LIBERTY PROPERTY TRUST, 424B5, 1997-08-15

LIBERTY PROPERTY TRUST
424B5, 1997-08-15
REAL ESTATE INVESTMENT TRUSTS

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<PAGE>

FILED PURSUANT TO RULE 424(b)(5)
UNDER THE SECURITIES ACT OF 1933, AS AMENDED
COMMISSION FILE NOS. 33-94782 AND 333-22211
PROSPECTUS SUPPLEMENT
(To Prospectus dated August 5, 1997)

$200,000,000

LIBERTY PROPERTY LIMITED PARTNERSHIP

$100,000,000 7.10% SENIOR NOTES DUE 2004
$100,000,000 7.25% SENIOR NOTES DUE 2007

-----------------
INTEREST PAYABLE FEBRUARY 15 AND AUGUST 15

-----------------
The 7.10% Senior Notes Due August 15, 2004 (the "2004 Notes") and the 7.25%
Senior Notes Due August 15, 2007 (the "2007 Notes" and, together with the 2004
Notes, the "Notes") offered hereby (the "Offering") are being issued by
Liberty Property Limited Partnership, a Pennsylvania limited partnership (the
"Company"), each in an aggregate principal amount equal to $100.0 million.

Interest on the Notes will be payable semi-annually in arrears on each
February 15 and August 15, commencing February 15, 1998. The Notes are
redeemable at any time at the option of the Company, in whole or in part, at a
redemption price equal to the sum of: (i) the principal amount of the Notes
being redeemed plus accrued interest to the redemption date and (ii) the Make-
Whole Amount (as defined under "Description of Notes--Optional Redemption"),
if any. The 2004 Notes and the 2007 Notes will mature on August 15, 2004 and
August 15, 2007, respectively.

The 2004 Notes and the 2007 Notes constitute separate series of debt
securities, each of which will be represented by a single fully registered
note in book-entry form (each, a "Global Note") registered in the name of a
nominee of The Depository Trust Company ("DTC"). Beneficial interests in the
Global Notes will be shown on, and transfers thereof will be effected only
through, records maintained by DTC (with respect to beneficial interests of
participants) or by participants or persons that hold interests through
participants (with respect to beneficial interests of beneficial owners).
Owners of beneficial interests in the Global Notes will be entitled to
physical delivery of Notes in certificated form equal in principal amount to
their respective beneficial interests only under the limited circumstances
described under "Description of Notes--Book-Entry System." Settlement for the
Notes will be made in immediately available funds. The Notes will trade in
DTC's Same-Day Funds Settlement System until maturity or earlier redemption,
as the case may be, or until the Notes are issued in certificated form, and
secondary market trading activity in the Notes will therefore settle in
immediately available funds. All payments of principal and interest in respect
of the Notes will be made by the Company in immediately available funds. See
"Description of Notes--Same-Day Settlement and Payment."

-----------------
SEE "RISK FACTORS" BEGINNING ON PAGE S-10 OF THIS PROSPECTUS SUPPLEMENT FOR
A DISCUSSION OF CERTAIN MATTERS THAT SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF THE NOTES.

-----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price to Underwriting Proceeds to
Public(1) Discount(2) Company(1)(3)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per 2004 Note.......................... 99.971% .625% 99.346%
- --------------------------------------------------------------------------------
Per 2007 Note.......................... 99.858% .650% 99.208%
- --------------------------------------------------------------------------------
Total.................................. $199,829,000 $1,275,000 $198,554,000
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from August 19, 1997 to the date of
delivery.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting expenses, estimated at $555,000, which are payable by the
Company.

-----------------
The Notes offered by this Prospectus Supplement are offered by the
Underwriters subject to prior sale, to withdrawal, cancellation or
modification of the offer without notice, to delivery to and acceptance by the
Underwriters and to certain further conditions. It is expected that delivery
of the Notes will be made in book-entry form through the facilities of DTC,
against payment therefor in immediately available funds, on or about August
19, 1997.

-----------------
LEHMAN BROTHERS DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
SMITH BARNEY INC.
August 14, 1997
<PAGE>

[LIBERTY PROPERTY LIMITED PARTNERSHIP]

================================================================================

[MAP OF EASTERN UNITED STATES APPEARS HERE]

================================================================================

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES, INCLUDING
OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN THE NOTES, AND
MAY BID FOR AND PURCHASE THE NOTES IN THE OPEN MARKET, IN CONNECTION WITH THIS
OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "PLAN OF DISTRIBUTION" IN
THE ACCOMPANYING PROSPECTUS.
<PAGE>

SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus Supplement and the accompanying Prospectus or
incorporated therein by reference. Except as otherwise indicated, the cross-
references in this Prospectus Supplement are to sections hereof. Liberty
Property Limited Partnership, a Pennsylvania limited Partnership (the
"Company"), is the Operating Partnership of Liberty Property Trust, a Maryland
real estate investment trust (the "Trust"). The Trust conducts substantially
all of its operations through the Company. Unless the context otherwise
requires, the term "Company," as used in this Prospectus Supplement, means
Liberty Property Limited Partnership and its subsidiaries (and, where the
context indicates, its predecessor entities, Rouse & Associates, a Pennsylvania
general partnership, and certain affiliated entities (collectively, the
"Predecessor")). This Prospectus Supplement contains and the accompanying
Prospectus contains or incorporates by reference forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended
(the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). The Company's actual results could differ
materially from those set forth in the forward-looking statements. See "Risk
Factors" for a discussion of certain factors that might cause such a
difference.

THE COMPANY

The Notes offered hereby are being issued by the Company, which is the
Operating Partnership of the Trust, a self-administered and self-managed
Maryland real estate investment trust (a "REIT") formed in 1994 whose common
shares of beneficial interest, par value $0.001 per share (the "Common
Shares"), are listed on the New York Stock Exchange (the "NYSE") under the
symbol "LRY." The Company is administered and managed by the Trust, which is
the Company's sole general partner and also a limited partner. As of June 30,
1997, the Trust had a combined equity interest in the Company of 89.76%.

The Company is one of the largest owners and operators of suburban industrial
and office real estate in the United States. The Company provides leasing,
property management, acquisition, development, construction management, design
management and other related services for a portfolio which, as of June 30,
1997, consisted of 216 industrial and 110 office properties totaling
approximately 26.4 million leasable square feet (collectively, the "Operating
Properties"). The Operating Properties were approximately 93.2% leased to over
1,100 tenants as of June 30, 1997. As of the same date, the Company also had 28
properties under development (the "Development Properties"), which are expected
to generate approximately 3.2 million leasable square feet. As of June 30,
1997, the Company also owned 943 acres of land, which the Company anticipates
is capable of supporting, as and when developed, approximately nine million
leasable square feet. The Operating Properties and the Development Properties
(collectively, the "Properties") and such land are located principally within
the Southeastern, Mid-Atlantic and Mid-Western United States.

BUSINESS OBJECTIVES AND STRATEGIES

The Trust's senior management team consists of 19 senior executives, who
collectively 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 Trust and the Predecessor for 13 years. As of June 30,
1997, the 19 senior executives beneficially owned 4.7% of the outstanding
Common Shares on a fully diluted basis.

S-3
<PAGE>

RECENT FINANCING ACTIVITIES

On March 24, 1997, the Trust consummated a public offering of 7,500,000
Common Shares at a price of $24.50 per share. Pursuant to the exercise of the
over-allotment option by the underwriters of such offering, on April 1, 1997,
the Trust consummated the sale of an additional 750,000 Common Shares at the
same price per share. The aggregate net proceeds to the Trust from such
offering, including the proceeds from the exercise of such option, were
approximately $191.7 million. The aggregate net proceeds of such offering were
contributed to the Company.

On May 20, 1997, the Company closed a $325 million unsecured credit facility
(the "Credit Facility"). The interest rate on borrowings under the Credit
Facility adjusts, based on the Company's leverage levels and senior debt
ratings from Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's
Ratings Group ("Standard & Poor's"). The current interest rate on the Credit
Facility is 110 basis points over the London Interbank Offered Rate ("LIBOR").

On August 11, 1997, the Trust consummated a public offering (the "Preferred
Shares Offering") of 5,000,000 shares of 8.80% Series A Cumulative Redeemable
Preferred Shares of Beneficial Interest, Liquidation Preference $25.00 per
share (the "Series A Preferred Shares"). The aggregate net proceeds to the
Trust from the Preferred Shares Offering were approximately $120.8 million. The
aggregate net proceeds of the Preferred Shares Offering were contributed upon
receipt to the Company in exchange for preferred partnership interests in the
Company, the economic terms of which are substantially identical to the Series
A Preferred Shares.

THE OPERATING PROPERTIES

The Operating Properties, as of June 30, 1997, consisted of 216 industrial
and 110 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.

S-4
<PAGE>

The following table sets forth certain information, as of June 30, 1997, with
respect to the Company's industrial and office properties:

<TABLE>
<CAPTION>
INDUSTRIAL
--------------------
DISTRIBUTION FLEX OFFICE TOTAL
------------ ------- ------- --------
(LEASABLE SQUARE FEET AND
ANNUAL BASE RENT IN THOUSANDS)
<S> <C> <C> <C> <C>
Southeastern Pennsylvania
Number.......................... 19 18 40 77
Leasable square feet............ 2,065 1,153 2,488 5,706
Annual base rent................ $ 9,703 $ 9,576 $25,947 $ 45,226
Percent leased.................. 88.0% 95.3% 88.9% 89.8%
New Jersey/Delaware
Number.......................... 20 21 9 50
Leasable square feet............ 1,441 1,092 632 3,165
Annual base rent................ $ 6,186 $ 7,552 $ 5,881 $ 19,619
Percent leased.................. 100.0% 89.4% 84.2% 93.2%
Lehigh Valley, Pennsylvania
Number.......................... 16 21 10 47
Leasable square feet............ 3,640 967 359 4,966
Annual base rent................ $13,815 $ 6,420 $ 3,754 $ 23,989
Percent leased.................. 97.5% 93.8% 89.4% 96.2%
Maryland
Number.......................... 3 4 9 16
Leasable square feet............ 249 412 398 1,059
Annual base rent................ $ 1,163 $ 3,807 $ 4,278 $ 9,248
Percent leased.................. 100.0% 87.9% 94.5% 93.2%
Virginia
Number.......................... 28 6 10 44
Leasable square feet............ 4,078 230 151 4,459
Annual base rent................ $14,451 $ 1,747 $ 1,859 $ 18,057
Percent leased.................. 98.8% 97.5% 97.1% 98.6%
The Carolinas
Number.......................... 11 5 7 23
Leasable square feet............ 1,404 258 377 2,039
Annual base rent................ $ 5,770 $ 1,307 $ 3,523 $ 10,600
Percent leased.................. 87.4% 91.2% 88.0% 88.0%
Jacksonville, Florida
Number.......................... 6 11 12 29
Leasable square feet............ 381 660 1,026 2,067
Annual base rent................ $ 1,133 $ 3,508 $12,421 $ 17,062
Percent leased.................. 86.9% 80.2% 94.3% 88.5%
Tampa, Florida
Number.......................... 3 9 1 13
Leasable square feet............ 197 675 39 911
Annual base rent................ $ 537 $ 4,882 $ 262 $ 5,681
Percent leased.................. 100.0% 95.4% 100.0% 96.6%
Minneapolis, Minnesota
Number.......................... -- 14 2 16
Leasable square feet............ -- 803 219 1,022
Annual base rent................ -- $ 4,848 $ 1,576 $ 6,424
Percent leased.................. -- 95.8% 69.4% 90.1%
Detroit, Michigan
Number.......................... -- -- 7 7
Leasable square feet............ -- -- 915 915
Annual base rent................ -- -- $ 8,448 $ 8,448
Percent leased.................. -- -- 92.6% 92.6%
United Kingdom
Number.......................... -- 1 3 4
Leasable square feet............ -- 35 103 138
Annual base rent................ -- $ 494 $ 2,707 $ 3,201
Percent leased.................. -- 79.5% 97.9% 93.3%
Total
Number.......................... 106 110 110 326
Leasable square feet............ 13,455 6,285 6,707 26,447
Annual base rent................ $52,758 $44,141 $70,656 $167,555
Percent leased.................. 95.4% 91.9% 89.8% 93.2%
</TABLE>

S-5
<PAGE>

THE OFFERING

All capitalized terms used herein and not defined herein shall have the
meanings provided in "Description of Notes."

Securities Offered.......... $100,000,000 aggregate principal amount of 7.10%
Senior Notes due August 15, 2004 (the "2004
Notes") and

$100,000,000 aggregate principal amount of 7.25%
Senior Notes due August 15, 2007 (the "2007
Notes" and, together with the 2004 Notes, the
"Notes").

Maturity.................... The 2004 Notes will mature on August 15, 2004,
and the 2007 Notes will mature on August 15,
2007.

Optional Redemption......... Each series of the Notes is redeemable at the
option of the Company at any time, in whole or in
part, at a redemption price equal to the sum of
(i) the principal amount of the Notes being
redeemed plus accrued interest to the redemption
date and (ii) the Make-Whole Amount, if any. See
"Description of Notes--Optional Redemption."

Interest Payment Dates...... Interest on the Notes is payable semi-annually on
each February 15 and August 15, commencing
February 15, 1998, and at maturity.

Ranking..................... The Notes will be effectively subordinated to
secured indebtedness of the Company, which, as of
June 30, 1997, was in the aggregate principal
amount of approximately $388.0 million. The Notes
will be pari passu with each other, with the
Company's indebtedness under the Credit Facility
and with all other unsecured and unsubordinated
indebtedness of the Company. The outstanding
principal balance under the Credit Facility
varies from time to time and was, as of June 30,
1997, approximately $296.0 million. The Notes
will be senior to unsecured subordinated
indebtedness which was, as of June 30, 1997, in
the aggregate principal amount of approximately
$146.9 million.

Use of Proceeds............. To repay outstanding indebtedness under the
Credit Facility and to repay certain mortgage
debt. See "Use of Proceeds" and "Underwriting."

Limitations on Incurrence The Notes contain various covenants, including
of Debt..................... the following:

(1) The Company will not, and will not permit any
Subsidiary to, incur any Debt if, immediately
after giving effect thereto, the aggregate
principal amount of all outstanding Debt of the
Company and its Subsidiaries on a consolidated
basis is greater than 60% of the sum of: (i) the
Company's Adjusted Total Assets as of the end of
the most recent fiscal quarter prior to the
incurrence of such additional Debt and (ii) the
increase in Adjusted Total Assets since the end
of such quarter (including any increase resulting
from the incurrence of additional Debt).

S-6
<PAGE>

(2) The Company will not, and will not permit any
Subsidiary to, incur any Secured Debt if,
immediately after giving effect thereto, the
aggregate principal amount of all outstanding
Secured Debt of the Company and its Subsidiaries
on a consolidated basis is greater than 40% of
the sum of: (i) the Company's Adjusted Total
Assets as of the end of the most recent fiscal
quarter prior to the incurrence of such
additional Debt and (ii) the increase in Adjusted
Total Assets since the end of the most recent
fiscal quarter (including any increase resulting
from the incurrence of additional Debt).

(3) The Company will not, and will not permit any
Subsidiary to, incur any Debt if the ratio of
Consolidated Income Available for Debt Service to
the Annual Service Charge on the date on which
such additional Debt is to be incurred shall have
been less than 1.50 to 1 on a pro forma basis,
after giving effect thereto.

Maintenance of Total
Unencumbered Assets........
The Company must maintain an Unencumbered Total
Asset Value in an amount not less than 150% of
the aggregate principal amount of outstanding
unsecured Debt of the Company.

For a more complete description of the terms and definitions used in the
foregoing summary, see "Description of Notes--Certain Covenants."

S-7
<PAGE>

SUMMARY FINANCIAL DATA

The following table sets forth certain historical and pro forma summary
operating, balance sheet and other data for the Company and should be read in
conjunction with "Selected Financial Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the financial
statements of the Company and related notes thereto incorporated by reference
in the accompanying Prospectus.

<TABLE>
<CAPTION>
LIBERTY
PROPERTY
LIMITED
PARTNERSHIP
AND
PREDECESSOR
LIBERTY PROPERTY LIMITED PARTNERSHIP COMBINED
--------------------------------------------------- -----------
PRO FORMA (1) HISTORICAL
------------- ------------------------------------------------
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
----------------------------- ----------------------------------
JUNE 30, 1997 JUNE 30, 1997 1996 1995 1994
------------- ------------- ---------- --------- -----------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA
Total revenue........... $ 97,673 $ 97,673 $ 154,265 $ 117,041 $ 83,022
Rental and real estate
tax expense............ 25,397 25,397 40,853 29,314 21,750
General and
administrative
expenses............... 4,782 4,782 8,023 5,212 4,712
Depreciation and
amortization........... 17,288 17,288 28,203 22,518 14,732
---------- ---------- ---------- --------- ---------
Operating income........ 50,206 50,206 77,186 59,997 41,828
Premium on debenture
conversions............ -- -- 1,027 -- --
Write off of deferred
financing costs........ 2,566 2,566 -- -- --
Interest expense........ 19,921 23,911 38,528 37,688 34,243
---------- ---------- ---------- --------- ---------
Income before
extraordinary item..... 27,719 23,729 37,631 22,309 7,585
Extraordinary item--
Gain on extinguishment
of debt................ -- -- -- -- 55,761
---------- ---------- ---------- --------- ---------
Net income.............. $ 27,719 $ 23,729 $ 37,631 $ 22,309 $ 63,346
========== ========== ========== ========= =========
OTHER DATA
Cash provided by
operating activities... (6) $ 48,451 $ 59,817 $ 50,452 $ 38,832
Cash used by investing
activities............. (6) (340,149) (265,427) (281,862) (156,282)
Cash provided by
financing activities... (6) 297,136 214,593 216,870 142,381
Funds from
Operations(3).......... $ 42,996(7) 44,506 65,944 44,606 22,517
EBITDA(4)............... 67,494 67,494 105,389 82,515 56,560
Ratio of EBITDA to
interest expense....... 3.39 2.82 2.74 2.19 1.65
Long-term debt
(including current
maturities) to
Adjusted Total
Assets(5).............. 43.4% 49.5% 53.4% 47.8% 47.4%
<CAPTION>
LIBERTY PROPERTY LIMITED PARTNERSHIP
----------------------------------------------------------------
PRO FORMA(2) HISTORICAL
------------- ------------------------------------------------
DECEMBER 31,
----------------------------------
JUNE 30, 1997 JUNE 30, 1997 1996 1995 1994
------------- ------------- ---------- --------- -----------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Net real estate......... $1,441,977 $1,441,977 $1,059,562 $ 826,047 $ 512,281
Total assets............ 1,580,744 1,548,743 1,152,612 898,102 602,981
Long-term indebtedness
(including current
maturities)............ 742,148 830,960 678,709 473,909 320,857
Other liabilities....... 69,396 69,396 56,876 47,519 22,625
Owners' equity.......... 769,200 648,387 417,027 376,674 259,499
</TABLE>

S-8
<PAGE>

- --------
(1) Pro forma information reflects the application of the net proceeds of the
Preferred Shares Offering which was consummated on August 11, 1997 as well
as the anticipated application of the net proceeds from the Offering. See
"Use of Proceeds." The difference between pro forma and historical interest
expense for the six months ended June 30, 1997 results from the repayment
under the Credit Facility of $288.8 million and the incurrence of the
indebtedness under the Notes in the aggregate principal amount of $200.0
million.
(2) The pro forma balance sheet as of June 30, 1997 reflects an increase in
total assets of $32.0 million resulting primarily from net proceeds of the
Preferred Shares Offering and the Offering in excess of debt repayments, an
increase in owners' equity of $120.8 million associated with the net
proceeds of the Preferred Shares Offering and a decrease in long-term
indebtedness of $88.8 million representing the difference between the net
proceeds from the offerings used to repay indebtedness and the face amount
of the Notes.
(3) "Funds from Operations" is defined by the National Association of Real
Estate Investment Trusts ("NAREIT") as net income or loss (computed in
accordance with generally accepted accounting principles ("GAAP")),
excluding gains (or losses) from debt restructuring and sales of property,
plus real estate-related depreciation and amortization and excluding
significant non-recurring events that materially distort the comparative
measurement of Company performance over time. Funds from Operations does
not represent cash generated from operating activities in accordance with
GAAP and is not necessarily indicative of cash available to fund cash
needs.
(4) EBITDA means operating income before interest, income taxes, depreciation
and amortization. EBITDA does not represent cash generated from operating
activities in accordance with GAAP and should not be considered as an
alternative to operating income or net income as an indicator of
performance or as an alternative to cash flows from operating activities as
an indicator of liquidity. The Company has included information with
respect to EBITDA because it understands that such information is used by
certain investors as one measure of operating performance.
(5) Adjusted Total Assets equals total assets (as determined in accordance with
GAAP) plus accumulated depreciation.
(6) Pro forma information relating to cash flow from operating, investing and
financing activities has not been included because the Company believes
that the information would not be meaningful due to the number of
assumptions required in order to calculate this information.
(7) Funds from Operations has been reduced by $5.5 million for required
distributions associated with preferred partnership interests in the
Company which were issued concurrently with the consummation of the
Preferred Shares Offering.

S-9
<PAGE>

RISK FACTORS

An investment in the Notes offered hereby involves various risks. In
addition to general investment risks and those factors set forth elsewhere in
this Prospectus Supplement or incorporated by reference in the accompanying
Prospectus, prospective investors should consider, among other things, the
following factors:

GENERAL REAL ESTATE INVESTMENT RISKS

Dependence on Tenants; Renewal of Leases and Reletting of Space. The
Company's cash flow from operations will depend upon its ability to lease
space in the Properties on economically favorable terms. Upon the expiration
of leases, such leases may not be renewed, the space may not be relet or the
terms of renewal or reletting (including rental rates, the cost of leasing
commissions, required renovations and concessions to tenants) may be less
favorable than current lease terms. If any of these events should occur, the
Company's cash flow from operations and ability to satisfy its obligations
with respect to indebtedness could be adversely affected. The Company's cash
flow from operations also would be adversely affected if tenants leasing a
significant amount of space fail to pay rent or become bankrupt, or if for any
other reason such rents could not be collected. See "The Properties--Tenants."
Further, the Company may be adversely affected by various facts and events
over which the Company will have no control, such as a change in the demand in
the markets in which the Properties are located, the possible unavailability
of prospective tenants and the possibility of economic or physical decline of
the areas in which the Properties are located or physical damage to the
Properties that would make them less attractive to tenants.

Risks of Acquisition, Development and Construction Activities. The Company
intends to continue acquisition and development of industrial and office
properties. See "Business Objectives and Strategies." Acquisitions of
additional properties and development activities entail risks that investments
will fail to perform in accordance with expectations. With respect to the
Company's development activities, such development opportunities may be
abandoned, construction costs of any property may exceed original or budgeted
estimates (possibly making the property uneconomical) and construction and
lease-up may not be completed on schedule, resulting in increased debt service
expense and construction costs. Development activities are also subject to
risks relating to the inability to obtain, or delays in obtaining, all
necessary zoning, land-use, building, occupancy and other required
governmental permits and authorizations.

The Company anticipates that future acquisitions and developments will be
financed, in whole or in part, under the Credit Facility, through other forms
of secured or unsecured financing or through utilization of access to capital
markets. Such financings may result in the risk that, upon completion of
construction, permanent financing for newly developed commercial properties
may not be available or may be available only on disadvantageous terms. If
financing is not available on acceptable terms for new acquisitions or
developments undertaken without permanent financing, further acquisitions and
development might be curtailed, cash available to satisfy indebtedness might
be adversely affected and foreclosures on newly developed or acquired
properties could occur. Further, if any particular property is not successful,
the Company's losses could exceed its investment in the property.

Competition. There are numerous developers and real estate companies that
compete with the Company in seeking land for development, properties for
acquisition and tenants for properties. The Company may be adversely affected
by the fact that the availability of land for development within the Company's
markets continues to diminish, as does the availability of high quality
properties for acquisition within the Company's markets and elsewhere.

S-10
<PAGE>

Possible Environmental Liabilities. 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 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. 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 or land acquired or properties developed
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 of any properties or land 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 on-going 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. For additional
information, see the Annual Report on Form 10-K for the year ended December
31, 1996 of the Company and the Trust, incorporated by reference in the
accompanying Prospectus.

INDEBTEDNESS

The amount of indebtedness that the Company may incur is not limited by its
organizational documents and, subject to restrictions contained in the
instruments governing certain of the Company's indebtedness, including the
Credit Facility and the covenants applicable to the Notes, is solely within
the discretion of the Board of Trustees of the Trust, in the Trust's capacity
as the sole general partner of the Company. There can be no assurance that the
Company will not become more highly leveraged and have a related increase in
the amount of required debt service payments, resulting in an increased risk
of default on its obligations. Such increase in leverage could adversely
affect the financial condition and results of operations of the Company or the
Company's ability to satisfy its obligations with respect to indebtedness,
including the Notes, and to make distributions to its partners.

Required payments on mortgages and other indebtedness generally are not
reduced if the economic performance of any property declines. If such a
decline occurs, the Company's income, Funds from Operations and cash available
to satisfy indebtedness, will be adversely affected. As of June 30, 1997, the
Company had outstanding indebtedness in the aggregate principal amount of
$831.0 million, including $296.0 million principal amount of unsecured
indebtedness under the Credit Facility. If the Company should be unable to pay
its indebtedness as it becomes due, it could sustain a loss, which may include
foreclosures by or judgments against the Company in favor of mortgagees.
Instruments evidencing certain of the Company's indebtedness, including the
Company's Exchangeable Subordinated Debentures due 2001 (the "Debentures"),
the Credit Facility and the Indenture (as defined below), contain cross-
default and/or cross-acceleration provisions. Depending on the principal
amount of the Debentures that are exchanged for Common Shares, if any, the
Company may not have accumulated sufficient cash to repay the principal due on
the Debentures upon their maturity and may therefore be required to meet its
obligations through refinancings. There can be no assurance that the Company
will be able to refinance this or any other indebtedness. Additionally,
certain of the Company's indebtedness, including indebtedness under the Credit
Facility, bears interest at variable rates and, therefore, exposes the Company
to the risk of increasing interest rates.

S-11
<PAGE>

RISK OF ENTRY INTO NEW MARKETS

The Company's business strategy contemplates expanding its operations into
additional new markets. In determining whether to enter a new market,
management considers various factors, including demographics, job growth,
employment, real estate fundamentals and competition. There can be no
assurance that the Company will be successful in its effort to identify new
markets that will afford it the opportunity for favorable results or that the
Company will be able to achieve such results in those markets.

DEPENDENCE ON PRIMARY MARKETS

The Properties are located principally in the Southeastern, Mid-Atlantic and
Mid-Western United States. The Company's performance is, therefore, dependent
upon economic conditions in these geographic areas. Like much of the country,
the Southeastern, Mid-Atlantic and Mid-Western United States, have been
subject to periods of economic decline.

TAX RISKS

Risks Associated with Potential Borrowings Necessary to Make Distributions
to Qualify as a REIT. The Trust has made, and intends to continue to make,
distributions to shareholders to comply with the distribution provisions of
the Code in order to maintain qualification as a REIT and to avoid income
taxes and the non-deductible excise tax. The Trust's income and cash flow
consists primarily of its share of distributions from the Company. Timing of
and fluctuations in the receipt of income and the payment of expenses and the
effect of required debt amortization payments, if any, may require the Trust,
through the Company, to borrow funds to meet the distribution requirements
necessary to achieve the tax benefits associated with qualifying as a REIT or
to make distributions on the Company's preferred partnership interests to fund
the payment of dividends on the Series A Preferred Shares, even if the Trust's
management believes that then prevailing market conditions are not generally
favorable for such borrowings or that such borrowings would not be advisable
in the absence of such tax considerations. See "Federal Income Tax
Considerations with Respect to the Trust and the Operating Partnership" in the
accompanying Prospectus.

FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. This Prospectus Supplement, the
accompanying Prospectus and other materials filed or to be filed by the
Company with the Securities and Exchange Commission (the "Commission") and
incorporated by reference in the accompanying Prospectus contain or will
contain forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. Such statements include
information relating to acquisitions and other business development
activities, future capital expenditures, financing sources and availability
and the effects of regulations (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 contained in this Prospectus Supplement or the
accompanying Prospectus incorporated by reference in such Prospectus. 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), risks
relating to acquisition, construction and development activities, possible
environmental liabilities, risks relating to leverage, debt service and
obligations with respect to the payment of dividends (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 need to
use borrowings to make distributions necessary for the Trust to qualify as a
REIT or to make distributions on the Company's preferred partnership interests
to fund the payment of dividends on the Series A Preferred Shares, dependence
on the primary markets in which the Properties are located, the existence of
complex regulations relating to the Trust's status as a REIT and the adverse
consequences of the failure of the Trust to qualify as a REIT and the
potential adverse impact of market interest rates on the market price for the
Notes.

S-12
<PAGE>

THE COMPANY

The Company is one of the largest owners and operators of suburban
industrial and office real estate in the United States. The Company provides
leasing, property management, acquisition, development, construction
management, design management and other related services for a portfolio
which, as of June 30, 1997, consisted of the Operating Properties totaling
approximately 26.4 million leasable square feet. As of June 30, 1997, the
Company was developing 28 properties and held 943 acres of land for future
development. The Development Properties are expected to generate approximately
3.2 million leasable square feet. The land is zoned for commercial use and is
anticipated by the Company to be capable of supporting, as and when developed,
approximately nine million leasable square feet. The Properties and such land
are located principally within the Southeastern, Mid-Atlantic and Mid-Western
United States. As of June 30, 1997, the Operating Properties were
approximately 93.2% leased to over 1,100 tenants.

