Form 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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


		For the quarterly period ended June 30, 2010


OR


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


		For the transition period from ________ to ________


Commission file numbers:		1-13130 (Liberty Property Trust) 1-13132 (Liberty Property Limited Partnership)

LIBERTY PROPERTY TRUST
LIBERTY PROPERTY LIMITED PARTNERSHIP

(Exact name of registrants as specified in their governing documents)


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

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

500 Chesterfield 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 (Do not check if a smaller reporting company)		Smaller Reporting Company o

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 August 3, 2010, 113,749,354 Common Shares of Beneficial Interest, par value $0.001 per share, of Liberty Property Trust were outstanding.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS OF LIBERTY PROPERTY TRUST

(In thousands, except share and unit amounts)


	June 30, 2010			December 31, 2009
	(Unaudited)
ASSETS
Real estate:
Land and land improvements	$	858,919		$	850,559
Building and improvements		4,364,449			4,289,932
Less accumulated depreciation		(1,036,823	)		(973,624	)


Operating real estate		4,186,545			4,166,867

Development in progress		7,951			66,714
Land held for development		210,748			218,633


Net real estate		4,405,244			4,452,214

Cash and cash equivalents		39,541			237,446
Restricted cash		36,351			42,232
Accounts receivable		6,657			6,057
Deferred rent receivable		102,544			95,527
Deferred financing and leasing costs, net of accumulated amortization (2010, $118,545; 2009, $108,403)		131,880			134,309
Investments in and advances to unconsolidated joint ventures		172,586			175,584
Prepaid expenses and other assets		58,289			85,574


Total assets	$	4,953,092		$	5,228,943


LIABILITIES
Mortgage loans	$	352,019		$	473,993
Unsecured notes		1,842,882			1,842,882
Credit facility		50,000			140,000
Accounts payable		36,772			31,195
Accrued interest		31,294			31,251
Dividend and distributions payable		55,718			55,402
Other liabilities		133,281			171,051


Total liabilities		2,501,966			2,745,774

EQUITY
Liberty Property Trust shareholders’ equity
Common shares of beneficial interest, $.001 par value, 183,987,000 shares authorized; 114,642,717 (includes 1,249,909 in treasury) and 113,875,211 (includes 1,249,909 in treasury) shares issued and outstanding as of June 30, 2010 and December 31, 2009, respectively		115			114
Additional paid-in capital		2,530,789			2,509,704
Accumulated other comprehensive (loss) income		(3,195	)		2,339
Distributions in excess of net income		(382,461	)		(337,911	)
Common shares in treasury, at cost, 1,249,909 shares as of June 30, 2010 and December 31, 2009		(51,951	)		(51,951	)

Total Liberty Property Trust shareholders’ equity		2,093,297			2,122,295

Noncontrolling interest — operating partnership
3,943,224 and 4,011,354 common units outstanding as of June 30, 2010 and December 31, 2009, respectively 2009, respectively December 31, 2008, respectively		69,113			72,294
9,740,000 preferred units outstanding as of June 30, 2010 and December 31, 2009		287,959			287,959
Noncontrolling interest — consolidated joint ventures		757			621


Total equity		2,451,126			2,483,169


Total liabilities and equity	$	4,953,092		$	5,228,943

See accompanying notes.

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


	Three Months Ended
	June 30, 2010			June 30, 2009
OPERATING REVENUE
Rental	$	130,509		$	129,352
Operating expense reimbursement		54,469			54,205

Total operating revenue		184,978			183,557


OPERATING EXPENSE
Rental property		34,659			34,770
Real estate taxes		22,402			21,773
General and administrative		12,567			11,655
Depreciation and amortization		43,873			42,005

Total operating expenses		113,501			110,203


Operating income		71,477			73,354

OTHER INCOME (EXPENSE)
Interest and other income		2,681			2,511
Debt extinguishment gain		—			563
Interest expense		(39,144	)		(36,755	)


Total other income (expense)		(36,463	)		(33,681	)


Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures		35,014			39,673

Gain (loss) on property dispositions		2,242			(2,050	)
Income taxes		(503	)		(127	)
Equity in earnings of unconsolidated joint ventures		783			1,192


Income from continuing operations		37,536			38,688

Discontinued operations (including net gain on property dispositions of $2,408 and $3,670 for the three months ended June 30, 2010 and 2009, respectively)		2,478			4,524


Net income		40,014			43,212
Noncontrolling interest — operating partnership		(6,421	)		(6,597	)
Noncontrolling interest — consolidated joint ventures		(148	)		56


Net income available to common shareholders	$	33,445		$	36,671


Earnings per common share
Basic:
Income from continuing operations	$	0.28		$	0.31
Income from discontinued operations		0.02			0.04


Income per common share — basic	$	0.30		$	0.35


Diluted:
Income from continuing operations	$	0.27		$	0.31
Income from discontinued operations		0.02			0.04


Income per common share — diluted	$	0.29		$	0.35


Distributions per common share	$	0.475		$	0.475


Weighted average number of common shares outstanding
Basic		112,644			105,768
Diluted		113,380			106,245

Amounts attributable to common shareholders
Income from continuing operations	$	31,050		$	32,307
Discontinued operations		2,395			4,364

Net income available to common shareholders	$	33,445		$	36,671


See accompanying notes.

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


	Six Months Ended
	June 30, 2010			June 30, 2009
OPERATING REVENUE
Rental	$	260,578		$	257,064
Operating expense reimbursement		113,202			111,465

Total operating revenue		373,780			368,529


OPERATING EXPENSE
Rental property		75,073			73,151
Real estate taxes		44,910			43,546
General and administrative		27,441			27,212
Depreciation and amortization		86,804			84,575

Total operating expenses		234,228			228,484


Operating income		139,552			140,045

OTHER INCOME (EXPENSE)
Interest and other income		5,471			5,606
Debt extinguishment gain		—			1,092
Interest expense		(77,773	)		(73,946	)

Total other income (expense)		(72,302	)		(67,248	)


Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures		67,250			72,797

Gain (loss) on property dispositions		3,010			(2,344	)
Income taxes		(955	)		(344	)
Equity in earnings of unconsolidated joint ventures		1,177			1,609


Income from continuing operations		70,482			71,718

Discontinued operations (including net gain on property dispositions of $5,270 and $3,869 for the six months ended June 30, 2010 and 2009, respectively)		5,354			5,336


Net income		75,836			77,054
Noncontrolling interest — operating partnership		(12,704	)		(12,914	)
Noncontrolling interest — consolidated joint ventures		(136	)		420


Net income available to common shareholders	$	62,996		$	64,560


Earnings per common share
Basic:
Income from continuing operations	$	0.51		$	0.58
Income from discontinued operations		0.05			0.05


Income per common share — basic	$	0.56		$	0.63


Diluted:
Income from continuing operations	$	0.51		$	0.57
Income from discontinued operations		0.05			0.05


Income per common share — diluted	$	0.56		$	0.62


Distributions per common share	$	0.95		$	0.95


Weighted average number of common shares outstanding
Basic		112,512			103,244
Diluted		113,182			103,625

Amounts attributable to common shareholders
Income from continuing operations	$	57,822		$	59,418
Discontinued operations		5,174			5,142

Net income available to common shareholders	$	62,996		$	64,560

See accompanying notes.

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


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

Balance at January 1, 2010	$	114	$	2,509,704	$	2,339		$	(337,911	)	$	(51,951	)	$	2,122,295		$	72,294		$	287,959		$	621	$	2,483,169

Net proceeds from the issuance of Common Shares		1		11,657		—			—			—			11,658			—			—			—		11,658

Net income		—		—		—			62,996			—			62,996			2,198			10,506			136		75,836
Distributions		—		—		—			(107,546	)		—			(107,546	)		(3,959	)		(10,506	)		—		(122,011	)
Noncash compensation		—		8,201		—			—			—			8,201			—			—			—		8,201
Foreign currency translation adjustment		—		—		(5,534	)		—			—			(5,534	)		(193	)		—			—		(5,727	)
Redemption of noncontrolling interests — common units		—		1,227		—			—			—			1,227			(1,227	)		—			—		—


Balance at June 30, 2010	$	115	$	2,530,789	$	(3,195	)	$	(382,461	)	$	(51,951	)	$	2,093,297		$	69,113		$	287,959		$	757	$	2,451,126

See accompanying notes.

