Form 10-Q

Large Accelerated Filer þ

Accelerated Filer o

Non-Accelerated Filer o

Smaller Reporting Company o

(Do not check if a smaller

reporting company)

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 September 30, 2010


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

For the transition period from to

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

1-13132 (Liberty Property Limited Partnership)

LIBERTY PROPERTY TRUST
LIBERTY PROPERTY LIMITED PARTNERSHIP

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


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

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

500 Chesterfield Parkway
Malvern, Pennsylvania		19355

(Address of Principal Executive Offices)		(Zip Code)

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

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

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

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

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 November 2, 2010, 114,209,108 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)


	September 30, 2010			December 31, 2009
	(Unaudited)
ASSETS
Real estate:
Land and land improvements	$	863,143		$	848,988
Building and improvements		4,406,194			4,283,250
Less accumulated depreciation		(1,064,018	)		(970,935	)

Operating real estate		4,205,319			4,161,303

Development in progress		—			66,714
Land held for development		209,668			218,633

Net real estate		4,414,987			4,446,650

Cash and cash equivalents		111,941			237,446
Restricted cash		41,163			42,232
Accounts receivable		9,600			6,057
Deferred rent receivable		106,540			95,527
Deferred financing and leasing costs, net of accumulated amortization (2010, $118,298; 2009, $108,390)		142,218			134,309
Investments in and advances to unconsolidated joint ventures		172,936			175,584
Assets held for sale		5,457			5,564
Prepaid expenses and other assets		81,197			85,574

Total assets	$	5,086,039		$	5,228,943


LIABILITIES
Mortgage loans	$	338,405		$	473,993
Unsecured notes		2,023,143			1,842,882
Credit facility		—			140,000
Accounts payable		42,735			31,195
Accrued interest		25,915			31,251
Dividend and distributions payable		55,913			55,402
Other liabilities		152,952			171,051

Total liabilities		2,639,063			2,745,774


EQUITY
Liberty Property Trust shareholders’ equity
Common shares of beneficial interest, $.001 par value, 183,987,000 shares authorized; 115,017,633 (includes 1,249,909 in treasury) and 113,875,211 (includes 1,249,909 in treasury) shares issued and outstanding as of September 30, 2010 and December 31, 2009, respectively		115			114
Additional paid-in capital		2,543,049			2,509,704
Accumulated other comprehensive income		364			2,339
Distributions in excess of net income		(401,857	)		(337,911	)
Common shares in treasury, at cost, 1,249,909 shares as of September 30, 2010 and December 31, 2009		(51,951	)		(51,951	)

Total Liberty Property Trust shareholders’ equity		2,089,720			2,122,295

Noncontrolling interest — operating partnership
3,943,224 and 4,011,354 common units outstanding as of September 30, 2010 and December 31, 2009, respectively		68,629			72,294
9,740,000 preferred units outstanding as of September 30, 2010 and December 31, 2009		287,959			287,959
Noncontrolling interest — consolidated joint ventures		668			621

Total equity		2,446,976			2,483,169

Total liabilities and equity	$	5,086,039		$	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
	September 30, 2010			September 30, 2009
OPERATING REVENUE
Rental	$	131,655		$	129,848
Operating expense reimbursement		57,182			56,511

Total operating revenue		188,837			186,359


OPERATING EXPENSE
Rental property		38,181			35,957
Real estate taxes		22,731			22,852
General and administrative		12,634			11,246
Depreciation and amortization		43,178			43,039

Total operating expenses		116,724			113,094


Operating income		72,113			73,265

OTHER INCOME (EXPENSE)
Interest and other income		2,487			2,624
Debt extinguishment gain		—			455
Interest expense		(34,896	)		(36,533	)


Total other income (expense)		(32,409	)		(33,454	)


Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures		39,704			39,811

Gain on property dispositions		691			100
Income taxes		(475	)		(86	)
Equity in earnings of unconsolidated joint ventures		385			515


Income from continuing operations		40,305			40,340

Discontinued operations (including net gain on property dispositions of $221 and $5,131 for the three months ended September 30, 2010 and 2009, respectively)		701			10,404

Net income		41,006			50,744
Noncontrolling interest — operating partnership		(6,451	)		(6,818	)
Noncontrolling interest — consolidated joint ventures		89			(23	)


Net income available to common shareholders	$	34,644		$	43,903


Earnings per common share
Basic:
Income from continuing operations	$	0.30		$	0.30
Income from discontinued operations		0.01			0.09


Income per common share — basic	$	0.31		$	0.39


Diluted:
Income from continuing operations	$	0.29		$	0.30
Income from discontinued operations		0.01			0.09


Income per common share — diluted	$	0.30		$	0.39


Distributions per common share	$	0.475		$	0.475


Weighted average number of common shares outstanding
Basic		113,077			111,351
Diluted		113,773			111,926

Amounts attributable to common shareholders
Income from continuing operations	$	33,966		$	33,857
Discontinued operations		678			10,046

Net income available to common shareholders	$	34,644		$	43,903

See accompanying notes.

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


	Nine Months Ended
	September 30, 2010			September 30, 2009
OPERATING REVENUE
Rental	$	391,574		$	386,138
Operating expense reimbursement		170,250			167,796

Total operating revenue		561,824			553,934


OPERATING EXPENSE
Rental property		113,093			108,968
Real estate taxes		67,512			66,279
General and administrative		40,074			38,453
Depreciation and amortization		129,845			127,478

Total operating expenses		350,524			341,178


Operating income		211,300			212,756

OTHER INCOME (EXPENSE)
Interest and other income		7,956			8,227
Debt extinguishment gain		—			1,547
Interest expense		(112,468	)		(110,898	)

Total other income (expense)		(104,512	)		(101,124	)


Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures		106,788			111,632

Gain (loss) on property dispositions		3,701			(2,244	)
Income taxes		(1,430	)		(430	)
Equity in earnings of unconsolidated joint ventures		1,562			2,124


Income from continuing operations		110,621			111,082

Discontinued operations (including net gain on property dispositions of $5,491 and $9,000 for the nine months ended September 30, 2010 and 2009, respectively)		6,221			16,716


Net income		116,842			127,798
Noncontrolling interest — operating partnership		(19,155	)		(19,732	)
Noncontrolling interest — consolidated joint ventures		(47	)		397


Net income available to common shareholders	$	97,640		$	108,463


Earnings per common share
Basic:
Income from continuing operations	$	0.82		$	0.87
Income from discontinued operations		0.05			0.15


Income per common share — basic	$	0.87		$	1.02


Diluted:
Income from continuing operations	$	0.81		$	0.87
Income from discontinued operations		0.05			0.15


Income per common share — diluted	$	0.86		$	1.02


Distributions per common share	$	1.425		$	1.425


Weighted average number of common shares outstanding
Basic		112,708			105,989
Diluted		113,388			106,441

Amounts attributable to common shareholders
Income from continuing operations	$	91,628		$	92,354
Discontinued operations		6,012			16,109

Net income available to common shareholders	$	97,640		$	108,463

See accompanying notes.

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


														Total			Noncontroll-			Noncontroll-
	Common				Accumulated									Liberty			ing interest-			ing interest-			Noncontroll-
	Shares of		Additional		Other			Distributions			Common			Property Trust			operating			operating			ing Interest-
	Beneficial		Paid-In		Comprehensive			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		22,107		—			—			—			22,108			—			—			—		22,108

Net income		—		—		—			97,640			—			97,640			3,396			15,759			47		116,842

Distributions		—		—		—			(161,586	)		—			(161,586	)		(5,764	)		(15,759	)		—		(183,109	)

Noncash compensation		—		10,011		—			—			—			10,011			—			—			—		10,011

Foreign currency translation adjustment		—		—		(1,975	)		—			—			(1,975	)		(70	)		—			—		(2,045	)

Redemption of noncontrolling interests — common units		—		1,227		—			—			—			1,227			(1,227	)		—			—		—


Balance at September 30, 2010	$	115	$	2,543,049	$	364		$	(401,857	)	$	(51,951	)	$	2,089,720		$	68,629		$	287,959		$	668	$	2,446,976

See accompanying notes.