During the six months ended June 30, 1997, through Total Investments (as
defined below) aggregating $418.4 million, the Company increased its total
leasable square footage of industrial and office space by approximately 28.3%
through the acquisition of 63 properties containing approximately 4.4 million
leasable square feet, by the development of nine properties containing
approximately 1.8 million leasable square feet and through the sale of five
properties containing approximately 520,000 leasable square feet.

As of June 30, 1997, the Operating Properties consisted of 216 industrial
and 110 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
Company, with a combined equity interest in the Company of 89.76% at June 30,
1997. The units of limited partnership interest in the Company (the "Units")
are exchangeable on a one-for-one basis (subject to antidilution protections)
for Common Shares, typically after the first anniversary of the issuance of
any such Units. The limited partners of the Company other than the Trust are
persons or entities that contributed assets to the Company, principally senior
executives of the Company and their affiliates. The Units held by such limited
partners were exchangeable for approximately 4.7 million Common Shares as of
June 30, 1997.

The Trust's 216 employees (as of July 25, 1997) are under the direction of
19 senior executives, who collectively 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 Trust and the Predecessor for
13 years. As of June 30, 1997, the 19 senior executives beneficially owned
4.7% of the outstanding Common Shares on a fully diluted basis. The Trust's
in-house leasing, marketing and property management staff operates in ten
full-service local offices in the United States. This structure enables the
Trust 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's international operations include four Operating Properties in
the County of Kent, England. In addition, the Company provides management
services 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 Limited for
nominal consideration. The Company committed to loans in 1996 to two
affiliates for development projects. As of June 30, 1997, the balance of these
notes receivable was $7.7 million.

The Company's executive offices are located at 65 Valley Stream Parkway,
Malvern, Pennsylvania 19355. The telephone number is (610) 648-1700.

S-13
<PAGE>

BUSINESS OBJECTIVES AND STRATEGIES

The Company's business objective is to maximize long-term profitability for
its partners and the Trust's shareholders by (i) maintaining and increasing
property occupancy and rental rates through the effective management of the
Properties, (ii) developing and acquiring high quality new properties in
existing and select new markets and (iii) providing a full line of real estate
services to the Company's tenants. In addition, it is the Company's strategy
to maintain a conservative and flexible capital structure. While implementing
these strategies, the Trust's Funds from Operations per Common Share increased
by 12.8% based on a comparison of the six months ended June 30, 1997 with the
comparable period in 1996. No assurance can be given that this level of growth
will continue. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Calculation of Funds from Operations."

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. As a result of these activities, property-
level operating income for "Same Store" properties increased by 5.2% for the
six months ended June 30, 1997 as compared to the six months ended June 30,
1996. "Same Store" properties are those owned as of January 1, 1996.

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. During the first six months of 1997 the Company
achieved a 14.4% increase in the straight-line rents for the 1.8 million
square feet of replacement and renewal leases executed in 1997. See "The
Properties--Occupancy and Rental Rates," "--Leasing for Six Months Ended June
30, 1997" and "--Lease Expirations."

Contractual Increases. The Company seeks to generate increased cash flow
from the Operating Properties through contractual increases in rental rates
under its leases. The leases in effect with respect to the Operating
Properties as of June 30, 1997 provide for contractual rental increases that
are expected to contribute an additional $3.4 million to the Company's cash
flow for the year ending December 31, 1998. 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 67%
(based on square footage) for the six months ended June 30, 1997.

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 third 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, entities
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 and preventive maintenance program designed to reduce the
operating costs of the Properties and maintain their long-term value.

S-14
<PAGE>

ACQUIRING OFFICE AND INDUSTRIAL PROPERTIES

Strategy. The Company seeks to acquire properties consistent with its
business objectives and strategies. The Company has identified the following
categories of acquisitions:

Single-Asset Acquisitions:

. Stabilized Acquisitions--Individual properties generally located within
the Company's existing markets, which are typically at high occupancy
levels upon acquisition.

. Entrepreneurial Acquisitions--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
returns when fully leased.

Portfolio Acquisitions:

. Groups of properties or existing real estate companies that may include
both stabilized and entrepreneurial acquisitions within existing markets
or select new markets, as well as development properties, which offer
opportunities for enhanced operating performance as a result of the
Company's management expertise and financial strength.

Acquisitions Completed During Six Months Ended June 30, 1997. During the six
months ended June 30, 1997, the Company acquired 63 Properties containing
approximately 4.4 million leasable square feet for a Total Investment of
$344.0 million. 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.

Portfolio Acquisitions. The Company's acquisitions during the six months
ended June 30, 1997 included three portfolio acquisitions: a portfolio of 16
office and industrial properties located in the Minneapolis, Minnesota
metropolitan area totaling approximately one million leasable square feet for
a Total Investment of $63.3 million; a portfolio of 14 properties in South
Carolina, Florida and North Carolina totaling approximately 1.1 million
leasable square feet (exclusive of development properties included in the
portfolio) for a Total Investment of $57.6 million; and a portfolio of seven
properties in the Detroit, Michigan metropolitan area totaling 915,000
leasable square feet for a Total Investment of $110.4 million.

Individual Acquisitions. The Company's individual acquisitions during the
six months ended June 30, 1997 included 26 properties totaling approximately
1.4 million leasable square feet for a Total Investment of $112.7 million.

S-15
<PAGE>

The following table sets forth certain information, as of June 30, 1997,
regarding the Properties acquired in 1997:

ACQUISITIONS COMPLETED THROUGH JUNE 30, 1997

<TABLE>
<CAPTION>
TOTAL
TOTAL LEASABLE PERCENT INVESTMENT
SQUARE FEET LEASED (IN THOUSANDS)
-------------- ------- --------------
<S> <C> <C> <C>
Stabilized Acquisitions
Industrial--Distributions............... 384,568 100.0% $ 14,050
Industrial--Flex........................ 1,693,235 94.8 98,217
Office.................................. 1,650,256 91.2 174,947
--------- ----- --------
Total Stabilized Acquisitions......... 3,728,059 93.7 287,214
Entrepreneurial Acquisitions
Industrial--Distribution................ 169,042 0.0 6,730
Industrial--Flex........................ 54,032 66.3 2,313
Office.................................. 468,543 43.0 47,730
--------- ----- --------
Total Entrepreneurial Acquisitions.... 691,617 34.3 56,773
--------- ----- --------
Total 1997 Acquisitions................... 4,419,676 84.4% $343,987
========= ===== ========
</TABLE>

Acquisitions Completed After June 30, 1997. Since June 30, 1997 and through
August 14, 1997, the Company has completed single-asset acquisitions
consisting of ten stabilized properties, aggregating approximately 483,000
leasable square feet for a Total Investment of $37.3 million.

Pending Acquisitions. As of August 14, 1997, the Company had entered into
contracts to purchase nine additional suburban industrial and office
properties (the "Pending Acquisitions") which the Company considered probable
of closing as of the date of this Prospectus Supplement. The Pending
Acquisitions aggregate approximately 762,000 leasable square feet, for an
estimated Total Investment of approximately $56.9 million.

The purchase of all of the Pending Acquisitions is subject to various
contingencies, including, among others, completion of due diligence and other
customary conditions. Accordingly, there can be no assurance that the Company
will acquire any or all of the Pending Acquisitions or that the acquisitions
will be consummated for the estimated Total Investment.

DEVELOPMENT ACTIVITIES

Strategy. The Company pursues selective development opportunities focusing
on high quality suburban industrial and office properties typically 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 typically 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 to justify such construction.

Developments Completed During Six Months Ended June 30, 1997. During the six
months ended June 30, 1997, the Company completed six build-to-suit and three
inventory development properties. These properties contain approximately 1.8
million leasable square feet representing a Total Investment of $74.4 million.
As of June 30, 1997, these properties were 100% leased.

S-16
<PAGE>

The following table lists certain information, as of June 30, 1997, for all
of the Development Properties completed in the first and second quarters of
1997:

COMPLETED DEVELOPMENT PROPERTIES

<TABLE>
<CAPTION>
TOTAL TOTAL
INVESTMENT NUMBER OF LEASABLE PERCENT
(IN THOUSANDS) PROPERTIES SQUARE FEET LEASED
-------------- ---------- ----------- -------
<S> <C> <C> <C> <C>
1st Quarter, 1997
Build-to-Suit.................. $36,131 1 1,190,000 100.0%
Inventory...................... 7,694 2 222,000 100.0
------- --- --------- -----
Total........................ 43,825 3 1,412,000 100.0
------- --- --------- -----
2nd Quarter, 1997
Build-to-Suit.................. 29,173 5 399,600 100.0
Inventory...................... 1,409 1 32,400 100.0
------- --- --------- -----
Total........................ 30,582 6 432,000 100.0
------- --- --------- -----
All Development Properties....... $74,407 9 1,844,000 100.0%
======= === ========= =====
</TABLE>

Current Development Properties. As of June 30, 1997, the Company was
developing 28 properties, which upon completion are expected to generate
approximately 3.2 million leasable square feet. Approximately 58% of such
space was pre-leased as of June 30, 1997. The properties under development as
of June 30, 1997 represent a Total Investment of $206.7 million.

Land. As of June 30, 1997, the Company owned 943 acres of land for future
development, all zoned for commercial use. Substantially all of the land is
located adjacent to or within existing industrial or business parks with site
improvements, such as public sewers, water and utilities available for
service, and the Company anticipates that the land is capable of supporting,
as and when developed, approximately nine million leasable square feet. The
Company's investment (as determined in accordance with GAAP) in land held for
development as of June 30, 1997 was $48.9 million. 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.

FINANCING ACTIVITIES

On March 24, 1997, the Trust consummated the public offering of 7,500,000
Common Shares at a price of $24.50 per share. Pursuant to the exercise of the
over-allotment option by the underwriters of such offering, on April 1, 1997,
the Trust consummated the sale of an additional 750,000 Common Shares at the
same price per share. The aggregate net proceeds to the Trust from such
offering, including the proceeds from the exercise of such option, was
approximately $191.7 million. The aggregate net proceeds of such offering were
contributed to the Company.

On May 20, 1997, the Company closed on the $325 million unsecured Credit
Facility. The interest rate on borrowings under the Credit Facility adjusts
based on the Company's leverage levels and senior debt ratings from Moody's
and Standard & Poor's. The current interest rate for the Credit Facility is
110 basis points over LIBOR.

On August 11, 1997, the Trust consummated the Preferred Shares Offering. The
aggregate net proceeds to the Trust from the Preferred Shares Offering were
approximately $120.8 million. The aggregate net proceeds of the Preferred
Shares Offering were contributed upon receipt to the Company in exchange for
preferred partnership interests in the Company, the economic terms of which
are substantially identical to the Series A Preferred Shares.

S-17
<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of the Notes, after deduction
of the estimated expenses of the Offering, are estimated to be approximately
$198.0 million. The Company intends to use approximately $168.0 million of the
net proceeds from the Offering to repay indebtedness under the Credit
Facility, and approximately $30.0 million of the net proceeds of the Offering
to repay mortgage debt owed to an affiliate of one of the Underwriters (see
"Underwriting"). As of June 30, 1997, the Company had outstanding indebtedness
under the Credit Facility of approximately $296.0 million, bearing interest at
a rate of approximately 6.9% per annum and maturing May 20, 1999. The
indebtedness outstanding under the Credit Facility was incurred principally in
connection with the Company's acquisition activities and the refinancing of
previously incurred indebtedness.

S-18
<PAGE>

CAPITALIZATION

The following table sets forth the unaudited capitalization of the Company,
on a consolidated basis, as of June 30, 1997, and as of such date, as adjusted
to give effect to the sale of the Notes hereby and the completion of the
Preferred Shares Offering and the application of the estimated net proceeds
from both offerings. See "Business Objectives and Strastegies--Financing
Activities" and "Use of Proceeds." The information set forth in the following
table should be read in conjunction with the summary and selected financial
information presented elsewhere in this Prospectus Supplement, the
consolidated financial statements and notes thereto incorporated by reference
in the accompanying Prospectus and the discussion set forth in "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources."

<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
---------------------
(IN THOUSANDS)
ACTUAL PRO FORMA
---------- ----------
<S> <C> <C>
Senior Debt:
Credit Facility...................................... $ 296,000 $ 7,188
Mortgage loans....................................... 388,030 388,030(1)
7.10% Senior Notes due 2004......................... -- 100,000
7.25% Senior Notes due 2007......................... -- 100,000
---------- ----------
Total senior debt.................................. 684,030 595,218
Subordinated debentures................................ 146,930 146,930
Owners' Equity:
General partners' equity............................. 581,992 703,234
Limited partners' equity............................. 66,395 65,966
---------- ----------
Total owners' equity............................... 648,387 769,200
---------- ----------
Total capitalization............................... $1,479,347 $1,511,348
========== ==========
</TABLE>

- --------
(1) Does not reflect the application of approximately $30.0 million of the net
proceeds from the Offering which is intended to be used to repay
outstanding secured indebtedness incurred after June 30, 1997.

S-19
<PAGE>

THE PROPERTIES

The Operating Properties, as of June 30, 1997, consisted of 216 industrial
and 110 office properties. Single tenants occupy 116 Operating Properties. The
Company provides a reduced level of service in connection with the operation
or maintenance of these Properties. The remaining 210 of the Company's
Operating Properties 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,
distribution, service, assembly, light manufacturing and research and
development facilities. Substantially all of the Company's industrial
properties are located in suburban, mixed-use developments or business parks.
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. As of June 30, 1997, the Company's industrial properties were
approximately 94.3% leased.

The Company's office properties are mid-rise and single story office
buildings principally located in suburban, mixed-use developments or office
parks. Substantially all are located in prime business locations within
established business communities offering excellent access to interstate
highway systems. As of June 30, 1997, the office properties were approximately
89.8% leased.

Set forth as Appendix "A" to this Prospectus Supplement is a table which
provides certain information with respect to the Properties as of June 30,
1997.

OCCUPANCY AND RENTAL RATES

Property level operating income for "Same Store" properties increased by
5.2% for the six months ended June 30, 1997 compared to the six months ended
June 30, 1996. "Same Store" figures include results for the 203 (net of five
properties exchanged in connection with acquisitions) properties owned as of
January 1, 1996.

LEASING FOR SIX MONTHS ENDED JUNE 30, 1997

The Company achieved a 14.4% increase in the straight-line rents for the 1.8
million square feet of replacement and renewal leases executed in the first
six months of 1997. However, these results should not be viewed as necessarily
reflecting a trend in actual short-term rental rate fluctuations because the
properties leased during the period are not necessarily representative of the
balance of the Company's portfolio and the leases entered into during the
period reflect an uneven rate of expirations and signings of leases of varying
sizes and terms.

S-20
<PAGE>

LEASE EXPIRATIONS

The following table shows scheduled lease expirations and certain other
information, as of June 30, 1997, for leases in place for the Operating
Properties as of such date, assuming none of the tenants exercises renewal
options or termination rights, if any:

<TABLE>
<CAPTION>
AVERAGE
RENT PER PERCENT OF
NUMBER LEASABLE SQUARE ANNUALIZED BASE SQUARE ANNUAL BASE PERCENT OF
YEAR OF OF FEET SUBJECT RENT UNDER FOOT UNDER RENT SQUARE FEET
LEASE LEASES TO EXPIRING EXPIRING LEASES EXPIRING REPRESENTED BY REPRESENTED BY
EXPIRATION EXPIRING LEASES (IN THOUSANDS) LEASES EXPIRING LEASES EXPIRING LEASES
---------- -------- --------------- --------------- ---------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
ALL PROPERTIES
1997(1)................ 186 1,525,808 $ 9,749 $6.39 5.4% 6.2%
1998................... 277 3,542,976 20,079 5.67 11.1 14.4
1999................... 253 3,895,526 27,480 7.05 15.2 15.8
2000................... 247 3,922,095 36,316 9.26 20.0 15.9
2001................... 174 3,671,188 24,219 6.60 13.4 14.9
2002................... 98 1,345,700 10,423 7.75 5.8 5.5
Thereafter............. 134 6,733,012 52,698 7.83 29.1 27.3
----- ---------- -------- ----- ----- -----
Total................. 1,369 24,636,305 $180,964 $7.35 100.0% 100.0%
===== ========== ======== ===== ===== =====
</TABLE>
- --------
(1) From July 1, 1997 through December 31, 1997.

TENANTS

The Operating Properties are leased to over 1,100 tenants, which engage in a
wide variety of businesses including pharmaceuticals, telecommunications,
finance, insurance and electronics. As of June 30, 1997, the Company's largest
tenant, AT&T Resource Management Corp., accounted for approximately 4.5% of
the Company's total annual base rent. Leases accounting for approximately 88%
of this tenant's annual base rent do not expire until 2000 or later. Other
than AT&T Resource Management Corp., only eight tenants accounted for more
than 1% each of total annual base rent as of June 30, 1997.

The following table sets forth the Company's 10 largest tenants, based on
annual base rent as of June 30, 1997:

<TABLE>
<CAPTION>
NUMBER ANNUAL BASE RENT PERCENTAGE OF TOTAL
TENANT OF LEASES (IN THOUSANDS) ANNUAL BASE RENT
------ --------- ---------------- -------------------
<S> <C> <C> <C>
1.AT&T Resource Management
Corp....................... 14 $ 7,561 4.5
2.DSC Logistics............... 2 4,693 2.8
3.Vanguard Group.............. 3 3,811 2.3
4.Prudential Insurance
Company.................... 8 2,993 1.8
5.Sanofi Winthrop............. 6 2,916 1.7
6.United States of America.... 7 2,217 1.3
7.Fluor Daniel, Inc........... 7 2,202 1.3
8.RL Polk..................... 2 1,773 1.1
9.Hewlett-Packard Company..... 3 1,766 1.1
10.GMAC........................ 2 1,366 0.8
--- ------- ----
Total...................... 54 $31,298 18.7%
=== ======= ====
</TABLE>

PRINCIPAL MARKETS

The Company operates primarily in 10 markets in the Southeastern, Mid-
Atlantic and Mid-Western United States. For a more detailed presentation of
the industrial and office properties owned by the Company in each of

S-21
<PAGE>

these markets, see "Summary--The Operating Properties." The material presented
below is a brief description of these markets. The following market data has
been compiled from sources which the Company believes to be reliable, but no
assurance can be given as to the accuracy of such market data:

Southeastern Pennsylvania. Southeastern Pennsylvania's suburban market
covers the four counties that immediately surround Philadelphia, namely,
Bucks, Chester, Delaware, and Montgomery Counties. Of the various submarkets
comprising the Southeastern Pennsylvania suburban market, the Company's
operations have focused on two particular submarkets: the Route 202 Corridor
in Chester and Montgomery Counties (King of Prussia/Conshohocken to West
Chester), and the Horsham submarket in Montgomery and Bucks Counties. As of
December 1996 suburban industrial vacancy for the Southeastern Pennsylvania
market was estimated to be approximately 10.6% and suburban Class A office
vacancy for the Route 202 and Horsham submarkets was approximately 7.4% and
9.1%, respectively.

New Jersey/Delaware. The Company operates in the Southern New Jersey market,
which encompasses the three counties of New Jersey that border Philadelphia:
Burlington, Camden, and Gloucester. The Gloucester County distribution
submarket and the Route 73/Burlington/Camden Counties office submarket are the
focal points for the Company's New Jersey activity. As of December 1996
suburban industrial vacancy for the Southern New Jersey market was estimated
to be approximately 4.0% and suburban Class A office vacancy was estimated to
be approximately 12.8%.

The Company's operations in Delaware are located principally in the New
Castle County market. This market has, in addition to its strong industrial
base, both a large office market, serving Wilmington's financial services
industry, and a very active distribution market located at the convergence of
the major north-south arteries of I-95 and I-295, which convergence creates a
natural distribution center. As of December 1996 suburban industrial vacancy
for the Wilmington market was estimated to be approximately 10.0% and suburban
Class A office vacancy was estimated to be approximately 5.3%.

Lehigh Valley, Pennsylvania. The Lehigh Valley market includes the cities of
Allentown and Bethlehem and is centrally located on major transportation
routes I-78 and the Northeast Extension of the Pennsylvania Turnpike,
convenient to both New York and Philadelphia. This superior location has
created strength in the office and industrial markets. Located within a 250-
mile radius of 25% of the nation's population, the Lehigh Valley has become a
major distribution hub for the Northeastern United States, increasing the
demand for industrial warehouse space. As of December 1996 suburban industrial
vacancy for the Lehigh Valley market was estimated to be approximately 12.8%
and suburban Class A office vacancy was estimated to be approximately 6.7%.

Richmond, Virginia. Richmond, the capital of Virginia, is supported by a
diverse and growing economy. The Richmond metropolitan statistical area
("MSA") has a population of nearly one million, and serves as the headquarters
for eight Fortune 500 companies. The past three years have seen significant
growth in the region's economy, based on the following factors: improvement in
the national economy and increasing exports, a well educated work force, low
housing costs, wages and taxes and minimal governmental regulation. As of
December 1996 suburban industrial vacancy for the Richmond market was
estimated to be approximately 5.1% and suburban Class A office vacancy was
estimated to be approximately 4.0%.

Baltimore/Washington Corridor. The Baltimore/Washington corridor is a
vibrant market, where the Company operates in several submarkets, including
the "new city" of Columbia, Maryland, located on I-95 and convenient to both
Baltimore and Washington, and the Annapolis submarket, which due to the
opening of Route 50 and the completion of I-97 has benefited from improved
access to the Capitol Beltway, Baltimore, BWI Airport and Columbia. As of
December 1996 suburban industrial vacancy for the Howard County market was
estimated to be approximately 8.3% for the flex industrial and 11.0% for bulk
industrial and suburban Class A office vacancy was estimated to be
approximately 5.4%.

The Carolinas. The Company operates in the Piedmont Triad area of North
Carolina. Including the Greensboro, Winston-Salem and High Point regions, this
area reflects low unemployment and strong population

S-22
<PAGE>

and job growth. As of December 1996 suburban industrial vacancy for the
Piedmont Triad market was estimated to be approximately 6.7% and suburban
Class A office vacancy was estimated to be approximately 6.4%.

The Company operates in the Greenville, Columbia and Charleston markets in
South Carolina. Each of these markets has experienced economic growth in
recent years. As of December 1996 suburban industrial vacancy for the
Greenville market was estimated to be approximately 5.0% and suburban Class A
office vacancy was estimated to be approximately 5.0%. As of December 1996
suburban industrial vacancy for the Columbia market was estimated to be
approximately 7.2% and suburban Class A office vacancy was estimated to be
approximately 7.0%. As of December 1996 suburban Class A office vacancy for
the Charleston market was estimated to be approximately 12.4%.

Jacksonville, Florida. Jacksonville is an expanding market in an area with a
strong population growth rate and a relatively low cost of living. The
population of Jacksonville is now over one million, an increase of over 35%
since 1980. Fueled by corporate expansions and relocations, Jacksonville's
suburban office and industrial markets have continued to experience favorably
low vacancy rates. The Company's operations are concentrated in the two sub-
markets, the Southside, which includes both office and a new industrial
market, and the Westside industrial markets. As of December 1996 suburban
industrial vacancy for the Jacksonville market was estimated to be
approximately 6.1% and suburban Class A office vacancy was estimated to be
approximately 2.1%.

Tampa, Florida. The Tampa area includes the cities of Tampa, St. Petersburg
and Clearwater and is currently experiencing significant growth in population
and employment. The area has 2.2 million people, and is the fourteenth fastest
growing metropolitan area in the United States based upon employment growth.
The Tampa Bay area is projected to lead the state in the number of jobs by the
year 2005, surpassing the Miami MSA. As of December 1996 suburban industrial
vacancy in the Tampa market was estimated to be approximately 6.7% and
suburban Class A office vacancy was estimated to be approximately 8.5%.

Minneapolis Metropolitan Area. The Minneapolis/St. Paul market is the
twelfth largest MSA in the country with approximately 2.7 million people.
Minneapolis has enjoyed solid demographic growth in recent years, especially
compared to other Midwestern cities. This growth can be attributed to a number
of factors, including state employment, higher education and medical services.
As of December 1996 suburban industrial vacancy for the Minneapolis/St. Paul
market was estimated to be approximately 6.0% and suburban Class A office
vacancy was estimated to be approximately 6.0%.

Detroit Metropolitan Area. The Company operates in the submarkets of Troy,
Southfield and Farmington Hills, all of which are suburbs of Detroit located
in Oakland County. According to U.S. Census Bureau Statistics, Oakland County
has a population of over 1.2 million and this population is expected to grow
over the next five years. Vacancy rates in each of Detroit's submarkets have
been improving in the last four years, and such improvements have led to
increased rental rates in each of these submarkets. As of December 1996
suburban industrial vacancy for the Southern Michigan market place was
estimated to be approximately 6.2% and suburban Class A office vacancy was
estimated to be approximately 9.8%.

S-23
<PAGE>

SELECTED FINANCIAL DATA

The following table sets forth certain historical and pro forma summary
operating, balance sheet and other data for the Company and should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the financial statements of the Company and
related notes thereto incorporated by reference in the accompanying
Prospectus. Certain amounts from prior periods have been restated to conform
to current year presentations. The Company's historical consolidated operating
data for, and balance sheet data as of the end of, the six months ended June
30, 1997 have been derived from the Company's unaudited interim financial
statements. In the opinion of management, the financial data as of, and for
the six months ended, June 30, 1997 include all adjustments (consisting only
of normal recurring adjustments) necessary to present fairly the information
set forth therein. Pro forma operating data is presented as if the Offering
and the Preferred Shares Offering had been consummated as of January 1, 1997.
The pro forma balance sheet data are presented as if the Offering and the
Preferred Shares Offering had occurred on June 30, 1997.

The pro forma information does not (i) purport to represent what the
Company's financial position or results of operations would actually have been
if these transactions had, in fact, occurred on such date or at the beginning
of the period indicated or (ii) purport to project the Company's financial
position or results of operations at any future date or for any future period.

S-24
<PAGE>

- --------

(1) Pro forma information reflects the application of the net proceeds of the
Preferred Shares Offering which was consummated on August 11, 1997 as well
as the anticipated application of the net proceeds from the Offering. See
"Use of Proceeds." The difference between pro forma and historical
interest expense for the six months ended June 30, 1997 results from the
repayment under the Credit Facility of $288.8 million and the incurrence
of the indebtedness under the Notes in the aggregate principal amount of
$200.0 million.
(2) The pro forma balance sheet as of June 30, 1997 reflects an increase in
total assets of $32.0 million resulting primarily from net proceeds of the
Preferred Shares Offering and the Offering in excess of debt repayments,
an increase in owners' equity of $120.8 million associated with the net
proceeds of the Preferred Shares Offering and a decrease in long-term
indebtedness of $88.8 million representing the difference between the net
proceeds from the offerings used to repay indebtedness and the face amount
of the Notes.
(3) "Funds from Operations" is defined by NAREIT as net income or loss
(computed in accordance with GAAP), excluding gains (or losses) from debt
restructuring and sales of property, plus real estate-related depreciation
and amortization and excluding significant non-recurring events that
materially distort the comparative measurement of Company performance over
time. Funds from Operations does not represent cash generated from
operating activities in accordance with GAAP and is not necessarily
indicative of cash available to fund cash needs.
(4) EBITDA means operating income before interest, income taxes, depreciation
and amortization. EBITDA does not represent cash generated from operating
activities in accordance with GAAP and should not be considered as an
alternative to operating income or net income as an indicator of
performance or as an alternative to cash flows from operating activities
as an indicator of liquidity. The Company has included information with
respect to EBITDA because it understands that such information is used by
certain investors as one measure of operating performance.
(5) Adjusted Total Assets equals total assets (as determined in accordance
with GAAP) plus accumulated depreciation.
(6) Pro forma information relating to cash flow from operating, investing and
financing activities has not been included because the Company believes
that the information would not be meaningful due to the number of
assumptions required in order to calculate this information.
(7) Funds from Operations has been reduced by $5.5 million for required
distributions associated with preferred partnership interests in the
Company which were issued concurrently with the consummation of the
Preferred Shares Offering.

S-25
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

The following discussion compares the activities of the Company for the
three and six months ended June 30, 1997 (unaudited) with the activities of
the Company for the three and six months ended June 30, 1996 (unaudited).

RESULTS OF OPERATIONS

For the three and six months ended June 30, 1997 compared to the three and
six months ended June 30, 1996.

Rental revenues increased from $27.1 million to $39.3 million, or by 45%,
for the three months ended June 30, 1996 to 1997 and increased from $53.1
million to $74.0 million, or by 39%, for the six months ended June 30, 1996 to
1997. These increases are primarily due to the increase in the number of
Operating Properties during the respective periods. As of June 30, 1996, the
Company had 230 Operating Properties and as of June 30, 1997, the Company had
326 Operating Properties. From January 1, 1996 through March 31, 1996 and from
April 1, 1996 through June 30, 1996, the Company acquired or completed the
development on five properties and 17 properties, respectively, for a Total
Investment of approximately $18.4 million and $61.6 million, respectively.
From January 1, 1997 through March 31, 1997 and April 1, 1997 through June 30,
1997, the Company acquired or completed the development on 26 properties and
46 properties, respectively, for a Total Investment of approximately $158.9
million and $259.5 million, respectively.