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


	Six Months Ended
	June 30, 2010			June 30, 2009
OPERATING ACTIVITIES
Net income	$	75,836		$	77,054
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		86,853			86,306
Amortization of deferred financing costs		3,354			2,439
Debt extinguishment gain		—			(1,092	)
Equity in earnings of unconsolidated joint ventures		(1,177	)		(1,609	)
Distributions from unconsolidated joint ventures		517			663
Gain on property dispositions		(8,280	)		(1,526	)
Noncash compensation		8,201			9,790
Changes in operating assets and liabilities:
Restricted cash		5,000			970
Accounts receivable		(609	)		6,208
Deferred rent receivable		(7,155	)		(5,677	)
Prepaid expenses and other assets		1,966			18,806
Accounts payable		5,718			2,979
Accrued interest		43			(5,159	)
Other liabilities		(22,059	)		(15,793	)

Net cash provided by operating activities		148,208			174,359


INVESTING ACTIVITIES
Investment in properties		(49,316	)		(35,812	)
Investments in and advances to unconsolidated joint ventures		(280	)		(4,017	)
Distributions from unconsolidated joint ventures		3,177			18,379
Net proceeds from disposition of properties/land		27,752			80,333
Net proceeds from (advances on) grant receivable/escrow		22,969			(9,848	)
Investment in development in progress		(7,919	)		(50,385	)
Investment in land held for development		(2,683	)		(26,980	)
Investment in deferred leasing costs		(14,467	)		(12,020	)

Net cash used in investing activities		(20,767	)		(40,350	)


FINANCING ACTIVITIES
Net proceeds from issuance of Common Shares		11,691			218,970
Repayments of unsecured notes		—			(285,268	)
Proceeds from mortgage loans		635			317,213
Repayments of mortgage loans		(122,608	)		(43,029	)
Proceeds from credit facility		90,000			199,150
Repayments on credit facility		(180,000	)		(319,150	)
Increase in deferred financing costs		(8	)		(5,743	)
Distribution paid on Common Shares		(107,197	)		(96,350	)
Distribution paid on units		(14,531	)		(14,452	)

Net cash used in financing activities		(322,018	)		(28,659	)


Net (decrease) increase in cash and cash equivalents		(194,577	)		105,350
(Decrease) increase in cash and cash equivalents related to foreign currency translation		(3,328	)		3,392
Cash and cash equivalents at beginning of period		237,446			15,794

Cash and cash equivalents at end of period	$	39,541		$	124,536

See accompanying notes.

Liberty Property Trust

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2010

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 96.6% of the common equity of the Operating Partnership at June 30, 2010. 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. See a description of the Company’s markets in Note 2 to the Company’s financial statements.

Basis of Presentation

The accompanying unaudited condensed 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, 2009. 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 June 30, 2010						For the Three Months Ended June 30, 2009
			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	$	31,050		112,644	$	0.28	$	32,307		105,768	$	0.31

Dilutive shares for long-term compensation plans		—		736				—		477


Diluted income from continuing operations
Income from continuing operations net of noncontrolling interest and assumed conversions		31,050		113,380	$	0.27		32,307		106,245	$	0.31


Basic income from discontinued operations
Discontinued operations net of noncontrolling interest		2,395		112,644	$	0.02		4,364		105,768	$	0.04

Dilutive shares for long-term compensation plans		—		736				—		477


Diluted income from discontinued operations
Discontinued operations net of noncontrolling interest		2,395		113,380	$	0.02		4,364		106,245	$	0.04


Basic income per common share
Net income available to common shareholders		33,445		112,644	$	0.30		36,671		105,768	$	0.35

Dilutive shares for long-term compensation plans		—		736				—		477


Diluted income per common share
Net income available to common shareholders and assumed conversions	$	33,445		113,380	$	0.29	$	36,671		106,245	$	0.35


	For the Six Months Ended June 30, 2010						For the Six Months Ended June 30, 2009
			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	$	57,822		112,512	$	0.51	$	59,418		103,244	$	0.58

Dilutive shares for long-term compensation plans		—		670				—		381


Diluted income from continuing operations
Income from continuing operations net of noncontrolling interest and assumed conversions		57,822		113,182	$	0.51		59,418		103,625	$	0.57


Basic income from discontinued operations
Discontinued operations net of noncontrolling interest		5,174		112,512	$	0.05		5,142		103,244	$	0.05

Dilutive shares for long-term compensation plans		—		670				—		381


Diluted income from discontinued operations
Discontinued operations net of noncontrolling interest		5,174		113,182	$	0.05		5,142		103,625	$	0.05


Basic income per common share
Net income available to common shareholders		62,996		112,512	$	0.56		64,560		103,244	$	0.63

Dilutive shares for long-term compensation plans		—		670				—		381


Diluted income per common share
Net income available to common shareholders and assumed conversions	$	62,996		113,182	$	0.56	$	64,560		103,625	$	0.62

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 and six months ended June 30, 2010 were 1,513,000 and 1,473,000, respectively, as compared to 2,666,000 and 2,857,000, respectively, for the same periods in 2009.

During the three and six months ended June 30, 2010, 113,000 and 127,000 common shares, respectively, 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 (loss) income as a separate component of shareholders’ equity. A proportionate amount of gain or loss is allocated to noncontrolling interest-common units. Accumulated other comprehensive (loss) income consists solely of the foreign currency translation adjustments described above. Other comprehensive loss for the three and six months ended June 30, 2010 was $1.1 million and $5.7 million, respectively, as compared to other comprehensive income of $10.8 million and $9.5 million, respectively, for the same periods in 2009. 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 (loss) income 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. As such, the following regions are considered the Company’s reportable segments:


Reportable Segments		Markets

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 Company’s reportable segments are distinct business units which are each managed separately in order to concentrate market knowledge within a geographic area. Within these reportable segments, the Company derives its revenues from its two product types: industrial properties and office properties.

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 JUNE 30, 2010


	Northeast
			Lehigh/										Phila-
	Southeastern		Central		New								delphia/		United
	PA		PA		Jersey		Midwest		Mid-Atlantic		South		D.C.		Kingdom		Total
Operating revenue	$	44,161	$	24,546	$	7,833	$	19,377	$	33,733	$	47,063	$	7,255	$	1,010	$	184,978
Rental property expenses and real estate taxes		13,777		6,064		2,895		7,247		9,402		16,063		1,392		221		57,061


Property level operating income	$	30,384	$	18,482	$	4,938	$	12,130	$	24,331	$	31,000	$	5,863	$	789		127,917


Interest and other income																		2,681
Interest expense																		(39,144	)
General and administrative																		(12,567	)
Depreciation and amortization																		(43,873	)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures																		35,014
Gain on property dispositions																		2,242
Income taxes																		(503	)
Equity in earnings of unconsolidated joint ventures																		783
Discontinued operations																		2,478


Net income																	$	40,014

FOR THE THREE MONTHS ENDED JUNE 30, 2009


	Northeast
			Lehigh/										Phila-
	Southeastern		Central		New								delphia/		United
	PA		PA		Jersey		Midwest		Mid-Atlantic		South		D.C.		Kingdom		Total
Operating revenue	$	45,131	$	24,583	$	7,531	$	20,725	$	33,283	$	46,121	$	5,048	$	1,135	$	183,557
Rental property expenses and real estate taxes		13,965		6,409		2,760		7,681		9,253		15,022		1,193		260		56,543


Property level operating income	$	31,166	$	18,174	$	4,771	$	13,044	$	24,030	$	31,099	$	3,855	$	875		127,014


Interest and other income																		2,511
Debt extinguishment gain																		563
Interest expense																		(36,755	)
General and administrative																		(11,655	)
Depreciation and amortization																		(42,005	)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures																		39,673
Loss on property dispositions																		(2,050	)
Income taxes																		(127	)
Equity in earnings of unconsolidated joint ventures																		1,192
Discontinued operations																		4,524


Net income																	$	43,212

FOR THE SIX MONTHS ENDED JUNE 30, 2010


	Northeast
			Lehigh/										Phila-
	Southeastern		Central		New								delphia/		United
	PA		PA		Jersey		Midwest		Mid-Atlantic		South		D.C.		Kingdom		Total
Operating revenue	$	90,414	$	50,249	$	15,837	$	38,875	$	69,160	$	92,972	$	14,228	$	2,045	$	373,780
Rental property expenses and real estate taxes		29,654		13,333		6,259		15,077		20,564		31,741		2,904		451		119,983


Property level operating income	$	60,760	$	36,916	$	9,578	$	23,798	$	48,596	$	61,231	$	11,324	$	1,594		253,797


Interest and other income																		5,471
Interest expense																		(77,773	)
General and administrative																		(27,441	)
Depreciation and amortization																		(86,804	)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures																		67,250
Gain on property dispositions																		3,010
Income taxes																		(955	)
Equity in earnings of unconsolidated joint ventures																		1,177
Discontinued operations																		5,354


Net income																	$	75,836

FOR THE SIX MONTHS ENDED JUNE 30, 2009


	Northeast
			Lehigh/										Phila-
	Southeastern		Central		New								delphia/		United
	PA		PA		Jersey		Midwest		Mid-Atlantic		South		D.C.		Kingdom		Total
Operating revenue	$	91,858	$	49,626	$	15,345	$	41,389	$	67,175	$	91,117	$	9,783	$	2,236	$	368,529
Rental property expenses and real estate taxes		29,519		13,978		5,928		15,258		19,977		29,174		2,373		490		116,697


Property level operating income	$	62,339	$	35,648	$	9,417	$	26,131	$	47,198	$	61,943	$	7,410	$	1,746		251,832


Interest and other income																		5,606
Debt extinguishment gain																		1,092
Interest expense																		(73,946	)
General and administrative																		(27,212	)
Depreciation and amortization																		(84,575	)


Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures																		72,797
Loss on property dispositions																		(2,344	)
Income taxes																		(344	)
Equity in earnings of unconsolidated joint ventures																		1,609
Discontinued operations																		5,336


Net income																	$	77,054

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 condensed 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 and six months ended June 30, 2010 were $10.2 million and $16.5 million, respectively, as compared to $34.7 million and $69.5 million, respectively for the same periods in 2009.