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


	Nine Months Ended
	September 30, 2010			September 30, 2009
OPERATING ACTIVITIES
Net income	$	116,842		$	127,798
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		130,158			129,745
Amortization of deferred financing costs		4,735			3,685
Debt extinguishment gain		—			(1,547	)
Equity in earnings of unconsolidated joint ventures		(1,562	)		(2,124	)
Distributions from unconsolidated joint ventures		517			663
Gain on property dispositions		(9,192	)		(6,757	)
Noncash compensation		10,011			11,027
Changes in operating assets and liabilities:
Restricted cash		744			6,635
Accounts receivable		(3,553	)		5,427
Deferred rent receivable		(11,124	)		(10,499	)
Prepaid expenses and other assets		(18,431	)		3,755
Accounts payable		11,669			15,264
Accrued interest		(5,336	)		(8,680	)
Other liabilities		(4,200	)		(28,156	)

Net cash provided by operating activities		221,278			246,236


INVESTING ACTIVITIES
Investment in properties		(90,982	)		(42,017	)
Investments in and advances to unconsolidated joint ventures		(1,426	)		(4,021	)
Distributions from unconsolidated joint ventures		4,774			18,549
Net proceeds from disposition of properties/land		23,990			141,752
Net proceeds from (advances on) grant receivable/escrow		20,609			(13,594	)
Investment in development in progress		(9,265	)		(74,850	)
Investment in land held for development		(4,779	)		(28,074	)
Investment in deferred leasing costs		(23,414	)		(18,339	)

Net cash used in investing activities		(80,493	)		(20,594	)


FINANCING ACTIVITIES

Net proceeds from issuance of Common Shares		22,123			293,324
Proceeds from unsecured notes		350,000			—
Repayments of unsecured notes		(169,739	)		(288,725	)
Proceeds from mortgage loans		743			317,379
Repayments of mortgage loans		(136,331	)		(51,738	)
Proceeds from credit facility		338,500			199,150
Repayments on credit facility		(478,500	)		(319,150	)
Increase in deferred financing costs		(9,217	)		(4,651	)
Distribution paid on Common Shares		(161,043	)		(148,499	)
Distribution paid on units		(21,570	)		(21,554	)

Net cash used in financing activities		(265,034	)		(24,464	)


Net (decrease) increase in cash and cash equivalents		(124,249	)		201,178
(Decrease) increase in cash and cash equivalents related to foreign currency translation		(1,256	)		2,430
Cash and cash equivalents at beginning of period		237,446			15,794

Cash and cash equivalents at end of period	$	111,941		$	219,402

See accompanying notes.

Liberty Property Trust

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 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 96.7% of the common equity of the Operating Partnership at September 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						For the Three Months Ended
	September 30, 2010						September 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	$	33,966		113,077	$	0.30	$	33,857		111,351	$	0.30

Dilutive shares for long-term compensation plans		—		696				—		575


Diluted income from continuing operations
Income from continuing operations net of noncontrolling interest and assumed conversions		33,966		113,773	$	0.29		33,857		111,926	$	0.30


Basic income from discontinued operations
Discontinued operations net of noncontrolling interest		678		113,077	$	0.01		10,046		111,351	$	0.09

Dilutive shares for long-term compensation plans		—		696				—		575


Diluted income from discontinued operations
Discontinued operations net of noncontrolling interest		678		113,773	$	0.01		10,046		111,926	$	0.09


Basic income per common share
Net income available to common shareholders		34,644		113,077	$	0.31		43,903		111,351	$	0.39

Dilutive shares for long-term compensation plans		—		696				—		575


Diluted income per common share
Net income available to common shareholders and assumed conversions	$	34,644		113,773	$	0.30	$	43,903		111,926	$	0.39


	For the Nine Months Ended						For the Nine Months Ended
	September 30, 2010						September 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	$	91,628		112,708	$	0.82	$	92,354		105,989	$	0.87

Dilutive shares for long-term compensation plans		—		680				—		452


Diluted income from continuing operations
Income from continuing operations net of noncontrolling interest and assumed conversions		91,628		113,388	$	0.81		92,354		106,441	$	0.87


Basic income from discontinued operations
Discontinued operations net of noncontrolling interest		6,012		112,708	$	0.05		16,109		105,989	$	0.15

Dilutive shares for long-term compensation plans		—		680				—		452


Diluted income from discontinued operations
Discontinued operations net of noncontrolling interest		6,012		113,388	$	0.05		16,109		106,441	$	0.15


Basic income per common share
Net income available to common shareholders		97,640		112,708	$	0.87		108,463		105,989	$	1.02

Dilutive shares for long-term compensation plans		—		680				—		452


Diluted income per common share
Net income available to common shareholders and assumed conversions	$	97,640		113,388	$	0.86	$	108,463		106,441	$	1.02

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 nine months ended September 30, 2010 were 2,239,000 and 1,433,000, respectively, as compared to 2,454,000 and 2,661,000, respectively, for the same periods in 2009.

During the three and nine months ended September 30, 2010, 14,000 and 141,000 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 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 income consists solely of the foreign currency translation adjustments described above. Other comprehensive income for the three months ended September 30, 2010 was $3.7 million and for the nine months ended September 30, 2010 was a loss of $2.0 million, as compared to other comprehensive loss of $2.4 million and income of $7.0 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 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 SEPTEMBER 30, 2010


	Northeast
			Lehigh/										Phila-
	Southeastern		Central		New								delphia/		United
	PA		PA		Jersey		Midwest		Mid-Atlantic		South		D.C.		Kingdom		Total
Operating revenue	$	45,637	$	26,460	$	8,165	$	19,539	$	33,067	$	47,674	$	7,214	$	1,081	$	188,837
Rental property expenses and real estate taxes		14,602		6,588		3,364		7,741		10,368		16,333		1,680		236		60,912


Property level operating income	$	31,035	$	19,872	$	4,801	$	11,798	$	22,699	$	31,341	$	5,534	$	845		127,925


Interest and other income																		2,487
Interest expense																		(34,896	)
General and administrative																		(12,634	)
Depreciation and amortization																		(43,178	)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures																		39,704
Gain on property dispositions																		691
Income taxes																		(475	)
Equity in earnings of unconsolidated joint ventures																		385
Discontinued operations																		701


Net income																	$	41,006

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009


	Northeast
			Lehigh/										Phila-
	Southeastern		Central		New								delphia/		United
	PA		PA		Jersey		Midwest		Mid-Atlantic		South		D.C.		Kingdom		Total
Operating revenue	$	45,104	$	25,082	$	7,491	$	20,898	$	34,419	$	46,842	$	5,437	$	1,086	$	186,359
Rental property expenses and real estate taxes		14,291		5,425		3,194		8,394		10,016		15,890		1,382		217		58,809

Property level operating income	$	30,813	$	19,657	$	4,297	$	12,504	$	24,403	$	30,952	$	4,055	$	869		127,550


Interest and other income																		2,624
Debt extinguishment gain																		455
Interest expense																		(36,533	)
General and administrative																		(11,246	)
Depreciation and amortization																		(43,039	)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures																		39,811
Gain on property dispositions																		100
Income taxes																		(86	)
Equity in earnings of unconsolidated joint ventures																		515
Discontinued operations																		10,404


Net income																	$	50,744

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010


	Northeast
			Lehigh/										Phila-
	Southeastern		Central		New								delphia/		United
	PA		PA		Jersey		Midwest		Mid-Atlantic		South		D.C.		Kingdom		Total
Operating revenue	$	136,052	$	76,709	$	24,002	$	58,414	$	101,587	$	140,492	$	21,442	$	3,126	$	561,824
Rental property expenses and real estate taxes		44,256		19,822		9,623		22,768		30,837		48,028		4,584		687		180,605


Property level operating income	$	91,796	$	56,887	$	14,379	$	35,646	$	70,750	$	92,464	$	16,858	$	2,439		381,219


Interest and other income																		7,956
Interest expense																		(112,468	)
General and administrative																		(40,074	)
Depreciation and amortization																		(129,845	)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures																		106,788
Gain on property dispositions																		3,701
Income taxes																		(1,430	)
Equity in earnings of unconsolidated joint ventures																		1,562
Discontinued operations																		6,221


Net income																	$	116,842

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009


	Northeast
			Lehigh/										Phila-
	Southeastern		Central		New								delphia/		United
	PA		PA		Jersey		Midwest		Mid-Atlantic		South		D.C.		Kingdom		Total
Operating revenue	$	136,961	$	74,549	$	22,836	$	62,286	$	100,957	$	137,803	$	15,220	$	3,322	$	553,934
Rental property expenses and real estate taxes		43,810		19,315		9,122		23,615		29,902		45,021		3,755		707		175,247


Property level operating income	$	93,151	$	55,234	$	13,714	$	38,671	$	71,055	$	92,782	$	11,465	$	2,615		378,687


Interest and other income																		8,227
Debt extinguishment gain																		1,547
Interest expense																		(110,898	)
General and administrative																		(38,453	)
Depreciation and amortization																		(127,478	)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures																		111,632
Loss on property dispositions																		(2,244	)
Income taxes																		(430	)
Equity in earnings of unconsolidated joint ventures																		2,124
Discontinued operations																		16,716


Net income																	$	127,798

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 nine months ended September 30, 2010 were $3.2 million and $17.5 million, respectively, as compared to $61.0 million and $130.5 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						Nine Months Ended
	September 30,			September 30,			September 30,			September 30,
	2010			2009			2010			2009

Revenues	$	738		$	7,639		$	2,355		$	17,955
Operating expenses		(111	)		(1,143	)		(929	)		(4,828	)
Interest expense		(78	)		(556	)		(322	)		(2,474	)
Depreciation and amortization		(69	)		(667	)		(374	)		(2,937	)

Income before property dispositions	$	480		$	5,273		$	730		$	7,716

One property totaling 100,000 square feet in the Company’s Northeast segment, one property totaling 27,000 square feet in the Company’s Midwest segment, and one property totaling 50,000 square feet in the Company’s South segment are considered to be held for sale as of September 30, 2010. Two held for sale properties were sold subsequent to September 30, 2010 for proceeds of $2.7 million.

