UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to __________________
Commission file number: 1-13130 (Liberty Property Trust)
1-13132 (Liberty Property Limited Partnership)
LIBERTY PROPERTY TRUST
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Exact name of registrants as specified in their governing documents)
MARYLAND (Liberty Property Trust) 23-7768996
PENNSYLVANIA (Liberty Property Limited Partnership) 23-2766549
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
65 Valley Stream Parkway, Suite 100,
Malvern, Pennsylvania 19355
(Address of Principal Executive Offices) (Zip Code)
Registrants' Telephone Number, Including Area Code (610) 648-1700
Securities registered pursuant to Section 12(b) of the Act:
NAME ON EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Common Shares of Beneficial Interest, New York Stock Exchange
$0.001 par value
(Liberty Property Trust)
Exchangeable Subordinated Debentures due 2001 New York Stock Exchange
(Liberty Property Limited Partnership)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrants were required to file such reports) and (2) have been subject to
such filing requirements for the past ninety (90) days. YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulations S-K is not contained herein, and will not be contained, to
the best of the Registrants' knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
As of February 25, 1997, the aggregate market value of the 31,681,606 Common
Shares of Beneficial Interest held by non-affiliates of Liberty Property
Trust was approximately $784.1 million, based upon the closing price of
$24.75 on the New York Stock Exchange composite tape on such date.
Non-affiliate ownership is calculated by excluding all shares that may be
deemed to be beneficially owned by executive officers and trustees, without
conceding that all such persons are "affiliates" for purposes of the federal
securities laws.
Number of Shares of Beneficial Interest outstanding as of February 25, 1997:
31,868,006
Documents Incorporated by Reference
Portions of the proxy statement for the annual shareholders meeting of Liberty
Property Trust to be held in 1997 are incorporated by reference into Part III.
<PAGE>
INDEX
Page
PART I
Item 1. Business............................................... 5
Item 2. Properties............................................. 11
Item 3. Legal Proceedings...................................... 18
Item 4. Submission of Matters to a Vote of Security Holders.... 18
PART II
Item 5. Market for the Registrants' Shares and Related Share-
holders' Matters....................................... 20
Item 6. Selected Financial Data................................ 21
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 23
Item 8. Financial Statements and Supplementary Data............ 29
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.................... 90
PART III
Item 10. Directors and Executive Officers of the Registrant..... 90
Item 11. Executive Compensation................................. 90
Item 12. Security Ownership of Certain Beneficial Owners and
Management............................................. 90
Item 13. Certain Relationships and Related Transactions......... 90
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K............................................ 90
Signatures...................................................... 95
_________________________________
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included in
this Annual Report on Form 10-K and other materials filed or to be filed
by the Company with the Securities and Exchange Commission (as well as
information included in oral statements or other written statements made
or to be made by the Company) contains statements that are or will be
forward-looking, such as statements relating to acquisitions and other
business development activities, future capital expenditures, financing
sources and availability and the effects of regulation (including
environmental regulation) and competition. Such forward-looking
information involves important risks and uncertainties that could
significantly affect anticipated results in the future and, accordingly,
such results may differ from those expressed in any forward-looking
statements made by, or on behalf of, the Company. These risks and
uncertainties include, but are not limited to, uncertainties affecting
real estate businesses generally (such as entry into new leases,
renewals of leases and dependence on tenants' business operations),
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risks relating to acquisition, construction and development activities,
possible environmental liabilities, risks relating to leverage and debt
service (including availability of financing terms acceptable to the
Company and sensitivity of the Company's operations to fluctuations in
interest rates), the potential for the use of borrowings to make
distributions necessary to qualify as a REIT, dependence on the primary
markets in which the Company's properties are located, the existence of
complex regulations relating to status as a REIT and the adverse
consequences of the failure to qualify as a REIT and the potential
adverse impact of market interest rates on the market price for the
Company's securities.
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PART I
ITEM 1. BUSINESS
THE COMPANY
Liberty Property Trust (the "Trust") is one of the largest owners and
operators of suburban industrial and office real estate in the United
States. The Trust is a self-administered and self-managed Maryland real
estate investment trust (a "REIT"). The Trust and its subsidiary,
Liberty Property Limited Partnership, a Pennsylvania limited partnership
(the "Operating Partnership") and, together with the Trust, the
"Company"), were formed to continue and expand the commercial real
estate business of Rouse & Associates, a Pennsylvania general
partnership, and certain affiliated entities (collectively, the
"Predecessor"). Founded in 1972, the Predecessor developed and managed
commercial real estate in the Southeastern and Mid-Atlantic United
States. Substantially all of the Trust's assets are owned directly or
indirectly by, and substantially all of the Trust's operations are
conducted directly or indirectly by, the Operating Partnership.
The Company provides leasing, property management, acquisition,
development, construction management, design management and other
related services for a portfolio which, as of December 31, 1996,
consisted of 259 industrial and office properties (the "Properties in
Operation") totaling approximately 20.6 million leasable square feet.
As of December 31, 1996, the Company also had 22 properties under
development (the "Properties Under Development") and, together with the
Properties in Operation, the "Properties"). The Properties Under
Development are expected to generate approximately 3.0 million leasable
square feet. The land, which is all zoned for commercial use, is
believed to be capable of supporting, as and when developed, 9.3 million
leaseable square feet. The Properties are located principally within the
Southeastern and Mid-Atlantic United States. As of December 31, 1996,
the Properties in Operation were approximately 92.8% leased to over 800
tenants.
During the year ended December 31, 1996, through Total Investments (as
defined below) aggregating $232.2 million, the Company has increased its
total leasable square footage of industrial and office space by
approximately 23.5% by acquiring 33 properties totaling approximately
2.4 million leasable square feet and by developing 19 properties
totaling approximately 1.5 million leasable square feet. The "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 required to reach rent
commencement. During 1996, the Company has also increased its holdings
of land for future development by 98 acres (net of acreage utilized in
1996 for development projects and sold), all zoned for commercial use.
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As of December 31, 1996, the Properties in Operation consisted of 173
industrial and 86 office properties. The Company's industrial
properties are located principally in suburban mixed-use developments or
business parks and include warehouse/distribution facilities, as well as
flex facilities which accommodate both industrial and office use. The
industrial activities in the Company's flex facilities typically include
service, assembly, light manufacturing and research and development.
The Company's office properties are mid-rise and single story office
buildings, located principally in suburban mixed-use developments or
office parks.
The Trust is the sole general partner and also a limited partner of the
Operating Partnership, with a combined equity interest in the Operating
Partnership of 90.05% at December 31, 1996. The units of limited
partnership interest (the "Units") in the Operating Partnership are
exchangeable on a one for one basis (subject to antidilution
protections) for Common Shares of Beneficial Interest $.001 par value
per share (the "Common Shares"), of the Trust typically after the first
anniversary of the issuance of any such Units. The only limited
partners of the Operating Partnership other than the Trust are persons
or entities that contributed assets to the Operating Partnership,
principally senior executives of the Trust and their affiliates. The
Units held by the limited partners other than the Trust (that is, the
minority interest reflected in the Trust's financial statements) were
exchangeable for approximately 3.5 million Common Shares on December 31,
1996.
The Company's executive offices are located at 65 Valley Stream Parkway,
Malvern, Pennsylvania 19355. The telephone number is (610) 648-1700.
The Company maintains offices in each of its primary markets.
MANAGEMENT AND EMPLOYEES
The Company's 199 employees (as of February 18, 1997) are under the
direction of 17 senior executives, who have developed and managed over
35 million square feet of commercial real estate during the past 25
years and who, on average, have been affiliated with the Company and/or
the Predecessor for 14 years. The Company's in-house leasing, marketing
and property management staff operates in 8 full-service local offices
in the United States. This structure enables the Company to better
understand the particular characteristics of the local markets in which
it operates, to respond quickly and directly to tenant needs and to
better identify local acquisition and development opportunities. The
Company considers its relations with its employees to be good.
BUSINESS OBJECTIVES AND STRATEGIES FOR GROWTH
The Company's primary objective is to increase funds from operations.
See Item 6, "Selected Financial Data", for the definition of this term.
The operating strategies for achieving this goal are to deliver
outstanding tenant service, emphasize marketing to attract new tenants
and enhance the Company's portfolio through the acquisition and
development of high quality properties in markets affording
opportunities for attractive investments. In pursuing these strategies,
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the Company seeks to manage its capital structure to fund growth while
maintaining financial liquidity and stability.
INTERNAL GROWTH STRATEGIES
Management believes that the Properties offer significant opportunities
for the Company to increase its rental revenues and cash flow. The
Company seeks to increase cash flow by continuing its practice of
negotiating for contractual rental increases that take effect during the
terms of its leases. In addition, the Company seeks to increase rental
revenues through the renewal or replacement of expiring leases at higher
rental rates and by improving the occupancy rates of its portfolio.
New Leases and Lease Renewals. In the early 1990s, rental rates in the
markets in which the Properties are located were flat or decreased as a
result of recessionary market conditions and an oversupply of commercial
real estate in such markets. As these leases expire, the Company
expects, although no assurance can be given, that replacement leases
will reflect higher rental rates as economic conditions continue to
improve and the oversupply of commercial real estate is mitigated by the
decreased commercial construction starts in recent years.
Contractual Increases. The Company seeks to generate increased cash
flow from the Properties in Operation through contractual increases in
rental rates under its leases. The leases in effect with respect to the
Properties in Operation as of December 31, 1996 provide for contractual
rental increases that are expected to contribute an additional $1.2
million to the Company's cash flow for the year ending December 31,
1997. The Company intends to continue seeking to negotiate contractual
rent increases that take effect during the terms of its leases.
Improving Occupancies. The Company believes that the quality and
diversity of its tenant base has contributed, and will continue to
contribute, to the success of its strategy for increasing rental and
occupancy rates. The Company targets financially stable tenants in an
effort to minimize uncertainty relating to the ability of its tenants to
meet their lease obligations. The Company's success in maintaining its
occupancy rates and attracting and retaining tenants is demonstrated in
part by its renewal rate which was approximately 59.0% for the year
ended December 31, 1996.
Cost Controls. The Company seeks to monitor and control its operating
and administrative costs by performing many functions in-house rather
than by engaging outside parties. For example, the Company relies
primarily on its locally based leasing and marketing staff, thereby
reducing commissions to third parties. Similarly, although construction
and design services typically are provided by third parties (including,
in certain instances, an entity affiliated with one or more of the
Company's senior executives), the Company's in-house construction and
design management staff closely supervises construction and design
activities in an effort to control costs, minimize cost overruns, ensure
timely delivery of tenant space and maximize productivity and
efficiencies. The Company also employs an annual capital improvement
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and preventive maintenance program designed to reduce the operating
costs of the Properties and maintain their long-term value.
ACQUISITIONS
STRATEGY. The Company seeks to acquire properties consistent with its
business objectives and strategies for growth. The Company has
identified the following categories of acquisitions:
SINGLE-ASSET ACQUISITIONS:
STABILIZED ACQUISITIONS: Stabilized Acquisitions consist of individual
properties generally located within the Company's existing markets,
which are typically at high occupancy levels upon acquisition. During
the year ended December 31, 1996, the Company acquired 27 properties
which can be characterized as Stabilized Acquisitions containing
approximately 1.6 million leasable square feet of industrial and office
space for a Total Investment of approximately $96.3 million. These
properties were 96.7% leased as of December 31, 1996.
ENTREPRENEURIAL ACQUISITIONS: Entrepreneurial Acquisitions consist of
individual properties generally located within the Company's existing
markets, which are typically either vacant or at low occupancy levels
and can be purchased substantially below replacement cost, thereby
offering the opportunity for above average return when fully leased.
During the year ended December 31, 1996, the Company acquired 6
properties which can be characterized as Entrepreneurial Acquisitions
containing approximately 783,000 leasable square feet of industrial and
office space which was either vacant or partially leased at the time of
acquisition, for a Total Investment of approximately $36.6 million.
Approximately 45,000 square feet of space was acquired vacant for a
Total Investment of approximately $1.5 million, and was 100.0% leased as
of December 31, 1996. The remaining 738,000 square feet of this space
was acquired partially leased for a Total Investment of approximately
$35.1 million and was 68.1% leased as of December 31, 1996.
PORTFOLIO ACQUISITIONS:
Groups of properties or existing real estate companies that in either
case offer an immediate return which can be enhanced by the Company's
management expertise and financial strength.
DEVELOPMENT
STRATEGY. The Company pursues selective development opportunities
focusing primarily on high quality suburban industrial and office
properties within its existing markets. The Company's development
activities fall into two categories: build-to-suit projects and projects
built for inventory. The Company develops build-to-suit projects for
existing and new tenants. The buildings in these projects are
substantially pre-leased to one or more tenants prior to construction.
The Company also builds properties for inventory in high-occupancy
markets in which the Company has identified sufficient demand at market
rental rates justifying such construction.
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COMPLETED DEVELOPMENTS: During the year ended December 31, 1996, the
Company completed 4 build-to-suit and 15 inventory
projects, approximately 1.5 million square feet of leasable space
representing a Total Investment of approximately $99.3 million. As of
December 31, 1996, the completed development properties were 91.7%
leased.
PROPERTIES UNDER DEVELOPMENT: As of December 31, 1996, the Company was
developing 22 development properties which, upon completion, are
expected to generate approximately 3.0 million square feet of leasable
space representing a Total Investment of approximately $153.8 million.
Approximately 68.8% of such leaseable space was pre-leased as of
December 31, 1996. Five of these properties are 100% pre-leased under net
leases as build-to-suit projects. There can be no assurance that any of
these Properties Under Development will be completed, or that the
Company's budgets or estimates of construction costs or time periods
necessary to complete construction, will be realized. The Company
expects to complete development of 12 properties (totalling 2.2 million
square feet of leasable space) in the year ended December 31, 1997.
LAND: As of December 31, 1995, the Company owned 914 acres of land for
development, all zoned for commercial use. During the year ended
December 31, 1996 the Company purchased an additional 315 acres of land
for development, and utilized 177 acres in development projects and sold
40 acres. Substantially all of the remaining 1,012 acres is located
adjacent to or within existing industrial or business parks with site
improvements, such as public sewers, water and utilities, available for
service and the Company anticipates that the land would support 9.3
million leasable square feet. The Company believes that, because it is
a fully integrated real estate firm, its base of commercially zoned land
in existing industrial and business parks provides a competitive
advantage for future development activities, particularly as the
availability of land within the Company's geographic markets continues
to diminish.
INTERNATIONAL OPERATION: The Company earns an annual fee of $600,000
(subject to adjustment for additional services undertaken by the
Company) for its management services provided with respect to a joint
venture between Rouse Kent Limited, which is owned by certain senior
executives of the Company, and the County of Kent, England to develop a
650-acre, mixed-use park approximately 25 miles southeast of London.
The Company has an option to purchase Rouse Kent for nominal
consideration and an option to purchase future buildings and land within
the park. The Company's international operations also include 4
Properties in Operation in the County of Kent.
SUBSEQUENT ACTIVITIES
Since December 31, 1996, the date as of which tabular data presented
herein is reflected, the Company has purchased three office buildings
containing approximately 267,134 leasable square feet for a Total
Investment of $26.6 million. In addition, the Company has completed
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development on three industrial distribution properties containing
approximately 1.4 million leasable square feet for a Total Investment of
$42.1 million.
The Company intends to pursue its acquisition and development
strategies. The Company is currently in various stages of discussions
and negotiations with respect to acquisition and build-to-suit projects
totalling over $200.0 million. The consummation of these or any other
future acquisitions or developments, if any, and the pace at which
acquisitions may be made and developments completed, cannot be assured.
COMPETITION
The Company faces competition as a buyer, developer and lessor of
properties and will likely face competition as an eventual seller of
properties to the extent that properties are sold. The Company may be
competing with other owners and developers with greater resources and
whose management may have more experience than the Company's officers
and trustees. There are numerous other entities, including but not
limited to other REITs, that compete with the Company in seeking to
acquire the limited number of properties available for sale that meet
the Company's acquisition strategy. Like the Company, many of the
potentially competing purchasers can use their own securities in making
acquisitions. Additionally, the number of competitive properties in any
particular market in which the Company's Properties are located could
have a material adverse effect on both the Company's ability to lease
space at the Properties or any newly-acquired property and on the rents
charged at the Properties in Operation. However, the Company believes
that its capital base, its existing sources of credit and its access as
a public entity to the capital markets to raise funds during periods
when conventional sources of financing may be unavailable or
prohibitively expensive will provide the Company with competitive
advantages. Further, the Company believes that the number of real
estate developers has decreased as a result of the recessionary market
conditions and tight credit markets during the early 1990s as well as
the reluctance on the part of more conventional financing sources to
fund development and acquisition projects. Moreover, the Company
believes that its responsiveness to tenant needs will enable it to
attract and maintain high quality tenants in the markets in which the
Properties in Operation are located.
ENVIRONMENTAL REGULATIONS
Under various federal, state and local laws, ordinances and regulations
relating to the protection of the environment (collectively,
"Environmental Laws"), a current or previous owner or operator of real
estate may be liable for the cost of removal or remediation of certain
hazardous or toxic substances disposed, stored, released, generated,
manufactured or discharged from, on, at, onto, under or in such
property. Environmental Laws often impose such liability without regard
to whether the owner or operator knew of, or was responsible for, the
presence or release of such hazardous or toxic substances. In addition,
the presence of any such substances or the failure to properly remediate
such substances when present, released or discharged may adversely
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affect the owner's ability to sell or rent such property or to borrow
using such property as collateral. The cost of any required remediation
and the liability of the owner or operator therefor as to any property
is generally not limited under such Environmental Laws and could exceed
the value of the property and/or the aggregate assets of the owner or
operator. Persons who arrange for disposal of hazardous or toxic
substances may also be liable for the costs of removal or remediation of
such substances at a disposal or treatment facility, whether or not such
facility is owned or operated by such persons. In addition to any
action required by federal, state or local authorities, the presence of
hazardous or toxic substances on any of the Properties, or on any
properties acquired hereafter, could result in private plaintiffs
bringing claims for personal injury or other causes of action. In
connection with the ownership and operation of the Properties, and on
any properties acquired hereafter, the Company may be potentially liable
for remediation, release or injury. Further, various Environmental Laws
impose on owners or operators the requirement of ongoing compliance with
rules and regulations regarding business-related activities that may
affect the environment. Failure to comply with such requirements could
result in difficulty in the lease or sale of any affected Property or
the imposition of monetary penalties and fines in addition to the costs
required to attain compliance.
All of the Properties in Operation have been subject to Phase I
Environmental Assessments ("Phase I Assessments"). The Phase I
Assessments did not reveal, nor is the Company aware of, any non-
compliance with Environmental Laws, environmental liability or other
environmental claim that the Company believes would likely have a
material adverse effect on the Company. Although certain environmental
issues have been identified with respect to certain of the Properties,
the Company does not believe that any of these issues is likely to
materially adversely affect the results of the Company's operations. No
assurance can be given that the Phase I Assessments revealed all
potential environmental liabilities, that no prior owner or operator
created any material adverse environmental condition not known to the
Company, that no environmental liabilities have developed since such
Phase I Assessments were prepared, that future laws, ordinances or
regulations will not impose any material environmental requirement or
liability, or that a material adverse environmental condition does not
otherwise exist.
ITEM 2. PROPERTIES
The Properties in Operation, as of December 31, 1996, consisted of 173
industrial and 86 office properties.
Single tenants occupy 94 Properties in Operation. The Company provides a
reduced level of service in connection with the operation or maintenance
of these properties. The remaining 165 of the Company's Properties in
Operation are occupied by multiple tenants for which the Company renders
a range of building, operating and maintenance services.
The Company's industrial properties consist of a variety of warehouse,
assembly, light manufacturing, distribution, and research and
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development facilities. Substantially all of the Company's industrial
properties are located in suburban, mixed-use developments or business
parks and all are well-maintained facilities. They include both single-
tenant and multi-tenant facilities, with most designed flexibly to
accommodate various types of tenants, space requirements, and industrial
uses to increase re-leasing opportunities and control re-leasing costs.
They range in size from 11,600 square feet to 497,000 square feet, with
an average building size of 90,652 square feet. As of December 31,
1996, the Company's industrial properties were 93.5% leased. Major
tenants, based upon annual base rent, include the United States of
America, SKF USA, Inc. and, Vistakon Division of Johnson & Johnson
Vision Products, Inc., General Electric Company, and Biospherics, Inc.
The Company's office properties are mid-rise and single story office
buildings principally located in suburban, mixed-use developments or
office parks. All of the Company's office properties are well-
maintained facilities. Substantially all are located in prime business
locations within established business communities offering excellent
access to interstate highway systems. As of December 31, 1996, the
office properties were approximately 90.2% leased. The office
properties range in size from 4,900 to 220,000 square feet, with an
average building size of 57,379 square feet. Major tenants, based upon
annual base rent, include AT&T Resource Management Corp., Sanofi
Winthrop, Inc. (a division of Elf Aquitaine) and Prudential Insurance
Company of America.
The table on the following pages gives information on the Company's
Properties in Operation as of December 31, 1996.
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<TABLE>
LIBERTY PROPERTY TRUST/LIBERTY PROPERTY LIMITED PARTNERSHIP
PROPERTY LIST
<CAPTION>
PERCENT
LEASED AT
BUILDING YEAR LEASABLE DEC. 31, NO. OF
PROJECT NAME TYPE DEVE. SQ.FT.(1) 1996 (2) LEASES MAJOR TENANT
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<S> <C> <C> <C> <C> <C> <C>
SOUTHEASTERN PENNSYLVANIA
10, 20 Liberty Boulevard Ofc. 1988 62,237 90.3% 24 Great Valley Health Club, Inc.
420 Lapp Road Ind.-Flex 1989 92,250 85.8% 8 Akzo Coatings, Inc.
1 Chelsea Parkway Ind.-Flex 1988 43,267 99.0% 6 Valtek Incorporated
3 Chelsea Parkway Ind.-Flex 1988 43,240 55.5% 3 United Engineers & Constructors
747 Dresher Road Ofc. 1988 53,200 100.0% 2 Axon Communications, Inc.
45-67 Great Valley Parkway Ind.-Dist. 1974 128,001 100.0% 8 Taylor Publishing Co.
1180 Church Road Ind.-Dist. 1986 452,323 56.3% 3 Safeguard Business Systems, Inc.
40 Valley Stream Parkway Ofc. 1987 31,092 100.0% 1 Sanchez Computer Associates
50 Valley Stream Parkway Ofc. 1987 31,000 100.0% 3 Fisher Scientific Company
20 Valley Stream Parkway Ofc. 1987 58,834 100.0% 12 Shared Medical Systems
800 Town Center Drive Ind.-Flex 1987 141,714 100.0% 18 ICT Group, Inc.
1610 Medical Drive Ofc. 1986 38,100 54.4% 5 Employers Mutual Casualty Co.
11, 15 Great Valley Parkway Ofc. 1986 156,800 100.0% 2 Sanofi Winthrop, Inc.
257-275 Great Valley Parkway Ind.-Flex 1983 71,285 100.0% 7 Business Mail Express, Inc.
300 Technology Drive Ind.-Dist. 1985 22,500 100.0% 1 Nilfisk of America, Inc.
277-293 Great Valley Parkway Ind.-Flex 1984 28,800 100.0% 7 Alpha Scientific Corporation
311 Technology Drive Ofc. 1984 29,350 100.0% 3 Sherwin-Williams Co.
325 Technology Drive Ofc. 1984 25,000 100.0% 1 Premier Solutions Ltd.
7 Great Valley Parkway Ofc. 1985 59,021 100.0% 14 Rabbit Software Corporation
55 Valley Stream Parkway Ofc. 1983 40,057 100.0% 5 Meridian Properties, Inc.
65 Valley Stream Parkway Ofc. 1983 58,219 100.0% 7 Liberty Property Limited Ptsp.
508 Lapp Road Ind.-Dist. 1984 50,200 100.0% 1 Numar Corporation
10 Valley Stream Parkway Ofc. 1984 33,027 100.0% 8 West Chester Administrative
333 Phoenixville Pike Ind.-Dist. 1985 84,000 100.0% 1 Veterans Life Insurance Co.
1566 Medical Drive Ofc. 1985 28,540 88.1% 5 General Physics Corporation
30 Great Valley Parkway Ind.-Dist. 1975 12,000 100.0% 1 Sanofi Winthrop, Inc.
75 Great Valley Parkway Ind.-Dist. 1977 11,600 100.0% 1 York International Corp.
27-43 Great Valley Parkway Ind.-Flex 1977 60,623 100.0% 5 Sanofi Winthrop, Inc.
77-123 Great Valley Parkway Ind.-Flex 1978 104,095 99.3% 20 Durant Medical, Inc.
260 Great Valley Parkway Ind.-Dist. 1979 50,000 100.0% 1 American Parts Systems
256 Great Valley Parkway Ind.-Dist. 1980 56,160 100.0% 1 Centocor, Inc.
205 Great Valley Parkway Ind.-Dist. 1981 184,500 92.3% 3 General Electric Company
12,14,16 Great Valley Parkway Ofc. 1982 20,546 100.0% 3 Sanofi Winthrop, Inc.
155 Great Valley Parkway Ind.-Dist. 1981 71,200 100.0% 1 Ensoniq Corporation
333 Technology Drive Ofc. 1987 39,769 100.0% 1 Premier Solutions, Ltd.
510 Lapp Road Ind.-Dist. 1983 27,167 100.0% 1 Trugreen
181 Wheeler Court Ind.-Dist. 1979 100,000 100.0% 3 Executive Warehouse, Inc.
1100 Wheeler Way Ind.-Dist. 1979 40,915 100.0% 1 National Business Services, Inc.
60 Morehall Road Ofc. 1989 114,430 100.0% 3 Vanguard Group
905 Airport Road Ind.-Dist. 1988 128,588 100.0% 6 Arco Chemical Company
16 Cabot Boulevard Ind.-Dist. 1972 299,192 100.0% 1 White Consolidated Industries
1 Country View Road Ofc. 1982 48,900 100.0% 1 Systems & Computer Technology
2151 Cabot Boulevard Ind.-Dist. 1982 114,760 100.0% 1 Schwarz Paper Company
170 S Warner Road Ofc. 1980 87,685 93.8% 5 AT&T Resource Management Corp.
190 S Warner Road Ofc. 1980 87,500 100.0% 1 Electronic Data Systems Corp.
507 Prudential Road Ind.-Flex 1988 105,500 100.0% 1 Prudential Insurance Company
100 Witmer Road Ofc. 1995 139,546 100.0% 1 GMAC Mortgage Corporation
3100 Horizon Boulevard Ind.-Flex 1995 41,000 100.0% 1 Vtel Corporation
3300 Horizon Boulevard Ind.-Dist. 1996 92,000 100.0% 1 Central National-Gottesman, Inc.
3500 Horizon Boulevard Ind.-Flex 1996 65,579 100.0% 1 SmithKline Beecham Clinical
200 Chester Field Parkway Ofc. 1989 28,919 100.0% 3 Waverly, Inc.
767 Electronic Drive Ind.-Flex 1996 45,000 100.0% 1 Diversified Pharmaceutical Svc.
5 Country View Road Ofc. 1985 63,170 100.0% 2 HBO & Company of Georgia
3200 Horizon Boulevard Ind.-Flex 1996 60,000 100.0% 1 Fund/Plan Services, Inc.
111-195 Witmer Road Ofc. 1996 55,354 98.2% 15 Kulicke & Soffa Industries, Inc.
2460 General Armistead Avenue Ind.-Flex 1985 36,831 93.0% 8 Midlantic Distribution Co.
2490 General Armistead Avenue Ind.-Flex 1985 20,811 82.7% 6 Barefoot Grass Lawn Service
300 Welsh Road Ofc. 1983 23,461 100.0% 4 Delta Information Systems, Inc.
400 Welsh Road Ofc. 1983 36,723 96.7% 5 National Fraud Investigations
440 E. Swedesford Road Ofc. 1988 71,368 58.1% 11 Affiliated Distributors
460 E. Swedesford Road Ofc. 1988 70,205 97.6% 7 Johnson-Matthey Investments
2 Walnut Grove Drive Ofc. 1989 81,846 74.6% 11 Toyota Motor Credit Corp.
200 Gibralter Road Ofc. 1990 64,452 93.7% 10 Great West Life Assurance
220 Gibralter Road Ofc. 1990 63,587 100.0% 1 Prudential Insurance Company
240 Gibralter Road Ofc. 1990 63,587 100.0% 1 Prudential Insurance Company
151 S Warner Road Ofc. 1980 84,066 98.4% 11 Paging Network of Philadelphia
931 South Matlack Street Ind.-Dist. 1985 139,500 100.0% 1 Electronics Boutique, Inc.
14 Lee Boulevard Ind.-Flex 1988 89,026 86.9% 5 Vanguard Group
500 Chester Field Parkway Ofc. 1988 30,815 100.0% 2 Becket, Watkins and Associates
300-400 Chester Field Parkway Ofc. 1988 50,383 100.0% 3 Amerisource Corporation
--------- ------
Total Southeastern Pennsylvania 5,144,416 93.1%
========= ======
</TABLE>
-13-
<PAGE>
<TABLE>
LIBERTY PROPERTY TRUST/LIBERTY PROPERTY LIMITED PARTNERSHIP
PROPERTY LIST
<CAPTION>
PERCENT
LEASED AT
BUILDING YEAR LEASABLE DEC. 31, NO. OF
PROJECT NAME TYPE DEVE. SQ.FT.(1) 1996 (2) LEASES MAJOR TENANT
- --------------------------------- --------- ----- --------- --------- ------ -------------------------------
<S> <C> <C> <C> <C> <C> <C>
NEW JERSEY/DELAWARE
1805 Underwood Boulevard Ind.-Dist. 1973 14,383 100.0% 1 Uniscore, Inc.
150 Mid-Atlantic Parkway Ind.-Dist. 1973 30,873 100.0% 1 Reynolds Metals Company
18 Boulden Circle Ind.-Flex 1989 76,000 76.8% 10 Custom Computer Services, Inc.
501 Delran Parkway Ind.-Dist. 1988 49,500 68.1% 2 Gandalf Systems Corporation
600 Delran Parkway Ind.-Dist. 1988 119,290 100.0% 2 Computer & Comm Info
1607 Imperial Way Ind.-Dist. 1973 80,000 100.0% 1 Dunkin' Donuts
1 Boulden Circle Ind.-Dist. 1986 43,200 100.0% 1 Norel Paper Corporation
31-55 Read's Way Ind.-Flex 1986 78,009 100.0% 3 Cigna Corporation
3 Boulden Circle Ind.-Dist. 1987 60,812 100.0% 1 Livingston Healthcare Services
5 Boulden Circle Ind.-Dist. 1987 119,653 100.0% 1 Brundage Distribution Corp.
601 Delran Parkway Ind.-Dist. 1988 57,930 100.0% 1 Keymar Warehouse, Inc.
51 Haddonfield Road Ofc. 1986 93,000 89.0% 19 Lehigh Press, Inc.
57 Read's Way Ind.-Flex 1985 53,600 100.0% 2 Wachovia Bank of Georgia
1370 Imperial Way Ind.-Dist. 1978 179,785 100.0% 1 National Distribution Centers
8 Stow Road Ind.-Flex 1988 34,911 84.1% 4 AT&T Resource Management Corp.
10 Stow Road Ind.-Flex 1988 29,722 68.5% 1 Trans World Airlines, Inc.
12 Stow Road Ind.-Flex 1988 21,200 100.0% 5 Future Electronics Corp.
14 Stow Road Ind.-Flex 1988 18,821 100.0% 2 Wiltel Communications Sys, Inc.
1300 Metropolitan Avenue Ind.-Dist. 1972 76,196 100.0% 1 Phoenix Display & Packaging
701A Route 73 South Ofc. 1987 97,200 81.2% 8 Ohio Casualty Insurance
701C Route 73 South Ofc. 1987 27,813 80.9% 4 Prudential Property & Casualty
1008 Astoria Boulevard Ind.-Flex 1973 37,400 87.6% 6 ACSIS, Inc.
1475 Imperial Way Ind.-Dist. 1976 60,000 100.0% 1 Knauf Fiberglass, Inc.
3000 Atrium Way Ofc. 1987 110,115 68.3% 11 Atrium Executive Center, Inc.
750 Cardinal Drive Ind.-Dist. 1989 81,348 100.0% 1 Leslie's Poolmart
11000,15000,17000 Commerce Parkway Ind.-Flex 1985 100,170 97.8% 8 PHH Mortgage Services Corp.
12000,14000 Commerce Parkway Ind.-Flex 1985 68,000 87.8% 6 Simirex, Inc.
16000,18000 Commerce Parkway Ind.-Flex 1985 52,000 93.8% 7 CSX Intermodal, Inc.
406 Lippincott Drive Ofc. 1990 40,000 100.0% 5 Travelers Insurance Co
234 High Hill Road Ind.-Dist. 1987 60,000 100.0% 1 Skyway Freight Systems, Inc.
101 Arlington Boulevard Ind.-Dist. 1996 154,675 100.0% 2 Heinz Bakery Products
100 Berkeley Drive Ind.-Dist. 1990 67,000 100.0% 1 MCR Direct Mail, Inc.
301 Lippincott Drive Ofc. 1988 82,482 100.0% 4 Fluor Daniel, Inc.
303 Lippincott Drive Ofc. 1988 82,541 99.8% 4 Fluor Daniel, Inc.
510 Sharptown Road Ind.-Dist. 1984 40,156 100.0% 1 Day Products, Inc.
901 Route 73 Ofc. 1985 39,434 96.9% 4 Teknion, Inc.
1500 Route 73 North Ofc. 1988 62,069 65.6% 9 Prudential Securities, Inc.
512 Sharptown Road Ind.-Dist. 1984 58,000 100.0% 1 Trek Bicycle Corporation
263 Quigley Boulevard Ind.-Dist. 1987 43,525 98.5% 8 Small Systems Management Corp.
34 Blevins Drive Ind.-Flex 1987 50,022 100.0% 7 Panelmatic
104 Gaither Drive Ind.-Dist. 1975 45,390 100.0% 1 Eptech Corporation
2 Lukens Drive Ind.-Flex 1988 43,175 100.0% 3 Ameristar Technologies
--------- ------
Total New Jersey/Delaware 2,739,400 94.2%
========= ======
</TABLE>
-14-
<PAGE>
<TABLE>
LIBERTY PROPERTY TRUST/LIBERTY PROPERTY LIMITED PARTNERSHIP
PROPERTY LIST
<CAPTION>
PERCENT
LEASED AT
BUILDING YEAR LEASABLE DEC. 31, NO. OF
PROJECT NAME TYPE DEVE. SQ.FT.(1) 1996 (2) LEASES MAJOR TENANT
- --------------------------------- --------- ----- --------- --------- ------ -------------------------------
<S> <C> <C> <C> <C> <C> <C>
LEHIGH VALLEY
1655 Valley Center Parkway Ofc. 1993 28,300 62.3% 1 Allstate Insurance Company
6560 Stonegate Drive Ind.-Dist. 1989 80,000 100.0% 2 Vitra Seating, Inc.
6370 Hedgewood Drive Ind.-Dist. 1990 110,000 69.1% 2 ODL, Inc.
6390 Hedgewood Drive Ind.-Dist. 1990 69,000 100.0% 2 Behr Processing Corporation
1495 Valley Center Parkway Ofc. 1990 43,770 100.0% 2 Ingersoll-Rand Company
6350 Hedgewood Drive Ind.-Dist. 1989 121,000 100.0% 2 Organon, Inc.
6330 Hedgewood Drive Ind.-Flex 1988 89,700 100.0% 7 Submicron Systems, Inc.
1550 Valley Center Parkway Ind.-Flex 1988 43,400 100.0% 7 Employee Benefit Plans, Inc.
1560 Valley Center Parkway Ind.-Flex 1988 51,400 100.0% 1 TIG Insurance Company
6580 Snowdrift Road Ind.-Dist. 1988 104,000 100.0% 1 Dana Corporation
1510 Valley Center Parkway Ind.-Flex 1988 48,208 90.9% 6 Visiting Nurses Association
1530 Valley Center Parkway Ind.-Flex 1988 46,400 100.0% 1 SKF USA, Inc.
6540 Stonegate Drive Ind.-Dist. 1988 120,000 100.0% 1 SKF USA, Inc.
974 Marcon Boulevard Ind.-Flex 1987 39,200 29.3% 3 Norwood Industrial Construction
964 Marcon Boulevard Ind.-Flex 1985 39,200 100.0% 6 Health Spectrum Medical
764 Roble Road Ind.-Flex 1985 21,860 100.0% 1 ChemLawn Corp Center
3174 Airport Road Ind.-Flex 1979 42,000 64.3% 1 Allentech, Inc.
2196 Avenue C Ind.-Flex 1980 31,140 100.0% 1 Lehigh University
2202 Hangar Place Ind.-Flex 1981 66,495 100.0% 4 Lofts Seed, Inc.
2201 Hangar Place Ind.-Flex 1981 52,300 100.0% 6 Pacesetter Enterprises, Inc.
954 Marcon Boulevard Ind.-Dist. 1981 24,000 100.0% 1 Merck & Co., Inc.
57 South Commerce Way Ind.-Flex 1986 76,400 100.0% 7 SKF USA, Inc.
754 Roble Road Ind.-Flex 1986 46,800 79.5% 5 Computer Designs, Inc.
894 Marcon Boulevard Ind.-Flex 1986 28,800 100.0% 10 Spalding Company, Inc.
744 Roble Road Ind.-Flex 1986 46,800 97.7% 8 Fluoro-Seal
944 Marcon Boulevard Ind.-Flex 1986 38,400 100.0% 13 Integrated Solutions, Inc.
1685 Valley Center Parkway Ofc. 1996 27,200 100.0% 2 General Accident Insurance Co.
6520 Stonegate Drive Ind.-Flex 1996 43,200 100.0% 5 Submicron Systems Inc.
7437 Industrial Boulevard Ind.-Dist. 1976 191,330 100.0% 2 Stuart Medical, Inc.
2041 Avenue C Ind.-Flex 1990 30,400 100.0% 3 Dorst America, Inc.
2124 Avenue C Ind.-Dist. 1990 36,000 100.0% 1 Graybar Electric Co., Inc.
7339 Industrial Boulevard Ind.-Dist. 1996 215,000 47.9% 1 DSC Logistics, Inc.
7384 Penn Drive Ind.-Dist. 1988 112,000 100.0% 1 Osram Sylvania, Inc.
7144 Daniels Drive Ind.-Dist. 1975 300,312 100.0% 2 Simpson Paper Company
7620 Cetronia Road Ind.-Dist. 1990 155,060 100.0% 3 Lehigh Group
939 Marcon Boulevard Ind.-Dist. 1980 315,000 100.0% 1 Fieldcrest Cannon Sure Fit, Inc.
100 Brodhead Road Ofc. 1990 47,056 77.1% 6 First Valley Bank
1640 Valley Center Parkway Ofc. 1996 30,850 100.0% 1 Pennsylvania Cellular
83 South Commerce Way Ofc. 1989 18,983 72.5% 3 Nationwide Insurance
85 South Commerce Way Ofc. 1989 21,119 100.0% 2 Penn Del Directory Co.
87 South Commerce Way Ofc. 1989 22,653 100.0% 4 Versyss, Inc.
7248 Industrial Boulevard Ind.-Dist. 1988 497,000 67.5% 3 S.D. Warren Company
--------- ------
Total Lehigh Valley 3,571,736 89.0%
========= ======
MARYLAND
180 Admiral Cochrane Drive Ofc. 1989 128,236 96.0% 9 Columbia Medical Plan, Inc.
12000,001,040 Indian Creek Court Ind.-Flex 1986 185,776 100.0% 7 Biospherics, Inc.
190 Admiral Cochrane Drive Ofc. 1988 72,085 95.5% 12 Telespectrum
8280 Patuxent Range Drive Ind.-Dist. 1978 60,079 100.0% 2 Alcore, Inc.
8300 Professional Place Ofc. 1978 60,058 97.7% 9 TRW, Inc.
8100 Professional Place Ofc. 1987 54,613 62.9% 11 Ben Dyer Associates, Inc.
8100,8200,8300 Corporate Drive Ofc. 1981 119,227 69.9% 14 Kaiser Georgetown Community
7178 - 7180 Columbia Gateway Ind.-Flex 1987 88,895 92.4% 4 Nationsbank, N.A.
8200 - 8240 Professional Place Ofc. 1979 56,464 56.8% 11 F.M.E. Corporation
8400 Corporate Drive Ofc. 1984 147,800 23.2% 5 Digital Equipment Corp.
8730 Bollman Place Ind.-Dist. 1984 98,745 100.0% 1 Kraft Foodservice, Inc.
9101,9111,9115 Guilford Road Ind.-Flex 1984 51,751 81.1% 4 Sienna Biotech, Inc.
9125,9135,9145 Guilford Road Ind.-Flex 1983 85,804 63.6% 5 Federal Express Corporation
--------- ------
Total Maryland 1,209,533 79.2%
========= ======
</TABLE>
-15-
<PAGE>
<TABLE>
LIBERTY PROPERTY TRUST/LIBERTY PROPERTY LIMITED PARTNERSHIP
PROPERTY LIST
<CAPTION>
PERCENT
LEASED AT
BUILDING YEAR LEASABLE DEC. 31, NO. OF
PROJECT NAME TYPE DEVE. SQ.FT.(1) 1996 (2) LEASES MAJOR TENANT
- --------------------------------- --------- ----- --------- --------- ------ -------------------------------
<S> <C> <C> <C> <C> <C> <C>
VIRGINIA
10 South Third Street Ofc. 1930 4,900 100.0% 1 Scribner, Messer, Brady & Wade
1751 Bluehills Drive Ind.-Dist. 1991 265,082 100.0% 1 Conopco, Inc.
4300 Carolina Avenue Ind.-Dist. 1985 218,554 100.0% 1 United States of America
301 Hill Carter Parkway Ind.-Dist. 1989 80,000 100.0% 1 Philip Morris Incorporated
4001 Carolina Avenue Ind.-Dist. 1935 35,200 91.8% 6 Charles H. Snead, Jr.
5600-5626 Eastport Boulevard Ind.-Flex 1989 71,227 93.2% 5 American Honda Motor Co., Inc.
5650-5674 Eastport Boulevard Ind.-Dist. 1990 150,867 100.0% 4 Sterilization Services of VA
5700 Eastport Boulevard Ind.-Dist. 1990 100,336 100.0% 1 Merisel, Inc.
11020 Hull Street Road Ofc. 1987 5,172 100.0% 1 Patient First Corporation
3432 Holland Road Ofc. 1989 5,688 100.0% 1 Patient First Corporation
3001 Hungary Springs Road Ofc. 1984 11,235 100.0% 2 Broughton Systems, Inc.
7760 Shrader Road Ofc. 1987 18,247 100.0% 2 Signet Bank
7740 Shrader Road Ofc. 1989 10,167 71.5% 3 Rector & Visitors of UVA
4880 Cox Road Ofc. 1995 59,948 93.7% 2 Saxon Mortgage, Inc.
5162 Valleypointe Parkway Ofc. 1993 25,000 100.0% 1 United States of America
4101-4127 Carolina Avenue Ind.-Dist. 1973 126,000 100.0% 1 Hamilton Hybar, Inc.
4201-4261 Carolina Avenue Ind.-Dist. 1975 288,000 99.8% 8 Crestar Bank
4263-4299 Carolina Avenue Ind.-Dist. 1976 180,000 100.0% 1 Open Plan Systems, Inc.
4301-4335 Carolina Avenue Ind.-Dist. 1978 162,000 100.0% 1 Stone Container Corporation
4337-4379 Carolina Avenue Ind.-Dist. 1979 198,000 100.0% 2 The Goldberg Company, Inc.
4501-4549 Carolina Avenue Ind.-Dist. 1981 150,000 100.0% 2 Foxmeyer Drug Company
4551-4593 Carolina Avenue Ind.-Dist. 1982 151,800 100.0% 3 A.H. Robins Company, Inc.
4601-4643 Carolina Avenue Ind.-Dist. 1985 151,800 100.0% 2 T.E.U. Incorporated
4545-4583 Carolina Avenue Ind.-Dist. 1985 120,000 100.0% 1 Owens & Minor Medical, Inc.
4447-4491 Carolina Avenue Ind.-Dist. 1987 158,700 100.0% 1 Shelcore, Inc.
4401-4445 Carolina Avenue Ind.-Dist. 1988 158,700 100.0% 2 Media Post Marketing
12 S. Third Street Ofc. 1900 5,735 100.0% 1 Liberty Property Limited Ptnsp.
9601 Cosner Drive Ind.-Dist. 1995 128,500 100.0% 1 Simmons Company
315 Cardiff Valley Road Ind.-Dist. 1994 151,200 100.0% 1 Caterpillar Inc.
2300 East Parham Road Ofc. 1988 5,172 100.0% 1 Patient First Corporation
1347 Diamond Springs Road Ind.-Dist. 1980 99,260 100.0% 2 Nu-Home TV & Furniture, Inc.
5221 Valleypark Drive-Bldg A Ind.-Flex 1988 17,007 100.0% 1 RBX Holdings, Inc.
5228 Valleypointe Parkway-Bldg B Ind.-Flex 1988 14,477 61.4% 3 Allen-Bradley Company
5238 Valleypark Drive-Bldg C Ind.-Flex 1989 17,062 98.5% 6 MCI Telecommunications
5601-5609 Eastport Boulevard Ind.-Dist. 1996 150,000 100.0% 2 General Medical Corporation
4717-4729 Eubank Road Ind.-Dist. 1978 141,313 100.0% 3 Whithall-Robins
4263F Carolina Avenue Ind.-Dist. 1975 57,600 100.0% 3 Heflebower Transfer & Storage
4200 Oakleys Court Ind.-Dist. 1990 80,000 100.0% 1 Multiton Mic Corp.
1821 Battery Dantzler Road Ind.-Dist. 1990 129,600 100.0% 3 Richmond Cold Storage Co.
5000 Cox Road Ind.-Flex 1990 58,367 100.0% 6 Patient First Corporation
510 Eastpark Court Ind.-Flex 1989 51,874 100.0% 5 Power Distribution, Inc.
520 Eastpark Court Ind.-Dist. 1989 144,228 100.0% 5 Bunzl-Richmond, Inc.
--------- ------
Total Virginia 4,158,018 99.5%
========= ======
NORTH CAROLINA
4523 Green Point Drive Ind.-Dist. 1988 85,830 100.0% 1 Dry Storage Corporation
4501 Green Point Drive Ind.-Dist. 1989 90,049 100.0% 4 New Breed Leasing Corporation
4500 Green Point Drive Ind.-Dist. 1989 71,040 100.0% 6 Corporate Express
2427 Penny Road Ind.-Dist. 1990 270,000 100.0% 1 Masco Corporation
4524 Green Point Drive Ind.-Dist. 1988 74,587 84.4% 3 Standard Register Co.
4328,4336 Federal Drive Ind.-Dist. 1995 177,600 100.0% 2 United Parcel Service, Inc.
200 Centreport Drive Ofc. 1986 47,190 100.0% 18 MCI Telecommunications Corp.
4344 Federal Drive Ind.-Dist. 1996 92,425 100.0% 4 MAC Papers, Inc.
202 Centreport Drive Ofc. 1990 62,664 95.0% 5 Key Risk Management Services
4000 Piedmont Parkway Ofc. 1989 60,383 92.9% 20 New Breed Leasing Corporation
--------- ------
Total North Carolina 1,031,768 98.2%
========= ======
</TABLE>
-16-
<PAGE>
<TABLE>
LIBERTY PROPERTY TRUST/LIBERTY PROPERTY LIMITED PARTNERSHIP
PROPERTY LIST
<CAPTION>
PERCENT
LEASED AT
BUILDING YEAR LEASABLE DEC. 31, NO. OF
PROJECT NAME TYPE DEVE. SQ.FT.(1) 1996 (2) LEASES MAJOR TENANT
- --------------------------------- --------- ----- --------- --------- ------ ------------------------------
<S> <C> <C> <C> <C> <C> <C>
FLORIDA
1730 Stebbins Drive Ind.-Dist. 1973 40,000 100.0% 1 Atlas Bag, Inc.
5911-5925 Richard Street Ind.-Flex 1977 40,000 100.0% 1 Vistakon Div.- Johnson & Johnson
8383-8385 Baycenter Road Ind.-Dist. 1973 40,000 100.0% 1 Parts House, Inc.
8775 Baypine Road Ofc. 1989 50,000 100.0% 1 AT&T Resource Management Corp.
8539 Western Way Ind.-Flex 1987 72,030 0.0% -
6255 Lake Grey Boulevard Ind.-Flex 1987 94,174 100.0% 7 U.S. Telecom, Inc. - Sprint Serv.
6600-6660 Suemac Place Ind.-Dist. 1973 103,404 100.0% 5 American Flat Glass
6800-6850 Suemac Place Ind.-Dist. 1973 60,000 100.0% 1 R&G Sloane Manufacturing Co.
8665, 8667, 8669 Baypine Road Ofc. 1987 63,118 100.0% 5 Blue Cross and Blue Shield
8540 Baycenter Road Ind.-Flex 1984 30,028 100.0% 1 Reichhold Chemicals
1200 Gulf Life Drive Ofc. 1984 179,274 92.9% 20 Stein Mart, Inc.
8400 Baymeadows Way Ind.-Flex 1987 43,547 100.0% 8 Productivity Solutions, Inc.
8614 Baymeadows Way Ofc. 1986 16,000 100.0% 1 Allstate Insurance Company
5941-5975 Richard Street Ind.-Flex 1978 86,660 100.0% 1 Vistakon Div. - Johnson & Johnson
7970 Bayberry Road Ind.-Flex 1978 55,000 0.0% -
6000-6030 Bowdendale Avenue Ind.-Flex 1979 83,330 88.0% 4 Vistakon Div. - Johnson & Johnson
7898 Baymeadows Way Ofc. 1979 42,149 100.0% 2 American Transtech, Inc. (AT&T)
5977-6607 Richard Street Ind.-Flex 1980 73,333 100.0% 1 Vistakon Div. - Johnson & Johnson
7910 & 7948 Baymeadows Way Ofc. 1980 52,505 100.0% 3 American Transtech, Inc. (AT&T)
7954 & 7960 Baymeadows Way Ofc. 1982 52,608 100.0% 2 American Transtech, Inc. (AT&T)
8787 Baypine Road Ofc. 1990 220,000 100.0% 1 AT&T Resource Management Corp.
7077 Bonneval Road Ofc. 1988 102,942 95.1% 26 Florida Windstorm Underwriting
4190 Belfort Road Ofc. 1986 105,664 94.6% 24 Enterprise National Bank
8011, 8021, 8031 Phillips Highway Ofc. 1987 81,962 71.2% 9 Southwest Signal Engineering
7020 AC Skinner Parkway Ind.-Flex 1996 42,184 100.0% 6 Intermedia Communications, Inc.
7022 AC Skinner Parkway Ind.-Dist. 1996 88,200 100.0% 2 Microtek Medical, Inc.
11777 Central Highway Ind.-Dist. 1985 50,000 0.0% -
7016 AC Skinner Parkway Ind.-Flex 1996 39,350 100.0% 1 Georgia-Pacific Corporation
--------- ------
Total Florida 2,007,462 88.3%
========= ======
FLORIDA WEST
4001, 4051, 4101 Fowler Avenue Ind.-Flex 1987 101,198 90.5% 20 Musculoskeletal Institute
5501 Pioneer Park Boulevard Ind.-Dist. 1981 61,416 100.0% 5 Premdor Corporation
5502 Pioneer Park Boulevard Ind.-Dist. 1981 48,375 100.0% 3 Premdor Corporation
5690-5694 Crenshaw Street Ind.-Dist. 1979 87,095 100.0% 3 Florida Flooring Products, Inc.
3102,3104,3110 Cherry Palm Drive Ind.-Flex 1986 74,339 100.0% 12 Groundwater Technology, Inc.
8401-8408 Benjamin Road Ind.-Flex 1986 127,566 95.4% 18 National RX Services, Inc.
3501 Riga Boulevard Ind.-Flex 1987 57,220 100.0% 2 Customer Communications Center
111 Kelsey Lane Ind.-Flex 1990 60,200 50.0% 1 Westinghouse Electric Corp.
--------- ------
Total Florida West 617,409 92.6%
========= ======
UNITED KINGDOM
50 Gibson Drive Ofc. 1940 18,000 100.0% 1 Genzyme Biochemicals
25 Kings Hill Avenue Ofc. 1996 35,000 82.7% 2 Charities Aid Foundation
2 Kings Hill Avenue Ind.-Flex 1996 34,600 67.2% 2 Broadcast Surveillance Systems
50 Kings Hill Avenue Ofc. 1996 50,000 100.0% 1 Rhone-Polenc Rorer
---------- ------
Total United Kingdom 137,600 87.4%
========== ======
TOTAL COMPANY 20,617,342 92.8%
========== ======
(1) Based on current net leasable building area. Some buildings have
been expanded since their original acquisition or development.
(2) Based on rent commencement date.
</TABLE>
-17-
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
The Trust is not a party to any material legal proceedings. In the
ordinary course of business, the Operating Partnership is party to
ordinary routine litigation incidental to its business, including
routine actions for negligence, personal injury or other claims, many of
which are expected to be covered by liability insurance and in the
aggregate are not expected to have a material effect on the business or
financial condition of the Company.
On June 27, 1995, the Environmental Protection Agency ("EPA") notified
Willard G. Rouse III, George F. Congdon and David C. Hammers, together
with six other companies or individuals, that they may be potentially
responsible for a portion of the response costs for remediation of
ground water in part of the North Penn Service Area for certain
properties located in Upper Gwynedd Township, Pennsylvania, (the "Church
Road Properties"), as former owners. The Company acquired the Church
Road Properties from the Predecessor upon formation. The Company has
not been similarly notified by the EPA; however, as the present owner of
the Church Road Properties, the potential exists for the Company to be
named a potentially responsible party if there has been a release from
the Church Road Properties of hazardous substances, including
trichloroethylene, that requires remediation. In such circumstances,
the Company believes it would have claims against other financially
responsible parties (including previous owners of the Church Road
Properties, such as Zenith and the other parties identified by EPA as
potentially liable) and, consequently, the Company does not believe that
its liability with respect to this matter, if any, is likely to be
material. In addition, Mr. Rouse, Mr. Congdon, Mr. Hammers and Joseph
P. Denny, have agreed to indemnify the Company for a period of ten years
commencing in June 1994 with respect to material environmental
liabilities associated with the Church Road Properties.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year ended December 31, 1996.
EXECUTIVE OFFICERS
The following persons are the executive officers of the Trust, which is
the sole general partner of the Operating Partnership:
AGE AT
NAME FEBRUARY POSITION
27, 1997
- ----------------------- -------- ----------------------------------
Willard G. Rouse III 54 Chairman of the Board of Trustees
and Chief Executive Officer (1)
Joseph P. Denny 50 President, Chief Operating Officer
and Trustee (1)
George J. Alburger, Jr. 49 Chief Financial Officer and
Treasurer
-18-
<PAGE>
George F. Congdon 54 Executive Vice President of
Development and Trustee (1)
Robert E. Fenza 39 Executive Vice President
David C. Hammers 59 Executive Vice President
James J. Bowes 43 Corporate Secretary and General
Counsel
- --------------
(1) Serving under a three-year employment agreement beginning June 23,
1994.
Each officer was elected as such in July 1994 with the exception of Mr.
Alburger who was elected Chief Financial Officer and Treasurer in May
1995, and Mr. Bowes who was elected as Corporate Secretary in December
1996. Each officer will serve until the first meeting of the Board of
Trustees after the next annual meeting of shareholders or until the
officer resigns or is removed from office by the Board of Trustees.
Willard G. Rouse III has served as Chairman of the Board of Trustees and
Chief Executive Officer of the Company since March 1994. Mr. Rouse had
been a General Partner of the Predecessor since its founding in 1972.
He serves as a Trustee of the Urban Land Institute. Mr. Rouse has
served as Chairman of each of the Pennsylvania Convention Center
Authority, Foundation for Architecture, We the People 200 and the
Philadelphia Childrens Network and as President of the Fellowship
Commission.
Joseph P. Denny has served as President, Chief Operating Officer and a
trustee of the Company since March 1994. Mr. Denny joined the
Predecessor in 1979 and served as a Regional Managing General Partner,
and, later as President. In these capacities, he was responsible for
developing approximately one billion dollars of projects, primarily
large urban projects. Mr. Denny is a member of the Board of Directors
of Lawrence Holdings Co. Mr. Denny is also a Vice Chairman of the
Industrial and Office Park Council of the Urban Land Institute and
serves on the Advisory Board of the Wharton Business School's Real
Estate Center and the NAREIT Legislative Advisory Council.
George J. Alburger, Jr. became Chief Financial Officer and Treasurer of
the Company in May 1995. For more than five years prior to joining the
Company, Mr. Alburger served as Executive Vice President of EBL&S
Property Management, Inc., an owner and manager of approximately 200
shopping centers aggregating 30 million square feet of retail space.
Mr. Alburger is a certified public accountant and was formerly a Senior
Manager with Price Waterhouse LLP.
George F. Congdon has served as a trustee of the Trust since March 1994,
and as Executive Vice President of Development since April, 1995. Mr.
Congdon previously served as Chief Financial Officer and Treasurer of
the Company. Mr. Congdon had been a General Partner of the Predecessor
-19-
<PAGE>
since its founding in 1972. He is a member of the Board of Directors of
the People's Light and Theater Company and Historic Yellow Springs, Inc.
Robert E. Fenza has served as an Executive Vice President of the Company
since March 1994, with principal responsibility for operations, property
management and asset management. Mr. Fenza joined the Predecessor in
1984 and advanced to Regional Manager in 1987 and to Northern Division
Manager in 1991.
David C. Hammers has served as an Executive Vice President since March
1994. Mr. Hammers had been a General Partner of the Predecessor since
its founding in 1972.
James J. Bowes has served as General Counsel and Secretary of the
Company since December, 1996. Prior to joining the Company, Mr. Bowes
was a partner in the law firm of Blank Rome Comisky & McCauley.
PART II
ITEM 5. MARKET FOR THE REGISTRANTS' SHARES AND RELATED SHAREHOLDERS MATTERS
The Common Shares have been traded on the New York Stock Exchange under
the symbol "LRY" since June 16, 1994. There is no established public
trading market for the Units. The following table sets forth, for the
calendar quarters indicated, the high and low closing prices of the
Common Shares as reported on the New York Stock Exchange Composite Tape
and the dividends declared by the Company per Common Share for such
calendar quarter.
DIVIDENDS PER
HIGH LOW COMMON SHARE
---- --- -------------
1996
First Quarter 22 1/8 20 1/4 0.40
Second Quarter 21 19 1/2 0.40
Third Quarter 21 3/4 19 3/8 0.41
Fourth Quarter 25 7/8 21 1/8 0.41
1995
First Quarter 20 3/4 18 3/4 0.40
Second Quarter 20 1/8 18 3/8 0.40
Third Quarter 21 3/4 19 1/2 0.40
Fourth Quarter 21 3/8 19 0.40
1994
Second Quarter (from 6/16/94) 20 3/8 19 5/8 0.03
Third Quarter 20 1/8 19 0.40
Fourth Quarter 20 1/8 17 3/8 0.40
As of February 24, 1997, the Common Shares were held by 406 holders of
record. Since its initial public offering, the Company has paid regular
and uninterrupted dividends.
-20-
<PAGE>
Although the Company currently anticipates that comparable cash
dividends will continue to be paid in the future, the payment of future
dividends by the Company will be at the discretion of the Board of
Trustees and will depend on numerous factors including the Company's
cash flow, its financial condition, capital requirements, annual
distribution requirements under the REIT provisions of the Internal
Revenue Code of 1986, as amended, and such other factors as the Board of
Trustees deems relevant.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth Selected Financial Data for Liberty
Property Trust and Liberty Property Limited Partnership as of and for
the years ended December 31, 1996 and 1995 and for the period from June
23, 1994 to December 31, 1994, for Liberty Property Trust, Liberty
Property Limited Partnership and the Predecessor combined as of and for
the year ended December 31, 1994, and for the Predecessor for the period
from January 1, 1994 to June 22, 1994, and for the years ended 1993 and
1992. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" for further description of the Predecessor.
The information set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" and the financial statements and notes thereto appearing
elsewhere in this report. Certain amounts from prior periods have been
restated to conform to current year presentation.
