10-K 1 lry1231201310k.htm 10-K LRY 12.31.2013 10K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
 
 
 
þ
 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2013
OR
 
 
 
o
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
 
 
 
 
 
 
Commission file numbers:
 
1-13130 (Liberty Property Trust)
 
 
1-13132 (Liberty Property Limited Partnership)
 
LIBERTY PROPERTY TRUST
 
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Exact Names 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
 
(I.R.S. Employer
of Incorporation or Organization)
 
Identification Number)
 
 
 
500 Chesterfield Parkway
 
 
Malvern, Pennsylvania
 
19355
 
 
 
(Address of Principal Executive Offices)
 
(Zip Code)
Registrants' Telephone Number, including Area Code (610) 648-1700
Securities registered pursuant to Section 12(b) of the Act:
 
 
 
 
 
 
 
 
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS
 
ON WHICH REGISTERED
 
 
 
Common Shares of Beneficial Interest,
 
 
$0.001 par value
 
 
(Liberty Property Trust)
 
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
YES þ NO o
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
YES o NO þ
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 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 registrant was required to submit and post such files.) þ
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulations S-K is not contained herein, and will not be contained, to the best of the Registrants' knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. (See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act). (Check one):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Large Accelerated Filer þ
 
Accelerated Filer o
 
Non-Accelerated Filer o
 
Smaller Reporting Company o
 
 
 
 
(Do not check if a smaller reporting company)
 
 
Indicate by check mark if the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES o NO þ
The aggregate market value of the Common Shares of Beneficial Interest, $0.001 par value (the "Common Shares"), of Liberty Property Trust held by non-affiliates of Liberty Property Trust was $4.4 billion, based upon the closing price of $36.96 on the New York Stock Exchange composite tape on June 28, 2013. Non-affiliate ownership is calculated by excluding all Common Shares that may be deemed to be beneficially owned by executive officers and trustees, without conceding that any such person is an "affiliate" for purposes of the federal securities laws.
Number of Common Shares outstanding as of February 25, 2014: 147,049,789
Documents Incorporated by Reference
Portions of the proxy statement for the annual meeting of shareholders of Liberty Property Trust to be held in May 2014 are incorporated by reference into Part III of this Form 10-K.



EXPLANATORY NOTE


This report combines the annual reports on Form 10-K for the period ended December 31, 2013 of Liberty Property Trust and Liberty Property Limited Partnership. Unless stated otherwise or the context otherwise requires, references to the "Trust,” mean Liberty Property Trust and its consolidated subsidiaries; and references to the “Operating Partnership” mean Liberty Property Limited Partnership and its consolidated subsidiaries. The terms the “Company,” “we,” “our” and “us” mean the Trust and the Operating Partnership, collectively.

The Trust is a self-administered and self-managed Maryland real estate investment trust (a “REIT”). Substantially all of the Trust's assets are owned directly or indirectly, and substantially all of the Trust's operations are conducted directly or indirectly, by its subsidiary, the Operating Partnership, a Pennsylvania limited partnership.

The Trust is the sole general partner and also a limited partner of the Operating Partnership, owning 97.6% of the common equity of the Operating Partnership at December 31, 2013. The common units of limited partnership interest in the Operating Partnership (the “Common Units”), other than those owned by the Trust, are exchangeable on a one-for-one basis (subject to anti-dilution protections) for the Trust's Common Shares of Beneficial Interest, $0.001 par value per share (the “Common Shares”). The Company previously issued several series of Cumulative Redeemable Preferred Units of the Operating Partnership (the “Preferred Units"). The outstanding Preferred Units of each series were exchangeable on a one-for-one basis after stated dates into a corresponding series of Cumulative Redeemable Preferred Shares of the Trust except for the Series I-2 Preferred Units, which are not convertible or exchangeable into any other securities. The Preferred Units, except for the Series I-2 Preferred Units, were redeemed during the years ended December 31, 2013 and 2012. The ownership of the holders of Common and Preferred Units is reflected in the Trust's financial statements as “noncontrolling interest-operating partnership” both in mezzanine equity and as a component of total equity. The ownership of the holders of Common and Preferred Units not owned by the Trust is reflected in the Operating Partnership's financial statements as “limited partners' equity” both in mezzanine equity and as a component of total owners' equity.

The financial results of the Operating Partnership are consolidated into the financial statements of the Trust. The Trust has no significant assets other than its investment in the Operating Partnership. The Trust and the Operating Partnership are managed and operated as one entity. The Trust and the Operating Partnership have the same managers.

The Trust's sole business purpose is to act as the general partner of the Operating Partnership. Net proceeds from equity issuances by the Trust are contributed to the Operating Partnership in exchange for partnership units. The Trust itself does not issue any indebtedness, but guarantees certain of the unsecured debt of the Operating Partnership.

We believe combining the annual reports on Form 10-K of the Trust and the Operating Partnership into this single report results in the following benefits:
•
enhances investors' understanding of the Trust and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;
•
eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the Company's disclosure applies to both the Trust and the Operating Partnership; and
•
creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

To help investors understand the significant differences between the Trust and the Operating Partnership, this report presents the following separate sections for each of the Trust and the Operating Partnership:
•
consolidated financial statements;
•
the following notes to the consolidated financial statements;
◦
Income per Common Share of the Trust and Income per Common Unit of the Operating Partnership; and
◦
Shareholders' Equity of the Trust and Owners' Equity of the Operating Partnership.

This report also includes separate Item 9A. Controls and Procedures sections and separate Exhibit 31 and 32 certifications for each of the Trust and the Operating Partnership in order to establish that the Chief Executive Officer and the Chief Financial Officer of each entity have made the requisite certifications and that the Trust and Operating Partnership are compliant with Rule 13a-15 and Rule 15d-15 of the Securities Exchange Act of 1934, as amended.


2

INDEX
 
Index
 
Page
 
 
 
PART I.
 
 
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 1B.
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
PART II
 
 
 
 
 
Item 5.
 
 
 
Item 6.
 
 
 
Item 7.
 
 
 
Item 7A.
 
 
 
Item 8.
 
 
 
Item 9.
 
 
 
Item 9A.
 
 
 
Item 9B.
 
 
 
PART III
 
 
 
 
 
Item 10.
 
 
 
Item 11.
 
 
 
Item 12.
 
 
 
Item 13.
 
 
 
Item 14.
 
 
 
PART IV
 
 
 
 
 
Item 15.
 
 
 
 
 
 
 
 
 
 
 
 


3


----------
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain information included in this Annual Report on Form 10-K and other materials filed or to be filed by the Company (as defined herein) with the Securities and Exchange Commission (“SEC”) (as well as information included in oral statements or other written statements made or to be made by the Company) contain statements that are or will be forward-looking, such as statements relating to rental operations, business and property development activities, joint venture relationships, acquisitions and dispositions (including related pro forma financial information), future capital expenditures, financing sources and availability, litigation and the effects of regulation (including environmental regulation) and competition. These forward-looking statements generally are accompanied by words such as “believes,” “anticipates,” “expects,” “estimates,” “should,” “seeks,” “intends,” “planned,” “outlook” and “goal” or similar expressions. Although the Company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, the Company can give no assurance that its expectations will be achieved. As forward-looking statements, these statements involve important risks, uncertainties and other factors that could cause actual results to differ materially from the expected results and, accordingly, such results may differ from those expressed in any forward-looking statements made by, or on behalf of the Company. The Company assumes no obligation to update or supplement forward looking statements that become untrue because of subsequent events. These risks, uncertainties and other factors include, without limitation, uncertainties affecting real estate businesses generally (such as entry into new leases, renewals of leases and dependence on tenants' business operations), risks relating to our ability to maintain and increase property occupancy and rental rates, risks relating to construction and development activities, risks relating to acquisition and disposition activities, risks relating to the integration of the operations of entities that we have acquired or may acquire, risks relating to joint venture relationships and any possible need to perform under certain guarantees that we have issued or may issue in connection with such relationships, possible environmental liabilities, risks relating to leverage and debt service (including availability of financing terms acceptable to the Company and sensitivity of the Company's operations and financing arrangements to fluctuations in interest rates), dependence on the primary markets in which the Company's properties are located, the existence of complex regulations relating to status as a real estate investment trust (“REIT”) and the adverse consequences of the failure to qualify as a REIT, risks relating to litigation and the potential adverse impact of market interest rates on the market price for the Company's securities. See “Management's Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Statements.”



4

PART I
ITEM 1. BUSINESS
The Company
Liberty Property Trust (the "Trust") is a self-administered and self-managed Maryland real estate investment trust (a "REIT"). Substantially all of the Trust's assets are owned directly or indirectly, and substantially all of the Trust's operations are conducted directly or indirectly, by its subsidiary, Liberty Property Limited Partnership, a Pennsylvania limited partnership (the "Operating Partnership" and, together with the Trust and their consolidated subsidiaries, the "Company").
The Company completed its initial public offering in 1994 to continue and expand the commercial real estate business of Rouse & Associates, a Pennsylvania general partnership, and certain affiliated entities (collectively, the "Predecessor"), which was founded in 1972. As of December 31, 2013, the Company owned and operated 489 industrial and 223 office properties (the "Wholly Owned Properties in Operation") totaling 89.5 million square feet. In addition, as of December 31, 2013, the Company owned 16 properties under development, which when completed are expected to comprise 5.0 million square feet (the "Wholly Owned Properties under Development") and 1,315 acres of developable land, substantially all of which is zoned for commercial use. Additionally, as of December 31, 2013, the Company had an ownership interest, through unconsolidated joint ventures, in 45 industrial and 34 office properties totaling 13.5 million square feet (the "JV Properties in Operation" and, together with the Wholly Owned Properties in Operation, the "Properties in Operation"), one property under development, which when completed is expected to comprise 203,000 square feet (the "JV Property under Development" and, collectively with the Wholly Owned Properties under Development, the "Properties under Development" and, collectively with the Properties in Operation, the "Properties"), and 518 acres of developable land, substantially all of which is zoned for commercial use.
The Company provides leasing, property management, development and other tenant-related services for the Properties. The industrial Properties consist of a variety of warehouse, distribution, service, assembly, light manufacturing and research and development facilities. They include both single-tenant and multi-tenant facilities, with most designed flexibly to accommodate various types of tenants, space requirements and industrial uses. The Company's office Properties are multi-story and single-story office buildings located principally in suburban mixed-use developments or office parks. Substantially all of the Properties are located in prime business locations within established business communities. In addition, the Company, directly or through joint ventures, owns urban office properties in Philadelphia and Washington, D.C. The Company’s strategy with respect to product and market selection is expected to favor industrial properties nationally and metro-office properties in markets with favorable demographic and employment trends as well as certain urban characteristics such as population density and transportation access.
The Trust is the sole general partner and also a limited partner of the Operating Partnership, owning 97.6% of the common equity of the Operating Partnership at December 31, 2013. The common units of limited partnership interest in the Operating Partnership (the "Common Units"), other than those owned by the Trust, are exchangeable on a one-for-one basis (subject to anti-dilution protections) for the Trust's common shares of beneficial interest, $0.001 par value per share (the "Common Shares"). As of December 31, 2013, the Common Units held by the limited partners were exchangeable for 3.6 million Common Shares. The Company previously issued several series of Cumulative Redeemable Preferred Units of the Operating Partnership (the "Preferred Units"). The outstanding Preferred Units of each series were exchangeable on a one-for-one basis after stated dates into a corresponding series of Cumulative Redeemable Preferred Shares of the Trust except for the Series I-2 Preferred Units, which are not convertible or exchangeable into any other securities. The Preferred Units, except for the Series I-2 Preferred Units, were redeemed during the years ended December 31, 2012 and 2013. The ownership of the holders of Common and Preferred Units is reflected on the Trust's financial statements as “noncontrolling interest- operating partnership” both in mezzanine equity and as a component of total equity. The ownership of the holders of Common and Preferred Units not owned by the Trust is reflected on the Operating Partnership's financial statements as “limited partners' equity” both in mezzanine equity and as a component of total owners' equity.
In addition to this Annual Report on Form 10-K, the Company files with or furnishes to the SEC periodic and current reports, proxy statements and other information. The Company makes these documents available on its website, www.libertyproperty.com, free of charge, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. Any document the Company files with or furnishes to the SEC is available to read and copy at the SEC's Public Reference Room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. Further information about the public reference facilities is available by calling the SEC at (800) SEC-0330. These documents also may be accessed on the SEC's website, http://www.sec.gov.
Also posted on the Company's website is the Company's Code of Conduct, which applies to all of its employees and also serves as a code of ethics for its chief executive officer, chief financial officer and persons performing similar functions. The Company will send the Code of Conduct, free of charge, to anyone who requests a copy in writing from its Investor Relations Department at the address set forth on the cover of this filing. The Company intends to satisfy the disclosure requirement under Item 5.05 of

5

Form 8-K regarding any amendments to or waivers of the Code of Conduct by posting the required information in the Corporate Governance section of its website.
Management and Employees
As of February 26, 2014, the Company's 453 employees operated under the direction of 18 senior executives, who have been affiliated with the Company and the Predecessor for an average of 21 years. The Company and the Predecessor have developed and managed commercial real estate for the past 41 years. The Company maintains an in-house leasing and property management staff which the Company believes enables it to better understand the characteristics of the local markets in which it operates, to respond quickly and directly to tenant needs and to better identify local real estate opportunities. In certain circumstances the Company also engages and directs the activities of third party property managers and leasing agents.
Segments and Markets
At December 31, 2013, the Company's reportable segments were based on the Company's method of internal reporting and are as follows:
Industrial:
•
Lehigh/Central PA;
•
Chicago/Milwaukee;
•
Houston;
•
Carolinas;
•
Other.
The Industrial-Other category includes: Orlando; New Jersey; Maryland; Cincinnati, Columbus and Indianapolis; Dallas; Atlanta; Southern California.
Industrial/Office:
•
Minnesota;
•
South Florida;
•
Richmond/Hampton Roads;
•
Arizona;
•
United Kingdom;
•
Other.
The Industrial/Office-Other category includes: Jacksonville; Tampa; Seattle/Puget Sound, Boston, Delaware and Memphis; Northern Virginia.
Office:
•
Philadelphia;
•
Southeastern PA;
•
Washington D.C.
Business Objective and Strategies for Growth
The Company's business objective is to maximize long-term profitability for its shareholders by operating as a leader in commercial real estate through the ownership, management, development and acquisition of superior industrial and office properties. The Company intends to achieve this objective through offering industrial and/or office properties in multiple markets and operating as a leading landlord in the industry. The Company believes that this objective will provide the benefits of enhanced investment opportunities, economies of scale, risk diversification both in terms of geographic market and real estate product type, access to capital and the ability to attract and retain personnel. The Company also strives to be a leading provider of customer service, providing an exceptional and positive tenant experience. The Company seeks to be an industry leader in sustainable development and to operate an energy-efficient portfolio. In pursuing its business objective, the Company seeks to achieve a combination of internal and external growth, maintain a conservative balance sheet and pursue a strategy of financial flexibility.
Products
The Company strives to be a high quality provider of three products (industrial-distribution, industrial-flex and office). The Company's strategy with respect to product and market selection is expected generally to favor industrial and metro-office properties

6

and markets with strong demographic and economic fundamentals. However, consistent with the Company's strategy and market opportunities, the Company may pursue industrial and office products other than those noted above.
Markets
The Company owns and operates industrial properties nationally and owns and operates office properties primarily in Metro Philadelphia, Washington, D.C. and certain sunbelt cities. Additionally, the Company owns certain assets in the United Kingdom. The Company's goal is to operate in each of its markets with an appropriate product mix of industrial and/or office properties. In some markets it may offer only one of its product types. Generally, the Company seeks to have a presence in each market sufficient for the Company to compete effectively in that market. Given the Company's desire to operate industrial properties on a national platform and based on analysis of its present markets the Company intends to operate a portfolio that derives approximately two-thirds of its net operating income from industrial properties and one-third from office properties. As of December 31, 2013, adjusting to remove the second tranche of the Portfolio Sale which closed on January 30, 2014 (see below), approximately 60% of the Company's net operating income came from industrial properties and 40% from office properties. The Company's efforts emphasize efficiencies of scale through asset aggregation and controlled environments. The Company gathers information from internal sources and independent third parties and analyzes this information to support its evaluation of current and new markets and market conditions.
Organizational Plan
The Company seeks to maintain a management organization that facilitates efficient execution of the Company's strategy. As part of this effort, the Company pursues a human resources plan designed to create and maintain a highly effective real estate company through recruiting, training and retaining capable people. The structure is designed to support a local entrepreneurial platform operating within a value-added corporate structure. The Company seeks to provide management and all employees with technology tools to enhance competitive advantage and more effectively execute on strategic and operational goals.
Internal Growth Strategies
The Company seeks to maximize the profitability of its Properties by endeavoring to maintain high occupancy levels while obtaining competitive rental rates, controlling costs and focusing on customer service efforts.
Maintain High Occupancies
The Company believes that the quality and diversity of its tenant base and its strategy of operating in multiple markets is integral to achieving its goal of attaining high occupancy levels for its portfolio. The Company targets financially stable tenants in an effort to minimize uncertainty relating to the ability of the tenants to meet their lease obligations.
Cost Controls
The Company seeks to identify best practices to apply throughout the Company in order to enhance cost savings and other efficiencies. The Company also employs an annual capital improvement and preventative maintenance program designed to reduce the operating costs and maintain the long-term value of the Properties in Operation.
Customer Service
The Company seeks to achieve high tenant retention through a comprehensive customer service program, which is designed to provide an exceptional and positive tenant experience. The customer service program establishes best practices and provides an appropriate customer feedback process. The Company believes that the program has been helpful in increasing tenant satisfaction.
High Performance Buildings
The Company is committed to the sustainable design, development and operation of its portfolio. The Company strives to create work environments that limit resource consumption, improve building performance and promote human health and productivity. The Company believes that high performance buildings and environmentally responsible business practices are not only good for the environment, but that they also create value for the Company's tenants and shareholders.
The Company has set as a goal (1) to be an industry leader in sustainable real estate and high performance buildings; (2) to demonstrate improved performance year over year in resource consumption; and (3) to integrate sustainable business practices into our core business operations and decision making process.

7

The Company's efforts have included research and development, tenant education and outreach and education and accreditation for its development, property management and leasing staff.
The Company has utilized the U.S. Green Building Council's LEED rating system and the U.S. Department of Energy's Energy Star system for its evaluation of sustainability. To date the Company has completed or has under construction 69 LEED buildings and has completed three buildings in the United Kingdom under the international BREEAM standards. The Company has certified over 110 ENERGY STAR buildings and has achieved a significant reduction of energy usage in the Properties in Operation.
External Growth Strategies
The Company seeks to enhance its long-term profitability through the development, acquisition and disposition of properties either directly or through joint ventures. The Company also considers acquisitions of real estate operating companies.
Wholly Owned Properties
Development
The Company's development investment strategy focuses primarily on the development of high-quality industrial and office properties within its existing markets, including the markets recently entered as a result of the Cabot Acquisition (described below). When the Company's marketing efforts identify opportunities, the Company will consider pursuing such opportunities outside of the Company's established markets. The Company and its Predecessor have developed over 67 million square feet of commercial real estate during the past 41 years. The Company's development activities generally fall into two categories: build-to-suit projects and projects built for inventory (projects that are less than 75% leased prior to commencement of construction). The Company develops build-to-suit projects for existing and new tenants. The Company also builds properties for inventory where the Company has identified sufficient demand at market rental rates to justify such construction.
During the year ended December 31, 2013, the Company completed four build-to-suit projects and three inventory projects totaling 2.9 million square feet and representing an aggregate Total Investment of $280.7 million. As of December 31, 2013, these completed development properties were 44.3% leased.
As of December 31, 2013, the Company had 16 Wholly Owned Properties under Development, which are expected to comprise, upon completion, 5.0 million square feet and are expected to represent a Total Investment of $380.8 million. These Wholly Owned Properties under Development were 72.1% pre-leased as of December 31, 2013. The scheduled deliveries of the 5.0 million square feet of Wholly Owned Properties under Development are as follows (in thousands, except percentages):
 
 
SQUARE FEET
 
PERCENT LEASED
 
TOTAL
SCHEDULED IN-SERVICE DATE
 
IND-DIST.
 
IND-FLEX
 
OFFICE
 
TOTAL
 
DECEMBER 31, 2013
 
INVESTMENT
 1st Quarter, 2014
 
502

 
—

 
—

 
502

 
77.8
%
 
$
30,511

 2nd Quarter, 2014
 
227

 
—

 
—

 
227

 
100.0
%
 
12,828

 3rd Quarter, 2014
 
2,638

 
—

 
201

 
2,839

 
100.0
%
 
195,985

 1st Quarter, 2015
 
534

 
—

 
80

 
614

 
21.5
%
 
62,213

 2nd Quarter, 2015
 
644

 
—

 
—

 
644

 
—
%
 
48,435

 4th Quarter, 2015
 
—

 
—

 
154

 
154

 
—
%
 
30,788

TOTAL
 
4,545

 
—

 
435

 
4,980

 
72.1
%
 
$
380,760

 
 
 
 
 
 
 
 
 
 
 
 
 

“Total Investment” for a property is defined as the property's purchase price plus closing costs (in the case of acquisitions if vacant) and management's estimate, as determined at the time of acquisition, of the cost of necessary building improvements and lease transaction costs in the case of acquisitions, or land costs and land improvement, building improvement and lease transaction costs in the case of development projects, and, where appropriate, other development costs and carrying costs.
The Company believes that, because it is a fully integrated real estate firm, its base of commercially zoned land in existing industrial and office business parks provides a competitive advantage for future development activities. As of December 31, 2013, the Company owned 1,315 acres of land held for development, substantially all of which is zoned for commercial use. Substantially all of the land is located adjacent to or within existing industrial or business parks with site improvements, such as public sewers, water and utilities, available for service. The Company estimates that its land holdings would support, as and when developed, approximately 13.1 million square feet of property. The Company's investment in land held for development as of December 31, 2013 was $233.1 million.

8

Through a development agreement with Philadelphia Industrial Development Corporation, the Company has development rights for 143 acres of land located at the Navy Yard in Philadelphia. The Company estimates that these 143 acres would support, as and when developed, approximately 2.3 million square feet of property.
Through a development agreement with Kent County Council, the Company develops commercial buildings at Kings Hill, a 650-acre mixed use development site in the County of Kent, England. The Company also is the project manager for the installation of infrastructure on the site and receives a portion of the proceeds from the sale of land parcels to home builders. The site has planning consent for 2.0 million square feet of commercial space and 2,851 homes, of which approximately 825,000 square feet of commercial space has been built and 2,632 homes have been sold as of December 31, 2013.
Acquisitions/Dispositions
The Company seeks to acquire properties consistent with its business objectives and strategy. The Company executes its acquisition strategy by purchasing properties that the Company believes will create shareholder value over the long-term.
On October 8, 2013, the Company completed the acquisition (the "Cabot Acquisition") of 100% of the outstanding general partnership and limited partnership interests of the Cabot Industrial Value Fund III Operating Partnership, L.P. ("Cabot"). Pursuant to the Cabot Acquisition, the Company acquired a 100% ownership interest in 177 industrial assets totaling approximately 23.0 million square feet at a purchase price of $1.469 billion. These assets are located in 24 markets.
In addition, during the year ended December 31, 2013, the Company acquired three industrial properties and one office property for an aggregate purchase price of $201.1 million. These properties contain 1.6 million square feet of leaseable space.
The Company disposes of properties and land held for development that no longer fit within the Company's strategic plan, or with respect to which the Company believes it can optimize cash proceeds. On November 7, 2013, the Company entered into an Agreement of Sale and Purchase pursuant to which the Company agreed to sell a real estate portfolio which included the Company’s Jacksonville, Florida portfolio in its entirety, all of the office properties in Maryland, Southern New Jersey and the Fort Washington suburb of Philadelphia and flex properties in Minnesota for proceeds of $697.3 million (the "Portfolio Sale"). The properties consisted of 97 buildings containing an aggregate of 6.6 million square feet.  On December 24, 2013, the Company closed on the first of two planned settlements under this agreement.  The proceeds from the first settlement were $367.7 million and included 49 properties totaling 4.0 million square feet of space and 140 acres of land. The second settlement closed on January 30, 2014 and consisted of 48 properties containing an aggregate of 2.6 million square feet and 19 acres of land for proceeds of $329.6 million. In addition to the Portfolio Sale, during the year ended December 31, 2013, the Company sold nine operating properties containing an aggregate of 1.1 million square feet, and 17 acres of land, for aggregate proceeds of $140.0 million.
Joint Venture Properties
The Company, from time to time, considers joint venture opportunities with institutional investors or other real estate companies. Joint venture partnerships provide the Company with additional sources of capital to share investment risk and fund capital requirements. In some instances, joint venture partnerships provide the Company with additional local market or product type expertise.
As of December 31, 2013, the Company had investments in and advances to unconsolidated joint ventures totaling $179.7 million (see Note 7 to the Company's Consolidated Financial Statements).
Development
During the year ended December 31, 2013, none of the unconsolidated joint ventures in which the Company held an interest completed any development projects.
As of December 31, 2013, a joint venture in which the Company held a 25% interest had one property under development which is expected to comprise, upon completion, 203,000 square feet and is expected to represent a Total Investment of $11.8 million.
As of December 31, 2013, unconsolidated joint ventures in which the Company held an interest owned 518 acres of land held for development and had an option for a leasehold interest in an additional 27 acres of land. Substantially all of the land held for development and the land related to the leasehold interest is zoned for commercial use. Substantially all of the land held for development and the land related to the leasehold interest is located adjacent to or within existing industrial or business parks with site improvements, such as public sewers, water and utilities, available for service. The Company estimates that its joint venture land holdings and leasehold interest would support, as and when developed, approximately 6.5 million square feet of property.


9

Acquisitions/Dispositions
During the year ended December 31, 2013, none of the unconsolidated joint ventures in which the Company held an interest acquired any properties.
During the year ended December 31, 2013, a joint venture in which the Company held a 20% interest sold one property, which contained 44,000 square feet, for proceeds of $9.6 million. During the year ended December 31, 2013, a joint venture in which the Company held a 25% interest sold four properties, which contained 171,000 square feet, for aggregate proceeds of $31.5 million.

ITEM 1A. RISK FACTORS
The Company's results of operations and the ability to make distributions to our shareholders and service our indebtedness may be affected by the risk factors set forth below. (The Company refers to itself as "we," "us" or "our" in the following risk factors.) This section contains some forward looking statements. You should refer to the explanation of the qualifications and limitations on forward-looking statements in Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations.
Risks Related to Our Business
The Company's business is subject to the risks in this section.
Unfavorable events affecting our existing tenants and potential tenants, or negative market conditions that may affect our existing tenants and potential tenants, could have an adverse impact on our ability to attract new tenants, relet space, collect rent or renew leases, and thus could have a negative effect on our cash flow from operations.
Our cash flow from operations depends on our ability to lease space to tenants on economically favorable terms. Therefore, we could be adversely affected by various facts and events over which we have limited control, such as:
•
lack of demand for space in the areas where our Properties are located
•
inability to retain existing tenants and attract new tenants
•
oversupply of or reduced demand for space and changes in market rental rates
•
defaults by our tenants or their failure to pay rent on a timely basis
•
the need to periodically renovate and repair our space
•
physical damage to our Properties
•
economic or physical decline of the areas where our Properties are located
•
potential risk of functional obsolescence of our Properties over time
If a tenant is unable to pay rent due to us, we may be forced to evict the tenant, or engage in other remedies, which may be expensive and time consuming and may adversely affect our net income, shareholders' equity and cash distributions to shareholders.
If our tenants do not renew their leases as they expire, we may not be able to rent the space. Furthermore, leases that are renewed, and some new leases for space that is relet, may have terms that are less economically favorable to us than current lease terms, or may require us to incur significant costs, such as for renovations, tenant improvements or lease transaction costs.
Any of these events could adversely affect our cash flow from operations and our ability to make expected distributions to our shareholders and service our indebtedness.
A significant portion of our costs, such as real estate taxes, insurance costs, and debt service payments, generally are not reduced when circumstances cause a decrease in cash flow from our Properties.
Recent weakness in the general economy continues to adversely affect our business and financial condition and has affected some of our existing tenants, and thus could continue to have an adverse impact on our cash flow from operations.
The recent weakness in the general economy that followed the economic dislocation that began in mid-2007 has negatively impacted the Company by reducing demand for our properties. This lack of demand has reduced our ability to achieve increases in rents as

10

vacant spaces are leased, and in many cases has resulted in a decrease in rents as vacant spaces are leased. In addition, these economic conditions have had an adverse effect on many companies in numerous industries. We believe that some of our tenants have experienced and may be continuing to experience these adverse effects, thereby exacerbating the general leasing risks described in the Risk Factor immediately preceding this Risk Factor. While the general economy is recovering, the recovery has been weak. Should any of our tenants continue to experience a downturn in its business that weakens its financial condition, delays lease commencement or causes it to fail to make rental payments when due, become insolvent or declare bankruptcy, the result could be a termination of the tenant's lease and material losses to us. Our cash flow from operations and our ability to make expected distributions to our shareholders and service our indebtedness could, in such a case, be adversely affected.
We may face risks associated with our business strategy and the recent material acquisition and disposition transactions we have undertaken consistent with that strategy.
As previously reported, and as further summarized below in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” we undertook several significant transactions in 2013 consistent with our strategy to favor industrial and metro-office properties and markets with strong demographic and economic fundamentals, including the Cabot Acquisition and the Portfolio Sale.
While management believes that this strategy, and our completion of the Cabot Acquisition, the Portfolio Sale and the related equity and debt transactions will be in the best long-term interests of the Company and its shareholders,  we cannot assure you that this strategy and the associated transactions will produce the intended benefit, or when, if ever, those intended benefits will be achieved.   This strategy poses certain risks, including without limitation the following:
▪
for similar investment dollars, cash flow from industrial properties is generally less than cash flow generated from suburban office properties
▪
our expectation of increasing demand and increasing stability of value in the industrial sector and metro-office sector may not materialize
▪
the relative advantages in the ownership of industrial properties and metro-office properties as opposed to suburban office properties will be affected by variable and unpredictable macro-economic and global conditions that are outside of our control
▪
our identification of markets with strong demographic and economic fundamentals may prove erroneous, due to macro-economic and global conditions that are outside of our control
▪
the execution of our strategy may divert our management's attention away from other business concerns
▪
we cannot assure you that we will be able to complete the integration of the Cabot properties without encountering difficulties or that any such difficulties will not have a material adverse effect on us 
Failure of our strategy and associated transactions to achieve the intended benefits could have a material adverse effect on our results of operations, financial condition and liquidity.
We may not be able to compete successfully with other entities that operate in our industry.
We experience a great deal of competition in attracting tenants for our Properties and in locating land to develop and properties to acquire.
In our effort to lease our Properties, we compete for tenants with a broad spectrum of other landlords in each of our markets. These competitors include, among others, publicly-held REITs, privately-held entities, individual property owners and tenants who wish to sublease their space. Some of these competitors may be able to offer prospective tenants more attractive financial or other terms than we are able to offer.
We may experience increased operating costs, which could adversely affect our operations.
Our Properties are subject to increases in operating expenses such as insurance, cleaning, electricity, heating, ventilation and air conditioning, general and administrative costs and other costs associated with security, landscaping, repairs and maintenance. While our current tenants generally are obligated to pay a significant portion of these costs, there is no assurance that these tenants will make such payments or agree to pay these costs upon renewal or that new tenants will agree to pay these costs. If operating expenses increase in our markets, we may not be able to increase rents or reimbursements in all of these markets so as to meet

11

increased expenses without simultaneously decreasing occupancy rates. If this occurs, our ability to make distributions to shareholders and service our indebtedness could be adversely affected.
Our ability to achieve growth in operating income depends in part on our ability to develop properties, which may suffer under certain circumstances.
We intend to continue to develop properties when warranted by market conditions. Our general construction and development activities include the risks that:
▪
construction and leasing of a property may not be completed on schedule, which could result in increased expenses and construction costs, and would result in reduced profitability
▪
construction costs may exceed our original estimates due to increases in interest rates and increased materials, labor or other costs, possibly making the property unprofitable because we may not be able to increase rents to compensate for the increase in construction costs
▪
some developments may fail to achieve expectations, possibly making them unprofitable
▪
we may be unable to obtain, or may face delays in obtaining, required zoning, land-use, building, occupancy, and other governmental permits and authorizations, which could result in increased costs and could require us to abandon our activities entirely with respect to a project
▪
we may abandon development opportunities after we begin to explore them and as a result, we may fail to recover costs already incurred. If we alter or discontinue our development efforts, past and future costs of the investment may need to be expensed rather than capitalized and we may determine the investment is impaired, resulting in a loss
▪
we may expend funds on and devote management's time to projects that we do not complete
▪
occupancy rates and rents at newly completed properties may fluctuate depending on a number of factors, including market and economic conditions, and may result in lower than projected rental rates with the result that our investment is not profitable
We face risks associated with property acquisitions.
We acquire individual properties and portfolios of properties, in some cases through the acquisition of operating entities, and intend to continue to do so when circumstances warrant.
Our acquisition activities and their success are generally subject to the following risks, which risks can be exacerbated when we complete large acquisitions, such as the Cabot Acquisition:
▪
when we are able to locate a desirable property, competition from other real estate investors may significantly increase the purchase price
▪
acquired properties may fail to perform as expected
▪
the actual costs of repositioning or redeveloping acquired properties may be higher than our estimates
▪
acquired properties may be located in new markets where we face risks associated with an incomplete knowledge or understanding of the local market, a limited number of established business relationships in the area and a relative unfamiliarity with local governmental and permitting procedures
▪
we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties and operating entities, into our existing operations, and as a result, our results of operations and financial condition could be adversely affected
We may acquire properties subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities. As a result, if a liability were asserted against us based upon ownership of those properties, we might have to pay substantial sums to settle it, which could adversely affect our cash flow.
Many of our Properties are concentrated in our primary markets, and we therefore may suffer economic harm as a result of adverse conditions in those markets.
Our Properties are located principally in specific geographic areas. Due to the concentration of our Properties in these areas, performance is dependent on economic conditions in these areas. These areas have experienced periods of economic decline.
We may not be able to access financial markets to obtain capital on a timely basis, or on acceptable terms.
Our ability to access the public debt and equity markets depends on a variety of factors, including:
▪
general economic conditions affecting these markets
▪
our own financial structure and performance

12

▪
the market's opinion of REITs in general
▪
the market's opinion of REITs that own properties similar to ours
We may suffer adverse effects as a result of the terms of and covenants relating to our indebtedness.
Required payments on our indebtedness generally are not reduced if the economic performance of our portfolio of Properties declines. If the economic performance of our Properties declines, net income, cash flow from operations and cash available for distribution to shareholders will be reduced. If payments on debt cannot be made, we could sustain a loss, or in the case of mortgages, suffer foreclosures by mortgagees or suffer judgments. Further, some obligations, including our $500 million credit facility and $2.7 billion in unsecured notes issued in past public offerings, contain cross-default and/or cross-acceleration provisions, which means that a default on one obligation may constitute a default on other obligations.
Our credit facility and unsecured debt securities contain customary restrictions, requirements and limitations on our ability to incur indebtedness, including total debt to asset ratios, secured debt to total asset ratios, debt service coverage ratios and minimum ratios of unencumbered assets to unsecured debt which we must maintain. Our continued ability to borrow under our $500 million credit facility is subject to compliance with our financial and other covenants. In addition, our failure to comply with such covenants could cause a default under this credit facility, and we may then be required to repay such debt with capital from other sources. Under those circumstances, other sources of capital may not be available to us, or be available only on unattractive terms.
Our degree of leverage could limit our ability to obtain additional financing.
Our degree of leverage could affect our ability to obtain additional financing for working capital, capital expenditures, acquisitions, development or other general corporate purposes. Our senior unsecured debt is currently rated investment grade by the three major rating agencies. However, there can be no assurance we will be able to maintain this rating, and in the event our senior debt is downgraded from its current rating, we would likely incur higher borrowing costs. Our degree of leverage could also make us more vulnerable to a downturn in business or the economy generally.
Further issuances of equity securities may be dilutive to our existing shareholders.
The interests of our existing shareholders could be diluted if we issue additional equity securities to finance future developments, acquisitions, or repay indebtedness. Our Board of Trustees can authorize the issuance of additional securities without shareholder approval. Our ability to execute our business strategy depends on our access to an appropriate blend of debt financing, including unsecured lines of credit and other forms of secured and unsecured debt, and equity financing, including issuances of common and preferred equity.
An increase in interest rates would increase our interest costs on variable rate debt and could adversely impact our ability to refinance existing debt.
We currently have, and may incur more, indebtedness that bears interest at variable rates. Accordingly, if interest rates increase, so will our interest costs, which would adversely affect our cash flow and our ability to pay principal and interest on our debt and our ability to make distributions to our shareholders. Further, rising interest rates could limit our ability to refinance existing debt when it matures.
From time to time, we enter into interest rate swap agreements and other interest rate hedging contracts, including swaps, caps and floors. While these agreements are intended to lessen the impact of rising interest rates on us, they also expose us to the risk that the other parties to the agreements will not perform, we could incur significant costs associated with the settlement of the agreements, the agreements will be unenforceable and the underlying transactions will fail to qualify as highly-effective cash flow hedges under guidance included in ASC 815 “Derivatives and Hedging”. In addition, an increase in interest rates could decrease the amounts third parties are willing to pay for our assets, thereby limiting our ability to change our portfolio promptly in response to changes in economic or other conditions.
Property ownership through joint ventures will limit our ability to act exclusively in our interests and may require us to depend on the financial performance of our co-venturers.
From time to time we invest in joint ventures in which we do not hold a controlling interest. These investments involve risks that do not exist with properties in which we own a controlling interest, including the possibility that our partners may, at any time, have business, economic or other objectives that are inconsistent with our objectives. In instances where we lack a controlling interest, our partners may be in a position to require action that is contrary to our objectives. While we seek to negotiate the terms of these joint ventures in a way that secures our ability to act in our best interests, there can be no assurance that those terms will be sufficient to fully protect us against actions contrary to our interests. If the objectives of our co-ventures are inconsistent with ours, we may not in every case be able to act exclusively in our interests.

13

Additionally, our joint venture partners may experience financial difficulties or change their investment philosophies. This may impair their ability to meet their obligations to the joint venture, such as with respect to providing additional capital, if required. If such a circumstance presented itself we may be required to perform on their behalf, if possible, or suffer a loss of all or a portion of our investment in the joint venture.
Risks Related to the Real Estate Industry
Real estate investments are illiquid, and we may not be able to sell our Properties if and when we determine it is appropriate to do so.
Real estate generally cannot be sold quickly. We may not be able to dispose of our Properties promptly in response to economic or other conditions. In addition, provisions of the Internal Revenue Code of 1986, as amended (the "Code"), limit a REIT's ability to sell properties in some situations when it may be economically advantageous to do so, thereby adversely affecting returns to shareholders and adversely impacting our ability to meet our obligations to the holders of other securities.
We may experience economic harm if any damage to our Properties is not covered by insurance.
We believe all of our Properties are adequately insured with carriers that are adequately capitalized. However, we cannot guarantee that the limits of our current policies will be sufficient in the event of a catastrophe to our Properties or that carriers will be able to honor their obligations. Our existing property and liability policies expire during 2014. We cannot guarantee that we will be able to renew or duplicate our current coverages in adequate amounts or at reasonable prices.
We may suffer losses that are not covered under our comprehensive liability, fire, extended coverage and rental loss insurance policies. For example, we may not be insured for losses resulting from acts of war, certain acts of terrorism, or from environmental liabilities. If an uninsured loss or a loss in excess of insured limits should occur, we would nevertheless remain liable for the loss, which could adversely affect cash flow from operations.
Potential liability for environmental contamination could result in substantial costs.
Under federal, state and local environmental laws, ordinances and regulations, we may be required to investigate and clean up the effects of releases of hazardous or toxic substances or petroleum products at our Properties simply because of our current or past ownership or operation of the real estate. If unidentified environmental problems arise, we may have to make substantial payments which could adversely affect our cash flow and our ability to make distributions to our shareholders because:
▪
as owner or operator, we may have to pay for property damage and for investigation and clean-up costs incurred in connection with the contamination
▪
the law typically imposes clean-up responsibility and liability regardless of whether the owner or operator knew of or caused the contamination
▪
even if more than one person may be responsible for the contamination, each person who shares legal liability under the environmental laws may be held responsible for all of the clean-up costs
▪
governmental entities and third parties may sue the owner or operator of a contaminated site for damages and costs
These costs could be substantial. The presence of hazardous or toxic substances or petroleum products or the failure to properly remediate contamination may materially and adversely affect our ability to borrow against, sell or rent an affected property. In addition, applicable environmental laws create liens on contaminated sites in favor of the government for damages and costs it incurs in connection with a contamination. Changes in laws increasing the potential liability for environmental conditions existing at our Properties may result in significant unanticipated expenditures.
It is our policy to retain independent environmental consultants to conduct Phase I environmental site assessments and asbestos surveys with respect to our acquisition of properties. These assessments generally include a visual inspection of the properties and the surrounding areas, an examination of current and historical uses of the properties and the surrounding areas and a review of relevant state, federal and historical documents, but do not involve invasive techniques such as soil and ground water sampling. Where appropriate, on a property-by-property basis, our practice is to have these consultants conduct additional testing, including sampling for asbestos, for lead in drinking water, for soil contamination where underground storage tanks are or were located or where other past site usages create a potential environmental problem, and for contamination in groundwater. Even though these environmental assessments are conducted, there is still the risk that:
▪
the environmental assessments and updates will not identify all potential environmental liabilities
▪
a prior owner created a material environmental condition that is not known to us or the independent consultants preparing the assessments
▪
new environmental liabilities have developed since the environmental assessments were conducted

14

▪
future uses or conditions such as changes in applicable environmental laws and regulations could result in environmental liability for us
While we test indoor air quality on a regular basis and have an ongoing maintenance program in place to address this aspect of property operations, inquiries about indoor air quality may necessitate special investigation and, depending on the results, remediation. Indoor air quality issues can stem from inadequate ventilation, chemical contaminants from indoor or outdoor sources, pollen, viruses and bacteria. Indoor exposure to chemical or biological contaminants above certain levels can be alleged to be connected to allergic reactions or other health effects and symptoms in susceptible individuals. If these conditions were to occur at one of our Properties, we may need to undertake a targeted remediation program, including without limitation, steps to increase indoor ventilation rates and eliminate sources of contaminants. Such remediation programs could be costly, necessitate the temporary relocation of some or all of the Property's tenants or require rehabilitation of the affected Property.
Our Properties may contain or develop harmful mold, which could lead to liability for adverse health effects and costs of remediating the problem.
When excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants. Concern about indoor exposure to mold has been increasing as exposure to mold may cause a variety of adverse health effects and symptoms, including allergic or other reactions. As a result, the presence of significant mold at any of our Properties could require us to undertake a costly remediation program to contain or remove the mold from the affected Property. In addition, the presence of significant mold could expose us to liability from our tenants, employees of our tenants and others if property damage or health concerns arise.
Compliance with the Americans with Disabilities Act and fire, safety and other regulations may require us to make expenditures that adversely impact our operating results.
All of our Properties are required to comply with the Americans with Disabilities Act ("ADA"). The ADA generally requires that buildings be made accessible to people with disabilities. Compliance with the ADA requirements could require removal of access barriers, and non-compliance could result in imposition of fines by the United States government or an award of damages to private litigants, or both. Expenditures related to complying with the provisions of the ADA could adversely affect our results of operations and financial condition and our ability to make distributions to shareholders. In addition, we are required to operate our Properties in compliance with fire and safety regulations, building codes and other land use regulations, as they may be adopted by governmental agencies and bodies and become applicable to our Properties. We may be required to make substantial capital expenditures to comply with those requirements and these expenditures could have a material adverse effect on our operating results and financial condition, as well as our ability to make distributions to shareholders.
Terrorist attacks and other acts of violence or war may adversely impact our operating results and may affect markets on which our securities are traded.
Terrorist attacks against our Properties, or against the United States or United States interests generally, may negatively affect our operations and investments in our securities. Attacks or armed conflicts could have a direct adverse impact on our Properties or operations through damage, destruction, loss or increased security costs. Any terrorism insurance that we obtain may be insufficient to cover the loss for damages to our Properties as a result of terrorist attacks.
Furthermore, any terrorist attacks or armed conflicts could result in increased volatility in or damage to the United States and worldwide financial markets and economy. Adverse economic conditions could affect the ability of our tenants to pay rent, which could have an adverse impact on our operating results.
Risks Related to Our Organization and Structure
We have elected REIT status under the federal tax laws and could suffer adverse consequences if we fail to qualify as a REIT.
We have elected REIT status under federal tax laws and have taken the steps known to us to perfect that status, but we cannot be certain that we qualify or that we will remain qualified. Qualification as a REIT involves the application of highly technical and complex provisions of the Code, as to which there are only limited judicial or administrative interpretations. The complexity of these provisions and of the related income tax regulations is greater in the case of a REIT that holds its assets in partnership form, as we do. Moreover, no assurance can be given that new tax laws will not significantly affect our qualification as a REIT or the federal income tax consequences of such qualification. New laws could be applied retroactively, which means that past operations could be found to be in violation, which would have a negative effect on the business.

15

If we fail to qualify as a REIT in any taxable year, the distributions to shareholders would not be deductible when computing taxable income. If this happened, we would be subject to federal income tax on our taxable income at regular corporate rates. Also, we could be prevented from qualifying as a REIT for the four years following the year in which we were disqualified. Further, if we requalified as a REIT after failing to qualify, we might have to pay the full corporate-level tax on any unrealized gain in our assets during the period we were not qualified as a REIT. We would then have to distribute to our shareholders the earnings we accumulated while we were not qualified as a REIT. These additional taxes would reduce our funds available for distribution to our shareholders. In addition, while we were disqualified as a REIT, we would not be required by the Code to make distributions to our shareholders. A failure by the Company to qualify as a REIT and the resulting requirement to pay taxes and interest (and perhaps penalties) would cause us to default under various agreements to which we are a party, including under our credit facility, and would have a material adverse effect on our business, prospects, results of operations, earnings, financial condition and our ability to make distributions to shareholders.
Future economic, market, legal, tax or other considerations may lead our Board of Trustees to authorize the revocation of our election to qualify as a REIT. A revocation of our REIT status would require the consent of the holders of a majority of the voting interests of all of our outstanding Common Shares.
Certain officers of the Trust may not have the same interests as shareholders as to certain tax laws.
Certain officers of the Trust own Common Units. These units may be exchanged for our Common Shares. The officers who own those units and have not yet exchanged them for our Common Shares may suffer different and more adverse tax consequences than holders of our Common Shares suffer in certain situations:
▪
when certain of our Properties are sold
▪
when debt on those Properties is refinanced
▪
if we are involved in a tender offer or merger
Because these officers own units and face different consequences than shareholders do, the Trust and those officers may have different objectives as to these transactions than shareholders do.
Certain aspects of our organization could have the effect of restricting or preventing a change of control of our Company, which could have an adverse effect on the price of our shares.
Our charter contains an ownership limit on shares. To qualify as a REIT, five or fewer individuals cannot own, directly or indirectly, more than 50% in value of the outstanding shares of beneficial interest. To this end, our Declaration of Trust, among other things, generally prohibits any holder of the Trust's shares from owning more than 5% of the Trust's outstanding shares of beneficial interest, unless that holder gets the consent from our Board of Trustees. This limitation could prevent the acquisition of control of the Company by a third party without the consent from our Board of Trustees.
We can issue preferred shares. Our Declaration of Trust authorizes our Board of Trustees to establish the preferences and rights of any shares issued. The issuance of preferred shares could have the effect of delaying, making more difficult or preventing a change of control of the Company, even if a change in control were in the shareholder's interest.
There are limitations on acquisition of and changes in control pursuant to, and fiduciary protections of the Board under Maryland law. The Maryland General Corporation Law ("MGCL") contains provisions which are applicable to the Trust as if the Trust were a corporation. Among these provisions is a section, referred to as the "control share acquisition statute," which eliminates the voting rights of shares acquired in quantities so as to constitute "control shares," as defined under the MGCL. The MGCL also contains provisions applicable to us that are referred to as the "business combination statute," which would generally limit business combinations between the Company and any 10% owners of the Trust's shares or any affiliate thereof. Further, Maryland law provides broad discretion to the Board with respect to its fiduciary duties in considering a change in control of our Company, including that the Board is subject to no greater level of scrutiny in considering a change in control transaction than with respect to any other act by the Board. Finally, the "unsolicited takeovers" provisions of the MGCL permit the Board, without shareholder approval and regardless of what is currently provided in our Declaration of Trust or By-Laws, to implement takeover defenses that our Company does not yet have, including permitting only the Board to fix the size of the Board and permitting only the Board to fill a vacancy on the Board. All of these provisions may have the effect of inhibiting a third party from making an acquisition proposal for our Company or of delaying, deferring or preventing a change in control of the Company under circumstances that otherwise could provide the holders of Common Shares with the opportunity to realize a premium over the then current market price.


16

Various factors out of our control could hurt the market value of our publicly traded securities.
The value of our publicly traded securities depends on various market conditions, which may change from time to time. In addition to general economic and market conditions and our particular financial condition and performance, the value of our publicly traded securities could be affected by, among other things, the extent of institutional investor interest in us and the market's opinion of REITs in general and, in particular, REITs that own and operate properties similar to ours.
The market value of the equity securities of a REIT may be based primarily upon the market's perception of the REIT's growth potential and its current and future cash distributions, and may be secondarily based upon factors such as the real estate market value of the underlying assets. The failure to meet the market's expectations with regard to future earnings and cash distributions likely would adversely affect the market price of publicly traded securities. Our payment of future dividends will be at the discretion of our Board of Trustees and will depend on numerous factors including our cash flow, financial condition and capital requirements, annual distribution requirements under the REIT provisions of the Code, the general economic environment and such other factors as our Board of Trustees deems relevant, and we cannot assure you that our annual dividend rate will be maintained at its current level. We are currently distributing more in dividends than we receive in net cash provided by operating activities less customary tenant improvement and leasing transaction costs. Over time, increases in occupancy and rental rates could offset this shortfall. Should market opportunities allow us to accelerate our strategy relating to dispositions (i.e., sale of suburban office) without corresponding opportunities to reinvest those proceeds in the near term, this shortfall would increase. We will continually evaluate these circumstances opposite our distribution policies.
Rising market interest rates could make an investment in publicly traded securities less attractive. If market interest rates increase, purchasers of publicly traded securities may demand a higher annual yield on the price they pay for their securities. This could adversely affect the market price of publicly traded securities.
Furthermore, changes in tax laws may affect the price of our securities.  Pursuant to legislation newly enacted in 2013, the highest marginal ordinary income tax rate is 39.6% and the highest long-term capital gain rate is 20%; moreover, the Internal Revenue Service (“IRS”) issued final regulations in 2013 with respect to the Foreign Account Tax Compliance Act, adopting the effective dates for required withholding provided for in previous IRS guidance.  In addition, beginning in 2013, the dividends paid by the Trust are also subject to the new Medicare tax on unearned income.  That tax is a separate 3.8% tax payable on the net investment income of certain taxpayers, which includes income from business activities in which the taxpayer is not a material participant.  It applies to married taxpayers filing jointly with a modified adjusted gross income of greater than $250,000, married taxpayers filing separately with a modified AGI greater than $125,000, and all other individuals with a modified AGI greater than $200,000. 
The threshold amount for estates and trusts is the dollar amount at which the highest marginal income tax rate begins, $12,150 for the 2014 taxable year.   While we do not expect that the new legislation and IRS regulations to have any significant impact on our operations and financial results, no assurance can be given that additional new tax laws will not adversely affect the value of our publicly traded securities.
We do not have a shareholder rights plan but are not precluded from adopting one.
Our shareholder rights plan expired in accordance with its terms on December 31, 2007. While we did not extend or renew the plan, we are not prohibited from adopting, without shareholder approval, a shareholder rights plan that may discourage any potential acquirer from acquiring more than a specific percentage of our outstanding Common Shares since, upon this type of acquisition without approval of our Board of Trustees, all other common shareholders would have the right to purchase a specified amount of Common Shares at a substantial discount from market price.
Transactions by the Trust or the Operating Partnership could adversely affect debt holders.
Except with respect to several covenants limiting the incurrence of indebtedness and a covenant requiring the Operating Partnership to maintain a certain unencumbered total asset value, our indentures do not contain any additional provisions that would protect holders of the Operating Partnership's debt securities in the event of (i) a highly leveraged transaction involving the Operating Partnership, (ii) a change of control or (iii) certain reorganizations, restructurings, mergers or similar transactions involving the Operating Partnership or the Trust.

ITEM 1B. UNRESOLVED STAFF COMMENTS
None.

17

ITEM 2. PROPERTIES
The Wholly Owned Properties in Operation, as of December 31, 2013, consisted of 489 industrial and 223 office properties. Single tenants occupy 239 Wholly Owned Properties in Operation. These tenants generally require a reduced level of service in connection with the operation or maintenance of these properties. The remaining 473 Wholly Owned Properties in Operation are multi-tenant properties for which the Company renders a range of building, operating and maintenance services.
As of December 31, 2013, the industrial Wholly Owned Properties in Operation were 92.1% leased. The average building size for the industrial Wholly Owned Properties in Operation was approximately 149,000 square feet. As of December 31, 2013, the office Wholly Owned Properties in Operation were 88.7% leased. The average building size for the office Wholly Owned Properties in Operation was approximately 75,000 square feet.
The JV Properties in Operation, as of December 31, 2013, consisted of 45 industrial and 34 office properties. Single tenants occupy 24 JV Properties in Operation. These tenants generally require a reduced level of service in connection with the operation or maintenance of these properties. The remaining 55 JV Properties in Operation are multi-tenant properties for which the Company renders a range of building, operating and maintenance services.
As of December 31, 2013, the industrial JV Properties in Operation were 94.8% leased. The average building size for the industrial JV Properties in Operation was approximately 208,000 square feet. As of December 31, 2013, the office JV Properties in Operation were 86.5% leased. The average building size for the office JV Properties in Operation was approximately 121,000 square feet.
As of December 31, 2013, the industrial Properties in Operation were 92.4% leased. The average building size for the industrial Properties in Operation was approximately 154,000 square feet. As of December 31, 2013, the office Properties in Operation were 88.3% leased. The average building size for the office Properties in Operation was approximately 81,000 square feet.
A complete listing of the Wholly Owned Properties in Operation appears as Schedule III to the financial statements of the Company included in this Annual Report on Form 10-K. The table below sets forth certain information on the Company's Properties in Operation as of December 31, 2013 (in thousands, except percentages).


