SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20546
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 10, 1997
LIBERTY PROPERTY TRUST
LIBERTY PROPERTY LIMITED PARTNERSHIP
------------------------------------
(Exact name of registrant as specified in its charter)
MARYLAND 1-13130 23-7768996
PENNSYLVANIA 1-13132 23-2766549
- --------------------------- ------------- -------------------
State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
65 VALLEY STREAM PARKWAY, SUITE 100
MALVERN, PENNSYLVANIA 19355
- --------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (610) 648-1700
<PAGE>
ITEM 5: OTHER EVENTS
- -----------------------
Liberty Property Limited Partnership, is a Pennsylvania limited
partnership (the "Operating Partnership"). Liberty Property Trust, a
Maryland real estate investment trust (the "Trust") owns an approximate
89.97% interest in the Operating Partnership (as of September 30, 1996)
(the Trust and the Operating Partnership are collectively referred to as
the "Company"):
The Company acquired four properties during the period from December 10,
1996 (the date of the Company's last Current Report on Form 8-K) to
February 10, 1997. Although the acquisitions do not involve a
significant amount of assets or involve the acquisition of a business as
such terms are used in Form 8-K, pursuant to Rule 3-14 of Regulation S-
X, audited and unaudited historical financial information concerning
certain of the acquired properties, is provided in Item 7 of this
Current Report on Form 8-K. Additionally, certain pro forma financial
information is provided in Item 7.
The following properties were acquired from unaffiliated parties during
the period from December 10, 1996 (the date of the Company's last Current
Report on Form 8-K) to February 10, 1997.
200, 220 and 240 Gibraltar Road, a 192,000 square foot three-
building office project in Horsham, Pennsylvania on December
19, 1996 for $18.8 million.
650 - 660 E. Swedesford Road, a 200,762 square foot two-building
office building in King of Prussia, Pennsylvania, on February 10,
1997 for $14.5 million.
151 South Warner Road, a 84,066 square foot office building
in King of Prussia, Pennsylvania, on December 20, 1996 for
$8.0 million.
2 Lukens Drive, a 43,175 square foot industrial-flex building
in New Castle, Delaware on December 26, 1996 for 1.4 million.
This report contains audited financial statements for the property
located at 650 - 660 E. Swedesford Road for the years ended December 31,
1995 and 1996 and unaudited financial statements for the nine months
ended September 30, 1996.
This report also contains pro-forma financial information which reflects
the incremental effects of the acquisition of the four properties
acquired between December 10, 1996 and February 10, 1997, together with
the 18 properties acquired during the period from January 1, 1996 to
December 10, 1996 which were described in the Company's last Current Report
on Form 8-K dated December 10, 1996 (collectively, the "Acquired Properties")
on the financial statements of the Trust and the Operating Partnership.
The Acquired Properties were acquired for cash using funds provided by
the Company's financing sources.
-2-
<PAGE>
The costs shown above for each acquisition represent the initial cost at
the time of acquisition.
Factors considered by the Company in determining the price to be paid
for the properties included their historical and expected cash flow, the
nature of tenants and terms of leases in place, occupancy rates,
opportunities for alternative and new tenancies, current operating costs
and real estate taxes on the properties and anticipated changes therein
under Company ownership, physical condition and locations of the
properties, the anticipated effect to the Company's financial results
(particularly funds from operations), the ability to sustain and
potentially increase its distributions to Company shareholders, and
other factors. The Company took into consideration the capitalization
rates at which it believed other comparable buildings were recently
sold, but determined the price it was willing to pay primarily on
factors discussed above relating to the properties themselves and their
fit into the Company's operations. The Company, after investigation of
the properties, is not aware of any material fact other than those
enumerated above, that would cause the financial information reported
not to be necessarily indicative of future operating results.