Operating expense reimbursement increased from $8.2 million to $11.9 million
for the three months ended June 30, 1996 to 1997 and from $17.l million to
$22.8 million for the six months ended June 30, 1996 to 1997. This increase is
a result of the reimbursement from tenants for increases in rental property
expenses and real estate taxes. The operating expense recovery percentage (the
ratio of operating expense reimbursement to rental property expenses and real
estate taxes) increased from 87.2% for the three months ended June 30, 1996 to
88.6% for the three months ended June 30, 1997 and from 86.5% for the six
months ended June 30, 1996 to 89.7% for the six months ended June 30, 1997,
due to the increase in occupancy.

Rental property and real estate tax expenses increased from $9.4 million to
$13.5 million for the three months ended June 30, 1996 to 1997 and from $19.8
million to $25.4 million for the six months ended June 30, 1996 to 1997. These
increases are due to the increase in the number of properties owned during the
respective periods, partly offset by a reduction in snow removal and other
seasonal operating costs during the mild 1997 winter compared to the severe
1996 winter.

Property level operating income for the "Same Store" properties (properties
owned as of January 1, 1996) increased from $46.8 million to $49.2 million for
the six months ended June 30, 1996 to 1997, an increase of 5.2%. This increase
is due principally to increases in the rental rates for the properties and
increases in occupancy.

S-26
<PAGE>

Set forth below is a schedule comparing the property level operating income
for the Same Store properties for the six months ended June 30, 1997 and 1996.

<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30
---------------
1997 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Rental revenue............................................ $51,110 $49,058
Operating expense reimbursement........................... 14,901 15,373
------- -------
66,011 64,431
Rental property expenses.................................. 12,103 12,985
Real estate taxes......................................... 4,662 4,630
------- -------
Property level operating income........................... $49,246 $46,816
======= =======
</TABLE>

General and administrative expenses increased by $345,000 from the three
months ended June 30, 1996 to the comparable period in 1997, and by $1.2
million from the six months ended June 30, 1996 to the comparable period in
1997, 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.

Depreciation and amortization expense increased from $6.7 million for the
three months ended June 30, 1996 to $9.3 million for the three months ended
June 30, 1997 and by $13.2 million for the six months ended June 30, 1996 to
$17.3 million for the six months ended June 30, 1997. This increase is due to
an increase in the number of properties owned during the respective periods.

Interest expense increased from $9.4 million for the three months ended June
30, 1996 to $11.3 million for the three months ended June 30, 1997 and from
$18.6 million for the six months ended June 30, 1996 to $23.9 million for the
six months ended June 30, 1997. This increase is due to an increase in the
average debt outstanding for the second quarter of 1996 compared to the second
quarter of 1997, which equalled $522.9 million and $723.8 million,
respectively, partially offset by reduced interest as a result of the
Debenture conversions. Further, approximately $2.6 million in deferred
financing costs were written off as a result of the termination of certain
secured lines of credit (the "Lines of Credit").

As a result of the foregoing, the Company's operating income increased from
$18.6 million for the three months ended June 30, 1996 to $26.1 million for
the three months ended June 30, 1997 and increased from $36.6 million for the
six months ended June 30, 1996 to $50.2 million for the six months ended June
30, 1997. In addition, income before minority interest for the three months
increased by 40%, from $8.7 million for the three months ended June 30, 1996
to $12.2 million for the three months ended June 30, 1997 and by 34% from
$17.7 million for the six months ended June 30, 1996 to $23.7 million for the
six months ended June 30, 1997.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 1997, the Company had cash and cash equivalents of $25.1
million. Working capital at June 30, 1997 was $5.9 million.

Net cash flow provided by operating activities increased from $29.8 million
for the six months ended June 30, 1996, to $48.5 million for the six months
ended June 30, 1997. This $18.7 million increase was primarily due to the cash
provided by the additional Operating Properties in service during the latter
period.

Net cash used in investing activities increased from $80.4 million for the
six months ended June 30, 1996, to $340.1 million for the six months ended
June 30, 1997. This increase primarily resulted from increased acquisition
activity in the first six months of 1997, including the acquisition of a
portfolio of 16 properties in the

S-27
<PAGE>

Minneapolis, Minnesota marketplace, a portfolio of 14 properties in the South
Carolina marketplace and a portfolio of seven properties in the Detroit,
Michigan marketplace.

Net cash provided by financing activities increased from $53.6 million for
the six months ended June 30, 1996, to $297.1 million for the six months ended
June 30, 1997. This increase was primarily attributable to the Follow-On
Offering (as defined below) and the exercise of the over-allotment option
which were completed on March 24, 1997 and April 1, 1997, respectively, and
which resulted in the issuance of 8,250,000 Common Shares. The net proceeds of
the offering were approximately $191.7 million.

The Company believes that its undistributed cash flow from operations is
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 the Lines of Credit.
During the second quarter of 1997, the Company replaced these secured
facilities with a $325.0 million unsecured Credit Facility.

The interest rate on borrowings under the Credit Facility fluctuates based
upon the Company's leverage levels and senior debt ratings from Moody's and
Standard & Poor's. The initial interest rate for borrowings under the Credit
Facility was 125 basis points over LIBOR. On June 23, 1997, Moody's raised its
prospective senior debt rating of the Company to Baa3 from Ba2 and on July 22,
1997, Standard & Poor's assigned a BBB- prospective senior debt rating to the
Company. At these ratings, the interest rate for borrowings under the Credit
Facility is 110 basis points over LIBOR.

Periodically, the Company pays down borrowings on line of credit facilities
with funds from long-term capital sources. In 1997, the Company used $170.0
million of the proceeds from the Follow-On Offering to pay down the Lines of
Credit.

As of June 30, 1997, $388.0 million in mortgage loans were outstanding with
maturities ranging from 1997 to 2013. The interest rates on $353.3 million of
mortgage loans are fixed and range from 6% to 9%. Interest rates on $34.7
million of mortgage loans float with LIBOR or prime, of which $19.3 million is
subject to certain caps. The weighted average interest rate for the mortgage
loans is 7.7%, and the weighted average life is 8.2 years.

The closing of the Preferred Shares Offering occurred on August 11, 1997,
and resulted in net proceeds to the Trust of approximately $120.8 million. It
is expected that the net proceeds from the Offering will be approximately
$198.0 million. Of the combined proceeds of $318.8 million, $30.0 million will
be used to repay in full a secured loan incurred after June 30, 1997. The
$288.8 million balance of the net proceeds will be applied to repay a portion
of the borrowings under the Credit Facility, the outstanding balance of which
was $318.0 million prior to the consummation of the Preferred Shares Offering
and the Offering. Consequently, upon consummation of the Offering and use of
the proceeds as described above, approximately $295.8 million will be
available under the Credit Facility.

General

The Company expects to incur variable rate debt, including borrowings under
the Credit Facility, from time to time. The Company has entered into a swap
agreement, with a notional amount of $119.0 million, to hedge against possible
fluctuations in interest rates in anticipation of a debt issuance in 1997 for
a five- to seven- year term. 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
(the "Initial Shelf Registration"). 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.

S-28
<PAGE>

On October 15, 1996, the Company filed a Registration Statement of 1,000,000
shares to be issued through a Dividend Reinvestment and Share Purchase Plan.

On February 21, 1997, the Company filed a shelf registration with the
Securities and Exchange Commission that enables the Company to offer up to an
aggregate of $850.0 million of securities, including common stock, preferred
stock and debt (the "Second Shelf Registration"). On March 24, 1997, the
Company completed a public offering (the "Follow-On Offering") which resulted
in the issuance of an additional 7,500,000 Common Shares, and on April 1,
1997, the over allotment option was exercised, resulting in the issuance of an
additional 750,000 Common Shares. The issuance of these Common Shares resulted
in net proceeds of $191.7 million. Collectively, the Initial Shelf
Registration and the Second Shelf Registration are referred to as the "Shelf
Registration."

The Shelf Registration currently provides Liberty Property Trust and Liberty
Property Limited Partnership with the ability to offer up to $354.4 million of
securities and $400.0 million of securities ($200.0 million after giving
effect to the Offering), respectively.

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 GAAP), excluding gains (or
losses) from debt restructuring and sales of property, plus real-estate
related depreciation and amortization and excluding significant non-recurring
events that materially distort the comparative measurement of Company
performance over time. Funds from Operations should not be considered as an
alternative to net income or as an alternative to cash flow as a measure of
liquidity. The Trust's Funds from Operations for the three and six months
ended June 30, 1997 and 1996 are as follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------- -----------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996
--------- --------- -------- --------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
Net Income............................... $ 10,955 $ 7,809 $21,504 $15,798
Add Back:
Minority interest...................... 1,250 925 2,225 1,890
Depreciation and amortization.......... 9,209 6,639 17,068 13,027
(Gain) loss on sale.................... 1,143 -- 1,143 (377)
Premium on debenture conversion........ -- 390 -- 390
Write-off of deferred financing costs.. 2,566 -- 2,566 --
--------- --------- ------- -------
Funds from Operations.................... $ 25,123 $ 15,763 $44,506 $30,728
========= ========= ======= =======
</TABLE>

INFLATION

Inflation has remained relatively low during the last three years, and as a
result, it has not had a significant impact on the Company during this period.
The Credit Facility bears interest at a variable rate; therefore, the amount
of interest payable under the Credit Facility 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 and utilities, substantially all of
the tenants' leases require the tenants to absorb these costs as part of their
rental obligations. In addition, inflation also may have the effect of
increasing market rental rates.

S-29
<PAGE>

MANAGEMENT

TRUSTEES AND EXECUTIVE OFFICERS

The Trust's Board of Trustees consists of nine members, six of whom are not
employed by or otherwise affiliated with the Trust (the "Independent
Trustees"). The following table sets forth certain information with respect to
the trustees and executive officers of the Trust:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
Willard G. Rouse III............. 55 Chairman of the Board of Trustees and
Chief Executive Officer
Joseph P. Denny.................. 50 President, Chief Operating Officer and
Trustee
George J. Alburger, Jr. ......... 50 Chief Financial Officer and Treasurer
George F. Congdon................ 54 Executive Vice President and Trustee
Robert E. Fenza.................. 40 Executive Vice President
David C. Hammers................. 59 Executive Vice President
James J. Bowes................... 44 Secretary and General Counsel
Frederick F. Buchholz............ 51 Independent Trustee; Executive Vice
President of Equitable Real Estate
J. Anthony Hayden................ 53 Independent Trustee; President of
Hayden Real Estate, Inc.; former
Executive Director and a member of the
Board of Directors of Cushman &
Wakefield, Inc.
M. Leanne Lachman................ 54 Independent Trustee; Managing Director,
Schroder Real Estate Associates and a
director of Lincoln National
Corporation and Chicago Title & Trust
Company
David L. Lingerfelt.............. 44 Independent Trustee; former Director of
Property Administration and Counsel for
Best Products Co., Inc.
John A. Miller, CLU.............. 70 Independent Trustee; Retired Chairman
and Chief Executive Officer of
Provident Mutual Life Insurance Company
of Philadelphia
Stephen B. Siegel................ 52 Independent Trustee; President of the
Insignia/Edward S. Gordon Co., Inc.;
former Chief Executive Officer of
Cushman & Wakefield, Inc.
</TABLE>

S-30
<PAGE>

DESCRIPTION OF NOTES

GENERAL

The following description of the specific terms of the Notes supplements the
description of the general terms and provisions of Debt Securities set forth
in the Prospectus under the caption "Description of Debt Securities."

The 2004 Notes and the 2007 Notes constitute separate series of debt
securities (which are more fully described in the accompanying Prospectus),
each to be issued pursuant to an indenture to be dated as of August 14, 1997
(the "Base Indenture"), between the Company and The First National Bank of
Chicago, as trustee (the "Trustee"), and a Supplemental Indenture thereto to
be dated as of August 14, 1997, between the Company and the Trustee (the
"Supplemental Indenture" and, together with the Base Indenture, the
"Indenture"). The 2004 Notes and the 2007 Notes each will be limited to an
aggregate principal amount of $100.0 million. The terms of the Notes include
those provisions contained in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"). The Notes are subject to all such terms, and holders
of Notes are referred to the Indenture and the Trust Indenture Act for a
statement thereof. The following summary of certain provisions of the
Indenture does not purport to be complete and is subject to and qualified in
its entirety by reference to the Indenture, including the definitions therein
of certain terms used below. Except as otherwise indicated, section references
are to sections of the Indenture.

The Notes will be direct, unsecured recourse obligations of the Company and
each series of the Notes will rank pari passu with each other and with all
other unsecured and unsubordinated indebtedness of the Company from time to
time outstanding. The Notes will be effectively subordinated to the claims of
mortgage lenders holding secured indebtedness of the Company, as to the
specific property securing each such lender's mortgage. The Notes will be
senior to approximately $146.9 million principal amount of unsecured
subordinated indebtedness of the Company. The Notes will be recourse to all of
the assets of the Company, but will be non-recourse with respect to the
partners of the Company, including the Trust, the Company's sole general
partner. Subject to certain limitations set forth in the Indenture, and as
described below under "Certain Covenants," the Indenture will permit the
Company to incur additional secured and unsecured indebtedness.

The 2004 Notes will mature on August 15, 2004 and the 2007 Notes will mature
on August 15, 2007 (each, a "Maturity Date"). The Notes will not be subject to
any sinking fund provisions and will not be convertible into or exchangeable
for any equity interest in the Company or the Trust. The Notes will be issued
only in fully registered book-entry form without coupons, in denominations of
$1,000 and integral multiples thereof, except under the limited circumstances
described below under "Book-Entry System."

Except as described below under "Certain Covenants--Limitations on
Incurrence of Debt" and under "--Merger, Consolidation or Sale," the Indenture
does not contain any provisions that would limit the ability of the Company to
incur indebtedness or that would afford holders of the Notes protection in the
event of: (i) a highly leveraged or similar transaction involving the Company,
the Trust as the sole general partner of the Company or any affiliate of
either such party; (ii) a change of control; or (iii) a reorganization,
restructuring, merger or similar transaction involving the Company that may
adversely affect the holders of the Notes. However, certain restrictions on
the ownership and transfer of the Common Shares designed to preserve the
Trust's status as a REIT may act to prevent or hinder a change of control. The
Company and its management have no present intention of engaging in a
transaction which would result in the Company's being highly leveraged or that
would result in a change of control.

PRINCIPAL AND INTEREST

The 2004 Notes will bear interest at 7.10% per annum and the 2007 Notes will
bear interest at 7.25% per annum, in each case from August 19, 1997 or from
the immediately preceding Interest Payment Date (as defined below) to which
interest has been paid, payable semi-annually in arrears on each February 15
and August 15,

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commencing February 15, 1998 (each, an "Interest Payment Date"), and on the
applicable Maturity Date, to the persons (the "Holders") in whose names the
applicable Notes are registered in the Security Register applicable to the
Notes at the close of business 15 calendar days prior to such payment date
(each, a "Regular Record Date"), regardless of whether such day is a Business
Day (as defined below). Interest on the Notes will be computed on the basis of
a 360-day year of twelve 30-day months.

Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a Note ("Defaulted Interest") will forthwith
cease to be payable to the Holder on the applicable regular record date and
may either be paid to the person in whose name such Note is registered at the
close of business on a special record date (the "Special Record Date") for the
payment of such Defaulted Interest to be fixed by the Trustee, notice whereof
shall be given to the Holder of such Note not less than ten days prior to such
Special Record Date, or may be paid at any time in any other lawful manner,
all as more completely described in the Indenture (Section 307).

The principal of each Note payable on its Maturity Date will be paid against
presentation and surrender of such Note at the corporate trust office of the
Trustee, located initially at One First National Plaza, Chicago, Illinois
60670-0126, in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts.

If any Interest Payment Date or a Maturity Date falls on a day that is not a
Business Day, the required payment will be made on the next Business Day as if
it were made on the date such payment was due and no interest will accrue on
the amount so payable for the period from and after such Interest Payment Date
or Maturity Date, as the case may be. "Business Day" means any day, other than
a Saturday or Sunday, that is neither a legal holiday nor a day on which
banking institutions in New York City or Chicago are authorized or required by
law, regulation or executive order to close.

CERTAIN COVENANTS

The Indenture contains various covenants including the following:

Limitations on Incurrence of Debt. The Company will not, and will not permit
any Subsidiary (as defined below) to, incur any Debt (as defined below), other
than Intercompany Debt (as defined below) that is subordinate in right of
payment to the Notes, if, immediately after giving effect to the incurrence of
such Debt and the application of the proceeds thereof, the aggregate principal
amount of all outstanding Debt of the Company and its Subsidiaries on a
consolidated basis determined in accordance with GAAP is greater than 60% of
the sum of: (i) the Company's Adjusted Total Assets (as defined below) as of
the end of the most recent fiscal quarter prior to the incurrence of such
additional Debt; and (ii) the increase in Adjusted Total Assets since the end
of such quarter (including any increase resulting from the incurrence of
additional Debt) (Section 1004(a)).

In addition to the foregoing limitation on the incurrence of Debt, the
Company will not, and will not permit any Subsidiary to, incur any Debt if the
ratio of Consolidated Income Available for Debt Service (as defined below) to
Annual Service Charge (as defined below) on the date on which such additional
Debt is to be incurred, on a pro forma basis, after giving effect to the
incurrence of such Debt and to the application of the proceeds thereof, would
have been less than 1.5 to 1 (Section 1004(b)).

Further, the Company will not, and will not permit any Subsidiary to, incur
any Debt secured by any mortgage, lien, charge, pledge, encumbrance or
security interest of any kind upon any of the properties of the Company or any
Subsidiary ("Secured Debt"), whether owned at the date of the Indenture or
thereafter acquired, if, immediately after giving effect to the incurrence of
such Secured Debt and the application of the proceeds thereof, the aggregate
principal amount of all outstanding Secured Debt of the Company and its
Subsidiaries on a consolidated basis is greater than 40% of the sum of: (i)
the Company's Adjusted Total Assets as of the end of the most recent fiscal
quarter prior to the incurrence of such additional Debt; and (ii) the increase
in Adjusted

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Total Assets since the end of such quarter (including any increase resulting
from the incurrence of additional Debt) (Section 1004(c)).

For purposes of the foregoing provisions regarding the limitation on the
incurrence of Debt, Debt shall be deemed to be "incurred" by the Company or a
Subsidiary whenever the Company or such Subsidiary shall create, assume,
guarantee or otherwise become liable in respect thereof.

Maintenance of Unencumbered Total Asset Value. The Company will at all times
maintain an Unencumbered Total Asset Value (as defined below) in an amount not
less than 150% of the aggregate principal amount of all outstanding unsecured
Debt of the Company and its Subsidiaries on a consolidated basis (Section
1004(d)).

Merger, Consolidation or Sale. The Company may consolidate with, or sell,
lease or convey all or substantially all of its assets to, or merge with or
into any other entity, provided that in any such case: (i) either the Company
shall be the continuing entity, or the successor entity shall be an entity
organized and existing under the laws of the United States or a State thereof
and such successor entity shall expressly assume the due and punctual payment
of the principal of (and premium or Make-Whole Amount, if any) and any
interest on all of the Notes, according to their tenor, and the due and
punctual performance and observance of all of the covenants and conditions of
the Indenture to be performed by the Company by supplemental indenture,
complying with the provisions of the Indenture relating to supplemental
indentures, satisfactory to the Trustee, executed and delivered to the Trustee
by such entity; (ii) immediately after giving effect to such transaction and
treating any indebtedness which becomes an obligation of the Company or any
Subsidiary as a result thereof as having been incurred by the Company or such
Subsidiary at the time of such transaction, no Event of Default, and no event
which, after notice or the lapse of time, or both, would become an Event of
Default, shall have occurred and be continuing; and (iii) an officer's
certificate and legal opinion covering such conditions shall be delivered to
the Trustee (Sections 801 and 803).

Existence. Except as described under "Merger, Consolidation or Sale," above,
the Company will do or cause to be done all things necessary to preserve and
keep in full force and effect its existence, rights (by partnership agreement
and statute) and franchises; provided, however, that the Company shall not be
required to preserve any right or franchise if it determines that the
preservation thereof is no longer desirable in the conduct of its business and
that the loss thereof is not disadvantageous in any material respect to the
Holders of the Notes (Section 1005).

Maintenance of Properties. The Company will cause all of its material
properties used or useful in the conduct of its business or the business of
any Subsidiary to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that the Company and its
Subsidiaries shall not be prevented from selling or otherwise disposing of for
value their properties in the ordinary course of business (Section 1006).

Insurance. The Company will, and will cause each of its Subsidiaries to,
keep all of its insurable properties insured against loss or damage at least
equal to their then full insurable value with insurers of recognized
responsibility and having an A.M. Best policy holder's rating of not less than
A-V (Section 1007).

Payment of Taxes and Other Claims. The Company will pay or discharge or
cause to be paid or discharged, before the same shall become delinquent: (i)
all taxes, assessments and governmental charges levied or imposed upon it or
any Subsidiary or upon the income, profits or property of the Company or any
Subsidiary; and (ii) all lawful claims for labor, materials and supplies
which, if unpaid, might by law become a lien upon the property of the Company
or any Subsidiary; provided, however, that the Company shall not be required
to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings or for which the Company
has set apart and maintains an adequate reserve (Section 1008).

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Provision of Financial Information. Whether or not the Company is subject to
Section 13 or 15(d) of the Exchange Act, the Company will, to the extent
permitted under the Exchange Act, file with the Commission the annual reports,
quarterly reports and other documents which the Company would have been
required to file with the Commission pursuant to such Sections 13 or 15(d) if
the Company were so subject (the "Financial Information"), such documents to
be filed with the Commission on or prior to the respective dates (the
"Required Filing Dates") by which the Company would have been required so to
file such documents if the Company were so subject. The Company also will in
any event (x) within 15 days of each Required Filing Date: (i) transmit by
mail to all Holders of Notes, as their names and addresses appear in the
Security Register, without cost to such Holders, copies of the Financial
Information; and (ii) file with the Trustee copies of the Financial
Information, and (y) if filing such documents by the Company with the
Commission is not permitted under the Exchange Act, promptly upon written
request and payment of the reasonable cost of duplication and delivery, supply
copies of such documents to any prospective Holder (Section 1009).

As used in the Indenture and the description thereof herein:

"Adjusted Total Assets" as of any date means the total of all assets
determined in accordance with GAAP plus accumulated depreciation.

"Annual Service Charge" as of any date means the aggregate amount of any
interest expensed for the four consecutive fiscal quarters most recently
ended, as determined in accordance with GAAP.

"Consolidated Income Available for Debt Service" as of any date means
Consolidated Net Income (as defined below) of the Company and its Subsidiaries
plus amounts that have been deducted for: (a) interest on Debt of the Company
and its Subsidiaries; (b) provision for taxes of the Company and its
Subsidiaries based on income; (c) amortization of debt discount; (d)
depreciation and amortization; (e) the effect of any noncash charge resulting
from a change in accounting principles in determining Consolidated Net Income;
and (f) amortization of deferred charges, for the four consecutive fiscal
quarters most recently ended, all as determined in accordance with GAAP, and
without taking into account any provision for gains and losses on properties.

"Consolidated Net Income" for any period means the amount of net income (or
loss) of the Company and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP.

"Debt" of the Company or any Subsidiary means any indebtedness of the
Company or any Subsidiary, whether or not contingent, in respect of: (i)
borrowed money evidenced by bonds, notes, debentures or similar instruments;
(ii) indebtedness secured by any mortgage, pledge, lien, charge, encumbrance
or any security interest existing on property owned by the Company or any
Subsidiary; (iii) reimbursement obligations in connection with any letters of
credit actually issued or amounts representing the balance deferred and unpaid
of the purchase price of any property except any such balance that constitutes
an accrued expense or trade payable; or (iv) any lease of property by the
Company or any Subsidiary as lessee which is reflected on the Company's
consolidated balance sheet as a capitalized lease in accordance with GAAP; but
in the case of items of indebtedness incurred under (i) through (iii) above
only to the extent that any such items (other than letters of credit) would
appear as a liability on the Company's consolidated balance sheet in
accordance with GAAP; and also includes, to the extent not otherwise included,
any obligation of the Company or any Subsidiary to be liable for, or to pay,
as obligor, guarantor or otherwise (other than for purposes of collection in
the ordinary course of business), indebtedness of another person (other than
the Company or any Subsidiary).

"Intercompany Debt" means Debt to which the only parties are the Trust, any
of its subsidiaries, the Company and any Subsidiary, or Debt owed to the Trust
arising from routine cash management practices, but only so long as such Debt
is held solely by any of the Trust, any of its subsidiaries, the Company and
any Subsidiary.

"Security Register" means a register maintained at a place of payment for
the registration and transfer of the Notes.

"Subsidiary" means a corporation, partnership or limited liability company,
a majority of the outstanding voting stock, partnership interests or
membership interests, as the case may be, of which is owned or controlled,
directly or indirectly, by the Company or by one or more Subsidiaries of the
Company. Liberty Property

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Development Corp. is a Subsidiary for purposes of this definition. For the
purposes of this definition, "voting stock" means stock having the voting
power for the election of directors, general partners, managers or trustees,
as the case may be, whether at all times or only so long as no senior class of
stock has such voting power by reason of any contingency.

"Undepreciated Real Estate Assets" as of any date means the cost (original
cost plus capital improvements) of real estate assets of the Company and its
Subsidiaries on such date, before depreciation and amortization, determined on
a consolidated basis in accordance with GAAP.

"Unencumbered Total Asset Value" as of any date means the sum of: (i) the
value of those Undepreciated Real Estate Assets not subject to an encumbrance;
and (ii) the value of all other assets of the Company and its Subsidiaries on
a consolidated basis not subject to an encumbrance determined in accordance
with GAAP (but excluding accounts receivable and intangibles).

Compliance with the covenants described herein and with respect to the Notes
generally may not be waived by the Company, or by the Trustee unless the
Holders of at least a majority in principal amount of all outstanding Notes
consent to such waiver; provided, however, that the defeasance and covenant
defeasance provisions of the Indenture described under "Discharge, Defeasance
and Covenant Defeasance," below, will apply to the Notes, including with
respect to the covenants described in this Prospectus Supplement.

OPTIONAL REDEMPTION

The Notes of either or both series may be redeemed at any time at the option
of the Company, in whole or from time to time in part, at a redemption price
equal to the sum of: (i) the principal amount of the Notes being redeemed plus
accrued interest thereon to the redemption date; and (ii) the Make-Whole
Amount (as defined below), if any, with respect to such Notes (the "Redemption
Price").

If notice of redemption has been given as provided in the Indenture and
funds for the redemption of any Notes called for redemption shall have been
made available on the redemption date referred to in such notice, such Notes
will cease to bear interest on the date fixed for such redemption specified in
such notice and the only right of the Holders of the Notes from and after the
redemption date will be to receive payment of the Redemption Price upon
surrender of such Notes in accordance with such notice.

Notice of any optional redemption of any Notes will be given to Holders at
their addresses, as shown in the security register for the Notes, not more
than 60 nor less than 30 days prior to the date fixed for redemption. The
notice of redemption will specify, among other items, the Redemption Price and
principal amount of the Notes held by such Holder to be redeemed.

If all or less than all of the Notes of any series are to be redeemed at the
option of the Company, the Company will notify the Trustee at least 45 days
prior to giving notice of redemption (or such shorter period as may be
satisfactory to the Trustee) of the aggregate principal amount of Notes to be
redeemed, if less than all of the Notes of any series are to be redeemed, and
their redemption date. The Trustee shall select, in such manner as it shall
deem fair and appropriate, no less than 60 days prior to the date of
redemption, the Notes to be redeemed in whole or in part.

Neither the Company nor the Trustee shall be required to: (i) issue,
register the transfer of or exchange Notes during a period beginning at the
opening of business 15 days before any selection of Notes to be redeemed and
ending at the close of business on the day of mailing of the relevant notice
of redemption; (ii) register the transfer of or exchange any Note, or portion
thereof, called for redemption, except the unredeemed portion of any Note
being redeemed in part; or (iii) issue, register the transfer of or exchange
any Note that has been surrendered for repayment at the option of the Holder,
except the portion, if any, of such Note not to be so repaid (Section 305).

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As used herein:

"Make-Whole Amount" means, in connection with any optional redemption of any
Notes, the excess, if any, of: (i) the aggregate present value as of the date
of such redemption of each dollar of principal being redeemed and the amount
of interest (exclusive of interest accrued to the date of redemption) that
would have been payable in respect of each such dollar if such redemption had
not been made, determined by discounting, on a semi-annual basis, such
principal and interest at the Reinvestment Rate (as defined below) (determined
on the third Business Day preceding the date notice of such redemption is
given) from the respective dates on which such principal and interest would
have been payable if such redemption had not been made, to the date of
redemption, over (ii) the aggregate principal amount of the Notes being
redeemed.

