e10vq

/s/ WILLIAM P. HANKOWSKY

William P. Hankowsky

August 7, 2007

Date

President and Chief Executive Officer

/s/ GEORGE J. ALBURGER, JR.

George J. Alburger, Jr.

August 7, 2007

Date

Executive Vice President and Chief Financial Officer

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended June 30, 2007


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

For the transition period from to


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

LIBERTY PROPERTY TRUST
LIBERTY PROPERTY LIMITED PARTNERSHIP

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


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

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

500 Chesterfield Parkway Malvern, Pennsylvania		19355

(Address of Principal Executive Offices)		(Zip Code)

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

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

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

Large Accelerated Filer þ Accelerated Filer o Non-Accelerated Filer o

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

On August 2, 2007, 91,259,928 Common Shares of Beneficial Interest, par value $.001 per share, of Liberty Property Trust were outstanding.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

CONDENSED CONSOLIDATED BALANCE SHEETS OF LIBERTY PROPERTY TRUST

(In thousands, except share amounts)


	June 30, 2007			December 31, 2006
	(Unaudited)
ASSETS
Real estate:
Land and land improvements	$	740,003		$	677,041
Building and improvements		4,008,403			3,802,949
Less accumulated depreciation		(849,996	)		(803,968	)


Operating real estate		3,898,410			3,676,022

Development in progress		651,283			538,521
Land held for development		255,361			195,332


Net real estate		4,805,054			4,409,875

Cash and cash equivalents		12,741			53,737
Restricted cash		34,764			55,671
Accounts receivable		24,216			23,809
Deferred rent receivable		72,522			71,894
Deferred financing and leasing costs, net of accumulated amortization (2007,$111,914; 2006, $100,406)		134,681			129,157
Investments in and advances to unconsolidated joint ventures		72,570			54,723
Assets held for sale		180			51,266
Prepaid expenses and other assets		45,513			60,779


Total assets	$	5,202,241		$	4,910,911


LIABILITIES
Mortgage loans	$	185,814		$	185,978
Unsecured notes		1,955,000			1,955,000
Credit facility		542,960			246,960
Accounts payable		57,346			40,633
Accrued interest		36,339			36,297
Dividend and distributions payable		59,163			58,961
Other liabilities		245,133			217,751


Total liabilities		3,081,755			2,741,580

Minority interest		273,365			297,727

SHAREHOLDERS’ EQUITY
Common shares of beneficial interest, $.001 par value, 187,987,000 shares authorized; 92,069,183 (includes 835,377 in treasury) and 90,972,979 (includes 59,100 in treasury) shares issued and outstanding as of June 30, 2007 and December 31, 2006, respectively		92			91
Additional paid-in capital		1,951,554			1,906,403
Accumulated other comprehensive income		22,525			20,323
Distributions in excess of net income		(75,145	)		(53,886	)
Common shares in treasury, at cost, 835,377 and 59,100 shares as of June 30, 2007 and December 31, 2006, respectively		(51,905	)		(1,327	)


Total shareholders’ equity		1,847,121			1,871,604


Total liabilities and shareholders’ equity	$	5,202,241		$	4,910,911

See accompanying notes.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS OF LIBERTY PROPERTY TRUST

(Unaudited and in thousands, except per share amounts)


	Three Months Ended
	June 30, 2007			June 30, 2006
OPERATING REVENUE
Rental	$	121,843		$	113,322
Operating expense reimbursement		54,495			46,455

Total operating revenue		176,338			159,777


OPERATING EXPENSE
Rental property		37,886			32,014
Real estate taxes		19,490			17,296
General and administrative		12,799			11,558
Depreciation and amortization		39,266			35,299

Total operating expenses		109,441			96,167


Operating income		66,897			63,610

OTHER INCOME (EXPENSE)
Interest and other income		3,298			2,064
Interest expense		(30,137	)		(28,045	)

Total other income (expense)		(26,839	)		(25,981	)

Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures		40,058			37,629
Gain on property dispositions		1,299			17,438
Income taxes		(213	)		(235	)
Minority interest		(6,113	)		(5,738	)
Equity in earnings of unconsolidated joint ventures		326			741


Income from continuing operations		35,357			49,835

Discontinued operations, net of minority interest (including net gain on property dispositions of $17,430 and $16,550 for the three months ended June 30, 2007 and 2006, respectively)		17,070			18,615


Net income	$	52,427		$	68,450


Earnings per common share
Basic:
Income from continuing operations	$	0.38		$	0.56
Income from discontinued operations		0.19			0.21


Income per common share — basic	$	0.57		$	0.77


Diluted:
Income from continuing operations	$	0.38		$	0.55
Income from discontinued operations		0.19			0.21


Income per common share — diluted	$	0.57		$	0.76


Distributions per common share	$	0.62		$	0.615


Weighted average number of common shares outstanding
Basic		91,597			88,934
Diluted		92,328			90,324

See accompanying notes.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS OF LIBERTY PROPERTY TRUST

(Unaudited and in thousands, except per share amounts)


	Six Months Ended
	June 30, 2007			June 30, 2006
OPERATING REVENUE
Rental	$	241,306		$	223,069
Operating expense reimbursement		107,658			93,194

Total operating revenue		348,964			316,263


OPERATING EXPENSE
Rental property		76,030			64,951
Real estate taxes		36,637			33,722
General and administrative		26,138			21,588
Depreciation and amortization		76,982			69,102

Total operating expenses		215,787			189,363


Operating income		133,177			126,900

OTHER INCOME (EXPENSE)
Interest and other income		6,304			3,815
Interest expense		(58,315	)		(57,350	)

Total other income (expense)		(52,011	)		(53,535	)

Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures		81,166			73,365
Gain on property dispositions		1,451			17,483
Income taxes		(514	)		(610	)
Minority interest		(11,657	)		(10,223	)
Equity in earnings of unconsolidated joint ventures		1,055			916


Income from continuing operations		71,501			80,931

Discontinued operations, net of minority interest (including net gain on property dispositions of $20,231 and $76,080 for the six months ended June 30, 2007 and 2006, respectively)		20,624			77,946


Net income	$	92,125		$	158,877


Earnings per common share
Basic:
Income from continuing operations	$	0.78		$	0.91
Income from discontinued operations		0.23			0.88


Income per common share — basic	$	1.01		$	1.79


Diluted:
Income from continuing operations	$	0.78		$	0.89
Income from discontinued operations		0.22			0.87


Income per common share — diluted	$	1.00		$	1.76


Distributions per common share	$	1.24		$	1.23


Weighted average number of common shares outstanding
Basic		91,318			88,587
Diluted		92,168			90,101

See accompanying notes.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW OF LIBERTY PROPERTY TRUST

(Unaudited and in thousands)


	Six Months Ended
	June 30, 2007			June 30, 2006
OPERATING ACTIVITIES
Net income	$	92,125		$	158,877
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		77,483			75,928
Amortization of deferred financing costs		1,989			2,134
Equity in earnings of unconsolidated joint ventures		(1,055	)		(916	)
Distributions from unconsolidated joint ventures		1,050			2,937
Minority interest in net income		12,602			13,594
Gain on property dispositions		(21,682	)		(93,563	)
Noncash compensation		5,433			4,085
Changes in operating assets and liabilities:
Restricted cash		21,712			13,967
Accounts receivable		(241	)		(13,308	)
Deferred rent receivable		(2,113	)		3,031
Prepaid expenses and other assets		14,037			(91,558	)
Accounts payable		16,772			4,401
Accrued interest		42			420
Other liabilities		27,194			(9,581	)

Net cash provided by operating activities		245,348			70,448


INVESTING ACTIVITIES
Investment in properties		(207,617	)		(79,454	)
Investments in and advances to unconsolidated joint ventures		(17,282	)		(1,939	)
Net proceeds from disposition of properties/land		191,595			352,658
Investment in development in progress		(265,483	)		(176,263	)
Investment in land held for development		(95,590	)		(27,817	)
Investment in deferred leasing costs		(21,984	)		(11,311	)

Net cash (used in) provided by investing activities		(416,361	)		55,874


FINANCING ACTIVITIES
Net proceeds from issuance of common shares		39,453			39,841
Purchase of treasury shares		(50,578	)		—
Redemption of preferred units		(23,650	)		—
Repayment of mortgage loans		(5,798	)		(29,185	)
Proceeds from credit facility		552,200			234,445
Repayments on credit facility		(256,200	)		(275,415	)
Increase in deferred financing costs		(126	)		(1,813	)
Distribution paid on common shares		(113,180	)		(108,935	)
Distribution paid on units		(13,048	)		(11,369	)

Net cash provided by (used in) financing activities		129,073			(152,431	)


Decrease in cash and cash equivalents		(41,940	)		(26,109	)
Increase in cash and cash equivalents related to foreign currency translation		944			2,242
Cash and cash equivalents at the beginning of period		53,737			61,629

Cash and cash equivalents at end of period	$	12,741		$	37,762


SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS
Write-off of fully depreciated property and deferred costs	$	35,626		$	42,691
Assumption of mortgage loans	$	5,634		$	—
Issuance of operating partnership units	$	—		$	30,000

See accompanying notes.

Liberty Property Trust

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2007

Note 1: Organization and Basis of Presentation

Organization

Liberty Property Trust (the “Trust”) is a self-administered and self-managed Maryland real estate investment trust (a “REIT”). Substantially all of the Trust’s assets are owned directly or indirectly, and substantially all of the Trust’s operations are conducted directly or indirectly, by Liberty Property Limited Partnership (the “Operating Partnership” and, 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 95.6% of the common equity of the Operating Partnership at June 30, 2007. The Company provides leasing, property management, development, acquisition and other tenant-related services for a portfolio of industrial and office properties that are located within the United States and the United Kingdom. See a description of the Company’s markets in Note 2 to the Company’s financial statements.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Trust and its subsidiaries, including the Operating Partnership, have been prepared in accordance with United States generally accepted accounting principles (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K of the Trust and the Operating Partnership for the year ended December 31, 2006. In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the financial statements for these interim periods have been included. The results of interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. Certain amounts from prior periods have been reclassified to conform to the current period presentation.