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 nine months ended September 30, 2010, the Company recognized impairment charges of $782,000 and $1.2 million, respectively. For the three months ended September 30, 2010, $443,000 in impairment related to a property in the Midwest segment, $201,000 related to a property in the South segment and $138,000 related to a portfolio of properties in the Philadelphia/D.C. segment. During the three and nine months ended September 30, 2009, the Company recognized impairment charges of $4.8 million and $9.3 million, respectively. For the three months ended September 30, 2009, $4.3 million in impairment related to a property in the Mid-Atlantic segment, $185,000 related to a property in the South segment and $300,000 related to a property in the Philadelphia/D.C. segment. For the nine months ended September 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, $822,000 related to properties in the Midwest segment, $4.4 million related to properties in the Mid-Atlantic segment, $185,000 related to a property in the South segment and $2.7 million related to a property in the Philadelphia/D.C. segment.

For the three months ended September 30, 2010, $443,000 in impairment related to properties sold was included in discontinued operations in the Company’s statement of operations and $339,000 was included in gain on property dispositions in the Company’s statement of operations. For the nine months ended September 30, 2010, $443,000 in impairment was included in discontinued operations in the Company’s statement of operations and $739,000 was included in gain (loss) on property dispositions in the Company’s statement of operations. For the three months ended September 30, 2009, $4.5 million in impairment related to properties sold was included in discontinued operations in the Company’s statement of operations and $300,000 was included in gain on property dispositions in the Company’s statement of operations. For the nine months ended September 30, 2009, $6.0 million in impairment related to properties sold was included in discontinued operations in the Company’s statement of operations and $3.3 million was included in 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 September 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 September 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 common shares of the Company at September 30, 2010 was $125.8 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 unsecured 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.

Senior Notes

In August 2010, the Company used proceeds from its unsecured credit facility to repay $169.7 million principal value of 8.5% senior notes.

In September 2010, the Company issued $350 million of ten-year, 4.75% senior unsecured notes. The net proceeds from this issuance were used to repay borrowings under the Company’s unsecured credit facility and for general corporate purposes.

Credit Facility

In August 2010, The Company replaced its existing $600 million credit facility which was due in January 2011 with a new credit facility. The new facility is for $500 million. It matures in November 2013. Based upon the Company’s current credit ratings, borrowings under the new facility bear interest at LIBOR plus 230 basis points.

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 September 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 $179.5 million and $33.5 million at September 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 September 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 September 30, 2010 and current estimates of fair value may differ significantly from the amounts presented herein.

Note 7: Recently Issued Accounting Standards

Beginning with the first quarter of 2010, the Company is required to conduct an ongoing assessment to determine whether each entity in which it has an equity interest is a variable interest entity that should be consolidated if certain qualitative factors indicate that the Company has the controlling interest. This accounting change is required to be retroactively applied for all periods presented. The adoption of the requirement did not have a material impact on the Company’s financial statements.

Note 8: Supplemental Disclosure to Statements of Cash Flows

The following are supplemental disclosures to the statements of cash flows for the nine months ended September 30, 2010 and 2009 (amounts in thousands):


Non-cash activity	2010		2009

Write-off of fully depreciated property and deferred costs	$	31,610	$	56,171

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


	September 30, 2010			December 31, 2009
	(Unaudited)
ASSETS
Real estate:
Land and land improvements	$	863,143		$	848,988
Building and improvements		4,406,194			4,283,250
Less accumulated depreciation		(1,064,018	)		(970,935	)


Operating real estate		4,205,319			4,161,303

Development in progress		—			66,714
Land held for development		209,668			218,633


Net real estate		4,414,987			4,446,650

Cash and cash equivalents		111,941			237,446
Restricted cash		41,163			42,232
Accounts receivable		9,600			6,057
Deferred rent receivable		106,540			95,527
Deferred financing and leasing costs, net of accumulated amortization (2010, $118,298; 2009, $108,390)		142,218			134,309
Investments in and advances to unconsolidated joint ventures		172,936			175,584
Assets held for sale		5,457			5,564
Prepaid expenses and other assets		81,197			85,574


Total assets	$	5,086,039		$	5,228,943


LIABILITIES
Mortgage loans	$	338,405		$	473,993
Unsecured notes		2,023,143			1,842,882
Credit facility		—			140,000
Accounts payable		42,735			31,195
Accrued interest		25,915			31,251
Distributions payable		55,913			55,402
Other liabilities		152,952			171,051


Total liabilities		2,639,063			2,745,774

OWNERS’ EQUITY
General partner’s equity — common units, 115,017,633 and 113,875,211 units outstanding as of September 30, 2010 and December 31, 2009, respectively		2,089,720			2,122,295

Limited partners’ equity — 3,943,224 and 4,011,354 common units outstanding as of September 30, 2010 and December 31, 2009, respectively		68,629			72,294
— 9,740,000 preferred units outstanding as of September 30, 2010 and December 31, 2009		287,959			287,959
Noncontrolling interest — consolidated joint ventures		668			621


Total owners’ equity		2,446,976			2,483,169


Total liabilities and owners’ equity	$	5,086,039		$	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
	September 30, 2010			September 30, 2009
OPERATING REVENUE
Rental	$	131,655		$	129,848
Operating expense reimbursement		57,182			56,511

Total operating revenue		188,837			186,359


OPERATING EXPENSE
Rental property		38,181			35,957
Real estate taxes		22,731			22,852
General and administrative		12,634			11,246
Depreciation and amortization		43,178			43,039


Total operating expenses		116,724			113,094


Operating income		72,113			73,265

OTHER INCOME (EXPENSE)
Interest and other income		2,487			2,624
Debt extinguishment gain		—			455
Interest expense		(34,896	)		(36,533	)

Total other income (expense)		(32,409	)		(33,454	)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures		39,704			39,811
Gain on property dispositions		691			100
Income taxes		(475	)		(86	)
Equity in earnings of unconsolidated joint ventures		385			515


Income from continuing operations		40,305			40,340

Discontinued operations (including net gain on property dispositions of $221 and $5,131 for the three months ended September 30, 2010 and 2009, respectively)		701			10,404


Net income		41,006			50,744

Noncontrolling interest — consolidated joint ventures		89			(23	)
Preferred unit distributions		(5,253	)		(5,253	)


Income available to common unitholders	$	35,842		$	45,468


Earnings per common unit
Basic:
Income from continuing operations	$	0.30		$	0.30
Income from discontinued operations		0.01			0.09


Income per common unit — basic	$	0.31		$	0.39


Diluted:
Income from continuing operations	$	0.29		$	0.30
Income from discontinued operations		0.01			0.09


Income per common unit — diluted	$	0.30		$	0.39


Distributions per common unit	$	0.475		$	0.475


Weighted average number of common units outstanding
Basic		117,020			115,368
Diluted		117,716			115,943

Net income allocated to general partners	$	34,644		$	43,903
Net income allocated to limited partners		6,451			6,818

See accompanying notes.

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


	Nine Months Ended
	September 30, 2010			September 30, 2009
OPERATING REVENUE
Rental	$	391,574		$	386,138
Operating expense reimbursement		170,250			167,796

Total operating revenue		561,824			553,934


OPERATING EXPENSE
Rental property		113,093			108,968
Real estate taxes		67,512			66,279
General and administrative		40,074			38,453
Depreciation and amortization		129,845			127,478

Total operating expenses		350,524			341,178


Operating income		211,300			212,756

OTHER INCOME (EXPENSE)
Interest and other income		7,956			8,227
Debt extinguishment gain		—			1,547
Interest expense		(112,468	)		(110,898	)

Total other income (expense)		(104,512	)		(101,124	)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures		106,788			111,632
Gain (loss) on property dispositions		3,701			(2,244	)
Income taxes		(1,430	)		(430	)
Equity in earnings of unconsolidated joint ventures		1,562			2,124


Income from continuing operations		110,621			111,082

Discontinued operations (including net gain on property dispositions of $5,491 and $9,000 for the nine months ended September 30, 2010 and 2009, respectively)		6,221			16,716


Net income		116,842			127,798

Noncontrolling interest — consolidated joint ventures		(47	)		397
Preferred unit distributions		(15,759	)		(15,759	)


Income available to common unitholders	$	101,036		$	112,436


Earnings per common unit
Basic:
Income from continuing operations	$	0.82		$	0.87
Income from discontinued operations		0.05			0.15


Income per common unit — basic	$	0.87		$	1.02


Diluted:
Income from continuing operations	$	0.81		$	0.87
Income from discontinued operations		0.05			0.15


Income per common unit — diluted	$	0.86		$	1.02


Distributions per common unit	$	1.425		$	1.425


Weighted average number of common units outstanding
Basic		116,657			110,007
Diluted		117,337			110,459

Net income allocated to general partners	$	97,640		$	108,463
Net income allocated to limited partners		19,155			19,732

See accompanying notes.