18

 
 
 
Type
 
Net Rent(1)
 
Straight Line Rent and Operating Expense Reimbursement (2)
 
Square Feet
 
% Leased
Industrial -
Lehigh/Central PA
 
Industrial
—

Distribution
 
$
79,682

 
$
99,781

 
18,940

 
91.0
%
 
 
 
 
—

Flex
 
2,323

 
3,144

 
336

 
100.0
%
 
 
 
Office
 
 
 
1,343

 
2,375

 
121

 
96.3
%
 
 
 
Total
 
 
 
83,348

 
105,300

 
19,397

 
91.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Chicago/Milwaukee
 
Industrial
—

Distribution
 
25,636

 
33,733

 
6,816

 
98.1
%
 
 
 
 
—

Flex
 
299

 
502

 
94

 
86.8
%
 
 
 
Office
 
 
 
—

 
—

 
—

 
—

 
 
 
Total
 
 
 
25,935

 
34,235

 
6,910

 
98.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Houston
 
Industrial
—

Distribution
 
22,529

 
31,726

 
4,749

 
99.3
%
 
 
 
 
—

Flex
 
8,196

 
11,313

 
1,210

 
88.4
%
 
 
 
Office
 
 
 
—

 
—

 
—

 
—

 
 
 
Total
 
 
 
30,725

 
43,039

 
5,959

 
97.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Carolinas
 
Industrial
—

Distribution
 
22,261

 
29,881

 
5,787

 
98.5
%
 
 
 
 
—

Flex
 
1,483

 
1,863

 
263

 
100.0
%
 
 
 
Office
 
 
 
—

 
—

 
—

 
—

 
 
 
Total
 
 
 
23,744

 
31,744

 
6,050

 
98.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other
 
Industrial
—

Distribution
 
50,784

 
67,111

 
14,140

 
91.2
%
 
 
 
 
—

Flex
 
14,168

 
19,493

 
2,081

 
84.3
%
 
 
 
Office
 
 
 
36,554

 
59,067

 
2,775

 
94.7
%
 
 
 
Total
 
 
 
101,506

 
145,671

 
18,996

 
90.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Industrial/Office -
Minnesota
 
Industrial
—

Distribution
 
5,575

 
8,289

 
1,320

 
89.5
%
 
 
 
 
—

Flex
 
8,751

 
14,329

 
1,211

 
91.5
%
 
 
 
Office
 
 
 
17,894

 
28,741

 
1,866

 
81.3
%
 
 
 
Total
 
 
 
32,220

 
51,359

 
4,397

 
86.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
South Florida
 
Industrial
—

Distribution
 
10,031

 
13,969

 
1,654

 
91.8
%
 
 
 
 
—

Flex
 
2,991

 
4,205

 
388

 
87.1
%
 
 
 
Office
 
 
 
18,335

 
31,272

 
1,235

 
92.1
%
 
 
 
Total
 
 
 
31,357

 
49,446

 
3,277

 
91.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Richmond/Hampton Roads
 
Industrial
—

Distribution
 
14,258

 
17,647

 
4,020

 
89.3
%
 
 
 
 
—

Flex
 
1,591

 
2,053

 
261

 
87.1
%
 
 
 
Office
 
 
 
13,474

 
20,773

 
1,230

 
89.3
%
 
 
 
Total
 
 
 
29,323

 
40,473

 
5,511

 
89.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Arizona
 
Industrial
—

Distribution
 
4,031

 
5,310

 
1,565

 
57.5
%
 
 
 
 
—

Flex
 
302

 
415

 
47

 
100.0
%
 
 
 
Office
 
 
 
19,273

 
24,469

 
1,202

 
96.5
%
 
 
 
Total
 
 
 
23,606

 
30,194

 
2,814

 
74.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
United Kingdom
 
Industrial
—

Distribution
 
11,644

 
11,644

 
1,381

 
100.0
%
 
 
 
 
—

Flex
 
1,303

 
1,303

 
44

 
100.0
%
 
 
 
Office
 
 
 
2,641

 
2,622

 
90

 
92.4
%
 
 
 
Total
 
 
 
15,588

 
15,569

 
1,515

 
99.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other
 
Industrial
—

Distribution
 
9,515

 
13,150

 
2,190

 
91.8
%
 
 
 
 
—

Flex
 
13,846

 
19,420

 
1,758

 
89.2
%
 
 
 
Office
 
 
 
16,685

 
25,787

 
1,217

 
94.1
%
 
 
 
Total
 
 
 
40,046

 
58,357

 
5,165

 
91.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Office -
Philadelphia
 
Industrial
—

Distribution
 
3,714

 
5,656

 
346

 
100.0
%
 
 
 
 
—

Flex
 
3,254

 
4,161

 
204

 
100.0
%
 
 
 
Office
 
 
 
17,181

 
23,808

 
589

 
97.9
%
 
 
 
Total
 
 
 
24,149

 
33,625

 
1,139

 
98.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Southeastern PA
 
Industrial
—

Distribution
 
3,063

 
3,931

 
407

 
91.6
%
 
 
 
 
—

Flex
 
15,298

 
22,843

 
1,611

 
91.1
%
 
 
 
Office
 
 
 
76,583

 
118,530

 
5,944

 
84.1
%
 
 
 
Total
 
 
 
94,944

 
145,304

 
7,962

 
85.9
%

19

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Washington D.C.
 
Industrial
—

Distribution
 
—

 
—

 
—

 
—

 
 
 
 
—

Flex
 
—

 
—

 
—

 
—

 
 
 
Office
 
 
 
11,628

 
18,887

 
437

 
84.0
%
 
 
 
Total
 
 
 
11,628

 
18,887

 
437

 
84.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL
 
Industrial
—

Distribution
 
262,723

 
341,828

 
63,315

 
92.5
%
 
 
 
 
—

Flex
 
73,805

 
105,044

 
9,508

 
89.5
%
 
 
 
Office
 
 
 
231,591

 
356,331

 
16,706

 
88.7
%
 
 
 
Total
 
 
 
$
568,119

 
$
803,203

 
89,529

 
91.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Joint Ventures (3)
 
Industrial
—

Distribution
 
$
34,647

 
$
48,332

 
9,269

 
94.8
%
 
 
 
 
—

Flex
 
2,754

 
2,660

 
108

 
95.6
%
 
 
 
Office
 
 
 
90,431

 
129,989

 
4,114

 
86.5
%
 
 
 
Total
 
 
 
$
127,832

 
$
180,981

 
13,491

 
92.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
Net rent represents the contractual rent per square foot multiplied by the tenant's square feet leased at December 31, 2013 for tenants in occupancy. As of December 31, 2013, net rent per square foot for the Wholly Owned Properties in Operation was $6.94 and for the Joint Venture Properties in Operation was $10.27. Net rent does not include the tenant's obligation to pay property operating expenses and real estate taxes. If a tenant at December 31, 2013 was within a free rent period its rent would equal zero for the purposes of this metric.
(2)
Straight line rent and operating expense reimbursement represents the straight line rent including operating expense recoveries per square foot multiplied by the tenant's square feet leased at December 31, 2013 for tenants in occupancy. As of December 31, 2013, straight line rent and operating expense reimbursement per square foot for the Wholly Owned Properties in Operation was $9.81 and for the Joint Venture Properties in Operation was $14.43.
(3)
Joint Ventures represent the 79 properties owned by unconsolidated joint ventures in which the Company has an interest.

20

The expiring number of tenants, square feet and annual rent by year for the Properties in Operation as of December 31, 2013 are as follows (in thousands except number of tenants and % of annual rent):
 
 
Industrial-Distribution
 
Industrial-Flex
 
Office
 
Total
 
 
Number of Tenants
 
Square Feet
 
Annual (1) Rent
 
% of Annual Rent
 
Number of Tenants
 
Square Feet
 
Annual (1) Rent
 
% of Annual Rent
 
Number of Tenants
 
Square Feet
 
Annual (1) Rent
 
% of Annual Rent
 
Number of Tenants
 
Square Feet
 
Annual (1) Rent
 
% of Annual Rent
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wholly Owned Properties in Operation:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
126

  
7,691

  
$
29,577

 
10.2
%
 
111

 
1,166

 
$
9,120

 
11.1
%
 
207

  
1,672

 
$
24,354

 
9.2
%
 
444

 
10,529

 
$
63,051

 
9.9
%
2015
 
121

  
9,505

  
42,610

 
14.7
%
 
103

 
1,235

 
11,390

 
13.9
%
 
169

  
2,257

 
33,248

 
12.6
%
 
393

 
12,997

 
87,248

 
13.7
%
2016
 
121

  
9,583

  
47,027

 
16.3
%
 
102

 
1,621

 
14,502

 
17.7
%
 
146

  
1,858

 
32,066

 
12.1
%
 
369

 
13,062

 
93,595

 
14.7
%
2017
 
115

  
7,806

  
38,225

 
13.2
%
 
80

 
1,232

 
10,264

 
12.5
%
 
110

  
1,932

 
32,332

 
12.2
%
 
305

 
10,970

 
80,821

 
12.7
%
2018
 
102

  
8,865

  
46,859

 
16.2
%
 
58

 
912

 
8,563

 
10.4
%
 
100

  
1,706

 
28,711

 
10.9
%
 
260

 
11,483

 
84,133

 
13.2
%
2019
 
53

  
5,521

  
27,477

 
9.5
%
 
30

 
888

 
9,177

 
11.2
%
 
72

  
1,949

 
38,265

 
14.5
%
 
155

 
8,358

 
74,919

 
11.8
%
2020
 
28

  
4,236

  
23,145

 
8.0
%
 
19

 
476

 
6,388

 
7.8
%
 
36

  
925

 
18,004

 
6.8
%
 
83

 
5,637

 
47,537

 
7.5
%
2021
 
13

  
810

  
4,304

 
1.5
%
 
8

 
205

 
2,317

 
2.8
%
 
20

  
368

 
5,996

 
2.3
%
 
41

 
1,383

 
12,617

 
2.0
%
2022
 
12

  
1,053

  
5,724

 
2.0
%
 
11

 
355

 
3,503

 
4.3
%
 
13

  
424

 
7,536

 
2.8
%
 
36

 
1,832

 
16,763

 
2.6
%
2023
 
7

  
766

  
4,522

 
1.6
%
 
11

 
242

 
4,406

 
5.4
%
 
9

  
218

 
5,420

 
2.0
%
 
27

 
1,226

 
14,348

 
2.3
%
Thereafter
 
10

  
2,701

  
19,495

 
6.8
%
 
4

 
179

 
2,474

 
2.9
%
 
27

  
1,516

 
38,674

 
14.6
%
 
41

 
4,396

 
60,643

 
9.6
%
Total
 
708

  
58,537

  
$
288,965

 
100.0
%
 
537

  
8,511

 
$
82,104

 
100.0
%
 
909

  
14,825

 
$
264,606

 
100.0
%
 
2,154

 
81,873

 
$
635,675

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Joint Venture Properties in Operation:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
8

  
550

  
$
2,808

 
7.1
%
 
2

  
25

 
$
747

 
25.0
%
 
37

  
532

  
$
13,050

 
12.1
%
 
47

 
1,107

 
$
16,605

 
11.0
%
2015
 
7

  
577

  
2,307

 
5.9
%
 
2

  
9

 
260

 
8.7
%
 
23

  
218

  
4,930

 
4.6
%
 
32

 
804

 
7,497

 
5.0
%
2016
 
15

  
1,427

  
6,208

 
15.8
%
 
1

  
37

 
1,056

 
35.3
%
 
27

  
413

  
10,113

 
9.3
%
 
43

 
1,877

 
17,377

 
11.5
%
2017
 
10

  
1,210

  
5,012

 
12.7
%
 
2

  
25

 
754

 
25.2
%
 
25

  
283

  
6,540

 
6.0
%
 
37

 
1,518

 
12,306

 
8.2
%
2018
 
14

  
1,698

  
7,745

 
19.7
%
 
1

  
7

 
175

 
5.8
%
 
22

  
131

  
4,237

 
3.9
%
 
37

 
1,836

 
12,157

 
8.1
%
2019
 
3

  
547

  
3,154

 
8.0
%
 
—

  
—

 
—

 
—
%
 
25

  
300

  
8,099

 
7.5
%
 
28

 
847

 
11,253

 
7.5
%
2020
 
3

  
837

  
3,535

 
9.0
%
 
—

  
—

 
—

 
—
%
 
8

  
135

  
2,651

 
2.4
%
 
11

 
972

 
6,186

 
4.1
%
2021
 
2

  
521

  
2,280

 
5.8
%
 
—

  
—

 
—

 
—
%
 
11

  
188

  
5,519

 
5.1
%
 
13

 
709

 
7,799

 
5.2
%
2022
 
4

  
804

  
3,340

 
8.5
%
 
—

  
—

 
—

 
—
%
 
9

  
127

  
3,800

 
3.5
%
 
13

 
931

 
7,140

 
4.7
%
2023
 
1

  
308

  
1,682

 
4.3
%
 
—

  
—

 
—

 
—
%
 
8

  
1,198

  
47,580

 
43.9
%
 
9

 
1,506

 
49,262

 
32.7
%
Thereafter
 
3

  
306

  
1,312

 
3.2
%
 
—

  
—

 
—

 
—
%
 
4

  
34

  
1,742

 
1.7
%
 
7

 
340

 
3,054

 
2.0
%
Total
 
70

  
8,785

  
$
39,383

 
100.0
%
 
8

  
103

 
$
2,992

 
100.0
%
 
199

  
3,559

  
$
108,261

 
100.0
%
 
277

 
12,447

 
$
150,636

 
100.0
%

(1) Annual rent represents the contractual rent per square foot multiplied by the tenants' square feet leased on the date of lease expiration for the tenants in occupancy on December 31, 2013.

21

The table below highlights, for the Properties in Operation, the Company's top ten industrial tenants and top ten office tenants as of December 31, 2013. The table reflects, for the tenants in the JV Properties in Operation, the Company's ownership percentage of the respective joint venture.
 
 
Percentage of
Top 10 Industrial Tenants
 
Annual Rent
Home Depot U.S.A., Inc.
 
1.5
%
Amazon.com
 
1.1
%
Kellogg USA, Inc.
 
1.1
%
Wakefern Food Corp.
 
0.9
%
CEVA Logistics U.S., Inc.
 
0.9
%
Flowers Foods, Inc.
 
0.8
%
Ozburn Hessey Logistics, L.L.C.
 
0.8
%
Kmart of Pennsylvania, LP
 
0.8
%
Federal Express Corporation
 
0.7
%
DSC Logistics, Inc.
 
0.6
%
 
 
9.2
%
 
 
 
 
 
Percentage of
Top 10 Office Tenants
 
Annual Rent
The Vanguard Group, Inc.
 
3.4
%
GlaxoSmithKline, LLC
 
1.9
%
United States of America
 
1.5
%
Comcast Corporation
 
1.5
%
United Healthcare Services, Inc.
 
1.3
%
Fidelity National Information Services
 
0.9
%
WellCare Health Plans, Inc.
 
0.8
%
The Urban Institute
 
0.8
%
The Pennsylvania Hospital
 
0.7
%
Yellow Book USA, Inc.
 
0.6
%
 
 
13.4
%
The table below details the vacancy activity during the year ended December 31, 2013:
 
Year Ended
 
December 31, 2013
 
Square Feet
 
Wholly Owned Properties in Operation
 
JV Properties in Operation
 
Properties in Operation
Vacancy Activity
 
 
 
 
 
Vacancy at January 1, 2013
5,062,507

 
1,386,608

 
6,449,115

Acquisitions
2,369,300

 
—

 
2,369,300

Completed development
1,637,285

 
—

 
1,637,285

Dispositions
(833,991
)
 
(49,068
)
 
(883,059
)
Expirations
17,842,834

 
2,959,839

 
20,802,673

Property structural changes/other
(37,616
)
 
(13,900
)
 
(51,516
)
Leasing activity
(18,384,773
)
 
(3,239,084
)
 
(21,623,857
)
Vacancy at December 31, 2013
7,655,546

 
1,044,395

 
8,699,941

 
 
 
 
 
 
Lease transaction costs per square foot (1)
$
3.27

 
$
2.95

 
$
3.22

(1) Transaction costs include tenant improvement and lease transaction costs.


22

ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material litigation as of December 31, 2013.

ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.

23

PART II
ITEM 5. MARKET FOR THE REGISTRANTS' COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND RELATED ISSUER PURCHASES OF EQUITY SECURITIES
The Common Shares are traded on the New York Stock Exchange. As of December 31, 2013, these shares were traded under the symbol "LRY." Commencing on February 28, 2014, these shares are traded under the symbol "LPT." There is no established public trading market for the Common Units. The following table sets forth, for the calendar quarters indicated, the high and low closing prices of the Common Shares on the New York Stock Exchange, and the dividends declared per Common Share for such calendar quarter.
 
 
High
 
Low
 
Dividends Declared Per Common Share
2013
 
 
 
 
 
 
Fourth Quarter
 
$38.12
 
$32.12
 
$0.475
Third Quarter
 
40.33

 
33.76

 
0.475

Second Quarter
 
44.70

 
34.84

 
0.475

First Quarter
 
40.18

 
36.04

 
0.475

2012
 
 
 
 
 
 
Fourth Quarter
 
$37.46
 
$33.28
 
$0.475
Third Quarter
 
38.57

 
35.41

 
0.475

Second Quarter
 
37.03

 
33.84

 
0.475

First Quarter
 
35.72

 
30.91

 
0.475

As of February 26, 2014, the Common Shares were held by 937 holders of record. Since its initial public offering in 1994, the Company has paid regular and uninterrupted quarterly dividends.
Although the Company currently expects that dividends at $0.475 per Common Share per quarter or a comparable rate will continue to be paid in the future, the payment of future dividends by the Company will be at the discretion of the Board of Trustees and will depend on numerous factors including the Company's cash flow, its financial condition, capital requirements, annual distribution requirements under the REIT provisions of the Code, the general economic environment and such other factors as the Board of Trustees deems relevant.



24

The following line graph compares the cumulative total shareholder return on Common Shares for the period beginning December 31, 2008 and ended December 31, 2013 with the cumulative total return on the Standard and Poor's 500 Stock Index ("S&P 500") and the NAREIT Equity REIT Total Return Index ("NAREIT Index") over the same period. Total return values for the S&P 500, the NAREIT Index and the Company's Common Shares were calculated based on cumulative total return assuming the investment of $100 in the NAREIT Index, the S&P 500 and the Company's Common Shares on December 31, 2008, and assuming reinvestment of dividends in all cases.



25

ITEM 6. SELECTED FINANCIAL DATA
The following tables set forth Selected Financial Data for the Trust and the Operating Partnership as of and for the five years ended December 31, 2013. The information set forth below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and notes thereto appearing elsewhere in this report. Certain amounts from prior years have been reclassified to conform to current-year presentation.
Operating Data
 
YEAR ENDED DECEMBER 31,
(In thousands, except per share data)
 
2013
 
2012
 
2011
 
2010
 
2009
Total operating revenue
 
$645,930
 
$560,279
 
$533,699
 
$522,524
 
$508,503
Income from continuing operations
 
$97,755
 
$96,747
 
$104,645
 
$95,281
 
$(5,433)
Income from discontinued operations
 
$121,839
 
$51,004
 
$106,065
 
$58,094
 
$84,425
Net income
 
$219,594
 
$147,751
 
$210,710
 
$153,375
 
$78,992
Basic:
 
 
 
 
 
 
 
 
 
 
  Income (loss) from continuing operations
 
$0.70
 
$0.75
 
$0.71
 
$0.62
 
$(0.23)
  Income from discontinued operations
 
$0.91
 
$0.43
 
$0.89
 
$0.51
 
$0.75
  Income per common share/unit
 
$1.61
 
$1.18
 
$1.60
 
$1.13
 
$0.52
Diluted:
 
 
 
 
 
 
 
 
 
 
  Income (loss) from continuing operations
 
$0.70
 
$0.75
 
$0.70
 
$0.62
 
$(0.23)
  Income from discontinued operations
 
$0.90
 
$0.42
 
$0.89
 
$0.50
 
$0.75
  Income per common share/unit
 
$1.60
 
$1.17
 
$1.59
 
$1.12
 
$0.52
Dividends paid per common share
 
$1.90
 
$1.90
 
$1.90
 
$1.90
 
$1.90
Trust - weighted average number of shares outstanding - basic (1)
 
130,180

 
116,863

 
114,755

 
112,924

 
107,550

Trust - weighted average number of shares outstanding - diluted (2)
 
130,909

 
117,694

 
115,503

 
113,606

 
108,002

Operating Partnership - weighted average number of units outstanding - basic (1)
 
133,858

 
120,623

 
118,624

 
116,871

 
111,568

Operating Partnership - weighted average number of units outstanding - diluted (2)
 
134,587

 
121,454

 
119,372

 
117,553

 
112,020

 
 
 
 
 
 
 
 
 
 
 
Balance Sheet Data
 
DECEMBER 31,
(In thousands)
 
2013
 
2012
 
2011
 
2010
 
2009
Net real estate
 
$
5,668,775

 
$
4,316,307

 
$
3,928,908

 
$
3,673,255

 
$
3,702,450

Total assets
 
$
6,775,560

 
$
5,174,179

 
$
4,986,165

 
$
5,060,478

 
$
5,224,496

Total indebtedness
 
$
3,253,519

 
$
2,653,606

 
$
2,219,354

 
$
2,355,501

 
$
2,452,428

Liberty Property Trust shareholders' equity
 
$
3,035,844

 
$
2,091,012

 
$
2,103,594

 
$
2,082,186

 
$
2,122,295

Owners' equity (Liberty Property Limited Partnership)
 
$
3,096,179

 
$
2,217,820

 
$
2,459,756

 
$
2,438,552

 
$
2,483,169

 
 
 
 
 
 
 
 
 
 
 
Other Data
 
YEAR ENDED DECEMBER 31,
(Dollars in thousands)
 
2013
 
2012
 
2011
 
2010
 
2009
Net cash provided by operating activities
 
$
315,965

 
$
317,166

 
$
317,724

 
$
292,264

 
$
307,201

Net cash used in investing activities
 
$
(1,197,914
)
 
$
(312,669
)
 
$
(56,223
)
 
$
(103,461
)
 
$
(14,332
)
Net cash provided by (used in) financing activities
 
$
1,005,766

 
$
12,690

 
$
(351,513
)
 
$
(315,842
)
 
$
(74,033
)
Funds from operations available to common shareholders - diluted (3)
 
$
335,535

 
$
312,992

 
$
311,841

 
$
312,138

 
$
310,439

Total leaseable square footage of Wholly Owned Properties in Operation at end of period (in thousands)
 
89,528

 
67,181

 
65,202

 
65,241

 
64,384

Total leaseable square footage of JV Properties in Operation at end of period (in thousands)
 
13,491

 
14,161

 
14,164

 
14,422

 
13,786

Wholly Owned Properties in Operation at end of period
 
712

 
582

 
597

 
637

 
639

JV Properties in Operation at end of period
 
79

 
96

 
96

 
98

 
96

Wholly Owned Properties in Operation percentage leased at end of period
 
91
%
 
92
%
 
92
%
 
90
%
 
89
%
JV Properties in Operation percentage leased at end of period
 
92
%
 
90
%
 
89
%
 
83
%
 
88
%


26

(1)
Basic weighted average number of shares includes vested Common Shares (Liberty Property Trust); Common Units (Liberty Property Limited Partnership) outstanding during the year.
(2)
Diluted weighted average number of shares includes the vested and unvested Common Shares (Liberty Property Trust); Common Units (Liberty Property Limited Partnership) outstanding during the year as well as the dilutive effect of outstanding options.
(3)
The National Association of Real Estate Investment Trusts ("NAREIT") has issued a standard definition for Funds from operations (as defined below). The Securities and Exchange Commission has agreed to the disclosure of this non-GAAP financial measure on a per share basis in its Release No. 34-47226, Conditions for Use of Non-GAAP Financial Measures. The Company believes that the calculation of Funds from operations is helpful to investors and management as it is a measure of the Company's operating performance that excludes depreciation and amortization and gains and losses from property dispositions. As a result, year over year comparison of Funds from operations reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, development activities, general and administrative expenses, and interest costs, providing perspective not immediately apparent from net income. In addition, management believes that Funds from operations provides useful information to the investment community about the Company's financial performance when compared to other REITs since Funds from operations is generally recognized as the standard for reporting the operating performance of a REIT. Funds from operations available to common shareholders is defined by NAREIT as net income (computed in accordance with generally accepted accounting principles ("GAAP")), excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Funds from operations available to common shareholders does not represent net income or cash flows from operations as defined by GAAP and does not necessarily indicate that cash flows will be sufficient to fund cash needs. It should not be considered as an alternative to net income as an indicator of the Company's operating performance or to cash flows as a measure of liquidity. Funds from operations available to common shareholders also does not represent cash flows generated from operating, investing or financing activities as defined by GAAP. Historically the Company included impairment charges in this computation. However, excluding impairment charges from the computation of Funds from operations is consistent with NAREIT's reaffirmation in November 2011 of its July 2000 guidance on NAREIT-defined Funds from Operations, which indicated that impairment write-downs of depreciable real estate should be excluded in the computation of Funds from operations. Accordingly, Funds from operations have been restated for prior periods. A reconciliation of Funds from operations to net income may be found in Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations.

27


Item 7. 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 owns and operates industrial properties nationally and owns and operates office properties primarily in metro Philadelphia, Washington, D.C. and certain sunbelt cities. Additionally, the Company owns certain assets in the United Kingdom.
As of December 31, 2013, the Company owned and operated 489 industrial and 223 office properties (the “Wholly Owned Properties in Operation”) totaling 89.5 million square feet. In addition, as of December 31, 2013, the Company owned 16 properties under development, which when completed are expected to comprise 5.0 million square feet (the “Wholly Owned Properties under Development”) and 1,315 acres of developable land, substantially all of which is zoned for commercial use. Additionally, as of December 31, 2013, the Company had an ownership interest, through unconsolidated joint ventures, in 45 industrial and 34 office properties totaling 13.5 million square feet (the “JV Properties in Operation” and, together with the Wholly Owned Properties in Operation, the “Properties in Operation”), one property under development, which when completed is expected to comprise 203,000 square feet (the "JV Property under Development" and, collectively with the Wholly Owned Properties under Development, the "Properties under Development" and, collectively with the Properties in Operation, the "Properties") and 518 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 maximizing 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 expects its strategy with respect to product and market selection to favor industrial and metro-office properties and markets with strong demographic and economic fundamentals. Given the Company's desire to operate industrial properties on a national platform and based on analysis of its present markets the Company intends to operate a portfolio that derives approximately two-thirds of its net operating income from industrial properties and one-third from office properties. As of December 31, 2013, adjusting to remove the second tranche of the Portfolio Sale discussed below which closed on January 30, 2014, approximately 60% of the Company's net operating income came from industrial properties and 40% came from office properties.
Consistent with its strategy, on October 8, 2013, the Company completed the acquisition of 100% of the outstanding general partnership and limited partnership interests of the Cabot Industrial Value Fund III Operating Partnership, L.P. ("Cabot"). The purchase price for the acquisition (the "Cabot Acquisition") was $1.469 billion, which was paid through the assumption of approximately $229.8 million of mortgage debt and the remainder in cash. The Company funded the cash portion of the acquisition consideration through a combination of proceeds from an August 2013 offering of common shares, proceeds from a September 2013 offering of senior notes and draws under its $500 million revolving credit facility. Pursuant to the purchase of Cabot, the Company acquired a 100% ownership interest in 177 industrial assets totaling approximately 23.0 million square feet at a purchase price of approximately $64 per square foot. These assets are located in 24 markets.
Also consistent with its strategy, on November 7, 2013, the Company entered into an Agreement of Sale and Purchase pursuant to which the Company agreed to sell a real estate portfolio which included the Company’s Jacksonville, Florida portfolio in its entirety, all of the office properties in Maryland, Southern New Jersey and the Fort Washington suburb of Philadelphia and flex properties in Minnesota for a purchase price of $697.3 million. The properties consisted of 97 buildings containing an aggregate of 6.6 million square feet. On December 24, 2013, the Company closed on the first of two planned settlements under this agreement.  The proceeds from the first settlement were $367.7 million and included 49 properties containing approximately 4.0 million square feet of space and 140 acres of land. The remaining 48 properties containing an aggregate of 2.6 million square feet and 19 acres of land were sold for $329.6 million.
Due to long-term trends that the Company believes favor industrial properties and indicate potential erosion in value of suburban office properties, the Company has increased its investment in industrial and metro-office properties and decreased its investment in suburban office properties. The short-term implication of these activities is a decrease in net cash from operating activities, as rental income from industrial properties is less than that from office properties. The Company anticipates that over time it will realize the benefits of these activities, including increasing rental rates and lower lease transaction costs. In 2013, in the aggregate, the net cash provided by operating activities, less customary capital expenditures and leasing transaction costs, was less than

28

dividend distributions primarily due to acquisition and one time financing costs relating to the Cabot Acquisition. The Company will continue to evaluate its dividend distribution policy in light of these circumstances.
The Company’s operating results depend primarily upon income from rental operations and are substantially influenced by rental demand for the Properties in Operation. During the year ended December 31, 2013, the Company operated in a national economic environment characterized by high unemployment, low growth in GDP and low interest rates. Although this low interest rate environment has created opportunity for the Company to borrow money at a low rate of interest, the economy is in a state of transition following the economic dislocation that began in mid-2007 and although the downward pressure on rents has lessened, the economy is still in a general state of recovery. During the year ended December 31, 2013, the Company successfully leased 26.8 million square feet and attained occupancy of 91.4% for the Wholly Owned Properties in Operation and 92.3% for the JV Properties in Operation for a combined occupancy of 91.6% for the Properties in Operation as of that date. At December 31, 2012, occupancy for the Wholly Owned Properties in Operation was 92.5% and for the JV Properties in Operation was 90.2% for a combined occupancy for the Properties in Operation of 92.1%. During the year ended December 31, 2013, straight line rents on renewal and replacement leases were on average 1.0% lower than rents on expiring leases. The Company believes that average occupancy for its Properties in Operation will remain flat or increase by up to 1% for 2014 compared to 2013. Furthermore, the Company believes that straight line rents on renewal and replacement leases for 2014 will decrease by up to 5% as compared to rents on expiring leases.

WHOLLY OWNED CAPITAL ACTIVITY
Acquisitions
Pursuant to the Cabot acquisition, the Company acquired a 100% ownership interest in 177 industrial assets totaling approximately 23.0 million square feet for a purchase price of $1.469 billion. These assets are located in 24 markets.
In addition, during the year ended December 31, 2013, the Company acquired three industrial properties and one office property for an aggregate purchase price of $201.1 million. These properties contain 1.6 million square feet of leaseable space. The Company's 2013 acquisition properties were 90.6% leased as of December 31, 2013. The Company also acquired six parcels of land totaling 330 acres for $50.5 million. For 2014, the Company anticipates that wholly owned property acquisitions will range from $200 million to $400 million and believes that certain of the acquired properties will be either vacant or underleased. In addition for 2014, the Company anticipates that it will acquire land parcels in a range of $50 million to $100 million.

Dispositions
Disposition activity allows the Company to, among other things, (1) reduce its holdings in certain markets and product types within a market consistent with the Company's strategy; (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 year ended December 31, 2013, the Company realized proceeds of $507.7 million from the sale of 58 operating properties representing 5.1 million square feet and 157 acres of land. These totals include the first settlement of the Portfolio Sale. For 2014, the Company anticipates that proceeds from wholly owned property dispositions will range from $500 million to $650 million. This total includes the second settlement of the Portfolio Sale.
Development
During the year ended December 31, 2013, the Company brought into service seven Wholly Owned Properties under Development representing 2.9 million square feet and a Total Investment of $280.7 million and began construction on 13 Wholly Owned Properties under Development with a projected Total Investment of $350.2 million. As of December 31, 2013, the Company had 16 Wholly Owned Properties under Development, which are expected to comprise, upon completion, 5.0 million square feet and are expected to represent a Total Investment of $380.8 million. These Wholly Owned Properties under Development were 72.1% pre-leased as of December 31, 2013. In addition, pursuant to a 21,000 square foot lease that the Company has executed, the Company has agreed to start the development of a 75,000 square foot office building. The building is 27.6% leased and represents an anticipated Total Investment of $13.1 million. For 2014, the Company anticipates that wholly owned development deliveries will total between $250 million and $350 million and that during 2014 it will commence development on wholly owned properties with an expected aggregate Total Investment in a range from $400 million to $600 million.
“Total Investment” for a property is defined as the property's purchase price plus closing costs (in the case of acquisitions if vacant) and management's estimate, as determined at the time of acquisition, of the cost of necessary building improvements and lease transaction costs in the case of acquisitions, or land costs and land improvement, building improvement and lease transaction costs in the case of development projects, and, where appropriate, other development costs and carrying costs.


29

UNCONSOLIDATED JOINT VENTURE ACTIVITY
The Company periodically enters into unconsolidated joint venture relationships in connection with the execution of its real estate operating strategy.
Acquisitions/Dispositions
During the year ended December 31, 2013, none of the unconsolidated joint ventures in which the Company held an interest acquired any properties.
During the year ended December 31, 2013, a joint venture in which the Company held a 20% interest sold one property, which contained 44,000 square feet, for proceeds of $9.6 million. During the year ended December 31, 2013, a joint venture in which the Company held a 25% interest sold four properties, which contained 171,000 square feet, for aggregate proceeds of $31.5 million.
Consistent with the Company's strategy, from time to time the Company may consider transferring assets to or purchasing assets from an unconsolidated joint venture in which the Company holds an interest.
In October 2012, Blythe Valley JV Sarl, a joint venture in which the Company held an interest, defaulted on its mortgage loan. The mortgage loan was secured by all of the operating properties and land of the joint venture. In February 2013, the lender appointed a receiver, effectively taking control of the assets securing its loan. During the year ended December 31, 2012, the joint venture recorded an impairment charge, the Company's share of which was sufficient to bring the Company's investment in the joint venture to zero. The Company's share of this impairment charge was $4.6 million and is reflected in equity in (loss) earnings of unconsolidated joint ventures in the Company's 2012 consolidated statement of comprehensive income.
Development
During the year ended December 31, 2013, a joint venture in which the Company held a 25% interest started one property under development, which is expected to comprise, upon completion, 203,000 square feet and is expected to represent a Total Investment of $11.8 million. As of December 31, 2013, this was the only property under development for unconsolidated joint ventures in which the Company held an interest. For 2014, the Company anticipates that unconsolidated joint venture development deliveries will total up to $40 million.
On January 15, 2014, the Company announced that it has reached preliminary terms to develop, in a joint venture with Comcast Corporation, the “Comcast Innovation and Technology Center,” in Philadelphia, PA. The proposed project includes a 59-story, 1.5 million square foot tower incorporating 1.3 million square feet of office space and a 200+ room hotel. The project is expected to represent a Total Investment of $900 million to the joint venture, which we expect will be 20% owned by the Company.   The Company is in discussions with Comcast Corporation regarding the formation of this joint venture, but there is no assurance that the joint venture will be finalized or that the development will be commenced. If the development does proceed, it is anticipated that it would commence in the latter half of 2014 and the project would be completed in late 2017. In addition to the potential project with  Comcast Corporation, the Company anticipates that during 2014 unconsolidated joint ventures in which the Company owns an interest will commence development with an aggregate Total Investment of up to $60 million.
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 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 availability and cost of capital; 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.

30

Critical Accounting Policies and Estimates
The Company's discussion and analysis of its financial condition and results of operations are based upon the Company's consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles ("US GAAP"). The preparation of these financial statements requires the Company to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. The Company bases these estimates, judgments and assumptions on historical experience and on other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
The following critical accounting policies discussion reflects what the Company believes are the more significant estimates, assumptions and judgments used in the preparation of its Consolidated Financial Statements. This discussion of critical accounting policies is intended to supplement the description of the accounting policies in the footnotes to the Company's Consolidated Financial Statements and to provide additional insight into the information used by management when evaluating significant estimates, assumptions and judgments. For further discussion of our significant accounting policies, see Note 2 to the Consolidated Financial Statements included in this report.
Capitalized Costs
Acquisition costs related to the purchase of vacant operating properties and land are capitalized and included in net real estate.  Acquisition costs related to the purchase of operating properties with in-place tenants are expensed as incurred. Acquisition-related expenses related to the Cabot Acquisition for the year ended December 31, 2013 were $7.6 million. In addition, the Company incurred $2.6 million in acquisition expenses related to other acquisitions for the year ended December 31, 2013. Acquisition-related expenses for the years ended December 31, 2012 and 2011 were $2.9 million and $2.6 million, respectively.
Expenditures directly related to the improvement of real estate, including interest and other costs capitalized on development projects and land being readied for development, are included in net real estate and are stated at cost. The Company considers a development property substantially complete upon the completion of tenant build-out, but no later than one year after the completion of major construction activity. These capitalized costs include pre-construction costs essential to the development of the property, construction costs, interest costs, real estate taxes, development related compensation and other costs incurred during the period of development. The determination to capitalize rather than expense costs requires the Company to evaluate the status of the development activity. The total of capitalized compensation costs directly related to the development of property for the years ended December 31, 2013, 2012 and 2011 was $3.3 million, $2.1 million and $1.3 million, respectively.
Certain employees of the Company are compensated for leasing services related to the Company's properties. The compensation directly related to signed leases is capitalized and amortized as a deferred leasing cost. The total of this capitalized compensation was $2.8 million, $2.4 million and $2.1 million for the years ended December 31, 2013, 2012 and 2011, respectively.
Capitalized interest for the years ended December 31, 2013, 2012 and 2011 was $9.6 million, $9.9 million and $3.0 million, respectively.
Revenue Recognition
Rental revenue is recognized on a straight line basis over the terms of the respective leases. Deferred rent receivable represents the amount by which straight line rental revenue exceeds rents currently billed in accordance with the lease agreements. Above-market and below-market lease values for acquired properties are recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management's estimate of fair market lease rates for each corresponding in-place lease. The capitalized above or below-market lease values are amortized as a component of rental revenue over the remaining term of the respective leases and any bargain renewal option periods, where appropriate.
Allowance for Doubtful Accounts
The Company continually monitors the liquidity and creditworthiness of its tenants. Based on these reviews, provisions are established, and an allowance for doubtful accounts for estimated losses resulting from the inability of its tenants to make required rental payments is maintained. As of December 31, 2013 and 2012, the Company's allowance for doubtful accounts totaled $7.8 million and $7.0 million, respectively. The Company had bad debt expense of $1.8 million and $540,000 for the years ended December 31, 2013 and 2012, respectively, as well as a net recovery of bad debts of $1.9 million for the year ended December 31, 2011.

31

Impairment of Real Estate
The Company evaluates its real estate investments upon the occurrence of significant adverse changes in operations to assess whether any impairment indicators are present that could affect the recovery of the recorded value. Indicators the Company uses to determine whether an impairment evaluation is necessary include the low occupancy level of the property, holding period for the property, strategic decisions regarding future development plans for a property under development and land held for development and other market factors. If impairment indicators are present, the Company performs an undiscounted cash flow analysis and compares the net carrying amount of the property to the property's estimated undiscounted future cash flow over the anticipated holding period. The Company assesses the expected undiscounted cash flows based upon a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, current market rental rates, changes in market rental rates, operating costs, capitalization rates and holding periods. For these assumptions, the Company considers its experience and historical performance in the various markets and data provided by market research organizations. If any real estate investment is considered impaired, the carrying value of the property is written down to its estimated fair value. Fair value is estimated based on the discounting of future expected cash flows at a risk adjusted interest rate. During the years ended December 31, 2013, 2012 and 2011, the Company recognized impairment losses of $1.1 million, $2.3 million and $7.8 million, respectively. The determination of whether an impairment exists requires the Company to make estimates, judgments and assumptions about the future cash flows.
Intangibles
The Company allocates the purchase price of real estate acquired to land, building and improvements and intangibles based on the fair value of each component. The value ascribed to in-place leases is based on the rental rates for the existing leases compared to the Company's estimate of the fair market lease rates for leases of similar terms and present valuing the difference based on an interest rate which reflects the risks associated with the leases acquired. Origination values are also assigned to in-place leases, and, where appropriate, value is assigned to customer relationships. Origination cost estimates include the costs to execute leases with terms similar to the remaining lease terms of the in-place leases, including leasing commissions, legal and other related expenses. Additionally, the Company estimates carrying costs during the expected lease-up periods including real estate taxes, other operating expenses and lost rentals at contractual rates. Such amounts are also included in origination costs. The amounts allocated to the intangible relating to in-place leases, which are included in deferred financing and leasing costs or in other liabilities in the accompanying consolidated balance sheets, are amortized to rental income for market rental rate differences and to depreciation and amortization for origination costs on a straight line basis over the remaining term of the related leases. In the event that a tenant terminates its lease, the unamortized portion of the intangible is written off.
Investments in Unconsolidated Joint Ventures
The Company analyzes its investments in joint ventures to determine if the joint venture is considered a variable interest entity and would require consolidation. The Company accounts for its investments in unconsolidated joint ventures using the equity method of accounting as the Company exercises significant influence over, but does not control, these entities. These investments are recorded initially at cost and subsequently adjusted for equity in earnings and cash contributions and distributions.
On a periodic basis, management assesses whether there are any indicators that the value of the Company's investments in unconsolidated joint ventures may be impaired. An investment is impaired only if management's estimate of the value of the investment is less than the carrying value of the investment, and such decline in value is deemed to be other than temporary. To the extent impairment has occurred, the loss is measured as the excess of the carrying amount of the investment over the estimated fair value of the investment.
Management estimated the fair value of its ownership interest in the joint ventures considering the estimated fair value of the real estate assets owned by the joint ventures and the related indebtedness as well as the working capital assets and liabilities of the joint ventures and the terms of the related joint venture agreements. The Company's estimates of fair value of the real estate assets are based on a discounted cash flow analysis incorporating a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, current market rental rates, changes in market rental rates, operating costs, capitalization rates, holding periods and discount rates. For these assumptions, the Company considered its experience and historical performance in the various markets and data provided by market research organizations. In assessing whether an impairment is other-than-temporary, the Company considers several factors. The longevity and severity of the impairment are considered as well as the expected time for recovery of value to occur, if ever.
The Company determined that one investment in a joint venture had an other-than-temporary impairment of $683,000 during the year ended December 31, 2012. No impairment losses on the Company's investments in unconsolidated joint ventures were recognized during the years ended December 31, 2013 or 2011.


32

During the year ended December 31, 2013 the Kings Hill Unit Trust joint venture recorded an impairment charge. The Company's share of this impairment charge was $783,000 and is reflected in equity in earnings (loss) of unconsolidated joint ventures in the Company's 2013 consolidated statement of comprehensive income.

During the year ended December 31, 2012 the Blythe Valley JV Sarl joint venture recorded an impairment charge, the Company's share of which was sufficient to bring the Company's investment in the joint venture to zero. The Company's share of this impairment charge was $4.6 million and is reflected in equity in earnings (loss) of unconsolidated joint ventures in the Company's 2012 consolidated statement of comprehensive income.
Derivative Instruments and Hedging Activities
Derivative instruments and hedging activities require management to make judgments on the nature of its derivatives and their effectiveness as hedges. These judgments determine if the changes in fair value of the derivative instruments are reported in the consolidated statements of comprehensive income as a component of net income or as a component of other comprehensive income and as a component of equity on the Consolidated Balance Sheets. While management believes its judgments are reasonable, a change in a derivative’s effectiveness as a hedge could materially affect expenses, net income and equity.
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 year ended December 31, 2013 with the results of operations of the Company for the year ended December 31, 2012, and the results of operations of the Company for the year ended December 31, 2012 with the results of operations of the Company for the year ended December 31, 2011. As a result of the varying levels of development, acquisition and disposition activities by the Company in 2013, 2012 and 2011, the overall operating results of the Company during such periods are not directly comparable. However, certain data, including the Same Store (as defined below) comparison, do lend themselves to direct comparison.

This information should be read in conjunction with the accompanying consolidated financial statements and notes included elsewhere in this report.
Comparison of Year Ended December 31, 2013 to Year Ended December 31, 2012
Overview
The Company’s average gross investment in operating real estate owned for the year ended December 31, 2013 increased to $4,892.1 million from $4,021.5 million for the year ended December 31, 2012. This increase in operating real estate was primarily due to the Cabot Acquisition and resulted in increases in rental revenue, operating expense reimbursement, rental property operating expenses, real estate taxes and depreciation and amortization.  Rental property operating expenses include utilities, insurance, janitorial, landscaping, snow removal and other costs necessary to maintain a property.
Total operating revenue increased to $645.9 million for the year ended December 31, 2013 from $560.3 million for the year ended December 31, 2012. This $85.6 million increase was primarily due to an increase in average gross investment in operating real estate and an increase in occupancy. This increase was partially offset by a decrease in rental rates as well as a decrease in termination fees, which totaled $1.5 million for the year ended December 31, 2013 as compared to $2.5 million for the year ended December 31, 2012. Changes in occupancy and rental rates are detailed below in "Same Store." 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 or held for sale, related termination fees are included in discontinued operations. See “Other” below.
Segments
The Company evaluates the performance of the Wholly Owned Properties in Operation in terms of net operating income by reportable segment (see Note 18 to the Company’s financial statements for a reconciliation of this measure to net income). Net operating income includes operating revenue from external customers, real estate taxes, amortization of lease transaction costs and other operating expenses which relate directly to the management and operation of the assets within each reportable segment. The following table identifies changes in reportable segments (dollars in thousands):

33

Reportable Segment Net Operating Income:
 
 
 
Year Ended December 31,
 
PERCENTAGE
INCREASE
(DECREASE)
 
 
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
Industrial -
Lehigh/Central PA
$
68,504

 
$
65,566

 
4.5
%
 
 
Chicago/Milwaukee
11,726

 
5,329

 
120.0
%
(1)
 
Houston
22,632

 
17,862

 
26.7
%
(1)
 
Carolinas
20,434

 
18,733

 
9.1
%
 
 
Other
60,531

 
51,863

 
16.7
%
(1)
Industrial/Office -
Minnesota
30,016

 
26,348

 
13.9
%
(1)
 
South Florida
20,943

 
18,921

 
10.7
%
(1)
 
Richmond/Hampton Roads
24,063

 
24,762

 
(2.8
%)
 
 
Arizona
17,189

 
14,228

 
20.8
%
(1)
 
United Kingdom
1,924

 
(257
)
 
848.6
%
(1)
 
Other
50,456

 
43,711

 
15.4
%
(1)
Office -
Philadelphia
23,587

 
20,527

 
14.9
%
(1)
 
Southeastern PA
91,193

 
98,729

 
(7.6
%)
 
 
Washington D.C.
6,807

 
2,908

 
134.1
%
(1)
 
Total reportable segment net operating income
$
450,005

 
$
409,230

 
10.0
%
 


(1) The change was primarily due to an increase in average gross investment in operating real estate.

Same Store
Property level operating income, exclusive of Termination Fees, for the Same Store properties increased to $419.5 million for the year ended December 31, 2013 from $414.3 million for the year ended December 31, 2012, on a straight line basis (which recognizes rental revenue evenly over the life of the lease), and increased to $417.4 million for the year ended December 31, 2013 from $409.3 million for the year ended December 31, 2012 on a cash basis.
The same store results were affected by an increase in occupancy and decreases in cash and straight line rental rates. The following details the Same Store occupancy and rental rates for the respective periods:
 
Year Ended
 
December 31,
 
2013
 
2012
Average occupancy %
93.7
%
 
92.7
%
Average rental rate - cash basis (1)
$
7.78

 
$
7.81

Average rental rate - straight line basis (2)
$
11.25

 
$
11.32

(1) Represents the average contractual rent per square foot for the year ended December 31, 2013 or 2012 for tenants in occupancy in the Same Store properties. Cash rent does not include the tenant's obligation to pay property operating expenses and real estate taxes. If a tenant was within a free rent period at December 31, 2013 or 2012 its rent would equal zero for purposes of this metric.
(2) Straight line rent and operating expense reimbursement represents the average straight line rent including operating expense recoveries per square foot for the year ended December 31, 2013 or 2012 for tenants in occupancy in the Same Store properties.
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 490 properties totaling approximately 57.1 million square feet owned on January 1, 2012. Acquisitions and completed development during the years ended December 31, 2012 and 2013 are excluded from the Same Store properties.  Properties obtained through acquisition and completed development are included in Same Store when they have been

34

purchased in the case of acquisitions, and are stabilized in the case of completed development, prior to the beginning of the earliest year presented in the comparison.  The 50 properties sold during 2012 and the 58 properties sold during 2013 are also excluded.

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 years ended December 31, 2013 and 2012. Same Store property level operating income and cash basis property level operating income are non-US GAAP measures and do not represent income before gain on property dispositions, income taxes and equity in earnings (loss) 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” below), US 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).

 
Year Ended
 
December 31, 2013
 
December 31, 2012
Same Store:
 
 
 
Rental revenue
$
423,251

 
$
421,124

Operating expenses:
 
 
 
Rental property expense
120,710

 
121,049

Real estate taxes
70,646

 
68,469

Operating expense recovery
(187,630
)
 
(182,669
)
Unrecovered operating expenses
3,726

 
6,849

Property level operating income
419,525

 
414,275

Less straight line rent
2,123

 
4,948

Cash basis property level operating income
$
417,402

 
$
409,327

Reconciliation of non-GAAP financial measure – Same Store:
 
 
 
Cash basis property level operating income
$
417,402

 
$
409,327

Straight line rent
2,123

 
4,948

Property level operating income
419,525

 
414,275

Non-same store property level operating income - continuing operations
61,943

 
4,598

Less: Property level operating income – properties held for sale at December 31, 2013
(31,573
)
 
(31,197
)
Termination fees
1,500

 
2,475

General and administrative expense
(74,564
)
 
(64,686
)
Depreciation and amortization expense
(173,784
)
 
(135,523
)
Other income (expense)
(117,236
)
 
(94,618
)
Gain on property dispositions
8,676

 
3,080

Income taxes
(2,799
)
 
(976
)
Equity in earnings (loss) of unconsolidated joint ventures
6,067

 
(681
)
Discontinued operations (1)
121,839

 
51,004

Net income
$
219,594

 
$
147,751

 
(1)
Includes Termination Fees of $2.0 million and $1.8 million for the years ended December 31, 2013 and 2012, respectively.

35

General and Administrative
General and administrative expenses increased to $74.6 million for the year ended December 31, 2013 compared to $64.7 million for the year ended December 31, 2012. These increases were primarily due to increases in acquisition-related expenses and compensation. Acquisition-related expenses related to the Cabot Acquisition for the year ended December 31, 2013 were $7.6 million. In addition, the Company incurred $2.6 million in acquisition expenses related to other acquisitions for the year ended December 31, 2013. Acquisition-related expenses for the year ended December 31, 2012 were $2.9 million. General and administrative expenses include salaries, wages and incentive compensation for general and administrative staff along with related costs, consulting, marketing, public company expenses, costs associated with the acquisition of properties and other general and administrative costs.
Depreciation and Amortization
Depreciation and amortization increased to $173.8 million for the year ended December 31, 2013 from $135.5 million for the year ended December 31, 2012. This increase was primarily due to the increased investment in operating real estate.

Interest Expense
Interest expense increased to $127.1 million for the year ended December 31, 2013 from $103.4 million for the year ended December 31, 2012. This increase was primarily due to the increase in the average debt outstanding to $2,843.6 million for the year ended December 31, 2013 from $2,425.1 million for the year ended December 31, 2012. This increase in average debt was primarily due to financing related to and mortgage loans assumed in the Cabot Acquisition. This was partially offset by a decrease in the weighted average interest rate to 5.1% for the year ended December 31, 2013 from 5.3% for the year ended December 31, 2012. The increase was also partially due to a decrease in interest capitalized during the year ended December 31, 2013 compared to 2012.
Interest expense allocated to discontinued operations for the year ended December 31, 2013 and 2012 was $15.9 million and $19.8 million, respectively. This decrease was due to the level of dispositions in 2013 compared to 2012.
Equity in Earnings (Loss) of Unconsolidated Joint Ventures
Equity in earnings (loss) of unconsolidated joint ventures increased to income of $6.1 million for the year ended December 31, 2013 from a loss of $681,000 for the year ended December 31, 2012. This increase was primarily due to an impairment charge in the Blythe Valley JV Sarl joint venture during the year ended December 31, 2012, the Company's share of which was $4.6 million as well as an impairment charge of $683,000 relating to an other-than-temporary impairment of one of Company's investments in unconsolidated joint ventures. During the year ended December 31, 2013 the Kings Hill Unit Trust joint venture recorded an impairment charge, the Company's share of which was $783,000.
Other
Gain on property dispositions increased to $8.7 million for the year ended December 31, 2013 from $3.1 million for the year ended December 31, 2012.
Income from discontinued operations increased to $121.8 million for the year ended December 31, 2013 from $51.0 million for the year ended December 31, 2012. This increase was primarily due to an increase in gains recognized on sales which were $95.4 million for the year ended December 31, 2013 and $12.4 million for the year ended December 31, 2012.
As a result of the foregoing, the Company’s net income increased to $219.6 million for the year ended December 31, 2013 from $147.8 million for the year ended December 31, 2012.
Comparison of Year Ended December 31, 2012 to Year Ended December 31, 2011
Overview
The Company's average gross investment in operating real estate owned for the year ended December 31, 2012 increased to $4,018.1 million from $3,568.6 million for the year ended December 31, 2011. This increase in operating real estate resulted in increases in rental revenue, operating expense reimbursement, rental property operating expenses, real estate taxes and depreciation and amortization. Rental property operating expenses include utilities, insurance, janitorial, landscaping, snow removal and other costs necessary to maintain a property.

36

Total operating revenue increased to $560.3 million for the year ended December 31, 2012 from $533.7 million for the year ended December 31, 2011. This $26.6 million increase was primarily due to the increase in investment in operating real estate and an increase in termination fees, which totaled $2.5 million for the year ended December 31, 2012 as compared to $2.4 million for the year ended December 31, 2011. These increases were partially offset by a decrease in rental rates. Changes in occupancy and rental rates are detailed below in "Same Store." Termination Fees are included in rental revenue and if a property is sold or held for sale related termination fees are included in discontinued operations. See "Other" below.
Segments
The Company evaluates the performance of the Wholly Owned Properties in Operation in terms of net operating income by reportable segment (see Note 18 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):
Reportable Segment Net Operating Income:
 
 
Year Ended December 31,
 
PERCENTAGE
INCREASE
(DECREASE)
 
 
 
2012
 
2011
 
 
 
 
 
 
 
 
 
 
Industrial -
Lehigh/Central PA
$
65,566

 
$
64,786

 
1.2
%
 
 
Chicago/Milwaukee
5,329

 
10,581

 
(49.6
%)
(1)
 
Houston
17,862

 
16,379

 
9.1
%
 
 
Carolinas
18,733

 
19,471

 
(3.8
%)
 
 
Other
51,863

 
54,802

 
(5.4
%)
 
Industrial/Office -
Minnesota
26,348

 
27,701

 
(4.9
%)
 
 
South Florida
18,921

 
19,431

 
(2.6
%)
 
 
Richmond/Hampton Roads
24,762

 
29,324

 
(15.6
%)
(1)
 
Arizona
14,228

 
13,453

 
5.8
%
 
 
United Kingdom
(257
)
 
(178
)
 
(44.4
%)
 
 
Other
43,711

 
44,692

 
(2.2
%)
 
Office -
Philadelphia
20,527

 
20,504

 
0.1
%
 
 
Southeastern PA
98,729

 
101,982

 
(3.2
%)
 
 
Washington D.C.
2,908

 
(1,134
)
 
356.4
%
(2)
 
Total reportable segment net operating income
$
409,230

 
$
421,794

 
(3.0
%)
 
(1) These decreases are primarily due to sales of operating properties during the year ended December 31, 2012.
(2) The increase was primarily due to an increase in average gross investment in operating real estate.
Same Store
Property level operating income, exclusive of Termination Fees, for the Prior Year Same Store properties decreased to $450.3 million for the year ended December 31, 2012 from $453.8 million for the year ended December 31, 2011, on a straight line basis, and decreased to $447.1 million for the year ended December 31, 2012 from $448.2 million for the year ended December 31, 2011 on a cash basis.
The same store results were affected by one-time reductions in certain operating expense items during the year ended December 31, 2011 that did not occur during the same period in 2012, decreases in cash and straight line rental rates and an increase in occupancy. The following details the Prior Year Same Store occupancy and rental rates for the respective periods:
 
Year Ended
 
December 31,
 
2012
 
2011
Average occupancy %
93.1
%
 
91.9
%
Average rental rate - cash basis (1)
$
8.30

 
$
8.39

Average rental rate - straight line basis (2)
$
12.01

 
$
12.04


37

(1) Represents the average contractual rent per square foot for the year ended December 31, 2012 or 2011 for tenants in occupancy in Prior Year Same Store properties. Net rent does not include the tenant's obligation to pay property operating expenses and real estate taxes. If a tenant was within a free rent period its rent would equal zero for purposes of this metric.
(2) Straight line rent and operating expense reimbursement represents the average straight line rent including operating expense recoveries per square foot for the year ended December 31, 2012 or 2011 for tenants in occupancy in the Prior Year Same Store properties.

Management generally considers the performance of the Prior Year 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, Prior Year Same Store property level operating income and Prior Year Same Store cash basis property level operating income exclusive of Termination Fees are considered by management to be more reliable indicators of the portfolio's baseline performance. The Prior Year Same Store properties consist of the 526 properties totaling approximately 58.0 million square feet owned on January 1, 2011. Acquisitions and completed development during the years ended December 31, 2011 and 2012 are excluded from the Same Store properties.  Properties obtained through acquisition and completed development are included in Same Store when they have been purchased in the case of acquisitions, and are stabilized in the case of completed development, prior to the beginning of the earliest year presented in the comparison.  The 62 properties sold during 2011 and the 50 properties sold during 2011 are also excluded.

Set forth below is a schedule comparing the property level operating income, on a straight line basis and on a cash basis, for the Prior Year Same Store properties for the years ended December 31, 2012 and 2011. Prior Year Same Store property level operating income and Prior Year Same Store cash basis property level operating income are non-GAAP measures and do not represent income before property dispositions, income taxes and equity in (loss) earnings of unconsolidated joint ventures because they do not reflect the consolidated operations of the Company. Investors should review Prior Year Same Store results, along with Funds from operations (see "Liquidity and Capital Resources" section), GAAP net income and net 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 Prior Year Same Store property level operating income to net income (in thousands).