"Reinvestment Rate" means the yield on Treasury securities at a constant
maturity corresponding to the remaining life (as of the date of redemption,
and rounded to the nearest month) to stated maturity of the principal being
redeemed (the "Treasury Yield"), plus 0.25%. For purposes hereof, the Treasury
Yield shall be equal to the arithmetic mean of the yields published in the
Statistical Release (as defined below) under the heading "Week Ending" for
"U.S. Government Securities--Treasury Constant Maturities" with a maturity
equal to such remaining life; provided, that if no published maturity exactly
corresponds to such remaining life, then the Treasury Yield shall be
interpolated or extrapolated on a straight-line basis from the arithmetic
means of the yields for the next shortest and next longest published
maturities. For purposes of calculating the Reinvestment Rate, the most recent
Statistical Release published prior to the date of determination of the Make-
Whole Amount shall be used. If the format or content of the Statistical
Release changes in a manner that precludes determination of the Treasury Yield
in the above manner, then the Treasury Yield shall be determined in the manner
that most closely approximates the above manner, as reasonably determined by
the Company.

"Statistical Release" means the statistical release designated "H.15(519)"
or any successor publication which is published weekly by the Federal Reserve
System and which reports yields on actively traded United States government
securities adjusted to constant maturities, or, if such statistical release is
not published at the time of any determination under the Indenture, then such
other reasonably comparable index which shall be designated by the Company.

DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE

The Company will be permitted under the Indenture to discharge certain
obligations to the Holders of either or both series of the Notes that have not
already been delivered to the Trustee for cancellation by irrevocably
depositing with the Trustee, in trust, funds in the currency in which the
Notes are payable in an amount sufficient to pay the entire indebtedness on
such Notes in respect of principal (and premium or Make-Whole Amount, if any)
and interest to the date of such deposit (if such Notes have become due and
payable) or to the stated Maturity Date or redemption date, as the case may
be.

The Indenture will also provide that the Company may elect either (a) to
defease and be discharged from any and all obligations with respect to such
Notes other than the obligations to register the transfer or exchange of such
Notes, to replace temporary or mutilated, destroyed, lost or stolen Notes, to
maintain an office or agency in respect of such Notes and to hold moneys for
payment in trust ("defeasance") (Section 1402) or (b) to be released from its
obligations with respect to such Notes under certain sections of Article Ten
of the Indenture relating to limitations on the incurrence of Debt,
maintenance of Unencumbered Total Asset Value, existence of the Company,
maintenance of the Company's properties, insurance, payment of taxes and other
claims and provision of financial information and any omission to comply with
such obligations shall not constitute an Event of Default with respect to such
Notes ("covenant defeasance") (Section 1403), in either case upon the
irrevocable deposit by the Company with the Trustee, in trust, of an amount,
in the currency in which such Notes are payable at stated maturity, or
Government Obligations (as defined below), or both, applicable to such Notes
which through the scheduled payment of principal and interest in accordance
with their terms will provide money in an amount sufficient without
reinvestment to pay the principal of (and premium or Make-Whole Amount, if
any) and interest on such Notes or analogous payments thereon, on the
scheduled due dates therefor.

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Such a trust may only be established if, among other things, the Company has
delivered to the Trustee an opinion of counsel (as specified in the Indenture)
to the effect that the Holders of such Notes will not recognize income, gain
or loss for federal income tax purposes as a result of such defeasance or
covenant defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such defeasance or covenant defeasance had not occurred, and such opinion
of counsel, in the case of defeasance, will be required to refer to and be
based upon a ruling of the Internal Revenue Service or a change in applicable
federal income tax law occurring after the date of the Indenture (Section
1404).

"Government Obligations" means securities which are: (i) direct obligations
of the United States of America for the payment of which its full faith and
credit is pledged; or (ii) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States of America,
the payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust company as custodian
with respect to any such Government Obligation or a specific payment of
interest on or principal of any such Government Obligation held by such
custodian for the account of the holder of a depository receipt, provided that
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt
from any amount received by the custodian in respect of the Government
Obligation or the specific payment of interest on or principal of the
Government Obligation evidenced by such depository receipt.

In the event the Company effects covenant defeasance with respect to any
Notes and such Notes are declared due and payable because of the occurrence of
any Event of Default other than the Event of Default described in clause (iii)
under "Events of Default, Notice and Waiver" with respect to certain specified
sections of Article Ten of the Indenture (which sections would no longer be
applicable to such Notes as a result of such covenant defeasance) the amount
in such currency in which such Notes are payable, and Government Obligations
on deposit with the Trustee, will be sufficient to pay amounts due on such
Notes at the time of their stated maturity but may not be sufficient to pay
amounts due on such Notes at the time of the acceleration resulting from such
Default. However, the Company would remain liable to make payment of such
amounts due at the time of acceleration.

EVENTS OF DEFAULT, NOTICE AND WAIVER

The term "Event of Default," when used in the Indenture, means any one of
the following events (whatever the reason for such Event of Default and
whether or not it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body): (i)
default in the payment of any interest upon the Notes when such interest
becomes due and payable, and continuance of such default for a period of 30
days; (ii) default in the payment of the principal of (or premium or Make-
Whole Amount, if any, on) any Note when it becomes due and payable at its
Maturity Date or by declaration of acceleration, notice of redemption or
otherwise; (iii) default in the performance, or breach, of any covenant or
warranty of the Company in the Indenture with respect to any Note (other than
a covenant or warranty a default in whose performance or whose breach is
elsewhere in the relevant section of the Indenture specifically dealt with),
and continuance of such default or breach for a period of 60 days after there
has been given, by registered or certified mail, to the Company by the
Trustee, or to the Company and the Trustee by the Holders of at least 25% in
principal amount of the Notes, a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a
"Notice of Default" under the Indenture; (iv) a default under any bond,
debenture, note or other evidence of indebtedness of the Company, or under any
mortgage, indenture or other instrument of the Company under which there may
be issued or by which there may be secured any indebtedness of the Company (or
by any Subsidiary of the Company, the repayment of which the Company has
guaranteed or for which the Company is directly responsible or liable as
obligor or guarantor on a full recourse basis), whether such indebtedness now
exists or shall hereafter be created, which default shall constitute a failure
to pay an aggregate principal amount exceeding $10,000,000 of such
indebtedness when due and payable after the expiration of any applicable grace
period with respect thereto and shall have resulted in such indebtedness in an
aggregate principal amount exceeding $10,000,000

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becoming or being declared due and payable prior to the date on which it would
otherwise have become due and payable, without such indebtedness having been
discharged, or such acceleration having been rescinded or annulled, within a
period of 10 days after there shall have been given, by registered or
certified mail, to the Company by the Trustee, or to the Company and the
Trustee by the Holders of at least 10% in principal amount of the outstanding
Notes, a written notice specifying such default and requiring the Company to
cause such indebtedness to be discharged or cause such acceleration to be
rescinded or annulled and stating that such notice is a "Notice of Default"
under the Indenture; or (v) certain events of bankruptcy, insolvency or
reorganization (Section 501).

If an Event of Default under the Indenture with respect to the Notes at the
time outstanding occurs and is continuing (other than Events of Default
arising in connection with certain events of bankruptcy, insolvency or
reorganization), then in every such case the Trustee or the Holders of not
less than 25% of the principal amount of the outstanding Notes may declare the
principal amount and premium (if any) and accrued interest on all the Notes to
be due and payable immediately by written notice thereof to the Company (and
to the Trustee if given by the Holders). However, at any time after such a
declaration of acceleration with respect to the Notes has been made, but
before a judgment or decree for payment of the money due has been obtained by
the Trustee, the Holders of not less than a majority in principal amount of
the outstanding Notes may rescind and annul such declaration and its
consequences if (a) the Company shall have deposited with the Trustee all
required payments of the principal of (and premium or Make-Whole Amount, if
any) and interest on the Notes, plus certain fees, expenses, disbursements and
advances of the Trustee and (b) all Events of Default with respect to the
Notes, other than the non-payment of principal of (or premium or Make-Whole
Amount, if any) or interest on such Notes which has become due solely by such
declaration of acceleration, have been cured or waived as provided in the
Indenture. In the event of a declaration of acceleration because an Event of
Default as described in clause (iv) of the preceding paragraph has occurred
and is continuing, such declaration shall be automatically rescinded and
annulled if the default triggering such Event of Default (along with any other
defaults caused thereby) shall be remedied or cured by the Company or its
relevant Subsidiary or waived by the holders of such indebtedness within 60
days after such declaration of acceleration. Upon the occurrence of an Event
of Default arising in connection with certain events of bankruptcy, insolvency
or reorganization, the principal of, premium, if any, and accrued interest on
all Notes then outstanding shall immediately become due and payable without
any declaration or other act on the part of the Trustee or any Holder (Section
502).

The Trustee will be required to give notice to the Holders of the Notes
within 90 days of the occurrence of a default under the Indenture unless such
default shall have been cured or waived; provided, however, that the Trustee
may withhold notice to the Holders of the Notes of any default (except a
default in the payment of the principal of (or premium or Make-Whole Amount,
if any) or interest on the Notes) if and so long as specified responsible
officers of the Trustee determine in good faith that the withholding of such
notice is in the interest of such Holders; provided, that in the case of any
default or breach of a covenant or warranty under the Indenture as described
in clause (iii) of the first paragraph of this section "Events of Default,
Notice and Waiver," no such notice to Holders shall be given until at least 60
days after the occurrence thereof. For purposes of this paragraph, the term
"default" means any event which is, or after notice or lapse of time or both
would become, an Event of Default under the Indenture with respect to the
Notes (Section 601).

The Indenture provides that no Holder of Notes of either series may
institute any proceedings, judicial or otherwise, with respect to the
Indenture or for any remedy thereunder, except in the case of failure of the
Trustee, for 60 days, to act after it has received a written request to
institute proceedings in respect of an Event of Default from the Holders of
not less than 25% in principal amount of the outstanding Notes of either
series, as well as an offer of indemnity reasonably satisfactory to it
(Section 507). Such provision will not prevent, however, any Holder of Notes
from instituting suit for the payment of the principal of (and premium or
Make-Whole Amount, if any) and interest on such Notes on the respective due
dates thereof (Section 508).

Defaults (except a default in the payment of principal of (or premium or
Make-Whole Amount, if any) or interest on the Notes or default with respect to
a covenant or provision which cannot be modified under the terms

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of the Indenture without the consent of each Holder affected) may be waived by
the Holders of not less than a majority of principal amount of the then
outstanding Notes, upon the conditions provided in the Indenture (Section
513).

Subject to provisions in the Indenture relating to its duties in case of
default, the Trustee is under no obligation to exercise any of its rights or
powers under the Indenture at the request or direction of any Holders of
either series of Notes then outstanding under the Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
(Section 602). The Holders of not less than a majority in principal amount of
the outstanding Notes of either series shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available
to the Trustee or exercising any trust or power conferred upon such Trustee.
However, the Trustee may refuse to follow any direction which is in conflict
with any law or the Indenture, which may involve the Trustee in personal
liability or which may be unduly prejudicial to the Holders of Notes of such
series not joining therein and the Trustee may take any other action it deems
proper not inconsistent with such direction (Section 512).

Within 120 days after the close of each fiscal year, the Company will be
required to deliver to the Trustee a certificate, signed by one of several
specified officers of the Company, stating whether or not such officer has
knowledge of any default under the Indenture and, if so, specifying each such
default and the nature and status thereof (Section 1010).

MODIFICATION OF THE INDENTURE

Modifications and amendments of the Indenture may be made only with the
consent of the Holders of not less than a majority in principal amount of all
the Notes issued under the Indenture; provided, however, that no such
modification or amendment may, without the consent of the Holder of each such
Note affected thereby, (a) change the stated maturity of the principal of (or
premium or Make-Whole Amount, if any, on), or any installment of interest on,
any such Note; (b) reduce the principal amount of, or the rate or amount of
interest on, or any premium payable on redemption of the Notes, or adversely
affect any right of repayment of the Holder of any Notes; (c) change the place
of payment, or the coin or currency, for payment of principal or premium, if
any, or interest on the Notes; (d) impair the right to institute suit for the
enforcement of any payment on or with respect to the Notes on or after the
stated maturity of any such Note; (e) reduce the above-stated percentage in
principal amount of outstanding Notes the consent of whose Holders is
necessary to modify or amend the Indenture, for any waiver with respect to the
Notes, or to waive compliance with certain provisions of the Indenture or
certain defaults and consequences thereunder or to reduce the quorum or voting
requirements set forth in the Indenture; or (f) modify any of the foregoing
provisions or any of the provisions relating to the waiver of certain past
defaults or certain covenants, except to increase the required percentage to
effect such action or to provide that certain other provisions of the
Indenture may not be modified or waived without the consent of the Holder of
each Note (Section 902).

The Holders of not less than a majority in principal amount of the Notes
have the right to waive compliance by the Company with certain covenants in
the Indenture (Section 1012).

Modifications and amendments of the Indenture may be permitted to be made by
the Company and the Trustee without the consent of any Holder for any of the
following purposes: (i) to evidence the succession of another person to the
Company as obligor under the Indenture; (ii) to add to the covenants of the
Company for the benefit of the Holders of the Notes or to surrender any right
or power conferred upon the Company in the Indenture; (iii) to add Events of
Default for the benefit of the Holders of the Notes; (iv) to add or change any
provisions of the Indenture to facilitate the issuance of, or to liberalize
certain terms of, Notes in bearer form, or to permit or facilitate the
issuance of Notes in uncertificated form, provided that such action shall not
adversely affect the interests of the Holders of the Notes in any material
respect; (v) to change or eliminate any provisions of the Indenture, provided
that any such change or elimination shall become effective only when the
outstanding Notes are not entitled to the benefit of such provision; (vi) to
secure the Notes; (vii) to establish the form or terms of the Notes and any
related coupons as permitted by the Indenture; (viii) to evidence and provide
for the

S-39
<PAGE>

acceptance of appointment under the Indenture by a successor Trustee with
respect to the Notes or facilitate the administration of the trust under the
Indenture by more than one Trustee; (ix) to cure any ambiguity, defect or
inconsistency in the Indenture, provided that such action is not inconsistent
with the provisions of the Indenture and shall not adversely affect the
interests of Holders of Notes in any material respect; or (x) to supplement
any of the provisions of the Indenture to the extent necessary to permit or
facilitate defeasance and discharge of the Notes, provided that such action
shall not adversely affect the interests of the Holders of the Notes in any
material respect (Section 901).

The Indenture contains provisions for convening meetings of the Holders of
the Notes of either series (Section 1501). A meeting will be permitted to be
called at any time by the Trustee, and also, upon request, by the Company or
the Holders of at least 10% in principal amount of the outstanding Notes of
such series, in any such case upon notice given as provided in the Indenture.
Except for any consent that must be given by the Holder of each Note affected
by certain modifications and amendments of the Indenture, any resolution
presented at a meeting or adjourned meeting duly reconvened at which a quorum
is present may be adopted by the affirmative vote of the Holders of a majority
in principal amount of the outstanding Notes of that series; provided,
however, that, except as referred to above, any resolution with respect to any
request, demand, authorization, direction, notice, consent, waiver or other
action that may be made, given or taken by the Holders of a specific
percentage, which is less than a majority, in principal amount of the
outstanding Notes of a series may be adopted at a meeting or adjourned meeting
duly reconvened and at which a quorum is present by the affirmative vote of
the Holders of such specified percentage in principal amount of the
outstanding Notes of that series. Any resolution passed or decision taken at
any meeting of Holders of the Notes of either series duly held in accordance
with the Indenture will be binding on all Holders of Notes of that series. The
quorum at any meeting called to adopt a resolution, and at any reconvened
meeting, will be persons entitled to vote a majority in principal amount of
the outstanding Notes of a series; provided, however, that if any action is to
be taken at such meeting with respect to a consent or waiver which may be
given by the Holders of not less than a specified percentage in principal
amount of the outstanding Notes of a series, the persons entitled to vote such
specified percentage in principal amount of the outstanding Notes of such
series will constitute a quorum (Section 1504).

Notwithstanding the foregoing provisions, the Indenture provides that if any
action is to be taken at a meeting of Holders of Notes of either series with
respect to any request, demand, authorization, direction, notice, consent,
waiver and other action that the Indenture expressly provides may be made,
given or taken by the Holders of a specified percentage in principal amount of
all outstanding Notes affected thereby, or the Holders of such series and the
other series: (i) there shall be no minimum quorum requirement for such
meeting; and (ii) the principal amount of the outstanding Notes of such series
that vote in favor of such request, demand, authorization, direction, notice,
consent, waiver or other action shall be taken into account in determining
whether such request, demand, authorization, direction, notice, consent,
waiver or other action has been made, given or taken under the Indenture.

THE TRUSTEE

The First National Bank of Chicago will be the Trustee under the Indenture.
All payments of principal of, and interest on, and all registration, transfer,
exchange, authentication, and delivery (including authentication and delivery
on original issuance of the Notes) of, the Notes will be effected by the
Trustee in Chicago, Illinois, or at an office designated by the Trustee in New
York, New York.

The Indenture will contain certain limitations on the right of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage
in other transactions; however, if it acquires any conflicting interest it
must eliminate such conflict or resign.

The holders of not less than a majority in principal amount of the then
outstanding Notes shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee with respect to the
Notes, provided that (i) such

S-40
<PAGE>

direction shall not be in conflict with any rule of law or with the Indenture;
(ii) the Trustee may take any other action deemed proper by the Trustee which
is not inconsistent with such direction; (iii) such direction would not be
unduly prejudicial to the rights of another Holder; and (iv) such direction
would not involve the Trustee in personal liability (Section 512). If an Event
of Default with respect to the Notes occurs and is continuing, the Trustee
shall exercise with respect to the Notes such of the rights and powers vested
in it by the Indenture, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in
the conduct of his own affairs. Subject to such provisions, the Trustee will
be under no obligation to exercise any of its rights or powers vested in it by
the Indenture at the request of any of the Holders, unless such Holders shall
have offered to the Trustee security or indemnity reasonably satisfactory to
the Trustee against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction (Section 602).

BOOK-ENTRY SYSTEM

The following are summaries of certain rules and operating procedures of DTC
that affect the payment of principal and interest and transfers in the Global
Notes. Upon issuance, each series of Notes will be issued only in the form of
a Global Note which will be deposited with, or on behalf of, DTC and
registered in the name of Cede & Co., as nominee of DTC. Unless and until it
is exchanged in whole or in part for Notes in definitive form under the
limited circumstances described below, a Global Note may not be transferred
except as a whole: (i) by DTC to a nominee of DTC; (ii) by a nominee of DTC to
DTC or another nominee of DTC; or (iii) by DTC or any such nominee to a
successor or a nominee of such successor.

Ownership of beneficial interests in a Global Note will be limited to
persons that have accounts with DTC for such Global Note ("participants") or
persons that may hold interests through participants. Upon the issuance of a
Global Note, DTC will credit, on its book-entry registration and transfer
system, the participants' accounts with the respective principal amounts of
the Notes represented by such Global Note beneficially owned by such
participants. Ownership of beneficial interests in such Global Notes will be
shown on, and the transfer of such ownership interests will be effected only
through, records maintained by DTC (with respect to interests of participants)
and on the records of participants (with respect to interests of persons
holding through participants). The laws of some states may require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such laws may limit or impair the ability to own, transfer or
pledge beneficial interests in the Global Notes.

So long as DTC or its nominee is the registered owner of a Global Note, DTC
or its nominee, as the case may be, will be considered the sole owner or
Holder of the Notes represented by such Global Note for all purposes under the
Indenture. Except as set forth below, owners of beneficial interests in a
Global Note will not be entitled to have Notes represented by such Global Note
registered in their names, will not receive or be entitled to receive physical
delivery of such Notes in certified form and will not be considered the
registered owners or Holders thereof under the Indenture. Accordingly, each
person owning a beneficial interest in a Global Note must rely on the
procedures of DTC and, if such person is not a participant, on the procedures
of the participant through which such person owns its interest, to exercise
any rights of a Holder under the Indenture. The Company understands that under
existing industry practices, if the Company requests any action of Holders or
if an owner of a beneficial interest in a Global Note desires to give or take
any action that a Holder is entitled to give or take under the Indenture, DTC
would authorize the participants holding the relevant beneficial interests to
give or take such action, and such participants would authorize beneficial
owners owning through such participants to give or take such action or would
otherwise act upon the instructions of beneficial owners holding through them.

Principal and interest payments on interests represented by a Global Note
will be made to DTC or its nominee, as the case may be, as the registered
owner of such Global Note. None of the Company, the Trustee or any agent of
the Trustee will have any responsibility or liability for any aspect of the
records relating to or payment made on account of beneficial ownership
interests in the Global Notes or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.

S-41
<PAGE>

The Company expects that DTC, upon receipt of any payment of principal or
interest in respect of a Global Note, will immediately credit participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in such Global Note as shown on the records of DTC. The Company also
expects that payments by participants to owners of beneficial interests in the
Global Notes held through such participants will be governed by standing
customer instructions and customary practice, as is now the case with
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of such participants.

If DTC is at any time unwilling or unable to continue as depository for the
Notes and the Company fails to appoint a successor depository registered as a
clearing agency under the Exchange Act within 90 days, the Company will issue
the Notes in definitive from in exchange for the Global Notes. Any Notes
issued in definitive form in exchange for the Global Notes will be registered
in such name or names, and will be issued in denominations of $1,000 and such
integral multiples thereof, as DTC shall instruct the Trustee. It is expected
that such instructions will be based upon directions received by DTC from
participants with respect to ownership of beneficial interests in the Global
Notes.

DTC has advised the Company of the following information regarding DTC. DTC
is a limited-purpose trust company organized under the Banking Law of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC was created to hold securities of its participants and to
facilitate the clearance and settlement of transactions among its participants
in such securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. DTC's participants include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations,
some of which (and/or their representatives) own DTC. Access to the DTC book-
entry system is also available to others, such as banks, brokers and dealers
and trust companies that clear through or maintain a custodial relationship
with a participant, either directly or indirectly.

SAME-DAY SETTLEMENT AND PAYMENT

Settlement for the Notes will be made by the Underwriters in immediately
available funds. All payments of principal and interest in respect of the
Notes will be made by the Company in immediately available funds.

Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing house or next-day funds. In contrast, the Notes
will trade in DTC's Same-Day Funds Settlement System until maturity or until
the Notes are issued in certificated form, and secondary market trading
activity in the Notes will therefore be required by DTC to settle in
immediately available funds. No assurance can be given as to the effect, if
any, of settlement in immediately available funds on trading activity in the
Notes.

S-42
<PAGE>

UNDERWRITING

Subject to the terms and conditions set forth in the underwriting agreement
(the "Underwriting Agreement"), the Company has agreed to sell to each of the
Underwriters named below, and each of the Underwriters has severally agreed to
purchase from the Company, the principal amounts of the Notes set forth below
opposite their respective names.

<TABLE>
<CAPTION>
PRINCIPAL AMOUNT PRINCIPAL AMOUNT
UNDERWRITERS OF 2004 NOTES OF 2007 NOTES
------------ ---------------- ----------------
<S> <C> <C>
Lehman Brothers Inc. .................... $ 47,500,000 $ 47,500,000
Donaldson, Lufkin & Jenrette Securities
Corporation............................. 47,500,000 47,500,000
Smith Barney Inc. ....................... 5,000,000 5,000,000
------------ ------------
Total.................................. $100,000,000 $100,000,000
============ ============
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters to purchase the Notes are subject to the conditions contained
therein, and that if any of the Notes are purchased by the Underwriters
pursuant to the Underwriting Agreement, all the Notes agreed to be purchased
by the Underwriters must be so purchased.

The Company has been advised that the Underwriters propose initially to
offer the Notes directly to the public at the public offering price set forth
on the cover page of this Prospectus Supplement, and to certain selected
dealers (who may include the Underwriters) at such price less a concession not
in excess of .375% of the principal amount of the 2004 Notes and .40% of the
principal amount of the 2007 Notes. The Underwriters may allow and the
selected dealers may reallow a concession to certain other dealers not in
excess of .25% of the principal amount of the 2004 Notes or .20% of the
principal amount of the 2007 Notes.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute
to payments that the Underwriters may be required to make in respect thereof.

A portion of the proceeds of the Offering in the amount of approximately
$30.0 million will be utilized to repay the outstanding balance on a $75.0
million secured credit facility (the "Lehman Loan") provided to the Company by
Lehman Brothers Holding Inc., an affiliate of Lehman Brothers Inc., one of the
Underwriters. The Lehman Loan bears interest at a rate of 150 basis points
over LIBOR, and matures on July 1, 1998. The proceeds of the Lehman Loan were
used to repay a portion of the balance of the Credit Facility outstanding at
the closing of such loan and for general corporate purposes. In connection
with the Lehman Loan, the Company paid Lehman Brothers Holding Inc. a fee of
approximately $281,000.

The Company has agreed that from the date of the Underwriting Agreement
until the closing of the Offering, it will not, without the prior written
consent of Lehman Brothers Inc., sell, offer to sell, distribute or otherwise
dispose of any of its debt securities or register for sale under the
Securities Act any of its debt securities, except for the Notes offered
hereby.

The Company does not intend to apply for listing of the Notes on any
national securities exchange, but has been advised by the Underwriters that
they presently intend to make a market in the Notes, as permitted by
applicable law and regulations. The Underwriters are not obligated, however,
to make a market in the Notes and any such market making may be discontinued
at any time at the sole discretion of the Underwriters. Accordingly, no
assurance can be given as to the liquidity of, or the existence of trading
markets for, the Notes.

Certain of the Underwriters and their affiliates have from time to time
performed, and may continue to perform in the future, various investment
banking services for the Company, for which customary compensation has been
received.

S-43
<PAGE>

LEGAL MATTERS

The validity of the Notes will be passed upon for the Company by Wolf,
Block, Schorr and Solis-Cohen LLP, Philadelphia, Pennsylvania. Certain legal
matters with regard to the Trust will be passed upon by Weinberg & Green LLC,
Baltimore, Maryland. Rogers & Wells, New York, New York, will pass upon
certain legal matters for the Underwriters. Michael M. Dean, a partner in
Wolf, Block, Schorr and Solis-Cohen LLP, is the sole trustee of irrevocable
trusts established by three of the Company's senior executives for the benefit
of such executives' children. Each of such trusts received Units in the
transactions consummated at the time of the Company's initial public offering
in exchange for interests in the Predecessor owned by such trusts.