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
- ------------------------------------------
PAGE
-----
(a) Statement of Operating Revenues and Certain
Operating Expenses for 650-660 E. Swedesford Road
Report of Independent Auditors........................ 5
Statement of Operating Revenues and Certain
Operating Expenses for 650-660 E. Swedesford Road
for the nine months ended September 30, 1996
(unaudited) and for the years ended December 31,
1996 and 1995...................................... 6
Notes to the Statement of Operating Revenues and
Certain Operating Expenses for 650-660 E. Swedes-
ford Road for the nine months ended September 30,
1996 (unaudited) and for the years ended
December 31, 1996 and 1995......................... 7
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<PAGE>
(b) Pro Forma Financial Information (unaudited)
Liberty Property Trust....................................... 9
Pro Forma Condensed Consolidated Balance Sheet as of
September 30, 1996................................. 10
Pro Forma Consolidated Statement of Operations for
the nine months ended September 30, 1996........... 11
Notes to Pro Forma Condensed Consolidated Financial
Statements as of and for the nine months ended
September 30, 1996................................. 12
Pro Forma Consolidated Statement of Operations for
the year ended December 31, 1995................... 13
Notes to Pro Forma Consolidated Statement of
Operations for the year ended December 31, 1995.... 14
Liberty Property Limited Partnership......................... 15
Pro Forma Condensed Consolidated Balance Sheet as of
September 30, 1996................................. 16
Pro Forma Consolidated Statement of Operations for
the nine months ended September 30, 1996........... 17
Notes to Pro Forma Condensed Consolidated Financial
Statements as of and for the nine months ended
September 30, 1996................................. 18
Pro Forma Consolidated Statement of Operations for
the year ended December 31, 1995................... 19
Notes to Pro Forma Consolidated Statement of
Operations for the year ended December 31, 1995.... 20
(c) Exhibits
23.0 Consent of Independent Auditors................ 22
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<PAGE>
REPORT OF INDEPENDENT AUDITORS
To The Board of Trustees and Shareholders
Liberty Property Trust
We have audited the accompanying Statement of Operating Revenues and
Certain Operating Expenses of 650-660 E. Swedesford Road, as defined in
Note 1, for the years ended December 31, 1996 and 1995. This financial
statement is the responsibility of the management of 650-660 E.
Swedesford Road. Our responsibility is to express an opinion on this
financial statement based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statement is
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting principles
used and significant estimates made by management as well as evaluating
the overall presentation of the financial statement. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying Statement of Operating Revenues and Certain Operating
Expenses was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission (for inclusion in
the Current Report on Form 8-K of Liberty Property Trust and Liberty
Property Limited Partnership) and, as described in Note 1, is not
intended to be a complete presentation of 650-660 E. Swedesford Road's
revenues and expenses.
In our opinion, the Statement of Operating Revenues and Certain
Operating Expenses referred to above presents fairly, in all material
respects, the Operating Revenues and Certain Operating Expenses
described in Note 1 for the years ended December 31, 1996 and 1995, in
conformity with generally accepted accounting principles.
/s/ FEGLEY & ASSOCIATES
Plymouth Meeting, Pennsylvania FEGLEY & ASSOCIATES
February 3, 1997
-5-
<PAGE>
STATEMENT OF OPERATING REVENUES AND CERTAIN OPERATING EXPENSES
FOR 650-660 E. SWEDESFORD ROAD FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1996 (UNAUDITED) AND THE YEARS ENDED DECEMBER 31, 1996 AND 1995
(IN THOUSANDS)
NINE
MONTHS ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1996 1996 1995
------------- ------------ ------------
Operating revenues:
Rental $ 1,401 $ 1,868 $ 1,884
Operating expense
reimbursement 926 1,235 1,167
------------- ------------ ------------
Total operating
revenues 2,327 3,103 3,051
------------- ------------ ------------
Certain operating
expenses:
Rental property
expenses 798 1,064 1,004
Real estate taxes 151 201 197
------------- ------------ ------------
Total certain
operating expenses 949 1,265 1,201
------------- ------------ ------------
Operating revenues in
excess of certain
operating expenses $ 1,378 $ 1,838 $ 1,850
============= ============ ============
The accompanying notes are an integral part of this statement.
-6-
<PAGE>
NOTES TO THE STATEMENT OF OPERATING REVENUES AND
CERTAIN OPERATING EXPENSES FOR 650-660 E. SWEDESFORD ROAD
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED) AND THE YEARS ENDED DECEMBER 31, 1996 and 1995
(IN THOUSANDS)
1. Summary of Significant Accounting Policies
- ----------------------------------------------
The Statement of Operating Revenues and Certain Operating Expenses (see
"Basis of Presentation" below) includes the operations of one of the
properties acquired by Liberty Property Limited Partnership (the
"Operating Partnership") during the period from December 11, 1996
through February 10, 1997, as described below. Liberty Property Trust
(the "Company") owns an approximate 89.87% partners' interest in the
Operating Partnership (as of September 30, 1996) (the Trust and the
Operating Partnership are collectively referred to as the "Company").