38

 
Year Ended
 
December 31, 2012
 
December 31, 2011
Prior Year Same Store:
 
 
 
Rental revenue
$
454,194

 
$
457,219

Operating expenses:
 
 
 
Rental property expense
130,815

 
127,238

Real estate taxes
72,658

 
73,841

Operating expense recovery
(199,621
)
 
(197,619
)
Unrecovered operating expenses
3,852

 
3,460

Property level operating income
450,342

 
453,759

Less straight line rent
3,266

 
5,519

Cash basis property level operating income
$
447,076

 
$
448,240

Reconciliation of non-GAAP financial measure – Prior Year Same Store:
 
 
 
Cash basis property level operating income
$
447,076

 
$
448,240

Straight line rent
3,266

 
5,519

Property level operating income
450,342

 
453,759

Non-same store property level operating income - continuing operations
18,055

 
3,704

Less: Property level operating income – 2013 discontinued operations
(80,721
)
 
(83,561
)
Termination fees
2,475

 
2,497

General and administrative expense
(64,686
)
 
(59,186
)
Depreciation and amortization expense
(135,523
)
 
(126,218
)
Other income (expense)
(94,618
)
 
(93,851
)
Gain on property dispositions
3,080

 
5,025

Income taxes
(976
)
 
(1,020
)
Equity in (loss) earnings of unconsolidated joint ventures
(681
)
 
3,496

Discontinued operations at December 31, 2012 (1)
13,921

 
70,649

 2013 discontinued operations (1)
37,083

 
35,416

Net income
$
147,751

 
$
210,710


(1)
Includes Termination Fees of $1.8 million and $1.6 million in the aggregate for the years ended December 31, 2012 and 2011, respectively.
General and Administrative
General and administrative expenses increased to $64.7 million for the year ended December 31, 2012 from $59.2 million for the year ended December 31, 2011. This increase was primarily due to increases in compensation, the writeoff of costs for canceled projects and costs associated with operating initiatives. General and administrative expenses include salaries, wages and incentive compensation for general and administrative staff along with related costs, consulting, marketing, public company expenses, costs associated with the acquisition of properties and other general and administrative costs.
Depreciation and Amortization
Depreciation and amortization increased to $135.5 million for the year ended December 31, 2012 from $126.2 million for the year ended December 31, 2011. The increase was primarily due to the increased investment in operating real estate.

39

Interest Expense

Interest expense increased to $103.4 million for the year ended December 31, 2012 from $102.0 million for the year ended December 31, 2011. This increase was primarily due to an increase in the average debt outstanding, which was $2,425.1 million for the year ended December 31, 2012, compared to $2,214.9 million for the year ended December 31, 2011. The increase was partially offset by a decrease in the weighted average interest rate to 5.3% for the year ended December 31, 2012 from 5.8% for the year ended December 31, 2011 as well as an increase in interest capitalized during the year ended December 31, 2012 due to an increase in development activity.
Interest expense allocated to discontinued operations for the years ended December 31, 2012 and 2011 was $19.8 million and $29.1 million, respectively. This decrease was due to the level of dispositions in 2012 compared to 2011.
Other
Gain on property dispositions decreased to $3.1 million for the year ended December 31, 2012 from $5.0 million for the year ended December 31, 2011.
Income from discontinued operations decreased to $51.0 million from $106.1 million for the year ended December 31, 2012 compared to the year ended December 31, 2011. The decrease was due to a decrease in gains recognized on sales which were $12.4 million for the year ended December 31, 2012 compared to $60.6 million for the year ended December 31, 2011.
As a result of the foregoing, the Company's net income decreased to $147.8 million for the year ended December 31, 2012 from $210.7 million for the year ended December 31, 2011.
Liquidity and Capital Resources
Overview
The Company seeks to maintain a conservative balance sheet and pursue a strategy of financial flexibility. The Company expects to expend $300 million to $500 million to fund its investment in development properties in 2014. The Company’s 2014 debt maturities total approximately $213.7 million. The Company anticipates that it will invest $200 million to $400 million in property acquisitions and $50 million to $100 million in land acquisitions in 2014. The Company expects to realize approximately $500 million to $650 million in proceeds from asset sales in 2014. The Company believes that proceeds from asset sales, its available cash, borrowing capacity from its Credit Facility (as defined below) and its other sources of capital including the public debt and equity markets will provide it with sufficient funds to satisfy these obligations.
Activity
As of December 31, 2013, the Company had cash and cash equivalents of $214.9 million, including $51.5 million in restricted cash.
Net cash provided by operating activities decreased to $316.0 million for the year ended December 31, 2013 from $317.2 million for the year ended December 31, 2012. This decrease primarily related to a reduction in restricted cash during 2012 related to the distribution of land sales proceeds in the United Kingdom. This was partially offset by an increase in operating income resulting from the Cabot Acquisition. Net cash flow provided by operating activities is the primary source of liquidity to fund dividends to shareholders and for recurring capital expenditures and leasing transaction costs for the Company’s Wholly Owned Properties in Operation.

Net cash used in investing activities was $1,197.9 million for the year ended December 31, 2013 compared to $312.7 million for the year ended December 31, 2012. This $885.2 million increase primarily related to cash expended for the Cabot Acquisition partially offset by an increase in net proceeds from dispositions of properties and land including $367.7 million in proceeds from the first settlement of the Portfolio Sale.
Net cash provided by financing activities was $1,005.8 million for the year ended December 31, 2013 compared to $12.7 million for the year ended December 31, 2012. This $993.1 million increase was primarily due to an increase in net proceeds from the issuance of common shares used to fund the Cabot Acquisition. Net cash provided by financing activities includes proceeds from the issuance of equity and debt, net of debt repayments, equity repurchases and shareholder distributions.

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


40

In February 2012, the Company closed on a mortgage with $45.0 million of available funds bearing interest at 4.84%. As of December 31, 2013, there was $44.5 million outstanding on this loan. The net proceeds from this mortgage were used for construction costs on a property under development that was placed into service during the year ended December 31, 2013.

In June 2012, the Company issued $400.0 million of 4.125% senior unsecured notes due 2022. The net proceeds from this issuance were used to repay borrowings under the Company's unsecured credit facility and for general corporate purposes.

In August 2012, the Company used proceeds from its unsecured credit facility together with available cash on hand to repay $230.1 million of 10-year, 6.375% senior unsecured notes due August 2012.

In December 2012, the Company issued $300.0 million of 3.375% senior unsecured notes due 2023. The net proceeds from this issuance were used to repay borrowings under the Company's unsecured credit facility and for general corporate purposes.

During the year ended December 31, 2012, the Company redeemed $32.5 million of outstanding 6.65% Series F Cumulative Redeemable Preferred Units for $26.0 million. Also, the Company redeemed $95.0 million of outstanding 7.45% Series B Cumulative Redeemable Preferred Units and $100.0 million of outstanding 7.40% Series H Cumulative Redeemable Preferred Units at par.

In September 2013, the Company issued $450.0 million of 4.40% senior unsecured notes due 2024. The net proceeds from the offering were used to fund a portion of the cash consideration payable for the Cabot Acquisition.

In October 2013, as part of the Cabot Acquisition, the Company assumed $229.8 million in mortgages bearing interest at a weighted average rate of 5.85% with maturity dates from 2018 to 2021.

The Company sold 1.9 million common shares through its continuous offering program during the year ended December 31, 2013. The aggregate proceeds of $75.0 million were used to pay down outstanding borrowings under the Company's unsecured credit facility and for general corporate purposes.

In August 2013, the Company issued 24.2 million common shares for net proceeds of $834.1 million. The net proceeds from the offering were used to fund a portion of the cash consideration payable for the Cabot Acquisition. Prior to this use, the net proceeds were used for general corporate purposes which included the repayment of borrowings under the Company's credit facility.
During the year ended December 31, 2013, the Company redeemed or repurchased $20.0 million of outstanding 7.00% Series E Cumulative Redeemable Preferred Units, $17.5 million of outstanding 6.65% Series F Cumulative Redeemable Preferred Units and $27.0 million of outstanding 6.70% Series G Cumulative Redeemable Preferred Units, all at par.
The Company funds its development activities and acquisitions with long-term capital sources and proceeds from the disposition of properties. For the year ended December 31, 2013, a portion of these activities were funded through an unsecured $500 million credit facility. The Company has maintained an unsecured credit facility throughout 2011, 2012 and 2013. During that period the Company has replaced, restated and amended its credit facility to address due dates and changes in borrowing costs. As replaced, restated and amended these credit facilities are referred to below as the "Credit Facility." The interest rate on borrowings under the Credit Facility fluctuates based upon ratings from Moody’s Investors Service, Inc., Standard and Poor’s Ratings Group and Fitch, Inc. It matures in November 2015 and has a one year extension option at the Company's option, subject to the payment of a stated fee. Based upon the Company's credit ratings at December 31, 2013, borrowings under the facility would bear interest at LIBOR plus 107.5 basis points. Subsequent to December 31, 2013, as a result of changes in the Company's credit rating, this rate was increased to LIBOR plus 125 basis points.
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 December 31, 2013, the Company’s debt to gross assets ratio was 40.9% and for the year ended December 31, 2013, the fixed charge coverage ratio was 3.0x. Debt to gross assets equals total long-term debt and 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 December 31, 2013, $545.3 million (including $105.2 million fixed via a swap arrangement - see Footnote 21 in the notes to the consolidated financial statements) in mortgage loans and $2,708.2 million in unsecured notes were outstanding with a weighted average interest rate of 5.0%. The interest rates on $3,237.5 million of mortgage loans and unsecured notes are fixed and range from 3.0% to 7.5%. The weighted average remaining term for the mortgage loans and unsecured notes is 5.9 years.

41


 The Company's contractual obligations, as of December 31, 2013, are as follows (in thousands):

 
 
PAYMENTS DUE BY PERIOD
 
 
 
 
LESS THAN 1
 
 
 
 
 
MORE THAN
Contractual Obligations (2)
 
TOTAL
 
YEAR
 
1-3 YEARS
 
3-5 YEARS
 
5 YEARS
 
 
 
 
 
 
 
 
 
 
 
Long-term debt (1)
 
$
3,242,291

 
$
366,330

 
$
1,112,358

 
$
605,439

 
$
1,158,164

Land purchase obligations
 
52,752

 
14,945

 
37,807

 
—

 
—

Operating lease obligations
 
5,564

 
877

 
1,170

 
535

 
2,982

Share of debt of unconsolidated joint ventures (1)
 
290,949

 
16,126

 
127,936

 
121,048

 
25,839

Tenant contractual obligations
 
38,114

 
34,302

 
3,335

 
302

 
175

Share of tenant contractual obligations of unconsolidated joint ventures
 
1,910

 
1,910

 
—

 
—

 
—

Letter of credit
 
4,274

 
4,274

 
—

 
—

 
—

Share of letter of credit of unconsolidated joint ventures
 
1,250

 
1,250

 
—

 
—

 
—

Land improvement and renovation commitments
 
16,231

 
16,231

 
—

 
—

 
—

Development in progress
 
160,501

 
139,072

 
21,429

 
—

 
—

Share of development in progress of unconsolidated joint ventures
 
2,389

 
1,509

 
880

 
—

 
—

Development commitment
 
13,095

 
10,696

 
2,399

 
—

 
—

Total
 
$
3,829,320

 
$
607,522

 
$
1,307,314

 
$
727,324

 
$
1,187,160


(1)
Includes principal and interest payments. Interest payments assume Credit Facility borrowings and interest rates remain at the December 31, 2013 level until maturity.
(2)
The Company is contractually committed to build a minimum of 60,000 square feet of building space every two years at the Navy Yard Corporate Center in Philadelphia, with certain rights to defer these biannual requirements.  The failure by the Company  to meet these milestones could result in the loss of the Company’s exclusive development rights with respect to the Navy Yard Corporate Center.


General

The Company believes that its existing sources of capital will provide sufficient funds to finance its continued development and acquisition activities. The Company's existing sources of capital include the public debt and equity markets, proceeds from secured financing of properties, proceeds from property dispositions, equity capital from joint venture partners, remaining capacity of $125.0 million under the Company's at-the-market equity offering program and net cash provided by operating activities. Additionally, the Company expects to incur variable rate debt, including borrowings under the Credit Facility, from time to time.

The Company's annual Common Share dividend paid was $1.90 per share in 2013, 2012 and 2011.

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.
Off-Balance Sheet Arrangements
As of December 31, 2013, the Company had investments in and advances to unconsolidated joint ventures totaling $179.7 million (see Note 7 to the Company's Consolidated Financial Statements included in this report).
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 operating 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

42

(or losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Funds from operations available to common shareholders does not represent net income or cash flows from operations as defined by GAAP and does not necessarily indicate that cash flows will be sufficient to fund cash needs. It should not be considered as an alternative to net income as an indicator of the Company’s operating performance or to cash flows as a measure of liquidity. Funds from operations available to common shareholders also does not represent cash flows generated from operating, investing or financing activities as defined by GAAP.

Funds from operations (“FFO”) available to common shareholders for the year ended December 31, 2013, 2012, and 2011 are as follows (in thousands, except per share amounts):
 
Year Ended December 31,
 
2013
 
2012
 
2011
Reconciliation of net income to FFO - basic:
 
 
 
 
 
Net income available to common shareholders
$
209,738

 
$
137,436

 
$
183,999

Basic - income available to common shareholders
209,738

 
137,436

 
183,999

Basic - income available to common shareholders per weighted average share
$
1.61

 
$
1.18

 
$
1.60

Adjustments:
 
 
 
 
 
Depreciation and amortization of unconsolidated joint ventures
13,152

 
14,152

 
14,452

Depreciation and amortization
201,731

 
164,615

 
168,435

Gain on property dispositions
(94,934
)
 
(7,589
)
 
(61,198
)
Noncontrolling interest share in addback for depreciation and amortization and gain on property dispositions
(3,171
)
 
(5,286
)
 
(3,926
)
Funds from operations available to common shareholders – basic
$
326,516

 
$
303,328

 
$
301,762

Basic Funds from operations available to common shareholders per weighted average share
$
2.51

 
$
2.60

 
$
2.63

Reconciliation of net income to FFO - diluted:
 
 
 
 
 
Net income available to common shareholders
$
209,738

 
$
137,436

 
$
183,999

Diluted - income available to common shareholders
209,738

 
137,436

 
183,999

Diluted - income available to common shareholders per weighted average share
$
1.60

 
$
1.17

 
$
1.59

Adjustments:
 
 
 
 
 
Depreciation and amortization of unconsolidated joint ventures
13,152

 
14,152

 
14,452

Depreciation and amortization
201,731

 
164,615

 
168,435

Gain on property dispositions
(94,934
)
 
(7,589
)
 
(61,198
)
Noncontrolling interest less preferred share distributions
5,848

 
4,378

 
6,153

Funds from operations available to common shareholders - diluted
$
335,535

 
$
312,992

 
$
311,841

Diluted Funds from operations available to common shareholders per weighted average share
$
2.49

 
$
2.58

 
$
2.61

Reconciliation of weighted average shares:
 
 
 
 
 
Weighted average common shares - all basic calculations
130,180

 
116,863

 
114,755

Dilutive shares for long term compensation plans
729

 
831

 
748

Diluted shares for net income calculations
130,909

 
117,694

 
115,503

Weighted average common units
3,678

 
3,760

 
3,869

Diluted shares for Funds from operations calculations
134,587

 
121,454

 
119,372


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, the majority 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.

43

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The following discussion about the Company's risk management includes forward-looking statements that involve risks and uncertainties. Actual results could differ materially from the results discussed in the forward-looking statements.
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, which is based on estimates by management and on rates quoted on December 31, 2013 for comparable loans, is greater than the aggregate carrying value by approximately $85.3 million at December 31, 2013.
The Company's primary market risk exposure is to changes in interest rates. The Company is exposed to market risk related to its Credit Facility and certain other indebtedness as discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources."
The Company also uses long-term and medium-term debt as a source of capital. These debt instruments are typically issued at fixed interest rates. When these debt instruments mature, the Company typically refinances such debt at then-existing market interest rates which may be more or less than the interest rates on the maturing debt. In addition, the Company may attempt to reduce interest rate risk associated with a forecasted issuance of new debt. Our interest rate risk objective is to limit the impact of interest rate changes on earnings and cash flows and lower our overall borrowing costs. To achieve these objectives, from time to time the Company enters into interest rate hedge contracts such as collars, swaps, caps and treasury lock agreements in order to mitigate our interest rate risk with respect to various debt instruments. The Company does not hold or issue these derivative contracts for trading or speculative purposes.
If the interest rates for variable rate debt were 100 basis points higher or lower during 2013, the Company's interest expense would have increased or decreased by $2.2 million. If the interest rate for the fixed rate debt maturing in 2014 was 100 basis points higher or lower than its current rate of 5.66%, the Company's interest expense would have increased or decreased by $1.9 million.
The sensitivity analysis above assumes no changes in the Company's financial structure. It also does not consider future fluctuations in interest rates or the specific actions that might be taken by management to mitigate the impact of such fluctuations.
The Company is also exposed to currency risk on its net investment in the United Kingdom. The Company does not believe that this currency risk exposure is material to its financial statements.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and financial statement schedule of Liberty Property Trust and Liberty Property Operating Partnership, L.P. and the reports thereon of Ernst & Young LLP, an independent registered public accounting firm, with respect thereto are filed as part of this Annual Report on Form 10-K.




44

Management's Annual Report on Internal Control Over Financial Reporting
The Trust's management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a - 15 (f) and 15d - 15(f). The Trust's internal control system was designed to provide reasonable assurance to the Trust's management and Board of Trustees regarding the preparation and fair presentation of published financial statements.
Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we assessed the effectiveness of the Trust's internal control over financial reporting as of December 31, 2013. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (1992 Framework). Based on our assessment we believe that, as of December 31, 2013, the Trust's internal control over financial reporting is effective based on those criteria.
The Trust's independent registered public accounting firm, Ernst & Young LLP, has issued an attestation report on the Trust's internal control over financial reporting, which is included in this Annual Report on Form 10-K.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

45

Report of Independent Registered Public Accounting Firm
The Board of Trustees and Shareholders of Liberty Property Trust
We have audited Liberty Property Trust's (the "Trust") internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 Framework) (the COSO criteria). The Trust's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Trust's internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, Liberty Property Trust maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets as of December 31, 2013 and 2012, and the related consolidated statements of comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2013 of Liberty Property Trust and our report dated February 28, 2014 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
 
February 28, 2014

46

Report of Independent Registered Public Accounting Firm
The Board of Trustees and Shareholders of Liberty Property Trust
We have audited the accompanying consolidated balance sheets of Liberty Property Trust (the "Trust") as of December 31, 2013 and 2012, and the related consolidated statements of comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2013. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and schedule are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Liberty Property Trust at December 31, 2013 and 2012, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2013, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Liberty Property Trust's internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 Framework) and our report dated February 28, 2014 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
 
February 28, 2014


47

Management's Annual Report on Internal Control Over Financial Reporting
The Operating Partnership's management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15 (f) and 15d-15(f). The Operating Partnership's internal control system was designed to provide reasonable assurance to the Operating Partnership's management regarding the preparation and fair presentation of published financial statements.
Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we assessed the effectiveness of the Operating Partnership's internal control over financial reporting as of December 31, 2013. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (1992 Framework). Based on our assessment we believe that, as of December 31, 2013, the Operating Partnership's internal control over financial reporting is effective based on those criteria.
The Operating Partnership's independent registered public accounting firm, Ernst & Young LLP, has issued an attestation report on the Operating Partnership's internal control over financial reporting, which is included in this Annual Report on Form 10-K.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

48

Report of Independent Registered Public Accounting Firm
The Partners of Liberty Property Limited Partnership
We have audited Liberty Property Limited Partnership's (the "Operating Partnership") internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 Framework) (the COSO criteria). The Operating Partnership's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Operating Partnership's internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, Liberty Property Limited Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets as of December 31, 2013 and 2012, and the related consolidated statements of comprehensive income, owners' equity, and cash flows for each of the three years in the period ended December 31, 2013 of Liberty Property Limited Partnership and our report dated February 28, 2014 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
 
February 28, 2014

49

Report of Independent Registered Public Accounting Firm
The Partners of Liberty Property Limited Partnership
We have audited the accompanying consolidated balance sheets of Liberty Property Limited Partnership (the "Operating Partnership") as of December 31, 2013 and 2012, and the related consolidated statements of comprehensive income, owners' equity, and cash flows for each of the three years in the period ended December 31, 2013. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and schedule are the responsibility of the Operating Partnership's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Liberty Property Limited Partnership at December 31, 2013 and 2012, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2013, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Liberty Property Limited Partnership's internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 Framework) and our report dated February 28, 2014 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
 
February 28, 2014


50

CONSOLIDATED BALANCE SHEETS OF LIBERTY PROPERTY TRUST
(In thousands, except share and unit amounts)
 
 
December 31,
 
2013
 
2012
ASSETS
 
 
 
Real estate:
 
 
 
Land and land improvements
$
1,139,455

 
$
845,958

Building and improvements
5,144,758

 
4,045,385

Less accumulated depreciation
(1,057,680
)
 
(1,072,859
)
Operating real estate
5,226,533

 
3,818,484

Development in progress
209,187

 
248,602

Land held for development
233,055

 
249,221

Net real estate
5,668,775

 
4,316,307

Cash and cash equivalents
163,414

 
38,356

Restricted cash
51,456

 
33,147

Accounts receivable
13,900

 
8,988

Deferred rent receivable
99,956

 
101,621

Deferred financing and leasing costs, net
226,607

 
129,329

Investments in and advances to unconsolidated joint ventures
179,655

 
169,021

Assets held for sale
275,957

 
289,654

Prepaid expenses and other assets
95,840

 
87,756

Total assets
$
6,775,560

 
$
5,174,179

LIABILITIES
 
 
 
Mortgage loans
$
545,306

 
$
302,855

Unsecured notes
2,708,213

 
2,258,751

Credit facility
—

 
92,000

Accounts payable
70,406

 
31,058

Accrued interest
25,777

 
20,164

Dividend and distributions payable
71,323

 
58,038

Other liabilities
250,819

 
185,956

Total liabilities
3,671,844

 
2,948,822

Noncontrolling interest - operating partnership - 301,483 preferred units outstanding as of December 31, 2013 and December 31, 2012
7,537

 
7,537

EQUITY
 
 
 
Liberty Property Trust shareholders’ equity
 
 
 
Common shares of beneficial interest, $.001 par value, 183,987,000 shares authorized; 147,846,801 (includes 1,249,909 in treasury) and 119,720,776 (includes 1,249,909 in treasury) shares issued and outstanding as of December 31, 2013 and December 31, 2012, respectively
148

 
119

Additional paid-in capital
3,669,618

 
2,687,701

Accumulated other comprehensive income
9,742

 
2,900

Distributions in excess of net income
(591,713
)
 
(547,757
)
Common shares in treasury, at cost, 1,249,909 shares as of December 31, 2013 and 2012
(51,951
)
 
(51,951
)
Total Liberty Property Trust shareholders’ equity
3,035,844

 
2,091,012

Noncontrolling interest – operating partnership
 
 
 
3,556,566 and 3,713,851 common units outstanding as of December 31, 2013 and December 31, 2012, respectively
56,713

 
60,223

1,290,000 preferred units outstanding as of December 31, 2012
—

 
63,264

Noncontrolling interest – consolidated joint ventures
3,622

 
3,321

Total equity
3,096,179

 
2,217,820

Total liabilities, noncontrolling interest - operating partnership and equity
$
6,775,560

 
$
5,174,179


See accompanying notes.

51

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OF LIBERTY PROPERTY TRUST
(In thousands, except per share amounts)
 
Year Ended December 31,
 
2013
 
2012
 
2011
OPERATING REVENUE
 
 
 
 
 
Rental
$
458,081

 
$
396,418

 
$
379,811

Operating expense reimbursement
187,849

 
163,861

 
153,888

Total operating revenue
645,930

 
560,279

 
533,699

OPERATING EXPENSE
 
 
 
 
 
Rental property
114,617

 
104,431

 
95,192

Real estate taxes
79,918

 
65,697

 
62,108

General and administrative
74,564

 
64,686

 
59,186

Depreciation and amortization
173,784

 
135,523

 
126,218

Total operating expense
442,883

 
370,337

 
342,704

Operating income
203,047

 
189,942

 
190,995

OTHER INCOME (EXPENSE)
 
 
 
 
 
Interest and other income
9,879

 
8,745

 
8,137

Interest expense
(127,115
)
 
(103,363
)
 
(101,988
)
Total other income (expense)
(117,236
)
 
(94,618
)
 
(93,851
)
Income before gain on property dispositions, income taxes and equity in earnings (loss) of unconsolidated joint ventures
85,811

 
95,324

 
97,144

Gain on property dispositions
8,676

 
3,080

 
5,025

Income taxes
(2,799
)
 
(976
)
 
(1,020
)
Equity in earnings (loss) of unconsolidated joint ventures
6,067

 
(681
)
 
3,496

Income from continuing operations
97,755

 
96,747

 
104,645

Discontinued operations (including net gain on property dispositions of $95,384, $12,426 and $60,582 for the years ended December 31, 2013, 2012 and 2011, respectively)
121,839

 
51,004

 
106,065

Net income
219,594

 
147,751

 
210,710

Noncontrolling interest – operating partnership
(9,203
)
 
(10,590
)
 
(27,222
)
Noncontrolling interest – consolidated joint ventures
(653
)
 
275

 
511

Income available to common shareholders
$
209,738

 
$
137,436

 
$
183,999

 
 
 
 
 
 
Net income
$
219,594

 
$
147,751

 
$
210,710

Other comprehensive income (loss) - foreign currency translation
5,397

 
3,436

 
(280
)
Other comprehensive income - change in net unrealized gain on derivative instruments
1,584

 
—

 
—

Other comprehensive income (loss)
6,981

 
3,436

 
(280
)
Total comprehensive income
226,575

 
151,187

 
210,430

Less: comprehensive income attributable to noncontrolling interest
(9,995
)
 
(10,422
)
 
(26,706
)
Comprehensive income attributable to common shareholders
$
216,580

 
$
140,765

 
$
183,724

Earnings per common share
 
 
 
 
 
Basic:
 
 
 
 
 
Income from continuing operations
$
0.70

 
$
0.75

 
$
0.71

Income from discontinued operations
0.91

 
0.43

 
0.89

Income per common share – basic
$
1.61

 
$
1.18

 
$
1.60

Diluted:
 
 
 
 
 
Income from continuing operations
$
0.70

 
$
0.75

 
$
0.70

Income from discontinued operations
0.90

 
0.42

 
0.89

Income per common share – diluted
$
1.60

 
$
1.17

 
$
1.59

Weighted average number of common shares outstanding
 
 
 
 
 
Basic
130,180

 
116,863

 
114,755

Diluted
130,909

 
117,694

 
115,503

Amounts attributable to common shareholders
 
 
 
 
 
Income from continuing operations
$
91,274

 
$
88,008

 
$
81,392

Discontinued operations
118,464

 
49,428

 
102,607

Net income available to common shareholders
$
209,738

 
$
137,436

 
$
183,999


See accompanying notes.

52

CONSOLIDATED STATEMENTS OF EQUITY OF LIBERTY PROPERTY TRUST
(In thousands, except share amounts)
 
 
NUMBER OF COMMON SHARES
 
COMMON
SHARES OF
BENEFICIAL
INTEREST
 
ADDITIONAL
PAID-IN
CAPITAL
 
ACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSS)
 
DISTRIBUTIONS
IN EXCESS OF
NET INCOME
 
COMMON
SHARES
HELD
IN
TREASURY
 
TOTAL
LIBERTY
PROPERTY
TRUST
SHAREHOLDERS’
EQUITY
 
NONCONTROLL-
ING INTEREST -
OPERATING
PARTNERSHIP-
COMMON
 
NONCONTROLL-
ING INTEREST -
OPERATING
PARTNERSHIP –
PREFERRED
 
NONCONTROLL-
ING INTEREST -
CONSOLIDATED
JOINT
VENTURES
 
TOTAL
EQUITY
Balance at January 1, 2011
 
115,530,608

 
$
116

 
$
2,560,193

 
$
(155
)
 
$
(426,017
)
 
$
(51,951
)
 
$
2,082,186

 
$
67,621

 
$
287,959

 
$
786

 
$
2,438,552

Net proceeds from the issuance of common shares
 
1,701,758

 
1

 
44,547

 
—

 
—

 
—

 
44,548

 
—

 
—

 
—

 
44,548

Net income
 


 
—

 
—

 
—

 
183,999

 
—

 
183,999

 
6,153

 
21,069

 
(511
)
 
210,710

Contributions
 


 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
3,500

 
3,500

Distributions
 


 
—

 
—

 
—

 
(219,480
)
 
—

 
(219,480
)
 
(7,280
)
 
(21,069
)
 
—

 
(247,829
)
Noncash compensation
 


 
—

 
10,555

 
—

 
—

 
—

 
10,555

 
—

 
—

 
—

 
10,555

Other comprehensive income - foreign currency translation adjustment
 


 
—

 
—

 
(274
)
 
—

 
—

 
(274
)
 
(6
)
 
—

 
—

 
(280
)
Redemption of noncontrolling interests – common units
 
119,987

 
—

 
2,060

 
—

 
—

 
—

 
2,060

 
(2,060
)
 
—

 
—

 
—

Balance at December 31, 2011
 
117,352,353

 
117

 
2,617,355

 
(429
)
 
(461,498
)
 
(51,951
)
 
2,103,594

 
64,428

 
287,959

 
3,775

 
2,459,756

Net proceeds from the issuance of common shares
 
2,273,528

 
2

 
58,708

 
—

 
—

 
—

 
58,710

 
—

 
—

 
—

 
58,710

Net income
 


 
—

 
—

 
—

 
137,436

 
—

 
137,436

 
4,378

 
6,212

 
(275
)
 
147,751

Distributions
 


 
—

 
—

 
—

 
(223,695
)
 
—

 
(223,695
)
 
(7,109
)
 
(9,902
)
 
(179
)
 
(240,885
)
Noncash compensation
 


 
—

 
10,057

 
—

 
—

 
—

 
10,057

 
—

 
—

 
—

 
10,057

Other comprehensive income - foreign currency translation adjustment
 


 
—

 
—

 
3,329

 
—

 
—

 
3,329

 
107

 
—

 
—

 
3,436

Redemption of noncontrolling interests – common units
 
94,895

 
—

 
1,581

 
—

 
—

 
—

 
1,581

 
(1,581
)
 
—

 
—

 
—

Redemption of noncontrolling interest - preferred units
 


 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(224,694
)
 
—

 
(224,694
)
Excess of preferred unit carrying amount over redemption
 


 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
3,689

 
—

 
3,689

Balance at December 31, 2012
 
119,720,776

 
119

 
2,687,701

 
2,900

 
(547,757
)
 
(51,951
)
 
2,091,012

 
60,223

 
63,264

 
3,321

 
2,217,820

Net proceeds from the issuance of common shares
 
27,968,740

 
29

 
969,439

 
—

 
—

 
—

 
969,468

 
—

 
—

 
—

 
969,468

Net income
 


 
—

 
—

 
—

 
209,738

 
—

 
209,738

 
5,848

 
3,355

 
653

 
219,594

Distributions
 


 
—

 
—

 
—

 
(253,694
)
 
—

 
(253,694
)
 
(6,995
)
 
(2,119
)
 
(352
)
 
(263,160
)
Noncash compensation
 


 
—

 
9,976

 
—

 
—

 
—

 
9,976

 
—

 
—

 
—

 
9,976

Other comprehensive income - foreign currency translation adjustment
 


 
—

 
—

 
5,296

 
—

 
—

 
5,296

 
101

 
—

 
—

 
5,397

Other comprehensive income - change in net unrealized gain on derivative instruments
 
 
 
—

 
—

 
1,546

 
—

 
—

 
1,546

 
38

 
—

 
—

 
1,584

Redemption of noncontrolling interests – common units
 
157,285

 
—

 
2,502

 
—

 
—

 
—

 
2,502

 
(2,502
)
 
—

 
—

 
—

Redemption of noncontrolling interest - preferred units
 


 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(63,264
)
 
—

 
(63,264
)
Excess of preferred unit redemption over carrying amount
 


 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(1,236
)
 
—

 
(1,236
)
Balance at December 31, 2013
 
147,846,801

 
$
148

 
$
3,669,618

 
$
9,742

 
$
(591,713
)
 
$
(51,951
)
 
$
3,035,844

 
$
56,713

 
$
—

 
$
3,622

 
$
3,096,179

See accompanying notes.

53

CONSOLIDATED STATEMENTS OF CASH FLOWS OF LIBERTY PROPERTY TRUST
(In thousands)
 
 
Year Ended December 31,
 
2013
 
2012
 
2011
OPERATING ACTIVITIES
 
 
 
 
 
Net income
$
219,594

 
$
147,751

 
$
210,710

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
Depreciation and amortization
205,147

 
167,421

 
171,714

Amortization of deferred financing costs/noncash portion of interest
4,449

 
4,682

 
5,190

Equity in (earnings) loss of unconsolidated joint ventures
(6,067
)
 
681

 
(3,496
)
Distributions from unconsolidated joint ventures
844

 
624

 
551

Gain on property dispositions
(107,079
)
 
(15,506
)
 
(65,607
)
Noncash compensation
9,976

 
10,057

 
10,555

Changes in operating assets and liabilities:
 
 
 
 
 
Restricted cash
(18,397
)
 
30,713

 
(14,114
)
Accounts receivable
(4,889
)
 
(799
)
 
(1,320
)
Deferred rent receivable
(9,473
)
 
(6,363
)
 
(6,566
)
Prepaid expenses and other assets
(22,424
)
 
(10,871
)
 
6,027

Accounts payable
15,703

 
7,641

 
(229
)
Accrued interest
5,613

 
(3,983
)
 
(5,674
)
Other liabilities
22,968

 
(14,882
)
 
9,983

Net cash provided by operating activities
315,965

 
317,166

 
317,724

INVESTING ACTIVITIES
 
 
 
 
 
Investment in properties – acquisitions
(1,429,822
)
 
(211,894
)
 
(233,568
)
Investment in properties – other
(74,345
)
 
(49,682
)
 
(75,834
)
Investments in and advances to unconsolidated joint ventures
(16,185
)
 
(1,461
)
 
(11,195
)
Distributions from unconsolidated joint ventures
13,774

 
6,009

 
11,364

Net proceeds from disposition of properties/land
526,949

 
234,686

 
390,754

Net proceeds from (advances on) public reimbursement receivable/escrow
9,821

 
(986
)
 
(10,237
)
Investment in development in progress
(123,879
)
 
(199,384
)
 
(48,628
)
Investment in land held for development
(67,326
)
 
(67,513
)
 
(52,868
)
Investment in deferred leasing costs
(36,901
)
 
(22,444
)
 
(26,011
)
Net cash used in investing activities
(1,197,914
)
 
(312,669
)
 
(56,223
)
FINANCING ACTIVITIES
 
 
 
 
 
Net proceeds from issuance of common shares
969,468

 
58,710

 
44,552

Redemption of preferred units
(64,500
)
 
(221,000
)
 
(9,060
)
Proceeds from unsecured notes
448,646

 
700,000

 
—

Repayments of unsecured notes
—

 
(230,100
)
 
(246,500
)
Proceeds from mortgage loans
10,401

 
34,599

 
—

Repayments of mortgage loans
(10,605
)
 
(35,099
)
 
(29,860
)
Proceeds from credit facility
611,550

 
839,250

 
650,500

Repayments on credit facility
(703,550
)
 
(886,650
)
 
(511,100
)
Increase in deferred financing costs
(5,866
)
 
(7,206
)
 
(3,023
)
Distribution paid on common shares
(240,340
)
 
(222,573
)
 
(218,613
)
Distribution paid on units
(9,438
)
 
(17,241
)
 
(28,409
)
Net cash provided by (used in) financing activities
1,005,766

 
12,690

 
(351,513
)
Net increase (decrease) in cash and cash equivalents
123,817

 
17,187

 
(90,012
)
Increase (decrease) in cash and cash equivalents related to foreign currency translation
1,241

 
2,965

 
(193
)
Cash and cash equivalents at beginning of year
38,356

 
18,204

 
108,409

Cash and cash equivalents at end of year
$
163,414

 
$
38,356

 
$
18,204


See accompanying notes.

54

CONSOLIDATED BALANCE SHEETS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(In thousands, except unit amounts)
 
 
December 31,
 
2013
 
2012
ASSETS
 
 
 
Real estate:
 
 
 
Land and land improvements
$
1,139,455

 
$
845,958

Building and improvements
5,144,758

 
4,045,385

Less accumulated depreciation
(1,057,680
)
 
(1,072,859
)
Operating real estate
5,226,533

 
3,818,484

Development in progress
209,187

 
248,602

Land held for development
233,055

 
249,221

Net real estate
5,668,775

 
4,316,307

Cash and cash equivalents
163,414

 
38,356

Restricted cash
51,456

 
33,147

Accounts receivable
13,900

 
8,988

Deferred rent receivable
99,956

 
101,621

Deferred financing and leasing costs, net
226,607

 
129,329

Investments in and advances to unconsolidated joint ventures
179,655

 
169,021

Assets held for sale
275,957

 
289,654

Prepaid expenses and other assets
95,840

 
87,756

Total assets
$
6,775,560

 
$
5,174,179

LIABILITIES
 
 
 
Mortgage loans
$
545,306

 
$
302,855

Unsecured notes
2,708,213

 
2,258,751

Credit facility
—

 
92,000

Accounts payable
70,406

 
31,058

Accrued interest
25,777

 
20,164

Distributions payable
71,323

 
58,038

Other liabilities
250,819

 
185,956

Total liabilities
3,671,844

 
2,948,822

Limited partners' equity - 301,483 preferred units outstanding as of December 31, 2013 and December 31, 2012
7,537

 
7,537

OWNERS’ EQUITY
 
 
 
General partner’s equity - 146,596,892 (net of 1,249,909 treasury units) and 118,470,867 (net of 1,249,909 treasury units) common units outstanding as of December 31, 2013 and December 31, 2012, respectively
3,035,844

 
2,091,012

Limited partners’ equity – 3,556,566 and 3,713,851 common units outstanding as of December 31, 2013 and December 31, 2012, respectively
56,713

 
60,223

Limited partners’ equity – 1,290,000 preferred units outstanding as of December 31, 2012
—

 
63,264

Noncontrolling interest – consolidated joint ventures
3,622

 
3,321

Total owners’ equity
3,096,179

 
2,217,820

Total liabilities, limited partners' equity and owners’ equity
$
6,775,560

 
$
5,174,179

 
 
 
 

See accompanying notes.

55

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(In thousands, except per unit amounts)
 
Year Ended December 31,
 
2013
 
2012
 
2011
OPERATING REVENUE
 
 
 
 
 
Rental
$
458,081

 
$
396,418

 
$
379,811

Operating expense reimbursement
187,849

 
163,861

 
153,888

Total operating revenue
645,930

 
560,279

 
533,699

OPERATING EXPENSE
 
 
 
 
 
Rental property
114,617

 
104,431

 
95,192

Real estate taxes
79,918

 
65,697

 
62,108

General and administrative
74,564

 
64,686

 
59,186

Depreciation and amortization
173,784

 
135,523

 
126,218

Total operating expense
442,883

 
370,337

 
342,704

Operating income
203,047

 
189,942

 
190,995

OTHER INCOME (EXPENSE)
 
 
 
 
 
Interest and other income
9,879

 
8,745

 
8,137

Interest expense
(127,115
)
 
(103,363
)
 
(101,988
)
Total other income (expense)
(117,236
)
 
(94,618
)
 
(93,851
)
Income before gain on property dispositions, income taxes and equity in earnings (loss) of unconsolidated joint ventures
85,811

 
95,324

 
97,144

Gain on property dispositions
8,676

 
3,080

 
5,025

Income taxes
(2,799
)
 
(976
)
 
(1,020
)
Equity in earnings (loss) of unconsolidated joint ventures
6,067

 
(681
)
 
3,496

Income from continuing operations
97,755

 
96,747

 
104,645

Discontinued operations (including net gain on property dispositions of $95,384, $12,426 and $60,582 for the years ended December 31, 2013, 2012 and 2011, respectively)
121,839

 
51,004

 
106,065

Net income
219,594

 
147,751

 
210,710

Noncontrolling interest – consolidated joint ventures
(653
)
 
275

 
511

Preferred unit distributions
(2,119
)
 
(9,902
)
 
(21,069
)
Excess of preferred unit carrying amount over redemption
(1,236
)
 
3,689

 
—

Income available to common unitholders
$
215,586

 
$
141,813

 
$
190,152

 
 
 
 
 
 
Net income
$
219,594

 
$
147,751

 
$
210,710

Other comprehensive income (loss) - foreign currency translation
5,397

 
3,436

 
(280
)
Other comprehensive income - change in net unrealized gain on derivative instruments
1,584

 
—

 
—

Other comprehensive income (loss)
6,981

 
$
3,436

 
$
(280
)
Total comprehensive income
$
226,575

 
$
151,187

 
$
210,430

Earnings per common unit
 
 
 
 
 
Basic:
 
 
 
 
 
Income from continuing operations
$
0.70

 
$
0.75

 
$
0.71

Income from discontinued operations
0.91

 
0.43

 
0.89

Income per common unit - basic
$
1.61

 
$
1.18

 
$
1.60

Diluted:
 
 
 
 
 
Income from continuing operations
$
0.70

 
$
0.75

 
$
0.70

Income from discontinued operations
0.90

 
0.42

 
0.89

Income per common unit - diluted
$
1.60

 
$
1.17

 
$
1.59

Weighted average number of common units outstanding
 
 
 
 
 
Basic
133,858

 
120,623

 
118,624

Diluted
134,587

 
121,454

 
119,372

 
 
 
 
 
 
Net income allocated to general partners
$
209,738

 
$
137,436

 
$
183,999

Net income allocated to limited partners
9,203

 
10,590

 
27,222


See accompanying notes.

56

CONSOLIDATED STATEMENTS OF OWNERS’ EQUITY OF LIBERTY PROPERTY LIMITED PARTNERSHIP
(In thousands, except unit amounts)
 
 
NUMBER OF COMMON UNITS
 
GENERAL
PARTNER’S
EQUITY
 
LIMITED
PARTNERS’
EQUITY  –
COMMON
UNITS
 
LIMITED
PARTNERS’
EQUITY  –
PREFERRED
UNITS
 
NONCONTROLLING
INTEREST –
CONSOLIDATED
JOINT VENTURES
 
TOTAL
OWNERS’
EQUITY
Balance at January 1, 2011
3,928,733

 
$
2,082,186

 
$
67,621

 
$
287,959

 
$
786

 
$
2,438,552

Contributions from partners


 
55,103

 
—

 
—

 
—

 
55,103

Distributions to partners


 
(219,480
)
 
(7,280
)
 
(21,069
)
 
—

 
(247,829
)
Foreign currency translation adjustment


 
(274
)
 
(6
)
 
—

 
—

 
(280
)
Net income


 
183,999

 
6,153

 
21,069

 
(511
)
 
210,710

Redemption of limited partners common units for common shares
(119,987
)
 
2,060

 
(2,060
)
 
—

 
—

 
—

Contributions to partners


 
—

 
—

 
—

 
3,500

 
3,500

Balance at December 31, 2011
3,808,746

 
2,103,594

 
64,428

 
287,959

 
3,775

 
2,459,756

Contributions from partners


 
68,767

 
—

 
—

 
—

 
68,767

Distributions to partners


 
(223,695
)
 
(7,109
)
 
(9,902
)
 
(179
)
 
(240,885
)
Foreign currency translation adjustment


 
3,329

 
107

 
—

 
—

 
3,436

Net income


 
137,436

 
4,378

 
6,212

 
(275
)
 
147,751

Redemption of limited partners common units for common shares
(94,895
)
 
1,581

 
(1,581
)
 
—

 
—

 
—

Redemption of limited partners' preferred units


 
—

 
—

 
(224,694
)
 
—

 
(224,694
)
Excess of preferred unit carrying amount over redemption


 
—

 
—

 
3,689

 
—

 
3,689

Balance at December 31, 2012
3,713,851

 
2,091,012

 
60,223

 
63,264

 
3,321

 
2,217,820

Contributions from partners


 
979,444

 
—

 
—

 
—

 
979,444

Distributions to partners


 
(253,694
)
 
(6,995
)
 
(2,119
)
 
(352
)
 
(263,160
)
Foreign currency translation adjustment


 
5,296

 
101

 
—

 
—

 
5,397

Change in net unrealized gain on derivative instruments
 
 
1,546

 
38

 
—

 
—

 
1,584

Net income


 
209,738

 
5,848

 
3,355

 
653

 
219,594

Redemption of limited partners common units for common shares
(157,285
)
 
2,502

 
(2,502
)
 
—

 
—

 
—

Redemption of limited partners' preferred units


 
—

 
—

 
(63,264
)
 
—

 
(63,264
)
Excess of preferred unit redemption over carrying amount


 
—

 
—

 
(1,236
)
 
—

 
(1,236
)
Balance at December 31, 2013
3,556,566

 
$
3,035,844

 
$
56,713

 
$
—

 
$
3,622

 
$
3,096,179


See accompanying notes.

57

CONSOLIDATED STATEMENTS OF CASH FLOWS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(In thousands)
 
 
Year Ended December 31,
 
2013
 
2012
 
2011
OPERATING ACTIVITIES
 
 
 
 
 
Net income
$
219,594

 
$
147,751

 
$
210,710

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
Depreciation and amortization
205,147

 
167,421

 
171,714

Amortization of deferred financing costs/noncash portion of interest
4,449

 
4,682

 
5,190

Equity in (earnings) loss of unconsolidated joint ventures
(6,067
)
 
681

 
(3,496
)
Distributions from unconsolidated joint ventures
844

 
624

 
551

Gain on property dispositions
(107,079
)
 
(15,506
)
 
(65,607
)
Noncash compensation
9,976

 
10,057

 
10,555

Changes in operating assets and liabilities:
 
 
 
 
 
Restricted cash
(18,397
)
 
30,713

 
(14,114
)
Accounts receivable
(4,889
)
 
(799
)
 
(1,320
)
Deferred rent receivable
(9,473
)
 
(6,363
)
 
(6,566
)
Prepaid expenses and other assets
(22,424
)
 
(10,871
)
 
6,027

Accounts payable
15,703

 
7,641

 
(229
)
Accrued interest
5,613

 
(3,983
)
 
(5,674
)
Other liabilities
22,968

 
(14,882
)
 
9,983

Net cash provided by operating activities
315,965

 
317,166

 
317,724

INVESTING ACTIVITIES
 
 
 
 
 
Investment in properties – acquisitions
(1,429,822
)
 
(211,894
)
 
(233,568
)
Investment in properties – other
(74,345
)
 
(49,682
)
 
(75,834
)
Investments in and advances to unconsolidated joint ventures
(16,185
)
 
(1,461
)
 
(11,195
)
Distributions from unconsolidated joint ventures
13,774

 
6,009

 
11,364

Net proceeds from disposition of properties/land
526,949

 
234,686

 
390,754

Net proceeds from (advances on) public reimbursement receivable/escrow
9,821

 
(986
)
 
(10,237
)
Investment in development in progress
(123,879
)
 
(199,384
)
 
(48,628
)
Investment in land held for development
(67,326
)
 
(67,513
)
 
(52,868
)
Investment in deferred leasing costs
(36,901
)
 
(22,444
)
 
(26,011
)
Net cash used in investing activities
(1,197,914
)
 
(312,669
)
 
(56,223
)
FINANCING ACTIVITIES
 
 
 
 
 
Redemption of preferred units
(64,500
)
 
(221,000
)
 
(9,060
)
Proceeds from unsecured notes
448,646

 
700,000

 
—

Repayments of unsecured notes
—

 
(230,100
)
 
(246,500
)
Proceeds from mortgage loans
10,401

 
34,599

 
—

Repayments of mortgage loans
(10,605
)
 
(35,099
)
 
(29,860
)
Proceeds from credit facility
611,550

 
839,250

 
650,500

Repayments on credit facility
(703,550
)
 
(886,650
)
 
(511,100
)
Increase in deferred financing costs
(5,866
)
 
(7,206
)
 
(3,023
)
Capital contributions
969,468

 
58,710

 
44,552

Distributions to partners
(249,778
)
 
(239,814
)
 
(247,022
)
Net cash provided by (used in) financing activities
1,005,766

 
12,690

 
(351,513
)
Net increase (decrease) in cash and cash equivalents
123,817

 
17,187

 
(90,012
)
Increase (decrease) in cash and cash equivalents related to foreign currency translation
1,241

 
2,965

 
(193
)
Cash and cash equivalents at beginning of year
38,356

 
18,204

 
108,409

Cash and cash equivalents at end of year
$
163,414

 
$
38,356

 
$
18,204


See accompanying notes.

58

Liberty Property Trust and Liberty Property Limited Partnership
Notes to Consolidated Financial Statements
December 31, 2013
1.     ORGANIZATION
Liberty Property Trust (the “Trust”) is a self-administered and self-managed Maryland real estate investment trust (a “REIT”). Substantially all of the Trust’s assets are owned directly or indirectly, and substantially all of the Trust’s operations are conducted directly or indirectly, by its subsidiary, Liberty Property Limited Partnership, a Pennsylvania limited partnership (the “Operating Partnership” and, together with the Trust and their consolidated subsidiaries, the “Company”). The Trust is the sole general partner and also a limited partner of the Operating Partnership, owning 97.6% of the common equity of the Operating Partnership at December 31, 2013. The Company owns and operates industrial properties nationally and owns and operates office properties primarily in metro Philadelphia, Washington, D.C. and certain sunbelt cities. Additionally, the Company owns certain assets in the United Kingdom. Unless otherwise indicated, the notes to the Consolidated Financial Statements apply to both the Trust and the Operating Partnership. The terms the "Company,” “we,” “our” and “us” means the Trust and Operating Partnership collectively.
All square footage amounts are unaudited.
2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("US GAAP") requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements of the Company include the Trust, the Operating Partnership, wholly owned subsidiaries and those subsidiaries in which the Company owns a majority voting interest with the ability to control operations of the subsidiaries and where no approval, veto or other important rights have been granted to the noncontrolling shareholders. All significant intercompany transactions and accounts have been eliminated.
Reclassifications
Certain amounts from prior years have been reclassified to conform to current-year presentation including reclassifying the accompanying consolidated balance sheets for assets held for sale and the consolidated statements of comprehensive income for discontinued operations.
Real Estate and Depreciation
The properties are recorded at cost and are depreciated using the straight line method over their estimated useful lives. The estimated useful lives are as follows:
Building and improvements
 
40 years (blended)
Capital improvements
 
15 - 20 years
Equipment
 
5 - 10 years
Tenant improvements
 
Term of the related lease
Expenditures directly related to the acquisition or the improvement of real estate, including interest and other costs capitalized during development, are included in net real estate and are stated at cost. The capitalized costs include pre-construction costs essential to the development of the property, development and construction costs, interest costs, real estate taxes, development-related salaries and other costs incurred during the period of development.
The Company allocates the purchase price of real estate acquired to land, building and improvements and intangibles based on the fair value of each component. Lease values for acquired properties are recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management's estimate of fair market lease rates for each corresponding in-place lease. Origination values are also assigned to in-place leases, and, where appropriate, value is assigned to customer relationships.

59

Acquisition-related costs for properties with in-place leases are expensed as incurred. Expenditures for maintenance and repairs are charged to operations as incurred.
The Company considers any renewal options in determining the lease term. To the extent a lease includes a tenant option to renew or extend the duration of the lease at a fixed or determinable rental rate, the Company evaluates whether or not that option represents a bargain renewal option by analyzing if there is reasonable assurance at the acquisition date that the tenant will exercise the option because the rental rate is sufficiently lower than the expected rental rate for equivalent property under similar terms and conditions at the exercise date.
The Company depreciates the amounts allocated to building and improvements over 40 years and the amounts allocated to intangibles relating to in-place leases, which are included in deferred financing and leasing costs and other liabilities in the accompanying consolidated balance sheets, over the remaining term of the related leases. This calculation includes both the remaining noncancelable period and any bargain renewal option periods.
Once a property is designated as held for sale, no further depreciation expense is recorded. Operations for properties identified as held for sale and/or sold where no continuing involvement exists are presented in discontinued operations for all periods presented.
The Company evaluates its real estate investments upon occurrence of a significant adverse change in its operations to assess whether any impairment indicators are present that affect the recovery of the recorded value. If indicators of impairment are identified, the Company estimates the future undiscounted cash flows from the use and eventual disposition of the property and compares this amount to the carrying value of the property. If any real estate investment is considered impaired, a loss is recognized to reduce the carrying value of the property to its estimated fair value.
Investments in Unconsolidated Joint Ventures
The Company accounts for its investments in unconsolidated joint ventures using the equity method of accounting as the Company exercises significant influence, but does not control these entities. Under the equity method of accounting, the net equity investment of the Company is reflected in the accompanying consolidated balance sheets and the Company's share of net income from the joint ventures is included in the accompanying consolidated statements of comprehensive income.
On a periodic basis, management assesses whether there are any indicators that the value of the Company's investments in unconsolidated joint ventures may be impaired. An investment is impaired only if management's estimate of the value of the investment is less than the carrying value of the investment, and such decline in value is deemed to be other-than-temporary. To the extent impairment has occurred, the loss is measured as the excess of the carrying amount of the investment over the estimated fair value of the investment. The estimated fair value of the investments is determined using a discounted cash flow model which is a Level 3 valuation under ASC 820, "Fair Value Measurement." The Company considers a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, operating costs, capitalization rates, holding periods and discount rates. As these factors are difficult to predict and are subject to future events that may alter management's assumptions, the values estimated by management in its impairment analyses may not be realized.
During the year ended December 31, 2012, the Company recognized an impairment charge related to the decline in the fair value below the carrying value of one of the Company's investments in unconsolidated joint ventures. The Company considered the decline in fair value below the carrying value of $683,000 to be other-than-temporary. This impairment charge was recognized in the fourth quarter of 2012 and was related to the Company's United Kingdom reportable segment.
No impairment losses on unconsolidated joint ventures were recognized during the years ended December 31, 2011 or 2013.
Cash and Cash Equivalents
Highly liquid investments with a maturity of three months or less when purchased are classified as cash equivalents.
Restricted Cash
Restricted cash includes tenant security deposits and escrow funds that the Company maintains pursuant to certain mortgage loans. Restricted cash also includes the undistributed proceeds from the sale of residential land in Kent County, United Kingdom.