S-44
<PAGE>

APPENDIX "A"

PROPERTY LIST

<TABLE>
<CAPTION>
PERCENT
LEASED AT
BUILDING YEAR LEASABLE JUNE 30, NO. OF
PROJECT NAME TYPE DEVEL. SQ. FT.(1) 1997(2) LEASES MAJOR TENANT
- ------------ -------- ------ ---------- --------- ------ ------------
<S> <C> <C> <C> <C> <C> <C>
SOUTHEASTERN PENNSYLVA-
NIA
10, 20 Liberty Boule- Great Valley Health
vard................... Ofc. 1985 62,237 90.3% 24 Club, Inc.
Ind.-
420 Lapp Road........... Flex 1989 92,250 99.6 9 Akzo Coatings, Inc.
Ind.-
1 Chelsea Parkway....... Flex 1989 43,267 99.0 6 Valtek Incorporated
Ind.- United Engineers &
3 Chelsea Parkway....... Flex 1989 43,240 43.6 2 Constructors
Axon Communications,
747 Dresher Road........ Ofc. 1988 53,200 100.0 2 Inc.
45-67 Great Valley Park- Ind.-
way.................... Dist. 1974 128,001 100.0 7 Taylor Publishing Co.
Ind.- Safeguard Business
1180 Church Road........ Dist. 1986 452,323 56.3 3 Systems, Inc.
40 Valley Stream Park- Sanchez Computer
way.................... Ofc. 1987 31,092 100.0 1 Associates
50 Valley Stream Park- Fisher Scientific
way.................... Ofc. 1987 31,000 100.0 3 Company
20 Valley Stream Park-
way.................... Ofc. 1987 58,837 100.0 11 Shared Medical Systems
Ind.-
800 Town Center Drive... Flex 1987 141,714 91.3 15 ICT Group, Inc.
Employers Mutual
1610 Medical Drive...... Ofc. 1986 38,100 54.4 5 Casualty Co.
11, 15 Great Valley
Parkway................ Ofc. 1986 156,800 100.0 2 Sanofi Winthrop, Inc.
257-275 Great Valley Ind.- Business Mail Express,
Parkway................ Flex 1983 71,285 100.0 7 Inc.
Ind.-
300 Technology Drive.... Dist. 1985 22,500 100.0 1 Nilfisk of America, Inc.
277-293 Great Valley Ind.- Alpha Scientific
Parkway................ Flex 1984 28,800 100.0 7 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 97.8 13 Executive Office Link
55 Valley Stream Park- Meridian Asset
way.................... Ofc. 1983 40,057 100.0 2 Management, Inc.
65 Valley Stream Park- Liberty Property Limited
way.................... Ofc. 1983 58,219 92.2 8 Ptsp.
Ind.-
508 Lapp Road........... Dist. 1984 50,200 100.0 1 Numar Corporation
10 Valley Stream Park- West Chester
way.................... Ofc. 1984 33,027 100.0 8 Administrative
Ind.- Veterans Life Insurance
333 Phoenixville Pike... Dist. 1985 84,000 100.0 1 Co.
General Physics
1566 Medical Drive...... Ofc. 1985 28,540 88.1 5 Corporation
30 Great Valley Park- Ind.-
way.................... Dist. 1975 12,000 100.0 1 Sanofi Winthrop, Inc.
75 Great Valley Park- Ind.-
way.................... Dist. 1977 11,600 100.0 1 York International Corp.
27-43 Great Valley Park- Ind.-
way.................... Flex 1977 60,623 100.0 5 Sanofi Winthrop, Inc.
77-123 Great Valley Ind.-
Parkway................ Flex 1978 104,095 99.3 19 Durant Medical, Inc.
260 Great Valley Park- Ind.-
way.................... Dist. 1979 50,000 100.0 1 American Parts Systems
256 Great Valley Park- Ind.-
way.................... Dist. 1980 56,160 100.0 1 Centocor, Inc.
205 Great Valley Park- Ind.-
way.................... Dist. 1981 184,500 100.0 4 General Electric Company
12, 14, 16 Great Valley
Parkway................ Ofc. 1982 20,546 100.0 3 Sanofi Winthrop, Inc.
155 Great Valley Park- Ind.-
way.................... Dist. 1981 71,200 100.0 1 Ensoniq Corporation
333 Technology Drive.... Ofc. 1987 39,769 100.0 1 Premier Solutions, Ltd.
Ind.-
510 Lapp Road........... Dist. 1983 27,167 100.0 1 Trugreen
Ind.- Silgan Plastics
181 Wheeler Court....... Dist. 1979 100,000 49.7 2 Corporation
Ind.- National Business
1100 Wheeler Way........ Dist. 1979 40,915 100.0 1 Services, Inc.
60 Morehall Road........ Ofc. 1989 114,430 100.0 3 Vanguard Group
Ind.-
905 Airport Road........ Dist. 1988 128,588 100.0 6 Arco Chemical Company
Ind.- White Consolidated
16 Cabot Boulevard...... Dist. 1972 299,192 100.0 1 Industries
Systems & Computer
1 Country View Road..... Ofc. 1982 48,900 100.0 1 Technology
Ind.-
2151 Cabot Boulevard.... Dist. 1982 114,760 100.0 1 Schwarz Paper Company
AT&T Resource Management
170 S. Warner Road...... Ofc. 1980 87,685 100.0 6 Corp.
Electronic Data Systems
190 S. Warner Road...... Ofc. 1980 87,500 100.0 1 Corp.
Ind.- Prudential Insurance
507 Prudential Road..... Flex 1988 105,500 100.0 1 Company
GMAC Mortgage
100 Witmer Road......... Ofc. 1995 139,546 100.0 1 Corporation
Ind.-
3100 Horizon Boulevard.. Flex 1995 41,000 100.0 1 Vtel Corporation
Ind.- Central National-
3300 Horizon Boulevard.. Dist. 1996 92,000 100.0 1 Gottesman, Inc.
Ind.- SmithKline Beecham
3500 Horizon Boulevard.. Flex 1996 65,579 100.0 1 Clinical
200 Chester Field Park-
way.................... Ofc. 1989 28,919 100.0 3 Waverly, Inc.
Ind.- Diversified
767 Electronic Drive.... Flex 1996 45,000 100.0 1 Pharmaceutical Svc.
5 Country View Road..... Ofc. 1985 63,170 100.0 2 HBO & Company of Georgia
</TABLE>

A-1
<PAGE>

<TABLE>
<CAPTION>
PERCENT
LEASED AT
BUILDING YEAR LEASABLE JUNE 30, NO. OF
PROJECT NAME TYPE DEVEL. SQ. FT.(1) 1997(2) LEASES MAJOR TENANT
- ------------ -------- ------ ---------- --------- ------ ------------
<S> <C> <C> <C> <C> <C> <C>
Ind.-
3200 Horizon Boulevard.. Flex 1996 60,000 100.0 1 Fund/Plan Services, Inc.
Kulicke & Soffa
111-195 Witmer Road..... Ofc. 1996 55,354 76.1 11 Industries, Inc.
2460 General Armistead Ind.- Midlantic Distribution
Avenue................. Flex 1985 36,831 93.0 8 Co.
2490 General Armistead Ind.- Barefoot Grass Lawn
Avenue................. Flex 1985 20,811 82.7 6 Service
Delta Information
300 Welsh Road.......... Ofc. 1983 23,461 100.0 4 Systems Inc.
National Fraud
400 Welsh Road.......... Ofc. 1983 36,723 96.7 5 Investigations
440 E. Swedesford Road.. Ofc. 1988 75,842 95.4 9 Genex Services Inc.
Johnson-Matthey
460 E. Swedesford Road.. Ofc. 1988 73,105 97.7 8 Investments
Toyota Motor Credit
2 Walnut Grove Drive.... Ofc. 1989 81,846 76.7 12 Corp.
Great West Life
200 Gibralter Road...... Ofc. 1990 64,452 87.3 10 Assurance
Prudential Insurance
220 Gibralter Road...... Ofc. 1990 63,587 100.0 1 Company
Prudential Insurance
240 Gibralter Road...... Ofc. 1990 63,587 100.0 1 Company
Paging Network of
151 S. Warner Road...... Ofc. 1980 84,066 97.7 10 Philadelphia
1 Walnut Grove Drive.... Ofc. 1986 66,372 100.0 1 Merck & Company
First Benefits Agency,
650 Swedesford Road..... Ofc. 1971 100,410 4.9 2 Inc.
680 Swedesford Road..... Ofc. 1971 100,352 0.0 --
931 South Matlack Ind.- Electronics Boutique,
Street................. Dist. 1985 139,500 100.0 1 Inc.
Ind.-
14 Lee Boulevard........ Flex 1988 89,026 92.4 4 Vanguard Group
500 Chester Field Park- Becket, Watkins and
way.................... Ofc. 1988 30,815 100.0 2 Associates
300-400 Chester Field
Parkway................ Ofc. 1988 50,383 100.0 3 Amerisource Corporation
Ind.-
3000 Horizon Boulevard.. Flex 1997 43,200 100.0 1 Nanosystems, L.L.C.
50 Morehall Road........ Ofc. 1997 117,000 100.0 1 Vanguard Group
Ind.-
1 Great Valley Parkway.. Flex 1982 60,880 95.2 4 Apollon, Inc.
5 Great Valley Parkway.. Ofc. 1983 65,161 100.0 14 Our Freedom, Inc.
--------- -----
Total Southeastern
Pennsylvania.......... 5,705,168 89.8%
========= =====
NEW JERSEY/DELAWARE
1805 Underwood Boule- Ind.-
vard................... Dist. 1973 14,383 100.0% 1 Uniscore, Inc.
150 Mid-Atlantic Park- Ind.- Amerimark Building
way.................... Dist. 1973 30,873 100.0 1 Products
Ind.- Custom Computer
18 Boulden Circle....... Flex 1989 76,000 98.6 12 Services, Inc.
Ind.- Gandalf Systems
501 Delran Parkway...... Dist. 1988 49,500 99.2 3 Corporation
Ind.- Computer & Comm Info
600 Delran Parkway...... Dist. 1988 119,290 100.0 2 (Datapro)
Ind.-
1607 Imperial Way....... Dist. 1973 80,000 100.0 1 Dunkin' Donuts
Ind.-
1 Boulden Circle........ Dist. 1986 43,200 100.0 1 Norel Paper Corporation
Ind.-
31-55 Read's Way........ Flex 1986 78,009 100.0 2 Cigna Corporation
Ind.- Livingston Healthcare
3 Boulden Circle........ Dist. 1987 60,812 100.0 1 Services
Ind.- Brundage Distribution
5 Boulden Circle........ Dist. 1987 119,653 100.0 1 Corp.
Ind.-
601 Delran Parkway...... Dist. 1988 57,930 100.0 1 Keymar Warehouse, Inc.
51 Haddonfield Road..... Ofc. 1986 93,000 97.3 22 Lehigh Press, Inc.
Ind.-
57 Read's Way........... Flex 1985 53,600 81.4 1 Wachovia Bank of Georgia
Ind.- National Distribution
1370 Imperial Way....... Dist. 1978 179,785 100.0 1 Centers
Ind.- AT&T Resource Management
8 Stow Road............. Flex 1988 34,911 84.1 4 Corp.
Ind.- Trans World Airlines,
10 Stow Road............ Flex 1988 29,722 68.5 1 Inc.
Ind.-
12 Stow Road............ Flex 1988 21,200 83.0 4 Future Electronics Corp.
Ind.- Wiltel Communications
14 Stow Road............ Flex 1988 18,821 100.0 2 Sys, Inc.
1300 Metropolitan Ave- Ind.- Phoenix Display &
nue.................... Dist. 1972 76,196 100.0 1 Packaging
701A Route 73 South..... Ofc. 1987 94,521 68.1 8 Fluor Daniel, Inc.
Prudential Property &
701C Route 73 South..... Ofc. 1987 27,813 80.9 4 Casualty
Ind.-
1008 Astoria Boulevard.. Flex 1973 37,400 99.6 7 ACSIS, Inc.
Ind.-
1475 Imperial Way....... Dist. 1976 60,000 100.0 1 Knauf Fiberglass, Inc.
Atrium Executive Center,
3000 Atrium Way......... Ofc. 1987 110,115 74.6 12 Inc.
Ind.-
750 Cardinal Drive...... Dist. 1989 81,348 100.0 1 Leslie's Poolmart
11000, 15000, 17000 Ind.- PHH Mortgage Services
Commerce Parkway....... Flex 1985 100,170 86.4 6 Corp.
12000, 14000 Commerce Ind.-
Parkway................ Flex 1985 68,000 87.8 6 Simirex, Inc.
16000, 18000 Commerce Ind.- Cooper
Parkway................ Flex 1985 52,000 51.7 4 Hospital/University
406 Lippincott Drive.... Ofc. 1990 40,000 63.0 4 Sweatband II, Inc.
Ind.- Skyway Freight Systems,
234 High Hill Road...... Dist. 1987 60,000 100.0 1 Inc.
</TABLE>

A-2
<PAGE>

<TABLE>
<CAPTION>
PERCENT
LEASED AT
BUILDING YEAR LEASABLE JUNE 30, NO. OF
PROJECT NAME TYPE DEVEL. SQ. FT.(1) 1997(2) LEASES MAJOR TENANT
- ------------ -------- ------ ---------- --------- ------ ------------
<S> <C> <C> <C> <C> <C> <C>
101 Arlington Boule- Ind.-
vard................... Dist. 1996 154,675 100.0 2 Heinz Bakery Products
Ind.-
100 Berkeley Drive...... 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.
Ind.-
510 Sharptown Road...... Dist. 1984 40,156 100.0 1 Day Products, Inc.
901 Route 73............ Ofc. 1985 39,434 99.3 4 Teknion, Inc.
Prudential Securities,
1500 Route 73 North..... Ofc. 1988 62,069 70.2 10 Inc.
Ind.-
512 Sharptown Road...... Dist. 1984 58,000 100.0 1 Trek Bicycle Corporation
Ind.- Lamont Television
263 Quigley Boulevard... Dist. 1987 42,891 100.0 8 Systems, Inc.
Ind.-
34 Blevins Drive........ Flex 1987 50,022 100.0 7 Panelmatic, Inc.
Ind.-
104 Gaither Drive....... Dist. 1975 45,390 100.0 1 Eptech Corporation
Ind.-
2 Lukens Drive.......... Flex 1988 43,175 88.7 2 Ameristar Technologies
Ind.-
402 Lippincott Drive.... Flex 1997 26,000 100.0 1 First Trenton Indemnity
Ind.-
3000 Lincoln Drive...... Flex 1983 65,547 81.1 1 Test Technology
Ind.-
6000 Commerce Parkway... Flex 1985 54,032 66.3 4 Information Access Co.
Ind.-
7000 Commerce Parkway... Flex 1984 60,000 100.0 3 Pioneer Inc.
Ind.-
8000 Commerce Parkway... Flex 1983 54,185 100.0 4 Simirex, Inc.
Ind.-
9000 Commerce Parkway... Flex 1983 66,132 95.5 4 AW Computer Systems
Ind.-
1000 Briggs Road........ Flex 1986 42,064 97.3 2 Bluestone Consulting
Ind.- Dale, Gesek, McWilliams
1025 Briggs Road........ Flex 1987 61,109 100.0 7 & Sherman
--------- -----
Total New
Jersey/Delaware....... 3,165,066 93.2%
========= =====
LEHIGH VALLEY, PENNSYL-
VANIA
1655 Valley Center Park- Allstate Insurance
way.................... Ofc. 1993 28,300 100.0% 2 Company
Ind.-
6560 Stonegate Drive.... Dist. 1989 80,000 100.0 2 Vitra Seating, Inc.
Ind.- Caterpillar Logistics
6370 Hedgewood Drive.... Dist. 1990 110,000 100.0 2 Services, Inc.
Ind.- Behr Processing
6390 Hedgewood Drive.... Dist. 1990 69,000 100.0 2 Corporation
1495 Valley Center Park-
way.................... Ofc. 1990 43,770 100.0 2 Ingersoll-Rand Company
Ind.-
6350 Hedgewood Drive.... Dist. 1989 121,000 100.0 2 Organon, Inc.
Ind.-
6330 Hedgewood Drive.... Flex 1988 89,700 100.0 7 Submicron Systems, Inc.
1550 Valley Center Park- Ind.- Employee Benefit Plans,
way.................... Flex 1988 43,400 100.0 7 Inc.
1560 Valley Center Park- Ind.-
way.................... Flex 1988 51,400 100.0 1 TIG Insurance Company
Ind.-
6580 Snowdrift Road..... Dist. 1988 104,000 100.0 1 Dana Corporation
1510 Valley Center Park- Ind.- Visiting Nurses
way.................... Flex 1988 48,208 90.9 6 Association
1530 Valley Center Park- Ind.-
way.................... Flex 1988 46,400 100.0 1 SKF USA, Inc.
Ind.-
6540 Stonegate Drive.... Dist. 1988 120,000 100.0 1 SKF USA, Inc.
Ind.-
974 Marcon Boulevard.... Flex 1987 39,200 64.0 4 Inter-Media Marketing
Ind.-
964 Marcon Boulevard.... Flex 1985 39,200 100.0 6 Health Spectrum Medical
Ind.-
764 Roble Road.......... Flex 1985 21,860 100.0 2 ChemLawn Corporation
Ind.-
3174 Airport Road....... Flex 1979 42,000 64.3 1 Allentech, Inc.
Ind.-
2196 Avenue C........... Flex 1980 31,140 100.0 1 Lehigh University
Ind.-
2202 Hangar Place....... Flex 1981 66,495 78.3 3 Lofts Seed, Inc.
Ind.- Pacesetter Enterprises,
2201 Hangar Place....... Flex 1987 52,300 100.0 6 Inc.
Ind.-
954 Marcon Boulevard.... Dist. 1981 24,000 100.0 1 Merck & Co., Inc.
Ind.-
57 South Commerce Way... Flex 1986 76,400 100.0 7 SKF USA, Inc.
Ind.-
754 Roble Road.......... Flex 1986 46,800 100.0 6 Computer Designs, Inc.
Ind.-
894 Marcon Boulevard.... Flex 1986 28,800 100.0 11 Spalding Company, Inc.
Ind.-
744 Roble Road.......... Flex 1986 46,800 100.0 9 Flouro-Seal
Ind.- Integrated Solutions,
944 Marcon Boulevard.... Flex 1986 38,400 93.0 12 Inc.
1685 Valley Center Park- General Accident
way.................... Ofc. 1996 27,200 100.0 2 Insurance Co.
Ind.-
6520 Stonegate Drive.... Flex 1996 43,200 77.8 4 Submicron Systems Inc.
7437 Industrial Boule- Ind.-
vard................... Dist. 1976 191,330 100.0 2 Stuart Medical, Inc.
Ind.-
2041 Avenue C........... Flex 1990 30,400 100.0 3 Dorst America, Inc.
Ind.- Graybar Electric Co.,
2124 Avenue C........... Dist. 1990 36,000 100.0 1 Inc.
7339 Industrial Boule- Ind.-
vard................... Dist. 1996 215,000 100.0 1 Cott Beverages USA, Inc.
Ind.-
7384 Penn Drive......... Dist. 1988 112,000 17.9 1 Penske Logistics
Ind.-
7144 Daniels Drive...... Dist. 1975 300,312 100.0 2 Simpson Paper Company
Ind.-
7620 Cetronia Road...... Dist. 1990 155,060 100.0 3 Lehigh Group
</TABLE>

A-3
<PAGE>

<TABLE>
<CAPTION>
PERCENT
LEASED AT
BUILDING YEAR LEASABLE JUNE 30, NO. OF
PROJECT NAME TYPE DEVEL. SQ. FT.(1) 1997(2) LEASES MAJOR TENANT
- ------------ -------- ------ ---------- --------- ------ ------------
<S> <C> <C> <C> <C> <C> <C>
Ind.- Fieldcrest Cannon Sure
939 Marcon Boulevard.... Dist. 1980 315,000 100.0 1 Fit, Inc.
100 Brodhead Road....... Ofc. 1990 47,765 81.9 7 First Valley Bank
1640 Valley Center Park-
way.................... Ofc. 1996 30,850 100.0 1 Pennsylvania Cellular
Ind.-
400 Nestle Way.......... Dist. 1997 1,190,000 100.0 1 DSC Logistics, Inc.
Omnipoint
95 Highland Avenue...... Ofc. 1985 73,000 67.0 6 Communications, Inc.
236 Brodhead Road....... Ofc. 1994 45,097 100.0 1 Fireman's Fund Insurance
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 Boule- Ind.-
vard................... Dist. 1988 497,000 100.0 3 S.D. Warren Company
1455 Valley Center Park- Ind.- 1997 55,000 100.0 2 Life Insurance Company
way.................... Flex of North America
Ind.- Submicron Systems
6620 Grant Way.......... Flex 1989 30,204 100.0 1 Corporation
--------- -----
Total Lehigh Valley.... 4,965,746 96.2%
========= =====
MARYLAND
180 Admiral Cochrane Columbia Medical Plan,
Drive.................. Ofc. 1989 128,236 96.0% 9 Inc.
12000, 001, 040 Indian Ind.-
Creek Court............ Flex 1986 185,776 95.8 6 Biospherics, Inc.
190 Admiral Cochrane
Drive.................. Ofc. 1988 72,085 88.1 9 Telespectrum
8280 Patuxent Range Ind.-
Drive.................. Dist. 1978 60,079 100.0 2 Alcore, Inc.
7178-7180 Columbia Gate- Ind.-
way.................... Flex 1987 88,895 99.9 5 Nationsbank, N.A.
Ind.-
8730 Bollman Place...... Dist. 1984 98,745 100.0 1 Kraft Foodservice, Inc.
9101, 9111, 9115 Ind.-
Guilford Road.......... Flex 1984 52,004 100.0 5 Sienna Biotech, Inc.
9125, 9135, 9145 Ind.- Federal Express
Guilford Road.......... Flex 1983 85,804 50.9 4 Corporation
9770 Patuxent Woods
Drive.................. Ofc. 1986 35,520 100.0 1 Delaware Coca-Cola
9780 Patuxent Woods
Drive.................. Ofc. 1986 22,720 67.7 1 BBN Corporation
9790 Patuxent Woods
Drive.................. Ofc. 1986 25,345 100.0 2 GTE Government Systems
9810 Patuxent Woods
Drive.................. Ofc. 1986 27,725 100.0 2 Bolt, Baranek, & Newman
9800 Patuxent Woods
Drive.................. Ofc. 1988 31,095 100.0 3 Coca-Cola Corporation
9820 Patuxent Woods
Drive.................. Ofc. 1988 24,720 100.0 1 Kraft Foods
9830 Patuxent Woods
Drive.................. Ofc. 1986 30,800 100.0 1 JP Foodservice, Inc.
Ind.-
9050 Red Branch Road.... Dist. 1972 89,898 100.0 8 Kemi Laboratories
--------- -----
Total Maryland......... 1,059,447 93.2%
========= =====
VIRGINIA
Scribner, Messer, Brady
10 South Third Street... Ofc. 1930 4,900 100.0% 1 & Wade
Ind.-
1751 Bluehills Drive.... Dist. 1991 265,082 100.0 1 Conopco, Inc.
Ind.-
4300 Carolina Avenue.... Dist. 1985 218,554 100.0 1 United States of America
301 Hill Carter Park- Ind.- Philip Morris
way.................... Dist. 1989 80,000 100.0 1 Incorporated
Ind.-
4001 Carolina Avenue.... Dist. 1935 35,200 100.0 7 Shelcore
5600-5626 Eastport Bou- Ind.-
levard................. Flex 1989 71,227 100.0 5 Western Roto Engravers
5650-5674 Eastport Bou- Ind.- Sterilization Services
levard................. Dist. 1990 150,867 100.0 4 of VA
5700 Eastport Boule- Ind.-
vard................... Dist. 1990 100,336 100.0 1 Merisel, Inc.
Patient First
11020 Hull Street Road.. Ofc. 1987 5,172 100.0 1 Corporation
Patient First
3432 Holland Road....... Ofc. 1989 5,688 100.0 1 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 56.2 3 Rector & Visitors of UVA
4880 Cox Road........... Ofc. 1995 59,948 100.0 2 Saxon Mortgage, Inc.
5162 Valleypointe Park-
way.................... Ofc. 1993 25,000 100.0 1 United States of America
4101-4127 Carolina Ave- Ind.-
nue.................... Dist. 1973 126,000 100.0 1 Hamilton Hybar, Inc.
4201-4261 Carolina Ave- Ind.-
nue.................... Dist. 1975 288,000 100.0 9 Crestar Bank
4263-4299 Carolina Ave- Ind.-
nue.................... Dist. 1976 180,000 100.0 1 Open Plan Systems, Inc.
4301-4335 Carolina Ave- Ind.- Stone Container
nue.................... Dist. 1978 162,000 100.0 1 Corporation
4337-4379 Carolina Ave- Ind.- The Goldberg Company,
nue.................... Dist. 1979 198,000 100.0 2 Inc.
4501-4549 Carolina Ave- Ind.-
nue.................... Dist. 1981 150,000 100.0 2 Foxmeyer Drug Company
4551-4593 Carolina Ave- Ind.- A.H. Robins Company,
nue.................... Dist. 1982 151,800 100.0 3 Inc.
</TABLE>

A-4
<PAGE>

<TABLE>
<CAPTION>
PERCENT
LEASED AT
BUILDING YEAR LEASABLE JUNE 30, NO. OF
PROJECT NAME TYPE DEVEL. SQ. FT.(1) 1997(2) LEASES MAJOR TENANT
- ------------ -------- ------ ---------- --------- ------ ------------
<S> <C> <C> <C> <C> <C> <C>
4601-4643 Carolina Ave- Ind.-
nue.................... Dist. 1985 151,800 100.0 2 T.E.U. Incorporated
4545-4583 Carolina Ave- Ind.- Owens & Minor Medical,
nue.................... Dist. 1985 120,000 100.0 1 Inc.
4447-4491 Carolina Ave- Ind.-
nue.................... Dist. 1987 158,700 100.0 1 Shelcore, Inc.
4401-4445 Carolina Ave- Ind.-
nue.................... Dist. 1988 158,700 100.0 2 Media Post Marketing
Liberty Property Limited
12 S. Third Street...... Ofc. 1900 5,735 100.0 1 Ptnsp.
Ind.-
9601 Cosner Drive....... Dist. 1995 128,500 100.0 1 Simmons Company
315 Cardiff Valley Ind.-
Road................... Dist. 1994 151,200 100.0 1 Caterpillar Inc.
Patient First
2300 East Parham Road... Ofc. 1988 5,172 100.0 1 Corporation
1347 Diamond Springs Ind.-
Road................... Dist. 1980 99,260 49.2 1 Wetsel Seed Company
5221 Valleypark Drive- Ind.-
Bldg A................. Flex 1988 17,007 100.0 1 RBX Holdings, Inc.
5228 Valleypointe Park- Ind.-
way-Bldg B............. Flex 1988 14,477 61.4 3 Allen-Bradley Company
5238 Valleypark Drive- Ind.-
Bldg C................. Flex 1989 17,062 98.5 6 MCI Telecommunications
5601-5609 Eastport Bou- Ind.- General Medical
levard................. Dist. 1996 150,000 100.0 2 Corporation
Ind.-
4717-4729 Eubank Road... Dist. 1978 141,313 100.0 3 Whitehall-Robins
Ind.- Heflebower Transfer &
4263F Carolina Avenue... Dist. 1975 57,600 100.0 3 Storage
Ind.-
4200 Oakleys Court...... Dist. 1990 80,000 100.0 1 Multiton Mic Corp.
1821 Battery Dantzler Ind.-
Road................... Dist. 1990 129,600 100.0 3 Flare Corporation
Ind.- Patient First
5000 Cox Road........... Flex 1990 58,367 100.0 7 Corporation
Ind.-
510 Eastpark Court...... Flex 1989 51,874 100.0 5 Power Distribution, Inc.
Ind.-
520 Eastpark Court...... Dist. 1989 144,228 100.0 5 Bunzl-Richmond, Inc.
5900 Eastport Boule- Ind.-
vard................... Dist. 1997 142,800 100.0 1 Hewlett-Packard Company
Ind.-
600 Liberty Way......... Dist. 1997 158,400 100.0 1 Hewlett-Packard Company
--------- -----
Total Virginia......... 4,459,218 98.6%
========= =====
CAROLINAS
Ind.-
4523 Green Point Drive.. Dist. 1988 85,830 100.0% 1 Dry Storage Corporation
Ind.- New Breed Leasing
4501 Green Point Drive.. Dist. 1989 90,049 91.6 3 Corporation
Ind.- Corporate Express of the
4500 Green Point Drive.. Dist. 1989 71,040 100.0 6 South, Inc.
Ind.-
2427 Penny Road......... Dist. 1990 270,000 100.0 1 Masco Corporation
Ind.-
4524 Green Point Drive.. Dist. 1989 74,587 100.0 4 Standard Register Co.
4328, 4336 Federal Ind.- United Parcel Service,
Drive.................. Dist. 1995 177,600 100.0 2 Inc.
MCI Telecommunications
200 Centreport Drive.... Ofc. 1986 47,190 96.8 16 Corp.
Ind.-
4344 Federal Drive...... Dist. 1996 92,425 100.0 4 MAC Papers, Inc.
Key Risk Management
202 Centreport Drive.... Ofc. 1990 62,664 100.0 5 Services
New Breed Leasing
4000 Piedmont Parkway... Ofc. 1997 60,383 98.5 22 Corporation
Ind.-
4380 Federal Drive...... Dist. 1997 79,200 100.0 3 Triad Health Alliance
Ind.- Abacon
4388 Federal Drive...... Flex 1997 32,400 100.0 1 Telecommunications
1208 Eastchester Drive.. Ofc. 1988 56,937 59.0 13 L.M. Berry & Company
Ind.- Scientific Research
3860 Faber Place........ Flex 1995 42,500 88.2% 2 Corp.
4055 Faber Place........ Ofc. 1989 53,304 97.6 11 Allstate Company
Ind.- Executone Information
3820 Faber Place........ Flex 1993 39,422 83.6 6 Systems
440 Knox Abbott Drive... Ofc. 1989 50,248 94.2 16 SCE&G Company
150 Ridgeview Center Ind.-
Drive.................. Dist. 1984 222,670 100.0 1 Alcoa Fujikura
Ind.-
1320 Garlington Road.... Dist. 1986 72,000 100.0 1 Perrigo Company
9800 Twin Lakes Park- Ind.-
way.................... Flex 1994 40,000 72.0 3 Time Warner
420 Park Avenue......... Ofc. 1986 46,127 66.5 1 Geraghty & Miller, Inc.
Ind.-
111 Southchase Blvd..... Dist. 1980 169,042 0.0 --
300 Intercontinental Ind.-
Blvd. ................. Flex 1995 103,684 100.0 1 Ronald and Carolyn Jones
--------- -----
Total The Carolinas.... 2,039,302 88.0%
========= =====
JACKSONVILLE, FLORIDA
Ind.-
1730 Stebbins Drive..... Dist. 1973 40,000 100.0% 1 Atlas Bag, Inc.
5911-5925 Richard Ind.- Vistakon Div.--Johnson &
Street................. Flex 1977 40,000 100.0 1 Johnson
8383-8385 Baycenter Ind.-
Road................... Dist. 1973 40,000 100.0 1 Parts House, Inc.
AT&T Resource Management
8775 Baypine Road....... Ofc. 1989 50,000 100.0 1 Corp.
Ind.-
8539 Western Way........ Flex 1987 72,030 0.0 --
</TABLE>