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


	Nine Months Ended
OPERATING ACTIVITIES	September 30, 2010			September 30, 2009
Net income	$	116,842		$	127,798
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		130,158			129,745
Amortization of deferred financing costs		4,735			3,685
Debt extinguishment gain		—			(1,547	)
Equity in earnings of unconsolidated joint ventures		(1,562	)		(2,124	)
Distributions from unconsolidated joint ventures		517			663
Gain on property dispositions		(9,192	)		(6,757	)
Noncash compensation		10,011			11,027
Changes in operating assets and liabilities:
Restricted cash		744			6,635
Accounts receivable		(3,553	)		5,427
Deferred rent receivable		(11,124	)		(10,499	)
Prepaid expenses and other assets		(18,431	)		3,755
Accounts payable		11,669			15,264
Accrued interest		(5,336	)		(8,680	)
Other liabilities		(4,200	)		(28,156	)

Net cash provided by operating activities		221,278			246,236


INVESTING ACTIVITIES

Investment in properties		(90,982	)		(42,017	)
Investments in and advances to unconsolidated joint ventures		(1,426	)		(4,021	)
Distributions from unconsolidated joint ventures		4,774			18,549
Net proceeds from disposition of properties/land		23,990			141,752
Net proceeds from (advances on) grant receivable/escrow		20,609			(13,594	)
Investment in development in progress		(9,265	)		(74,850	)
Investment in land held for development		(4,779	)		(28,074	)
Investment in deferred leasing costs		(23,414	)		(18,339	)

Net cash used in investing activities		(80,493	)		(20,594	)


FINANCING ACTIVITIES
Proceeds from unsecured notes		350,000			—
Repayments of unsecured notes		(169,739	)		(288,725	)
Proceeds from mortgage loans		743			317,379
Repayments of mortgage loans		(136,331	)		(51,738	)
Proceeds from credit facility		338,500			199,150
Repayments on credit facility		(478,500	)		(319,150	)
Increase in deferred financing costs		(9,217	)		(4,651	)
Capital contributions		22,123			293,324
Distributions to partners		(182,613	)		(170,053	)

Net cash used in financing activities		(265,034	)		(24,464	)


Net (decrease) increase in cash and cash equivalents		(124,249	)		201,178
(Decrease) increase in cash and cash equivalents related to foreign currency translation		(1,256	)		2,430
Cash and cash equivalents at beginning of period		237,446			15,794

Cash and cash equivalents at end of period	$	111,941		$	219,402

See accompanying notes.

Liberty Property Limited Partnership

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

Note 1: Organization and Basis of Presentation

Organization

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							For the Three Months Ended
	September 30, 2010							September 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	$	40,394						$	40,317
Less: Preferred unit distributions		(5,253	)						(5,253	)


Basic income from continuing operations
Income from continuing operations available to common unitholders		35,141			117,020	$	0.30		35,064			115,368	$	0.30

Dilutive units for long-term compensation plans		—			696				—			575


Diluted income from continuing operations
Income from continuing operations available to common unitholders and assumed conversions		35,141			117,716	$	0.29		35,064			115,943	$	0.30


Basic income from discontinued operations
Discontinued operations		701			117,020	$	0.01		10,404			115,368	$	0.09

Dilutive units for long-term compensation plans		—			696				—			575


Diluted income from discontinued operations
Discontinued operations		701			117,716	$	0.01		10,404			115,943	$	0.09


Basic income per common unit
Income available to common unitholders		35,842			117,020	$	0.31		45,468			115,368	$	0.39


Diluted units for long-term compensation plans		—			696				—			575


Diluted income per common unit
Income available to common unitholders and assumed conversions	$	35,842			117,716	$	0.30	$	45,468			115,943	$	0.39


	For the Nine Months Ended							For the Nine Months Ended
	September 30, 2010							September 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	$	110,574						$	111,479
Less: Preferred unit distributions		(15,759	)						(15,759	)


Basic income from continuing operations
Income from continuing operations available to common unitholders		94,815			116,657	$	0.82		95,720			110,007	$	0.87

Dilutive units for long-term compensation plans		—			680				—			452


Diluted income from continuing operations
Income from continuing operations available to common unitholders and assumed conversions		94,815			117,337	$	0.81		95,720			110,459	$	0.87


Basic income from discontinued operations
Discontinued operations		6,221			116,657	$	0.05		16,716			110,007	$	0.15

Dilutive units for long-term compensation plans		—			680				—			452


Diluted income from discontinued operations
Discontinued operations		6,221			117,337	$	0.05		16,716			110,459	$	0.15


Basic income per common unit
Income available to common unitholders		101,036			116,657	$	0.87		112,436			110,007	$	1.02


Diluted units for long-term compensation plans		—			680				—			452


Diluted income per common unit
Income available to common unitholders and assumed conversions	$	101,036			117,337	$	0.86	$	112,436			110,459	$	1.02

During the three and nine months ended September 30, 2010, 14,000 and 141,000 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 income for the three months ended September 30, 2010 was $3.7 million and for the nine months ended September 30, 2010 was a loss of $2.0 million, as compared to other comprehensive loss of $2.4 million and income of $7.0 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 SEPTEMBER 30, 2010


	Northeast
			Lehigh/										Phila-
	Southeastern		Central		New								delphia/		United
	PA		PA		Jersey		Midwest		Mid-Atlantic		South		D.C.		Kingdom		Total
Operating revenue	$	45,637	$	26,460	$	8,165	$	19,539	$	33,067	$	47,674	$	7,214	$	1,081	$	188,837
Rental property expenses and real estate taxes		14,602		6,588		3,364		7,741		10,368		16,333		1,680		236		60,912


Property level operating income	$	31,035	$	19,872	$	4,801	$	11,798	$	22,699	$	31,341	$	5,534	$	845		127,925


Interest and other income																		2,487
Interest expense																		(34,896	)
General and administrative																		(12,634	)
Depreciation and amortization																		(43,178	)


Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures																		39,704
Gain on property dispositions																		691
Income taxes																		(475	)
Equity in earnings of unconsolidated joint ventures																		385
Discontinued operations																		701


Net income																	$	41,006

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009


	Northeast
			Lehigh/										Phila-
	Southeastern		Central										delphia/		United
	PA		PA		New Jersey		Midwest		Mid-Atlantic		South		D.C.		Kingdom		Total
Operating revenue	$	45,104	$	25,082	$	7,491	$	20,898	$	34,419	$	46,842	$	5,437	$	1,086	$	186,359
Rental property expenses and real estate taxes		14,291		5,425		3,194		8,394		10,016		15,890		1,382		217		58,809


Property level operating income	$	30,813	$	19,657	$	4,297	$	12,504	$	24,403	$	30,952	$	4,055	$	869		127,550


Interest and other income																		2,624
Debt extinguishment gain																		455
Interest expense																		(36,533	)
General and administrative																		(11,246	)
Depreciation and amortization																		(43,039	)


Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures																		39,811
Gain on property dispositions																		100
Income taxes																		(86	)
Equity in earnings of unconsolidated joint ventures																		515
Discontinued operations																		10,404


Net income																	$	50,744

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010


	Northeast
			Lehigh/										Phila-
	Southeastern		Central		New								delphia/		United
	PA		PA		Jersey		Midwest		Mid-Atlantic		South		D.C.		Kingdom		Total
Operating revenue	$	136,052	$	76,709	$	24,002	$	58,414	$	101,587	$	140,492	$	21,442	$	3,126	$	561,824
Rental property expenses and real estate taxes		44,256		19,822		9,623		22,768		30,837		48,028		4,584		687		180,605


Property level operating income	$	91,796	$	56,887	$	14,379	$	35,646	$	70,750	$	92,464	$	16,858	$	2,439		381,219


Interest and other income																		7,956
Interest expense																		(112,468	)
General and administrative																		(40,074	)
Depreciation and amortization																		(129,845	)


Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures																		106,788
Gain on property dispositions																		3,701
Income taxes																		(1,430	)
Equity in earnings of unconsolidated joint ventures																		1,562
Discontinued operations																		6,221


