SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20546
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 10, 1996
LIBERTY PROPERTY TRUST
LIBERTY PROPERTY LIMITED PARTNERSHIP
------------------------------------
(Exact name of registrant as specified in its charter)
MARYLAND 1-13130 23-7768996
PENNSYLVANIA 1-13132 23-2766549
- --------------------------- ------------- -------------------
State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
65 VALLEY STREAM PARKWAY, SUITE 100
MALVERN, PENNSYLVANIA 19355
- --------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (610) 648-1700
<PAGE>
ITEM 5: OTHER EVENTS
- -----------------------
Liberty Property Limited Partnership, a Pennsylvania limited partnership
(the "Operating Partnership"), acquired eighteen properties from
unrelated parties during the period from January 1, 1996 to December 10,
1996. In addition, the Operating Partnership is contractually obligated
to close on, has completed the due diligence on, and anticipates
closing on one additional property prior to December 31,
1996. Collectively, the properties acquired and the property which is
anticipated to be acquired prior to December 31, 1996 are referred to as
the "Acquired Properties." Liberty Property Trust, a Maryland real
estate investment trust (the "Trust") owns an approximate 89.87%
interest in the Operating Partnership (as of September 30,
1996) (the Trust and the Operating Partnership are collectively referred
to as the "Company"):
Although the acquisitions do not involve a significant amount of assets
or involve the acquisition of a business as such terms are used in Form
8-K, pursuant to Rule 3-14 of Regulation S-X, audited and unaudited
historical financial information concerning certain of the Acquired
Properties is provided in Item 7 of this Current Report on Form 8-K.
Additionally, certain pro forma financial information is provided in
Item 7.
The combined financial statements of the ten properties, listed in
paragraph A below for the year ended December 31, 1995 and representing
a majority of all properties acquired through December 10, 1996 have
been audited (the "Section A Properties"). The combined financial
statements of the Section A Properties for the period from January 1,
1996 to September 30, 1996 have not been audited. Paragraph B below
lists the Section B Properties (the "Section B Properties") which are
the remaining properties acquired by the Company during 1996.
The pro forma financial information reflects certain of the incremental
effects of the Acquired Properties on the financial statements of the
Trust and the Operating Partnership.
A. THE SECTION A PROPERTIES
- ----------------------------
The Section A Properties consist of nine acquired properties and one
acquisition which the Operating Partnership is obligated to close on,
has completed the due diligence relating to and anticipates closing on
prior to December 31, 1996:
Completed Acquisitions:
901 Route 73, a 39,434 square foot office building in Marlton,
New Jersey, on March 12, 1996 for $3.0 million.
1500 Route 73 North, a 62,069 square foot office building in
Marlton, New Jersey, on May 8, 1996 for $3.4 million.
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<PAGE>
111-195 Witmer Road, a 55,354 square foot five-building office
project in Horsham, Pennsylvania, on May 17, 1996 for $3.4
million.
440 and 460 East Swedesford Road, a 141,573 square foot two-
building office project in King of Prussia, Pennsylvania, on
June 20, 1996 for $10.7 million.
2460 and 2490 General Armistead Avenue, a 57,642 square foot
two-building industrial-flex project in King of Prussia,
Pennsylvania, on June 28, 1996 for $1.8 million.
300 and 400 Welsh Road, a 60,184 square foot two-building office
project in Horsham, Pennsylvania on June 28, 1996 for $4.1
million.
83, 85 and 87 South Commerce Way, a 62,755 square foot three-
building office project in Bethlehem, Pennsylvania on June 28,
1996 for $3.9 million.
3501 Riga Boulevard, a 57,220 square foot industrial-flex
building in Tampa, Florida on August 1, 1996 for $3.8 million.
Two Walnut Grove Drive, an 81,846 square foot office building
along with 19.4 acres of land in Horsham, Pennsylvania on
December 10, 1996 for $12.5 million.
Additional Property:
200, 220 and 240 Gibraltar Road, a 192,000 square foot three-
building office project in Horsham, Pennsylvania for $18.8
million.
B. THE SECTION B PROPERTIES
- ----------------------------
The Section B Properties consist of nine acquired properties, (the
"Section B Properties"):
510-512 Sharptown Road, a 98,156 square foot two-building
industrial-distribution project in Bridgeport, New Jersey on
March 12, 1996 for $2.9 million.
263 Quigley Boulevard and 34 Blevins Drive, a 93,522 square foot
two-building industrial-distribution and industrial-flex project
in New Castle, Delaware on September 16, 1996 for $3.1 million.