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						Six Months Ended
	June 30, 2010			June 30, 2009			June 30, 2010			June 30, 2009
Revenues	$	309		$	3,991		$	822		$	9,359
Operating expenses		(144	)		(1,281	)		(527	)		(3,421	)
Interest expense		(22	)		(845	)		(43	)		(2,337	)
Depreciation and amortization		(73	)		(1,011	)		(168	)		(2,134	)

Income before property dispositions	$	70		$	854		$	84		$	1,467

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

Asset Impairment

During the three and six months ended June 30, 2010, the Company recognized impairment charges of $400,000 related to a portfolio of properties in the Company’s Philadelphia/D.C. segment. During the three and six months ended June 30, 2009, the Company recognized impairments totaling $3.9 million and $4.5 million, respectively. For the three months ended June 30, 2009, $1.1 million in impairment related to a property in the Northeast segment, $331,000 related to a property in the Midwest segment, and $2.4 million related to a property in the Philadelphia/D.C. segment. For the six months ended June 30, 2009, $1.1 million in impairment related to a property in the Northeast segment, $113,000 related to a parcel of land in the Northeast segment, $89,000 related to a portfolio of properties in the Mid-Atlantic segment, $822,000 related to properties in the Midwest segment and $2.4 million related to a property in the Philadelphia/D.C. segment.

For the three and six months ended June 30, 2010, $400,000 in impairment was included in the caption gain (loss) on property dispositions in the Company’s statements of operations. For the three months ended June 30, 2009, $1.5 million in impairment related to properties sold was included in the caption discontinued operations in the Company’s statement of operations and $2.4 million in impairment was included in the caption gain (loss) on property dispositions in the Company’s statement of operations. For the six months ended June 30, 2009, $1.5 million in impairment related to properties sold was included in the caption discontinued operations in the Company’s statement of operations and $3.0 million in impairment was included in the caption gain (loss) on property dispositions in the Company’s statement of operations. The Company determined these impairments through a comparison of the aggregate future cash flows (including quoted offer prices) to be generated by the properties to the carrying value of the properties. 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 June 30, 2010.

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 June 30, 2010 have the same economic characteristics as common shares of the Trust. The 3,943,224 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 3,943,224 outstanding common units based on the closing price of the shares of the Company at June 30, 2010 was $113.8 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

Mortgage Loans
In April 2010, the Company used available cash and proceeds from its $600 million Credit Facility to repay $119.3 million principal value of mortgage loans. The weighted average interest rate of these loans as of March 31, 2010 was 7.3%. The mortgages encumbered certain of the Company’s operating properties with a net book value of $216.8 million. The Company incurred a $1.2 million prepayment penalty and wrote off $936,000 in deferred financing costs in conjunction with the prepayment of these loans. These costs are included as interest expense in the accompanying statements of operations.

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 June 30, 2010 and December 31, 2009. 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 $136.8 million and $33.5 million at June 30, 2010 and December 31, 2009, 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 June 30, 2010 and December 31, 2009. 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 June 30, 2010 and current estimates of fair value may differ significantly from the amounts presented herein.

CONDENSED CONSOLIDATED BALANCE SHEETS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(In thousands, except unit amounts)


	June 30, 2010			December 31, 2009
	(Unaudited)
ASSETS
Real estate:
Land and land improvements	$	858,919		$	850,559
Building and improvements		4,364,449			4,289,932
Less accumulated depreciation		(1,036,823	)		(973,624	)


Operating real estate		4,186,545			4,166,867

Development in progress		7,951			66,714
Land held for development		210,748			218,633


Net real estate		4,405,244			4,452,214

Cash and cash equivalents		39,541			237,446
Restricted cash		36,351			42,232
Accounts receivable		6,657			6,057
Deferred rent receivable		102,544			95,527
Deferred financing and leasing costs, net of accumulated amortization (2010, $118,545; 2009, $108,403)		131,880			134,309
Investments in and advances to unconsolidated joint ventures		172,586			175,584
Prepaid expenses and other assets		58,289			85,574


Total assets	$	4,953,092		$	5,228,943


LIABILITIES
Mortgage loans	$	352,019		$	473,993
Unsecured notes		1,842,882			1,842,882
Credit facility		50,000			140,000
Accounts payable		36,772			31,195
Accrued interest		31,294			31,251
Distributions payable		55,718			55,402
Other liabilities		133,281			171,051


Total liabilities		2,501,966			2,745,774

OWNERS’ EQUITY
General partner’s equity — common units, 114,642,717 and 113,875,211 units outstanding as of June 30, 2010 and December 31, 2009, respectively		2,093,297			2,122,295

Limited partners’ equity — 3,943,224 and 4,011,354 common units outstanding as of June 30, 2010 and December 31, 2009, respectively		69,113			72,294
— 9,740,000 preferred units outstanding as of June 30, 2010 and December 31, 2009		287,959			287,959
Noncontrolling interest — consolidated joint ventures		757			621


Total owners’ equity		2,451,126			2,483,169


Total liabilities and owners’ equity	$	4,953,092		$	5,228,943

See accompanying notes.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Unaudited and in thousands, except per unit amounts)


	Three Months Ended
	June 30, 2010			June 30, 2009
OPERATING REVENUE
Rental	$	130,509		$	129,352
Operating expense reimbursement		54,469			54,205

Total operating revenue		184,978			183,557


OPERATING EXPENSE
Rental property		34,659			34,770
Real estate taxes		22,402			21,773
General and administrative		12,567			11,655
Depreciation and amortization		43,873			42,005

Total operating expenses		113,501			110,203


Operating income		71,477			73,354

OTHER INCOME (EXPENSE)
Interest and other income		2,681			2,511
Debt extinguishment gain		—			563
Interest expense		(39,144	)		(36,755	)

Total other income (expense)		(36,463	)		(33,681	)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures		35,014			39,673
Gain (loss) on property dispositions		2,242			(2,050	)
Income taxes		(503	)		(127	)
Equity in earnings of unconsolidated joint ventures		783			1,192


Income from continuing operations		37,536			38,688

Discontinued operations (including net gain on property dispositions of $2,408 and $3,670 for the three months ended June 30, 2010 and 2009, respectively)		2,478			4,524


Net income		40,014			43,212

Noncontrolling interest — consolidated joint ventures		(148	)		56
Preferred unit distributions		(5,253	)		(5,253	)


Income available to common unitholders	$	34,613		$	38,015


Earnings per common unit
Basic:
Income from continuing operations	$	0.28		$	0.31
Income from discontinued operations		0.02			0.04


Income per common unit — basic	$	0.30		$	0.35


Diluted:
Income from continuing operations	$	0.27		$	0.31
Income from discontinued operations		0.02			0.04


Income per common unit — diluted	$	0.29		$	0.35


Distributions per common unit	$	0.475		$	0.475


Weighted average number of common units outstanding
Basic		116,587			109,785
Diluted		117,323			110,262

Net income allocated to general partners	$	33,445		$	36,671
Net income allocated to limited partners		6,421			6,597

See accompanying notes.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Unaudited and in thousands, except per unit amounts)


	Six Months Ended
	June 30, 2010			June 30, 2009
OPERATING REVENUE
Rental	$	260,578		$	257,064
Operating expense reimbursement		113,202			111,465

Total operating revenue		373,780			368,529


OPERATING EXPENSE
Rental property		75,073			73,151
Real estate taxes		44,910			43,546
General and administrative		27,441			27,212
Depreciation and amortization		86,804			84,575

Total operating expenses		234,228			228,484


Operating income		139,552			140,045

OTHER INCOME (EXPENSE)
Interest and other income		5,471			5,606
Debt extinguishment gain		—			1,092
Interest expense		(77,773	)		(73,946	)

Total other income (expense)		(72,302	)		(67,248	)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures		67,250			72,797
Gain (loss) on property dispositions		3,010			(2,344	)
Income taxes		(955	)		(344	)
Equity in earnings of unconsolidated joint ventures		1,177			1,609


Income from continuing operations		70,482			71,718

Discontinued operations (including net gain on property dispositions of $5,270 and $3,869 for the six months ended June 30, 2010 and 2009, respectively)		5,354			5,336


Net income		75,836			77,054

Noncontrolling interest — consolidated joint ventures		(136	)		420
Preferred unit distributions		(10,506	)		(10,506	)


Income available to common unitholders	$	65,194		$	66,968


Earnings per common unit
Basic:
Income from continuing operations	$	0.51		$	0.58
Income from discontinued operations		0.05			0.05


Income per common unit — basic	$	0.56		$	0.63


Diluted:
Income from continuing operations	$	0.51		$	0.57
Income from discontinued operations		0.05			0.05


Income per common unit — diluted	$	0.56		$	0.62


Distributions per common unit	$	0.95		$	0.95


Weighted average number of common units outstanding
Basic		116,464			107,263
Diluted		117,134			107,644

Net income allocated to general partners	$	62,996		$	64,560
Net income allocated to limited partners		12,704			12,914

See accompanying notes.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Unaudited and in thousands)


	Six Months Ended
	June 30, 2010			June 30, 2009
OPERATING ACTIVITIES
Net income	$	75,836		$	77,054
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		86,853			86,306
Amortization of deferred financing costs		3,354			2,439
Debt extinguishment gain		—			(1,092	)

Equity in earnings of unconsolidated joint ventures		(1,177	)		(1,609	)

Distributions from unconsolidated joint ventures		517			663
Gain on property dispositions		(8,280	)		(1,526	)
Noncash compensation		8,201			9,790
Changes in operating assets and liabilities:
Restricted cash		5,000			970
Accounts receivable		(609	)		6,208
Deferred rent receivable		(7,155	)		(5,677	)
Prepaid expenses and other assets		1,966			18,806
Accounts payable		5,718			2,979
Accrued interest		43			(5,159	)
Other liabilities		(22,059	)		(15,793	)