Net income																	$	116,842

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009


			Lehigh/										Phila-
	Southeastern		Central		New								delphia/		United
	PA		PA		Jersey		Midwest		Mid-Atlantic		South		D.C.		Kingdom		Total
Operating revenue	$	136,961	$	74,549	$	22,836	$	62,286	$	100,957	$	137,803	$	15,220	$	3,322	$	553,934
Rental property expenses and real estate taxes		43,810		19,315		9,122		23,615		29,902		45,021		3,755		707		175,247


Property level operating income	$	93,151	$	55,234	$	13,714	$	38,671	$	71,055	$	92,782	$	11,465	$	2,615		378,687


Interest and other income																		8,227
Debt extinguishment gain																		1,547
Interest expense																		(110,898	)
General and administrative																		(38,453	)
Depreciation and amortization																		(127,478	)


Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures																		111,632
Loss on property dispositions																		(2,244	)
Income taxes																		(430	)
Equity in earnings of unconsolidated joint ventures																		2,124
Discontinued operations																		16,716


Net income																	$	127,798

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						Nine Months Ended
	September 30,			September 30,			September 30,			September 30,
	2010			2009			2010			2009

Revenues	$	738		$	7,639		$	2,355		$	17,955
Operating expenses		(111	)		(1,143	)		(929	)		(4,828	)
Interest expense		(78	)		(556	)		(322	)		(2,474	)
Depreciation and amortization		(69	)		(667	)		(374	)		(2,937	)

Income before property dispositions	$	480		$	5,273		$	730		$	7,716

Asset Impairment

During the three and nine months ended September 30, 2010, the Company recognized impairment charges of $782,000 and $1.2 million, respectively. For the three months ended September 20, 2010, $443,000 in impairment related to a property in the Midwest segment, $201,000 related to a property in the South segment and $138,000 related to a portfolio of properties in the Philadelphia/D.C. segment. During the three and nine months ended September 30, 2009, the Company recognized impairment charges of $4.8 million and $9.3 million, respectively. For the three months ended September 30, 2009, $4.3 million in impairment related to a property in the Mid-Atlantic segment, $185,000 related to a property in the South segment and $300,000 related to a property in the Philadelphia/D.C. segment. For the nine months ended September 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, $822,000 related to properties in the Midwest segment, $4.4 million related to properties in the Mid-Atlantic segment, $185,000 related to a property in the South segment and $2.7 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 September 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 September 30, 2010 based on the closing price of the common shares of the Company at September 30, 2010 was $125.8 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

Mortgage Loans

Senior Notes

In August 2010, the Company used proceeds from its unsecured credit facility to repay $169.7 million principal value of 8.5% senior notes.

Credit Facility

Note 6: Disclosure of Fair Value of Financial Instruments

Note 7: Recently Issued Accounting Standards

Note 8: Supplemental Disclosure to Statements of Cash Flows

The following are supplemental disclosures to the statements of cash flows for the nine months ended September 30, 2010 and 2009 (amounts in thousands):


Non-cash activity	2010		2009
Write-off of fully depreciated property and deferred costs	$	31,610	$	56,171

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 September 30, 2010, the Company owned and operated 348 industrial and 292 office properties (the “Wholly Owned Properties in Operation”) totaling 65.3 million square feet. In addition, as of September 30, 2010, the Company owned 1,338 acres of developable land, substantially all of which is zoned for commercial use. Additionally, as of September 30, 2010, the Company had an ownership interest, through unconsolidated joint ventures, in 48 industrial and 50 office properties totaling 14.4 million square feet (the “JV Properties in Operation” and, together with the Wholly Owned Properties in Operation, the “Properties in Operation”). The Company also has an ownership interest through unconsolidated joint ventures in 627 acres of developable land, substantially all of which is zoned for commercial use.

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

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 September 30, 2010 even though improved when compared to the three months ended September 30, 2009. As of September 30, 2010, the Company attained occupancy of 90.2% for the Wholly Owned Properties in Operation and 83.5% for the JV Properties in Operation for a combined occupancy of 89.0% for the Properties in Operation. 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%.

GUIDANCE

The Company’s guidance for the balance of 2010 and 2011 is based on assumptions about the economy and real estate market fundamentals. The Company believes that average occupancy for its Properties in Operation will be flat or will increase by 2% for 2011 compared to 2010. The Company believes the increase in occupancy will be in the industrial properties and this increase will be partially offset by decreases in flex and office occupancy. Furthermore, the Company believes that straight line rents on renewal and replacement leases for the balance of 2010 will on average be 10% to 15% lower than rents on expiring leases and for 2011 will on average be 7% to 12% lower than rents on expiring leases.

The Company’s guidance for its 2010 and 2011 capital activity is as follows:


Category	2010 Guidance	2010 Revised Guidance	2011 Guidance
Wholly Owned Acquisitions	$25 - $75 million	$50 million	$25 - $75 million
Wholly Owned Dispositions	$75 - $125 million	$30 million	$50 - $100 million
Wholly Owned Development Deliveries	$75 - $100 million	$80 million	$—
Joint Venture Acquisitions	$—	$—	$0 - $100 million
Joint Venture Dispositions	$—	$—	$—
Joint Venture Development Deliveries	$125 - $175 million	$160 million	$—

WHOLLY OWNED CAPITAL ACTIVITY

Acquisitions

During the three and nine months ended September 30, 2010, the Company acquired three properties representing 941,000 square feet for a Total Investment, as defined below, of $38.4 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 September 30, 2010, the Company realized proceeds of $3.9 million from the sale of one operating property representing 220,000 square feet and five acres of land. During the nine months ended September 30, 2010, the Company realized proceeds of $20.5 million from the sale of five operating properties representing 370,000 square feet and 17 acres of land.

Development

During the three months ended September 30, 2010, the Company brought into service one Wholly Owned Property under Development representing 75,000 square feet and a Total Investment of $10.5 million, and did not initiate any development. During the nine months ended September 30, 2010, the Company brought into service three Wholly Owned Properties under Development representing 381,000 square feet and a Total Investment of $81.0 million, and did not initiate any development. As of September 30, 2010, the Company has no Wholly Owned Properties under Development. The Company continues to pursue development opportunities. Given current market conditions, new development for the balance of 2010 and 2011 will generally be build to suit or substantially pre-leased developments. Speculative development will be less likely and will need to be supported by strong local market conditions.

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 nine months ended September 30, 2010, none of the unconsolidated joint ventures in which the Company held an interest acquired any properties.

Dispositions

During the three and nine months ended September 30, 2010, none of the unconsolidated joint ventures in which the Company held an interest disposed of any properties.

Development

During the three months ended September 30, 2010, an unconsolidated joint venture in which the Company held an interest brought one JV Property under Development into service representing 176,000 square feet and a Total Investment of $134.0 million. During the nine months ended September 30, 2010, unconsolidated joint ventures in which the Company held an interest brought two JV Properties under Development into service representing 640,000 square feet and a Total Investment of $159.0 million. As of September 30, 2010, the Company has no JV Properties under Development.

PROPERTIES IN OPERATION

The composition of the Company’s Properties in Operation as of September 30, 2010 and 2009 was as follows (square feet in thousands):


	Net Rent
	Per Square Foot				Total Square Feet				Percent Occupied
	September 30,				September 30,				September 30,
	2010		2009		2010		2009		2010			2009
Wholly Owned Properties in Operation:
Industrial-Distribution	$	4.40	$	4.37		32,293		30,961		91.0	%		88.8	%
Industrial-Flex	$	9.20	$	9.08		11,234		11,403		87.2	%		89.2	%
Office	$	14.20	$	14.40		21,808		21,427		90.5	%		90.5	%

	$	8.48	$	8.62		65,335		63,791		90.2	%		89.4	%


Joint Venture Properties in Operation:
Industrial-Distribution	$	3.83	$	4.28		9,505		8,816		81.1	%		87.7	%
Industrial-Flex	$	23.17	$	24.41		171		171		82.0	%		93.6	%
Office	$	23.84	$	24.72		4,746		4,575		88.3	%		90.8	%

	$	11.01	$	11.60		14,422		13,562		83.5	%		88.8	%


Properties in Operation:
Industrial-Distribution	$	4.28	$	4.35		41,798		39,777		88.8	%		88.5	%
Industrial-Flex	$	9.40	$	9.32		11,405		11,574		87.1	%		89.2	%
Office	$	15.89	$	16.22		26,554		26,002		90.1	%		90.6	%

	$	8.91	$	9.14		79,757		77,353		89.0	%		89.3	%

Geographic segment data for the three months ended September 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 September 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 nine months ended September 30, 2010 with the results of operations of the Company for the three and nine months ended September 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 Nine Months Ended September 30, 2010 to Three and Nine Months Ended September 30, 2009