60

Accounts Receivable/Deferred Rent Receivable
The Company's accounts receivable are comprised of rents and charges for property operating costs due from tenants. The Company's deferred rent receivable represents the cumulative difference between rent revenue recognized on a straight line basis and contractual payments due under the terms of tenant leases. The Company periodically performs a detailed review of amounts due from tenants to determine if accounts receivable and deferred rent receivable balances are collectible. Based on this review, accounts receivable and deferred rent receivable are reduced by an allowance for doubtful accounts. The Company considers tenant credit quality and payment history and general economic conditions in determining the allowance for doubtful accounts. If the accounts receivable balance or the deferred rent receivable balance is subsequently deemed uncollectible, the receivable and allowance for doubtful account balance are written off.
The allowance for doubtful accounts at December 31, 2013 and 2012 was $7.8 million and $7.0 million, respectively. The Company had bad debt expense of $1.8 million and $540,000 for the years ended December 31, 2013 and 2012, respectively, as well as a net recovery of bad debts of $1.9 million for the year ended December 31, 2011.
Revenues
The Company earns rental income under operating leases with tenants. Rental income is recognized on a straight line basis over the applicable lease term. Operating expense reimbursements consisting of amounts due from tenants for real estate taxes, utilities and other recoverable costs are recognized as revenue in the period in which the corresponding expenses are incurred.
Termination fees (included in rental revenue) are fees that the Company has agreed to accept in consideration for permitting certain tenants to terminate their lease prior to the contractual expiration date. The Company recognizes termination fees during the period that landlord services are rendered in accordance with Securities and Exchange Commission Staff Accounting Bulletin 104, "Revenue Recognition," after the following conditions are met:
a.
the termination agreement is executed,
b.
the termination fee is determinable, and
c.
collectability of the termination fee is assured.
Deferred Financing and Leasing Costs
Costs incurred in connection with financing or leasing are capitalized and amortized on a straight line basis over the term of the related loan or lease. Deferred financing cost amortization is reported as interest expense. Intangible assets related to acquired in-place leases are amortized over the terms of the related leases. Certain employees of the Company are compensated for leasing services related to the Company's properties. The compensation directly related to these leasing services is capitalized and amortized as a deferred leasing cost.
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 December 31, 2013 and December 31, 2012. 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, dividend and distributions payable and other liabilities are reasonable estimates of fair value because of the short-term nature of these instruments. The carrying value of the outstanding amounts under the Company's credit facility is also a reasonable estimate of fair value because interest rates float at a rate based on LIBOR.
The Company determines the fair value of its interest rate swaps by using the standard methodology of netting discounted future fixed cash payments with the discounted expected variable cash receipts. These variable cash receipts of interest rate swaps are based on expectations of future LIBOR interest rates (forward curves) estimated by observing market LIBOR interest rate curves. This is a Level 2 fair value calculation. Also, credit valuation adjustments are factored into the fair value calculations to account for potential nonperformance risk. These credit valuation adjustments were concluded to be not significant inputs for the fair value calculations for the periods presented.
The Company used a discounted cash flow model to determine the estimated fair value of its debt as of December 31, 2013 and December 31, 2012. This is a Level 3 fair value calculation. The inputs used in preparing the discounted cash flow model include actual maturity dates and scheduled cash flows as well as estimates for market value discount rates. The Company updates the

61

discounted cash flow model on a quarterly basis to reflect any changes in the Company's debt holdings and changes to discount rate assumptions.  
The only significant unobservable input in the discounted cash flow model is the discount rate.  For the fair value of the Company's unsecured notes, the Company uses a discount rate based on the indicative new issue pricing provided by lenders.  For the Company's mortgage loans, the Company uses an estimate based on its knowledge of the mortgage market. The weighted average discount rate for the unsecured notes used as of December 31, 2013 was 3.90% compared to 2.70% at December 31, 2012. The weighted average discount rate for the mortgage loans used as of December 31, 2013 was 4.00% compared to 4.12% at December 31, 2012. An increase in the discount rate used in the discounted cash flow model would result in a decrease to the fair value of the Company's long-term debt.  A decrease in the discount rate used in the discounted cash flow model would result in an increase to the fair value of the Company's long-term debt.
The following summarizes the changes in the fair value of the Company's mortgage loans and unsecured notes from December 31, 2012 to December 31, 2013 (in thousands):
 
 
Mortgage Loans
 
Unsecured Notes
 
 
Carrying Value
 
Fair Value
 
Fair Value Above (Below) Carrying Value
 
Carrying Value
 
Fair Value
 
Fair Value Above (Below) Carrying Value
As of December 31, 2012
 
$
302,855

 
$
330,109

 
$
27,254

 
$
2,258,751

 
$
2,511,515

 
$
252,764

 
 
 
 
 
 
 
 
 
 
 
 
 
Payoffs and amortization
 
(10,605
)
 
(10,605
)
 
 
 
—

 
—

 
 
Accretion of discount
 
—

 
—

 
 
 
816

 
—

 
(816
)
Issuances/assumptions
 
253,056

 
253,056

 
 
 
448,646

 
448,646

 
—

Changes in fair value assumptions
 
 
 
1,384

 
1,384

 
 
 
(195,330
)
 
(195,330
)
 
 
 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2013
 
$
545,306

 
$
573,944

 
$
28,638

 
$
2,708,213

 
$
2,764,831

 
$
56,618

Disclosure about fair value of financial instruments is based on pertinent information available to management as of December 31, 2013 and December 31, 2012. 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 December 31, 2013 and current estimates of fair value may differ significantly from the amounts presented herein.
Income Taxes
The Company has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"). As a result, the Company generally is not subject to federal income taxation at the corporate level to the extent it distributes annually at least 100% of its REIT taxable income, as defined in the Code, to its shareholders and satisfies certain other organizational and operational requirements. The Company has met these requirements and, accordingly, no provision has been made for federal income taxes in the accompanying consolidated financial statements. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to federal income tax on its taxable income at regular corporate rates (including any alternative minimum tax) and may not be able to qualify as a REIT for the four subsequent taxable years. Even as a REIT, the Company may be subject to certain state and local income and property taxes, and to federal income and excise taxes on undistributed taxable income.
Several of the Company's subsidiaries are taxable REIT subsidiaries (each a "TRS") and are subject to federal income taxes. In general, a TRS may perform additional services for tenants and generally may engage in real estate or non-real estate businesses that are not permitted REIT activities. The Company is also taxed in certain states, the United Kingdom, and Luxembourg. Accordingly, the Company has recognized federal, state and foreign income taxes in accordance with US GAAP, as applicable.
There are no uncertain tax positions or possibly significant unrecognized tax benefits that are reasonably expected to occur within the next 12 months. The Company's policy is to recognize interest accrued related to unrecognized benefits in interest expense and penalties in other expense. There were no interest or penalties deducted in any of the years ended December 31, 2013, 2012 and 2011 and no interest and penalties accrued at December 31, 2013 or December 31, 2012.

62

Certain of the Company's taxable REIT subsidiaries had net operating loss carryforwards available of approximately $27.4 million as of December 31, 2013. These carryforwards begin to expire in 2018. The Company has considered estimated future taxable income and has determined that a valuation allowance for the full carrying value of net operating loss carryforwards is appropriate.
The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, certain state and local jurisdictions, the United Kingdom and Luxembourg. With few exceptions, the Company is no longer subject to U.S. federal, state, and local, or United Kingdom and Luxembourg examinations by tax authorities for years before 2007.
The Federal tax cost basis of the wholly owned real estate was $7.4 billion and $6.1 billion at December 31, 2013 and 2012, respectively.
Share Based Compensation
Share based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense over the employees' requisite service period.
Derivative Financial Instruments
We borrow funds at a combination of fixed and variable rates. Borrowings under our revolving credit facility and certain bank mortgage loans bear interest at variable rates. Our long-term debt typically bears interest at fixed rates. Our interest rate risk management objectives are to limit generally the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, from time to time, we enter into interest rate hedge contracts such as collars, swaps, caps and treasury lock agreements in order to mitigate our interest rate risk with respect to various debt instruments. We generally do not hold or issue these derivative contracts for trading or speculative purposes. The interest rate on all of our variable rate debt is generally adjusted at one or three month intervals, subject to settlements under interest rate hedge contracts.
Interest rate swaps involve the receipt of variable-rate amounts from a counterparty in exchange for making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (for the Trust) and general partner's equity and limited partners' equity - common units (for the Operating Partnership) and is subsequently reclassified into interest expense in the period that the hedged forecasted transaction affects earnings.
Foreign Currency
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. For the Trust, gains and losses resulting from this translation are included in accumulated other comprehensive income (loss) as a separate component of shareholders' equity and a proportionate amount of gain or loss is allocated to noncontrolling interest - operating partnership - common units. For the Operating Partnership, gains and losses resulting from this translation are included in general partner's equity and limited partners' equity - common units. Upon sale or upon complete or substantially complete liquidation of the Company's foreign investment, the gain or loss on the sale will include the cumulative translation adjustments that have been previously recorded in accumulated other comprehensive income (loss) and noncontrolling interest - operating partnership - common units (for the Trust) and in general partner's equity and limited partners' equity - common units (for the Operating Partnership).


63

3.     INCOME PER COMMON SHARE OF THE TRUST

The following table sets forth the computation of basic and diluted income per common share of the Trust (in thousands except per share amounts):
 
2013
 
2012
 
Income
(Numerator)
 
Weighted
Average
Shares
(Denominator)
 
Per Share
 
Income
(Numerator)
 
Weighted
Average
Shares
(Denominator)
 
Per Share
Basic income from continuing operations
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations net of noncontrolling interest
$
91,274

 
130,180

 
$
0.70

 
$
88,008

 
116,863

 
$
0.75

Dilutive shares for long-term compensation plans
—

 
729

 
 
 
—

 
831

 
 
Diluted income from continuing operations
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations net of noncontrolling interest
91,274

 
130,909

 
$
0.70

 
88,008

 
117,694

 
$
0.75

Basic income from discontinued operations
 
 
 
 
 
 
 
 
 
 
 
Discontinued operations net of noncontrolling interest
118,464

 
130,180

 
$
0.91

 
49,428

 
116,863

 
$
0.43

Dilutive shares for long-term compensation plans
—

 
729

 
 
 
—

 
831

 
 
Diluted income from discontinued operations
 
 
 
 
 
 
 
 
 
 
 
Discontinued operations net of noncontrolling interest
118,464

 
130,909

 
$
0.90

 
49,428

 
117,694

 
$
0.42

Basic income per common share
 
 
 
 
 
 
 
 
 
 
 
Net income available to common shareholders
209,738

 
130,180

 
$
1.61

 
137,436

 
116,863

 
$
1.18

Dilutive shares for long-term compensation plans
—

 
729

 
 
 
—

 
831

 
 
Diluted income per common share
 
 
 
 
 
 
 
 
 
 
 
Net income available to common shareholders
$
209,738

 
130,909

 
$
1.60

 
$
137,436

 
117,694

 
$
1.17


64

 
2011
 
Income
(Numerator)
 
Weighted
Average
Shares
(Denominator)
 
Per Share
Basic income from continuing operations
 
 
 
 
 
Income from continuing operations net of noncontrolling interest
$
81,392

 
114,755

 
$
0.71

Dilutive shares for long-term compensation plans
—

 
748

 
 
Diluted income from continuing operations
 
 
 
 
 
Income from continuing operations net of noncontrolling interest
81,392

 
115,503

 
$
0.70

Basic income from discontinued operations
 
 
 
 
 
Discontinued operations net of noncontrolling interest
102,607

 
114,755

 
$
0.89

Dilutive shares for long-term compensation plans
—

 
748

 
 
Diluted income from discontinued operations
 
 
 
 
 
Discontinued operations net of noncontrolling interest
102,607

 
115,503

 
$
0.89

Basic income per common share
 
 
 
 
 
Net income available to common shareholders
183,999

 
114,755

 
$
1.60

Dilutive shares for long-term compensation plans
—

 
748

 
 
Diluted income per common share
 
 
 
 
 
Net income available to common shareholders
$
183,999

 
115,503

 
$
1.59


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 as the exercise price was higher than the average share price of the Company in 2013, 2012 and 2011 were 959,000, 905,000 and 1,685,000, respectively.
During the years ended December 31, 2013, 2012 and 2011, 504,000, 841,000 and 256,000 common shares, respectively, were issued upon the exercise of options.
During the years ended December 31, 2013, 2012 and 2011, individuals acquired 157,285, 94,895 and 119,987 common shares, respectively, in exchange for the same number of common units. These individuals acquired these common units in connection with their contributions to the Operating Partnership of certain assets in prior years. The exchange of common shares for the common units is exempt from the registration requirement of the Securities Act of 1933, as amended, pursuant to Section 4(2) thereunder.
During the years ended December 31, 2013, 2012 and 2011, distributions per common share were $1.90 for each period.


65

4.    INCOME PER COMMON UNIT OF THE OPERATING PARTNERSHIP

The following table sets forth the computation of basic and diluted income per common unit of the Operating Partnership (in thousands, except per unit amounts):
 
 
2013
 
2012
 
Income
(Numerator)
 
Weighted
Average Units
(Denominator)
 
Per Unit
 
Income
(Numerator)
 
Weighted
Average Units
(Denominator)
 
Per Unit
Income from continuing operations net of noncontrolling interest - consolidated joint ventures
$
97,102

 
 
 
 
 
$
97,022

 
 
 
 
Less: Preferred unit distributions
(2,119
)
 
 
 
 
 
(9,902
)
 
 
 
 
Excess of preferred unit (redemption over carrying amount) carrying amount over redemption

(1,236
)
 
 
 
 
 
3,689

 
 
 
 
Basic income from continuing operations
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations available to common unitholders
93,747

 
133,858

 
$
0.70

 
90,809

 
120,623

 
$
0.75

Dilutive units for long-term compensation plans
—

 
729

 
 
 
—

 
831

 
 
Diluted income from continuing operations
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations available to common unitholders
93,747

 
134,587

 
$
0.70

 
90,809

 
121,454

 
$
0.75

Basic income from discontinued operations
 
 
 
 
 
 
 
 
 
 
 
Discontinued operations
121,839

 
133,858

 
$
0.91

 
51,004

 
120,623

 
$
0.43

Dilutive units for long-term compensation plans
—

 
729

 
 
 
—

 
831

 
 
Diluted income from discontinued operations
 
 
 
 
 
 
 
 
 
 
 
Discontinued operations
121,839

 
134,587

 
$
0.90

 
51,004

 
121,454

 
$
0.42

Basic income per common unit
 
 
 
 
 
 
 
 
 
 
 
Income available to common unitholders
215,586

 
133,858

 
$
1.61

 
141,813

 
120,623

 
$
1.18

Dilutive units for long-term compensation plans
—

 
729

 
 
 
—

 
831

 
 
Diluted income per common unit
 
 
 
 
 
 
 
 
 
 
 
Income available to common unitholders
$
215,586

 
134,587

 
$
1.60

 
$
141,813

 
121,454

 
$
1.17



66

 
2011
 
Income
(Numerator)
 
Weighted
Average Units
(Denominator)
 
Per Unit
Income from continuing operations net of noncontrolling interest - consolidated joint ventures
$
105,156

 
 
 
 
Less: Preferred unit distributions
(21,069
)
 
 
 
 
Basic income from continuing operations
 
 
 
 
 
Income from continuing operations available to common unitholders
84,087

 
118,624

 
$
0.71

Dilutive units for long-term compensation plans
—

 
748

 
 
Diluted income from continuing operations
 
 
 
 
 
Income from continuing operations available to common unitholders
84,087

 
119,372

 
$
0.70

Basic income from discontinued operations
 
 
 
 
 
Discontinued operations
106,065

 
118,624

 
$
0.89

Dilutive units for long-term compensation plans
—

 
748

 
 
Diluted income from discontinued operations
 
 
 
 
 
Discontinued operations
106,065

 
119,372

 
$
0.89

Basic income per common unit
 
 
 
 
 
Income available to common unitholders
190,152

 
118,624

 
$
1.60

Dilutive units for long-term compensation plans
—

 
748

 
 
Diluted income per common unit
 
 
 
 
 
Income available to common unitholders
$
190,152

 
119,372

 
$
1.59


Dilutive units for long-term compensation plans represent the unvested common units outstanding during the year as well as the dilutive effect of outstanding options. The amounts of anti-dilutive options that were excluded from the computation of diluted income per common unit as the exercise price was higher than the average unit price of the Company in 2013, 2012 and 2011 were 959,000, 905,000 and 1,685,000, respectively.
During the years ended December 31, 2013, 2012 and 2011, 504,000, 841,000 and 256,000 common units, respectively, were issued upon the exercise of options.
During the years ended December 31, 2013, 2012 and 2011, individuals acquired 157,285, 94,895 and 119,987 common shares of the Trust in exchange for the same number of common units of the Operating Partnership. These individuals acquired these common units in connection with their contributions to the Operating Partnership of certain assets in prior years. The exchange of common shares for the common units is exempt from the registration requirement of the Securities Act of 1933, as amended, pursuant to Section 4(2) thereunder.
During the years ended December 31, 2013, 2012 and 2011, distributions per common unit were $1.90 for each period.









67

5.     ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table sets forth the components of Accumulated Other Comprehensive Income (in thousands):

 
 
December 31,
 
 
2013
 
2012
Foreign Currency Translation:
 
 
 
 
     Beginning balance
 
$
3,195

 
$
(241
)
     Translation adjustment
 
5,397

 
3,436

     Ending balance
 
8,592

 
3,195

 
 
 
 
 
Net unrealized gain on derivative instruments:
 
 
 
 
     Beginning balance
 
—

 
—

     Unrealized gains
 
1,584

 
—

     Ending balance
 
1,584

 
—

Total accumulated other comprehensive income
 
10,176

 
3,195

Less: portion included in noncontrolling interest – operating partnership
 
(434
)
 
(295
)
Total accumulated other comprehensive income included in shareholders' equity
 
$
9,742

 
$
2,900



6.     REAL ESTATE
The Company owns and operates industrial and office properties. The carrying value of these properties by type as of December 31, 2013 and 2012 is as follows (in thousands):
 
 
Land
 
Building
 
 
 
 
 
 
And Land
 
And
 
 
 
Accumulated
 
 
Improvements
 
Improvements
 
Total
 
Depreciation
2013
 
 
 
 
 
 
 
 
Industrial properties
 
$708,484
 
$3,238,875
 
$3,947,359
 
$514,109
Office properties
 
430,971

 
1,905,883

 
2,336,854

 
543,571

 
 
 
 
 
 
 
 
 
2013 Total
 
$1,139,455
 
$5,144,758
 
$6,284,213
 
$1,057,680
 
 
 
 
 
 
 
 
 
2012
 
 
 
 
 
 
 
 
Industrial properties
 
$442,814
 
$2,064,928
 
$2,507,742
 
$496,208
Office properties
 
403,144

 
1,980,457

 
2,383,601

 
576,651

 
 
 
 
 
 
 
 
 
2012 Total
 
$845,958
 
$4,045,385
 
$4,891,343
 
$1,072,859
Depreciation expense was $162.5 million, $140.6 million and $144.3 million for the years ended December 31, 2013, 2012 and 2011, respectively.

68

Information on the operating properties the Company sold during the years ended December 31, 2013 and 2012 is as follows:
2013 Sales
 
 
 
Number of
 
Leaseable
 
 
 
Reportable Segment
 
Buildings
 
Square Feet
 
Gross Proceeds
 
 
 
 
 
 
 
(in thousands)
Industrial -
Lehigh/Central PA
 
1

 
101,750

 
$
8,650

 
Carolinas
 
1

 
59,200

 
2,000

 
Other
 
2

 
80,635

 
4,422

Industrial/Office -
Minnesota
 
12

 
915,693

 
71,493

 
Richmond/Hampton Roads
 
1

 
86,170

 
10,978

 
Other
 
34

 
2,226,500

 
187,853

Office -
Philadelphia
 
2

 
656,350

 
103,650

 
Southeastern PA
 
5

 
996,874

 
102,734

 
Total
 
58

 
5,123,172

 
$
491,780

2012 Sales
 
 
 
Number of
 
Leaseable
 
 
 
Reportable Segment
 
Buildings
 
Square Feet
 
Gross Proceeds
 
 
 
 
 
 
 
(in thousands)
Industrial -
Lehigh/Central PA
 
1

 
45,000

 
$
2,025

 
Chicago/Milwaukee
 
20

 
996,115

 
69,861

 
Carolinas
 
13

 
704,120

 
55,228

 
Other
 
8

 
632,758

 
49,386

Industrial/Office -
South Florida
 
1

 
47,442

 
4,143

 
Richmond/Hampton Roads
 
3

 
289,278

 
22,131

 
Other
 
1

 
15,000

 
2,386

Office -
Southeastern PA
 
3

 
308,344

 
23,300

 
Total
 
50

 
3,038,057

 
$
228,460


7.     INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES
Listed below are the unconsolidated joint ventures in which the Company has a noncontrolling interest. The Company receives fees from these joint ventures for services it provides. These services include property management, leasing, development and administration. These fees are included in interest and other income in the accompanying consolidated statements of comprehensive income. The Company may also receive a promoted interest if certain return thresholds are met.
Liberty Venture I, LP
As of December 31, 2013, the Company had a 25% interest in Liberty Venture I, LP, an entity engaged in the ownership of industrial properties in New Jersey. This joint venture is part of the Company's Industrial-Other reportable segment.
As of December 31, 2013, the joint venture owned 23 industrial properties totaling 3.1 million square feet and 43 acres of developable land. The joint venture also had one property under development, which is expected to comprise, upon completion, 203,000 square feet and is expected to represent a Total Investment of $11.8 million.
The Company recognized $578,000, $619,000 and $614,000 in fees for services during the years ended December 31, 2013, 2012 and 2011, respectively.

69

Kings Hill Unit Trust
As of December 31, 2013, the Company had a 20% interest in Kings Hill Unit Trust, an entity engaged in the ownership of office and industrial properties in the County of Kent, United Kingdom. This joint venture is part of the Company's United Kingdom reportable segment.
As of December 31, 2013, the joint venture owned three industrial properties and 11 office properties totaling 490,000 square feet.
The Company had notes receivable from Kings Hill Unit Trust for an aggregate of $18.6 million and $14.4 million as of December 31, 2013 and 2012, respectively. The notes receivable bear interest at rates of 2% to 10% and are due in February 2016. These related party receivables are reflected in investments in and advances to unconsolidated joint ventures in the Company's consolidated balance sheets.
The Company had a receivable from Kings Hill Unit Trust for $133,000 and $109,000 as of December 31, 2013 and 2012, respectively. This related party receivable is reflected in accounts receivable in the Company's consolidated balance sheets.
The Company had prepaid rent with Kings Hill Unit Trust for $47,000 and $46,000 as of December 31, 2013 and 2012, respectively. This related party asset is reflected in the prepaid expenses and other assets in the Company's consolidated balance sheets.
Income from fees and interest was $237,000, $333,000 and $427,000 during the years ended December 31, 2013, 2012 and 2011, respectively.
Liberty Illinois, LP
As of December 31, 2013, the Company had a 25% interest in Liberty Illinois, LP, an entity primarily engaged in the ownership of industrial properties in Illinois. This joint venture is part of the Company's Chicago/Milwaukee reportable segment.
As of December 31, 2013, the joint venture owned 15 industrial properties totaling 5.1 million square feet and 335 acres of developable land.
The Company recognized $952,000, $655,000 and $635,000 in fees for services during the years ended December 31, 2013, 2012 and 2011, respectively.
Blythe Valley JV Sarl
As of December 31, 2012, the Company had a 20% interest in Blythe Valley JV Sarl, an entity engaged in the ownership of office properties in the West Midlands, United Kingdom. This joint venture was part of the Company's United Kingdom reportable segment.
In October 2012, the joint venture defaulted on its mortgage loan. The mortgage loan was secured by all of the operating properties and land of the joint venture. In February 2013, the lender appointed a receiver, effectively taking control of the assets securing its loan. The Company no longer holds an interest in this joint venture.

During the year ended December 31, 2012, the joint venture recorded an impairment charge, the Company's share of which was sufficient to bring the Company's investment in the joint venture to zero. The Company's share of this impairment charge was $4.6 million and is reflected in equity in earnings (loss) of unconsolidated joint ventures in the Company's consolidated statements of comprehensive income.
The Company had a receivable from Blythe Valley JV Sarl for $127,000 as of December 31, 2012. This related party receivable is reflected in accounts receivable in the Company's consolidated balance sheets. This receivable was collected during the year ended December 31, 2013.
The Company recognized $33,000, $355,000 and $335,000 in fees for services during the years ended December 31, 2013, 2012 and 2011, respectively.
Liberty Washington, LP
As of December 31, 2013, the Company had a 25% interest in Liberty Washington, LP, an entity engaged in the ownership of office properties in Northern Virginia and Washington, D.C. This joint venture's properties are part of the Company's Industrial/Office-Other and the Washington, D.C. reportable segment.

70

As of December 31, 2013, the joint venture owned 21 office properties totaling 2.4 million square feet and six acres of developable land.
The Company had a receivable from Liberty Washington, LP for $523,000 and $1.2 million as of December 31, 2013 and 2012, respectively. This related party receivable is reflected as prepaid expenses and other assets in the Company's consolidated balance sheets.
The Company recognized $4.9 million, $4.5 million and $4.0 million in fees for services during the years ended December 31, 2013, 2012 and 2011, respectively.
Liberty/Commerz 1701 JFK Boulevard, LP
As of December 31, 2013, the Company had a 20% interest in Liberty/Commerz 1701 JFK Boulevard, LP ("Liberty/Commerz"), an entity engaged in the ownership of a 1.25 million square foot office tower in Philadelphia, Pennsylvania. This joint venture is part of the Company's Philadelphia reportable segment.
The Company had a payable to this joint venture for $59,000 as of December 31, 2013 and a receivable from this joint venture for $266,000 as of December 31, 2012. This related party payable and receivable are reflected in investments in and advances to unconsolidated joint ventures in the Company's consolidated balance sheets.
The Company had a receivable from this joint venture for $323,000 and $175,000 as of December 31, 2013 and 2012, respectively. This related party receivable is reflected in prepaid expenses and other assets in the Company's consolidated balance sheets. Additionally, the Company had a receivable from this joint venture for $469,000 and $204,000 as of December 31, 2013 and 2012, respectively. This related party receivable is reflected in accounts receivable in the Company's consolidated balance sheets.
The Company recognized $2.2 million, $2.2 million and $2.1 million in fees for services during the years ended December 31, 2013, 2012 and 2011 respectively.
Other Joint Ventures
As of December 31, 2013, the Company had a 50% ownership interest in four additional unconsolidated joint ventures. One of these joint ventures has four operating properties and an investment in land held for development and is part of the Company's Industrial/Office Other reportable segment. One of these joint ventures has one operating property and an investment in land held for development and is part of the Company's United Kingdom reportable segment. One of these joint ventures owns one acre of developable land and is part of the Company's Philadelphia reportable segment. The final joint venture has a leasehold interest and does not operate or own operating properties and is part of the Company's United Kingdom reportable segment. As of December 31, 2013 and 2012, the Company had a $3.0 million note payable due to this joint venture. The note payable is interest free and is due upon written notice from the joint venture. This related party payable is reflected in investments in and advances to unconsolidated joint ventures in the Company's consolidated balance sheets.
The Company's share of each of the joint venture's earnings is included in equity in earnings of unconsolidated joint ventures in the accompanying consolidated statements of comprehensive income.
Summary Financial Data
The condensed balance sheets as of December 31, 2013 and 2012 and condensed statements of operations for Liberty Venture I, LP, Kings Hill Unit Trust, Liberty Illinois, LP, Blythe Valley JV Sarl (no remaining interest as of December 31, 2013), Liberty Washington, LP, Liberty/Commerz and the other unconsolidated joint ventures for the years ended December 31, 2013, 2012 and 2011 are as follows (in thousands):







71

Condensed Balance Sheets:
 
December 31, 2013
 
Liberty
 
Kings Hill
 
Liberty
 
Liberty
 
Liberty/
 
 
 
 
 
Venture I, LP
 
Unit Trust
 
Illinois, LP
 
Washington, LP
 
Commerz
 
Other
 
Total
Real estate assets
$
129,354

 
$
182,220

 
$
261,375

 
$
887,452

 
$
494,150

 
$
70,274

 
$
2,024,825

Accumulated depreciation
(32,617
)
 
(25,006
)
 
(43,304
)
 
(131,064
)
 
(83,461
)
 
(8,456
)
 
(323,908
)
   Real estate assets, net
96,737

 
157,214

 
218,071

 
756,388

 
410,689

 
61,818

 
1,700,917

Development in progress
2,226

 
—

 
—

 
—

 
—

 
—

 
2,226

Land held for development
2,842

 
—

 
42,770

 
2,000

 
—

 
47,549

 
95,161

Other assets
11,531

 
20,173

 
20,346

 
58,701

 
50,680

 
15,911

 
177,342

   Total assets
$
113,336

 
$
177,387

 
$
281,187

 
$
817,089

 
$
461,369

 
$
125,278

 
$
1,975,646

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt
$
72,121

 
$
97,091

 
$
140,400

 
$
319,856

 
$
321,401

 
$
43,151

 
$
994,020

Other liabilities
4,032

 
100,112

 
7,936

 
15,012

 
9,544

 
9,846

 
146,482

Equity
37,183

 
(19,816
)
 
132,851

 
482,221

 
130,424

 
72,281

 
835,144

   Total liabilities and equity
$
113,336

 
$
177,387

 
$
281,187

 
$
817,089

 
$
461,369

 
$
125,278

 
$
1,975,646

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Company's net investment in
 
 
 
 
 
 
 
 
 
 
 
 
 
unconsolidated joint ventures (1)
$
8,551

 
$
12,772

 
$
21,688

 
$
72,981

 
$
24,740

 
$
38,923

 
$
179,655


 
December 31, 2012
 
Liberty
 
Kings Hill
 
Liberty
 
Blythe Valley
 
Liberty
 
Liberty/
 
 
 
 
 
Venture I, LP
 
Unit Trust
 
Illinois, LP
 
JV Sarl
 
Washington, LP
 
Commerz
 
Other
 
Total
Real estate assets
$
129,296

 
$
193,628

 
$
259,786

 
$
124,204

 
$
929,790

 
$
494,045

 
$
69,680

 
$
2,200,429

Accumulated depreciation
(28,849
)
 
(22,666
)
 
(36,978
)
 
(23,764
)
 
(116,072
)
 
(69,572
)
 
(6,853
)
 
(304,754
)
   Real estate assets, net
100,447

 
170,962

 
222,808

 
100,440

 
813,718

 
424,473

 
62,827

 
1,895,675

Land held for development
2,760

 
—

 
42,734

 
38,683

 
2,000

 
—

 
23,193

 
109,370

Other assets
9,845

 
13,736

 
14,974

 
10,934

 
62,647

 
50,638

 
14,294

 
177,068

   Total assets
$
113,052

 
$
184,698

 
$
280,516

 
$
150,057

 
$
878,365

 
$
475,111

 
$
100,314

 
$
2,182,113

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt
$
73,426

 
$
117,308

 
$
140,400

 
$
192,803

 
$
341,804

 
$
324,000

 
$
43,946

 
$
1,233,687

Other liabilities
3,754

 
77,832

 
7,675

 
80,326

 
21,989

 
9,257

 
6,173

 
207,006

Equity
35,872

 
(10,442
)
 
132,441

 
(123,072
)
 
514,572

 
141,854

 
50,195

 
741,420

   Total liabilities and equity
$
113,052

 
$
184,698

 
$
280,516

 
$
150,057

 
$
878,365

 
$
475,111

 
$
100,314

 
$
2,182,113

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Company's net investment in
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
unconsolidated joint ventures (1)
$
8,205

 
$
10,341

 
$
21,331

 
$
—

 
$
76,965

 
$
27,305

 
$
24,874

 
$
169,021


(1)
Differences between the Company's net investment in unconsolidated joint ventures and its underlying equity in the net assets of the venture are primarily a result of impairments related to the Company's investment in unconsolidated joint ventures, the deferral of gains associated with the sales of properties to joint ventures in which the Company retains an ownership interest and loans made to the joint ventures by the Company. These adjustments have resulted in an aggregate difference reducing the Company's investments in unconsolidated joint ventures by $41.7 million and $28.5 million as of December 31, 2013 and 2012, respectively. Differences between historical cost basis and the basis reflected at the joint venture level (other than loans) are typically depreciated over the life of the related asset.












72

Condensed Statements of Operations (2):
 
Year Ended December 31, 2013
 
Liberty
 
Kings Hill
 
Liberty
 
Liberty
 
Liberty/
 
 
 
 
 
Venture I, LP
 
Unit Trust
 
Illinois, LP
 
Washington, LP
 
Commerz
 
Other
 
Total
Total revenue
$
16,238

 
$
12,701

 
$
24,455

 
$
75,821

 
$
62,411

 
$
8,415

 
$
200,041

Operating expense
5,248

 
4,187

 
8,353

 
27,549

 
23,074

 
2,636

 
71,047

 
10,990

 
8,514

 
16,102

 
48,272

 
39,337

 
5,779

 
128,994

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest
(5,318
)
 
(5,133
)
 
(8,348
)
 
(18,946
)
 
(20,391
)
 
(2,933
)
 
(61,069
)
Depreciation and amortization
(4,414
)
 
(3,829
)
 
(7,382
)
 
(28,392
)
 
(14,734
)
 
(1,870
)
 
(60,621
)
Other income/(expense)
53

 
71

 
38

 
122

 
(233
)
 
(37
)
 
14

Income (loss) from discontinued operations
—

 
(5,647
)
 
—

 
(8,731
)
 
—

 
—

 
(14,378
)
Net income (loss)
$
1,311

 
$
(6,024
)
 
$
410

 
$
(7,675
)
 
$
3,979

 
$
939

 
$
(7,060
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Company's equity in earnings (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 of unconsolidated joint ventures
$
530

 
$
(908
)
 
$
618

 
$
3,748

 
$
1,406

 
$
673

 
$
6,067

 
 
Year Ended December 31, 2012
 
Liberty
 
Kings Hill
 
Liberty
 
Blythe Valley
 
Liberty
 
Liberty/
 
 
 
 
 
Venture I, LP
 
Unit Trust
 
Illinois, LP
 
JV Sarl
 
Washington, LP
 
Commerz
 
Other
 
Total
Total revenue
$
15,328

 
$
15,642

 
$
22,156

 
$
14,278

 
$
81,128

 
$
62,484

 
$
7,481

 
$
218,497

Operating expense
5,277

 
4,237

 
8,093

 
3,921

 
27,901

 
22,935

 
2,392

 
74,756

 
10,051

 
11,405

 
14,063

 
10,357

 
53,227

 
39,549

 
5,089

 
143,741

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest
(5,402
)
 
(6,520
)
 
(8,348
)
 
(12,130
)
 
(21,260
)
 
(20,501
)
 
(2,989
)
 
(77,150
)
Depreciation and amortization
(3,930
)
 
(3,731
)
 
(7,395
)
 
(4,148
)
 
(28,749
)
 
(15,411
)
 
(1,885
)
 
(65,249
)
Other income/(expense)
40

 
(160
)
 
31

 
211

 
149

 
(80
)
 
21

 
212

Impairment
—

 
—

 
—

 
(77,026
)
 
—

 
—

 
—

 
(77,026
)
Net income (loss)
$
759

 
$
994

 
$
(1,649
)
 
$
(82,736
)
 
$
3,367

 
$
3,557

 
$
236

 
$
(75,472
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Company's equity in earnings (loss) of
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 unconsolidated joint ventures
$
306

 
$
352

 
$
106

 
$
(5,610
)
 
$
3,243

 
$
1,304

 
$
(382
)
 
$
(681
)

 
Year Ended December 31, 2011
 
Liberty
 
Kings Hill
 
Liberty
 
Blythe Valley
 
Liberty
 
Liberty/
 
 
 
 
 
Venture I, LP
 
Unit Trust
 
Illinois, LP
 
JV Sarl
 
Washington, LP
 
Commerz
 
Other
 
Total
Total revenue
$
17,008

 
$
16,389

 
$
20,245

 
$
13,950

 
$
76,811

 
$
62,225

 
$
7,212

 
$
213,840

Operating expense
5,912

 
3,372

 
8,055

 
3,942

 
27,074

 
20,575

 
1,869

 
70,799

 
11,096

 
13,017

 
12,190

 
10,008

 
49,737

 
41,650

 
5,343

 
143,041

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest
(5,472
)
 
(5,979
)
 
(8,348
)
 
(14,991
)
 
(22,998
)
 
(20,445
)
 
(3,169
)
 
(81,402
)
Depreciation and amortization
(4,088
)
 
(4,219
)
 
(7,342
)
 
(4,951
)
 
(28,618
)
 
(15,494
)
 
(1,793
)
 
(66,505
)
Other income/(expense)
985

 
(511
)
 
(56
)
 
(191
)
 
125

 
(2,046
)
 
(509
)
 
(2,203
)
Gain (loss) on sale
1,515

 
—

 
—

 
(1,605
)
 
—

 
—

 
1,253

 
1,163

Net income (loss)
$
4,036

 
$
2,308

 
$
(3,556
)
 
$
(11,730
)
 
$
(1,754
)
 
$
3,665

 
$
1,125

 
$
(5,906
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Company's equity in earnings (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
of unconsolidated joint ventures
$
1,212

 
$
637

 
$
(394
)
 
$
(1,898
)
 
$
1,889

 
$
1,314

 
$
736

 
$
3,496


(2) The years ended December 31, 2012 and 2011 have not been restated for discontinued operations.

73

8.     DEFERRED FINANCING AND LEASING COSTS
Deferred financing and leasing costs were comprised of the following as of December 31, 2013 and 2012 (in thousands):
 
December 31,
 
2013
 
2012
Deferred financing costs
$
36,882

 
$
32,023

Deferred leasing costs
193,015

 
188,181

Intangible - market rent
19,411

 
6,935

Intangible - origination value
118,077

 
25,577

 
367,385

 
252,716

Accumulated amortization:
 
 
 
Deferred financing costs
(17,536
)
 
(14,465
)
Deferred leasing costs
(92,462
)
 
(92,580
)
Intangible - market rent
(4,185
)
 
(2,569
)
Intangible - origination value
(26,595
)
 
(13,773
)
 
(140,778
)
 
(123,387
)
Deferred financing and leasing costs, net
$
226,607

 
$
129,329


Amortization of deferred financing costs was $4.1 million, $4.9 million and $5.4 million for the years ended December 31, 2013, 2012 and 2011, respectively. Amortization of deferred leasing costs and intangible - origination value was $39.2 million, $24.0 million and $24.6 million for the years ended December 31, 2013, 2012 and 2011, respectively.
As of December 31, 2013, the remaining weighted-average amortization period was 3.7 years for intangible - market rent and 4.5 years for intangible - origination value.
The table above includes intangible - market rent assets. There were also $9.1 million and $5.4 million of unamortized market rent - intangible liabilities as of December 31, 2013 and 2012, respectively. Amortization of the aggregate asset and liability for intangible - market rent was expense of $290,000 for the year ended December 31, 2013, and was income of $491,000 and $536,000 for the years ended December 31, 2012 and 2011, respectively. These amounts were included as a decrease or increase in rental revenue in the accompanying consolidated statements of comprehensive income as appropriate.
The aggregate amortization of intangible - market rent is a decrease (increase) in rental revenue over the next five years and thereafter as follows (in thousands):
2014
$
2,628

2015
2,039

2016
1,542

2017
579

2018
176

Thereafter
(864
)
Total
$
6,100

The aggregate amortization expense for intangible - origination value for the next five years and thereafter is as follows (in thousands):
2014
$
29,808

2015
21,720

2016
16,193

2017
10,180

2018
5,782

Thereafter
7,799

Total
$
91,482



74


9.     INDEBTEDNESS
Overview
Indebtedness consists of mortgage loans, unsecured notes, and borrowings under a credit facility. The weighted average interest rates for the years ended December 31, 2013, 2012 and 2011 were 5.1%, 5.3% and 5.8%, respectively. Interest costs during the years ended December 31, 2013, 2012 and 2011 in the amount of $9.6 million, $9.9 million and $3.0 million, respectively, were capitalized. Cash paid for interest for the years ended December 31, 2013, 2012 and 2011 was $143.2 million, $132.2 million and $134.3 million, respectively.
The Company is subject to financial covenants contained in some of its debt agreements, the most restrictive of which are detailed below under the heading "Credit Facility." As of December 31, 2013, the Company was in compliance with all financial covenants.
The scheduled principal amortization and maturities of the Company's mortgage loans, unsecured notes outstanding and the Credit Facility (as defined below) and the related weighted average interest rates at December 31, 2013 are as follows (in thousands, except percentages):
 
 
 
 
 
 
 
 
 
 
 
 
Weighted
 
 
Mortgages
 
 
 
 
 
 
 
Average
 
 
Principal
 
Principal
 
Unsecured
 
Credit
 
 
 
Interest
 
 
Amortization
 
Maturities
 
Notes
 
Facility
 
Total
 
Rate
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
$
11,088

 
$
2,696

 
$
199,953

 
$
—

 
$
213,737

 
5.63
%
2015
 
12,138

 
44,469

 
315,869

 
—

 
372,476

 
5.16
%
2016
 
11,720

 
182,318

 
299,362

 
—

 
493,400

 
6.08
%
2017
 
10,916

 
2,349

 
295,861

 
—

 
309,126

 
6.57
%
2018
 
8,730

 
27,051

 
99,968

 
—

 
135,749

 
6.80
%
2019
 
8,680

 
50,043

 
—

 
—

 
58,723

 
3.99
%
2020
 
4,280

 
67,361

 
349,441

 
—

 
421,082

 
4.83
%
2021
 
2,716

 
65,008

 
—

 
—

 
67,724

 
4.06
%
2022
 
2,172

 
—

 
399,342

 
—

 
401,514

 
4.14
%
2023 and thereafter
 
29,625

 
1,946

 
748,417

 
—

 
779,988

 
4.03
%
 
 
$
102,065

 
$
443,241

 
$
2,708,213

 
$
—

 
$
3,253,519

 
5.05
%
Mortgage Loans, Unsecured Notes
Mortgage loans with maturities ranging from 2014 to 2033 are collateralized by and in some instances cross-collateralized by properties with a net book value of $997.3 million as of December 31, 2013.
The interest rates on $3,237.5 million of mortgage loans (including $105.2 million fixed via a swap arrangement - see Footnote 21 - Derivative Instruments) and unsecured notes are fixed and range from 3.0% to 7.5%. The weighted average remaining term for the mortgage loans and unsecured notes is 5.9 years.
Credit Facility

The Company has maintained an unsecured credit facility throughout 2011, 2012 and 2013. During that period the Company has replaced, restated and amended its credit facility. This activity has resulted in changes to due dates, borrowing costs and covenant calculations. As replaced, restated and amended these credit facilities are referred to below as the "Credit Facility." The interest rate on borrowings under the Credit Facility fluctuates based upon ratings from Moody’s Investors Service, Inc., Standard and Poor’s Ratings Group and Fitch, Inc. Based on the Company's ratings as of December 31, 2013, borrowings under the Credit Facility would bear interest at LIBOR plus 107.5 basis points. The Credit Facility expires in November 2015 and has a one-year extension option at the Company's option, subject to the payment of a stated fee. The Credit Facility contains a competitive bid option, whereby participating lenders bid on the interest rate to be charged. This feature is available for up to 50% of the amount of the facility. There were no borrowings outstanding under the Credit Facility at December 31, 2013. There is also a 20 basis point annual facility fee on the current borrowing capacity. The Credit Facility contains financial covenants, certain of which are set forth below:
•
total debt to total assets may not exceed 0.60:1;
•
earnings before interest, taxes, depreciation and amortization to fixed charges may not be less than 1.50:1;

75

•
unsecured debt to unencumbered asset value must equal or be less than 60%; and
•
unencumbered net operating income to unsecured interest expense must equal or exceed 200%.
Activity

In September 2013, the Company issued $450.0 million of 4.40% senior unsecured notes due 2024. The net proceeds from the offering were used to fund a portion of the cash consideration payable for the Cabot Acquisition (see Note 20).

In October 2013, as part of the Cabot Acquisition, the Company assumed $229.8 million in mortgages bearing interest at a weighted average rate of 5.85% with maturity dates from 2018 to 2021.

In February 2012, the Company closed on a mortgage with $45.0 million of available funds bearing interest at 4.84% and maturing in 2033. As of December 31, 2013, there was $44.5 million outstanding on this loan. The net proceeds from this mortgage were used for construction costs on a property under development that was placed in service during the year ended December 31, 2013.

In June 2012, the Company issued $400.0 million of 4.125% senior unsecured notes due 2022. The net proceeds from this issuance were used to repay borrowings under the Company's unsecured credit facility and for general corporate purposes.

In August 2012, the Company used proceeds from its unsecured credit facility together with available cash on hand to repay $230.1 million of 10-year, 6.375% senior unsecured notes due August 2012.

In December 2012, the Company issued $300.0 million of 3.375% senior unsecured notes due 2023. The net proceeds from this issuance were used to repay borrowings under the Company's unsecured credit facility and for general corporate purposes.

During the year ended December 31, 2011, the Company used proceeds from its Credit Facility together with available cash on hand to repay $246.5 million principal value of 7.25% senior notes.
10.     LEASING ACTIVITY
Future minimum rental payments due from tenants under noncancelable operating leases as of December 31, 2013 are as follows (in thousands):
2014
 
$
555,691

2015
 
498,377

2016
 
417,793

2017
 
328,969

2018
 
255,675

Thereafter
 
819,870

TOTAL
 
$
2,876,375

In addition to minimum rental payments, most leases require the tenants to pay for their pro rata share of specified operating expenses. These payments are included as operating expense reimbursement in the accompanying consolidated statements of comprehensive income.
11.     NONCONTROLLING INTEREST - OPERATING PARTNERSHIP / LIMITED PARTNERS' EQUITY - PREFERRED UNITS
As of December 31, 2013, the Company had outstanding the following cumulative preferred units of the Operating Partnership:
ISSUE
 
AMOUNT
 
UNITS
 
LIQUIDATION
PREFERENCE
 
DIVIDEND
RATE
 
 
(in 000’s)
 
 
 
 
Series I-2
 
$
7,537

 
301

 
$25
 
6.25
%
The preferred units are putable at the holder's option at any time and are callable at the Operating Partnership's option after a stated period of time for cash.
Preferred distributions related to the Series I units were $471,000 for each of the years ended December 31, 2013 and 2012 and $57,000 for the year ended December 31, 2011.

76


12.     SHAREHOLDERS' EQUITY - TRUST
Common Shares
The Company paid to holders of its common shares and holders of its common units distributions of $247.4 million, $229.7 million and $226.0 million during the years ended December 31, 2013, 2012 and 2011, respectively. On a per share basis, the Company paid common share and common unit distributions of $1.90 during each of the years ended December 31, 2013, 2012 and 2011.
The following unaudited table summarizes the taxability of common share distributions (taxability for 2013 is estimated):
 
 
2013
 
2012
 
2011
 
 
 
 
 
 
 
Ordinary dividend
 
$
1.4312

 
$
1.5036

 
$
1.4300

Qualified dividend
 
—

 
—

 
—

Capital gain - 15%
 
—

 
—

 
0.1708

Capital gain - 20%
 
0.0016

 
—

 
—

IRC Sec 1250 unrecapture gain - 25%
 
0.4672

 
0.0164

 
0.2992

Return of capital
 
—

 
0.3800

 
—

 
 
 
 
 
 
 
Total
 
$
1.9000

 
$
1.9000

 
$
1.9000

The Company's tax return for the year ended December 31, 2013 has not been filed. The taxability information presented for the 2013 distributions is based upon the best available data. The Company's prior federal income tax returns are subject to examination by taxing authorities. Because the application of tax laws and regulations is susceptible to varying interpretations, the taxability of distributions could be changed at a later date upon final determination by taxing authorities.
Common Shares Held in Treasury
The Company has a share repurchase plan under which the Company may purchase up to $100 million of the Company's common shares and preferred shares (as defined below).
The Company purchased no common shares under the share repurchase plan during 2013, 2012 or 2011.
Common units
The common units of the Operating Partnership not held by the Trust outstanding as of December 31, 2013 have the same economic characteristics as common shares of the Trust. The 3,556,566 outstanding common units of the Operating Partnership not held by the Trust 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 3,556,566 outstanding common units based on the closing price of the common shares of the Company at December 31, 2013 was $120.5 million.
No common units were issued in connection with acquisitions during 2013, 2012 or 2011.
Preferred units
The Operating Partnership had no outstanding cumulative redeemable preferred units of the Operating Partnership as of December 31, 2013. During the year ended December 31, 2013, the Company redeemed or repurchased $20.0 million of outstanding 7.00% Series E Cumulative Redeemable Preferred Units, $17.5 million of outstanding 6.65% Series F Cumulative Redeemable Preferred Units and $27.0 million of outstanding 6.70% Series G Cumulative Redeemable Preferred Units, all at par. In connection with these redemptions and repurchases, the Company wrote off $1.2 million in origination costs. This amount was included in noncontrolling interest - operating partnership in the Trust's consolidated statements of comprehensive income.

During the year ended December 31, 2012, the Company redeemed $32.5 million of outstanding 6.65% Series F Cumulative Redeemable Preferred Units for $26.0 million. Also, the Company redeemed $95.0 million of outstanding 7.45% Series B Cumulative Redeemable Preferred Units and $100.0 million of outstanding 7.40% Series H Cumulative Redeemable Preferred Units at par. In connection with these redemptions, during the year ended December 31, 2012, the Company recognized a $3.7

77

million net gain relating to the excess of preferred unit carrying amount over redemption price net of certain costs. This amount was included in noncontrolling interest - operating partnership in the Trust's consolidated statements of comprehensive income.
The Company paid the following Equity Preferred Unit distributions for the years ended December 31:
 
 
2013
 
2012
 
2011
Distributions (in millions)
 
$1.6
 
$9.9
 
$21.0
Distribution per unit:
 
 
 
 
 
 
Series B
 
—

 
$0.45
 
$1.86
Series E
 
$1.21
 
$3.50
 
$3.50
Series F
 
$1.32
 
$1.43
 
$3.33
Series G
 
$1.33
 
$3.35
 
$3.35
Series H
 
—

 
$0.77
 
$1.85
As of December 31, 2013, the Company had 16,013,000 authorized but unissued preferred shares.
Dividend Reinvestment and Share Purchase Plan
The Company has a Dividend Reinvestment and Share Purchase Plan under which holders of common shares may elect to automatically reinvest their distributions in additional common shares and may make optional cash payments for additional common shares. The Company may issue additional common shares or repurchase common shares in the open market for purposes of satisfying its obligations under the Dividend Reinvestment and Share Purchase Plan. During the years ended December 31, 2013, 2012, and 2011, 1,248,842, 1,037,712, and 1,181,776 common shares, respectively, were issued through the Dividend Reinvestment and Share Purchase Plan. The Company used the proceeds to pay down outstanding borrowings under the Company's Credit Facility and for general corporate purposes.
Continuous Equity Offering
The Company has a continuous equity offering program in place for up to $200 million of equity. During the year ended December 31, 2013, the Company sold 1.9 million common shares through this program. The aggregate proceeds from the offering of $75.0 million were used to pay down outstanding borrowings under the Company's unsecured credit facility and for general corporate purposes. The Company did not sell any common shares pursuant to a continuous offering program during 2012 or 2011.
Noncontrolling Interest - Consolidated Joint Ventures
Noncontrolling interest - consolidated joint ventures includes third-party ownership interests in consolidated joint venture investments.

13.     OWNERS' EQUITY - OPERATING PARTNERSHIP

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 Operating Partnership and certain subsequent acquisitions. The common units outstanding as of December 31, 2013 have the same economic characteristics as common shares of the Trust. The 3,556,566 outstanding common units are the limited partners' equity - common units held by persons and entities other than the Trust, the general partner of the Operating 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 the Trust and the common units held by persons and entities other than the Trust are counted in the weighted average number of common units outstanding during any given period. The 3,556,566 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 3,556,566 outstanding common units at December 31, 2013 based on the closing price of the common shares of the Company at December 31, 2013 was $120.5 million.



78

Preferred Units
The Operating Partnership had no outstanding cumulative redeemable preferred units of the Operating Partnership as of December 31, 2013. During the year ended December 31, 2013, the Company redeemed or repurchased $20.0 million of outstanding 7.00% Series E Cumulative Redeemable Preferred Units, $17.5 million of outstanding 6.65% Series F Cumulative Redeemable Preferred Units and $27.0 million of outstanding 6.70% Series G Cumulative Redeemable Preferred Units, all at par. In connection with these redemptions and repurchases, the Company wrote off $1.2 million in origination costs.

During the year ended December 31, 2012, the Company redeemed $32.5 million of outstanding 6.65% Series F Cumulative Redeemable Preferred Units for $26.0 million. Also, the Company redeemed $95.0 million of outstanding 7.45% Series B Cumulative Redeemable Preferred Units and $100.0 million of outstanding 7.40% Series H Cumulative Redeemable Preferred Units at par. In connection with these redemptions, during the year ended December 31, 2012, the Company recognized a $3.7 million net gain relating to the excess of preferred unit carrying amount over redemption price net of certain costs.
The Operating Partnership paid the following Equity Preferred Unit distributions for the years ended December 31:
 
 
2013
 
2012
 
2011
Distributions (in millions)
 
$1.6
 
$9.9
 
$21.0
Distribution per unit:
 
 
 
 
 
 
Series B
 
—

 
$0.45
 
$1.86
Series E
 
$1.21
 
$3.50
 
$3.50
Series F
 
$1.32
 
$1.43
 
$3.33
Series G
 
$1.33
 
$3.35
 
$3.35
Series H
 
—

 
$0.77
 
$1.85
Continuous Equity Offering
The Company has a continuous equity offering program in place for up to $200 million of equity. During year ended December 31, 2013, the Company sold 1.9 million common shares through this program. The aggregate proceeds from the offering of $75.0 million were used to pay down outstanding borrowings under the Company's unsecured credit facility and for general corporate purposes. The Company did not sell any common shares pursuant to a continuous offering program during 2012 or 2011.
Noncontrolling Interest - Consolidated Joint Ventures
Noncontrolling interest - consolidated joint ventures includes third-party ownership interests in consolidated joint venture investments.
14.     EMPLOYEE BENEFIT PLANS
The Company maintains a 401(k) plan for the benefit of its full-time employees. The Company matches the employees' contributions up to 3% of the employees' salary and may also make annual discretionary contributions. Total 401(k) expense recognized by the Company was $923,000, $865,000 and $768,000 for the years ended December 31, 2013, 2012 and 2011, respectively.
15.     SHARE BASED COMPENSATION
Compensation Plans
The Company has a share-based compensation plan (the "Plan") which is utilized to compensate key employees, non-employee trustees and consultants. In addition, the Company has a 2008 Long-Term Incentive Plan (the "2008 Plan") which is applicable to the Company's executive officers. Pursuant to both the Plan and the 2008 Plan, grants of stock options, restricted shares and restricted stock units have been made. The Company has authorized the grant of shares and options under the Plan and the 2008 Plan of up to 21.1 million common shares of the Company.
Options
All options granted have a 10-year term and most options vest and are expensed over a 3-year period, with options to purchase up to 20% of the shares exercisable after the first anniversary, up to 50% after the second anniversary and 100% after the third anniversary of the date of grant.
Share based compensation cost related to options for the years ended December 31, 2013, 2012 and 2011 was $1.6 million, $1.7 million and $1.7 million, respectively.

79

The fair value of share option awards is estimated on the date of the grant using the Black-Scholes option valuation model. The following weighted-average assumptions were utilized in calculating the fair value of options granted during the periods indicated:
 
Year Ended December 31,
 
2013
 
2012
 
2011
Risk-free interest rate
1.1%
 
1.1%
 
2.1%
Dividend yield
5.4%
 
5.7%
 
6.1%
Historical volatility factor
0.356
 
0.377
 
0.366
Weighted-average expected life
6 years
 
5 years
 
5 years
The historical volatility factor is based on the Company's historical share prices. The weighted-average expected life is based on the contractual term of the options as well as the historical periods held before exercise.
A summary of the Company's share option activity and related information for the year ended December 31, 2013 follows:
 
 
Options (000s)
 
Weighted Average Exercise Price
Outstanding January 1, 2013
 
2,662

 
$35.50
Granted
 
228

 
38.78
Exercised
 
(505
)
 
30.22
Forfeited
 
(30
)
 
39.66
Outstanding December 31, 2013
 
2,355

 
$36.90
Exercisable at December 31, 2013
 
1,795

 
$37.14
The weighted average fair value of options granted during the years ended December 31, 2013, 2012 and 2011 was $7.18, $6.55 and $6.17, respectively. Exercise prices for options outstanding as of December 31, 2013 ranged from $20.32 to $49.74. The weighted average remaining contractual life of the options outstanding and exercisable at December 31, 2013 was 5.0 years and 3.9 years, respectively.
During the years ended December 31, 2013, 2012 and 2011, the total intrinsic value of share options exercised (the difference between the market price at exercise and the price paid by the individual to exercise the option) was $4.9 million, $5.9 million and $900,000, respectively. As of December 31, 2013, 920,000 of the options outstanding and exercisable had an exercise price higher than the closing price of the Company's common shares and are considered to have no intrinsic value at that date. As of December 31, 2013, 870,000 options outstanding and exercisable had an exercise price lower than the closing price of the Company's common shares. The aggregate intrinsic value of these options was $2.9 million at that date. The total cash received from the exercise of options for the years ended December 31, 2013, 2012 and 2011 was $15.2 million, $22.9 million and $7.6 million, respectively. The Company has historically issued new shares to satisfy share option exercises.
As of December 31, 2013, there was $458,000 of unrecognized compensation costs related to nonvested options granted under the Plan. That cost is expected to be recognized over a weighted average period of 0.7 years.
Long Term Incentive Shares ("LTI")
Restricted LTI share grants made under the Plan are valued at the grant date fair value, which is the market price of the underlying common shares, and vest ratably over a 5-year period beginning with the first anniversary of the grant.
During 2013, 2012 and 2011, the Company granted restricted stock units to the executive officers pursuant to the 2008 Plan. For the chief executive officer's award, a portion of the restricted stock units will vest up to 272% at the end of a three-year period for the 2013 and 2012 awards and will vest up to 200% at the end of a 3-year period for the 2011 award. For the other executives, a portion of the restricted stock units will vest up to 200% at the end of a 3-year period for the 2013, 2012 and 2011 awards. A portion ("First Portion") of the award vests based on whether the Company's total return exceeds the average total returns of a selected group of peer companies. The grant date fair value of the First Portion was calculated based on a Monte Carlo simulation model and was determined to be 150% and 159% of the market value of a common share as of the grant date ("Market Value") for the chief executive officer and 121% and 127% of the Market Value for the other executives for the 2013 and 2012 grants, respectively. For the 2011 grant, this calculation was the same for all executives and was 146% of the Market Value. The First Portion is amortized over the respective 3-year period subject to certain accelerated vesting due to the age and years of service of certain executive officers. Another portion ("Second Portion") of the award vests based on the Company's Funds from operations. Targets are established for each of the 3 years in the relevant award period. Depending on how each year's performance compares to the projected performance for that year, the restricted stock units are deemed earned and will vest at the end of the award period.