A-5
<PAGE>

<TABLE>
<CAPTION>
PERCENT
LEASED AT
BUILDING YEAR LEASABLE JUNE 30, NO. OF
PROJECT NAME TYPE DEVEL. SQ. FT.(1) 1997(2) LEASES MAJOR TENANT
- ------------ -------- ------ ---------- --------- ------ ------------
<S> <C> <C> <C> <C> <C> <C>
6255 Lake Grey Boule- Ind.- U.S. Telecom, Inc.--
vard................... Flex 1987 94,174 96.5 6 Sprint Serv.
Ind.-
6600-6660 Suemac Place.. Dist. 1987 103,404 100.0 5 American Flat Glass
Ind.- R&G Sloane Manufacturing
6800-6850 Suemac Place.. Dist. 1973 60,000 100.0 1 Co.
8665, 8667, 8669 Baypine Blue Cross and Blue
Road................... Ofc. 1987 63,118 100.0 5 Shield
Ind.-
8540 Baycenter Road..... Flex 1984 30,028 100.0 1 Reichhold Chemicals
1200 Gulf Life Drive.... Ofc. 1985 179,274 93.4 21 Stein Mart, Inc.
8400 Baymeadows Way..... Ind.- 1987 43,547 100.0 6 Respiflow, Inc. and M.K.
Flex Diabetics, Inc.
Allstate Insurance
8614 Baymeadows Way..... Ofc. 1986 16,000 100.0 1 Company
5941-5975 Richard Ind.- Vistakon Div.--Johnson &
Street................. Flex 1978 86,660 100.0 1 Johnson
Ind.-
7970 Bayberry Road...... Flex 1978 55,000 0.0 --
6000-6030 Bowdendale Av- Ind.- Vistakon Div.--Johnson &
enue................... Flex 1979 83,330 100.0 6 Johnson
American Transtech, Inc.
7898 Baymeadows Way..... Ofc. 1978 42,149 100.0 2 (AT&T)
5977-6607 Richard Ind.- Vistakon Div.--Johnson &
Street................. Flex 1980 73,333 100.0 1 Johnson
7910 & 7948 Baymeadows American Transtech, Inc.
Way.................... Ofc. 1981 52,505 100.0 3 (AT&T)
7954 & 7960 Baymeadows American Transtech, Inc.
Way.................... Ofc. 1982 52,608 100.0 2 (AT&T)
AT&T Resource Management
8787 Baypine Road....... Ofc. 1990 220,000 100.0 1 Corp.
Florida Windstorm
7077 Bonneval Road...... Ofc. 1988 102,942 92.9 24 Underwriting
Enterprise National Bank
4190 Belfort Road....... Ofc. 1986 105,664 95.2 24 of Florida
8011, 8021, 8031 Phil- Southwest Signal
lips Highway........... Ofc. 1987 81,962 65.2 8 Engineering
7020 AC Skinner Park- Ind.- Intermedia
way.................... Flex 1996 42,184 100.0 6 Communications, Inc.
7022 AC Skinner Park- Ind.-
way.................... Dist. 1996 88,200 100.0 2 Microtek Medical, Inc.
Ind.-
11777 Central Highway... Dist. 1985 50,000 0.0 --
7016 AC Skinner Park- Ind.- Georgia-Pacific
way.................... Flex 1996 39,350 100.0 1 Corporation
6620 Southpoint Drive... Ofc. 1984 59,762 90.6 17 LC Footwear, LLC
--------- -----
Total Jacksonville,
Florida............... 2,067,224 88.5%
========= =====
TAMPA, FLORIDA
4001, 4051, 4101 Fowler Ind.- Musculoskeletal
Avenue................. Flex 1988 101,198 96.2% 15 Institute
5501 Pioneer Park Boule- Ind.-
vard................... Dist. 1981 61,416 100.0 5 Premdor Corporation
5502 Pioneer Park Boule- Ind.-
vard................... Dist. 1981 48,375 100.0 3 Premdor Corporation
5690-5694 Crenshaw Ind.- Florida Flooring
Street................. Dist. 1979 87,095 100.0 3 Products, Inc.
3102, 3104, 3110 Cherry Ind.- Groundwater Technology,
Palm Drive............. Flex 1986 74,339 100.0 12 Inc.
8401-8408 Benjamin Ind.- National RX Services,
Road................... Flex 1986 127,566 100.0 17 Inc.
Ind.- Customer Communications
3501 Riga Boulevard..... Flex 1983 57,220 100.0 2 Center
Ind.- Westinghouse Electric
111 Kelsey Lane......... Flex 1990 60,200 75.0 2 Corp.
7930, 8010-20 Woodland Ind.-
Center................. Flex 1990 89,758 92.6 10 Intertel Communications
8154-8198 Woodland Cen- Ind.- Williams
ter.................... Flex 1988 45,382 88.4 12 Telecommunications
8112-14 Woodland Cen- Ind.-
ter.................... Flex 1995 39,155 100.0 2 American Express Travel
Metropolitan Fiber
8212 Woodland Center.... Ofc. 1996 39,155 100.0 1 System
Ind.-
1701 Clint Moore Blvd... Flex 1985 80,060 100.0 2 Amitek Corporation
--------- -----
Total Tampa, Florida.. 910,919 96.6%
========= =====
MINNESOTA
2905 Northwest Boule- Ind.-
vard................... Flex 1983 84,765 82.1% 8 Deltak Corporation
Ind.-
2800 Campus Drive....... Flex 1985 64,852 99.7 6 Ciprico, Inc.
Ind.-
2955 Xenium Lane........ Flex 1985 24,800 100.0 2 Norstan, Inc.
9401-9443 Science Center Ind.-
Drive.................. Flex 1989 73,898 80.7 7 Ameridata
Ind.- Ontrack Computer
6321-6325 Bury Drive.... Flex 1988 72,965 100.0 5 Systems, Inc.
7115-7173 Shady Oak Ind.-
Road................... Flex 1984 77,925 96.2 16 Teddy Bear Child Care
7660-7716 Golden Trian- Ind.-
gle Drive.............. Flex 1988 89,672 98.5 8 Sick Optical-Electronik
7400 Flying Cloud Ind.-
Drive.................. Flex 1987 32,137 100.0 1 Mamac Systems, Inc.
Office of Hearings and
330 Second Avenue....... Ofc. 1980 197,100 66.0 44 Appeals
10301-10305 West 70th Ind.-
Street................. Flex 1984 23,547 100.0 3 Sci-Com Data Services
10321 West 70th Ind.-
Street................. Flex 1984 28,372 100.0 1 Pattern Processing, Inc.
10333 West 70th
Street................. Ofc. 1984 21,640 100.0 1 Olympic Financial
10349-10357 West 70th Ind.-
Street................. Flex 1985 53,912 100.0 5 Regis Corporation
</TABLE>

A-6
<PAGE>

<TABLE>
<CAPTION>
PERCENT
LEASED AT
BUILDING YEAR LEASABLE JUNE 30, NO. OF
PROJECT NAME TYPE DEVEL. SQ. FT.(1) 1997(2) LEASES MAJOR TENANT
- ------------ -------- ------ ---------- --------- ------ ------------
<S> <C> <C> <C> <C> <C> <C>
10365-10375 West 70th Ind.-
Street................. Flex 1985 56,877 100.0 2 Viking Press
10393-10394 West 70th Ind.-
Street................. Flex 1985 52,684 100.0 2 Augustine Medical, Inc.
Ind.-
7078 Shady Oak Road..... Flex 1985 67,041 100.0 1 Laser Master Corp.
---------- -----
Total Minnesota........ 1,022,187 90.1%
========== =====
MICHIGAN
26911-26957 Northwest-
ern.................... Ofc. 1985 634,359 90.6% 31 R.L. Polk
1650 Research Drive..... Ofc. 1985 70,562 100.0 6 Hughes Aircraft
1775 Research Drive..... Ofc. 1986 30,450 100.0 1 New Venture Gear
Avery Dennison
1875 Research Drive..... Ofc. 1986 30,305 100.0 3 Corporation
1850 Research Drive..... Ofc. 1986 72,229 88.3 3 The Budd Company
Porsche Engineering
1965 Research Drive..... Ofc. 1987 38,600 100.0 3 Services
1960 Research Drive..... Ofc. 1987 38,600 100.0 2 Square D Corporation
---------- -----
Total Michigan......... 915,105 92.6%
========== =====
UNITED KINGDOM
50 Gibson Drive......... Ofc. 1996 18,000 100.0% 1 Genzyme Biochemicals
25 Kings Hill Avenue.... Ofc. 1996 35,000 93.9 2 Charities Aid Foundation
Ind.- Broadcast Surveillance
2 Kings Hill Avenue..... Flex 1996 34,600 79.5 4 Systems
50 Kings Hill Avenue.... Ofc. 1996 50,000 100.0 1 Rhone-Poulenc Rorer
---------- -----
Total United Kingdom... 137,600 93.3%
---------- -----
TOTAL COMPANY.......... 26,446,982 93.2%
========== =====
</TABLE>
- --------
(1) Based on current net leasable building area. Some buildings have been
expanded since their original acquisition or development.
(2) Percent leased is based on rent commencement date.

A-7
<PAGE>

PROSPECTUS
[LOGO OF LIBERTY PROPERTY APPEARS HERE]

$479,395,000

LIBERTY PROPERTY TRUST

COMMON SHARES OF BENEFICIAL INTEREST
PREFERRED SHARES OF BENEFICIAL INTEREST
DEPOSITARY SHARES
WARRANTS
GUARANTIES

$400,000,000

LIBERTY PROPERTY LIMITED PARTNERSHIP
DEBT SECURITIES

Liberty Property Trust, a Maryland real estate investment trust (the
"Trust"), may offer from time to time in one or more series hereunder,
together or separately, at prices and on terms to be determined at the time of
offering: (a) its Preferred Shares of Beneficial Interest, $0.001 par value
("Preferred Shares"), which may be issued in the form of depositary shares
evidenced by depositary receipts ("Depositary Shares") and which may be
convertible into or exchangeable for Common Shares (as defined below) or other
Securities (as defined below); (b) its Common Shares of Beneficial Interest,
$0.001 par value ("Common Shares"); and (c) warrants to purchase Preferred
Shares ("Preferred Shares Warrants") or Common Shares ("Common Shares
Warrants"). The Preferred Shares Warrants and Common Shares Warrants are
herein referred to collectively as "Warrants" and, together with Trust
Guaranties (as defined below), Preferred Shares, Depositary Shares and Common
Shares, as "Trust Securities." No Debt Securities (as defined below) will be
offered hereby by the Trust.

Liberty Property Limited Partnership, a Pennsylvania limited partnership
(the "Operating Partnership" and, together with the Trust, the "Company"), may
offer from time to time in one or more series hereunder, together or
separately, at prices and on terms to be determined at the time of offering,
its debt securities ("Debt Securities"), consisting of debentures, notes
and/or other evidences of indebtedness, representing secured or unsecured
obligations of the Operating Partnership, which may be either senior or
subordinated, which may have the benefit of conditional or unconditional
guaranties of the Trust ("Guaranties") and which may be convertible into or
exchangeable for Common Shares, Preferred Shares, units of limited partnership
interest of the Operating Partnership ("Units") and other Securities. The Debt
Securities and Units are herein referred to as "Partnership Securities" and,
together with Trust Securities, as "Securities."

The specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in an accompanying Prospectus Supplement
(the "Prospectus Supplement") which will describe, without limitation and to
the extent applicable, terms for such Securities, including: (a) in the case
of Debt Securities, the specific title, aggregate principal amount, currency,
denomination, maturity, priority, rate of interest (which may be fixed or
variable), time and place of payment of interest, terms for optional
redemption or repayment by the issuer thereof or any holder thereof or for
sinking fund payments, terms for conversion into or exchange for other
Securities, if any, including terms of any Securities into or for which they
are convertible or exchangeable, the initial public offering price, any
securities exchange listings, any special provisions related to denomination
in a foreign currency or issuance as medium term notes, original issue
discount or other special terms, the designation
(cover page continues)
<PAGE>

of the Trustee (as defined below), Security Registrar (as defined below) and
Paying Agent (as defined below), and the terms of any applicable Guaranty; (b)
in the case of Preferred Shares, the specific designation and stated value,
number of shares or fractional interests therein, any dividend, liquidation
preference, redemption, sinking fund, voting or other rights, the terms for
conversion into or exchange for other Securities, if any, including terms of
any Securities into or for which they are convertible or exchangeable, the
initial public offering price and any securities exchange listings; (c) in the
case of Depositary Shares, the fraction of a Preferred Share represented by
one Depositary Share and terms of the Preferred Shares; (d) in the case of
Common Shares, the aggregate number of shares offered, public offering price
and other terms thereof; and (e) in the case of Warrants, to the extent
applicable, the duration, offering price, exercise price, terms of the
Securities for which they are exercisable, any securities exchange listings
and detachability and other terms thereof. The Prospectus Supplement will also
contain information, where applicable, with regard to certain U.S. federal
income tax, accounting or other considerations relating to the Securities
offered thereby.

The offering price to the public of the Securities to be issued by the Trust
and the Operating Partnership will be limited to US $479,395,000 and US
$400,000,000, respectively (or the equivalent based on the applicable exchange
rate at the time of issue, if Securities offered are denominated in one or
more foreign currencies or currency units). The Debt Securities may be
denominated in United States dollars or, at the option of the Operating
Partnership, if so specified in the applicable Prospectus Supplement, in one
or more foreign currencies or currency units. Such Debt Securities may be
issued in registered form or bearer form, or both. If so specified in the
applicable Prospectus Supplement, Debt Securities of a series may be issued in
whole or in part in the form of one or more temporary or permanent global
securities.

The Securities may be sold to or through dealers or underwriters, directly
to other purchasers or through agents. If an agent of the Trust or the
Operating Partnership or a dealer or an underwriter is involved in the sale of
the Securities with respect to which this Prospectus is being delivered, such
agent's commission or dealer's purchase price or underwriter's discount will
be set forth in, or may be calculated from, the Prospectus Supplement. Any
underwriters, dealers or agents participating in the offering of Securities
may be deemed "underwriters" within the meaning of the Securities Act of 1933,
as amended (the "Securities Act"). See "Plan of Distribution" for possible
indemnification arrangements for any agents, dealers or underwriters.

The Securities may be used as all or part of the consideration to be paid by
the Trust or the Operating Partnership for the acquisition of non-operating
assets, for which financial statements would not be required to be filed with
the Securities and Exchange Commission (the "Commission"), or in exchange for
units of limited partnership interest of the Operating Partnership. In
addition, Common Shares may be offered hereby in exchange for certain debt
securities of the Operating Partnership that are exchangeable for such Common
Shares. This Prospectus may not be used to consummate sales of Securities
unless accompanied by a Prospectus Supplement.

The Common Shares are traded on the New York Stock Exchange (the "NYSE")
under the symbol "LRY." On August 4, 1997, the last reported sale price, as
reported on the NYSE Composite Tape, was $26 7/16 per Common Share.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR ANY SUPPLEMENT HERETO. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THE DATE OF THIS PROSPECTUS IS AUGUST 5, 1997.
<PAGE>

AVAILABLE INFORMATION

The Trust and the Operating Partnership are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and, in accordance therewith, file reports and other information with
the Commission, including proxy statements in the case of the Trust. Such
reports and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, and at the Commission's regional offices at
Seven World Trade Center, Suite 1300, New York, New York 10048 and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material
also may be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed
rates. Electronic filings made through the Electronic Data Gathering, Analysis
and Retrieval System ("EDGAR") are publicly available through the Commission's
Web site (http://www.sec.gov). Reports, proxy statements and other information
regarding the Trust and the Operating Partnership may also be inspected at the
offices of the NYSE at 20 Broad Street, New York, New York 10005.

The Trust and the Operating Partnership have filed with the Commission a
registration statement on Form S-3 (together with any amendments thereto, the
"Registration Statement") under the Securities Act with respect to the
Securities offered hereby. This Prospectus constitutes a part of such
Registration Statement. As permitted by the rules and regulations of the
Commission, this Prospectus and the Prospectus Supplement do not contain all
of the information set forth in the Registration Statement and the exhibits
thereto. Statements contained in this Prospectus, the Prospectus Supplement or
in any document incorporated by reference in this Prospectus or the Prospectus
Supplement as to the contents of any contract or other document referred to
herein or therein are not necessarily complete, and in each instance where
such contract or document has been filed as an exhibit to the Registration
Statement or other document incorporated by reference, reference is made to
the copy of such contract or other document, each such statement being
qualified in all respects by such reference. The Registration Statement,
together with exhibits thereto, may be inspected at the Commission's public
reference facilities in Washington, D.C., and copies of all or any part
thereof may be obtained from the Commission upon the payment of prescribed
fees.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed with the Commission under the Exchange Act,
are hereby incorporated herein by reference as of their respective dates:

(a) The Annual Report on Form 10-K of the Trust and the Operating
Partnership for the fiscal year ended December 31, 1996;

(b) The Quarterly Reports on Form 10-Q of the Trust and the Operating
Partnership for the fiscal quarters ended March 31, 1997 and June 30,
1997;

(c) The Current Reports on Form 8-K of the Trust and the Operating
Partnership filed February 13, 1997, March 5, 1997, March 21, 1997,
June 25, 1997 and July 7, 1997; and

(d) The description of the Common Shares contained in the Registration
Statement on Form 8-A filed by the Trust to register such securities
under Section 12 of the Exchange Act.

All documents and reports filed by the Trust or the Operating Partnership
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of this Prospectus and prior to termination of the offering described
herein shall be deemed to be incorporated by reference in this Prospectus and
to be a part hereof from the respective dates of filing of such documents or
reports, except as to any portion of any future annual or quarterly report to
the holders of securities of the Trust or the Operating Partnership or any
proxy or information statement which is not deemed to be filed under such
provisions.

Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of the Registration Statement, this Prospectus

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and the Prospectus Supplement to the extent that a statement contained herein,
in the Prospectus Supplement or in any other subsequently filed document which
also is or is deemed to be incorporated by reference in the Registration
Statement or this Prospectus modifies or supersedes such statement. Any such
statement so modified or superseded, except as so modified or superseded,
shall not be deemed to constitute a part of this Prospectus or the Prospectus
Supplement.

The Company will provide without charge to each person to whom a copy of
this Prospectus or the Prospectus Supplement has been delivered, upon written
or oral request of such person, a copy of any or all of the documents
incorporated herein by reference, other than exhibits to such documents unless
such exhibits are specifically incorporated by reference into such documents.
Requests for such copies should be directed to: Investor Relations, Liberty
Property Trust, 65 Valley Stream Parkway, Malvern, Pennsylvania 19355;
telephone (610) 648-1700.

THE COMPANY

Liberty Property 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
("REIT") that was formed to continue and expand the commercial real estate
business of Rouse & Associates, a developer and manager of commercial real
estate in the Mid-Atlantic and Southeastern states, founded in 1972. The Trust
provides leasing, property management, acquisition, development, construction
and design management and other related services to a portfolio which, as of
June 30, 1997, consisted of 326 industrial and office properties.

On a consolidated basis, substantially all of the Trust's assets are owned
directly or indirectly by, and all of the Trust's operations are conducted
directly or indirectly by, Liberty Property Limited Partnership, a
Pennsylvania limited partnership. As used herein, unless the context otherwise
requires, such partnership, together with its direct and indirect
subsidiaries, is referred to as the "Operating Partnership" and the Operating
Partnership, together with the Trust (and, where the context requires, the
predecessor entity), is referred to as the "Company." The Trust is the sole
general partner and also is a limited partner of the Operating Partnership,
with a combined equity interest in the Operating Partnership of 89.76% at June
30, 1997.

The Company's primary objective is to increase funds from operations per
share. See "Selected Financial Data" in the Prospectus Supplement for the
definition of this term. The 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 projects in markets affording opportunities for attractive
yields. In pursuing these strategies, the Company seeks to manage its capital
structure to fund growth while maintaining the strength of its balance sheet.

The Company owned 326 properties as of June 30, 1997, including 216
industrial and 110 office properties, which at that date were approximately
93.2% leased to over 1,100 tenants. As of June 30, 1997, the Company also had
28 properties under development and held 943 acres of land for future
development.

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.

USE OF PROCEEDS

Unless otherwise provided in the Prospectus Supplement, the net proceeds, if
any, from the sale of the Securities offered hereby will be used for general
business purposes, including the acquisition of properties or other assets. At
the date hereof, no specific material proposed purchases have been identified
as probable. The amount of Securities offered from time to time pursuant to
this Prospectus and any Prospectus Supplement, and the precise amounts and
timing of the application of net proceeds from the sale of such Securities,
will depend

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<PAGE>

upon funding requirements of the Company. If the Company elects at the time of
an issuance of Securities to make different or more specific use of proceeds
than set forth herein, such use will be described in the Prospectus
Supplement.

RATIOS OF EARNINGS TO FIXED CHARGES

The ratios of earnings to fixed charges of the Company for the six months
ended June 30, 1997, for the years ended December 31, 1996 and 1995 and for
the period from June 23, 1994 to December 31, 1994 were 1.77, 1.66, 1.47 and
1.85, respectively. The ratios of earnings to fixed charges were computed by
dividing earnings by fixed charges. For this purpose, earnings have been
calculated by adding fixed charges (excluding capitalized interest) to income
(loss) before minority interest and extraordinary items. Fixed charges consist
of interest costs, whether expensed or capitalized, and amortization of
deferred financing costs.

Prior to the completion of the initial public offering of its Common Shares
on June 23, 1994, the operations of the Company were conducted through its
predecessor, Rouse & Associates and certain of its affiliates (collectively,
the "Rouse Group"). In connection with completion of the initial public
offering, the Company reorganized the Rouse Group and substantially
deleveraged such predecessor's asset base. As a result of these factors, the
Company does not consider information relating to the ratio of earnings to
fixed charges for the periods prior to the completion of the public offering
to be meaningful.

DESCRIPTION OF DEBT SECURITIES

The Debt Securities may be issued in one or more series under a senior
indenture (the "Senior Indenture") or a subordinated indenture (the
"Subordinated Indenture" and, together with the Senior Indenture, the
"Indenture"), between the Operating Partnership and a Trustee (a "Trustee"),
and in the forms that have been filed as exhibits to the Registration
Statement, subject to the terms of such amendments or supplements thereto as
may be entered into from time to time and filed with the Commission as
exhibits to or incorporated by reference in the Registration Statement. The
following summaries of certain provisions of the Indentures do not purport to
be complete and are subject to, and qualified in their entirety by reference
to, all provisions of the Indentures, including the definitions therein of
certain terms. Wherever particular sections or defined terms of the Indentures
are summarized herein or in a Prospectus Supplement, it is intended that such
sections or defined terms (including, unless otherwise indicated herein,
definitions of terms capitalized in such summaries) shall be incorporated
herein or therein by reference. The following sets forth certain general terms
and provisions of the Debt Securities to which any Prospectus Supplement may
relate. The particular terms of the Debt Securities offered by any Prospectus
Supplement and the extent, if any, to which such general provisions may apply
to the Debt Securities so offered, will be described in the Prospectus
Supplement relating to such Debt Securities. The Operating Partnership is
referred to as the "Issuer" for purposes of the following summary.

The Issuer's rights and the rights of its creditors, including the holders
of the Debt Securities offered hereby, to participate in the assets of any
subsidiary upon the latter's liquidation or recapitalization will be subject
to the prior claims of the subsidiary's creditors except, subject to certain
limitations, to the extent that the Issuer may itself be a creditor with
recognized claims against the subsidiary.

GENERAL

The Indentures do not limit the aggregate principal amount of Debt
Securities that may be issued thereunder and provide that Debt Securities may
be issued from time to time in one or more series. The Debt Securities will be
direct obligations, secured or unsecured, of the Issuer. The Debt Securities
issued under the Senior Indenture ("Senior Debt Securities") will rank on a
parity with all other unsubordinated indebtedness of the Issuer. The Debt
Securities issued under the Subordinated Indenture ("Subordinated Debt
Securities") will be subordinate and junior in right of payment to all Senior
Indebtedness of the Issuer, to the extent and in the manner set forth in the
Subordinated Indenture. To the extent applicable to any particular series of
Debt Securities, the terms that are capitalized herein, but are not defined
herein, shall have the respective meanings ascribed to them in the

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<PAGE>

Indenture applicable to such Debt Securities. Whenever defined terms of the
Indenture are summarized herein or in a Prospectus Supplement, it is intended
that such defined terms shall be incorporated herein or therein by reference.
See "Special Terms Relating to Subordinated Debt Securities."

Reference is made to the Prospectus Supplement relating to the particular
series of Debt Securities offered thereby for the following terms, to the
extent applicable: (a) the title and series of such Debt Securities; (b) any
limit on the aggregate principal amount of such Debt Securities; (c) the price
or prices (expressed as a percentage of the aggregate principal amount
thereof) at which such Debt Securities will be issued; (d) the date or dates
on which such Debt Securities will mature, or the method or methods, if any,
by which such date or dates shall be determined; (e) the rate or rates (which
may be fixed or variable) per annum at which such Debt Securities will bear
interest, if any, or the method or methods, if any, by which such rate or
rates are to be determined; (f) the date or dates from which such interest, if
any, on such Debt Securities will accrue or the method or methods, if any, by
which such date or dates are to be determined, the dates on which such
interest, if any, will be payable, the date on which payment of such interest,
if any, will commence and the Regular Record Dates for such Interest Payment
Dates, if any; (g) the dates, if any, on which, and the price or prices at
which the Debt Securities will, pursuant to any mandatory sinking fund
provisions, or may, pursuant to any optional sinking fund or purchase fund
provisions, be redeemed by the Issuer or otherwise, and the other detailed
terms and provisions of any such sinking fund or purchase fund; (h) the date,
if any, after which, and the price or prices at which the Debt Securities may,
pursuant to any optional redemption provisions, be redeemed at the option of
the Issuer, the holder thereof or otherwise and the other detailed terms and
provisions of such optional redemption; (i) the extent to which any of the
Debt Securities will be issuable in temporary or permanent global form and, if
so, the identity of the depositary for such global Debt Security, and the
manner in which any interest payable on a temporary or permanent global Debt
Security will be paid; (j) the denomination or denominations in which such
Debt Securities are authorized to be issued; (k) whether any of the Debt
Securities will be issued in bearer form and, if so, any limitations on the
issuance or conversion of such bearer Debt Securities (including exchange for
registered Debt Securities of the same series); (l) information with respect
to book-entry procedures; (m) whether any of the Debt Securities will be
issued as Original Issue Discount Securities (as defined below); (n) each
office or agency where, subject to the terms of the related Indenture, such
Debt Securities may be presented for registration of transfer or exchange; (o)
the currencies or currency units in which such Debt Securities are issued and
in which the principal of, interest on and additional amounts, if any, in
respect of such Debt Securities will be payable; (p) whether the amount of
payments of principal of, and interest and additional amounts, if any, on such
Debt Securities may be determined with reference to an index, formula or other
method (which index, formula or method may, but need not be, based on one or
more currencies, currency units or composite currencies, commodities, equity
indices or other indices) and the manner in which such amounts shall be
determined; (q) whether the Issuer or a holder may elect payment of the
principal of or interest on such Debt Securities in a currency, currencies,
currency unit or units or composite currency or currencies other than that in
which such Debt Securities are denominated or stated to be payable, the period
or periods within which, and the terms and conditions upon which, such
election may be made, and the time and manner of determining the exchange rate
between the currency, currencies, currency unit or units or composite currency
or currencies in which such Debt Securities are denominated or stated to be
payable and the currency, currencies, currency unit or units or composite
currency or currencies in which such Debt Securities are to be so payable; (r)
the identity of the Trustee, and if other than the applicable Trustee, the
identity of each Security Registrar, Paying Agent and Authenticating Agent and
the designation of the initial Exchange Rate Agent, if any; (s) if applicable,
the defeasance of certain obligations by the Issuer pertaining to Debt
Securities of the series; (t) the person to whom any interest on any
registered Debt Security of the series shall be payable, if other than the
person in whose name that Debt Security (or one or more predecessor Debt
Securities) is registered at the close of business on the Regular Record Date
for such interest, the manner in which, or the person to whom, any interest on
any bearer Debt Security of the series shall be payable, if otherwise than
upon presentation and surrender of the coupons appertaining thereto as they
severally mature, and the extent to which, or the manner in which, any
interest payable on a temporary global Debt Security on an Interest Payment
Date will be paid if other than in the manner provided in the related
Indenture; (u) whether and under what circumstances the Issuer will pay

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additional amounts (the term "interest," as used in this Prospectus, shall
include such additional amounts) on such Debt Securities to any holder who is
not a United States person (including any modification to the definition of
such term as contained in the related Indenture as originally executed) in
respect of any tax, assessment or governmental charge and, if so, whether the
Issuer will have the option to redeem such Debt Securities rather than pay
such additional amounts (and the terms of any such option); (v) any deletions
from, modifications of or additions to the Events of Default or covenants of
the Issuer with respect to any of such Debt Securities; (w) whether such Debt
Securities shall be convertible into or exchangeable for other Securities and,
if so, the terms of any such conversion or exchange and the terms of such
other Securities; (x) any other terms of the series (which will not be
inconsistent with the provisions of the applicable Indenture); and (y) the
terms of any guaranties, which may be conditional. The Prospectus Supplement
relating to any particular guaranty offered thereby will include any
additional terms of such guaranty, including the rank in priority and any
covenants applicable to such guaranty.

Debt Securities may be issued as "Original Issue Discount Securities" to be
sold at a discount below their principal amount, which discount may be
substantial. In the event of an acceleration of the maturity of any Original
Issue Discount Security, the amount payable to the holder of such Original
Issue Discount Security upon such acceleration will be determined in
accordance with the applicable Prospectus Supplement, the terms of such Debt
Security and the applicable Indenture, but will be an amount less than the
amount payable at the maturity of such Original Issue Discount Security. All
material federal income tax, accounting and other considerations applicable
thereto will be described in the Prospectus Supplement relating thereto.