Overview

The Company’s average gross investment in operating real estate owned for the three months ended September 30, 2010 increased to $5,248.2 million from $5,041.9 million for the three months ended September 30, 2009. This increase in operating real estate resulted in increases in rental revenue, operating expense reimbursement, rental property expenses and depreciation and amortization expense. For the nine months ended September 30, 2010, the Company’s average gross investment in operating real estate owned increased to $5,175.4 million from $4,973.6 million for the nine months ended September 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 $188.8 million for the three months ended September 30, 2010 from $186.4 million for the three months ended September 30, 2009. The $2.4 million increase was primarily due to the increase in investment in operating real estate. Total operating revenue increased to $561.8 million for the nine months ended September 30, 2010 from $553.9 million for the nine months ended September 30, 2009. The $7.9 million increase was primarily due to the increase in investment in operating real estate and an increase in “Termination Fees,” which totaled $4.8 million for the nine months ended September 30, 2010 as compared to $2.7 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			Nine Months Ended				Percentage
	September 30,				Increase			September 30,				Increase
	2010		2009		(Decrease)			2010		2009		(Decrease)
Northeast
– Southeastern PA	$	31,035	$	30,813		0.7	%	$	91,796	$	93,151		(1.5	%)
– Lehigh/Central PA		19,872		19,657		1.1	%		56,887		55,234		3.0	%
– New Jersey		4,801		4,297		11.7	%(1)		14,379		13,714		4.8	%
Midwest		11,798		12,504		(5.6	%)(2)		35,646		38,671		(7.8	%)(2)
Mid-Atlantic		22,699		24,403		(7.0	%)(3)		70,750		71,055		(0.4	%)
South		31,341		30,952		1.3	%		92,464		92,782		(0.3	%)

Philadelphia		5,534		4,055		36.5	%(4)		16,858		11,465		47.0	%(1)
United Kingdom		845		869		(2.8	%)		2,439		2,615		(6.7	%)

Total property level operating income	$	127,925	$	127,550		0.3	%	$	381,219	$	378,687		0.7	%


(1)		The change was primarily due to an increase in average gross investment in operating real estate, occupancy and rental rates in 2010.

(2)		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.

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

(4)		The change was primarily due to an increase in average gross investment in operating real estate and rental rates in 2010.

Same Store

Property level operating income, exclusive of Termination Fees, for the Same Store properties decreased to $119.7 million for the three months ended September 30, 2010 from $124.4 million for the three months ended September 30, 2009, on a straight line basis (which recognizes rental revenue evenly over the life of the lease), and decreased to $117.9 million for the three months ended September 30, 2010 from $120.4 million for the three months ended September 30, 2009 on a cash basis. These decreases of 3.8% and 2.1%, respectively, are primarily due to a decrease in occupancy in the Company’s office and flex portfolios, and also due to reductions in rents.

Property level operating income, exclusive of Termination Fees, for the Same Store properties decreased to $358.0 million for the nine months ended September 30, 2010 from $371.1 million for the nine months ended September 30, 2009, on a straight line basis (which recognizes rental revenue evenly over the life of the lease), and decreased to $352.3 million for the nine months ended September 30, 2010 from $359.6 million for the nine months ended September 30, 2009 on a cash basis. These decreases of 3.5% and 2.0%, respectively, are primarily due to a decrease in occupancy in the Company’s office and flex portfolios.

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 620 properties totaling approximately 61.1 million square feet owned on January 1, 2009, excluding properties sold through September 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 nine months ended September 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						Nine Months Ended
	September 30,			September 30,			September 30,			September 30,
	2010			2009			2010			2009
Same Store:
Rental revenue	$	123,017		$	125,958		$	367,619		$	378,167
Operating expenses:
Rental property expense		36,999			35,615			110,687			109,724
Real estate taxes		21,323			21,496			63,606			63,218
Operating expense recovery		(55,036	)		(55,595	)		(164,648	)		(165,912	)

Unrecovered operating expenses		3,286			1,516			9,645			7,030


Property level operating income		119,731			124,442			357,974			371,137
Less straight line rent		1,841			4,035			5,655			11,533


Cash basis property level operating income	$	117,890		$	120,407		$	352,319		$	359,604


Reconciliation of non-GAAP financial measure – Same Store:
Cash basis property level operating income	$	117,890		$	120,407		$	352,319		$	359,604
Straight line rent		1,841			4,035			5,655			11,533

Property level operating income		119,731			124,442			357,974			371,137
Property level operating income — properties purchased or developed subsequent to January 1, 2009		6,625			1,596			18,408			5,060
Less: Property level operating income – properties held for sale at September 30, 2010		(18	)		(86	)		23			(233	)
Termination fees		1,587			1,598			4,814			2,723
General and administrative expense		(12,634	)		(11,246	)		(40,074	)		(38,453	)
Depreciation and amortization expense		(43,178	)		(43,039	)		(129,845	)		(127,478	)
Other income (expense)		(32,409	)		(33,454	)		(104,512	)		(101,124	)
Gain (loss) on property dispositions		691			100			3,701			(2,244	)
Income taxes		(475	)		(86	)		(1,430	)		(430	)
Equity in earnings of unconsolidated joint ventures		385			515			1,562			2,124
Discontinued operations (1)		701			10,404			6,221			16,716


Net income	$	41,006		$	50,744		$	116,842		$	127,798


(1)		Includes Termination Fees of $399,000 for the three and nine months ended September 30, 2010, $4.6 million for the three months ended September 30, 2009, and $4.8 million for the nine months ended September 30, 2009.

General and Administrative

General and administrative expenses increased to $12.6 million for the three months ended September 30, 2010 compared to $11.2 million for the three months ended September 30, 2009 and increased to $40.1 million for the nine months ended September 30, 2010 compared to $38.5 million for the nine months ended September 30, 2009. The increase for the three month period was primarily due to a decrease in costs capitalized related to development activity as well as increases in compensation costs. The increase for the nine month period was primarily due to a decrease in costs capitalized related to development activity. The increase for the nine month periods was partially offset by a decrease in expenses associated with the Company’s Long Term Incentive Compensation Plan.

Depreciation and Amortization

Depreciation and amortization increased to $43.2 million for the three months ended September 30, 2010 from $43.0 million for the three months ended September 30, 2009 and $129.8 million for the nine months ended September 30, 2010 from $127.5 million for the nine months ended September 30, 2009. These increases were primarily due to the increased investment in operating real estate.

Interest Expense

Interest expense decreased to $34.9 million for the three months ended September 30, 2010 from $36.5 million for the three months ended September 30, 2009. The decrease was primarily due to the decrease in the average debt outstanding to $2,303.2 million for the three months ended September 30, 2010 from $2,451.9 million for the three months ended September 30, 2009. The weighted average interest rate remained relatively unchanged at 6.1% for both periods. The decrease was partially offset by a decrease in interest capitalized due to a decrease in development activity. Interest expense increased to $112.5 million for the nine months ended September 30, 2010 from $110.9 million for the nine months ended September 30, 2009. This increase was primarily related to the prepayment of $119.3 million of mortgage loans in April 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 $2,353.5 million for the nine months ended September 30, 2010 from $2,515.5 million for the nine months ended September 30, 2009. The weighted average interest rate remained unchanged at 6.2% for both periods.

Interest expense allocated to discontinued operations for the three months ended September 30, 2010 and 2009 was $78,000 and $556,000, respectively, and for the nine months ended September 30, 2010 and 2009 was $322,000 and $2.5 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 $691,000 for the three months ended September 30, 2010 from $100,000 for the three months ended September 30, 2009 and to a gain of $3.7 million for the nine months ended September 30, 2010 from a loss of $2.2 million for the nine months ended September 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 September 30, 2009, the Company purchased $3.5 million principal amount of its 6.625% October 2017 senior unsecured notes. These notes were purchased at a $0.5 million discount. During the nine months ended September 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, $4.9 million principal amount of its 6.375% August 2012 senior unsecured notes and $3.5 million principal amount of its 6.625% October 2017 senior unsecured notes. These notes were purchased at a $1.5 million aggregate 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 nine months ended September 30, 2010.

Income from discontinued operations decreased to $701,000 for the three months ended September 30, 2010 from $10.4 million for the three months ended September 30, 2009 and decreased to $6.2 million for the nine months ended September 30, 2010 from $16.7 million for the nine months ended September 30, 2009. The decrease for the three month periods was due to a decrease in gains recognized on sales which were $221,000 for the three months ended September 30, 2010 and $5.1 million for the three months ended September 30, 2009, as well as termination fees included in discontinued operations, which were $399,000 for the three months ended September 30, 2010 compared to $4.6 million for the three months ended September 30, 2009. The increase for the nine month periods was due to an increase in gains recognized on sales which were $5.5 million for the nine months ended September 30, 2010 compared to $9.0 million for the nine months ended September 30, 2009, as well as termination fees included in discontinued operations, which were $399,000 for the nine months ended September 30, 2010 compared to $4.8 million for the nine months ended September 30, 2009.