<TABLE>
LIBERTY PROPERTY TRUST/LIBERTY PROPERTY LIMITED PARTNERSHIP
AND PREDECESSOR (COMBINED)
<CAPTION>
LIBERTY
PROPERTY
TRUST/
LIBERTY
PROPERTY
LIMITED
LIBERTY PROPERTY PARTNERSHIP/
TRUST/LIBERTY PROPERTY PREDECESSOR
LIMITED PARTNERSHIP PREDECESSOR COMBINED PREDECESSOR
--------------------------------- ----------- ----------- ------------------
YEAR YEAR JUNE 23, JANUARY 1, YEAR ENDED
ENDED ENDED 1994 TO 1994 to YEAR ENDED DECEMBER 31,
DECEMBER DECEMBER DECEMBER JUNE DECEMBER ------------------
31, 1996 31, 1995 31, 1994 22, 1994 31, 1994 1993 1992
---------- ---------- ---------- ----------- ---------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA
Total Revenue $ 154,265 $ 117,041 $ 46,638 $ 36,384 $ 83,022 $75,440 $ 77,078
Rental and real estate
tax expense 40,853 29,314 11,377 10,373 21,750 19,319 19,146
General and administra-
tive expenses 8,023 5,212 2,273 2,439 4,712 5,135 8,120
Depreciation and
amortization 28,203 22,518 8,294 6,438 14,732 13,375 13,474
---------- --------- --------- -------- --------- ------- --------
Operating income 77,186 59,997 24,694 17,134 41,828 37,611 36,338
Premium on debenture
conversions 1,027 - - - - - -
Interest expense 38,528 37,688 13,826 20,417 34,243 45,231 46,504
---------- --------- --------- -------- --------- ------- --------
-21-
<PAGE>
Income (loss) before
minority interest and
extraordinary item <F1> 37,631 22,309 10,868 (3,283) 7,585 (7,620) (10,166)
Minority interest <F1> 3,891 2,843 7,664 - 7,664 - -
Extraordinary item-gain
on extinguishment of
debt - - 52,667 3,084 55,761 - -
---------- --------- --------- -------- --------- ------- --------
Net income (loss) <F1> $ 33,740 $ 19,466 $ 55,881 $ (199) $ 55,682 $(7,620) $(10,166)
========== ========= ========= ======== ========= ======= ========
Dividends paid $ 52,569 $ 38,683 $ 10,219 - - - -
========== ========= =========
PER SHARE DATA
Net income per share be-
fore extraordinary item $ 1.14 $ 0.89 $ 0.46 - - - -
Net income per share $ 1.14 $ 0.89 $ 2.67 - - - -
Dividends paid per share $ 1.61 $ 1.60 $ 0.43
Weighted average number
of shares outstanding
<F2> 29,678 21,838 20,965 - - - -
OTHER DATA
Cash provided by opera-
ting activities $ 59,817 $ 50,452 $ 31,782 $ 7,050 $ 38,832 $ 9,655 $ 5,766
Cash used by investing
activities (265,427) (281,862) (154,273) (2,009) (156,282) (5,850) (5,805)
Cash provided (used)
by financing activities 214,593 216,870 136,855 5,526 142,381 (3,213) (2,159)
Funds from operations <F3> 65,944 44,606 19,082 3,075 22,517 5,595 3,148
</TABLE>
<TABLE>
<CAPTION>
LIBERTY PROPERTY TRUST/ PREDECESSOR
LIBERTY PROPERTY LIMITED PARTNERSHIP -----------------------
------------------------------------------ DECEMBER 31,
DECEMBER 31, DECEMBER 31, DECEMBER 31, -----------------------
1996 1995 1994 1993 1992
------------ ------------ ------------ ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Net real estate $ 1,059,562 $ 826,047 $ 512,281 $ 370,438 $ 377,640
Total assets 1,152,612 898,102 602,981 413,629 417,815
Total long term indebtedness 678,709 473,909 320,857 523,576 524,711
Shareholders' and owners'
equity (deficit) 375,532 335,521 229,667 (150,987) (143,079)
OTHER DATA
Total leaseable square foot-
age of properties at end
of period (in thousands) 20,617 16,693 11,090 8,054 8,026
Number of properties at
the end of period 259 208 151 113 112
Percentage leased at end
of period 93% 92% 88% 93% 90%
</TABLE>
<F1> Minority interest reflects the portion of net income attributable
to the equity interest in the Operating Partnership not owned by the
Trust. Net income and amounts based on net income provided for the
Trust are net of minority interest. Shareholder's equity of the Trust
excludes minority interest.
<F2> Weighted average number of shares outstanding excludes shares
issuable upon conversion of the 8% Exchangeable Subordinated Debentures
due 2001 (the "Debentures") issued by the Operating Partnership and upon
-22-
conversion of the Units and includes the dilutive effect of outstanding
options.
<F3> Industry analysts generally consider funds from operations to be
an appropriate measure of the performance of an equity REIT. Funds from
operations is defined as net income or loss (computed in accordance with
generally accepted accounting principles), excluding gains (or losses)
from debt restructuring and sales of property, plus real estate related
depreciation and amortization excluding the amortization of deferred
financing costs and depreciation of non-real estate assets. Funds from
operations does not represent cash generated from operating activities
in accordance with generally accepted accounting principals and is not
necessarily indicative of cash available to fund cash needs. The
Company believes that to facilitate a clear understanding of the
Company's operating results, funds from operations should be examined in
conjunction with net income, although it should not be considered as an
alternative to net income as an indicator of the Company's operating
performance or as an alternative to cash flow as a measure of liquidity.
Funds from operations computed by the Company may not be comparable to
other similarly titled measures of other REITs.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
The following discussion is based on the consolidated financial
statements of the Company and the combined financial statements of the
Predecessor. The combined financial statements of the Predecessor
reflect the combination of data from the balance sheets and the
statements of operations of the partnerships that owned the properties,
and the management, development and leasing operations of the
Predecessor that were contributed to the Company in connection with its
formation, which was consummated concurrently with its initial public
offering. The combined financial statements of the Predecessor are
presented for comparative purposes only.
The following discussion compares the results of operations of the
Company for the year ended December 31, 1996 with the results of
operations of the Company for the year ended December 31, 1995, and the
results of operations of the Company for the year ended December 31,
1995 with the results of operations of the Company and Predecessor, on a
combined basis, for the year ended December 31, 1994. As used herein,
the term "Company" includes the Trust, the Operating Partnership and
their subsidiaries (and, where the context indicates, the Predecessor).
RESULTS OF OPERATIONS
Comparison of year ended December 31, 1996 to year ended December 31,
1995. Total revenues (principally rental revenues and operating expense
reimbursement) increased from $117.0 million for the year ended December
31, 1995 to $154.3 million for the year ended December 31, 1996. This
increase was primarily due to the increase in the number of properties
owned during the respective periods. As of January 1, 1995, the Company
-23-
<PAGE>
owned 151 properties and, through December 31, 1995, acquired 52
additional properties (net of two properties exchanged in connection
with such acquisitions) and completed development of five properties for
a Total Investment of $223.1 million. As of January 1, 1996, the
Company owned 208 properties, and, through December 31, 1996, acquired
33 additional properties and completed the development on 19 properties
for a Total Investment of $232.2 million.
Rental property and real estate tax expenses increased from $29.3
million for the year ended December 31, 1995 to $40.9 million for the
year ended December 31, 1996. This increase is due to the increase in
the number of properties owned, and because of significant snow removal
and other seasonal operating costs incurred as a result of the severe
1996 winter.
Property level operating income for the "Same Store" properties
(properties owned since January 1, 1995) increased from $68.0 million
for the year ended December 31, 1995 to $71.5 million for the year ended
December 31, 1996. This increase of 5.1% is due to increases in rental
rates and increases in occupancy.
Set forth below is a schedule comparing the operating results for the
Same Store properties for the years ended December 31, 1996 and 1995.
1996 1995
-------- --------
(IN THOUSANDS)
-----------------------
Rental revenue $ 75,823 $ 72,808
Operating expense reimbursement 24,553 21,463
-------- --------
100,376 94,271
Rental property expenses 21,023 18,191
Real estate taxes 7,878 8,086
-------- --------
Property level operating income $ 71,475 $ 67,994
======== ========
General and administrative expenses increased from $5.2 million for the
year ended December 31, 1995 to $8.0 million for the year ended December
31, 1996. This $2.8 million increase is due to the increase in
personnel and other related overhead costs necessitated by the increase
in the number of properties owned during the respective periods.
Included in the general and administrative expenses for the year ended
December 31, 1996 is a $704,000 non-cash charge resulting from the
amortization of a stock award over its vesting period. There is no
corresponding charge for the year ended December 31, 1995.
Depreciation and amortization expenses increased from $22.5 million in
1995 to $28.2 million in 1996. This increase is due to the increase in
the number of properties owned during the respective periods.
-24-
<PAGE>
Interest expense increased from $37.7 million for the year ended
December 31, 1995 to $38.5 million for the year ended December 31,
1996. This increase is due to an increase in the average debt
outstanding for the respective periods which was $397.4 million in 1995
and $576.3 million in 1996. This increase is partly offset by the lower
interest rate on the outstanding debt because of the 1% reduction in the
interest rate on the Line of Credit borrowings which became effective on
May 1, 1995, and because of a decrease in the outstanding Subordinated
Debentures due to the conversion of $58.7 million Debentures in 1996.
As a result of the foregoing, the Company's operating income increased
from $60.0 million for the year ended December 31, 1995 to $77.2 million
for the year ended December 31, 1996. In addition, income before
minority interest increased from $22.3 million for the year ended
December 31, 1995 to $37.6 million for the year ended December 31, 1996.
Comparison of year ended December 31, 1995 to year ended December 31,
1994. Total revenues (principally rental revenues and operating expense
reimbursement) increased from $83.0 million for the year ended December
31, 1994 to $117.0 million for the year ended December 31, 1995. This
increase was primarily due to the increase in the number of properties
owned during the respective periods. From January 1, 1994 through June
22, 1994, the Predecessor owned 113 properties. Concurrent with the
initial public offering, the Company purchased 18 properties for a Total
Investment of $57.0 million. From the consummation of its initial
public offering through December 31, 1994, the Company purchased 20
additional properties for $79.5 million. As of January 1, 1995, the
Company owned 151 properties and, through December 31, 1995, acquired 52
additional properties (net of two properties exchanged in connection
with such acquisitions) and completed the development of five properties
for a Total Investment of $223.1 million.
Rental property and real estate tax expenses increased from $21.8
million for the year ended December 31, 1994 to $29.3 million for the
year ended December 31, 1995. This increase is due to the increase in
the number of properties owned.
Property level operating income for the "Same Store" properties
(properties owned since January 1, 1994) increased from $52.4 million
for the year ended December 31, 1994 to $53.3 million for the year ended
December 31, 1995. This increase of 1.7% was attributable primarily to
an increase in the occupancy in the industrial distribution and office
properties.
Set forth below is a schedule comparing the property level operating
income for the Same Store properties for the years ended December 31,
1995 and 1994.
1995 1994
-------- --------
(IN THOUSANDS)
----------------------
Rental revenue $ 57,054 $ 57,323
Operating expense reimbursement 14,993 15,543
-------- --------
72,047 72,866
-25-
<PAGE>
Rental property expense 13,040 14,605
Real estate taxes 5,661 5,844
-------- --------
Property level operating income $ 53,346 $ 52,417
======== ========
General and administrative expenses increased from $4.7 million for the
year ended December 31, 1994 to $5.2 million for the year ended December
31, 1995. This $500,000 increase is due to an increase in the number of
properties owned during the respective periods and as a result of costs
incurred to operate as a publicly owned company during the entire period
of 1995. The Predecessor did not incur similar costs from January 1,
1994 through June 22, 1994.
Depreciation and amortization expenses increased from $14.7 million for
the year ended December 31, 1994 to $22.5 million for the year ended
December 31, 1995. This increase is due to the increase in the number
of properties owned during the respective periods.
Interest expense increased from $34.2 million for the year ended
December 31, 1994 to $37.7 million for the year ended December 31, 1995.
Interest expense for 1994 reflects, 1) interest on $525.0 million of
mortgage loans for the Rouse Group, which loans were satisfied from the
proceeds of the initial public offerings, and 2) interest on the
Debentures for the period from issuance at June 23, 1994 through
December 31, 1994. Interest expense for 1995 reflects, 1) interest on
the Line of Credit borrowings and mortgage loans incurred to fund
property acquisitions and development, and 2) interest on the Debentures
for the full 1995 year.
During the year ended December 31, 1994, the Company recognized $55.8
million in extraordinary income from the extinguishment of debt. There
was no similar item in 1995.
As a result of the foregoing, income before the effect of minority
interest and extraordinary items increased from $7.6 million in 1994 to
$22.3 million in 1995. In addition, the Company's operating income
increased from $41.8 million in 1994 to $60.0 million in 1995.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1996, the Company had cash and cash equivalents of
$19.6 million. Working capital at December 31, 1996 was $14.6 million.
Net cash flow provided by operating activities increased from $50.5
million for the year ended December 31, 1995 to $59.8 million for the
year ended December 31, 1996. This $9.3 million increase was primarily
due to the additional cash flow generated by the greater number of
properties in service during the latter period.
-26-
<PAGE>
Net cash used in investing activities decreased from $281.9 million for
the year ended December 31, 1995 to $265.4 million for the year ended
December 31, 1996. This decrease was a result of the $125.9 million
investment made in March 1995 in connection with the acquisition of the
Lingerfelt portfolio, while there was no similar portfolio acquisition
made in 1996. This decrease was partly offset by the increase in
acquisition, development and property investment from $156.9 for the
year ended December 31, 1995 to $265.4 million for the year ended
December 31, 1996.
Net cash provided by financing activities decreased from $216.9 million
for the year ended December 31, 1995 to $214.6 million for the year
ended December 31, 1996. This decrease is consistent with the decrease
in investing activities.
The Company believes that its undistributed cash flow from operations
are adequate to fund its short-term liquidity requirements.
The Company has funded its long-term liquidity requirements such as
property acquisition and development activities primarily through its
$250 million Line of Credit. This Line matures on June 15, 1998, subject
to the Company's option to extend the maturity of the loan as described
below. As of December 31, 1996, $241.7 million was outstanding under
the Line of Credit. The Line of Credit is recourse to the Company only
with respect to 50% of the outstanding principal amount thereof. Funds
borrowed under the Line of Credit bear interest at an annual rate of 175
basis points over LIBOR. Subject to certain conditions and the payment
of a fee equal to 0.5% of the then outstanding loan balance, the Company
may exercise a one-time option to convert the loan balance into a two-
year term loan upon the maturity of the Line of Credit. Following such
conversion, the interest rate on the term loan would be LIBOR plus 4%.
In December 1996, the Company closed on an $80 million secured Line of
Credit. The Line matures on December 13, 1998, however, at any time
prior to December 13, 1998, maturity may be extended for one year
subject to certain conditions and the payment of an extension fee equal
to 1/4% of the total commitment (as defined). As of December 31, 1996
collateral had been approved to enable the Company to borrow up to $56.0
million, of which $25.0 million was outstanding. The interest rate on
the Line of Credit is 1.60% over LIBOR.
Periodically, the Company pays down borrowings on its Line of Credit
facilities with funds from long term capital sources. During 1996, the
Company utilized the funds from $77.6 million of mortgage loans it
placed in 1996 to paydown the line of credit. The Company has entered
into a swap agreement, with a notional amount of $114.5 million, to
hedge against possible fluctuations in interest rates in anticipation of
a debt issuance in 1997 for a five to seven year term.
As of December 31, 1996, $240.8 million in mortgage loans were
outstanding with maturities ranging from 1997 to 2013. The interest
rates on $230.4 million of mortgage loans are fixed and range from 6% to
10%. Interest rates on $10.4 million of mortgage loans float with LIBOR
or prime and are subject to certain caps. The weighted average interest
-27-
<PAGE>
rate for the mortgage loans is 7.7% and the weighted average life is 8
years.
General
The Company expects to incur variable rate debt, including borrowings
under the Lines of Credit, from time to time. The Company believes that
its existing sources of capital will provide sufficient funds to finance
its continued acquisition and development activities. In this regard,
the Company continues to evaluate its long term capital sources which
generally include the availability of debt financing and access to
equity.
In July 1995, the Company filed a shelf registration with the Securities
and Exchange Commission that enabled the Company to offer up to an
aggregate of $350.0 million of securities, including common stock,
preferred stock and debt. On November 27, 1995, the Company completed a
follow-on public offering of 7,200,000 common shares resulting in
proceeds of $140.4 million. The remaining $209.6 million shelf
registration is available for future offerings.
On February 8, 1996, Moody's Investors Service assigned a prospective
rating of Ba2 for senior unsecured debt issued by Liberty Property
Limited Partnership under the shelf registration.
On October 15, 1996, the Company filed a Registration Statement of
1,000,000 shares to be issued through a Dividend Reinvestment and Stock
Purchase Plan.
On February 21, 1997, the Company filed a shelf registration with the
Securities and Exchange Commission that enable the Company to offer up
to an aggregate of $850.0 million of securities, including common stock,
preferred stock and debt.
CALCULATION OF FUNDS FROM OPERATIONS
Management considers funds from operations an appropriate measure of the
performance of an equity REIT. Funds from operations is defined by
NAREIT as net income or loss (computed in accordance with generally
accepted accounting principles), excluding gains or losses from debt
restructuring and sales of property plus depreciation and amortization
excluding the amortization of deferred financing costs and depreciation
of non-real estate assets. Funds from operations should not be
considered as an alternative to net income or as an alternative to cash
flow or as a measure of liquidity. Funds from operations for the years
ended December 31, 1996 and 1995 are as follows:
-28-
<PAGE>
1996 1995
---------- ----------
(IN THOUSANDS)
Net income $ 33,740 $ 19,466
Addback:
Minority interest 3,891 2,843
Depreciation and amortization 27,863 22,297
Premium on debenture conversion 1,027 -
Gain on sale (577) -
---------- --------
Funds from operations $ 65,944 $ 44,606
========== ========
INFLATION
Inflation has remained relatively low during the last three years, and
as a result, has not had a significant impact on the Predecessor or the
Company during this period. The Lines of Credit bear interest at a
variable rate; therefore, the amount of interest payable under the Lines
of Credit will be 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 or utilities, substantially all of the
tenant's 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 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- -----------------------------------------------------
FINANCIAL STATEMENTS AND REPORTS OF ERNST & YOUNG LLP, INDEPENDENT
AUDITORS
Report of Independent Auditors - Liberty Property Trust
- -------------------------------------------------------
Financial Statements - Liberty Property Trust:
- ----------------------------------------------
Balance Sheets:
Liberty Property Trust Consolidated as of December 31, 1996 and
1995
Statements of Operations:
Liberty Property Trust Consolidated for the years ended December 31,
1996 and 1995 and for the period from June 23, 1994 to December 31,
1994
Rouse Group Combined for the period from January 1, 1994 to June 22,
1994
Statements of Shareholders' Equity and Owners' Deficit:
Liberty Property Trust Consolidated for the years ended December 31,
1996 and 1995 and for the period from June 23, 1994 to December 31,
1994
Rouse Group Combined for the period from January 1, 1994 to June 22,
1994
Statements of Cash Flows:
Liberty Property Trust Consolidated for the years ended December 31,
1996 and 1995 and for the period from June 23, 1994 to December 31,
1994
Rouse Group Combined for the period from January 1, 1994 to June 22,
1994
-29-
<PAGE>
Notes to Financial Statements - Liberty Property Trust
Financial Statement Schedule - Liberty Property Trust:
Schedule III - Real Estate and Accumulated Depreciation as of December
31, 1996
Report of Independent Auditors - Liberty Property Limited Partnership
- ---------------------------------------------------------------------
Financial Statements - Liberty Property Limited Partnership:
- ------------------------------------------------------------
Balance Sheets:
Liberty Property Limited Partnership Consolidated as of December 31,
1996 and 1995
Statements of Operations:
Liberty Property Limited Partnership Consolidated for the years ended
December 31, 1996 and 1995 and for the period from June 23, 1994 to
December 31, 1994
Rouse Group Combined for the period from January 1, 1994 to June 22,
1994
Statements of Owners' Equity and Owners' Deficit:
Liberty Property Limited Partnership Consolidated for the years ended
December 31, 1996 and 1995 and for the period from June 23, 1994 to
December 31, 1994
Rouse Group Combined for the period from January 1, 1994 to June 22,
1994
Statements of Cash Flows:
Liberty Property Limited Partnership Consolidated for the years ended
December 31, 1996 and 1995 and for the period from June 23, 1994 to
December 31, 1994
Rouse Group Combined for the period from January 1, 1994 to June 22,
1994
Notes to Financial Statements - Liberty Property Limited Partnership
Financial Statement Schedule - Liberty Property Limited Partnership:
Schedule III - Real Estate and Accumulated Depreciation as of
December 31, 1996
-30-
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To The Board of Trustees and Shareholders
Liberty Property Trust
We have audited the accompanying consolidated balance sheets of Liberty
Property Trust (the "Trust") as of December 31, 1996 and 1995, and the
related consolidated statements of operations, shareholders' equity, and
cash flows for each of the two years in the period ended December 31,
1996, and the period June 23, 1994 through December 31, 1994. We have
also audited the combined statements of operations, owners' deficit and
cash flows of the Rouse Group for the period January 1, 1994 through
June 22, 1994. Our audits also included the financial statement
schedule listed in the Index at Item 14(a). These financial statements
and schedule are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements
and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Liberty Property Trust at December 31, 1996 and 1995, the consolidated
results of Liberty Property Trust's operations and cash flows for each
of the two years in the period ended December 31, 1996 and for the
period June 23, 1994 through December 31, 1994, and the combined results
of the Rouse Group's operations and cash flows for the period January 1,
1994 through June 22, 1994, in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects
the information set forth therein.
Philadelphia, Pennsylvania ERNST & YOUNG LLP
February 17, 1997
-31-
<PAGE>
CONSOLIDATED BALANCE SHEETS OF LIBERTY PROPERTY TRUST
(IN THOUSANDS)
DECEMBER 31,
-------------------------
1996 1995
ASSETS ---------- ----------
Real estate:
Land and land improvements $ 140,196 $ 108,723
Buildings and improvements 908,835 715,908
Less accumulated depreciation (119,151) (94,183)
---------- ---------
Operating real estate 929,880 730,448
Development in progress 85,628 67,021
Land held for development 44,054 28,578
---------- ---------
Net real estate 1,059,562 826,047
Cash and cash equivalents 19,612 10,629
Accounts receivable 8,707 5,608
Deferred financing and leasing costs,
net of accumulated amortization
(1996 $30,985; 1995 $24,007) 27,013 26,363
Prepaid expenses and other assets 37,718 29,455
---------- ---------
Total assets $1,152,612 $ 898,102
========== =========
LIABILITIES
Mortgage loans $ 240,803 $ 172,115
Subordinated debentures 171,214 229,900
Lines of credit 266,692 71,894
Accounts payable 6,294 4,577
Accrued interest 7,411 9,439
Dividend payable 14,248 12,668
Other liabilities 28,923 20,835
---------- ---------
Total liabilities 735,585 521,428
Minority interest 41,495 41,153
SHAREHOLDERS' EQUITY
Common shares of beneficial interest,
$.001 par value, 200,000,000 shares
authorized, 31,400,361 and 28,348,048
shares issued and outstanding as of
December 31, 1996 and 1995, respectively 31 28
Additional paid-in capital 370,813 314,407
Unearned compensation (1,408) -
Retained earnings 6,096 21,086
---------- ---------
Total shareholders' equity 375,532 335,521
---------- ---------
Total liabilities and shareholders' equity $1,152,612 $ 898,102
========== =========
See accompanying notes.
-32-
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS OF LIBERTY PROPERTY TRUST
AND COMBINED STATEMENTS OF OPERATIONS OF THE ROUSE GROUP
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<CAPTION>
LIBERTY PROPERTY TRUST ROUSE GROUP
------------------------------------------ -----------
JANUARY 1,
YEAR ENDED YEAR ENDED JUNE 23, TO 1994 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, JUNE 22,
1996 1995 1994 1994
------------ ------------ ------------ ----------
<S> <C> <C> <C> <C>
REVENUE
Rental $ 112,841 $ 89,163 $ 34,698 $ 26,416
Operating expense reimbursement 35,886 24,604 9,057 8,148
Management fees 1,340 734 536 688
Interest and other 4,198 2,540 2,347 1,132
----------- ----------- --------- -----------
Total revenue 154,265 117,041 46,638 36,384
OPERATING EXPENSES
Rental property 29,624 20,010 7,577 7,606
Real estate taxes 11,229 9,304 3,800 2,767
General and administrative 8,023 5,212 2,273 2,439
Depreciation and amortization 28,203 22,518 8,294 6,438
----------- ----------- --------- -----------
Total operating expenses 77,079 57,044 21,944 19,250
----------- ----------- --------- -----------
Operating income 77,186 59,997 24,694 17,134
Premium on debenture conversions 1,027 -- -- --
Interest expense 38,528 37,688 13,826 20,417
----------- ----------- --------- -----------
Income (loss) before extra-
ordinary item and minority
interest 37,631 22,309 10,868 (3,283)
Extraordinary item - Gain on
extinguishment of debt -- -- 52,677 3,084
----------- ----------- --------- -----------
Income (loss) before minority
interest 37,631 22,309 63,545 (199)
Minority interest 3,891 2,843 7,664 --
----------- ----------- --------- -----------
Net income (loss) $ 33,740 $ 19,466 $ 55,881 $ (199)
=========== =========== ========= ===========
Net income per common share
before extraordinary item $ 1.14 $ 0.89 $ 0.46
Extraordinary item per
common share -- -- 2.21
----------- ----------- ---------
Net income per common share $ 1.14 $ 0.89 $ 2.67
=========== =========== =========
Weighted average number of
common shares outstanding 29,678 21,838 20,965
=========== =========== =========
See accompanying notes.
</TABLE>
-33-
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY OF LIBERTY PROPERTY
TRUST AND COMBINED STATEMENTS OF OWNERS' DEFICIT OF THE ROUSE GROUP
(IN THOUSANDS)
<CAPTION> TOTAL
COMMON SHAREHOLDERS'
SHARES OF ADDITIONAL ACCUMULATED AND OWNERS'
BENEFICIAL PAID-IN UNEARNED EQUITY EQUITY
INTEREST CAPITAL COMPENSATION (DEFICIT) (DEFICIT)
---------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Owners' deficit at January 1,
1994 $ (150,987) $ (150,987)
Distribution to partners (4,941) (4,941)
Net income from the period
January 1, 1994 through
June 22, 1994 (199) (199)
------------ ------------
Owners' deficit contributed
at June 23, 1994 (156,127) (156,127)
Contributions from partners $(156,127) 156,127 -
Distribution to partners (23,154) (23,154)
Net proceeds from the issuance
common shares $ 21 362,137 362,158
Net income 55,881 55,881
Dividends paid (9,091) (9,091)
---------- ---------- ------------ ------------
Balance at December 31, 1994 21 182,856 46,790 229,667
Net proceeds from the issuance
common shares 7 131,451 131,458
Conversion of debentures 100 100
Net income 19,466 19,466
Dividends paid and accrued (45,170) (45,170)
---------- ---------- ------------ ------------
Balance at December 31, 1995 28 314,407 21,086 335,521
Conversion of debentures 3 55,802 55,805
Uearned compensation 2,112 $ (1,408) 704
Net income 33,740 33,740
Dividends paid and accrued (48,730) (48,730)
Noncash compensation 370 370
Minority interest reclassifcation (1,878) (1,878)
---------- ---------- ----------- ----------- -----------
Balance at December 31, 1996 $ 31 $ 370,813 $ (1,408) $ 6,096 $ 375,532
========== ========== ========== =========== ===========
</TABLE>
See accompanying notes.
-34-
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS OF LIBERTY PROPERTY TRUST
AND COMBINED STATEMENTS OF CASH FLOWS OF THE ROUSE GROUP
(IN THOUSANDS)
<CAPTION>
LIBERTY PROPERTY TRUST ROUSE GROUP
---------------------------------------- -----------
YEAR ENDED JUNE 23, JANUARY 1,
-------------------------- 1994 TO 1994 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, JUNE 22,
1996 1995 1994 1994
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 33,740 $ 19,466 $ 55,881 $ (199)
Adjustments to reconcile net
income (loss) to net cash pro-
vided by operating activities:
Gain on extinguishment
of debt - - (52,677) (3,084)
Depreciation and amorti-
zation 28,203 22,518 9,544 6,438
Minority interest in net
income 3,891 2,843 7,664 -
Gain on sale (577) - - -
Noncash compensation 704 - - -
Changes in operating assets
and liabilities:
Accounts receivable (3,099) (1,006) (62) (277)
Prepaid expense and other
assets (11,197) (5,595) 463 4,287
Accounts payable 1,717 2,871 (6,060) 586
Accrued interest on exist-
ing debt (2,028) (286) 9,725 55
Other liabilities 8,463 9,641 7,304 (756)
------------ ------------ ------------ -----------
Net cash provided by opera-
ting activities 59,817 50,452 31,782 7,050
------------ ------------ ------------ -----------
INVESTING ACTIVITIES
Investment in properties (223,756) (193,219) (145,144) (4,827)
Investment in development
in progress (18,607) (64,122) (2,899) -
Investment in land held for
development (15,476) (20,367) (1,226) -
(Increase) decrease in
deferred leasing costs (7,588) (4,154) (5,004) 2,818
------------ ------------ ------------ -----------
Net cash used in investing
activities (265,427) (281,862) (154,273) (2,009)
------------ ------------ ------------ -----------
FINANCING ACTIVITIES
Net proceeds from issuance of
common stock - 131,458 385,454 -
Proceeds from issuance of
debentures - - 230,000 -
Decrease in restricted cash - - 5,967 6,108
Proceeds from mortgage loans 77,605 91,800 - 16,198
Repayments of mortgage loans (8,917) (7,659) (396,980) (17,078)
Repayments of accrued interest
at formation - - (29,269) -
Proceeds from lines of credit 237,191 167,925 69,000 -
Repayments on line of credit (42,393) (140,031) (25,000) -
Proceeds from notes payable - - - 2,421
Repayment of notes payable - - (25,519) -
-35-
<PAGE>
Deposits on pending acquisi-
tions 2,593 12,865 (22,700) -
Decrease (increase) in deferred
financing costs 1,092 (707) (20,695) 2,818
Dividends (47,190) (33,830) (9,091) -
Distribution to partners (5,388) (4,951) (24,282) (4,941)
------------ ------------ ------------ -----------
Net cash
provided by
financing activities 214,593 216,870 136,885 5,526
Increase (decrease) in cash and
cash equivalents 8,983 (14,540) 14,394 10,567
Cash and cash equivalents at
beginning of period 10,629 25,169 10,775 208
------------ ------------ ------------ -----------
Cash and cash equivalents at
end of period $ 19,612 $ 10,629 $ 25,169 $ 10,775
============ ============ =========== ==========
SUPPLEMENTAL DISCLOSURE OF
NONCASH TRANSACTIONS
Write-off of fully depreciated
property and deferred costs $ 487 $ 2,617 $ 6,699 $ -
Acquisition of properties - (55,874) - -
Assumption of mortgage loans - 41,117 - -
Issuance of operating partner-
ship units - 14,757 - -
Noncash compensation 370 - - -
Conversion of subordinated
debentures 55,802 100 - -
============ ============ ============ ===========
</TABLE>
See accompanying notes.
-36-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF LIBERTY PROPERTY TRUST
AND COMBINED FINANCIAL STATEMENTS OF THE ROUSE GROUP
1. ORGANIZATION
Liberty Property Trust (the "Trust") a self-administered and self-
managed real estate investment trust (a "REIT"), was formed in the State
of Maryland on March 28, 1994 and commenced operations on June 23, 1994
upon completion of its initial public offering of 20,987,500 Common
Shares of Beneficial Interest (the "Share Offering"). The Trust
conducts all of its operations, including leasing, property management
and other services through Liberty Property Limited Partnership (the
"Operating Partnership" and together with the Trust referred to as the
"Company"). Simultaneous with the closing of the Share Offering, the
Company succeeded to substantially all of the interests of Rouse &
Associates, a general partnership, and certain other entities affiliated
with Rouse & Associates (collectively the "Rouse Group"). At December
31, 1996, the Trust owns an 90.02% interest in the Operating Partnership
as the sole general partner and a .03% interest as a limited partner.
Concurrent with the Share Offering, the Operating Partnership completed
a public offering of $230 million of Exchangeable Subordinated
Debentures (the "Debenture Offering", and, together with the Share
Offering, the "Offerings") due 2001. The Debentures are guaranteed by
the Trust. After June 23, 1995, the Debentures are exchangeable at any
time prior to maturity into Common Shares of Beneficial Interest at a
rate of one share for each $20 outstanding principal amount of
Debentures, subject to certain adjustments. The Company completed a
follow-on offering (the "Follow-on Offering") on November 27, 1995,
which resulted in net proceeds of $131.5 million. The Company provides
leasing, property management, acquisition, development, construction
management, and design management for a portfolio of industrial and
office properties which are located principally within the Southeastern
and Mid-Atlantic United States.
The Rouse Group combined financial statements include accounts of the
properties and entities acquired by the Operating Partnership which are
considered to be entities under common ownership and management.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Principles of Consolidation
The Consolidated Financial Statements of the Company include the
accounts of the Trust, the Operating Partnership and the Operating
Partnership's direct and indirect subsidiaries including Liberty
Property Development Corporation. The acquisition of the Rouse Group
-37-
<PAGE>
interest by the Operating Partnership was accounted for as a
reorganization of entities under common control which is similar to the
accounting for a pooling of interests. As a result, the operations of
the Rouse Group are included in these Financial Statements. All
significant intercompany transactions and accounts have been eliminated.
Certain amounts from prior periods have been restated to conform to
current year presentation.
Real Estate and Depreciation
The Properties are recorded at the lower of cost or net realizable value
and are depreciated using the straight-line method over their estimated
useful lives. The estimated lives are as follows:
Building and improvements 40 years
Equipment 10 years
Tenant improvements Term of the related lease
Cash Equivalents
Highly liquid investments with a maturity of three months or less when
purchased are classified as cash equivalents. The carrying amount of
these assets approximates their fair market value.
Revenues
The Company earns rental income under operating leases with tenants.
Rental income is recognized on a straight-line basis over the applicable
lease term.
Deferred Financing and Leasing Costs
Costs incurred in connection with financing or leasing are capitalized
and amortized over the term of the related loan or lease. Amortization
of deferred financing costs is reported as interest expense.
Earnings per Share
Earnings per share is computed using the weighted average common shares
and common stock equivalents outstanding during the years ended December
31, 1996 and December 31, 1995 and for the period from June 23, 1994
through December 31, 1994. Fully diluted earnings per share is not
disclosed because such information is not meaningful. Earnings per
share is $1.16 calculated as if the debenture conversions which occurred
in 1996 had occurred on January 1, 1996.
Income Taxes
The Trust has made an election to be taxed as a Real Estate Investment
Trust ("REIT") under Sections 856 through 860 of the Internal Revenue
Code. As a REIT, the Trust generally will not be subject to Federal
income tax to the extent that it distributes at least 95% of its REIT
-38-
<PAGE>
taxable income to its shareholders. If the Trust fails to qualify as a
REIT in any taxable year, the Trust will be subject to Federal income
tax (including any applicable Alternative Minimum Tax) at regular
corporate rates on its taxable income. Even if the Trust qualifies for
taxation as a REIT, the Trust may be subject to certain state and local
taxes on its income and property and to Federal income and excise taxes
on its undistributed income.
The Company paid dividends of $52.6 million, $38.7 million, and $10.2
million during the years ended December 31, 1996 and 1995 and for the
period from June 23, 1994 to December 31, 1994. On a per share basis,
the Company paid dividends of $1.61, $1.60 and $0.43 during the years
ended December 31, 1996 and 1995 and for the period from June 23, 1994
to December 31, 1994. The portions of the 1996 dividend relating to
return of capital and earnings and profits are 29.9% and 70.1%,
respectively.
The Federal tax cost basis of the real estate at December 31, 1996 was
approximately $1.1 billion.
3. REAL ESTATE
At December 31, 1996 and 1995, the Company owned and operated industrial
and office properties within suburban mixed use developments or business
parks. The carrying value of these properties by type is as follows (in
thousands):
<TABLE>
<CAPTION>
LAND BUILDINGS
AND LAND AND ACCUMULATED
IMPROVEMENTS IMPROVEMENTS TOTAL DEPRECIATION
------------ ------------ --------- ------------
<S> <C> <C> <C> <C>
1996:
Industrial properties $ 85,459 $ 517,272 $ 602,731 $ 62,557
Office Properties 54,737 391,563 446,300 56,594
--------- --------- ---------- --------
1996 Total $ 140,196 $ 908,835 $1,049,031 $119,151
========= ========= ========== ========
1995:
Industrial properties $ 67,373 $ 427,369 $ 494,742 $ 50,907
Office properties 41,350 288,539 329,889 43,276
--------- --------- ---------- --------
1995 Total $ 108,723 $ 715,908 $ 824,631 $ 94,183
========= ========= ========== ========
</TABLE>
Depreciation expense was $24,968 in 1996, $19,675 in 1995, and $11,976
in 1994.
The Company has commenced development on 22 properties, which upon
completion are expected to comprise approximately 3.0 million square
feet of leasable space. As of December 31, 1996 approximately $85.6
million has been expended for the development of these projects and an
additional $68.2 million is required for completion.
-39-
<PAGE>
4. RELATED PARTY TRANSACTIONS
An affiliated company provides construction services to the Company.
Amounts paid to this affiliate were $29,717,000 in 1996, $6,245,000 in
1995, and $2,583,000 in 1994.
During 1995, three properties were purchased from partnerships
affiliated with Rouse & Associates not included in the Rouse Group. The
Rouse principals received no financial consideration for the purchase.
Pursuant to agreements, the Company has been retained by an affiliate
(Rouse Kent Limited) to provide development, management and other
services. For the years ended December 31, 1996 and December 31, 1995
and the period from June 23, 1994 to December 31, 1994 the fees for
these services were $600,000, $600,000 and $453,000 respectively. At
December 31, 1995, the Company had a $250,000 receivable from Rouse Kent
Limited for these management and other services. Additionally, the
Company committed to loans in 1996 to two affiliates (Rouse Kent
Development Limited and 1 Tower View Limited) for development projects.
As of December 31, 1996, the balance of these notes receivable was $7.4
million.
5. MORTGAGE LOANS, SUBORDINATED DEBENTURES AND LINES OF CREDIT
Long term indebtedness consists generally of mortgage loans,
subordinated debentures and Lines of Credit. The average annualized
interest rates for the years ended December 31, 1996, 1995, and 1994,
were approximately 7.6%, 7.8%, and 8.0% respectively. Interest expense
for the years ended December 31, 1996, 1995, and 1994, aggregated
$38,528,000, $37,688,000, and $34,243,000, respectively. Interest
costs during these periods of $7,708,000, $3,475,000, and $190,000 were
capitalized. Cash paid for interest for the years ended December 31,
1996, 1995, and 1994 was $35,995,000, $33,202,000, and $51,232,000,
respectively.
Mortgage loans with maturities ranging from 1997 to 2013 are
collateralized by and in some instances cross collateralized by
properties with a book value of $314.0 million. The interest rates on
$230.4 million of mortgage loans are fixed and range from 6% to 10%.
Interest rates on $10.4 million of mortgage loans float with LIBOR or
prime and are subject to certain caps. The weighted average interest
rate on the mortgage loans is 7.7% and the weighted average life is 8
years.
-40-
<PAGE>
The aggregate maturities of the mortgages loans outstanding are as
follows (in thousands):
1997 $ 7,065
1998 10,936
1999 19,031
2000 29,717
2001 12,555
Thereafter 161,499
--------
TOTAL $240,803
========
The Debentures are due on June 23, 2001 and are exchangeable for shares
of the Trust at a rate of one share for each $20 outstanding principal
amount of Debentures, subject to certain adjustments. The initial
interest rate on the Debentures was 8% and increases with increases in
the dividend payment on the Company's Common Shares of Beneficial
Interest. At the current $.41 per share per quarter dividend payment
rate, the effective interest rate on the Debentures is 8.2%. During the
year ended December 31, 1996, the Company paid sums aggregating $1.0
million to facilitate the conversion of $58.7 million of Debentures into
2,934,300 common shares. During the year ended December 31, 1996, $2.9
million of related deferred financing costs were written off through
additional paid-in capital.
The Lines of Credit are composed of two secured lines of credit (the
"$250 million Line of Credit" and the "$80 million Line of Credit").
The $250 million Line of Credit is secured and is due on June 15, 1998
at which time it may be converted into a two year term loan with the
payment of a conversion fee equal to 1/2% of the then outstanding
balance. As of December 31, 1996, the $250.0 million Line of Credit was
fully collateralized and $241.7 million was outstanding. The interest
rate on the $250 million Line of Credit is 30-day LIBOR plus 1.75%
(7.13% and 7.75% at December 31, 1996 and 1995, respectively). Other
normal and customary fees apply including an unused line fee. The $250
million Line of Credit is recourse to the Company only with respect to
50% of the outstanding principal thereof and is otherwise non-recourse
subject to certain conditions. At December 31, 1996, 109 properties
with a book value of $387.6 million collateralized the $250 million Line
of Credit. During 1996, the Company closed on an $80 million Line of
Credit. The $80 million Line of Credit is secured and is due on
December 13, 1998. At any time prior to December 13, 1998, maturity may
be extended for one year subject to certain conditions and the payment
of an extension fee equal to 1/4% of the total commitment. As of
December 31, 1996, collateral had been approved to enable the company to
borrow up to $56.0 million, of which $25.0 million was outstanding. The
interest rate on the $80 million Line of Credit is 90-day LIBOR plus
1.60% (7.13% at December 31, 1996). At December 31, 1996, 23 properties
with a book value of $64.5 million, and 2 development properties with a
book value of $3.9 million collateralized the $80 million Line of
Credit.
-41-
<PAGE>
In 1994, the Company recognized a gain on extinguishment of debt which
resulted primarily from the payment of mortgage notes and notes payable
including penalties and accrued interest at a discount with $451.8
million in proceeds obtained from the issuance of shares and the
Debentures.
The fair value of the Debentures at December 31, 1996 was $220.4 million
based on the closing bid price of the security on the New York Stock
Exchange. The fair values of the mortgages and Lines of Credit were
estimated using discounted cash flow analysis, based on the Company's
estimated incremental borrowing rate at December 31, 1996, for similar
types of borrowing arrangements. The carrying values of the mortgages
and the Lines of Credit approximate their fair values.
6. LEASING ACTIVITY
Future minimum rental payments due from tenants under non-cancellable
operating leases as of December 31, 1996 are as follows (in thousands):
1997 $119,777
1998 107,177
1999 91,805
2000 68,264
2001 40,441
Thereafter 126,211
--------
TOTAL $553,675
========
In addition to minimum rental payments, tenants pay for their pro rata
share of specified operating expenses. These amounts are included as
operating expense reimbursement in the accompanying statements of
operations.
7. MINORITY INTEREST
In conjunction with the formation of the Company, persons contributing
interest in properties to the Operating Partnership have received
limited partnership interests in the Operating Partnership. The
aggregate outstanding limited partnership interests have the same
economic characteristics as would 3,470,961 common shares of the Trust,
inasmuch as they share proportionately in the net income or loss and in
any distributions of the Operating Partnership and such interests are
exchangeable into the same number of shares of the Trust.
Minority interest in the accompanying consolidated financial statements
relates to such limited partnership interests.
8. SHARE OPTIONS
The Company has elected to follow Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" (APB 25) and related
Interpretations in accounting for its employee stock options because, as
discussed below, the alternative fair value accounting provided for
-42-
<PAGE>
under FASB Statement No. 123, "Accounting for Stock-Based Compensation,"
requires use of option valuation models that were not developed for use
in valuing employee stock options. Under APB 25, because the exercise
price of the Company's employee stock options equals the market price
of the underlying stock on the date of grant, no compensation expense is
recognized.
The Company's 1995 Share Incentive Plan has authorized the grant of
options to executive officers, other key employees, non-employee
trustees and consultants for up to 2,100,000 shares of the Company's
common shares of beneficial interest. All options granted have 10 year
terms and vest over a 3 year period, with options to purchase up to 20%
of the shares exercisable after the first anniversary, up to 50% after
the second anniversary and 100% after the third anniversary of the date
of grant.
Pro forma information regarding net income and earnings per share is
required by Statement 123, and has been determined as if the Company had
accounted for its employee stock options under the fair value method of
that Statement. The fair value for these options was estimated at the
date of grant using a Black-Scholes option pricing model with the
following weighted-average assumptions: risk-free interest rate of 6.2%;
dividend yield of 7.0%; volatility factor of the expected market price
of the Company's common stock of .164; and a weighted-average expected
life of the option of 3 years.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, option valuation
models require the input of highly subjective assumptions including the
expected stock price volatility. Because the Company's employee stock
options have characteristics significantly different from those of
traded options, and because changes in the subjective input assumptions
can materially affect the fair value estimate, in management's opinion,
the existing models do not necessarily provide a reliable single measure
of the fair value of its employee stock options.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The
Company's pro forma information follows (in thousands, except for per
share amounts):
1996 1995
---------- -----------
(IN THOUSANDS)
----------------------------
Pro forma net income $ 33,359 $ 19,392
Pro forma earnings per share:
Primary $ 1.12 $ 0.89
-43-
<PAGE>
Pro forma disclosures are not likely to be representative of the effects
on reported net income for future years because of the staggered vesting
periods of the options.
A summary of the Company's stock option activity, and related
information for the years ended December 31, 1996, 1995 and the period
from June 23, 1994 through December 31, 1994 follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ----------------- -----------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
OPTIONS EXERCISE OPTIONS EXERCISE OPTIONS EXERCISE
(000s) PRICE (000s) PRICE (000s) PRICE
------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding-beginning of year 1,468 $ 20.26 765 $ 20.00 765 (1) $ 20.00
Granted 166 20.77 703 20.54 - -
Exercised (118) 20.77 - - - -
Forfeited (46) 20.00 - - - -
------- ------- ------- ------- ------- -------
Outstanding-end of year 1,470 $ 20.28 1,468 $ 20.26 765 $ 20.00
======= ======= ======= ======= ======= =======
Exercisable at end of year 501 $ 20.15 153 $ 20.00 - -
Weighted-average fair
value of options granted
during the year $ 1.56
(1) Outstanding 6/23/94
</TABLE>
Exercise prices for options outstanding as of December 31, 1996 ranged
from $19.75 to $20.875. The weighted-average remaining contractual life
of those options is 8.2 years.
An additional 511,887, 632,400 and 1,335,000 shares were reserved for
issuance for future grants from the option plan at December 31, 1996,
1995 and 1994, respectively.
9. COMMITMENTS AND CONTINGENCIES
All of the Properties have been subject to Phase I Environmental
Assessments ("Phase I Assessments") performed and obtained in
contemplation of the formation or acquisitions. The Phase I Assessments
consisted of, among other activities, a visual inspection of each
Property and its neighborhood and a check of pertinent public records.
The Phase I Assessments did not reveal, nor is the Company aware of, any
non-compliance with environmental laws, environmental liability or other
environmental claim that the Company believes would likely have a
material adverse effect on the Company.
The Trust is not a party to any material legal proceedings. In the
ordinary course of business, the Operating Partnership is party to
ordinary routine litigation incidental to its business and in addition
it is covered by insurance.
-44-
<PAGE>
The Company has entered into an interest rate swap agreement to hedge
against possible fluctuations in interest rates in anticipation of a
$120 million debt issuance in 1997 for a five to seven year term. The
securities underlying the interest rate swap agreement, with a notional
amount of $114.5 million, are 5.875% US Treasury Securities maturing on
February 15, 2004. Gain or loss on this hedging transaction is being
deferred and will be amortized as adjustments to interest expense
commencing on the date of issuance of the debt and over the term of the
debt. At December 31, 1996, the Company had one swap transaction
outstanding, and approximately $645,000 in unrealized gain has been
deferred.
10. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of quarterly results of operations for the
two years ended December 31, 1996 and 1995 (in thousands, except per
share amounts):
<TABLE>
<CAPTION>
QUARTER ENDED
----------------------------------------------------------------------------------
DEC. 31, SEPT. 30, JUNE 30, MARCH 31, DEC. 31, SEPT. 30, JUNE 30, MARCH 31,
1996 1996 1996 1996 1995 1995 1995 1995
-------- --------- -------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rental revenue $ 30,822 $ 28,921 $ 27,146 $ 25,952 $ 24,203 $ 23,206 $ 22,261 $ 19,493
======== ======== ======== ======== ======== ========= ======== =========
Operating income 20,884 19,657 18,557 18,088 16,760 15,637 14,441 13,159
======== ======== ======== ======== ======== ========= ======== =========
Income before extra-
ordinary item and
minority interest 10,630 9,313 8,734 8,954 6,525 5,591 5,428 4,765
======== ======== ======== ======== ======== ========= ======== =========
Net income 9,572 8,370 7,809 7,989 5,814 4,808 4,668 4,176
======== ======== ======== ======== ======== ========= ======== =========
Net income per
common share before
extraordinary item $ 0.31 $ 0.28 $ 0.27 $ 0.28 $ 0.24 $ 0.23 $ 0.22 $ 0.20
======== ======== ======== ======== ======== ========= ======== =========
Net income per
common share $ 0.31 $ 0.28 $ 0.27 $ 0.28 $ 0.24 $ 0.23 $ 0.22 $ 0.20
======== ======== ======== ======== ======== ========= ======== =========
</TABLE>
11. PRO FORMA INFORMATION (UNAUDITED)
The following unaudited pro forma information has been prepared assuming
the Secondary Offering described in Note 1 and the acquisitions of 54
properties acquired in 1995 and 33 properties acquired in 1996 had
occurred at January 1, 1995. The 1995 acquisitions were acquired for a
total investment of $202.3 million and the 1996 acquisitions were
acquired for a total investment of $132.9 million.
YEAR ENDED DECEMBER 31,
-----------------------
1996 1995
-------- --------
(IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
------------------------
Total revenues $172,503 $155,537
Net income 34,229 28,619
Net income per share (1) 1.15 1.01
-45-
<PAGE>
(1) Net income in the per share calculation has been computed after a
deduction for minority interest.
This pro forma information is not necessarily indicative of what actual
results of operations of the Company would have been, assuming the
Company had completed the Secondary Offering as of January 1, 1995, nor
do they purport to represent the results of operations of the Company
for future periods.