80

The fair value of the Second Portion is based on the market value of a common share as of the grant date and is being amortized to expense during the period from grant date to the vesting dates, adjusting for the expected level of vesting that is anticipated to occur at those dates also subject to certain accelerated vesting provisions as described above.
Share-based compensation cost related to restricted LTI share grants for the years ended December 31, 2013, 2012 and 2011 were $9.1 million, $8.7 million and $8.2 million, respectively.
The Company's restricted LTI share activity for the year ended December 31, 2013 is as follows:
 
 
Shares (000s)
 
Weighted Avg. Grant Date Fair value
Nonvested at January 1, 2013
 
849

 
$32.94
Granted
 
251

 
39.42

Vested
 
(310
)
 
31.98

Forfeited
 
(4
)
 
34.69

Nonvested at December 31, 2013
 
786

 
$35.37
The weighted average fair value of restricted shares granted during the years ended December 31, 2013, 2012 and 2011 was $39.42, $34.61 and $33.62 per share, respectively. As of December 31, 2013, there was $13.0 million of total unrecognized compensation cost related to nonvested shares granted under the Plan. That cost is expected to be recognized over a weighted average period of 1.5 years. The total fair value of restricted shares vested during the years ended December 31, 2013, 2012 and 2011 was $9.9 million, $8.7 million and $6.2 million, respectively.
Bonus Shares
The Plan provides that employees of the Company may elect to receive bonuses or commissions in the form of common shares in lieu of cash ("Bonus Shares"). By making such election, the employee receives shares equal to 120% of the cash value of the bonus or commission, less applicable withholding tax. Bonus Shares issued for the years ended December 31, 2013, 2012 and 2011 were 79,271, 80,573 and 85,471, respectively. Share-based compensation cost related to Bonus Shares for the years ended December 31, 2013, 2012 and 2011 was $3.1 million, $2.9 million and $2.8 million, respectively.
Profit Sharing Plan
The Plan provides that employees of the Company, below the officer level, may receive up to 5% of base pay in the form of cash contributions to an investment account depending on Company performance. Compensation cost related to the profit sharing plan for the years ended December 31, 2013, 2012 and 2011 was $698,000, $564,000 and $868,000 respectively.
An additional 6,637,761, 7,156,179 and 7,899,926 common shares were reserved for issuance for future grants under the Plan and the 2008 Plan at December 31, 2013, 2012 and 2011, respectively.
Employee Share Purchase Plan
The Company registered 750,000 common shares under the Securities Act of 1933, as amended, in connection with an employee share purchase plan ("ESPP"). The ESPP enables eligible employees to purchase shares of the Company, in amounts up to 10% of the employee's salary, at a 15% discount to fair market value. There were 16,793, 18,611 and 18,818 shares issued, in accordance with the ESPP, during the years ended December 31, 2013, 2012 and 2011, respectively. Share-based compensation cost related to the ESPP for the years ended December 31, 2013, 2012 and 2011 was $71,000, $99,000 and $67,000, respectively.
16.     COMMITMENTS AND CONTINGENCIES
Environmental Matters
Substantially all of the Properties and land were subject to Phase I Environmental Assessments and when appropriate Phase II Environmental Assessments (together, the “Environmental Assessments”) obtained in contemplation of their acquisition by the Company. The Environmental Assessments did not reveal, nor is the Company aware of, any non-compliance with environmental laws, environmental liability or other environmental claim that the Company believes would likely have a material adverse effect on the Company.


81

Operating Ground Lease Agreements
Future minimum rental payments under the terms of all non-cancelable operating ground leases under which the Company is the lessee, as of December 31, 2013, were as follows (in thousands):
 
Year
Amount
2014
$
203

2015
203

2016
203

2017
203

2018
203

2019 though 2034
2,981

Total
$
3,996


Operating ground lease expense incurred by the Company during the years December 31, 2013, 2012 and 2011 totaled $210,000, $162,000 and $219,000, respectively.
Legal Matters
From time to time, the Company is a party to a variety of legal proceedings, claims and assessments arising in the normal course of business. The Company believes that as of December 31, 2013 there were no legal proceedings, claims or assessments expected to have a material adverse effect on the Company’s business or financial statements.
Other
As of December 31, 2013, the Company had letter of credit obligations of $4.3 million related to development requirements. The Company believes that it is remote that there will be a draw upon these letter of credit obligations.
As of December 31, 2013, the Company had 16 buildings under development. These buildings are expected to contain a total of 5.0 million square feet of leaseable space and represent an anticipated aggregate investment of $380.8 million. At December 31, 2013, Development in Progress totaled $209.2 million. In addition, as of December 31, 2013, the Company had invested $11.1 million in deferred leasing costs related to these development buildings. Also, the Company had a signed commitment for an inventory development not yet commenced for an anticipated investment of $13.1 million.
As of December 31, 2013, the Company was committed to $16.2 million in improvements on certain land parcels.
As of December 31, 2013, the Company was obligated to pay tenants for allowances for tenant improvements not yet completed for a maximum of $38.1 million.
As of December 31, 2013, the Company was committed to $52.8 million in future land purchases.
The Company maintains cash and cash equivalents at financial institutions. The combined account balances at each institution typically exceed FDIC insurance coverage and, as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. The Company believes the risk is not significant.

82

17.     QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
A summary of quarterly results of operations for the years ended December 31, 2013 and 2012 follows. Certain amounts have been reclassified to conform to the current presentation of discontinued operations (in thousands, except per share amounts).
 
 
QUARTER ENDED
 
 
DEC. 31,
 
SEPT. 30,
 
JUNE 30,
 
MAR. 31,
 
DEC. 31,
 
SEPT. 30,
 
JUNE 30,
 
MAR. 31,
 
 
2013
 
2013
 
2013
 
2013
 
2012
 
2012
 
2012
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating revenue
 
$192,427
 
$155,349
 
$151,026
 
$147,128
 
$144,431
 
$140,515
 
$137,987
 
$137,346
Income from continuing operations
 
19,911

 
23,406

 
29,611

 
24,827

 
23,776

 
22,358

 
24,725

 
25,888

Discontinued operations
 
51,832

 
6,544

 
13,633

 
49,830

 
16,795

 
7,539

 
12,956

 
13,714

Net income
 
71,743

 
29,950

 
43,244

 
74,657

 
40,571

 
29,897

 
37,681

 
39,602

Income per common share - basic (1)
 
0.48

 
0.21

 
0.33

 
0.60

 
0.33

 
0.24

 
0.29

 
0.32

Income per common share - diluted (1)
 
0.48

 
0.21

 
0.33

 
0.60

 
0.32

 
0.24

 
0.29

 
0.32


(1)
The sum of quarterly financial data may vary from the annual data due to rounding.

18.     SEGMENT INFORMATION
The Company operates its portfolio of industrial and office properties throughout the United States and the United Kingdom. During the year ended December 31, 2013, the Company realigned its reportable segments as follows.
Industrial:
•
Lehigh/Central PA;
•
Chicago/Milwaukee;
•
Houston;
•
Carolinas;
•
Other.
The Industrial-Other category includes: Orlando; New Jersey; Maryland; Cincinnati, Columbus and Indianapolis; Dallas; Atlanta; Southern California.
Industrial/Office:
•
Minnesota;
•
South Florida;
•
Richmond/Hampton Roads;
•
Arizona;
•
United Kingdom;
•
Other.
The Industrial/Office Other category includes: Jacksonville; Tampa; Seattle/Puget Sound, Boston, Delaware and Memphis; Northern Virginia.
Office:
•
Philadelphia;
•
Southeastern PA;
•
Washington D.C.
Comparative prior periods have been restated to reflect current segment disclosures.

83

The Company evaluates the performance of its reportable segments based on net operating income. Net operating income includes operating revenue from external customers, real estate taxes, amortization of lease transaction costs and other operating expenses which relate directly to the management and operation of the assets within each reportable segment.
The Company's accounting policies for the segments are the same as those used in the Company's consolidated financial statements. There are no material inter-segment transactions.

84

The operating information by reportable segment is as follows (in thousands):
 
 
 
 Year ended
 
 
 
 December 31,
 
 
 
2013
 
2012
 
2011
Operating revenue
 
 
 
 
 
 
Industrial -
Lehigh/Central PA
 
$
101,101

 
$
96,804

 
$
99,311

 
Chicago/Milwaukee
 
18,083

 
9,780

 
21,973

 
Houston
 
37,773

 
30,172

 
27,325

 
Carolinas
 
30,243

 
28,667

 
32,470

 
Other
 
104,387

 
93,667

 
101,004

Industrial/Office -
Minnesota
 
62,415

 
57,331

 
55,886

 
South Florida
 
38,464

 
35,628

 
36,792

 
Richmond/Hampton Roads
 
40,247

 
41,395

 
49,714

 
Arizona
 
26,559

 
23,033

 
21,083

 
United Kingdom
 
7,669

 
4,690

 
4,408

 
Other
 
81,487

 
73,126

 
72,608

Office -
Philadelphia
 
31,690

 
28,153

 
28,129

 
Southeastern PA
 
165,248

 
169,645

 
174,063

 
Washington D.C.
 
13,599

 
5,207

 
448

Segment-level operating revenue
 
758,965

 
697,298

 
725,214

 
 
 
 
 
 
 
 
 Reconciliation to total operating revenues
 
 
 
 
 
 
 
 Discontinued operations
 
(113,586
)
 
(137,476
)
 
(191,723
)
 
 Other
 
551

 
457

 
208

 Total operating revenue
 
$
645,930

 
$
560,279

 
$
533,699

 
 
 
 
 
 
 
 
 Net operating income
 
 
 
 
 
 
 
Industrial -
Lehigh/Central PA
 
$
68,504

 
$
65,566

 
$
64,786

 
Chicago/Milwaukee
 
11,726

 
5,329

 
10,581

 
Houston
 
22,632

 
17,862

 
16,379

 
Carolinas
 
20,434

 
18,733

 
19,471

 
Other
 
60,531

 
51,863

 
54,802

Industrial/Office -
Minnesota
 
30,016

 
26,348

 
27,701

 
South Florida
 
20,943

 
18,921

 
19,431

 
Richmond/Hampton Roads
 
24,063

 
24,762

 
29,324

 
Arizona
 
17,189

 
14,228

 
13,453

 
United Kingdom
 
1,924

 
(257
)
 
(178
)
 
Other
 
50,456

 
43,711

 
44,692

Office -
Philadelphia
 
23,587

 
20,527

 
20,504

 
Southeastern PA
 
91,193

 
98,729

 
101,982

 
Washington D.C.
 
6,807

 
2,908

 
(1,134
)
Segment-level net operating income
 
450,005

 
409,230

 
421,794

 
 
 
 
 
 
 
 
 Reconciliation to income from continuing operations
 
 
 
 
 
 
 
 Interest expense (1)
 
(143,018
)
 
(123,146
)
 
(131,046
)
 
 Depreciation/amortization expense (2)
 
(138,343
)
 
(104,643
)
 
(106,487
)
 
 Gain on property dispositions
 
8,676

 
3,080

 
5,025

 
 Equity in earnings (loss) of unconsolidated joint ventures
 
6,067

 
(681
)
 
3,496

 
 General and administrative expense (2)
 
(50,998
)
 
(40,831
)
 
(36,140
)
 
 Discontinued operations excluding gain on property dispositions
 
(26,455
)
 
(38,578
)
 
(45,483
)
 
 Income taxes (2)
 
(2,748
)
 
(874
)
 
(841
)
 
 Other
 
(5,431
)
 
(6,810
)
 
(5,673
)
 Income from continuing operations
 
$
97,755

 
$
96,747

 
$
104,645

(1)
Includes interest on discontinued operations.
(2)
Excludes costs which are included in determining segment-level net operating income.

85


The amount of depreciation and amortization expense related to tenant improvement and lease transaction costs within each reporting segment for the Net operating income calculation is as follows:

 
 
 
 Year ended
 
 
 
 December 31,
 
 
 
2013
 
2012
 
2011
 
 
 
 
 
 
 
Industrial -
Lehigh/Central PA
 
$
9,781

 
$
9,753

 
$
9,821

 
Chicago/Milwaukee
 
251

 
233

 
1,695

 
Houston
 
3,200

 
2,608

 
2,213

 
Carolinas
 
1,935

 
1,726

 
2,194

 
Other
 
10,061

 
10,461

 
11,254

Industrial/Office -
Minnesota
 
5,797

 
5,132

 
5,014

 
South Florida
 
2,979

 
3,083

 
3,623

 
Richmond/Hampton Roads
 
4,156

 
4,157

 
4,820

 
Arizona
 
3,546

 
3,014

 
2,694

 
United Kingdom
 
845

 
269

 
210

 
Other
 
5,654

 
5,193

 
5,217

Office -
Philadelphia
 
1,729

 
1,724

 
1,774

 
Southeastern PA
 
15,040

 
14,109

 
13,436

 
Washington D.C.
 
248

 
156

 
63

Depreciation and amortization of tenant improvement and lease transaction costs
 
$
65,222

 
$
61,618

 
$
64,028



The Company's operating revenue by product type and by reportable segment for the years ended December 31, 2013, 2012 and 2011 is as follows (in thousands):

 
 
Year Ended
 
 
December 31, 2013
 
December 31, 2012
 
December 31, 2011
 
 
Industrial
 
Office
 
Total
 
Industrial
 
Office
 
Total
 
Industrial
 
Office
 
Total
Industrial -
Lehigh/Central PA
$
98,715

 
$
2,386

 
$
101,101

 
$
94,440

 
$
2,364

 
$
96,804

 
$
93,193

 
$
6,118

 
$
99,311

 
Chicago/Milwaukee
18,083

 
—

 
18,083

 
6,908

 
2,872

 
9,780

 
8,239

 
13,734

 
21,973

 
Houston
37,773

 
—

 
37,773

 
30,172

 
—

 
30,172

 
27,325

 
—

 
27,325

 
Carolinas
30,243

 
—

 
30,243

 
26,818

 
1,849

 
28,667

 
23,381

 
9,089

 
32,470

 
Other (1)
44,672

 
59,715

 
104,387

 
32,313

 
61,354

 
93,667

 
33,847

 
67,157

 
101,004

Industrial/Office -
Minnesota
32,043

 
30,372

 
62,415

 
27,810

 
29,521

 
57,331

 
24,398

 
31,488

 
55,886

 
South Florida
7,955

 
30,509

 
38,464

 
5,213

 
30,415

 
35,628

 
5,887

 
30,905

 
36,792

 
Richmond/Hampton Roads
19,073

 
21,174

 
40,247

 
18,490

 
22,905

 
41,395

 
18,889

 
30,825

 
49,714

 
Arizona
4,231

 
22,328

 
26,559

 
2,393

 
20,640

 
23,033

 
1,407

 
19,676

 
21,083

 
United Kingdom
4,205

 
3,464

 
7,669

 
1,307

 
3,383

 
4,690

 
1,288

 
3,120

 
4,408

 
Other
35,318

 
46,169

 
81,487

 
26,986

 
46,140

 
73,126

 
27,805

 
44,803

 
72,608

Office -
Philadelphia
9,534

 
22,156

 
31,690

 
8,356

 
19,797

 
28,153

 
7,817

 
20,312

 
28,129

 
Southeastern PA
27,076

 
138,172

 
165,248

 
28,604

 
141,041

 
169,645

 
29,289

 
144,774

 
174,063

 
Washington D.C.
—

 
13,599

 
13,599

 
—

 
5,207

 
5,207

 
—

 
448

 
448

 
 
$
368,921

 
$
390,044

 
758,965

 
$
309,810

 
$
387,488

 
697,298

 
$
302,765

 
$
422,449

 
725,214

Reconciliation to total operating revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Discontinued operations
 
 
 
 
(113,586
)
 
 
 
 
 
(137,476
)
 
 
 
 
 
(191,723
)
   Corporate Other
 
 
 
 
551

 
 
 
 
 
457

 
 
 
 
 
208

Total operating revenue
 
 
 
 
$
645,930

 
 
 
 
 
$
560,279

 
 
 
 
 
$
533,699


(1)
A substantial portion of the office revenues were sold in conjunction with the Portfolio Sale. See Footnote 23.

86

The Company's total assets by reportable segment as of December 31, 2013 and 2012 is as follows (in thousands):

 
 
As of December 31,
 
 
2013
 
2012
Total assets
 
 
 
 
Industrial -
Lehigh/Central PA
$
938,824

 
$
779,929

 
Chicago/Milwaukee
413,585

 
153,128

 
Houston
380,248

 
266,061

 
Carolinas
257,230

 
249,479

 
Other
1,315,732

 
639,629

Industrial/Office -
Minnesota
335,613

 
353,428

 
South Florida
380,138

 
227,754

 
Richmond/Hampton Roads
250,008

 
250,600

 
Arizona
364,231

 
300,149

 
United Kingdom
247,537

 
72,323

 
Other
465,997

 
554,352

Office -
Philadelphia
316,810

 
348,541

 
Southeastern PA
695,966

 
814,460

 
Washington D.C.
180,621

 
50,575

 
Corporate Other
233,020

 
113,771

Total assets
$
6,775,560

 
$
5,174,179


The Company's real estate assets by reportable segment as of December 31, 2013 and 2012 is as follows (in thousands):
 
 
As of December 31,
 
 
2013
 
2012
Real estate assets
 
 
 
 
Industrial -
Lehigh/Central PA
$
877,969

 
$
742,464

 
Chicago/Milwaukee
371,149

 
127,125

 
Houston
360,779

 
252,221

 
Carolinas
245,938

 
239,052

 
Other
964,322

 
323,200

Industrial/Office -
Minnesota
308,272

 
333,380

 
South Florida
358,492

 
217,769

 
Richmond/Hampton Roads
238,129

 
231,506

 
Arizona
348,043

 
287,895

 
United Kingdom
187,699

 
44,861

 
Other
369,935

 
453,931

Office -
Philadelphia
229,769

 
266,144

 
Southeastern PA
638,211

 
748,939

 
Washington D.C.
170,068

 
47,820

Total real estate assets
$
5,668,775

 
$
4,316,307



87

The Company incurred the following costs related to its long-lived assets for the years ended December 31, 2013, 2012 and 2011 (in thousands):
 
 
Year Ended December 31,
 
 
2013
 
2012
 
2011
Costs incurred on long-lived assets
 
 
 
 
 
Industrial -
Lehigh/Central PA
$
161,925

 
$
86,245

 
$
66,472

 
Chicago/Milwaukee
248,640

 
49,941

 
55,077

 
Houston
116,024

 
46,003

 
10,188

 
Carolinas
15,582

 
26,860

 
85,732

 
Other
664,008

 
21,065

 
13,006

Industrial/Office -
Minnesota
38,434

 
41,821

 
45,595

 
South Florida
148,165

 
3,337

 
23,493

 
Richmond/Hampton Roads
15,880

 
8,612

 
5,920

 
Arizona
68,138

 
35,750

 
8,794

 
United Kingdom
155,829

 
6,110

 
4,838

 
Other
79,813

 
80,402

 
4,914

Office -
Philadelphia
17,941

 
93,673

 
49,407

 
Southeastern PA
39,590

 
11,577

 
14,851

 
Washington D.C.
125,480

 
621

 
48,786

Total costs incurred on long-lived assets
$
1,895,449

 
$
512,017

 
$
437,073


19.     ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS
The operating results and gain on disposition of real estate for properties sold and held for sale are reflected in the consolidated statements of comprehensive income as discontinued operations. Prior period financial statements have been adjusted for discontinued operations. The proceeds from dispositions of operating properties with no continuing involvement were $491.8 million, $228.5 million and $365.2 million for the years ended December 31, 2013, 2012 and 2011, respectively.
A summary of the results of operations for the properties held for sale and disposed of through the respective disposition dates is as follows (in thousands):
 
 
For the Year Ended
 
December 31, 2013
 
December 31, 2012
 
December 31, 2011
Revenues
$
113,586

 
$
137,476

 
$
191,723

Operating expenses
(41,875
)
 
(48,956
)
 
(73,462
)
Interest and other income
213

 
580

 
577

Interest expense
(15,903
)
 
(19,783
)
 
(29,058
)
Depreciation and amortization
(29,566
)
 
(30,739
)
 
(44,297
)
Income before property dispositions
26,455

 
38,578

 
45,483

Gain on property dispositions
95,384

 
12,426

 
60,582

Net income
$
121,839

 
$
51,004

 
$
106,065

On November 7, 2013, the Company entered into an Agreement of Sale and Purchase pursuant to which the Company agreed to sell a real estate portfolio which included the Company’s Jacksonville, Florida portfolio in its entirety, all of the office properties in Maryland, Southern New Jersey and the Fort Washington suburb of Philadelphia and flex properties in Minnesota for a purchase price of $697.3 million. The properties consisted of 97 buildings containing an aggregate of 6.6 million square feet. On December 24, 2013, the Company closed on the first of two planned settlements under this agreement.  The proceeds from the first settlement were $367.7 million and included 49 properties totaling approximately 4.0 million square feet of space and 140 acres of land. The remaining settlement consisted of 47 properties and 19 acres totaling 2.6 million square feet in the Company's Industrial-Other reportable segment and one property totaling 37,000 square feet in the Company's Southeastern PA reportable segment. These properties and land parcels were considered held for sale and were sold subsequent to December 31, 2013 for proceeds of $329.6 million.

88

Interest expense is allocated to discontinued operations. The allocation of interest expense to discontinued operations was based on the ratio of net assets sold and held for sale to the sum of total net assets plus consolidated debt.
Asset Impairment
During the years ended December 31, 2013, 2012 and 2011, the Company recognized impairment losses of $1.9 million, $6.9 million and $7.8 million, respectively. The impairment losses are for operating properties or land parcels and were in the reportable segments and for the amounts as indicated below (amounts in thousands):
 
 
 
Year Ended December 31,
 
 
Reportable Segment
 
2013
 
2012
 
2011
 
Industrial -
Chicago/Milwaukee
 
—

 
514

 
5,985

 
 
Houston
 
—

 
—

 
6

 
 
Carolinas
 
—

 
36

 
670

 
 
Other
 
—

 
29

 
538

 
Industrial/Office -
South Florida
 
—

 
(51
)
(1) 
160

 
 
Richmond/Hampton Roads
 
—

 
27

 
501

 
 
United Kingdom
 
784

 
4,597

 
—

 
 
Other
 
1,120

 
—

 
(30
)
(1) 
Office -
Southeastern PA
 
—

 
1,699

 
—

 
 
Total
 
$
1,904

 
$
6,851

 
$
7,830

 
(1) Represents recovery of estimated sales costs on properties sold.
For the year ended December 31, 2013, $872,000 in impairments related to properties sold were included in the caption discontinued operations in the Company's consolidated statements of comprehensive income, $248,000 in impairments related to land parcels sold were included in the caption gain on property dispositions in the Company's consolidated statements of comprehensive income and $784,000 in impairments were included in the caption equity in earnings (loss) of unconsolidated joint ventures in the Company's consolidated statements of comprehensive income. For the year ended December 31, 2012, $2.3 million in impairments related to properties sold were included in the caption discontinued operations in the Company's consolidated statements of comprehensive income and $4.6 million in impairment was included in the caption equity in earnings (loss) of unconsolidated joint ventures in the Company's consolidated statements of comprehensive income. For the year ended December 31, 2011, $7.9 million in impairment related to properties sold was included in the caption discontinued operations in the Company's consolidated statements of comprehensive income. The Company determined these impairments through a comparison of the aggregate future cash flows (including quoted offer prices, a Level 1 input according to the fair value hierarchy established in ASC 820) 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 December 31, 2013.

20.     BUSINESS COMBINATION

On October 8, 2013, the Company acquired all of the outstanding general and limited partnership interests of Cabot Industrial Fund III Operating Partnership, L.P., a Delaware limited partnership (the "Cabot Acquisition"). The acquisition resulted in the purchase of a 100% ownership interest in 177 industrial assets totaling approximately 23.0 million square feet. The purchase price for the Cabot Acquisition was $1.469 billion, which was paid through the assumption of approximately $229.8 million of mortgage debt and the remainder in cash. The Company funded the cash portion of the acquisition consideration through a combination of proceeds from an August 2013 equity offering, proceeds from a September 2013 offering of senior notes and draws under its Credit Facility.


89

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date. The allocation of purchase price of the Cabot Acquisition is preliminary pending the receipt of the information necessary to complete the resolution of certain tangible and intangible assets and liabilities including the reconciliation of working capital accounts and the completion of tenant operating expense reconciliations (in thousands):
Assets
 
Real estate:
 
Land and land improvements
$
247,393

Building and improvements
1,152,717

Operating real estate
1,400,110

Intangible - in-place leases/market rent
97,396

Other assets
4,953

    Total assets
1,502,459

Liabilities
 
Mortgage loans
243,230

Other liabilities
32,958

Intangible - market rent
5,737

    Total liabilities
281,925

Net assets acquired
$
1,220,534


The weighted average amortization period of the in-place lease intangibles is 4.4 years.

Costs incurred in conjunction with the Cabot Acquisition and related funding include the following:
•
$7.6 million of acquisition costs in the year ended December 31, 2013 (included in general and administrative expenses on the Company’s consolidated statements of comprehensive income) and $4.2 million in financing fees in the year ended December 31, 2013 (included in interest expense in the Company’s consolidated statements of comprehensive income).
•
Deferred financing costs of approximately $2.0 million associated with the assumption of $229.8 million in mortgage debt ($243.2 million fair value) assumed at closing.
•
Deferred financing costs of $3.9 million incurred in conjunction with the financing of the September 27, 2013 $450.0 million senior unsecured notes offering (included in deferred financing and leasing costs in the Company’s consolidated balance sheets with amortization reflected in interest expense over the life of the related notes in the Company’s consolidated statements of comprehensive income).
•
Costs of $35.3 million incurred in conjunction with the August 7, 2013 issuance of 24.2 million of the Company’s common shares (included as a reduction to equity in the Company’s consolidated balance sheets).

The Company recognized $31.4 million of operating revenue and $22.0 million of net operating income (see description of net operating income in Footnote 18 - Segment Information) related to the properties acquired in the Cabot Acquisition. These amounts are included in the Company's consolidated statements of comprehensive income for the year ended December 31, 2013.

The following unaudited pro forma condensed income statement information has been prepared as if the Cabot Acquisition, the Trust’s August 2013 common share offering and the Operating Partnership’s September 2013 senior note offering had been completed on January 1, 2012. The pro forma condensed consolidated financial information does not purport to represent what the Company’s results of operations would have been assuming the completion of the Cabot Acquisition and the related financing activities had occurred on January 1, 2012 nor do they purport to project the results of operations of the Company for any future period (in thousands):


 
 
For the Year Ended
 
 
December 31,
 
 
2013
 
2012
Total operating revenue
 
$
750,896

 
$
692,583

Net income available to common shareholders
 
$
211,601

 
$
134,295



90

These amounts have been calculated after applying the Company's accounting policies and adjusting the results of the Cabot Acquisition to reflect the additional depreciation and amortization that would have been charged assuming the fair value adjustments to building and improvements and in-place lease intangibles had been applied on January 1, 2012.

21.     DERIVATIVE INSTRUMENTS

In connection with the October 8, 2013 Cabot acquisition, the Company assumed the seller’s interest in three interest rate swap contracts (“Swaps”) that eliminate the impact of changes in interest rates on the payments required under variable rate mortgages that were also assumed. The Swaps had an aggregate notional amount of $105.2 million at December 31, 2013 and expire at various dates between 2018 and 2020.

The Company designated the Swaps as cash flow hedges on November 22, 2013. The change in the fair value of the Swaps from October 8, 2013 through November 22, 2013 in the amount of $813,000 is included as an increase in interest expense in the accompanying consolidated statements of comprehensive income. From November 22, 2013 through December 31, 2013, the effective portion of the change in the fair value of the swaps was an increase in the amount of $1.6 million and was recorded as an increase to other comprehensive income (“OCI”) and will be reclassified into earnings as a component of interest expense in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in the fair value of the Swaps from November 22, 2013 through December 31, 2013 in the amount of $266,000 was recorded as a reduction of interest expense in the accompanying consolidated statements of comprehensive income.

The fair value of the interest rate swaps in the amount of $8.4 million as of December 31, 2013 is included in other liabilities in the accompanying consolidated balance sheets. The Company estimates that $1.4 million will be reclassified from accumulated other comprehensive income as an increase to interest expense over the next twelve months.
The Company has agreements with its derivative counterparties that contain a provision whereby if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations. If the Company were to breach any of the contractual provisions of the derivative contracts, it would be required to settle its obligations under the agreements at their termination value including accrued interest for approximately $8.4 million.

22.     SUPPLEMENTAL DISCLOSURE TO STATEMENT OF CASH FLOWS
The following are supplemental disclosures to the statements of cash flows for the years ended December 31, 2013, 2012 and 2011 (amounts in thousands):
 
 
2013
 
2012
 
2011
 Write-off of fully depreciated/amortized property and deferred costs
$
22,269

 
$
31,069

 
$
16,591

 Write-off of depreciated property and deferred costs due to sale
202,695

 
106,698

 
110,414

Write-off of preferred units costs due to redemption
1,214

 
2,806

 
—

Assumption of mortgage loans in connection with the acquisition of properties
(229,751
)
 
(12,537
)
 
—

Equity contribution from consolidated joint venture partner
—

 
—

 
3,500

Issuance of preferred units
—

 
—

 
16,597

Unrealized gains on cash flow hedge
1,584

 
—

 
—


Amounts paid in cash for deferred leasing costs incurred in connection with signed leases with tenants are paid in conjunction with improving (acquiring) property, plant and equipment. Such costs are not contained within net real estate. However, they are integral to the completion of a tenant lease and ultimately are related to the improvement and thus the value of the Company’s property, plant and equipment. They are therefore included in investing activities in the Company’s consolidated statements of cash flows.

23.     SUBSEQUENT EVENTS
On January 30, 2014, the Company closed on the second settlement of a two-part sale of a real estate portfolio which included the Company’s Jacksonville, Florida portfolio in its entirety, all of the office properties in Maryland, Southern New Jersey and the Fort Washington suburb of Philadelphia and flex properties in Minnesota for an aggregate purchase price of $697.3 million

91

(the "Portfolio Sale"). The first settlement closed on December 24, 2013. The proceeds from the second settlement were $329.6 million and consisted of 48 properties containing an aggregate of 2.6 million square feet and 19 acres of land.





92

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2013
 
 
 Accumulated Depreciation 12/31/2013
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1501 Perryman Road
Aberdeen, MD
 
$
—


$
5,813,324

 
$
18,874,059

 
$
5,131,464

 
$
5,816,839

 
 
$
24,002,008

 
$
29,818,847

 
 
$
4,447,800

 
2005
 
5 - 40
869 S Route 53
Addison, IL
 
—


1,194,223

 
4,201,881

 
50,460

 
1,194,223

 
 
4,252,342

 
5,446,565

 
 
32,013

 
2013
 
5 - 40
901 S Route 53
Addison, IL
 
—


2,055,066

 
5,984,093

 
118,292

 
2,055,066

 
 
6,102,385

 
8,157,451

 
 
45,479

 
2013
 
5 - 40
200 Boulder Drive
Allentown, PA
 
—


4,722,683

 
18,922,645

 
440,557

 
4,722,683

 
 
19,363,202

 
24,085,885

 
 
4,655,569

 
2004
 
5 - 40
250 Boulder Drive
Allentown, PA
 
—


3,599,936

 
12,099,145

 
2,149,322

 
3,717,733

 
 
14,130,670

 
17,848,403

 
 
3,760,264

 
2004
 
5 - 40
400 Nestle Way
Allentown, PA
 
—


8,065,500

 
—

 
27,602,841

 
8,184,096

 
 
27,484,245

 
35,668,341

 
 
12,798,838

 
1997
 
5 - 40
650 Boulder Drive
Allentown, PA
 
—

*
5,208,248

 
—

 
31,938,579

 
9,961,788

 
 
27,185,039

 
37,146,827

 
 
7,512,248

 
2002
 
5 - 40
651 Boulder Drive
Allentown, PA
 
—


4,308,646

 
—

 
17,689,842

 
4,308,646

 
 
17,689,842

 
21,998,488

 
 
6,583,129

 
2000
 
5 - 40
700 Nestle Way
Allentown, PA
 
—

*
3,473,120

 
—

 
20,186,320

 
4,174,970

 
 
19,484,470

 
23,659,440

 
 
8,849,079

 
1998
 
5 - 40
705 Boulder Drive
Allentown, PA
 
—

*
10,594,027

 
—

 
28,536,883

 
10,596,767

 
 
28,534,143

 
39,130,910

 
 
9,283,319

 
2001
 
5 - 40
7165 Ambassador Drive
Allentown, PA
 
—

*
792,999

 
—

 
4,556,918

 
804,848

 
 
4,545,069

 
5,349,917

 
 
1,590,637

 
2002
 
5 - 40
7248 Industrial Boulevard
Allentown, PA
 
—


2,670,849

 
13,307,408

 
4,513,163

 
2,670,673

 
 
17,820,747

 
20,491,420

 
 
7,278,499

 
1988
 
5 - 40
7339 Industrial Boulevard
Allentown, PA
 
—


1,187,776

 
—

 
7,587,682

 
1,197,447

 
 
7,578,011

 
8,775,458

 
 
3,127,648

 
1996
 
5 - 40
7437 Industrial Boulevard
Allentown, PA
 
—


717,488

 
5,022,413

 
3,176,937

 
726,651

 
 
8,190,186

 
8,916,837

 
 
4,527,473

 
1976
 
5 - 40
8014 Industrial Boulevard
Allentown, PA
 
—

*
4,019,258

 
—

 
9,880,091

 
3,645,117

 
 
10,254,232

 
13,899,349

 
 
4,392,952

 
1999
 
5 - 40
8150 Industrial Boulevard
Allentown, PA
 
—


2,564,167

 
—

 
8,961,554

 
2,571,466

 
 
8,954,255

 
11,525,721

 
 
2,579,485

 
2002
 
5 - 40
8250 Industrial Boulevard
Allentown, PA
 
—


1,025,667

 
—

 
5,245,086

 
1,035,854

 
 
5,234,899

 
6,270,753

 
 
1,651,004

 
2002
 
5 - 40
8400 Industrial Boulevard
Allentown, PA
 
—

*
6,725,948

 
—

 
27,079,140

 
7,521,211

 
 
26,283,877

 
33,805,088

 
 
5,400,471

 
2005
 
5 - 40
6330 Hedgewood Drive
Allentown, PA
 
—


531,268

 
—

 
5,359,739

 
532,047

 
 
5,358,960

 
5,891,007

 
 
3,292,239

 
1988
 
5 - 40
6350 Hedgewood Drive
Allentown, PA
 
—


360,027

 
—

 
4,028,297

 
560,691

 
 
3,827,633

 
4,388,324

 
 
2,142,023

 
1989
 
5 - 40
6370 Hedgewood Drive
Allentown, PA
 
—


540,795

 
—

 
3,959,133

 
541,459

 
 
3,958,469

 
4,499,928

 
 
1,988,574

 
1990
 
5 - 40
6390 Hedgewood Drive
Allentown, PA
 
—


707,203

 
—

 
3,000,621

 
707,867

 
 
2,999,957

 
3,707,824

 
 
1,637,716

 
1990
 
5 - 40
6520 Stonegate Drive
Allentown, PA
 
—


453,315

 
—

 
1,712,509

 
484,361

 
 
1,681,463

 
2,165,824

 
 
894,982

 
1996
 
5 - 40
6540 Stonegate Drive
Allentown, PA
 
—


422,042

 
—

 
4,012,192

 
422,730

 
 
4,011,504

 
4,434,234

 
 
2,538,102

 
1988
 
5 - 40
6560 Stonegate Drive
Allentown, PA
 
—


458,281

 
—

 
2,805,111

 
458,945

 
 
2,804,447

 
3,263,392

 
 
1,843,559

 
1989
 
5 - 40
6580 Snowdrift Road
Allentown, PA
 
—


388,328

 
—

 
4,211,286

 
389,081

 
 
4,210,533

 
4,599,614

 
 
2,461,382

 
1988
 
5 - 40
7620 Cetronia Road
Allentown, PA
 
—


1,091,806

 
3,851,456

 
258,140

 
1,093,724

 
 
4,107,678

 
5,201,402

 
 
1,914,712

 
1990
 
5 - 40
180,190 Cochrane Drive
Annapolis, MD
 
—


545,757

 
—

 
—

 
545,757

 
 
—

 
545,757

 
 
—

 
1988
 
5 - 40

93

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2013
 
 
 Accumulated Depreciation 12/31/2013
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3095 Presidential Drive
Atlanta, GA
 
—


200,351

 
1,729,161

 
86,151

 
200,351

 
 
1,815,312

 
2,015,663

 
 
14,655

 
2013
 
5 - 40
3097 Presidential Drive
Atlanta, GA
 
—


188,680

 
1,721,048

 
82,483

 
188,680

 
 
1,803,531

 
1,992,211

 
 
20,624

 
2013
 
5 - 40
7030 Buford Highway NE
Atlanta, GA
 
—

*
919,850

 
4,051,340

 
406,470

 
919,850

 
 
4,457,810

 
5,377,660

 
 
43,359

 
2013
 
5 - 40
Barton 150
Barton Under Needwood, UK
 
—


2,196,955

 
13,643,981

 
—

 
2,196,955

 
 
13,643,981

 
15,840,936

 
 
246,794

 
2013
 
5 - 40
1055-1071 Kingsland Drive
Batavia, IL
 
—


727,294

 
2,367,529

 
147,582

 
727,294

 
 
2,515,111

 
3,242,405

 
 
22,389

 
2013
 
5 - 40
4606 Richlynn Drive
Belcamp, MD
 
—


299,600

 
1,818,861

 
712,788

 
299,600

 
 
2,531,649

 
2,831,249

 
 
914,347

 
1985
 
5 - 40
11800 Baltimore Avenue
Beltsville,MD
 
—

*
2,769,962

 
1,829,028

 
85,389

 
2,769,962

 
 
1,914,418

 
4,684,380

 
 
20,796

 
2013
 
5 - 40
11850 Baltimore Avenue
Beltsville,MD
 
—

*
3,595,044

 
2,415,132

 
178,910

 
3,595,044

 
 
2,594,042

 
6,189,086

 
 
32,100

 
2013
 
5 - 40
11900 Baltimore Avenue
Beltsville,MD
 
—

*
3,492,036

 
2,024,038

 
237,559

 
3,492,036

 
 
2,261,597

 
5,753,633

 
 
39,318

 
2013
 
5 - 40
12104 Indian Creek Court
Beltsville,MD
 
—

*
2,021,752

 
2,503,802

 
214,416

 
2,021,752

 
 
2,718,218

 
4,739,970

 
 
34,626

 
2013
 
5 - 40
12140 Indian Creek Court
Beltsville,MD
 
—

*
1,196,726

 
1,949,555

 
91,813

 
1,196,726

 
 
2,041,367

 
3,238,093

 
 
16,680

 
2013
 
5 - 40
12200 Indian Creek Court
Beltsville,MD
 
—

*
1,347,882

 
1,460,291

 
102,190

 
1,347,882

 
 
1,562,481

 
2,910,363

 
 
13,071

 
2013
 
5 - 40
12240 Indian Creek Court
Beltsville,MD
 
—

*
1,479,307

 
2,159,997

 
124,828

 
1,479,307

 
 
2,284,826

 
3,764,133

 
 
18,678

 
2013
 
5 - 40
1071 Thorndale Avenue
Bensenville,IL
 
—


2,173,006

 
2,280,788

 
162,564

 
2,173,006

 
 
2,443,352

 
4,616,358

 
 
31,689

 
2013
 
5 - 40
1260-1274 Ellis Street
Bensenville,IL
 
—

*
2,298,560

 
4,020,382

 
358,604

 
2,298,560

 
 
4,378,986

 
6,677,546

 
 
44,404

 
2013
 
5 - 40
371-377 Meyer Road
Bensenville,IL
 
—

*
1,903,423

 
3,563,953

 
300,151

 
1,903,423

 
 
3,864,104

 
5,767,527

 
 
37,194

 
2013
 
5 - 40
850-880 Devon Ave
Bensenville,IL
 
—

*
2,958,756

 
7,959,013

 
548,843

 
2,958,756

 
 
8,507,856

 
11,466,612

 
 
76,496

 
2013
 
5 - 40
2785 Commerce Center Boulevard
Bethlehem, PA
 
—


11,961,623

 
—

 
45,390,365

 
12,009,985

 
 
45,342,003

 
57,351,988

 
 
420,478

 
2011
 
5 - 40
74 West Broad Street
Bethlehem, PA
 
—


1,096,127

 
—

 
14,202,628

 
1,099,079

 
 
14,199,676

 
15,298,755

 
 
5,877,473

 
2002
 
5 - 40
10801 Nesbitt Avenue South
Bloomington, MN
 
—


784,577

 
—

 
5,010,219

 
786,382

 
 
5,008,414

 
5,794,796

 
 
1,389,997

 
2001
 
5 - 40
5705 Old Shakopee Road
Bloomington, MN
 
—


2,113,223

 
—

 
5,520,731

 
2,148,571

 
 
5,485,383

 
7,633,954

 
 
1,632,626

 
2001
 
5 - 40
5715 Old Shakopee Road West
Bloomington, MN
 
—


1,263,226

 
2,360,782

 
2,081,249

 
1,264,758

 
 
4,440,499

 
5,705,257

 
 
1,494,873

 
2002
 
5 - 40
5735 Old Shakopee Road West
Bloomington, MN
 
—


1,263,226

 
2,360,782

 
1,028,892

 
1,264,758

 
 
3,388,142

 
4,652,900

 
 
1,090,634

 
2002
 
5 - 40
5775 West Old Shakopee Road
Bloomington, MN
 
—


2,052,018

 
3,849,649

 
1,669,598

 
2,060,644

 
 
5,510,621

 
7,571,265

 
 
1,948,075

 
2002
 
5 - 40
6161 Green Valley Drive
Bloomington, MN
 
—


740,378

 
3,311,602

 
2,114,197

 
709,961

 
 
5,456,216

 
6,166,177

 
 
1,906,331

 
1992
 
5 - 40
6601-6625 W. 78th Street
Bloomington, MN
 
—


2,263,060

 
—

 
41,314,332

 
2,310,246

 
 
41,267,146

 
43,577,392

 
 
15,344,697

 
1998
 
5 - 40
750 Park of Commerce Boulevard
Boca Raton, FL
 
—


2,430,000

 
—

 
22,129,358

 
2,473,406

 
 
22,085,952

 
24,559,358

 
 
2,712,965

 
2007
 
5 - 40
777 Yamato Road
Boca Raton, FL
 
—


4,101,247

 
16,077,347

 
6,795,258

 
4,501,247

 
 
22,472,605

 
26,973,852

 
 
8,814,520

 
1987
 
5 - 40
951 Broken Sound Parkway
Boca Raton, FL
 
—


1,426,251

 
6,098,952

 
1,818,945

 
1,426,251

 
 
7,917,897

 
9,344,148

 
 
3,374,737

 
1986
 
5 - 40

94

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2013
 
 
 Accumulated Depreciation 12/31/2013
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1455 Remington Boulevard
Bolingbrook, IL
 
—


2,501,294

 
10,704,719

 
—

 
2,501,294

 
 
10,704,719

 
13,206,013

 
 
299,947

 
2012
 
5 - 40
150 E Crossroads Parkway
Bolingbrook, IL
 
—

*
3,078,949

 
14,143,377

 
845,243

 
3,078,949

 
 
14,988,620

 
18,067,569

 
 
127,295

 
2013
 
5 - 40
553 S Joliet Ave
Bolingbrook, IL
 
—

*
3,764,831

 
15,109,947

 
621,121

 
3,764,831

 
 
15,731,068

 
19,495,899

 
 
155,088

 
2013
 
5 - 40
400 Boulder Drive
Breinigsville, PA
 
—


2,859,106

 
—

 
10,599,615

 
2,865,575

 
 
10,593,146

 
13,458,721

 
 
2,496,467

 
2003
 
5 - 40
8201 Industrial Boulevard
Breinigsville, PA
 
—

*
2,089,719

 
—

 
8,353,910

 
2,222,168

 
 
8,221,461

 
10,443,629

 
 
1,624,672

 
2006
 
5 - 40
8500 Industrial Bouldvard
Breinigsville, PA
 
—


8,752,708

 
—

 
39,685,301

 
11,511,499

 
 
36,926,510

 
48,438,009

 
 
6,658,524

 
2007
 
5 - 40
860 Nestle Way
Breinigsville, PA
 
—


8,118,881

 
18,885,486

 
7,400,855

 
8,118,881

 
 
26,286,341

 
34,405,222

 
 
6,820,111

 
2004
 
5 - 40
1485 W. Commerce Avenue
Carlisle, PA
 
—


4,249,868

 
13,886,039

 
2,241,826

 
4,095,262

 
 
16,282,471

 
20,377,733

 
 
4,752,884

 
2004
 
5 - 40
40 Logistics Drive
Carlisle, PA
 
—


7,981,850

 
—

 
30,108,809

 
8,081,272

 
 
30,009,387

 
38,090,659

 
 
459,967

 
2011
 
5 - 40
135-195 East Elk Trail
Carol Stream, IL
 
—


4,873,094

 
12,430,320

 
459,455

 
4,873,094

 
 
12,889,775

 
17,762,869

 
 
46,085

 
2013
 
5 - 40
515 Kehoe Boulevard
Carol Stream, IL
 
—


5,523,427

 
14,581,705

 
—

 
5,523,427

 
 
14,581,705

 
20,105,132

 
 
56,145

 
2013
 
5 - 40
1413 Bradley Lane
Carrollton, TX
 
—

*
247,477

 
2,028,322

 
83,523

 
247,477

 
 
2,111,845

 
2,359,322

 
 
18,245

 
2013
 
5 - 40
3200 Belmeade Drive
Carrollton, TX
 
—


1,042,453

 
8,027,974

 
401,254

 
1,042,453

 
 
8,429,228

 
9,471,681

 
 
67,676

 
2013
 
5 - 40
1475 Nitterhouse Dr
Chambersburg, PA
 
—


7,081,007

 
39,002,011

 
2,083,301

 
7,081,007

 
 
41,085,312

 
48,166,319

 
 
337,082

 
2013
 
5 - 40
95 Kriner Road
Chambersburg, PA
 
—


8,695,501

 
—

 
34,926,589

 
9,407,871

 
 
34,214,219

 
43,622,090

 
 
4,617,807

 
2006
 
5 - 40
9000 109th Street
Champlin, MN
 
—

*
1,251,043

 
11,662,995

 
86,100

 
1,251,043

 
 
11,749,095

 
13,000,138

 
 
815,277

 
2011
 
5 - 40
11701 Goodrich Drive
Charlotte, NC
 
—


2,054,621

 
6,356,151

 
461,642

 
2,054,621

 
 
6,817,792

 
8,872,413

 
 
108,858

 
2013
 
5 - 40
12810 Virkler Drive
Charlotte, NC
 
—


475,368

 
2,367,586

 
706,208

 
476,262

 
 
3,072,899

 
3,549,161

 
 
209,041

 
2010
 
5 - 40
2700 Hutchinson McDonald Road
Charlotte, NC
 
—


912,500

 
4,721,259

 
69,635

 
912,500

 
 
4,790,894

 
5,703,394

 
 
320,147

 
2011
 
5 - 40
2701 Hutchinson McDonald Road
Charlotte, NC
 
—


1,275,000

 
4,649,750

 
260,294

 
1,275,000

 
 
4,910,044

 
6,185,044

 
 
337,129

 
2011
 
5 - 40
2730 Hutchinson McDonald Road
Charlotte, NC
 
—


1,878,750

 
10,129,499

 
3,034

 
1,878,750

 
 
10,132,533

 
12,011,283

 
 
609,763

 
2011
 
5 - 40
2801 Hutchinson McDonald Road
Charlotte, NC
 
—


1,065,000

 
6,975,250

 
167,601

 
1,065,000

 
 
7,142,851

 
8,207,851

 
 
441,336

 
2011
 
5 - 40
3000 Crosspoint Center Lane
Charlotte, NC
 
—


1,831,250

 
10,779,412

 
171,533

 
1,831,250

 
 
10,950,945

 
12,782,195

 
 
705,320

 
2011
 
5 - 40
3005 Crosspoint Center Lane
Charlotte, NC
 
—


1,990,000

 
6,561,540

 
433,141

 
1,990,000

 
 
6,994,681

 
8,984,681

 
 
439,153

 
2011
 
5 - 40
4045 Perimeter West Drive
Charlotte, NC
 
—


1,418,928

 
7,511,050

 
26,915

 
1,418,928

 
 
7,537,965

 
8,956,893

 
 
568,940

 
2011
 
5 - 40
4047 Perimeter West Drive
Charlotte, NC
 
—


1,279,004

 
—

 
6,391,962

 
1,279,004

 
 
6,391,962

 
7,670,966

 
 
293,396

 
2011
 
5 - 40
4525 Statesville Road
Charlotte, NC
 
—


841,250

 
5,279,315

 
167,556

 
837,144

 
 
5,450,977

 
6,288,121

 
 
331,322

 
2011
 
5 - 40
4835 Sirona Drive
Charlotte, NC
 
4,243,165


690,750

 
5,086,388

 
172,041

 
690,750

 
 
5,258,429

 
5,949,179

 
 
207,403

 
2012
 
5 - 40
4925 Sirona Drive
Charlotte, NC
 
4,164,318


603,003

 
4,969,011

 
—

 
603,003

 
 
4,969,011

 
5,572,014

 
 
211,106

 
2012
 
5 - 40

95

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2013
 
 
 Accumulated Depreciation 12/31/2013
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5033 Sirona Drive
Charlotte, NC
 
3,634,246


509,247

 
4,710,218

 
160,736

 
613,962

 
 
4,766,239

 
5,380,201

 
 
162,055

 
2012
 
5 - 40
8910 Pioneer Avenue
Charlotte, NC
 
—


527,873

 
4,959,206

 
46,726

 
527,873

 
 
5,005,932

 
5,533,805

 
 
302,605

 
2011
 
5 - 40
8916 Pioneer Avenue
Charlotte, NC
 
—


557,730

 
5,785,333

 
340,623

 
557,730

 
 
6,125,956

 
6,683,686

 
 
355,651

 
2011
 
5 - 40
1301 Executive Boulevard
Chesapeake, VA
 
—


997,570

 
—

 
5,163,173

 
970,151

 
 
5,190,592

 
6,160,743

 
 
1,164,892

 
2005
 
5 - 40
1305 Executive Boulevard
Chesapeake, VA
 
—


861,020

 
—

 
4,975,983

 
1,129,850

 
 
4,707,153

 
5,837,003

 
 
1,276,635

 
2002
 
5 - 40
1309 Executive Boulevard
Chesapeake, VA
 
—


926,125

 
—

 
5,098,066

 
955,374

 
 
5,068,817

 
6,024,191

 
 
1,628,773

 
2001
 
5 - 40
1313 Executive Boulevard
Chesapeake, VA
 
—


1,180,036

 
—

 
5,146,319

 
1,708,050

 
 
4,618,305

 
6,326,355

 
 
1,467,773

 
2002
 
5 - 40
2601 Indian River Road
Chesapeake, VA
 
—

*
1,711,746

 
10,418,032

 
433,142

 
1,711,746

 
 
10,851,174

 
12,562,920

 
 
91,239

 
2013
 
5 - 40
500 Independence Parkway
Chesapeake, VA
 
—


864,150

 
4,427,285

 
660,242

 
866,609

 
 
5,085,068

 
5,951,677

 
 
1,418,193

 
2004
 
5 - 40
501 Independence Parkway
Chesapeake, VA
 
—


1,202,556

 
5,975,538

 
1,572,766

 
1,292,273

 
 
7,458,587

 
8,750,860

 
 
1,863,791

 
2005
 
5 - 40
505 Independence Parkway
Chesapeake, VA
 
—


1,292,062

 
6,456,515

 
1,274,225

 
1,292,254

 
 
7,730,547

 
9,022,801

 
 
1,773,034

 
2005
 
5 - 40
510 Independence Parkway
Chesapeake, VA
 
—


2,012,149

 
7,546,882

 
996,838

 
2,014,689

 
 
8,541,181

 
10,555,870

 
 
2,161,922

 
2005
 
5 - 40
676 Independence Parkway
Chesapeake, VA
 
—


1,527,303

 
—

 
11,321,991

 
1,562,903

 
 
11,286,391

 
12,849,294

 
 
1,339,355

 
2006
 
5 - 40
700 Independence Parkway
Chesapeake, VA
 
—


1,950,375

 
7,236,994

 
675,718

 
1,951,135

 
 
7,911,952

 
9,863,087

 
 
2,365,051

 
2004
 
5 - 40
1540 S 54th Avenue
Cicero, IL
 
—


3,540,236

 
20,130,552

 
927,655

 
3,540,236

 
 
21,058,207

 
24,598,443

 
 
162,747

 
2013
 
5 - 40
4650 Lake Forest Drive
Cinncinnati, OH
 
—


1,030,242

 
4,003,024

 
115,772

 
1,030,242

 
 
4,118,795

 
5,149,037

 
 
39,758

 
2013
 
5 - 40
4750 Lake Forest Drive
Cinncinnati, OH
 
—


1,138,166

 
5,914,789

 
197,670

 
1,138,166

 
 
6,112,459

 
7,250,625

 
 
58,433

 
2013
 
5 - 40
9645 Gerwig Lane
Columbia, MD
 
—


1,915,960

 
6,461,228

 
320,391

 
1,915,960

 
 
6,781,619

 
8,697,579

 
 
59,613

 
2013
 
5 - 40
2550 John Glenn Avenue
Columbus, OH
 
—


540,601

 
5,129,342

 
169,332

 
540,601

 
 
5,298,674

 
5,839,275

 
 
41,107

 
2013
 
5 - 40
3800 Twin Creeks Drive
Columbus, OH
 
—


549,393

 
4,643,302

 
181,695

 
549,393

 
 
4,824,997

 
5,374,390

 
 
41,734

 
2013
 
5 - 40
455 Airline Drive
Coppell, TX
 
—

*
312,701

 
2,311,531

 
334,283

 
312,701

 
 
2,645,814

 
2,958,515

 
 
17,627

 
2013
 
5 - 40
2130 Baldwin Avenue
Crofton, MD
 
—


3,172,032

 
7,350,782

 
418,907

 
3,172,032

 
 
7,769,689

 
10,941,721

 
 
64,488

 
2013
 
5 - 40
329-333 Herrod Blvd
Dayton, NJ
 
—

*
4,039,559

 
20,863,051

 
937,014

 
4,039,559

 
 
21,800,065

 
25,839,624

 
 
155,086

 
2013
 
5 - 40
1250 Hall Court
Deer Park, TX
 
2,722,013


829,570

 
4,778,327

 
47,399

 
831,611

 
 
4,823,685

 
5,655,296

 
 
934,423

 
2006
 
5 - 40
301-321 S Goolsby Blvd
Deerfield Beach, FL
 
—


498,136

 
2,781,180

 
18,971

 
498,136

 
 
2,800,151

 
3,298,287

 
 
22,061

 
2013
 
5 - 40
1680 Executive Drive
Duluth, GA
 
—


1,928,412

 
4,651,819

 
573,340

 
1,928,412

 
 
5,225,159

 
7,153,571

 
 
62,809

 
2013
 
5 - 40
1700 Executive Drive
Duluth, GA
 
—


1,082,072

 
2,496,599

 
319,679

 
1,082,072

 
 
2,816,278

 
3,898,350

 
 
30,845

 
2013
 
5 - 40
2670 Breckinridge Blvd
Duluth, GA
 
—


1,676,415

 
4,567,592

 
328,885

 
1,676,415

 
 
4,896,478

 
6,572,893

 
 
61,091

 
2013
 
5 - 40
170 Parkway West
Duncan, SC
 
—


598,348

 
3,643,756

 
203,325

 
598,918

 
 
3,846,511

 
4,445,429

 
 
860,720

 
2006
 
5 - 40

96

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2013
 
 
 Accumulated Depreciation 12/31/2013
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
190 Parkway West
Duncan, SC
 
—


551,663

 
3,310,993

 
153,027

 
552,211

 
 
3,463,471

 
4,015,682

 
 