4200 Oakleys Court, an 80,000 square foot industrial-
distribution project in Richmond, Virginia on September 30, 1996
for $3.1 million. The project also includes 23.3 acres of
adjacent vacant land.
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<PAGE>
1821 Battery Dantzler Road, a 129,600 square foot industrial-
distribution project in Chester, Virginia on September 30, 1996
for $3.4 million. The project also includes .1 acre of adjacent
vacant land.
5000 Cox Road, a 58,367 square foot industrial-flex building in
Glen Allen, Virginia on September 30, 1996 for $4.8 million.
The project also includes 4.4 acres of adjacent vacant land.
510 and 520 Eastpark Court, a 196,102 square foot two-building
industrial-flex and industrial-distribution project in Sandston,
Virginia on September 30, 1996 for $8.2 million. The project
includes 22.4 acres of adjacent vacant land.
7248 Industrial Boulevard, a 495,000 square foot industrial-
distribution project in Allentown, Pennsylvania on November 13,
1996 for $15.8 million.
111 Kelsey Lane, a 60,200 square foot industrial-flex project in
Tampa, Florida on November 14, 1996 for $1.8 million.
104 Gaither Drive, a 45,390 square foot industrial-distribution
project in Mount Laurel, New Jersey on November 20, 1996 for
$1.3 million.
The properties were acquired for cash using funds provided by the
Company's revolving line of credit.
The costs shown above for each acquisition represent the initial cost at
the time of acquisition.
The Company believes these acquisitions are consistent with the
Company's objective of becoming the preeminent real estate operating
company focusing on suburban industrial and office properties in the
Southeastern and Mid-Atlantic States.
Factors considered by the Company in determining the price to be paid
for the properties included their historical and expected cash flow, the
nature of tenants and terms of leases in place, occupancy rates,
opportunities for alternative and new tenancies, current operating costs
and real estate taxes on the properties and anticipated changes therein
under Company ownership, physical condition and locations of the
properties, the anticipated effect to the Company's financial results
(particularly funds from operations), the ability to sustain and
potentially increase its distributions to Company shareholders, and
other factors. The Company took into consideration the capitalization
rates at which it believed other comparable buildings were recently
sold, but determined the price it was willing to pay primarily on
factors discussed above relating to the properties themselves and their
fit into the Company's operations. The Company, after investigation of
the properties, is not aware of any material fact other than those
enumerated above, that would cause the financial information reported
not to be necessarily indicative of future operating results.
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<PAGE>
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
- ------------------------------------------
PAGE
-----
(a) Combined Statement of Operating Revenues and Certain
Operating Expenses of the Section A Properties
Report of Independent Auditors........................ 6
Combined Statement of Operating Revenues and Certain
Operating Expenses for the Section A Properties
for the nine months ended September 30, 1996
(unaudited) and for the year ended December 31,
1995.............................................. 7
Notes to Combined Statement of Operating Revenues and
Certain Operating Expenses for the Section A
Properties for the nine months ended September 30,
1996 (unaudited) and for the year ended
December 31, 1995................................. 8-10
(b) Pro Forma Financial Information (unaudited)
Liberty Property Trust...................................... 11
Pro Forma Condensed Consolidated Balance Sheet as of
September 30, 1996................................ 12
Pro Forma Consolidated Statement of Operations for
the nine months ended September 30, 1996.......... 13
Notes to Pro Forma Condensed Consolidated Financial
Statements as of and for the nine months ended
September 30, 1996................................ 14-15
Pro Forma Consolidated Statement of Operations for
the year ended December 31, 1995.................. 16
Notes to Pro Forma Consolidated Statement of
Operations for the year ended December 31, 1995... 17
Liberty Property Limited Partnership........................ 18
Pro Forma Condensed Consolidated Balance Sheet as of
September 30, 1996................................ 19
Pro Forma Consolidated Statement of Operations for
the nine months ended September 30, 1996.......... 20
Notes to Pro Forma Condensed Consolidated Financial
Statements as of and for the nine months ended
September 30, 1996................................ 21-22
Pro Forma Consolidated Statement of Operations for
the year ended December 31, 1995.................. 23
Notes to Pro Forma Consolidated Statement of
Operations for the year ended December 31, 1995... 24
(c) Exhibits
23.0 Consent of Independent Auditors................ 26
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<PAGE>
REPORT OF INDEPENDENT AUDITORS
To The Board of Trustees and Shareholders
Liberty Property Trust
We have audited the accompanying Combined Statement of Operating
Revenues and Certain Operating Expenses of the Section A Properties, as
defined in Note 1 for the year ended December 31, 1995. This financial
statement is the responsibility of the management of the Section A
Properties. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statement is
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting principles
used and significant estimates made by management; as well as evaluating
the overall presentation of the financial statement. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying Combined Statement of Operating Revenues and Certain
Operating Expenses was prepared for the purpose of complying with the
rules and regulations of the Securities and Exchange Commission (for
inclusion in the Current Report on Form 8-K of Liberty Property Trust
and Liberty Property Limited Partnership) and, as described in Note 1,
is not intended to be a complete presentation of the Section A
Properties' revenues and expenses.