PROPERTY NAME LOCATION DESCRIPTION
- -------------------------- -------------------- --------------------
650-660 E. Swedesford Road King of Prussia, PA Two multi-story
office buildings
200,762 square feet
USE OF ESTIMATES
- ----------------
Generally accepted accounting principles required management to make
estimates and assumptions in preparing financial statements. Those
estimates and assumptions affect the reported revenues and expenses.
BASIS OF PRESENTATION
- ---------------------
The Statement of Operating Revenues and Certain Operating Expenses is
presented in conformity with Rule 3-14 of the Securities and Exchange
Commission. Accordingly, depreciation, interest and income taxes are
not presented. The Company is not aware of any factors relating to 650-
660 E. Swedesford Road that would cause the reported financial
information not to be indicative of future operating results. General
company overhead has not been allocated to 650-660 E. Swedesford Road.
The financial information presented for the nine months ended September
30, 1996 is unaudited. In the opinion of management, the unaudited
financial information contains all adjustments, consisting of normal
recurring accruals, necessary for a fair presentation of the Statements
of Revenues and Certain Operating Expenses for 650-660 E. Swedesford
Road.
The property consists of multi-tenant commercial office space leased to
tenants under leases with varying terms. Tenant renewal options are
available.
-7-
<PAGE>
REVENUE RECOGNITION
- -------------------
Base rental income attributable to leases is recorded when due from
tenants. The leases also typically provide for tenant reimbursement of
common area maintenance and other operating expenses which are included
in the accompanying Statement of Operating Revenue and Certain Operating
Expenses as operating expense reimbursements.
2. MINIMUM FUTURE RENTALS
- ---------------------------
Future minimum rental payments due from tenants of 650-660 E. Swedesford
Road under non-cancellable operating leases as of December 31, 1996 are
as follows (in thousands):
1997 $ 141
1998 100
1999 56
2000 23
2001 19
Thereafter -
-----
Total $ 339
=====
-8-
<PAGE>
LIBERTY PROPERTY TRUST
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The unaudited, pro forma condensed consolidated balance sheet as of
September 30, 1996 reflects the incremental effect of the Acquired
Properties described in Item 5 as if the acquisitions occurring after
September 30, 1996 had occurred on September 30, 1996. The accompanying
unaudited, pro forma consolidated statement of operations for the nine
months ended September 30, 1996 and the year ended December 31, 1995
reflect the incremental effect of the Acquired Properties, as if such
acquisitions had occurred on January 1, 1995. These statements should
be read in conjunction with respective consolidated financial statements
and notes thereto included in the Company's Quarterly Report on Form 10-
Q for the quarter ended September 30, 1996 and its Annual Report on Form
10-K for the year ended December 31, 1995. In the opinion of
management, the unaudited, pro forma consolidated financial information
provides for all adjustments necessary to reflect the effects of the
Acquired Properties.
These pro forma statements may not necessarily be indicative of the
results that would have actually occurred if the acquisition of the
Acquired Properties had been in effect on the date indicated, nor does
it purport to represent the financial position, results of operations or
cash flows for future periods.
-9-
<PAGE>
LIBERTY PROPERTY TRUST
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1996
(UNAUDITED, IN THOUSANDS)
LIBERTY
ACQUIRED PROPERTY
HISTORICAL PROPERTIES TRUST
<F1> <F2> CONSOLIDATED
---------- ----------- ------------
ASSETS:
Investment in real estate,
net $ 946,789 $ 74,019 $ 1,020,808
Cash and cash equivalents 7,973 - 7,973
Deferred financing and
leasing costs, net 23,745 - 23,745
Other assets 44,632 - 44,632
---------- ----------- -----------
Total assets $1,023,139 $ 74,019 $ 1,097,158
========== =========== ===========
LIABILITIES:
Mortgage loans $ 203,221 $ - $ 203,221
Subordinated debentures 183,625 - 183,625
Line of credit 176,618 74,019 <F3> 250,637
Other liabilities 51,001 - 51,001
---------- ----------- -----------
Total liabilities 614,465 74,019 688,484
---------- ----------- -----------
MINORITY INTEREST 41,399 - 41,399
---------- ----------- -----------
SHAREHOLDERS' EQUITY:
Common shares 31 - 31
Additional paid-in capital 359,472 - 359,472
Unearned compensation (1,636) - (1,636)
Retained earnings 9,408 - 9,408
---------- ----------- -----------
Total shareholders'
equity 367,275 - 367,275
---------- ----------- -----------
Total liabilities and
shareholders' equity $1,023,139 $ 74,019 $ 1,097,158
========== =========== ===========
The accompanying notes are an integral part of this unaudited, pro forma
condensed consolidated financial statement.