Income per Common Share

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


	For the Three Months Ended June 30, 2007						For the Three Months Ended June 30, 2006
			Weighted						Weighted
			Average						Average
	Income		Shares				Income		Shares
	(Numerator)		(Denominator)		Per Share		(Numerator)		(Denominator)		Per Share
Basic income from continuing operations
Income from continuing operations	$	35,357		91,597	$	0.38	$	49,835		88,934	$	0.56

Diluted shares for long-term compensation plans		—		731				—		1,390


Diluted income from continuing operations
Income from continuing operations and assumed conversions		35,357		92,328	$	0.38		49,835		90,324	$	0.55


Basic income from discontinued operations
Discontinued operations net of minority interest		17,070		91,597	$	0.19		18,615		88,934	$	0.21

Dilutive shares for long-term compensation plans		—		731				—		1,390


Diluted income from discontinued operations
Discontinued operations net of minority interest		17,070		92,328	$	0.19		18,615		90,324	$	0.21


Basic income per common share
Net income		52,427		91,597	$	0.57		68,450		88,934	$	0.77

Dilutive shares for long-term compensation plans		—		731				—		1,390


Diluted income per common share
Net income and assumed conversions	$	52,427		92,328	$	0.57	$	68,450		90,324	$	0.76


	For the Six Months Ended June 30, 2007						For the Six Months Ended June 30, 2006
			Weighted						Weighted
			Average						Average
	Income		Shares				Income		Shares
	(Numerator)		(Denominator)		Per Share		(Numerator)		(Denominator)		Per Share
Basic income from continuing operations
Income from continuing operations	$	71,501		91,318	$	0.78	$	80,931		88,587	$	0.91

Diluted shares for long-term compensation plans		—		850				—		1,514


Diluted income from continuing operations
Income from continuing operations and assumed conversions		71,501		92,168	$	0.78		80,931		90,101	$	0.89


Basic income from discontinued operations
Discontinued operations net of minority interest		20,624		91,318	$	0.23		77,946		88,587	$	0.88

Dilutive shares for long-term compensation plans		—		850				—		1,514


Diluted income from discontinued operations
Discontinued operations net of minority interest		20,624		92,168	$	0.22		77,946		90,101	$	0.87


Basic income per common share
Net income		92,125		91,318	$	1.01		158,877		88,587	$	1.79

Dilutive shares for long-term compensation plans		—		850				—		1,514


Diluted income per common share
Net income and assumed conversions	$	92,125		92,168	$	1.00	$	158,877		90,101	$	1.76

Share-Based Compensation

At June 30, 2007, the Company had a share-based employee compensation plan (the “Plan”). The Plan provides that grants may be made in various forms including options and restricted shares. The Company accounts for share-based compensation in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 123(R), “Share-Based Payment” (“SFAS No. 123(R)”).

The Company has authorized the grant of options under the Plan to executive officers, other key employees, non-employee trustees and consultants. All options granted have 10-year terms and most options vest over a three-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 up to 100% after the third anniversary of the date of grant.

Restricted 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 five-year period beginning with the first anniversary of the date of grant.

During the three months ended June 30, 2007 and 2006, the Company recognized $1.4 million and $1.5 million of share-based compensation expense, respectively. During the six months ended June 30, 2007 and 2006, the Company recognized $5.4 million and $4.1 million of share-based compensation expense, respectively.

Foreign Currency Translation

The functional currency of the Company’s United Kingdom operations is pounds sterling. The Company translates the financial statements for the United Kingdom operations into US dollars. Gains and losses resulting from this translation do not impact the results of operations and are included in accumulated other comprehensive income as a separate component of shareholders’ equity. Accumulated other comprehensive income consists solely of the translation adjustments described. Other comprehensive income for the three and six months ended June 30, 2007 was $1.8 million and $2.2 million, respectively, as compared to $5.1 million and $5.6 million, respectively, for the same periods in 2006. Upon sale or upon complete or substantially complete liquidation of a foreign investment, the gain or loss on the sale will include the cumulative translation adjustments that have been previously recorded in accumulated other comprehensive income.

Note 2: Segment Information

The Company operates its portfolio of properties within the United States and the United Kingdom as fully detailed below. The Company reviews the performance of the portfolio on a geographical basis. As such, the following regions are considered the Company’s reportable segments:


Reportable Segments		Markets
Delaware Valley		Southeastern Pennsylvania; New Jersey
Midwest		Lehigh Valley, Pennsylvania; Michigan; Minnesota; Milwaukee; Chicago
Mid-Atlantic		Maryland; Piedmont Triad, NC; Greenville, SC; Richmond; Virginia Beach
Florida		Jacksonville; Orlando; Boca Raton; Tampa; Texas
Arizona		Phoenix
United Kingdom		County of Kent

The Company began to report the results of the Arizona segment during the three months ended March 31, 2007. As required by SFAS No. 131 (“SFAS No. 131”) “Disclosures about Segments of an Enterprise and Related Information,” consolidated financial statements issued by the Company in the future will reflect modifications to the Company’s reportable segments resulting from the changes described above, including reclassification of all comparative prior period segment information.

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

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

For the Three Months Ended June 30, 2007


	Delaware Valley				Midwest
	Southeastern				Lehigh				Mid-						United
	Pennsylvania		Other		Valley		Other		Atlantic		Florida		Arizona		Kingdom		Total
Operating revenue	$	43,107	$	13,444	$	23,350	$	26,213	$	32,769	$	35,809	$	1,061	$	585	$	176,338
Rental property expenses and real estate taxes		14,382		4,504		6,541		9,637		10,004		11,850		271		187		57,376

Property level operating income	$	28,725	$	8,940	$	16,809	$	16,576	$	22,765	$	23,959	$	790	$	398		118,962

Interest and other income																		3,298
Interest expense																		(30,137	)
General and administrative																		(12,799	)
Depreciation and amortization																		(39,266	)

Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures																		40,058
Gain on property dispositions																		1,299
Income taxes																		(213	)
Minority interest																		(6,113	)
Equity in earnings of unconsolidated joint ventures																		326
Discontinued operations, net of minority interest																		17,070


Net income																	$	52,427

For the Three Months Ended June 30, 2006


	Delaware Valley				Midwest
	Southeastern				Lehigh				Mid-						United
	Pennsylvania		Other		Valley		Other		Atlantic		Florida		Arizona		Kingdom		Total
Operating revenue	$	43,517	$	13,187	$	21,104	$	25,643	$	29,385	$	26,124	$	547	$	270	$	159,777
Rental property expenses and real estate taxes		13,138		3,687		5,634		9,509		8,414		8,800		39		89		49,310

Property level operating income	$	30,379	$	9,500	$	15,470	$	16,134	$	20,971	$	17,324	$	508	$	181		110,467

Interest and other income																		2,064
Interest expense																		(28,045	)
General and administrative																		(11,558	)
Depreciation and amortization																		(35,299	)

Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures																		37,629
Gain on property dispositions																		17,438
Income taxes																		(235	)
Minority interest																		(5,738	)
Equity in earnings of unconsolidated joint ventures																		741
Discontinued operations, net of minority interest																		18,615


Net income																	$	68,450

For the Six Months Ended June 30, 2007


	Delaware Valley				Midwest
	Southeastern				Lehigh				Mid-						United
	Pennsylvania		Other		Valley		Other		Atlantic		Florida		Arizona		Kingdom		Total
Operating revenue	$	86,885	$	27,358	$	44,427	$	51,810	$	65,077	$	70,344	$	2,076	$	987	$	348,964
Rental property expenses and real estate taxes		29,386		8,846		11,425		19,651		20,157		22,428		448		326		112,667

Property level operating income	$	57,499	$	18,512	$	33,002	$	32,159	$	44,920	$	47,916	$	1,628	$	661		236,297

Interest and other income																		6,304
Interest expense																		(58,315	)
General and administrative																		(26,138	)
Depreciation and amortization																		(76,982	)

Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures																		81,166
Gain on property dispositions																		1,451
Income taxes																		(514	)
Minority interest																		(11,657	)
Equity in earnings of unconsolidated joint ventures																		1,055
Discontinued operations, net of minority interest																		20,624


Net income																	$	92,125

For the Six Months Ended June 30, 2006


	Delaware Valley				Midwest
	Southeastern				Lehigh				Mid-						United
	Pennsylvania		Other		Valley		Other		Atlantic		Florida		Arizona		Kingdom		Total
Operating revenue	$	85,163	$	26,083	$	42,906	$	52,642	$	57,236	$	51,194	$	547	$	492	$	316,263
Rental property expenses and real estate taxes		26,637		7,543		10,860		19,578		17,044		16,843		39		129		98,673

Property level operating income	$	58,526	$	18,540	$	32,046	$	33,064	$	40,192	$	34,351	$	508	$	363		217,590

Interest and other income																		3,815
Interest expense																		(57,350	)
General and administrative																		(21,588	)
Depreciation and amortization																		(69,102	)

Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures																		73,365
Gain on property dispositions																		17,483
Income taxes																		(610	)
Minority interest																		(10,223	)
Equity in earnings of unconsolidated joint ventures																		916
Discontinued operations, net of minority interest																		77,946


Net income																	$	158,877

Note 3: SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”

In accordance with SFAS No. 144, the operating results and gain/(loss) on the disposition of operating real estate for properties sold and held for sale are reflected in the condensed consolidated statements of operations as discontinued operations. Prior period financial statements have been adjusted for discontinued operations. The proceeds from dispositions of operating properties for the three and six months ended June 30, 2007 were $97.6 million and $181.9 million, respectively, as compared to $101.7 million and $258.2 million for the same periods in 2006.

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


	Three Months Ended						Six Months Ended
	June 30, 2007			June 30, 2006			June 30, 2007			June 30, 2006
Revenues	$	1,301		$	12,083		$	4,912		$	25,587
Operating expenses		(219	)		(4,117	)		(1,348	)		(8,836	)
Interest expense		(250	)		(1,942	)		(999	)		(5,052	)
Depreciation and amortization		(408	)		(3,086	)		(1,227	)		(6,462	)

Income before property dispositions and minority interest	$	424		$	2,938		$	1,338		$	5,237

One property totaling 6,000 square feet located in the Company’s Mid-Atlantic segment was sold in July 2007 and is considered to be held for sale as of June 30, 2007.

Interest expense is allocated to discontinued operations as permitted under Emerging Issues Task Force (“EITF”) Issue 87-24, “Allocation of Interest to Discontinued Operations,” and such interest expense has been included in computing income from discontinued operations. The allocation of interest expense to discontinued operations was based on the ratio of net assets sold (without continuing involvement) or held for sale to the sum of total net assets plus consolidated debt.

Note 4: Joint Ventures

Liberty/Commerz 1701 JFK Boulevard, LP

On April 13, 2006, the Company entered into a joint venture pursuant to which it sold an 80% interest in the equity of Comcast Center, a 1.25 million square foot office tower the Company is developing in Philadelphia, Pennsylvania. The transaction valued the property at $512 million. In connection with the transaction, the joint venture obtained a $324 million forward loan commitment at a rate of 6.15% assuming the loan closes in March 2008. In addition to retaining a 20% interest, the Company will receive leasing and property management fees and may receive a promoted interest if certain return thresholds are met.

Under the terms of the joint venture arrangement, the Company is obligated to complete development of the building, the estimated cost of which is approximately $495 million, and is also obligated to complete the initial lease up of the property. Based upon the updated leasing schedule as of June 30, 2007, the Company may have to fund $3.5 million in rent support. The criteria for sale recognition in accordance with SFAS No. 66 “Accounting for the Sale of Real Estate” have not been met and this transaction is accounted for as a financing arrangement.