In our opinion, the Combined Statement of Operating Revenues and Certain
Operating Expenses referred to above presents fairly, in all material
respects, the Combined Operating Revenues and Certain Operating Expenses
described in Note 1 of the Section A Properties, for the year ended
December 31, 1995, in conformity with generally accepted accounting
principles.
/s/ FEGLEY & ASSOCIATES
Plymouth Meeting, Pennsylvania FEGLEY & ASSOCIATES
December 2, 1996
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<PAGE>
COMBINED STATEMENT OF OPERATING REVENUES AND CERTAIN OPERATING EXPENSES
FOR THE SECTION A PROPERTIES FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1996 (UNAUDITED) AND THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS)
NINE
MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
Operating revenues:
Rental $ 5,458 $ 6,947
Operating expense reimbursement 3,066 3,818
------------ ------------
Total operating revenues 8,524 10,765
------------ ------------
Certain operating expenses:
Rental property expenses 2,162 2,769
Real estate taxes 953 1,121
------------ ------------
Total certain operating expenses 3,115 3,890
------------ ------------
Operating revenues in excess of
certain operating expenses $ 5,409 $ 6,875
============ ============
The accompanying notes are an integral part of this combined statement.
-7-
<PAGE>
NOTES TO THE COMBINED STATEMENT OF OPERATING REVENUES AND
CERTAIN OPERATING EXPENSES FOR THE SECTION A PROPERTIES
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED) AND THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS)
1. Summary of Significant Accounting Policies
- ----------------------------------------------
The Combined Statement of Operating Revenues and Certain Operating
Expenses (see "Basis of Presentation" below) includes the combined
operations of nine of the properties acquired by Liberty Property
Limited Partnership (the "Operating Partnership") during the period from
January 1, 1996 through December 10, 1996 and one additional
property which the Operating Partnership is contractually obligated to
close on, has completed the due diligence on, and anticipates
closing prior to December 31, 1996 (the "Section A Properties"), as
described below. Liberty Property Trust (the "Company") owns an
approximate 89.87% partners' interest in the Operating Partnership (as of
September 30, 1996) (the Trust and the Operating Partnership are
collectively referred to as the "Company").
THE SECTION A PROPERTIES
- ------------------------
PROPERTY NAME LOCATION DESCRIPTION
- ---------------------- ----------------------- --------------------
Completed Acquisitions:
901 Route 73 Marlton, New Jersey One multi-story
office building
39,434 square feet
1500 Route 73 North Marlton, New Jersey One multi-story
office building
62,069 square feet
111-195 Witmer Road Horsham, Pennsylvania Five, one-story
office buildings
55,354 square feet
440 and 460 East King of Prussia, Two multi-story
Swedesford Road Pennsylvania office buildings
141,573 square feet
2460 and 2490 General King of Prussia, Two one-story
Armistead Avenue Pennsylvania industrial-flex
buildings
57,642 square feet
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<PAGE>
300 and 400 Welsh Road Horsham, Pennsylvania Two multi-story
office buildings
60,184 square feet
83, 85 and 87 South
Commerce Way Bethlehem, Pennsylvania Three, one-story
office buildings
62,755 square feet
3501 Riga Boulevard Tampa, Florida One, one-story
industrial-flex
building
57,220 square feet
Two Walnut Grove Drive Horsham, Pennsylvania One multi-story
office building
81,846 square feet
Additional Property:
- --------------------
200, 220 and 240
Gibraltar Road Horsham, Pennsylvania Three multi-story
office buildings
192,000 square feet
USE OF ESTIMATES
- ----------------
Generally accepted accounting principles required management to make
estimates and assumptions in preparing financial statements. Those
estimates and assumptions affect the reported revenues and expenses.
BASIS OF PRESENTATION
- ---------------------
The Combined Statement of Operating Revenues and Certain Operating
Expenses is presented in conformity with Rule 3-14 of the Securities and
Exchange Commission. Accordingly, depreciation, interest and income
taxes are not presented. The Company is not aware of any factors
relating to the Section A Properties that would cause the reported
financial information not to be indicative of future operating results.