680,980

 
2006
 
5 - 40
265 Parkway East
Duncan, SC
 
—


901,444

 
5,751,389

 
190,639

 
902,374

 
 
5,941,098

 
6,843,472

 
 
1,430,296

 
2006
 
5 - 40
285 Parkway East
Duncan, SC
 
—


975,433

 
5,851,990

 
358,457

 
976,393

 
 
6,209,487

 
7,185,880

 
 
1,219,786

 
2006
 
5 - 40
3169 Dodd Road
Eagan, MN
 
—


988,594

 
6,586,907

 
—

 
988,594

 
 
6,586,907

 
7,575,501

 
 
343,323

 
2012
 
5 - 40
3255 Neil Armstrong Boulevard
Eagan, MN
 
—


1,131,017

 
—

 
3,372,043

 
1,103,860

 
 
3,399,200

 
4,503,060

 
 
1,275,823

 
1998
 
5 - 40
3711 Kennebec Drive
Eagan, MN
 
—


999,702

 
4,042,589

 
4,966

 
999,702

 
 
4,047,555

 
5,047,257

 
 
381,896

 
2011
 
5 - 40
917 Lone Oak Road
Eagan, MN
 
—

*
1,493,115

 
6,120,455

 
535,886

 
1,493,115

 
 
6,656,341

 
8,149,456

 
 
66,015

 
2013
 
5 - 40
10301-10305 West 70th Street
Eden Prairie, MN
 
—


120,622

 
1,085,226

 
474,001

 
118,300

 
 
1,561,549

 
1,679,849

 
 
722,729

 
1984
 
5 - 40
10321 West 70th Street
Eden Prairie, MN
 
—


145,198

 
1,305,700

 
568,632

 
142,399

 
 
1,877,131

 
2,019,530

 
 
666,111

 
1984
 
5 - 40
10333 West 70th Street
Eden Prairie, MN
 
—


110,746

 
995,868

 
351,149

 
108,610

 
 
1,349,153

 
1,457,763

 
 
637,325

 
1984
 
5 - 40
10349-10357 West 70th Street
Eden Prairie, MN
 
—


275,903

 
2,481,666

 
675,480

 
270,584

 
 
3,162,465

 
3,433,049

 
 
1,345,212

 
1985
 
5 - 40
10365-10375 West 70th Street
Eden Prairie, MN
 
—


291,077

 
2,618,194

 
629,305

 
285,464

 
 
3,253,112

 
3,538,576

 
 
1,378,360

 
1985
 
5 - 40
10393-10394 West 70th Street
Eden Prairie, MN
 
—


269,618

 
2,423,318

 
877,174

 
264,419

 
 
3,305,691

 
3,570,110

 
 
1,257,559

 
1985
 
5 - 40
10400 Viking Drive
Eden Prairie, MN
 
—


2,912,391

 
—

 
22,747,046

 
2,938,372

 
 
22,721,065

 
25,659,437

 
 
9,595,577

 
1999
 
5 - 40
7075 Flying Cloud Drive
Eden Prairie, MN
 
—


10,232,831

 
10,855,851

 
58,415

 
10,243,977

 
 
10,903,119

 
21,147,096

 
 
1,863,010

 
2007
 
5 - 40
7078 Shady Oak Road
Eden Prairie, MN
 
—


343,093

 
3,085,795

 
1,500,861

 
336,481

 
 
4,593,268

 
4,929,749

 
 
1,838,989

 
1985
 
5 - 40
7615 Smetana Lane
Eden Prairie, MN
 
—


1,011,517

 

 
8,469,751

 
3,000,555

 
 
6,480,713

 
9,481,268

 
 
2,309,902

 
2001
 
5 - 40
7625 Smetana Lane
Eden Prairie, MN
 
—


4,500,641

 
—

 
3,023,926

 
1,916,609

 
 
5,607,958

 
7,524,567

 
 
1,204,109

 
2006
 
5 - 40
7695-7699 Anagram Drive
Eden Prairie, MN
 
—


760,525

 
3,254,758

 
991,584

 
760,525

 
 
4,246,342

 
5,006,867

 
 
1,924,564

 
1997
 
5 - 40
7777 Golden Triangle Drive
Eden Prairie, MN
 
—


993,101

 
2,136,862

 
1,151,599

 
993,101

 
 
3,288,460

 
4,281,561

 
 
1,272,795

 
2000
 
5 - 40
7800 Equitable Drive
Eden Prairie, MN
 
—


2,188,525

 
3,788,762

 
392,378

 
2,188,525

 
 
4,181,139

 
6,369,664

 
 
1,472,735

 
1993
 
5 - 40
7905 Fuller Road
Eden Prairie, MN
 
—


1,229,862

 
4,075,167

 
1,980,136

 
1,230,965

 
 
6,054,200

 
7,285,165

 
 
2,932,113

 
1994
 
5 - 40
8855 Columbine Road
Eden Prairie, MN
 
—


1,400,925

 

 
5,226,017

 
1,599,757

 
 
5,027,185

 
6,626,942

 
 
1,221,178

 
2000
 
5 - 40
8911 Columbine Road (B2)
Eden Prairie, MN
 
—


916,687

 

 
3,559,577

 
1,718,407

 
 
2,757,857

 
4,476,264

 
 
844,041

 
2000
 
5 - 40
8937 Columbine Road
Eden Prairie, MN
 
—


1,325,829

 

 
4,385,490

 
1,739,966

 
 
3,971,353

 
5,711,319

 
 
1,270,671

 
2001
 
5 - 40
8967 Columbine Road
Eden Prairie, MN
 
—


1,450,000

 
—

 
4,088,618

 
1,450,000

 
 
4,088,618

 
5,538,618

 
 
1,422,640

 
2000
 
5 - 40
8995 Columbine Road
Eden Prairie, MN
 
—


1,087,594

 

 
3,850,532

 
2,055,296

 
 
2,882,830

 
4,938,126

 
 
998,881

 
2001
 
5 - 40
9023 Columbine Road
Eden Prairie, MN
 
—


1,956,273

 
—

 
5,123,697

 
1,956,273

 
 
5,123,697

 
7,079,970

 
 
2,059,439

 
1999
 
5 - 40
2250 Arthur Avenue
Elk Grove, IL
 
—


1,403,196

 
2,386,396

 
51,263

 
1,403,196

 
 
2,437,659

 
3,840,855

 
 
20,679

 
2013
 
5 - 40

97

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2013
 
 
 Accumulated Depreciation 12/31/2013
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6600 Business Parkway
Elkridge, MD
 
—


3,680,220

 
14,671,910

 
395,344

 
3,680,220

 
 
15,067,254

 
18,747,474

 
 
105,499

 
2013
 
5 - 40
6675 Business Parkway
Elkridge, MD
 
—

*
2,421,854

 
9,730,192

 
225,677

 
2,421,854

 
 
9,955,869

 
12,377,723

 
 
73,191

 
2013
 
5 - 40
7351 Coca Cola Drive
Elkridge, MD
 
—


1,897,044

 
—

 
7,286,413

 
3,023,417

 
 
6,160,040

 
9,183,457

 
 
1,292,513

 
2006
 
5 - 40
21705-21707 Mississippi Street
Elwood, IL
 
—


10,594,259

 
30,329,802

 
892,439

 
10,594,259

 
 
31,222,242

 
41,816,501

 
 
2,032,198

 
2011
 
5 - 40
27143 S. Baseline Road
Elwood, IL
 
—


6,022,000

 
5,612,934

 
191,986

 
6,022,000

 
 
5,804,920

 
11,826,920

 
 
423,122

 
2011
 
5 - 40
1800 Donaldson Road
Erlanger, KY
 
—


—

 
13,211,604

 
616,661

 
—

 
 
13,828,265

 
13,828,265

 
 
115,624

 
2013
 
5 - 40
180 Sheree Boulevard
Exton, PA
 
—


2,647,861

 
11,334,403

 
2,676,399

 
2,649,426

 
 
14,009,237

 
16,658,663

 
 
3,117,837

 
2007
 
5 - 40
6880 Fairfield Drive
Fairfield, OH
 
—


412,136

 
3,029,177

 
74,745

 
412,136

 
 
3,103,922

 
3,516,058

 
 
24,226

 
2013
 
5 - 40
7000-7018 Fairfield Business
Fairfield, OH
 
—


367,925

 
2,205,817

 
79,892

 
367,925

 
 
2,285,709

 
2,653,634

 
 
19,689

 
2013
 
5 - 40
2000 Southpointe Dr
Forest Park, GA
 
—


756,221

 
9,115,626

 
429,263

 
756,221

 
 
9,544,889

 
10,301,110

 
 
81,581

 
2013
 
5 - 40
1400 NW 65th Place
Fort Lauderdale, FL
 
—

*
545,480

 
2,540,210

 
66,119

 
545,480

 
 
2,606,329

 
3,151,809

 
 
18,432

 
2013
 
5 - 40
6500 NW 12th Avenue
Fort Lauderdale, FL
 
—

*
—

 
3,064,734

 
159,947

 
—

 
 
3,224,681

 
3,224,681

 
 
27,778

 
2013
 
5 - 40
6501 NW 12th Avenue
Fort Lauderdale, FL
 
—


519,984

 
2,677,465

 
51,998

 
519,984

 
 
2,729,463

 
3,249,447

 
 
20,525

 
2013
 
5 - 40
6600 NW 12th Avenue
Fort Lauderdale, FL
 
—

*
—

 
2,988,181

 
159,201

 
—

 
 
3,147,382

 
3,147,382

 
 
28,193

 
2013
 
5 - 40
5400 Alliance Gateway Freeway
Fort Worth, TX
 
—


1,515,860

 
6,710,118

 
403,669

 
1,515,860

 
 
7,113,787

 
8,629,647

 
 
72,186

 
2013
 
5 - 40
101 Constitution Blvd
Franklin, MA
 
—


532,339

 
4,206,412

 
310,120

 
532,339

 
 
4,516,532

 
5,048,871

 
 
96,829

 
2013
 
5 - 40
20 Liberty Way
Franklin, MA
 
—


618,521

 
4,570,341

 
339,916

 
618,521

 
 
4,910,257

 
5,528,778

 
 
50,621

 
2013
 
5 - 40
9601 Cosner Drive
Fredericksburg, VA
 
—


475,262

 
3,917,234

 
242,595

 
475,262

 
 
4,159,829

 
4,635,091

 
 
1,926,193

 
1995
 
5 - 40
200 W Cypress Creek Road
Ft. Lauderdale, FL
 
—


3,414,989

 
2,399,738

 
8,597,913

 
3,414,989

 
 
10,997,651

 
14,412,640

 
 
2,194,161

 
2003
 
5 - 40
5410 - 5430 Northwest 33rd Avenue
Ft. Lauderdale, FL
 
—


603,776

 
4,176,238

 
1,424,212

 
625,111

 
 
5,579,115

 
6,204,226

 
 
2,243,225

 
1985
 
5 - 40
12601 Industry Street
Garden Grove, CA
 
—


2,048,143

 
1,088,697

 
70,518

 
2,048,143

 
 
1,159,215

 
3,207,358

 
 
17,229

 
2013
 
5 - 40
12641 Industry Street
Garden Grove, CA
 
—


3,766,822

 
2,539,214

 
132,812

 
3,766,822

 
 
2,672,026

 
6,438,848

 
 
22,781

 
2013
 
5 - 40
850 S Jupiter Road
Garland, TX
 
—


799,707

 
6,122,065

 
249,660

 
799,707

 
 
6,371,725

 
7,171,432

 
 
50,441

 
2013
 
5 - 40
2510 W Main Street
Grand Prairie, TX
 
—

*
1,785,741

 
11,158,818

 
869,832

 
1,785,741

 
 
12,028,650

 
13,814,391

 
 
117,548

 
2013
 
5 - 40
4251 North Highway 121
Grapevine, TX
 
—

*
1,165,780

 
7,799,270

 
420,260

 
1,165,780

 
 
8,219,529

 
9,385,309

 
 
71,766

 
2013
 
5 - 40
116 Pleasant Ridge Road
Greenville, SC
 
—


1,547,811

 
—

 
14,172,014

 
3,712,683

 
 
12,007,142

 
15,719,825

 
 
1,664,305

 
2006
 
5 - 40
45 Brookfield Oaks Drive
Greenville, SC
 
—


818,114

 
—

 
4,471,082

 
825,529

 
 
4,463,667

 
5,289,196

 
 
695,196

 
2006
 
5 - 40
2011 Southtech Drive
Greenwood, IN
 
—


223,702

 
3,574,142

 
310,465

 
223,702

 
 
3,884,607

 
4,108,309

 
 
41,409

 
2013
 
5 - 40


98


LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2013
 
 
 Accumulated Depreciation 12/31/2013
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2121 Southtech Drive
Greenwood, IN
 
—


272,823

 
3,606,920

 
411,808

 
272,823

 
 
4,018,729

 
4,291,552

 
 
51,669

 
2013
 
5 - 40
800 Commerce Parkway West Dr
Greenwood, IN
 
—


1,374,664

 
29,963,830

 
1,317,168

 
1,374,664

 
 
31,280,998

 
32,655,662

 
 
259,427

 
2013
 
5 - 40
1487 South Highway 101
Greer, SC
 
—


464,237

 
—

 
5,829,595

 
1,301,738

 
 
4,992,094

 
6,293,832

 
 
612,898

 
2007
 
5 - 40
2727 London Grove Road
Groveport, OH
 
—


1,875,607

 
11,937,935

 
334,714

 
1,875,607

 
 
12,272,649

 
14,148,256

 
 
112,099

 
2013
 
5 - 40
11841 Newgate Boulevard
Hagerstown, MD
 
—


3,356,207

 
—

 
30,555,105

 
9,741,685

 
 
24,169,627

 
33,911,312

 
 
3,608,467

 
2008
 
5 - 40
1 Enterprise Parkway
Hampton, VA
 
—


974,675

 
5,579,869

 
1,739,690

 
974,675

 
 
7,319,559

 
8,294,234

 
 
3,146,481

 
1987
 
5 - 40
1317 Executive Boulevard
Hampton, VA
 
—


1,650,423

 
—

 
7,945,718

 
1,128,829

 
 
8,467,312

 
9,596,141

 
 
1,721,885

 
2006
 
5 - 40
21 Enterprise Parkway
Hampton, VA
 
—


263,668

 
8,167,118

 
1,136,137

 
265,719

 
 
9,301,204

 
9,566,923

 
 
3,214,411

 
1999
 
5 - 40
22 Enterprise Parkway
Hampton, VA
 
—


1,097,368

 
6,760,778

 
1,388,402

 
1,097,368

 
 
8,149,180

 
9,246,548

 
 
3,333,063

 
1990
 
5 - 40
5 Manhattan Square
Hampton, VA
 
—


207,368

 
—

 
1,535,912

 
212,694

 
 
1,530,586

 
1,743,280

 
 
595,962

 
1999
 
5 - 40
521 Butler Farm Road
Hampton, VA
 
—


750,769

 
2,911,149

 
225,580

 
710,486

 
 
3,177,012

 
3,887,498

 
 
900,610

 
2003
 
5 - 40
1560 Hunter Road
Hanover Park, IL
 
—

*
2,639,734

 
12,310,741

 
578,659

 
2,639,734

 
 
12,889,400

 
15,529,134

 
 
101,393

 
2013
 
5 - 40
1575 Hunter Road
Hanover Park, IL
 
—

*
3,293,284

 
17,235,926

 
752,167

 
3,293,284

 
 
17,988,093

 
21,281,377

 
 
151,165

 
2013
 
5 - 40
7361 Coca Cola Drive
Hanover, MD
 
—


2,245,187

 
—

 
9,391,010

 
3,822,710

 
 
7,813,487

 
11,636,197

 
 
986,214

 
2004
 
5 - 40
500 McCarthy Drive
Harrisburg, PA
 
—

*
5,194,872

 
19,991,436

 
4,534,843

 
5,687,013

 
 
24,034,138

 
29,721,151

 
 
6,506,685

 
2005
 
5 - 40
600 Industrial Drive
Harrisburg, PA
 
—


7,743,800

 
—

 
29,107,932

 
9,368,557

 
 
27,483,175

 
36,851,732

 
 
6,194,273

 
2005
 
5 - 40
7195 Grayson Road
Harrisburg, PA
 
—


464,534

 
6,066,272

 
129,149

 
464,534

 
 
6,195,421

 
6,659,955

 
 
46,145

 
2013
 
5 - 40
7253 Grayson Road
Harrisburg, PA
 
—


954,130

 
10,585,367

 
280,506

 
954,130

 
 
10,865,873

 
11,820,003

 
 
76,147

 
2013
 
5 - 40
12537 Cerise Avenue
Hawthorne, CA
 
—


2,203,194

 
5,758,809

 
94,181

 
2,203,194

 
 
5,852,990

 
8,056,184

 
 
39,989

 
2013
 
5 - 40
1010 Petersburg Road
Hebron, KY
 
—


305,471

 
5,434,505

 
306,564

 
305,471

 
 
5,741,069

 
6,046,540

 
 
46,358

 
2013
 
5 - 40
785 Lindbergh Court
Hebron, KY
 
—


401,410

 
3,087,899

 
146,729

 
401,410

 
 
3,234,628

 
3,636,038

 
 
38,908

 
2013
 
5 - 40
805 Lindbergh Court
Hebron, KY
 
—


292,096

 
2,502,486

 
156,556

 
292,096

 
 
2,659,041

 
2,951,137

 
 
25,212

 
2013
 
5 - 40
825 Lindbergh Court
Hebron, KY
 
—


370,149

 
3,095,116

 
198,440

 
370,149

 
 
3,293,557

 
3,663,706

 
 
41,428

 
2013
 
5 - 40
845 Lindbergh Court
Hebron, KY
 
—


444,318

 
3,811,889

 
213,437

 
444,318

 
 
4,025,326

 
4,469,644

 
 
44,027

 
2013
 
5 - 40
1498 Eagle Hill Drive
High Point, NC
 
—


94,274

 
—

 
6,219,495

 
791,880

 
 
5,521,889

 
6,313,769

 
 
1,004,621

 
2005
 
5 - 40
4183 Eagle Hill Drive
High Point, NC
 
—


122,203

 
—

 
3,259,320

 
526,266

 
 
2,855,257

 
3,381,523

 
 
978,595

 
2001
 
5 - 40
4189 Eagle Hill Drive
High Point, NC
 
—


100,106

 
—

 
3,595,213

 
431,106

 
 
3,264,213

 
3,695,319

 
 
1,228,964

 
2001
 
5 - 40

99

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2013
 
 
 Accumulated Depreciation 12/31/2013
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4195 Eagle Hill Drive
High Point, NC
 
—


107,586

 
—

 
3,543,904

 
505,700

 
 
3,145,790

 
3,651,490

 
 
804,486

 
2004
 
5 - 40
4328, 4336 Federal Drive
High Point, NC
 
2,020,222


521,122

 
—

 
7,525,947

 
825,092

 
 
7,221,977

 
8,047,069

 
 
4,379,264

 
1995
 
5 - 40
4344 Federal Drive
High Point, NC
 
—


484,001

 
—

 
2,848,373

 
173,623

 
 
3,158,751

 
3,332,374

 
 
1,489,961

 
1996
 
5 - 40
4380 Federal Drive
High Point, NC
 
—


282,996

 
—

 
2,160,892

 
283,368

 
 
2,160,520

 
2,443,888

 
 
914,535

 
1997
 
5 - 40
4388 Federal Drive
High Point, NC
 
—


143,661

 
—

 
1,213,832

 
132,655

 
 
1,224,838

 
1,357,493

 
 
493,837

 
1997
 
5 - 40
4475 Premier Drive
High Point, NC
 
—


748,693

 
—

 
6,805,541

 
1,525,421

 
 
6,028,813

 
7,554,234

 
 
826,571

 
2006
 
5 - 40
4500 Green Point Drive
High Point, NC
 
—


230,622

 
—

 
2,434,222

 
231,692

 
 
2,433,152

 
2,664,844

 
 
1,236,930

 
1989
 
5 - 40
4501 Green Point Drive
High Point, NC
 
—


319,289

 
—

 
3,156,348

 
320,450

 
 
3,155,187

 
3,475,637

 
 
1,466,476

 
1989
 
5 - 40
4523 Green Point Drive
High Point, NC
 
—


234,564

 
—

 
3,324,961

 
235,698

 
 
3,323,827

 
3,559,525

 
 
1,819,904

 
1988
 
5 - 40
4524 Green Point Drive
High Point, NC
 
—


182,810

 
—

 
2,756,119

 
183,888

 
 
2,755,041

 
2,938,929

 
 
1,503,373

 
1989
 
5 - 40
Unit 5 Logix Road
Hinckley, UK
 
—


10,547,677

 
29,691,911

 
—

 
10,547,677

 
 
29,691,911

 
40,239,588

 
 
548,662

 
2013
 
5 - 40
1515 6th Street South
Hopkins,MN
 
—


813,036

 
1,503,075

 
361,550

 
813,036

 
 
1,864,625

 
2,677,661

 
 
27,652

 
2013
 
5 - 40
1600 5th Street South
Hopkins,MN
 
—


339,336

 
2,106,454

 
80,794

 
339,336

 
 
2,187,249

 
2,526,585

 
 
17,021

 
2013
 
5 - 40
100 Gibraltar Road
Horsham, PA
 
—


38,729

 
349,811

 
59,073

 
38,729

 
 
408,884

 
447,613

 
 
155,147

 
1975
 
5 - 40
100 Witmer Road
Horsham, PA
 
—


3,102,784

 
—

 
20,452,861

 
3,764,784

 
 
19,790,861

 
23,555,645

 
 
6,480,136

 
1996
 
5 - 40
100-107 Lakeside Drive
Horsham, PA
 
—


239,528

 
2,163,498

 
617,512

 
255,528

 
 
2,765,010

 
3,020,538

 
 
1,042,612

 
1982
 
5 - 40
101 Gibraltar Road
Horsham, PA
 
—


651,990

 
5,888,989

 
2,069,897

 
732,552

 
 
7,878,324

 
8,610,876

 
 
3,284,305

 
1977
 
5 - 40
101-111 Rock Road
Horsham, PA
 
—


350,561

 
3,166,389

 
1,163,717

 
452,251

 
 
4,228,416

 
4,680,667

 
 
1,871,431

 
1975
 
5 - 40
102 Rock Road
Horsham, PA
 
—


1,110,209

 
2,301,302

 
1,203,842

 
1,185,635

 
 
3,429,717

 
4,615,352

 
 
1,132,494

 
1985
 
5 - 40
103-109 Gibraltar Road
Horsham, PA
 
—


270,906

 
2,448,500

 
362,165

 
270,906

 
 
2,810,664

 
3,081,570

 
 
1,188,356

 
1978
 
5 - 40
104 Witmer Road
Horsham, PA
 
—


1,248,148

 
—

 
593,447

 
189,793

 
 
1,651,802

 
1,841,595

 
 
643,313

 
1975
 
5 - 40
110 Gibraltar Road
Horsham, PA
 
—


673,041

 
5,776,369

 
1,969,345

 
673,041

 
 
7,745,714

 
8,418,755

 
 
3,132,658

 
1979
 
5 - 40
111-159 Gibraltar Road
Horsham, PA
 
—


489,032

 
4,126,151

 
1,235,014

 
489,032

 
 
5,361,165

 
5,850,197

 
 
2,365,400

 
1981
 
5 - 40
113-123 Rock Road
Horsham, PA
 
—


351,072

 
3,171,001

 
708,270

 
451,731

 
 
3,778,612

 
4,230,343

 
 
1,601,594

 
1975
 
5 - 40
120 Gibraltar Road
Horsham, PA
 
—


533,142

 
4,830,515

 
1,855,500

 
558,142

 
 
6,661,015

 
7,219,157

 
 
2,639,758

 
1980
 
5 - 40
123-135 Rock Road
Horsham, PA
 
—


292,360

 
2,411,677

 
2,125,649

 
393,019

 
 
4,436,667

 
4,829,686

 
 
1,769,955

 
1975
 
5 - 40
132 Welsh Road
Horsham, PA
 
—


1,333,642

 
—

 
3,752,651

 
1,408,041

 
 
3,678,252

 
5,086,293

 
 
1,523,111

 
1998
 
5 - 40
161-175 Gibraltar Road
Horsham, PA
 
—


294,673

 
2,663,722

 
957,148

 
294,673

 
 
3,620,870

 
3,915,543

 
 
1,559,023

 
1976
 
5 - 40

100

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2013
 
 
 Accumulated Depreciation 12/31/2013
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
181-187 Gibraltar Road
Horsham, PA
 
—


360,549

 
3,259,984

 
787,154

 
360,549

 
 
4,047,138

 
4,407,687

 
 
1,849,809

 
1982
 
5 - 40
2 Walnut Grove Drive
Horsham, PA
 
—


1,281,870

 
7,767,374

 
1,442,612

 
1,265,363

 
 
9,226,493

 
10,491,856

 
 
4,013,758

 
1989
 
5 - 40
200 Gibraltar Road
Horsham, PA
 
—


638,513

 
5,811,323

 
1,991,542

 
638,513

 
 
7,802,865

 
8,441,378

 
 
3,237,354

 
1990
 
5 - 40
200-264 Lakeside Drive
Horsham, PA
 
—


502,705

 
4,540,597

 
2,291,981

 
502,705

 
 
6,832,578

 
7,335,283

 
 
2,696,472

 
1982
 
5 - 40
201 Gibraltar Road
Horsham, PA
 
—


380,127

 
3,433,433

 
2,324,673

 
380,802

 
 
5,757,431

 
6,138,233

 
 
2,311,095

 
1983
 
5 - 40
210-223 Witmer Road
Horsham, PA
 
—


270,282

 
2,441,276

 
1,962,945

 
270,282

 
 
4,404,221

 
4,674,503

 
 
1,766,596

 
1972
 
5 - 40
220 Gibraltar Road
Horsham, PA
 
—


629,944

 
5,733,228

 
1,333,679

 
629,944

 
 
7,066,907

 
7,696,851

 
 
2,822,143

 
1990
 
5 - 40
231-237 Gibraltar Road
Horsham, PA
 
—


436,952

 
3,948,963

 
1,068,263

 
436,952

 
 
5,017,226

 
5,454,178

 
 
2,096,540

 
1981
 
5 - 40
240 Gibraltar Road
Horsham, PA
 
—


629,944

 
5,733,234

 
1,804,045

 
629,944

 
 
7,537,279

 
8,167,223

 
 
3,637,398

 
1990
 
5 - 40
255 Business Center Drive
Horsham, PA
 
—


1,154,289

 
2,007,214

 
770,989

 
1,140,597

 
 
2,791,895

 
3,932,492

 
 
888,099

 
2003
 
5 - 40
261-283 Gibraltar Road
Horsham, PA
 
—


464,871

 
3,951,972

 
1,781,425

 
464,871

 
 
5,733,397

 
6,198,268

 
 
2,402,519

 
1978
 
5 - 40
300 Welsh Road
Horsham, PA
 
—


696,061

 
3,339,991

 
640,370

 
696,061

 
 
3,980,360

 
4,676,421

 
 
1,715,407

 
1985
 
5 - 40
300 Welsh Road - Building 3
Horsham, PA
 
—


180,459

 
1,441,473

 
633,163

 
180,459

 
 
2,074,635

 
2,255,094

 
 
843,190

 
1983
 
5 - 40
300 Welsh Road - Building 4
Horsham, PA
 
—


282,493

 
2,256,508

 
1,780,163

 
282,493

 
 
4,036,671

 
4,319,164

 
 
1,761,750

 
1983
 
5 - 40
300-309 Lakeside Drive
Horsham, PA
 
—


369,475

 
3,338,761

 
1,832,004

 
376,475

 
 
5,163,765

 
5,540,240

 
 
2,556,952

 
1982
 
5 - 40
355 Business Center Drive
Horsham, PA
 
—


483,045

 
898,798

 
544,472

 
471,171

 
 
1,455,144

 
1,926,315

 
 
546,069

 
2003
 
5 - 40
4 Walnut Grove
Horsham, PA
 
—


2,515,115

 
—

 
10,809,109

 
2,515,115

 
 
10,809,109

 
13,324,224

 
 
4,516,707

 
1999
 
5 - 40
400-445 Lakeside Drive
Horsham, PA
 
—


543,628

 
4,910,226

 
2,440,949

 
583,628

 
 
7,311,175

 
7,894,803

 
 
3,193,874

 
1981
 
5 - 40
455 Business Center Drive
Horsham, PA
 
—


1,351,011

 
2,503,449

 
1,907,857

 
1,322,317

 
 
4,440,000

 
5,762,317

 
 
1,268,213

 
2003
 
5 - 40
5 Walnut Grove Drive
Horsham, PA
 
—


1,065,951

 
—

 
10,625,374

 
1,939,712

 
 
9,751,613

 
11,691,325

 
 
3,498,803

 
2000
 
5 - 40
506 Prudential Road
Horsham, PA
 
—


208,140

 
895,470

 
894,621

 
208,140

 
 
1,790,091

 
1,998,231

 
 
802,323

 
1973
 
5 - 40
507 Prudential Road
Horsham, PA
 
—


644,900

 
5,804,100

 
8,408,030

 
1,131,380

 
 
13,725,650

 
14,857,030

 
 
6,360,060

 
1988
 
5 - 40
555 Business Center Drive
Horsham, PA
 
—


727,420

 
1,353,650

 
883,754

 
709,967

 
 
2,254,858

 
2,964,825

 
 
464,979

 
2003
 
5 - 40
680 Blair Mill Road
Horsham, PA
 
—


3,527,151

 

 
17,475,489

 
4,138,577

 
 
16,864,063

 
21,002,640

 
 
5,312,518

 
2001
 
5 - 40
7 Walnut Grove Drive
Horsham, PA
 
—


2,631,696

 
—

 
18,432,489

 
2,631,956

 
 
18,432,229

 
21,064,185

 
 
2,968,622

 
2006
 
5 - 40
700 Dresher Road
Horsham, PA
 
—


2,551,777

 
3,020,638

 
2,866,350

 
2,565,140

 
 
5,873,625

 
8,438,765

 
 
2,331,100

 
1987
 
5 - 40
747 Dresher Road
Horsham, PA
 
—


1,607,238

 
—

 
5,032,964

 
1,607,977

 
 
5,032,225

 
6,640,202

 
 
2,984,537

 
1988
 
5 - 40
767 Electronic Drive
Horsham, PA
 
—


1,229,685

 
—

 
2,436,397

 
1,241,970

 
 
2,424,112

 
3,666,082

 
 
1,318,586

 
1996
 
5 - 40

101

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2013
 
 
 Accumulated Depreciation 12/31/2013
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1000 South Loop West
Houston, TX
 
—

*
509,351

 
3,549,504

 
255,499

 
509,351

 
 
3,805,003

 
4,314,354

 
 
36,289

 
2013
 
5 - 40
10241 W Little York Rd
Houston, TX
 
—


558,491

 
5,740,552

 
129,761

 
558,491

 
 
5,870,313

 
6,428,804

 
 
40,844

 
2013
 
5 - 40
10245 W Little York Rd
Houston, TX
 
—


426,927

 
3,460,513

 
64,622

 
426,927

 
 
3,525,135

 
3,952,062

 
 
32,514

 
2013
 
5 - 40
10301 Round Up Lane
Houston, TX
 
—


545,501

 
2,927,700

 
599,143

 
545,501

 
 
3,526,842

 
4,072,343

 
 
217,921

 
2010
 
5 - 40
10305 Round Up Lane
Houston, TX
 
—


1,340,609

 
7,489,720

 
3,381,308

 
1,340,609

 
 
10,871,027

 
12,211,636

 
 
899,234

 
2010
 
5 - 40
10607 Haddington Drive
Houston, TX
 
—

*
201,469

 
1,631,561

 
104,388

 
201,469

 
 
1,735,950

 
1,937,419

 
 
14,698

 
2013
 
5 - 40
10735 West Little York Road
Houston, TX
 
—

*
1,110,988

 
6,351,946

 
2,271,088

 
1,135,483

 
 
8,598,539

 
9,734,022

 
 
2,297,741

 
2000
 
5 - 40
10739 West Little York Road
Houston, TX
 
—

*
797,931

 
5,950,894

 
400,330

 
799,560

 
 
6,349,595

 
7,149,155

 
 
1,799,185

 
1999
 
5 - 40
11201 Greens Crossing Boulevard
Houston, TX
 
—

*
1,006,194

 
5,412,584

 
2,777,537

 
1,008,542

 
 
8,187,773

 
9,196,315

 
 
1,677,006

 
2007
 
5 - 40
11502 South Main Street
Houston, TX
 
—

*
588,865

 
3,479,264

 
186,713

 
588,865

 
 
3,665,977

 
4,254,842

 
 
46,550

 
2013
 
5 - 40
1283 N Post Oak Rd
Houston, TX
 
—

*
80,730

 
870,656

 
40,876

 
80,730

 
 
911,532

 
992,262

 
 
6,872

 
2013
 
5 - 40
1287 N Post Oak Rd
Houston, TX
 
—

*
146,654

 
1,620,780

 
59,710

 
146,654

 
 
1,680,489

 
1,827,143

 
 
16,877

 
2013
 
5 - 40
1291 N Post Oak Rd
Houston, TX
 
—

*
510,102

 
4,129,042

 
217,109

 
510,102

 
 
4,346,151

 
4,856,253

 
 
54,758

 
2013
 
5 - 40
1416 N Sam Houston Parkway E
Houston, TX
 
—

*
218,850

 
1,639,902

 
90,023

 
218,850

 
 
1,729,924

 
1,948,774

 
 
14,111

 
2013
 
5 - 40
1420 N Sam Houston Parkway E
Houston, TX
 
—

*
211,279

 
1,554,156

 
107,515

 
211,279

 
 
1,661,671

 
1,872,950

 
 
14,273

 
2013
 
5 - 40
14200 Hollister Road
Houston, TX
 
—


1,396,794

 
—

 
4,855,857

 
1,699,632

 
 
4,553,019

 
6,252,651

 
 
189,974

 
2011
 
5 - 40
1424 N Sam Houston Parkway E
Houston, TX
 
—

*
283,107

 
2,077,323

 
145,748

 
283,107

 
 
2,223,071

 
2,506,178

 
 
19,688

 
2013
 
5 - 40
1428 N Sam Houston Parkway E
Houston, TX
 
—

*
367,446

 
1,952,453

 
102,727

 
367,446

 
 
2,055,179

 
2,422,625

 
 
20,402

 
2013
 
5 - 40
14400 Hollister Road
Houston, TX
 
—


1,830,419

 
—

 
6,654,454

 
1,861,540

 
 
6,623,333

 
8,484,873

 
 
16,966

 
2012
 
5 - 40
15102 Sommermeyer St
Houston, TX
 
—


755,121

 
3,155,774

 
230,571

 
755,121

 
 
3,386,345

 
4,141,466

 
 
36,052

 
2013
 
5 - 40
15150 Sommermeyer St
Houston, TX
 
—


418,580

 
1,564,587

 
131,319

 
418,580

 
 
1,695,906

 
2,114,486

 
 
17,228

 
2013
 
5 - 40
16405 Air Center Boulevard
Houston, TX
 
—

*
438,853

 
3,030,396

 
515,937

 
438,853

 
 
3,546,333

 
3,985,186

 
 
1,493,111

 
1997
 
5 - 40
16420 West Hardy Road
Houston, TX
 
—


529,876

 
3,267,872

 
118,332

 
529,876

 
 
3,386,204

 
3,916,080

 
 
35,961

 
2013
 
5 - 40
16445 Air Center Boulevard
Houston, TX
 
—

*
363,339

 
2,509,186

 
266,552

 
363,339

 
 
2,775,738

 
3,139,077

 
 
1,117,896

 
1997
 
5 - 40
1646 Rankin Road
Houston, TX
 
—

*
329,961

 
—

 
5,210,202

 
592,234

 
 
4,947,929

 
5,540,163

 
 
1,300,632

 
2005
 
5 - 40
1655 Townhurst Drive
Houston, TX
 
—

*
197,226

 
935,036

 
87,883

 
197,226

 
 
1,022,919

 
1,220,145

 
 
9,400

 
2013
 
5 - 40
16580 Air Center Boulevard
Houston, TX
 
—

*
289,000

 
3,559,857

 
1,290,182

 
289,000

 
 
4,850,040

 
5,139,040

 
 
1,462,889

 
1997
 
5 - 40
16602 Central Green Boulevard
Houston, TX
 
—

*
284,403

 
—

 
4,953,014

 
503,779

 
 
4,733,638

 
5,237,417

 
 
908,865

 
2005
 
5 - 40

102

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2013
 
 
 Accumulated Depreciation 12/31/2013
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
16605 Air Center Boulevard
Houston, TX
 
—

*
298,999

 

 
3,417,513

 
496,186

 
 
3,220,326

 
3,716,512

 
 
927,143

 
2002
 
5 - 40
1665 Townhurst Drive
Houston, TX
 
—

*
452,439

 
2,016,585

 
57,074

 
452,439

 
 
2,073,658

 
2,526,097

 
 
15,817

 
2013
 
5 - 40
16680 Central Green Boulevard
Houston, TX
 
—

*
311,952

 
—

 
4,165,907

 
492,869

 
 
3,984,990

 
4,477,859

 
 
863,414

 
2001
 
5 - 40
16685 Air Center Boulevard
Houston, TX
 
—

*
414,691

 
—

 
2,459,338

 
414,691

 
 
2,459,338

 
2,874,029

 
 
576,093

 
2004
 
5 - 40
1755 Trans Central Drive
Houston, TX
 
—

*
293,534

 
3,036,269

 
518,093

 
306,147

 
 
3,541,749

 
3,847,896

 
 
1,107,572

 
1999
 
5 - 40
4301 S Pinemont Dr
Houston, TX
 
—

*
226,973

 
1,174,979

 
46,852

 
226,973

 
 
1,221,831

 
1,448,804

 
 
21,677

 
2013
 
5 - 40
4401 S Pinemont Dr
Houston, TX
 
—

*
244,240

 
1,412,622

 
35,635

 
244,240

 
 
1,448,257

 
1,692,497

 
 
23,544

 
2013
 
5 - 40
4501 S Pinemont Dr
Houston, TX
 
—

*
252,907

 
1,504,053

 
52,253

 
252,907

 
 
1,556,306

 
1,809,213

 
 
25,380

 
2013
 
5 - 40
5200 N. Sam Houston Parkway
Houston, TX
 
—

*
1,519,458

 
7,135,548

 
3,654,765

 
1,520,074

 
 
10,789,697

 
12,309,771

 
 
2,170,043

 
2007
 
5 - 40
5250 N. Sam Houston Parkway
Houston, TX
 
—

*
2,173,287

 
8,868,256

 
2,748,599

 
2,173,942

 
 
11,616,200

 
13,790,142

 
 
1,974,496

 
2007
 
5 - 40
5500 N. Sam Houston Parkway West
Houston, TX
 
—


1,243,541

 
—

 
6,452,951

 
1,513,152

 
 
6,183,340

 
7,696,492

 
 
295,882

 
2011
 
5 - 40
5910 West by Northwest Blvd
Houston, TX
 
—

*
891,397

 
3,765,299

 
203,141

 
891,397

 
 
3,968,440

 
4,859,837

 
 
40,200

 
2013
 
5 - 40
8017 Pinemont Drive
Houston, TX
 
—


900,953

 
5,323,727

 
114,191

 
900,953

 
 
5,437,918

 
6,338,871

 
 
45,057

 
2013
 
5 - 40
8272 El Rio Street
Houston, TX
 
—

*
530,494

 
4,108,626

 
206,722

 
530,494

 
 
4,315,348

 
4,845,842

 
 
35,649

 
2013
 
5 - 40
8282 El Rio Street
Houston, TX
 
—

*
450,422

 
3,304,942

 
180,261

 
450,422

 
 
3,485,203

 
3,935,625

 
 
30,003

 
2013
 
5 - 40
8301 Fallbrook Drive
Houston, TX
 
—

*
4,515,862

 
—

 
24,080,332

 
5,877,884

 
 
22,718,310

 
28,596,194

 
 
3,572,248

 
2006
 
5 - 40
850 Greens Parkway
Houston, TX
 
—

*
2,893,405

 
11,593,197

 
2,894,626

 
2,899,861

 
 
14,481,366

 
17,381,227

 
 
2,345,024

 
2007
 
5 - 40
860 Greens Parkway
Houston, TX
 
—

*
1,399,365

 
6,344,650

 
1,579,558

 
1,374,012

 
 
7,949,561

 
9,323,573

 
 
1,285,909

 
2007
 
5 - 40
8801 A-E Wallisville Rd
Houston, TX
 
—

*
444,205

 
2,340,333

 
108,163

 
444,205

 
 
2,448,496

 
2,892,701

 
 
22,120

 
2013
 
5 - 40
8801-19 & 8821-49 Fallbrook Drive
Houston, TX
 
—

*
2,290,001

 
15,297,141

 
1,867,404

 
2,290,002

 
 
17,164,544

 
19,454,546

 
 
4,657,668

 
2000
 
5 - 40
8802-8824 Fallbrook Drive
Houston, TX
 
—

*
2,774,995

 
6,364,767

 
1,362,915

 
2,775,021

 
 
7,727,655

 
10,502,676

 
 
2,101,491

 
2004
 
5 - 40
8811 A-E Wallisville Rd
Houston, TX
 
—

*
373,412

 
1,963,599

 
96,907

 
373,412

 
 
2,060,506

 
2,433,918

 
 
20,969

 
2013
 
5 - 40
8825-8839 N Sam Houston Pkwy
Houston, TX
 
—

*
638,453

 
3,258,815

 
650,142

 
638,477

 
 
3,908,932

 
4,547,409

 
 
958,990

 
2004
 
5 - 40
8850-8872 Fallbrook Drive
Houston, TX
 
—

*
504,317

 
2,878,351

 
1,054,230

 
504,341

 
 
3,932,557

 
4,436,898

 
 
1,303,330

 
2004
 
5 - 40
9500-9540 Clay Road
Houston, TX
 
—

*
1,412,849

 
7,279,448

 
336,295

 
1,412,849

 
 
7,615,743

 
9,028,592

 
 
63,534

 
2013
 
5 - 40
Liberty 11 at Central Green
Houston, TX
 
—


1,748,348

 
—

 
9,336,316

 
2,120,319

 
 
8,964,345

 
11,084,664

 
 
164,651

 
2012
 
5 - 40
Cabot III UK1B01
Isle of Man, UK
 
—


11,888,058

 
35,003,668

 
—

 
11,888,058

 
 
35,003,668

 
46,891,726

 
 
646,011

 
2013
 
5 - 40
1011 N Hilltop Drive
Itasca, IL
 
—


842,043

 
984,087

 
42,920

 
842,043

 
 
1,027,007

 
1,869,050

 
 
7,617

 
2013
 
5 - 40

103

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2013
 
 
 Accumulated Depreciation 12/31/2013
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1035 N Hilltop Drive
Itasca, IL
 
—


875,172

 
2,071,051

 
52,042

 
875,172

 
 
2,123,094

 
2,998,266

 
 
16,965

 
2013
 
5 - 40
1549 W Glenlake Avenue
Itasca, IL
 
—

*
1,339,627

 
3,763,288

 
79,355

 
1,339,627

 
 
3,842,642

 
5,182,269

 
 
29,399

 
2013
 
5 - 40
901 N Hilltop Drive
Itasca, IL
 
—


866,378

 
2,112,616

 
38,715

 
866,378

 
 
2,151,331

 
3,017,709

 
 
15,922

 
2013
 
5 - 40
925 N Hilltop Drive
Itasca, IL
 
—


945,251

 
2,010,181

 
46,316

 
945,251

 
 
2,056,497

 
3,001,748

 
 
15,961

 
2013
 
5 - 40
8241 Sandy Court
Jessup, MD
 
—


1,246,618

 
6,844,393

 
270,912

 
1,246,618

 
 
7,115,304

 
8,361,922

 
 
56,334

 
2013
 
5 - 40
8242 Sandy Court
Jessup, MD
 
—


1,488,746

 
9,072,440

 
363,544

 
1,488,746

 
 
9,435,984

 
10,924,730

 
 
70,410

 
2013
 
5 - 40
8246 Sandy Court
Jessup, MD
 
—


590,922

 
3,374,522

 
65,542

 
590,922

 
 
3,440,064

 
4,030,986

 
 
26,282

 
2013
 
5 - 40
1305 Chastain Road NW
Kennesaw, GA
 
—

*
808,159

 
5,712,959

 
536,521

 
808,159

 
 
6,249,480

 
7,057,639

 
 
63,945

 
2013
 
5 - 40
1325 Chastain Road NW
Kennesaw, GA
 
—

*
1,612,924

 
9,771,680

 
1,055,382

 
1,612,924

 
 
10,827,062

 
12,439,986

 
 
117,822

 
2013
 
5 - 40
3600 Cobb International Bld NW
Kennesaw, GA
 
—


716,860

 
6,962,212

 
409,426

 
716,860

 
 
7,371,639

 
8,088,499

 
 
67,898

 
2013
 
5 - 40
Unit 1 Bear Way
Kettering, UK
 
—


10,849,890

 
36,219,855

 
—

 
10,849,890

 
 
36,219,855

 
47,069,745

 
 
667,061

 
2013
 
5 - 40
151 South Warner Road
King of Prussia, PA
 
—


1,218,086

 
6,937,866

 
7,192,372

 
1,187,900

 
 
14,160,424

 
15,348,324

 
 
2,183,117

 
1980
 
5 - 40
170 South Warner Road
King of Prussia, PA
 
—


547,800

 
3,137,400

 
4,421,277

 
458,232

 
 
7,648,245

 
8,106,477

 
 
2,809,789

 
1980
 
5 - 40
180 South Warner Drive
King of Prussia, PA
 
—


995,393

 
—

 
8,754,035

 
—

 
 
9,749,428

 
9,749,428

 
 
870,655

 
2009
 
5 - 40
190 South Warner Road
King of Prussia, PA
 
—


552,200

 
3,162,600

 
1,063,496

 
461,909

 
 
4,316,387

 
4,778,296

 
 
2,112,178

 
1980
 
5 - 40
2100 Renaissance Boulevard
King of Prussia, PA
 
—


1,110,111

 
—

 
12,098,486

 
1,132,519

 
 
12,076,078

 
13,208,597

 
 
3,702,844

 
1999
 
5 - 40
2201 Renaissance Boulevard
King of Prussia, PA
 
—


2,370,895

 
—

 
15,284,223

 
2,413,514

 
 
15,241,604

 
17,655,118

 
 
5,481,014

 
2000
 
5 - 40
2300 Renaissance Boulevard
King of Prussia, PA
 
—


509,580

 
—

 
3,050,939

 
574,152

 
 
2,986,367

 
3,560,519

 
 
1,444,383

 
1999
 
5 - 40
2301 Renaissance Boulevard
King of Prussia, PA
 
—


1,645,246

 
—

 
30,080,438

 
4,581,649

 
 
27,144,035

 
31,725,684

 
 
10,059,898

 
2002
 
5 - 40
2500 Renaissance Boulevard
King of Prussia, PA
 
—


509,580

 
—

 
2,662,758

 
592,886

 
 
2,579,452

 
3,172,338

 
 
1,140,031

 
1999
 
5 - 40
2520 Renaissance Boulevard
King of Prussia, PA
 
—


1,020,000

 
—

 
4,622,740

 
978,402

 
 
4,664,338

 
5,642,740

 
 
2,198,388

 
1999
 
5 - 40
2560 Renaissance Boulevard
King of Prussia, PA
 
—


607,210

 
—

 
3,122,044

 
649,792

 
 
3,079,462

 
3,729,254

 
 
1,358,606

 
2000
 
5 - 40
2700 Horizon Drive
King of Prussia, PA
 
—


764,370

 
—

 
3,643,566

 
867,815

 
 
3,540,121

 
4,407,936

 
 
1,525,767

 
1998
 
5 - 40
2900 Horizon Drive
King of Prussia, PA
 
—


679,440

 
—

 
3,503,074

 
774,096

 
 
3,408,418

 
4,182,514

 
 
1,519,241

 
1998
 
5 - 40
3000 Horizon Drive
King of Prussia, PA
 
—


1,191,449

 
—

 
2,476,299

 
946,703

 
 
2,721,045

 
3,667,748

 
 
1,038,239

 
1997
 
5 - 40
3100 Horizon Drive
King of Prussia, PA
 
—


601,956

 
—

 
2,192,852

 
611,436

 
 
2,183,372

 
2,794,808

 
 
847,707

 
1995
 
5 - 40
3200 Horizon Drive
King of Prussia, PA
 
—


928,637

 
—

 
6,272,635

 
1,210,137

 
 
5,991,135

 
7,201,272

 
 
2,268,296

 
1996
 
5 - 40
3400 Horizon Drive
King of Prussia, PA
 
—


776,496

 
3,139,068

 
1,537,958

 
776,496

 
 
4,677,025

 
5,453,521

 
 
1,765,636

 
1995
 
5 - 40

104


LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2013
 
 
 Accumulated Depreciation 12/31/2013
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3500 Horizon Drive
King of Prussia, PA
 
—


1,204,839

 
—

 
2,830,072

 
1,223,875

 
 
2,811,036

 
4,034,911

 
 
1,200,183

 
1996
 
5 - 40
3600 Horizon Drive
King of Prussia, PA
 
—


236,432

 
1,856,252

 
743,039

 
236,432

 
 
2,599,291

 
2,835,723

 
 
1,034,493

 
1989
 
5 - 40
3602 Horizon Drive
King of Prussia, PA
 
—


217,734

 
1,759,489

 
385,029

 
217,809

 
 
2,144,443

 
2,362,252

 
 
888,596

 
1989
 
5 - 40
3604 Horizon Drive
King of Prussia, PA
 
—


397,178

 
—

 
1,836,269

 
350,874

 
 
1,882,573

 
2,233,447

 
 
771,370

 
1998
 
5 - 40
440 East Swedesford Road
King of Prussia, PA
 
—


717,001

 
4,816,121

 
2,824,138

 
717,001

 
 
7,640,259

 
8,357,260

 
 
3,604,214

 
1988
 
5 - 40
460 East Swedesford Road
King of Prussia, PA
 
—


705,317

 
4,737,487

 
4,083,817

 
705,317

 
 
8,821,304

 
9,526,621

 
 
3,708,707

 
1988
 
5 - 40
650 Swedesford Road
King of Prussia, PA
 
—


952,911

 
6,722,830

 
8,139,683

 
952,911

 
 
14,862,513

 
15,815,424

 
 
6,614,425

 
1971
 
5 - 40
680 Swedesford Road
King of Prussia, PA
 
—


952,361

 
6,722,830

 
7,217,277

 
952,361

 
 
13,940,107

 
14,892,468

 
 
6,234,016

 
1971
 
5 - 40
1700 Interstate Drive
Lakeland, FL
 
—


650,000

 
5,444,220

 
—

 
650,000

 
 
5,444,220

 
6,094,220

 
 
164,953

 
2012
 
5 - 40
5801 Columbia Park Road
Landover,MD
 
—


1,187,620

 
4,598,346

 
182,789

 
1,187,620

 
 
4,781,135

 
5,968,755

 
 
38,810

 
2013
 
5 - 40
11425 State Highway 225
LaPorte, TX
 
—

*
975,974

 
3,409,036

 
8,957

 
977,542

 
 
3,416,424

 
4,393,966

 
 
714,598

 
2006
 
5 - 40
11503 State Highway 225
LaPorte, TX
 
—

*
2,561,931

 
9,695,493

 
237,274

 
2,566,047

 
 
9,928,651

 
12,494,698

 
 
1,945,902

 
2006
 
5 - 40
640 S State Road 39
Lebanon,IN
 
—


1,612,787

 
18,065,552

 
1,213,251

 
1,612,787

 
 
19,278,803

 
20,891,590

 
 
168,035

 
2013
 
5 - 40
7528 Walker Way
Lehigh, PA
 
—


893,441

 
—

 
5,510,457

 
779,330

 
 
5,624,568

 
6,403,898

 
 
1,613,828

 
2004
 
5 - 40
8301 Industrial Boulevard
Lehigh, PA
 
—


11,249,550

 
—

 
45,365,956

 
11,254,716

 
 
45,360,790

 
56,615,506

 
 
9,145,860

 
2005
 
5 - 40
8500 Willard Drive
Lehigh, PA
 
2,620,462


6,398,815

 
—

 
21,851,472

 
7,734,826

 
 
20,515,461

 
28,250,287

 
 
3,041,960

 
2004
 
5 - 40
875 Maxham Road
Lithia Springs, GA
 
—


445,493

 
10,160,616

 
558,420

 
445,493

 
 
10,719,036

 
11,164,529

 
 
86,272

 
2013
 
5 - 40
2145 Center Square Road
Logan Township, NJ
 
—


817,326

 
5,466,668

 
310,105

 
817,326

 
 
5,776,773

 
6,594,099

 
 
81,911

 
2013
 
5 - 40
7533 Industrial Parkway
Lower Macungie, PA
 
—


5,603,460

 
18,807,987

 
2,434,039

 
5,603,460

 
 
21,242,026

 
26,845,486

 
 
2,045,508

 
2011
 
5 - 40
1901 Summit Tower Boulevard
Maitland, FL
 
—


6,078,791

 
12,348,567

 
2,053,578

 
6,083,206

 
 
14,397,731

 
20,480,937

 
 
6,291,291

 
1998
 
5 - 40
1 Country View Road
Malvern, PA
 
—


400,000

 
3,600,000

 
6,360,798

 
406,421

 
 
9,954,377

 
10,360,798

 
 
3,704,662

 
1982
 
5 - 40
1 Great Valley Parkway
Malvern, PA
 
—


419,460

 
3,792,570

 
1,350,316

 
419,460

 
 
5,142,886

 
5,562,346

 
 
1,928,648

 
1982
 
5 - 40
10 Great Valley Parkway
Malvern, PA
 
—


823,540

 
1,341,376

 
459,973

 
832,244

 
 
1,792,645

 
2,624,889

 
 
590,788

 
2003
 
5 - 40
10 Valley Stream Parkway
Malvern, PA
 
—


509,075

 
—

 
2,726,213

 
509,899

 
 
2,725,389

 
3,235,288

 
 
1,789,979

 
1984
 
5 - 40
10, 20 Liberty Boulevard
Malvern, PA
 
—


724,058

 
—

 
5,827,720

 
724,846

 
 
5,826,932

 
6,551,778

 
 
3,506,696

 
1985
 
5 - 40
100 Chesterfield Parkway
Malvern, PA
 
—


1,320,625

 
—

 
7,321,902

 
1,965,944

 
 
6,676,583

 
8,642,527

 
 
3,366,709

 
1998
 
5 - 40
1001 Cedar Hollow Road
Malvern, PA
 
—


1,436,814

 
—

 
16,163,891

 
1,676,470

 
 
15,924,235

 
17,600,705

 
 
7,708,864

 
1998
 
5 - 40

105

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2013
 
 
 Accumulated Depreciation 12/31/2013
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11 Great Valley Parkway
Malvern, PA
 
—


496,297

 
—

 
2,960,712

 
708,331

 
 
2,748,678

 
3,457,009

 
 
887,432

 
2001
 
5 - 40
11,15 Great Valley Parkway
Malvern, PA
 
—


1,837,050

 
—

 
14,960,110

 
1,837,878

 
 
14,959,282

 
16,797,160

 
 
11,580,321

 
1986
 
5 - 40
12,14,16 Great Valley Parkway
Malvern, PA
 
—


130,689

 
—

 
1,326,294

 
128,767

 
 
1,328,216

 
1,456,983

 
 
910,800

 
1982
 
5 - 40
14 Lee Boulevard
Malvern, PA
 
—


664,282

 
—

 
5,569,322

 
643,892

 
 
5,589,712

 
6,233,604

 
 
3,657,798

 
1988
 
5 - 40
155 Great Valley Parkway
Malvern, PA
 
—


625,147

 
—

 
2,640,082

 
626,068

 
 
2,639,161

 
3,265,229

 
 
1,954,876

 
1981
 
5 - 40
18 Great Valley Parkway
Malvern, PA
 
—


394,036

 
3,976,221

 
68,969

 
397,293

 
 
4,041,933

 
4,439,226

 
 
1,503,167

 
1980
 
5 - 40
2 West Liberty Boulevard
Malvern, PA
 
—


5,405,041

 
—

 
11,903,540

 
5,405,042

 
 
11,903,539

 
17,308,581

 
 
3,157,412

 
2003
 
5 - 40
20 Valley Stream Parkway
Malvern, PA
 
—


465,539

 
—

 
6,062,255

 
466,413

 
 
6,061,381

 
6,527,794

 
 