Liberty Illinois, LP

On April 25, 2006, the Company entered into a joint venture selling a 75% equity interest in six distribution buildings totaling 2.1 million square feet and 104 acres of developable land. The joint venture valued the buildings and land at $125.0 million. The Company retained a 25% ownership interest in the joint venture, receives development, leasing and property management fees, and may receive a promoted interest if certain thresholds are met.

Note 5: Preferred Units

On June 15, 2007, the Company redeemed for $23.7 million its outstanding 7.625% Series D Cumulative Redeemable Preferred Units. The redemption resulted in a $0.7 million write off of Series D issuance costs which is reflected in minority interest in the accompanying condensed consolidated statements of operations.

Note 6: Accelerated Share Repurchase

On June 25, 2007, the Company initiated a $50 million accelerated share repurchase program. Purchases of 776,000 and 301,000 shares were made on June 27, 2007 and July 12, 2007, respectively.

Note 7: Recently Issued Accounting Standards

SFAS No. 157

In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”), which defines fair value, establishes a framework for consistently measuring fair value under US GAAP and expands disclosures about fair value measurements. SFAS No. 157 is effective for the Company beginning January 1, 2008, and the provisions of SFAS No. 157 will be applied prospectively as of that date. The Company does not anticipate that the adoption of this statement will have a material effect on its financial position or results of operations.

SFAS No. 159

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS No. 159”). SFAS No. 159 provides companies with an option to report selected financial assets and liabilities at fair value and establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company does not anticipate that the adoption of this statement will have a material effect on its financial position or results of operations.

FIN 48

In July 2006, the FASB issued FASB Interpretation No. 48, ”Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 is an interpretation of SFAS No. 109, “Accounting for Income Taxes”, and it seeks to reduce the diversity in practice associated with certain aspects of measurement and recognition in accounting for income taxes. In addition, FIN 48 provides guidance on derecognition, classification, interest and penalties, and accounting in interim periods and requires expanded disclosure with respect to the uncertainty in income taxes.

The Company adopted the provisions of FIN 48 on January 1, 2007. As a result of the implementation of FIN 48, no uncertain tax positions were identified which would result in the recording of a liability for unrecognized tax benefits, and correspondingly no benefit recognition was identified that would affect the effective tax rate. Additionally, there are no possibly significant unrecognized tax benefits which 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 are no interest and penalties deducted in the current period and no interest and penalties accrued at June 30, 2007 and December 31, 2006, respectively.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, various states and the United Kingdom. With few exceptions, the Company is no longer subject to U.S. federal, state, and local, or United Kingdom examinations by tax authorities for years before 2002.

Note 8: Commitments and Contingencies

The Company entered into a contract to purchase properties comprising 428,000 square feet and 19 acres of land for an investment of $104.1 million. The properties are located in the Arizona region. As part of this transaction the Company agreed to assume a mortgage of $51 million. Concurrent with entering into this contract, the Company paid a deposit of approximately $1.2 million which is included in prepaid expenses and other assets in the accompanying condensed consolidated balance sheet as of June 30, 2007.

Note 9: Subsequent Events

On July 23, 2007, the Company entered into an Agreement and Plan of Merger with Republic Property Trust and Republic Property Limited Partnership, (together, “Republic”). Pursuant to the agreement the Company will acquire Republic for $14.70 per fully diluted share and unit in cash and will assume debt which was approximately $415 million at March 31, 2007. The total consideration is approximately $900 million. The transaction has been approved by both companies’ boards of trustees and is expected to close in the fourth quarter of 2007. The transaction is subject to the approval of Republic’s shareholders as well as other customary closing conditions.

After the completion of the transaction, the Company will own 2.6 million square feet of office properties in the Greater Washington, DC area. The Republic portfolio consists of 13 operating properties consisting of 24 office buildings and a redevelopment property which, upon completion, is expected to comprise 176,000 square feet of office space.

CONDENSED CONSOLIDATED BALANCE SHEETS OF

LIBERTY PROPERTY LIMITED PARTNERSHIP

(In thousands)


	June 30, 2007			December 31, 2006
	(Unaudited)
ASSETS
Real estate:
Land and land improvements	$	740,003		$	677,041
Building and improvements		4,008,403			3,802,949
Less accumulated depreciation		(849,996	)		(803,968	)


Operating real estate		3,898,410			3,676,022

Development in progress		651,283			538,521
Land held for development		255,361			195,332


Net real estate		4,805,054			4,409,875

Cash and cash equivalents		12,741			53,737
Restricted cash		34,764			55,671
Accounts receivable		24,216			23,809
Deferred rent receivable		72,522			71,894
Deferred financing and leasing costs, net of accumulated amortization (2007, $111,914; 2006 $100,406)		134,681			129,157
Investments in and advances to unconsolidated joint ventures		72,570			54,723
Assets held for sale		180			51,266
Prepaid expenses and other assets		45,513			60,779


Total assets	$	5,202,241		$	4,910,911


LIABILITIES
Mortgage loans	$	185,814		$	185,978
Unsecured notes		1,955,000			1,955,000
Credit facility		542,960			246,960
Accounts payable		57,346			40,633
Accrued interest		36,339			36,297
Dividend and distributions payable		59,163			58,961
Other liabilities		245,133			217,751


Total liabilities		3,081,755			2,741,580

Minority interest		477			419

OWNERS’ EQUITY
General partner’s equity — common units		1,847,121			1,871,604
Limited partners’ equity — preferred units		188,003			210,960
— common units		84,885			86,348


Total owners’ equity		2,120,009			2,168,912


Total liabilities and owners’ equity	$	5,202,241		$	4,910,911

See accompanying notes.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS OF

LIBERTY PROPERTY LIMITED PARTNERSHIP

(Unaudited and in thousands, except per unit amounts)


	Three Months Ended
	June 30, 2007			June 30, 2006
OPERATING REVENUE
Rental	$	121,843		$	113,322
Operating expense reimbursement		54,495			46,455

Total operating revenue		176,338			159,777


OPERATING EXPENSE
Rental property		37,886			32,014
Real estate taxes		19,490			17,296
General and administrative		12,799			11,558
Depreciation and amortization		39,266			35,299

Total operating expenses		109,441			96,167


Operating income		66,897			63,610

OTHER INCOME (EXPENSE)
Interest and other income		3,298			2,064
Interest expense		(30,137	)		(28,045	)

Total other income (expense)		(26,839	)		(25,981	)

Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures		40,058			37,629
Gain on property dispositions		1,299			17,438
Income taxes		(213	)		(235	)
Minority interest		(20	)		—
Equity in earnings of unconsolidated joint ventures		326			741


Income from continuing operations		41,450			55,573

Discontinued operations (including net gain on property dispositions of $17,430 and $16,550 for the three months ended June 30, 2007 and 2006, respectively)		17,854			19,488


Net income		59,304			75,061

Preferred unit distributions		(3,774	)		(3,401	)
Excess of preferred unit redemption over carrying amount		(696	)		—


Income available to common unitholders	$	54,834		$	71,660


Earnings per common unit
Basic:
Income from continuing operations	$	0.38		$	0.56
Income from discontinued operations		0.19			0.21


Income per common unit — basic	$	0.57		$	0.77


Diluted:
Income from continuing operations	$	0.38		$	0.55
Income from discontinued operations		0.19			0.21


Income per common unit — diluted	$	0.57		$	0.76


Distributions per common unit	$	0.62		$	0.615


Weighted average number of common units outstanding
Basic		95,787			92,587
Diluted		96,518			93,977

See accompanying notes.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS OF

LIBERTY PROPERTY LIMITED PARTNERSHIP

(Unaudited and in thousands, except per unit amounts)


	Six Months Ended
	June 30, 2007			June 30, 2006
OPERATING REVENUE
Rental	$	241,306		$	223,069
Operating expense reimbursement		107,658			93,194

Total operating revenue		348,964			316,263


OPERATING EXPENSE
Rental property		76,030			64,951
Real estate taxes		36,637			33,722
General and administrative		26,138			21,588
Depreciation and amortization		76,982			69,102

Total operating expenses		215,787			189,363


Operating income		133,177			126,900

OTHER INCOME (EXPENSE)
Interest and other income		6,304			3,815
Interest expense		(58,315	)		(57,350	)

Total other income (expense)		(52,011	)		(53,535	)

Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures		81,166			73,365
Gain on property dispositions		1,451			17,483
Income taxes		(514	)		(610	)
Minority interest		(56	)		—
Equity in earnings of unconsolidated joint ventures		1,055			916


Income from continuing operations		83,102			91,154

Discontinued operations (including net gain on property dispositions of $20,231 and $76,080 for the six months ended June 30, 2007 and 2006, respectively)		21,569			81,317


Net income		104,671			172,471

Preferred unit distributions		(7,628	)		(6,802	)
Excess of preferred unit redemption over carrying amount		(696	)		—


Income available to common unitholders	$	96,347		$	165,669


Earnings per common unit
Basic:
Income from continuing operations	$	0.78		$	0.91
Income from discontinued operations		0.23			0.88


Income per common unit – basic	$	1.01		$	1.79


Diluted:
Income from continuing operations	$	0.78		$	0.89
Income from discontinued operations		0.22			0.87


Income per common unit – diluted	$	1.00		$	1.76


Distributions per common unit	$	1.24		$	1.23


Weighted average number of common units outstanding
Basic		95,508			92,173
Diluted		96,358			93,687

See accompanying notes.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW OF

LIBERTY PROPERTY LIMITED PARTNERSHIP

(Unaudited and in thousands)


	Six Months Ended
	June 30, 2007			June 30, 2006
OPERATING ACTIVITIES
Net income	$	104,671		$	172,471
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		77,483			75,928
Amortization of deferred financing costs		1,989			2,134
Equity in earnings of unconsolidated joint ventures		(1,055	)		(916	)
Distributions from unconsolidated joint ventures		1,050			2,937
Minority interest in net income		56			—
Gain on property dispositions		(21,682	)		(93,563	)
Noncash compensation		5,433			4,085
Changes in operating assets and liabilities:
Restricted cash		21,712			13,967
Accounts receivable		(241	)		(13,308	)
Deferred rent receivable		(2,113	)		3,031
Prepaid expenses and other assets		14,037			(91,558	)
Accounts payable		16,772			4,401
Accrued interest		42			420
Other liabilities		27,194			(9,581	)

Net cash provided by operating activities		245,348			70,448


INVESTING ACTIVITIES
Investment in properties		(207,617	)		(79,454	)
Investments in and advances to unconsolidated joint ventures		(17,282	)		(1,939	)
Net proceeds from disposition of properties/land		191,595			352,658
Investment in development in progress		(265,483	)		(176,263	)
Investment in land held for development		(95,590	)		(27,817	)
Investment in deferred leasing costs		(21,984	)		(11,311	)

Net cash (used in) provided by investing activities		(416,361	)		55,874


FINANCING ACTIVITIES
Redemption of preferred units		(23,650	)		—
Repayments of mortgage loans		(5,798	)		(29,185	)
Proceeds from credit facility		552,200			234,445
Repayments on credit facility		(256,200	)		(275,415	)
Increase in deferred financing costs		(126	)		(1,813	)
Capital contributions		39,453			39,841
Distributions to partners		(176,806	)		(120,304	)

Net cash provided by (used in) financing activities		129,073			(152,431	)


Decrease in cash and cash equivalents		(41,940	)		(26,109	)
Increase in cash and cash equivalents related to foreign currency translation		944			2,242
Cash and cash equivalents at beginning of period		53,737			61,629

Cash and cash equivalents at end of period	$	12,741		$	37,762


SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS
Write-off of fully depreciated property and deferred costs	$	35,626		$	42,691
Assumption of mortgage loans	$	5,634		$	—
Issuance of operating partnership units	$	—		$	30,000

See accompanying notes.