General company overhead has not been allocated to the Section A
Properties.
The financial information presented for the nine months ended September
30, 1996 is unaudited. In the opinion of management, the unaudited
financial information contains all adjustments, consisting of normal
recurring accruals, necessary for a fair presentation of the Combined
Statements of Revenues and Certain Operating Expenses for the Section A
Properties.
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<PAGE>
All of the properties, with the exception of 3501 Riga Boulevard, and
2460 and 2490 General Armistead Avenue, which are industrial-flex space,
consist of multi-tenant commercial office space leased to tenants under
leases with varying terms. Tenant renewal options are available. Two
Walnut Grove Drive includes two additional parcels of land approximating
19.4 acres.
REVENUE RECOGNITION
- -------------------
Base rental income attributable to leases is recorded when due from
tenants. The leases also typically provide for tenant reimbursement of
common area maintenance and other operating expenses which are included
in the accompanying Combined Statement of Operating Revenue and Certain
Operating Expenses as operating expense reimbursements.
2. MINIMUM FUTURE RENTALS
- ---------------------------
Future minimum rental payments due from tenants of the Section A
Properties under non-cancellable operating leases as of December 31,
1995 are as follows (in thousands):
1996 $ 6,873
1997 5,835
1998 5,043
1999 3,910
2000 3,324
Thereafter 1,355
-------
Total $26,340
=======
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<PAGE>
LIBERTY PROPERTY TRUST
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The unaudited, pro forma condensed consolidated balance sheet as of
September 30, 1996 reflects the incremental effect of the Acquired
Properties described in Item 5 as if the acquisitions occurring after
September 30, 1996 had occurred on September 30, 1996. The accompanying
unaudited, pro forma consolidated statement of operations for the nine
months ended September 30, 1996 and the year ended December 31, 1995
reflect the incremental effect of the Acquired Properties, as if such
acquisitions had occurred on January 1, 1995. These statements should
be read in conjunction with respective consolidated financial statements
and notes thereto included in the Company's Quarterly Report on Form 10-
Q for the quarter ended September 30, 1996 and its Annual Report on Form
10-K for the year ended December 31, 1995. In the opinion of
management, the unaudited, pro forma consolidated financial information
provides for all adjustments necessary to reflect the effects of the
Acquired Properties.
These pro forma statements may not necessarily be indicative of the
results that would have actually occurred if the acquisition of the
Acquired Properties had been in effect on the date indicated, nor does
it purport to represent the financial position, results of operations or
cash flows for future periods.
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<PAGE>
LIBERTY PROPERTY TRUST
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1996
(UNAUDITED, IN THOUSANDS)
LIBERTY
ACQUIRED PROPERTY
HISTORICAL PROPERTIES TRUST
<F1> <F2> CONSOLIDATED
---------- ----------- ------------
ASSETS:
Investment in real estate,
net $ 946,789 $ 50,069 $ 996,858
Cash and cash equivalents 7,973 - 7,973
Deferred financing and
leasing costs, net 23,745 - 23,745
Other assets 44,632 - 44,632
---------- ----------- -----------
Total assets $1,023,139 $ 50,069 $ 1,073,208
========== =========== ===========
LIABILITIES:
Mortgage loans $ 203,221 $ - $ 203,221
Subordinated debentures 183,625 - 183,625
Line of credit 176,618 50,069 <F3> 226,687
Other liabilities 51,001 - 51,001
---------- ----------- -----------
Total liabilities 614,465 50,069 664,534
---------- ----------- -----------
MINORITY INTEREST 41,399 - 41,399
---------- ----------- -----------
SHAREHOLDERS' EQUITY:
Common shares 31 - 31
Additional paid-in capital 359,472 - 359,472
Unearned compensation (1,636) - (1,636)
Retained earnings 9,408 - 9,408
---------- ----------- -----------
Total shareholders'
equity 367,275 - 367,275
---------- ----------- -----------
Total liabilities and
shareholders' equity $1,023,139 $ 50,069 $ 1,073,208
========== =========== ===========
The accompanying notes are an integral part of this unaudited, pro forma
condensed consolidated financial statement.