3,436,599

 
1987
 
5 - 40
200 Chesterfield Parkway
Malvern, PA
 
—


495,893

 
2,739,093

 
641,555

 
807,638

 
 
3,068,903

 
3,876,541

 
 
2,401,423

 
1989
 
5 - 40
257-275 Great Valley Parkway
Malvern, PA
 
—


504,611

 
—

 
5,086,503

 
505,458

 
 
5,085,656

 
5,591,114

 
 
3,457,782

 
1983
 
5 - 40
27-43 Great Valley Parkway
Malvern, PA
 
—


448,775

 
—

 
2,347,289

 
449,447

 
 
2,346,617

 
2,796,064

 
 
1,820,823

 
1977
 
5 - 40
277-293 Great Valley Parkway
Malvern, PA
 
—


530,729

 
—

 
2,268,833

 
531,534

 
 
2,268,028

 
2,799,562

 
 
1,616,657

 
1984
 
5 - 40
3 Country View Road
Malvern, PA
 
—


814,278

 
—

 
5,142,433

 
1,128,881

 
 
4,827,830

 
5,956,711

 
 
1,868,164

 
1998
 
5 - 40
30 Great Valley Parkway
Malvern, PA
 
—


128,126

 
—

 
554,378

 
128,783

 
 
553,721

 
682,504

 
 
372,198

 
1975
 
5 - 40
300 Technology Drive
Malvern, PA
 
—


368,626

 
—

 
1,351,625

 
374,497

 
 
1,345,754

 
1,720,251

 
 
884,437

 
1985
 
5 - 40
300-400 Chesterfield Parkway
Malvern, PA
 
—


937,212

 
—

 
5,607,142

 
1,393,919

 
 
5,150,435

 
6,544,354

 
 
2,944,236

 
1988
 
5 - 40
311 Technology Drive
Malvern, PA
 
—


397,131

 
—

 
2,713,845

 
397,948

 
 
2,713,028

 
3,110,976

 
 
1,805,580

 
1984
 
5 - 40
333 Phoenixville Pike
Malvern, PA
 
—


523,530

 
—

 
3,708,843

 
524,230

 
 
3,708,143

 
4,232,373

 
 
2,286,593

 
1985
 
5 - 40
375 Technology Drive
Malvern, PA
 
—


191,114

 
—

 
1,625,516

 
234,922

 
 
1,581,708

 
1,816,630

 
 
641,806

 
1998
 
5 - 40
40 Liberty Boulevard
Malvern, PA
 
—


4,241,137

 
17,737,090

 
2,904,729

 
4,241,168

 
 
20,641,787

 
24,882,955

 
 
8,383,098

 
1989
 
5 - 40
40 Valley Stream Parkway
Malvern, PA
 
—


322,918

 
—

 
2,315,958

 
325,775

 
 
2,313,101

 
2,638,876

 
 
1,534,806

 
1987
 
5 - 40
420 Lapp Road
Malvern, PA
 
—


1,054,418

 
—

 
8,850,116

 
1,055,243

 
 
8,849,291

 
9,904,534

 
 
4,249,871

 
1989
 
5 - 40
425 Technology Drive
Malvern, PA
 
—


191,114

 
—

 
1,700,603

 
321,473

 
 
1,570,244

 
1,891,717

 
 
654,666

 
1998
 
5 - 40
45 Liberty Boulevard
Malvern, PA
 
—


4,380,221

 
—

 
15,322,821

 
4,749,748

 
 
14,953,294

 
19,703,042

 
 
7,245,970

 
1999
 
5 - 40
45-67 Great Valley Parkway
Malvern, PA
 
—


795,143

 
—

 
4,331,125

 
795,831

 
 
4,330,437

 
5,126,268

 
 
2,927,317

 
1974
 
5 - 40
5 Country View Road
Malvern, PA
 
—


785,168

 
4,678,632

 
226,536

 
786,235

 
 
4,904,101

 
5,690,336

 
 
2,231,504

 
1985
 
5 - 40
5 Great Valley Parkway
Malvern, PA
 
—


684,200

 
6,181,661

 
1,652,942

 
684,200

 
 
7,834,603

 
8,518,803

 
 
3,356,876

 
1983
 
5 - 40
50 Morehall Road
Malvern, PA
 
—


849,576

 
—

 
13,104,302

 
1,337,076

 
 
12,616,802

 
13,953,878

 
 
6,568,093

 
1997
 
5 - 40
50 Valley Stream Parkway
Malvern, PA
 
—


323,971

 
—

 
2,434,613

 
323,792

 
 
2,434,792

 
2,758,584

 
 
1,538,462

 
1987
 
5 - 40

106


LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2013
 
 
 Accumulated Depreciation 12/31/2013
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
500 Chesterfield Parkway
Malvern, PA
 
—


472,364

 
—

 
3,156,878

 
756,847

 
 
2,872,395

 
3,629,242

 
 
1,675,028

 
1988
 
5 - 40
508 Lapp Road
Malvern, PA
 
—


331,392

 
—

 
1,713,394

 
332,216

 
 
1,712,570

 
2,044,786

 
 
1,248,445

 
1984
 
5 - 40
510 Lapp Road
Malvern, PA
 
—


356,950

 
—

 
926,587

 
357,751

 
 
925,786

 
1,283,537

 
 
723,943

 
1983
 
5 - 40
55 Valley Stream Parkway
Malvern, PA
 
—


215,005

 
—

 
4,094,361

 
215,818

 
 
4,093,548

 
4,309,366

 
 
2,874,838

 
1983
 
5 - 40
60 Morehall Road
Malvern, PA
 
—


865,424

 
9,285,000

 
5,182,805

 
884,974

 
 
14,448,255

 
15,333,229

 
 
9,061,777

 
1989
 
5 - 40
600 Chesterfield Parkway
Malvern, PA
 
—


2,013,750

 
—

 
9,074,858

 
2,784,282

 
 
8,304,326

 
11,088,608

 
 
3,957,954

 
1999
 
5 - 40
65 Valley Stream Parkway
Malvern, PA
 
—


381,544

 
—

 
6,785,626

 
382,361

 
 
6,784,809

 
7,167,170

 
 
4,999,023

 
1983
 
5 - 40
7 Great Valley Parkway
Malvern, PA
 
—


176,435

 
—

 
6,593,330

 
177,317

 
 
6,592,448

 
6,769,765

 
 
3,104,195

 
1985
 
5 - 40
700 Chesterfield Parkway
Malvern, PA
 
—


2,013,750

 
—

 
8,829,877

 
2,771,540

 
 
8,072,087

 
10,843,627

 
 
3,926,051

 
1999
 
5 - 40
75 Great Valley Parkway
Malvern, PA
 
—


143,074

 
—

 
618,372

 
143,811

 
 
617,635

 
761,446

 
 
505,537

 
1977
 
5 - 40
77-123 Great Valley Parkway
Malvern, PA
 
—


887,664

 
—

 
5,232,375

 
888,359

 
 
5,231,680

 
6,120,039

 
 
3,789,228

 
1978
 
5 - 40
1169 Canton Rd
Marietta, GA
 
—

*
1,232,219

 
17,897,326

 
435,643

 
1,232,219

 
 
18,332,969

 
19,565,188

 
 
130,432

 
2013
 
5 - 40
65 Brookfield Oaks Drive
Mauldin, SC
 
—


557,174

 
—

 
2,842,439

 
506,318

 
 
2,893,295

 
3,399,613

 
 
603,024

 
2004
 
5 - 40
75 Brookfield Oaks Drive
Mauldin, SC
 
—


419,731

 
—

 
2,332,292

 
430,909

 
 
2,321,114

 
2,752,023

 
 
565,611

 
2003
 
5 - 40
126-132 Liberty Industrial Pkw
McDonough, GA
 
—


600,666

 
4,184,131

 
480,533

 
600,666

 
 
4,664,663

 
5,265,329

 
 
72,925

 
2013
 
5 - 40
95-115 Liberty Industrial Pkwy
McDonough, GA
 
—


660,420

 
4,785,127

 
526,335

 
660,420

 
 
5,311,462

 
5,971,882

 
 
61,944

 
2013
 
5 - 40
11401 NW 134th Street
Medley, FL
 
—

*
5,558,619

 
17,678,237

 
730,681

 
5,558,619

 
 
18,408,918

 
23,967,537

 
 
176,279

 
2013
 
5 - 40
3824-3960 Crowfarn Drive
Memphis, TN
 
—


291,223

 
1,044,953

 
74,204

 
291,223

 
 
1,119,156

 
1,410,379

 
 
23,364

 
2013
 
5 - 40
4700 Nathan Lane North
Minneapolis, MN
 
—


1,501,308

 
8,446,083

 
13,720,236

 
1,501,308

 
 
22,166,319

 
23,667,627

 
 
4,819,927

 
1996
 
5 - 40
12501 & 12701 Whitewater Drive
Minnetonka, MN
 
—


2,175,209

 
3,948,085

 
8,574,579

 
2,177,953

 
 
12,519,920

 
14,697,873

 
 
3,604,849

 
1986
 
5 - 40
12800 Whitewater Drive
Minnetonka, MN
 
—


1,273,600

 
3,158,737

 
1,082,966

 
1,273,731

 
 
4,241,571

 
5,515,302

 
 
240,525

 
2011
 
5 - 40
12900 Whitewater Drive
Minnetonka, MN
 
—


1,236,560

 
2,762,325

 
1,023,214

 
1,236,687

 
 
3,785,412

 
5,022,099

 
 
212,508

 
2011
 
5 - 40
5400-5500 Feltl Road
Minnetonka, MN
 
—


883,895

 
7,983,345

 
2,466,053

 
883,895

 
 
10,449,398

 
11,333,293

 
 
4,538,606

 
1985
 
5 - 40
6000 Clearwater Drive
Minnetonka, MN
 
—


985,016

 
2,091,371

 
2,503,007

 
985,117

 
 
4,594,277

 
5,579,394

 
 
253,018

 
2011
 
5 - 40
456 International Parkway
Minooka, IL
 
—


3,862,683

 
14,357,981

 
3,540

 
3,862,683

 
 
14,361,521

 
18,224,204

 
 
1,095,591

 
2012
 
5 - 40
3100 SW 145th Avenue
Miramar, FL
 
—


6,204,407

 
—

 
16,706,567

 
6,265,000

 
 
16,645,974

 
22,910,974

 
 
2,182,874

 
2007
 
5 - 40
3350 SW 148th Avenue
Miramar, FL
 
—


2,960,511

 
—

 
18,332,548

 
2,980,689

 
 
18,312,370

 
21,293,059

 
 
7,221,373

 
2000
 
5 - 40

107

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2013
 
 
 Accumulated Depreciation 12/31/2013
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3400 Lakeside Drive
Miramar, FL
 
—


2,022,153

 
11,345,881

 
2,005,331

 
2,022,153

 
 
13,351,212

 
15,373,365

 
 
5,350,136

 
1990
 
5 - 40
3450 Lakeside Drive
Miramar, FL
 
—


2,022,152

 
11,357,143

 
2,802,516

 
2,022,152

 
 
14,159,659

 
16,181,811

 
 
6,059,965

 
1990
 
5 - 40
21 S Middlesex Avenue
Monroe Township, NJ
 
—

*
2,097,170

 
9,715,401

 
535,119

 
2,097,170

 
 
10,250,520

 
12,347,690

 
 
92,629

 
2013
 
5 - 40
4 S Middlesex Avenue
Monroe Township, NJ
 
—

*
2,263,153

 
10,261,759

 
594,026

 
2,263,153

 
 
10,855,785

 
13,118,938

 
 
88,852

 
2013
 
5 - 40
323 Park Knoll Drive
Morrisville, NC
 
2,614,609


1,071,600

 
4,397,807

 
1,022,728

 
1,071,600

 
 
5,420,535

 
6,492,135

 
 
683,726

 
2010
 
5 - 40
324 Park Knoll Drive
Morrisville, NC
 
—

*
1,449,092

 
4,424,932

 
305,792

 
1,449,450

 
 
4,730,366

 
6,179,816

 
 
850,539

 
2007
 
5 - 40
619 Distribution Drive
Morrisville, NC
 
—

*
1,031,430

 
5,655,167

 
341,601

 
1,031,685

 
 
5,996,513

 
7,028,198

 
 
1,075,863

 
2007
 
5 - 40
627 Distribution Drive
Morrisville, NC
 
—

*
1,061,370

 
5,152,110

 
600,687

 
1,061,632

 
 
5,752,535

 
6,814,167

 
 
953,626

 
2007
 
5 - 40
701 Distribution Drive
Morrisville, NC
 
—

*
1,300,889

 
5,313,226

 
207,184

 
1,301,211

 
 
5,520,088

 
6,821,299

 
 
982,101

 
2007
 
5 - 40
220 Lake Drive
Newark, DE
 
—


566,650

 
6,099,337

 
361,819

 
566,650

 
 
6,461,156

 
7,027,806

 
 
80,822

 
2013
 
5 - 40
222 Lake Drive
Newark, DE
 
—


1,045,238

 
1,975,553

 
149,013

 
1,045,238

 
 
2,124,565

 
3,169,803

 
 
29,443

 
2013
 
5 - 40
1879 Lamont Avenue
Odenton, MD
 
—


1,976,000

 
8,099,579

 
2,469,160

 
2,011,030

 
 
10,533,709

 
12,544,739

 
 
2,815,153

 
2004
 
5 - 40
350 Winmeyer Avenue
Odenton, MD
 
—


1,778,400

 
7,289,165

 
2,069,298

 
1,809,927

 
 
9,326,936

 
11,136,863

 
 
2,295,694

 
2004
 
5 - 40
4000 E Airport Drive
Ontario, CA
 
—


2,686,533

 
10,125,772

 
347,718

 
2,686,533

 
 
10,473,490

 
13,160,023

 
 
81,663

 
2013
 
5 - 40
1000 Gills Drive
Orlando, FL
 
—


415,906

 
—

 
2,713,878

 
435,400

 
 
2,694,384

 
3,129,784

 
 
408,256

 
2006
 
5 - 40
10003 Satellite Boulevard
Orlando, FL
 
—


680,312

 
2,120,754

 
1,367,678

 
680,312

 
 
3,488,432

 
4,168,744

 
 
1,060,925

 
2003
 
5 - 40
10511 & 10611 Satellite Boulevard
Orlando, FL
 
—


517,554

 
2,568,186

 
443,582

 
522,991

 
 
3,006,331

 
3,529,322

 
 
1,294,479

 
1985
 
5 - 40
10771 Palm Bay Drive
Orlando, FL
 
—


664,605

 

 
2,363,613

 
685,383

 
 
2,342,835

 
3,028,218

 
 
709,672

 
2001
 
5 - 40
1090 Gills Drive
Orlando, FL
 
—


878,320

 
2,558,833

 
1,401,321

 
878,320

 
 
3,960,154

 
4,838,474

 
 
1,039,531

 
2003
 
5 - 40
1400-1440 Central Florida Parkway
Orlando, FL
 
—


518,043

 
2,561,938

 
972,059

 
518,043

 
 
3,533,997

 
4,052,040

 
 
1,415,579

 
1962
 
5 - 40
1902 Cypress Lake Drive
Orlando, FL
 
—


523,512

 
3,191,790

 
1,501,108

 
538,512

 
 
4,677,898

 
5,216,410

 
 
1,811,632

 
1989
 
5 - 40
1950 Summit Park Drive
Orlando, FL
 
—


2,573,700

 
17,478,646

 
3,366,242

 
2,583,667

 
 
20,834,921

 
23,418,588

 
 
5,598,959

 
2005
 
5 - 40
1958 Summit Park Drive
Orlando, FL
 
—


2,573,961

 
11,206,937

 
10,302,131

 
2,583,216

 
 
21,499,813

 
24,083,029

 
 
4,753,999

 
2005
 
5 - 40
2000 Park Oaks Avenue
Orlando, FL
 
—

*
913,201

 
6,818,610

 
230,114

 
913,201

 
 
7,048,724

 
7,961,925

 
 
58,079

 
2013
 
5 - 40
201 Summit Park Drive
Orlando, FL
 
—


4,435,921

 
—

 
38,416,263

 
4,510,990

 
 
38,341,194

 
42,852,184

 
 
4,114,956

 
2008
 
5 - 40
2202 Taft-Vineland Road
Orlando, FL
 
—


1,283,713

 
—

 
5,350,222

 
1,283,713

 
 
5,350,222

 
6,633,935

 
 
2,340,664

 
2004
 
5 - 40
2212 Taft Vineland Road
Orlando, FL
 
—


838,853

 
—

 
4,084,540

 
767,953

 
 
4,155,440

 
4,923,393

 
 
954,226

 
2006
 
5 - 40


108


LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2013
 
 
 Accumulated Depreciation 12/31/2013
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2256 Taft-Vineland Road
Orlando, FL
 
—


467,296

 
—

 
2,494,667

 
825,673

 
 
2,136,290

 
2,961,963

 
 
577,460

 
2005
 
5 - 40
2351 Investors Row
Orlando, FL
 
—


2,261,924

 
7,496,249

 
2,521,108

 
2,271,785

 
 
10,007,496

 
12,279,281

 
 
2,442,643

 
2004
 
5 - 40
2400 South Lake Orange Drive
Orlando, FL
 
—


385,964

 
—

 
3,215,820

 
642,427

 
 
2,959,357

 
3,601,784

 
 
920,539

 
2001
 
5 - 40
2412 Sand Lake Road
Orlando, FL
 
—


1,236,819

 
3,243,314

 
1,080,993

 
1,244,667

 
 
4,316,459

 
5,561,126

 
 
102,027

 
2012
 
5 - 40
2416 Lake Orange Drive
Orlando, FL
 
—


535,964

 

 
2,707,004

 
704,800

 
 
2,538,168

 
3,242,968

 
 
836,397

 
2002
 
5 - 40
6200 Lee Vista Boulevard
Orlando, FL
 
—


1,435,301

 
6,174,642

 
638,970

 
1,435,301

 
 
6,813,612

 
8,248,913

 
 
1,295,111

 
2006
 
5 - 40
6501 Lee Vista Boulevard
Orlando, FL
 
—


903,701

 

 
5,660,760

 
925,671

 
 
5,638,790

 
6,564,461

 
 
1,742,041

 
2001
 
5 - 40
6918 Presidents Drive
Orlando, FL
 
—


872,550

 
2,526,043

 
8,631

 
872,550

 
 
2,534,674

 
3,407,224

 
 
113,853

 
2012
 
5 - 40
6923 Lee Vista Boulevard
Orlando, FL
 
—


903,701

 
—

 
3,790,427

 
830,953

 
 
3,863,175

 
4,694,128

 
 
871,059

 
2006
 
5 - 40
7022 TPC Drive
Orlando, FL
 
—


1,443,510

 
6,775,194

 
538,223

 
1,457,286

 
 
7,299,642

 
8,756,928

 
 
1,442,201

 
2006
 
5 - 40
7100 TPC Drive
Orlando, FL
 
—


1,431,489

 
8,002,539

 
793,222

 
1,445,807

 
 
8,781,443

 
10,227,250

 
 
1,640,546

 
2006
 
5 - 40
7101 TPC Drive
Orlando, FL
 
—


1,553,537

 
5,702,243

 
329,099

 
1,570,863

 
 
6,014,016

 
7,584,879

 
 
1,154,156

 
2006
 
5 - 40
7315 Kingspointe Parkway
Orlando, FL
 
—


1,931,697

 
6,388,203

 
2,052,761

 
1,932,004

 
 
8,440,657

 
10,372,661

 
 
2,810,050

 
2004
 
5 - 40
8201 Chancellor Drive
Orlando, FL
 
—


4,295,972

 
15,564,905

 
2,994,969

 
4,295,972

 
 
18,559,875

 
22,855,847

 
 
3,178,833

 
2010
 
5 - 40
851 Gills Drive
Orlando, FL
 
—


332,992

 
—

 
2,861,135

 
373,500

 
 
2,820,627

 
3,194,127

 
 
460,129

 
2006
 
5 - 40
950 Gills Drive
Orlando, FL
 
—


443,989

 
—

 
2,907,134

 
464,800

 
 
2,886,323

 
3,351,123

 
 
411,719

 
2006
 
5 - 40
9550 Satellite Boulevard
Orlando, FL
 
—


574,831

 
—

 
2,507,801

 
587,319

 
 
2,495,313

 
3,082,632

 
 
1,044,792

 
1999
 
5 - 40
9600 Satellite Boulevard
Orlando, FL
 
—


252,850

 
1,297,923

 
102,860

 
252,850

 
 
1,400,783

 
1,653,633

 
 
549,904

 
1989
 
5 - 40
9700 Satellite Boulevard
Orlando, FL
 
—


405,362

 
1,146,546

 
298,443

 
405,362

 
 
1,444,989

 
1,850,351

 
 
550,617

 
1989
 
5 - 40
13 Centennial Drive
Peabody, MA
 
—


1,203,464

 
7,752,384

 
489,439

 
1,203,464

 
 
8,241,823

 
9,445,287

 
 
111,551

 
2013
 
5 - 40
1 Crescent Drive
Philadelphia, PA
 
—


567,280

 
—

 
15,417,229

 
347,892

 
 
15,636,617

 
15,984,509

 
 
3,015,280

 
2004
 
5 - 40
12285 McNulty Road
Philadelphia, PA
 
—


532,748

 
2,126,150

 
152,538

 
532,748

 
 
2,278,689

 
2,811,437

 
 
35,995

 
2013
 
5 - 40
150 Rouse Boulevard
Philadelphia, PA
 
—


567,531

 
—

 
13,999,552

 
569,349

 
 
13,997,734

 
14,567,083

 
 
496,978

 
2011
 
5 - 40
3 Crescent Drive
Philadelphia, PA
 
—


214,726

 
—

 
22,906,987

 
417,823

 
 
22,703,890

 
23,121,713

 
 
2,484,841

 
2008
 
5 - 40
4000 S 26th Street
Philadelphia, PA
 
—


51,784

 
—

 
7,097,969

 
616,467

 
 
6,533,286

 
7,149,753

 
 
228,285

 
2011
 
5 - 40
4050 S 26th Street
Philadelphia, PA
 
—


46,301

 
—

 
7,018,037

 
616,670

 
 
6,447,668

 
7,064,338

 
 
280,999

 
2011
 
5 - 40
4300 South 26th Street
Philadelphia, PA
 
—


402,673

 
—

 
34,872,598

 
413,030

 
 
34,862,241

 
35,275,271

 
 
3,880,730

 
2008
 
5 - 40

109

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2013
 
 
 Accumulated Depreciation 12/31/2013
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4751 League Island Boulevard
Philadelphia, PA
 
—


992,965

 
331,924

 
7,223,254

 
1,022,081

 
 
7,526,062

 
8,548,143

 
 
2,041,669

 
2003
 
5 - 40
4775 League Island Boulevard
Philadelphia, PA
 
—


891,892

 
—

 
4,623,172

 
366,982

 
 
5,148,082

 
5,515,064

 
 
810,065

 
2006
 
5 - 40
5 Crescent Drive
Philadelphia, PA
 
—


1,765,341

 
—

 
74,982,228

 
1,897,041

 
 
74,850,528

 
76,747,569

 
 
1,827,449

 
2011
 
5 - 40
8th & Walnut Streets
Philadelphia, PA
 
44,463,003


734,275

 
—

 
45,224,560

 
4,349,661

 
 
41,609,174

 
45,958,835

 
 
341,951

 
2011
 
5 - 40
2626 South 7th Street
Phoenix, AZ
 
—


2,519,510

 
3,798,560

 
3,286,737

 
2,519,510

 
 
7,085,297

 
9,604,807

 
 
228,380

 
2012
 
5 - 40
4207 E. Cotton Center Boulevard
Phoenix, AZ
 
—


1,409,908

 
4,680,808

 
1,100,202

 
1,410,248

 
 
5,780,670

 
7,190,918

 
 
1,401,486

 
2007
 
5 - 40
4217 E. Cotton Center Boulevard
Phoenix, AZ
 
—


6,920,980

 
10,045,599

 
3,757,067

 
6,690,321

 
 
14,033,325

 
20,723,646

 
 
2,988,108

 
2007
 
5 - 40
4303 E. Cotton Center Boulvard
Phoenix, AZ
 
—

*
2,619,964

 
9,675,711

 
43,651

 
2,619,964

 
 
9,719,362

 
12,339,326

 
 
1,883,829

 
2007
 
5 - 40
4313 E. Cotton Center Boulevard
Phoenix, AZ
 
—

*
3,895,539

 
16,724,283

 
1,467,793

 
3,895,539

 
 
18,192,076

 
22,087,615

 
 
3,801,214

 
2007
 
5 - 40
4405 E. Cotton Center Boulevard
Phoenix, AZ
 
—

*
2,646,318

 
9,697,439

 
825,620

 
2,646,318

 
 
10,523,059

 
13,169,377

 
 
1,931,623

 
2007
 
5 - 40
4410 E. Cotton Center Boulevard
Phoenix, AZ
 
—


4,758,484

 
10,559,563

 
5,608,207

 
4,765,172

 
 
16,161,082

 
20,926,254

 
 
3,290,039

 
2007
 
5 - 40
4415 E. Cotton Center Boulevard
Phoenix, AZ
 
—

*
1,749,957

 
3,667,748

 
465,844

 
1,749,957

 
 
4,133,592

 
5,883,549

 
 
786,739

 
2007
 
5 - 40
4425 E. Cotton Center Boulvard
Phoenix, AZ
 
—

*
7,318,457

 
24,549,401

 
(473,426
)
 
7,318,457

 
 
24,075,975

 
31,394,432

 
 
3,927,918

 
2007
 
5 - 40
4435 E. Cotton Center Boulevard
Phoenix, AZ
 
—


1,910,584

 
1,954,020

 
2,166,648

 
1,911,045

 
 
4,120,208

 
6,031,253

 
 
1,040,886

 
2007
 
5 - 40
4550 South 44th Street
Phoenix, AZ
 
—


5,380,972

 
—

 
9,257,593

 
6,391,283

 
 
8,247,282

 
14,638,565

 
 
2,049,181

 
2007
 
5 - 40
4610 South 44th Street
Phoenix, AZ
 
—


6,539,310

 
—

 
10,331,533

 
6,827,288

 
 
10,043,555

 
16,870,843

 
 
1,663,976

 
2007
 
5 - 40
4750 South 44th Place
Phoenix, AZ
 
—


3,756,307

 
8,336,400

 
4,190,610

 
3,761,587

 
 
12,521,730

 
16,283,317

 
 
2,136,090

 
2007
 
5 - 40
563 South 63rd Avenue
Phoenix, AZ
 
—


5,523,427

 
14,581,705

 
7,876,524

 
5,636,070

 
 
22,345,586

 
27,981,656

 
 
281,487

 
2013
 
5 - 40
9801 South 51st Street
Phoenix, AZ
 
—


2,225,839

 
2,059,235

 
1,063,738

 
2,225,839

 
 
3,122,973

 
5,348,812

 
 
267,643

 
2012
 
5 - 40
Cotton Center Building 18
Phoenix, AZ
 
—


11,222,938

 
—

 
15,254,730

 
11,318,033

 
 
15,159,635

 
26,477,668

 
 
309,257

 
2012
 
5 - 40
1000 Klein Road
Plano, TX
 
—


706,660

 
5,894,330

 
248,060

 
706,660

 
 
6,142,391

 
6,849,051

 
 
47,536

 
2013
 
5 - 40
1901 10th Street
Plano, TX
 
—

*
555,168

 
6,401,789

 
336,023

 
555,168

 
 
6,737,812

 
7,292,980

 
 
57,231

 
2013
 
5 - 40
1909 10th Street
Plano, TX
 
—

*
551,706

 
5,797,440

 
262,150

 
551,706

 
 
6,059,590

 
6,611,296

 
 
51,828

 
2013
 
5 - 40
3605 East Plano Parkway
Plano, TX
 
—


1,047,996

 
9,218,748

 
355,589

 
1,047,996

 
 
9,574,336

 
10,622,332

 
 
76,223

 
2013
 
5 - 40
3701 East Plano Parkway
Plano, TX
 
—


877,564

 
7,460,686

 
332,221

 
877,564

 
 
7,792,906

 
8,670,470

 
 
63,480

 
2013
 
5 - 40
800 Klein Road
Plano, TX
 
—


580,456

 
5,681,283

 
299,393

 
580,456

 
 
5,980,676

 
6,561,132

 
 
53,087

 
2013
 
5 - 40
900 Klein Road
Plano, TX
 
—


723,534

 
6,004,923

 
349,690

 
723,534

 
 
6,354,613

 
7,078,147

 
 
53,655

 
2013
 
5 - 40
9801 80th Avenue
Pleasant Prairie, WI
 
—


1,692,077

 
7,934,794

 
337,494

 
1,689,726

 
 
8,274,639

 
9,964,365

 
 
3,145,391

 
1994
 
5 - 40
2250 Hickory Road
Plymouth Meeting, PA
 
—


1,015,851

 
9,175,555

 
3,070,214

 
1,024,040

 
 
12,237,581

 
13,261,621

 
 
5,510,733

 
1985
 
5 - 40

110

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2013
 
 
 Accumulated Depreciation 12/31/2013
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14630-14650 28th Avenue North
Plymouth, MN
 
—


198,205

 
1,793,422

 
733,275

 
198,205

 
 
2,526,696

 
2,724,901

 
 
1,167,527

 
1978
 
5 - 40
2920 Northwest Boulevard
Plymouth, MN
 
—


392,026

 
3,433,678

 
434,126

 
384,235

 
 
3,875,595

 
4,259,830

 
 
1,549,911

 
1997
 
5 - 40
5905 Trenton Lane North
Plymouth, MN
 
—


1,616,360

 
4,487,462

 
388,509

 
1,616,360

 
 
4,875,970

 
6,492,330

 
 
45,381

 
2013
 
5 - 40
6055 Nathan Lane North
Plymouth, MN
 
—

*
1,327,017

 
4,527,404

 
319,429

 
1,327,017

 
 
4,846,833

 
6,173,850

 
 
43,172

 
2013
 
5 - 40
1400 SW 6th Court
Pompano Beach, FL
 
—


1,157,049

 
4,620,956

 
1,294,899

 
1,157,049

 
 
5,915,855

 
7,072,904

 
 
2,116,446

 
1986
 
5 - 40
1405 SW 6th Court
Pompano Beach, FL
 
—


392,138

 
1,565,787

 
444,436

 
392,138

 
 
2,010,224

 
2,402,362

 
 
868,485

 
1985
 
5 - 40
1500 SW 5th Court
Pompano Beach, FL
 
—


972,232

 
3,892,085

 
503,712

 
972,232

 
 
4,395,797

 
5,368,029

 
 
1,730,940

 
1957
 
5 - 40
1501 SW 5th Court
Pompano Beach, FL
 
—


203,247

 
811,093

 
342,376

 
203,247

 
 
1,153,470

 
1,356,717

 
 
408,458

 
1990
 
5 - 40
1601 SW 5th Court
Pompano Beach, FL
 
—


203,247

 
811,093

 
78,411

 
203,247

 
 
889,505

 
1,092,752

 
 
345,590

 
1990
 
5 - 40
1651 SW 5th Court
Pompano Beach, FL
 
—


203,247

 
811,093

 
183,052

 
203,247

 
 
994,146

 
1,197,393

 
 
364,633

 
1990
 
5 - 40
2201-2215 NW 30th Place
Pompano Beach, FL
 
—


1,120,328

 
3,427,358

 
96,028

 
1,120,328

 
 
3,523,386

 
4,643,714

 
 
30,893

 
2013
 
5 - 40
2250-2270 NW 30th Place
Pompano Beach, FL
 
—


993,015

 
2,423,174

 
123,273

 
993,015

 
 
2,546,447

 
3,539,462

 
 
21,532

 
2013
 
5 - 40
2280-2300 NW 30th Place
Pompano Beach, FL
 
—


906,947

 
2,157,802

 
156,054

 
906,947

 
 
2,313,857

 
3,220,804

 
 
17,823

 
2013
 
5 - 40
2301-2329 NW 30th Place
Pompano Beach, FL
 
—


1,268,707

 
3,079,811

 
109,158

 
1,268,707

 
 
3,188,969

 
4,457,676

 
 
28,692

 
2013
 
5 - 40
3000 NW 25th Avenue
Pompano Beach, FL
 
—


1,087,554

 
2,897,117

 
107,430

 
1,087,554

 
 
3,004,547

 
4,092,101

 
 
28,291

 
2013
 
5 - 40
3001-3037 NW 25th Avenue
Pompano Beach, FL
 
—


1,548,542

 
3,512,041

 
182,217

 
1,548,542

 
 
3,694,259

 
5,242,801

 
 
34,966

 
2013
 
5 - 40
3012-3050 NW 25th Avenue
Pompano Beach, FL
 
—


1,112,781

 
2,763,862

 
209,767

 
1,112,781

 
 
2,973,628

 
4,086,409

 
 
24,616

 
2013
 
5 - 40
595 SW 13th Terrace
Pompano Beach, FL
 
—


359,933

 
1,437,116

 
624,145

 
359,933

 
 
2,061,261

 
2,421,194

 
 
840,297

 
1984
 
5 - 40
601 SW 13th Terrace
Pompano Beach, FL
 
—


164,413

 
655,933

 
279,326

 
164,413

 
 
935,259

 
1,099,672

 
 
434,373

 
1984
 
5 - 40
605 SW 16th Terrace
Pompano Beach, FL
 
—


310,778

 
1,238,324

 
186,248

 
310,178

 
 
1,425,172

 
1,735,350

 
 
663,040

 
1965
 
5 - 40
8720 Rochester Avenue
Ranco Cucamonga, CA
 
—


1,304,547

 
3,371,959

 
104,950

 
1,304,547

 
 
3,476,909

 
4,781,456

 
 
25,864

 
2013
 
5 - 40
301 Hill Carter Parkway
Richmond, VA
 
—


659,456

 
4,836,010

 
159,898

 
659,456

 
 
4,995,908

 
5,655,364

 
 
2,377,111

 
1989
 
5 - 40
4101-4127 Carolina Avenue
Richmond, VA
 
—


310,854

 
2,279,597

 
1,093,550

 
310,854

 
 
3,373,147

 
3,684,001

 
 
1,518,335

 
1973
 
5 - 40
4201-4261 Carolina Avenue
Richmond, VA
 
—


693,203

 
5,083,493

 
1,908,968

 
693,203

 
 
6,992,461

 
7,685,664

 
 
3,263,202

 
1975
 
5 - 40
4263-4299 Carolina Avenue
Richmond, VA
 
—


256,203

 
2,549,649

 
2,159,827

 
256,203

 
 
4,709,476

 
4,965,679

 
 
2,057,224

 
1976
 
5 - 40
4263F-N. Carolina Avenue
Richmond, VA
 
—


91,476

 
—

 
1,760,194

 
91,599

 
 
1,760,071

 
1,851,670

 
 
789,708

 
1975
 
5 - 40
4301-4335 Carolina Avenue
Richmond, VA
 
—


223,696

 
1,640,435

 
2,470,110

 
223,696

 
 
4,110,545

 
4,334,241

 
 
1,549,168

 
1978
 
5 - 40
4337-4379 Carolina Avenue
Richmond, VA
 
—


325,303

 
2,385,557

 
1,293,892

 
325,303

 
 
3,679,449

 
4,004,752

 
 
1,744,383

 
1979
 
5 - 40
4401-4445 Carolina Avenue
Richmond, VA
 
—


615,038

 
4,510,272

 
443,077

 
615,038

 
 
4,953,349

 
5,568,387

 
 
2,314,990

 
1988
 
5 - 40

111


LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2013
 
 
 Accumulated Depreciation 12/31/2013
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4447-4491 Carolina Avenue
Richmond, VA
 
—


454,056

 
2,729,742

 
364,252

 
454,056

 
 
3,093,994

 
3,548,050

 
 
1,580,731

 
1987

 
5 - 40
4501-4549 Carolina Avenue
Richmond, VA
 
—


486,166

 
3,565,211

 
553,422

 
486,166

 
 
4,118,633

 
4,604,799

 
 
1,882,892

 
1981

 
5 - 40
4551-4593 Carolina Avenue
Richmond, VA
 
—


474,360

 
3,478,646

 
944,590

 
474,360

 
 
4,423,236

 
4,897,596

 
 
2,088,072

 
1982

 
5 - 40
4601-4643 Carolina Avenue
Richmond, VA
 
—


652,455

 
4,784,675

 
769,136

 
652,455

 
 
5,553,811

 
6,206,266

 
 
2,805,560

 
1985

 
5 - 40
4645-4683 Carolina Avenue
Richmond, VA
 
—


404,616

 
2,967,187

 
541,284

 
404,616

 
 
3,508,471

 
3,913,087

 
 
1,624,533

 
1985

 
5 - 40
4717-4729 Eubank Road
Richmond, VA
 
—


449,447

 
3,294,697

 
2,212,870

 
452,263

 
 
5,504,751

 
5,957,014

 
 
2,275,160

 
1978

 
5 - 40
510 Eastpark Court
Richmond, VA
 
—


261,961

 
2,110,874

 
470,589

 
262,210

 
 
2,581,214

 
2,843,424

 
 
1,206,531

 
1989

 
5 - 40
520 Eastpark Court
Richmond, VA
 
—


486,118

 
4,083,582

 
698,931

 
486,598

 
 
4,782,033

 
5,268,631

 
 
1,931,125

 
1989

 
5 - 40
530 Eastpark Court
Richmond, VA
 
—


266,883

 
—

 
2,582,885

 
334,772

 
 
2,514,996

 
2,849,768

 
 
994,877

 
1999

 
5 - 40
540 Eastpark Court
Richmond, VA
 
—


742,300

 
—

 
5,415,233

 
1,066,839

 
 
5,090,694

 
6,157,533

 
 
751,308

 
2007

 
5 - 40
5600-5626 Eastport Boulevard
Richmond, VA
 
—


489,941

 
3,592,900

 
536,950

 
489,941

 
 
4,129,850

 
4,619,791

 
 
1,787,664

 
1989

 
5 - 40
5601-5659 Eastport Boulevard
Richmond, VA
 
—


705,660

 
—

 
4,769,910

 
720,100

 
 
4,755,470

 
5,475,570

 
 
2,165,001

 
1996

 
5 - 40
5650-5674 Eastport Boulevard
Richmond, VA
 
—


644,384

 
4,025,480

 
215,069

 
644,384

 
 
4,240,549

 
4,884,933

 
 
1,998,249

 
1990

 
5 - 40
5700 Eastport Boulevard
Richmond, VA
 
—


408,729

 
2,697,348

 
677,432

 
408,729

 
 
3,374,780

 
3,783,509

 
 
1,789,346

 
1990

 
5 - 40
5701-5799 Eastport Boulevard
Richmond, VA
 
—


694,644

 
—

 
5,612,200

 
700,503

 
 
5,606,341

 
6,306,844

 
 
2,084,265

 
1998

 
5 - 40
5900 Eastport Boulevard
Richmond, VA
 
—


676,661

 
—

 
4,974,338

 
687,898

 
 
4,963,101

 
5,650,999

 
 
2,222,816

 
1997

 
5 - 40
6000 Eastport Blvd
Richmond, VA
 
—


872,901

 
—

 
7,486,258

 
901,666

 
 
7,457,493

 
8,359,159

 
 
1,083,392

 
1997

 
5 - 40
2020 US Highway 301 South
Riverview, FL
 
—


1,233,639

 
13,608,485

 
109,899

 
1,233,800

 
 
13,718,223

 
14,952,023

 
 
2,769,053

 
2006

 
5 - 40
6530 Judge Adams Road
Rock Creek, NC
 
—


305,821

 
—

 
4,967,815

 
335,061

 
 
4,938,575

 
5,273,636

 
 
1,812,271

 
1999

 
5 - 40
6532 Judge Adams Road
Rock Creek, NC
 
—


354,903

 
—

 
4,016,834

 
399,988

 
 
3,971,749

 
4,371,737

 
 
1,626,000

 
1997

 
5 - 40
13098 George Weber Drive
Rogers, MN
 
—


895,811

 
6,004,189

 
645,566

 
895,811

 
 
6,649,755

 
7,545,566

 
 
564,459

 
2011

 
5 - 40
1070 Windham Parkway
Romeoville, IL
 
—


8,672,143

 
24,144,864

 
—

 
8,672,143

 
 
24,144,864

 
32,817,007

 
 
840,005

 
2012

 
5 - 40
1550 Central Avenue
Roselle, IL
 
—

*
2,884,492

 
10,439,793

 
484,562

 
2,884,492

 
 
10,924,355

 
13,808,847

 
 
96,728

 
2013

 
5 - 40
1135 Aviation Place
San Fernando, CA
 
—


3,035,034

 
2,844,962

 
135,218

 
3,035,034

 
 
2,980,180

 
6,015,214

 
 
22,470

 
2013

 
5 - 40
8715 Bollman Place
Savage, MD
 
—


1,263,237

 
2,633,210

 
99,509

 
1,263,237

 
 
2,732,719

 
3,995,956

 
 
21,816

 
2013

 
5 - 40
8501 East Raintree Drive
Scottsdale, AZ
 
—


4,076,412

 
—

 
27,621,159

 
4,115,137

 
 
27,582,434

 
31,697,571

 
 
7,042,077

 
2005

 
5 - 40
1150 Gateway Drive
Shakopee, MN
 
—


1,126,865

 
5,684,178

 
—

 
1,126,865

 
 
5,684,178

 
6,811,043

 
 
164,890

 
2012

 
5 - 40
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

112

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2013
 
 
 Accumulated Depreciation 12/31/2013
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5555 12th Avenue East
Shakopee, MN
 
—


887,285

 
5,321,200

 
6,820

 
887,285

 
 
5,328,020

 
6,215,305

 
 
163,463

 
2012

 
5 - 40
1210 Champion Way
Sharonville, OH
 
—


1,337,271

 
6,135,118

 
489,270

 
1,337,271

 
 
6,624,389

 
7,961,660

 
 
112,936

 
2013

 
5 - 40
3990 Heritage Oak Court
Simi Valley, CA
 
—

*
1,964,140

 
10,667,267

 
345,689

 
1,964,140

 
 
11,012,956

 
12,977,096

 
 
79,863

 
2013

 
5 - 40
3654-3668 Swenson Avenue
St. Charles, IL
 
—


643,639

 
1,645,058

 
100,470

 
643,639

 
 
1,745,528

 
2,389,167

 
 
17,590

 
2013

 
5 - 40
3701 Illinois Ave
St. Charles, IL
 
—


672,500

 
1,288,924

 
117,765

 
672,500

 
 
1,406,689

 
2,079,189

 
 
14,779

 
2013

 
5 - 40
3950-3980 Swenson Avenue
St. Charles, IL
 
—


851,080

 
3,027,753

 
149,571

 
851,080

 
 
3,177,324

 
4,028,404

 
 
27,743

 
2013

 
5 - 40
1501 102nd Avenue North
St. Petersburg, FL
 
—

*
283,474

 
2,230,868

 
96,546

 
283,474

 
 
2,327,413

 
2,610,887

 
 
18,314

 
2013

 
5 - 40
1527 102nd Avenue North
St. Petersburg, FL
 
—

*
374,284

 
2,987,226

 
128,152

 
374,284

 
 
3,115,378

 
3,489,662

 
 
24,452

 
2013

 
5 - 40
1551 102nd Avenue North
St. Petersburg, FL
 
—

*
699,797

 
5,214,438

 
254,949

 
699,797

 
 
5,469,387

 
6,169,184

 
 
64,802

 
2013

 
5 - 40
6900 Harbour View Boulevard
Suffolk, VA
 
—


904,052

 
—

 
8,652,438

 
807,006

 
 
8,749,484

 
9,556,490

 
 
1,719,372

 
2006

 
5 - 40
6920 Harbour View Boulevard
Suffolk, VA
 
—


603,391

 
—

 
6,707,341

 
2,628,635

 
 
4,682,097

 
7,310,732

 
 
218,907

 
2005

 
5 - 40
6950 Harbour View Blvd
Suffolk, VA
 
—


929,844

 
—

 
6,485,717

 
794,848

 
 
6,620,713

 
7,415,561

 
 
1,337,252

 
2004

 
5 - 40
1516 Fryar Avenue
Sumner, WA
 
—


1,675,402

 
5,079,543

 
301,095

 
1,675,402

 
 
5,380,638

 
7,056,040

 
 
54,920

 
2013

 
5 - 40
1301 International Parkway
Sunrise, FL
 
—


5,100,162

 
24,219,956

 
7,381,868

 
5,100,791

 
 
31,601,195

 
36,701,986

 
 
5,568,038

 
2006

 
5 - 40
13621 NW 12th Street
Sunrise, FL
 
—


5,570,820

 
9,454,900

 
2,690,353

 
5,570,820

 
 
12,145,253

 
17,716,073

 
 
3,055,333

 
2008

 
5 - 40
13630 NW 8th Street
Sunrise, FL
 
—


659,797

 
2,596,275

 
540,787

 
659,825

 
 
3,137,033

 
3,796,858

 
 
1,145,342

 
1991

 
5 - 40
13650 NW 8th Street
Sunrise, FL
 
—


558,223

 
2,171,930

 
214,395

 
558,251

 
 
2,386,297

 
2,944,548

 
 
918,225

 
1991

 
5 - 40
100 Dartmouth Drive
Swedesboro, NJ
 
—


909,723

 
11,453,198

 
138,839

 
909,723

 
 
11,592,037

 
12,501,760

 
 
102,087

 
2013

 
5 - 40
100 Gloucester Court
Swedesboro, NJ
 
—


829,732

 
8,758,904

 
262,213

 
829,732

 
 
9,021,118

 
9,850,850

 
 
81,346

 
2013

 
5 - 40
111 Kelsey Lane
Tampa, FL
 
—


359,540

 
1,461,850

 
1,266,152

 
359,540

 
 
2,728,002

 
3,087,542

 
 
899,662

 
1990

 
5 - 40
131 Kelsey Lane
Tampa, FL
 
—


511,463

 
—

 
4,437,886

 
559,527

 
 
4,389,822

 
4,949,349

 
 
2,452,150

 
1,985

 
5 - 40
150-182 Kelsey Lane
Tampa, FL
 
—


403,541

 
—

 
5,260,899

 
1,181,609

 
 
4,482,831

 
5,664,440

 
 
625,275

 
2,006

 
5 - 40
200-34 Kelsey Lane
Tampa, FL
 
—


330,097

 
—

 
3,314,788

 
933,362

 
 
2,711,523

 
3,644,885

 
 
564,239

 
2,005

 
5 - 40
3102,3104,3110 Cherry Palm Drive
Tampa, FL
 
—


503,767

 
2,787,585

 
1,301,589

 
503,767

 
 
4,089,174

 
4,592,941

 
 
1,818,822

 
1,986

 
5 - 40
3401-3409 Cragmont Drive
Tampa, FL
 
—


556,952

 
3,849,236

 
5,141

 
556,952

 
 
3,854,377

 
4,411,329

 
 
104,522

 
2,012

 
5 - 40
3502 Roga Boulevard
Tampa, FL
 
—


201,600

 
1,263,131

 
21,392

 
201,600

 
 
1,284,523

 
1,486,123

 
 
35,575

 
2,012

 
5 - 40
3505 Cragmont Drive
Tampa, FL
 
—


936,336

 
7,155,520

 
1,313

 
936,336

 
 
7,156,833

 
8,093,169

 
 
212,052

 
2,012

 
5 - 40
3608 Queen Palm Drive
Tampa, FL
 
—


650,384

 
4,764,301

 
32,287

 
650,384

 
 
4,796,588

 
5,446,972

 
 
139,360

 
2,012

 
5 - 40
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


113

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2013
 
 
 Accumulated Depreciation 12/31/2013
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4502 Woodland Corporate Boulevard
Tampa, FL
 
—


1,035,422

 
—

 
3,472,386

 
1,071,535

 
 
3,436,273

 
4,507,808

 
 
1,216,693

 
1999
 
5 - 40
4503 Woodland Corporate Boulevard
Tampa, FL
 
—


619,913

 
—

 
2,876,500

 
619,913

 
 
2,876,500

 
3,496,413

 
 
973,291

 
2002
 
5 - 40
4505 Woodland Corporate Boulevard
Tampa, FL
 
—


516,594

 
—

 
2,443,438

 
716,594

 
 
2,243,438

 
2,960,032

 
 
789,237

 
2002
 
5 - 40
4508 Woodland Corporate Boulevard
Tampa, FL
 
—


498,598

 
—

 
3,087,970

 
556,887

 
 
3,029,681

 
3,586,568

 
 
1,127,131

 
2000
 
5 - 40
4511 Woodland Corporate Boulevard
Tampa, FL
 
—


516,594

 
—

 
2,311,508

 
686,594

 
 
2,141,508

 
2,828,102

 
 
642,253

 
2002
 
5 - 40
4520 Seedling Circle
Tampa, FL
 
—


854,797

 
42,131

 
2,724,029

 
854,797

 
 
2,766,160

 
3,620,957

 
 
669,577

 
2003
 
5 - 40
4630 Woodland Corporate Boulevard
Tampa, FL
 
—


943,169

 
—

 
14,042,129

 
1,560,099

 
 
13,425,199

 
14,985,298

 
 
4,914,641

 
2000
 
5 - 40
4631 Woodland Corporate Blvd
Tampa, FL
 
—


1,453,367

 
—

 
13,375,916

 
1,908,792

 
 
12,920,491

 
14,829,283

 
 
1,715,755

 
2006
 
5 - 40
501 US Highway 301 South
Tampa, FL
 
—


898,884

 
—

 
3,412,262

 
900,508

 
 
3,410,638

 
4,311,146

 
 
1,040,719

 
2004
 
5 - 40
5250 Eagle Trail Drive
Tampa, FL
 
—


952,860

 
—

 
3,464,999

 
952,860

 
 
3,464,999

 
4,417,859

 
 
1,322,152

 
1998
 
5 - 40
5501-5519 Pioneer Park Boulevard
Tampa, FL
 
—


162,000

 
1,613,000

 
963,054

 
262,416

 
 
2,475,638

 
2,738,054

 
 
1,097,196

 
1981
 
5 - 40
5690-5694 Crenshaw Street
Tampa, FL
 
—


181,923

 
1,812,496

 
784,786

 
181,923

 
 
2,597,282

 
2,779,205

 
 
1,019,089

 
1979
 
5 - 40
701-725 South US Hwy 301
Tampa, FL
 
—


419,683

 
—

 
3,418,844

 
661,680

 
 
3,176,847

 
3,838,527

 
 
1,261,568

 
2000
 
5 - 40
7621 Bald Cypress Place (Bldg N)
Tampa, FL
 
—


716,580

 
132,773

 
604,699

 
447,498

 
 
1,006,554

 
1,454,052

 
 
260,020

 
2001
 
5 - 40
7724 Woodland Center Boulevard
Tampa, FL
 
—


235,893

 
—

 
2,244,863

 
235,894

 
 
2,244,862

 
2,480,756

 
 
784,825

 
1998
 
5 - 40
7725 Woodland Center Boulevard
Tampa, FL
 
—


553,335

 
—

 
3,396,664

 
771,501

 
 
3,178,498

 
3,949,999

 
 
1,177,442

 
1999
 
5 - 40
7802-50 Woodland Center Boulevard
Tampa, FL
 
—


357,364

 
—

 
2,948,109

 
506,949

 
 
2,798,524

 
3,305,473

 
 
899,310

 
1999
 
5 - 40
7851-7861 Woodland Center Blvd
Tampa, FL
 
—


548,905

 
2,241,627

 
204,199

 
548,905

 
 
2,445,826

 
2,994,731

 
 
520,111

 
2006
 
5 - 40
7852-98 Woodland Center Boulevard
Tampa, FL
 
—


357,364

 
—

 
2,662,010

 
506,949

 
 
2,512,425

 
3,019,374

 
 
931,414

 
1999
 
5 - 40
7920 Woodland Center Boulevard
Tampa, FL
 
—


1,082,648

 
2,445,444

 
434,554

 
1,082,648

 
 
2,879,998

 
3,962,646

 
 
1,050,378

 
1997
 
5 - 40
7930, 8010-20 Woodland Center Boulevard
Tampa, FL
 
—


1,408,478

 
5,247,246

 
1,166,149

 
1,408,478

 
 
6,413,395

 
7,821,873

 
 
2,782,366

 
1990
 
5 - 40
8001 Woodland Center Boulevard
Tampa, FL
 
—


350,406

 
—

 
2,295,752

 
438,061

 
 
2,208,097

 
2,646,158

 
 
796,181

 
1999
 
5 - 40
8110 Anderson Road
Tampa, FL
 
—


912,663

 
5,425,143

 
70,834

 
912,663

 
 
5,495,977

 
6,408,640

 
 
177,417

 
2012
 
5 - 40
8112-42 Woodland Center Boulevard
Tampa, FL
 
—


513,263

 
3,230,239

 
649,274

 
513,263

 
 
3,879,513

 
4,392,776

 
 
1,782,213

 
1995
 
5 - 40
8130 Anderson Road
Tampa, FL
 
—


655,668

 
4,132,076

 
26,203

 
655,668

 
 
4,158,279

 
4,813,947

 
 
133,968

 
2012
 
5 - 40
8154-8198 Woodland Center Boulevard
Tampa, FL
 
—


399,088

 
2,868,834

 
1,074,969

 
399,088

 
 
3,943,803

 
4,342,891

 
 
1,561,150

 
1988
 
5 - 40
8212 Woodland Center Boulevard
Tampa, FL
 
—


820,882

 
2,322,720

 
37,907

 
820,882

 
 
2,360,627

 
3,181,509

 
 
983,441

 
1996
 
5 - 40
8401-8408 Benjamin Road
Tampa, FL
 
—


789,651

 
4,454,648

 
325,682

 
611,626

 
 
4,958,355

 
5,569,981

 
 
2,434,848

 
1986
 
5 - 40
8705 Henderson Road
Tampa, FL
 
—


4,303,870

 
23,688,409

 
(15,944
)
 
4,304,102

 
 
23,672,234

 
27,976,336

 
 
5,416,432

 
2006
 
5 - 40

114

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2013
 
 
 Accumulated Depreciation 12/31/2013
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8715 Henderson Road
Tampa, FL
 
—


3,343,910

 
18,325,599

 
323,223

 
3,344,090

 
 
18,648,642

 
21,992,732

 
 
4,784,886

 
2006
 
5 - 40
8725 Henderson Road
Tampa, FL
 
—


3,167,787

 
19,126,318

 
342,145

 
3,167,958

 
 
19,468,292

 
22,636,250

 
 
4,944,543

 
2006
 
5 - 40
8735 Henderson Road
Tampa, FL
 
—


3,166,130

 
18,735,573

 
1,276,725

 
3,166,300

 
 
20,012,128

 
23,178,428

 
 
4,997,971

 
2006
 
5 - 40
8745 Henderson Road
Tampa, FL
 
—


2,050,439

 
11,173,008

 
(44,065
)
 
2,050,548

 
 
11,128,834

 
13,179,382

 
 
1,936,630

 
2006
 
5 - 40
8900-34 Brittany Was
Tampa, FL
 
—


537,194

 
—

 
3,664,883

 
978,019

 
 
3,224,058

 
4,202,077

 
 
871,357

 
2005
 
5 - 40
8921 Brittany Way
Tampa, FL
 
—


224,369

 
1,063,882

 
868,340

 
254,493

 
 
1,902,098

 
2,156,591

 
 
729,000

 
1998
 
5 - 40
9001-9015 Brittany Way
Tampa, FL
 
—


209,841

 
—

 
1,806,688

 
364,514

 
 
1,652,015

 
2,016,529

 
 
670,629

 
2000
 
5 - 40
9002-9036 Brittany Way
Tampa, FL
 
—


492,320

 
—

 
3,785,603

 
899,284

 
 
3,378,639

 
4,277,923

 
 
1,255,220

 
2004
 
5 - 40
901-933 US Highway 301 South
Tampa, FL
 
—


500,391

 
—

 
4,162,685

 
840,314

 
 
3,822,762

 
4,663,076

 
 
1,522,409

 
2001
 
5 - 40
9020 King Palm Drive
Tampa, FL
 
—


1,718,496

 
11,697,381

 
133,305

 
1,718,496

 
 
11,830,686

 
13,549,182

 
 
348,543

 
2012
 
5 - 40
910-926 Chad Lane
Tampa, FL
 
—


201,771

 
—

 
3,214,583

 
628,237

 
 
2,788,117

 
3,416,354

 
 
975,719

 
2006
 
5 - 40
9110 King Palm Drive
Tampa, FL
 
—


1,203,200

 
7,979,540

 
64,475

 
1,203,200

 
 
8,044,015

 
9,247,215

 
 
252,514

 
2012
 
5 - 40
9203 King Palm Drive
Tampa, FL
 
—


754,832

 
4,966,864

 
92,249

 
754,832

 
 