-10-
<PAGE>
LIBERTY PROPERTY TRUST
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED AND IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
<TABLE>
<CAPTION>
LIBERTY
ACQUIRED PRO PROPERTY
HISTORICAL PROPERTIES FORMA TRUST
<F1> <F4> ADJUSTMENTS CONSOLIDATED
---------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
REVENUE
Rental $ 82,019 $ 10,050 $ - $ 92,069
Operation expense reim-
bursement 26,463 4,787 - 31,250
Management fees 1,190 - - 1,190
Interest and other 3,080 - - 3,080
---------- ----------- ------------ ------------
Total revenue 112,752 14,837 - 127,589
---------- ----------- ------------ ------------
OPERATING EXPENSES
Rental property expenses 22,158 3,566 - 25,724
Real estate taxes 8,176 1,569 - 9,745
General and administrative 5,681 - - 5,681
Depreciation and amorti-
zation 20,435 - 2,185 <F5> 22,620
---------- ----------- ------------ ------------
Total operating expenses 56,450 5,135 2,185 63,770
---------- ----------- ------------ ------------
Operating income 56,302 9,702 (2,185) 63,819
Premium on debenture con-
version 1,027 - - 1,027
Interest expense 28,274 - 6,130 <F6> 34,404
---------- ----------- ------------ ------------
Income (loss) before
minority interest 27,001 9,702 (8,315) 28,388
Minority interest 2,833 1,017 (872) <F7> 2,978
---------- ----------- ------------ ------------
Net income (loss) $ 24,168 $ 8,685 $ (7,443) $ 25,410 <F8>
========== =========== ============ ============
Net income per common
share - primary $ .87
============
Weighted average number
of common shares out-
standing 29,176
============
The accompanying notes are an integral part of this unaudited, proforma
consolidated financial statement.
</TABLE>
-11-
<PAGE>
LIBERTY PROPERTY TRUST
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(Unaudited, dollars in thousands)
<F1> Reflects historical financial information of the Company as of
September 30, 1996 and for the nine months ended September 30, 1996.
<F2> Reflects the cost basis of the properties acquired subsequent to
September 30, 1996.
PROPERTY ACQUISITION DATE COST
- ---------------------------------- ---------------- ----------
7248 Industrial Boulevard November 13, 1996 $ 15,759
111 Kelsey Lane November 14, 1996 1,780
104 Gaither Drive November 20, 1996 1,280
Two Walnut Grove Drive December 10, 1996 12,500
200, 220 and 240 Gibraltar December 19, 1996 18,750
151 South Warner Road December 20, 1996 8,025
2 Lukens Drive December 26, 1996 1,425
650-660 E. Swedesford Road February 10, 1997 14,500
----------
Total $ 74,019
==========
<F3> Represents draws on the Company's line of credit to fund the
acquisitions subsequent to September 30, 1996.
<F4> Reflects the incremental addition of revenues and certain expenses
of the Acquired Properties in order to reflect a full nine months of
operations for these acquisitions.
<F5> Reflects incremental depreciation of the Acquired Properties based
on asset lives of 40 years.
<F6> Reflects an incremental increase in interest expense from the
assumed borrowings of $130.1 million on the line of credit to fund the
purchase of the Acquired Properties.
<F7> Reflects the allocation of the pro forma adjustment to minority
interest based upon pro forma minority interest in the Operating
Partnership of approximately 10.49%.
<F8> The Company's pro forma taxable income for the nine month period
ended September 30, 1996 is approximately $25,507 which has been
calculated as pro forma income from operations of approximately $25,410
plus GAAP depreciation and amortization of $22,620 less tax basis
depreciation and amortization and other tax differences of approximately
$22,523.