Net cash provided by operating activities		148,208			174,359


INVESTING ACTIVITIES
Investment in properties		(49,316	)		(35,812	)
Investments in and advances to unconsolidated joint ventures		(280	)		(4,017	)
Distributions from unconsolidated joint ventures		3,177			18,379
Net proceeds from disposition of properties/land		27,752			80,333
Net proceeds from (advances on) grant receivable/escrow		22,969			(9,848	)
Investment in development in progress		(7,919	)		(50,385	)
Investment in land held for development		(2,683	)		(26,980	)
Investment in deferred leasing costs		(14,467	)		(12,020	)

Net cash used in investing activities		(20,767	)		(40,350	)


FINANCING ACTIVITIES
Repayments of unsecured notes		—			(285,268	)
Proceeds from mortgage loans		635			317,213
Repayments of mortgage loans		(122,608	)		(43,029	)
Proceeds from credit facility		90,000			199,150
Repayments on credit facility		(180,000	)		(319,150	)
Increase in deferred financing costs		(8	)		(5,743	)
Capital contributions		11,691			218,970
Distributions to partners		(121,728	)		(110,802	)

Net cash used in financing activities		(322,018	)		(28,659	)


Net (decrease) increase in cash and cash equivalents		(194,577	)		105,350
(Decrease) increase in cash and cash equivalents related to foreign currency translation		(3,328	)		3,392
Cash and cash equivalents at beginning of period		237,446			15,794

Cash and cash equivalents at end of period	$	39,541		$	124,536

See accompanying notes.

Liberty Property Limited Partnership

Notes to Condensed Consolidated Financial Statements (Unaudited)
June 30, 2010

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 96.6% of the common equity of the Operating Partnership at June 30, 2010. 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. See a description of the Company’s markets in Note 2 to the Company’s financial statements.

Basis of Presentation
The accompanying unaudited condensed 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, 2009. 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 June 30, 2010							For the Three Months Ended June 30, 2009
				Weighted							Weighted
	Income			Average Units				Income			Average Units
	(Numerator)			(Denominator)		Per Unit		(Numerator)			(Denominator)		Per Unit
Income from continuing operations net of noncontrolling interest	$	37,388						$	38,744
Less: Preferred unit distributions		(5,253	)						(5,253	)


Basic income from continuing operations
Income from continuing operations available to common unitholders		32,135			116,587	$	0.28		33,491			109,785	$	0.31

Dilutive units for long-term compensation plans		—			736				—			477


Diluted income from continuing operations
Income from continuing operations available to common unitholders and assumed conversions		32,135			117,323	$	0.27		_33,491			110,262	$	0.31


Basic income from discontinued operations
Discontinued operations		2,478			116,587	$	0.02		4,524			109,785	$	0.04

Dilutive units for long-term compensation plans		—			736				—			477


Diluted income from discontinued operations
Discontinued operations		2,478			117,323	$	0.02		4,524			110,262	$	0.04


Basic income per common unit
Income available to common unitholders		34,613			116,587	$	0.30		38,015			109,785	$	0.35


Diluted units for long-term compensation plans		—			736				—			477


Diluted income per common unit
Income available to common unitholders and assumed conversions	$	34,613			117,323	$	0.29	$	38,015			110,262	$	0.35


	For the Six Months Ended June 30, 2010							For the Six Months Ended June 30, 2009
				Weighted							Weighted
	Income			Average Units				Income			Average Units
	(Numerator)			(Denominator)		Per Unit		(Numerator)			(Denominator)		Per Unit
Income from continuing operations net of noncontrolling interest	$	70,346						$	72,138
Less: Preferred unit distributions		(10,506	)						(10,506	)


Basic income from continuing operations

Income from continuing operations available to common unitholders		59,840			116,464	$	0.51		61,632			107,263	$	0.58

Dilutive units for long-term compensation plans		—			670				—			381


Diluted income from continuing operations
Income from continuing operations available to common unitholders and assumed conversions		59,840			117,134	$	0.51		_61,632			107,644	$	0.57


Basic income from discontinued operations
Discontinued operations		5,354			116,464	$	0.05		5,336			107,263	$	0.05

Dilutive units for long-term compensation plans		—			670				—			381


Diluted income from discontinued operations
Discontinued operations		5,354			117,134	$	0.05		5,336			107,644	$	0.05


Basic income per common unit

Income available to common unitholders		65,194			116,464	$	0.56		66,968			107,263	$	0.63


Diluted units for long-term compensation plans		—			670				—			381


Diluted income per common unit
Income available to common unitholders and assumed conversions	$	65,194			117,134	$	0.56	$	66,968			107,644	$	0.62

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 share for the three and six months ended June 30, 2010 were 1,513,000 and 1,473,000, respectively, as compared to 2,666,000 and 2,857,000, respectively, for the same periods in 2009.

During the three and six months ended June 30, 2010, 113,000 and 127,000 common shares, respectively, 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 loss for the three and six months ended June 30, 2010 was $1.1 million and $5.7 million, respectively, as compared to other comprehensive income of $10.8 million and $9.5 million, respectively, for the same periods in 2009. 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


Reportable Segments		Markets

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 JUNE 30, 2010


	Northeast
			Lehigh/										Phila-
	Southeastern		Central		New				Mid-				delphia/		United
	PA		PA		Jersey		Midwest		Atlantic		South		D.C.		Kingdom		Total
Operating revenue	$	44,161	$	24,546	$	7,833	$	19,377	$	33,733	$	47,063	$	7,255	$	1,010	$	184,978
Rental property expenses and real estate taxes		13,777		6,064		2,895		7,247		9,402		16,063		1,392		221		57,061


Property level operating income	$	30,384	$	18,482	$	4,938	$	12,130	$	24,331	$	31,000	$	5,863	$	789		127,917


Interest and other income																		2,681
Interest expense																		(39,144)
General and administrative																		(12,567)
Depreciation and amortization																		(43,873)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures																		35,014
Gain on property dispositions																		2,242
Income taxes																		(503)
Equity in earnings of unconsolidated joint ventures																		783
Discontinued operations																		2,478


Net income																	$	40,014

FOR THE THREE MONTHS ENDED JUNE 30, 2009


	Northeast
			Lehigh/										Phila-
	Southeastern		Central		New				Mid-				delphia/		United
	PA		PA		Jersey		Midwest		Atlantic		South		D.C.		Kingdom		Total
Operating revenue	$	45,131	$	24,583	$	7,531	$	20,725	$	33,283	$	46,121	$	5,048	$	1,135	$	183,557
Rental property expenses and real estate taxes		13,965		6,409		2,760		7,681		9,253		15,022		1,193		260		56,543


Property level operating income	$	31,166	$	18,174	$	4,771	$	13,044	$	24,030	$	31,099	$	3,855	$	875		127,014


Interest and other income																		2,511
Debt extinguishment gain																		563
Interest expense																		(36,755)
General and administrative																		(11,655)
Depreciation and amortization																		(42,005)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures																		39,673
Loss on property dispositions																		(2,050)
Income taxes																		(127)
Equity in earnings of unconsolidated joint ventures																		1,192
Discontinued operations																		4,524


Net income																	$	43,212

FOR THE SIX MONTHS ENDED JUNE 30, 2010


	Northeast
			Lehigh/										Phila-
	Southeastern		Central		New				Mid-				delphia/		United
	PA		PA		Jersey		Midwest		Atlantic		South		D.C.		Kingdom		Total
Operating revenue	$	90,414	$	50,249	$	15,837	$	38,875	$	69,160	$	92,972	$	14,228	$	2,045	$	373,780
Rental property expenses and real estate taxes		29,654		13,333		6,259		15,077		20,564		31,741		2,904		451		119,983


Property level operating income	$	60,760	$	36,916	$	9,578	$	23,798	$	48,596	$	61,231	$	11,324	$	1,594		253,797


Interest and other income																		5,471
Interest expense																		(77,773)
General and administrative																		(27,441)
Depreciation and amortization																		(86,804)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures																		67,250
Gain on property dispositions																		3,010
Income taxes																		(955)
Equity in earnings of unconsolidated joint ventures																		1,177
Discontinued operations																		5,354


Net income																	$	75,836

FOR THE SIX MONTHS ENDED JUNE 30, 2009


	Northeast
			Lehigh/										Phila-
	Southeastern		Central		New				Mid-				delphia/		United
	PA		PA		Jersey		Midwest		Atlantic		South		D.C.		Kingdom		Total
Operating revenue	$	91,858	$	49,626	$	15,345	$	41,389	$	67,175	$	91,117	$	9,783	$	2,236	$	368,529
Rental property expenses and real estate taxes		29,519		13,978		5,928		15,258		19,977		29,174		2,373		490		116,697


Property level operating income	$	62,339	$	35,648	$	9,417	$	26,131	$	47,198	$	61,943	$	7,410	$	1,746		251,832


Interest and other income																		5,606
Debt extinguishment gain																		1,092
Interest expense																		(73,946)
General and administrative																		(27,212)
Depreciation and amortization																		(84,575)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures																		72,797
Loss on property dispositions																		(2,344)
Income taxes																		(344)
Equity in earnings of unconsolidated joint ventures																		1,609
Discontinued operations																		5,336


Net income																	$	77,054

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						Six Months Ended
	June 30, 2010			June 30, 2009			June 30, 2010			June 30, 2009

Revenues	$	309		$	3,991		$	822		$	9,359
Operating expenses		(144	)		(1,281	)		(527	)		(3,421	)
Interest expense		(22	)		(845	)		(43	)		(2,337	)
Depreciation and amortization		(73	)		(1,011	)		(168	)		(2,134	)

Income before property dispositions	$	70		$	854		$	84		$	1,467

Asset Impairment
During the three and six months ended June 30, 2010, the Company recognized impairment charges of $400,000 related to a portfolio of properties in the Company’s Philadelphia/D.C. segment. During the three and six months ended June 30, 2009, the Company recognized impairments totaling $3.9 million and $4.5 million, respectively. For the three months ended June 30, 2009, $1.1 million in impairment related to a property in the Northeast segment, $331,000 related to a property in the Midwest segment, and $2.4 million related to a property in the Philadelphia/D.C. segment. For the six months ended June 30, 2009, $1.1 million in impairment related to a property in the Northeast segment, $113,000 related to a parcel of land in the Northeast segment, $89,000 related to a portfolio of properties in the Mid-Atlantic segment, $822,000 related to properties in the Midwest segment and $2.4 million related to a property in the Philadelphia/D.C. segment.