-46-
<PAGE>
<TABLE>
LIBERTY PROPERTY TRUST
REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1996
<CAPTION>
Cost
Capitalized
Initial Cost Subsequent
------------------------- to
Project City Encumbrances Land Building Acquisition
- -------------------------------------- ------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATING REAL ESTATE
10,20 Liberty Boulevard Malvern, PA $ - $ 724,058 $ - $ 4,704,961
420 Lapp Road Malvern, PA ** 1,054,418 - 6,204,241
1 Chelsea Parkway Boothwyn, PA * 245,082 - 2,613,641
3 Chelsea Parkway Boothwyn, PA * 288,654 - 2,693,647
747 Dresher Road Horsham, PA * 1,607,238 - 3,939,268
45-67 Great Valley Parkway Malvern, PA ** 795,143 - 2,744,403
1180 Church Road Lansdale, PA - 2,357,045 10,041,340 4,388,188
40 Valley Stream Parkway Malvern, PA ** 322,918 - 2,185,822
50 Valley Stream Parkway Malvern, PA *** 323,971 - 2,375,079
20 Valley Stream Parkway Malvern, PA ** 465,539 - 4,989,163
800 Town Center Drive Langhorne, PA * 1,617,150 - 8,766,575
1610 Medical Drive Pottstown, PA * 211,639 - 2,492,497
9, 15 Great Valley Parkway Malvern, PA ** 1,837,050 - 14,959,932
257-275 Great Valley Parkway Malvern, PA ** 504,611 - 4,319,860
300 Technology Drive Malvern, PA *** 368,626 - 1,259,207
277-293 Great Valley Parkway Malvern, PA *** 530,729 - 1,888,752
311 Technology Drive Malvern, PA *** 397,131 - 2,186,606
325 Technology Drive Malvern, PA ** 376,444 - 1,851,241
7 Great Valley Parkway Malvern, PA ** 176,435 - 4,109,751
55 Valley Stream Parkway Malvern, PA *** 215,005 - 2,835,622
65 Valley Stream Parkway Malvern, PA ** 381,544 - 4,478,264
508 Lapp Road Malvern, PA ** 331,392 - 1,700,134
10 Valley Stream Parkway Malvern, PA ** 509,075 - 2,624,471
333 Phoenixville Pike Malvern, PA 2,191,808 523,530 - 3,053,475
1566 Medical Drive Pottstown, PA * 203,083 - 1,828,288
30 Great Valley Parkway Malvern, PA *** 128,126 - 355,565
75 Great Valley Parkway Malvern, PA *** 143,074 - 419,401
27-43 Great Valley Parkway Malvern, PA ** 448,775 - 2,070,060
77-123 Great Valley Parkway Malvern, PA ** 887,664 - 4,228,300
260 Great Valley Parkway Malvern, PA ** 203,916 - 849,426
256 Great Valley Parkway Malvern, PA ** 161,098 - 1,888,761
205 Great Valley Parkway Malvern, PA ** 1,368,259 - 9,422,329
12,14,16 Great Valley Parkway Malvern, PA - 130,689 - 1,162,378
155 Great Valley Parkway Malvern, PA ** 625,147 - 2,197,599
333 Technology Drive Malvern, PA ** 157,249 - 2,310,848
510 Lapp Road Malvern, PA ** 356,950 - 862,790
181 Wheeler Court Langhorne, PA * 260,000 1,940,000 61,328
1100 Wheeler Way Langhorne, PA * 150,000 1,100,000 83,716
60 Morehall Road Malvern, PA * 865,424 9,285,000 165,540
905 Airport Road West Chester, PA * 1,715,000 5,185,000 207,858
16 Cabot Boulevard Langhorne, PA ** 648,889 5,851,112 74,975
1 Country View Road Malvern, PA 2,869,709 400,000 3,600,000 391,538
2151 Cabot Boulevard Langhorne, PA ** 384,100 3,456,900 262,768
170 South Warner Road King of Prussia, PA * 547,800 3,137,400 2,040,734
190 South Warner Road King of Prussia, PA * 552,200 3,162,600 1,146,805
507 Prudential Road Horsham, PA ** 644,900 5,804,100 230,380
100 Witmer Road Horsham, PA 10,000,000 3,102,784 - 9,671,115
3100 Horizon Blvd King of Prussia, PA * 601,956 - 1,984,766
3300 Horizon Blvd King of Prussia, PA * 566,403 - 3,251,926
3500 Horizon Blvd King of Prussia, PA * 1,204,839 - 2,498,090
200 Chester Field Parkway Malvern, PA *** 495,893 2,739,093 36,670
767 Electronic Drive Horsham, PA * 1,229,685 - 2,928,020
5 Country View Road Malvern, PA ** 785,168 4,678,632 129,524
3200 Horizon Blvd King of Prussia, PA *** 928,637 - 4,261,364
111-195 Witmer Road Horsham, PA * 407,005 3,129,058 95,268
2460 General Armistead Ave Norristown, PA - 117,316 1,064,442 23,605
2490 General Armistead Ave Norristown, PA - 66,288 601,433 20,900
300 Welsh Road Horsham, PA * 180,459 1,441,473 44,054
400 Welsh Road Horsham, PA * 282,493 2,256,508 540,786
440 East Swedesford Road Wayne, PA * 717,001 4,816,121 861,041
460 East Swedesford Road Wayne, PA * 705,317 4,737,487 264,645
2 Walnut Grove Drive Horsham, PA *** 1,281,870 7,767,374 429
200 Gibralter Road Horsham, PA - 638,513 5,811,323 -
220 Gibralter Road Horsham, PA - 629,944 5,733,228 -
240 Gibralter Road Horsham, PA - 629,944 5,733,234 -
151 S. Warner Road Wayne, PA - 1,218,086 6,937,866 -
931 South Matlack Street West Chester, PA * 855,865 5,284,065 738,185
14 Lee Boulevard Malvern, PA ** 664,282 - 6,895,903
500 Chester Field Parkway Malvern, PA ** 472,364 - 2,777,020
300-400 Chester Field Parkway Malvern, PA ** 937,212 - 4,335,779
1805 Underwood Boulevard Delran, NJ * 188,610 612,736 17,699
150 Mid-Atlantic Parkway West Deptford, NJ * 86,968 304,672 131,758
18 Boulden Circle New Castle, DE * 188,144 - 3,735,480
501 Delran Parkway Delran, NJ * 182,192 - 2,410,505
600 Delran Parkway Delran, NJ * 368,843 - 5,945,538
1607 Imperial Way West Deptford, NJ * 286,413 - 2,751,965
1 Boulden Circle New Castle, DE * 88,397 - 1,337,860
-47-
<PAGE>
Cost
Capitalized
Initial Cost Subsequent
------------------------- to
Project City Encumbrances Land Building Acquisition
- -------------------------------------- ------------------- ------------ ------------ ------------ ------------
31-55 Read's Way New Castle, DE * 901,391 - 5,549,247
3 Boulden Circle New Castle, DE * 119,802 - 2,110,440
5 Boulden Circle New Castle, DE * 219,641 - 3,509,612
601 Delran Parkway Delran, NJ * 193,794 - 1,635,208
51 Haddonfield Road Cherry Hill, NJ * 251,443 - 9,015,059
57 Read's Way New Castle, DE 2,452,040 253,119 - 2,781,118
1370 Imperial Way West Deptford, NJ * 297,000 4,373,155 19,539
8 Stow Road Marlton, NJ * 172,600 1,704,436 77,520
10 Stow Road Marlton, NJ * 147,000 1,451,536 9,799
12 Stow Road Marlton, NJ * 103,300 1,021,036 139,288
14 Stow Road Marlton, NJ * 93,100 920,336 130,753
1300 Metropolitan Avenue West Deptford, NJ * 220,000 1,980,000 36,101
701A Route 73 South Marlton, NJ * 264,387 3,772,000 1,322,487
701C Route 73 South Marlton, NJ * 84,949 1,328,000 194,171
1008 Astoria Boulevard Cherry Hill, NJ * 27,120 424,880 290,548
1475 Imperial Way West Deptford, NJ * 54,000 846,000 181,048
3000 Atrium Way Mt. Laurel, NJ - 500,000 4,500,000 2,143,849
750 Cardinal Drive Pureland, NJ * 230,000 2,070,000 459,439
11000, 15000, 17000 Commerce Parkway Mt. Laurel, NJ * 455,100 4,394,900 487,002
12000, 14000 Commerce Parkway Mt. Laurel, NJ * 361,800 3,285,817 131,515
16000, 18000 Commerce Parkway Mt. Laurel, NJ * 289,700 2,512,683 137,303
406 Lippincott Drive Marlton, NJ * 321,455 1,539,871 517,017
234 High Hill Road Bridgeport, NJ - 249,472 1,477,515 229,224
100 Arlington Boulevard Bridgeport, NJ *** 6,368 - 4,503,477
100 Berkeley Drive Swedesboro, NJ - 395,160 1,915,215 159,830
301 Lippincott Drive Marlton, NJ * 1,069,837 4,780,163 337,732
303 Lippincott Drive Marlton, NJ * 1,069,837 4,780,163 270,954
510 Sharptown Road Bridgeport, NJ - 125,410 1,072,683 32,615
901 Route 73 (901 Building) Marlton, NJ * 334,411 2,733,314 76,607
Four Greentree Center Marlton, NJ - 449,400 3,074,850 206,375
512 Sharptown Road Bridgeport, NJ - 180,468 1,543,617 42,013
263 Quigley Blvd New Castle, DE *** 170,386 1,302,739 35,812
34 Blevins Drive New Castle, DE *** 195,932 1,498,061 35,472
104 Gaither Drive Mt Laurel, NJ *** 132,075 1,151,988 33,827
2 Lukens Drive New Castle, DE - 169,050 1,290,150 11,627
1655 Valley Center Parkway Bethlehem, PA 1,821,799 214,431 - 1,687,501
6560 Stonegate Drive Allentown, PA 1,756,160 458,281 - 2,310,959
6370 Hedgewood Drive Allentown, PA 2,482,280 540,795 - 2,944,004
6390 Hedgewood Drive Allentown, PA 1,784,480 707,203 - 2,496,381
1495 Valley Center Parkway Bethlehem, PA 4,166,495 434,640 - 3,586,015
6350 Hedgewood Drive Allentown, PA 2,619,840 360,027 - 3,098,286
6330 Hedgewood Drive Allentown, PA * 531,268 - 4,175,469
1550 Valley Center Parkway Bethlehem, PA * 196,954 - 3,152,216
1560 Valley Center Parkway Bethlehem, PA * 240,069 - 3,778,113
6580 Snowdrift Road Allentown, PA * 388,328 - 2,432,638
1510 Valley Center Parkway Bethlehem, PA 3,379,289 312,209 - 3,230,687
1530 Valley Center Parkway Bethlehem, PA * 211,747 - 2,567,189
6540 Stonegate Drive Allentown, PA * 422,042 - 3,559,873
974 Marcon Boulevard Allentown, PA * 143,500 - 2,051,264
964 Marcon Boulevard Allentown, PA 1,089,933 138,816 - 1,549,509
764 Roble Road Allentown, PA 792,660 141,069 - 794,167
3174 Airport Road Allentown, PA * 98,986 - 1,073,621
2196 Avenue C Allentown, PA * 101,159 - 1,181,487
2202 Hanger Place Allentown, PA * 137,439 - 1,286,863
2201 Hanger Place Allentown, PA * 128,454 - 1,395,959
954 Marcon Boulevard Allentown, PA * 103,665 - 896,843
57 South Commerce Way Allentown, PA * 390,839 2,701,161 159,033
754 Roble Road Allentown, PA * 162,115 1,731,885 52,615
894 Marcon Boulevard Allentown, PA * 117,134 1,048,866 20,997
744 Roble Road Allentown, PA * 159,771 1,734,229 55,874
944 Marcon Boulevard Allentown, PA * 118,521 1,435,479 72,756
1685 Valley Center Parkway Allentown, PA * 244,029 - 2,050,791
6520 Stonegate Drive Allentown, PA *** 453,315 - 1,769,467
7437 Industrial Boulevard Allentown, PA * 717,488 5,022,413 1,330,295
2041 Avenue C Allentown, PA ** 213,599 1,095,217 48,607
2124 Avenue C Allentown, PA ** 289,197 1,039,835 44,709
7339 Industrial Boulevard Allentown, PA - 1,187,776 - 5,351,535
7384 Penn Drive Allentown, PA ** 651,696 2,286,518 250,188
7144 Daniels Drive Allentown, PA * 2,390,217 2,342,761 3,398,953
7620 Cetronia Road Allentown, PA * 1,091,806 3,851,456 78,222
939 Marcon Blvd Allentown, PA ** 2,220,414 4,524,393 732,775
100 Brodhead Road Allentown, PA ** 429,416 2,919,588 92,431
1640 Valley Center Parkway Bethlehem, PA *** 359,000 - 2,355,682
83 South Commerce Way Bethlehem, PA *** 143,661 888,128 145,914
85 South Commerce Way Bethlehem, PA *** 236,708 987,949 77,106
87 South Commerce Way Bethlehem, PA *** 253,886 1,062,881 74,250
7339 Industrial Blvd Allentown, PA - 2,670,849 13,307,408 173,209
12000,001,040 Indian Creek Court Beltsville, MD 6,572,600 2,659,431 - 10,031,986
180,190 Cochrane Drive Annapolis, MD * 3,670,256 - 16,077,835
8280 Patuxent Range Drive Columbia, MD * 181,601 - 1,270,967
8300 Professional Place Landover, MD * 650,621 - 4,232,306
8100 Professional Place Landover, MD * 543,948 - 3,468,575
8100,8200,8300 Corporate Drive Landover, MD * 1,771,135 - 5,162,964
-48-
<PAGE>
Cost
Capitalized
Initial Cost Subsequent
------------------------- to
Project City Encumbrances Land Building Acquisition
- -------------------------------------- ------------------- ------------ ------------ ------------ ------------
7178-80 Columbia Gateway Columbia, MD * 1,569,237 4,786,887 155,245
8200-40 Professional Place Landover, MD - 588,946 1,796,152 278,515
8400 Corporate Drive Landover, MD - 2,502,485 7,622,698 2,081,802
8730 Bollman Place Columbia, MD ** 624,131 4,576,964 77,839
9101,9111,9115 Guilford Road Columbia, MD * 758,951 - 2,966,933
9125,9135,9145 Guilford Road Columbia, MD * 900,154 - 5,009,493
10 South Third Street Richmond, VA - 27,970 127,419 45,962
1751 Bluehills Drive Roanoke, VA * 1,063,728 8,500,677 101,951
4300 Carolina Avenue Richmond, VA *** 2,007,717 14,927,608 257,556
301 Hill Carter Parkway Richmond, VA ** 659,456 4,836,010 63,204
4001 Carolina Avenue Richmond, VA - 29,443 215,914 7,861
5600-5626 Eastport Boulevard Richmond, VA ** 489,941 3,592,900 117,655
5650-5674 Eastport Boulevard Richmond, VA ** 644,384 4,025,480 66,204
5700 Eastport Boulevard Richmond, VA ** 408,729 2,697,348 43,619
11020 Hull Street Road Richmond, VA - 139,887 637,261 8,938
3432 Holland Road Virginia Beach, VA - 173,527 790,515 11,088
3001 Hungary Springs Road Richmond, VA ** 136,270 620,785 (33,852)
7760 Shrader Road Richmond, VA ** 187,971 756,313 13,906
7740 Shrader Road Richmond, VA ** 81,200 369,911 21,346
4880 Cox Road Richmond, VA ** 743,898 4,499,807 1,142,066
5162 Valleypointe Parkway Roanoke, VA ** 551,483 2,612,312 35,237
4101-4127 Carolina Avenue Richmond, VA 1,350,645 310,854 2,279,597 29,793
4201-4261 Carolina Avenue Richmond, VA 3,087,188 693,203 5,083,493 84,633
4263-4299 Carolina Avenue Richmond, VA 1,929,492 256,203 2,549,649 21,570
4301-4335 Carolina Avenue Richmond, VA - 223,696 1,640,435 87,487
4337-4379 Carolina Avenue Richmond, VA 2,122,441 325,303 2,385,557 185,032
4501-4549 Carolina Avenue Richmond, VA 2,738,913 486,166 3,565,211 49,013
4551-4593 Carolina Avenue Richmond, VA 2,771,780 474,360 3,478,646 74,254
4601-4643 Carolina Avenue Richmond, VA 2,771,780 652,455 4,784,675 253,442
4545-4583 Carolina Avenue Richmond, VA 2,191,131 404,616 2,967,187 785,810
4447-4491 Carolina Avenue Richmond, VA 2,897,770 454,056 2,729,742 45,935
4401-4445 Carolina Avenue Richmond, VA ** 615,038 4,510,272 61,364
12 S. Third Street Richmond, VA - 40,539 184,682 6,125
9601 Cosner Drive Fredericksburg, VA ** 475,262 3,917,234 148,902
315 Cardiff Valley Road Knoxville, TN * 443,305 2,950,903 42,487
2300 East Parham Road Richmond, VA - 221,947 1,011,088 14,181
1347 Diamond Springs Road Virginia Beach, VA ** 436,898 3,203,919 46,194
5221 Valleypark Drive Roanoke, VA 1,308,683 285,008 998,370 223,829
5228 Valleypointe Parkway Roanoke, VA 1,125,067 218,663 796,133 21,685
5238 Valleypark Drive Roanoke, VA 1,311,913 416,375 1,896,832 77,099
5601-5659 Eastport Boulevard Richmond, VA ** 705,660 - 4,708,044
4717-4729 Eubank Road Richmond, VA ** 449,447 3,294,697 103,705
4263F-N. Carolina Ave Richmond, VA - 91,476 - 1,573,730
4200 Oakleys Court Richmond, VA - 459,090 2,468,454 25,824
1821 Battery Dantzler Road Chester, VA - 394,212 3,035,113 8,120
5000 Cox Road Glen Allen, VA - 770,214 3,685,248 10,217
510 Eastpark Court Sandston, VA - 261,961 2,110,874 28,047
520 Eastpark Court Sandston, VA - 486,118 4,083,582 28,111
4523 Green Point Drive High Point, NC 900,000 234,564 - 1,904,487
4501 Green Point Drive High Point, NC 1,153,942 319,289 - 2,195,589
4500 Green Point Drive High Point, NC 946,057 230,622 - 1,983,226
2427 Penny Road High Point, NC 6,989,672 1,165,664 - 6,187,028
4524 Green Point Drive High Point, NC ** 182,810 - 2,002,336
4328, 4336 Federal Drive High Point, NC 6,382,465 521,122 - 7,243,516
200 Centreport Drive Greensboro, NC ** 331,400 3,768,600 189,762
4344 Federal Drive High Point, NC ** 484,001 - 2,324,644
202 Centreport Drive Greensboro, NC ** 549,948 5,360,462 144,251
4000 Piedmont Parkway High Point, NC ** 592,885 4,825,615 96,960
1730 Stebbins Drive Houston, TX * 143,258 - 412,792
5911-5925 Richard Street Jacksonville, FL * 275,582 - 508,059
8383-8385 Baycenter Road Jacksonville, FL * 63,703 - 527,320
8775 Baypine Road Jacksonville, FL * 906,804 - 2,892,795
8539 Western Way Jacksonville, FL * 328,133 - 3,108,958
6255 Lake Gray Boulevard Jacksonville, FL * 813,067 - 3,292,174
6600-6660 Suemac Place Jacksonville, FL * 210,804 - 1,656,841
6800-6850 Suemac Place Jacksonville, FL * 121,077 - 963,417
8665,8667,8669 Baypine Road Jacksonville, FL * 966,552 - 3,910,492
8540 Baycenter Road Jacksonville, FL 2,232,541 445,603 - 1,371,536
1200 Gulf Life Drive Jacksonville, FL * 1,028,864 - 16,465,604
8400 Baymeadows Way Jacksonville, FL * 557,682 - 2,325,708
8614 Baymeadows Way Jacksonville, FL * 290,291 - 1,114,160
5941-5975 Richard Street Jacksonville, FL * 583,622 - 1,113,225
7970 Bayberry Road Jacksonville, FL * 127,520 - 830,100
6000-6030 Bowdendale Avenue Jacksonville, FL * 275,475 - 1,511,461
7898 Baymeadows Way Jacksonville, FL * 561,802 - 1,971,967
5977-6607 Richard Street Jacksonville, FL * 180,033 - 1,565,681
7910 & 7948 Baymeadows Way Jacksonville, FL * 210,299 - 2,678,714
7954 & 7960 Baymeadows Way Jacksonville, FL - 291,312 - 2,933,358
8787 Baypine Road Jacksonville, FL * 2,076,306 - 34,505,962
7077 Bonneval Road Jacksonville, FL * 768,000 5,789,000 634,571
4190 Belfort Road Jacksonville, FL * 821,000 5,866,000 783,106
8011, 8021, 8031 Phillips Highway Jacksonville, FL * 626,250 3,548,750 207,290
7020 AC Skinner Parkway Jacksonville, FL ** 398,257 - 2,425,290
-49-
<PAGE>
Cost
Capitalized
Initial Cost Subsequent
------------------------- to
Project City Encumbrances Land Building Acquisition
- -------------------------------------- ------------------- ------------ ------------ ------------ ------------
7040 AC Skinner Parkway Jacksonville, FL ** 706,934 - 3,068,915
11777 Central Highway Jacksonville, FL - 92,207 429,997 765,464
7016 AC Skinner Parkway Jacksonville, FL - 597,181 - 2,082,723
4001,4051,4101 Fowler Avenue Tampa, FL * 1,299,310 - 4,614,336
5501-5502 Pioneer Park Boulevard Tampa, FL *** 162,000 1,613,000 62,622
5690-5694 Crenshaw Street Tampa, FL *** 181,923 1,812,496 30,171
3102,3104,3110 Cherry Palm Drive Tampa, FL * 503,767 2,787,585 39,332
8401-8408 Benjamin Road Tampa, FL * 789,651 4,454,648 148,808
3501 Riga Blvd Tampa, FL - 617,289 3,048,379 -
111 Kelsey Lane Tampa, FL - 359,540 1,461,850 (12,644)
2 Kings Hill Avenue West Malling, UK - 785,565 - 4,769,535
50 Gibson Drive West Malling, UK - **** - 3,938,732
50 Kings Hill Avenue West Malling, UK - 1,215,608 - 12,847,475
25 Kings Hill Avenue West Malling, UK 5,955,250 1,105,380 - 5,373,958
----------- ------------ ------------ ------------
Subtotal Operating Real Estate $94,145,823 $138,795,268 $409,308,408 $500,927,804
DEVELOPMENT PROPERTIES
3000 Horizon Blvd King of Prussia, PA - 1,191,449 - 165,446
8801 Tinicum Boulevard Philadelphia, PA - 2,474,031 - 9,978,814
50 Morehall Road Malvern, PA - 849,576 - 2,394,626
231 Lake Drive New Castle, DE - 623,043 - 3,389,970
15 Boulden Circle New Castle, DE - 406,064 - 1,591,996
404 Lippincott Drive Marlton, NJ - 131,896 - 113,901
402 Lippincott Drive Marlton, NJ - 131,896 - 116,587
1455 Valley Center Parkway Bethlehem, PA - 670,290 - 3,203,693
1650 Valley Center Parkway Bethlehem, PA *** 359,000 - 1,934,036
1660 Valley Center Parkway Bethlehem, PA *** 359,000 - 1,298,082
Nestle Way Allentown, PA - 8,065,500 - 22,358,668
Southpoint Pkwy Jacksonville, FL - - - 4,998,930
7018 AC Skinner Parkway Jacksonville, FL - 840,996 - 2,177,968
5900 Eastport Boulevard Richmond, VA - 676,661 - 4,080,611
5251 Concourse Drive Roanoke, VA - 2,813 - 1,623,331
501 Liberty Way Chester, VA - 400,664 - 238,629
13033 Kingston Ave Chester, VA - 376,584 - 182,745
5701-5799 Eastport Blvd Richmond, VA - 694,644 - 70,946
Centreport III Greensboro, NC - 826,237 - 358,302
Federal Ridge III - Distr Bldg Greensboro, NC - 282,996 - 1,863,556
Federal Ridge III - Flex Bldg Greensboro, NC - 143,661 - 711,676
6532 Judge Adams Road Whitsette, NC - 354,903 - 2,913,681
------------ ------------ ------------ ------------
Subtotal Development in Progress $ - $ 19,861,904 $ - $ 65,766,194
============ ============ ============ ============
LAND HELD FOR DEVELOPMENT
Chelsea Business Park Land Boothwyn, PA - 1,236,146 - 68,331
132 Welsh Road Horsham, PA - 1,333,642 - 461,892
Three Country View Road Malvern, PA - 912,890 - 127,247
550 Lapp Road Malvern, PA - 380,891 - 124,888
South Commerce Way Land Bethlehem, PA - 320,000 - 20,268
Cedar Hollow Road Land Malvern, PA - 1,429,473 - 60,723
Walnut Grove Land Horsham, PA - 3,435,695 - 171,005
3604 Horizon Blvd King of Prussia, PA - 763,885 - (364,523)
3606 Horizon Blvd King of Prussia, PA - 390,091 - 402,550
Swedes Run Business Park Land Delran, NJ - 1,057,204 - 47,413
Marlton Executive Park Land Marlton, NJ - 69,402 - 142,777
Commodore 295 Logan Twp., NJ - 3,850,613 - 1,736,551
Marlton Executive Park Land Marlton, NJ - 550,664 - 99,808
200 Exeter Court Bridgeport, NJ - 270,880 - 66,093
17 Boulden Circle New Castle, DE - 374,982 - 16,657
Lehigh Valley Corporate Center Land Bethlehem, PA - 2,729,998 - (678,998)
Lehigh Valley West Lots 13,14,15 Allentown, PA - 3,473,120 - 723,883
Valleypointe Land Richmond, VA - 326,654 - 581,190
Fairgrounds IRS Land Richmond, VA - 100,000 - 18,591
Rivers' Bend Land Chesterfield, VA - 1,068,507 - 1,468,222
Oakleys Center Land Richmond, VA - 228,757 - 11,176
Technology Pointe Land Glen Allen, VA - 443,485 - 11,639
Woodlands Center Land Sandston, VA - 1,390,058 - 34,188
Mendenhall Land High Point, NC - 2,927,363 - 737,276
6532 Judge Adams Road Whitsette, NC - 242,386 - 183,908
Southpoint Business Park Land Jacksonville, FL - 756,000 - (355,016)
Liberty Business Park Land Jacksonville, FL - 1,379,053 - 467,107
7024 AC Skinner Parkway Jacksonville, FL - 839,554 - (271,775)
7014 AC Skinner Pkwy Jacksonville, FL - 574,198 - 129,749
Crenshaw Street Tampa, FL - 67,510 - 16,597
Silo Bend Land Tampa, FL - 4,359,613 - 84
Silo Bend Land Tampa, FL - 511,463 - 10
----------- ------------ ------------ ------------
Subtotal Land Held for Development $ - $ 37,794,177 $ - $ 6,259,511
=========== ============ ============ ============
Total All Properties $94,145,823 $196,451,349 $409,308,408 $572,953,509
=========== ============ ============ ============
-50-
<PAGE>
* Denotes property is collateralized under the Line of Credit with G.E. Capital
** Denotes property is collateralized under mortgages with Nationwide, Principal Mutual and American General
totalling $146.7 million
*** Denotes property is collateralized under Line of Credit with Bank of Boston with a capacity of $80.0 million.
Properties currently collateralized allow the Company to borrow up to $25.0 million.
**** Rouse leases land from Kent County Council.
</TABLE>
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<PAGE>
<TABLE>
LIBERTY PROPERTY TRUST
REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1996
<CAPTION>
Gross Amount Carried
At Close of Period
-------------------------------------------
Land and Building and Total
Project City Improvements Improvements @ 12/31/96
- -------------------------------------- ------------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
10,20 Liberty Boulevard Malvern, PA $ 645,318 $ 4,783,701 $ 5,429,019
420 Lapp Road Malvern, PA 1,049,243 6,209,416 7,258,659
1 Chelsea Parkway Boothwyn, PA 245,735 2,612,988 2,858,723
3 Chelsea Parkway Boothwyn, PA 209,177 2,773,124 2,982,301
747 Dresher Road Horsham, PA 1,611,977 3,934,529 5,546,506
45-67 Great Valley Parkway Malvern, PA 795,831 2,743,715 3,539,546
1180 Church Road Lansdale, PA 2,387,191 14,399,383 16,786,573
40 Valley Stream Parkway Malvern, PA 323,792 2,184,948 2,508,740
50 Valley Stream Parkway Malvern, PA 371,068 2,327,982 2,699,050
20 Valley Stream Parkway Malvern, PA 466,413 4,988,289 5,454,702
800 Town Center Drive Langhorne, PA 1,617,803 8,765,922 10,383,725
1610 Medical Drive Pottstown, PA 212,413 2,491,723 2,704,136
9, 15 Great Valley Parkway Malvern, PA 1,837,878 14,959,104 16,796,982
257-275 Great Valley Parkway Malvern, PA 505,458 4,319,013 4,824,471
300 Technology Drive Malvern, PA 374,497 1,253,336 1,627,833
277-293 Great Valley Parkway Malvern, PA 531,534 1,887,947 2,419,481
311 Technology Drive Malvern, PA 348,099 2,235,638 2,583,737
325 Technology Drive Malvern, PA 385,693 1,841,992 2,227,685
7 Great Valley Parkway Malvern, PA 177,317 4,108,869 4,286,186
55 Valley Stream Parkway Malvern, PA 215,818 2,834,809 3,050,627
65 Valley Stream Parkway Malvern, PA 382,361 4,477,447 4,859,808
508 Lapp Road Malvern, PA 263,116 1,768,410 2,031,526
10 Valley Stream Parkway Malvern, PA 465,135 2,668,411 3,133,546
333 Phoenixville Pike Malvern, PA 524,229 3,052,776 3,577,005
1566 Medical Drive Pottstown, PA 203,827 1,827,544 2,031,371
30 Great Valley Parkway Malvern, PA 128,783 354,908 483,691
75 Great Valley Parkway Malvern, PA 143,811 418,664 562,475
27-43 Great Valley Parkway Malvern, PA 449,447 2,069,388 2,518,835
77-123 Great Valley Parkway Malvern, PA 888,359 4,227,605 5,115,964
260 Great Valley Parkway Malvern, PA 212,768 840,574 1,053,342
256 Great Valley Parkway Malvern, PA 161,949 1,887,910 2,049,859
205 Great Valley Parkway Malvern, PA 1,369,003 9,421,585 10,790,588
12,14,16 Great Valley Parkway Malvern, PA 131,517 1,161,550 1,293,067
155 Great Valley Parkway Malvern, PA 626,068 2,196,678 2,822,746
333 Technology Drive Malvern, PA 90,952 2,377,145 2,468,097
510 Lapp Road Malvern, PA 325,415 894,325 1,219,740
181 Wheeler Court Langhorne, PA 263,490 1,997,838 2,261,328
1100 Wheeler Way Langhorne, PA 151,500 1,182,216 1,333,716
60 Morehall Road Malvern, PA 884,974 9,430,990 10,315,964
905 Airport Road West Chester, PA 1,735,012 5,372,846 7,107,858
16 Cabot Boulevard Langhorne, PA 649,743 5,925,232 6,574,975
1 Country View Road Malvern, PA 406,421 3,985,117 4,391,538
2151 Cabot Boulevard Langhorne, PA 389,990 3,713,778 4,103,768
170 South Warner Road King of Prussia, PA 555,911 5,170,024 5,725,935
190 South Warner Road King of Prussia, PA 560,373 4,301,232 4,861,605
507 Prudential Road Horsham, PA 652,919 6,026,461 6,679,380
100 Witmer Road Horsham, PA 3,133,783 9,640,116 12,773,899
3100 Horizon Blvd King of Prussia, PA 611,435 1,975,287 2,586,722
3300 Horizon Blvd King of Prussia, PA 687,878 3,130,450 3,818,328
3500 Horizon Blvd King of Prussia, PA 1,223,875 2,479,054 3,702,929
200 Chester Field Parkway Malvern, PA 495,893 2,775,763 3,271,656
767 Electronic Drive Horsham, PA 1,241,970 2,915,735 4,157,705
5 Country View Road Malvern, PA 786,235 4,807,089 5,593,324
3200 Horizon Blvd King of Prussia, PA 1,209,009 3,980,991 5,190,001
111-195 Witmer Road Horsham, PA 407,205 3,224,126 3,631,331
2460 General Armistead Ave Norristown, PA 117,316 1,088,047 1,205,363
2490 General Armistead Ave Norristown, PA 66,288 622,333 688,621
300 Welsh Road Horsham, PA 180,459 1,485,527 1,665,986
400 Welsh Road Horsham, PA 282,493 2,797,293 3,079,786
440 East Swedesford Road Wayne, PA 717,001 5,677,163 6,394,164
460 East Swedesford Road Wayne, PA 705,317 5,002,133 5,707,450
2 Walnut Grove Drive Horsham, PA 1,266,546 7,783,127 9,049,673
200 Gibralter Road Horsham, PA 638,513 5,811,323 6,449,836
220 Gibralter Road Horsham, PA 629,944 5,733,228 6,363,172
240 Gibralter Road Horsham, PA 629,944 5,733,234 6,363,178
151 S. Warner Road Wayne, PA 1,218,086 6,937,866 8,155,952
931 South Matlack Street West Chester, PA 815,015 6,063,100 6,878,115
14 Lee Boulevard Malvern, PA 665,053 6,895,132 7,560,185
500 Chester Field Parkway Malvern, PA 473,139 2,776,245 3,249,384
300-400 Chester Field Parkway Malvern, PA 931,212 4,341,779 5,272,991
1805 Underwood Boulevard Delran, NJ 196,901 622,144 819,045
150 Mid-Atlantic Parkway West Deptford, NJ 88,153 435,245 523,398
18 Boulden Circle New Castle, DE 198,062 3,725,562 3,923,624
501 Delran Parkway Delran, NJ 184,162 2,408,535 2,592,697
600 Delran Parkway Delran, NJ 372,719 5,941,662 6,314,381
1607 Imperial Way West Deptford, NJ 288,280 2,750,098 3,038,378
1 Boulden Circle New Castle, DE 93,309 1,332,948 1,426,257
-52-
<PAGE>
Gross Amount Carried
At Close of Period
-------------------------------------------
Land and Building and Total
Project City Improvements Improvements @ 12/31/96
- -------------------------------------- ------------------- ------------ ------------ ------------
31-55 Read's Way New Castle, DE 972,159 5,478,479 6,450,638
3 Boulden Circle New Castle, DE 126,701 2,103,541 2,230,242
5 Boulden Circle New Castle, DE 232,274 3,496,979 3,729,253
601 Delran Parkway Delran, NJ 193,336 1,635,666 1,829,002
51 Haddonfield Road Cherry Hill, NJ 248,326 9,018,176 9,266,502
57 Read's Way New Castle, DE 352,736 2,681,501 3,034,237
1370 Imperial Way West Deptford, NJ 298,010 4,391,684 4,689,694
8 Stow Road Marlton, NJ 172,945 1,781,611 1,954,556
10 Stow Road Marlton, NJ 147,318 1,461,017 1,608,335
12 Stow Road Marlton, NJ 103,618 1,160,006 1,263,624
14 Stow Road Marlton, NJ 93,418 1,050,772 1,144,190
1300 Metropolitan Avenue West Deptford, NJ 221,218 2,014,883 2,236,101
701A Route 73 South Marlton, NJ 271,743 5,087,131 5,358,874
701C Route 73 South Marlton, NJ 96,161 1,510,959 1,607,120
1008 Astoria Boulevard Cherry Hill, NJ 32,698 709,850 742,548
1475 Imperial Way West Deptford, NJ 58,606 1,022,442 1,081,048
3000 Atrium Way Mt. Laurel, NJ 512,018 6,631,831 7,143,849
750 Cardinal Drive Pureland, NJ 236,190 2,523,249 2,759,439
11000, 15000, 17000 Commerce Parkway Mt. Laurel, NJ 456,465 4,880,537 5,337,002
12000, 14000 Commerce Parkway Mt. Laurel, NJ 362,855 3,416,277 3,779,132
16000, 18000 Commerce Parkway Mt. Laurel, NJ 290,545 2,649,141 2,939,686
406 Lippincott Drive Marlton, NJ 327,554 2,050,789 2,378,343
234 High Hill Road Bridgeport, NJ 250,445 1,705,766 1,956,211
100 Arlington Boulevard Bridgeport, NJ 374,836 4,135,009 4,509,845
100 Berkeley Drive Swedesboro, NJ 401,254 2,068,951 2,470,205
301 Lippincott Drive Marlton, NJ 1,069,837 5,117,895 6,187,732
303 Lippincott Drive Marlton, NJ 1,069,837 5,051,117 6,120,954
510 Sharptown Road Bridgeport, NJ 125,410 1,105,298 1,230,708
901 Route 73 (901 Building) Marlton, NJ 334,411 2,809,921 3,144,332
Four Greentree Center Marlton, NJ 450,558 3,280,067 3,730,625
512 Sharptown Road Bridgeport, NJ 180,468 1,585,630 1,766,098
263 Quigley Blvd New Castle, DE 170,727 1,338,210 1,508,937
34 Blevins Drive New Castle, DE 196,273 1,533,192 1,729,465
104 Gaither Drive Mt Laurel, NJ 134,461 1,183,429 1,317,890
2 Lukens Drive New Castle, DE 169,118 1,301,709 1,470,827
1655 Valley Center Parkway Bethlehem, PA 215,095 1,686,837 1,901,932
6560 Stonegate Drive Allentown, PA 437,122 2,332,118 2,769,240
6370 Hedgewood Drive Allentown, PA 515,707 2,969,092 3,484,799
6390 Hedgewood Drive Allentown, PA 670,819 2,532,765 3,203,584
1495 Valley Center Parkway Bethlehem, PA 258,014 3,762,641 4,020,655
6350 Hedgewood Drive Allentown, PA 360,691 3,097,622 3,458,313
6330 Hedgewood Drive Allentown, PA 499,720 4,207,017 4,706,737
1550 Valley Center Parkway Bethlehem, PA 188,320 3,160,851 3,349,171
1560 Valley Center Parkway Bethlehem, PA 229,301 3,788,881 4,018,182
6580 Snowdrift Road Allentown, PA 367,377 2,453,589 2,820,966
1510 Valley Center Parkway Bethlehem, PA 312,873 3,230,023 3,542,896
1530 Valley Center Parkway Bethlehem, PA 212,491 2,566,445 2,778,936
6540 Stonegate Drive Allentown, PA 422,730 3,559,185 3,981,915
974 Marcon Boulevard Allentown, PA 144,248 2,050,516 2,194,764
964 Marcon Boulevard Allentown, PA 139,480 1,548,845 1,688,325
764 Roble Road Allentown, PA 141,746 793,490 935,236
3174 Airport Road Allentown, PA 98,986 1,073,621 1,172,607
2196 Avenue C Allentown, PA 107,307 1,175,339 1,282,646
2202 Hanger Place Allentown, PA 138,127 1,286,175 1,424,302
2201 Hanger Place Allentown, PA 129,142 1,395,271 1,524,413
954 Marcon Boulevard Allentown, PA 104,452 896,056 1,000,508
57 South Commerce Way Allentown, PA 395,459 2,855,574 3,251,033
754 Roble Road Allentown, PA 163,735 1,782,880 1,946,615
894 Marcon Boulevard Allentown, PA 118,304 1,068,693 1,186,997
744 Roble Road Allentown, PA 161,371 1,788,503 1,949,874
944 Marcon Boulevard Allentown, PA 119,711 1,507,045 1,626,756
1685 Valley Center Parkway Allentown, PA 198,482 2,096,338 2,294,820
6520 Stonegate Drive Allentown, PA 948,395 1,274,387 2,222,782
7437 Industrial Boulevard Allentown, PA 726,651 6,343,544 7,070,195
2041 Avenue C Allentown, PA 213,879 1,143,544 1,357,423
2124 Avenue C Allentown, PA 289,529 1,084,212 1,373,741
7339 Industrial Boulevard Allentown, PA 1,197,121 5,342,190 6,539,311
7384 Penn Drive Allentown, PA 652,118 2,536,284 3,188,402
7144 Daniels Drive Allentown, PA 1,579,169 6,552,762 8,131,931
7620 Cetronia Road Allentown, PA 1,093,724 3,927,761 5,021,485
939 Marcon Blvd Allentown, PA 2,220,548 5,257,034 7,477,582
100 Brodhead Road Allentown, PA 429,456 3,011,979 3,441,435
1640 Valley Center Parkway Bethlehem, PA 190,728 2,523,954 2,714,682
83 South Commerce Way Bethlehem, PA 212,744 964,959 1,177,703
85 South Commerce Way Bethlehem, PA 237,078 1,064,685 1,301,763
87 South Commerce Way Bethlehem, PA 253,886 1,137,131 1,391,017
7339 Industrial Blvd Allentown, PA 2,670,673 13,480,792 16,151,465
12000,001,040 Indian Creek Court Beltsville, MD 2,698,195 9,993,222 12,691,417
180,190 Cochrane Drive Annapolis, MD 3,752,293 15,995,798 19,748,091
8280 Patuxent Range Drive Columbia, MD 181,601 1,270,967 1,452,568
8300 Professional Place Landover, MD 670,450 4,212,477 4,882,927
8100 Professional Place Landover, MD 543,948 3,468,575 4,012,523
-53-
<PAGE>
Gross Amount Carried
At Close of Period
-------------------------------------------
Land and Building and Total
Project City Improvements Improvements @ 12/31/96
- -------------------------------------- ------------------- ------------ ------------ ------------
8100,8200,8300 Corporate Drive Landover, MD 1,771,135 5,162,964 6,934,099
7178-80 Columbia Gateway Columbia, MD 1,571,105 4,940,264 6,511,369
8200-40 Professional Place Landover, MD 589,932 2,073,681 2,663,613
8400 Corporate Drive Landover, MD 2,505,184 9,701,801 12,206,985
8730 Bollman Place Columbia, MD 626,269 4,652,665 5,278,934
9101,9111,9115 Guilford Road Columbia, MD 765,953 2,959,931 3,725,884
9125,9135,9145 Guilford Road Columbia, MD 920,439 4,989,208 5,909,647
10 South Third Street Richmond, VA 27,970 173,381 201,351
1751 Bluehills Drive Roanoke, VA 1,063,728 8,602,628 9,666,356
4300 Carolina Avenue Richmond, VA 2,009,136 15,183,745 17,192,881
301 Hill Carter Parkway Richmond, VA 659,456 4,899,214 5,558,670
4001 Carolina Avenue Richmond, VA 29,443 223,775 253,218
5600-5626 Eastport Boulevard Richmond, VA 489,941 3,710,555 4,200,496
5650-5674 Eastport Boulevard Richmond, VA 644,384 4,091,684 4,736,068
5700 Eastport Boulevard Richmond, VA 408,729 2,740,967 3,149,696
11020 Hull Street Road Richmond, VA 139,887 646,199 786,086
3432 Holland Road Virginia Beach, VA 173,527 801,603 975,130
3001 Hungary Springs Road Richmond, VA 136,270 586,933 723,203
7760 Shrader Road Richmond, VA 187,971 770,219 958,190
7740 Shrader Road Richmond, VA 81,200 391,257 472,457
4880 Cox Road Richmond, VA 743,898 5,641,873 6,385,771
5162 Valleypointe Parkway Roanoke, VA 551,483 2,647,549 3,199,032
4101- 4127 Carolina Avenue Richmond, VA 310,854 2,309,390 2,620,244
4201-4261 Carolina Avenue Richmond, VA 693,203 5,168,126 5,861,329
4263-4299 Carolina Avenue Richmond, VA 256,203 2,571,219 2,827,422
4301-4335 Carolina Avenue Richmond, VA 223,696 1,727,922 1,951,618
4337-4379 Carolina Avenue Richmond, VA 325,203 2,570,689 2,895,892
4501-4549 Carolina Avenue Richmond, VA 486,166 3,614,224 4,100,390
4551-4593 Carolina Avenue Richmond, VA 474,360 3,552,900 4,027,260
4601-4643 Carolina Avenue Richmond, VA 652,455 5,038,117 5,690,572
4545-4583 Carolina Avenue Richmond, VA 404,616 3,752,997 4,157,613
4447-4491 Carolina Avenue Richmond, VA 454,056 2,775,677 3,229,733
4401-4445 Carolina Avenue Richmond, VA 615,038 4,571,636 5,186,674
12 S. Third Street Richmond, VA 40,539 190,807 231,346
9601 Cosner Drive Fredericksburg, VA 476,262 4,065,136 4,541,398
315 Cardiff Valley Road Knoxville, TN 443,305 2,993,390 3,436,695
2300 East Parham Road Richmond, VA 221,947 1,025,269 1,247,216
1347 Diamond Springs Road Virginia Beach, VA 436,898 3,250,113 3,687,011
5221 Valleypark Drive Roanoke, VA 285,008 1,222,199 1,507,207
5228 Valleypointe Parkway Roanoke, VA 218,663 817,818 1,036,481
5238 Valleypark Drive Roanoke, VA 416,375 1,973,931 2,390,306
5601-5659 Eastport Boulevard Richmond, VA 720,100 4,693,605 5,413,705
4717-4729 Eubank Road Richmond, VA 452,263 3,395,586 3,847,849
4263F-N. Carolina Ave Richmond, VA 91,599 1,573,607 1,665,206
4200 Oakleys Court Richmond, VA 459,653 2,493,715 2,953,368
1821 Battery Dantzler Road Chester, VA 392,332 3,045,113 3,437,445
5000 Cox Road Glen Allen, VA 771,029 3,694,650 4,465,679
510 Eastpark Court Sandston, VA 262,210 2,138,672 2,400,882
520 Eastpark Court Sandston, VA 486,598 4,111,213 4,597,811
4523 Green Point Drive High Point, NC 223,614 1,915,437 2,139,051
4501 Green Point Drive High Point, NC 320,450 2,194,428 2,514,878
4500 Green Point Drive High Point, NC 231,692 1,982,156 2,213,848
2427 Penny Road High Point, NC 1,168,074 6,184,618 7,352,692
4524 Green Point Drive High Point, NC 183,888 2,001,258 2,185,146
4328, 4336 Federal Drive High Point, NC 825,092 6,939,546 7,764,638
200 Centreport Drive Greensboro, NC 332,017 3,957,745 4,289,762
4344 Federal Drive High Point, NC 173,623 2,635,023 2,808,646
202 Centreport Drive Greensboro, NC 549,679 5,504,982 6,054,661
4000 Piedmont Parkway High Point, NC 592,885 4,922,575 5,515,460
1730 Stebbins Drive Houston, TX 144,016 412,034 556,050
5911-5925 Richard Street Jacksonville, FL 286,335 497,306 783,641
8383-8385 Baycenter Road Jacksonville, FL 65,329 525,694 591,023
8775 Baypine Road Jacksonville, FL 913,264 2,886,335 3,799,599
8539 Western Way Jacksonville, FL 631,558 2,805,533 3,437,091
6255 Lake Gray Boulevard Jacksonville, FL 811,963 3,293,278 4,105,241
6600-6660 Suemac Place Jacksonville, FL 216,014 1,651,631 1,867,645
6800-6850 Suemac Place Jacksonville, FL 125,576 958,918 1,084,494
8665,8667,8669 Baypine Road Jacksonville, FL 1,023,514 3,853,530 4,877,044
8540 Baycenter Road Jacksonville, FL 450,431 1,366,708 1,817,139
1200 Gulf Life Drive Jacksonville, FL 1,035,091 16,459,377 17,494,468
8400 Baymeadows Way Jacksonville, FL 566,370 2,317,020 2,883,390
8614 Baymeadows Way Jacksonville, FL 312,761 1,091,690 1,404,451
5941-5975 Richard Street Jacksonville, FL 585,280 1,111,567 1,696,847
7970 Bayberry Road Jacksonville, FL 129,979 827,641 957,620
6000-6030 Bowdendale Avenue Jacksonville, FL 275,475 1,511,461 1,786,936
7898 Baymeadows Way Jacksonville, FL 568,005 1,965,764 2,533,769
5977-6607 Richard Street Jacksonville, FL 182,747 1,562,967 1,745,714
7910 & 7948 Baymeadows Way Jacksonville, FL 211,449 2,677,564 2,889,013
7954 & 7960 Baymeadows Way Jacksonville, FL 292,667 2,932,003 3,224,670
8787 Baypine Road Jacksonville, FL 2,045,574 34,536,694 36,582,268
7077 Bonneval Road Jacksonville, FL 774,020 6,417,551 7,191,571
4190 Belfort Road Jacksonville, FL 827,420 6,642,686 7,470,106
-54-
<PAGE>
Gross Amount Carried
At Close of Period
-------------------------------------------
Land and Building and Total
Project City Improvements Improvements @ 12/31/96
- -------------------------------------- ------------------- ------------ ------------ ------------
8011, 8021, 8031 Phillips Highway Jacksonville, FL 628,437 3,753,853 4,382,290
7020 AC Skinner Parkway Jacksonville, FL 749,811 2,073,736 2,823,547
7040 AC Skinner Parkway Jacksonville, FL 853,981 2,921,869 3,775,850
11777 Central Highway Jacksonville, FL 143,785 1,143,883 1,287,668
7016 AC Skinner Parkway Jacksonville, FL 602,619 2,077,285 2,679,904
4001,4051,4101 Fowler Avenue Tampa, FL 1,293,206 4,620,440 5,913,646
5501-5502 Pioneer Park Boulevard Tampa, FL 187,884 1,649,738 1,837,622
5690-5694 Crenshaw Street Tampa, FL 181,923 1,842,667 2,024,590
3102,3104,3110 Cherry Palm Drive Tampa, FL 503,767 2,826,917 3,330,684
8401-8408 Benjamin Road Tampa, FL 789,652 4,603,455 5,393,107
3501 Riga Blvd Tampa, FL 617,289 3,048,379 3,665,668
111 Kelsey Lane Tampa, FL 359,540 1,449,206 1,808,746
2 Kings Hill Avenue West Malling, UK 785,565 4,769,535 5,555,100
50 Gibson Drive West Malling, UK 192,270 3,746,462 3,938,732
50 Kings Hill Avenue West Malling, UK 1,216,608 12,846,475 14,063,083
25 Kings Hill Avenue West Malling, UK 1,014,011 5,465,327 6,479,338
------------ ------------ --------------
Subtotal Operating Real Estate $140,195,919 $908,835,565 $1,049,031,484
============ ============ ==============
DEVELOPMENT PROPERTIES
3000 Horizon Blvd King of Prussia, PA $ 943,697 $ 413,198 $ 1,356,895
8801 Tinicum Boulevard Philadelphia, PA 124,062 12,328,783 12,452,845
50 Morehall Road Malvern, PA 1,037,076 2,207,126 3,244,202
231 Lake Drive New Castle, DE 623,043 3,389,969 4,013,012
15 Boulden Circle New Castle, DE 447,065 1,550,995 1,998,060
404 Lippincott Drive Marlton, NJ 131,896 113,901 245,797
402 Lippincott Drive Marlton, NJ 131,896 116,587 248,483
1455 Valley Center Parkway Bethlehem, PA 545,013 3,328,970 3,873,983
1650 Valley Center Parkway Bethlehem, PA 188,896 2,104,140 2,293,036
1660 Valley Center Parkway Bethlehem, PA 188,721 1,468,360 1,657,081
Nestle Way Allentown, PA 8,074,926 22,349,242 30,424,168
Southpoint Pkwy Jacksonville, FL 418,093 4,580,837 4,998,930
7018 AC Skinner Parkway Jacksonville, FL 846,433 2,172,531 3,018,964
5900 Eastport Boulevard Richmond, VA 687,855 4,069,417 4,757,272
5251 Concourse Drive Roanoke, VA 217,247 1,408,897 1,626,144
501 Liberty Way Chester, VA 400,689 238,604 639,293
13033 Kingston Ave Chester, VA 376,584 182,745 559,329
5701-5799 Eastport Blvd Richmond, VA 694,644 70,946 765,590
Centreport III Greensboro, NC 826,237 358,302 1,184,539
Federal Ridge III - Distr Bldg Greensboro, NC 283,368 1,863,183 2,146,551
Federal Ridge III - Flex Bldg Greensboro, NC 132,655 722,682 855,337
6532 Judge Adams Road Whitsette, NC 358,116 2,910,468 3,268,584
------------ ------------ -------------
Subtotal Development in Progress $ 17,678,212 $ 67,949,883 $ 85,628,095
============ ============ =============
LAND HELD FOR DEVELOPMENT
Chelsea Business Park Land Boothwyn, PA $ 1,298,240 $ 6,237 $ 1,304,477
132 Welsh Road Horsham, PA 1,393,613 401,921 1,795,534
Three Country View Road Malvern, PA 914,278 125,859 1,040,137
550 Lapp Road Malvern, PA 388,066 117,713 505,780
South Commerce Way Land Bethlehem, PA 321,502 18,766 340,268
Cedar Hollow Road Land Malvern, PA 1,447,902 42,294 1,490,196
Walnut Grove Land Horsham, PA 3,569,526 37,174 3,606,700
3604 Horizon Blvd King of Prussia, PA 397,178 2,184 399,363
3606 Horizon Blvd King of Prussia, PA 777,764 14,877 792,641
Swedes Run Business Park Land Delran, NJ 1,104,617 - 1,104,617
Marlton Executive Park Land Marlton, NJ 109,687 102,492 212,179
Commodore 295 Logan Twp., NJ 3,766,142 1,821,023 5,587,165
Marlton Executive Park Land Marlton, NJ 550,664 99,808 650,472
200 Exeter Court Bridgeport, NJ 291,902 45,070 336,973
17 Boulden Circle New Castle, DE 385,818 5,821 391,638
Lehigh Valley Corporate Center Land Bethlehem, PA 2,047,058 3,942 2,051,000
Lehigh Valley West Lots 13,14,15 Allentown, PA 3,473,128 723,875 4,197,003
Valleypointe Land Richmond, VA 671,817 236,028 907,844
Fairgrounds IRS Land Richmond, VA 101,539 17,052 118,591
Rivers' Bend Land Chesterfield, VA 1,266,942 1,269,787 2,536,729
Oakleys Center Land Richmond, VA 235,221 4,712 239,933
Technology Pointe Land Glen Allen, VA 445,978 9,146 455,124
Woodlands Center Land Sandston, VA 1,395,665 28,581 1,424,246
Mendenhall Land High Point, NC 3,065,859 598,780 3,664,639
6532 Judge Adams Road Whitsette, NC 242,386 183,908 426,293
Southpoint Business Park Land Jacksonville, FL 353,264 47,720 400,984
Liberty Business Park Land Jacksonville, FL 928,753 917,408 1,846,160
7024 AC Skinner Parkway Jacksonville, FL 539,554 28,224 567,779
7014 AC Skinner Pkwy Jacksonville, FL 579,800 124,147 703,947
-55-
<PAGE>
Gross Amount Carried
At Close of Period
-------------------------------------------
Land and Building and Total
Project City Improvements Improvements @ 12/31/96
- -------------------------------------- ------------------- ------------ ------------ ------------
Crenshaw Street Tampa, FL 74,532 9,575 84,107
Silo Bend Land Tampa, FL 4,359,613 84 4,359,697
Silo Bend Land Tampa, FL 511,463 10 511,473
------------ ------------ ------------
Subtotal Land Held for Development $ 37,009,471 $ 7,044,218 $ 44,053,689
============ ============ ==============
TOTAL ALL PROPERTIES $194,883,602 $983,829,666 $1,178,713,268
============ ============ ==============
* Denotes property is collateralized under the Line of Credit with G.E. Capital
** Denotes property is collateralized under mortgages with Nationwide, Principal Mutual and American General
totalling $146.7 million
*** Denotes property is collateralized under Line of Credit with Bank of Boston with a capacity of $80.0 million.
Properties currently collateralized allow the Company to borrow up to $25.0 million.
**** Rouse leases land from Kent County Council.
</TABLE>
-56-
<PAGE>
<TABLE>
LIBERTY PROPERTY TRUST
REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1996
<CAPTION>
Accumulated
Depreciation Date of Depreciable
Project City @ 12/31/95 Construction Life (years)
- -------------------------------------- ------------------- ------------ ------------ ------------
<S> <C> <C> <C>
10,20 Liberty Boulevard Malvern, PA $ 788,624 1988 40 yrs.
420 Lapp Road Malvern, PA 924,756 1989 40 yrs.
1 Chelsea Parkway Boothwyn, PA 548,134 1988 40 yrs.
3 Chelsea Parkway Boothwyn, PA 481,248 1988 40 yrs.
747 Dresher Road Horsham, PA 691,486 1988 40 yrs.
45-67 Great Valley Parkway Malvern, PA 1,330,691 1974 40 yrs.
1180 Church Road Lansdale, PA 3,244,011 1986 40 yrs.
40 Valley Stream Parkway Malvern, PA 501,252 1987 40 yrs.
50 Valley Stream Parkway Malvern, PA 552,172 1987 40 yrs.
20 Valley Stream Parkway Malvern, PA 1,061,207 1987 40 yrs.
800 Town Center Drive Langhorne, PA 1,862,658 1987 40 yrs.
1610 Medical Drive Pottstown, PA 566,014 1986 40 yrs.
9, 15 Great Valley Parkway Malvern, PA 7,354,674 1986 40 yrs.
257-275 Great Valley Parkway Malvern, PA 1,249,908 1983 40 yrs.
300 Technology Drive Malvern, PA 311,313 1985 40 yrs.
277-293 Great Valley Parkway Malvern, PA 532,345 1984 40 yrs.
311 Technology Drive Malvern, PA 597,650 1984 40 yrs.
325 Technology Drive Malvern, PA 482,887 1984 40 yrs.
7 Great Valley Parkway Malvern, PA 1,062,434 1985 40 yrs.
55 Valley Stream Parkway Malvern, PA 813,199 1983 40 yrs.
65 Valley Stream Parkway Malvern, PA 1,260,290 1983 40 yrs.
508 Lapp Road Malvern, PA 491,766 1984 40 yrs.
10 Valley Stream Parkway Malvern, PA 725,789 1984 40 yrs.
333 Phoenixville Pike Malvern, PA 796,975 1985 40 yrs.
1566 Medical Drive Pottstown, PA 469,589 1985 40 yrs.
30 Great Valley Parkway Malvern, PA 194,877 1975 40 yrs.
75 Great Valley Parkway Malvern, PA 164,208 1977 40 yrs.
27-43 Great Valley Parkway Malvern, PA 863,247 1977 40 yrs.
77-123 Great Valley Parkway Malvern, PA 1,665,852 1978 40 yrs.
260 Great Valley Parkway Malvern, PA 280,697 1979 40 yrs.
256 Great Valley Parkway Malvern, PA 681,544 1980 40 yrs.
205 Great Valley Parkway Malvern, PA 3,066,132 1981 40 yrs.
12,14,16 Great Valley Parkway Malvern, PA 438,530 1982 40 yrs.
155 Great Valley Parkway Malvern, PA 742,491 1981 40 yrs.
333 Technology Drive Malvern, PA 823,514 1987 40 yrs.
510 Lapp Road Malvern, PA 301,181 1983 40 yrs.
181 Wheeler Court Langhorne, PA 124,049 1979 40 yrs.
1100 Wheeler Way Langhorne, PA 72,280 1979 40 yrs.
60 Morehall Road Malvern, PA 594,470 1989 40 yrs.
905 Airport Road West Chester, PA 338,879 1988 40 yrs.
16 Cabot Boulevard Langhorne, PA 345,430 1972 40 yrs.
1 Country View Road Malvern, PA 216,723 1982 40 yrs.
2151 Cabot Boulevard Langhorne, PA 198,591 1982 40 yrs.
170 South Warner Road King of Prussia, PA 452,724 1980 40 yrs.
190 South Warner Road King of Prussia, PA 251,887 1980 40 yrs.
507 Prudential Road Horsham, PA 299,655 1988 40 yrs.
100 Witmer Road Horsham, PA 156,076 1995 40 yrs.
3100 Horizon Blvd King of Prussia, PA 35,831 1995 40 yrs.
3300 Horizon Blvd King of Prussia, PA 92,713 1996 40 yrs.
3500 Horizon Blvd King of Prussia, PA 46,928 1996 40 yrs.
200 Chester Field Parkway Malvern, PA 1,131,622 1989 40 yrs.
767 Electronic Drive Horsham, PA 94,656 1996 40 yrs.
5 Country View Road Malvern, PA 149,756 1985 40 yrs.
3200 Horizon Blvd King of Prussia, PA 22,703 1996 40 yrs.
111-195 Witmer Road Horsham, PA 48,545 1996 40 yrs.
2460 General Armistead Ave Norristown, PA 13,622 1985 40 yrs.
2490 General Armistead Ave Norristown, PA 7,752 1985 40 yrs.
300 Welsh Road Horsham, PA 18,189 1983 40 yrs.
400 Welsh Road Horsham, PA 28,873 1983 40 yrs.
440 East Swedesford Road Wayne, PA 64,162 1988 40 yrs.
460 East Swedesford Road Wayne, PA 65,023 1988 40 yrs.
2 Walnut Grove Drive Horsham, PA 16,427 1989 40 yrs.
200 Gibralter Road Horsham, PA - 1990 40 yrs.
220 Gibralter Road Horsham, PA - 1990 40 yrs.
240 Gibralter Road Horsham, PA - 1990 40 yrs.
151 S. Warner Road Wayne, PA - 1980 40 yrs.
931 South Matlack Street West Chester, PA 1,170,708 1985 40 yrs.
14 Lee Boulevard Malvern, PA 866,089 1988 40 yrs.
500 Chester Field Parkway Malvern, PA 510,986 1988 40 yrs.
300-400 Chester Field Parkway Malvern, PA 795,480 1988 40 yrs.
1805 Underwood Boulevard Delran, NJ 110,301 1973 40 yrs.
150 Mid-Atlantic Parkway West Deptford, NJ 199,579 1973 40 yrs.
18 Boulden Circle New Castle, DE 601,300 1989 40 yrs.
501 Delran Parkway Delran, NJ 467,365 1988 40 yrs.
600 Delran Parkway Delran, NJ 1,059,777 1988 40 yrs.
1607 Imperial Way West Deptford, NJ 927,568 1973 40 yrs.
1 Boulden Circle New Castle, DE 306,780 1986 40 yrs.
31-55 Read's Way New Castle, DE 1,149,943 1986 40 yrs.
3 Boulden Circle New Castle, DE 428,976 1987 40 yrs.
5 Boulden Circle New Castle, DE 651,394 1987 40 yrs.
-57-
<PAGE>
Accumulated
Depreciation Date of Depreciable
Project City @ 12/31/95 Construction Life (years)
- -------------------------------------- ------------------- ------------ ------------ ------------
601 Delran Parkway Delran, NJ 348,123 1988 40 yrs.
51 Haddonfield Road Cherry Hill, NJ 2,003,738 1986 40 yrs.
57 Read's Way New Castle, DE 686,487 1985 40 yrs.
1370 Imperial Way West Deptford, NJ 274,863 1978 40 yrs.
8 Stow Road Marlton, NJ 130,494 1988 40 yrs.
10 Stow Road Marlton, NJ 91,085 1988 40 yrs.
12 Stow Road Marlton, NJ 91,056 1988 40 yrs.
14 Stow Road Marlton, NJ 105,765 1988 40 yrs.
1300 Metropolitan Avenue West Deptford, NJ 113,275 1972 40 yrs.
701A Route 73 South Marlton, NJ 314,011 1987 40 yrs.
701C Route 73 South Marlton, NJ 83,807 1987 40 yrs.
1008 Astoria Boulevard Cherry Hill, NJ 39,635 1973 40 yrs.
1475 Imperial Way West Deptford, NJ 52,150 1976 40 yrs.
3000 Atrium Way Mt. Laurel, NJ 434,433 1987 40 yrs.
750 Cardinal Drive Pureland, NJ 175,604 1989 40 yrs.
11000, 15000, 17000 Commerce Parkway Mt. Laurel, NJ 253,675 1985 40 yrs.
12000, 14000 Commerce Parkway Mt. Laurel, NJ 172,747 1985 40 yrs.
16000, 18000 Commerce Parkway Mt. Laurel, NJ 136,636 1985 40 yrs.
406 Lippincott Drive Marlton, NJ 106,224 1990 40 yrs.
234 High Hill Road Bridgeport, NJ 47,012 1987 40 yrs.
100 Arlington Boulevard Bridgeport, NJ 69,025 1996 40 yrs.
100 Berkeley Drive Swedesboro, NJ 51,932 1990 40 yrs.
301 Lippincott Drive Marlton, NJ 133,557 1988 40 yrs.
303 Lippincott Drive Marlton, NJ 119,831 1988 40 yrs.
510 Sharptown Road Bridgeport, NJ 23,878 1984 40 yrs.
901 Route 73 (901 Building) Marlton, NJ 52,777 1985 40 yrs.
Four Greentree Center Marlton, NJ 48,562 1988 40 yrs.
512 Sharptown Road Bridgeport, NJ 26,449 1984 40 yrs.
263 Quigley Blvd New Castle, DE 8,430 1987 40 yrs.
34 Blevins Drive New Castle, DE 9,684 1987 40 yrs.
104 Gaither Drive Mt Laurel, NJ 2,485 1975 40 yrs.
2 Lukens Drive New Castle, DE - 1988 40 yrs.
1655 Valley Center Parkway Bethlehem, PA 113,247 1993 40 yrs.
6560 Stonegate Drive Allentown, PA 412,465 1989 40 yrs.
6370 Hedgewood Drive Allentown, PA 381,336 1990 40 yrs.
6390 Hedgewood Drive Allentown, PA 474,228 1990 40 yrs.
1495 Valley Center Parkway Bethlehem, PA 526,353 1990 40 yrs.
6350 Hedgewood Drive Allentown, PA 541,080 1989 40 yrs.
6330 Hedgewood Drive Allentown, PA 982,842 1988 40 yrs.
1550 Valley Center Parkway Bethlehem, PA 509,861 1988 40 yrs.
1560 Valley Center Parkway Bethlehem, PA 653,025 1988 40 yrs.
6580 Snowdrift Road Allentown, PA 510,011 1988 40 yrs.
1510 Valley Center Parkway Bethlehem, PA 596,623 1988 40 yrs.
1530 Valley Center Parkway Bethlehem, PA 487,892 1988 40 yrs.
6540 Stonegate Drive Allentown, PA 704,737 1988 40 yrs.
974 Marcon Boulevard Allentown, PA 456,203 1987 40 yrs.
964 Marcon Boulevard Allentown, PA 405,927 1985 40 yrs.
764 Roble Road Allentown, PA 208,658 1985 40 yrs.
3174 Airport Road Allentown, PA 381,045 1979 40 yrs.
2196 Avenue C Allentown, PA 378,173 1980 40 yrs.
2202 Hanger Place Allentown, PA 443,767 1981 40 yrs.
2201 Hanger Place Allentown, PA 470,974 1981 40 yrs.
954 Marcon Boulevard Allentown, PA 301,340 1981 40 yrs.
57 South Commerce Way Allentown, PA 178,075 1986 40 yrs.
754 Roble Road Allentown, PA 110,527 1986 40 yrs.
894 Marcon Boulevard Allentown, PA 67,724 1986 40 yrs.
744 Roble Road Allentown, PA 126,142 1986 40 yrs.
944 Marcon Boulevard Allentown, PA 101,670 1986 40 yrs.
1685 Valley Center Parkway Allentown, PA 62,824 1996 40 yrs.
6520 Stonegate Drive Allentown, PA 23,295 1976 40 yrs.
7437 Industrial Boulevard Allentown, PA 372,593 1990 40 yrs.
2041 Avenue C Allentown, PA 49,615 1990 40 yrs.
2124 Avenue C Allentown, PA 47,098 1996 40 yrs.
7339 Industrial Boulevard Allentown, PA - 1988 40 yrs.
7384 Penn Drive Allentown, PA 108,782 1975 40 yrs.
7144 Daniels Drive Allentown, PA 153,270 1990 40 yrs.
7620 Cetronia Road Allentown, PA 146,045 1980 40 yrs.
939 Marcon Blvd Allentown, PA 200,244 1990 40 yrs.
100 Brodhead Road Allentown, PA 92,025 1996 40 yrs.
1640 Valley Center Parkway Bethlehem, PA 27,932 1988 40 yrs.
83 South Commerce Way Bethlehem, PA 14,737 1996 40 yrs.
85 South Commerce Way Bethlehem, PA 13,122 1989 40 yrs.
87 South Commerce Way Bethlehem, PA 13,391 1989 40 yrs.
7339 Industrial Blvd Allentown, PA 28,399 1989 40 yrs.
12000,001,040 Indian Creek Court Beltsville, MD 2,133,170 1986 40 yrs.
180,190 Cochrane Drive Annapolis, MD 2,765,357 1988 40 yrs.
8280 Patuxent Range Drive Columbia, MD 506,481 1978 40 yrs.
8300 Professional Place Landover, MD 1,264,179 1978 40 yrs.
8100 Professional Place Landover, MD 1,001,037 1987 40 yrs.
8100,8200,8300 Corporate Drive Landover, MD 1,613,036 1981 40 yrs.
7178-80 Columbia Gateway Columbia, MD 248,853 1987 40 yrs.
8200-40 Professional Place Landover, MD 101,075 1979 40 yrs.
8400 Corporate Drive Landover, MD 422,988 1984 40 yrs.
8730 Bollman Place Columbia, MD 210,365 1984 40 yrs.
9101,9111,9115 Guilford Road Columbia, MD 785,006 1984 40 yrs.
-58-
<PAGE>
Accumulated
Depreciation Date of Depreciable
Project City @ 12/31/95 Construction Life (years)
- -------------------------------------- ------------------- ------------ ------------ ------------
9125,9135,9145 Guilford Road Columbia, MD 1,406,750 1983 40 yrs.
10 South Third Street Richmond, VA 6,481 1930 40 yrs.
1751 Bluehills Drive Roanoke, VA 373,351 1991 40 yrs.
4300 Carolina Avenue Richmond, VA 681,394 1985 40 yrs.
301 Hill Carter Parkway Richmond, VA 221,513 1989 40 yrs.
4001 Carolina Avenue Richmond, VA 9,890 1935 40 yrs.
5600-5626 Eastport Boulevard Richmond, VA 175,218 1989 40 yrs.
5650-5674 Eastport Boulevard Richmond, VA 200,418 1990 40 yrs.
5700 Eastport Boulevard Richmond, VA 130,427 1990 40 yrs.
11020 Hull Street Road Richmond, VA 29,190 1987 40 yrs.
3432 Holland Road Virginia Beach, VA 36,210 1989 40 yrs.
3001 Hungary Springs Road Richmond, VA 27,797 1984 40 yrs.
7760 Shrader Road Richmond, VA 36,939 1987 40 yrs.
7740 Shrader Road Richmond, VA 24,121 1989 40 yrs.
4880 Cox Road Richmond, VA 89,194 1995 40 yrs.
5162 Valleypointe Parkway Roanoke, VA 117,367 1993 40 yrs.
4101-4127 Carolina Avenue Richmond, VA 104,417 1973 40 yrs.
4201-4261 Carolina Avenue Richmond, VA 234,576 1975 40 yrs.
4263-4299 Carolina Avenue Richmond, VA 119,370 1976 40 yrs.
4301-4335 Carolina Avenue Richmond, VA 75,572 1978 40 yrs.
4337-4379 Carolina Avenue Richmond, VA 110,714 1979 40 yrs.
4501-4549 Carolina Avenue Richmond, VA 163,304 1981 40 yrs.
4551-4593 Carolina Avenue Richmond, VA 164,352 1982 40 yrs.
4601-4643 Carolina Avenue Richmond, VA 246,050 1985 40 yrs.
4545-4583 Carolina Avenue Richmond, VA 359,442 1985 40 yrs.
4447-4491 Carolina Avenue Richmond, VA 138,769 1987 40 yrs.
4401-4445 Carolina Avenue Richmond, VA 206,593 1988 40 yrs.
12 S. Third Street Richmond, VA 8,492 1900 40 yrs.
9601 Cosner Drive Fredericksburg, VA 165,687 1995 40 yrs.
315 Cardiff Valley Road Knoxville, TN 142,033 1994 40 yrs.
2300 East Parham Road Richmond, VA 46,313 1988 40 yrs.
1347 Diamond Springs Road Virginia Beach, VA 146,845 1980 40 yrs.
5221 Valleypark Drive Roanoke, VA 89,229 1988 40 yrs.
5228 Valleypointe Parkway Roanoke, VA 41,119 1988 40 yrs.
5238 Valleypark Drive Roanoke, VA 89,339 1989 40 yrs.
5601-5659 Eastport Boulevard Richmond, VA 114,394 1996 40 yrs.
4717-4729 Eubank Road Richmond, VA 104,067 1978 40 yrs.
4263F-N. Carolina Ave Richmond, VA 19,090 1975 40 yrs.
4200 Oakleys Court Richmond, VA 15,722 1990 40 yrs.
1821 Battery Dantzler Road Chester, VA 18,795 1990 40 yrs.
5000 Cox Road Glen Allen, VA 23,388 1990 40 yrs.
510 Eastpark Court Sandston, VA 13,425 1989 40 yrs.
520 Eastpark Court Sandston, VA 25,898 1989 40 yrs.
4523 Green Point Drive High Point, NC 356,751 1988 40 yrs.
4501 Green Point Drive High Point, NC 337,209 1989 40 yrs.
4500 Green Point Drive High Point, NC 327,333 1989 40 yrs.
2427 Penny Road High Point, NC 911,816 1990 40 yrs.
4524 Green Point Drive High Point, NC 344,111 1988 40 yrs.
4328, 4336 Federal Drive High Point, NC 354,418 1995 40 yrs.
200 Centreport Drive Greensboro, NC 192,570 1986 40 yrs.
4344 Federal Drive High Point, NC 21,403 1996 40 yrs.
202 Centreport Drive Greensboro, NC 169,548 1990 40 yrs.
4000 Piedmont Parkway High Point, NC 122,232 1988 40 yrs.
1730 Stebbins Drive Houston, TX 217,699 1973 40 yrs.
5911-5925 Richard Street Jacksonville, FL 206,188 1977 40 yrs.
8383-8385 Baycenter Road Jacksonville, FL 229,451 1973 40 yrs.
8775 Baypine Road Jacksonville, FL 466,088 1989 40 yrs.
8539 Western Way Jacksonville, FL 673,736 1987 40 yrs.
6255 Lake Gray Boulevard Jacksonville, FL 679,901 1987 40 yrs.
6600-6660 Suemac Place Jacksonville, FL 722,196 1973 40 yrs.
6800-6850 Suemac Place Jacksonville, FL 428,359 1973 40 yrs.
8665,8667,8669 Baypine Road Jacksonville, FL 852,564 1987 40 yrs.
8540 Baycenter Road Jacksonville, FL 402,468 1984 40 yrs.
1200 Gulf Life Drive Jacksonville, FL 4,378,882 1984 40 yrs.
8400 Baymeadows Way Jacksonville, FL 477,358 1987 40 yrs.
8614 Baymeadows Way Jacksonville, FL 240,238 1986 40 yrs.
5941-5975 Richard Street Jacksonville, FL 486,171 1978 40 yrs.