-12-
<PAGE>
LIBERTY PROPERTY TRUST
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED AND IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
<TABLE>
<CAPTION>
LIBERTY
ACQUIRED PROPERTY
HISTORICAL PROPERTIES PRO FORMA TRUST
<F1> <F2> ADJUSTMENTS CONSOLIDATED
---------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
REVENUE
Rental $ 89,163 $ 12,622 $ - $ 101,785
Operation expense reim-
bursement 24,604 5,835 - 30,439
Management fees 734 - - 734
Interest and other 2,540 - - 2,540
---------- ----------- ------------ ------------
Total revenue 117,041 18,457 - 135,498
---------- ----------- ------------ ------------
OPERATING EXPENSES
Rental property expenses 20,010 4,324 - 24,334
Real estate taxes 9,304 1,931 - 11,235
General and administrative 5,212 - - 5,212
Depreciation and amorti-
zation 22,518 - 3,251 <F3> 25,769
---------- ----------- ------------ ------------
Total operating expenses 57,044 6,255 3,251 66,550
---------- ----------- ------------ ------------
Operating income 59,997 12,202 (3,251) 68,948
Interest expense 37,688 - 9,439 <F4> 47,127
---------- ----------- ------------ ------------
Income (loss) before
minority interest 22,309 12,202 (12,690) 21,821
Minority interest 2,843 1,554 (1,617) <F5> 2,780
---------- ----------- ------------ ------------
Net income (loss) $ 19,466 $ 10,648 $ (11,073) $ 19,041 <F6>
========== =========== ============ ============
Net income per common
share - primary $ .87
============
Weighted average number
of common shares out-
standing 21,838
============
The accompanying notes are an integral part of this unaudited, proforma
consolidated financial statement.
</TABLE>
-13-
<PAGE>
LIBERTY PROPERTY TRUST
NOTES TO PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(Unaudited, dollars in thousands)
<F1> Reflects the historical consolidated statement of operations of
the Company for the year ended December 31, 1995.
<F2> Reflects the addition of revenues and certain expenses of the
Acquired Properties required in order to reflect a full year of
operations for these acquisitions.
<F3> Reflects depreciation of the Acquired Properties based on asset
lives of 40 years.
<F4> Reflects an increase in interest expense from the assumed
borrowings of $130.1 on the line of credit to fund the purchase of the
Acquired Properties.
<F5> Reflects the allocation of the pro forma adjustment to minority
interest based upon pro forma minority interest in the Operating
Partnership of approximately 12.74%.
<F6> The Company's pro forma taxable income for the year ended December
31, 1995 is approximately $20,032 which has been calculated as pro forma
income from operations of approximately $19,041 plus GAAP depreciation
and amortization of $25,769 less tax basis depreciation and amortization
and other tax differences of approximately $24,778.
-14-
<PAGE>
LIBERTY PROPERTY LIMITED PARTNERSHIP
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The unaudited, pro forma condensed consolidated balance sheet as of
September 30, 1996 reflects the incremental effect of the Acquired
Properties described in Item 5 as if the acquisitions occurring after
September 30, 1996 had occurred on September 30, 1996. The accompanying
unaudited, pro forma consolidated statement of operations for the nine
months ended September 30, 1996 and the year ended December 31, 1995
reflect the incremental effect of the Acquired Properties, as if such
acquisitions had occurred on January 1, 1995. These statements should
be read in conjunction with respective consolidated financial statements
and notes thereto included in the Company's Quarterly Report on Form 10-
Q for the quarter ended September 30, 1996 and its Annual Report on Form
10-K for the year ended December 31, 1995. In the opinion of
management, the unaudited, pro forma consolidated financial information
provides for all adjustments necessary to reflect the effects of the
Acquired Properties.
These pro forma statements may not necessarily be indicative of the
results that would have actually occurred if the acquisition of the
Acquired Properties had been in effect on the date indicated, nor does
it purport to represent the financial position, results of operations or
cash flows for future periods.