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 June 30, 2010 have the same economic characteristics as common shares of the Trust. The 3,943,224 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 3,943,224 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 3,943,224 outstanding common units at June 30, 2010 based on the closing price of the shares of the Company at June 30, 2010 was $113.8 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

Note 6: Disclosure of Fair Value of Financial Instruments

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 June 30, 2010, the Company owned and operated 346 industrial and 291 office properties (the “Wholly Owned Properties in Operation”) totaling 64.5 million square feet. In addition, as of June 30, 2010, the Company owned one property under development, which when completed is expected to comprise 75,000 square feet (the “Wholly Owned Property under Development”), and 1,343 acres of developable land, substantially all of which is zoned for commercial use. Additionally, as of June 30, 2010, the Company had an ownership interest, through unconsolidated joint ventures, in 48 industrial and 49 office properties totaling 14.2 million square feet (the “JV Properties in Operation” and, together with the Wholly Owned Properties in Operation, the “Properties in Operation”), and one property under development, which when completed is expected to comprise 176,000 square feet (the “JV Property under Development” and, together with the Wholly Owned Property under Development, the “Properties under Development”). 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. Continued weakness in the economy has had a negative impact on the Company’s business. Although credit market conditions have somewhat improved for the Company, continued general credit constraints in the economy, as well as persistent high levels of unemployment, present challenges relating to the pricing of commercial real estate and demand for the Company’s products.

Consistent with the current reduced level of economic growth in the United States, rental demand for the Properties in Operation remained weak for the three months ended June 30, 2010 even though improved when compared to the three months ended June 30, 2009. The Company leased 4.1 million square feet in its Properties in Operation during the three months ended June 30, 2010 and attained occupancy of 90.2% for the Wholly Owned Properties in Operation and 81.5% for the JV Properties in Operation for a combined occupancy of 88.7% for the Properties in Operation, all as of that date. At December 31, 2009, occupancy for the Wholly Owned Properties in Operation was 89.5% and for the JV Properties in Operation was 87.7% for a combined occupancy for the Properties in Operation of 89.2%. The Company believes that straight line rents on renewal and replacement leases for 2010 will on average be 10% to 15% lower than rents on expiring leases. Furthermore, the Company believes that average occupancy for its Properties in Operation will not increase or decrease by more than 1% for 2010 compared to 2009.

WHOLLY OWNED CAPITAL ACTIVITY

Acquisitions

The Company did not acquire any operating properties during the six months ended June 30, 2010. For 2010, the Company anticipates that wholly owned property acquisitions will range from no acquisitions to acquisitions of up to $100 million.

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 June 30, 2010, the Company realized proceeds of $10.2 million from the sale of two operating properties representing 72,000 square feet and 12 acres of land. During the six months ended June 30, 2010, the Company realized proceeds of $16.5 million from the sale of four operating properties representing 150,000 square feet and 12 acres of land. The Company’s original guidance for 2010 suggested that it would realize proceeds of approximately $75 million to $125 million from the sale of operating properties. The Company currently believes that it will not reach the low end of this range.

Development

During the three months ended June 30, 2010, the Company brought into service one Wholly Owned Property under Development representing 211,000 square feet and a Total Investment, as defined below, of $45.7 million, and did not initiate any development. During the six months ended June 30, 2010, the Company brought into service two Wholly Owned Properties under Development representing 306,000 square feet and a Total Investment of $70.5 million, and did not initiate any development. As of June 30, 2010, the projected Total Investment of the Wholly Owned Property under Development was $12.4 million. For 2010, the Company expects to bring into service operating properties representing between $75 million and $100 million of Total Investment. Although the Company continues to pursue development opportunities, current market conditions are not generally favorable for speculative development. Any development starts for 2010 likely will be substantially pre-leased.

The “Total Investment” for a Property is defined as the Property’s purchase price plus closing costs (for development properties and land) 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 and six months ended June 30, 2010, none of the unconsolidated joint ventures in which the Company held an interest acquired any properties. For 2010, the Company believes that none of the unconsolidated joint ventures in which the Company holds an interest will acquire any properties.

Dispositions

During the three and six months ended June 30, 2010, none of the unconsolidated joint venture in which the Company held an interest disposed of any properties. For 2010, the Company does not anticipate that any unconsolidated joint ventures in which it holds an interest will dispose of any operating properties.

Development

During the three and six months ended June 30, 2010, an unconsolidated joint ventures in which the Company held an interest brought one JV Property under Development into service representing 464,000 square feet and a Total Investment of $25.1 million. As of June 30, 2010, the projected Total Investment of the JV Property under Development was $134.0 million. For 2010, the Company expects unconsolidated joint ventures in which it holds an interest to bring into service between $125 million and $175 million of Total Investment in operating properties.

PROPERTIES IN OPERATION

The composition of the Company’s Properties in Operation as of June 30, 2010 and 2009 was as follows (in thousands, except dollars and percentages):


	Net Rent
	Per Square Foot				Total Square Feet				Percent Occupied
	June 30,				June 30,				June 30,
	2010		2009		2010		2009		2010			2009

Wholly Owned Properties in Operation:
Industrial-Distribution	$	4.37	$	4.34		31,572		31,502		90.8	%		88.5	%
Industrial-Flex	$	9.00	$	9.18		11,233		11,497		88.5	%		87.9	%
Office	$	14.35	$	14.35		21,734		21,272		90.3	%		92.1	%

	$	8.52	$	8.60		64,539		64,271		90.2	%		89.6	%


Joint Venture Properties in Operation:
Industrial-Distribution	$	3.86	$	4.23		9,505		8,316		77.3	%		87.7	%
Industrial-Flex	$	22.03	$	27.86		171		171		81.9	%		81.3	%
Office	$	23.54	$	25.00		4,574		4,575		90.1	%		89.9	%

	$	11.06	$	11.91		14,250		13,062		81.5	%		88.4	%


Properties in Operation:
Industrial-Distribution	$	4.27	$	4.32		41,077		39,818		87.7	%		88.3	%
Industrial-Flex	$	9.18	$	9.43		11,404		11,668		88.4	%		87.8	%
Office	$	15.94	$	16.20		26,308		25,847		90.2	%		91.7	%

	$	8.94	$	9.15		78,789		77,333		88.7	%		89.4	%

Geographic segment data for the three months ended June 30, 2010 and 2009 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, 2009 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 June 30, 2010, 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 and six months ended June 30, 2010 with the results of operations of the Company for the three and six months ended June 30, 2009. As a result of the varying levels of development, acquisition and disposition activities by the Company in 2010 and 2009, 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 condensed consolidated financial statements and notes included elsewhere in this report.

Comparison of Three and Six Months Ended June 30, 2010 to Three and Six Months Ended June 30, 2009

Overview

The Company’s average gross investment in operating real estate owned for the three months ended June 30, 2010 increased to $5,191.6 million from $4,971.1 million for the three months ended June 30, 2009. This increase in operating real estate resulted in increases in rental revenue, operating expense reimbursement, real estate taxes and depreciation and amortization expense. For the six months ended June 30, 2010, the Company’s average gross investment in operating real estate owned increased to $5,146.0 million from $4,945.6 million for the six months ended June 30, 2009. This increase in operating real estate resulted in increases in rental revenue, operating expense reimbursement, rental property expenses, real estate taxes and depreciation and amortization expense.

Total operating revenue increased to $185.0 million for the three months ended June 30, 2010 from $183.6 million for the three months ended June 30, 2009. The $1.4 million increase was primarily due to the increase in investment in operating real estate and an increase in “Termination Fees,” which totaled $1.5 million for the three months ended June 30, 2010 as compared to $0.8 million for the same period in 2009. Total operating revenue increased to $373.8 million for the six months ended June 30, 2010 from $368.5 million for the six months ended June 30, 2009. The $5.3 million increase was primarily due to the increase in investment in operating real estate and an increase in “Termination Fees,” which totaled $3.2 million for the six months ended June 30, 2010 as compared to $1.1 million for the same period in 2009. 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.