Liberty Property Limited Partnership

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2007

Note 1: Organization and Basis of Presentation

Organization

Liberty Property Trust (“the Trust”) is a self-administered and self-managed Maryland real estate investment trust (a “REIT”). Substantially all of the Trust’s assets are owned directly or indirectly, and substantially all of the Trust’s operations are conducted directly or indirectly, by its subsidiary, Liberty Property Limited Partnership, a Pennsylvania limited partnership, (the “Operating Partnership” and, together with the Trust and their consolidated subsidiaries, the “Company”). The Trust is the sole general partner and also a limited partner of the Operating Partnership, owning 95.6% of the common equity of the Operating Partnership at June 30, 2007. The Company provides leasing, property management, development, acquisition and other tenant-related services for a portfolio of industrial and office properties that are located within the United States and the United Kingdom. See a description of the Company’s markets in Note 2 to the Company’s financial statements.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Operating Partnership and its subsidiaries have been prepared in accordance with United States generally accepted accounting principles (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K of the Trust and the Operating Partnership for the year ended December 31, 2006. In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the financial statements for these interim periods have been included. The results of interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. Certain amounts from prior periods have been reclassified to conform to the current period presentation.

Income per Common Unit

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


	For the Three Months Ended June 30, 2007							For the Three Months Ended June 30, 2006
				Weighted							Weighted
	Income			Average Units		Per		Income			Average Units		Per
	(Numerator)			(Denominator)		Unit		(Numerator)			(Denominator)		Unit
Income from continuing operations	$	41,450						$	55,573
Less: Preferred unit distributions		(3,774	)						(3,401	)
Less: Excess of preferred unit redemption over carrying amount		(696	)						—


Basic income from continuing operations
Income from continuing operations available to common unitholders		36,980			95,787	$	0.38		52,172			92,587	$	0.56

Dilutive units for long-term compensation plans		—			731				—			1,390


Diluted income from continuing operations
Income from continuing operations available to common unitholders and assumed conversions		36,980			96,518	$	0.38		52,172			93,977	$	0.55


Basic income from discontinued operations
Discontinued operations		17,854			95,787	$	0.19		19,488			92,587	$	0.21

Dilutive units for long-term compensation plans		—			731				—			1,390


Diluted income from discontinued operations
Discontinued operations		17,854			96,518	$	0.19		19,488			93,977	$	0.21


Basic income per common unit
Income available to common unitholders		54,834			95,787	$	0.57		71,660			92,587	$	0.77

Diluted units for long-term compensation plans		—			731				—			1,390


Diluted income per common unit
Income available to common unitholders and assumed conversions	$	54,834			96,518	$	0.57	$	71,660			93,977	$	0.76


	For the Six Months Ended June 30, 2007							For the Six Months Ended June 30, 2006
				Weighted							Weighted
	Income			Average Units		Per		Income			Average Units		Per
	(Numerator)			(Denominator)		Unit		(Numerator)			(Denominator)		Unit
Income from continuing operations	$	83,102						$	91,154
Less: Preferred unit distributions		(7,628	)						(6,802	)
Less: Excess of preferred unit redemption over carrying amount		(696	)						—


Basic income from continuing operations
Income from continuing operations available to common unitholders		74,778			95,508	$	0.78		84,352			92,173	$	0.91

Dilutive units for long-term compensation plans		—			850				—			1,514


Diluted income from continuing operations
Income from continuing operations available to common unitholders and assumed conversions		74,778			96,358	$	0.78		84,352			93,687	$	0.89


Basic income from discontinued operations
Discontinued operations		21,569			95,508	$	0.23		81,317			92,173	$	0.88

Dilutive units for long-term compensation plans		—			850				—			1,514


Diluted income from discontinued operations
Discontinued operations		21,569			96,358	$	0.22		81,317			93,687	$	0.87


Basic income per common unit
Income available to common unitholders		96,347			95,508	$	1.01		165,669			92,173	$	1.79

Diluted units for long-term compensation plans		—			850				—			1,514


Diluted income per common unit
Income available to common unitholders and assumed conversions	$	96,347			96,358	$	1.00	$	165,669			93,687	$	1.76

Foreign Currency Translation

The functional currency of the Company’s United Kingdom operations is pounds sterling. The Company translates the financial statements for the United Kingdom operations into US dollars. Gains and losses resulting from this translation do not impact the results of operations and are included in general partner’s equity – common units. Other comprehensive income for the three and six months ended June 30, 2007 was $1.8 million and $2.2 million, respectively, as compared to $5.1 million and $5.6 million for the same periods in 2006. Upon sale or upon complete or substantially complete liquidation of a foreign investment, the gain or loss on the sale will include the cumulative translation adjustments, which equaled $22.5 million and $20.3 million at June 30, 2007 and December 31, 2006, respectively, that have been previously recorded in general partner’s equity – common units.

Note 2: Segment Information


Reportable Segments		Markets
Delaware Valley		Southeastern Pennsylvania; New Jersey
Midwest		Lehigh Valley, Pennsylvania; Michigan; Minnesota; Milwaukee; Chicago
Mid-Atlantic		Maryland; Piedmont Triad, NC; Greenville, SC; Richmond; Virginia Beach
Florida		Jacksonville; Orlando; Boca Raton; Tampa; Texas
Arizona		Phoenix
United Kingdom		County of Kent

The Company began to report the results of the Arizona segment during the three months ended March 31, 2007. As required by SFAS No. 131 (“SFAS No. 131”) “Disclosures about Segments of an Enterprise and Related Information,” consolidated financial statements issued by the Company in the future will reflect modifications to the Company’s reportable segments resulting from the changes described above including reclassification of all comparative prior period segment information.

For the Three Months Ended June 30, 2007


	Delaware Valley				Midwest
	Southeastern				Lehigh				Mid-						United
	Pennsylvania		Other		Valley		Other		Atlantic		Florida		Arizona		Kingdom		Total
Operating revenue	$	43,107	$	13,444	$	23,350	$	26,213	$	32,769	$	35,809	$	1,061	$	585	$	176,338
Rental property expenses and real estate taxes		14,382		4,504		6,541		9,637		10,004		11,850		271		187		57,376

Property level operating income	$	28,725	$	8,940	$	16,809	$	16,576	$	22,765	$	23,959	$	790	$	398		118,962

Interest and other income																		3,298
Interest expense																		(30,137	)
General and administrative																		(12,799	)
Depreciation and amortization																		(39,266	)

Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures																		40,058
Gain on property dispositions																		1,299
Income taxes																		(213	)
Minority interest																		(20	)
Equity in earnings of unconsolidated joint ventures																		326
Discontinued operations																		17,854


Net income																	$	59,304

For the Three Months Ended June 30, 2006


	Delaware Valley				Midwest
	Southeastern				Lehigh				Mid-						United
	Pennsylvania		Other		Valley		Other		Atlantic		Florida		Arizona		Kingdom		Total
Operating revenue	$	43,517	$	13,187	$	21,104	$	25,643	$	29,385	$	26,124	$	547	$	270	$	159,777
Rental property expenses and real estate taxes		13,138		3,687		5,634		9,509		8,414		8,800		39		89		49,310

Property level operating income	$	30,379	$	9,500	$	15,470	$	16,134	$	20,971	$	17,324	$	508	$	181		110,467

Interest and other income																		2,064
Interest expense																		(28,045	)
General and administrative																		(11,558	)
Depreciation and amortization																		(35,299	)

Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures																		37,629
Gain on property dispositions																		17,438
Income taxes																		(235	)
Minority interest																		—
Equity in earnings of unconsolidated joint ventures																		741
Discontinued operations																		19,488


Net income																	$	75,061

For the Six Months Ended June 30, 2007


	Delaware Valley				Midwest
	Southeastern				Lehigh				Mid-						United
	Pennsylvania		Other		Valley		Other		Atlantic		Florida		Arizona		Kingdom		Total
Operating revenue	$	86,885	$	27,358	$	44,427	$	51,810	$	65,077	$	70,344	$	2,076	$	987	$	348,964
Rental property expenses and real estate taxes		29,386		8,846		11,425		19,651		20,157		22,428		448		326		112,667

Property level operating income	$	57,499	$	18,512	$	33,002	$	32,159	$	44,920	$	47,916	$	1,628	$	661		236,297

Interest and other income																		6,304
Interest expense																		(58,315	)
General and administrative																		(26,138	)
Depreciation and amortization																		(76,982	)

Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures																		81,166
Gain on property dispositions																		1,451
Income taxes																		(514	)
Minority interest																		(56	)
Equity in earnings of unconsolidated joint ventures																		1,055
Discontinued operations																		21,569


Net income																	$	104,671

For the Six Months Ended June 30, 2006



	Delaware Valley				Midwest
	Southeastern				Lehigh				Mid-						United
	Pennsylvania		Other		Valley		Other		Atlantic		Florida		Arizona		Kingdom		Total
Operating revenue	$	85,163	$	26,083	$	42,906	$	52,642	$	57,236	$	51,194	$	547	$	492	$	316,263
Rental property expenses and real estate taxes		26,637		7,543		10,860		19,578		17,044		16,843		39		129		98,673

Property level operating income	$	58,526	$	18,540	$	32,046	$	33,064	$	40,192	$	34,351	$	508	$	363		217,590

Interest and other income																		3,815
Interest expense																		(57,350	)
General and administrative																		(21,588	)
Depreciation and amortization																		(69,102	)

Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures																		73,365
Gain on property dispositions																		17,483
Income taxes																		(610	)
Minority interest																		—
Equity in earnings of unconsolidated joint ventures																		916
Discontinued operations																		81,317


Net income																	$	172,471

Note 3: SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”

In accordance with SFAS No. 144, the operating results and gain/(loss) on the disposition of operating real estate for properties sold and held for sale are reflected in the condensed consolidated statements of operations as discontinued operations. Prior period financial statements have been adjusted for discontinued operations. The proceeds from dispositions of operating properties for the three and six months ended June 30, 2007 were $97.6 million and $181.9 million, respectively, as compared to the $101.7 million and $258.2 million, respectively, for the same periods in 2006.