-15-
<PAGE>
LIBERTY PROPERTY LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1996
(UNAUDITED, IN THOUSANDS)
LIBERTY
PROPERTY
ACQUIRED LIMITED
HISTORICAL PROPERTIES PARTNERSHIP
<F1> <F2> CONSOLIDATED
---------- ----------- ------------
ASSETS:
Investment in real estate,
net $ 946,789 $ 74,019 $ 1,020,808
Cash and cash equivalents 7,973 - 7,973
Deferred financing and
leasing costs, net 23,745 - 23,745
Other assets 44,632 - 44,632
---------- ----------- -----------
Total assets $1,023,139 $ 74,019 $ 1,097,158
========== =========== ===========
LIABILITIES:
Mortgage loans $ 203,221 $ - $ 203,221
Subordinated debentures 183,625 - 183,625
Line of credit 176,618 74,019 <F3> 250,637
Other liabilities 51,001 - 51,001
---------- ----------- -----------
Total liabilities 614,465 74,019 688,484
---------- ----------- -----------
OWNERS' EQUITY:
General partner's equity 367,275 - 367,275
Limited partners' equity 41,399 - 41,399
---------- ----------- -----------
Total owners' equity 408,674 - 408,674
---------- ----------- -----------
Total liabilities and
owners' equity $1,023,139 $ 74,019 $ 1,097,158
========== =========== ===========
The accompanying notes are an integral part of this unaudited, pro forma
condensed consolidated financial statement.
-16-
<PAGE>
LIBERTY PROPERTY LIMITED PARTNERSHIP
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED AND IN THOUSANDS)
<TABLE>
<CAPTION>
LIBERTY
PROPERTY
ACQUIRED LIMITED
HISTORICAL PROPERTIES PRO FORMA PARTNERSHIP
<F1> <F4> ADJUSTMENTS CONSOLIDATED
---------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
REVENUE
Rental $ 82,019 $ 10,050 $ - $ 92,069
Operation expense reim-
bursement 26,463 4,787 - 31,250
Management fees 1,190 - - 1,190
Interest and other 3,080 - - 3,080
---------- ----------- ------------ ------------
Total revenue 112,752 14,837 - 127,589
---------- ----------- ------------ ------------
OPERATING EXPENSES
Rental property expenses 22,158 3,566 - 25,724
Real estate taxes 8,176 1,569 - 9,745
General and administrative 5,681 - - 5,681
Depreciation and amorti-
zation 20,435 - 2,185 <F5> 22,620
---------- ----------- ------------ ------------
Total operating expenses 56,450 5,135 2,185 63,770
---------- ----------- ------------ ------------
Operating income 56,302 9,702 (2,185) 63,819
Premium on debenture con-
version 1,027 - - 1,027
Interest expense 28,274 - 6,130 <F6> 34,404
---------- ----------- ------------ ------------
Net income (loss) $ 27,001 $ 9,702 $ (8,315) $ 28,388 <F8>
========== =========== ============ ============
Net income (loss)
allocated to general
partner $ 24,168 $ 8,685 $ (7,443) $ 25,410
Net income (loss)
allocated to limited
partners 2,833 1,017 (872) <F7> 2,978
========== =========== ============ ============
The accompanying notes are an integral part of this unaudited, proforma
consolidated financial statement.
</TABLE>
-17-
<PAGE>
LIBERTY PROPERTY LIMITED PARTNERSHIP
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(Unaudited, dollars in thousands)
<F1> Reflects historical financial information of the Company as of
September 30, 1996 and for the nine months ended September 30, 1996.
<F2> Reflects the cost basis of the properties acquired subsequent to
September 30, 1996.
PROPERTY ACQUISITION DATE COST
- ---------------------------------- ---------------- ----------
7248 Industrial Boulevard November 13, 1996 $ 15,759
111 Kelsey Lane November 14, 1996 1,780
104 Gaither Drive November 20, 1996 1,280
Two Walnut Grove Drive December 10, 1996 12,500
200, 220 and 240 Gibraltar December 19, 1996 18,750
151 South Warner Road December 20, 1996 8,025
2 Lukens Drive December 26, 1996 1,425
650-660 E. Swedesford Road February 10, 1997 14,500
----------
Total $ 74,019
==========
<F3> Represents draws on the Company's line of credit to fund the
acquisitions subsequent to September 30, 1996.
<F4> Reflects the incremental addition of revenues and certain expenses
of the Acquired Properties in order to reflect a full nine months of
operations for these acquisitions.
<F5> Reflects incremental depreciation of the Acquired Properties based
on asset lives of 40 years.
<F6> Reflects an incremental increase in interest expense from the
assumed borrowings of $130.1 million on the line of credit to fund the
purchase of the Acquired Properties.
<F7> Reflects the allocation of the pro forma adjustment to the net
income allocated to the limited partners based upon pro forma ownership
in the Operating Partnership.