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<PAGE>
<TABLE>
LIBERTY PROPERTY TRUST
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED AND IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
<CAPTION> LIBERTY
ACQUIRED PRO PROPERTY
HISTORICAL PROPERTIES FORMA TRUST
<F1> <F4> ADJUSTMENTS CONSOLIDATED
---------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
REVENUE
Rental $ 82,019 $ 8,174 $ - $ 90,193
Operation expense reim-
bursement 26,463 3,552 - 30,015
Management fees 1,190 - - 1,190
Interest and other 3,080 - - 3,080
---------- ----------- ------------ ------------
Total revenue 112,752 11,726 - 124,478
---------- ----------- ------------ ------------
OPERATING EXPENSES
Rental property expenses 22,158 2,449 - 24,607
Real estate taxes 8,176 1,325 - 9,501
General and administrative 5,681 - - 5,681
Depreciation and amorti-
zation 20,435 - 1,736 <F5> 22,171
---------- ----------- ------------ ------------
Total operating expenses 56,450 3,774 1,736 61,960
---------- ----------- ------------ ------------
Operating income 56,302 7,952 (1,736) 62,518
Premium on debenture con-
version 1,027 - - 1,027
Interest expense 28,274 - 4,750 <F6> 33,024
---------- ----------- ------------ ------------
Income (loss) before
minority interest 27,001 7,952 (6,486) 28,467
Minority interest 2,833 806 (657) <F7> 2,982
---------- ----------- ------------ ------------
Net income (loss) $ 24,168 $ 7,146 $ (5,829) $ 25,485 <F8>
========== =========== ============ ============
Net income per common
share - primary $ .87
============
Weighted average number
of common shares out-
standing 29,176
============
The accompanying notes are an integral part of this unaudited, proforma
consolidated financial statement.
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<PAGE>
LIBERTY PROPERTY TRUST
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(Unaudited, dollars in thousands)
<FN>
<F1> Reflects historical financial information of the Company as of
September 30, 1996 and for the nine months ended September 30, 1996.
<F2> Reflects the cost basis of the properties acquired subsequent to
September 30, 1996.
PROPERTY ACQUISITION DATE COST
- ---------------------------------- ---------------- ----------
7248 Industrial Boulevard November 13, 1996 $ 15,759
111 Kelsey Lane November 14, 1996 1,780
104 Gaither Drive November 20, 1996 1,280
Two Walnut Grove Drive December 10, 1996 12,500
200, 220 and 240 Gibraltar N/A 18,750
----------
Total $ 50,069
==========
<F3> Represents draws on the Company's line of credit to fund the
acquisitions subsequent to September 30, 1996.
<F4> Reflects the incremental addition of revenues and certain expenses
of the Acquired Properties in order to reflect a full nine months of
operations for these acquisitions.
NINE MONTHS ENDED
SEPTEMBER 30, 1996
-------------------------
TOTAL
SECTION A SECTION B ACQUIRED
PROPERTIES PROPERTIES PROPERTIES
---------- ---------- ----------
Revenues:
Rental $ 5,458 $ 2,716 $ 8,174
Operating expense
reimbursement 3,066 486 3,552
Certain operating
expenses:
Rental property expenses 2,162 287 2,449
Real estate taxes 953 372 1,325
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<PAGE>
<F5> Reflects incremental depreciation of the Acquired Properties based
on asset lives of 40 years.
<F6> Reflects an incremental increase in interest expense from the
assumed borrowings of $106.3 million on the line of credit to fund the
purchase of the Acquired Properties.
<F7> Reflects the allocation of the pro forma adjustment to minority
interest based upon pro forma minority interest in the Operating
Partnership of approximately 10.13%.
<F8> The Company's pro forma taxable income for the nine month period
ended September 30, 1996 is approximately $21,004 which has been
calculated as pro forma income from operations of approximately $25,485
plus GAAP depreciation and amortization of $22,171 less tax basis
depreciation and amortization and other tax differences of approximately
$26,652.
</FN>
</TABLE>
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<PAGGE>
<TABLE>
LIBERTY PROPERTY TRUST
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED AND IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
<CAPTION>
LIBERTY
ACQUIRED PROPERTY
HISTORICAL PROPERTIES PRO FORMA TRUST
<F1> <F2> ADJUSTMENTS CONSOLIDATED
---------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
REVENUE
Rental $ 89,163 $ 10,386 $ - $ 99,549
Operation expense reim-
bursement 24,604 4,439 - 29,043
Management fees 734 - - 734
Interest and other 2,540 - - 2,540
---------- ----------- ------------ ------------
Total revenue 117,041 14,825 - 131,866
---------- ----------- ------------ ------------
OPERATING EXPENSES
Rental property expenses 20,010 2,965 - 22,975
Real estate taxes 9,304 1,618 - 10,922
General and administrative 5,212 - - 5,212
Depreciation and amorti-
zation 22,518 - 2,653 <F3> 25,171
---------- ----------- ------------ ------------
Total operating expenses 57,044 4,583 2,653 64,280
---------- ----------- ------------ ------------
Operating income 59,997 10,242 (2,653) 67,586
Interest expense 37,688 - 7,510 <F4> 45,198
---------- ----------- ------------ ------------
Income (loss) before
minority interest 22,309 10,242 (10,163) 22,388
Minority interest 2,843 1,117 (1,109) <F5> 2,851
---------- ----------- ------------ ------------
Net income (loss) $ 19,466 $ 9,125 $ (9,054) $ 19,537 <F6>
========== =========== ============ ============
Net income per common
share - primary $ .89
============
Weighted average number
of common shares out-
standing 21,838
============
The accompanying notes are an integral part of this unaudited, proforma
consolidated financial statement.