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


	Three Months Ended						Six Months Ended
	June 30, 2007			June 30, 2006			June 30, 2007			June 30, 2006
Revenues	$	1,301		$	12,083		$	4,912		$	25,587
Operating expenses		(219	)		(4,117	)		(1,348	)		(8,836	)
Interest expense		(250	)		(1,942	)		(999	)		(5,052	)
Depreciation and amortization		(408	)		(3,086	)		(1,227	)		(6,462	)

Income before property dispositions and minority interest	$	424		$	2,938		$	1,338		$	5,237

One property totaling 6,000 square feet located in the Company’s Mid-Atlantic segment was sold in July 2007 and is considered to be held for sale as of June 30, 2007.

Note 4: Joint Ventures

Liberty/Commerz 1701 JFK Boulevard, LP

Under the terms of the joint venture arrangement, the Company is obligated to complete development of the building, the estimated cost of which is approximately $495 million, and is also obligated to complete the initial lease up of the property. Based upon the updated leasing schedule as of June 30, 2007, the Company may have to fund $3.5 million in rent support. The criteria for sale recognition in accordance with SFAS No. 66 “Accounting for the Sale of Real Estate” have not been met and this transaction is accounted for a financing arrangement.

Liberty Illinois, LP

Note 5: Preferred Units

Note 6: Recently Issued Accounting Standards

SFAS No. 157

SFAS No. 159

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS No. 159”). SFAS No. 159 provides companies with an option to report selected financial assets and liabilities at fair value and establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurements attributes for similar types of assets and liabilities. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company does not anticipate that the adoption of this statement will have a material effect on its financial position or results of operations.

FIN 48

Note 7: Commitments and Contingencies

Note 8: Subsequent Events

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

Overview

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

As of June 30, 2007, the Company owned and operated 373 industrial and 298 office properties (the “Wholly Owned Properties in Operation”) totaling 60.9 million square feet. In addition, as of June 30, 2007, the Company owned 26 properties under development (the “Wholly Owned Properties under Development”) and 1,409 acres of land, substantially all of which is zoned for commercial use. Additionally, the Company had an ownership interest in 42 industrial and 10 office properties comprising 7.5 million square feet, (the “JV Properties in Operation” and, together with the Wholly Owned Properties in Operation, the “Properties in Operation”), four development properties comprising 690,000 square feet (the “JV Properties under Development” and together with the Wholly Owned Properties under Development, the “Properties under Development”) and 380 acres of developable land owned by unconsolidated joint ventures.

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

Rental demand for the Properties in Operation generally improved during the six months ended June 30, 2007. Although in some markets the Company continues to experience market conditions characterized by an oversupply of leaseable space and/or soft demand, the Company believes that the majority of its markets are recovering from several years of a generally slow real estate economy. Rental rates in many of the Company’s markets have stabilized or improved. The Company successfully leased 5.2 million square feet during the three months ended June 30, 2007 and attained occupancy of 90.9% for the Wholly Owned Properties in Operation and 92.5% for the Joint Venture Properties in Operation for a combined occupancy of 91.1% for the Properties in Operation as of that date. The Company believes that straight line rents on renewal and replacement leases for 2007 will on average be 1% to 3% greater than rents on expiring leases, notwithstanding selected decreases. Furthermore, the Company believes that average occupancy for its Properties in Operation will improve by 1% to 2% for 2007 compared to 2006.

WHOLLY OWNED CAPITAL ACTIVITY

Conditions to date in 2007 for the acquisition of properties continue to be very competitive. For 2007, the Company believes that wholly owned property acquisitions will be in the $450 to $550 million range and that, similar to 2006, certain of the acquired properties will be either vacant or underleased. A substantial portion of the overall planned acquisition activity will be used to facilitate the Company’s entry into the Phoenix market. In addition, as described below, the Company expects to close on a $900 million acquisition of Republic Property Trust. The Company executes acquisitions of properties when it believes that they are attractively priced and will positively contribute to earnings upon lease up and stabilization. During the three months ended June 30, 2007, the Company acquired five properties representing 363,000 square feet for a Total Investment, as defined below, of $69.4 million. From January 1, 2007 to June 30, 2007, the Company acquired 14 properties representing 2.0 million square feet for a Total Investment of $201.0 million. These acquisitions generally served to increase the Company’s presence or balance the product mix in markets the Company believes to have significant potential. The properties acquired in the six months ended June 30, 2007 were primarily located in Phoenix (500,000 square feet) and Houston (900,000 square feet). “Total Investment” for a property is defined as the property’s purchase price plus closing costs and management’s estimate, as determined at the time of acquisition, of the cost of necessary building improvements in the case of acquisitions, or land costs and land and building improvement costs in the case of development projects, and, where appropriate, other development costs and carrying costs.

The real estate investment market continues to be very strong. Given this situation, the Company anticipates that wholly owned disposition activity will be in the $350 million to $450 million range for 2007. Disposition activity allows the Company to (1) reduce its holdings in certain markets and product types within a market; (2) lower the average age of the portfolio; and (3) take advantage of favorable market conditions to optimize the cash proceeds from the sale of certain assets. A substantial portion of the planned disposition activity will be related to the Company’s planned exit from the Michigan market. During the three months ended June 30, 2007, the Company realized proceeds of $111.0 million from the sale of 10 operating properties representing 1.8 million square feet and 149 acres of land. From January 1, 2007 to June 30, 2007, the Company realized proceeds of $195.3 million from the sale of 29 operating properties representing 2.7 million square feet and 149 acres of land. A substantial portion of the properties sold during this period were in the Michigan market.

In 2007, the Company will continue to pursue development opportunities and the Company believes that during 2007 it will bring into service from its development pipeline approximately $325 to $350 million of Total Investment in operating real estate. During the three months ended June 30, 2007, the Company brought into service 11 Wholly Owned Properties under Development representing 2.2 million square feet and a Total Investment of $164.0 million, and initiated $34.7 million in real estate development. During the six months ended June 30, 2007, the Company brought into service 14 Wholly Owned Properties under Development representing 2.4 million square feet and a Total Investment of $189.1 million, and initiated $117.1 million in real estate development. As of June 30, 2007, the projected Total Investment of the Wholly Owned Properties under Development (excluding the Comcast Center) was $388.8 million. The projected Total Investment for the Comcast Center is $495 million. Although in April 2006 the Company entered into a joint venture, whereby the Company sold an 80% interest in the equity of the Comcast Center, the terms of the joint venture obligate the Company to complete the development of the building and consequently this development is treated as a Wholly Owned Property under Development.

JOINT VENTURE CAPITAL ACTIVITY

The Company periodically enters into joint venture relationships in connection with the execution of its real estate operating strategy. During 2006, the Company entered into two joint ventures. – See Note 4 to the Company’s financial statements. The Company believes that joint ventures in which it holds an ownership interest will acquire properties in the $75 to $100 million range in 2007. During the three months ended June 30, 2007, joint ventures in which the Company held an ownership interest acquired two properties representing 500,000 square feet for a Total Investment of $26.3 million. In addition, during the three months ended June 30, 2007, unconsolidated joint ventures brought into service one development property representing 593,000 square feet and a Total Investment of $27.4 million and initiated $16.4 million in real estate development. During the six months ended June 30, 2007, joint ventures in which the Company held an ownership interest acquired two properties representing 500,000 square feet for a Total Investment of $26.3 million. In addition, during the six months ended June 30, 2007, unconsolidated joint ventures brought into service two development properties representing 796,000 square feet and a Total Investment of $38.5 million and initiated $16.4 million in real estate development. As of June 30, 2007, the projected Total Investment of Joint Venture Properties under Development was $60.1 million.

ACQUISITION OF REPUBLIC PROPERTY TRUST

On July 23, 2007, The Company entered into an Agreement and Plan of Merger with Republic Property Trust, a Maryland real estate investment trust and Republic Property Limited Partnership, a Delaware limited partnership and Republic’s operating partnership (together, “Republic”). Pursuant to the Merger Agreement, the Company will acquire Republic for $14.70 per fully diluted share and unit in cash and will assume debt which was approximately $415 million at March 31, 2007. The Company believes that its existing sources of capital, which include the public debt and equity markets, proceeds from disposition of properties, equity contributions from joint venture partners and net cash provided from operating activities will provide sufficient funds to fund the Republic acquisition. The parties currently anticipate that the Merger, which is subject to customary closing conditions, will close in the fourth quarter of 2007.

The composition of the Company’s Properties in Operation as of June 30, 2007 and 2006 is as follows (in thousands, except dollars and percentages):


	Net Rent
	Per Square Foot				Total Square Feet				Percent Occupied
	June 30				June 30				June 30
	2007		2006		2007		2006		2007			2006
Wholly Owned Properties in Operation:
Industrial-Distribution	$	4.34	$	4.25		27,296		25,623		90.2	%		93.5	%
Industrial-Flex	$	8.81	$	8.71		12,405		12,333		92.3	%		93.5	%
Office	$	13.82	$	13.78		21,215		19,870		90.9	%		90.4	%

	$	8.56	$	8.42		60,916		57,826		90.9	%		92.5	%


	Net Rent
	Per Square Foot				Total Square Feet				Percent Occupied
	June 30				June 30				June 30
	2007		2006		2007		2006		2007			2006
Joint Venture Properties in Operation:
Industrial-Distribution	$	3.60	$	4.11		6,934		5,229		92.2	%		95.9	%
Industrial-Flex	$	28.64	$	29.67		171		170		100.0	%		100.0	%
Office	$	36.56	$	33.13		364		364		94.7	%		98.1	%

	$	5.86	$	6.76		7,469		5,763		92.5	%		96.1	%


	Net Rent
	Per Square Foot				Total Square Feet				Percent Occupied
	June 30				June 30				June 30
	2007		2006		2007		2006		2007			2006
Properties in Operation:
Industrial-Distribution	$	4.19	$	4.23		34,230		30,852		90.6	%		93.9	%
Industrial-Flex	$	9.10	$	9.02		12,576		12,503		92.4	%		93.6	%
Office	$	14.22	$	14.16		21,579		20,234		91.0	%		90.6	%

	$	8.27	$	8.26		68,385		63,589		91.1	%		92.8	%

Geographic segment data for the three and six months ended June 30, 2007 and 2006 are included in Note 2 to the Company’s financial statements.

