	$	266,447	$	1,792,643	$	200,000	$	2,287,763		5.57	%

General

The Company believes that its existing sources of capital will provide sufficient funds to finance its continued development and acquisition activities. The Company’s existing sources of capital include the public debt and equity markets, proceeds from secured financing of properties, proceeds from property dispositions, equity capital from joint venture partners and net cash provided by operating activities. Additionally, the Company expects to incur variable rate debt, including borrowings under the Credit Facility, from time to time.

The Company has an effective S-3 shelf registration statement on file with the SEC pursuant to which the Trust and the Operating Partnership may issue an unlimited amount of equity securities and debt securities.

Calculation of Funds from Operations

The National Association of Real Estate Investment Trusts (“NAREIT”) has issued a standard definition for Funds from operations (as defined below). The SEC has agreed to the disclosure of this non-GAAP financial measure on a per share basis in its Release No. 34-47226, Conditions for Use of Non-GAAP Financial Measures. The Company believes that the calculation of Funds from operations is helpful to investors and management as it is a measure of the Company’s operating performance that excludes depreciation and amortization and gains and losses from property dispositions. As a result, year over year comparison of Funds from operations reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, development activities, general and administrative expenses, and interest costs, providing perspective not immediately apparent from net income. In addition, management believes that Funds from operations provides useful information to the investment community about the Company’s financial performance when compared to other REITs since Funds from operations is generally recognized as the standard for reporting the operating performance of a REIT. Funds from operations available to common shareholders is defined by NAREIT as net income (computed in accordance with generally accepted accounting principles (“GAAP”)), excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Funds from operations available to common shareholders does not represent net income or cash flows from operations as defined by GAAP and does not necessarily indicate that cash flows will be sufficient to fund cash needs. It should not be considered as an alternative to net income as an indicator of the Company’s operating performance or to cash flows as a measure of liquidity. Funds from operations available to common shareholders also does not represent cash flows generated from operating, investing or financing activities as defined by GAAP.

Funds from operations (“FFO”) available to common shareholders for the three months ended March 31, 2011 and 2010 are as follows (in thousands, except per share amounts):


	Three Months Ended
	March 31, 2011			March 31, 2010
Reconciliation of net income to FFO — basic
Net Income available to common shareholders	$	28,909		$	29,551

Basic — Income available to common shareholders		28,909			29,551
*Basic — income available to common shareholders per weighted average share*	$	0.25		$	0.26

Adjustments:
Depreciation and amortization of unconsolidated joint ventures		3,649			4,059
Depreciation and amortization		43,971			42,449
Gain on property dispositions		(1,019	)		(2,664	)
Noncontrolling interest share in addback for depreciation and amortization and gain on property dispositions		(1,541	)		(1,478	)

Funds from operations available to common shareholders — basic	$	73,969		$	71,917


*Basic Funds from operations available to common shareholders per weighted average share*	$	0.65		$	0.64

Reconciliation of net income to FFO — diluted:

Net Income available to common shareholders	$	28,909		$	29,551

Diluted — income available to common shareholders		28,909			29,551
*Diluted — income available to common shareholders per weighted average share*	$	0.25		$	0.26

Adjustments:
Depreciation and amortization of unconsolidated joint ventures		3,649			4,059
Depreciation and amortization		43,971			42,449
Gain on property dispositions		(1,019	)		(2,664	)
Noncontrolling interest less preferred share distributions		982			1,030


Funds from operations available to common shareholders - diluted	$	76,492		$	74,425


*Diluted Funds from operations available to common shareholders per weighted average share*	$	0.64		$	0.64

Reconciliation of weighted average shares:
Weighted average common shares — all basic calculations		114,013			112,341
Dilutive shares for long term compensation plans		753			614


Diluted shares for net income calculations		114,766			112,955
Weighted average common units		3,929			3,961


Diluted shares for Funds from operations calculations		118,695			116,916

Inflation

Inflation has remained relatively low in recent years, and as a result, it has not had a significant impact on the Company during this period. To the extent an increase in inflation would result in increased operating costs, such as insurance, real estate taxes and utilities, substantially all of the tenants’ leases require the tenants to absorb these costs as part of their rental obligations. In addition, inflation also may have the effect of increasing market rental rates.