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<PAGE>
LIBERTY PROPERTY TRUST
NOTES TO PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(Unaudited, dollars in thousands)
<FN>
<F1> Reflects the historical consolidated statement of operations of
the Company for the year ended December 31, 1995.
<F2> Reflects the addition of revenues and certain expenses of the
Acquired Properties required in order to reflect a full year of
operations for these acquisitions.
TOTAL
SECTION A SECTION B ACQUIRED
PROPERTIES PROPERTIES PROPERTIES
---------- ---------- ----------
Revenues:
Rental $ 6,947 $ 3,439 $ 10,386
Operating expense
reimbursement 3,818 621 4,439
Certain operating expenses:
Rental property expenses 2,769 196 2,965
Real estate taxes 1,121 497 1,618
<F3> Reflects depreciation of the Acquired Properties based on asset
lives of 40 years.
<F4> Reflects an increase in interest expense from the assumed
borrowings of $106.3 on the line of credit to fund the purchase of the
Acquired Properties.
<F5> Reflects the allocation of the pro forma adjustment to minority
interest based upon pro forma minority interest in the Operating
Partnership of approximately 10.91%.
<F6> The Company's pro forma taxable income for the year ended December
31, 1995 is approximately $20,528 which has been calculated as pro forma
income from operations of approximately $19,537 plus GAAP depreciation
and amortization of $25,171 less tax basis depreciation and amortization
and other tax differences of approximately $24,180.
</FN>
</TABLE>
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<PAGE>
LIBERTY PROPERTY LIMITED PARTNERSHIP
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The unaudited, pro forma condensed consolidated balance sheet as of
September 30, 1996 reflects the incremental effect of the Acquired
Properties described in Item 5 as if the acquisitions occurring after
September 30, 1996 had occurred on September 30, 1996. The accompanying
unaudited, pro forma consolidated statement of operations for the nine
months ended September 30, 1996 and the year ended December 31, 1995
reflect the incremental effect of the Acquired Properties, as if such
acquisitions had occurred on January 1, 1995. These statements should
be read in conjunction with respective consolidated financial statements
and notes thereto included in the Company's Quarterly Report on Form 10-
Q for the quarter ended September 30, 1996 and its Annual Report on Form
10-K for the year ended December 31, 1995. In the opinion of
management, the unaudited, pro forma consolidated financial information
provides for all adjustments necessary to reflect the effects of the
Acquired Properties.
These pro forma statements may not necessarily be indicative of the
results that would have actually occurred if the acquisition of the
Acquired Properties had been in effect on the date indicated, nor does
it purport to represent the financial position, results of operations or
cash flows for future periods.
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<PAGE>
LIBERTY PROPERTY LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1996
(UNAUDITED, IN THOUSANDS)
LIBERTY
PROPERTY
ACQUIRED LIMITED
HISTORICAL PROPERTIES PARTNERSHIP
<F1> <F2> CONSOLIDATED
---------- ----------- ------------
ASSETS:
Investment in real estate,
net $ 946,789 $ 50,069 $ 996,858
Cash and cash equivalents 7,973 - 7,973
Deferred financing and
leasing costs, net 23,745 - 23,745
Other assets 44,632 - 44,632
---------- ----------- -----------
Total assets $1,023,139 $ 50,069 $ 1,073,208
========== =========== ===========
LIABILITIES:
Mortgage loans $ 203,221 $ - $ 203,221
Subordinated debentures 183,625 - 183,625
Line of credit 176,618 50,069 <F3> 226,687
Other liabilities 51,001 - 51,001
---------- ----------- -----------
Total liabilities 614,465 50,069 664,534
---------- ----------- -----------
OWNERS' EQUITY:
General partner's equity 367,275 - 367,275
Limited partners' equity 41,399 - 41,399
---------- ----------- -----------
Total owners' equity 408,674 - 408,674
---------- ----------- -----------
Total liabilities and
owners' equity $1,023,139 $ 50,069 $ 1,073,208
========== =========== ===========
The accompanying notes are an integral part of this unaudited, pro forma
condensed consolidated financial statement.