7970 Bayberry Road Jacksonville, FL 343,613 1978 40 yrs.
6000-6030 Bowdendale Avenue Jacksonville, FL 595,909 1979 40 yrs.
7898 Baymeadows Way Jacksonville, FL 669,970 1979 40 yrs.
5977-6607 Richard Street Jacksonville, FL 758,810 1980 40 yrs.
7910 & 7948 Baymeadows Way Jacksonville, FL 861,007 1980 40 yrs.
7954 & 7960 Baymeadows Way Jacksonville, FL 877,689 1982 40 yrs.
8787 Baypine Road Jacksonville, FL 10,219,370 1990 40 yrs.
7077 Bonneval Road Jacksonville, FL 530,100 1988 40 yrs.
4190 Belfort Road Jacksonville, FL 556,333 1986 40 yrs.
8011, 8021, 8031 Phillips Highway Jacksonville, FL 198,751 1987 40 yrs.
7020 AC Skinner Parkway Jacksonville, FL 38,045 1996 40 yrs.
7040 AC Skinner Parkway Jacksonville, FL 92,338 1996 40 yrs.
11777 Central Highway Jacksonville, FL 283,406 1985 40 yrs.
7016 AC Skinner Parkway Jacksonville, FL 5,139 1996 40 yrs.
4001,4051,4101 Fowler Avenue Tampa, FL 898,330 1987 40 yrs.
5501-5502 Pioneer Park Boulevard Tampa, FL 106,279 1981 40 yrs.
5690-5694 Crenshaw Street Tampa, FL 88,086 1979 40 yrs.
3102,3104,3110 Cherry Palm Drive Tampa, FL 111,647 1986 40 yrs.
-59-
<PAGE>
Accumulated
Depreciation Date of Depreciable
Project City @ 12/31/95 Construction Life (years)
- -------------------------------------- ------------------- ------------ ------------ ------------
8401-8408 Benjamin Road Tampa, FL 112,282 1986 40 yrs.
3501 Riga Blvd Tampa, FL 31,891 1987 40 yrs.
111 Kelsey Lane Tampa, FL 6,094 1990 40 yrs.
2 Kings Hill Avenue West Malling, UK 9,864 1940 40 yrs.
50 Gibson Drive West Malling, UK 392,960 1996 40 yrs.
50 Kings Hill Avenue West Malling, UK - 1996 40 yrs.
25 Kings Hill Avenue West Malling, UK 17,900 1996 40 yrs.
-------------
Subtotal Operating Real Estate $ 119,151,189
=============
DEVELOPMENT PROPERTIES
3000 Horizon Blvd King of Prussia, PA $ - 1996 N/A
8801 Tinicum Boulevard Philadelphia, PA - 1996 N/A
50 Morehall Road Malvern, PA - 1996 N/A
231 Lake Drive New Castle, DE - 1995 N/A
15 Boulden Circle New Castle, DE - 1996 N/A
404 Lippincott Drive Marlton, NJ - 1996 N/A
402 Lippincott Drive Marlton, NJ - 1996 N/A
1455 Valley Center Parkway Bethlehem, PA - 1995 N/A
1650 Valley Center Parkway Bethlehem, PA - 1996 N/A
1660 Valley Center Parkway Bethlehem, PA - 1996 N/A
Nestle Way Allentown, PA - 1996 N/A
Southpoint Pkwy Jacksonville, FL - 1996 N/A
7018 AC Skinner Parkway Jacksonville, FL - 1996 N/A
5900 Eastport Boulevard Richmond, VA - 1995 N/A
5251 Concourse Drive Roanoke, VA - 1995 N/A
501 Liberty Way Chester, VA - 1996 N/A
13033 Kingston Ave Chester, VA - 1996 N/A
5701-5799 Eastport Blvd Richmond, VA - 1996 N/A
Centreport III Greensboro, NC - 1995 N/A
Federal Ridge III - Distr Bldg Greensboro, NC - 1996 N/A
Federal Ridge III - Flex Bldg Greensboro, NC - 1996 N/A
6532 Judge Adams Road Whitsette, NC - 1996 N/A
----------
Subtotal Development in Progress $ -
==========
LAND HELD FOR DEVELOPMENT
Chelsea Business Park Land Boothwyn, PA - 1988 N/A
132 Welsh Road Horsham, PA - 1995 N/A
Three Country View Road Malvern, PA - 1995 N/A
550 Lapp Road Malvern, PA - 1995 N/A
South Commerce Way Land Bethlehem, PA - 1996 N/A
Cedar Hollow Road Land Malvern, PA - 1996 N/A
Walnut Grove Land Horsham, PA - 1996 N/A
3604 Horizon Blvd King of Prussia, PA - 1996 N/A
3606 Horizon Blvd King of Prussia, PA - 1996 N/A
Swedes Run Business Park Land Delran, NJ - 1992 N/A
Marlton Executive Park Land Marlton, NJ - 1994 N/A
Commodore 295 Logan Twp., NJ - 1995 N/A
Marlton Executive Park Land Marlton, NJ - 1996 N/A
200 Exeter Court Bridgeport, NJ - 1996 N/A
17 Boulden Circle New Castle, DE - 1987 N/A
Lehigh Valley Corporate Center Land Bethlehem, PA - 1987 N/A
Lehigh Valley West Lots 13,14,15 Allentown, PA - 1995 N/A
Valleypointe Land Richmond, VA - 1995 N/A
Fairgrounds IRS Land Richmond, VA - 1995 N/A
Rivers' Bend Land Chesterfield, VA - 1995 N/A
Oakleys Center Land Richmond, VA - 1996 N/A
Technology Pointe Land Glen Allen, VA - 1996 N/A
Woodlands Center Land Sandston, VA - 1996 N/A
Mendenhall Land High Point, NC - 1995 N/A
6532 Judge Adams Road Whitsette, NC - 1996 N/A
Southpoint Business Park Land Jacksonville, FL - 1994 N/A
Liberty Business Park Land Jacksonville, FL - 1995 N/A
7024 AC Skinner Parkway Jacksonville, FL - 1996 N/A
7014 AC Skinner Parkway Jacksonville, FL - 1996 N/A
Crenshaw Street Tampa, FL - 1995 N/A
Silo Bend Land Tampa, FL - 1996 N/A
Silo Bend Land Tampa, FL - 1996 N/A
------------
Subtotal Land Held for Development $ -
============
TOTAL ALL PROPERTIES $119,151,189
============
* Denotes property is collateralized under the Line of Credit with G.E. Capital
** Denotes property is collateralized under mortgages with Nationwide, Principal Mutual and American
General totalling $146.7 million
*** Denotes property is collateralized under Line of Credit with Bank of Boston with a capacity of
$80.0 million. Properties currently collateralized allow the Company to borrow up to $25.0 million.
**** Rouse leases land from Kent County Council.
</TABLE>
-60-
<PAGE>
SCHEDULE III
LIBERTY PROPERTY TRUST
REAL ESTATE AND ACCUMULATED DEPRECIATION
(In thousands)
A summary of activity for real estate and accumulated depreciation is as
follows:
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1996 <F1> 1995 <F1> 1994 <F2>
--------- --------- ---------
REAL ESTATE:
Balance at beginning of year $ 920,230 $ 586,789 $ 432,970
Additions 268,066 333,441 153,819
Disposition of property (9,583) -- --
---------- --------- ---------
Balance at end of year $1,178,713 $ 920,230 $ 586,789
========== ========= =========
ACCUMULATED DEPRECIATION:
Balance at beginning of year $ 94,183 $ 74,508 $ 62,532
Depreciation expense 24,968 19,675 11,976
---------- --------- ---------
Balance at end of year $ 119,151 $ 94,183 $ 74,508
========== ========= =========
<F1> Liberty Property Trust
<F2> Liberty Property Trust and Rouse Group Combined
-61-
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To The Partners
Liberty Property Limited Partnership
We have audited the accompanying consolidated balance sheets of Liberty
Property Limited Partnership ("the Operating Partnership") as of
December 31, 1996 and 1995, and the related consolidated statements of
operations, owners' equity, and cash flows for each of the two years in
the period ended December 31, 1996, and the period June 23, 1994 through
December 31, 1994. We have also audited the combined statements of
operations, owners' deficit and cash flows of the Rouse Group for the
period January 1, 1994 through June 22, 1994. Our audits also included
the financial statement schedule listed in the Index at Item 14(a).
These financial statements and schedule are the responsibility of the
Operating Partnership's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Liberty Property Limited Partnership at December 31, 1996 and 1995, the
consolidated results of Liberty Property Limited Partnership's
operations and cash flows for each of the two years in the period ended
December 31, 1996 and for the period June 23, 1994 through December 31,
1994, and the combined results of the Rouse Group's operations and cash
flows for the period January 1, 1994 through June 22, 1994, in
conformity with generally accepted accounting principles. Also, in our
opinion, the related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents
fairly in all material respects the information set forth therein.
Philadelphia, Pennsylvania ERNST & YOUNG LLP
February 17, 1997
-62-
<PAGE>
CONSOLIDATED BALANCE SHEETS OF LIBERTY PROPERTY LIMITED PARTNERSHIP
(IN THOUSANDS)
DECEMBER 31,
-------------------------
1996 1995
---------- ----------
ASSETS
Real estate:
Land and land improvements $ 140,196 $ 108,723
Buildings and improvements 908,835 715,908
Less accumulated depreciation (119,151) (94,183)
---------- ---------
Operating real estate 929,880 730,448
Development in progress 85,628 67,021
Land held for development 44,054 28,578
---------- ---------
Net real estate 1,059,562 826,047
Cash and cash equivalents 19,612 10,629
Accounts receivable 8,707 5,608
Deferred financing and leasing costs,
net of accumulated amortization
(1995, $30,985; 1994, $24,007) 27,013 26,363
Prepaid expenses and other assets 37,718 29,455
---------- ---------
Total assets $1,152,612 $ 898,102
========== =========
LIABILITIES
Mortgage loans $ 240,803 $ 172,115
Subordinated debentures 171,214 229,900
Line of credit 266,692 71,894
Accounts payable 6,294 4,577
Accrued interest 7,411 9,439
Dividend payable 14,248 12,668
Other liabilities 28,923 20,835
---------- ---------
Total liabilities 735,585 521,428
OWNERS' EQUITY
General partner's equity 375,532 335,521
Limited partners' equity 41,495 41,153
---------- ---------
Total owners' equity 417,027 376,674
---------- ---------
Total liabilities and owners' equity $1,152,612 $ 898,102
========== =========
See accompanying notes.
-63-
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS OF LIBERTY PROPERTY LIMITED PARTNERSHIP
AND COMBINED STATEMENTS OF OPERATIONS OF THE ROUSE GROUP
(IN THOUSANDS)
<CAPTION>
LIBERTY PROPERTY LIMITED PARTNERSHIP ROUSE GROUP
------------------------------------------ -----------
JANUARY 1,
YEAR ENDED YEAR ENDED JUNE 23, TO 1994 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, JUNE 22,
1996 1995 1994 1994
------------ ------------ ------------ ----------
<S> <C> <C> <C> <C>
REVENUE
Rental $ 112,841 $ 89,163 $ 34,698 $ 26,416
Operating expense reimbursement 35,886 24,604 9,057 8,148
Management fees 1,340 734 536 688
Interest and other 4,198 2,540 2,347 1,132
------------ ----------- --------- -----------
Total revenue 154,265 117,041 46,638 36,384
OPERATING EXPENSES
Rental property 29,624 20,010 7,577 7,606
Real estate taxes 11,229 9,304 3,800 2,767
General and administrative 8,023 5,212 2,273 2,439
Depreciation and amortization 28,203 22,518 8,294 6,438
------------ ----------- --------- -----------
Total operating expenses 77,079 57,044 21,944 19,250
------------ ----------- --------- -----------
Operating income 77,186 59,997 24,694 17,134
Premium on debenture conversions 1,027 - - -
Interest expense 38,528 37,688 13,826 20,417
------------ ----------- --------- -----------
Income (loss) before extra-
ordinary item 37,631 22,309 10,868 (3,283)
Extraordinary item - Gain on
extinguishment of debt - - 52,677 3,084
------------ ----------- --------- -----------
Net income (loss) $ 37,631 $ 22,309 $ 63,545 $ (199)
============ =========== ========= ===========
Net income allocated
to general partner $ 33,740 $ 19,466 $ 55,881 $ (199)
Net income allocated
to limited partners 3,891 2,843 7,664 -
============ =========== =========== ===========
</TABLE>
See accompanying notes.
-64-
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF OWNERS' EQUITY OF
LIBERTY PROPERTY LIMITED PARTNERSHIP AND
COMBINED STATEMENTS OF OWNERS' DEFICIT OF THE ROUSE GROUP
(IN THOUSANDS)
<CAPTION>
GENERAL LIMITED TOTAL OWNERS'
PARTNER'S PARTNERS' EQUITY
EQUITY EQUITY (DEFICIT)
---------- ---------- -------------
<S> <C> <C> <C>
Owners' deficit at January 1, 1994 $ (150,987)
Distribution to partners (4,941)
Net income from the period January 1, 1994
through June 22, 1994 (199)
------------
Owners' deficit contributed at June 23, 1994 $(156,127) (156,127)
Contributions from partners $ 182,877 202,577 385,454
Distribution to partners (9,091) (24,282) (33,373)
Net income 55,881 7,664 63,545
---------- ---------- ------------
Balance at December 31, 1994 229,667 29,832 259,499
Contribution from partners 131,558 - 131,558
Distribution to partners (45,170) (6,279) (51,449)
Issuance of Operating Partnership Units - 14,757 14,757
Net income 19,466 2,843 22,309
---------- ----------- ------------
Balance at December 31, 1995 335,521 41,153 376,674
Contribution from partners 55,001 1,879 56,880
Distribution to partners (48,730) (5,428) (54,158)
Net income 33,740 3,891 37,631
---------- ----------- ------------
Balance at December 31, 1996 $ 375,532 $ 41,495 $ 417,027
========= ========== ===========
</TABLE>
See accompanying notes.
-65-
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS OF LIBERTY PROPERTY LIMITED PARTNERSHIP
AND COMBINED STATEMENTS OF CASH FLOWS OF THE ROUSE GROUP
(IN THOUSANDS)
<CAPTION>
LIBERTY PROPERTY LIMITED PARTNERSHIP ROUSE GROUP
---------------------------------------- -----------
YEAR ENDED JUNE 23, JANUARY 1,
-------------------------- 1994 TO 1994 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, JUNE 22,
1996 1995 1994 1994
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 37,631 $ 22,309 $ 63,545 $ (199)
Adjustments to reconcile net
income (loss) to net cash pro-
vided by operating activities:
Gain on extinguishment
of debt - - (52,677) (3,084)
Depreciation and amorti-
zation 28,203 22,518 9,544 6,438
Gain on sale (577) - - -
Noncash compensation 704 - - -
Changes in operating assets
and liabilities:
Accounts receivable (3,099) (1,006) (62) (277)
Prepaid expense and other
assets (11,197) (5,595) 463 4,287
Accounts payable 1,717 2,871 (6,060) 586
Accrued interest on exist-
ing debt (2,028) (286) 9,725 55
Other liabilities 8,463 9,641 7,304 (756)
------------ ------------ ------------ -----------
Net cash provided by opera-
ting activities 59,817 50,452 31,782 7,050
------------ ------------ ------------ -----------
INVESTING ACTIVITIES
Investment in properties (223,756) (193,219) (145,144) (4,827)
Investment in development
in progress (18,607) (64,122) (2,899) -
Increase in land held for
development (15,476) (20,367) (1,226) -
(Increase) decrease in de-
ferred leasing costs (7,588) (4,154) (5,004) 2,818
------------ ------------ ------------ -----------
Net cash used in investing
activities (265,427) (281,862) (154,273) (2,009)
------------ ------------ ------------ -----------
FINANCING ACTIVITIES
Proceeds from issuance of
debentures - - 230,000 -
Decrease in restricted cash - - 5,967 6,108
Proceeds from mortgage loans 77,605 91,800 - 16,198
Repayments of mortgage loans (8,917) (7,659) (396,980) (17,078)
Repayments of accrued interest
at formation - - (29,269) -
Proceeds from lines of credit 237,191 167,925 69,000 -
Repayments on line of credit (42,393) (140,031) (25,000) -
Proceeds from notes payable - - - 2,421
Repayment of notes payable - - (25,519) -
Deposits on pending acquisitions 2,593 12,865 (22,700) -
Decrease (increase) in deferred
financing costs 1,092 (707) (20,695) 2,818
Capital contributions - 131,458 385,454 -
-66-
<PAGE>
Distribution to partners (52,578) (38,781) (33,373) (4,941)
------------ ------------ ------------ -----------
Net cash provided by
financing activities 214,593 216,870 136,885 5,526
Increase (decrease) in cash and
cash equivalents 8,983 (14,540) 14,394 10,567
Cash and cash equivalents at
beginning of period 10,629 25,169 10,775 208
------------ ------------ ------------ -----------
Cash and cash equivalents at
end of period $ 19,612 $ 10,629 $ 25,169 $ 10,775
============ =========== =========== ==========
SUPPLEMENTAL DISCLOSURE OF
NONCASH TRANSACTIONS
Write-off of fully depreciated
property and deferred costs $ 487 $ 2,617 $ 6,699 $ -
Acquisition of properties - (55,874) - -
Assumption of mortgage loans - 41,117 - -
Issuance of operating partner-
ship units - 14,757 - -
Noncash compensation 370 - - -
Conversion of subordinated
debentures 55,802 100 - -
============ ============ ============ ===========
</TABLE>
See accompanying notes.
-67-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF LIBERTY PROPERTY LIMITED
PARTNERSHIP AND COMBINED FINANCIAL STATEMENTS OF THE ROUSE GROUP
1. ORGANIZATION
Liberty Property Trust (the "Trust") a self-administered and self-
managed real estate investment trust (a "REIT"), was formed in the State
of Maryland on March 28, 1994 and commenced operations on June 23, 1994
upon completion of its initial public offering of 20,987,500 Common
Shares of Beneficial Interest (the "Share Offering"). The Trust
conducts all of its operations, including leasing, property management
and other services through Liberty Property Limited Partnership (the
"Operating Partnership" and together with the Trust referred to as the
"Company"). Simultaneous with the closing of the Share Offering, the
Company succeeded to substantially all of the interests of Rouse &
Associates, a general partnership, and certain other entities affiliated
with Rouse & Associates (collectively the "Rouse Group"). At December
31, 1996, the Trust owns an 90.02% interest in the Operating Partnership
as the sole general partner and a .03% interest as a limited partner.
Concurrent with the Share Offering, the Operating Partnership completed
a public offering of $230 million of Exchangeable Subordinated
Debentures (the "Debenture Offering", and, together with the Share
Offering, the "Offerings") due 2001. The Debentures are guaranteed by
the Trust. After June 23, 1995, the Debentures are exchangeable at any
time prior to maturity into Common Shares of Beneficial Interest at a
rate of one share for each $20 outstanding principal amount of
Debentures, subject to certain adjustments. The Company completed a
follow-on offering (the "Follow-on Offering") on November 27, 1995,
which resulted in net proceeds of $131.5 million. The Company provides
leasing, property management, acquisition, development, construction
management, and design management for a portfolio of industrial and
office properties which are located principally within the Southeastern
and Mid-Atlantic United States.
The Rouse Group combined financial statements include accounts of the
properties and entities acquired by the Operating Partnership which are
considered to be entities under common ownership and management.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Principles of Consolidation
The Consolidated Financial Statements of the Company include the
accounts of the Operating Partnership and the Operating Partnership's
direct and indirect subsidiaries including Liberty Property Development
Corporation. The acquisition of the Rouse Group interest by the
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<PAGE>
Operating Partnership was accounted for as a reorganization of entities
under common control which is similar to the accounting for a pooling of
interests. As a result, the operations of the Rouse Group are included
in these Financial Statements. All significant intercompany transactions
and accounts have been eliminated.
Certain amounts from prior periods have been restated to conform to
current year presentation.
Real Estate and Depreciation
The Properties are recorded at the lower of cost or net realizable value
and are depreciated using the straight-line method over their estimated
useful lives. The estimated lives are as follows:
Building and improvements 40 years
Equipment 10 years
Tenant improvements Term of the related lease
Cash Equivalents
Highly liquid investments with a maturity of three months or less when
purchased are classified as cash equivalents. The carrying amount of
these assets approximates their fair market value.
Revenues
The Company earns rental income under operating leases with tenants.
Rental income is recognized on a straight-line basis over the applicable
lease term.
Deferred Financing and Leasing Costs
Costs incurred in connection with financing or leasing are capitalized
and amortized over the term of the related loan or lease. Amortization
of deferred financing costs is reported as interest expense.
Income Taxes
In conformity with the Internal Revenue Code and applicable state and
local tax statutes, taxable income or loss of the Operating Partnership
is required to be reported in the tax returns of the partners in
accordance with the terms of the Partnership Agreement and, accordingly,
no provision has been made in the accompanying financial statements for
any federal, state, or local income taxes.
3. REAL ESTATE
At December 31, 1996 and 1995, the Company owned and operated industrial
and office properties within suburban mixed use developments or business
parks. The carrying value of these properties by type is as follows (in
thousands):
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<PAGE>
<TABLE>
<CAPTION>
LAND BUILDINGS
AND LAND AND ACCUMULATED
IMPROVEMENTS IMPROVEMENTS TOTAL DEPRECIATION
------------ ------------ --------- ------------
<S> <C> <C> <C> <C>
1996:
Industrial properties $ 85,459 $ 517,272 $ 602,731 $ 62,557
Office Properties 54,737 391,563 446,300 56,594
--------- --------- ---------- --------
1996 Total $ 140,196 $ 908,835 $1,049,031 $119,151
========= ========= ========== ========
1995:
Industrial properties $ 67,373 $ 427,369 $ 494,742 $ 50,907
Office properties 41,350 288,539 329,889 43,276
--------- --------- ---------- --------
1995 Total $ 108,723 $ 715,908 $ 824,631 $ 94,183
========= ========= ========== ========
</TABLE>
Depreciation expense was $24,968 in 1996, $19,675 in 1995, and $11,976
in 1994.
The Company has commenced development on 22 properties, which upon
completion are expected to comprise approximately 3.0 million square
feet of leasable space. As of December 31, 1996 approximately $85.6
million has been expended for the development of these projects and an
additional $68.2 million is required for completion.
4. RELATED PARTY TRANSACTIONS
An affiliated company provides construction services to the Company.
Amounts paid to this affiliate were $29,717,000 in 1996, $6,245,000 in
1995, and $2,583,000 in 1994.
During 1995, three properties were purchased from partnerships
affiliated with Rouse & Associates not included in the Rouse Group. The
Rouse principals received no financial consideration for the purchase.
Pursuant to agreements, the Company has been retained by an affiliate
(Rouse Kent Limited) to provide development, management and other
services. For the years ended December 31, 1996 and December 31, 1995,
and the period from June 23, 1994 to December 31, 1994, the fees for
these services were $600,000, $600,000 and $453,000, respectively. At
December 31, 1995, the Company had a $250,000 receivable from Rouse Kent
Limited for these management and other services. Additionally, the
Company committed to loans in 1996 to two affiliates (Rouse Kent
Development Limited and 1 Tower View Limited) for development projects.
At December 31, 1996, the balance of these notes receivable was $7.4
million.
5. MORTGAGE LOANS, SUBORDINATED DEBENTURES AND LINES OF CREDIT
Long term indebtedness consists generally of mortgage loans,
subordinated debentures and Lines of Credit. The average annualized
interest rates for the years ended December 31, 1996, 1995, and 1994,
were approximately 7.6%, 7.8%, and 8.0%, respectively. Interest expense
-70-
<PAGE>
for the years ended December 31, 1996, 1995, and 1994, aggregated
$38,528,000, $37,688,000, and $34,243,000, respectively. Interest costs
during these periods of $7,708,000, $3,475,000, and $190,000 were
capitalized. Cash paid for interest for the years ended December 31,
1996, 1995, and 1994 was $35,995,000, $33,202,000, and $51,232,000,
respectively.
Mortgage loans with maturities ranging from 1997 to 2013 (weighted
average life 8 years) are collateralized by and in some instances cross
collateralized by properties with a book value of $314.0 million. The
interest rates on $230.4 million of mortgage loans are fixed and range
from 6% to 10%. Interest rates on $10.4 million of mortgage loans float
with LIBOR or prime and are subject to certain caps. The weighted
average interest rate on the mortgage loans is 7.7% and the weighted
average life is 8 years.
The aggregate maturities of the mortgage loans outstanding are as
follows (in thousands):
1997 $ 7,065
1998 10,936
1999 19,031
2000 29,717
2001 12,555
Thereafter 161,499
--------
TOTAL $240,803
========
The Debentures are due on June 23, 2001 and are exchangeable for shares
of the Trust at a rate of one share for each $20 outstanding principal
amount of Debentures, subject to certain adjustments. The initial
interest rate on the Debentures was 8% and increases with increases in
the dividend payment on the Company's Common Shares of Beneficial
Interest. At the current $.41 per share per quarter dividend payment
rate, the effective interest rate on the Debentures is 8.2%. During the
year ended December 31, 1996, the Company paid sums aggregating $1.0
million to facilitate the conversion of $58.7 million of Debentures into
2,934,300 common shares. During the year ended December 31, 1996, $2.9
million of related deferred financing costs were written off through
additional paid-in capital.
The Lines of Credit are composed of two secured lines of credit (the
"$250 million Line of Credit" and the "$80 million Line of Credit").
The $250 million Line of Credit is secured and is due on June 15, 1998
at which time it may be converted into a two year term loan with the
payment of a conversion fee equal to 1/2% of the then outstanding
balance. As of December 31, 1996, the $250 million Line of Credit was
fully collateralized and $241.7 million was outstanding. The interest
rate on the $250 million Line of Credit is 30-day LIBOR plus 1.75%
(7.13% and 7.75% at December 31, 1996 and 1995, respectively). Other
normal and customary fees apply including an unused line fee. The $250
million Line of Credit is recourse to the Company only with respect to
50% of the outstanding principal thereof and is otherwise non-recourse
-71-
<PAGE>
subject to certain conditions. At December 31, 1996, 109 properties
with a book value of $387.6 million collateralized the $250 million Line
of Credit. During 1996, the Company closed on an $80 million Line of
Credit. The $80 million Line of Credit is secured and is due on
December 13, 1998. At any time prior to December 13, 1998, maturity may
be extended for one year subject to certain conditions and the payment
of an extension fee equal to 1/4% of the total commitment. As of
December 31, 1996, collateral had been approved to enable the Company to
borrow up to $56.0 million, of which $25.0 million was outstanding. The
interest rate on the $80 million Line of Credit is 90-day LIBOR plus
1.60% (7.13% at December 31, 1996). At December 31, 1996, 23 properties
with a book value of $64.5 million, and 2 development properties with a
book value of $3.9 million collateralized the $80 million Line of
Credit.
In 1994, the Company recognized a gain on extinguishment of debt which
resulted primarily from the payment of mortgage notes and notes payable
including penalties and accrued interest at a discount with $451.8
million in proceeds obtained from the issuance of shares and the close
of the Debenture offering.
The fair value of the Debentures at December 31, 1996 was $220.4 million
based on the closing bid price of the security on the New York Stock
Exchange. The fair values of the mortgages and Lines of Credit were
estimated using discounted cash flow analysis, based on the Company's
estimated incremental borrowing rate at December 31, 1996, for similar
types of borrowing arrangements. The carrying values of the mortgages
and the Lines of Credit approximate their fair values.
6. LEASING ACTIVITY
Future minimum rental payments due from tenants under non-cancellable
operating leases as of December 31, 1996 are as follows (in thousands):
1997 $119,777
1998 107,177
1999 91,805
2000 68,264
2001 40,441
Thereafter 126,211
--------
TOTAL $553,675
========
In addition to minimum rental payments, tenants pay for their pro rata
share of specified operating expenses. These amounts are included as
operating expense reimbursement in the accompanying statements of
operations.
7. COMMITMENTS AND CONTINGENCIES
All of the Properties have been subject to Phase I Environmental
Assessments ("Phase I Assessments") performed and obtained in
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<PAGE>
contemplation of the formation or acquisitions. The Phase I Assessments
consisted of, among other activities, a visual inspection of each
Property and its neighborhood and a check of pertinent public records.
The Phase I Assessments did not reveal, nor is the Company aware of, any
non-compliance with environmental laws, environmental liability or other
environmental claim that the Company believes would likely have a
material adverse effect on the Company.
The Trust is not a party to any material legal proceedings. In the
ordinary course of business, the Operating Partnership is party to
ordinary routine litigation incidental to its business and in addition
it is covered by insurance.
The Company has entered into an interest rate swap agreement to hedge
against possible fluctuations in interest rates in anticipation of a
$120 million debt issuance in 1997 for a five to seven year term. The
securities underlying the interest rate swap agreement, with a notional
amount of $114.5 million, are 5.875% US Treasury securities maturing on
February 15, 2004. Gain or loss on this hedging transaction is being
deferred and will be amortized as adjustments to interest expense
commencing on the date of issuance of the debt and over the term of the
debt. At December 31, 1996, the Company had one swap transaction
outstanding, and approximately $645,000 in unrealized gain has been
deferred.
8. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of quarterly results of operations for the
two years ended December 31, 1996 and 1995 (in thousands):
<TABLE>
<CAPTION>
QUARTER ENDED
----------------------------------------------------------------------------------
DEC. 31, SEPT. 30, JUNE 30, MARCH 31, DEC. 31, SEPT. 30, JUNE 30, MARCH 31,
1996 1996 1996 1996 1995 1995 1995 1995
-------- --------- -------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rental revenue $ 30,822 $ 28,921 $ 27,146 $ 25,952 $ 24,203 $ 23,206 $ 22,261 $ 19,493
======== ======== ======== ======== ======== ========= ======== =========
Operating income 20,884 19,657 18,557 18,088 16,760 15,637 14,441 13,159
======== ======== ======== ======== ======== ========= ======== =========
Income before extraordinary item 10,630 9,313 8,734 8,954 6,525 5,591 5,428 4,765
======== ======== ======== ======== ======== ========= ======== =========
Net income 10,630 9,313 8,734 8,954 6,525 5,591 5,428 4,765
======== ======== ======== ======== ======== ========= ======== =========
</TABLE>
9. PRO FORMA INFORMATION (UNAUDITED)
The following unaudited pro forma information has been prepared assuming
the Secondary Offering described in Note 1 and the acquisitions of 54
properties acquired in 1995 and 33 properties acquired in 1996 had
occurred at January 1, 1995. The 1995 acquisitions were acquired for a
total investment of $202.3 million and the 1996 acquisitions were
acquired for a total investment of $132.9 million.
-73-
<PAGE>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1995
-------- --------
(IN THOUSANDS)
------------------------
Total revenues $172,503 $155,537
Net income 34,229 28,619
This pro forma information is not necessarily indicative of what actual
results of operations of the Company would have been, assuming the
Company had completed the Secondary Offering as of January 1, 1995, nor
do they purport to represent the results of operations of the Company
for future periods.
-74-
<PAGE>
<TABLE>
LIBERTY PROPERTY LIMITED PARTNERSHIP
REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1996
<CAPTION>
Cost
Capitalized
Initial Cost Subsequent
------------------------- to
Project City Encumbrances Land Building Acquisition
- -------------------------------------- ------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATING REAL ESTATE
10,20 Liberty Boulevard Malvern, PA $ - $ 724,058 $ - $ 4,704,961
420 Lapp Road Malvern, PA ** 1,054,418 - 6,204,241
1 Chelsea Parkway Boothwyn, PA * 245,082 - 2,613,641
3 Chelsea Parkway Boothwyn, PA * 288,654 - 2,693,647
747 Dresher Road Horsham, PA * 1,607,238 - 3,939,268
45-67 Great Valley Parkway Malvern, PA ** 795,143 - 2,744,403
1180 Church Road Lansdale, PA - 2,357,045 10,041,340 4,388,188
40 Valley Stream Parkway Malvern, PA ** 322,918 - 2,185,822
50 Valley Stream Parkway Malvern, PA *** 323,971 - 2,375,079
20 Valley Stream Parkway Malvern, PA ** 465,539 - 4,989,163
800 Town Center Drive Langhorne, PA * 1,617,150 - 8,766,575
1610 Medical Drive Pottstown, PA * 211,639 - 2,492,497
9, 15 Great Valley Parkway Malvern, PA ** 1,837,050 - 14,959,932
257-275 Great Valley Parkway Malvern, PA ** 504,611 - 4,319,860
300 Technology Drive Malvern, PA *** 368,626 - 1,259,207
277-293 Great Valley Parkway Malvern, PA *** 530,729 - 1,888,752
311 Technology Drive Malvern, PA *** 397,131 - 2,186,606
325 Technology Drive Malvern, PA ** 376,444 - 1,851,241
7 Great Valley Parkway Malvern, PA ** 176,435 - 4,109,751
55 Valley Stream Parkway Malvern, PA *** 215,005 - 2,835,622
65 Valley Stream Parkway Malvern, PA ** 381,544 - 4,478,264
508 Lapp Road Malvern, PA ** 331,392 - 1,700,134
10 Valley Stream Parkway Malvern, PA ** 509,075 - 2,624,471
333 Phoenixville Pike Malvern, PA 2,191,808 523,530 - 3,053,475
1566 Medical Drive Pottstown, PA * 203,083 - 1,828,288
30 Great Valley Parkway Malvern, PA *** 128,126 - 355,565
75 Great Valley Parkway Malvern, PA *** 143,074 - 419,401
27-43 Great Valley Parkway Malvern, PA ** 448,775 - 2,070,060
77-123 Great Valley Parkway Malvern, PA ** 887,664 - 4,228,300
260 Great Valley Parkway Malvern, PA ** 203,916 - 849,426
256 Great Valley Parkway Malvern, PA ** 161,098 - 1,888,761
205 Great Valley Parkway Malvern, PA ** 1,368,259 - 9,422,329
12,14,16 Great Valley Parkway Malvern, PA - 130,689 - 1,162,378
155 Great Valley Parkway Malvern, PA ** 625,147 - 2,197,599
333 Technology Drive Malvern, PA ** 157,249 - 2,310,848
510 Lapp Road Malvern, PA ** 356,950 - 862,790
181 Wheeler Court Langhorne, PA * 260,000 1,940,000 61,328
1100 Wheeler Way Langhorne, PA * 150,000 1,100,000 83,716
60 Morehall Road Malvern, PA * 865,424 9,285,000 165,540
905 Airport Road West Chester, PA * 1,715,000 5,185,000 207,858
16 Cabot Boulevard Langhorne, PA ** 648,889 5,851,112 74,975
1 Country View Road Malvern, PA 2,869,709 400,000 3,600,000 391,538
2151 Cabot Boulevard Langhorne, PA ** 384,100 3,456,900 262,768
170 South Warner Road King of Prussia, PA * 547,800 3,137,400 2,040,734
190 South Warner Road King of Prussia, PA * 552,200 3,162,600 1,146,805
507 Prudential Road Horsham, PA ** 644,900 5,804,100 230,380
100 Witmer Road Horsham, PA 10,000,000 3,102,784 - 9,671,115
3100 Horizon Blvd King of Prussia, PA * 601,956 - 1,984,766
3300 Horizon Blvd King of Prussia, PA * 566,403 - 3,251,926
3500 Horizon Blvd King of Prussia, PA * 1,204,839 - 2,498,090
200 Chester Field Parkway Malvern, PA *** 495,893 2,739,093 36,670
767 Electronic Drive Horsham, PA * 1,229,685 - 2,928,020
5 Country View Road Malvern, PA ** 785,168 4,678,632 129,524
3200 Horizon Blvd King of Prussia, PA *** 928,637 - 4,261,364
111-195 Witmer Road Horsham, PA * 407,005 3,129,058 95,268
2460 General Armistead Ave Norristown, PA - 117,316 1,064,442 23,605
2490 General Armistead Ave Norristown, PA - 66,288 601,433 20,900
300 Welsh Road Horsham, PA * 180,459 1,441,473 44,054
400 Welsh Road Horsham, PA * 282,493 2,256,508 540,786
440 East Swedesford Road Wayne, PA * 717,001 4,816,121 861,041
460 East Swedesford Road Wayne, PA * 705,317 4,737,487 264,645
2 Walnut Grove Drive Horsham, PA *** 1,281,870 7,767,374 429
200 Gibralter Road Horsham, PA - 638,513 5,811,323 -
220 Gibralter Road Horsham, PA - 629,944 5,733,228 -
240 Gibralter Road Horsham, PA - 629,944 5,733,234 -
151 S. Warner Road Wayne, PA - 1,218,086 6,937,866 -
931 South Matlack Street West Chester, PA * 855,865 5,284,065 738,185
14 Lee Boulevard Malvern, PA ** 664,282 - 6,895,903
500 Chester Field Parkway Malvern, PA ** 472,364 - 2,777,020
300-400 Chester Field Parkway Malvern, PA ** 937,212 - 4,335,779
1805 Underwood Boulevard Delran, NJ * 188,610 612,736 17,699
150 Mid-Atlantic Parkway West Deptford, NJ * 86,968 304,672 131,758
18 Boulden Circle New Castle, DE * 188,144 - 3,735,480
501 Delran Parkway Delran, NJ * 182,192 - 2,410,505
600 Delran Parkway Delran, NJ * 368,843 - 5,945,538
1607 Imperial Way West Deptford, NJ * 286,413 - 2,751,965
1 Boulden Circle New Castle, DE * 88,397 - 1,337,860
31-55 Read's Way New Castle, DE * 901,391 - 5,549,247
3 Boulden Circle New Castle, DE * 119,802 - 2,110,440
-75-
<PAGE>
Cost
Capitalized
Initial Cost Subsequent
------------------------- to
Project City Encumbrances Land Building Acquisition
- -------------------------------------- ------------------- ------------ ------------ ------------ ------------
5 Boulden Circle New Castle, DE * 219,641 - 3,509,612
601 Delran Parkway Delran, NJ * 193,794 - 1,635,208
51 Haddonfield Road Cherry Hill, NJ * 251,443 - 9,015,059
57 Read's Way New Castle, DE 2,452,040 253,119 - 2,781,118
1370 Imperial Way West Deptford, NJ * 297,000 4,373,155 19,539
8 Stow Road Marlton, NJ * 172,600 1,704,436 77,520
10 Stow Road Marlton, NJ * 147,000 1,451,536 9,799
12 Stow Road Marlton, NJ * 103,300 1,021,036 139,288
14 Stow Road Marlton, NJ * 93,100 920,336 130,753
1300 Metropolitan Avenue West Deptford, NJ * 220,000 1,980,000 36,101
701A Route 73 South Marlton, NJ * 264,387 3,772,000 1,322,487
701C Route 73 South Marlton, NJ * 84,949 1,328,000 194,171
1008 Astoria Boulevard Cherry Hill, NJ * 27,120 424,880 290,548
1475 Imperial Way West Deptford, NJ * 54,000 846,000 181,048
3000 Atrium Way Mt. Laurel, NJ - 500,000 4,500,000 2,143,849
750 Cardinal Drive Pureland, NJ * 230,000 2,070,000 459,439
11000, 15000, 17000 Commerce Parkway Mt. Laurel, NJ * 455,100 4,394,900 487,002
12000, 14000 Commerce Parkway Mt. Laurel, NJ * 361,800 3,285,817 131,515
16000, 18000 Commerce Parkway Mt. Laurel, NJ * 289,700 2,512,683 137,303
406 Lippincott Drive Marlton, NJ * 321,455 1,539,871 517,017
234 High Hill Road Bridgeport, NJ - 249,472 1,477,515 229,224
100 Arlington Boulevard Bridgeport, NJ *** 6,368 - 4,503,477
100 Berkeley Drive Swedesboro, NJ - 395,160 1,915,215 159,830
301 Lippincott Drive Marlton, NJ * 1,069,837 4,780,163 337,732
303 Lippincott Drive Marlton, NJ * 1,069,837 4,780,163 270,954
510 Sharptown Road Bridgeport, NJ - 125,410 1,072,683 32,615
901 Route 73 (901 Building) Marlton, NJ * 334,411 2,733,314 76,607
Four Greentree Center Marlton, NJ - 449,400 3,074,850 206,375
512 Sharptown Road Bridgeport, NJ - 180,468 1,543,617 42,013
263 Quigley Blvd New Castle, DE *** 170,386 1,302,739 35,812
34 Blevins Drive New Castle, DE *** 195,932 1,498,061 35,472
104 Gaither Drive Mt Laurel, NJ *** 132,075 1,151,988 33,827
2 Lukens Drive New Castle, DE - 169,050 1,290,150 11,627
1655 Valley Center Parkway Bethlehem, PA 1,821,799 214,431 - 1,687,501
6560 Stonegate Drive Allentown, PA 1,756,160 458,281 - 2,310,959
6370 Hedgewood Drive Allentown, PA 2,482,280 540,795 - 2,944,004
6390 Hedgewood Drive Allentown, PA 1,784,480 707,203 - 2,496,381
1495 Valley Center Parkway Bethlehem, PA 4,166,495 434,640 - 3,586,015
6350 Hedgewood Drive Allentown, PA 2,619,840 360,027 - 3,098,286
6330 Hedgewood Drive Allentown, PA * 531,268 - 4,175,469
1550 Valley Center Parkway Bethlehem, PA * 196,954 - 3,152,216
1560 Valley Center Parkway Bethlehem, PA * 240,069 - 3,778,113
6580 Snowdrift Road Allentown, PA * 388,328 - 2,432,638
1510 Valley Center Parkway Bethlehem, PA 3,379,289 312,209 - 3,230,687
1530 Valley Center Parkway Bethlehem, PA * 211,747 - 2,567,189
6540 Stonegate Drive Allentown, PA * 422,042 - 3,559,873
974 Marcon Boulevard Allentown, PA * 143,500 - 2,051,264
964 Marcon Boulevard Allentown, PA 1,089,933 138,816 - 1,549,509
764 Roble Road Allentown, PA 792,660 141,069 - 794,167
3174 Airport Road Allentown, PA * 98,986 - 1,073,621
2196 Avenue C Allentown, PA * 101,159 - 1,181,487
2202 Hanger Place Allentown, PA * 137,439 - 1,286,863
2201 Hanger Place Allentown, PA * 128,454 - 1,395,959
954 Marcon Boulevard Allentown, PA * 103,665 - 896,843
57 South Commerce Way Allentown, PA * 390,839 2,701,161 159,033
754 Roble Road Allentown, PA * 162,115 1,731,885 52,615
894 Marcon Boulevard Allentown, PA * 117,134 1,048,866 20,997
744 Roble Road Allentown, PA * 159,771 1,734,229 55,874
944 Marcon Boulevard Allentown, PA * 118,521 1,435,479 72,756
1685 Valley Center Parkway Allentown, PA * 244,029 - 2,050,791
6520 Stonegate Drive Allentown, PA *** 453,315 - 1,769,467
7437 Industrial Boulevard Allentown, PA * 717,488 5,022,413 1,330,295
2041 Avenue C Allentown, PA ** 213,599 1,095,217 48,607
2124 Avenue C Allentown, PA ** 289,197 1,039,835 44,709
7339 Industrial Boulevard Allentown, PA - 1,187,776 - 5,351,535
7384 Penn Drive Allentown, PA ** 651,696 2,286,518 250,188
7144 Daniels Drive Allentown, PA * 2,390,217 2,342,761 3,398,953
7620 Cetronia Road Allentown, PA * 1,091,806 3,851,456 78,222
939 Marcon Blvd Allentown, PA ** 2,220,414 4,524,393 732,775
100 Brodhead Road Allentown, PA ** 429,416 2,919,588 92,431
1640 Valley Center Parkway Bethlehem, PA *** 359,000 - 2,355,682
83 South Commerce Way Bethlehem, PA *** 143,661 888,128 145,914
85 South Commerce Way Bethlehem, PA *** 236,708 987,949 77,106
87 South Commerce Way Bethlehem, PA *** 253,886 1,062,881 74,250
7339 Industrial Blvd Allentown, PA - 2,670,849 13,307,408 173,209
12000,001,040 Indian Creek Court Beltsville, MD 6,572,600 2,659,431 - 10,031,986
180,190 Cochrane Drive Annapolis, MD * 3,670,256 - 16,077,835
8280 Patuxent Range Drive Columbia, MD * 181,601 - 1,270,967
8300 Professional Place Landover, MD * 650,621 - 4,232,306
8100 Professional Place Landover, MD * 543,948 - 3,468,575
8100,8200,8300 Corporate Drive Landover, MD * 1,771,135 - 5,162,964
7178-80 Columbia Gateway Columbia, MD * 1,569,237 4,786,887 155,245
8200-40 Professional Place Landover, MD - 588,946 1,796,152 278,515
-76-
<PAGE>
Cost
Capitalized
Initial Cost Subsequent
------------------------- to
Project City Encumbrances Land Building Acquisition
- -------------------------------------- ------------------- ------------ ------------ ------------ ------------
8400 Corporate Drive Landover, MD - 2,502,485 7,622,698 2,081,802
8730 Bollman Place Columbia, MD ** 624,131 4,576,964 77,839
9101,9111,9115 Guilford Road Columbia, MD * 758,951 - 2,966,933
9125,9135,9145 Guilford Road Columbia, MD * 900,154 - 5,009,493
10 South Third Street Richmond, VA - 27,970 127,419 45,962
1751 Bluehills Drive Roanoke, VA * 1,063,728 8,500,677 101,951
4300 Carolina Avenue Richmond, VA *** 2,007,717 14,927,608 257,556
301 Hill Carter Parkway Richmond, VA ** 659,456 4,836,010 63,204
4001 Carolina Avenue Richmond, VA - 29,443 215,914 7,861
5600-5626 Eastport Boulevard Richmond, VA ** 489,941 3,592,900 117,655
5650-5674 Eastport Boulevard Richmond, VA ** 644,384 4,025,480 66,204
5700 Eastport Boulevard Richmond, VA ** 408,729 2,697,348 43,619
11020 Hull Street Road Richmond, VA - 139,887 637,261 8,938
3432 Holland Road Virginia Beach, VA - 173,527 790,515 11,088
3001 Hungary Springs Road Richmond, VA ** 136,270 620,785 (33,852)
7760 Shrader Road Richmond, VA ** 187,971 756,313 13,906
7740 Shrader Road Richmond, VA ** 81,200 369,911 21,346
4880 Cox Road Richmond, VA ** 743,898 4,499,807 1,142,066
5162 Valleypointe Parkway Roanoke, VA ** 551,483 2,612,312 35,237
4101-4127 Carolina Avenue Richmond, VA 1,350,645 310,854 2,279,597 29,793
4201-4261 Carolina Avenue Richmond, VA 3,087,188 693,203 5,083,493 84,633
4263-4299 Carolina Avenue Richmond, VA 1,929,492 256,203 2,549,649 21,570
4301-4335 Carolina Avenue Richmond, VA - 223,696 1,640,435 87,487
4337-4379 Carolina Avenue Richmond, VA 2,122,441 325,303 2,385,557 185,032
4501-4549 Carolina Avenue Richmond, VA 2,738,913 486,166 3,565,211 49,013
4551-4593 Carolina Avenue Richmond, VA 2,771,780 474,360 3,478,646 74,254
4601-4643 Carolina Avenue Richmond, VA 2,771,780 652,455 4,784,675 253,442
4545-4583 Carolina Avenue Richmond, VA 2,191,131 404,616 2,967,187 785,810
4447-4491 Carolina Avenue Richmond, VA 2,897,770 454,056 2,729,742 45,935
4401-4445 Carolina Avenue Richmond, VA ** 615,038 4,510,272 61,364
12 S. Third Street Richmond, VA - 40,539 184,682 6,125
9601 Cosner Drive Fredericksburg, VA ** 475,262 3,917,234 148,902
315 Cardiff Valley Road Knoxville, TN * 443,305 2,950,903 42,487
2300 East Parham Road Richmond, VA - 221,947 1,011,088 14,181
1347 Diamond Springs Road Virginia Beach, VA ** 436,898 3,203,919 46,194
5221 Valleypark Drive Roanoke, VA 1,308,683 285,008 998,370 223,829
5228 Valleypointe Parkway Roanoke, VA 1,125,067 218,663 796,133 21,685
5238 Valleypark Drive Roanoke, VA 1,311,913 416,375 1,896,832 77,099
5601-5659 Eastport Boulevard Richmond, VA ** 705,660 - 4,708,044
4717-4729 Eubank Road Richmond, VA ** 449,447 3,294,697 103,705
4263F-N. Carolina Ave Richmond, VA - 91,476 - 1,573,730
4200 Oakleys Court Richmond, VA - 459,090 2,468,454 25,824
1821 Battery Dantzler Road Chester, VA - 394,212 3,035,113 8,120
5000 Cox Road Glen Allen, VA - 770,214 3,685,248 10,217
510 Eastpark Court Sandston, VA - 261,961 2,110,874 28,047
520 Eastpark Court Sandston, VA - 486,118 4,083,582 28,111
4523 Green Point Drive High Point, NC 900,000 234,564 - 1,904,487
4501 Green Point Drive High Point, NC 1,153,942 319,289 - 2,195,589
4500 Green Point Drive High Point, NC 946,057 230,622 - 1,983,226
2427 Penny Road High Point, NC 6,989,672 1,165,664 - 6,187,028
4524 Green Point Drive High Point, NC ** 182,810 - 2,002,336
4328, 4336 Federal Drive High Point, NC 6,382,465 521,122 - 7,243,516
200 Centreport Drive Greensboro, NC ** 331,400 3,768,600 189,762
4344 Federal Drive High Point, NC ** 484,001 - 2,324,644
202 Centreport Drive Greensboro, NC ** 549,948 5,360,462 144,251
4000 Piedmont Parkway High Point, NC ** 592,885 4,825,615 96,960
1730 Stebbins Drive Houston, TX * 143,258 - 412,792
5911-5925 Richard Street Jacksonville, FL * 275,582 - 508,059
8383-8385 Baycenter Road Jacksonville, FL * 63,703 - 527,320
8775 Baypine Road Jacksonville, FL * 906,804 - 2,892,795
8539 Western Way Jacksonville, FL * 328,133 - 3,108,958
6255 Lake Gray Boulevard Jacksonville, FL * 813,067 - 3,292,174
6600-6660 Suemac Place Jacksonville, FL * 210,804 - 1,656,841
6800-6850 Suemac Place Jacksonville, FL * 121,077 - 963,417
8665,8667,8669 Baypine Road Jacksonville, FL * 966,552 - 3,910,492
8540 Baycenter Road Jacksonville, FL 2,232,541 445,603 - 1,371,536
1200 Gulf Life Drive Jacksonville, FL * 1,028,864 - 16,465,604
8400 Baymeadows Way Jacksonville, FL * 557,682 - 2,325,708
8614 Baymeadows Way Jacksonville, FL * 290,291 - 1,114,160
5941-5975 Richard Street Jacksonville, FL * 583,622 - 1,113,225
7970 Bayberry Road Jacksonville, FL * 127,520 - 830,100
6000-6030 Bowdendale Avenue Jacksonville, FL * 275,475 - 1,511,461
7898 Baymeadows Way Jacksonville, FL * 561,802 - 1,971,967
5977-6607 Richard Street Jacksonville, FL * 180,033 - 1,565,681
7910 & 7948 Baymeadows Way Jacksonville, FL * 210,299 - 2,678,714
7954 & 7960 Baymeadows Way Jacksonville, FL - 291,312 - 2,933,358
8787 Baypine Road Jacksonville, FL * 2,076,306 - 34,505,962
7077 Bonneval Road Jacksonville, FL * 768,000 5,789,000 634,571
4190 Belfort Road Jacksonville, FL * 821,000 5,866,000 783,106
8011, 8021, 8031 Phillips Highway Jacksonville, FL * 626,250 3,548,750 207,290
7020 AC Skinner Parkway Jacksonville, FL ** 398,257 - 2,425,290
7040 AC Skinner Parkway Jacksonville, FL ** 706,934 - 3,068,915
11777 Central Highway Jacksonville, FL - 92,207 429,997 765,464
-77-
<PAGE>
Cost
Capitalized
Initial Cost Subsequent
------------------------- to
Project City Encumbrances Land Building Acquisition
- -------------------------------------- ------------------- ------------ ------------ ------------ ------------
7016 AC Skinner Parkway Jacksonville, FL - 597,181 - 2,082,723
4001,4051,4101 Fowler Avenue Tampa, FL * 1,299,310 - 4,614,336
5501-5502 Pioneer Park Boulevard Tampa, FL *** 162,000 1,613,000 62,622
5690-5694 Crenshaw Street Tampa, FL *** 181,923 1,812,496 30,171
3102,3104,3110 Cherry Palm Drive Tampa, FL * 503,767 2,787,585 39,332
8401-8408 Benjamin Road Tampa, FL * 789,651 4,454,648 148,808
3501 Riga Blvd Tampa, FL - 617,289 3,048,379 -
111 Kelsey Lane Tampa, FL - 359,540 1,461,850 (12,644)
2 Kings Hill Avenue West Malling, UK - 785,565 - 4,769,535
50 Gibson Drive West Malling, UK - **** - 3,938,732
50 Kings Hill Avenue West Malling, UK - 1,215,608 - 12,847,475
25 Kings Hill Avenue West Malling, UK 5,955,250 1,105,380 - 5,373,958
----------- ------------ ------------ ------------
Subtotal Operating Real Estate $94,145,823 $138,795,268 $409,308,408 $500,927,804
DEVELOPMENT PROPERTIES
3000 Horizon Blvd King of Prussia, PA - 1,191,449 - 165,446
8801 Tinicum Boulevard Philadelphia, PA - 2,474,031 - 9,978,814
50 Morehall Road Malvern, PA - 849,576 - 2,394,626
231 Lake Drive New Castle, DE - 623,043 - 3,389,970
15 Boulden Circle New Castle, DE - 406,064 - 1,591,996
404 Lippincott Drive Marlton, NJ - 131,896 - 113,901
402 Lippincott Drive Marlton, NJ - 131,896 - 116,587
1455 Valley Center Parkway Bethlehem, PA - 670,290 - 3,203,693
1650 Valley Center Parkway Bethlehem, PA *** 359,000 - 1,934,036
1660 Valley Center Parkway Bethlehem, PA *** 359,000 - 1,298,082
Nestle Way Allentown, PA - 8,065,500 - 22,358,668
Southpoint Pkwy Jacksonville, FL - - - 4,998,930
7018 AC Skinner Parkway Jacksonville, FL - 840,996 - 2,177,968
5900 Eastport Boulevard Richmond, VA - 676,661 - 4,080,611
5251 Concourse Drive Roanoke, VA - 2,813 - 1,623,331
501 Liberty Way Chester, VA - 400,664 - 238,629
13033 Kingston Ave Chester, VA - 376,584 - 182,745
5701-5799 Eastport Blvd Richmond, VA - 694,644 - 70,946
Centreport III Greensboro, NC - 826,237 - 358,302
Federal Ridge III - Distr Bldg Greensboro, NC - 282,996 - 1,863,556
Federal Ridge III - Flex Bldg Greensboro, NC - 143,661 - 711,676
6532 Judge Adams Road Whitsette, NC - 354,903 - 2,913,681
------------ ------------ ------------ ------------
Subtotal Development in Progress $ - $ 19,861,904 $ - $ 65,766,194
============ ============ ============ ============
LAND HELD FOR DEVELOPMENT
Chelsea Business Park Land Boothwyn, PA - 1,236,146 - 68,331
132 Welsh Road Horsham, PA - 1,333,642 - 461,892
Three Country View Road Malvern, PA - 912,890 - 127,247
550 Lapp Road Malvern, PA - 380,891 - 124,888
South Commerce Way Land Bethlehem, PA - 320,000 - 20,268
Cedar Hollow Road Land Malvern, PA - 1,429,473 - 60,723
Walnut Grove Land Horsham, PA - 3,435,695 - 171,005
3604 Horizon Blvd King of Prussia, PA - 763,885 - (364,523)
3606 Horizon Blvd King of Prussia, PA - 390,091 - 402,550
Swedes Run Business Park Land Delran, NJ - 1,057,204 - 47,413
Marlton Executive Park Land Marlton, NJ - 69,402 - 142,777
Commodore 295 Logan Twp., NJ - 3,850,613 - 1,736,551
Marlton Executive Park Land Marlton, NJ - 550,664 - 99,808
200 Exeter Court Bridgeport, NJ - 270,880 - 66,093
17 Boulden Circle New Castle, DE - 374,982 - 16,657
Lehigh Valley Corporate Center Land Bethlehem, PA - 2,729,998 - (678,998)
Lehigh Valley West Lots 13,14,15 Allentown, PA - 3,473,120 - 723,883
Valleypointe Land Richmond, VA - 326,654 - 581,190
Fairgrounds IRS Land Richmond, VA - 100,000 - 18,591
Rivers' Bend Land Chesterfield, VA - 1,068,507 - 1,468,222
Oakleys Center Land Richmond, VA - 228,757 - 11,176
Technology Pointe Land Glen Allen, VA - 443,485 - 11,639
Woodlands Center Land Sandston, VA - 1,390,058 - 34,188
Mendenhall Land High Point, NC - 2,927,363 - 737,276
6532 Judge Adams Road Whitsette, NC - 242,386 - 183,908
Southpoint Business Park Land Jacksonville, FL - 756,000 - (355,016)
Liberty Business Park Land Jacksonville, FL - 1,379,053 - 467,107
7024 AC Skinner Parkway Jacksonville, FL - 839,554 - (271,775)
7014 AC Skinner Pkwy Jacksonville, FL - 574,198 - 129,749
Crenshaw Street Tampa, FL - 67,510 - 16,597
Silo Bend Land Tampa, FL - 4,359,613 - 84
Silo Bend Land Tampa, FL - 511,463 - 10
----------- ------------ ------------ ------------
Subtotal Land Held for Development $ - $ 37,794,177 $ - $ 6,259,511
=========== ============ ============ ============
Total All Properties $94,145,823 $196,451,349 $409,308,408 $572,953,509
=========== ============ ============ ============
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<PAGE>
* Denotes property is collateralized under the Line of Credit with G.E. Capital
** Denotes property is collateralized under mortgages with Nationwide, Principal Mutual and American General
totalling $146.7 million
*** Denotes property is collateralized under Line of Credit with Bank of Boston with a capacity of $80.0 million.
Properties currently collateralized allow the Company to borrow up to $25.0 million.