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			Six Months Ended				Percentage
	June 30,				Increase			June 30,				Increase
	2010		2009		(Decrease)			2010		2009		(Decrease)
Northeast
- Southeastern PA	$	30,384	$	31,166		(2.5	%)	$	60,760	$	62,339		(2.5	%)
- Lehigh/Central PA		18,482		18,174		1.7	%		36,916		35,648		3.6	%
- New Jersey		4,938		4,771		3.5	%		9,578		9,417		1.7	%
Midwest		12,130		13,044		(7.0%	) (1)		23,798		26,131		(8.9%	) (1)
Mid-Atlantic		24,331		24,030		1.3	%		48,596		47,198		3.0	%
South		31,000		31,099		(0.3	%)		61,231		61,943		(1.1	%)

Philadelphia		5,863		3,855		52.1%	(2)		11,324		7,410		52.8%	(2)
United Kingdom		789		875		(9.8	%)		1,594		1,746		(8.7	%)

Total property level operating income	$	127,917	$	127,014		0.7	%	$	253,797	$	251,832		0.8	%


(1)		The change was primarily due to a decrease in occupancy. This decrease was partially offset by an increase in average gross investment in operating real estate and an increase in rental rates in 2010.

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

Same Store

Property level operating income, exclusive of Termination Fees, for the Same Store properties decreased to $120.1 million for the three months ended June 30, 2010 from $124.1 million for the three months ended June 30, 2009, on a straight line basis (which recognizes rental revenue evenly over the life of the lease), and decreased to $118.2 million for the three months ended June 30, 2010 from $120.3 million for the three months ended June 30, 2009 on a cash basis. These decreases of 3.2% and 1.8%, respectively, are primarily due to a decrease in occupancy in the Company’s office portfolio.

Property level operating income, exclusive of Termination Fees, for the Same Store properties decreased to $238.8 million for the six months ended June 30, 2010 from $247.3 million for the six months ended June 30, 2009, on a straight line basis (which recognizes rental revenue evenly over the life of the lease), and decreased to $235.0 million for the six months ended June 30, 2010 from $239.8 million for the six months ended June 30, 2009 on a cash basis. These decreases of 3.4% and 2.0%, respectively, are primarily due to a decrease in occupancy in the Company’s office portfolio.

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 621 properties totaling approximately 61.4 million square feet owned on January 1, 2009, excluding properties sold through June 30, 2010.

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 and six months ended June 30, 2010 and 2009. 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						Six Months Ended
	June 30, 2010			June 30, 2009			June 30, 2010			June 30, 2009
Same Store:
Rental revenue	$	122,698		$	126,478		$	245,150		$	252,757
Operating expenses:
Rental property expense		34,155			35,107			73,720			74,137
Real estate taxes		21,095			20,847			42,331			41,770
Operating expense recovery		(52,605	)		(53,546	)		(109,703	)		(110,404	)

Unrecovered operating expenses		2,645			2,408			6,348			5,503


Property level operating income		120,053			124,070			238,802			247,254
Less straight line rent		1,841			3,752			3,778			7,462


Cash basis property level operating income	$	118,212		$	120,318		$	235,024		$	239,792


Reconciliation of non-GAAP financial measure — Same Store:
Cash basis property level operating income	$	118,212		$	120,318		$	235,024		$	239,792
Straight line rent		1,841			3,752			3,778			7,462

Property level operating income		120,053			124,070			238,802			247,254
Property level operating income — properties purchased or developed subsequent to January 1, 2009		6,395			2,119			11,768			3,453
Termination fees		1,469			825			3,227			1,125
General and administrative expense		(12,567	)		(11,655	)		(27,441	)		(27,212	)
Depreciation and amortization expense		(43,873	)		(42,005	)		(86,804	)		(84,575	)
Other income (expense)		(36,463	)		(33,681	)		(72,302	)		(67,248	)
Gain (loss) on property dispositions		2,242			(2,050	)		3,010			(2,344	)
Income taxes		(503	)		(127	)		(955	)		(344	)
Equity in earnings of unconsolidated joint ventures		783			1,192			1,177			1,609
Discontinued operations (1)		2,478			4,524			5,354			5,336


Net income	$	40,014		$	43,212		$	75,836		$	77,054


(1)		Includes Termination Fees of $227,000 for the three and six months ended June 30, 2009.

General and Administrative

General and administrative expenses increased to $12.6 million for the three months ended June 30, 2010 compared to $11.7 million for the three months ended June 30, 2009 and increased to $27.4 million for the six months ended June 30, 2010 compared to $27.2 million for the six months ended June 30, 2009. These increases were primarily due to a decrease in costs capitalized related to development activity. These increases for the six-month periods were offset by a decrease in expenses associated with the Company’s Long Term Incentive Compensation Plan.

Depreciation and Amortization

Depreciation and amortization increased to $43.9 million for the three months ended June 30, 2010 from $42.0 million for the three months ended June 30, 2009 and $86.8 million for the six months ended June 30, 2010 from $84.6 million for the six months ended June 30, 2009. These increases were primarily due to the increased investment in operating real estate.

Interest Expense

Interest expense increased to $39.1 million for the three months ended June 30, 2010 from $36.8 million for the three months ended June 30, 2009. This increase was primarily related to the prepayment of $119.3 million of mortgage loans during the three months ended June 30, 2010. The Company incurred a $1.2 million prepayment penalty and wrote off $936,000 in deferred financing costs in conjunction with the prepayment of these loans. The increase was also related to a decrease in interest capitalized due to a decrease in development activity. The effect of the loan prepayment and the decrease in interest capitalized was partially offset by a decrease in interest expense associated with the decrease in the average debt outstanding to $2,297.7 million for the three months ended June 30, 2010 from $2,513.2 million for the three months ended June 30, 2009. The weighted average interest rate remained relatively unchanged at 6.3% for the three months ended June 30, 2010 compared to 6.4% for the three months ended June 30, 2009. Interest expense increased to $77.8 million for the six months ended June 30, 2010 from $73.9 million for the six months ended June 30, 2009. This increase was primarily related to the loan prepayment noted above and a decrease in interest capitalized due to a decrease in development activity. The effect of the loan prepayment and the decrease in interest capitalized was partially offset by a decrease in interest expense associated with the decrease in the average debt outstanding to $2,350.8 million for the six months ended June 30, 2010 from $2,538.8 million for the six months ended June 30, 2009. The weighted average interest rate remained unchanged at 6.3% for both periods.

Interest expense allocated to discontinued operations for the three months ended June 30, 2010 and 2009 was $22,000 and $845,000, respectively, and for the six months ended June 30, 2010 and 2009 was $43,000 and $2.3 million, respectively. These decreases were due to the decrease in the level of dispositions in 2010 compared to 2009.

Other

Gain (loss) on property dispositions increased to a gain of $2.2 million for the three months ended June 30, 2010 from a loss of $2.1 million for the three months ended June 30, 2009 and to a gain of $3.0 million for the six months ended June 30, 2010 from a loss of $2.3 million for the six months ended June 30, 2009. These increases were primarily due to impairments recognized on certain of the Company’s properties in 2009 in connection with sales activities.

During the three months ended June 30, 2009, the Company purchased $3.5 million principal amount of its 7.25% March 2011 senior unsecured notes and $4.9 million principal amount of its 6.375% August 2012 senior unsecured notes. These notes were purchased at an aggregate $0.6 million discount. During the six months ended June 30, 2009, the Company purchased $6.9 million principal amount of its 8.50% August 2010 senior unsecured notes, $3.5 million principal amount of its 7.25% March 2011 senior unsecured notes and $4.9 million principal amount of its 6.375% August 2012 senior unsecured notes. These notes were purchased at an aggregate $1.1 million discount. These discounts are included as a debt extinguishment gain in the Company’s statements of operations. There were no similar transactions during the three and six months ended June 30, 2010.

Income from discontinued operations decreased to $2.5 million for the three months ended June 30, 2010 from $4.5 million for the three months ended June 30, 2009 and increased to $5.4 million for the six months ended June 30, 2010 from $5.3 million for the six months ended June 30, 2009. The decrease for the three month periods was due to a decrease in gains recognized on sales which were $2.4 million for the three months ended June 30, 2010 and $3.7 million for the three months ended June 30, 2009. This increase for the six month periods was due to an increase in gains recognized on sales which were $5.3 million for the six months ended June 30, 2010 compared to $3.9 million for the six months ended June 30, 2009.

As a result of the foregoing, the Company’s net income decreased to $40.0 million for the three months ended June 30, 2010 from $43.2 million for the three months ended June 30, 2009 and decreased to $75.8 million for the six months ended June 30, 2010 from $77.1 million for the six months ended June 30, 2009.

Liquidity and Capital Resources

Overview

The Company has historically accessed capital primarily from the public unsecured debt markets and the equity markets. The uncertainty in the global credit markets that existed in early 2009 has eased considerably for issuers such as the Company. The Company believes that its traditional access to capital through the unsecured debt market is currently available. Additionally, the Company’s sources of capital include proceeds from the disposition of properties, equity contributions from joint venture partners and net cash provided by operating activities. The Company also expects to incur variable rate debt, including borrowings under the Company’s credit facility, from time to time.

Activity

As of June 30, 2010, the Company had cash and cash equivalents of $75.9 million, including $36.4 million in restricted cash.

Net cash flow provided by operating activities decreased to $148.2 million for the six months ended June 30, 2010 from $174.4 million for the six months ended June 30, 2009. This $26.2 million decrease was primarily due to a decrease in operating results and fluctuations in operating assets and liabilities during the respective periods. The decrease in operating results is due to a decrease in same store performance which is primarily attributable to the decrease in occupancy, primarily in the office portfolio. 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. To date during 2010 the performance of the Company’s business is generally consistent with its expectations. The Company anticipates moderate increases in occupancy during the second half of 2010 and further increases in occupancy in 2011. Currently the amount the Company distributes as dividends to its shareholders exceeds the net cash provided by its operating activities less costs associated with lease transactions. The Company believes that the anticipated increases in occupancy in the remainder of 2010 and 2011 should provide for sufficient net cash to cover the cost of the dividend at some point in 2011. However, should this increased occupancy not occur or our operating results are otherwise adversely affected, the Company might need to re-evaluate the amount of the quarterly dividend.