Forward-Looking Statements

When used throughout this report, the words “believes,” “anticipates” 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 secure additional properties and sites that meet its criteria for acquisition or development; the availability and cost of capital; the effect of prevailing market interest rates; and other risks described from time to time in the Company’s filings with the SEC. Given these uncertainties, readers are cautioned not to place undue reliance on such statements.

Critical Accounting Policies and Estimates

Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2006 for a discussion of critical accounting policies which include capitalized costs, revenue recognition, allowance for doubtful accounts and impairment of real estate and intangibles. During the three months ended June 30, 2007, there were no material changes to these policies.

Results of Operations

The following discussion is based on the consolidated financial statements of the Company. It compares the results of operations of the Company for the three and six months ended June 30, 2007 with the results of operations of the Company for the three and six months ended June 30, 2006. As a result of the varying levels of development, acquisition and disposition activities by the Company in 2007 and 2006, the overall operating results of the Company during such periods are not directly comparable. However, certain data, including the Same Store comparison, do lend themselves to direct comparison.

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

Comparison of Three and Six Months Ended June 30, 2007 to Three and Six Months Ended June 30, 2006

Overview
The Company’s average gross investment in operating real estate owned for the three months ended June 30, 2007 increased to $4,621.5 million from $3,927.8 million for the three months ended June 30, 2006, and for the six months ended June 30, 2007 increased to $4,513.1 million from $3,885.8 million for the six months ended June 30, 2006. These increases in operating real estate resulted in increases in rental revenue, operating expense reimbursement, rental property operating expenses, real estate taxes, and depreciation and amortization expense.

Total operating revenue increased to $176.3 million for the three months ended June 30, 2007 from $159.8 million for the three months ended June 30, 2006 and increased to $349.0 million for the six months ended June 30, 2007 from $316.3 million for the six months ended June 30, 2006. The $16.5 million increase during the three months ended June 30, 2007 compared to the same period in 2006 was primarily due to the increase in investment in operating real estate and the increase in operating revenue from the Same Store group of properties – discussed below. This increase was partially offset by a decrease in “Termination Fees” which totaled $0.6 million for the three months ended June 30, 2007 as compared to $3.8 million for the same period in 2006. The $32.7 million increase during the six months ended June 30, 2007 compared to the same period in 2006 was primarily due to the increase in investment in operating real estate and the increase in operating revenue from the Same Store group of properties – discussed below. This increase was partially offset by a decrease in “Termination Fees” which totaled $1.3 million for the six months ended June 30, 2007 as compared to $4.9 million for the same period in 2006. 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.

Segments
The Company evaluates the performance of the Properties in Operation by reportable segment (see Note 2 to the Company’s financial statements for reconciliation to net income). The following table identifies changes in reportable segments (dollars in thousands):

Property Level Operating Income:


	Three Months Ended							Six Months Ended
	June 30, 2007		June 30, 2006		% inc (dec)			June 30, 2007		June 30, 2006		% inc (dec)
Delaware Valley
– SE Pennsylvania	$	28,725	$	30,379		(5.4	%)	$	57,499	$	58,526		(1.8	%)
– Other		8,940		9,500		(5.9	%)		18,512		18,540		(0.2	%)
Midwest
– Lehigh Valley		16,809		15,470		8.7	%		33,002		32,046		3.0	%
– Other		16,576		16,134		2.7	%		32,159		33,064		(2.7	%)
Mid-Atlantic		22,765		20,971		8.6	%		44,920		40,192		11.8	%(2)
Florida		23,959		17,324		38.3	%(2)		47,916		34,351		39.4	%(2)
Arizona		790		508		55.5	%(1)		1,628		508		220.5	%(1)
United Kingdom		398		181		119.9	%(2)		661		363		82.1	%(2)

Totals	$	118,962	$	110,467		7.7	%	$	236,297	$	217,590		8.6	%


(1)		The increases for the three and six months ended June 30, 2007 versus the three and six months ended June 30, 2006 are primarily due to an increase in average gross investment in operating real estate.

(2)		The increases for the three and six months ended June 30, 2007 versus the three and six months ended June 30, 2006 are due to an increase in average gross investment in operating real estate and increased occupancy during 2007.

Same Store

Property level operating income, exclusive of Termination Fees, for the Same Store properties increased to $105.7 million for the three months ended June 30, 2007 from $103.5 million for the three months ended June 30, 2006 on a straight line basis (which recognizes rental revenue evenly over the life of the lease) and increased to $105.3 million for the three months ended June 30, 2007 from $102.2 million for the three months ended June 30, 2006 on a cash basis. These increases of 2.2% and 3.1%, respectively, are primarily due to an increase in occupancy and an increase in average rent per square foot for the Same Store properties.

Property level operating income, exclusive of Termination Fees, for the Same Store properties increased to $212.6 million for the six months ended June 30, 2007 from $206.7 million for the six months ended June 30, 2006 on a straight line basis and increased to $211.4 million for the six months ended June 30, 2007 from $203.8 million for the six months ended June 30, 2006 on a cash basis. These increases of 2.8% and 3.7%, respectively, are primarily due to an increase in occupancy and an increase in average rent per square foot for 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 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 602 properties totaling approximately 52.8 million square feet owned since January 1, 2006.

Set forth below is a schedule comparing the property level operating income, on a straight line basis and on a cash basis, for the Same Store properties for the three and six months ended June 30, 2007 and 2006. Same Store property level operating income is a non-GAAP measure and does not represent income before property dispositions, income taxes, minority interest and equity in earnings (loss) of unconsolidated joint ventures because it does not reflect the consolidated operations of the Company. Investors should review Same Store results, along with Funds from operations (see “Liquidity and Capital Resources” section), GAAP net income and cash flow from operating activities, investing activities and financing activities when trying to understand the Company’s operating performance. Also, set forth below is a reconciliation of Same Store property level operating income to net income (in thousands).


	Three Months Ended						Six Months Ended
	June 30, 2007			June 30, 2006			June 30, 2007			June 30, 2006
Same Store:
Rental revenue	$	107,822		$	105,927		$	216,175		$	211,364
Operating expenses:
Rental property expense		34,711			31,577			69,961			64,135
Real estate taxes		17,012			16,526			32,781			31,963
Operating expense recovery		(49,649	)		(45,670	)		(99,167	)		(91,468	)

Unrecovered operating expenses		2,074			2,433			3,575			4,630


Property level operating income		105,748			103,494			212,600			206,734
Less straight line rent		425			1,336			1,165			2,921


Cash basis property level operating income	$	105,323		$	102,158		$	211,435		$	203,813


Reconciliation of non-GAAP financial measure:
Property level operating income — Same Store	$	105,748		$	103,494		$	212,600		$	206,734
Property level operating income — properties purchased or developed subsequent to January 1, 2006		12,648			3,206			22,411			6,001
Termination fees		566			3,767			1,286			4,855
General and administrative expense		(12,799	)		(11,558	)		(26,138	)		(21,588	)
Depreciation and amortization expense		(39,266	)		(35,299	)		(76,982	)		(69,102	)
Other income (expense)		(26,839	)		(25,981	)		(52,011	)		(53,535	)
Gain on property dispositions		1,299			17,438			1,451			17,483
Income taxes		(213	)		(235	)		(514	)		(610	)
Minority interest		(6,113	)		(5,738	)		(11,657	)		(10,223	)
Equity in earnings of unconsolidated joint ventures		326			741			1,055			916
Discontinued operations, net of minority interest		17,070			18,615			20,624			77,946


Net income	$	52,427		$	68,450		$	92,125		$	158,877

General and Administrative

General and administrative expenses increased to $12.8 million for the three months ended June 30, 2007 from $11.6 million for the three months ended June 30, 2006 and increased to $26.1 million for the six months ended June 30, 2007 from $21.6 million for the six months ended June 30, 2006. These increases were primarily due to increases in compensation expense for real estate personnel necessitated by the competitive real estate market and increases in personnel consistent with the increase in the size and complexity of the Company.

Depreciation and Amortization

Depreciation and amortization increased to $39.3 million for the three months ended June 30, 2007 from $35.3 million for the three months ended June 30, 2006 and increased to $77.0 million for the six months ended June 30, 2007 from $69.1 million for the six months ended June 30, 2006. These increases were primarily due to the increase in gross investment in operating real estate during the respective periods and particularly the increased investment in tenant improvement costs, which are amortized over a shorter period than buildings.

Interest Expense

Interest expense increased to $30.1 million for the three months ended June 30, 2007 from $28.0 million for the three months ended June 30, 2006 and increased to $58.3 million for the six months ended June 30, 2007 from $57.4 million for the six months ended June 30, 2006. Interest expense allocated to discontinued operations for the three months ended June 30, 2007 and 2006 was $0.3 million and $1.9 million, respectively, and for the six months ended June 30, 2007 and 2006 was $1.0 million and $5.1 million, respectively. These decreases were due to the level of dispositions in 2007 versus 2006. The average debt outstanding for the respective periods was $2,610.3 million for the three months ended June 30, 2007 as compared to $2,198.7 million for the three months ended June 30, 2006 and $2,536.2 million for the six months ended June 30, 2007 as compared to $2,215.5 million for the six months ended June 30, 2006. Interest costs for the three months ended June 30, 2007 and 2006 in the amount of $12.4 million and $7.6 million, respectively, and interest costs for the six months ended June 30, 2007 and 2006 in the amounts of $23.8 million and $13.4 million, respectively, were capitalized. The increase in capitalized interest costs was primarily due to the increased investment in Wholly Owned Properties under Development. The effect of the increase in the average debt outstanding was partially offset by the increase in capitalized interest costs and decreases in the weighted average interest rates for the periods to 6.45% for the three months ended June 30, 2007 from 6.68% for the three months ended June 30, 2006 and to 6.48% for the six months ended June 30, 2007 from 6.66% for the six months ended June 30, 2006.

Other

Costs directly related to the development of Properties under Development and land being readied for development are capitalized. Capitalized development costs include interest, development-related salaries, property taxes, insurance and other directly identifiable costs incurred during the period of development. Capitalized development-related salaries and benefits historically represent approximately 1-2% of the cost of developed properties.

Gain on property dispositions decreased to $1.3 million for the three months ended June 30, 2007 compared to $17.4 million for the three months ended June 30, 2006; and decreased to $1.5 million for the six months ended June 30, 2007 compared to $17.5 million for the six months ended June 30, 2006. These decreases were the result of the gain on sale of properties to a joint venture in which the Company has an ownership interest in the three months ended June 30, 2006.