**** Rouse leases land from Kent County Council.
</TABLE>
-79-
<PAGE>
<TABLE>
LIBERTY PROPERTY LIMITED PARTNERSHIP
REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1996
<CAPTION>
Gross Amount Carried
At Close of Period
-------------------------------------------
Land and Building and Total
Project City Improvements Improvements @ 12/31/96
- -------------------------------------- ------------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
10,20 Liberty Boulevard Malvern, PA $ 645,318 $ 4,783,701 $ 5,429,019
420 Lapp Road Malvern, PA 1,049,243 6,209,416 7,258,659
1 Chelsea Parkway Boothwyn, PA 245,735 2,612,988 2,858,723
3 Chelsea Parkway Boothwyn, PA 209,177 2,773,124 2,982,301
747 Dresher Road Horsham, PA 1,611,977 3,934,529 5,546,506
45-67 Great Valley Parkway Malvern, PA 795,831 2,743,715 3,539,546
1180 Church Road Lansdale, PA 2,387,191 14,399,383 16,786,573
40 Valley Stream Parkway Malvern, PA 323,792 2,184,948 2,508,740
50 Valley Stream Parkway Malvern, PA 371,068 2,327,982 2,699,050
20 Valley Stream Parkway Malvern, PA 466,413 4,988,289 5,454,702
800 Town Center Drive Langhorne, PA 1,617,803 8,765,922 10,383,725
1610 Medical Drive Pottstown, PA 212,413 2,491,723 2,704,136
9, 15 Great Valley Parkway Malvern, PA 1,837,878 14,959,104 16,796,982
257-275 Great Valley Parkway Malvern, PA 505,458 4,319,013 4,824,471
300 Technology Drive Malvern, PA 374,497 1,253,336 1,627,833
277-293 Great Valley Parkway Malvern, PA 531,534 1,887,947 2,419,481
311 Technology Drive Malvern, PA 348,099 2,235,638 2,583,737
325 Technology Drive Malvern, PA 385,693 1,841,992 2,227,685
7 Great Valley Parkway Malvern, PA 177,317 4,108,869 4,286,186
55 Valley Stream Parkway Malvern, PA 215,818 2,834,809 3,050,627
65 Valley Stream Parkway Malvern, PA 382,361 4,477,447 4,859,808
508 Lapp Road Malvern, PA 263,116 1,768,410 2,031,526
10 Valley Stream Parkway Malvern, PA 465,135 2,668,411 3,133,546
333 Phoenixville Pike Malvern, PA 524,229 3,052,776 3,577,005
1566 Medical Drive Pottstown, PA 203,827 1,827,544 2,031,371
30 Great Valley Parkway Malvern, PA 128,783 354,908 483,691
75 Great Valley Parkway Malvern, PA 143,811 418,664 562,475
27-43 Great Valley Parkway Malvern, PA 449,447 2,069,388 2,518,835
77-123 Great Valley Parkway Malvern, PA 888,359 4,227,605 5,115,964
260 Great Valley Parkway Malvern, PA 212,768 840,574 1,053,342
256 Great Valley Parkway Malvern, PA 161,949 1,887,910 2,049,859
205 Great Valley Parkway Malvern, PA 1,369,003 9,421,585 10,790,588
12,14,16 Great Valley Parkway Malvern, PA 131,517 1,161,550 1,293,067
155 Great Valley Parkway Malvern, PA 626,068 2,196,678 2,822,746
333 Technology Drive Malvern, PA 90,952 2,377,145 2,468,097
510 Lapp Road Malvern, PA 325,415 894,325 1,219,740
181 Wheeler Court Langhorne, PA 263,490 1,997,838 2,261,328
1100 Wheeler Way Langhorne, PA 151,500 1,182,216 1,333,716
60 Morehall Road Malvern, PA 884,974 9,430,990 10,315,964
905 Airport Road West Chester, PA 1,735,012 5,372,846 7,107,858
16 Cabot Boulevard Langhorne, PA 649,743 5,925,232 6,574,975
1 Country View Road Malvern, PA 406,421 3,985,117 4,391,538
2151 Cabot Boulevard Langhorne, PA 389,990 3,713,778 4,103,768
170 South Warner Road King of Prussia, PA 555,911 5,170,024 5,725,935
190 South Warner Road King of Prussia, PA 560,373 4,301,232 4,861,605
507 Prudential Road Horsham, PA 652,919 6,026,461 6,679,380
100 Witmer Road Horsham, PA 3,133,783 9,640,116 12,773,899
3100 Horizon Blvd King of Prussia, PA 611,435 1,975,287 2,586,722
3300 Horizon Blvd King of Prussia, PA 687,878 3,130,450 3,818,328
3500 Horizon Blvd King of Prussia, PA 1,223,875 2,479,054 3,702,929
200 Chester Field Parkway Malvern, PA 495,893 2,775,763 3,271,656
767 Electronic Drive Horsham, PA 1,241,970 2,915,735 4,157,705
5 Country View Road Malvern, PA 786,235 4,807,089 5,593,324
3200 Horizon Blvd King of Prussia, PA 1,209,009 3,980,991 5,190,001
111-195 Witmer Road Horsham, PA 407,205 3,224,126 3,631,331
2460 General Armistead Ave Norristown, PA 117,316 1,088,047 1,205,363
2490 General Armistead Ave Norristown, PA 66,288 622,333 688,621
300 Welsh Road Horsham, PA 180,459 1,485,527 1,665,986
400 Welsh Road Horsham, PA 282,493 2,797,293 3,079,786
440 East Swedesford Road Wayne, PA 717,001 5,677,163 6,394,164
460 East Swedesford Road Wayne, PA 705,317 5,002,133 5,707,450
2 Walnut Grove Drive Horsham, PA 1,266,546 7,783,127 9,049,673
200 Gibralter Road Horsham, PA 638,513 5,811,323 6,449,836
220 Gibralter Road Horsham, PA 629,944 5,733,228 6,363,172
240 Gibralter Road Horsham, PA 629,944 5,733,234 6,363,178
151 S. Warner Road Wayne, PA 1,218,086 6,937,866 8,155,952
931 South Matlack Street West Chester, PA 815,015 6,063,100 6,878,115
14 Lee Boulevard Malvern, PA 665,053 6,895,132 7,560,185
500 Chester Field Parkway Malvern, PA 473,139 2,776,245 3,249,384
300-400 Chester Field Parkway Malvern, PA 931,212 4,341,779 5,272,991
1805 Underwood Boulevard Delran, NJ 196,901 622,144 819,045
150 Mid-Atlantic Parkway West Deptford, NJ 88,153 435,245 523,398
18 Boulden Circle New Castle, DE 198,062 3,725,562 3,923,624
501 Delran Parkway Delran, NJ 184,162 2,408,535 2,592,697
600 Delran Parkway Delran, NJ 372,719 5,941,662 6,314,381
1607 Imperial Way West Deptford, NJ 288,280 2,750,098 3,038,378
-80-
<PAGE>
Gross Amount Carried
At Close of Period
-------------------------------------------
Land and Building and Total
Project City Improvements Improvements @ 12/31/96
- -------------------------------------- ------------------- ------------ ------------ ------------
1 Boulden Circle New Castle, DE 93,309 1,332,948 1,426,257
31-55 Read's Way New Castle, DE 972,159 5,478,479 6,450,638
3 Boulden Circle New Castle, DE 126,701 2,103,541 2,230,242
5 Boulden Circle New Castle, DE 232,274 3,496,979 3,729,253
601 Delran Parkway Delran, NJ 193,336 1,635,666 1,829,002
51 Haddonfield Road Cherry Hill, NJ 248,326 9,018,176 9,266,502
57 Read's Way New Castle, DE 352,736 2,681,501 3,034,237
1370 Imperial Way West Deptford, NJ 298,010 4,391,684 4,689,694
8 Stow Road Marlton, NJ 172,945 1,781,611 1,954,556
10 Stow Road Marlton, NJ 147,318 1,461,017 1,608,335
12 Stow Road Marlton, NJ 103,618 1,160,006 1,263,624
14 Stow Road Marlton, NJ 93,418 1,050,772 1,144,190
1300 Metropolitan Avenue West Deptford, NJ 221,218 2,014,883 2,236,101
701A Route 73 South Marlton, NJ 271,743 5,087,131 5,358,874
701C Route 73 South Marlton, NJ 96,161 1,510,959 1,607,120
1008 Astoria Boulevard Cherry Hill, NJ 32,698 709,850 742,548
1475 Imperial Way West Deptford, NJ 58,606 1,022,442 1,081,048
3000 Atrium Way Mt. Laurel, NJ 512,018 6,631,831 7,143,849
750 Cardinal Drive Pureland, NJ 236,190 2,523,249 2,759,439
11000, 15000, 17000 Commerce Parkway Mt. Laurel, NJ 456,465 4,880,537 5,337,002
12000, 14000 Commerce Parkway Mt. Laurel, NJ 362,855 3,416,277 3,779,132
16000, 18000 Commerce Parkway Mt. Laurel, NJ 290,545 2,649,141 2,939,686
406 Lippincott Drive Marlton, NJ 327,554 2,050,789 2,378,343
234 High Hill Road Bridgeport, NJ 250,445 1,705,766 1,956,211
100 Arlington Boulevard Bridgeport, NJ 374,836 4,135,009 4,509,845
100 Berkeley Drive Swedesboro, NJ 401,254 2,068,951 2,470,205
301 Lippincott Drive Marlton, NJ 1,069,837 5,117,895 6,187,732
303 Lippincott Drive Marlton, NJ 1,069,837 5,051,117 6,120,954
510 Sharptown Road Bridgeport, NJ 125,410 1,105,298 1,230,708
901 Route 73 (901 Building) Marlton, NJ 334,411 2,809,921 3,144,332
Four Greentree Center Marlton, NJ 450,558 3,280,067 3,730,625
512 Sharptown Road Bridgeport, NJ 180,468 1,585,630 1,766,098
263 Quigley Blvd New Castle, DE 170,727 1,338,210 1,508,937
34 Blevins Drive New Castle, DE 196,273 1,533,192 1,729,465
104 Gaither Drive Mt Laurel, NJ 134,461 1,183,429 1,317,890
2 Lukens Drive New Castle, DE 169,118 1,301,709 1,470,827
1655 Valley Center Parkway Bethlehem, PA 215,095 1,686,837 1,901,932
6560 Stonegate Drive Allentown, PA 437,122 2,332,118 2,769,240
6370 Hedgewood Drive Allentown, PA 515,707 2,969,092 3,484,799
6390 Hedgewood Drive Allentown, PA 670,819 2,532,765 3,203,584
1495 Valley Center Parkway Bethlehem, PA 258,014 3,762,641 4,020,655
6350 Hedgewood Drive Allentown, PA 360,691 3,097,622 3,458,313
6330 Hedgewood Drive Allentown, PA 499,720 4,207,017 4,706,737
1550 Valley Center Parkway Bethlehem, PA 188,320 3,160,851 3,349,171
1560 Valley Center Parkway Bethlehem, PA 229,301 3,788,881 4,018,182
6580 Snowdrift Road Allentown, PA 367,377 2,453,589 2,820,966
1510 Valley Center Parkway Bethlehem, PA 312,873 3,230,023 3,542,896
1530 Valley Center Parkway Bethlehem, PA 212,491 2,566,445 2,778,936
6540 Stonegate Drive Allentown, PA 422,730 3,559,185 3,981,915
974 Marcon Boulevard Allentown, PA 144,248 2,050,516 2,194,764
964 Marcon Boulevard Allentown, PA 139,480 1,548,845 1,688,325
764 Roble Road Allentown, PA 141,746 793,490 935,236
3174 Airport Road Allentown, PA 98,986 1,073,621 1,172,607
2196 Avenue C Allentown, PA 107,307 1,175,339 1,282,646
2202 Hanger Place Allentown, PA 138,127 1,286,175 1,424,302
2201 Hanger Place Allentown, PA 129,142 1,395,271 1,524,413
954 Marcon Boulevard Allentown, PA 104,452 896,056 1,000,508
57 South Commerce Way Allentown, PA 395,459 2,855,574 3,251,033
754 Roble Road Allentown, PA 163,735 1,782,880 1,946,615
894 Marcon Boulevard Allentown, PA 118,304 1,068,693 1,186,997
744 Roble Road Allentown, PA 161,371 1,788,503 1,949,874
944 Marcon Boulevard Allentown, PA 119,711 1,507,045 1,626,756
1685 Valley Center Parkway Allentown, PA 198,482 2,096,338 2,294,820
6520 Stonegate Drive Allentown, PA 948,395 1,274,387 2,222,782
7437 Industrial Boulevard Allentown, PA 726,651 6,343,544 7,070,195
2041 Avenue C Allentown, PA 213,879 1,143,544 1,357,423
2124 Avenue C Allentown, PA 289,529 1,084,212 1,373,741
7339 Industrial Boulevard Allentown, PA 1,197,121 5,342,190 6,539,311
7384 Penn Drive Allentown, PA 652,118 2,536,284 3,188,402
7144 Daniels Drive Allentown, PA 1,579,169 6,552,762 8,131,931
7620 Cetronia Road Allentown, PA 1,093,724 3,927,761 5,021,485
939 Marcon Blvd Allentown, PA 2,220,548 5,257,034 7,477,582
100 Brodhead Road Allentown, PA 429,456 3,011,979 3,441,435
1640 Valley Center Parkway Bethlehem, PA 190,728 2,523,954 2,714,682
83 South Commerce Way Bethlehem, PA 212,744 964,959 1,177,703
85 South Commerce Way Bethlehem, PA 237,078 1,064,685 1,301,763
87 South Commerce Way Bethlehem, PA 253,886 1,137,131 1,391,017
7339 Industrial Blvd Allentown, PA 2,670,673 13,480,792 16,151,465
12000,001,040 Indian Creek Court Beltsville, MD 2,698,195 9,993,222 12,691,417
180,190 Cochrane Drive Annapolis, MD 3,752,293 15,995,798 19,748,091
8280 Patuxent Range Drive Columbia, MD 181,601 1,270,967 1,452,568
8300 Professional Place Landover, MD 670,450 4,212,477 4,882,927
-81-
<PAGE>
Gross Amount Carried
At Close of Period
-------------------------------------------
Land and Building and Total
Project City Improvements Improvements @ 12/31/96
- -------------------------------------- ------------------- ------------ ------------ ------------
8100 Professional Place Landover, MD 543,948 3,468,575 4,012,523
8100,8200,8300 Corporate Drive Landover, MD 1,771,135 5,162,964 6,934,099
7178-80 Columbia Gateway Columbia, MD 1,571,105 4,940,264 6,511,369
8200-40 Professional Place Landover, MD 589,932 2,073,681 2,663,613
8400 Corporate Drive Landover, MD 2,505,184 9,701,801 12,206,985
8730 Bollman Place Columbia, MD 626,269 4,652,665 5,278,934
9101,9111,9115 Guilford Road Columbia, MD 765,953 2,959,931 3,725,884
9125,9135,9145 Guilford Road Columbia, MD 920,439 4,989,208 5,909,647
10 South Third Street Richmond, VA 27,970 173,381 201,351
1751 Bluehills Drive Roanoke, VA 1,063,728 8,602,628 9,666,356
4300 Carolina Avenue Richmond, VA 2,009,136 15,183,745 17,192,881
301 Hill Carter Parkway Richmond, VA 659,456 4,899,214 5,558,670
4001 Carolina Avenue Richmond, VA 29,443 223,775 253,218
5600-5626 Eastport Boulevard Richmond, VA 489,941 3,710,555 4,200,496
5650-5674 Eastport Boulevard Richmond, VA 644,384 4,091,684 4,736,068
5700 Eastport Boulevard Richmond, VA 408,729 2,740,967 3,149,696
11020 Hull Street Road Richmond, VA 139,887 646,199 786,086
3432 Holland Road Virginia Beach, VA 173,527 801,603 975,130
3001 Hungary Springs Road Richmond, VA 136,270 586,933 723,203
7760 Shrader Road Richmond, VA 187,971 770,219 958,190
7740 Shrader Road Richmond, VA 81,200 391,257 472,457
4880 Cox Road Richmond, VA 743,898 5,641,873 6,385,771
5162 Valleypointe Parkway Roanoke, VA 551,483 2,647,549 3,199,032
4101- 4127 Carolina Avenue Richmond, VA 310,854 2,309,390 2,620,244
4201-4261 Carolina Avenue Richmond, VA 693,203 5,168,126 5,861,329
4263-4299 Carolina Avenue Richmond, VA 256,203 2,571,219 2,827,422
4301-4335 Carolina Avenue Richmond, VA 223,696 1,727,922 1,951,618
4337-4379 Carolina Avenue Richmond, VA 325,203 2,570,689 2,895,892
4501-4549 Carolina Avenue Richmond, VA 486,166 3,614,224 4,100,390
4551-4593 Carolina Avenue Richmond, VA 474,360 3,552,900 4,027,260
4601-4643 Carolina Avenue Richmond, VA 652,455 5,038,117 5,690,572
4545-4583 Carolina Avenue Richmond, VA 404,616 3,752,997 4,157,613
4447-4491 Carolina Avenue Richmond, VA 454,056 2,775,677 3,229,733
4401-4445 Carolina Avenue Richmond, VA 615,038 4,571,636 5,186,674
12 S. Third Street Richmond, VA 40,539 190,807 231,346
9601 Cosner Drive Fredericksburg, VA 476,262 4,065,136 4,541,398
315 Cardiff Valley Road Knoxville, TN 443,305 2,993,390 3,436,695
2300 East Parham Road Richmond, VA 221,947 1,025,269 1,247,216
1347 Diamond Springs Road Virginia Beach, VA 436,898 3,250,113 3,687,011
5221 Valleypark Drive Roanoke, VA 285,008 1,222,199 1,507,207
5228 Valleypointe Parkway Roanoke, VA 218,663 817,818 1,036,481
5238 Valleypark Drive Roanoke, VA 416,375 1,973,931 2,390,306
5601-5659 Eastport Boulevard Richmond, VA 720,100 4,693,605 5,413,705
4717-4729 Eubank Road Richmond, VA 452,263 3,395,586 3,847,849
4263F-N. Carolina Ave Richmond, VA 91,599 1,573,607 1,665,206
4200 Oakleys Court Richmond, VA 459,653 2,493,715 2,953,368
1821 Battery Dantzler Road Chester, VA 392,332 3,045,113 3,437,445
5000 Cox Road Glen Allen, VA 771,029 3,694,650 4,465,679
510 Eastpark Court Sandston, VA 262,210 2,138,672 2,400,882
520 Eastpark Court Sandston, VA 486,598 4,111,213 4,597,811
4523 Green Point Drive High Point, NC 223,614 1,915,437 2,139,051
4501 Green Point Drive High Point, NC 320,450 2,194,428 2,514,878
4500 Green Point Drive High Point, NC 231,692 1,982,156 2,213,848
2427 Penny Road High Point, NC 1,168,074 6,184,618 7,352,692
4524 Green Point Drive High Point, NC 183,888 2,001,258 2,185,146
4328, 4336 Federal Drive High Point, NC 825,092 6,939,546 7,764,638
200 Centreport Drive Greensboro, NC 332,017 3,957,745 4,289,762
4344 Federal Drive High Point, NC 173,623 2,635,023 2,808,646
202 Centreport Drive Greensboro, NC 549,679 5,504,982 6,054,661
4000 Piedmont Parkway High Point, NC 592,885 4,922,575 5,515,460
1730 Stebbins Drive Houston, TX 144,016 412,034 556,050
5911-5925 Richard Street Jacksonville, FL 286,335 497,306 783,641
8383-8385 Baycenter Road Jacksonville, FL 65,329 525,694 591,023
8775 Baypine Road Jacksonville, FL 913,264 2,886,335 3,799,599
8539 Western Way Jacksonville, FL 631,558 2,805,533 3,437,091
6255 Lake Gray Boulevard Jacksonville, FL 811,963 3,293,278 4,105,241
6600-6660 Suemac Place Jacksonville, FL 216,014 1,651,631 1,867,645
6800-6850 Suemac Place Jacksonville, FL 125,576 958,918 1,084,494
8665,8667,8669 Baypine Road Jacksonville, FL 1,023,514 3,853,530 4,877,044
8540 Baycenter Road Jacksonville, FL 450,431 1,366,708 1,817,139
1200 Gulf Life Drive Jacksonville, FL 1,035,091 16,459,377 17,494,468
8400 Baymeadows Way Jacksonville, FL 566,370 2,317,020 2,883,390
8614 Baymeadows Way Jacksonville, FL 312,761 1,091,690 1,404,451
5941-5975 Richard Street Jacksonville, FL 585,280 1,111,567 1,696,847
7970 Bayberry Road Jacksonville, FL 129,979 827,641 957,620
6000-6030 Bowdendale Avenue Jacksonville, FL 275,475 1,511,461 1,786,936
7898 Baymeadows Way Jacksonville, FL 568,005 1,965,764 2,533,769
5977-6607 Richard Street Jacksonville, FL 182,747 1,562,967 1,745,714
7910 & 7948 Baymeadows Way Jacksonville, FL 211,449 2,677,564 2,889,013
7954 & 7960 Baymeadows Way Jacksonville, FL 292,667 2,932,003 3,224,670
8787 Baypine Road Jacksonville, FL 2,045,574 34,536,694 36,582,268
7077 Bonneval Road Jacksonville, FL 774,020 6,417,551 7,191,571
-82-
<PAGE>
Gross Amount Carried
At Close of Period
-------------------------------------------
Land and Building and Total
Project City Improvements Improvements @ 12/31/96
- -------------------------------------- ------------------- ------------ ------------ ------------
4190 Belfort Road Jacksonville, FL 827,420 6,642,686 7,470,106
8011, 8021, 8031 Phillips Highway Jacksonville, FL 628,437 3,753,853 4,382,290
7020 AC Skinner Parkway Jacksonville, FL 749,811 2,073,736 2,823,547
7040 AC Skinner Parkway Jacksonville, FL 853,981 2,921,869 3,775,850
11777 Central Highway Jacksonville, FL 143,785 1,143,883 1,287,668
7016 AC Skinner Parkway Jacksonville, FL 602,619 2,077,285 2,679,904
4001,4051,4101 Fowler Avenue Tampa, FL 1,293,206 4,620,440 5,913,646
5501-5502 Pioneer Park Boulevard Tampa, FL 187,884 1,649,738 1,837,622
5690-5694 Crenshaw Street Tampa, FL 181,923 1,842,667 2,024,590
3102,3104,3110 Cherry Palm Drive Tampa, FL 503,767 2,826,917 3,330,684
8401-8408 Benjamin Road Tampa, FL 789,652 4,603,455 5,393,107
3501 Riga Blvd Tampa, FL 617,289 3,048,379 3,665,668
111 Kelsey Lane Tampa, FL 359,540 1,449,206 1,808,746
2 Kings Hill Avenue West Malling, UK 785,565 4,769,535 5,555,100
50 Gibson Drive West Malling, UK 192,270 3,746,462 3,938,732
50 Kings Hill Avenue West Malling, UK 1,216,608 12,846,475 14,063,083
25 Kings Hill Avenue West Malling, UK 1,014,011 5,465,327 6,479,338
------------ ------------ --------------
Subtotal Operating Real Estate $140,195,919 $908,835,565 $1,049,031,484
============ ============ ==============
DEVELOPMENT PROPERTIES
3000 Horizon Blvd King of Prussia, PA $ 943,697 $ 413,198 $ 1,356,895
8801 Tinicum Boulevard Philadelphia, PA 124,062 12,328,783 12,452,845
50 Morehall Road Malvern, PA 1,037,076 2,207,126 3,244,202
231 Lake Drive New Castle, DE 623,043 3,389,969 4,013,012
15 Boulden Circle New Castle, DE 447,065 1,550,995 1,998,060
404 Lippincott Drive Marlton, NJ 131,896 113,901 245,797
402 Lippincott Drive Marlton, NJ 131,896 116,587 248,483
1455 Valley Center Parkway Bethlehem, PA 545,013 3,328,970 3,873,983
1650 Valley Center Parkway Bethlehem, PA 188,896 2,104,140 2,293,036
1660 Valley Center Parkway Bethlehem, PA 188,721 1,468,360 1,657,081
Nestle Way Allentown, PA 8,074,926 22,349,242 30,424,168
Southpoint Pkwy Jacksonville, FL 418,093 4,580,837 4,998,930
7018 AC Skinner Parkway Jacksonville, FL 846,433 2,172,531 3,018,964
5900 Eastport Boulevard Richmond, VA 687,855 4,069,417 4,757,272
5251 Concourse Drive Roanoke, VA 217,247 1,408,897 1,626,144
501 Liberty Way Chester, VA 400,689 238,604 639,293
13033 Kingston Ave Chester, VA 376,584 182,745 559,329
5701-5799 Eastport Blvd Richmond, VA 694,644 70,946 765,590
Centreport III Greensboro, NC 826,237 358,302 1,184,539
Federal Ridge III - Distr Bldg Greensboro, NC 283,368 1,863,183 2,146,551
Federal Ridge III - Flex Bldg Greensboro, NC 132,655 722,682 855,337
6532 Judge Adams Road Whitsette, NC 358,116 2,910,468 3,268,584
------------ ------------ -------------
Subtotal Development in Progress $ 17,678,212 $ 67,949,883 $ 85,628,095
============ ============ =============
LAND HELD FOR DEVELOPMENT
Chelsea Business Park Land Boothwyn, PA $ 1,298,240 $ 6,237 $ 1,304,477
132 Welsh Road Horsham, PA 1,393,613 401,921 1,795,534
Three Country View Road Malvern, PA 914,278 125,859 1,040,137
550 Lapp Road Malvern, PA 388,066 117,713 505,780
South Commerce Way Land Bethlehem, PA 321,502 18,766 340,268
Cedar Hollow Road Land Malvern, PA 1,447,902 42,294 1,490,196
Walnut Grove Land Horsham, PA 3,569,526 37,174 3,606,700
3604 Horizon Blvd King of Prussia, PA 397,178 2,184 399,363
3606 Horizon Blvd King of Prussia, PA 777,764 14,877 792,641
Swedes Run Business Park Land Delran, NJ 1,104,617 - 1,104,617
Marlton Executive Park Land Marlton, NJ 109,687 102,492 212,179
Commodore 295 Logan Twp., NJ 3,766,142 1,821,023 5,587,165
Marlton Executive Park Land Marlton, NJ 550,664 99,808 650,472
200 Exeter Court Bridgeport, NJ 291,902 45,070 336,973
17 Boulden Circle New Castle, DE 385,818 5,821 391,638
Lehigh Valley Corporate Center Land Bethlehem, PA 2,047,058 3,942 2,051,000
Lehigh Valley West Lots 13,14,15 Allentown, PA 3,473,128 723,875 4,197,003
Valleypointe Land Richmond, VA 671,817 236,028 907,844
Fairgrounds IRS Land Richmond, VA 101,539 17,052 118,591
Rivers' Bend Land Chesterfield, VA 1,266,942 1,269,787 2,536,729
Oakleys Center Land Richmond, VA 235,221 4,712 239,933
Technology Pointe Land Glen Allen, VA 445,978 9,146 455,124
Woodlands Center Land Sandston, VA 1,395,665 28,581 1,424,246
Mendenhall Land High Point, NC 3,065,859 598,780 3,664,639
6532 Judge Adams Road Whitsette, NC 242,386 183,908 426,293
Southpoint Business Park Land Jacksonville, FL 353,264 47,720 400,984
Liberty Business Park Land Jacksonville, FL 928,753 917,408 1,846,160
7024 AC Skinner Parkway Jacksonville, FL 539,554 28,224 567,779
7014 AC Skinner Pkwy Jacksonville, FL 579,800 124,147 703,947
-83-
<PAGE>
Gross Amount Carried
At Close of Period
-------------------------------------------
Land and Building and Total
Project City Improvements Improvements @ 12/31/96
- -------------------------------------- ------------------- ------------ ------------ ------------
Crenshaw Street Tampa, FL 74,532 9,575 84,107
Silo Bend Land Tampa, FL 4,359,613 84 4,359,697
Silo Bend Land Tampa, FL 511,463 10 511,473
------------ ------------ ------------
Subtotal Land Held for Development $ 37,009,471 $ 7,044,218 $ 44,053,689
============ ============ ==============
TOTAL ALL PROPERTIES $194,883,602 $983,829,666 $1,178,713,268
============ ============ ==============
* Denotes property is collateralized under the Line of Credit with G.E. Capital
** Denotes property is collateralized under mortgages with Nationwide, Principal Mutual and American General
totalling $146.7 million
*** Denotes property is collateralized under Line of Credit with Bank of Boston with a capacity of $80.0 million.
Properties currently collateralized allow the Company to borrow up to $25.0 million.
**** Rouse leases land from Kent County Council.
</TABLE>
-84-
<PAGE>
<TABLE>
LIBERTY PROPERTY LIMITED PARTNERSHIP
REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1996
<CAPTION>
Accumulated
Depreciation Date of Depreciable
Project City @ 12/31/95 Construction Life (years)
- -------------------------------------- ------------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
10,20 Liberty Boulevard Malvern, PA $ 788,624 1988 40 yrs.
420 Lapp Road Malvern, PA 924,756 1989 40 yrs.
1 Chelsea Parkway Boothwyn, PA 548,134 1988 40 yrs.
3 Chelsea Parkway Boothwyn, PA 481,248 1988 40 yrs.
747 Dresher Road Horsham, PA 691,486 1988 40 yrs.
45-67 Great Valley Parkway Malvern, PA 1,330,691 1974 40 yrs.
1180 Church Road Lansdale, PA 3,244,011 1986 40 yrs.
40 Valley Stream Parkway Malvern, PA 501,252 1987 40 yrs.
50 Valley Stream Parkway Malvern, PA 552,172 1987 40 yrs.
20 Valley Stream Parkway Malvern, PA 1,061,207 1987 40 yrs.
800 Town Center Drive Langhorne, PA 1,862,658 1987 40 yrs.
1610 Medical Drive Pottstown, PA 566,014 1986 40 yrs.
9, 15 Great Valley Parkway Malvern, PA 7,354,674 1986 40 yrs.
257-275 Great Valley Parkway Malvern, PA 1,249,908 1983 40 yrs.
300 Technology Drive Malvern, PA 311,313 1985 40 yrs.
277-293 Great Valley Parkway Malvern, PA 532,345 1984 40 yrs.
311 Technology Drive Malvern, PA 597,650 1984 40 yrs.
325 Technology Drive Malvern, PA 482,887 1984 40 yrs.
7 Great Valley Parkway Malvern, PA 1,062,434 1985 40 yrs.
55 Valley Stream Parkway Malvern, PA 813,199 1983 40 yrs.
65 Valley Stream Parkway Malvern, PA 1,260,290 1983 40 yrs.
508 Lapp Road Malvern, PA 491,766 1984 40 yrs.
10 Valley Stream Parkway Malvern, PA 725,789 1984 40 yrs.
333 Phoenixville Pike Malvern, PA 796,975 1985 40 yrs.
1566 Medical Drive Pottstown, PA 469,589 1985 40 yrs.
30 Great Valley Parkway Malvern, PA 194,877 1975 40 yrs.
75 Great Valley Parkway Malvern, PA 164,208 1977 40 yrs.
27-43 Great Valley Parkway Malvern, PA 863,247 1977 40 yrs.
77-123 Great Valley Parkway Malvern, PA 1,665,852 1978 40 yrs.
260 Great Valley Parkway Malvern, PA 280,697 1979 40 yrs.
256 Great Valley Parkway Malvern, PA 681,544 1980 40 yrs.
205 Great Valley Parkway Malvern, PA 3,066,132 1981 40 yrs.
12,14,16 Great Valley Parkway Malvern, PA 438,530 1982 40 yrs.
155 Great Valley Parkway Malvern, PA 742,491 1981 40 yrs.
333 Technology Drive Malvern, PA 823,514 1987 40 yrs.
510 Lapp Road Malvern, PA 301,181 1983 40 yrs.
181 Wheeler Court Langhorne, PA 124,049 1979 40 yrs.
1100 Wheeler Way Langhorne, PA 72,280 1979 40 yrs.
60 Morehall Road Malvern, PA 594,470 1989 40 yrs.
905 Airport Road West Chester, PA 338,879 1988 40 yrs.
16 Cabot Boulevard Langhorne, PA 345,430 1972 40 yrs.
1 Country View Road Malvern, PA 216,723 1982 40 yrs.
2151 Cabot Boulevard Langhorne, PA 198,591 1982 40 yrs.
170 South Warner Road King of Prussia, PA 452,724 1980 40 yrs.
190 South Warner Road King of Prussia, PA 251,887 1980 40 yrs.
507 Prudential Road Horsham, PA 299,655 1988 40 yrs.
100 Witmer Road Horsham, PA 156,076 1995 40 yrs.
3100 Horizon Blvd King of Prussia, PA 35,831 1995 40 yrs.
3300 Horizon Blvd King of Prussia, PA 92,713 1996 40 yrs.
3500 Horizon Blvd King of Prussia, PA 46,928 1996 40 yrs.
200 Chester Field Parkway Malvern, PA 1,131,622 1989 40 yrs.
767 Electronic Drive Horsham, PA 94,656 1996 40 yrs.
5 Country View Road Malvern, PA 149,756 1985 40 yrs.
3200 Horizon Blvd King of Prussia, PA 22,703 1996 40 yrs.
111-195 Witmer Road Horsham, PA 48,545 1996 40 yrs.
2460 General Armistead Ave Norristown, PA 13,622 1985 40 yrs.
2490 General Armistead Ave Norristown, PA 7,752 1985 40 yrs.
300 Welsh Road Horsham, PA 18,189 1983 40 yrs.
400 Welsh Road Horsham, PA 28,873 1983 40 yrs.
440 East Swedesford Road Wayne, PA 64,162 1988 40 yrs.
460 East Swedesford Road Wayne, PA 65,023 1988 40 yrs.
2 Walnut Grove Drive Horsham, PA 16,427 1989 40 yrs.
200 Gibralter Road Horsham, PA - 1990 40 yrs.
220 Gibralter Road Horsham, PA - 1990 40 yrs.
240 Gibralter Road Horsham, PA - 1990 40 yrs.
151 S. Warner Road Wayne, PA - 1980 40 yrs.
931 South Matlack Street West Chester, PA 1,170,708 1985 40 yrs.
14 Lee Boulevard Malvern, PA 866,089 1988 40 yrs.
500 Chester Field Parkway Malvern, PA 510,986 1988 40 yrs.
300-400 Chester Field Parkway Malvern, PA 795,480 1988 40 yrs.
1805 Underwood Boulevard Delran, NJ 110,301 1973 40 yrs.
150 Mid-Atlantic Parkway West Deptford, NJ 199,579 1973 40 yrs.
18 Boulden Circle New Castle, DE 601,300 1989 40 yrs.
501 Delran Parkway Delran, NJ 467,365 1988 40 yrs.
600 Delran Parkway Delran, NJ 1,059,777 1988 40 yrs.
1607 Imperial Way West Deptford, NJ 927,568 1973 40 yrs.
1 Boulden Circle New Castle, DE 306,780 1986 40 yrs.
31-55 Read's Way New Castle, DE 1,149,943 1986 40 yrs.
3 Boulden Circle New Castle, DE 428,976 1987 40 yrs.
5 Boulden Circle New Castle, DE 651,394 1987 40 yrs.
-85-
<PAGE>
Accumulated
Depreciation Date of Depreciable
Project City @ 12/31/95 Construction Life (years)
- -------------------------------------- ------------------- ------------ ------------ ------------
601 Delran Parkway Delran, NJ 348,123 1988 40 yrs.
51 Haddonfield Road Cherry Hill, NJ 2,003,738 1986 40 yrs.
57 Read's Way New Castle, DE 686,487 1985 40 yrs.
1370 Imperial Way West Deptford, NJ 274,863 1978 40 yrs.
8 Stow Road Marlton, NJ 130,494 1988 40 yrs.
10 Stow Road Marlton, NJ 91,085 1988 40 yrs.
12 Stow Road Marlton, NJ 91,056 1988 40 yrs.
14 Stow Road Marlton, NJ 105,765 1988 40 yrs.
1300 Metropolitan Avenue West Deptford, NJ 113,275 1972 40 yrs.
701A Route 73 South Marlton, NJ 314,011 1987 40 yrs.
701C Route 73 South Marlton, NJ 83,807 1987 40 yrs.
1008 Astoria Boulevard Cherry Hill, NJ 39,635 1973 40 yrs.
1475 Imperial Way West Deptford, NJ 52,150 1976 40 yrs.
3000 Atrium Way Mt. Laurel, NJ 434,433 1987 40 yrs.
750 Cardinal Drive Pureland, NJ 175,604 1989 40 yrs.
11000, 15000, 17000 Commerce Parkway Mt. Laurel, NJ 253,675 1985 40 yrs.
12000, 14000 Commerce Parkway Mt. Laurel, NJ 172,747 1985 40 yrs.
16000, 18000 Commerce Parkway Mt. Laurel, NJ 136,636 1985 40 yrs.
406 Lippincott Drive Marlton, NJ 106,224 1990 40 yrs.
234 High Hill Road Bridgeport, NJ 47,012 1987 40 yrs.
100 Arlington Boulevard Bridgeport, NJ 69,025 1996 40 yrs.
100 Berkeley Drive Swedesboro, NJ 51,932 1990 40 yrs.
301 Lippincott Drive Marlton, NJ 133,557 1988 40 yrs.
303 Lippincott Drive Marlton, NJ 119,831 1988 40 yrs.
510 Sharptown Road Bridgeport, NJ 23,878 1984 40 yrs.
901 Route 73 (901 Building) Marlton, NJ 52,777 1985 40 yrs.
Four Greentree Center Marlton, NJ 48,562 1988 40 yrs.
512 Sharptown Road Bridgeport, NJ 26,449 1984 40 yrs.
263 Quigley Blvd New Castle, DE 8,430 1987 40 yrs.
34 Blevins Drive New Castle, DE 9,684 1987 40 yrs.
104 Gaither Drive Mt Laurel, NJ 2,485 1975 40 yrs.
2 Lukens Drive New Castle, DE - 1988 40 yrs.
1655 Valley Center Parkway Bethlehem, PA 113,247 1993 40 yrs.
6560 Stonegate Drive Allentown, PA 412,465 1989 40 yrs.
6370 Hedgewood Drive Allentown, PA 381,336 1990 40 yrs.
6390 Hedgewood Drive Allentown, PA 474,228 1990 40 yrs.
1495 Valley Center Parkway Bethlehem, PA 526,353 1990 40 yrs.
6350 Hedgewood Drive Allentown, PA 541,080 1989 40 yrs.
6330 Hedgewood Drive Allentown, PA 982,842 1988 40 yrs.
1550 Valley Center Parkway Bethlehem, PA 509,861 1988 40 yrs.
1560 Valley Center Parkway Bethlehem, PA 653,025 1988 40 yrs.
6580 Snowdrift Road Allentown, PA 510,011 1988 40 yrs.
1510 Valley Center Parkway Bethlehem, PA 596,623 1988 40 yrs.
1530 Valley Center Parkway Bethlehem, PA 487,892 1988 40 yrs.
6540 Stonegate Drive Allentown, PA 704,737 1988 40 yrs.
974 Marcon Boulevard Allentown, PA 456,203 1987 40 yrs.
964 Marcon Boulevard Allentown, PA 405,927 1985 40 yrs.
764 Roble Road Allentown, PA 208,658 1985 40 yrs.
3174 Airport Road Allentown, PA 381,045 1979 40 yrs.
2196 Avenue C Allentown, PA 378,173 1980 40 yrs.
2202 Hanger Place Allentown, PA 443,767 1981 40 yrs.
2201 Hanger Place Allentown, PA 470,974 1981 40 yrs.
954 Marcon Boulevard Allentown, PA 301,340 1981 40 yrs.
57 South Commerce Way Allentown, PA 178,075 1986 40 yrs.
754 Roble Road Allentown, PA 110,527 1986 40 yrs.
894 Marcon Boulevard Allentown, PA 67,724 1986 40 yrs.
744 Roble Road Allentown, PA 126,142 1986 40 yrs.
944 Marcon Boulevard Allentown, PA 101,670 1986 40 yrs.
1685 Valley Center Parkway Allentown, PA 62,824 1996 40 yrs.
6520 Stonegate Drive Allentown, PA 23,295 1976 40 yrs.
7437 Industrial Boulevard Allentown, PA 372,593 1990 40 yrs.
2041 Avenue C Allentown, PA 49,615 1990 40 yrs.
2124 Avenue C Allentown, PA 47,098 1996 40 yrs.
7339 Industrial Boulevard Allentown, PA - 1988 40 yrs.
7384 Penn Drive Allentown, PA 108,782 1975 40 yrs.
7144 Daniels Drive Allentown, PA 153,270 1990 40 yrs.
7620 Cetronia Road Allentown, PA 146,045 1980 40 yrs.
939 Marcon Blvd Allentown, PA 200,244 1990 40 yrs.
100 Brodhead Road Allentown, PA 92,025 1996 40 yrs.
1640 Valley Center Parkway Bethlehem, PA 27,932 1988 40 yrs.
83 South Commerce Way Bethlehem, PA 14,737 1996 40 yrs.
85 South Commerce Way Bethlehem, PA 13,122 1989 40 yrs.
87 South Commerce Way Bethlehem, PA 13,391 1989 40 yrs.
7339 Industrial Blvd Allentown, PA 28,399 1989 40 yrs.
12000,001,040 Indian Creek Court Beltsville, MD 2,133,170 1986 40 yrs.
180,190 Cochrane Drive Annapolis, MD 2,765,357 1988 40 yrs.
8280 Patuxent Range Drive Columbia, MD 506,481 1978 40 yrs.
8300 Professional Place Landover, MD 1,264,179 1978 40 yrs.
8100 Professional Place Landover, MD 1,001,037 1987 40 yrs.
8100,8200,8300 Corporate Drive Landover, MD 1,613,036 1981 40 yrs.
7178-80 Columbia Gateway Columbia, MD 248,853 1987 40 yrs.
8200-40 Professional Place Landover, MD 101,075 1979 40 yrs.
8400 Corporate Drive Landover, MD 422,988 1984 40 yrs.
8730 Bollman Place Columbia, MD 210,365 1984 40 yrs.
9101,9111,9115 Guilford Road Columbia, MD 785,006 1984 40 yrs.
-86-
<PAGE>
Accumulated
Depreciation Date of Depreciable
Project City @ 12/31/95 Construction Life (years)
- -------------------------------------- ------------------- ------------ ------------ ------------
9125,9135,9145 Guilford Road Columbia, MD 1,406,750 1983 40 yrs.
10 South Third Street Richmond, VA 6,481 1930 40 yrs.
1751 Bluehills Drive Roanoke, VA 373,351 1991 40 yrs.
4300 Carolina Avenue Richmond, VA 681,394 1985 40 yrs.
301 Hill Carter Parkway Richmond, VA 221,513 1989 40 yrs.
4001 Carolina Avenue Richmond, VA 9,890 1935 40 yrs.
5600-5626 Eastport Boulevard Richmond, VA 175,218 1989 40 yrs.
5650-5674 Eastport Boulevard Richmond, VA 200,418 1990 40 yrs.
5700 Eastport Boulevard Richmond, VA 130,427 1990 40 yrs.
11020 Hull Street Road Richmond, VA 29,190 1987 40 yrs.
3432 Holland Road Virginia Beach, VA 36,210 1989 40 yrs.
3001 Hungary Springs Road Richmond, VA 27,797 1984 40 yrs.
7760 Shrader Road Richmond, VA 36,939 1987 40 yrs.
7740 Shrader Road Richmond, VA 24,121 1989 40 yrs.
4880 Cox Road Richmond, VA 89,194 1995 40 yrs.
5162 Valleypointe Parkway Roanoke, VA 117,367 1993 40 yrs.
4101-4127 Carolina Avenue Richmond, VA 104,417 1973 40 yrs.
4201-4261 Carolina Avenue Richmond, VA 234,576 1975 40 yrs.
4263-4299 Carolina Avenue Richmond, VA 119,370 1976 40 yrs.
4301-4335 Carolina Avenue Richmond, VA 75,572 1978 40 yrs.
4337-4379 Carolina Avenue Richmond, VA 110,714 1979 40 yrs.
4501-4549 Carolina Avenue Richmond, VA 163,304 1981 40 yrs.
4551-4593 Carolina Avenue Richmond, VA 164,352 1982 40 yrs.
4601-4643 Carolina Avenue Richmond, VA 246,050 1985 40 yrs.
4545-4583 Carolina Avenue Richmond, VA 359,442 1985 40 yrs.
4447-4491 Carolina Avenue Richmond, VA 138,769 1987 40 yrs.
4401-4445 Carolina Avenue Richmond, VA 206,593 1988 40 yrs.
12 S. Third Street Richmond, VA 8,492 1900 40 yrs.
9601 Cosner Drive Fredericksburg, VA 165,687 1995 40 yrs.
315 Cardiff Valley Road Knoxville, TN 142,033 1994 40 yrs.
2300 East Parham Road Richmond, VA 46,313 1988 40 yrs.
1347 Diamond Springs Road Virginia Beach, VA 146,845 1980 40 yrs.
5221 Valleypark Drive Roanoke, VA 89,229 1988 40 yrs.
5228 Valleypointe Parkway Roanoke, VA 41,119 1988 40 yrs.
5238 Valleypark Drive Roanoke, VA 89,339 1989 40 yrs.
5601-5659 Eastport Boulevard Richmond, VA 114,394 1996 40 yrs.
4717-4729 Eubank Road Richmond, VA 104,067 1978 40 yrs.
4263F-N. Carolina Ave Richmond, VA 19,090 1975 40 yrs.
4200 Oakleys Court Richmond, VA 15,722 1990 40 yrs.
1821 Battery Dantzler Road Chester, VA 18,795 1990 40 yrs.
5000 Cox Road Glen Allen, VA 23,388 1990 40 yrs.
510 Eastpark Court Sandston, VA 13,425 1989 40 yrs.
520 Eastpark Court Sandston, VA 25,898 1989 40 yrs.
4523 Green Point Drive High Point, NC 356,751 1988 40 yrs.
4501 Green Point Drive High Point, NC 337,209 1989 40 yrs.
4500 Green Point Drive High Point, NC 327,333 1989 40 yrs.
2427 Penny Road High Point, NC 911,816 1990 40 yrs.
4524 Green Point Drive High Point, NC 344,111 1988 40 yrs.
4328, 4336 Federal Drive High Point, NC 354,418 1995 40 yrs.
200 Centreport Drive Greensboro, NC 192,570 1986 40 yrs.
4344 Federal Drive High Point, NC 21,403 1996 40 yrs.
202 Centreport Drive Greensboro, NC 169,548 1990 40 yrs.
4000 Piedmont Parkway High Point, NC 122,232 1988 40 yrs.
1730 Stebbins Drive Houston, TX 217,699 1973 40 yrs.
5911-5925 Richard Street Jacksonville, FL 206,188 1977 40 yrs.
8383-8385 Baycenter Road Jacksonville, FL 229,451 1973 40 yrs.
8775 Baypine Road Jacksonville, FL 466,088 1989 40 yrs.
8539 Western Way Jacksonville, FL 673,736 1987 40 yrs.
6255 Lake Gray Boulevard Jacksonville, FL 679,901 1987 40 yrs.
6600-6660 Suemac Place Jacksonville, FL 722,196 1973 40 yrs.
6800-6850 Suemac Place Jacksonville, FL 428,359 1973 40 yrs.
8665,8667,8669 Baypine Road Jacksonville, FL 852,564 1987 40 yrs.
8540 Baycenter Road Jacksonville, FL 402,468 1984 40 yrs.
1200 Gulf Life Drive Jacksonville, FL 4,378,882 1984 40 yrs.
8400 Baymeadows Way Jacksonville, FL 477,358 1987 40 yrs.
8614 Baymeadows Way Jacksonville, FL 240,238 1986 40 yrs.
5941-5975 Richard Street Jacksonville, FL 486,171 1978 40 yrs.
7970 Bayberry Road Jacksonville, FL 343,613 1978 40 yrs.
6000-6030 Bowdendale Avenue Jacksonville, FL 595,909 1979 40 yrs.
7898 Baymeadows Way Jacksonville, FL 669,970 1979 40 yrs.
5977-6607 Richard Street Jacksonville, FL 758,810 1980 40 yrs.
7910 & 7948 Baymeadows Way Jacksonville, FL 861,007 1980 40 yrs.
7954 & 7960 Baymeadows Way Jacksonville, FL 877,689 1982 40 yrs.
8787 Baypine Road Jacksonville, FL 10,219,370 1990 40 yrs.
7077 Bonneval Road Jacksonville, FL 530,100 1988 40 yrs.
4190 Belfort Road Jacksonville, FL 556,333 1986 40 yrs.
8011, 8021, 8031 Phillips Highway Jacksonville, FL 198,751 1987 40 yrs.
7020 AC Skinner Parkway Jacksonville, FL 38,045 1996 40 yrs.
7040 AC Skinner Parkway Jacksonville, FL 92,338 1996 40 yrs.
11777 Central Highway Jacksonville, FL 283,406 1985 40 yrs.
7016 AC Skinner Parkway Jacksonville, FL 5,139 1996 40 yrs.
4001,4051,4101 Fowler Avenue Tampa, FL 898,330 1987 40 yrs.
5501-5502 Pioneer Park Boulevard Tampa, FL 106,279 1981 40 yrs.
5690-5694 Crenshaw Street Tampa, FL 88,086 1979 40 yrs.
3102,3104,3110 Cherry Palm Drive Tampa, FL 111,647 1986 40 yrs.
-87-
<PAGE>
Accumulated
Depreciation Date of Depreciable
Project City @ 12/31/95 Construction Life (years)
- -------------------------------------- ------------------- ------------ ------------ ------------
8401-8408 Benjamin Road Tampa, FL 112,282 1986 40 yrs.
3501 Riga Blvd Tampa, FL 31,891 1987 40 yrs.
111 Kelsey Lane Tampa, FL 6,094 1990 40 yrs.
2 Kings Hill Avenue West Malling, UK 9,864 1940 40 yrs.
50 Gibson Drive West Malling, UK 392,960 1996 40 yrs.
50 Kings Hill Avenue West Malling, UK - 1996 40 yrs.
25 Kings Hill Avenue West Malling, UK 17,900 1996 40 yrs.
-------------
Subtotal Operating Real Estate $ 119,151,189
=============
DEVELOPMENT PROPERTIES
3000 Horizon Blvd King of Prussia, PA $ - 1996 N/A
8801 Tinicum Boulevard Philadelphia, PA - 1996 N/A
50 Morehall Road Malvern, PA - 1996 N/A
231 Lake Drive New Castle, DE - 1995 N/A
15 Boulden Circle New Castle, DE - 1996 N/A
404 Lippincott Drive Marlton, NJ - 1996 N/A
402 Lippincott Drive Marlton, NJ - 1996 N/A
1455 Valley Center Parkway Bethlehem, PA - 1995 N/A
1650 Valley Center Parkway Bethlehem, PA - 1996 N/A
1660 Valley Center Parkway Bethlehem, PA - 1996 N/A
Nestle Way Allentown, PA - 1996 N/A
Southpoint Pkwy Jacksonville, FL - 1996 N/A
7018 AC Skinner Parkway Jacksonville, FL - 1996 N/A
5900 Eastport Boulevard Richmond, VA - 1995 N/A
5251 Concourse Drive Roanoke, VA - 1995 N/A
501 Liberty Way Chester, VA - 1996 N/A
13033 Kingston Ave Chester, VA - 1996 N/A
5701-5799 Eastport Blvd Richmond, VA - 1996 N/A
Centreport III Greensboro, NC - 1995 N/A
Federal Ridge III - Distr Bldg Greensboro, NC - 1996 N/A
Federal Ridge III - Flex Bldg Greensboro, NC - 1996 N/A
6532 Judge Adams Road Whitsette, NC - 1996 N/A
----------
Subtotal Development in Progress $ -
==========
LAND HELD FOR DEVELOPMENT
Chelsea Business Park Land Boothwyn, PA - 1988 N/A
132 Welsh Road Horsham, PA - 1995 N/A
Three Country View Road Malvern, PA - 1995 N/A
550 Lapp Road Malvern, PA - 1995 N/A
South Commerce Way Land Bethlehem, PA - 1996 N/A
Cedar Hollow Road Land Malvern, PA - 1996 N/A
Walnut Grove Land Horsham, PA - 1996 N/A
3604 Horizon Blvd King of Prussia, PA - 1996 N/A
3606 Horizon Blvd King of Prussia, PA - 1996 N/A
Swedes Run Business Park Land Delran, NJ - 1992 N/A
Marlton Executive Park Land Marlton, NJ - 1994 N/A
Commodore 295 Logan Twp., NJ - 1995 N/A
Marlton Executive Park Land Marlton, NJ - 1996 N/A
200 Exeter Court Bridgeport, NJ - 1996 N/A
17 Boulden Circle New Castle, DE - 1987 N/A
Lehigh Valley Corporate Center Land Bethlehem, PA - 1987 N/A
Lehigh Valley West Lots 13,14,15 Allentown, PA - 1995 N/A
Valleypointe Land Richmond, VA - 1995 N/A
Fairgrounds IRS Land Richmond, VA - 1995 N/A
Rivers' Bend Land Chesterfield, VA - 1995 N/A
Oakleys Center Land Richmond, VA - 1996 N/A
Technology Pointe Land Glen Allen, VA - 1996 N/A
Woodlands Center Land Sandston, VA - 1996 N/A
Mendenhall Land High Point, NC - 1995 N/A
6532 Judge Adams Road Whitsette, NC - 1996 N/A
Southpoint Business Park Land Jacksonville, FL - 1994 N/A
Liberty Business Park Land Jacksonville, FL - 1995 N/A
7024 AC Skinner Parkway Jacksonville, FL - 1996 N/A
7014 AC Skinner Parkway Jacksonville, FL - 1996 N/A
Crenshaw Street Tampa, FL - 1995 N/A
Silo Bend Land Tampa, FL - 1996 N/A
Silo Bend Land Tampa, FL - 1996 N/A
------------
Subtotal Land Held for Development $ -
============
TOTAL ALL PROPERTIES $119,151,189
============
* Denotes property is collateralized under the Line of Credit with G.E. Capital
** Denotes property is collateralized under mortgages with Nationwide, Principal Mutual and American
General totalling $146.7 million
*** Denotes property is collateralized under Line of Credit with Bank of Boston with a capacity of
$80.0 million. Properties currently collateralized allow the Company to borrow up to $25.0 million.
**** Rouse leases land from Kent County Council.
</TABLE>
-88-
<PAGE>
SCHEDULE III
LIBERTY PROPERTY LIMITED PARTNERSHIP
REAL ESTATE AND ACCUMULATED DEPRECIATION
(In thousands)
A summary of activity for real estate and accumulated depreciation is as
follows:
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1996 <F1> 1995 <F1> 1994 <F2>
---------- --------- ---------
REAL ESTATE:
Balance at beginning of year $ 920,230 $ 586,789 $ 432,970
Additions 268,066 333,441 153,819
Disposition of property (9,583) -- --
---------- --------- ---------
Balance at end of year $1,178,713 $ 920,230 $ 586,789
========== ========= =========
ACCUMULATED DEPRECIATION:
Balance at beginning of year $ 94,183 $ 74,508 $ 62,532
Depreciation expense 24,968 19,675 11,976
---------- --------- ---------
Balance at end of year $ 119,151 $ 94,183 $ 74,508
========== ========= =========
<F1> Liberty Property Trust
<F2> Liberty Property Trust and Rouse Group Combined
-89-
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------------------------------------------------------------------------
FINANCIAL DISCLOSURE
- --------------------
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- -------------------------------------------------------------
ITEM 11. EXECUTIVE COMPENSATION
- ---------------------------------
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
- --------------------------------------------------------------
MANAGEMENT
- ----------
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- ---------------------------------------------------------
Except as set forth under the caption "Executive Officers" in Part I,
the information required by Part III, Items 10, 11, 12 and 13, is hereby
incorporated by reference to the Trust's definitive proxy statement for
its Annual Meeting of Shareholders (other than the information called
for by Item 402(i), (k) and (l) of Regulation S-K, which is not
incorporated herein by reference) presently scheduled for May 21, 1997,
which proxy statement will be filed pursuant to Regulation 14A not later
than April 30, 1997, in accordance with General Instruction G(3) to Form
10-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM
- ----------------------------------------------------------------------
8-K
- ---
The following consolidated Financial Statements of Liberty Property
Trust, Liberty Property Limited Partnership and Rouse Group (The
Predecessor) are included in Item 8.
(A) 1. FINANCIAL STATEMENTS AND REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
Report of Independent Auditors - Liberty Property Trust
- -------------------------------------------------------
Financial Statements - Liberty Property Trust
- ---------------------------------------------
Balance Sheet:
Liberty Property Trust Consolidated as of December 31, 1996 and 1995
-90-
<PAGE>
Statement of Operations:
Liberty Property Trust Consolidated for the years ended December 31,
1996 and 1995 and for the period from June 23, 1994 to
December 31, 1994
Rouse Group Combined for the period from January 1, 1994 to June 22,
1994
Statements of Shareholders' Equity and Owners' Deficit:
Liberty Property Trust Consolidated for the years ended December 31,
1996 and 1995 and for the period from June 23, 1994
to December 31, 1994
Rouse Group Combined for the period from January 1, 1994 to June 22,
1994
Statements of Cash Flows:
Liberty Property Trust Consolidated for the years ended December 31,
1996 and 1995 and for the period from June 23, 1994 to
December 31, 1994
Rouse Group Combined for the period from January 1, 1994 to June 22,
1994
Notes to Financial Statements
Report of Independent Auditors - Liberty Property Limited Partnership
- ---------------------------------------------------------------------
Financial Statements - Liberty Property Limited Partnership
- -----------------------------------------------------------
Balance Sheet:
Liberty Property Limited Partnership Consolidated as of December 31,
1996 and 1995
Statement of Operations:
Liberty Property Limited Partnership Consolidated for the years ended
December 31, 1996 and 1995 and for the period from June 23, 1994 to
December 31, 1994
Rouse Group Combined for the period from January 1, 1994 to June 22,
1994
Statements of Owners' Equity and Owners' Deficit:
Liberty Property Limited Partnership Consolidated for the years ended
December 31, 1996 and 1995 and for the period from June 23, 1994 to
December 31, 1994
Rouse Group Combined for the period from January 1, 1994 to June 22,
1994
Statements of Cash Flows:
Liberty Property Limited Partnership Consolidated for the years ended
December 31, 1996 and 1995 and for the period from June 23, 1994 to
December 31, 1994
Rouse Group Combined for the period from January 1, 1994 to June 22,
1994
Notes to Financial Statements
-91-
<PAGE>
2. FINANCIAL STATEMENT SCHEDULES:
Schedule III -- Real Estate and Accumulated Depreciation as of December
31, 1996 for Liberty Property Trust
All other schedules are omitted because they are not required or the
required information is shown in the financial statements or notes
thereto.
Schedule III -- Real Estate and Accumulated Depreciation as of December
31, 1996 for Liberty Property Limited Partnership
All other schedules are omitted because they are not required or the
required information is shown in the financial statements or notes
thereto.
3. EXHIBITS
The following exhibits are filed herewith or are incorporated by
reference to exhibits previously filed.
EXHIBIT NO. DESCRIPTION
- ------------- --------------------------------------------------------
* 3.1 First Restated and Amended Agreement of Limited Partner-
ship Limited Partnership, dated June 19, 1995, as
amended.
** 3.1.1 Second Amendment to Agreement of Limited Partnership.
**** 3.2.1 Third Amendment to Agreement of Limited Partnership,
dated December 30, 1996.
**** 3.2 Declaration of Trust, as amended of the Trust.
**** 3.3 By-laws of Trust.
**** 4.1 Indenture between the Operating Partnership and Bank of
Boston, as Trustee, including Guaranty Provisions and
Form of Debenture.
+ * 10.1 Liberty Property Trust Share Incentive Plan.
**** 10.2 Employment Agreement between the Company and Willard G.
Rouse III.
**** 10.3 Employment Agreement between the Company and George F.
Congdon.
**** 10.4 Employment Agreement between the Company and Joseph P.
Denny.
**** 10.5 Contribution Agreement.
**** 10.6 Amended and Restated Limited Partnership Agreements of
Pre-existing Pennsylvania Partnerships.
-92-
<PAGE>
**** 10.7 Agreement of Sale for the Acquisition Properties.
**** 10.8 Option Agreement and Right of First Offer.
**** 10.9 Form of Indemnity Agreement.
***** 10.10 Contribution Agreement among the Trust, the Operating
Partnership and the Contributing Owners described
therein, related to the Lingerfelt Properties.
***** 10.11 Employment Agreement between the Company and Alan
Lingerfelt.
****** 10.12 Amendment and Restated Revolving Loan Agreement and
Note Modification, dated as of May 1, 1995, between
General Electric Capital Corporation, as Dollar
Lender, G.E. Capital Corporation (Funding) Limited,
as Pound Lender, and Liberty Property Limited
Partnership, as Borrower (including exhibits thereto).
** 10.13 Amended Exhibit A, dated as of February 29, 1996 of the
Liberty Property Limited Partnership Agreement.
10.14 Loan Agreement between Liberty Property Limited
Partnership and Liberty Property Trust and the
The First National Bank of Boston, dated December 13,
1996.
* 21.1 Subsidiaries of the Registrants.
23.1 Consent of Ernst & Young, LLP on Liberty Property Trust.
23.2 Consent of Ernst & Young, LLP on Liberty Property
Limited Partnership.
27.1 Financial Data Schedule. (EDGAR Version Only)
* 99.2 Waiver of Agreement.
- ----------------
* Incorporated by Reference to exhibit of the same number
filed with the Registrants' Quarterly Report on Form
10-Q dated August 14, 1995.
** Incorporated by reference to exhibit of the same number
filed with the Registrants' Annual Report on Form 10-K
for the fiscal year ended December 31, 1995.
*** Incorporated by reference to exhibit of the same number
filed with the Trusts' Registration Statement on Form
S-11, Reg. No. 333-2221l.
-93-
<PAGE>
**** Incorporated by reference to exhibit of the same number
filed with the Trusts' Registration Statement on Form
S-11, Reg. No. 33-77084.
***** Incorporated by reference to exhibit 10.1 filed with the
Registrants' Current Report on Form 8-K, dated March 3,
1995.
***** Incorporated by reference to exhibit 10.2 filed with the
Registrants' Current Report on Form 8-K, dated March 3,
1995.
****** Incorporated by reference to exhibit 10.1 to the
Registrants' Registration Statement on Form S-3,
Reg. No. 33-94782.
+ Indicates a management employment contract or compensa-
tion agreement.
(B) REPORTS ON FORM 8-K
REPORTS ON FORM 8-K
-------------------
Report on Form 8-K dated December 10, 1996 filed under Item 5
relating to the acquisition of eighteen properties during the period
from January 1, 1996 to December 10, 1996. The report included a
Combined Statement of Operating Revenue and Certain Operating Expenses
for a majority of the properties, Pro Forma Condensed Consolidated
Balance Sheets for Liberty Property Trust and Liberty Property Limited
Partnership, and Pro Forma Consolidated Statements of Operations for
Liberty Property Trust and Liberty Property Limited Partnership.
-94-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
LIBERTY PROPERTY TRUST
Date: Februrary 26, 1997 By: /s/ WILLARD G. ROUSE III
--------------------------------------
WILLARD G. ROUSE III
CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant in the capacities and on the dates indicated.
Chairman of the Board
of Trustees and Chief
Executive Officer
(Principal Executive
/s/ Willard G. Rouse III Officer) February 26, 1997
- ---------------------------
Willard G. Rouse III
Chief Financial Officer
and Treasurer (Principal
Financial and Accounting
/s/ George J. Alburger, Jr. Officer) February 26, 1997
- ---------------------------
George J. Alburger, Jr.
/s/ Joseph P. Denny Trustee February 26, 1997
- ---------------------------
Joseph P. Denny
/s/ George F. Congdon Trustee February 26, 1997
- ---------------------------
George F. Congdon
/s/ M. Leanne Lachman Trustee February 26, 1997
- ---------------------------
M. Leanne Lachman
-95-
<PAGE>
/s/ Frederick F. Buchholz Trustee February 26, 1997
- ---------------------------
Frederick F. Buchholz
/s/ J. Anthony Hayden Trustee February 26, 1997
- ---------------------------
J. Anthony Hayden
/s/ David L. Lingerfelt Trustee February 26, 1997
- ---------------------------
David L. Lingerfelt
/s/ John A. Miller Trustee February 26, 1997
- ---------------------------
John A. Miller, CLU
/s/ Stephen B. Siegel Trustee February 26, 1997
- ---------------------------
Stephen B. Siegel
-96-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
LIBERTY PROPERTY LIMITED PARTNERSHIP
BY: Liberty Property Trust
General Partner
Date: February 26, 1997 By: /s/ WILLARD G. ROUSE III
--------------------------------------
WILLARD G. ROUSE III
CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant in the capacities and on the dates indicated.