Net cash used in investing activities was $20.8 million for the six months ended June 30, 2010 compared to $40.4 million for the six months ended June 30, 2009. This $19.6 million decrease primarily resulted from the reduction of expenditures on the Company’s development pipeline and land held for development. Net cash used in investing activities also decreased due to the change in net proceeds received from (advances on) a grant receivable and an escrow in 2010. Offsetting these decreases was a decrease in net proceeds from the disposition of properties and land.

Net cash used in financing activities was $322.0 million for the six months ended June 30, 2010 compared to $28.7 million for the six months ended June 30, 2009. This $293.3 million increase was primarily due to the net proceeds received in 2009 from the issuance of shares pursuant to the Company’s continuous equity offering program. Additionally during 2010 the Company prepaid $119.3 million of mortgage loans and repaid its credit facility in the net amount of $90 million with cash on hand. 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 and acquisitions with long-term capital sources and proceeds from the disposition of properties. For the three months ended June 30, 2010, a portion of these activities were funded through a $600 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. (“Moody’s”), Standard and Poor’s Ratings Group (“S&P”) and Fitch, Inc. (“Fitch”). The current ratings for the Company’s senior unsecured debt are Baa2, BBB and BBB+ from Moody’s, S&P and Fitch, respectively. At these ratings, the interest rate for borrowings under the Credit Facility is 65 basis points over LIBOR. The Company has exercised its one year renewal option and the Credit Facility now expires in January 2011. The Company is currently in negotiations for a credit facility to replace the expiring Credit Facility. In light of the anticipated demands of the Company’s capital plan, the Company expects to reduce the amount of credit facility to approximately $500 million. A closing on the replacement credit facility is expected to take place in the third quarter of 2010. Although still in negotiation, the Company anticipates that the interest rate on borrowings under the replacement credit facility will be higher than the interest rate on the expiring Credit Facility. Similar facilities that other borrowers have recently obtained have required rates equal to 200-300 basis points over LIBOR.

Additionally, the Company has entered into an agreement to fund its planned improvements for the Kings Hill Phase 2 land development project. At June 30, 2010, the Company hadn’t 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 June 30, 2010 the Company’s debt to gross assets ratio was 37.5% and for the six months ended June 30, 2010 the fixed charge coverage ratio was 2.6x. 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 June 30, 2010, $352.0 million in mortgage loans and $1,842.9 million in unsecured notes were outstanding with a weighted average interest rate of 6.41%. The interest rates on $2,151.3 million of mortgage loans and unsecured notes are fixed and range from 5.00% to 8.75%. For $43.6 million of mortgage loans, the interest rate floats at a spread to LIBOR. The interest rate on these loans at June 30, 2010 was 5.15%. The weighted average remaining term for the mortgage loans and unsecured notes is 4.3 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 June 30, 2010 are as follows (in thousands, except percentages):


	MORTGAGES											WEIGHTED
	PRINCIPAL		PRINCIPAL			UNSECURED		CREDIT				AVERAGE
	AMORTIZATION		MATURITIES			NOTES		FACILITY		TOTAL		INTEREST RATE
2010 (6 months)	$	3,217	$	4,736		$	169,739	$	—	$	177,692		8.37	%
2011		5,948		10,511			246,500		50,000		312,959		6.09	%
2012		4,605		72,433	(1)		230,100		—		307,138		6.29	%
2013		4,027		4,510			—		—		8,537		5.79	%
2014		4,398		2,684			200,000		—		207,082		5.67	%
2015		3,932		44,469			300,000		—		348,401		5.25	%
2016		2,461		182,318			300,000		—		484,779		6.11	%
2017		1,770		—			296,543		—		298,313		6.62	%
2018 & thereafter		—		—			100,000		—		100,000		7.50	%

	$	30,358	$	321,661		$	1,842,882	$	50,000	$	2,244,901		6.29	%


(1)		There are two one — year extensions for $42,310 of mortgages.

General

The Company has continued to focus on the performance of the Same Store portfolio. In addition, the Company has continued to pursue development and acquisition opportunities and the strategic disposition of certain properties. The Company endeavors to maintain high occupancy levels while increasing rental rates and controlling costs, though the current economic environment and weak real estate fundamentals have pressured occupancy and created a declining rental rate environment.

The expiring square feet and annual net rent by year for the Properties in Operation as of June 30, 2010 are as follows (in thousands except number of tenants and % of Annual Rent):


	Industrial-Distribution									Industrial-Flex									Office									Total
	Number						% of			Number						% of			Number						% of			Number						% of
	of		Square		Annual		Annual			of		Square		Annual		Annual			of		Square		Annual		Annual			of		Square		Annual		Annual
	Tenants		Feet		Rent		Rent			Tenants		Feet		Rent		Rent			Tenants		Feet		Rent		Rent			Tenants		Feet		Rent		Rent
Wholly Owned Properties in Operation:
2010		21		806	$	3,419		2.3	%		61		710	$	6,265		6.3	%		159		1,216	$	15,270		4.8	%		241		2,732	$	24,954		4.4	%
2011		61		3,026		13,563		9.1	%		131		1,412		12,424		12.4	%		252		1,918		26,827		8.3	%		444		6,356		52,814		9.2	%
2012		54		5,032		22,920		15.5	%		125		1,715		15,907		15.9	%		253		2,332		38,754		12.0	%		432		9,079		77,581		13.6	%
2013		47		2,808		13,389		9.0	%		102		1,621		15,674		15.6	%		201		2,323		37,494		11.7	%		350		6,752		66,557		11.7	%
2014		34		2,741		13,817		9.3	%		69		964		9,954		9.9	%		147		2,798		43,464		13.5	%		250		6,503		67,235		11.8	%
2015		33		4,070		18,847		12.7	%		63		1,045		10,746		10.7	%		135		2,536		36,490		11.3	%		231		7,651		66,083		11.6	%
2016		17		2,062		10,345		7.0	%		25		709		7,673		7.7	%		57		1,656		29,368		9.1	%		99		4,427		47,386		8.3	%
2017		12		1,761		8,981		6.0	%		26		701		7,707		7.7	%		30		647		11,097		3.4	%		68		3,109		27,785		4.9	%
2018		13		1,731		10,983		7.4	%		11		344		2,926		2.9	%		26		930		17,778		5.5	%		50		3,005		31,687		5.5	%
2019		10		1,323		7,745		5.2	%		4		247		3,248		3.2	%		29		1,500		30,433		9.5	%		43		3,070		41,426		7.2	%
Thereafter		16		3,318		24,446		16.5	%		12		476		7,707		7.7	%		44		1,767		35,136		10.9	%		72		5,561		67,289		11.8	%


Total		318		28,678	$	148,455		100.0	%		629		9,944	$	100,231		100.0	%		1,333		19,623	$	322,111		100.0	%		2,280		58,245	$	570,797		100.0	%


Joint Venture Properties in Operation:
2010		3		263	$	1,216		3.5	%		—		—	$	—		0.0	%		38		207	$	4,047		3.4	%		41		470	$	5,263		3.3	%
2011		10		1,027		3,874		11.3	%		1		11		281		7.7	%		36		479		12,236		10.3	%		47		1,517		16,391		10.5	%
2012		8		356		1,614		4.7	%		5		68		1,717		47.4	%		20		219		5,106		4.3	%		33		643		8,437		5.4	%
2013		7		936		3,616		10.6	%		—		—		—		0.0	%		13		146		3,570		3.0	%		20		1,082		7,186		4.6	%
2014		7		1,125		5,194		15.2	%		2		25		674		18.6	%		20		394		10,534		8.9	%		29		1,544		16,402		10.5	%
2015		5		741		3,326		9.7	%		—		—		—		0.0	%		22		198		4,609		3.9	%		27		939		7,935		5.1	%
2016		7		552		3,114		9.1	%		1		36		953		26.3	%		17		506		12,500		10.5	%		25		1,094		16,567		10.6	%
2017		4		720		3,350		9.8	%		—		—		—		0.0	%		5		200		4,695		4.0	%		9		920		8,045		5.1	%
2018		5		726		3,964		11.6	%		—		—		—		0.0	%		12		48		1,665		1.4	%		17		774		5,629		3.6	%
2019		1		500		3,151		9.2	%		—		—		—		0.0	%		15		203		5,853		4.9	%		16		703		9,004		5.7	%
Thereafter		3		401		1,818		5.3	%		—		—		—		0.0	%		16		1,522		53,918		45.4	%		19		1,923		55,736		35.6	%


Total		60		7,347	$	34,237		100.0	%		9		140	$	3,625		100.0	%		214		4,122	$	118,733		100.0	%		283		11,609	$	156,595		100.0	%

The scheduled deliveries of the 251,000 square feet of Properties under Development as of June 30, 2010 are as follows (dollars in thousands):


		Square Feet
	Scheduled	Industrial-		Industrial						Percent			Total
	In-Service Date	Distribution		- Flex		Office		Total		Leased			Investment
Wholly Owned Property under Development	3rd Quarter 2010		—		—		75,000		75,000		100.0	%	$	12,384