<F8> The Company's pro forma taxable income for the nine month period
ended September 30, 1996 is approximately $28,084 which has been
calculated as pro forma income from operations of approximately $28,388
plus GAAP depreciation and amortization of $22,620 less tax basis
depreciation and amortization and other tax differences of approximately
$22,924.
-18-
<PAGE>
LIBERTY PROPERTY LIMITED PARTNERSHIP
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED AND IN THOUSANDS)
<TABLE>
<CAPTION>
LIBERTY
PROPERTY
ACQUIRED LIMITED
HISTORICAL PROPERTIES PRO FORMA PARTNERSHIP
<F1> <F2> ADJUSTMENTS CONSOLIDATED
---------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
REVENUE
Rental $ 89,163 $ 12,622 $ - $ 101,785
Operation expense reim-
bursement 24,604 5,835 - 30,439
Management fees 734 - - 734
Interest and other 2,540 - - 2,540
---------- ----------- ------------ ------------
Total revenue 117,041 18,457 - 135,498
---------- ----------- ------------ ------------
OPERATING EXPENSES
Rental property expenses 20,010 4,324 - 24,334
Real estate taxes 9,304 1,931 - 11,235
General and administrative 5,212 - - 5,212
Depreciation and amorti-
zation 22,518 - 3,251 <F3> 25,769
---------- ----------- ------------ ------------
Total operating expenses 57,044 6,255 3,251 66,550
---------- ----------- ------------ ------------
Operating income 59,997 12,202 (3,251) 68,948
Interest expense 37,688 - 9,439 <F4> 47,127
---------- ----------- ------------ ------------
Net income (loss) $ 22,309 $ 12,202 $ (12,690) $ 21,821 <F6>
========== =========== ============ ============
Net income (loss)
allocated to general
partner $ 19,466 $ 10,648 $ (11,073) $ 19,041
Net income (loss)
allocated to limited
partners 2,843 1,554 (1,617) <F5> 2,780
========== =========== ============ ============
The accompanying notes are an integral part of this unaudited, proforma
consolidated financial statement.
</TABLE>
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<PAGE>
LIBERTY PROPERTY LIMITED PARTNERSHIP
NOTES TO PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(Unaudited, dollars in thousands)
<F1> Reflects the historical consolidated statement of operations of
the Company for the year ended December 31, 1995.
<F2> Reflects the addition of revenues and certain expenses of the
Acquired Properties required in order to reflect a full year of
operations for these acquisitions.
<F3> Reflects depreciation of the Acquired Properties based on asset
lives of 40 years.
<F4> Reflects an increase in interest expense from the assumed
borrowings of $130.1 on the line of credit to fund the purchase of the
Acquired Properties.
<F5> Reflects the allocation of the pro forma adjustment to the net
income allocated to the limited partners, based upon pro forma ownership
in the Operating Partnership.
<F6> The Company's pro forma taxable income for the year ended December
31, 1995 is approximately $25,006 which has been calculated as pro forma
income from operations of approximately $21,821 plus GAAP depreciation
and amortization of $25,769 less tax basis depreciation and amortization
and other tax differences of approximately $22,584.
-20-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
each Registrant has duly caused this Report to be signed on its behalf
by the undersigned hereunto duly authorized.
LIBERTY PROPERTY TRUST
Dated: February 10,1997 BY: /s/ JOSEPH P. DENNY
----------------------------------------
NAME: Joseph P. Denny
TITLE: President
LIBERTY PROPERTY LIMITED PARTNERSHIP
BY: LIBERTY PROPERTY TRUST,
SOLE GENERAL PARTNER
Dated: February 10, 1997 BY: /s/ JOSEPH P. DENNY
----------------------------------------
NAME: Joseph P. Denny
TITLE: President
-21-
<PAGE>
EXHIBIT 23.0
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-3 No. 33-94782) and related Prospectus of Liberty
Property Trust and Liberty Property Limited Partnership and to the
incorporation by reference in the Registration Statement (Form S-3 No.
333-14139) and related Prospectus of Liberty Property Trust, of our
report dated February 3, 1997, with respect to the Statement of
Operating Revenues and Certain Operating Expenses for 650-660 E.
Swedesford Road included in the Current Report on Form 8-K of Liberty
Property Trust and Liberty Property Limited Partnership dated February
10, 1997 filed with the Securities and Exchange Commission.
/s/ FEGLEY & ASSOCIATES
Plymouth Meeting, Pennsylvania FEGLEY & ASSOCIATES
February 10, 1997
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