Income from discontinued operations decreased to $17.1 million from $18.6 million for the three month period ended June 30, 2007 compared to the three month period ended June 30, 2006 and decreased to $20.6 million from $77.9 million for the six month period ended June 30, 2007 compared to the six month period ended June 30, 2006. The decrease for the three month period ended June 30, 2007 is due to lower operating income for the sold properties for the three months ended June 30, 2007 compared to the three months ended June 30, 2006. The decrease for the six month period ended June 30, 2007 is primarily due to the decrease in gains recognized on sales which were $20.2 million for the six months ended June 30, 2007 compared to $76.1 million for the six months ended June 30, 2006.

As a result of the foregoing, the Company’s net income decreased to $52.4 million for the three months ended June 30, 2007 from $68.5 million for the three months ended June 30, 2006 and decreased to $92.1 million for the six months ended June 30, 2007 from $158.9 million for the six months ended June 30, 2006.

Liquidity and Capital Resources

As of June 30, 2007, the Company had cash and cash equivalents of $47.5 million, including $34.8 million in restricted cash.

Net cash flow provided by operating activities increased to $245.3 million for the six months ended June 30, 2007 from $70.4 million for the six months ended June 30, 2006. This $174.9 million increase was due to fluctuations in operating assets and liabilities during the respective periods. The largest fluctuation in operating assets relates to the utilization of restricted funds in escrow in the six months ended June 30, 2006. Net cash flow provided by operations is the primary source of liquidity to fund distributions to shareholders and for the recurring capital expenditures and leasing transaction costs for the Company’s Wholly Owned Properties in Operation.

Net cash used in investing activities equaled $416.4 million for the six months ended June 30, 2007 and net cash provided by investing activities equaled $55.9 million for the six months ended June 30, 2006. This $472.3 million change primarily resulted from an increase in property acquisitions, a decrease in net proceeds from the disposition of properties/land and an increase in investment in development in progress and land held for development.

Net cash provided by financing activities was $129.1 million for the six months ended June 30, 2007 compared to $152.4 million used in financing activities for the six months ended June 30, 2006. This $281.5 million change was primarily due to an increase in borrowings in 2007 compared to 2006, partially offset by the purchase of treasury shares and the redemption of preferred units in 2007. Net cash provided by or used in financing activities includes proceeds from the issuance of equity and debt, net of debt repayments and equity repurchases and shareholder distributions. Cash provided by financing activities is a source of capital utilized by the Company to fund investment activities.

The Company funds its development and acquisitions with long-term capital sources and proceeds from the disposition of properties. For the six months ended June 30, 2007, a significant portion of these activities were funded through a $600 million Credit Facility (the “$600 million Credit Facility”). The interest rate on borrowings under the $600 million Credit Facility fluctuates based upon ratings from Moody’s Investors Service, Inc. (“Moody’s”), Standard and Poor’s Ratings Group (“S&P”) and Fitch, Inc. (“Fitch”). The current ratings for the Company’s senior unsecured debt are Baa2, BBB and BBB+ from Moody’s, S&P and Fitch, respectively. At these ratings, the interest rate for borrowings under the $600 million Credit Facility is 65 basis points over LIBOR. The $600 million Credit Facility contains an accordion feature whereby the Company may borrow an additional $200 million. The $600 million Credit Facility expires in January 2010, and has a one-year extension option.

Additionally, the Company has entered into an agreement to fund its planned improvements for the Kings Hill Phase 2 land development project. At June 30, 2007, a £5 million short term loan facility and a £7 million revolving credit facility are undrawn and available. The short term loan matures on November 22, 2007 and the revolving credit facility expires on November 22, 2011.

The Company uses debt financing to lower its overall cost of capital in an attempt to increase the return to shareholders. The Company staggers its debt maturities and maintains debt levels it considers to be prudent. In determining its debt levels, the Company considers various financial measures including the debt to gross assets ratio and the fixed charge coverage ratio. As of June 30, 2007 the Company’s debt to gross assets ratio was 44.3%, and for the six months ended June 30, 2007, the fixed charge coverage ratio was 2.5x. Debt to gross assets equals total long-term debt, borrowings under the $600 million Credit Facility, and borrowings under the Liberty/Commerz 1701 JFK Boulevard, LP financing arrangement divided by total assets plus accumulated depreciation. The fixed charge coverage ratio equals income from continuing operations before property dispositions and minority interest, including operating activity from discontinued operations, plus interest expense and depreciation and amortization, divided by interest expense, including capitalized interest, plus distributions on preferred units.

As of June 30, 2007, $185.8 million in mortgage loans and $1,955.0 million in unsecured notes were outstanding with a weighted average interest rate of 6.6%. The interest rates on $2,140.8 million of mortgage loans and unsecured notes are fixed and range from 5.125% to 9.75%. The weighted average remaining term for the mortgage loans and unsecured notes is 5.5 years.

The scheduled principal amortization and maturities of the Company’s mortgage loans, unsecured notes outstanding, the $600 million Credit Facility, the Liberty/Commerz 1701 JFK Boulevard, LP financing arrangement and the related weighted average interest rates as of June 30, 2007 are as follows (in thousands, except percentages):


	MORTGAGES											WEIGHTED
	PRINCIPAL		PRINCIPAL		UNSECURED		CREDIT					AVERAGE
	AMORTIZATION		MATURITIES		NOTES		FACILITY			TOTAL		INTEREST RATE
2007 (6 months)	$	4,661	$	—	$	100,000	$	—		$	104,661		7.24	%
2008		8,128		39,753		—		152,960	(1)		200,841		5.96	%
2009		5,860		46,148		270,000		—			322,008		7.77	%
2010		5,048		4,738		200,000		390,000			599,786		6.61	%
2011		4,334		10,730		250,000		—			265,064		7.26	%
2012		3,466		32,911		235,000		—			271,377		6.47	%
2013		2,923		4,518		–-		—			7,441		6.38	%
2014		2,894		2,681		200,000		—			205,575		5.65	%
2015		3,033		—		300,000		—			303,033		5.13	%
2016		2,220		—		300,000		—			302,220		5.50	%
2017 & thereafter		1,768		—		100,000		—			101,768		7.47	%

	$	44,335	$	141,479	$	1,955,000	$	542,960		$	2,683,774		6.44	%


(1)		Represents a deposit by the joint venture partner in the Comcast Center (see Note 4 to the Company’s financial statements) which bears interest at the greater of 5% or the current rate on the $600 million Credit Facility until development of the Comcast Center building is completed.

The Company anticipates that it will refinance or retire these maturities through its available sources of capital.

General

The Company has continued to focus on the performance of the Same Store portfolio. In addition, the Company has continued to pursue development and acquisition opportunities and the strategic disposition of certain properties. The Company endeavors to maintain high occupancy levels while increasing rental rates.

The expiring square feet and annual net rent by year for the Properties in Operation as of June 30, 2007 are as follows (in thousands):


Wholly Owned Properties	Industrial-				Industrial-
in Operation:	Distribution				Flex				Office				Total
	Square		Annual		Square		Annual		Square		Annual		Square		Annual
	Feet		Rent		Feet		Rent		Feet		Rent		Feet		Rent
2007 (6 months)		647	$	2,515		563	$	4,710		1,146	$	14,357		2,356	$	21,582
2008		3,515		14,209		2,265		20,885		2,069		30,557		7,849		65,651
2009		3,804		17,757		1,921		17,962		2,821		42,150		8,546		77,869
2010		2,620		12,756		1,794		16,624		2,711		38,629		7,125		68,009
2011		2,858		13,236		1,254		12,682		2,500		38,934		6,612		64,852
2012		4,446		22,013		1,426		14,435		2,163		34,533		8,035		70,981
Thereafter		6,735		36,318		2,229		24,963		5,882		98,227		14,846		159,508

TOTAL		24,625	$	118,804		11,452	$	112,261		19,292	$	297,387		55,369	$	528,452


Joint Venture Properties	Industrial-				Industrial-
in Operation:	Distribution				Flex				Office				Total
	Square		Annual		Square		Annual		Square		Annual		Square		Annual
	Feet		Rent		Feet		Rent		Feet		Rent		Feet		Rent
2007 (6 months)		594	$	2,255		62	$	1,861		5	$	196		661	$	4,312
2008		980		4,123		9		304		30		1,077		1,019		5,504
2009		361		1,401		11		324		61		2,288		433		4,013
2010		991		4,107		20		742		65		2,556		1,076		7,405
2011		362		1,524		11		378		86		3,123		459		5,025
2012		452		2,121		19		643		97		3,603		568		6,367
Thereafter		2,651		12,869		39		1,369		—		—		2,690		14,238

TOTAL		6,391	$	28,400		171	$	5,621		344	$	12,843		6,906	$	46,864


Properties	Industrial-				Industrial-
in Operation:	Distribution				Flex				Office				Total
	Square		Annual		Square		Annual		Square		Annual		Square		Annual
	Feet		Rent		Feet		Rent		Feet		Rent		Feet		Rent
2007 (6 months)		1,241	$	4,770		625	$	6,571		1,151	$	14,553		3,017	$	25,894
2008		4,495		18,332		2,274		21,189		2,099		31,634		8,868		71,155
2009		4,165		19,158		1,932		18,286		2,882		44,438		8,979		81,882
2010		3,611		16,863		1,814		17,366		2,776		41,185		8,201		75,414
2011		3,220		14,760		1,265		13,060		2,586		42,057		7,071		69,877
2012		4,898		24,134		1,445		15,078		2,260		38,136		8,603		77,348
Thereafter		9,386		49,187		2,268		26,332		5,882		98,227		17,536		173,746

TOTAL		31,016	$	147,204		11,623	$	117,882		19,636	$	310,230		62,275	$	575,316

The Company believes that its existing sources of capital will provide sufficient funds to finance its continued development and acquisition activities. The scheduled deliveries of the 5.8 million square feet of Properties under Development as of June 30, 2007 are as follows (dollars in thousands):


		Square Feet
	Scheduled	Industrial-		Industrial						Percent			Total
	In-Service Date	Distribution		Flex		Office		Total		Leased			Investment
Wholly Owned Properties under Development	3rd Quarter 2007		551,759		96,000		230,000		877,759		86.9	%	$	71,995
	4th Quarter 2007		168,000		—		450,000		618,000		76.2	%		90,002
	1st Quarter 2008		120,000		—		73,583		193,583		26.0	%		16,300
	2nd Quarter 2008		—		208,177		1,400,263		1,608,440		82.4	%		542,639
	3rd Quarter 2008		341,000		115,600		129,418		586,018		4.4	%		52,970
	4th Quarter 2008		963,540		—		36,000		999,540		—			51,049
	1st Quarter 2009		—		—		185,964		185,964		—			42,947
	2nd Quarter 2009		—		—		81,000		81,000		—			15,936

	TOTAL		2,144,299		419,777		2,586,228		5,150,304		51.1	%	$	883,838


Joint Venture Properties under Development	4th Quarter 2007		340,000		—		—		340,000		100.0	%	$	16,391
	2nd Quarter 2008		—		—		54,230		54,230		—			25,690
	3rd Quarter 2008		296,100		—		—		296,100		—			18,061

	TOTAL		636,100		—		54,230		690,330		49.3	%	$	60,142


Total Properties under Development	TOTAL		2,780,399		419,777		2,640,458		5,840,634		50.9	%	$	943,980

The Company’s existing sources of capital include the public debt and equity markets, proceeds from dispositions of properties, equity contributions by joint venture partners and net cash provided from operating activities. Additionally, the Company expects to incur variable rate debt, including borrowings under the $600 million Credit Facility, from time to time.