As a result of the foregoing, the Company’s net income decreased to $41.0 million for the three months ended September 30, 2010 from $50.7 million for the three months ended September 30, 2009 and decreased to $116.8 million for the nine months ended September 30, 2010 from $127.8 million for the nine months ended September 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 Company believes that, after a recent period of uncertainty in the global credit markets, its traditional access to capital through the unsecured debt market and equity markets 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.

During the three months ended September 30, 2010, the Company replaced its existing $600 million credit facility which was due in January 2011 with a new credit facility. The new facility is for $500 million. It matures in November 2013. Based upon the Company’s current credit ratings, borrowings under the new facility bear interest at LIBOR plus 230 basis points.

Activity

As of September 30, 2010, the Company had cash and cash equivalents of $153.1 million, including $41.2 million in restricted cash.

Net cash flow provided by operating activities decreased to $221.3 million for the nine months ended September 30, 2010 from $246.2 million for the nine months ended September 30, 2009. This $24.9 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 and flex portfolios, and also due to reductions in rents. 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 relatively flat occupancy for the remainder of 2010. The Company anticipates that average occupancy for its industrial portfolio will increase by 1% to 3% for 2011 compared to 2010 and anticipates that average occupancy for its office and flex portfolios will decrease by 0% to 2% for 2011 compared to 2010. 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 through the end of 2011 should provide for sufficient net cash flow to cover the dividend. However, should this increased occupancy not occur or our operating results are otherwise adversely affected, the Company might revisit its current dividend policy.

Net cash used in investing activities was $80.5 million for the nine months ended September 30, 2010 compared to $20.6 million for the nine months ended September 30, 2009. This $59.9 million increase primarily resulted from a decrease in net proceeds from the disposition of properties and land and an increase in investment in properties. Offsetting these items was a reduction in expenditures for development in progress and land held for development.

Net cash used in financing activities was $265.0 million for the nine months ended September 30, 2010 compared to $24.5 million for the nine months ended September 30, 2009. This $240.5 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. Net cash used in financing activities includes proceeds from the issuance of equity and debt, net of debt repayments, equity repurchases and shareholder distributions.

The Company funds its development activities and acquisitions with long-term capital sources and proceeds from the disposition of properties. For the three months ended September 30, 2010, a portion of these activities were funded through a $500 million Credit Facility (the “Credit Facility”). The interest rate on borrowings under the Credit Facility fluctuates based upon ratings from Moody’s Investors Service, Inc. (“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 LIBOR plus 230 basis points.

Additionally, the Company has entered into an agreement to fund its planned improvements for the Kings Hill Phase 2 land development project. At September 30, 2010, the Company had not drawn any of a £7 million revolving credit facility. The facility expires on November 22, 2011.

The Company uses debt financing to lower its overall cost of capital in an attempt to increase the return to shareholders. The Company staggers its debt maturities and maintains debt levels it considers to be prudent. In determining its debt levels, the Company considers various financial measures including the debt to gross assets ratio and the fixed charge coverage ratio. As of September 30, 2010 the Company’s debt to gross assets ratio was 38.4% and for the nine months ended September 30, 2010 the fixed charge coverage ratio was 2.7x. Debt to gross assets equals total long-term debt, borrowings under the Credit Facility divided by total assets plus accumulated depreciation. The fixed charge coverage ratio equals income from continuing operations before property dispositions, including operating activity from discontinued operations, plus interest expense and depreciation and amortization, divided by interest expense, including capitalized interest, plus distributions on preferred units.

As of September 30, 2010, $338.4 million in mortgage loans and $2,023.1 million in unsecured notes were outstanding with a weighted average interest rate of 6.01%. The interest rates on $2,318.2 million of mortgage loans and unsecured notes are fixed and range from 4.75% to 8.75%. For $43.4 million of mortgage loans, the interest rate floats at a spread to LIBOR. The interest rate on these loans at September 30, 2010 was 5.10%. The weighted average remaining term for the mortgage loans and unsecured notes is 5.2 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 September 30, 2010 are as follows (in thousands, except percentages):


	MORTGAGES											WEIGHTED
	PRINCIPAL		PRINCIPAL			UNSECURED		CREDIT				AVERAGE
	AMORTIZATION		MATURITIES			NOTES		FACILITY		TOTAL		INTEREST RATE
2010 (3 months)	$	1,439	$	—		$	—	$	—	$	1,439		6.43	%
2011		5,974		3,314			246,500		—		255,788		7.23	%
2012		4,632		72,433	(1)		230,100		—		307,165		6.28	%
2013		4,056		4,510			—		—		8,566		5.79	%
2014		4,413		2,684			200,000		—		207,097		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		—		—			100,000		—		100,000		7.50	%
2019 & thereafter		—		—			350,000		—		350,000		4.75	%

	$	28,677	$	309,728		$	2,023,143	$	—	$	2,361,548		6.01	%


(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 September 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			of		Square				Annual			of		Square				Annual			of		Square				Annual
	Tenants		Feet		Annual Rent		Rent			Tenants		Feet		Annual Rent		Rent			Tenants		Feet		Annual Rent		Rent			Tenants		Feet		Annual Rent		Rent

Wholly Owned Properties in Operation:
2010		14		422	$	1,754		1.2	%		33		351	$	3,005		3.0	%		85		534	$	6,020		1.9	%		132		1,307	$	10,779		1.9	%
2011		56		2,144		9,666		6.4	%		126		1,268		10,628		10.7	%		259		1,719		22,435		6.9	%		441		5,131		42,729		7.5	%
2012		57		4,004		17,624		11.8	%		133		1,778		16,703		16.9	%		266		2,519		41,705		12.9	%		456		8,301		76,032		13.3	%
2013		46		3,983		17,815		11.9	%		105		1,626		15,716		15.8	%		208		2,308		37,168		11.5	%		359		7,917		70,699		12.3	%
2014		37		2,805		14,124		9.4	%		69		930		9,753		9.8	%		152		3,005		46,103		14.2	%		258		6,740		69,980		12.2	%
2015		35		4,799		21,146		14.1	%		68		1,077		10,974		11.1	%		157		2,769		39,622		12.2	%		260		8,645		71,742		12.5	%
2016		19		2,563		12,216		8.2	%		33		878		9,287		9.4	%		66		1,763		31,410		9.7	%		118		5,204		52,913		9.2	%
2017		18		2,300		11,712		7.8	%		28		763		8,416		8.5	%		33		679		11,714		3.6	%		79		3,742		31,842		5.6	%
2018		14		1,741		11,068		7.4	%		12		348		2,981		3.0	%		27		967		18,449		5.7	%		53		3,056		32,498		5.7	%
2019		10		1,323		7,745		5.2	%		4		247		3,248		3.3	%		28		1,498		30,434		9.4	%		42		3,068		41,427		7.2	%
Thereafter		16		3,317		24,772		16.6	%		15		529		8,455		8.5	%		49		1,969		38,823		12.0	%		80		5,815		72,050		12.6	%


Total		322		29,401	$	149,642		100.0	%		626		9,795	$	99,166		100.0	%		1,330		19,730	$	323,883		100.0	%		2,278		58,926	$	572,691		100.0	%

Joint Venture Properties in Operation:
2010		1		118	$	548		1.6	%		—		—	$	—		0.0	%		26		124	$	2,482		2.0	%		27		242	$	3,030		1.9	%
2011		11		813		2,394		6.9	%		1		11		296		7.8	%		39		472		12,250		10.0	%		51		1,296		14,940		9.3	%
2012		8		469		1,743		5.0	%		5		68		1,805		47.4	%		19		220		5,270		4.3	%		32		757		8,818		5.4	%
2013		7		936		3,616		10.4	%		—		—		—		0.0	%		13		151		3,772		3.1	%		20		1,087		7,388		4.6	%
2014		8		1,190		5,489		15.7	%		2		25		709		18.5	%		22		409		10,884		8.9	%		32		1,624		17,082		10.6	%
2015		5		741		3,326		9.5	%		—		—		—		0.0	%		23		238		5,358		4.4	%		28		979		8,684		5.4	%
2016		7		553		3,115		8.9	%		1		36		1,002		26.3	%		19		521		12,975		10.6	%		27		1,110		17,092		10.6	%
2017		8		1,247		5,547		15.9	%		—		—		—		0.0	%		6		206		4,992		4.1	%		14		1,453		10,539		6.5	%
2018		5		726		3,964		11.4	%		—		—		—		0.0	%		14		65		2,127		1.7	%		19		791		6,091		3.8	%
2019		1		500		3,151		9.0	%		—		—		—		0.0	%		16		218		6,458		5.3	%		17		718		9,609		6.0	%
Thereafter		3		420		2,003		5.7	%		—		—		—		0.0	%		19		1,566		55,908		45.6	%		22		1,986		57,911		35.9	%