5,059,113

 
5,813,945

 
 
211,377

 
2012
 
5 - 40
9306-24 East Broadway Avenue
Tampa, FL
 
—


450,440

 
—

 
3,303,369

 
486,004

 
 
3,267,805

 
3,753,809

 
 
479,734

 
2007
 
5 - 40
9319 Peach Palm Drive
Tampa, FL
 
—


612,536

 
4,168,473

 
9,700

 
612,536

 
 
4,178,173

 
4,790,709

 
 
115,323

 
2012
 
5 - 40
9704 Solar Drive
Tampa, FL
 
—


374,548

 
1,354,800

 
126,348

 
374,548

 
 
1,481,148

 
1,855,696

 
 
37,252

 
2012
 
5 - 40
9945 Currie Davis Drive
Tampa, FL
 
—


1,134,286

 
9,241,807

 
380,833

 
1,134,286

 
 
9,622,639

 
10,756,925

 
 
75,495

 
2013
 
5 - 40
1858 E Encanto Dr
Tempe, AZ
 
—

*
877,611

 
4,485,427

 
190,934

 
877,611

 
 
4,676,361

 
5,553,972

 
 
40,311

 
2013
 
5 - 40
475 W Vaughn St
Tempe, AZ
 
—


1,112,245

 
2,260,348

 
134,556

 
1,112,245

 
 
2,394,904

 
3,507,149

 
 
23,366

 
2013
 
5 - 40
921 South Park Lane
Tempe, AZ
 
—


1,192,820

 
1,580,155

 
477,881

 
1,192,820

 
 
2,058,037

 
3,250,857

 
 
129,894

 
2011
 
5 - 40
8313 West Pierce Street
Tolleson, AZ
 
—


2,295,090

 
9,079,811

 
3,224,097

 
2,295,090

 
 
12,303,908

 
14,598,998

 
 
2,702,937

 
2007
 
5 - 40
8591 West Washington Street
Tolleson, AZ
 
—


1,574,912

 
7,308,021

 
274,301

 
1,574,912

 
 
7,582,322

 
9,157,234

 
 
347,237

 
2012
 
5 - 40
8601 West Washington Street
Tolleson, AZ
 
—


1,524,603

 
6,352,070

 
493,296

 
1,524,603

 
 
6,845,366

 
8,369,969

 
 
350,898

 
2012
 
5 - 40
5111 S Royal Atlanta Drive
Tucker, GA
 
—

*
435,776

 
1,875,685

 
214,242

 
435,776

 
 
2,089,928

 
2,525,704

 
 
23,119

 
2013
 
5 - 40
5151 S Royal Atlanta Drive
Tucker, GA
 
—

*
345,061

 
1,428,840

 
178,941

 
345,061

 
 
1,607,781

 
1,952,842

 
 
19,469

 
2013
 
5 - 40
1457 Miller Store Road
Virginia Beach, VA
 
—


473,689

 
2,663,045

 
413,058

 
474,746

 
 
3,075,046

 
3,549,792

 
 
910,738

 
2003
 
5 - 40
200 Golden Oak Court
Virginia Beach, VA
 
—


1,116,693

 
6,770,480

 
2,106,737

 
1,116,693

 
 
8,877,217

 
9,993,910

 
 
3,538,776

 
1988
 
5 - 40
208 Golden Oak Court
Virginia Beach, VA
 
—


965,177

 
6,728,717

 
1,870,956

 
965,177

 
 
8,599,673

 
9,564,850

 
 
3,552,417

 
1989
 
5 - 40
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

115

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2013
 
 
 Accumulated Depreciation 12/31/2013
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2809 South Lynnhaven Road
Virginia Beach, VA
 
—


953,590

 
6,142,742

 
1,769,833

 
953,590

 
 
7,912,575

 
8,866,165

 
 
3,130,409

 
1987
 
5 - 40
484 Viking Drive
Virginia Beach, VA
 
—


891,753

 
3,607,890

 
513,437

 
891,753

 
 
4,121,326

 
5,013,079

 
 
1,655,629

 
1987
 
5 - 40
629 Phoenix Drive
Virginia Beach, VA
 
—


371,694

 
2,108,097

 
250,511

 
371,694

 
 
2,358,608

 
2,730,302

 
 
973,996

 
1996
 
5 - 40
1100 17th Street NW
Washington, DC
 
—


16,558,660

 
32,223,978

 
954,372

 
16,558,660

 
 
33,178,350

 
49,737,010

 
 
3,041,022

 
2011
 
5 - 40
2100 M Street NW
Washington, DC
 
—


70,000,000

 
55,123,783

 
27,462

 
70,000,000

 
 
55,151,245

 
125,151,245

 
 
1,775,617

 
2013
 
5 - 40
1200 Liberty Ridge Drive
Wayne, PA
 
—


6,215,667

 
—

 
9,208,335

 
5,223,660

 
 
10,200,342

 
15,424,002

 
 
3,867,751

 
2001
 
5 - 40
1500 Liberty Ridge Drive
Wayne, PA
 
—


8,287,555

 
—

 
34,049,515

 
11,636,499

 
 
30,700,571

 
42,337,070

 
 
10,277,630

 
2002
 
5 - 40
825 Duportail Road
Wayne, PA
 
—


5,536,619

 
16,179,213

 
5,024,030

 
5,539,281

 
 
21,200,581

 
26,739,862

 
 
7,648,775

 
1979
 
5 - 40
400-500 Brandywine Parkway
West Chester, PA
 
—


845,846

 
6,809,025

 
656,823

 
845,846

 
 
7,465,848

 
8,311,694

 
 
3,029,672

 
1988
 
5 - 40
600 Brandywine Parkway
West Chester, PA
 
—


664,899

 
5,352,410

 
814,645

 
664,899

 
 
6,167,055

 
6,831,954

 
 
2,577,095

 
1988
 
5 - 40
1400 Powis Court
West Chicago, IL
 
—

*
578,314

 
2,448,562

 
72,419

 
578,314

 
 
2,520,981

 
3,099,295

 
 
18,384

 
2013
 
5 - 40
1 Kings Hill Aveune
West Malling, UK
 
—


4,288,389

 
—

 
10,583,801

 
4,142,996

 
 
10,729,194

 
14,872,190

 
 
2,065,152

 
2006
 
5 - 40
42 Kings Hill Avenue
West Malling, UK
 
—


5,397,739

 
—

 
13,460,795

 
4,497,753

 
 
14,360,781

 
18,858,534

 
 
2,390,197

 
2005
 
5 - 40
Liberty Square Retail Blocks
West Malling, UK
 
—


559,590

 
5,113,902

 
3,984,564

 
1,191,419

 
 
8,466,637

 
9,658,056

 
 
1,790,561

 
2006
 
5 - 40
1400 Northpoint Parkway
West Palm Beach, FL
 
—

*
2,454,972

 
5,312,829

 
276,502

 
2,454,972

 
 
5,589,331

 
8,044,303

 
 
54,818

 
2013
 
5 - 40
300 Northpoint Parkway
West Palm Beach, FL
 
—

*
1,177,064

 
2,102,451

 
125,706

 
1,177,064

 
 
2,228,157

 
3,405,221

 
 
20,749

 
2013
 
5 - 40
400 Northpoint Parkway
West Palm Beach, FL
 
—

*
1,029,595

 
1,728,187

 
109,374

 
1,029,595

 
 
1,837,561

 
2,867,156

 
 
15,908

 
2013
 
5 - 40
2935 West Corporate Lakes Blvd
Weston, FL
 
—


4,682,521

 
25,905,126

 
558,332

 
4,682,521

 
 
26,463,458

 
31,145,979

 
 
179,132

 
2013
 
5 - 40
2945 West Corporate Lakes Blvd
Weston, FL
 
—


2,345,242

 
13,973,766

 
273,455

 
2,345,242

 
 
14,247,221

 
16,592,463

 
 
95,264

 
2013
 
5 - 40
43-47 Hintz Road
Wheeling, IL
 
—

*
2,051,093

 
18,283,480

 
536,842

 
2,051,093

 
 
18,820,323

 
20,871,416

 
 
134,175

 
2013
 
5 - 40
10 Cornell Place
Wilmington, MA
 
—


598,120

 
2,142,736

 
232,897

 
598,120

 
 
2,375,632

 
2,973,752

 
 
26,040

 
2013
 
5 - 40
265 Ballardvale Street
Wilmington, MA
 
—


868,433

 
4,358,998

 
324,566

 
868,433

 
 
4,683,564

 
5,551,997

 
 
74,959

 
2013
 
5 - 40


 

 

 

 

 

 
 

 

 
 

 

 

 Subtotal Operating Real Estate
 
 
$
64,974,227

 
$
1,079,681,038

 
$
2,829,350,974

 
$
2,375,181,699

 
$
1,139,454,639

 
 
$
5,144,759,070

 
$
6,284,213,709

 
 
$
1,057,679,601

 
 
 
 



116

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2013
 
 
 Accumulated Depreciation 12/31/2013
 
Date of Construction or Acquisition
 
Depreciable life (years)
Development Properties
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1467 Perryman Road
Aberdeen, MD
 
$
—

 
$
12,052,635

 
$
—

 
$
16,209,308

 
$
—

 
 
$
28,261,943

 
$
28,261,943

 
 
$
—

 
2013
 
 N/A
100 Caliber Ridge Drive
Greer, SC
 
—

 
555,549

 
—

 
5,179,599

 
—

 
 
5,735,148

 
5,735,148

 
 
—

 
2013
 
 N/A
7460 New Ridge Road
Hanover, MD
 
—

 
3,785,446

 
—

 
3,050,119

 
—

 
 
6,835,565

 
6,835,565

 
 
—

 
2013
 
 N/A
7462 New Ridge Road
Hanover, MD
 
—

 
4,059,337

 
—

 
2,784,516

 
—

 
 
6,843,853

 
6,843,853

 
 
—

 
2013
 
 N/A
1050 Greens Parkway
Houston, TX
 
—

 
973,482

 
—

 
2,634,974

 
—

 
 
3,608,456

 
3,608,456

 
 
—

 
2013
 
 N/A
11220 Ella Boulevard
Houston, TX
 
—

 
1,505,855

 
—

 
6,103,964

 
—

 
 
7,609,819

 
7,609,819

 
 
—

 
2013
 
 N/A
14300 Hollister Road
Houston, TX
 
—

 
1,377,193

 
—

 
5,204,006

 
—

 
 
6,581,199

 
6,581,199

 
 
—

 
2012
 
 N/A
16330 Central Green Boulevard
Houston, TX
 
—

 
1,540,109

 
—

 
7,617,017

 
—

 
 
9,157,126

 
9,157,126

 
 
—

 
2012
 
 N/A
8303 Fallbrook Drive
Houston, TX
 
—

 
4,613,370

 
—

 
3,282,520

 
—

 
 
7,895,890

 
7,895,890

 
 
—

 
2013
 
 N/A
425 Old Morehall Road
Malvern, PA
 
—

 
3,847,501

 
—

 
24,622,365

 
—

 
 
28,469,866

 
28,469,866

 
 
—

 
2013
 
 N/A
11500 NW 122 Street
Miami, FL
 
—

 
1,623,293

 
—

 
9,137,691

 
—

 
 
10,760,984

 
10,760,984

 
—

—

 
2013
 
 N/A
201 Rouse Boulevard
Philadelphia, PA
 
—

 
243,905

 
—

 
3,859,694

 
—

 
 
4,103,599

 
4,103,599

 
—

—

 
2013
 
 N/A
13225 Brockton Lane
Rogers, MN
 
—

 
1,048,093

 
—

 
4,636,867

 
—

 
 
5,684,960

 
5,684,960

 
—

—

 
2013
 
 N/A
13320 Wilfred Lane
Rogers, MN
 
—

 
508,532

 
—

 
10,975,170

 
—

 
 
11,483,702

 
11,483,702

 
—

—

 
2012
 
 N/A
9300 Old Scotland Road
Shippensburg, PA
 
—

 
10,232,633

 
—

 
50,083,929

 
—

 
 
60,316,562

 
60,316,562

 
—

—

 
2013
 
 N/A
1850 W Rio Salado Parkway
Tempe, AZ
 
—

 
3,975,600

 
—

 
1,862,428

 
—

 
 
5,838,028

 
5,838,028

 
—

—

 
2013
 
 N/A
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Subtotal Development in Progress
 
$
—

 
$
51,942,533

 
$
—

 
$
157,244,167

 
$
—

 
 
$
209,186,700

 
$
209,186,700

 
 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


117


LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances
 
 Land
 
 Building
 
  Costs Capitalized Subsequent to Acquisition
 
 Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2013
 
 
 Accumulated Depreciation 12/31/2013
 
Date of Construction or Acquisition
 
 Depreciable life (years)
LAND HELD FOR DEVELOPMENT
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4551 New York Avenue Land
Arlington, TX
 
$
—

 
$
4,754,659

 
$
—

 
$
(17,253
)
 
$
4,737,406

 
 
$
—

 
$
4,737,406

 
 
$
—

 
2013
 
 N/A
LVIP Area VII-Lots 3, 4, 5 Land
Bethlehem, PA
 
—

 
6,058,664

 
—

 
2,832,704

 
8,891,368

 
 
—

 
8,891,368

 
 
—

 
2012
 
 N/A
Mill Creek Road Land
Bethlehem, PA
 
—

 
18,548,585

 
—

 
1,256,223

 
19,804,808

 
 
—

 
19,804,808

 
 
—

 
2012
 
 N/A
Boca Colannade Yamato Road
Boca Raton, FL
 
—

 
2,039,735

 
—

 
556,668

 
2,596,403

 
 
—

 
2,596,403

 
 
—

 
1998
 
 N/A
12912 Virkler Drive Land
Charlotte, NC
 
—

 
208,646

 
—

 
14,743

 
223,389

 
 
—

 
223,389

 
 
—

 
2010
 
 N/A
Charlotte Distribution Center Land-Lot 1
Charlotte, NC
 
—

 
654,713

 
—

 
(2,376
)
 
652,337

 
 
—

 
652,337

 
 
—

 
2011
 
 N/A
Amberpoint Business Park Land
Dallas, TX
 
—

 
2,040,233

 
—

 
41,457

 
2,081,690

 
 
—

 
2,081,690

 
 
—

 
2012
 
 N/A
Flying Cloud Drive Land
Eden Pairie, MN
 
—

 
2,051,631

 
—

 
17,695

 
2,069,326

 
 
—

 
2,069,326

 
 
—

 
2007
 
 N/A
Camelback 303 Business Center Land
Goodyear, AZ
 
—

 
16,857,556

 
—

 
3,164,682

 
20,022,238

 
 
—

 
20,022,238

 
 
—

 
2007
 
 N/A
Pleasant Ridge Road Land
Greensboro, NC
 
—

 
564,535

 
—

 
2,887,177

 
3,451,712

 
 
—

 
3,451,712

 
 
—

 
2006
 
 N/A
Caliber Ridge Ind. Park Land
Greer, SC
 
—

 
1,811,803

 
—

 
2,639,848

 
4,451,651

 
 
—

 
4,451,651

 
 
—

 
2007
 
 N/A
Hunters Green Land
Hagerstown, MD
 
—

 
5,489,586

 
—

 
8,581,024

 
14,070,610

 
 
—

 
14,070,610

 
 
—

 
2006
 
 N/A
Lakefront Plaza II Land
Hampton, VA
 
—

 
138,101

 
—

 
100,289

 
238,390

 
 
—

 
238,390

 
 
—

 
2001
 
 N/A
Ridge Road & Hanover Road Land
Hanover, MD
 
—

 
3,875,203

 
—

 
71,152

 
3,946,355

 
 
—

 
3,946,355

 
 
—

 
2012
 
 N/A
Ridge Road Land
Hanover, MD
 
—

 
3,371,183

 
—

 
438,536

 
3,809,719

 
 
—

 
3,809,719

 
 
—

 
2008
 
 N/A
Piedmond Centre Land
High Point, NC
 
—

 
913,276

 
—

 
907,686

 
1,820,962

 
 
—

 
1,820,962

 
 
—

 
2006
 
 N/A
Commonwealth Corporate Center Land
Horsham, PA
 
—

 
3,043,938

 
—

 
14,024

 
3,057,962

 
 
—

 
3,057,962

 
 
—

 
2005
 
 N/A
Interwood Land
Houston, TX
 
—

 
5,160,668

 
—

 
(4,131
)
 
5,156,537

 
 
—

 
5,156,537

 
 
—

 
2012
 
 N/A
Rankin Road Land
Houston, TX
 
—

 
5,756,865

 
—

 
252,866

 
6,009,731

 
 
—

 
6,009,731

 
 
—

 
2007
 
 N/A
Taub Beltway 8 Land
Houston, TX
 
—

 
9,511,795

 
—

 
49,341

 
9,561,136

 
 
—

 
9,561,136

 
 
—

 
2012
 
 N/A
Kent County, UK
Kent, UK
 
—

 
—

 
—

 
—

 
2,579,128

 
 
—

 
2,579,128

 
 

 
2012
 
 N/A
Commodore Business Park
Logan, NJ
 
—

 
792,118

 
—

 
1,061,915

 
1,854,033

 
 
—

 
1,854,033

 
 
—

 
1995
 
 N/A
Spring Creek Land
Lower Macungie Twp, PA
 
—

 
25,615,668

 
—

 
168,389

 
25,784,057

 
 
—

 
25,784,057

 
 
—

 
2013
 
 N/A
380 Old Morehall Road
Malvern, PA
 
—

 
1,344,809

 
—

 
(4,880
)
 
1,339,929

 
 
—

 
1,339,929

 
 
—

 
2012
 
 N/A
Quarry Ridge Land
Malvern, PA
 
—

 
675,499

 
—

 
—

 
675,499

 
 
—

 
675,499

 
 
—

 
2001
 
 N/A
Miami International Tradeport Land
Medley, FL
 
—

 
16,739,632

 
—

 
7,848,096

 
24,587,728

 
 
—

 
24,587,728

 
 
—

 
2011
 
 N/A
Monarch Towne Center Land
Mirarar, FL
 
—

 
6,085,337

 
—

 
390,343

 
6,475,680

 
 
—

 
6,475,680

 
 
—

 
2006
 
 N/A

118

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances
 
 Land
 
 Building
 
  Costs Capitalized Subsequent to Acquisition
 
 Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2013
 
 
 Accumulated Depreciation 12/31/2013
 
Date of Construction or Acquisition
 
 Depreciable life (years)
LAND HELD FOR DEVELOPMENT
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
557 Nazareth Pike Land
Nazareth, PA
 
—

 
4,667,646

 
—

 
38,720

 
4,706,366

 
 
—

 
4,706,366

 
 
—

 
2013
 
 N/A
South 27th Street Land
Oak Creek, WI
 
—

 
2,169,232

 
—

 
2,066,217

 
4,235,449

 
 
—

 
4,235,449

 
 
—

 
2006
 
 N/A
Beachline Industrial Park Land
Orlando, FL
 
—

 
365,230

 
—

 
(1,325
)
 
363,905

 
 
—

 
363,905

 
 
—

 
2006
 
 N/A
26th Street North Land
Philadelphia, PA
 
—

 
90,774

 
—

 
1,047,441

 
1,138,215

 
 
—

 
1,138,215

 
 
—

 
2009
 
 N/A
Buckeye Logistics Center West Land
Phoenix, AZ
 
—

 
11,203,594

 
—

 
(34,100
)
 
11,169,494

 
 
—

 
11,169,494

 
 
—

 
2013
 
 N/A
Cotton Center Land
Phoenix, AZ
 
—

 
8,238,461

 
—

 
(29,895
)
 
8,208,566

 
 
—

 
8,208,566

 
 
—

 
2007
 
 N/A
Eastport IX
Richmond, VA
 
—

 
211,627

 
—

 
2,545

 
214,172

 
 
—

 
214,172

 
 
—

 
1997
 
 N/A
Eastport VIII
Richmond, VA
 
—

 
382,698

 
—

 
1,925

 
384,623

 
 
—

 
384,623

 
 
—

 
1997
 
 N/A
Woodlands Center Land
Sandston, VA
 
—

 
148,314

 
—

 
21,100

 
169,414

 
 
—

 
169,414

 
 
—

 
1996
 
 N/A
Northsight Land
Scottsdale, AZ
 
—

 
6,176,464

 
—

 
2,174,185

 
8,350,649

 
 
—

 
8,350,649

 
 
—

 
2005
 
 N/A
Suffolk Land
Suffolk, VA
 
—

 
2,715,714

 
—

 
767,883

 
3,483,597

 
 
—

 
3,483,597

 
 
—

 
2006
 
 N/A
6119 W. Linebaugh Avenue
Tampa, FL
 
—

 
180,136

 
—

 
29,735

 
209,871

 
 
—

 
209,871

 
 
—

 
2000
 
 N/A
Legacy Park Land
Tampa, FL
 
—

 
3,289,423

 
—

 
4,975,350

 
8,264,773

 
 
—

 
8,264,773

 
 
—

 
2006
 
 N/A
Renaissance Park Land
Tampa, FL
 
—

 
1,995,375

 
—

 
211,062

 
2,206,437

 
 
—

 
2,206,437

 
 
—

 
2007
 
 N/A
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Subtotal Land Held for Development
 
 
$
—

 
$
185,939,126

 
$
—

 
$
44,537,061

 
$
233,055,315

 
 
$
—

 
$
233,055,315

 
 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total All Properties
 
 
$64,974,227
 
$1,317,562,696
 
$2,829,350,974
 
$2,576,962,929
 
$1,372,509,954
 
 
$5,353,945,770
 
$6,726,455,724
 
 
$1,057,679,601
 
 
 
 

* Denotes property is collateralized under mortgages with Allianz, John Hancock, LaSalle Bank, Aviva, New York Life and Wells Fargo totaling $475.8 million.

119

SCHEDULE III
LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
REAL ESTATE AND ACCUMULATED DEPRECIATION
(In thousands)
A summary of activity for real estate and accumulated depreciation is as follows:
 
 
Year Ended December 31,
 
 
2013
 
2012
 
2011
REAL ESTATE:
 
 
 
 
 
 
Balance at beginning of year
 
$
5,389,166

 
$
4,887,560

 
$
4,518,560

Additions
 
1,891,117

 
505,643

 
418,712

Disposition of property
 
(553,828
)
 
(4,037
)
 
(49,712
)
 
 
 
 
 
 
 
Balance at end of year
 
$
6,726,455

 
$
5,389,166

 
$
4,887,560

 
 
 
 
 
 
 
ACCUMULATED DEPRECIATION:
 
 
 
 
 
 
Balance at beginning of year
 
$
1,072,859

 
$
958,652

 
$
845,305

Depreciation expense
 
162,546

 
140,570

 
144,284

Disposition of property
 
(177,725
)
 
(26,363
)
 
(30,937
)
 
 
 
 
 
 
 
Balance at end of year
 
$
1,057,680

 
$
1,072,859

 
$
958,652

 


120

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Controls and Procedures with respect to the Trust
(a) Evaluation of Disclosure Controls and Procedures
The Trust’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on this evaluation, the Trust’s Chief Executive Officer and Chief Financial Officer have concluded that the Trust’s disclosure controls and procedures, as of the end of the period covered by this report, were effective to provide reasonable assurance that information required to be disclosed by the Trust in its reports filed or submitted under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC’s rules and forms and (ii) accumulated and communicated to the Trust’s management, including its principal executive and principal financial officers, or persons performing similar function, as appropriate to allow timely decisions regarding required disclosure.
(b) Changes in Internal Control Over Financial Reporting
There were no changes in the Trust’s internal control over financial reporting during the quarter ended December 31, 2013 that have materially affected or are reasonable likely to materially affect the Company’s internal control over financial reporting.
Controls and Procedures with respect to the Operating Partnership
(a) Evaluation of Disclosure Controls and Procedures
The Trust’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, on behalf of the Trust in its capacity as the general partner of the Operating Partnership, evaluated the effectiveness of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on this evaluation, the Trust’s Chief Executive Officer and Chief Financial Officer have concluded that the Operating Partnership’s disclosure controls and procedures, as of the end of the period covered by this report, were effective to provide reasonable assurance that information required to be disclosed by the Operating Partnership in its reports filed or submitted under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC’s rules and forms and (ii) accumulated and communicated to the Trust’s management, including its principal executive and principal financial officers, or persons performing similar function, as appropriate to allow timely decisions regarding required disclosure.
(b) Changes in Internal Control Over Financial Reporting
There were no changes in the Operating Partnership’s internal control over financial reporting during the quarter ended December 31, 2013 that have materially affected or are reasonable likely to materially affect the Operating Partnership’s internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.

121

PART III
ITEM 10. TRUSTEES, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by Item 10 shall be included in the Proxy Statement to be filed relating to the Company's 2014 Annual Meeting of Shareholders and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 shall be included in the Proxy Statement to be filed relating to the Company's 2014 Annual Meeting of Shareholders and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS

The information required by Item 12 shall be included in the Proxy Statement to be filed relating to the Company's 2014 Annual Meeting of Shareholders and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND TRUSTEE INDEPENDENCE

The information required by Item 13 shall be included in the Proxy Statement to be filed relating to the Company's 2014 Annual Meeting of Shareholders and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by Item 14 shall be included in the Proxy Statement to be filed relating to the Company's 2014 Annual Meeting of Shareholders and is incorporated herein by reference.

PART IV


ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements of Liberty Property Trust and Liberty Property Limited Partnership are included in Item 8.

1. REPORTS OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AND CONSOLIDATED FINANCIAL STATEMENTS

Management's Annual Report on Internal Control Over Financial Reporting - Liberty Property Trust

Reports of Independent Registered Public Accounting Firm - Liberty Property Trust

Management's Annual Report on Internal Control Over Financial Reporting - Liberty Property Limited Partnership

Reports of Independent Registered Public Accounting Firm - Liberty Property Limited Partnership

Financial Statements - Liberty Property Trust

Balance Sheets:
Liberty Property Trust Consolidated as of December 31, 2013 and 2012

Statements of Comprehensive Income:
Liberty Property Trust Consolidated for the years ended December 31, 2013, 2012 and 2011

Statements of Equity:
Liberty Property Trust Consolidated for the years ended December 31, 2013, 2012 and 2011


122

Statements of Cash Flows:
Liberty Property Trust Consolidated for the years ended December 31, 2013, 2012 and 2011

Financial Statements - Liberty Property Limited Partnership

Balance Sheets:
Liberty Property Limited Partnership Consolidated as of December 31, 2013 and 2012

Statements of Comprehensive Income:
Liberty Property Limited Partnership Consolidated for the years ended December 31, 2013, 2012 and 2011

Statements of Owners' Equity:
Liberty Property Limited Partnership Consolidated for the years ended December 31, 2013, 2012 and 2011

Statements of Cash Flows:
Liberty Property Limited Partnership Consolidated for the years ended December 31, 2013, 2012 and 2011

Notes to Consolidated Financial Statements

2.    FINANCIAL STATEMENT SCHEDULES:

Schedule III - Real Estate and Accumulated Depreciation as of December 31, 2013 for Liberty Property Trust and Liberty Property Limited Partnership

All other schedules are omitted because they are either not required or the required information is shown in the financial statements or notes thereto.



123

3.    EXHIBITS

The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed.

Exhibit No.
Description
 
 
3.1.1
Amended and Restated Declaration of Trust of the Trust (Incorporated by reference to Exhibit 3.1.1 filed with the Registrants' Current Report on Form 8-K filed with the Commission on June 25, 1997 (the “June 1997 Form 8-K”)).
 
 
3.1.2
Articles Supplementary to the Amended and Restated Declaration of Trust of the Trust Relating to Designation, Preferences, and Rights of Series A Junior Participating Preferred Shares of the Trust (Incorporated by reference to Exhibit 3.1.3 filed with the Registrants' Annual Report on Form 10-K for the fiscal year ended December 3l, 1997).
 
 
3.1.3
Articles Supplementary to the Amended and Restated Declaration of Trust of the Trust relating to the 9.25% Series B Cumulative Redeemable Preferred Shares of Beneficial Interest (Incorporated by reference to Exhibit 3.1.2 filed with the Registrants' Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1999 (the “Second Quarter 1999 Form 10-Q”)).
 
 
3.1.4
Articles Supplementary to the Amended and Restated Declaration of Trust of the Trust relating to the 9.125% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest. (Incorporated by reference to Exhibit 3.1.1 filed with the Registrants' Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2000).

 
 
3.1.5
Articles Supplementary to the Amended and Restated Declaration of Trust of the Trust relating to the 7.625% Series D Cumulative Redeemable Preferred Shares of Beneficial Interest (Incorporated by reference to Exhibit 3.1.1 filed with the Registrants' Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2002).

 
 
3.1.6
Articles of Amendment to the Amended and Restated Declaration of Trust of the Trust, filed with the State Department of Assessments and Taxation of Maryland on June 21, 2004 (Incorporated by reference to Exhibit 3.1 with Registrants' Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2004 (the “Second Quarter 2004 Form 10-Q”)).
 
 
3.1.7
Restatement of the Amended Restated Declaration of Trust of the Trust, filed with the State Department of Assessments and Taxation of Maryland on June 21, 2004 (Incorporated by reference to Exhibit 3.2 to the Second Quarter 2004 Form 10-Q).
 
 
3.1.8
Articles of Amendment to the Amended and Restated Declaration of Trust of the Trust (Incorporated by reference to Annex A to the Registrant's Definitive Proxy Statement for the Annual Meeting of Shareholders held on May 20, 2010, filed with the Commission on April 20, 2010).
 
 
3.1.9
Articles Supplementary, as filed with the State Department of Assessments and Taxation of Maryland on September 1, 2004 (Incorporated by reference to Exhibit 3(i) to the Current Report on Form 8-K of the Registrants, filed with the Commission on September 2, 2004 (the “September 2, 2004 Form 8-K”)).
 
 
3.1.10
Articles Supplementary to the Amended and Restated Declaration of Trust of the Trust relating to the 7.00% Series E Cumulative Redeemable Preferred Shares of Beneficial Interest (Incorporated by reference to Exhibit 3(i) to the Current Report on Form 8-K of the Registrants, filed with the Commission on June 17, 2005 (the “June 17, 2005 Form 8-K”)).
 
 
3.1.11
Articles Supplementary to the Amended and Restated Declaration of Trust of the Trust relating to the 6.65% Series F Cumulative Redeemable Preferred Shares of Beneficial Interest (Incorporated by reference to Exhibit 3(i) to the Current Report on Form 8-K of the Registrants, filed with the Commission on June 30, 2005 (the “June 30, 2005 Form 8-K”)).

124

 
 
3.1.12
Articles Supplementary to the Amended and Restated Declaration of Trust of the Trust relating to the 6.65% Series F Cumulative Redeemable Preferred Shares of Beneficial Interest (Incorporated by reference to Exhibit 3(i) to the Current Report on Form 8-K of the Registrants, filed with the Commission on August 24, 2005).
 
 
3.1.13
Articles Supplementary to the amended and Restated Declaration of Trust of the Trust relating to the 6.70% Series G Cumulative Redeemable Shares of Beneficial Interest (Incorporated by reference to Exhibit 3(i) to the Current Report on Form 8-K of the Registrants, filed with the Commission on December 18, 2006 (the “December 18, 2006 Form 8-K”)).
 
 
3.1.14
Articles Supplementary to the Amended and Restated Declaration of Trust of the Trust relating to the 7.40% Series H Cumulative Redeemable Preferred Partnership Interests (Incorporated by reference to Exhibit 3(i) to the Current Report on Form 8-K of the Registrants, filed with the Commission on August 23, 2007 (the “August 23, 2007 Form 8-K”)).
 
 
3.1.15
Second Restated and Amended Agreement of Limited Partnership of the Operating Partnership, dated as of October 22, 1997 (Incorporated by reference to Exhibit 3.1.1 filed with the Registrants Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1997 (the “Third Quarter 1997 Form 10-Q”)).
 
 
3.1.16
First Amendment to Second Restated and Amended Agreement of Limited Partnership of the Operating Partnership (Incorporated by reference to Exhibit 3.1.1 to the Second Quarter 1999 Form 10-Q).
 
 
3.1.17
Second Amendment to Second Restated and Amended Agreement of Limited Partnership of the Operating Partnership (Incorporated by reference to Exhibit 3.1.2 to the First Quarter 2000 Form 10-Q).
 
 
3.1.18
Third Amendment to Second Restated and Amended Agreement of Limited Partnership of the Operating Partnership (Incorporated by reference to Exhibit 3.1.2 to the Second Quarter Form 2002 10-Q).
 
 
3.1.19
Fourth Amendment to the Second Amended and Restated Agreement of Limited Partnership of the Operating Partnership (Incorporated by reference to Exhibit 10 to the September 2, 2004 Form 8-K).
 
 
3.1.20
Fifth Amendment to the Second Amended and Restated Agreement of Limited Partnership of Liberty Property Limited Partnership (Incorporated by reference to Exhibit 10 to the June 17, 2005 8-K).
 
 
3.1.21
Sixth Amendment to the Second Amended and Restated Agreement of Limited Partnership of Liberty Property Limited Partnership (Incorporated by reference to Exhibit 10 to the June 30, 2005 8-K).
 
 
3.1.22
Amendment No. 1 to the Sixth Amendment to the Second Amended and Restated Agreement of Limited Partnership of Liberty Property Limited Partnership (Incorporated by reference to Exhibit 10 to the Current Report on Form 8-K of the Registrants, filed with the Commission on August 24, 2005).
 
 
3.1.23
Amendment No. 2 to the Sixth Amendment to the Second Amended and Restated Agreement of Limited Partnership of Liberty Property Limited Partnership (Incorporated by reference to Exhibit 10 to the Current Report on Form 8-K of the Registrants, filed with the Commission on December 23, 2005).
 
 

125

3.1.24
Seventh Amendment to the Second Amended and Restated Agreement of Limited Partnership of Liberty Property Limited Partnership (Incorporated by reference to Exhibit 10 to the December 18, 2006 Form 8-K).
 
 
3.1.25
Eighth Amendment to the Second Amendment and Restated Agreement of Limited Partnership of Liberty Property Limited Partnership (Incorporated by reference to Exhibit 10 to the August 23, 2007 Form 8-K).
 
 
3.1.26
Ninth Amendment to the Second Amendment and Restated Agreement of Limited Partnership of Liberty Property Limited Partnership. (Incorporated by reference to Exhibit 3.1.25 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2011.)
 
 
3.1.27*
Amended and Restated Schedule A to the Second Restated and Amended Agreement of Limited Partnership of the Operating Partnership.
 
 
3.1.28
Liberty Property Trust First Amended and Restated By-Laws of the Trust, as Amended on December 6, 2007 (Incorporated by reference to Exhibit 3.1 filed with the Current Report on Form 8-K filed with the Commission on December 12, 2007).
 
 
4.1
Senior Indenture (the “Second Indenture”), dated as of October 24, 1997, between the Operating Partnership, as Obligor, and First Chicago, as Trustee (Incorporated by reference to Exhibit 10.3 filed with the Third Quarter 1997 Form 10-Q).
 
 
4.2
First Supplemental Indenture, dated as of October 24, 1997, between the Operating Partnership, as Issuer, and First Chicago, as Trustee, supplementing the Second Indenture and relating to the Fixed Rate and Floating Rate Medium-Term Notes due Nine Months or More from Date of Issue of the Operating Partnership (Incorporated by reference to Exhibit 10.4 filed with the Third Quarter 1997 Form 10-Q).
 
 
4.3
Second Supplemental Indenture, dated as of January 12, 1998, between the Operating Partnership, as Issuer, and First Chicago, as Trustee, supplementing the Second Indenture, and relating to the Fixed Rate and Floating Rate Medium-Term Notes due Nine Months or more from Date of Issue of the Operating Partnership (Incorporated by reference to Exhibit 4.1 filed with the Registrants' Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1998 (the “First Quarter 1998 Form 10-Q”)).
 
 
4.4
Third Supplemental Indenture, dated as of April 20, 1999, between the Operating Partnership, as Issuer, and the First National Bank of Chicago, as Trustee, supplementing the Second Indenture and relating to the $250,000,000 principal amount of 7.75% Senior Notes, due 2009 of the Operating Partnership (Incorporated by reference to Exhibit 4 filed with the Registrants' Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1999 (the “First Quarter 1999 Form 10-Q”)).
 
 
4.5
Fourth Supplemental Indenture, dated as of July 26, 2000, between the Operating Partnership, as Issuer, and Bank One Trust Company, N.A., as Trustee, supplementing the Senior Indenture, dated as of October 24, 1997, between the Operating Partnership, as Obligor, and Bank One Trust Company, N.A. (as successor to the First National Bank of Chicago), as Trustee, and relating to $200,000,000 principal amount of 8.5% Senior Notes due 2010 of the Operating Partnership (Incorporated by reference to Exhibit 4 to the Second Quarter 2000 Form 10-Q).
 
 
4.6
Fifth Supplemental Indenture, dated as of March 14, 2001, between the Operating Partnership, as Issuer, and Bank One Trust Company, N.A., as Trustee, supplementing the Senior Indenture, dated as of October 24, 1997, between the Operating Partnership, as Obligor, and Bank One Trust Company, N.A. (as successor to the First National Bank of Chicago), as Trustee, and relating to $250,000,000 principal amount of 7.25% Senior Notes due 2011 of the Operating Partnership (Incorporated by reference to Exhibit 4.10 filed with the Registrants' Annual Report on Form 10-K for the fiscal year ended December 31, 2000).
 
 

126

4.7
Sixth Supplemental Indenture, dated as of August 22, 2002, between Liberty Property Limited Partnership, as Issuer, and Bank One Trust Company, N.A., as Trustee, supplementing the Senior Indenture, dated as of October 24, 1997, between Liberty Property Limited Partnership, as Obligor, and Bank One Trust Company, N.A. (as successor to the First National Bank of Chicago), as Trustee, and relating to $150,000,000 principal amount of 6.375% Senior Notes due 2012 of Liberty Property Limited Partnership (Incorporated by reference to Exhibit 3.1.1 filed with the Registrants' Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2002 (the “Third Quarter 2002 Form 10-Q”)).
 
 
4.8
Seventh Supplemental Indenture, dated as of August 10, 2004, between Liberty Property Limited Partnership, as Issuer, and Bank One Trust Company, N.A., as Trustee, supplementing the Senior Indenture, dated as of October 24, 1997, between Liberty Property Limited Partnership, as Obligor, and Bank One Trust Company, National Association. (as successor to the First National Bank of Chicago), as Trustee, and relating to $200,000,000 principal amount of 5.65% Senior Notes due 2012 of Liberty Property Limited Partnership (Incorporated by reference to Exhibit 4.1.2 filed with the Registrants' Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2004 (the “Third Quarter 2004 Form 10-Q”)).
 
 
4.9
Eighth Supplemental Indenture, dated as of March 1, 2005, between Liberty Property Limited Partnership, as Issuer, and Bank One Trust Company, as Trustee, supplementing the Senior Indenture, dated as of October 24, 1997, between Liberty Property Limited Partnership, as Obligor, and Bank One Trust Company, National Association (as successor to the First National Bank of Chicago), as Trustee, and relating to $300,000,000 principal amount of 5.125% Senior Notes due 2015 of Liberty Property Limited Partnership (Incorporated by reference to Exhibit 4.2 filed with the Registrants' Current Report on Form 8-K/A filed with the Commission on March 1, 2005 (the “March 2005 Form 8-K”)).
 
 
4.10
Ninth Supplemental Indenture, dated as of December 18, 2006, between Liberty Property Limited Partnership, as Issuer, and The Bank of New York Trust Company, N.A., as Trustee, supplementing the Senior Indenture, dated as of October 24, 1997, between Liberty Property Limited Partnership, as Obligor, and The Bank of New York Trust Company, N.A., (as successor to J.P. Morgan Trust Company, National Association and the First National Bank of Chicago), as Trustee, and relating to $300,000,000 principal amount of 5.50% Senior Notes due 2016 of Liberty Property Limited Partnership (Incorporated by reference to Exhibit 4.13 to the Registrants' Annual Report on Form 10-K for the fiscal year ended December 31, 2006).
 
 
4.11
Tenth Supplemental Indenture, dated as of September 25, 2007, between Liberty Property Limited Partnership, as Issuer, and The Bank of New York Trust Company, N.A., as Trustee, supplementing the Senior Indenture, dated as of October 24, 1997, between Liberty Property Limited Partnership, as Obligor, and The Bank of New York Trust Company, N.A., (as successor to J.P. Morgan Trust Company, National Association and the First National Bank of Chicago), as Trustee, and relating to $300,000,000 principal amount of 6.625% Senior Notes due 2017 of Liberty Property Limited Partnership (Incorporated by reference to Exhibit 4.1 to the Registrants' Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2007).
 
 
4.12
Senior Indenture, dated as of September 22, 2010, between the Operating Partnership, as Obligor, and U.S. Bank National Association, as Trustee (Incorporated by reference to Exhibit 4.3 to Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 of the Registrants (Commission File No. 333-150737) filed with the Commission on September 22, 2010).
 
 
4.13
First Supplemental Indenture, dated as of September 27, 2010, between the Operating Partnership, as Issuer, and U.S. Bank National Association, as Trustee, supplementing the Senior Indenture, dated as of September 22, 2010, between the Operating Partnership, as Obligor, and U.S. Bank National Association, as Trustee, and relating to $350,000,000 principal amount of 4.75% Senior Notes due 2020 of Liberty Property Limited Partnership. (Incorporated by reference to Exhibit 4.19 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010.)

 
 

127

4.14
Second Supplemental Indenture, dated as of June 11, 2012, between the Operating Partnership, as Issuer, and U.S. Bank National Association, as Trustee, supplementing the Senior Indenture, dated as of September 22, 2010, between the Operating Partnership, as Obligor, and U.S. Bank National Association, as Trustee, and relating to $400,000,000 principal amount of 4.125% Senior Notes due 2022 of Liberty Property Limited Partnership. (Incorporated by reference to Exhibit 4.1 filed with the Registrants' Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2012).

 
 
4.15
Third Supplemental Indenture, dated as of December 10, 2012, between the Operating Partnership, as Issuer, and U.S. Bank National Association, as Trustee, supplementing the Senior Indenture, dated as of September 22, 2010, between the Operating Partnership, as Obligor, and U.S. Bank National Association, as Trustee, and relating to $300,000,000 principal amount of 3.375% Senior Notes due 2023 of Liberty Property Limited Partnership. (Incorporated by reference to Exhibit 4.15 filed with the Registrants' Annual Report on Form 10-K for the fiscal year ended December 31, 2012 (the "2012 Form 10-K")).

 
 
4.16*
Fourth Supplemental Indenture, dated as of September 27, 2013, between the Operating Partnership, as Issuer, and U.S. Bank National Association, as Trustee, supplementing the Senior Indenture, dated as of September 22, 2010, between the Operating Partnership, as Obligor, and U.S. Bank National Association, as Trustee, and relating to $450,000,000 principal amount of 4.400% Senior Notes due 2024 of Liberty Property Limited Partnership.

 
 
10.1@
Liberty Property Trust Amended and Restated Share Incentive Plan as amended effective May 21, 2009 (Incorporated by reference to Appendix A to the Registrant's Definitive Proxy Statement for the Annual Meeting of Shareholders held on May 21, 2009, filed with the Commission on April 17, 2009).
 
 
10.2
Contribution Agreement (Incorporated by reference to Exhibit 10.5 filed with the Form S-11).
 
 
10.3
Amended and Restated Limited Partnership Agreements of Pre-existing Pennsylvania Partnerships (Incorporated by reference to Exhibit 10.6 filed with the Form S-11).
 
 
10.4
Agreement of Sale for the Acquisition Properties (Incorporated by reference to Exhibit 10.7 filed with the Form S-11).
 
 
10.5
Option Agreement and Right of First Offer (Incorporated by reference to Exhibit 10.8 filed with the Form S-11).
 
 
10.6
Form of Indemnity Agreement (Incorporated by reference to Exhibit 10.9 filed with the Form S-11).
 
 
10.7
Contribution Agreement among the Trust, the Operating Partnership and the Contributing Owners described therein, related to the Lingerfelt Properties (Incorporated by reference to Exhibit 10.1 filed with the Registrants' Current Report on Form 8-K filed with the Commission on March 3, 1995).
 
 
10.8.1
Third Amended and Restated Credit Agreement, dated as of October 21, 2011, 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., SunTrust Bank and Citizens Bank of Pennsylvania, as Documentation Agents, PNC Bank, National Association, as Co-Documentation Agent, Citibank, N.A., UBS Securities LLC, U.S. Bank National Association, Capital One, N.A. and Bank of Tokyo Mitsubishi UFJ, Ltd., as Managing Agents, Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities LLC, as Joint Bookrunners and Joint Lead Arrangers, and the lenders a party thereto. (The "Third Amended and Restated Credit Agreement") (Incorporated by reference to Exhibit 99.1 filed with the Registrants' Current Report on Form 8-K filed with the Commission on October 27, 2011).

 
 

128

10.8.2
Amendment No. 1 to the Third Amended and Restated Credit Agreement dated January 25, 2013, by and among Liberty Property Limited Partnership, as borrower, Liberty Property Trust, Bank of America, N.A., as administrative agent for itself and the lenders under the Third Amended and Restated Credit Agreement (incorporated by reference to Exhibit 10.8.2 filed with the 2012 Form 10-K).
 
 
10.9@
Liberty Property Trust - Amended Management Severance Plan (Incorporated by reference to Exhibit 10.9 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2008).
 
 
10.10@
Liberty Property Trust - Employee Stock Purchase Plan (Incorporated by reference to Exhibit 4.1 filed with the Trust's Registration Statement on Form S-8 (Commission File No. 333-175263)).
 
 
10.11@
Liberty Property Trust 2008 Long-Term Incentive Plan (Incorporated by reference to Exhibit 10.1 filed with the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2008 (the “First Quarter 2008 Form 10-Q”)).
 
 
10.12@
Form of Restricted Share Grant under the Liberty Property Trust Amended and Restated Share Incentive Plan. (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Registrants filed with the Commission on February 24, 2005 (the “February 24, 2005 8-K”)).
 
 
10.13@
Form of Option Grant Agreement under the Liberty Property Trust Amended and Restated Share Incentive Plan (Incorporated by reference to Exhibit 10.2 filed with the First Quarter 2008 Form 10-Q).
 
 
10.14@
Form of 2009 Long Term Incentive Plan Target Unit Award Agreement (Incorporated by reference to Exhibit 10.2 filed with the Registrants' Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2009).
 
 
10.15.1+
Amended and Restated Limited Partnership of Liberty/Commerz 1701 JFK Boulevard Limited Partnership, dated as of April 11, 2006, by and among Liberty Property Philadelphia Corporation IV East, as general partner, and the Operating Partnership and 1701 JFK Boulevard Philadelphia, L.P. as limited partners (Incorporated by reference to Exhibit 10.3 filed with the Registrants' Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2006 (the “Second Quarter 2006 Form 10-Q”)).
 
 
10.15.2+*
Substitution of Limited Partner Agreement, dated as of December 31, 2013, by and among Liberty Property Philadelphia Corporation IV East, as general partner, Liberty Property Limited Partnership and Comcast Philadelphia Holdings, LLC.
 
 
10.16
NOI Support Agreement, dated as of April 11, 2006, by Liberty Property Limited Partnership in favor of Liberty/Commerz 1701 JFK Boulevard, L.P. and 1701 JFK Boulevard Philadelphia, L.P. (Incorporated by reference to Exhibit 10.4 filed with the Registrants' Second Quarter 2006 Form 10-Q).
 
 
10.17
Completion and Payment Agreement and Guaranty, dated as of April 11, 2006, by the Operating Partnership for the benefit of 1701 JFK Boulevard Philadelphia, L.P. and Liberty/Commerz 1701 JFK Boulevard L.P. (Incorporated by reference to Exhibit 10.5 filed with the Registrants' Second Quarter 2006 Form 10-Q).
 
 
10.18+
Agreement of Limited Partnership of Liberty Washington, L.P. by and between Liberty Washington Venture, LLC and New York State Common Retirement Fund dated as of October 4, 2007 (Incorporated by reference to Exhibit 10.18 filed with the Registrants' Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2010).
 
 

129

10.19+
Contribution Agreement among New York State Common Retirement Fund and Liberty Property Limited Partnership and Liberty Washington, L.P. dated October 4, 2007 (Incorporated by reference to Exhibit 10.19 filed with the Registrants' Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2010).
 
 
10.20$+

Partnership Interest Purchase Agreement, dated as of July 31, 2013, by and among Liberty Property Limited Partnership, Cabot Industrial Value Fund III Manager, Limited Partnership and Cabot Industrial Value Fund III, Inc. (Incorporated by reference to Exhibit 2.1 filed with the Registrants’ Current Report on Form 8-K filed with the Securities and Exchange Commission on October 15, 2013).

 
 
10.21$
Agreement of Sale and Purchase, dated as of November 7, 2013, by and among Liberty Property Limited Partnership, Liberty Property Development Corp., 9755 Patuxent Woods Drive Trust and Annapolis Development, LLC and Greenfield Real Estate, LLC (Incorporated by reference to Exhibit 2.1 filed with the Registrants’ Current Report on Form 8-K filed with the Securities and Exchange Commission on December 30, 2013).

 
 
10.22
First Amendment to Agreement of Sale and Purchase, dated as of December 4, 2013, by and among Liberty Property Limited Partnership, Liberty Property Development Corp., 9755 Patuxent Woods Drive Trust and Annapolis Development, LLC and Greenfield Real Estate, LLC(Incorporated by reference to Exhibit 2.2 filed with the Registrants’ Current Report on Form 8-K filed with the Securities and Exchange Commission on December 30, 2013).

 
 
10.23
Second Amendment to Agreement of Sale and Purchase, dated as of December 17, 2013, by and among Liberty Property Limited Partnership, Liberty Property Development Corp., 9755 Patuxent Woods Drive Trust and Annapolis Development, LLC and Greenfield Real Estate, LLC (Incorporated by reference to Exhibit 2.3 filed with the Registrants’ Current Report on Form 8-K filed with the Securities and Exchange Commission on December 30, 2013).

 
 
10.24
Third Amendment to Agreement of Sale and Purchase, dated as of December 23, 2013, by and among Liberty Property Limited Partnership, Liberty Property Development Corp., 9755 Patuxent Woods Drive Trust and Annapolis Development, LLC and Greenfield Real Estate, LLC (Incorporated by reference to Exhibit 2.4 filed with the Registrants’ Current Report on Form 8-K filed with the Securities and Exchange Commission on December 30, 2013).

 
 
12*
Statement Re: Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges
 
 
21*
Subsidiaries.
 
 
23.1*
Consent of Ernst & Young LLP relating to the Trust.
 
 
23.2*
Consent of Ernst & Young LLP relating to the Operating Partnership.
 
 
31.1*
Certifications of the Chief Executive Officer of Liberty Property Trust required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
 
 
31.2*
Certifications of the Chief Financial Officer of Liberty Property Trust required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
 
 
31.3*
Certifications 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.
 
 

130

31.4*
Certifications 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**
Certifications 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**
Certifications 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**
Certifications of the Chief Executive Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
 
 
32.4**
Certifications 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.
 
 
101.SCH*
XBRL Taxonomy Extension Schema Document.
 
 
101.CAL*
XBRL Taxonomy Extension Calculation Linkbase Document.
 
 
101.DEF*
XBRL Taxonomy Extension Definition Linkbase Document.
 
 
101.LAB*
XBRL Extension Labels Linkbase.
 
 
101.PRE*
XBRL Taxonomy Extension Presentation Linkbase Document.

131

 
____________
*
Filed herewith.
 
 
**
Furnished herewith
 
 
+
Confidential treatment has been granted by or requested from the Securities and Exchange Commission with respect to portions of this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.
 
 
@
Compensatory plan or arrangement.
 
 
$
The Company will file supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request.


132

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

LIBERTY PROPERTY TRUST

Date: February 28, 2014                    By: /s/ WILLIAM P. HANKOWSKY
--------------------
WILLIAM P. HANKOWSKY
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


/s/ WILLIAM P. HANKOWSKY
Chairman of the Board of Trustees, President and Chief Executive Officer (Principal Executive Officer)
February 28, 2014
William P. Hankowsky
 
 
 
 
 

/s/ GEORGE J. ALBURGER, JR.
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
February 28, 2014
George J. Alburger, Jr.
 
 
 
 
 
/s/ M. LEANNE LACHMAN
Trustee
February 28, 2014
M. Leanne Lachman
 
 
 
 
 
/s/ FREDERICK F. BUCHHOLZ
Trustee
February 28, 2014
Frederick F. Buchholz
 
 
 
 
 
/s/ DAVID L. LINGERFELT
Trustee
February 28, 2014
David L. Lingerfelt
 
 
 
 
 
/s/ THOMAS C. DELOACH, JR.
Trustee
February 28, 2014
Thomas C. DeLoach, Jr.
 
 
 
 
 
/s/ DANIEL P. GARTON
Trustee
February 28, 2014
Daniel P. Garton
 
 
 
 
 
/s/ STEPHEN D. STEINOUR
Trustee
February 28, 2014
Stephen D. Steinour
 
 
 
 
 
/s/ KATHERINE E. DIETZE
Trustee
February 28, 2014
Katherine E. Dietze
 
 


133

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

LIBERTY PROPERTY LIMITED PARTNERSHIP

Date: February 28, 2014                    By: /s/ WILLIAM P. HANKOWSKY
--------------------
WILLIAM P. HANKOWSKY
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


/s/ WILLIAM P. HANKOWSKY
Chairman of the Board of Trustees, President and Chief Executive Officer (Principal Executive Officer)
February 28, 2014
William P. Hankowsky
 
 
 
 
 

/s/ GEORGE J. ALBURGER, JR.
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
February 28, 2014
George J. Alburger, Jr.
 
 
 
 
 
/s/ M. LEANNE LACHMAN
Trustee
February 28, 2014
M. Leanne Lachman
 
 
 
 
 
/s/ FREDERICK F. BUCHHOLZ
Trustee
February 28, 2014
Frederick F. Buchholz
 
 
 
 
 
/s/ DAVID L. LINGERFELT
Trustee
February 28, 2014
David L. Lingerfelt
 
 
 
 
 
/s/ THOMAS C. DELOACH, JR.
Trustee
February 28, 2014
Thomas C. DeLoach, Jr.
 
 
 
 
 
/s/ DANIEL P. GARTON
Trustee
February 28, 2014
Daniel P. Garton
 
 
 
 
 
/s/ STEPHEN D. STEINOUR
Trustee
February 28, 2014
Stephen D. Steinour
 
 
 
 
 
/s/ KATHERINE E. DIETZE
Trustee
February 28, 2014
Katherine E. Dietze
 
 


134

EXHIBIT INDEX
EXHIBIT
NO.
 
 
 
3.1.27
Amended and Restated Schedule A to the Second Restated and Amended Agreement of Limited Partnership of the Operating Partnership.
 
 
4.16
Fourth Supplemental Indenture, dated as of September 27, 2013, between the Operating Partnership, as Issuer, and U.S. Bank National Association, as Trustee, supplementing the Senior Indenture, dated as of September 22, 2010, between the Operating Partnership, as Obligor, and U.S. Bank National Association, as Trustee, and relating to $450,000,000 principal amount of 4.400% Senior Notes due 2024 of Liberty Property Limited Partnership.
 
 
10.15.2+
Substitution of Limited Partner Agreement, dated as of December 31, 2013, by and among Liberty Property Philadelphia Corporation IV East, as general partner, Liberty Property Limited Partnership and Comcast Philadelphia Holdings, LLC.
 
 
12
Statement Re: Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges
 
 
21
Subsidiaries.
 
 
23.1
Consent of Ernst & Young LLP relating to the Trust.
 
 
23.2
Consent of Ernst & Young LLP relating to the Operating Partnership.
 
 
31.1
Certification of the Chief Executive Officer of Liberty Property Trust required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
 
 
31.2
Certification of the Chief Financial Officer of Liberty Property Trust required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
 
 
31.3
Certification of the Chief Executive Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
 
 
31.4
Certification of the Chief Financial Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
 
 
32.1
Certification of the Chief Executive Officer of Liberty Property Trust required under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
 
 
32.2
Certification of the Chief Financial Officer of Liberty Property Trust required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
 
 
32.3
Certification of the Chief Executive Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
 
 
32.4
Certification of the Chief Financial Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
 
 
101.INS
XBRL Instance Document.
 
 
101.SCH
XBRL Taxonomy Extension Schema Document.
 
 
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document.
 
 

135

101.DEF
XBRL Taxonomy Extension Definition Linkbase Document.
 
 
101.LAB
XBRL Extension Labels Linkbase.
 
 
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document.
 
 
+
Confidential treatment has been requested with respect to a portion of this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

136