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<PAGE>
<TABLE>
LIBERTY PROPERTY LIMITED PARTNERSHIP
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED AND IN THOUSANDS)
<CAPTION>
LIBERTY
PROPERTY
ACQUIRED LIMITED
HISTORICAL PROPERTIES PRO FORMA PARTNERSHIP
<F1> <F4> ADJUSTMENTS CONSOLIDATED
---------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
REVENUE
Rental $ 82,019 $ 8,174 $ - $ 90,193
Operation expense reim-
bursement 26,463 3,552 - 30,015
Management fees 1,190 - - 1,190
Interest and other 3,080 - - 3,080
---------- ----------- ------------ ------------
Total revenue 112,752 11,726 - 124,478
---------- ----------- ------------ ------------
OPERATING EXPENSES
Rental property expenses 22,158 2,449 - 24,607
Real estate taxes 8,176 1,325 - 9,501
General and administrative 5,681 - - 5,681
Depreciation and amorti-
zation 20,435 - 1,736 <F5> 22,171
---------- ----------- ------------ ------------
Total operating expenses 56,450 3,774 1,736 61,960
---------- ----------- ------------ ------------
Operating income 56,302 7,952 (1,736) 62,518
Premium on debenture con-
version 1,027 - - 1,027
Interest expense 28,274 - 4,750 <F6> 33,024
---------- ----------- ------------ ------------
Net income (loss) $ 27,001 $ 7,952 $ (6,486) $ 28,467 <F8>
========== =========== ============ ============
Net income (loss)
allocated to general
partner $ 24,168 $ 7,146 $ (5,829) $ 25,485
Net income (loss)
allocated to limited
partners 2,833 806 (657) <F7> 2,982
========== =========== ============ ============
The accompanying notes are an integral part of this unaudited, proforma
consolidated financial statement.
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<PAGE>
LIBERTY PROPERTY LIMITED PARTNERSHIP
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(Unaudited, dollars in thousands)
<FN>
<F1> Reflects historical financial information of the Company as of
September 30, 1996 and for the nine months ended September 30, 1996.
<F2> Reflects the cost basis of the properties acquired subsequent to
September 30, 1996.
PROPERTY ACQUISITION DATE COST
- ---------------------------------- ---------------- ----------
7248 Industrial Boulevard November 13, 1996 $ 15,759
111 Kelsey Lane November 14, 1996 1,780
104 Gaither Drive November 20, 1996 1,280
Two Walnut Grove Drive December 10, 1996 12,500
200, 220 and 240 Gibraltar N/A 18,750
----------
Total $ 50,069
==========
<F3> Represents draws on the Company's line of credit to fund the
acquisitions subsequent to September 30, 1996.
<F4> Reflects the incremental addition of revenues and certain expenses
of the Acquired Properties in order to reflect a full nine months of
operations for these acquisitions.
NINE MONTHS ENDED
SEPTEMBER 30, 1996
-------------------------
TOTAL
SECTION A SECTION B ACQUIRED
PROPERTIES PROPERTIES PROPERTIES
---------- ---------- ----------
Revenues:
Rental $ 5,458 $ 2,716 $ 8,174
Operating expense
reimbursement 3,066 486 3,552
Certain operating
expenses:
Rental property expenses 2,162 287 2,449
Real estate taxes 953 372 1,325
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<PAGE>
<F5> Reflects incremental depreciation of the Acquired Properties based
on asset lives of 40 years.
<F6> Reflects an incremental increase in interest expense from the
assumed borrowings of $106.3 million on the line of credit to fund the
purchase of the Acquired Properties.
<F7> Reflects the allocation of the pro forma adjustment to the net
income allocated to the limited partners based upon pro forma ownership
in the Operating Partnership.
<F8> The Company's pro forma taxable income for the nine month period
ended September 30, 1996 is approximately $23,594 which has been
calculated as pro forma income from operations of approximately $28,467
plus GAAP depreciation and amortization of $22,171 less tax basis
depreciation and amortization and other tax differences of approximately
$27,044.