Total		64		7,713	$	34,896		100.0	%		9		140	$	3,812		100.0	%		216		4,190	$	122,476		100.0	%		289		12,043	$	161,184		100.0	%

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 nine months ended September 30, 2010 and 2009 are as follows (in thousands, except per share amounts):


	Three Months Ended						Nine Months Ended
	September 30,			September 30,			September 30,			September 30,
	2010			2009			2010			2009
Reconciliation of net income to FFO — basic

Net Income available to common shareholders	$	34,644		$	43,903		$	97,640		$	108,463


Basic — Income available to common shareholders		34,644			43,903			97,640			108,463

*Basic — income available to common shareholders per weighted average share*	$	0.31		$	0.39		$	0.87		$	1.02

Adjustments:
Depreciation and amortization of unconsolidated joint ventures		3,799			3,991			11,253			12,113
Depreciation and amortization		42,523			43,041			128,243			128,427
Gain on property dispositions		(626	)		(9,442	)		(6,036	)		(14,817	)
Noncontrolling interest share in addback for depreciation and amortization and gain on property dispositions		(1,531	)		(1,293	)		(4,485	)		(4,497	)


Funds from operations available to common shareholders – basic	$	78,809		$	80,200		$	226,615		$	229,689


*Basic Funds from operations available to common shareholders per weighted average share*	$	0.70		$	0.72		$	2.01		$	2.17

Reconciliation of net income to FFO — diluted:

Net Income available to common shareholders	$	34,644		$	43,903		$	97,640		$	108,463

Diluted — income available to common shareholders		34,644			43,903			97,640			108,463
*Diluted — income available to common shareholders per weighted average share*	$	0.30		$	0.39		$	0.86		$	1.02

Adjustments:
Depreciation and amortization of unconsolidated joint ventures		3,799			3,991			11,253			12,113
Depreciation and amortization		42,523			43,041			128,243			128,427
Gain on property dispositions		(626	)		(9,442	)		(6,036	)		(14,817	)
Noncontrolling interest less preferred share distributions		1,198			1,565			3,396			3,974


Funds from operations available to common shareholders — diluted	$	81,538		$	83,058		$	234,496		$	238,160


*Diluted Funds from operations available to common shareholders per weighted average share*	$	0.69		$	0.72		$	2.00		$	2.16
Reconciliation of weighted average shares:
Weighted average common shares — all basic calculations		113,077			111,351			112,708			105,989
Dilutive shares for long term compensation plans		696			575			680			452


Diluted shares for net income calculations		113,773			111,926			113,388			106,441
Weighted average common units		3,943			4,017			3,949			4,018


Diluted shares for Funds from operations calculations		117,716			115,943			117,337			110,459

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 September 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 September 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


	10.1			Second Amended and Restated Credit Agreement, dated as of August 31, 2010, by and among Liberty Property Limited Partnership, Liberty Property Trust, Bank of America, N.A. as Administrative Agent, JPMorgan Chase Bank, N.A., as Syndication Agent, Wells Fargo Bank, N.A., Citizens Bank, SunTrust Bank and PNC Bank, National Association as Documentation Agents, Citicorp North America, Inc., UBS Loan Finance LLC, The Bank of Nova Scotia, Capital One Bank and U.S. Bank National Association, as Managing Agents, Banc of America Securities LLC and J.P. Morgan Securities Inc., as Joint Bookrunners and Joint Lead Arrangers, and the lenders a party thereto. (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Registrants filed with the Commission on September 17, 2010.)

	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 INDEX


EXHIBIT
NO.


	12.1	Statement Re: Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges.

	31.1	Certification of the Chief Executive Officer of Liberty Property Trust required by Rule 13a-14(a) under the Securities Exchange Act of 1934.

	31.2	Certification of the Chief Financial Officer of Liberty Property Trust required by Rule 13a-14(a) under the Securities Exchange Act of 1934.

	31.3	Certification of the Chief Executive Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(a) under the Securities Exchange Act of 1934.

	31.4	Certification of the Chief Financial Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(a) under the Securities Exchange Act of 1934.

	32.1	Certification of the Chief Executive Officer of Liberty Property Trust required under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)

	32.2	Certification of the Chief Financial Officer of Liberty Property Trust required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)

	32.3	Certification of the Chief Executive Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)


Index	Page

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Condensed consolidated balance sheets of Liberty Property Trust at September 30, 2010 and December 31, 2009		3

Condensed consolidated statements of operations of Liberty Property Trust for the three months ended September 30, 2010 and September 30, 2009		4

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

Condensed consolidated statement of equity of Liberty Property Trust for the nine months ended September 30, 2010		6

Condensed consolidated statements of cash flows of Liberty Property Trust for the nine months ended September 30, 2010 and September 30, 2009		7

Notes to condensed consolidated financial statements of Liberty Property Trust		8

Condensed consolidated balance sheets of Liberty Property Limited Partnership at September 30, 2010 and December 31, 2009		17

Condensed consolidated statements of operations of Liberty Property Limited Partnership for the three months ended September 30, 2010 and September 30, 2009		18

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

Condensed consolidated statement of equity of Liberty Property Limited Partnership for the nine months ended September 30, 2010		20

Condensed consolidated statements of cash flows of Liberty Property Limited Partnership for the nine months ended September 30, 2010 and September 30, 2009		21

Notes to condensed consolidated financial statements of Liberty Property Limited Partnership		22

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		31

Item 3. Quantitative and Qualitative Disclosures about Market Risk		43

Item 4. Controls and Procedures		43

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		44

Item 1A. Risk Factors		44

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		44

Item 3. Defaults Upon Senior Securities		44

Item 4. Removed and Reserved		44

Item 5. Other Information		44

Item 6. Exhibits		45

Signatures for Liberty Property Trust		47

Signatures for Liberty Property Limited Partnership		48

Exhibit Index		49

STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO COMBINED FIXED CHARGES
CERTIFICATION OF CEO OF LIBERTY PROPERTY TRUST REQUIRED BY RULE 13A-14(A)
CERTIFICATION OF CFO OF LIBERTY PROPERTY TRUST REQUIRED BY RULE 13A-14(A)
CERTIFICATION OF CEO OF LIBERTY PROPERTY TRUST REQUIRED BY RULE 13A-14(B)
CERTIFICATION OF CFO OF LIBERTY PROPERTY TRUST REQUIRED BY RULE 13A-14(B)
CERTIFICATION OF CEO OF LIBERTY PROPERTY TRUST, IN ITS CAPACITY AS THE GENERAL PARTNER OF LIBERTY PROPERTY LIMITED PARTNERSHIP, REQUIRED BY RULE 13A-14(A)
CERTIFICATION OF CFO OF LIBERTY PROPERTY TRUST, IN ITS CAPACITY AS THE GENERAL PARTNER OF LIBERTY PROPERTY LIMITED PARTNERSHIP, REQUIRED BY RULE 13A-14(A)
CERTIFICATION OF CEO OF LIBERTY PROPERTY TRUST, IN ITS CAPACITY AS THE GENERAL PARTNER OF LIBERTY PROPERTY LIMITED PARTNERSHIP, REQUIRED BY RULE 13A-14(B)
CERTIFICATION OF CFO OF LIBERTY PROPERTY TRUST, IN ITS CAPACITY AS THE GENERAL PARTNER OF LIBERTY PROPERTY LIMITED PARTNERSHIP, REQUIRED BY RULE 13A-14(B)
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT



	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).


/s/ WILLIAM P. HANKOWSKY		November 5, 2010
William P. Hankowsky		Date
President and Chief Executive Officer

/s/ GEORGE J. ALBURGER, JR.		November 5, 2010
George J. Alburger, Jr.		Date
Executive Vice President and Chief Financial Officer


/s/ WILLIAM P. HANKOWSKY		November 5, 2010
William P. Hankowsky		Date
President and Chief Executive Officer

/s/ GEORGE J. ALBURGER, JR.		November 5, 2010
George J. Alburger, Jr.		Date
Executive Vice President and Chief Financial Officer


EXHIBIT
NO.

	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).


				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		32,119			—			—			—		32,119

Distributions to partners		(161,586	)		(5,764	)		(15,759	)		—		(183,109	)
Foreign currency translation adjustment		(1,975	)		(70	)		—			—		(2,045	)
Net income		97,640			3,396			15,759			47		116,842

Redemption of limited partners common units for common shares		1,227			(1,227	)		—			—		—


Balance at September 30, 2010	$	2,089,720		$	68,629		$	287,959		$	668	$	2,446,976