Trustee of the
/s/ Joseph P. Denny General Partner February 26, 1997
- ---------------------------
Joseph P. Denny
Trustee of the
/s/ George F. Congdon General Partner February 26, 1997
- ---------------------------
George F. Congdon
Trustee of the
/s/ M. Leanne Lachman General Partner February 26, 1997
- ---------------------------
M. Leanne Lachman
Trustee of the
/s/ Frederick F. Buchholz General Partner February 26, 1997
- ---------------------------
Frederick F. Buchholz
Trustee of the
/s/ J. Anthony Hayden General Partner February 26, 1997
- ---------------------------
J. Anthony Hayden
-97-
<PAGE>
Trustee of the
/s/ David L. Lingerfelt General Partner February 26, 1997
- ---------------------------
David L. Lingerfelt
Trustee of the
/s/ John A. Miller General Partner February 26, 1997
- ---------------------------
John A. Miller, CLU
Trustee of the
/s/ Stephen B. Siegel General Partner February 26, 1997
- ---------------------------
Stephen B. Siegel
-98-
<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT NO. DESCRIPTION
- ------------- --------------------------------------------------------
* 3.1 First Restated and Amended Agreement of Limited Partner-
ship Limited Partnership, dated June 19, 1995, as
amended.
** 3.1.1 Second Amendment to Agreement of Limited Partnership.
**** 3.2.1 Third Amendment to Agreement of Limited Partnership,
dated December 30, 1996.
**** 3.2 Declaration of Trust, as amended of the Trust.
**** 3.3 By-laws of Trust.
**** 4.1 Indenture between the Operating Partnership and Bank of
Boston, as Trustee, including Guaranty Provisions and
Form of Debenture.
+ * 10.1 Liberty Property Trust Share Incentive Plan.
**** 10.2 Employment Agreement between the Company and Willard G.
Rouse III.
**** 10.3 Employment Agreement between the Company and George F.
Congdon.
**** 10.4 Employment Agreement between the Company and Joseph P.
Denny.
**** 10.5 Contribution Agreement.
**** 10.6 Amended and Restated Limited Partnership Agreements of
Pre-existing Pennsylvania Partnerships.
**** 10.7 Agreement of Sale for the Acquisition Properties.
**** 10.8 Option Agreement and Right of First Offer.
**** 10.9 Form of Indemnity Agreement.
***** 10.10 Contribution Agreement among the Trust, the Operating
Partnership and the Contributing Owners described
therein, related to the Lingerfelt Properties.
***** 10.11 Employment Agreement between the Company and Alan
Lingerfelt.
-99-
<PAGE>
****** 10.12 Amendment and Restated Revolving Loan Agreement and
Note Modification, dated as of May 1, 1995, between
General Electric Capital Corporation, as Dollar
Lender, G.E. Capital Corporation (Funding) Limited,
as Pound Lender, and Liberty Property Limited
Partnership, as Borrower (including exhibits thereto).
** 10.13 Amended Exhibit A, dated as of February 29, 1996 of the
Liberty Property Limited Partnership Agreement.
10.14 Loan Agreement between Liberty Property Limited
Partnership and Liberty Property Trust and the
The First National Bank of Boston, dated December 13,
1996.
* 21.1 Subsidiaries of the Registrants.
23.1 Consent of Ernst & Young, LLP on Liberty Property Trust.
23.2 Consent of Ernst & Young, LLP on Liberty Property
Limited Partnership.
27.1 Financial Data Schedule. (EDGAR Version Only)
* 99.2 Waiver of Agreement.
- ----------------
* Incorporated by Reference to exhibit of the same number
filed with the Registrants' Quarterly Report on Form
10-Q dated August 14, 1995.
** Incorporated by reference to exhibit of the same number
filed with the Registrants' Annual Report on Form 10-K
for the fiscal year ended December 31, 1995.
*** Incorporated by reference to exhibit of the same number
filed with the Trusts' Registration Statement on Form
S-11, Reg. No. 333-2221l.
**** Incorporated by reference to exhibit of the same number
filed with the Trusts' Registration Statement on Form
S-11, Reg. No. 33-77084.
***** Incorporated by reference to exhibit 10.1 filed with the
Registrants' Current Report on Form 8-K, dated March 3,
1995.
***** Incorporated by reference to exhibit 10.2 filed with the
Registrants' Current Report on Form 8-K, dated March 3,
1995.
****** Incorporated by reference to exhibit 10.1 to the
Registrants' Registration Statement on Form S-3,
Reg. No. 33-94782.
-100-
<PAGE>
+ Indicates a management employment contract or compensa-
tion agreement.
-101-
LOAN AGREEMENT
BETWEEN
LIBERTY PROPERTY LIMITED PARTNERSHIP
and
LIBERTY PROPERTY TRUST
AND
THE FIRST NATIONAL BANK OF BOSTON
TABLE OF CONTENTS
PAGE
1. DEFINITIONS OF RULES OF INTERPRETATION..................... 1
1.1. Definitions......................................... 1
1.2. Rules of Interpretation............................. 14
2. REVOLVING CREDIT FACILITY.................................. 15
2.1. Commitment to Lend; Limitation on Total Commitment.. 15
2.2. Reduction of Commitment............................. 16
2.3. The Notes........................................... 16
2.4. Interest on Loans................................... 17
2.5. Requests for Loans.................................. 17
2.6. Conversion Options.................................. 17
2.7. Funds for Loans..................................... 18
3. REPAYMENT OF THE LOANS..................................... 19
3.1. Maturity; Term Extension Option..................... 19
3.2. Mandatory Repayments of Loan........................ 20
3.3. Option Repayments of Loans.......................... 20
4. CERTAIN GENERAL PROVISIONS................................. 21
4.1. Revolving Credit Facility Fees and Agent's Fee...... 21
4.2. Commitment Fee...................................... 21
4.3. Funds for Payments.................................. 21
4.4. Computations........................................ 22
4.5. Additional Costs, Etc............................... 22
4.6. Capital Adequacy.................................... 23
4.7. Certificate......................................... 24
4.8. Indemnity........................................... 24
4.9. Interest or Overdue Amounts......................... 24
4.10. Inability to Determine Eurodollar Rate.............. 24
4.11. Illegality.......................................... 25
4.12. Replacement of Banks................................ 25
5. COLLATERAL SECURITY; NO LIMITATION ON RECOURSE.............. 25
5.1. Collateral Security.................................. 25
5.2. No Limitation on Recourse............................ 25
5.3. Additional Properties................................ 26
5.4. Conditions to Approval of Additional Properties...... 26
5.5. Release of Mortgaged Properties...................... 27
6. REPRESENTATION AND WARRANTIES............................... 26
6.1. Authority, Etc....................................... 27
6.2. Governmental Approval................................ 28
6.4. Financial Statements................................. 29
6.5. No Material Changes, Etc............................. 30
6.6. Franchises, patents, Copyrights, Etc................. 30
6.7. Litigation........................................... 30
6.8. No Materially Adverse Contracts, Etc................. 30
6.9. Compliance With Other Instruments, Laws, Etc......... 31
6.10. Tax Status........................................... 31
6.11. Event of Default..................................... 31
6.12. Investment Company Act............................... 31
6.13. Absence of Financing Statements, Etc................. 31
6.14. Setoff, Etc.......................................... 31
6.15. Certain Transactions................................. 31
6.16. Benefit Plans: Multiemployer Plans: Guaranteed
Pension Plans...................................... 32
6.17. Regulations U and X.................................. 32
6.18. Environmental Compliance............................. 32
6.19. Subsidiaries and Affiliates.......................... 34
6.20. Major Leases......................................... 34
6.21. Loan Documents....................................... 34
6.22. Mortgaged Properties................................. 34
7. AFFIRMATIVE COVENANTS OF THE BORROWER....................... 37
7.1. Punctual Payment..................................... 37
7.2. Maintenance of Office................................ 37
7.3. Records and Accounts................................. 37
7.4. Financial Statements, Certificates and Information... 37
7.5. Notices.............................................. 39
7.6. Existence; Maintenance of REIT Status; Maintenance
Properties......................................... 40
7.7. Insurance............................................ 41
7.8. Taxes................................................ 41
7.9. Inspection of Properties and Books................... 41
7.10. Compliance with Laws, Contracts, Licenses,
and Permits........................................ 42
7.11. Use of Proceeds...................................... 42
7.12. Appraisals........................................... 42
7.13. Leases; Lease Approvals.............................. 42
7.14. Further Assurance.................................... 43
7.15. Environmental Indemnification........................ 43
7.16. Response Actions..................................... 43
7.17. Environmental Assessments............................ 43
7.18. Employee Benefit Plans............................... 44
7.19. Required Interest Rate Contracts..................... 45
8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.................. 45
8.1. Restrictions on Indebtedness......................... 45
8.2. Restrictions on Liens, Etc........................... 45
8.3. Restrictions on Investments.......................... 46
8.4. Merger, Consolidation and Disposition of Properties.. 47
8.5. Sale and Leaseback................................... 48
8.6. Compliance with Environmental Laws................... 48
8.7. Distributions........................................ 48
8.8. Leases............................................... 48
9. FINANCIAL COVENANTS OF THE BORROWER......................... 48
9.1. Appraised Value...................................... 49
9.2. Minimum Debt Service Coverage........................ 49
9.3. Total Liabilities to Total Assets.................... 49
9.4. Minimum Tangible Net Worth........................... 49
9.5. Total Operating Cash Flow to Interest Expense........ 49
9.6. Total Operating Cash Flow to Senior Interest Expense. 49
9.7. EBITDA to Fixed Charges.............................. 49
10. CONDITIONS TO EFFECTIVENESS................................. 49
10.1 Loan Documents....................................... 49
10.2. Certified Copies of Organization Documents; Good
Standing Certificates.............................. 49
10.3. By-laws; Resolutions................................. 50
10.4. Incumbency Certificate; Authorized Signers........... 50
10.5. Opinions of Counsel Concerning Organization and
Loan Documents..................................... 50
10.6. Payment of Fees...................................... 50
10.7. Validity of Liens.................................... 50
10.8. Survey............................................... 50
10.9. Title Insurance; Title Exception Documents........... 51
10.10. Major Leases......................................... 51
10.11. Estoppel Agreements.................................. 51
10.12. Certificates of Insurance............................ 51
10.13. Hazardous Substance Assessments...................... 51
10.14. Evidence of Compliance with Laws and Permits......... 51
10.15. Appraisals........................................... 51
10.16. Inspecting Engineers' Reports........................ 51
10.17. UCC Lien Searches.................................... 52
11. CONDITIONS TO ALL BORROWINGS................................ 52
11.1 Representations True; No Event of Default;
Compliance Certificate............................. 52
11.2. No Legal Impediment.................................. 52
11.3. Governmental Regulation.............................. 52
11.4. Proceedings and Documents............................ 52
12. EVENTS OF DEFAULT; ACCELERATION; ETC........................ 53
12.1. Events of Default and Acceleration................... 53
12.2. Termination of Commitments........................... 55
12.3. Remedies............................................. 55
12.4. Distribution of Collateral Proceeds.................. 56
12.5. Addition of Real Estate Assets to Cure Default....... 56
13. SETOFFS.................................................... 57
14. THE AGENT.................................................. 58
14.1. Authorization....................................... 58
14.2. Employees and Agents................................ 58
14.3. No Liability........................................ 58
14.4. No Representations.................................. 58
14.5. Payments............................................ 59
14.6. Holders of Notes.................................... 60
14.7. Indemnity........................................... 60
14.8. Agent as Bank....................................... 60
14.9. Resignation......................................... 60
14.10. Notification of Defaults and Events of Default...... 60
14.11. Duties in the Case of Enforcement................... 61
15. EXPENSES................................................... 61
16. INDEMNIFICATION............................................ 62
17. SURVIVAL OF COVENANTS, ETC. ............................... 63
18. ASSIGNMENT; PARTICIPATIONS; ETC. .......................... 63
18.1. Conditions to Assignment by Banks................... 63
18.2. Certain Representations and Warranties; Limitations;
Covenants......................................... 63
18.3. Register............................................ 64
18.4. New Notes........................................... 64
18.5. Participations...................................... 65
18.6. Pledge by Lender.................................... 65
18.7. No Assignment by Borrower........................... 66
18.8. Disclosure.......................................... 66
19. NOTICES, ETC............................................... 66
20. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICES........ 66
21. HEADINGS................................................... 67
22. COUNTERPARTS............................................... 67
23. ENTIRE AGREEMENT........................................... 67
24. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS............. 67
25. CONSENTS, AMENDMENTS, WAIVERS, ETC......................... 68
26. SEVERABILITY............................................... 68
Exhibit A..........Form of Note
Exhibit B..........Form of Loan Request
Exhibit C..........Form of Compliance Certificate
Exhibit D..........Form of Estoppel Agreement
Exhibit E..........Opinion Requirements
Exhibit F..........Form of Assignment and Acceptance
Schedule 1.........Banks; Domestic and Eurodollar Lending Offices
Schedule 1.1.......Mortgaged Properties and Allocated Loan Amounts
Schedule 1.2.......Commitments and Commitment Percentages
Schedule 1.3.......Related Companies, Guarantor Subsidiaries and
Permitted Joint Ventures
Schedule 6.3.......Title to Properties
Schedule 6.7.......Litigation
Schedule 6.15......Insider Transactions
Schedule 6.18......Environmental Reports
Schedule 6.22(d)...Engineering Reports
Schedule 6.22(l)...Rent Rolls
Schedule 6.22(m)...Service Agreements
Schedule 6.22(n)...Other Material Agreements
Schedule 8.3(d)....Investments
LOAN AGREEMENT
This LOAN AGREEMENT is made as of the __ day of December, 1996, by and
among LIBERTY PROPERTY LIMITED PARTNERSHIP, a Pennsylvania limited
partnership (the "Borrower"), LIBERTY PROPERTY TRUST, a Maryland trust
(the "Company") and THE FIRST NATIONAL BANK OF BOSTON, a national
banking association ("FNBB"), the other lending institutions which are
listed on Schedule 1, (the "Banks") and THE FIRST NATIONAL BANK OF
BOSTON, as agent for itself and such other lending institutions (the
"Agent").
WHEREAS, the Borrower has requested and FNBB has agreed to provide a
revolving credit facility, and to attempt to syndicate such facility to
other lending institutions, and Borrower has agreed to provide real
property collateral and other collateral to FNBB and such other lending
institutions;
NOW, THEREFORE, to accomplish these purposes, the Agent, the Borrower
and the Banks hereby agree as follows:
1. DEFINITIONS OF RULES OF INTERPRETATION
1.1. Definitions. The following terms shall have the meanings set
forth in this l or elsewhere in the provisions of this Agreement
referred to below:
Additional Properties. Real Estate Assets which hereafter become
Mortgaged Properties pursuant to 5.3.
Affiliated Banks. Any commercial bank which is (i) the parent
corporation of any of the Banks, (ii) a wholly-owned subsidiary of any
of the Banks or (iii) a wholly-owned subsidiary of the parent
corporation of any of the Banks.
Agent. The First National Bank of Boston acting as agent for the
Banks or any successor agent.
Agent's Head Office. The Agent's head office located at 100
Federal Street, Boston, Massachusetts 02110, or at such other location
as the Agent may designate from time to time.
Agreement. This Loan Agreement, including the Schedules and
Exhibits hereto.
Allocated Loan Amount. With respect to each Mortgaged Property
the amount set forth on Schedule 1.1 hereto as such schedule may be
subsequently revised by the Agent to reflect the addition of Mortgaged
Properties pursuant to 5.3, the release of Mortgaged Properties pursuant
to 5.5 and any updated Appraisals which may be obtained pursuant to
7.12.
Appraisals. Appraisals of the value of the Mortgaged Properties
determined on an "as is" market value basis, prepared in writing
independently and impartially by qualified MAI appraisers selected and
retained by the Agent and paid for by Borrower, the form and substance
of such appraisals and final determination of market value of the
Mortgaged Properties thereunder to be reviewed and subject to approval
by the Requisite Banks based on their respective reviews of such
appraisals pursuant to their internal appraisal review policies and
procedures. All appraisals shall be prepared in accordance with the
Uniform Standards of Professional Appraisal Practice, Supplemental
Standards Applicable To Federally Related Transactions, as further
described in Title XI of the "Financial Institutions Reform, Recovery
and Enforcement Act of 1989" ("FIRREA"), and any additional standards
and conditions required for appraisals prepared for the Requisite Banks.
All Appraisals shall disregard any value associated with any unimproved
land or unoccupied building expansion projects located on the applicable
Mortgaged Property.
Appraised Value. The market value of each of the Mortgaged
Properties, determined by the Requisite Banks based upon the most recent
Appraisals obtained pursuant to 5.4(b), 7.12 or 10.14.
Assignment and Acceptance. See 18.
Assignments of Leases and Rents. The assignments of rents and
leases from the Mortgagor to the Agent pursuant to which the Mortgagor
shall grant and assign to the Agent as agent for the Banks a security
interest in and assignment of the Mortgagor's interest as lessor with
respect to all Leases and rents thereunder of all or any part of the
Mortgaged Properties as security for the Obligations.
Balance Sheet Date. September 30, 1996.
Banks. FNBB and the other lending institutions listed from time to
time on Schedule 1 hereto and any other Person who becomes an assignee
of any rights of a Bank pursuant to 18 or a Person who acquires all or
substantially all of the stock or assets of a Bank.
Base Rate. The higher of (a) the annual rate of interest announced
from time to time by FNBB at the Agent's Head Office as its "base rate",
and (b) one half of one percent (1/2%) above the overnight federal funds
effective rate as published by the Board of Governors of the Federal
Reserve System, as in effect from time to time.
Base Rate Loans. Those Loans bearing interest calculated by
reference to the Base Rate.
Borrower. As defined in the preamble hereto.
Buildings. The buildings, structures and other improvements now
or hereafter located on the Mortgaged Properties.
Building Service Equipment. All apparatus, fixtures and articles
of personal property owned by the Mortgagor now or hereafter attached to
or used or procured for use in connection with the operation or
maintenance of any Building located on or included in the Mortgaged
Properties, including, but without limiting the generality of the
foregoing, all engines, furnaces, boilers, stokers, pumps, heaters,
tanks, dynamos, motors, generators, switchboards, electrical equipment,
heating, plumbing, lifting and ventilating apparatus, air-cooling and
air-conditioning apparatus, gas and electric fixtures, elevators,
escalators, fittings, and machinery and all other equipment of every
kind and description, used or procured for use in the operation of the
Buildings (except apparatus, fixtures or articles of personal property
belonging to lessees or other occupants of such building or to persons
other than the Mortgagor unless the same be abandoned by any such lessee
or other occupant or person), together with any and all replacements
thereof and additions thereto.
Business Day. Any day on which banking institutions in Boston,
Massachusetts, are open for the transaction of banking business and, in
the case of Eurodollar Rate Loans, also a day which is a Eurodollar
Business Day.
Capitalized Leases. Leases under which the Borrower is the lessee
or obligor, the discounted future rental payment obligations under which
are required to be capitalized on the balance sheet of the Borrower in
accordance with generally accepted accounting principles.
CERCLA. See 6.18.
Code. The Internal Revenue Code of 1986, as amended and in effect
from time to time.
Collateral. All of the properties of the Borrower or of any
Guarantor that are or are intended to be subject to the security
interests, liens and mortgages created by the Security Documents,
including, without limitation, the Mortgaged Properties, the Leases, the
Permits and the Service Agreements.
Commitment. With respect to each Bank, the amount set forth from
time to time on Schedule 1.2 hereto as the amount of such Bank's
commitment to make Loans to the Borrower.
Commitment Percentage. With respect to each Bank, the percentage
set forth from time to time on Schedule 1.2 hereto as such Bank's
percentage of the Total Commitment.
Conversion Request. A notice given by the Borrower to the Agent
of its election to convert or continue a Loan in accordance with 2.6.
Default. See 12.1.
Distribution. The declaration or payment of any dividend or
distribution of cash or cash equivalents to the shareholders of the
Company or the limited partners of the Borrower, or any distribution to
any officer, employee or director of the Borrower or the Company, other
than employee compensation consistent with past practices.
Dollars or $. Dollars in lawful currency of the United States of
America.
Domestic Lending Office. Initially, the office of each Bank
designated as such in Schedule 1 hereto; thereafter, such other office
of such Bank, if any, located within the United States that will be
making or maintaining Base Rate Loans.
Drawdown Date. The date on which any Loan is made or is to be
made, and the date on which any Loan is converted or continued in
accordance with 2.6.
EBITDA. The Borrower's earnings before interest, taxes,
depreciation and amortization, as determined in accordance with
generally accepted accounting principles.
Effective Date. The date upon which this Agreement shall become
effective pursuant to 10.
Eligible Assignee. Any of (a) a commercial bank organized under
the laws of the United States, or any State thereof or the District of
Columbia, and having total assets in excess of $1,000,000,000; (b) a
savings and loan association or savings bank organized under the laws of
the United States, or any State thereof or the District of Columbia, and
having a net worth of at least $100,000,000, calculated in accordance
with generally accepted accounting principles; (c) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the "OECD"), and
having total assets in excess of $1,000,000,000, provided that such bank
is acting through a branch or agency located in the country in which it
is organized or another country which is also a member of the OECD; and
(d) the central bank of any country which is a member of the OECD.
Employee Benefit Plan. Any employee benefit plan within the
meaning of 3 (3) of ERISA maintained or contributed to by the Borrower
or any ERISA Affiliate, other than a Multiemployer Plan.
Environmental Laws. See 6.18(a).
Environmental Reports. Reports addressed to the Agent (or
addressed to the Borrower with an acceptable reliance letter addressed
to the Agent) prepared by environmental engineering firms acceptable to
the Agent relating to environmental site assessments conducted with
respect to the Mortgaged Properties described in Schedule 6.18 hereto
and conducted with respect to prospective Additional Properties pursuant
to 5.3.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended and in effect from time to time.
ERISA Affiliate. Any Person which is treated as a single employer
with the Borrower under 414 of the Code.
ERISA Reportable Event. A reportable event with respect to a
Guaranteed Pension Plan within the meaning of 4043 of ERISA and the
regulations promulgated thereunder as to which the requirement of notice
has not been waived.
Eurocurrency Reserve Rate. For any day with respect to a
Eurodollar Rate Loan, the maximum rate (expressed as a decimal) at which
any of the Banks would be required to maintain reserves under Regulation
D of the Board of Governors of the Federal Reserve System (or any
successor or similar regulations relating to such reserve requirements)
against "Eurocurrency Liabilities" (as that term is used in Regulation
D) , if such liabilities were outstanding. The Eurocurrency Reserve Rate
shall be adjusted automatically on and as of the effective date of any
change in the Eurocurrency Reserve Rate.
Eurodollar Business Day. Any day on which commercial banks are
open for international business (including dealings in Dollar deposits)
in London or such other eurodollar interbank market as may be selected
by the Agent in its sole discretion acting in good faith.
Eurodollar Lending Office. Initially, the office of each Bank
designated as such in Schedule 1 hereto; thereafter, such other office
of such Bank, if any, that shall be making or maintaining Eurodollar
Rate Loans.
Eurodollar Rate. For any Interest Period with respect to a
Eurodollar Rate Loan, the rate per annum equal to the quotient (rounded
upwards to the nearest 1/16 of one percent) of (a) the rate at which the
Agent is offered Dollar deposits two Eurodollar Business Days prior to
the beginning of such Interest Period in an interbank eurodollar market
where the eurodollar and foreign currency and exchange operations of the
Agent are customarily conducted for delivery on the first day of such
Interest Period for the number of days comprised therein and in an
amount comparable to the amount of the Eurodollar Rate Loan to which
such Interest Period applies, divided by (b) a number equal to 1.00
minus the Eurocurrency Reserve Rate.
Eurodollar Rate Loans. Loans bearing interest calculated by
reference to the Eurodollar Rate.
Event of Default. See 12.1.
Fixed Charges. With respect to any fiscal period of the Borrower,
an amount equal to the sum of (i) Interest Expense, (ii) capitalized
interest determined in accordance with generally accepted accounting
principles, (iii) regularly scheduled installments of principal payable
and (except to the extent refinanced with replacement Indebtedness)
current maturities with respect to all Indebtedness of Borrower, plus
(iv) all dividend payments due to the holders of any preferred stock of
the Company or any limited partnership interests in the Borrower.
Fixed Rate Prepayment Fee. See 3.3.
FNBB. See preamble.
Funds From Operations. With respect to any fiscal period of the
Borrower, an amount equal to the Borrower's Funds From Operations
determined in accordance with the definition approved by the National
Association of Real Estate Investment Trusts.
Generally Accepted Accounting Principles. Principles that are (a)
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, as in effect from time
to time and (b) consistently applied with past financial statements of
the Borrower adopting the same principles; provided that a certified
public accountant would, insofar as the use of such accounting
principles is pertinent, be in a position to deliver an unqualified
opinion (other than a qualification regarding changes in generally
accepted accounting principles) as to financial statements in which such
principles have been properly applied.
Guaranteed Pension Plan. Any employee pension benefit plan within
the meaning of 3(2) of ERISA maintained or contributed to by the
Borrower or any ERISA Affiliate the benefits of which are guaranteed on
termination in full or in part by the PBGC pursuant to Title IV of
ERISA, other than a Multiemployer Plan.
Guarantor. Each of the Company and the Guarantor Subsidiaries.
Guarantor Subsidiaries. The partnerships and corporations
designated as Guarantor Subsidiaries on Schedule 1.3 hereto and any
other partnerships or corporations hereafter approved by the Requisite
Banks which are at least 89% owned by Borrower and which execute and
deliver a Guaranty.
Guaranty. The Unconditional Guaranty of Payment and Performance
from each Guarantor to the Agent pursuant to which such Guarantor has
guaranteed the Obligations.
Hazardous Substances. See 6.18(b).
Indebtedness. All obligations, contingent and otherwise, that in
accordance with generally accepted accounting principles should be
classified upon the obligor's balance sheet as liabilities, or to which
reference should be made by footnotes thereto, including in any event
the following whether or not so classified: (a) the Obligations, (b)
all debt and similar monetary obligations for borrowed money, whether
direct or indirect; (c) all liabilities secured by any mortgage, pledge,
negative pledge, security interest, lien, negative lien, charge, or
other encumbrance existing on property owned or acquired subject
thereto, whether or not the liability secured thereby shall have been
assumed; (d) all guarantees, endorsements and other contingent
obligations whether direct or indirect in respect of indebtedness or
obligations of others, including any obligation to supply funds to or in
any manner to invest in, directly or indirectly, the debtor, to purchase
indebtedness, or to assure the owner of indebtedness against loss,
through an agreement to purchase goods, supplies, or services for the
purpose of enabling the debtor to make payment of the indebtedness held
by such owner or otherwise, and the obligations to reimburse the issuer
in respect of any letters of credit; and (e) joint venture and
partnership obligations, contingent or otherwise of the type set forth
in (a) through (d) above.
Interest Expense. With respect to any fiscal period of the
Borrower, an amount equal to the sum of the following with respect to
all Indebtedness (including without limitation Subordinated
Indebtedness) of the Borrower and the Related Companies: (i) total
interest expense, accrued in accordance with generally accepted
accounting principles plus (ii) the amortization of loan acquisition
costs.
Interest Payment Date. As to any Base Rate Loan or Eurodollar Rate
Loan, the first day of each calendar month.
Interest Period. With respect to each Loan, (a) initially, the
period commencing on the Drawdown Date of such Loan and ending on the
last day of one of the periods set forth below, as selected by the
Borrower in a Loan Request (i) for any Base Rate Loan, the last day of
the calendar month; and (ii) for any Eurodollar Rate Loan, 1, 2, 3 or 6
months; and (b) thereafter, each period commencing on the last day of
the next preceding Interest Period applicable to such Loan and ending on
the last day of one of the periods set forth above, as selected by the
Borrower in a Conversion Request; provided that all of the foregoing
provisions relating to Interest Periods are subject to the following:
(A) if any Interest Period with respect to a Eurodollar Rate
Loan would otherwise end on a day that is not a Eurodollar Business Day,
that Interest Period shall be extended to the next succeeding Eurodollar
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding Eurodollar
Business Day;
(B) if any Interest Period with respect to a Base Rate Loan
would end on a day that is not a Business Day, that Interest Period
shall end on the next succeeding Business Day;
(C) if the Borrower shall fail to give notice as provided in
2.6, the Borrower shall be deemed to have requested a conversion of the
affected Eurodollar Rate Loan to a Base Rate Loan on the last day of the
then current Interest Period with respect thereto;
(D) any Interest Period relating to any Eurodollar Rate Loan
that begins on the last Eurodollar Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Eurodollar Business Day of a calendar month; and
(E) the Borrower may not select any Interest Period relating
to any Eurodollar Rate Loan that would extend beyond the Maturity Date,
or if the Term Extension Option is exercised, the Term Extension
Maturity Date.
Investments. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock, partnership or
membership interests or Indebtedness of, or for loans, advances, capital
contributions or transfers of property to, or in respect of any
guaranties (or other commitments as described under Indebtedness), or
obligations of, any Person. In determining the aggregate amount of
Investments outstanding at any particular time: (a) the amount of any
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding;
(b) there shall be included as an Investment all interest accrued with
respect to Indebtedness constituting an Investment unless and until such
interest is paid; (c) there shall be deducted in respect of each such
Investment any amount received as a return of capital (but only by
repurchase, redemption, retirement, repayment, liquidating dividend or
liquidating distribution) ; (d) there shall not be deducted in respect
of any Investment any amounts received as earnings on such Investment,
whether as dividends, interest or otherwise, except that accrued
interest included as provided in the foregoing clause (b) may be
deducted when paid; and (e) there shall not be deducted from the
aggregate amount of Investments any decrease in the value thereof.
Leases. Leases, licenses and agreements whether written or oral,
relating to the use or occupation of space in or on the Buildings or on
the Mortgaged Properties by persons other than Mortgagor, including but
not limited to the leases listed on Schedule 6.22(1).
Loan Documents. This Agreement, the Notes, the Guaranties, the
Security Documents, and any and all other agreements, documents and
instruments now or hereafter evidencing, securing or otherwise relating
to the Loans.
Loan Request. See 2.5.
Loans. Loans made or to be made by the Banks to the Borrower
pursuant to 2.
Major Lease. A Lease of 25,000 square feet or more of the gross
leasable area of a Building located on a Mortgaged Property and any
guaranty of such Lease.
Major Tenants. As to any Major Lease, those tenants that are
parties to that Major Lease and any guarantors of those tenants.
Material Adverse Effect means a material adverse effect on (i) the
business, Mortgaged Properties, results of operations or financial
condition of the Borrower and the Related Companies taken as a whole or
(ii) the ability of the Borrower or any Guarantor to perform its
obligations under the Loan Documents, or (iii) the validity or
enforceability of any of the Loan Documents or the remedies or material
rights of the Agent or the Banks thereunder.
Maturity Date. December 13, 1997, or such earlier date on which
the Loans shall become due and payable pursuant to the terms hereof.
Maximum Loan Amount. Maximum Loan Amount shall mean the least of
the following: (i) the maximum amount of Loans which may be outstanding
without causing a violation of Section 9.1; (ii) the maximum amount of
Loans which may be outstanding without causing a violation of Section
9.2; and (iii) the Total Commitment.
Mortgaged Properties. The (a) Real Estate Assets described on
Schedule 1.1 hereto and such other Real Estate Assets which may be
subsequently conveyed to the Agent as Additional Properties to secure
the Obligations in accordance with 5.3 hereof, excluding from the
foregoing any Real Estate Assets which the Agent may release pursuant to
5.5 hereof, as such Real Estate Assets are more particularly described
in the Security Deeds; (b) the Buildings and Building Service Equipment
located thereon and (to the extent assignable) all Permits relating
thereto; and (c) all other property incident to any of same described in
any Security Document or other Loan Document.
Mortgagor. With respect to each of the Mortgaged Properties, the
owner thereof.
Multi-employer Plan. Any multiemployer plan within the meaning of
3(37) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate.
Net Offering Proceeds. All cash proceeds received after the date
hereof by the Borrower or the Company as a result of the sale of common,
preferred or other classes of stock of the Company or the issuance of
limited partnership interests in the Borrower less customary costs and
discounts of issuance paid by Company or Borrower in connection
therewith.
Net Operating Income. With respect to any fiscal period of the
Borrower and with respect to any one or more of the Real Estate Assets,
the total rental and other operating income from the operation of such
Real Estate Assets after deducting all expenses and other proper charges
incurred by the Borrower in connection with the operation of the
Mortgaged Properties during such fiscal period, including, without
limitation, real estate taxes and bad debt expenses, but before payment
or provision for Fixed Charges, income taxes, and depreciation,
amortization, and other non-cash expenses, all as determined in
accordance with generally accepted accounting principles.
Notes. See 2.3.
Obligations. All indebtedness, obligations and liabilities of the
Borrower or any Guarantor to any of the Banks and the Agent,
individually or collectively, under this Agreement or any of the other
Loan Documents or in respect of any of the Loans or the Notes or other
instruments at any time evidencing any thereof, whether existing on the
date of this Agreement or arising or incurred hereafter, direct or
indirect, joint or several, absolute or contingent, matured or
unmatured, liquidated or unliquidated, secured or unsecured, arising by
contract, operation of law of otherwise.
Outstanding. With respect to the Loans, the aggregate unpaid
principal thereof as of any date of determination.
PBGC. The Pension Benefit Guaranty Corporation created by 4002 of
ERISA and any successor entity or entities having similar
responsibilities.
Permits. All governmental permits, licenses, and approvals
necessary for the lawful operation and maintenance of the Mortgaged
Properties.
Permitted Acquisition. The acquisition by Borrower or any
Guarantor of Real Estate Assets which, in the aggregate, are primarily
leased or intended to be leased primarily for industrial or office
purposes (including "flex" and warehouse uses)..
Permitted Joint Ventures. Any entity in which Borrower has any
direct or indirect ownership interest, except the Company and the
Related Companies, including general partnerships, corporations, trusts
and limited liability companies, which own or propose to develop
industrial or office properties provided that neither Borrower or any
Guarantor shall have any recourse liability for the Indebtedness of such
entity. Permitted Joint Ventures existing on the date hereof are set
forth in Schedule 1.3.
Permitted Build-To-Suit Developments. Permitted Developments with
respect to which, prior to the start of construction, at least sixty
percent (60%) of the gross leasable area of the buildings to be
constructed pursuant thereto are subject to executed Leases having an
average term of not less than four (4) years and which obligate the
tenants named therein to accept occupancy and commence paying rent
promptly upon the issuance of a certificate of occupancy with respect
thereto.
Permitted Developments. The construction of any new buildings or
the construction of additions expanding existing buildings or the
rehabilitation of the existing buildings (other than normal refurbishing
and tenant fit up work when one tenant leases space previously occupied
by another tenant) relating to any Real Estate Assets of the Borrower or
any of the Related Companies and each Permitted Development shall be
counted for purposes of 8.3 from the time of commencement of the
applicable construction work until a final certificate of occupancy has
been issued with respect to such project.
Permitted Liens. Liens, security interests and other encumbrances
permitted by 8.2.
Person. Any individual, corporation, partnership, trust,
unincorporated association, business, or other legal entity, and any
government or any governmental agency or political subdivision thereof.
Prepayment Date. See 3.3.
Pro Forma Debt Service Charges for the Mortgaged Properties. For
any fiscal quarter of the Borrower, an amount determined by the Agent
based on a twenty (20) year mortgage style amortization schedule,
calculated on the Pro Forma Principal Amount and an interest rate equal
to the greater of (i) ten percent (10%) per annum or (ii) the then
current ten (10) year U.S. Treasury bill yield plus two percent (2%).
Pro Forma Principal Amount. (a) With respect to Compliance
Certificates delivered pursuant to 7.4(e), the maximum principal amount
outstanding at any time during the applicable fiscal quarter; (b) with
respect to Compliance Certificates delivered pursuant to 2.5(a) or 11.1,
the principal amount outstanding after giving effect to the requested
Loan; (c) with respect to Compliance Certificates delivered pursuant to
5.5(a) or 8.4(b), the principal amount outstanding after giving effect
to any proposed sale or transfer including any payments on the Loans to
be made in connection therewith.
Properties. All Real Estate Assets, Real Estate, and all other
assets, including, without limitation, intangibles and personalty owned
by the Borrower.
Real Estate. All real property at any time owned, leased (as
lessee or sublessee) or operated by the Borrower, any Guarantor, or any
of the Related Companies or any Permitted Joint Venture.
Real Estate Assets. Those fixed and tangible properties
consisting of land, buildings and/or other improvements owned by the
Borrower, by any Guarantor, by any of the Related Companies or by any
Permitted Joint Venture at the relevant time of reference thereto,
including without limitation, the Mortgaged Properties, but excluding
all leaseholds other than leaseholds under ground leases having an
unexpired term of 30 years.
Record. The grid attached to any Note, or the continuation of
such grid, or any other similar record, including computer records,
maintained by any Bank with respect to any Loan referred to in such
Note.
Recourse Indebtedness. All Indebtedness except Indebtedness with
respect to which recourse for payment is contractually limited (except
for customary exclusions) to specific assets encumbered by a lien
securing such Indebtedness.
Related Companies. The entities listed and described on Schedule
1.3 hereto, or thereafter, any entity whose financial statements are
consolidated or combined with the Borrower's pursuant to generally
accepted accounting principles, or any ERISA Affiliate.
Release. See 6.18(c)(iii).
Required Interest Rate Contracts. Interest rate swap, cap or
similar agreements providing for interest rate protection, at an all-in
rate not higher than one percent (1%) per annum above the average
interest rate applicable to Eurodollar Rate Loans hereunder at the time
such interest rate protection agreements are acquired, covering that
portion of Borrower's Variable Rate Indebtedness equal to the lesser of
(i) the Total Commitment or (ii) the amount by which Borrower's Variable
Rate Indebtedness exceeds 20% of Total Assets.
Requisite Banks. As of any date, the Banks whose aggregate
Commitments constitute at least sixty-six percent (66%) of the Total
Commitment provided that the Agent must always be among the Requisite
Banks and provided that the Commitments of any Delinquent Banks shall be
disregarded when determining the Requisite Banks.
Responsible Officer. With respect to the Company, any one of its
Chief Financial Officer, Treasurer, Executive Vice Presidents or Senior
Vice Presidents.
Security Deeds. The mortgages and deeds of trust from the
Mortgagor to the Agent pursuant to which the Mortgagor shall convey the
Mortgaged Properties as security for the Obligations.
Security Documents. The Security Deeds, the Assignments of Rents
and Leases and the UCC-1 financing statements.
Senior Interest Expense. With respect to any fiscal period of the
Borrower, an amount equal to Interest Expense minus the portion thereof
relating to Subordinated Indebtedness plus all capitalized interest
determined in accordance with generally accepted accounting principles.
Service Agreements. All service agreements between the Borrower
and third parties, whether written or oral, relating to the operation,
maintenance, security, finance or insurance of the Mortgaged Properties.
Subordinated Indebtedness. All Indebtedness of Borrower which is
expressly subordinated and junior in right of payment to the prior
payment in full of the Obligations provided that the subordination
provisions applicable to such Indebtedness are satisfactory to the
Agent. On the date hereof Subordinated Indebtedness consists of the
Indebtedness of Borrower with respect to its Exchangeable Subordinated
Debentures due 2001 issued and outstanding pursuant to the Subordinated
Debenture Indenture.
Subordinated Debenture Indenture. The Indenture dated as of June
23, 1994 among the Borrower, the Company and The First National Bank of
Boston as Trustee relating to the Borrower's Exchangeable Subordinated
Debentures due 2001.
Subsidiary. Any corporation, association, trust, or other
business entity of which the designated parent or other controlling
Person shall at any time own directly or indirectly through a Subsidiary
or Subsidiaries at least a majority (by number of votes) of the
outstanding Voting Interests.
Surveys shall mean instrument surveys of the Mortgaged Properties,
which shall show the location of all Buildings, easements and utility
lines on the Mortgaged Properties, shall be sufficient to remove the
survey exception from the Title Policy, shall show that all Buildings
are within the lot lines of the Mortgaged Properties, shall not show any
material encroachments by others, and shall show whether or not the
Mortgaged Properties are located in any flood hazard district as
established by the Federal Emergency Management Agency or any successor
agency or are located in any flood plain, flood hazard or wetland
protection district established under federal, state or local law and in
addition shall meet the then applicable standards of the Agent.
Tangible Net Worth. Total Assets minus Total Liabilities minus
all intangibles determined in accordance with generally accepted
accounting principles.
Term Extension Maturity Date. December 13, 1998.
Term Extension Option. See 3.1.
Title Insurance Company shall mean Commonwealth Land Title
Insurance Company.
Title Policy shall mean for each Mortgaged Property an ALTA
standard form title insurance policy issued by the Title Insurance
Company (with such reinsurance or co-insurance as the Agent may require,
any such reinsurance to be with direct access endorsements) insuring the
priority of the Security Deed and Assignment of Leases and Rents and
that the Mortgagor holds good and clear record marketable fee simple
title to the Mortgaged Property, subject only to the encumbrances
permitted by the Security Deed and which shall not contain exceptions
for mechanics liens, persons in occupancy (other than Leases listed on
Schedule 6.22(1)) or matters which would be shown by a survey (other
than matters approved by the Agent in its reasonable discretion), shall
not insure over any matter except to the extent that any such
affirmative insurance is acceptable to the Agent in its sole discretion,
and shall contain such endorsements and affirmative insurance as the
Agent in its reasonable discretion may require, including but not
limited to (a) comprehensive endorsement, (b) variable rate of interest
endorsement, (c) usury endorsement, (d) revolving credit endorsement,
(e) doing business endorsement, (f) ALTA form 3.1 zoning endorsement (g)
survey(same-as) endorsement (h) access endorsement, (i) tie-in
endorsement and (j) a first loss endorsement, to the extent that such
endorsements are available in the state where the applicable Mortgaged
Property is located. The Title Policies with tie-in endorsements
referencing all other Title Policies shall have a face amount equal to
the Allocated Loan Amount of the applicable Mortgaged Properties. The
Title Policies without tie-in endorsements referencing all other Title
Policies shall have a face amount equal to the Appraised Value of the
applicable Mortgaged Properties.
Total Assets. The aggregate book value of all assets of the
Borrower and the Related Companies consolidated and determined in
accordance with generally accepted accounting principles plus
accumulated depreciation and amortization related to Real Estate Assets.
Total Commitment. The sum of the Commitments of the Banks, as in
effect from time to time.
Total Liabilities. The sum of the following (without duplication):
(i) all liabilities of the Borrower and the Related Companies
consolidated and determined in accordance with generally accepted
accounting principles, (ii) all Indebtedness of the Borrower and the
Related Companies whether or not so classified, including, without
limitation, all outstanding Loans under this Agreement, and (iii) the
balance available for drawing under letters of credit issued for the
account of the Borrower or any of the Related Companies.
Total Operating Cash Flow. With respect to any fiscal period of
the Borrower the sum of (i) Funds From Operations plus (ii) Interest
Expense minus (iii) a reserve for capital expenditures and leasing costs
equal to fifteen cents ($0.15) per year per square foot of the gross
leasable area of all Real Estate Assets owned by the Borrower or any of
the Related Companies, all as determined in accordance with generally
accepted accounting principles except that any rent leveling adjustments
shall be deducted from Funds From Operations.
Type. As to any Loan its nature as a Base Rate Loan or a
Eurodollar Rate Loan.
Unused Amount. See 4.2
Variable Rate Indebtedness. The Loans and all other Indebtedness
of the Borrower which bears interest at a rate which is not fixed
through the maturity of such Indebtedness.
Voting Interests. Stock or similar ownership interests, of any
class or classes (however designated), the holders of which are at the
time entitled, as such holders, (a) to vote for the election of a
majority of the directors (or persons performing similar functions) of
the corporation, association, partnership, trust or other business
entity involved, or (b) to control, manage or conduct the business of
the corporation, partnership, association, trust or other business
entity involved.
1.2. Rules of Interpretation.
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to
time in accordance with its terms and the terms of this Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any amendment or modification
to such law.
(d) A reference to any Person includes its permitted
successors and permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by generally accepted accounting principles
applied on a consistent basis by the accounting entity to which they
refer and, except as otherwise expressly stated, all use of accounting
terms with respect to the Borrower shall reflect the consolidation of
the financial statements of Borrower and the Related Companies.
(f) The words "include", "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by
generally accepted accounting principles, which terms are defined in the
Uniform Commercial Code as in effect in Massachusetts, have the meanings
assigned to them therein.
(h) Reference to a particular "" refers to that section of
this Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of
like import shall refer to this Agreement as a whole and not to any
particular section or subdivision of this Agreement.
(j) The words "so long as any Loan or Note is outstanding"
shall mean so long as such Loan or Note is not indefeasibly paid in full
in cash.
2. REVOLVING CREDIT FACILITY.
2.1. Commitment to Lend; Limitation on Total Commitment. Subject
to the provisions of 2.5 and the other terms and conditions set forth in
this Agreement, each of the Banks severally agrees to lend to the
Borrower and the Borrower may borrow, repay, and reborrow from time to
time between the Effective Date and the Maturity Date (or, if the Term
Extension Option is exercised, the Term Extension Maturity Date) upon
notice by the Borrower to the Agent given and approved by the Agent in
accordance with 2.5, such sums as are requested by the Borrower up to a
maximum aggregate principal amount outstanding (after giving effect to
all amounts requested) at any one time equal to such Bank's Commitment,
provided that the sum of the outstanding amount of the Loans (after
giving effect to all amounts requested) shall not at any time exceed the
Maximum Loan Amount. The Loans shall be made pro rata in accordance with
each Bank's Commitment Percentage and the Banks shall at all times
immediately adjust inter se any inconsistency between each Bank's
outstanding principal amount and each Bank's Commitment. Each request
for a Loan hereunder shall constitute a representation and warranty by
the Borrower that the conditions set forth in 10 or 11 (whichever is
applicable) have been satisfied on the date of such request and will be
satisfied on the proposed Drawdown Date of the requested Loan, provided
that the making of such representation and warranty by Borrower shall
not limit the right of any Bank not to lend upon a determination by the
Requisite Banks that such conditions have not been satisfied.
2.2. Reduction of Commitment. The Borrower shall have the right
effective upon the extension of the Maturity Date pursuant to 3.1, upon
at least ten (10) Business Days' prior written notice to the Agent, to
reduce by $1,000,000 or an integral multiple of $100,000 in excess
thereof the unborrowed portion of the then Total Commitment, provided
that the Total Commitment shall not be reduced to less than $50,000,000,
whereupon the Commitments of the Banks shall be reduced pro rata in
accordance with their respective Commitment Percentages by the amount
specified in such notice. Upon the effective date of any such reduction,
the Borrower shall pay to the Agent for the respective accounts of the
Banks the full amount of any commitment fee then accrued on the amount
of the reduction. No reduction of the Commitments may be reinstated.
2.3. The Notes. The Loans shall be evidenced by separate
promissory notes of the Borrower in substantially the form of Exhibit A
hereto (each a "Note"), and completed with appropriate insertions. A
Note shall be payable to the order of each Bank in a principal amount
equal to such Bank's Commitment. The Borrower irrevocably authorizes
each Bank to make or cause to be made, at or about the time of the
Drawdown Date of any Loan or at the time of receipt of any payment of
principal on such Bank's Note, an appropriate notation on such Bank's
Record reflecting the making of such Loan or (as the case may be) the
receipt of such payment. The outstanding amount of the Loans set forth
on such Bank's Record shall (absent manifest error) be prima facie
evidence of the principal amount thereof owing and unpaid to such Bank,
but the failure to record, or any error in so recording, any such amount
on the Record shall not limit or otherwise affect the obligations of the
Borrower hereunder or under any Note to make payments of principal of or
interest on any Note when due.
2.4. Interest on Loans.
(a) Each Base Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of
the Interest Period with respect thereto at the Base Rate.
(b) Each Eurodollar Rate Loan shall bear interest for the
period commencing with the Drawdown Date thereof and ending on the last
day of the Interest Period with respect thereto at the rate of 160 basis
points per annum above the Eurodollar Rate determined for such Interest
Period.
(c) The Borrower unconditionally promises to pay interest
on each Loan in arrears on each Interest Payment Date with respect
thereto.
2.5. Requests for Loans.
(a) The Borrower shall give to the Agent written notice in
the form of Exhibit B hereto of each Loan requested hereunder (a "Loan
Request") no less than (a) two (2) Business Days prior to the proposed
Drawdown Date of any Base Rate Loan and (b) four (4) Eurodollar Business
Days prior to the proposed Drawdown Date of any Eurodollar Rate Loan.
Each such notice shall specify (i) the principal amount of the Loan
requested, (ii) the proposed Drawdown Date of such Loan, (iii) the
Interest Period for such Loan, and (iv) the Type of such Loan, and shall
be accompanied by a statement in the form of Exhibit C hereto signed by
a Responsible Officer setting forth in reasonable detail computations
evidencing compliance with the covenants contained in 9.1 through 9.7
hereof after giving effect to such requested Loan (a "Compliance
Certificate"). Promptly upon receipt of a Loan Request, the Agent shall
notify each of the Banks thereof and each Bank shall immediately notify
the Agent if it believes that any of the conditions contained in 11 of
this Agreement has not been met or waived. If such a notice is given
the Requisite Banks shall promptly determine whether all of the
conditions contained in 11 of this Agreement have been met or waived.
If no such notice is given by any Bank or if following such notice the
Requisite Banks determine that the conditions contained in 11 have been
met or waived, each of the Banks shall be obligated to fund its
Commitment Percentage of the requested Loans. Each such Loan Request
shall be irrevocable and binding on the Borrower and the Borrower shall
be obligated to accept the Loan requested from the Banks on the proposed
Drawdown Date. Each Loan Request shall be in a minimum aggregate amount
of $3,000,000 or an integral multiple of $1,000,000 in excess thereof.
(b) Notwithstanding anything contained in 2.5 (a) to the
contrary, in the event that the making of a requested Loan would cause
non-compliance with any of the covenants contained in 9.1 through 9.7
hereof, the Agent may, in its sole discretion, reduce the amount of the
Loan Request to an amount which would enable the Borrower to maintain
compliance with such otherwise defaulted covenant or covenants and
Borrower shall accept the Loan made pursuant to such reduced Loan
Request.
2.6. Conversion Options.
(a) The Borrower may elect from time to time to convert any
outstanding Loan to a Loan of another Type, provided that (i) with
respect to any such conversion of a Eurodollar Rate Loan to a Base Rate
Loan, the Borrower shall give the Agent at least three (3) Business
Days, prior written notice of such election; (ii) with respect to any
such conversion of a Eurodollar Rate Loan into a Base Rate Loan, such
conversion shall only be made on the last day of the Interest Period
with respect thereto; (iii) subject to the further proviso at the end of
this section and subject to 2.6(b) and 2.6(d) hereof with respect to any
such conversion of a Base Rate Loan to a Eurodollar Rate Loan, the
Borrower shall give the Agent at least four (4) Eurodollar Business
Days, prior written notice of such election and (iv) no Loan may be
converted into a Eurodollar Rate Loan when any Default or Event of
Default has occurred and is continuing. On the date on which such
conversion is being made, each Bank shall take such action as is
necessary to transfer its Commitment Percentage of such Loans to its
Domestic Lending Office or its Eurodollar Lending Office, as the case
may be. All or any part of outstanding Loans of any Type may be
converted as provided herein, provided further that each Conversion
Request relating to the conversion of a Base Rate Loan to a Eurodollar
Rate Loan shall be for an amount equal to $3,000,000 or an integral
multiple of $1,000,000 in excess thereof and shall be irrevocable by the
Borrower.
(b) Any Loans of any Type may be continued as such upon the
expiration of an Interest Period with respect thereto by compliance by
the Borrower with the notice provisions contained in 2.6 (a) ; provided
that no Eurodollar Rate Loan may be continued as such when any Default
or Event of Default has occurred and is continuing but shall be
automatically converted to a Base Rate Loan on the last day of the first
Interest Period relating thereto ending during the continuance of any
Default or Event of Default of which the officers of the Agent active
upon the Borrower's account have actual knowledge.
(c) In the event that the Borrower does not notify the
Agent of its election hereunder with respect to any Loan, such Loan
shall be automatically converted to a Base Rate Loan at the end of the
applicable Interest Period.
(d) The Borrower may not request a Eurodollar Rate Loan
pursuant to 2.5, elect to convert a Base Rate Loan to a Eurodollar Rate
Loan pursuant to 2.5(a) or elect to continue a Eurodollar Rate Loan
pursuant to 2.6(b) if, after giving effect thereto, there would be
greater than six (6) Eurodollar Rate Loans outstanding. Any Loan Request
for a Eurodollar Rate Loan that would create greater than six (6)
Eurodollar Rate Loans outstanding shall be deemed to be a Loan Request
for a Base Rate Loan.
2.7. Funds for Loans.
(a) Subject to 2.5 and other provisions of this Agreement,
not later than 11:00 a.m. (Boston time) on the proposed Drawdown Date of
any Loans, each of the Banks will make available to the Agent, at the
Agent's Head office, in immediately available funds, the amount of such
Bank's Commitment Percentage of the amount of the requested Loans. Upon
receipt from each Bank of such amount, and upon receipt of the documents
required by 10 or 11 (whichever is applicable) and the satisfaction of
the other conditions set forth therein, to the extent applicable, the
Agent will make available to the Borrower the aggregate amount of such
Loans made available to the Agent by the Banks. The failure or refusal
of any Bank to make available to the Agent at the aforesaid time and
place on any Drawdown Date the amount of its Commitment Percentage of
the requested Loans shall not relieve any other Bank from its several
obligation hereunder to make available to the Agent the amount of such
other Bank's Commitment Percentage of any requested Loans but shall not
obligate any other Bank or Agent to fund more than its Commitment
Percentage of the requested Loans or to increase its Commitment
Percentage.
(b) The Agent may, unless notified to the contrary by any
Bank prior to a Drawdown Date, assume that such Bank has made available
to the Agent on such Drawdown Date the amount of such Bank's Commitment
Percentage of the Loans to be made on such Drawdown Date, and the Agent
may (but it shall not be required to), in reliance upon such assumption,
make available to the Borrower a corresponding amount. If any Bank makes
available to the Agent such amount on a date after such Drawdown Date,
such Bank shall pay to the Agent on demand an amount equal to the
product of (i) the average computed for the period referred to in clause
(iii) below, of the weighted average interest rate paid by the Agent for
federal funds acquired by the Agent during each day included in such
period, times (ii) the amount of such Bank's Commitment Percentage of
such Loans, times (iii) a fraction, the numerator of which is the number
of days or portion thereof that elapsed from and including such Drawdown
Date to the date on which the amount of such Bank's Commitment
Percentage of such Loans shall become immediately available to the
Agent, and the denominator of which is 365. A statement of the Agent
submitted to such Bank with respect to any amounts owing under this
paragraph shall be prima facie evidence of the amount due and owing to
the Agent by such Bank.
3. REPAYMENT OF THE LOANS.
3.1. Maturity; Term Extension Option. (a) The Borrower
unconditionally promises to pay on the Maturity Date, and there shall
become absolutely due and payable on the Maturity Date, all of the Loans
outstanding on such date, together with any and all accrued and unpaid
interest and charges thereon unless prior to the Maturity Date the
Borrower elects the Term Extension Option pursuant to this 3.1.
(b) At any time prior to the Maturity Date, provided that
no Default or Event of Default has occurred and is continuing, the
Borrower shall have the option to extend the Maturity Date for one (1)
year subject to satisfaction of the following conditions: (a) the
Borrower shall acquire the Required Interest Rate Contracts, and (b) not
more than an aggregate of $10,000,000 of other Recourse Indebtedness of
Borrower has a maturity which is sooner than ninety days after the
extended Maturity Date. The Term Extension Option shall be exercised by
written notice to the Agent at least ten (10) Business Days prior to the
Maturity Date. Such written notice must be accompanied by payment of a
Term Extension option fee equal to twenty-five basis points (0.25%) of
the Total Commitment to be in effect after such extension taking into
account any reduction pursuant to 2.2.
3.2. Mandatory Repayments of Loan. If at any time the sum of the
outstanding amount of the Loans exceeds the Maximum Loan Balance, then
the Borrower shall immediately pay the amount of such excess to the
Agent for the respective accounts of the Banks for application to the
Loans.
3.3. Optional Repayments of Loans. The Borrower shall have the
right, at its election, to repay the outstanding amount of the Loans, as
a whole or in part, on any Business Day, without penalty or premium;
provided that the full or partial prepayment of the outstanding amount
of any Eurodollar Rate Loans made pursuant to this 3.3 may be made only
on the last day of the Interest Period relating thereto, except as set
forth below in this 3.3. The Borrower shall give the Agent no later than
10:00 a.m., Boston time, at least three (3) Business Days' prior written
notice of any prepayment pursuant to this 3.3 of any Base Rate Loans and
four (4) Eurodollar Business Days, notice of any proposed repayment
pursuant to this 3.3 of any Eurodollar Rate Loans, specifying the
proposed date of payment of Loans and the principal amount to be paid.
Each such partial prepayment of the Loans shall be in an integral
multiple of $100,000 and shall be accompanied by the payment of all
charges outstanding on all Loans and of accrued interest on the
principal repaid to the date of payment and shall be applied, in the
absence of instruction by the Borrower, first to the principal of Base
Rate Loans and then to the principal of Eurodollar Rate Loans.
Notwithstanding anything contained herein to the contrary, the Borrower
may make a full or partial prepayment of a Eurodollar Rate Loan on a
date other than the last day of the Interest Period relating thereto, if
all optional prepayments (in whole or in part) on such Loans shall be
accompanied by, and the Borrower hereby promises to pay, a prepayment
fee in an amount determined by the Agent in the following manner:
(i) Fixed Rate Prepayment Fee. Borrower acknowledges
that prepayment or acceleration of a Eurodollar Loan during an Interest
Period shall result in the Banks incurring additional costs, expenses
and/or liabilities and that it is extremely difficult and impractical to
ascertain the extent of such costs, expenses and/or liabilities. (For
all purposes of this Section, any Loan not being made as a Eurodollar
Rate Loan in accordance with the Loan Request therefor, as a result of
Borrower's cancellation thereof, shall be treated as if such Eurodollar
Rate Loan had been prepaid.) Therefore, on the date a Eurodollar Rate
Loan is prepaid or the date all sums payable hereunder become due and
payable, by acceleration or otherwise ("Prepayment Date"), Borrower will
pay to Agent, for the account of each Bank, (in addition to all other
sums then owing), an amount ("Fixed Rate Prepayment Fee") determined by
the Agent to be the amount, if any, by which (i) the amount of interest
which would have accrued on the prepaid Eurodollar Rate Loan for the
remainder of the Interest Period at the rate applicable to such
Eurodollar Rate Loan exceeds (ii) the amount of interest that would
accrue on a Eurodollar Rate Loan in the same amount for the same period
if the Eurodollar Rate were set on the Prepayment Date.
(ii) Upon the written notice to Borrower from Agent,
Borrower shall immediately pay to Agent, for the account of the Banks,
the Fixed Rate Prepayment Fee. Such written notice (which shall include
calculations in reasonable detail) shall, in the absence of manifest
error, be conclusive and binding on the parties hereto.
(iii) Borrower understands, agrees and acknowledges the
following: (i) no Bank has any obligation to purchase, sell and/or
match funds in connection with the use of the Eurodollar Rate as a basis
for calculating the rate of interest on a Eurodollar Rate Loan; (ii) the
Eurodollar Rate is used merely as a reference in determining such rate;
and (iii) Borrower has accepted the Eurodollar Rate as a reasonable and
fair basis for calculating such rate and a Fixed Rate Prepayment Fee.
Borrower further agrees to pay the Fixed Rate Prepayment Fee, if any,
whether or not a Bank elects to purchase, sell and/or match funds.
4. CERTAIN GENERAL PROVISIONS.
4.1. Revolving Credit Facility Fees and Agent's Fee. The
Borrower agrees to pay to the Agent a revolving credit facility fee and
agency fees in the amounts specified in the agreement regarding fees
between the Agent and the Borrower and the Agent shall be responsible
for any facility fees which it may agree to pay to the other Banks which
become a party to this Agreement.
4.2. Commitment Fee. The Borrower shall pay to the Agent for
the accounts of the Banks in accordance with their respective Commitment
Percentages a commitment fee calculated at the rates set forth below per
annum on the daily amount by which the Total Commitment (as it may have
been reduced pursuant to 2.2) exceeds the outstanding amount of Loans
(the "Unused Amount"):
Unused Amount Fee Rate
less than 1/3 of Total Commitment 15 basis points
at least 1/3 of Total Commitment
but less than 2/3 of Total Commitment 20 basis points
at least 2/3 of Total Commitment 25 basis points
The commitment fee shall not accrue until March 1, 1997. Thereafter,
the commitment fee shall be payable on the basis of the applicable
annual rate quarterly in arrears on the first day of each calendar
quarter for the immediately preceding calendar quarter commencing on the
first such date following the date hereof, with a final payment on the
Maturity Date or, if the Term Extension Option is exercised, the Term
Extension Maturity Date or any earlier date on which the Commitments
shall terminate.
4.3. Funds for Payments.
(a) All payments of principal, interest, closing fees,
commitment fees and any other amounts due hereunder (other than as
provided in 4.1, 4.5 and 4.6) or under any of the other Loan Documents,
and all prepayments, shall be made to the Agent, for the respective
accounts of the Banks, at the Agent's Head Office, in each case in
Dollars in immediately available funds.
(b) All payments by the Borrower hereunder and under any
of the other Loan Documents shall be made without setoff or counterclaim
and free and clear of and without deduction for any taxes, levies,
imposts, duties, charges, fees, deductions, withholdings, compulsory
liens, restrictions or conditions of any nature now or hereafter imposed
or levied by any jurisdiction or any political subdivision thereof or
taxing or other authority therein unless the Borrower is compelled by
law to make such deduction or withholding. If any such obligation is
imposed upon the Borrower with respect to any amount payable by it
hereunder or under any of the other Loan Documents, the Borrower shall
pay to the Agent, for the account of the Banks or (as the case may be)
the Agent, on the date on which such amount is due and payable hereunder
or under such other Loan Document, such additional amount in Dollars as
shall be necessary to enable the Banks or the Agent to receive the same
net amount which the Banks or the Agent would have received on such due
date had no such obligation been imposed upon the Borrower. The Borrower
will deliver promptly to the Agent certificates or other valid vouchers
for all taxes or other charges deducted from or paid with respect to
payments made by the Borrower hereunder or under such other Loan
Document.