REGISTRATION, TRANSFER, PAYMENT AND PAYING AGENT

Unless otherwise indicated in the applicable Prospectus Supplement, each
series of Debt Securities will be issued in registered form only, without
coupons. The Indentures, however, provide that the Issuer may also issue Debt
Securities in bearer form only, or in both registered and bearer form. Debt
Securities issued in bearer form shall have interest coupons attached, unless
issued as Original Issue Discount Securities. Debt Securities in bearer form
shall not be offered, sold, resold or delivered in connection with their
original issuance in the United States or to any United States person (as
defined below) other than through offices located outside the United States of
certain United States financial institutions. As used herein, "United States
person" means any citizen or resident of the United States, any corporation,
partnership or other entity created or organized in or under the laws of the
United States, or any estate or trust, the income of which is subject to
United States federal income taxation regardless of its source, and "United
States" means the United States of America (including the States and the
District of Columbia), its territories, its possessions and other areas
subject to its jurisdiction. Purchasers of Debt Securities in bearer form will
be subject to certification procedures and may be affected by certain
limitations under United States tax laws. Such procedures and limitations will
be described in the Prospectus Supplement relating to the offering of the Debt
Securities in bearer form.

Unless otherwise indicated in the applicable Prospectus Supplement, Debt
Securities will be issued in denominations of $1,000 or any integral multiple
thereof. No service charge will be made for any transfer, exchange or
conversion of the Debt Securities but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.

Unless otherwise described in the Prospectus Supplement relating thereto,
the principal, premium, if any, and interest, if any, of or on the Debt
Securities will be payable, transfer of the Debt Securities will be
registerable, and, if applicable, any Convertible Debt Securities (as defined
below) will be convertible, at the office or agency of the Issuer maintained
for that purpose, as the Issuer may designate from time to time, provided that
payments of interest may be made at the option of the Issuer by check mailed
to the address appearing in the Security Register of the person in whose name
such registered Debt Security is registered at the close of business on the
applicable Regular Record Date(s).

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<PAGE>

Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of, premium, if any, and interest, if any, on, Debt Securities in
bearer form will be made payable, subject to any applicable laws and
regulations, at such office outside the United States as specified in the
Prospectus Supplement and as the Issuer may designate from time to time, at
the option of the holder, by check or by transfer to an account maintained by
the payee with a bank located outside the United States. Unless otherwise
indicated in the applicable Prospectus Supplement, payment of interest and
certain additional amounts on Debt Securities in bearer form will be made only
against surrender of the coupon relating to the applicable Interest Payment
Date. No payment with respect to any Debt Security in bearer form will be made
at any office or agency of the Issuer in the United States or by check mailed
to any address in the United States or by transfer to an account maintained
with a bank located in the United States.

GLOBAL DEBT SECURITIES

The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities ("Global Debt Securities") that will be
deposited with, or on behalf of, a depositary (the "Depositary") identified in
the Prospectus Supplement relating to such series. Global Debt Securities may
be issued in either registered or bearer form and in either temporary or
permanent form. Unless and until it is exchanged in whole or in part for
individual certificates evidencing Debt Securities in definitive form
represented thereby, a Global Debt Security may not be transferred except as a
whole by the Depositary for such Global Debt Security to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by such Depositary or any such nominee to a
successor of such Depositary or a nominee of such successor.

The specific terms of the depositary arrangement with respect to a series of
Global Debt Securities, and certain limitations and restrictions relating to a
series of bearer Global Debt Securities, will be described in the Prospectus
Supplement relating to such series.

RESTRICTIVE COVENANTS

The Indentures do not contain restrictive covenants, but the indenture
supplement or amendment entered into at the time of the issuance of any Debt
Securities may contain such restrictions on the Issuer and its operations. The
applicable Prospectus Supplement will describe any restrictive covenants
applicable to the Debt Securities that are issued thereunder.

OUTSTANDING DEBT SECURITIES

Unless otherwise indicated in the applicable Prospectus Supplement, in
determining whether the holders of the requisite principal amount of
Outstanding Debt Securities have given any request, demand, authorization,
direction, notice, consent or waiver under the Indentures: (a) the portion of
the principal amount of an Original Issue Discount Security that shall be
deemed to be Outstanding for such purposes shall be that portion of the
principal amount thereof that could be declared to be due and payable pursuant
to the terms of such Original Issue Discount Security as of the date of such
determination; (b) the principal amount of any Indexed Security shall be the
principal face amount of such Indexed Security determined on the date of its
original issuance; and (c) any Debt Security owned by the Issuer or any
obligor on such Debt Security, or any Affiliate of the Issuer or such other
obligor, shall be deemed not to be outstanding.

MODIFICATION AND WAIVER

The Issuer may amend the Indentures with the written consent of the holders
of a majority in principal amount of the respective Debt Securities
outstanding thereunder. However, without the consent of each Holder affected,
an amendment may not: (a) reduce the amount of Debt Securities whose holders
must consent to an amendment; (b) reduce the rate or change the time of
payment of interest on any Debt Securities; (c) reduce the principal of or
change the fixed maturity of Debt Securities; (d) make any Debt Securities
payable in money

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other than that stated in the definitive notes representing such Debt
Securities; (e) change the provisions of the respective Indenture regarding
the right of a majority of the Holders to waive defaults under such Indenture
or impair the right of any Holder to institute suit for the enforcement of any
payment of principal and interest on the Debt Securities on and after their
respective due dates; (f) make any change that adversely affects the right to
convert or exchange any Convertible Debt Securities; or (g) make any change to
the provisions of the respective Indenture regarding subordination and
seniority of the Debt Securities that adversely affects the rights of any
Holders.

SPECIAL TERMS RELATING TO SUBORDINATED DEBT SECURITIES

Upon any distribution of assets of the Issuer resulting from any
dissolution, winding up, liquidation or reorganization, payments on
Subordinated Debt Securities are to be subordinated, to the extent provided in
the Subordinated Indenture, in right of payment to the prior payment in full
of all Senior Indebtedness, but the obligation of the Issuer to make payments
on the Subordinated Debt Securities will not otherwise be affected. No payment
on Subordinated Debt Securities may be made at any time when there is a
default in the payment of any principal, premium, interest, Additional Amounts
or sinking fund of or on any Senior Indebtedness. Holders of Subordinated Debt
Securities will be subrogated to the rights of holders of Senior Indebtedness
to the extent of payments made on Senior Indebtedness upon any distribution of
assets in any such proceedings out of the distributive shares of Subordinated
Debt Securities. By reason of such subordination, in the event of a
distribution of assets upon insolvency, certain creditors of the Issuer may
recover more, ratably, than holders of Subordinated Debt Securities.

The Prospectus Supplement relating to any Subordinated Debt Securities will
set forth the aggregate amount of Senior Indebtedness outstanding as of the
most recent date practicable and any limitations on the issuance of additional
Senior Indebtedness. As of the date of this Prospectus, there is no limitation
on the amount of Senior Indebtedness that may be issued by the Trust or the
Operating Partnership.

CONVERSION OR EXCHANGE

The holders of Debt Securities of a specified series that are convertible
into or exchangeable for other Securities ("Convertible Debt Securities") will
be entitled at certain times specified in the Prospectus Supplement relating
to such Convertible Debt Securities, subject to prior redemption, exchange,
repayment or repurchase, to convert or exchange any Convertible Debt
Securities of such series into such other Securities, at the conversion price
set forth in such Prospectus Supplement, subject to adjustment and to such
other terms as are set forth in such Prospectus Supplement. Any such
conversion or exchange of Convertible Debt Securities will be further subject
to the applicable terms and conditions set forth in the Indentures, as
supplemented or amended from time to time.

DESCRIPTION OF PREFERRED SHARES

GENERAL

The rights, preferences, privileges and restrictions of the Preferred Shares
in respect of which this Prospectus is delivered shall be described in the
Prospectus Supplement relating to such Preferred Shares. Among the terms of
the Preferred Shares which may be specified in the related Prospectus
Supplement are the following: (a) the annual dividend rate, if any, or the
means by which such dividend rate may be calculated (including without
limitation the possibility that the rate of such dividends may bear an inverse
relationship to some index or standard) and the date or dates from which such
dividends shall accrue and the date or dates on which such dividends shall be
paid and whether such dividends shall be cumulative; (b) the price at which
and the terms and conditions on which the shares of such series of Preferred
Shares may be redeemed, including the period of time during which such shares
may be redeemed, any premium to be paid over and above the par value of such
Preferred Shares, whether and to what extent accumulated dividends on such
Preferred Shares will be paid upon the redemption of such shares; (c) the
liquidation preference, if any, over and above the par value of such

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Preferred Shares and whether and to what extent the holders of such shares
shall be entitled to accumulated dividends in the event of the voluntary or
involuntary liquidation, dissolution or winding-up of the affairs of the
Company; (d) whether the Preferred Shares shall be subject to the operation of
a retirement or sinking fund and, if so, a description of the operation of
such retirement or sinking fund; (e) the terms and conditions, if any, on
which the Preferred Shares may be convertible into, or exchangeable for,
shares of any other class or classes of equity interests in the Trust,
including the price or rate of conversion or exchange and the method for
effecting such conversion or exchange, provided that no Preferred Shares will
be convertible into shares of a class that has superior rights or preferences
as to dividends or distribution of assets of the Company upon the voluntary or
involuntary dissolution or liquidation of the Company; (f) a description of
the voting rights, if any, of the Preferred Shares; and (g) other preferences,
rights, qualifications or restrictions or material terms of such Preferred
Shares.

The description of the foregoing provisions of the Preferred Shares as set
forth in the related Prospectus Supplement is only a summary, does not purport
to be complete and is subject to, and is qualified in its entirety by,
reference to the definitive Certificate of Amendment to the Trust's
Declaration of Trust relating to such series of Preferred Shares. In
connection with any offering of Preferred Shares, such Certificate of
Amendment will be filed with the Commission as an exhibit to or incorporated
by reference in the Registration Statement.

DEPOSITARY SHARES

The Trust may, at its option, elect to offer fractional Preferred Shares,
rather than full Preferred Shares. In the event such option is exercised, the
Trust will issue receipts for Depositary Shares, each of which will represent
a fraction (to be set forth in the Prospectus Supplement relating to the
Preferred Shares) of a share of such Preferred Shares.

The Preferred Shares represented by Depositary Shares will be deposited
under a Deposit Agreement (the "Deposit Agreement") between the Trust and a
bank or trust company selected by the Trust having its principal office in the
United States and having a combined capital and surplus of at least
$50,000,000 (the "Depositary Shares Depositary"). Subject to the terms of the
Deposit Agreement, each owner of a Depositary Share will be entitled, in
proportion to the applicable fraction of a Preferred Share represented by such
Depositary Share, to all the rights and preferences of the Preferred Share,
represented thereby (including dividend, voting, redemption, conversion and
liquidation rights).

The above description of the Depositary Shares is only a summary, is not
complete and is subject to, and is qualified in its entirety by, the
description in the related Prospectus Supplement and the provisions of the
Deposit Agreement (which will contain the form of Depositary Receipt), a copy
of which will be filed with the Commission as an exhibit to or incorporated by
reference in the Registration Statement.

DESCRIPTION OF WARRANTS

The Trust may issue separately, or together with any Preferred Shares or
Common Shares offered by any Prospectus Supplement, Warrants for the purchase
of other Preferred Shares or Common Shares (collectively, "Warrants"). The
Warrants may be issued under warrant agreements (each, a "Warrant Agreement")
to be entered into between the Trust and a bank or trust company, as warrant
agent (the "Warrant Agent"), or may be represented by certificates evidencing
the Warrants (the "Warrant Certificates"), all as set forth in the Prospectus
Supplement relating to the particular series of Warrants. The following
summaries of certain provisions of the Warrants do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all
the provisions of any related Warrant Agreement and Warrant Certificate,
respectively, including the definitions therein of certain terms. Wherever
defined terms of the Warrant Agreement are summarized herein or in a
Prospectus Supplement, it is intended that such defined terms shall be
incorporated herein or therein by reference. In connection with any offering
of Warrants, any such Warrant Agreement or a form of any such Warrant

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Certificate will be filed with the Commission as an exhibit to or incorporated
by reference in the Registration Statement.

GENERAL

The Prospectus Supplement relating to the particular series of Warrants
offered thereby will describe the terms of the offered Warrants, any related
Warrant Agreement and Warrant Certificate, including the following, to the
extent applicable: (a) if the Warrants are offered for separate consideration,
the offering price and the currency for which Warrants may be purchased; (b)
if applicable, the designation, number, stated value and terms (including,
without limitation, liquidation, dividend, conversion and voting rights) of
the Preferred Shares purchasable upon exercise of Preferred Shares Warrants
and the price at which such number of Preferred Shares may be purchased upon
such exercise; (c) if applicable, the number of shares of Common Shares
purchasable upon exercise of Common Shares Warrants and the price at which
such number of Common Shares may be purchased upon such exercise; (d) the
date, if any, on and after which the offered Warrants and the related
Preferred Shares and/or Common Shares will be separately transferable; (e) the
date on which the right to exercise the offered Warrants shall commence and
the date on which such right shall expire ("Expiration Date"); (f) a
discussion of the specific U.S. federal income tax, accounting and other
considerations applicable to the Warrants or to any Securities purchasable
upon the exercise of such Warrants; (g) whether the offered Warrants
represented by Warrant Certificates will be issued in registered or bearer
form, and if registered, where they may be transferred and registered; (h) any
applicable anti-dilution provisions; (i) any applicable redemption or call
provisions; (j) any applicable book-entry provisions; and (k) any other terms
of the offered Warrants.

Warrant Certificates will be exchangeable on the terms specified in the
related Prospectus Supplement for new Warrant Certificates of different
denominations and Warrants may be exercised at the corporate trust office of
the Warrant Agent or any other office indicated in the Prospectus Supplement
relating thereto. Prior to the exercise of their Warrants, holders of Warrants
will not have any of the rights of holders of the Preferred Shares or Common
Shares purchasable upon such exercise, including the right to receive payments
of dividends or distributions of any kind, if any, on the Preferred Shares or
Common Shares, respectively, purchasable upon exercise or to exercise any
applicable right to vote.

EXERCISE OF WARRANTS

Each Warrant will entitle the holder thereof to purchase such number of
Preferred Shares or Common Shares, as the case may be, at such exercise price
as shall in each case be set forth in, or be determinable from, the Prospectus
Supplement relating to such Warrant, by payment of such exercise price in full
in the currency and in the manner specified in such Prospectus Supplement.
Warrants may be exercised at any time up to the close of business on the
Expiration Date (or such later date to which such Expiration Date may be
extended by the Trust); unexercised Warrants will become null and void.

Upon receipt at the corporate trust office of the Warrant Agent or any other
office indicated in the related Prospectus Supplement of (a) payment of the
exercise price and (b) the Warrant Certificate properly completed and duly
executed, the Trust will, as soon as practicable, forward the Preferred Shares
or Common Shares purchasable upon such exercise to the holder of such Warrant.
If less than all of the Warrants represented by such Warrant Certificate are
exercised, a new Warrant Certificate will be issued for the remaining number
of Warrants.

FEDERAL INCOME TAX CONSIDERATIONS
WITH RESPECT TO THE TRUST AND THE OPERATING PARTNERSHIP

The following summary of the material federal income tax considerations with
respect to the Trust and the Operating Partnership regarding the offering of
Securities is based on current law, is for general information only and is not
tax advice. The tax treatment of a holder of any of the Securities will vary
depending on the terms of

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<PAGE>

the specific Securities acquired or held by such holder as well as such
holder's particular situation, and this summary does not attempt to address
any aspects of federal income taxation relating to holders of the Securities.
Certain federal income tax consideration relevant to holders of Securities
will be provided on the applicable Prospectus Supplement relating thereto.

EACH PROSPECTIVE PURCHASER OF SECURITIES IS ADVISED TO CONSULT HIS OR HER
OWN TAX ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF THE
PURCHASE, OWNERSHIP AND SALE OF THE SECURITIES AND OF THE TRUST'S ELECTION TO
BE TAXED AS A REAL ESTATE INVESTMENT TRUST, INCLUDING THE FEDERAL, STATE,
LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP, SALE
AND ELECTION AND OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS.

TAXATION OF THE TRUST

The Trust believes that, commencing with the Trust's taxable year ended
December 31, 1994, the Trust has been organized and operated in such a manner
as to qualify as a REIT under Sections 856 through 860 of the Code. The Trust
intends to continue to operate in such a manner as to qualify for taxation as
a REIT in the future, but no assurance can be given that is has or will remain
qualified.

The sections of the Code relating to qualification and operation as a REIT
are highly technical and complex. The following sets forth the material
aspects of the Code sections that govern the federal income taxation of a
REIT. This summary is qualified in its entirety by the applicable Code
provisions, rules and regulations promulgated thereunder, and administrative
and judicial interpretations thereof.

Wolf, Block, Schorr and Solis-Cohen has opined that, commencing with the
Trust's taxable year ended December 31, 1994, the Trust has been organized and
operated in conformity with the requirements for qualification and taxation as
a REIT under the Code, and its proposed method of operation will enable it to
continue to meet the requirements for qualification and taxation as a REIT
under the Code for future taxable periods. It must be emphasized that the
opinion of Wolf, Block, Schorr and Solis-Cohen is based on certain assumptions
and representations made by the Trust and the Operating Partnership as to
factual matters. Moreover, such qualification and taxation as a REIT depend
upon the Trust's future ability to meet, through actual annual operating
results, certain distribution levels, the diversity of stock ownership
requirements and the various other qualification tests imposed under the Code
discussed below, the results of which may not be reviewed by Wolf, Block,
Schorr and Solis-Cohen. Accordingly, no assurance can be given that the actual
results of the Trust's operation for any particular taxable year will satisfy
such requirements. For a discussion of the tax consequences of failure to
qualify as a REIT, see "--Failure to Qualify."

As a REIT, the Trust generally is not subject to federal corporate income
taxes on its net income that it currently distributes to shareholders. This
treatment substantially eliminates the "double taxation" (at the corporate and
shareholder levels) that generally results from investment in a corporation.
However, the Trust will be subject to federal income tax as follows. First,
the Trust will be taxed at regular corporate rates on any undistributed real
estate investment trust taxable income, including undistributed net capital
gains. Second, under certain circumstances, the Trust may be subject to the
"alternative minimum tax" on its items of tax preference. Third, if the Trust
has (i) net income from the sale or other disposition of "foreclosure
property" (generally property acquired by a REIT upon the default by a debtor
with respect to indebtedness secured by the property or upon the default by a
lessee where the REIT was the lessor) which is held primarily for sale to
customers in the ordinary course of business or (ii) other nonqualifying
income from foreclosure property, it will be subject to tax at the highest
corporate tax rate on such income. Fourth, if the Trust has net income from
"prohibited transactions" (which are, in general, certain sales or other
dispositions of property held primarily for sale to customers in the ordinary
course of business other than foreclosure property), such income will be
subject to a 100% tax. Fifth, if the Trust should fail to satisfy the 75%
gross income test or the 95% gross income test (discussed below), but has
nonetheless maintained its qualification as a REIT because certain other
requirements have been met, it will be subject to a 100% tax on the net income
attributable to the greater of the amount by

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<PAGE>

which the Trust fails the 75% test or the 95% test in the taxable year,
multiplied by a fraction generally intended to reflect the Trust's
profitability. Sixth, if the Trust should fail to distribute during each
calendar year at least the sum of (i) 85% of its REIT ordinary income for such
year, (ii) 95% of its REIT capital gain net income for such year, and (iii)
any undistributed taxable income from prior periods, the Trust would be
subject to a 4% excise tax on the excess of such required distribution over
the amounts actually distributed. Seventh, if the Trust acquires any asset
from a C corporation (i.e., generally a corporation subject to full corporate-
level tax) in a transaction in which the basis of the asset in the Trust's
hands is determined by reference to the basis of the asset (or any other
property) in the hands of the C corporation, and the Trust recognizes gain on
the disposition of such asset during the 10-year period following acquisition
of the asset, then, pursuant to guidelines issued by the Internal Revenue
Service (the "IRS"), to the extent of the "built-in gain," the excess of the
fair market value of the asset on the date acquired over its adjusted tax
basis at that date, such gain will be subject to tax at the highest regular
corporate rate. The result described above with respect to the recognition of
built-in gain assumes the Trust is eligible to make, and makes, an election
pursuant to IRS Notice 88-19.

REQUIREMENTS FOR QUALIFICATION

The Code defines a REIT as a corporation, trust or association (1) that is
managed by one or more trustees or directors; (2) the beneficial ownership of
which is evidenced by transferable shares, or by transferable certificates of
beneficial interest; (3) that would be taxable as a domestic corporation, but
for Sections 856 through 860 of the Code; (4) that is neither a financial
institution nor an insurance company subject to certain provisions of the
Code; (5) the beneficial ownership of which is held by 100 or more persons;
(6) during the last half of each taxable year not more than 50% in value of
the outstanding stock of which is owned, directly or indirectly, by five or
fewer individuals (as defined in the Code to include certain entities as
"individuals" for these purposes); and (7) which meets certain other tests,
described below, regarding the nature of its income and assets. The Code
provides that conditions (1) to (4), inclusive, must be met during the entire
taxable year and that condition (5) must be met during at least 335 days of a
taxable year of 12 months, or during a proportionate part of a taxable year of
less than 12 months. Conditions (5) and (6) do not apply until after the first
taxable year for which an election is made by the Trust to be taxed as a REIT.
For purposes of determining stock ownership under the rule limiting ownership
by five or fewer individuals, REIT shares held by a pension fund generally are
treated as held proportionately by its beneficiaries.

The Trust has satisfied conditions (5) and (6) above. In making the "five or
fewer individual" determination, if treating interests in the Operating
Partnership that can be converted into shares of the Trust as converted into
outstanding shares would cause the Trust to fail that test, the interests are
deemed to have been converted. In addition, the Trust's Declaration of Trust
provides for restrictions regarding transfer of its shares, in order to assist
the Trust in continuing to satisfy the share ownership requirements described
in (5) and (6) above. Such transfer restrictions are included in the Trust's
Registration Statement on Form 8-A, which is incorporated by reference herein.
See "Incorporation of Certain Documents by Reference."

Code Section 856(i) provides that a corporation which is a "qualified REIT
subsidiary" is not to be treated as a separate corporation, and all assets,
liabilities, and items of income, deduction, and credit of a "qualified REIT
subsidiary" are treated as assets, liabilities, and such items (as the case
may be) of the REIT. A qualified REIT subsidiary is a corporation 100% of the
stock of which is held by the REIT at all times during the existence of the
corporation. Thus, in applying the requirements described herein, the Trust's
"qualified REIT subsidiaries" are ignored, and all assets, liabilities, and
items of income, deduction, and credit of such subsidiaries will be treated as
assets, liabilities and items of the Trust.

In the case of a REIT which is a partner in a partnership, Treasury
Regulations provide that the REIT will be deemed to own its proportionate
share of the assets of the partnership and will be deemed to be entitled to
the income of the partnership attributable to such share. In addition, the
character of the assets and gross income of the partnership retain the same
character in the hands of the REIT for purposes of Section 856 of the Code,
including satisfying the gross income tests and the asset tests described
below. The Trust's proportionate share of the assets, liabilities and items of
income of the Operating Partnership and the other partnerships through

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<PAGE>

which the Trust's properties are owned (the "Property Partnerships") will be
treated as assets, liabilities and items of income of the Trust for purposes
of applying the requirements described herein. The references to the gross
income or assets of the Trust, as discussed immediately below in "Income
Tests" and "Assets Tests," include the Trust's proportionate share of the
gross income or assets, as the case may be, of the Operating Partnership and
the Property Partnerships.

INCOME TESTS

For the Trust to maintain its qualification as a REIT, the Trust must
satisfy three separate tests based on the nature of the underlying gross
income. These requirements must be satisfied annually. First, at least 75% of
the Trust's gross income (excluding gross income from prohibited transactions)
for each taxable year must consist of income derived directly or indirectly
from investments relating to real property or mortgages on real property
(including "rents from real property" and, in certain circumstances, interest)
or certain types of "qualified temporary investment income." Second, at least
95% of the Trust's gross income (excluding gross income from prohibited
transactions) for each taxable year must be derived from such real property
investments, and from dividends, other types of interest, and gain from the
sale or disposition of stock or securities or from any combination of the
foregoing. Third, short-term gain from the sale or other disposition of stock
or securities, gain from prohibited transactions and gain on the sale or other
disposition of real property held for less than four years (apart from
involuntary conversions and sales of foreclosure property) must represent less
than 30% of the Trust's gross income (including gross income from prohibited
transactions) for each taxable year.

Rents received by the Trust will qualify as "rents from real property" in
satisfying the gross income requirements for a REIT described above provided
that several conditions are met. First, the amount of rent must not be based
in whole or in part on the income or profits of any person. An amount received
or accrued generally is not excluded from the term "rents from real property"
solely by reason of being based on a fixed percentage or percentages of
receipts or sales. Special rules apply where the tenant is a sublessor with
respect to property which permits a REIT to receive rent determined by
reference to the income or profits of the tenant in some cases. Second, the
Code provides that rents received from a tenant do not qualify as "rents from
real property" in satisfying the gross income tests if the REIT, or a direct
or indirect owner of 10% or more of the REIT, directly or constructively, owns
10% or more of such tenant (a "Related Party Tenant"). Although the Trust may
lease portions of its properties to tenants that may constitute Related Party
Tenants, the Trust does not believe that the rents attributable to such leases
would cause the Trust to fail to satisfy the 75% or 95% gross income tests.
Third, if rent attributable to personal property leased in connection with a
lease of real property is greater than 15% of the total rent received under
the lease, the portion of rent attributable to such personal property will not
qualify as "rents from real property." The Trust does not anticipate that the
rent attributable to the personal property leased in connection with the real
property will be greater than 15% of the total rent received under the lease
or, if it was as to any particular lease or group of leases, that the rent
attributable to the personal property would cause the Trust to fail to satisfy
the 75% or 95% gross income tests. Finally, in order for rents received to
qualify as "rents from real property," the REIT generally must not operate or
manage the property or furnish or render services to the tenants of such
property, other than through an independent contractor that is adequately
compensated and from whom the REIT derives no revenue; provided, however, that
the Trust may directly perform services "usually and customarily" rendered in
connection with the rental of space for occupancy only and that are not
otherwise considered "rendered to the occupant" of the property. The Trust has
represented that it does not and will not knowingly (i) charge rent for any
property that is based in whole or in part on the income or profits of any
person or (ii) directly perform services considered to be rendered to the
occupant of property.

The Trust is a self-managed REIT; i.e., the Operating Partnership performs
all of the management and leasing functions with respect to the properties it
owns; provided that the services called for do not cause the rents received
with respect to those leases to fail to qualify as "rents from real property."
To the extent that the services provided are not "usual and customary" under
the foregoing rules, the Trust will employ a qualifying independent contractor
to render the services. The Trust may provide property management and leasing
services to third parties and will provide services to an affiliated entity
for a fee. Although such income will not be

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<PAGE>

qualifying income under the 75% and 95% gross income tests, the Trust does not
expect that the revenue derived from such services would cause it to fail to
qualify as a REIT.

For purposes of the gross income test, the term "interest" generally does
not include any amount received or accrued (directly or indirectly) if the
determination of such amount depends in whole or in part on the income or
profits of any person. However, an amount received or accrued generally will
not be excluded from the term "interest" solely by reason of being based on a
fixed percentage or percentages of receipts or sales.

Any gross income derived from a prohibited transaction is taken into account
in applying the 30% income test necessary to maintain the Trust's
qualification as a REIT (and the net income from that transaction is subject
to a 100% tax). The Operating Partnership and the Trust believe that no asset
owned by the Operating Partnership, the Property Partnerships or the Trust is
inventory property or property held for sale to customers or in the ordinary
course of business of the Operating Partnership, the relevant Property
Partnership or the Trust. Whether property is held "primarily for sale to
customers in the ordinary course of a trade or business" depends, however, on
the facts and circumstances in effect from time to time, including those
related to a particular property. The Trust, Operating Partnership and the
Property Partnerships will attempt to comply with the terms of safe-harbor
provisions in the Code prescribing when asset sales will not be characterized
as prohibited transactions. Complete assurance cannot be given, however, that
the Trust can comply with the safe-harbor provisions of the Code or avoid
owning property that may be characterized as property held "primarily for sale
to customers in the ordinary course of business." Assets owned by Liberty
Development may constitute property held for sale, although the Trust owns an
interest solely as a shareholder in such entity.

Generally, the failure to satisfy either or both of the 75% and 95% gross
income tests will cause the REIT status of the Trust to terminate with the
taxable year in which the failure occurs. Relief from the adverse consequences
of such failure is available if the Trust's failure to meet such tests was due
to reasonable cause and not willful neglect, the Trust attaches a schedule of
the nature and the sources of its gross income to its income tax return, and
any incorrect information set forth on the schedule is not due to fraud with
intent to evade tax. It is not possible to state whether, in all
circumstances, the Trust would be entitled to the benefit of these relief
provisions. As discussed above in "Taxation of the Trust," even if these
relief provisions apply, a tax would be imposed with respect to the excess of
75% or 95% of the Trust's gross income over the Trust's qualifying income in
the relevant category, whichever is greater. This statutory relief is
available only for failures to satisfy the 75% and 95% gross income tests and
no such relief is available for a failure to satisfy the 30% gross income
test. In such case, the Trust would cease to qualify as a REIT.