</FN>
</TABLE>
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<PAGE>
<TABLE>
LIBERTY PROPERTY LIMITED PARTNERSHIP
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED AND IN THOUSANDS)
<CAPTION>
LIBERTY
PROPERTY
ACQUIRED LIMITED
HISTORICAL PROPERTIES PRO FORMA PARTNERSHIP
<F1> <F2> ADJUSTMENTS CONSOLIDATED
---------- ----------- ------------ ------------
<S> <S> <S> <S> <S>
REVENUE
Rental $ 89,163 $ 10,386 $ - $ 99,549
Operation expense reim-
bursement 24,604 4,439 - 29,043
Management fees 734 - - 734
Interest and other 2,540 - - 2,540
---------- ----------- ------------ ------------
Total revenue 117,041 14,825 - 131,866
---------- ----------- ------------ ------------
OPERATING EXPENSES
Rental property expenses 20,010 2,965 - 22,975
Real estate taxes 9,304 1,618 - 10,922
General and administrative 5,212 - - 5,212
Depreciation and amorti-
zation 22,518 - 2,653 <F3> 25,171
---------- ----------- ------------ ------------
Total operating expenses 57,044 4,583 2,653 64,280
---------- ----------- ------------ ------------
Operating income 59,997 10,242 (2,653) 67,586
Interest expense 37,688 - 7,510 <F4> 45,198
---------- ----------- ------------ ------------
Net income (loss) $ 22,309 $ 10,242 $ (10,163) $ 22,388 <F6>
========== =========== ============ ============
Net income (loss)
allocated to general
partner $ 19,466 $ 9,125 $ (9,054) $ 19,537
Net income (loss)
allocated to limited
partners 2,843 1,117 (1,109) <F5> 2,851
========== =========== ============ ============
The accompanying notes are an integral part of this unaudited, proforma
consolidated financial statement.
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<PAGE>
LIBERTY PROPERTY LIMITED PARTNERSHIP
NOTES TO PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(Unaudited, dollars in thousands)
<FN>
<F1> Reflects the historical consolidated statement of operations of
the Company for the year ended December 31, 1995.
<F2> Reflects the addition of revenues and certain expenses of the
Acquired Properties required in order to reflect a full year of
operations for these acquisitions.
TOTAL
SECTION A SECTION B ACQUIRED
PROPERTIES PROPERTIES PROPERTIES
---------- ---------- ----------
Revenues:
Rental $ 6,947 $ 3,439 $ 10,386
Operating expense
reimbursement 3,818 621 4,439
Certain operating expenses:
Rental property expenses 2,769 196 2,965
Real estate taxes 1,121 497 1,618
<F3> Reflects depreciation of the Acquired Properties based on asset
lives of 40 years.
<F4> Reflects an increase in interest expense from the assumed
borrowings of $106.3 on the line of credit to fund the purchase of the
Acquired Properties.
<F5> Reflects the allocation of the pro forma adjustment to the net
income allocated to the limited partners, based upon pro forma ownership
in the Operating Partnership.
<F6> The Company's pro forma taxable income for the year ended December
31, 1995 is approximately $25,494 which has been calculated as pro forma
income from operations of approximately $22,388 plus GAAP depreciation
and amortization of $25,171 less tax basis depreciation and amortization
and other tax differences of approximately $22,065.
</FN>
</TABLE>
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
each Registrant has duly caused this Report to be signed on its behalf
by the undersigned hereunto duly authorized.
LIBERTY PROPERTY TRUST
Dated: December 19, 1996 BY: /s/ JOSEPH P. DENNY
--------------------------------------
NAME: Joseph P. Denny
TITLE: President
LIBERTY PROPERTY LIMITED PARTNERSHIP
BY: LIBERTY PROPERTY TRUST,
SOLE GENERAL PARTNER
Dated: December 19, 1996 BY: /s/ JOSEPH P. DENNY
--------------------------------------
NAME: Joseph P. Denny
TITLE: President
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<PAGE>
EXHIBIT 23.0
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-3 No. 33-94782) and related Prospectus of Liberty
Property Trust and Liberty Property Limited Partnership and to the
incorporation by reference in the Registration Statement (Form S-3 No.
333-14139) and related Prospectus of Liberty Property Trust, of our
report dated December 2, 1996, with respect to the Combined Statement of
Operating Revenues and Certain Operating Expenses for the Section A
Properties included in the Current Report on Form 8-K of Liberty
Property Trust and Liberty Property Limited Partnership dated December
10, 1996, filed with the Securities and Exchange Commission.
/s/ FEGLEY & ASSOCIATES
Plymouth Meeting, Pennsylvania FEGLEY & ASSOCIATES
December 16, 1996
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