	TOTAL		—		—		75,000		75,000		100.0	%	$	12,384


Joint Venture Property under Development	3rd Quarter 2010		—		—		176,058		176,058		53.2	%	$	133,984

	TOTAL		—		—		176,058		176,058		53.2	%	$	133,984


Total Properties under Development	TOTAL		—		—		251,058		251,058		67.2	%	$	146,368

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 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 (“FFO”) available to common shareholders also does not represent cash flows generated from operating, investing or financing activities as defined by GAAP. Funds from operations available to common shareholders for the three and six months ended June 30, 2010 and 2009 are as follows (in thousands, except per share amounts):


	Three Months Ended						Six Months Ended
	June 30, 2010			June 30, 2009			June 30, 2010			June 30, 2009
Reconciliation of net income to FFO — basic

Net Income available to common shareholders	$	33,445		$	36,671		$	62,996		$	64,560


Basic — Income available to common shareholders		33,445			36,671			62,996			64,560

*Basic — income available to common shareholders per weighted average share*	$	0.30		$	0.35		$	0.56		$	0.63

Adjustments:
Depreciation and amortization of unconsolidated joint ventures		3,395			4,132			7,454			8,122
Depreciation and amortization		43,271			42,364			85,720			85,386
Gain on property dispositions		(2,746	)		(5,067	)		(5,410	)		(5,375	)
Noncontrolling interest share in addback for depreciation and amortization and gain on property dispositions		(1,476	)		(1,467	)		(2,954	)		(3,204	)

Funds from operations available to common shareholders — basic	$	75,889		$	76,633		$	147,806		$	149,489


*Basic Funds from operations available to common shareholders per weighted average share*	$	0.67		$	0.72		$	1.31		$	1.45

Reconciliation of net income to FFO — diluted:

Net Income	$	33,445		$	36,671		$	62,996		$	64,560

Diluted — income available to common shareholders		33,445			36,671			62,996			64,560
*Diluted — income available to common shareholders per weighted average share*	$	0.29		$	0.35		$	0.56		$	0.62

Adjustments:
Depreciation and amortization of unconsolidated joint ventures		3,395			4,132			7,454			8,122
Depreciation and amortization		43,271			42,364			85,720			85,386
Gain on property dispositions		(2,746	)		(5,067	)		(5,410	)		(5,375	)
Noncontrolling interest less preferred share distributions		1,168			1,345			2,198			2,409


Funds from operations available to common shareholders — diluted	$	78,533		$	79,445		$	152,958		$	155,102


*Diluted Funds from operations available to common shareholders per weighted average share*	$	0.67		$	0.72		$	1.31		$	1.44

Reconciliation of weighted average shares:
Weighted average common shares — all basic calculations		112,644			105,768			112,512			103,244
Dilutive shares for long term compensation plans		736			477			670			381


Diluted shares for net income calculations		113,380			106,245			113,182			103,625
Weighted average common units		3,943			4,017			3,952			4,019


Diluted shares for Funds from operations calculations		117,323			110,262			117,134			107,644

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, 2009.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’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 Exchange Act) as of the end of the period covered by this report. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that its disclosure controls and procedures, as of the end of the period covered by this report, are functioning effectively to provide reasonable assurance that information required to be disclosed by the Company 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 Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls

There were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2010 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company has been substituted for Republic Property Trust, a Maryland real estate investment trust, and Republic Property Limited Partnership, a Delaware limited partnership, (together, “Republic”) as a party to certain litigation as a result of the Company’s acquisition of Republic on October 4, 2007.

The litigation is described in the Company’s 2009 Annual Report on Form 10-K. On July 12, 2010, the Superior Court for the District of Columbia, in the matter of Steven A. Grigg v. Liberty Property Trust, granted the Company’s Motion for Summary Judgment in part and denied it in part. The result of the action was to dismiss Mr. Grigg’s claims that he was entitled to a severance payment under his employment agreement because (a) he had terminated his employment contract for “Good Reason” (as defined in the employment contract) or (b) the Company had terminated his employment “Without Cause.” However, the Court did find that a genuine issue of material fact exists as to Mr. Grigg’s claim as to a breach by the Company of its duty of good faith and fair dealing under the employment contract. Mr. Grigg has petitioned the court to reconsider its ruling. Other than as noted above, there were no material developments in this litigation during the three months ended June 30, 2010.

While management currently believes that resolving these matters will not have a material adverse impact on our financial position, our results of operations or our cash flows, the litigation noted above is subject to inherent uncertainties and management’s view of these matters may change in the future. Were an unfavorable final outcome to occur, there exists the possibility of a material adverse impact on our financial position and the results of operations for the period in which the effect becomes capable of being reasonably estimated.

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, 2009.

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

Note to Exhibits: Exhibits 10.18 and 10.19 were filed with the Registrants’ Annual Report on Form 10-K for the fiscal year ended December 31, 2007. The Registrants are refiling these exhibits solely to include certain schedules and exhibits that were omitted from the exhibits as filed. Confidential treatment has been granted by the Securities and Exchange Commission with respect to portions of these exhibits pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended, and the Registrants have submitted an application for confidential treatment with respect to portions of the schedules and exhibits that have been added in this filing.


10.18 +		Agreement of Limited Partnership of Liberty Washington, L.P. by and between Liberty Washington Venture, LLC and New York State Common Retirement Fund dated as of October 4, 2007.

10.19 +		Contribution Agreement among New York State Common Retirement Fund and Liberty Property Limited Partnership and Liberty Washington, L.P. dated October 4, 2007.

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.

+		The Registrants have submitted an application for confidential treatment with respect to portions of this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

EXHIBIT INDEX


EXHIBIT NO.				DESCRIPTION

10.18 +				Agreement of Limited Partnership of Liberty Washington, L.P. by and between Liberty Washington Venture, LLC and New York State Common Retirement Fund dated as of October 4, 2007.

10.19 +				Contribution Agreement among New York State Common Retirement Fund and Liberty Property Limited Partnership and Liberty Washington, L.P. dated October 4, 2007.

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.)


EXHIBIT NO.				DESCRIPTION

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).


+		The Registrants have submitted an application for confidential treatment with respect to portions of this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.


Index	Page

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Condensed consolidated balance sheets of Liberty Property Trust at June 30, 2010 and December 31, 2009		4

Condensed consolidated statements of operations of Liberty Property Trust for the three months ended June 30, 2010 and June 30, 2009		5

Condensed consolidated statements of operations of Liberty Property Trust for the six months ended June 30, 2010 and June 30, 2009		6

Condensed consolidated statement of equity of Liberty Property Trust for the six months ended June 30, 2010		7

Condensed consolidated statements of cash flows of Liberty Property Trust for the six months ended June 30, 2010 and June 30, 2009		8

Notes to condensed consolidated financial statements of Liberty Property Trust		9

Condensed consolidated balance sheets of Liberty Property Limited Partnership at June 30, 2010 and December 31, 2009		18

Condensed consolidated statements of operations of Liberty Property Limited Partnership for the three months ended June 30, 2010 and June 30, 2009		19

Condensed consolidated statements of operations of Liberty Property Limited Partnership for the six months ended June 30, 2010 and June 30, 2009		20

Condensed consolidated statement of equity of Liberty Property Limited Partnership for the six months ended June 30, 2010		21

Condensed consolidated statements of cash flows of Liberty Property Limited Partnership for the six months ended June 30, 2010 and June 30, 2009		22

Notes to condensed consolidated financial statements of Liberty Property Limited Partnership		23

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		32

Item 3. Quantitative and Qualitative Disclosures about Market Risk		44

Item 4. Controls and Procedures		44


Index	Page

PART II. OTHER INFORMATION		45

Item 1. Legal Proceedings		45

Item 1A. Risk Factors		45

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		45

Item 3. Defaults Upon Senior Securities		45

Item 4. Removed and Reserved		45

Item 5. Other Information		45

Item 6. Exhibits		46

Signatures for Liberty Property Trust		48

Signatures for Liberty Property Limited Partnership		49

Exhibit Index		50

Exhibit 10.18
Exhibit 10.19
Exhibit 12.1
Exhibit 31.1
Exhibit 31.2
Exhibit 31.3
Exhibit 31.4
Exhibit 32.1
Exhibit 32.2
Exhibit 32.3
Exhibit 32.4
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


Non-cash activity	2010		2009

Write-off of fully depreciated property and deferred costs	$	16,912	$	17,476


Non-cash activity	2010		2009
Write-off of fully depreciated property and deferred costs	$	16,912	$	17,476


/s/ WILLIAM P. HANKOWSKY		August 6, 2010
William P. Hankowsky		Date
President and Chief Executive Officer

/s/ GEORGE J. ALBURGER, JR.		August 6, 2010
George J. Alburger, Jr.		Date
Executive Vice President and Chief Financial Officer


				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, 2010	$	2,122,295		$	72,294		$	287,959		$	621	$	2,483,169

Contributions from partners		19,859			—			—			—		19,859
Distributions to partners		(107,546	)		(3,959	)		(10,506	)		—		(122,011	)
Foreign currency translation adjustment		(5,534	)		(193	)		—			—		(5,727	)
Net income		62,996			2,198			10,506			136		75,836
Redemption of limited partners common units for common shares		1,227			(1,227	)		—			—		—


Balance at June 30, 2010	$	2,093,297		$	69,113		$	287,959		$	757	$	2,451,126