ASSET TESTS

The Trust, at the close of each quarter of its taxable year, must also
satisfy three tests relating to the nature of its assets. First, at least 75%
of the value of the Trust's total assets must be represented by real estate
assets (including (i) its allocable share of real estate assets held by
partnerships in which the Trust owns an interest or held by "qualified REIT
subsidiaries" of the Trust and (ii) stock or debt instruments held for not
more than one year purchased with the proceeds of a stock offering or long-
term (at least five years) debt offering of the Trust), cash, cash items and
governmental securities. Second, not more than 25% of the Trust's total assets
may be represented by securities other than those in the 75% asset class.
Third, of the investments included in the 25% asset class, the value of any
one issuer's securities owned by the Trust may not exceed 5% of the value of
the Trust's total assets and the Trust may not own more than 10% of any one
issuer's outstanding voting securities (excluding the stock of a qualified
REIT subsidiary, of which the REIT is required to own all of the stock, or of
another real estate investment trust).

The Operating Partnership owns 8.0% of the voting common stock and 100% of
the non-voting common stock of Liberty Development. By virtue of its ownership
of partnership interests in the Operating Partnership, the Trust owns its pro
rata share of the common stock of Liberty Development. The Operating
Partnership does not own more than 10% of the voting securities of Liberty
Development and, therefore, the Trust will not own more than 10% of the voting
securities of Liberty Development. The IRS could contend that the Trust,
through

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<PAGE>

its interest in the Operating Partnership, should be viewed as owning more
than 10% of the voting securities of Liberty Development because of its
substantial economic position in Liberty Development and the close business
relationship between the two entities. If such contention were sustained, the
Trust would not qualify as a REIT. The Operating Partnership does not possess
the requisite power to elect or designate a member of the Board of Directors
of Liberty Development, and there is no understanding or arrangement
permitting the Trust to exercise voting power or control over the voting
common stock of Liberty Development not owned by it. Accordingly, Wolf, Block,
Schorr and Solis-Cohen and the Trust do not believe that the Trust will be
viewed as owning in excess of 10% of the voting securities of Liberty
Development. Based on its analysis of the estimated value of the securities of
the subsidiaries to be owned by the Operating Partnership relative to the
estimated value of the other assets to be owned by the Operating Partnership,
the Trust has determined that its pro rata share of the securities of Liberty
Development held by the Operating Partnership does not exceed 5% of the total
value of the Trust's assets. No independent appraisals will be obtained to
support this conclusion and Wolf, Block, Schorr and Solis-Cohen, in rendering
its opinion as to the qualification of the Trust as a REIT, is relying solely
on the representations of the Trust regarding the value of Liberty
Development. The 5%-of-value requirement must be satisfied each time the Trust
increases its ownership of securities of Liberty Development (including as a
result of increasing its interest in the Operating Partnership as its limited
partners exercise their conversion rights). Although the Trust plans to take
steps to insure that it satisfies the 5% value test for any quarter with
respect to which retesting is to occur, there can be no assurance that such
steps will always be successful or will not require a reduction in the
Operating Partnership's overall interest in Liberty Development.

After initially meeting the asset tests at the close of any quarter, the
Trust will not lose its status as a REIT for failure to satisfy the asset
tests at the end of a later quarter solely by reason of changes in asset
values. If the failure to satisfy the asset tests results from an acquisition
of securities or other property during a quarter, the failure can be cured by
disposition of sufficient non-qualifying assets within 30 days after the close
of any quarter as may be required to cure any non-compliance.

ANNUAL DISTRIBUTION REQUIREMENTS

The Trust, to qualify as a REIT is required to distribute dividends (other
than capital gain dividends) to its stockholders in an amount at least equal
to (A) the sum of (i) 95% of the "REIT taxable income" of the Trust (computed
without regard to the dividends paid deduction and the Trust's net capital
gain) and (ii) 95% of the net taxable income (after tax), if any, from
foreclosure property, minus (B) the sum of certain items of noncash income.
Such distributions must be paid in the taxable year to which they relate, or
in the following taxable year if declared before the Trust timely files its
tax return for such year and if paid on or before the first regular dividend
payment after such declaration. To the extent the Trust does not distribute
all of the net capital gain or distributes at least 95%, but less than 100%,
of its "REIT taxable income," as adjusted, it will be subject to tax on the
undistributed amount at the regular corporate tax rates applicable to such
income. Furthermore, if the Trust should fail to distribute during each
calendar year at least the sum of (i) 85% of its REIT ordinary income for such
year, (ii) 95% of its REIT capital gain income for such year, and (iii) any
undistributed taxable income from prior periods, the Trust would be subject to
a 4% excise tax on the excess of such required distribution over the amounts
actually distributed.

The Trust has made, and intends to make, timely distributions to its
shareholders in amounts sufficient to satisfy the annual distribution
requirements. The Operating Partnership, as the general partner of each
Property Partnership, is authorized under the various partnership agreements
to cause distributions to be made to their respective partners of all
available cash to permit the Trust to meet the annual distribution
requirement. It is possible that, from time to time, the Trust may experience
timing differences between (i) the actual receipt of income and actual payment
of deductible expenses and (ii) the inclusion of such income and deduction of
such expenses in arriving at REIT taxable income. Further, it is possible
that, from time to time, the Trust may be allocated a share of net capital
gain attributable to the sale of depreciable property which exceeds its
allocable share of cash attributable to that sale. In such cases, the Trust
may have less cash available for distribution than is necessary to meet the
annual 95% distribution requirement or to avoid tax with respect to the
capital gain or the excise tax imposed on certain undistributed income. To
meet the 95% distribution requirement necessary to

16
<PAGE>

qualify as a real estate investment trust or to avoid tax with respect to
capital gain or the excise tax imposed on certain undistributed income, the
Trust may find it appropriate to arrange for short-term (or possibly long-
term) borrowings or to pay distributions in the form of taxable stock
dividends. Any such borrowings for the purpose of making distributions to
shareholders of the Trust are required to be arranged through the Operating
Partnership.

Under certain circumstances, the Trust may be able to rectify a failure to
meet the distribution requirement for a year by paying "deficiency dividends"
to shareholders in a later year, which may be included in the Trust's
deduction for dividends paid for the earlier year. Thus, the Trust may be able
to avoid being taxed on amounts distributed as deficiency dividends; however,
the Trust will be required to pay interest based upon the amount of any
deduction taken for deficiency dividends.

Pursuant to applicable Treasury Regulations, in order to qualify as a REIT,
the Trust must maintain certain records and timely request certain information
from its shareholders designed to disclose the actual ownership of its stock.
The Trust believes it has complied, and intends to continue to comply, with
such requirements.

FAILURE TO QUALIFY

If the Trust fails to qualify for taxation as a REIT in any taxable year and
the relief provisions do not apply, the Trust would be subject to tax
(including any applicable alternative minimum tax) on its taxable income at
regular corporate rates. Distributions to shareholders of the Trust in any
year in which the Trust failed to qualify would not be deductible by the Trust
nor would there be a requirement to make distributions. In such event, to the
extent of current and accumulated earnings and profits, all distributions to
shareholders of the Trust would be taxable as ordinary income, and, subject to
certain limitations of the Code, corporate distributees may be eligible for
the dividends received deduction. Unless entitled to relief under specific
statutory provisions, the Trust would also be disqualified from taxation as a
REIT for the four taxable years following the year in which qualification was
lost. It is not possible to state whether in all circumstances the Trust would
be entitled to such statutory relief.

OTHER TAX CONSIDERATIONS

The Trust may be subject to state or local taxation in various state or
local jurisdictions, including those in which it transacts business. The state
and local tax treatment of the Trust may not conform to the federal income tax
consequences discussed above. Consequently, prospective investors should
consult their own tax advisors regarding the effect of state and local tax
laws on an investment in the Trust.

To the extent that the Trust engages in real estate development activities
in foreign countries or invests in real estate located in foreign countries,
the Trust's profits from such activities or investments will generally be
subject to tax in the countries where such activities are conducted or such
properties are located. The precise nature and amount of such taxation will
depend on the laws of the countries where the activities are conducted or the
properties are located. Although the Trust will attempt to minimize the amount
of such foreign taxation, there can be no assurance as to whether or the
extent to which measures taken to minimize such taxes will be successful. If
the Trust satisfies the annual distribution requirements for qualification as
a REIT and is, therefore, not subject to federal corporate income tax on that
portion of its ordinary income and capital gain that is currently distributed
to its shareholders, the Trust will generally not be able to recover the cost
of any foreign tax imposed on such profits from its foreign activities or
investments by claiming foreign tax credits against its federal income tax
liability on such profits. Moreover, the Trust will not be able to pass
foreign tax credits through to its shareholders. As a result, to the extent
that the Trust is required to pay taxes in foreign countries, the cash
available for distribution to its shareholders will be reduced accordingly.

The Operating Partnership will receive fees from an affiliated entity as
consideration for services that the Operating Partnership will provide to such
entity in connection with the development and management of the Kings Hill
project in the United Kingdom ("U.K."). The amount of this fee income will not
be qualifying

17
<PAGE>

income for purposes of the 75% or 95% gross income tests, although the Trust
does not expect that the revenue derived from such services would cause it to
fail the 75% or 95% gross income tests. The Trust may be subject to
Corporation Tax in the U.K. at the rate of 33% on its share of such fee income
if the Trust is deemed to have a branch or agency in the U.K. as a result of
services that may be performed for such entity in the U.K. In addition, rental
income received by the Trust with respect to leases of real property in the
U.K. would be subject to U.K. withholding tax at the rate of 25%. It is
possible that such rental income (together with any gain arising from the sale
or other disposition of such properties) could instead be subject to
Corporation Tax in the U.K. at the rate of 33% if the U.K. Inland Revenue did
not regard the Trust as holding the properties for purposes of long term
investment or if such income or gain were deemed attributable to a branch or
agency of the Trust in the U.K. Such U.K. taxes will reduce the amount of cash
available for distribution by the Trust to its shareholders out of such
income.

TAX ASPECTS OF THE TRUST'S INVESTMENTS IN PARTNERSHIPS

The following discussion summarizes certain federal income tax
considerations applicable solely to the Trust's investment in the Operating
Partnership and the Property Partnerships (collectively, the "Partnerships").

CLASSIFICATION AS A PARTNERSHIP

The Trust will be required to include in its income its distributive share
of the Operating Partnership's income and to deduct its distributive share of
the Operating Partnership's losses, and the Trust and the Operating
Partnership will be required to include in computing their income their
respective distributive shares of the income and losses of the Property
Partnerships only if the Operating Partnership and each of the Property
Partnerships is classified, for federal income tax purposes, as a partnership
rather than as an association taxable as a corporation.

For taxable periods prior to January 1, 1997, an organization formed as a
partnership was treated as a partnership rather than as a corporation for
federal income tax purposes only if it possessed no more than two of the four
corporate characteristics that the Treasury Regulations used to distinguish a
partnership from a corporation. These four characteristics were continuity of
life, centralization of management, limited liability, and free
transferability of interests. Although neither the Operating Partnership nor
the Property Partnerships requested a ruling from the IRS that they would be
classified as partnerships for Federal income tax purposes, rather than as
associations taxable as corporations, Wolf, Block, Schorr and Solis-Cohen had
opined that, based on the provisions of the respective Partnership Agreements
of the Operating Partnership and each Property Partnership, and certain
factual assumptions and representations as to each of them, the Operating
Partnership and each Property Partnership will be treated as partnerships for
federal income tax purposes and not as associations taxable as corporations.
Effective January 1, 1997, newly promulgated Treasury Regulations eliminated
the four-factor test described above and, instead, permit partnerships and
other non-corporate entities to be taxed as partnerships for federal income
tax purposes without regard to the number of corporate characteristics
possessed by such entity. Under those Regulations, both the Operating
Partnership and each of the Property Partnerships will be classified as
partnerships for federal income tax purposes unless an affirmative election is
made by the entity to be taxed as a corporation. The Trust has represented
that no such election has been made, or is anticipated to be made, on behalf
of the Operating Partnership or any of the Property Partnerships. Under a
special transitional rule in the Regulations, the IRS will not challenge the
classification of an existing entity such as the Operating Partnership or a
Property Partnership for periods prior to January 1, 1997 if: (i) the entity
has a "reasonable basis" for its classification; (ii) the entity and each of
its members recognized the federal income tax consequences of any change in
classification of the entity made within the 60 months prior to January 1,
1997; and (iii) neither the entity nor any of its members had been notified in
writing on or before May 8, 1996 that its classification was under examination
by the IRS. Neither the Partnership nor any of the Property Partnerships
changed their classification within the 60 month period preceding May 8, 1996,
nor was any one of them notified that their classification as a partnership
for federal income tax purposes was under examination by the IRS. Therefore,
in reliance on the opinion previously rendered by Wolf, Block, Schorr and

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<PAGE>

Solis-Cohen, the Operating Partnership and each of the Property Partnerships
should continue to be taxed as partnerships for federal tax purposes.

If for any reason the Operating Partnership or a Property Partnership were
taxable as a corporation rather than as a partnership for federal income tax
purposes, the Trust would not be able to satisfy the income and asset
requirements for status as a REIT. In addition, any change in the Operating
Partnership's status or that of a Property Partnership for tax purposes might
be treated as a taxable event, in which case the Trust might incur a tax
liability without any related cash distribution. See "--Taxation of the
Trust," above. Further, items of income and deduction for the Operating
Partnership or a Property Partnership would not pass through to the respective
partners, and the partners would be treated as stockholders for tax purposes.
Each Partnership would be required to pay income tax at regular corporate tax
rates on its net income and distributions to partners would constitute
dividends that would not be deductible in computing the Partnership's taxable
income.

INCOME TAXATION OF THE PARTNERSHIPS

Partners, Not the Operating Partnership or Property Partnerships, Subject to
Tax

A partnership is not a taxable entity for federal income tax purposes.
Rather, the Trust will be required to take into account its allocable share of
the income, gains, losses, deductions and credits of each of the Operating
Partnership and the Property Partnerships for any taxable year of such
Partnerships ending within or with the taxable year of the Trust, without
regard to whether the Trust has received or will receive any cash
distributions. The same will be true for the Operating Partnership with
respect to its allocable share of the income, gains, losses, deductions and
credits of each of the Property Partnerships.

Partnership Allocations

Although a partnership agreement generally will determine the allocation of
income and losses among partners, the allocations provided in the partnership
agreement will be disregarded for tax purposes if they do not comply with the
provisions of Section 704(b) of the Code and the Treasury Regulations
promulgated thereunder.

If an allocation is not recognized for federal income tax purposes, the item
subject to the allocation will be reallocated in accordance with the partners'
interests in the partnership, which will be determined by taking into account
all of the facts and circumstances relating to the economic arrangement of the
partners with respect to such item. The allocations of taxable income and loss
of each of the Operating Partnership and the Property Partnerships are
intended to comply with the requirements of Section 704(b) of the Code and the
Treasury Regulations promulgated thereunder.

Tax Allocations With Respect to Pre-Contribution Gain

Pursuant to Section 704(c) of the Code, income, gain, loss, and deduction
attributable to appreciated property that is contributed to a partnership in
exchange for an interest in the partnership must be allocated for federal
income tax purposes in a manner such that the contributor is charged with the
unrealized gain associated with the property at the time of the contribution.
The amount of such unrealized gain is generally equal to the difference
between the fair market value of the contributed property at the time of
contribution and the adjusted tax basis of such property at the time of
contribution (the "Book-Tax Difference"). In general, the fair market value of
the properties owned (directly or indirectly) by the Trust and interests in
Property Partnerships contributed to the Operating Partnership has been
substantially in excess of their respective adjusted tax bases. The
Partnership Agreements of each of the Operating Partnership and the Property
Partnerships require that allocations attributable to each item of contributed
property be made so as to allocate the tax depreciation available with respect
to such property first to the partners other than the partner that contributed
the property, to the extent of, and in proportion to, their book depreciation,
and then, if any tax depreciation remains, to the partner that contributed the
property. Upon the disposition of any item of contributed property, any gain

19
<PAGE>

attributable to the "built-in" gain of the property at the time of
contribution would be allocated for tax purposes to the contributing partner.
These allocations are intended to be consistent with the Treasury Regulations
under Section 704(c) of the Code.

In general, participants in the formation of the Trust (and the
Partnerships) have been allocated disproportionately lower amounts of
depreciation deductions for tax purposes relative to their percentage
interests in the Operating Partnership, and disproportionately greater shares
relative to their percentage interests in the Operating Partnership of the
gain on the sale by the Partnerships of one or more of the contributed
properties. These tax allocations will tend to reduce or eliminate the Book-
Tax Difference over the life of the Partnerships. Because the Partnership
Agreements of the Partnerships adopt the "traditional method" in obtaining
items allocable under Section 704(c) of the Code, the amounts of the special
allocations of depreciation and gain under the special allocation rules of
Section 704(c) of the Code may be limited by the so-called "ceiling rule" and
may not always eliminate the Book-Tax Difference on an annual basis or with
respect to a specific transaction such as a sale. Thus, the carryover basis of
the contributed assets in the hands of the Partnerships may cause the Trust to
be allocated less depreciation than would be available for newly purchased
properties.

The foregoing principles also apply in determining the earnings and profits
of the Trust. The application of these rules may result in a larger share of
the distributions from the Trust being taxable to shareholders as dividends.

Basis in Operating Partnership Interest

The Trust's adjusted tax basis in its partnership interest in the Operating
Partnership generally (i) will be equal to the amount of cash and the basis of
any other property contributed to the Operating Partnership by the Trust plus
the fair market value of the Shares it issues or cash it pays upon conversion
of interests in the Operating Partnership, (ii) has been, and will be,
increased by (a) its allocable share of the Operating Partnership's income and
(b) its allocable share of indebtedness of the Operating Partnership and of
the Property Partnerships and (iii) has been, and will be, reduced (but not
below zero) by the Trust's allocable share of (a) the Operating Partnership's
loss and (b) the amount of cash distributed to the Trust, and by constructive
distributions resulting from a reduction in the Trust's share of indebtedness
of the Operating Partnership and the Property Partnerships.

If the allocation of the Trust's distributive share of the Operating
Partnership's loss would reduce the adjusted tax basis of the Trust's
partnership interest in the Operating Partnership below zero, the loss is
deferred until such time as the recognition of such loss would not reduce the
Trust's adjusted tax basis below zero. To the extent that the Operating
Partnership's distributions, or any decrease in the Trust's share of the
indebtedness of the Operating Partnership or a Property Partnership (each such
decrease being considered a constructive cash distribution to the partners),
would reduce the Trust's adjusted tax basis below zero, such distributions
(including such constructive distributions) would be includible as taxable
income to the Trust in the amount of such excess. Such distributions and
constructive distributions would normally be characterized as capital gain,
and if the Trust's partnership interest in the Operating Partnership has been
held for longer than the long-term capital gain holding period (currently, one
year), the distributions and constructive distributions would constitute long-
term capital gain. Based on certain undertakings by limited partners of the
Operating Partnership, the Subordinated Debentures issued by the Operating
Partnership are allocated for purposes of Section 752 of the Code
disproportionately in favor of certain limited partners.

SALE OF THE PARTNERSHIPS' PROPERTY

Generally, any gain realized by the Operating Partnership or a Property
Partnership on the sale of property held by the Operating Partnership or a
Property Partnership, or on the sale of partnership interests in the Property
Partnerships, if the property or partnership interests are held for more than
one year, will be long-term capital gain, except for any portion of such gain
that is treated as depreciation or cost recovery recapture.

20
<PAGE>

The Trust's share of any gain realized on the sale of any property held by
the Operating Partnership or a Property Partnership as inventory or other
property held primarily for sale to customers in the ordinary course of the
trade or business of any of the Operating Partnership or the Property
Partnerships will, however, be treated as income from a prohibited transaction
that is subject to a 100% penalty tax. See "--Requirements for Qualification"
and "--Income Tests." Such prohibited transaction income may also have an
adverse effect upon the Trust's ability to satisfy the income tests for REIT
status. See "--Requirements For Qualification" and "--Income Tests," above.
Under existing law, whether property is held as inventory or primarily for
sale to customers in the ordinary course of a trade or business is a question
of fact that depends on all the facts and circumstances with respect to the
particular transaction. The Operating Partnership and the Property
Partnerships intend to hold their properties for investment with a view to
long-term appreciation, to engage in the business of acquiring, developing,
owning and operating their properties and to make such occasional sales of
such properties, including peripheral land, as are consistent with the
investment objectives of the Trust and the Operating Partnership.

PLAN OF DISTRIBUTION

The Trust and/or the Operating Partnership, as the case may be, may sell the
Securities being offered hereby: (a) directly to purchasers; (b) through
agents; (c) through underwriters; (d) through dealers; or (e) through a
combination of any such methods of sale. The Securities may also be used as
all or part of the consideration to be paid by the Trust or the Operating
Partnership for the acquisition of non-operating assets for which financial
statements would not be required to be filed with the Commission, or in
exchange for units of limited partnership interest of the Operating
Partnership. In addition, Common Shares may be offered hereby in exchange for
certain debt securities of the Operating Partnership that are exchangeable for
such Common Shares.

The distribution of the Securities may be effected from time to time in one
or more transactions: (a) at a fixed price or at final prices, which may be
changed; (b) at market prices prevailing at the time of sale; (c) at prices
related to such prevailing market prices; or (d) at negotiated prices. Offers
to purchase Securities may be solicited directly by the Trust or the Operating
Partnership, as the case may be, or by agents designated by the Trust or the
Operating Partnership, as the case may be, from time to time. Any such agent,
which may be deemed to be an underwriter as that term is defined in the
Securities Act, involved in the offer or sale of the Securities in respect of
which this Prospectus is delivered will be named, and any commissions payable
by the Trust or the Operating Partnership, as the case may be, to such agent
will be set forth, in the applicable Prospectus Supplement.

If an underwriter is, or underwriters are, utilized in the offer and sale of
Securities in respect of which this Prospectus and the accompanying Prospectus
Supplement are delivered, the Trust and/or the Operating Partnership will
execute an underwriting agreement with such underwriter(s) for the sale to it
or them and the name(s) of the underwriter(s) and the terms of the transaction
will be set forth in such Prospectus Supplement, which will be used by the
underwriter(s) to make resales of the Securities in respect of which this
Prospectus and such Prospectus Supplement are delivered to the public.

If a dealer is utilized in the sale of the Securities in respect of which
this Prospectus is delivered, the Trust and/or the Operating Partnership will
sell such Securities to the dealer, as principal. The dealer may then resell
such Securities to the public at varying prices to be determined by such
dealer at the time of resale.

Certain of the underwriters, dealers or agents utilized by the Trust and/or
the Operating Partnership in any offering hereby may be customers of,
including borrowers from, engage in transactions with, and perform services
for, the Trust and/or the Operating Partnership or one or more of their
respective affiliates in the ordinary course of business. Underwriters,
dealers, agents and other persons may be entitled, under agreements which may
be entered into with the Trust or the Operating Partnership, as the case may
be, to indemnification against certain civil liabilities, including
liabilities under the Securities Act.

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<PAGE>

Until the distribution of the Securities is completed, rules of the
Commission may limit the ability of the underwriters and certain selling group
members, if any, to bid for and purchase the Securities. As an exception to
these rules, the representatives of the underwriters, if any, are permitted to
engage in certain transactions that stabilize the price of the Securities.
Such transactions may consist of bids or purchases for the purpose of pegging,
fixing or maintaining the price of the Securities.

If underwriters create a short position in the Securities in connection with
the offering thereof, (i.e., if they sell more Securities than are set forth
on the cover page of the applicable Prospectus Supplement), the
representatives of such underwriters may reduce that short position by
purchasing Securities in the open market. Any such representatives also may
elect to reduce any short position by exercising all or part of the over-
allotment option described in the applicable Prospectus Supplement.

Any such representatives also may impose a penalty bid on certain
underwriters and selling group members. This means that if the representatives
purchase Securities in the open market to reduce the underwriters' short
position or to stabilize the price of the Securities, they may reclaim the
amount of the selling concession from the underwriters and selling group
members who sold those shares as part of the offering thereof.

In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of such purchases. The
imposition of a penalty bid might have an effect on the price of a security to
the extent that it were to discourage resales of the security by purchasers in
the offering.

Neither the Company nor any of the underwriters, if any, makes any
representation or prediction as to the direction or magnitude of any effect
that the transactions described above may have on the price of the Securities.
In addition, neither the Company nor any of the underwriters, if any, makes
any representation that the representatives of the underwriters, if any, will
engage in such transactions or that such transactions, once commenced, will
not be discontinued without notice.

LEGAL OPINIONS

Wolf, Block, Schorr and Solis-Cohen LLP, Philadelphia, Pennsylvania, has
rendered an opinion with respect to the legality of the Securities to be
issued by the Operating Partnership. Weinberg & Green LLC, Baltimore,
Maryland, has rendered an opinion with respect to the legality of the
Securities to be issued by the Trust. The statements in this Prospectus under
the caption "Federal Income Tax Considerations with Respect to the Trust and
the Operating Partnership" and the other statements herein relating to the
Trust's qualification as a real estate investment trust will be passed upon
for the Trust by Wolf, Block, Schorr and Solis-Cohen LLP, although such firm
has rendered no opinion as to matters involving the imposition of non-U.S.
taxes on the operations of, and distributions of payments from, its United
Kingdom affiliate. Michael M. Dean, a partner of Wolf, Block, Schorr and
Solis-Cohen LLP, is the sole trustee of irrevocable trusts established by
three of the Trust's senior executives for the benefit of their respective
children. Each of such trusts received limited partnership interests in the
Operating Partnership in connection with the Company's formation in exchange
for interests in the Rouse Group owned by such trusts.

EXPERTS

The consolidated financial statements of the Trust and the Operating
Partnership for the years ended December 31, 1996 and 1995 and the period from
June 23, 1994 through December 31, 1994 and the combined financial statements
of the Rouse Group for the period January 1, 1994 through June 22, 1994,
appearing in the Annual Reports (Form 10-K) of the Trust and the Operating
Partnership for the year ended December 31, 1996, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their reports thereon
included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by

22
<PAGE>

reference in reliance upon such reports given upon the authority of such firm
as experts in accounting and auditing.

The statement of operating revenues and certain operating expenses of 650-
660 E. Swedesford Road for the years ended December 31, 1996 and 1995
appearing in the Current Reports (Form 8-K) of the Trust and the Operating
Partnership, filed February 13, 1997, have been audited by Fegley &
Associates, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference. Such statement of
operating revenues and certain operating expenses is incorporated herein by
reference in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.

The statement of operating revenues and certain operating expenses of the
Minnesota Properties for the year ended December 31, 1996 appearing in the
Current Reports (Form 8-K) of the Trust and the Operating Partnership, filed
March 5, 1997, have been audited by Fegley & Associates, independent auditors,
as set forth in their report thereon included therein and incorporated herein
by reference. Such statement of operating revenues and certain operating
expenses is incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.

The statement of operating revenues and certain operating expenses of the
South Carolina Properties for the year ended December 31, 1996 appearing in
the Current Reports (Form 8-K) of the Trust and the Operating Partnership
filed March 5, 1997 have been audited by Fegley & Associates, independent
auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such statement of operating revenues and
certain operating expenses is incorporated herein by reference in reliance
upon such report given upon the authority of such firm as experts in
accounting and auditing.

The statement of operating revenues and certain operating expenses of the
Detroit Properties for the year ended December 31, 1996 appearing in the
Current Reports (Form 8-K) of the Trust and the Operating Partnership filed
June 25, 1997 have been audited by Fegley & Associates, independent auditors,
as set forth in their report thereon included therein and incorporated herein
by reference. Such statement of operating revenues and certain operating
expenses is incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.

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<PAGE>

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NO DEALER, SALES PERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, THE NOTES IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PRO-
SPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS NOT BEEN
ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOM-
PANYING PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.

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TABLE OF CONTENTS

PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary.................................................................. S-3
Risk Factors............................................................. S-10
The Company.............................................................. S-13
Business Objectives and Strategies....................................... S-14
Use of Proceeds.......................................................... S-18
Capitalization........................................................... S-19
The Properties........................................................... S-20
Selected Financial Data.................................................. S-24
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... S-26
Management............................................................... S-30
Description of Notes..................................................... S-31
Underwriting............................................................. S-43
Legal Matters............................................................ S-44
Appendix "A"............................................................. A-1

PROSPECTUS
Available Information.................................................... 3
Incorporation of Certain Documents by Reference.......................... 3
The Company.............................................................. 4
Use of Proceeds.......................................................... 4
Ratios of Earnings to Fixed Charges...................................... 5
Description of Debt Securities........................................... 5
Description of Preferred Shares.......................................... 9
Description of Warrants.................................................. 10
Federal Income Tax Considerations with Respect to the Trust and the
Operating Partnership................................................... 11
Plan of Distribution..................................................... 21
Legal Opinions........................................................... 22
Experts.................................................................. 22
</TABLE>

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$200,000,000

LIBERTY PROPERTY LIMITED PARTNERSHIP

$100,000,000 7.10% SENIOR NOTES DUE 2004

$100,000,000 7.25% SENIOR NOTES DUE 2007

INTEREST PAYABLE FEBRUARY 15 AND AUGUST 15

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PROSPECTUS SUPPLEMENT
August 14, 1997

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LEHMAN BROTHERS

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

SMITH BARNEY INC.

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