The Company has an effective S-3 shelf registration statement on file with the SEC (the “Shelf Registration Statement”). As of August 2, 2007, pursuant to the Shelf Registration Statement, the Trust had the capacity to issue up to $586.1 million in equity securities and the Operating Partnership had the capacity to issue up to $508.4 million in debt securities.

Calculation of Funds from Operations

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

Funds from operations (“FFO”) available to common shareholders also does not represent cash flows generated from operating, investing or financing activities as defined by GAAP. Funds from operations available to common shareholders for the three and six months ended June 30, 2007 and 2006 are as follows (in thousands, except per share amounts):


	Three Months Ended						Six Months Ended
	June 30, 2007			June 30, 2006			June 30, 2007			June 30, 2006
Reconciliation of net income to FFO — basic

Net Income	$	52,427		$	68,450		$	92,125		$	158,877

Basic — Income available to common shareholders		52,427			68,450			92,125			158,877
*Basic — income available to common shareholders per weighted average share*	$	0.57		$	0.77		$	1.01		$	1.79

Adjustments:
Depreciation and amortization of unconsolidated joint ventures		844			763			1,685			1,316
Depreciation and amortization		39,062			37,809			76,989			74,400
Gain on property dispositions		(18,549	)		(34,649	)		(21,936	)		(94,295	)
Minority interest share in addback for depreciation and amortization and gain on property dispositions		(938	)		(176	)		(2,484	)		681

Funds from operations available to common shareholders — basic	$	72,846		$	72,197		$	146,379		$	140,979


*Basic Funds from operations available to common shareholders per weighted average share*	$	0.80		$	0.81		$	1.60		$	1.59

Reconciliation of net income to FFO — diluted:

Net Income	$	52,427		$	68,450		$	92,125		$	158,877

Diluted — income available to common shareholders		52,427			68,450			92,125			158,877
*Diluted — income available to common shareholders per weighted average share*	$	0.57		$	0.76		$	1.00		$	1.76

Adjustments:
Depreciation and amortization of unconsolidated joint ventures		844			763			1,685			1,316
Depreciation and amortization		39,062			37,809			76,989			74,400
Gain on property dispositions		(18,549	)		(34,649	)		(21,936	)		(94,295	)
Minority interest less preferred share distributions and excess of preferred unit redemption over carrying amount		2,407			3,210			4,222			6,792


Funds from operations available to common shareholders — diluted	$	76,191		$	75,583		$	153,085		$	147,090


*Diluted Funds from operations available to common shareholders per weighted average share*	$	0.79		$	0.80		$	1.59		$	1.57

Reconciliation of weighted average shares:
Weighted average common shares — all basic calculations		91,597			88,934			91,318			88,587
Dilutive shares for long term compensation plans		731			1,390			850			1,514


Diluted shares for net income calculations		92,328			90,324			92,168			90,101
Weighted average common units		4,190			3,653			4,190			3,586


Diluted shares for Funds from operations calculations		96,518			93,977			96,358			93,687

Inflation

Inflation has remained relatively low during the last three years, and as a result, it has not had a significant impact on the Company during this period. The $600 million Credit Facility and the financing related to the Comcast Center (see footnote (1) to the debt maturity schedule in the Liquidity and Capital Resources Section) bear interest at variable rates; therefore, the amount of interest payable under the $600 million Credit Facility and the financing related to the Comcast Center is influenced by changes in short-term interest rates, which tend to be sensitive to inflation. To the extent an increase in inflation would result in increased operating costs, such as in insurance, real estate taxes and utilities, substantially all of the tenants’ leases require the tenants to absorb these costs as part of their rental obligations. In addition, inflation also may have the effect of increasing market rental rates.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes to the Company’s exposure to market risk since its Annual Report on Form 10-K for the year ended December 31, 2006.

Item 4. Controls and Procedures

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

Changes in Internal Controls

There were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2007 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in Item 1A of Part 1 “Risk Factors,” in our Form 10-K for the year ended December 31, 2006.

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

The following table provides information relating to the Company’s repurchase of common shares for the second quarter of 2007.

Approximate

Total Number of

Dollar Value of

Shares Purchased

Shares that May

Total Number

Average

as Part of Publicly

Yet Be Purchased

of Shares

Price Paid

Announced

Under the

Period

Purchased

per Share

Program

Program ⁽¹⁾

June 1 – June 30

776,277

46.408

⁽²⁾

776,277

50,000,000

⁽³⁾

Total

776,277

⁽⁴⁾

46.408

776,277

⁽⁴⁾

50,000,000

⁽⁴⁾


(1)		On June 25, 2007, the Company announced that the Board of Trustees had approved a $50 million accelerated share repurchase program (ASR) as part of an approval of an overall program to repurchase up to $100 million of the Trust’s common shares of beneficial interest over the period beginning on the date of the authorization and ending on March 13, 2012. The Company further announced that, upon completion of the ASR, the Company will consider repurchasing the balance of the $100 million overall share repurchase authorization in open market transactions, in privately negotiated transactions or through the use of derivatives. The specific timing and amount of repurchases will vary based on market conditions, securities law limitations and other factors. The repurchases will be made using the Company’s cash resources, and the program may be suspended or discontinued at any time without prior notice. The Trust does not expect the accelerated share repurchase agreements settlement periods to conclude until October 10, 2007. This table does not include shares tendered to satisfy the exercise price in connection with cashless exercises of employee stock options or shares tendered to satisfy tax withholding obligations in connection with employee equity awards.

(2)		Represents the initial purchase price paid for shares repurchased under the accelerated share repurchase agreements and is subject to adjustment.

(3)		The remaining authorization may be used for the settlement of the accelerated share repurchase agreements or additional common share repurchases after the final settlement under the accelerated share repurchase agreements.

(4)		On July 12, 2007, the Company repurchased an additional 301,122 common shares at an average price of $46.408, which represents the initial purchase price paid for shares repurchased under the accelerated share repurchase agreements and is subject to adjustment.

Item 3. Defaults upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

At the 2007 Annual Meeting of Shareholders of the Trust, held on May 17, 2007, the following matters were approved by the requisite vote of the Shareholders, as follows:

Management’s nominees, J. Anthony Hayden and M. Leanne Lachman, were elected to fill the two available positions as Class I trustees. Voting (expressed in number of shares) was as follows: Mr. Hayden; 75,665,904 for, 5,703,602 against or withheld and no abstentions or broker non-votes; and Ms. Lachman; 80,742,230 for, 627,276 against or withheld and no abstentions or broker non-votes.

Item 6. Exhibits


10.1		Liberty Property Trust Amended and Restated Share Incentive Plan, as amended effective May 17, 2007. (Incorporated by reference to Appendix A to the Registrant’s Definitive Proxy Statement for the Annual Meeting of Shareholders held on May 17, 2007, filed with the Securities Exchange Commission on April 17, 2007.)

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

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.

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.)


*		Filed herewith.

EXHIBIT INDEX


EXHIBIT
NO.		DESCRIPTION

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

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.

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.)


BY: Liberty Property Trust General Partner

/s/ WILLIAM P. HANKOWSKY William P. Hankowsky				August 7, 2007 Date
President and Chief Executive Officer

/s/ GEORGE J. ALBURGER, JR. George J. Alburger, Jr.				August 7, 2007 Date
Executive Vice President and Chief Financial Officer


Index		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed consolidated balance sheets of Liberty Property Trust at June 30, 2007 and December 31, 2006		3

	Condensed consolidated statements of operations of Liberty Property Trust for the three months ended June 30, 2007 and June 30, 2006		4

	Condensed consolidated statements of operations of Liberty Property Trust for the six months ended June 30, 2007 and June 30, 2006		5

	Condensed consolidated statements of cash flows of Liberty Property Trust for the six months ended June 30, 2007 and June 30, 2006		6

	Notes to condensed consolidated financial statements of Liberty Property Trust		7

	Condensed consolidated balance sheets of Liberty Property Limited Partnership at June 30, 2007 and December 31, 2006		14

	Condensed consolidated statements of operations of Liberty Property Limited Partnership for the three months ended June 30, 2007 and June 30, 2006		15

	Condensed consolidated statements of operations of Liberty Property Limited Partnership for the six months ended June 30, 2007 and June 30, 2006		16

	Condensed consolidated statements of cash flows of Liberty Property Limited Partnership for the six months ended June 30, 2007 and June 30, 2006		17

	Notes to condensed consolidated financial statements of Liberty Property Limited Partnership		18

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

Item 3.	Quantitative and Qualitative Disclosures about Market Risk		38

Item 4.	Controls and Procedures		38

PART II.	OTHER INFORMATION		39

Item 1.	Legal Proceedings		39

Item 1A.	Risk Factors		39

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		39

Item 3.	Defaults Upon Senior Securities		39

Item 4.	Submission of Matters to a Vote of Security Holders		39

Item 5.	Other Information		40

Item 6.	Exhibits		41

Signatures for Liberty Property Trust			42

Signatures for Liberty Property Limited Partnership			43

Exhibit Index			44
Statement Re: Computation of Ratio of Earnings to Fixed Charges
Certification of the Chief Executive Officer
Certification of the Chief Financial Officer
Certification of the Chief Executive Officer, in its capacity as the general partner
Certification of the Chief Financial Officer, in its capacity as the general partner
Certification of the Chief Executive Officer required under Rule 13a-14(b)
Certification of the Chief Financial Officer required under Rule 13a-14(b)
Certification of the Chief Executive Officer, in its capacity as the general partner, required by Rule 13a-14(b)
Certification of the Chief Financial Officer, in its capacity as the general partner, required by Rule 13a-14(b)

	2.		The shareholders approved a proposal to ratify the selection of Ernst & Young LLP as the Trust’s independent registered public accounting firm for 2007. Voting (expressed in number of shares) was as follows: 81,084,303 for, 250,402 against and 34,801 abstentions or broker non-votes.

	3.		The shareholders approved a proposal to amend and restate the Liberty Property Trust Amended and Restated Share Incentive Plan, without increasing the number of shares available for grant thereunder, including among other things to add to the types of awards available for grant under the Plan. Voting (expressed in number of shares) was as follows: 72,520,820 for, 1,033,379 against and 133,477 abstentions or broker non-votes.