4.4. Computations. All computations of interest on the Loans and of
other fees to the extent applicable shall be based on a 360-day year and
paid for the actual number of days elapsed. Except as otherwise provided
in the definition of the term "Interest Period" with respect to
Eurodollar Rate Loans, whenever a payment hereunder or under any of the
other Loan Documents becomes due on a day that is not a Business Day,
the due date for such payment shall be extended to the next succeeding
Business Day, and interest shall accrue during such extension. The
outstanding amount of the Loans as reflected on the Records from time to
time shall (absent manifest error) be considered correct and binding on
the Borrower unless within thirty (30) Business Days after receipt by
the Agent or any of the Banks from Borrower of any notice by the
Borrower of such outstanding amount, the Agent or such Bank shall notify
the Borrower to the contrary.
4.5. Additional Costs, Etc. If any present or future applicable law
which expression, as used herein, includes statutes, rules and
regulations thereunder and interpretations thereof by any competent
court or by any governmental or other regulatory body or official
charged with the administration or the interpretation thereof and
requests, directives, instructions and notices at any time or from time
to time hereafter made upon or otherwise issued to any Bank or the Agent
by any central bank or other fiscal, monetary or other authority
(whether or not having the force of law), shall:
(a) subject any Bank or the Agent to any tax, levy,
impost, duty, charge, fee, deduction or withholding of any nature with
respect to this Agreement, the other Loan Documents, such Bank's
Commitment or the Loans (other than taxes based upon or measured by the
income or profits of such Bank or the Agent), or
(b) materially change the basis of taxation (except for
changes in taxes on income or profits) of payments to any Bank of the
principal of or the interest on any Loans or any other amounts payable
to any Bank under this Agreement or the other Loan Documents, or
(c) impose or increase or render applicable (other than to
the extent specifically provided for elsewhere in this Agreement) any
special deposit, reserve, assessment, liquidity, capital adequacy or
other similar requirements (whether or not having the force of law)
against assets held by, or deposits in or for the account of, or loans
by, or commitments of an office of any Bank, or
(d) impose on any Bank any other conditions or
requirements with respect to this Agreement, the other Loan Documents,
the Loans, the Commitment, or any class of loans or commitments of which
any of the Loans or the Commitment forms a part;
and the result of any of the foregoing is
(i) to increase the cost to such Bank of making,
funding, issuing, renewing, extending or maintaining any of the Loans or
such Bank's Commitment, or
(ii) to reduce the amount of principal, interest or
other amount payable to such Bank or the Agent hereunder on account of
the Commitments or any of the Loans, or
(iii) to require such Bank or the Agent to make any
payment or to forego any interest or other sum payable hereunder, the
amount of which payment or foregone interest or other sum is calculated
by reference to the gross amount of any sum receivable or deemed
received by such Bank or the Agent from the Borrower hereunder, then,
and in each such case, the Borrower will, upon demand made by such Bank
or (as the case may be) the Agent at any time and from time to time and
as often as the occasion therefor may arise, pay to such Bank or the
Agent, to the extent permitted by law, such additional amounts as will
be sufficient to compensate such Bank or the Agent for such additional
cost, reduction, payment or foregone interest or other sum.
4.6. Capital Adequacy. If any present or future law,
governmental rule, regulation, policy, guideline or directive (whether
or not having the force of law) or the interpretation thereof by a court
or governmental authority with appropriate jurisdiction affects the
amount of capital required or expected to be maintained by banks or bank
holding companies and any Bank or the Agent determines that the amount
of capital required to be maintained by it is increased by or based upon
the existence of the Loans made or deemed to be made pursuant hereto,
then such Bank or the Agent may notify the Borrower of such fact, and
the Borrower shall pay to such Bank or the Agent from time to time on
demand, as an additional fee payable hereunder, such amount as such Bank
or the Agent shall determine in good faith and certify in a notice to
the Borrower to be an amount that will adequately compensate such Bank
or the Agent in light of these circumstances for its increased costs of
maintaining such capital. Each Bank and the Agent shall allocate such
cost increases among its customers in good faith and on an equitable
basis.
4.7. Certificate. A certificate setting forth any additional
amounts payable pursuant to 4.5 or 4.6 and a brief explanation of such
amounts which are due, submitted by any Bank or the Agent to the
Borrower, shall be prima facie evidence that such amounts are due and
owing.
4.8. Indemnity. In addition to the other provisions of this
Agreement regarding any such matters, the Borrower agrees to indemnify
each Bank and to hold each Bank harmless from and against any loss, cost
or reasonable expense (including loss of anticipated profits) that such
Bank may sustain or incur as a consequence of (a) a default by the
Borrower in payment of the principal amount of or any interest on any
Eurodollar Rate Loans as and when due and payable, including any such
loss or expense caused by Borrower's breach or other default and arising
from interest or fees payable by such Bank to lenders of funds obtained
by it in order to maintain its Eurodollar Rate Loans, (b) a default by
the Borrower in making a borrowing or conversion after the Borrower has
given (or is deemed to have given) a Loan Request or a Conversion
Request, and (c) the making of any payment of a Eurodollar Rate Loan or
the making of any conversion of a Eurodollar Rate Loan to a Base Rate
Loan on a day that is not the last day of the applicable Interest Period
with respect thereto, including interest or fees payable by such Bank to
lenders of funds obtained by it in order to maintain any such Eurodollar
Rate Loan.
4.9. Interest or Overdue Amounts. Overdue principal and (to the
extent permitted by applicable law) interest on the Loans and all other
overdue amounts payable hereunder or under any of the other Loan
Documents shall bear interest compounded monthly and payable on demand
at a rate per annum equal to four percent (4%) above the rate of
interest otherwise payable hereunder until such amount shall be paid in
full (after as well as before judgment) . In addition, the Borrower
shall pay to the Agent a late charge equal to three percent (3%) of any
amount of principal and/or interest and/or charges on the Loans which is
not paid within ten (10) days of the date when due.
4.10. Inability to Determine Eurodollar Rate. In the event,
prior to the commencement of any Interest Period relating to any
Eurodollar Rate Loan, the Agent shall determine that adequate and
reasonable methods do not exist for ascertaining the Eurodollar Rate
that would otherwise determine the rate of interest to be applicable to
any Eurodollar Rate Loan during any Interest Period, the Agent shall
forthwith give notice of such determination (which shall be conclusive
and binding on the Borrower) to the Borrower. In such event (a) any Loan
Request with respect to Eurodollar Rate Loans shall be automatically
withdrawn and shall be deemed a request for Base Rate Loans, (b) each
Eurodollar Rate Loan will automatically, on the last day of the then
current Interest Period thereof, become a Base Rate Loan, and (c) the
obligations of the Banks to make Eurodollar Rate Loans shall be
suspended until the Agent determines that the circumstances giving rise
to such suspension no longer exist, whereupon the Agent shall so notify
the Borrower.
4.11. Illegality. Notwithstanding any other provisions herein,
if any present or future law, regulation, treaty or directive or in the
interpretation or application thereof shall make it unlawful for any
Bank to make or maintain Eurodollar Rate Loans, such Bank shall
forthwith give notice of such circumstances to the Borrower and
thereupon (a) the Commitment of such Bank to make Eurodollar Rate Loans
or convert Loans of another Type to Eurodollar Rate Loans shall
forthwith be suspended and (b) the Eurodollar Rate Loans then
outstanding shall be converted automatically to Base Rate Loans on the
last day of each Interest Period applicable to such Eurodollar Rate
Loans or within such earlier period as may be required by law. The
Borrower hereby agrees promptly to pay to the Agent for the account of
such Bank, upon demand, any additional amounts necessary to compensate
such Bank for any costs incurred by such Bank in making any conversion
in accordance with this 4.11, including any interest or fees payable by
such Bank to lenders of funds obtained by it in order to make or
maintain its Eurodollar Rate Loans hereunder.
4.12. Replacement of Banks. If any of the Banks shall make a
notice or demand upon the Borrower pursuant to 4.5, 4.6, or 4.11 based
on circumstances or laws which are not generally applicable to the Banks
organized under the laws of the United States or any State thereof, the
Borrower shall have the right to replace such Bank with an Eligible
Assignee selected by the Borrower and approved by the Agent. In such
event the assignment shall take place on a date set by the Agent at
which time the assigning Bank and the Eligible Assignee shall enter into
an Assignment and Acceptance as contemplated by 18.1 (and clause (d)
thereof shall not be applicable) and the assigning Bank shall receive
from the Eligible Assignee or the Borrower a sum equal to the
outstanding principal amount of the Loans owed to the assigning Bank
together with accrued interest thereon plus the accrued commitment fee
under 4.2 allocated to the assigning Bank.
5. COLLATERAL SECURITY; NO LIMITATION ON RECOURSE.
5.1. Collateral Security. The Obligations shall be secured by
(i) a perfected first priority lien and security interest to be held by
the Agent (subject only to Permitted Liens) in the Mortgaged Properties,
pursuant to the terms of the Security Documents, (ii) a perfected first
priority lien and security interest to he held by the Agent in the
Leases and rents pursuant to the Assignments of Leases and Rents, and
(iii) the Guaranties. Each of the Security Documents shall secure all
of the Obligations and Allocated Loan Amounts shall not be deemed to in
any way limit the amount of the Obligations secured pursuant to any
Security Documents.
5.2. No Limitation on Recourse. Notwithstanding the foregoing
Collateral, the Obligations are full recourse obligations of the
Borrower and, to the extent provided in the applicable Guaranty, of the
Guarantors, and all of their respective Real Estate Assets and other
properties shall be available for the indefeasible payment in full in
cash and performance of the Obligations. Notwithstanding anything to
the contrary contained herein, the trustees of Liberty Property Trust
shall have no personal liability of any nature under this document. The
Agent and the Banks shall look solely to the assets of Liberty Property
Trust to satisfy any liability or recourse against Liberty Property
Trust hereunder.
5.3. Additional Properties.
(a) Additional Real Estate Assets owned by the Borrower may
become Mortgaged Properties with the approval of the Requisite Banks
provided that such Real Estate Assets satisfy the conditions set forth
in 5.4. In the event that the Requisite Banks grant such approval and
all of the conditions set forth in 5.4 are satisfied, the Agent shall
notify the Borrower and within ten (10) days thereafter the Mortgagor
shall execute and deliver to the Agent a Security Deed, an Assignment of
Rents and Leases and UCC-1 Financing Statements, which Security
Documents shall be in substantially the form of the Security Documents
executed and delivered herewith with such changes as the Agent may deem
desirable to address the laws of the State where the Additional Property
is located or the factual circumstances of the Additional Property. Such
Additional Properties shall be deemed to be Mortgaged Properties upon
the recording and filing of such Security Documents and the Agent's
receipt of satisfactory evidence thereof.
5.4. Conditions to Approval of Additional Properties. Prior to
acceptance of any Real Estate Asset to become an Additional Property
pursuant to 5.3, such property must satisfy the following conditions,
which may be modified or waived only by the written agreement of the
Requisite Banks:
(a) At least sixty percent (60%) of the gross leasable
area of the Buildings located on the Mortgaged Properties following the
addition of the Additional Property must be occupied pursuant to Leases
with respect to which the Agent shall have received an Estoppel
Agreement reasonably satisfactory to the Agent.
(b) An Appraisal of the Additional Property ordered by the
Agent and paid for by the Borrower shall have been approved by the
Requisite Banks.
(c) The Agent shall have received all of the items
relating to the Additional Property described in 10.8, 10.9, 10.10,
10.12, 10.13, 10.14, 10.16 and 10.17 and such items shall have been
approved by the Agent or the Requisite Banks as required by such
Sections.
(d) The Agent shall have received a Certificate executed
on behalf of the Borrower containing the representations and warranties
with respect to the Additional Property as are set forth in 6.18 and
6.22.
(e) The Agent shall have received updated certificates and
other items relating to the Borrower and the General Partner as
described in 10.2, 10.3 and 10.4 and a favorable opinion addressed to
the Banks and the Agent, in form and substance satisfactory to the Banks
and the Agent as to the matters described on Exhibit E relating to the
Loan Documents executed by Borrower with respect to the Additional
Property and relating to the laws of the state where the Additional
Property is located.
5.5. Release of Mortgaged Properties. The Borrower may request
that the Agent release any Mortgaged Property from the lien of the
Security Documents and the Agent shall approve any such request provided
that there is then no continuing Default or Event of Default under this
Agreement and the requested release will not result in any Default or
Event of Default under this Agreement and the Borrower delivers to the
Agent a pro-forma Compliance Certificate reasonably satisfactory to the
Agent demonstrating that the requested release will not result in a
violation of any of the covenants in 9.1 through 9.7. The Borrower may
request releases of a portion of a Mortgaged Property consisting of
undeveloped land to be developed by Borrower or sold provided that in
addition to the requirements set forth above, the Borrower shall also
submit such additional information as may be requested by the Agent
including, without limitation, (i) an updated survey and endorsements to
the Title Policy; (ii) an updated Appraisal of the remaining portion of
the Mortgaged Property and (iii) evidence that the division of the
Mortgaged Property pursuant to the requested release will not result in
violation of any zoning ordinance or other applicable laws and
ordinances. If the Borrower shall request the release of any Mortgaged
Property which is adjacent to any other Mortgaged Property which is not
to be simultaneously released, the Agent may require the establishment
of appropriate easements and maintenance agreements satisfactory to the
Agent relating to any shared utilities, drainage facilities, access
drives or walks, parking areas or other shared facilities.
6. REPRESENTATIONS AND WARRANTIES. The Borrower represents and
warrants to the Agent and each of the Banks as follows.
6.1. Authority; Etc.
(a) Organization; Good Standing. The Company (i) is a
Maryland real estate investment trust duly organized, validly existing
and in good standing under the laws of the State of Maryland, (ii) has
all requisite power to own its properties and conduct its business as
now conducted and as presently contemplated, and (iii) to the extent
required by law is in good standing as a foreign entity and is duly
authorized to do business in the States in which the Mortgaged
Properties are located and in each other jurisdiction where such
qualification is necessary except where a failure to be so qualified in
such other jurisdiction would not have a Materially Adverse Effect. The
Borrower is a Pennsylvania limited partnership, and each Guarantor
Subsidiary is a Pennsylvania limited partnership or a Pennsylvania
corporation, and each such entity is duly organized, validly existing
and in good standing under the laws of the State of its formation, has
all requisite power to own its properties and conduct its business as
presently contemplated and is duly authorized to do business in the
States in which the Mortgaged Properties owned by it are located and in
each other jurisdiction where such qualification is necessary except
where a failure to be so qualified in such other jurisdiction would not
have a Material Adverse Effect.
(b) Authorization. The execution, delivery and
performance of this Agreement and the other Loan Documents to which the
Borrower is to become a party and the transactions contemplated hereby
and thereby (i) are within the authority of the Borrower, (ii) have been
duly authorized by all necessary proceedings on the part of the Borrower
and the Company as general partner of Borrower, (iii) do not conflict
with or result in any breach or contravention of any provision of law,
statute, rule or regulation to which the Borrower or the Company is
subject or any judgment, order, writ, injunction, license or permit
applicable to the Borrower or the Company and (iv) do not conflict with
any provision of the Borrower's partnership agreement or Company's
declaration of trust, charter documents or bylaws, or any agreement
(except agreements as to which such a conflict would not result in a
Material Adverse Effect) or other instrument binding upon, the Borrower
or the Company or to which any of their properties are subject. The
execution, delivery and performance of the Guaranty and the other Loan
Documents to which any Guarantor is to become a party and the
transactions contemplated hereby and thereby (i) are within the
authority of such Guarantor, (ii) have been duly authorized by all
necessary proceedings on the part of such Guarantor, (iii) do not
conflict with or result in any breach or contravention of any provision
of law, statute, rule or regulation to which such Guarantor is subject
or any judgment, order, writ, injunction, license or permit applicable
to such Guarantor and (iv) do not conflict with any provision of such
Guarantor's charter documents or bylaws, partnership agreement,
declaration of trust, or any agreement (except agreements as to which
such a conflict would not result in a Material Adverse Effect) or other
instrument binding upon such Guarantor or to which any of such
Guarantor's properties are subject.
(c) Enforceability. The execution and delivery of this
Agreement and the other Loan Documents to which the Borrower is or is to
become a party will result in valid and legally binding obligations of
the Borrower enforceable against it in accordance with the respective
terms and provisions hereof and thereof, except as enforceability is
limited by bankruptcy, insolvency, reorganization, moratorium or other
laws relating to or affecting generally the enforcement of creditors'
rights and except to the extent that availability of the remedy of
specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding therefor may be brought. The
execution and delivery of the Guaranty and the other Loan Documents to
which any Guarantor is or is to become a party will result in valid and
legally binding obligations of such Guarantor enforceable against such
Guarantor in accordance with the respective terms and provisions hereof
and thereof, except as enforceability is limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or
affecting generally the enforcement of creditors, rights and except to
the extent that availability of the remedy of specific performance or
injunctive relief is subject to the discretion of the court before which
any proceeding therefor may be brought.
6.2. Governmental Approvals. The execution, delivery and
performance by the Borrower and each Guarantor of this Agreement and the
other Loan Documents to which the Borrower or such Guarantor is or is to
become a party and the transactions contemplated hereby and thereby do
not require the approval or consent of, or filing with, any governmental
agency or authority other than those already obtained and the filing of
the Security Documents in the appropriate records office with respect
thereto.
6.3. Title to Properties.
(a) The Borrower holds good and clear record and
marketable fee simple title to the Mortgaged Properties, subject to no
rights of others, including any mortgages, leases, conditional sales
agreements, title retention agreements, liens or encumbrances except for
the Permitted Liens.
(b) Except as indicated on Schedule 6.3 hereto, the
Borrower owns all of the properties reflected in the balance sheet of
the Borrower as at the Balance Sheet Date or acquired since that date
(except properties sold or otherwise disposed of in the ordinary course
of business since that date), subject to no rights of others, including
any mortgages, leases, conditional sales agreements, title retention
agreements, liens or other encumbrances except Permitted Liens.
6.4. Financial Statements. The following financial statements
have been furnished to each of the Banks.
(a) A balance sheet of the Company as of the Balance Sheet
Date, and a statement of income, statement of changes in shareholders'
equity and statement of cash flows for the fiscal year then ended,
accompanied by an auditor's report prepared without qualification by
Ernst & Young. Such balance sheet and statements of income, of changes
in shareholders' equity and of cash flows have been prepared in
accordance with generally accepted accounting principles and fairly
present the financial condition of the Borrower and the Company as at
the close of business on the date thereof and the results of operations,
changes in shareholders' equity and cash flows for the fiscal year then
ended. There are no contingent liabilities of the Borrower or the
Company as of such date involving material amounts, known to the
officers of the Company not disclosed in said balance sheet and the
related notes thereto.
(b) A balance sheet and a statement of income, statement
of changes in shareholders' equity and statement of cash flows of the
Company for each of the fiscal quarters of the Company ended since the
Balance Sheet Date which by the Company's Responsible Officer certifies
has been prepared in accordance with generally accepted accounting
principles consistent with those used in the preparation of the annual
audited statements delivered pursuant to paragraph (a) above and fairly
represents the financial condition of the Borrower as at the close of
business on the dates thereof and the results of operations, of changes
in shareholders' equity and of cash flows for the fiscal quarters then
ended (subject to year-end adjustments). There are no contingent
liabilities of the Borrower or the Company as of such dates involving
material amounts, known to the officers of the Company, not disclosed in
such balance sheets and the related notes thereto.
(c) With respect to each Mortgaged Property, a statement
prepared by the Borrower of the rental and other income of the Borrower
from the operation of such Mortgaged Property for each of the fiscal
quarters of the Borrower ended since the Balance Sheet Date, and all
operating and other costs and expenses incurred by the Borrower in
connection with such Mortgaged Property during such fiscal quarters,
certified by a Responsible Officer of the Company as fairly presenting
the results of operation of the Borrower with respect to such Mortgaged
Property for such fiscal period.
(d) With respect to each Mortgaged Property acquired by
Borrower since October 1, 1996 or to be acquired by Borrower, copies of
all financial statements, copies of all material financial information
which any Guarantor or Borrower has obtained from the prior owners.
6.5. No Material Changes, Etc. Since the Balance Sheet Date,
there has occurred no material adverse change in the financial condition
or assets or business of the Borrower as shown on or reflected in the
balance sheet of the Borrower as of the Balance Sheet Date, or the
statement of income for the fiscal year then ended, other than changes
in the ordinary course of business that have not had any Material
Adverse Effect either individually or in the aggregate.
6.6. Franchises, Patents, Copyrights, Etc. The Borrower
possesses all franchises, patents, copyrights, trademarks, trade names,
licenses and permits, and rights in respect of the foregoing, adequate
for the conduct of its business substantially as now conducted without
known conflict with any rights of others, including all Permits except
to the extent the Borrower's failure to possess the same does not have a
Material Adverse Effect.
6.7. Litigation. Except as listed and described on Schedule 6.7
hereto, there are no actions, suits, proceedings or investigations of
any kind pending or, to Borrower's knowledge, threatened against the
Borrower, any Guarantor or any of the Related Companies before any
court, tribunal or administrative agency or board that, if adversely
determined, might, either in any case or in the aggregate, have a
Material Adverse Effect or materially impair the right of the Borrower,
any Guarantor or any of the Related Companies to carry on business
substantially as now conducted by it, or which question the validity of
this Agreement or any of the other Loan Documents, any action taken or
to be taken pursuant hereto or thereto, or any lien or security interest
created or intended to be created pursuant hereto or thereto, or which
will materially adversely affect the ability of the Borrower or any
Guarantor to pay and perform the Obligations in the manner contemplated
by this Agreement and the other Loan Documents.
6.8. No Materially Adverse Contracts, Etc. The Borrower is not
subject to any charter, trust or other legal restriction, or any
judgment, decree, order, rule or regulation that has or is expected in
the future to have a Material Adverse Effect. The Borrower is not a
party to any contract or agreement that has or is expected, in the
judgment of the Borrower's officers, to have any Material Adverse
Effect.
6.9. Compliance With Other Instruments, Laws, Etc. The Borrower
is not in violation of any provision of the Borrower's partnership
agreement or of the Company's charter documents, by-laws, or any
agreement or instrument to which it may be subject or by which it or any
of its properties may be bound or any decree, order, judgment, statute,
license, rule or regulation, in any of the foregoing cases in a manner
that could result in the imposition of substantial penalties or have a
Material Adverse Effect.
6.10. Tax Status. The Borrower (a) has made or filed all federal
and state income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject, and (b) has paid
all taxes and other governmental assessments and charges shown or
determined to be due on such returns, reports and declarations, except
those being contested in good faith and by appropriate proceedings.
There are no unpaid taxes in any material amount claimed to be due by
the taxing authority of any jurisdiction, and the officers of the
Borrower know of no basis for any such claim.
6.11. Event of Default. No Default or Event of Default has
occurred and is continuing.
6.12. Investment Company Act. The Borrower is not an "investment
company", or an "affiliated company" or a "principal underwriter" of an
"investment company", as such terms are defined in the Investment
Company Act of 1940.
6.13. Absence of Financing Statements, Etc. There is no financing
statement, security agreement, chattel mortgage, real estate mortgage,
equipment lease, financing lease, option, encumbrance or other document
existing, filed or recorded with any filing records, registry, or other
public office, that purports to cover, affect or give notice of any
present or possible future lien or encumbrance on, or security interest
in, any Collateral, except those in favor of the Agent or Permitted
Liens.
6.14. Setoff, Etc. The Collateral and the Agent's rights with
respect to the Collateral are not subject to any setoff, claims,
withholdings or other defenses. Either the Borrower or a Guarantor is
the owner of the Collateral free from any lien, security interest,
encumbrance and any other claim or demand, except for the Permitted
Liens.
6.15. Certain Transactions. Except as set forth on Schedule 6. 15
hereto, none of the officers or employees of the Borrower or any
Guarantor are presently a party to any transaction with the Borrower or
any Guarantor (other than for services as employees, officers and
trustees), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental
of real or personal property to or from, or otherwise requiring payments
to or from any officer, trustee or such employee or, to the knowledge of
the Borrower and the Company, any corporation, partnership, trust or
other entity in which any officer, trustee or any such employee or
natural Person related to such officer, trustee or employee or other
Person in which such officer, trustee or employee has a direct or
indirect beneficial interest has a substantial interest or is an officer
or trustee.
6.16. Benefit Plans: Multiemployer Plans: Guaranteed Pension
Plans. As of the date hereof as to any Employee Benefit Plan,
Multiemployer Plan or Guaranteed Pension Plan, neither the Borrower nor
any ERISA Affiliate maintains or contributes to any Employee Benefit
Plan, Multiemployer Plan or Guaranteed Pension Plan. To the extent that
Borrower or any ERISA Affiliate hereafter maintains or contributes to
any Employee Benefit Plan or Guaranteed Pension Plan, it shall at all
times do so in compliance with 7.20 hereof.
6.17. Regulations U and X. No portion of any Loan is to be used
for the purpose of purchasing or carrying any "margin security" or
"margin stock" as such terms are used in Regulations U and X of the
Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 221
and 224.
6.18. Environmental Compliance. The Borrower has caused Phase I
environmental assessments to be conducted with respect to the Mortgaged
Properties and which reports are listed on Schedule 6.18, the results of
which are set forth in those certain environmental reports delivered
previously to the Agent (collectively, the "Environmental Reports"). As
used in this 6.18 only the term "Real Estate" shall mean any of the
Mortgaged Properties and any other Real Estate if the existence of any
of the facts, events or circumstances described in this 6.18 with
respect to such other Real Estate would have a Material Adverse Effect.
Based on the information contained in the Environmental Reports,
Borrower makes the following representations and warranties:
(a) Except as may be set forth in the Environmental
Reports or otherwise on Schedule 6.18, to the best of Borrower's
knowledge none of the Borrower, any Guarantor, any of the Related
Companies or any operator of the Real Estate or any portion thereof, or
any operations thereon is in violation, or alleged material violation,
of any judgment, decree, order, law, license, rule or regulation
pertaining to environmental matters (hereinafter collectively referred
to as the "Environmental Laws"), including without limitation, those
arising under the Resource Conservation and Recovery Act ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act of
1980 as amended ("CERCLA"), the Superfund Amendments and Reauthorization
Act of 1986 ("SARA"), the Federal Clean Water Act, the Federal Clean Air
Act, the Toxic Substances Control Act, or any state or local statute,
regulation, ordinance, order or decree relating to health, safety or the
environment, including, without limitation, the environmental statutes,
regulations, orders and decrees of the States in which any of the
Mortgaged Properties may be located, which violation involves the
Mortgaged Properties or would have a Material Adverse Effect.
(b) Except as set forth on Schedule 6.18 attached hereto,
none of the Borrower, the Guarantors or the Related Companies has
received written notice from any third party including, without
limitation any federal, state or local governmental authority with
respect to any of the Mortgaged Properties or otherwise if the same
would have a Material Adverse Effect, (i) that it has been identified by
the United States Environmental Protection Agency ("EPA") as a
potentially responsible party under CERCLA with respect to a site listed
on the National Priorities List, 40 C.F.R. Part 300 Appendix B (1986) ;
(ii) that any hazardous waste, as defined by 42 U.S.C. 9601(5), any
hazardous substances as defined by 42 U.S.C. 9601(14), any pollutant or
contaminant as defined by 42 U.S.C. 9601(33) or any toxic substances,
oil or hazardous materials or other chemicals or substances regulated by
any Environmental Laws ("Hazardous Materials") which it has generated,
transported or disposed of have been found at any site at which a
federal, state or local agency or other third party has conducted or has
ordered that the Borrower, any Guarantor or any of the Related Companies
conduct a remedial investigation, removal or other response action
pursuant to any Environmental Law; or (iii) that it is or shall be a
named party to any claim, action, cause of action, complaint, or legal
or administrative proceeding (in each case, contingent or otherwise)
arising out of any third party's incurrence of costs, expenses, losses
or damages of any kind whatsoever in connection with the release of
Hazardous Materials.
(c) Except as set forth on Schedule 6.18 attached hereto
and/or in the Environmental Reports, (i) to the best of Borrower's
knowledge no portion of the Real Estate has been used for the handling,
processing, storage or disposal of Hazardous Materials except in
material compliance with applicable Environmental Laws; and except as
set forth on Schedule 6.18, no underground tank or other underground
storage receptacle for Hazardous Materials is located on any portion of
the Real Estate; (ii) in the course of any activities conducted by the
Borrower, any Guarantor, any of the Related Companies or the operators
of any Real Estate, or to the best of Borrower's knowledge, any ground
or space tenants on any Real Estate, no Hazardous Materials have been
generated or are being used on the Real Estate except in material
compliance with applicable Environmental Laws; (iii) there has been no
present, or to the best of Borrower's knowledge past, releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, disposing or dumping (a "Release") or threatened
Release of Hazardous Materials on, upon, into or from the Mortgaged
Properties or the other Real Estate, which Release in the case of Real
Estate other than the Mortgaged Properties would have a material adverse
effect on the value of any of such Real Estate or adjacent real property
or the environment; (iv) to the best of Borrower's knowledge, there have
been no Releases on, upon, from or into any real property in the
vicinity of any of the Real Estate which, through soil or groundwater
contamination, may have come to be located on, and which would have a
material adverse effect on the value of, the Real Estate; and (v) to the
best of Borrower's knowledge, any Hazardous Materials that have been
generated on any of the Real Estate have been transported off-site only
by carriers having an identification number issued by the EPA, treated
or disposed of only by treatment or disposal facilities maintaining
valid permits as required under applicable Environmental Laws, which
transporters and facilities have been and are, to the best of the
Borrower's knowledge, operating in material compliance with such permits
and applicable Environmental Laws. Notwithstanding that any
representation contained herein may be limited to the knowledge of the
Borrower, any such limitation shall not affect the covenants specified
in 7.10 or elsewhere in this Agreement.
(d) None of the Real Estate is or shall be subject to any
applicable environmental clean-up responsibility law or environmental
restrictive transfer law or regulation, solely by virtue of the
transactions set forth herein and contemplated hereby.
6.19. Subsidiaries and Affiliates. The Borrower has no
Subsidiaries except for the Related Companies listed on Schedule 1.3 and
does not have an ownership interest in any entity whose financial
statements are not consolidated with the Borrower's except for the
Permitted Joint Ventures listed on Schedule 1.3. The Company is not a
partner in any partnership other than Borrower and is not a member of
any limited liability company. The Company owns no material assets
other than its partnership interest in Borrower.
6.20. Major Leases. The Borrower has delivered to the Agent
copies of the Major Leases.
6.21. Loan Documents. All of the representations and warranties
of the Borrower or any Guarantor made in the other Loan Documents or any
document or instrument delivered or to be delivered to the Agent or the
Banks pursuant to or in connection with any of such Loan Documents are
true and correct in all material respects.
6.22. Mortgaged Properties. The Borrower makes the following
additional representations and warranties concerning the Mortgaged
Properties:
(a) Off-Site Utilities. All water, sewer, electric, gas,
telephone and other utilities are installed to the property lines of the
Mortgaged Properties and, except in the case of drainage facilities, are
connected to the Buildings located thereon with valid permits and are
adequate to service the Buildings in full compliance with applicable
law; and the Buildings are properly and legally connected directly to,
and served exclusively by, public water and sewer systems. No easements
over land of others not yet obtained are required for any such
utilities, and no drainage of surface or other water across land of
others is required except as disclosed in the Surveys.
(b) Surveys, Access; Etc. Since the date of the most
recent Survey delivered to the Agent with respect to each Mortgaged
Property, there has been no construction of additional Buildings or
additions to Buildings on such Mortgaged Property, no takings by eminent
domain affecting such Mortgaged Property or other changes which may have
caused such Survey to be no longer accurate. The streets abutting the
Mortgaged Properties are public roads, to which each of the Mortgaged
Properties has direct access by trucks and other motor vehicles and by
foot, or are private ways (with direct access by trucks and other motor
vehicles and by foot to public roads) to which each of the Mortgaged
Properties has direct access without charge or liability for maintenance
or repair. No easements over land of others not yet obtained are
required for such means of access and egress except as disclosed in the
Surveys.
(c) Independent Building. The Buildings on each Mortgaged
Property are fully independent from any other real estate in all
respects including, without limitation, in respect of structural
integrity, heating, ventilating and air conditioning, plumbing,
mechanical and other operating and mechanical systems, and electrical,
sanitation and water systems, all of which are connected directly to
off-site utilities located in public streets or ways. The Buildings are
located on lots which are separately assessed for purposes of real
estate tax assessment and payment. The Buildings, all Building Service
Equipment and all paved or landscaped areas related to or used in
connection with the Buildings are located wholly within the perimeter
lines of the lot or lots on which the Mortgaged Properties are located
except as disclosed in the Surveys.
(d) Condition of Building; No Asbestos. Except as set
forth in the engineering reports provided to the Agent and listed on
Schedule 6.22(d), to the best of Borrower's knowledge there are no
material defects in the roof, foundation, structural elements and
masonry walls of the Buildings or their heating, ventilating and air
conditioning, electrical, sprinkler, plumbing or other mechanical
systems or their Building Service Equipment; the Buildings are fully
sprinkled; and no asbestos is located in or on the Buildings except as
may be disclosed in the Environmental Reports.
(e) Building Compliance with Law; Permits. The Buildings
as presently constructed and used do not materially violate any
applicable federal or state law or governmental regulation, or any local
ordinance, order or regulation the violation of which may materially
affect the use or the value of the applicable Mortgaged Property,
including but not limited to laws, regulations, or ordinances relating
to zoning, building use and occupancy, subdivision control, fire
protection, health and sanitation; and the zoning laws permit use of the
Buildings for their current use; there is such number of parking spaces
on the lot or lots on which the Mortgaged Properties are located as is
adequate under the zoning laws to permit use of the Buildings for their
current use; and all private ways providing access to the Mortgaged
Properties are zoned in a manner which will permit access to the
Buildings over such ways by trucks and other commercial and industrial
vehicles. All Permits required for the operation and maintenance of the
Mortgaged Properties, including without limitation, building permits,
curb-cut permits, water connection permits, sewer extension or
connection permits and other permits relating to the use of utilities,
and permits required under the Federal Clean Air Act, as amended, the
Federal Clean Water Act, as amended (including, without limitation a
so-called Section 404 Permit"), and by state law or regulations
consistent with the requirements of said Acts, have been validly issued
by the appropriate governmental Persons and are now in full force and
effect.
(f) No Required Real Property Consents, Permits, Etc. The
Borrower has received no notices of, nor has any knowledge of, any
Permits, utility installations and connections (including, without
limitation, drainage facilities, curb cuts and street openings), or
private consents required for the maintenance, operation, servicing and
use of the Mortgaged Properties for their current use which have not
been granted, effected, or performed and completed (as the case may be)
or any fees or charges therefor which have not been fully paid.
(g) Suits; Judgments. There are no outstanding material
notices, suits, orders, decrees or judgments relating to zoning,
building use and occupancy, subdivision control, fire protection,
health, sanitation, or other violations affecting, against, or with
respect to, the Mortgaged Properties or any part thereof.
(h) Insurance. The Borrower has not received any notices
from any insurer or its agent requiring performance of any work with
respect to the Mortgaged Properties or canceling or threatening to
cancel any policy of insurance.
(i) Real Property Taxes; Special Assessments. There are
no unpaid or outstanding real estate or other taxes or assessments on or
against the Mortgaged Properties or any part thereof which are payable
by Borrower or tenants (except only real estate taxes not yet due and
payable). There are no betterment assessments or other special
assessments presently pending with respect to any portion of the
Mortgaged Properties, and Borrower has received no notice of any such
special assessment being contemplated.
(j) Historic Status. The Buildings are not historic
structures or landmarks, and the Mortgaged Properties are not within any
historic district pursuant to any federal, state or local law or
governmental regulation.
(k) Domain. There are no pending eminent domain
proceedings against the Mortgaged Properties or any part thereof, and,
to the Borrower's knowledge, no such proceedings are presently
threatened or contemplated by any taking authority.
(l) Leases. A rent roll with respect to all Leases of any
portion of the Mortgaged Properties (current as of the date set forth
thereon) is accurate and completely set forth in Schedule 6.22(1) as the
same shall be supplemented each fiscal quarter by a certificate signed
by an authorized officer of Borrower. The Leases reflected on such rent
roll constitute the sole and complete agreements and understandings
relating to leasing or licensing of space in the Buildings or otherwise
at the Mortgaged Properties. The Borrower has delivered to the Agent a
true and complete copy of all Major Leases. There are no occupancies,
rights, privileges or licenses in or to the Buildings or any other part
of the Mortgaged Properties other than pursuant to the Leases reflected
on the rent roll set forth in Schedule 6. 22(1). Except as set forth in
Schedule 6.22(1) the Leases reflected on the Schedule 6.22(1) rent roll
are in full force and effect, in accordance with their respective terms,
without any payment default or any other material default thereunder,
nor are there any defenses, counterclaims, offsets, concessions or
rebates available to any tenant thereunder, and the Mortgagor has not
given or made, or received, any notice of default, or any material
claim, which remains uncured or unsatisfied, with respect to any of the
Major Leases and, to the best of the Borrower's knowledge there is no
basis for any such claim or notice of default by any tenant. The
Schedule 6.22(1) rent roll accurately and completely sets forth all
rents payable by tenants, no tenant having paid more than one month's
rent in advance. All tenant improvements or work to be done, furnished
or paid for by the landlord, or credited or allowed to a tenant, for, or
in connection with, the Buildings pursuant to any Lease has been
completed and paid for, or provided for in a manner satisfactory to the
Agent, or will be paid for by the Borrower in the ordinary course of the
Borrower's business. No leasing, brokerage or like commissions, fees or
payments are due from the Borrower in respect of the Leases, or will be
paid for by the Borrower in the ordinary course of the Borrower's
business. Except as set forth on the Schedule 6.22(1) rent roll, all
tenants under all Leases are in occupancy and operating the premises
covered by such Leases within the permitted uses under such Leases.
(m) Service Agreements. Except as listed on Schedule 6.22
(m), there are no Service Agreements relating to the operation and
maintenance of the Mortgaged Properties or any part thereof except
Service Agreements which may be terminated at the owner's option upon
not more than 60 days advance notice. To the best of Borrower's
knowledge, there are no claims or any bases for claims in respect of the
Mortgaged Properties or their operation by any party to any Service
Agreement.
(n) Other Material Real Property Agreements; No Options.
Except as listed on Schedule 6.22(n), there are no material agreements
pertaining to the Mortgaged Properties or the operation or maintenance
thereof other than as described in this Agreement (including the
Schedules hereto) or otherwise disclosed in writing to the Agent by the
Borrower, and no person or entity has any right or option to acquire any
of the Mortgaged Properties or any portion thereof or interest therein
or lease any portion thereof or additional portion thereof or provide
services thereat.
7. AFFIRMATIVE COVENANTS OF THE BORROWER. Borrower covenants and
agrees as follows, so long as any Loan or Note is outstanding or the
Banks have any obligations to make Loans:
7.1. Punctual Payment. The Borrower will unconditionally duly
and punctually pay the principal and interest on the Loans and all other
amounts provided for in the Note, this Agreement, and the other Loan
Documents all in accordance with the terms of the Note, this Agreement
and the other Loan Documents.
7.2. Maintenance of Office. The Borrower will maintain its
chief executive office in Malvern, Pennsylvania or at such other place
in the United States Of America as the Borrower shall designate upon
written notice to the Agent to be delivered within fifteen (15) days of
such change, where notices, presentations and demands to or upon the
Borrower in respect of the Loan Documents may be given or made.
7.3. Records and Accounts. The Borrower will keep true and
accurate records and books of account in which full, true and correct
entries will be made in accordance with generally accepted accounting
principles.
7.4. Financial Statements, Certificates and Information. The
Borrower will deliver to each of the Banks:
(a) as soon as practicable, but in any event not later
than ninety (90) days after the end of each fiscal year of the Borrower,
the audited balance sheet of the Company at the end of such year, and
the related audited statement of income, statement of changes in
shareholders, equity and statement of Funds From Operations and taxable
income for such year, each setting forth in comparative form the figures
for the previous fiscal year and all such statements to be in reasonable
detail, prepared in accordance with generally accepted accounting
principles on a consolidated basis including the Borrower and the
Related Companies, and accompanied by an auditor's report prepared
without qualification by Ernst & Young or by another independent
certified public accountant reasonably acceptable to the Agent;
(b) as soon as practicable, but in any event not later
than forty-five (45) days after the end of each of the first three (3)
fiscal quarters of the Borrower, copies of the unaudited balance sheets
of the Borrower and of the Company as at the end of such quarter, and
the related unaudited statement of income, statement of changes in
shareholders' equity and statement of Funds From Operations and
estimated taxable income for the portion of the Borrower's fiscal year
then elapsed, all in reasonable detail and prepared in accordance with
generally accepted accounting principles, together with a certification
by the principal financial or accounting officer of the Company that the
information contained in such financial statements fairly presents the
financial position of the Borrower and of the Company on the date
thereof (subject to year-end adjustments); provided, however, that for
so long as the Borrower and the Company are filing form 10-Q with the
SEC, the delivery of a copy thereof pursuant to paragraph (f) of this
7.4 shall be deemed to satisfy this paragraph (b);
(c) as soon as practicable, but in any event not later
than forty-five (45) days after the end of each of the fiscal quarters
of the Borrower, copies of a statement of the Net Operating Income for
such fiscal quarter for each Mortgaged Property, prepared on a basis
consistent with the statements furnished pursuant to 6.4 (c) , and
certified by a Responsible Officer of the Company;
(d) as soon as practicable, but in any event no later than
forty-five (45) days after the end of each fiscal quarter of the
Borrower, the Borrower will provide the Agent with , for each of the
Mortgaged Properties a rent roll dated as of the end of such fiscal
quarter in form reasonably satisfactory to the Agent;
(e) simultaneously with the delivery of the financial
statements referred to in subsections (a) and (b) above, a statement in
the form of Exhibit C hereto signed by a Responsible Officer of the
Company and setting forth in reasonable detail computations evidencing
compliance with the covenants contained herein and (if applicable)
reconciliations to reflect changes in generally accepted accounting
principles since the Balance Sheet Date;
(f) as soon as practicable, but in any event not later
than ninety (90) days after the end of each fiscal year of the Company,
copies of the Form 10-K statement filed with the Securities and Exchange
Commission ("SEC") for such fiscal year, and as soon as practicable, but
in any event not later than forty-five (45) days after the end of each
fiscal quarter, copies of the Form 10-Q statement filed with the SEC for
such fiscal quarter, provided that in either case if the SEC has granted
an extension for the filing of such statements, Borrower shall deliver
such statements to the Agent simultaneously with the filing thereof with
the SEC;
(g) promptly following the filing or mailing thereof,
copies of all other material of a financial nature filed with the SEC or
sent to the shareholders of the Company or to the limited partners of
the Borrower and copies of all press releases promptly upon the issuance
thereof;
(h) from time to time such other financial data and
information (including accountants' management letters) as the Agent may
reasonably request;
7.5. Notices.
(a) Defaults. The Borrower will promptly notify the Agent
in writing of the occurrence of any Default or Event of Default. If any
Person shall give any notice or take any other action in respect of a
claimed default (whether or not constituting a Default or an Event of
Default under this Agreement) under any note, evidence of Indebtedness,
indenture or other obligation to which or with respect to which the
Borrower, Guarantor or any of the Related Companies is a party or
obligor, whether as principal or surety, and if the principal amount
thereof exceeds $5,000,000, and such default would permit the holder of
such note or obligation or other evidence of Indebtedness to accelerate
the maturity thereof, the Borrower shall forthwith give written notice
thereof to the Agent and each of the Banks, describing the notice or
action and the nature of the claimed default.
(b) Environmental Events. The Borrower will promptly
notify the Agent in writing of any of the following events: (i) upon
Borrower's obtaining knowledge of any violation of any Environmental Law
regarding a Mortgaged Property or any Real Estate or Borrower's
operations which violation could have a Material Adverse Effect; (ii)
upon Borrower's obtaining knowledge of any potential or known Release,
or threat of Release, of any Hazardous Substance at, from, or into a
Mortgaged Property or any Real Estate which it reports in writing or is
reportable by it in writing to any governmental authority and which is
material in amount or nature or which could materially affect the value
of such Mortgaged Property or which could have a Material Adverse
Effect; (iii) upon Borrower's receipt of any notice of violation of any
Environmental Laws or of any Release or threatened Release of Hazardous
Substances, including a notice or claim of liability or potential
responsibility from any third party (including without limitation any
federal, state or local governmental officials) and including notice of
any formal inquiry, proceeding, demand, investigation or other action
with regard to (A) Borrower's or any Person's operation of a Mortgaged
Property or any Real Estate if the same would have a Material Adverse
Effect, (3) contamination on, from or into a Mortgaged Property or any
Real Estate if the same would have a Material Adverse Effect, or (C)
investigation or remediation of off-site locations at which Borrower or
any of its predecessors are alleged to have directly or indirectly
disposed of Hazardous Substances; or (iv) upon Borrower's obtaining
knowledge that any expense or loss has been incurred by such
governmental authority in connection with the assessment, containment,
removal or remediation of any Hazardous Substances with respect to which
Borrower, Guarantor or any of the Related Companies may be liable or for
which a lien may be imposed on a Mortgaged Property.
(c) Notification of Claims Against Collateral. The
Borrower will, immediately upon becoming aware thereof, notify the Agent
in writing of any setoff, claims (including, with respect to any of the
Mortgaged Properties, environmental claims), withholdings or other
defenses which could have a Material Adverse Effect.
(d) Notice of Litigation and Judgments. The Borrower will
give notice to the Agent in writing within fifteen (15) days of becoming
aware of any litigation or proceedings threatened in writing or any
pending litigation and proceedings affecting any of the Mortgaged
Properties or affecting the Borrower, Guarantor or any of the Related
Companies or to which the Borrower, Guarantor or any of the Related
Companies is or is to become a party involving an uninsured claim (or as
to which the insurer reserves rights) against the Borrower, Guarantor or
any of the Related Companies that at the time of giving of notice could
reasonably be expected to have a Materially Adverse Effect, and stating
the nature and status of such litigation or proceedings. The Borrower
will give notice to the Agent, in writing, in form and detail
satisfactory to the Agent, within ten (10) days of any judgment not
covered by insurance, final or otherwise, against the Borrower in an
amount in excess of $1,000,000.
(e) Notice of Default under Major Leases. The Borrower
will immediately notify the Agent in writing of the occurrence of any
failure of any of the Major Tenants to materially comply with any of the
material terms, covenants, conditions or agreements under any of the
Major Leases.
7.6. Existence; Maintenance of REIT Status; Maintenance of
Properties. The Company will do or cause to be done all things
necessary to preserve and keep in full force and effect its existence as
a Maryland trust and its status as a self administered real estate
investment trust under the Code and the existence of Borrower as a
Pennsylvania limited partnership. The Borrower will do or cause to be
done all things necessary to preserve and keep in full force all of its
rights and franchises which in the judgment of the Borrower may be
necessary to properly and advantageously conduct the businesses being
conducted by it, the Company or any of the Related Companies. The
Borrower (a) will cause all of the properties used or useful in the
conduct of the business of Borrower, the Company or any of the Related
Companies to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment, (b) will cause
to be made all necessary repairs, renewals, replacements, betterments
and improvements thereof, all as in the judgment of the Borrower may be
necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times, and (c) will
continue to engage primarily in the businesses now conducted by it and
in related businesses.
7.7. Insurance. The Borrower will maintain insurance on the
Mortgaged Properties as required by the Security Deeds. With respect to
other properties and businesses of Borrower, the Guarantors and the
Related Companies, the Borrower will maintain or cause to be maintained
insurance with financially sound and reputable insurers against such
casualties and contingencies as shall be in accordance with the general
practices of businesses engaged in similar activities in similar
geographic areas and in amounts, containing such terms, in such forms
and for such periods as may be reasonable and prudent.
7.8. Taxes. The Borrower will pay real estate taxes, other
taxes, assessments and other governmental charges against the Mortgaged
Properties before the same become delinquent, and will duly pay and
discharge, or cause to be paid and discharged, before the same shall
become overdue, all taxes, assessments and other governmental charges
imposed upon it and its other properties, sales and activities, or any
part thereof, or upon the income or profits therefrom, as well as all
claims for labor, materials, or supplies that if unpaid might by law
become a lien or charge upon any of its properties; provided that any
such tax, assessment, charge, levy or claim with respect to properties
other than the Mortgaged Properties need not be paid if the validity or
amount thereof shall currently be contested in good faith by appropriate
proceedings and if the Borrower shall have set aside on its books
adequate reserves with respect thereto; and provided further that the
Borrower will pay all such taxes, assessments, charges, levies or claims
forthwith upon the commencement of proceedings to foreclose any lien
that may have attached as security therefor. Promptly after payment of
real estate taxes, other taxes, assessments and other governmental
charges against the Mortgaged Properties, Borrower will provide evidence
of such payments to the Agent, in the form of receipted tax bills or
other form reasonably acceptable to the Agent. Notwithstanding anything
contained herein to the contrary, with respect to the Mortgaged
Properties, Borrower, after receipt of notice from the Agent (which
notice may be given by the Agent at any time after the occurrence of an
Event of Default) , shall deposit with Agent, on the first day of each
month thereafter, a sum determined by Agent to be sufficient to provide,
in the aggregate, a fund adequate to pay all real estate taxes, other
taxes, assessments and other governmental charges against the Mortgaged
Properties at least ten (10) days before the same becomes delinquent;
and whenever the Agent determines sums accumulated under such escrow to
be insufficient to meet the obligations for which such deposits were
made, the Borrower shall pay, on the demand of the Agent, any amount
required to cover the deficiency therein.
7.9. Inspection of Properties and Books. The Borrower shall
permit the Banks, through the Agent or any of the Banks' other
designated representatives, to visit and inspect any of the Mortgaged
Properties, to examine the books of account of the Borrower, the Company
and the Related Companies (and to make copies thereof and extracts
therefrom) and to discuss the affairs, finances and accounts of the
Borrower with, and to be advised as to the same by, its officers, all at
such reasonable times and intervals as the Agent or any Bank may
reasonably request.
7.10. Compliance with Laws, Contracts, Licenses, and Permits.
The Borrower will comply, and will cause each Guarantor and all Related
Companies to comply, with (a) all applicable laws and regulations now or
hereafter in effect wherever its business is conducted, including all
Environmental Laws, (b) the provisions of all applicable partnership
agreements, charter documents and by-laws, (c) all agreements and
instruments to which it is a party or by which it or any of its Real
Estate Assets may be bound including the Leases, and (d) all applicable
decrees, orders, and judgments except (with respect to (a) through (d)
above) to the extent such non-compliance would not have a Material
Adverse Effect. If at any time any Permit from any governmental Person
shall become necessary or required in order that the Borrower or any
Guarantor may fulfill or be in compliance with any of its obligations
hereunder or under any of the Loan Documents, the Borrower will
immediately take or cause to be taken all reasonable steps within the
power of the Borrower to obtain such authorization, consent, approval,
permit or license and furnish the Agent and the Banks with evidence
thereof.
7.11. Use of Proceeds. Subject to the provisions of 2.5 hereof,
the proceeds of the Loans shall be used by the Borrower for Permitted
Acquisitions, Permitted Build-to-Suit Developments and Permitted
Developments, working capital and other purposes consistent with the
covenants contained herein.
7.12. Appraisals. The Appraised Values of the Mortgaged
Properties, including the Appraised Values of Additional Properties
determined pursuant to Appraisals approved by the Requisite Banks
pursuant to 10. 14 and 5.4(b), may increase or decrease only upon the
approval by the Requisite Banks of a new or updated Appraisal of such
Mortgaged Property. The Agent shall order a new or updated Appraisal of
a Mortgaged Property (i) promptly following a written request from the
Borrower, (ii) at any time with respect to any Mortgaged Property if the
occupied percentage of the gross leasable area of the Buildings on such
Mortgaged Property for two (2) consecutive fiscal quarters is more than
20 percentage points lower than the occupancy percentage shown on the
rent roll for such Mortgaged Property attached as Schedule 6.22(l)
hereto, (iii) on a date which is approximately 24 months after the date
of the most recent Appraisal of such Mortgaged Property, and (iv)
following an Event of Default, if requested by any Bank. The Borrower
shall provide to the Agent all available information needed to assist in
the preparation of an Appraisal and shall pay to the Agent on demand all
reasonable costs of all such Appraisals.
7.13. Leases; Lease Approvals. The Borrower will at all times
exercise or enforce its material rights under the Leases. The Agent
shall have the right, and the Borrower hereby authorizes the Agent, to
communicate directly with any of the tenants or guarantors solely for
the purpose of verifying any information delivered to the Agent by the
Borrower concerning the tenants or guarantors, the Buildings, or the
Leases provided that during the continuance of a Default or Event of
Default the Agent may contact any tenant or guarantor for any purpose
contemplated by this Agreement or any of the Security Documents. In the
event that any of the Leases is terminated, the Borrower will take or
cause to be taken all steps within the power of the Borrower to market
and lease the untenanted rentable area of the Buildings. Any proposed
lease which would be a Major Lease shall be submitted to and approved by
the Agent prior to execution, along with the most recent financial
statements of such proposed tenant and any guarantor. The Borrower will
not materially adversely amend, terminate, or accept a surrender of any
Major Lease or release any Major Tenant or waive the material
performance of a Major Lease by a Major Tenant, in each case without
prior approval of the Agent.
7.14. Further Assurance. The Borrower will cooperate with the
Agent and the Banks and execute such further instruments and documents
and perform such further acts as the Agent and the Banks shall
reasonably request to carry out to their satisfaction the transactions
contemplated by this Agreement and the other Loan Documents and the
granting and perfecting of all liens in the Collateral for the benefit
of the Agent as agent for the Banks.
7.15. Environmental Indemnification. The Borrower covenants and
agrees that it will indemnify and hold the Agent and each Bank harmless
from and against any and all claims, expense, damage, loss or liability
incurred by the Agent or any Bank (including all reasonable costs of
legal representation incurred by the Agent or any Bank, but excluding,
as applicable, for the Agent or a Bank any claim, expense, damage, loss
or liability as a result of the gross negligence or willful misconduct
of the Agent or such Bank) relating to (a) any Release or threatened
Release of Hazardous Substances on any Mortgaged Property or any Real
Estate; (b) any violation of any Environmental Laws with respect to
conditions at any Mortgaged Property or any Real Estate or the
operations conducted thereon; or (c) the investigation or remediation of
off-site locations at which the Borrower or its predecessors are alleged
to have directly or indirectly disposed of Hazardous Substances. It is
expressly acknowledged by the Borrower that this covenant of
indemnification shall survive any foreclosure or any modification,
release or discharge of any or all of the Security Documents or the
payment of the Loans and shall inure to the benefit of the Agent and the
Banks, and their successors and assigns.
7.16. Response Actions. The Borrower covenants and agrees that
if any Release or disposal of Hazardous Substances shall occur or shall
have occurred on any Mortgaged Property or any other Real Estate if the
same would have a Material Adverse Effect, the Borrower will cause the
prompt containment and removal of such Hazardous Substances and
remediation of such Mortgaged Property or Real Estate as necessary to
comply with all Environmental Laws or to preserve the value of such
Mortgaged Property or Real Estate to the extent necessary to avoid a
Material Adverse Effect.
7.17. Environmental Assessments. The Borrower shall diligently
and continuously comply with all recommendations set forth in the
Environmental Reports to the extent the Borrower's failure to do so
would result in a Material Adverse Effect. If the Agent in its good
faith judgment, after discussion with the Borrower, has reason to
believe that the environmental condition of any Mortgaged Property has
deteriorated, after reasonable notice by the Agent, whether or not a
Default or an Event of Default shall have occurred, the Agent may, from
time to time, for the purpose of assessing and ensuring the value of
such Mortgaged Property, obtain one or more environmental assessments or
audits of such Mortgaged Property prepared by a hydrogeologist, an
independent engineer or other qualified consultant or expert approved by
the Agent to evaluate or confirm (i) whether any Hazardous Substances
are present in the soil or water at such Mortgaged Property and (ii)
whether the use and operation of such Mortgaged Property complies with
all Environmental Laws. Environmental assessments may include without
limitation detailed visual inspections of such Mortgaged Property
including, without limitation, any and all storage areas, storage tanks,
drains, dry wells and leaching areas, and the taking of soil samples,
surface water samples and ground water samples, as well as such other
investigations or analyses as the Agent deems appropriate. All such
environmental assessments shall be at the sole cost and expense of the
Borrower; provided, however, the Agent may not require environmental
assessments at the Borrower's expense, with respect to any Mortgaged
Property, more frequently than annually except (i) during the
continuance of an Event of Default or (ii) upon the occurrence of a
Release on any Mortgaged Property.
7.18. Employee Benefit Plans.
(a) Representation. The Borrower and its ERISA Affiliates
do not currently maintain or contribute to any Employee Benefit Plan,
Guaranteed Pension Plan or Multiemployer Plan.
(b) Notice. The Borrower will obtain the consent of the
Agent prior to the establishment of any Employee Benefit Plan or
Guaranteed Pension Plan by the Borrower or any ERISA Affiliate.
(c) In General. Each Employee Benefit Plan maintained by
the Borrower or any ERISA Affiliate will be operated in compliance in
all material respects with the provisions of ERISA and, to the extent
applicable, the Code, including but not limited to the provisions
thereunder respecting prohibited transactions.
(d) Terminability of Welfare Plans. With respect to each
Employee Benefit Plan maintained by the Borrower or an ERISA Affiliate
which is an employee welfare benefit plan within the meaning of 3(1) or
3(2)(B) of ERISA, the Borrower, or the ERISA Affiliate, as the case may
be, has the right to terminate each such plan at any time (or at any
time subsequent to the expiration of any applicable bargaining
agreement) without liability other than liability to pay claims incurred
prior to the date of termination.
(e) Multiemployer Plans. Without the consent of the
Agent, the Borrower will not enter into, maintain or contribute to, any
multiemployer Plan.
(f) Unfunded or Underfunded Liabilities. The Borrower
will not, at any time, have accruing unfunded or underfunded liabilities
with respect to any Employee Benefit Plan, Guaranteed Pension Plan or
Multiemployer Plan, or permit any condition to exist under any
Multiemployer Plan that would create a withdrawal liability.
7.19 Required Interest Rate Contracts. If the Maturity Date is
extended pursuant to 3.1(b) commencing on December 13, 1997 and
thereafter until all Loans are paid in full and the Banks have no
further obligation to make Loans hereunder, the Borrower shall maintain
in effect the Required Interest Rate Contracts in form reasonably
satisfactory to the Agent.
8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER. The Borrower
covenants and agrees as follows, so long as any Loan or Note is
outstanding or the Banks have any obligation to make any Loans:
8.1 Restrictions on Indebtedness. Except with the prior
written consent of the Requisite Banks, the Borrower will not, and the
Borrower will not permit any Guarantor, any of the Related Companies or
any Permitted Joint Venture to create, incur, assume, guarantee or
become or remain liable, contingently or otherwise, or agree not to do
any of same with respect to any Indebtedness other than:
(a) Indebtedness to the Banks arising under any of the
Loan Documents;
(b) current liabilities of the Borrower incurred in the
ordinary course of business but not incurred through (i) the borrowing
of money, or (ii) the obtaining of credit except for credit on an open
account basis customarily extended and in fact extended in connection
with normal purchases of goods and services;
(c) Indebtedness in respect of taxes, assessments,
governmental charges or levies and claims for labor, materials and
supplies to the extent that payment therefor shall not at the time be
required to be made in accordance with the provisions of 7.8;
(d) Indebtedness in respect of judgments or awards that
have been in force for less than the applicable period for taking an
appeal so long as execution is not levied thereunder or in respect of
which the Borrower shall at the time in good faith be prosecuting an
appeal or proceedings for review and in respect of which a stay of
execution shall have been obtained pending such appeal or review;
(e) endorsements for collection, deposit or negotiation
and warranties of products or services, in each case incurred in the
ordinary course of business;
(f) Indebtedness of Borrower, the Company or the Related
Companies to the extent the same does not create a violation of 9.3,
9.5, 9.6 or 9.7.
8.2. Restrictions on Liens, Etc. The Borrower will not, and
will not permit Guarantor, any of the Related Companies or any Permitted
Joint Venture to, (a) create or incur or agree not to create or incur or
suffer to be created or incurred or to exist any lien, encumbrance,
mortgage, pledge, charge, restriction or other security interest of any
kind upon any of the Mortgaged Property of any character whether now
owned or hereafter acquired, or upon the rents, income or profits
therefrom; (b) suffer to exist for a period of more than thirty (30)
days after the same shall have been incurred any Indebtedness (not
permitted by 8.1(c)) or claim or demand against it that if unpaid might
by law or upon bankruptcy or insolvency, or otherwise, be given any
priority whatsoever over the Security Documents; or (c) sell, assign,
pledge or otherwise transfer any rents, issues, profits, accounts,
contract rights or general intangibles relating to any of the Mortgaged
Premises; provided that the Borrower may create or incur or suffer to be
created or incurred or to exist:
(i) liens to secure taxes, assessments and other
governmental charges in respect of obligations not overdue, the
Indebtedness with respect to which is permitted by 8.1(c);
(ii) deposits or pledges made in connection with, or to
secure payment of, workmen's compensation, unemployment insurance, old
age pensions or other social security obligations;
(iii) liens in respect of judgments or awards, the
Indebtedness with respect to which is permitted by 8.1(d);
(iv) liens of carriers, warehousemen, mechanics and
materialmen, and other like liens on properties other than the Mortgaged
Properties in existence less than 120 days from the date of creation
thereof in respect of obligations not overdue, the Indebtedness with
respect to which is permitted by 8.1(c);
(v) encumbrances consisting of easements, rights of way,
covenants, restrictions on the use of real property and defects and
irregularities in the title thereto; and other minor liens or
encumbrances none of which in the opinion of the Borrower interferes
materially with the use of the property affected in the ordinary conduct
of the business of the Borrower, and which matters (x) do not
individually or in the aggregate have a materially adverse effect on the
value of the Mortgaged Property and (xx) do not make title to such
property unmarketable by the conveyancing standards in effect where such
property is located;
(vi) any Leases permitted by this Agreement or otherwise
approved by the Agent;
(vii) presently outstanding liens and other encumbrances
on the Mortgaged Properties listed on Schedule B to the Title Policies;
and
(viii) liens in favor of the Agent and/or any of the Banks
granted pursuant to the Security Documents.