Item 3.		Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes to the Company’s exposure to market risk since its Annual Report on Form 10-K for the year ended December 31, 2010.


Item 4.		Controls and Procedures

Controls and Procedures with respect to the Trust

(a) Evaluation of Disclosure Controls and Procedures

The Trust’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on this evaluation, the Trust’s Chief Executive Officer and Chief Financial Officer have concluded that the Trust’s disclosure controls and procedures, as of the end of the period covered by this report, were effective to provide reasonable assurance that information required to be disclosed by the Trust in its reports filed or submitted under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC’s rules and forms and (ii) accumulated and communicated to the Trust’s management, including its principal executive and principal financial officers, or persons performing similar function, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in Internal Control Over Financial Reporting

There were no changes in the Trust’s internal control over financial reporting during the quarter ended March 31, 2011 that have materially affected or are reasonable likely to materially affect the Company’s internal control over financial reporting.

Controls and Procedures with respect to the Operating Partnership

(a) Evaluation of Disclosure Controls and Procedures

The Trust’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, on behalf of the Trust in its capacity as the general partner of the Operating Partnership, evaluated the effectiveness of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on this evaluation, the Trust’s Chief Executive Officer and Chief Financial Officer have concluded that the Operating Partnership’s disclosure controls and procedures, as of the end of the period covered by this report, were effective to provide reasonable assurance that information required to be disclosed by the Operating Partnership in its reports filed or submitted under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC’s rules and forms and (ii) accumulated and communicated to the Trust’s management, including its principal executive and principal financial officers, or persons performing similar function, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in Internal Control Over Financial Reporting

There were no changes in the Operating Partnership’s internal control over financial reporting during the quarter ended March 31, 2011 that have materially affected or are reasonable likely to materially affect the Operating Partnership’s internal control over financial reporting.

PART II. OTHER INFORMATION


Item 1.		Legal Proceedings

The Company is not a party to any material litigation as of March 31, 2011.


Item 1A.		Risk Factors

There have been no material changes to the risk factors disclosed in Item 1A of Part 1 “Risk Factors,” in our Form 10-K for the year ended December 31, 2010.


Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds

None.


Item 3.		Defaults upon Senior Securities

None.


Item 4.		Removed and Reserved


Item 5.		Other Information

None.


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.)

101.INS		XBRL Instance Document (furnished herewith).

101.SCH		XBRL Taxonomy Extension Schema Document (furnished herewith).

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document (furnished herewith).

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document (furnished herewith).

101.LAB		XBRL Extension Labels Linkbase (furnished herewith).

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document (furnished herewith).


*		Filed herewith.

SIGNATURES

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


LIBERTY PROPERTY TRUST

/s/ WILLIAM P. HANKOWSKY William P. Hankowsky President and Chief Executive Officer		May 5, 2011 Date

/s/ GEORGE J. ALBURGER, JR. George J. Alburger, Jr. Executive Vice President and Chief Financial Officer		May 5, 2011 Date

SIGNATURES

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


LIBERTY PROPERTY LIMITED PARTNERSHIP

BY:	Liberty Property Trust General Partner

/s/ WILLIAM P. HANKOWSKY		May 5, 2011

William P. Hankowsky President and Chief Executive Officer		Date

/s/ GEORGE J. ALBURGER, JR.		May 5, 2011

George J. Alburger, Jr. Executive Vice President and Chief Financial Officer		Date

EXHIBIT INDEX


EXHIBIT
NO.

	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.)

101.INS		XBRL Instance Document (furnished herewith).

101.SCH		XBRL Taxonomy Extension Schema Document (furnished herewith).

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document (furnished herewith).

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document (furnished herewith).

101.LAB		XBRL Extension Labels Linkbase (furnished herewith).

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document (furnished herewith).

LIBERTY PROPERTY TRUST - FORM 10-Q - May 5, 2011

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