8.3. Restrictions on Investments. The Borrower will not, and
will not permit Guarantor, any of the Related Companies or any Permitted
Joint Venture to make or permit to exist or to remain outstanding any
Investment except Investments in:
(a) marketable direct or guaranteed obligations of the
United States of America that mature within one (1) year from the date
of purchase by the Borrower;
(b) demand deposits, certificates of deposit, bankers
acceptances and time deposits of United States banks having total assets
in excess of $1,000,000,000;
(c) securities commonly known as "commercial paper" issued
by a corporation organized and existing under the laws of the United
States of America or any state thereof that at the time of purchase have
been rated and the ratings for which are not less than " P 1 " if rated
by Moody's Investors Services, Inc. , and not less than "A 1" if rated
by Standard and Poor's;
(d) Investments existing or contemplated on the date
hereof and listed on Schedule 8.3(d) hereto;
(e) Investments made in the ordinary course of the
Borrower's business, in (i) mortgages and notes receivable, (ii)
Permitted Joint Ventures (to the extent permitted by 8.4(a)), or (iii)
undeveloped land;
(f) Investments in Permitted Acquisitions;
(g) Investments in Permitted Developments which shall not
exceed 25% of Total Assets; provided that within said aggregate limit
Investments in Permitted Developments which are not Permitted Build-to-
Suit Developments shall not exceed 15% of Total Assets.
8.4. Merger, Consolidation and Disposition of Properties.
(a) The Borrower will not, and will not permit the
Company, any of the Related Companies or any Permitted Joint Venture to
(i) become a party to any merger or consolidation, or (ii) agree to or
effect any property acquisition or stock acquisition (other than
Permitted Acquisitions in compliance with the other terms of this
Agreement) , or (iii) enter into any joint venture or invest in any
Permitted Joint Venture unless prior to such transaction the Borrower
has provided the Agent with a notice describing such transaction and, if
the reasonably expected financial impact on the Borrower as reflected on
its balance sheet arising from all transactions described in this 8.4(a)
shall exceed 15% of Total Assets, the Borrower shall have obtained the
prior consent of the Agent provided, however, that this paragraph shall
not be applicable to mergers or transfers among the Borrower's wholly-
owned subsidiaries other than Guarantors. The Company will not acquire
or own any material assets other than its partnership interest in
Borrower.
(b) Neither the Borrower nor any Guarantor will become a
party to or agree to or effect any disposition of the Collateral without
obtaining the prior written consent of the Agent. Real Estate Assets
other than the Mortgaged Properties may be sold or transferred except
that to the extent the aggregate sales price of all such dispositions
during any fiscal quarter shall exceed $30,000,000, prior to such sale
or transfer, the Borrower shall provide a statement in the form of
Exhibit C hereto signed by a Responsible Officer of the Company and
setting forth in reasonable detail computations evidencing compliance
with the financial covenants contained in 9 after giving effect to such
proposed transfer and all liabilities, fixed or contingent, pursuant
thereto.
8.5. Sale and Leaseback. The Borrower will not enter into any
arrangement, directly or indirectly, whereby the Borrower shall sell or
transfer any property owned by it in order then or thereafter to lease
such property or lease other property that the Borrower intends to use
for substantially the same purpose as the property being sold or
transferred. The Borrower will not permit the Company, any of the
Related Companies or any Permitted Joint Venture to enter into any such
arrangement.
8.6. Compliance with Environmental Laws. The Borrower will not
do, and will not permit the Company, any of the Related Companies or any
Permitted Joint Venture to do, any of the following: (a) use any of the
Real Estate or any portion thereof as a facility for the handling,
processing, storage or disposal of Hazardous Materials except for
immaterial amounts of Hazardous Materials used in the routine
maintenance and operation of the Real Estate and in compliance with
applicable law, (b) cause or permit to be located on any of the Real
Estate any underground tank or other underground storage receptacle for
Hazardous Materials except in material compliance with Environmental
Laws, (c) generate any Hazardous Materials on any of the Real Estate
except in material compliance with Environmental Laws, or (d) conduct
any activity at any Real Estate or use any Real Estate in any manner so
as to cause a Release.
8.7. Distributions. Borrower shall not permit the total
Distributions by it and the Company during any fiscal year to exceed the
Funds from Operations for such year except that such limitation may be
exceeded to the extent necessary for the Company to maintain its REIT
status provided that the Company provides the Agent with a letter from
its accountants or attorneys setting forth the basis for computation of
the amount of such necessary excess Distributions. During any period
when any Default or Event of Default has occurred and is continuing
total Distributions by the Borrower and the Company will not exceed the
minimum amount necessary for the Company to maintain its REIT status.
8.8. Leases. The Borrower will not materially amend, supplement
or otherwise materially modify, or terminate or cancel, or accept the
surrender of, or grant any material concessions to or waive the material
performance of any of the Major Tenants under the Major Leases without
the prior approval of the Agent.
9. FINANCIAL COVENANTS OF THE BORROWER. The Borrower covenants and
agrees as follows, so long as any Loan or Note is outstanding or any
Bank has any obligation to make any Loan:
9.1. Appraised Value. The Borrower will not at any time permit
the outstanding principal amount of the Loans to exceed seventy percent
(70%) of the Appraised Value of the Mortgaged Properties.
9.2. Minimum Debt Service Coverage. The Borrower will not at
any time permit the outstanding principal amount of the Loans to exceed
an amount such that: (a) the aggregate of the Net Operating Income for
all of the Mortgaged Properties, divided by (b) Pro Forma Debt Service
Charges for the Mortgaged Properties would be less than 1.25 for any
fiscal quarter of Borrower.
9.3. Total Liabilities to Total Assets. The Borrower will not
at any time permit Total Liabilities at the end of any fiscal quarter to
exceed sixty percent (60%) of Total Assets.
9.4. Minimum Tangible Net Worth. The Borrower will not at any
time permit the Tangible Net Worth of either the Borrower or Guarantor
to be less than $300,000,000 plus 75% of Net Offering Proceeds.
9.5. Total Operating Cash Flow to Interest Expense. The
Borrower will not permit the ratio of its Total Operating Cash Flow to
Interest Expense to be less than 1.7 to 1.0 for any fiscal quarter.
9.6. Total Operating Cash Flow to Senior Interest Expense. The
Borrower will not permit the ratio of its Total Operating Cash Flow to
Senior Interest Expense to be less than 2.5 to 1.0 for any fiscal
quarter.
9.7. EBITDA to Fixed Charges. The Borrower will not permit the
ratio of its EBITDA to Fixed Charges to be less than 1.6 to 1.0 for any
fiscal quarter.
10. CONDITIONS TO EFFECTIVENESS. This Agreement shall become
effective when each of the following conditions precedent have been
satisfied:
10.1. Loan Documents. Each of the Loan Documents shall have been
duly executed and delivered by the respective parties thereto, shall be
in full force and effect and shall be in form and substance satisfactory
to each of the Banks. Each Bank shall have received a fully executed
copy of each such document prior to or on the Effective Date.
10.2. Certified Copies of Organization Documents; Good Standing
Certificates. The Agent shall have received (i) a Certificate of the
Company to which there shall be attached complete copies of the
Borrower's Limited Partnership Agreement and its Certificate of Limited
Partnership, certified as of a recent date by the Secretary of State of
Pennsylvania, (ii) Certificates of Good Standing for the Borrower from
the State of Pennsylvania and each State in which a Mortgaged Property
is located, (iii) a copy of the Company's Declaration of Trust certified
by the Maryland Secretary of State, (iv) Certificates of Good Standing
for the Company from the State of Maryland and each State in which a
Mortgaged Property is located, and (v) certificates of good standing and
certified copies of partnership agreements and certificates of limited
partnership with respect to each of the Guarantor Subsidiaries.
10.3. By-laws; Resolutions. All action on the part of the
Borrower and each Guarantor necessary for the valid execution, delivery
and performance by the Borrower and each Guarantor of this Agreement and
the other Loan Documents to which it is or is to become a party shall
have been duly and effectively taken, and evidence thereof satisfactory
to the Agent shall have been provided to the Agent. The Agent shall have
received from the Company true copies of its by-laws and the resolutions
adopted by its Board of Directors authorizing the transactions described
herein, each certified by its secretary to be true and complete and in
effect on the Effective Date.
10.4. Incumbency Certificate; Authorized Signers. The Agent
shall have received from the Company an incumbency certificate, dated as
of the Effective Date, signed by a duly authorized officer of the
Company and giving the name and bearing a specimen signature of each
individual who shall be authorized: (a) to sign, in the name and on
behalf of the Company (in its own capacity and as general partner on
behalf of Borrower and on behalf of each Guarantor Subsidiary which is a
partnership), each of the Loan Documents to which the Borrower or any
Guarantor is or is to become a party; (b) to make Loan Requests and
Conversion Requests; and (c) to give notices and to take other action on
behalf of the Borrower under the Loan Documents.
10.5. Opinions of Counsel Concerning Organization and Loan
Documents. Each of the Banks and the Agent shall have received
favorable opinions addressed to the Banks and the Agent and dated as of
the Effective Date, in form and substance satisfactory to the Banks and
the Agent from Borrower's counsel, as to the matters described on
Exhibit E, which opinion may rely on opinions from other law firms
approved by the Agent as to matters of law applicable in the various
states where the Mortgaged Properties are located.
10.6. Payment of Fees. The Borrower shall have paid to the Agent
the fees pursuant to 4.1 and shall have paid all other expenses as
provided in 15 hereof then outstanding.
10.7. Validity of Liens. The Security Documents shall be
effective to create in favor of the Agent legal, valid and enforceable
first priority, perfected liens and security interests in the Collateral
covered thereby, subject only to the Permitted Liens. All filings,
recordings, deliveries of instruments and other actions or consents
necessary or desirable in the opinion of the Agent to grant, perfect,
protect and preserve such liens and security interests shall have been
duly effected. The Agent shall have received evidence thereof in form
and substance satisfactory to the Agent.
10.8. Survey. The Agent shall have received Surveys of the
Mortgaged Properties, bearing dates acceptable to the Agent, and in form
and substance acceptable to the Agent.
10.9. Title Insurance; Title Exception Documents. The Agent
shall have received the Title Policies satisfactory to the Agent,
together with proof of payment of all fees and premiums for such
policies. The Agent shall have received true and accurate copies of all
documents listed as exceptions under such policies.
10.10. Major Leases. The Agent shall have received true copies of
the Major Leases.
10.11. Estoppel Agreements. The Agent shall have received
Estoppel Agreements substantially in the form of Exhibit D attached
hereto from Tenants who lease and occupy at least 60% of the aggregate
occupied gross leasable area of the Mortgaged Properties.
10.12. Certificates of Insurance. The Agent shall have received
(a) a certificate of insurance as to the insurance maintained by
Borrower on the Mortgaged Properties (including flood insurance if
necessary) from the insurer or an independent insurance broker dated as
of the Effective Date, identifying insurers, types of insurance,
insurance limits, and policy terms; (b) certified copies of all policies
evidencing such insurance (or certificates therefor signed by tile
insurer or an agent authorized to bind the insurer); and (c) such
further information and certificates from Borrower, its insurers and
insurance brokers as the Agent may reasonably request.
10.13. Hazardous Substance Assessments. The Agent shall have
received a hazardous waste site assessment report concerning absence of
Hazardous Substances and asbestos on the Mortgaged Properties, dated as
of a recent date, from environmental engineers acceptable to the Agent
which report shall have been approved by the Agent and the Requisite
Banks.
10.14. Evidence of Compliance with Laws and Permits. The Agent
shall have received final Certificates of occupancy for those portions
of the Buildings occupied by tenants, legal opinions, certifications
from engineers or architects and/or other evidence satisfactory to the
Agent that all activities being conducted on the Mortgaged Properties
which require federal, state or local Permits have been duly licensed
and that such Permits are in full force and effect.
10.15. Appraisals. The Agent and each of the Banks shall have
received Appraisals dated as of a recent date in form and substance
satisfactory to the Agent and the Requisite Banks (including
satisfaction as to determination of Appraised Value).
10.16. Inspecting Engineers' Reports. The Agent shall have
received reports, addressed to Agent and the Banks or accompanied by
reliance letters in favor of the Agent and the Banks, from third party
inspecting engineers dated as of a date acceptable to the Agent as to
the good structural condition of the Buildings located on the Mortgaged
Properties, which reports shall be in form and substance satisfactory to
the Agent provided that with respect to Mortgaged Properties constructed
by the Borrower, in lieu of such engineers' reports the Borrower may
provide (i) a certificate from its architect or construction project
manager confirming that the project has been completed in accordance
with the applicable plans, specifications and permits, (ii) a
certificate of occupancy and (iii) an estoppel certificate from all
tenants who have occupied such construction project confirming their
satisfaction with the completion thereof.
10.17. UCC Lien Searches. The Agent shall have received UCC lien
searches of the applicable public records disclosing no conditional
sales contracts, security agreements, chattel mortgages, leases of
personalty, financing statements or other encumbrances which affect any
of the Collateral other than those relating to any liens permitted
hereby and by the Security Documents.
11. CONDITIONS TO ALL BORROWINGS. The obligations of the Banks to
make any Loan, whether on or after the Effective Date, shall also be
subject to the satisfaction of the following conditions precedent:
11.1. Representations True; No Event of Default; Compliance
Certificate. Each of the representations and warranties of the Borrower
and the Company contained in this Agreement, the other Loan Documents or
in any document or instrument delivered pursuant to or in connection
with this Agreement shall be true as of the date as of which they were
made and shall also be true at and as of the time of the making of such
Loan, with the same effect as if made at and as of that time (except to
the extent of changes resulting from transactions contemplated or
permitted by this Agreement and the other Loan Documents and changes
occurring in the ordinary course of business that singly or in the
aggregate are not materially adverse, and except to the extent that such
representations and warranties relate expressly to an earlier date); the
Borrower shall have performed and complied with all terms and conditions
herein required to be performed by it or prior to the Drawdown Date of
Such Loan; and no Default or Event of Default shall have occurred and be
continuing on the date of any Loan Request or on the Drawdown Date of
such Loan. Each of the Banks shall have received a Compliance
Certificate of the Borrower signed by a Responsible Officer to such
effect, which certificate will include, without limitation, computations
evidencing compliance with the covenants contained in 9.1 through 9.7
hereof after giving effect to such requested Loan.
11.2. No Legal Impediment. No change shall have occurred in any
law or regulations thereunder or interpretations thereof that in the
reasonable opinion of any Bank would make it illegal for such Bank to
make such Loan.
11.3. Governmental Regulation. Each Bank shall have received
such statements in substance and form reasonably satisfactory to such
Bank as such Bank shall require for the purpose of compliance with any
applicable regulations of the Comptroller of the Currency or the Board
of Governors of the Federal Reserve System.
11.4. Proceedings and Documents. All proceedings in connection
with the transactions contemplated by this Agreement, the other Loan
Documents and all other documents incident thereto shall be reasonably
satisfactory in substance and in form to the Agent, and the Banks shall
have received all information and such counterpart originals or
certified or other copies of such documents as the Agent may reasonably
request.
12. EVENTS OF DEFAULT; ACCELERATION; ETC.
12.1. Events of Default and Acceleration. If any of the
following events ("Events of Default" or, if the giving of notice or the
lapse of time or both is required, then, prior to such notice or lapse
of time, "Defaults") shall occur:
(a) the Borrower shall fail to pay any principal of the
Loans within five (5) days after the same shall become due and payable;
(b) the Borrower shall fail to pay any interest on the
Loans or any other sums due hereunder or under any of the other Loan
Documents when the same shall become due and payable;
(c) the Borrower or the Company shall fail to comply with
any of its covenants contained in 7.5, the first sentence of 7.6, 7.7, 8
or 9 hereof;
(d) the Borrower or any Guarantor shall fail to perform
any other term, covenant or agreement contained herein or in any of the
other Loan Documents (other than those specified elsewhere in this 12)
for thirty (30) days after written notice of such failure from Agent to
the Borrower;
(e) any representation or warranty of the Borrower in this
Agreement or any of the other Loan Documents or in any other document or
instrument delivered pursuant to or in connection with this Agreement,
shall prove to have been false in any material respect upon the date
when made or deemed to have been made or repeated, provided, however,
that with respect to the representations and warranties of the Borrower
contained in 6.2, 6.3, 6.13, 6.18 and in paragraphs (a), (c), (d), (e)
and (f) of 6.22, if the condition or event making the representation and
warranty false is capable of being cured by the Borrower, no enforcement
action has been commenced against the Borrower or the applicable
Mortgaged Property on account of such condition or event nor is the
applicable Mortgaged Property subject to risk of forfeiture due to such
condition or event, and the Borrower promptly commences the cure thereof
after the Borrower's first obtaining knowledge of such condition or
event, the Borrower shall have a period of thirty (30) days after the
date that the Borrower first obtained knowledge of such condition or
event during which the Borrower may cure such condition or event (or, if
such condition or event is not reasonably capable of being cured within
such thirty (30) day period, such additional period of time as may be
reasonably required in order to cure such condition or event but in any
event such period shall not exceed six (6) months from the date that the
Borrower first obtained knowledge of such condition or event), and no
Event of Default shall exist hereunder during such thirty (30) day or
additional period so long as the Borrower continuously and diligently
pursues the cure of such condition or event and the other conditions to
such cure period have not changed;
(f) the Borrower, the Company, any of the Related
Companies or any Permitted Joint Venture shall fail to pay at maturity,
or within any applicable period of grace, any Recourse Indebtedness, or
shall fail to observe or perform any material term, covenant or
agreement contained in any agreement by which it is bound, evidencing or
securing Indebtedness for such period of time as would permit (assuming
the giving of appropriate notice if required) the holder or holders
thereof or of any obligations issued thereunder to accelerate the
maturity thereof, and in any event, such failure shall continue for
thirty (30) days, unless the aggregate amount of all such defaulted
Recourse Indebtedness plus the amount of any unsatisfied judgments
described in paragraph (i) of this 12.1 is less than $30,000,000.00;
(g) any of the Borrower, the Company or any Guarantor
shall make an assignment for the benefit of creditors, or admit in
writing its inability to pay or generally fail to pay its debts as they
mature or become due, or shall petition or apply for the appointment of
a trustee or other custodian, liquidator or receiver of any substantial
part of its properties or shall commence any case or other proceeding
under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law of any
jurisdiction, now or hereafter in effect, or shall take any action to
authorize or in furtherance of any of the foregoing, or if any such
petition or application shall be filed or any such case or other
proceeding shall be commenced against any such Person and such Person
shall indicate its approval thereof, consent thereto or acquiescence
therein or any of the events described in this paragraph shall occur
with respect to any other Related Company or any Permitted Joint Venture
and such event shall have a Material Adverse Effect;
(h) a decree or order is entered appointing any such
trustee, custodian, liquidator or receiver or adjudicating the Borrower,
the Company, or any Guarantor bankrupt or insolvent, or approving a
petition in any such case or other proceeding, or a decree or order for
relief is entered in respect of the Borrower, the Company, or any
Guarantor in an involuntary case under federal bankruptcy laws as now or
hereafter constituted or any of the events described in this paragraph
shall occur with respect to any other Related Company or any Permitted
Joint Venture and such event shall have a Material Adverse Effect;
(i) there shall remain in force, undischarged, unsatisfied
and unstayed, for more than thirty days, whether or not consecutive, any
uninsured final judgment against the Borrower that, with other
outstanding uninsured final judgments, undischarged, against the
Borrower, the Company or any of the Related Companies plus the amount of
any defaulted Recourse Indebtedness under paragraph (f) of this 12.1,
exceeds in the aggregate $30,000,000.00;
(j) if any of the Loan Documents or any material provision
of any Loan Documents shall be unenforceable, cancelled, terminated,
revoked or rescinded otherwise than in accordance with the terms thereof
or with the express prior written agreement, consent or approval of the
Agent, or any action at law, suit or in equity or other legal proceeding
to make unenforceable, cancel, revoke or rescind any of the Loan
Documents shall be commenced by or on behalf of the Borrower or any
Guarantor, or any court or any other governmental or regulatory
authority or agency of competent jurisdiction shall make a determination
that, or issue a judgment, order, decree or ruling to the effect that,
any one or more of the Loan Documents is illegal, invalid or
unenforceable in accordance with the terms thereof;
(k) the Borrower or any Guarantor shall be indicted for a
federal crime, a punishment for which could include the forfeiture of
any assets of the Borrower;
(l) the Borrower shall fail to pay, observe or perform any
term, covenant, condition or agreement contained in any agreement,
document or instrument evidencing, securing or otherwise relating to any
Indebtedness of the Borrower to any Bank (other than the Obligations)
and/or relating to any Permitted Lien (other than the Obligations)
within any applicable period of grace provided for in such agreement,
document or instrument;
(m) any "Event of Default", as defined in any of the other
Loan Documents or in the Subordinated Debenture Indenture, shall occur;
then, and in any such event, so long as the same may be continuing, the
Agent may, and upon the request of the Requisite Banks shall, by notice
in writing to the Borrower declare all amounts owing with respect to
this Agreement, the Notes and the other Loan Documents to be, and they
shall thereupon forthwith become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Borrower; provided that in the event
of any Event of Default specified in 12.1(g) or 12.1(h), all such
amounts shall become immediately due and payable automatically and
without any requirement of notice from the Agent or action by the
Requisite Banks.
12.2. Termination of Commitments. If any one or more Events of
Default specified in 12.1(g) or 12.1(h) shall occur, any unused portion
of the Commitments hereunder shall forthwith terminate and the Banks
shall be :relieved of all obligations to make Loans to the Borrower. If
any other Event of Default shall have occurred and be continuing, any
Bank may by notice to the Borrower terminate the unused portion of its
Commitment hereunder, and upon such notice being given such unused
portion of its Commitment hereunder shall terminate immediately and such
Bank shall be relieved of all further obligations to make Loans. No
termination of such Bank's Commitment hereunder shall relieve the
Borrower of any of the Obligations or any of its existing obligations to
such Bank arising under other agreements or instruments.
12.3. Remedies. In case any one or more of the Events of Default
shall have occurred, and whether or not the Requisite Banks shall have
accelerated the maturity of the Loans pursuant to 12.1, each Bank, if
owed any amount with respect to the Loans, may, with the consent of the
Requisite Banks, direct the Agent to proceed to protect and enforce the
rights and remedies of the Agent and the Banks under this Agreement, the
Notes or any of the other Loan Documents by suit in equity, action at
law or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Agreement and
the other Loan Documents or any instrument pursuant to which the
Obligations are evidenced, including to the full extent permitted by
applicable law the obtaining of the ex parte appointment of a
receiverand, if any amount shall have become due, by declaration or
otherwise, to proceed to enforce the payment thereof or any other legal
or equitable right of such Bank. No remedy herein conferred upon any
Bank or the Agent or the holder of any Note is intended to be exclusive
of any other remedy and each and every remedy shall be cumulative and
shall be in addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute or any other
provision of law.
12.4. Distribution of Collateral Proceeds. In the event that,
following the occurrence or during the continuance of any Default or
Event of Default, the Agent or any Bank as the case may be, receives any
monies in connection with the enforcement of any of the Security
Documents, or otherwise with respect to the realization upon any of the
Collateral, such monies shall be distributed for application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Agent for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or
sustained by the Agent in connection with the collection of such monies
by the Agent, for the exercise, protection or enforcement by the Agent
of all or any of the rights, remedies, powers and privileges of the
Agent or the Banks under this Agreement or any of the other Loan
Documents or in respect of the Collateral or in support of any provision
of adequate indemnity to the Agent against any taxes or liens which by
law shall have, or may have, priority over the rights of the Agent to
such monies;
(b) Second, to all other Obligations in such order or
preference as the Requisite Banks may determine; provided, however, that
distribution in respect of such Obligations shall be made among the
Banks pro rata in accordance with each Bank's respective Commitment
Percentage; and provided, further, that the Agent may in its discretion
make proper allowance to take into account any Obligations not then due
and payable;
(c) Third, upon payment and satisfaction in full or other
provisions for payment in full satisfactory to the Requisite Banks and
the Agent of all of the obligations, and to the payment of any
obligations required to be paid pursuant to 9-504(1)(c) of the Uniform
Commercial Code of the Commonwealth of Massachusetts; and
(d) Fourth, the excess, if any, shall be returned to the
Borrower or to such other Persons as are legally entitled thereto.
12.5. Addition of Real Estate Assets to Cure Default. As an
alternative to the payment of cash to cure a Default under 9.1 or 9.2
hereof, the Borrower shall have the right to offer to provide additional
Collateral to the Agent in the form of Additional Properties pursuant to
5.3 and 5.4, for the purpose of curing a Default under 9.1 or 9.2
hereof, if the Borrower designates such Collateral for addition within
fifteen (15) days after the occurrence of such Default and the Borrower
executes and delivers to the Agent a Security Deed, an Assignment of
Leases and Rents, an Indemnity Agreement and UCC-1 Financing Statements
relating to the Additional Property together with the Certificates and
opinion described in 5.4(d) and 5.4(e) within thirty (30) days after the
occurrence of such Default. The Agent and the Banks shall accept and
approve the addition of such Collateral as a cure for such Default if
such Collateral shall cure the Default and satisfies the due diligence
requirements of the Agent and the Requisite Banks, including, without
limitation, the conditions set forth in 5.4 and those requirements with
respect to the Mortgaged Properties specified in 10 hereof, within
ninety (90) days after the occurrence of the subject Default, and at the
time that such due diligence requirements are so satisfied, no other
Defaults or Events of Default are continuing. If any such additional
Collateral is provided to the Agent in accordance with this 12.5, such
additional Collateral shall, for all purposes hereof, be deemed to be a
"Mortgaged Property." Until the Agent and Requisite Banks have
acknowledged in writing the cure of such Default, all consequences of
such Default hereunder shall be effective (except as provided in 8.7)
and the Agent may exercise all available remedies except that the
maturity of the Loans shall not be accelerated based solely on the
Default which Borrower is diligently attempting to cure hereunder, prior
to the expiration of said ninety (90) day period.
13. SETOFF. Regardless of the adequacy of any Collateral, during the
continuance of any Event of Default, any deposits (general or specific,
time or demand, provisional or final, regardless of currency, maturity,
or the branch of where such deposits are held) or other sums credited by
or due from any of the Banks to the Borrower and any securities or other
property of the Borrower in the possession of such Bank may WITH THE
PRIOR APPROVAL OF THE AGENT be applied to or set off against the payment
of Obligations and any and all other liabilities, direct, or indirect,
absolute or contingent, due or to become due, now existing or hereafter
arising, of the Borrower to such Bank. Each of the Banks agrees with
each other Bank that (a) if an amount to be set off is to be applied to
Indebtedness of the Borrower to such Bank, other than Indebtedness
evidenced by the Notes held by such Bank, such amount shall be applied
ratably to such other Indebtedness and to the Indebtedness evidenced by
all such Notes held by such Bank, and (b) if such Bank shall receive
from the Borrower, whether by voluntary payment, exercise of the right
of setoff, counterclaim, cross action, enforcement of the claim
evidenced by the Notes held by such Bank by proceedings against the
Borrower at law or in equity or by proof thereof in bankruptcy,
reorganization, liquidation, receivership or similar proceedings, or
otherwise, and shall retain and apply to the payment of the Note or
Notes held by such Bank any amount in excess of its ratable portion of
the payments received by all of the Banks with respect to the Notes held
by all of the Banks, such Bank will make such disposition and
arrangements with the other Banks with respect to such excess, either by
way of distribution, pro tanto assignment of claims, subrogation or
otherwise as shall result in each Bank receiving in respect of the Notes
held by it its proportionate payment as contemplated by this Agreement;
provided that if all or any part of such excess payment is thereafter
recovered from such Bank, such disposition and arrangements shall be
rescinded and the amount restored to the extent of such recovery, but
without interest. Notwithstanding the foregoing, no Bank shall exercise
a right of setoff if such exercise would limit or prevent the exercise
of any other remedy, right to Collateral or other recourse against the
Borrower.
14. THE AGENT.
14.1. Authorization. The Agent is authorized to take such action
on behalf of each of the Banks and to exercise all such powers as are
hereunder and under any of the other Loan Documents and any related
documents delegated to the Agent, together with such powers as are
reasonably incident thereto, provided that no duties or responsibilities
not expressly assumed herein or therein shall be implied to have been
assumed by the Agent. The relationship between the Agent and the Banks
is and shall be that of agent and principal only, and nothing contained
in this Agreement or any of the other Loan Documents shall be construed
to constitute the Agent as a trustee for any Bank.
14.2. Employees and Agents. The Agent may exercise its powers
and execute its duties by or through employees or agents and shall be
entitled to take, and to rely on, advice of counsel concerning all
matters pertaining to its rights and duties under this Agreement and the
other Loan Documents. The Agent may utilize the services of such Persons
as the Agent in its sole discretion may reasonably determine, and all
reasonable fees and expenses of any such Persons shall be paid by the
Borrower.
14.3. No Liability. Neither the Agent nor any of its
shareholders, directors, officers or employees nor any other Person
assisting them in their duties nor any agent or employee thereof, shall
be liable for any waiver, consent or approval given or any action taken,
or omitted to be taken, in good faith by it or them hereunder or under
any of the other Loan Documents, or in connection herewith or therewith,
or be responsible for the consequences of any oversight or error of
judgment whatsoever, except that the Agent or such other Person, as the
case may be, may be liable for losses due to its willful misconduct or
gross negligence.
14.4. No Representations. The Agent shall not be responsible for
the execution or validity or enforceability of this Agreement, the
Notes, any of the other Loan Documents or any instrument at any time
constituting, or intended to constitute, collateral security for the
Notes, or for the value of any such collateral security or for the
validity, enforceability or collectability of any such amounts owing
with respect to the Notes, or for any recitals or statements, warranties
or representations made herein or in any of the other Loan Documents or
in any certificate or instrument hereafter furnished to it by or on
behalf of the Borrower, or be bound to ascertain or inquire as to the
performance or observance of any of the terms, conditions, covenants or
agreements herein or in any instrument at any time constituting, or
intended to constitute, collateral security for the Notes. The Agent
shall not be bound to ascertain whether any notice, consent, waiver or
request delivered to it by the Borrower or any holder of any of the
Notes shall have been duly authorized or is true, accurate and complete.
The Agent has not made nor does it now make any representations or
warranties, express or implied, nor does it assume any liability to the
Banks, with respect to the credit worthiness or financial condition of
the Borrower. Each Bank acknowledges that it has, independently and
without reliance upon the Agent or any other Bank, and based upon such
information and documents as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank has
been independently represented by separate counsel on all matters
regarding this Agreement.
14.5. Payments.
(a) A payment by the Borrower to the Agent hereunder or
any of the other Loan Documents for the account of any Bank shall
constitute a payment to such Bank subject to the pro rata rights to
repayment based upon the Commitment Percentage of each Bank. The Agent
agrees promptly to distribute to each Bank such Bank's pro rata share of
payments received by the Agent for the account of the Banks except as
otherwise expressly provided herein or in any of the other Loan
Documents.
(b) If in the opinion of the Agent the distribution of any
amount received by it in such capacity hereunder, under the Notes or
under any of the other Loan Documents might involve it in liability, it
may refrain from making distribution until its right to make
distribution shall have been adjudicated by a court of competent
jurisdiction. If a court of competent jurisdiction shall adjudge that
any amount received and distributed by the Agent is to be repaid, each
Person to whom any such distribution shall have been made shall either
repay to the Agent its proportionate share of the amount so adjudged to
be repaid or shall pay over the same in such manner and to such Persons
as shall be determined by such court.
(c) Notwithstanding anything to the contrary contained in
this Agreement or any of the other Loan Documents, any Bank that fails
(i) to make available to the Agent its pro rata share of any Loan or
(ii) to comply with the provisions of 13 with respect to making
dispositions and arrangements with the other Banks, where such Bank's
share of any payment received, whether by setoff or otherwise, is in
excess of its pro rata share of such payments due and payable to all of
the Banks, in each case as, when and to the full extent required by the
provisions of this Agreement, or to adjust promptly such Bank's
outstanding principal and its pro rata Commitment Percentage as provided
in 2.1 hereof, shall be deemed delinquent (a "Delinquent Bank") and
shall be deemed a Delinquent Bank until such time as such delinquency is
satisfied. A Delinquent Bank shall be deemed to have assigned any and
all payments due to it from the Borrower, whether on account of
outstanding Loans, interest, fees or otherwise, to the remaining
nondelinquent Banks for application to, and reduction of, their
respective pro rata shares of all outstanding Loans. The Delinquent
Bank hereby authorizes the Agent to distribute such payments to the
nondelinquent Banks in proportion to their respective pro rata shares of
all outstanding Loans. A Delinquent Bank shall be deemed to have
satisfied in full a delinquency when and if, as a result of application
of the assigned payments to all outstanding Loans of the nondelinquent
Banks, the Banks' respective pro rata shares of all outstanding Loans
have returned to those in effect immediately prior to such delinquency
and without giving effect to the nonpayment causing such delinquency.
14.6. Holders of Notes. The Agent may deem and treat the payee
of any Note as the absolute owner or purchaser thereof for all purposes
hereof until it shall have been furnished in writing with a different
name by such payee or by a subsequent holder assignee or transferee.
14.7. Indemnity. The Banks ratably agree hereby to indemnify and
hold harmless the Agent from and against any and all claims, actions and
suits (whether groundless or otherwise), losses, damages, costs,
expenses (including any expenses for which the Agent has not been
reimbursed by the Borrower as required by 15), and liabilities of every
nature and character arising out of or related to this Agreement, the
Notes, or any of the other Loan Documents or the transactions
contemplated or evidenced hereby or thereby, or the Agent's actions
taken hereunder or thereunder, except to the extent that any of the same
shall be directly caused by the Agent's willful misconduct or gross
negligence.
14.8. Agent as Bank. In its individual capacity, FNBB shall have
the same obligations and the same rights, powers and privileges in
respect to its Commitment and the Loans made by it, and as the holder of
any of the Notes as it would have were it not also the Agent.
14.9. Resignation. The Agent may resign at any time by giving
sixty (60) days, prior written notice thereof to the Banks and the
Borrower. Upon any such resignation, the Requisite Banks shall have the
right to appoint a successor Agent. Unless a Default or Event of
Default shall have occurred and be continuing, appointment of such
successor Agent shall be subject to the reasonable approval of the
Borrower. If no successor Agent shall have been so appointed by the
Requisite Banks and shall have accepted such appointment within thirty
(30) days after the giving of notice of resignation or removal of the
Borrower has disapproved or failed to approve a successor agent within
such period, then the retiring Agent may, on behalf of the Banks,
appoint a successor Agent, which shall be a financial institution having
a rating of not less than A2/P2 or its equivalent by Standard & Poor's
Corporation. Upon the acceptance of any appointment as Agent hereunder
by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations as Agent hereunder. After any retiring Agent's
resignation, the provisions of this Agreement and the other Loan
Documents shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as Agent.
14.10. Notification of Defaults and Events of Default. Each Bank
hereby agrees that, upon learning of the existence of a Default or an
Event of Default, it shall promptly notify the Agent thereof. The Agent
hereby agrees that upon receipt of any notice under this 14.10 it shall
promptly notify the other Banks of the existence of such Default or
Event of Default.
14.11. Duties in the Case of Enforcement. In case one of more
Events of Default have occurred and shall be continuing, and whether or
not acceleration of the Obligations shall have occurred, the Agent
shall, if (a) so requested by the Requisite Banks and (b) the Banks have
provided to the Agent such additional indemnities and assurances against
expenses and liabilities as the Agent may reasonably request, proceed to
enforce the provisions of the Security Documents authorizing the sale or
other disposition of all or any part of the Collateral and exercise all
or any such other legal and equitable and other rights or remedies as it
may have in respect of such Collateral. The Requisite Banks may direct
the Agent in writing as to the method and the extent of any such sale or
other disposition, the Banks hereby agreeing to indemnify and hold the
Agent harmless from all liabilities incurred in respect of all actions
taken or omitted in accordance with such directions, provided that the
Agent need not comply with any such direction to the extent that the
Agent reasonably believes the Agent's compliance with such direction to
be unlawful or commercially unreasonable in any applicable jurisdiction.
The Agent may take such steps as it reasonably determines for the taking
of possession or title to any Collateral, including the formation of
trusts or corporation with each Bank having a beneficial interest equal
to its pro rata percentage of the outstanding Loans.
15. EXPENSES. The Borrower agrees to pay (a) the reasonable costs of
producing and reproducing this Agreement, the other Loan Documents and
the other agreements and instruments mentioned herein, (b) any taxes
(including any interest and penalties in respect thereto) payable by the
Agent or any of the Banks (other than taxes based upon the Agent's or
any Bank's net income), including any recording, mortgage, documentary
or intangibles taxes in connection with the Security Documents and other
Loan Documents, or other taxes payable on or with respect to the
transactions contemplated by this Agreement, including any taxes payable
by the Agent or any of the Banks after the Effective Date (the Borrower
hereby agreeing to indemnify the Banks with respect thereto), (c) all
title insurance premiums, appraisal fees, engineer's, inspector's and
surveyor's fees, recording costs and the reasonable fees, expenses and
disbursements of the Agent's counsel or any local counsel to the Agent
incurred in connection with the preparation, administration or
interpretation of the Loan Documents and other instruments mentioned
herein, each closing hereunder, and amendments, modifications,
approvals, consents or waivers hereto or hereunder, (d) the fees, costs,
expenses and disbursements of the Agent incurred in connection with the
preparation, administration or interpretation of the Loan Documents and
other instruments mentioned herein including without limitation, the
costs incurred by the Agent in connection with its inspection of the
Mortgaged Properties, and the fees and disbursements of the Agent's
counsel and the Borrower's legal counsel in preparing documentation, (e)
the fees, costs, expenses and disbursements of the Agent incurred in
connection with the syndication and/or participation of the Loans, (f)
all reasonable out-of-pocket expenses (including reasonable attorneys'
fees and costs, which attorneys may be employees of any Bank or the
Agent and the fees and costs of appraisers, engineers, investment
bankers, surveyors or other experts retained by the Agent or any Bank in
connection with any such enforcement proceedings) incurred by any Bank
or the Agent in connection with (i) the enforcement of or preservation
of rights under any of the Loan Documents against the Borrower or the
administration thereof after the occurrence of a Default or Event of
Default (including, without limitation, expenses incurred in any
restructuring and/or "workout" of the Loans), and (ii) any litigation,
proceeding or dispute whether arising hereunder or otherwise, in any way
related to the Agent's or the Bank's relationship with the Borrower, the
Company, any Permitted Joint Venture or any of the Related Companies,
(g) all reasonable fees, expenses and disbursements of the Agent
incurred in connection with UCC searches, UCC filings or mortgage
recordings, (h) all costs incurred by the Agent in the future in
connection with its inspection of the Mortgaged Properties, and (i) the
fees, costs, expenses and disbursements of the Agent incurred in
connection with the granting of additional Collateral by the Borrower
pursuant to 12.5 hereof, including, without limitation, the costs
incurred by the Agent in connection with its inspection of such
additional Collateral, and the fees and disbursements of the Agent's
counsel. The covenants of this 15 shall survive payment or satisfaction
of payment of amounts owing with respect to the Notes.
16. INDEMNIFICATION. The Borrower agrees to indemnify and hold
harmless the Agent and the Banks and the shareholders, directors,
agents, officers, subsidiaries, and affiliates of the Agent and the
Banks from and against any and all claims, actions or causes of action
and suits whether groundless or otherwise, and from and against any and
all Liabilities, losses, settlement payments, obligations, damages and
expenses of every nature and character arising out of this Agreement or
any of the other Loan Documents or the transactions contemplated hereby
or which otherwise arise in connection with the financing including,
without limitation unless directly caused by the gross negligence or
willful misconduct of a Bank or the Agent (but such limitation on
indemnification shall only apply to the Agent or Bank being grossly
negligent or committing willful misconduct), (a) any actual or proposed
use by the Borrower of the proceeds of any of the Loans, (b) any actual
or alleged infringement of any patent, copyright, trademark, service
mark or similar right of the Borrower comprised in the Collateral, (c)
the Borrower entering into or performing this Agreement or any of the
other Loan Documents or (d) with respect to the Borrower and its
respective properties, the violation of any Environmental Law, the
Release or threatened Release of any Hazardous Substances or any action,
suit, proceeding or investigation brought or threatened with respect to
any Hazardous Substances (including, but not limited to claims with
respect to wrongful death, personal injury or damage to property), (e)
any cost, claim liability, damage or expense in connection with any harm
the Borrower may be found to have caused in the role of a broker, in
each case including, without limitation, the reasonable fees and
disbursements of counsel and allocated costs of internal counsel
incurred in connection with any such investigation, litigation or other
proceeding. In litigation, or the preparation therefor, the Banks and
the Agent shall each be entitled to select their own separate counsel
and, in addition to the foregoing indemnity, the Borrower agrees to pay
promptly the reasonable fees and expenses of such counsel. If, and to
the extent that the obligations of the Borrower under this 16 are
unenforceable for any reason, the Borrower hereby agrees to make the
maximum contribution to the payment in satisfaction of such obligations
which is permissible under applicable law. The provisions of this 16
shall survive the repayment of the Loans and the termination of the
obligations of the Banks hereunder and shall continue in full force and
effect as to the Banks so long as the possibility of any such claim,
action, cause of action or suit exists.
17. SURVIVAL OF COVENANTS, ETC. All covenants, agreements,
representations and warranties made herein, in the Notes, in any of the
other Loan Documents or in any documents or other papers delivered by or
on behalf of the Borrower or any Guarantor pursuant hereto shall be
deemed to have been relied upon by the Banks and the Agent,
notwithstanding any investigation heretofore or hereafter made by it,
and shall survive the making by the Banks of the Loans, as herein
contemplated, and shall continue in full force and effect so long as any
amount due under this Agreement or the Notes or any of the other Loan
Documents remains outstanding or the Banks have any obligation to make
any Loans. The indemnification obligations of the Borrower provided
herein and the other Loan Documents shall survive the full repayment of
amounts due and the termination of the obligations of the Banks
hereunder and thereunder to the extent provided herein and therein. All
statements contained in any certificate or other paper delivered to the
Agent or any Bank at any time by or on behalf of the Borrower pursuant
hereto or in connection with the transactions contemplated hereby shall
constitute representations and warranties by the Borrower hereunder.
18. ASSIGNMENT; PARTICIPATIONS; ETC.
18.1. Conditions to Assignment by Banks. Except as provided
herein, each Bank may assign to one or more Eligible Assignees all or a
portion of its interests, rights and obligations under this Agreement
(including all or a portion of its Commitment Percentage and Commitment
and the same portion of the Loans at the time owing to it, and the Notes
held by it; provided that (a) the Agent shall have given its prior
written consent to such assignment except that such consent shall not be
needed with respect to an assignment from a Bank to one of its
Affiliated Banks, (b) each such assignment shall be of a constant, and
not a varying, percentage of all the assigning Bank's rights and
obligations under this Agreement, (c) each assignment shall be in an
amount of not less than $9,000,000 that is a whole multiple of
$1,000,000, (d) each Bank shall retain, free of any such assignment, an
amount of its Commitment of not less than 51% of its Commitment at the
time it initially became a Bank hereunder and (e) the parties to such
assignment shall execute and deliver to the Agent, for recording in the
Register (as hereinafter defined), an Assignment and Acceptance,
substantially in the form of Exhibit F hereto (an "Assignment and
Acceptance') , together with any Notes subject to such assignment. Upon
such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which
effective date shall be at least five (5) Business Days after the
execution thereof, (i) the assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the
rights and obligations of a Bank hereunder, and (ii) the assigning Bank
shall, to the extent provided in such assignment and upon payment to the
Agent of the registration fee referred to in 18.3, be released from its
obligations under this Agreement.
18.2. Certain Representations and Warranties; Limitations;
Covenants. By executing and delivering an Assignment and Acceptance,
the parties to the assignment thereunder confirm to and agree with each
other and the other parties hereto as follows: (a) other than the
representation and warranty that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim,
the assigning Bank makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency
or value of this Agreement, the other Loan Documents or any other
instrument or document furnished pursuant hereto; (b) the assigning Bank
makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower or any other Person
primarily or secondarily liable in respect of any of the Obligations, or
the performance or observance by the Borrower or any other Person
primarily or secondarily liable in respect of any of the Obligations of
any of their obligations under this Agreement or any of the other Loan
Documents or any other instrument or document furnished pursuant hereto
or thereto or the validity or enforceability or priority of any lien or
any Collateral; (c) such assignee confirms that it has received a copy
of this Agreement, together with copies of the most recent financial
statements referred to in 6.4 and 7.4 and such other documents and
information as it has deemed appropriate to make its own credit analysis
and decision to enter into such Assignment and Acceptance; (d) such
assignee will, independently and without reliance upon the assigning
Bank, the Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make
its own credit and Collateral decisions in taking or not taking action
under this Agreement, (e) such assignee represents and warrants that it
is an Eligible Assignee; (f) such assignee appoints and authorizes the
Agent to take such action as "Agent" on its behalf and to exercise such
powers under this Agreement and the other Loan Documents as are
delegated to the Agent by the terms hereof or thereof, together with
such powers as are reasonably incidental thereto; (g) such assignee
agrees that it will perform in accordance with their terms all of the
obligations that by the terms of this Agreement are required to be
performed by it as a Bank; and (h) such assignee represents and warrants
that it is legally authorized to enter into such Assignment and
Acceptance.
18.3 Register. The Agent shall maintain a copy of each
Assignment and Acceptance delivered to it and a register or similar list
(the "Register") for the recordation of the names and addresses of the
Banks and the Commitment Percentages of, and principal amount of the
Loans owing to the Banks from time to time. The entries in the Register
shall be conclusive, in the absence of manifest error, and the Borrower,
the Agent and the Banks may treat each Person whose name is recorded in
the Register as a Bank hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower and the Banks
at any reasonable time and from time to time upon reasonable prior
notice. Upon each such recordation, the assigning Bank agrees to pay to
the Agent a registration fee in the sum of $2,500.00. The Agent may
amend Schedules 1 and 1.2 hereof to reflect the recording of any such
assignments.
18.4. New Notes. Upon its receipt of an Assignment and
Acceptance executed by the parties to such assignment, together with
each Note subject to such assignment, the Agent shall (a) record the
information contained therein in the Register, and (b) give prompt
notice thereof to the Borrower and the Banks (other than the assigning
Bank). Within five (5) Business Days after receipt of such notice, the
Borrower, at its own expense, shall execute and deliver to the Agent, in
exchange for each surrendered Note, a new Note to the order of such
Eligible Assignee in an amount equal to the amount assumed by such
Eligible Assignee pursuant to such Assignment and Acceptance and, if the
assigning Bank has retained some portion of its Loans hereunder, a new
Note to the order of the assigning Bank in an amount equal to the amount
retained by it hereunder. Such new Notes shall provide that they are
replacements for the surrendered Notes and that they do not constitute a
novation, shall be in an aggregate principal amount equal to the
aggregate principal amount of the surrendered Notes, shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be
in substantially the form of the assigned Notes. Within five (S) days of
issuance of any new Notes pursuant to this 18.4, the Borrower shall
deliver an opinion of counsel, addressed to the Banks and the Agent,
relating to the due authorization, execution and delivery of such new
Notes and the legality, validity and binding non-preferential effect
thereof, and that the Obligations evidenced by the new Notes are secured
by the Collateral with the same validity, enforceability and priority as
if given on the Effective Date, in form and substance satisfactory to
the Banks. The surrendered Notes shall be cancelled and returned to the
Borrower.
18.5. Participations. Each Bank may sell participations to one
or more banks or other entities in a portion of such Bank's rights and
obligations under this Agreement and the other Loan Documents not to
exceed forty-nine percent (49%) of its Commitment Percentage; provided
that (a) the Agent shall have given its prior written consent to such
participation, except that any Bank may sell participations to its
Affiliated Banks without such consent, (b) each such participation shall
be in an amount of not less than $9,000,000 that is a whole multiple of
$1,000,000, (c) any such sale or participation shall not affect the
rights and duties of the selling Bank hereunder to the Borrower and the
Bank shall continue to exercise all approvals, disapprovals and other
functions of a Bank, (d) the only rights granted to the participant
pursuant to such participation arrangements with respect to waivers,
amendments or modifications of the Loan Documents shall be the rights to
approve the vote of the Bank as to waivers, amendments or modifications
that would reduce the principal of or the interest rate on any Loans,
extend the term or increase the amount of the Commitment of such Bank as
it relates to such participant, reduce the amount of any fees to which
such participant is entitled or extend any regularly scheduled payment
date for principal or interest, provided that all approvals affecting a
Loan or this Agreement under this clause (d) shall be by a fifty-one
percent (51%) vote of such Bank's Commitment Percentage, and (e) no
participant shall have the right to grant further participations or
assign its rights, obligations or interests under such participation to
other Persons without the prior written consent of the Agent. The Agent
shall promptly advise the Borrower in writing of any such sale or
participation.
18.6. Pledge by Lender. Any Bank may at any time pledge all or
any portion of its interest and rights under this Agreement (including
all or any portion of its Note) to any of the twelve Federal Reserve
Banks organized under 4 of the Federal Reserve Act, 12 U.S.C. 341. No
such pledge or the enforcement thereof shall release the pledgor Bank
from its obligations hereunder or under any of the other Loan Documents.
18.7. No Assignment by Borrower. The Borrower shall not assign
or transfer any of its rights or obligations under any of the Loan
Documents without the prior written consent of each of the Banks.
18.8. Disclosure. The Borrower agrees that in addition to
disclosures made in accordance with standard banking practices any Bank
may disclose information obtained by such Bank pursuant to this
Agreement to assignees or participants and potential assignees or
participants hereunder.
19. NOTICES, ETC. Except as otherwise expressly provided in this
Agreement, all notices and other communications made or required to be
given pursuant to this Agreement or the Notes shall be in writing and
shall be delivered in hand, mailed by United States registered or
certified first class mail, postage prepaid, sent by overnight courier,
or sent by telegraph, telecopy, telefax or telex and confirmed by
delivery via courier or postal service, addressed as follows:
(a) if to the Borrower, at 65 Valley Stream Parkway,
Malvern, PA 19355, Attention: Chief Financial Officer or at such other
address for notice as the Borrower shall last have furnished in writing
to the Agent; and
(b) if to the Agent, at 100 Federal Street, Boston,
Massachusetts 02110, Attention: Real Estate Department, and to 115
Perimeter Center Place, N.E., Suite 500, Atlanta, Georgia 30346, Attn:
Lori Y. Litow, Vice President, or such other address for notice as the
Agent shall last have furnished in writing to the Borrower.
(c) if to any Bank, at such Bank's address set forth on
Schedule 1, hereto, or such other address for notice as such Bank shall
have last furnished in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been
duly given or made and to have become effective (i) if delivered by
hand, overnight courier or facsimile to a responsible officer of the
party to which it is directed, at the time of the receipt thereof by
such officer or the sending of such facsimile and (ii) if sent by
registered or certified first-class mail, postage prepaid, on the third
Business Day following the mailing thereof.
20. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE. THIS
AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS, EXCEPT AS
OTHERWISE
SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE
CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SUCH COMMONWEALTH
(EXCLUDING
THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWER
AGREES
THAT ANY SUIT BY IT FOR THE ENFORCEMENT OF THIS AGREEMENT OR ANY OF
THE
OTHER LOAN DOCUMENTS MAY BE BROUGHT ONLY IN THE COURTS OF THE
COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING
THEREIN AND
BORROWER CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT
FOR ANY
SUIT BY AGENT OR ANY BANK AND THE SERVICE OF PROCESS IN ANY SUCH SUIT
BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN 19.
THE
BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE
TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS
BROUGHT IN AN INCONVENIENT COURT. IN ADDITION TO THE COURTS OF THE
COMMONWEALTH OR ANY FEDERAL COURT SITTING THEREIN, THE AGENT OR
ANY BANK
MAY BRING ACTION(S) FOR ENFORCEMENT ON A NONEXCLUSIVE BASIS WHERE
ANY
COLLATERAL EXISTS AND THE BORROWER CONSENTS TO THE NON-EXCLUSIVE
JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH
SUIT
BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN 19.
21. HEADINGS. The captions in this Agreement are for convenience of
reference only and shall not define or limit the provisions hereof.
22. COUNTERPARTS. This Agreement and any amendment hereof may be
executed in several counterparts and by each party on a separate
counterpart, each of which when so executed and delivered shall be an
original, and all of which together shall constitute one instrument. In
proving this Agreement it shall not be necessary to produce or account
for more than one such counterpart signed by the party against whom
enforcement is sought.
23. ENTIRE AGREEMENT. The Loan Documents and any other documents
executed in connection herewith or therewith express the entire
understanding of the parties with respect to the transactions
contemplated hereby. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated, except as provided in 25.
24. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS. THE BORROWER
HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR
CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE
NOTES OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS
HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS. EXCEPT TO THE EXTENT EXPRESSLY PROHIBITED BY LAW, THE
BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY
LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES, INCLUDING ANY DAMAGES PURSUANT TO M.G.L. C.
93A ET SEQ. THE BORROWER (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF THE AGENT OR ANY BANK HAD REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT THE AGENT OR SUCH BANK WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B)
ACKNOWLEDGES THAT THE AGENT AND THE BANKS HAVE BEEN INDUCED TO ENTER INTO
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH THEY ARE PARTIES BY,
AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.
25. CONSENTS, AMENDMENTS, WAIVERS, ETC. Any consent or approval
required or permitted by this Agreement may be given, and any term of
this Agreement or of any other instrument related hereto or mentioned
herein may be amended, and the performance or observance by the Borrower
of any terms of this Agreement or such other instrument or the
continuance of any Default or Event of Default may be waived (either
generally or in a particular instance and either retroactively or
prospectively) with, but only with, the written consent of the Requisite
Banks, and, in the case of amendments, with the written consent of the
Borrower other than amendments to schedules made in the ordinary course
as contemplated by this Agreement. Notwithstanding the foregoing, (i)
the rate of interest on and the term or amount of the Notes, (ii) the
amount of the Commitments of the Banks, (iii) the amount of any fee
payable to a Bank hereunder, (iv) any provision herein or in any of the
Loan Documents which expressly requires consent of all the Banks, (v)
the funding provisions of 2.4 and 2.5 hereof, and (vi) the rights,
duties and obligations of the Agent specified in 14 hereof, may not be
amended without the written consent of each Bank affected thereby, nor
may the Agent release any obligor from its liability with respect to the
Obligations, without first obtaining the written consent of all the
Banks. No waiver shall extend to or affect any obligation not expressly
waived or impair any right consequent thereon. No course of dealing or
delay or omission on the part of the Agent or any Bank in exercising any
right shall operate as a waiver thereof or otherwise be prejudicial
thereto. No notice to or demand upon the Borrower shall entitle the
Borrower to other or further notice or demand in similar or other
circumstances.
26. SEVERABILITY. The provisions of this Agreement are severable, and
if any one clause or provision hereof shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall affect only such clause or
provision, or part thereof, in such jurisdiction, and shall not in any
manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Agreement in any jurisdiction.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as
a sealed instrument as of the date first set forth above.
WITNESS: THE FIRST NATIONAL BANK OF BOSTON,
as Agent
By:
- -------------------------------- ------------------------------
THE FIRST NATIONAL BANK OF BOSTON
By:
- -------------------------------- ------------------------------
LIBERTY PROPERTY TRUST
By:
- -------------------------------- ------------------------------
LIBERTY PROPERTY LIMITED PARTNERSHIP
By: Liberty Property Trust,
its general partner
By:
- -------------------------------- ------------------------------
NOTE
No. 5 December 27, 1996
$16,666,000.00
FOR VALUE RECEIVED, the undersigned, Liberty Property Limited
Partnership, a Pennsylvania limited partnership (the "Borrower"),
promises to pay to the order of Dresdner Bank AG (hereinafter, together
with its successors in title and assigns, called the "Bank") at the head
office of The First National Bank of Boston, as Agent (the "Agent") at
100 Federal Street, Boston, Massachusetts 02110, the principal sum of
Sixteen Million Six Hundred Sixty-Six Thousand Dollars ($16,666,000.00)
or, if less, the aggregate unpaid principal amount of all Loans made by
the Bank to the Borrower pursuant to the Loan Agreement dated as of
December 13, 1996 among the Bank, the Borrower, Liberty Property Trust,
the other lending institutions named therein and the Agent, as amended
from time to time (the "Loan Agreement"). Capitalized terms used herein
and not otherwise defined herein shall have the meanings assigned to
them in the Loan Agreement. Unless otherwise provided herein, the rules
of interpretation set forth in Section 1.2 of the Loan Agreement shall be
applicable to this Note. This Note replaces, in part, Note No. 2 issued
under the Loan Agreement and does not constitute a novation.
The Borrower also promises to pay (a) principal from time to time at the
times provided in the Loan Agreement and (b) interest from the date
hereof on the principal amount from time to time unpaid at the rates and
times set forth in the Loan Agreement and in all cases in accordance
with the terms of the Loan Agreement. Late charges and other charges
and default rate interest shall be paid by Borrower in accordance with
the terms of the Loan Agreement. The entire outstanding principal
amount of this Note, together with all accrued but unpaid interest
thereon, shall be due and payable in full on the Maturity Date or, if
prior to such Maturity Date Borrower exercises the Term Extension Option
pursuant to Section 3.1 of the Loan Agreement, such outstanding principal and
interest shall be due and payable in full on the Term Extension
Maturity Date. The Bank may endorse the record relating to this Note
with appropriate notations evidencing advances and payments of principal
hereunder as contemplated by the Loan Agreement.
This Note is issued pursuant to, is entitled to the benefits of, and is
subject to the provisions of the Loan Agreement. The principal of this
Note is subject to prepayment in whole or in part in the manner and to
the extent specified in the Loan Agreement. This Note is secured by the
Security Documents. However, the principal of this Note, the interest
accrued on this Note and all other Obligations of the Borrower are full
recourse obligations of the Borrower, and all of its Real Estate Assets,
the Collateral and its other properties shall be available for the
payment and performance of this Note, the interest accrued on this Note,
and all of such other Obligations. Notwithstanding anything to the
contrary contained herein, the trustees of Liberty Property Trust shall
have no personal liability of any nature under this document. The Agent
and the Bank shall look solely to the assets of Liberty Property Trust
to satisfy any liability or recourse against Liberty Property Trust
hereunder.
In case an Event of Default shall occur and be continuing, the entire
unpaid principal amount of this Note and all of the unpaid interest
accrued thereon may become or be declared due and payable in the manner
and with the effect provided in the Loan Agreement.
The Borrower and all endorsers hereby waive presentment, demand, protest
and notice of any kind in connection with the delivery, acceptance,
performance and enforcement of this Note, and also hereby assent to
extensions of time of payment or forebearance or other indulgences
without notice.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL BE
GOVERNED BY AND INTERPRETED AND DETERMINED IN ACCORDANCE WITH
THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS
APPLICABLE TO CONFLICTS OR CHOICE OF LAW).
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed in its name as an instrument under seal on the date first above
written.
ATTEST: LIBERTY PROPERTY LIMITED
PARTNERSHIP
By: LIBERTY PROPERTY TRUST,
Sole general partner
- ------------------------------- -----------------------------------
Assistant Secretary By:
Title
Exhibit 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration
Statement (Form S-3 No. 33-94782) and in the related Prospectus of
Liberty Property Trust and Liberty Property Limited Partnership, to the
incorporation by reference in the Registration Statement (Form S-3 No.
333-22211) and in the related Prospectus of Liberty Property Trust and
Liberty Property Limited Partnership, to the incorporation by reference
in the Registration Statement (Form S-8 No. 33-94036), and to the
incorporation by reference in the Registration Statement (Form S-3 No.
333-14139) and in the related Prospectus of Liberty Property Trust of
our report dated February 17, 1997, with respect to the consolidated
financial statements and schedule of Liberty Property Trust included in
this Annual Report (Form 10-K) for the year ended December 31, 1996.
Philadelphia, Pennsylvania /s/ ERNST & YOUNG LLP
February 26, 1997 ERNST & YOUNG LLP
Exhibit 23.2
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration
Statement (Form S-3 No. 33-94782) and in the 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. 333-22211) and in the related Prospectus of Liberty Property Trust
and Liberty Property Limited Partnership of our report dated February
17, 1997, with respect to the consolidated financial statements and
schedule of Liberty Property Limited Partnership included in this Annual
Report (Form 10-K) for the year ended December 31, 1996.
Philadelphia, Pennsylvania /s/ ERNST & YOUNG LLP
February 26, 1997 ERNST & YOUNG LLP
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet at December 31, 1996 and the Consolidated Statement
of Operations for the Year Ended December 31, 1996 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000921112
<NAME> LIBERTY PROPERTY TRUST
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 19,612
<SECURITIES> 0
<RECEIVABLES> 8,707
<ALLOWANCES> 1,701
<INVENTORY> 0
<CURRENT-ASSETS> 28,319
<PP&E> 1,182,910
<DEPRECIATION> 121,671
<TOTAL-ASSETS> 1,152,612
<CURRENT-LIABILITIES> 13,705
<BONDS> 678,709
0
0
<COMMON> 31
<OTHER-SE> 375,501
<TOTAL-LIABILITY-AND-EQUITY> 1,152,612
<SALES> 0
<TOTAL-REVENUES> 154,265
<CGS> 0
<TOTAL-COSTS> 40,853
<OTHER-EXPENSES> 37,253
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 38,528
<INCOME-PRETAX> 37,631
<INCOME-TAX> 0
<INCOME-CONTINUING> 37,631
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 33,740
<EPS-PRIMARY> 1.14
<EPS-DILUTED> 1.29
</TABLE>
