UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
For the transition period from __________________ to __________________
Commission file number: 1-13130 (Liberty Property Trust)
1-13132 (Liberty Property Limited Partnership)
LIBERTY PROPERTY TRUST
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Exact name of registrants as specified in their governing documents)
MARYLAND (Liberty Property Trust) 23-7768996
PENNSYLVANIA (Liberty Property Limited Partnership) 23-2766549
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer Identification Number)
65 Valley Stream Parkway, Suite 100, Malvern, Pennsylvania 19355
(Address of Principal Executive Offices) (Zip Code)
Registrants' Telephone Number, Including Area Code (610)648-1700
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding twelve (12) months (or for such shorter
period that the registrants were required to file such reports) and (2)
have been subject to such filing requirements for the past ninety (90)
days. YES X NO
On August 7, 1998, 64,742,257 Common Shares of Beneficial Interest, par
value $.001 per share, of Liberty Property Trust were outstanding.
<PAGE>
LIBERTY PROPERTY TRUST/LIBERTY PROPERTY LIMITED PARTNERSHIP
FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 1998
INDEX
- -----
Part I. Financial Information
- -------------------------------
Item 1. Financial Statements (unaudited) Page
----
Consolidated balance sheets of Liberty Property
Trust at June 30, 1998 and December 31, 1997. 4
Consolidated statements of operations of Liberty
Property Trust for the three months ended June 30,
1998 and June 30, 1997. 5
Consolidated statements of operations of Liberty
Property Trust for the six months ended June 30,
1998 and June 30, 1997. 6
Consolidated statements of cash flows of Liberty
Property Trust for the six months ended June 30,
1998 and June 30, 1997. 7
Notes to consolidated financial statements for
Liberty Property Trust. 8-11
Consolidated balance sheets of Liberty Property
Limited Partnership at June 30, 1998 and
December 31, 1997. 12
Consolidated statements of operations of Liberty
Property Limited Partnership for the three months
ended June 30, 1998 and June 30, 1997. 13
Consolidated statements of operations of Liberty
Property Limited Partnership for the six months
ended June 30, 1998 and June 30, 1997. 14
Consolidated statements of cash flows of Liberty
Property Limited Partnership for the six months
ended June 30, 1998 and June 30, 1997. 15
Notes to consolidated financial statements for
Liberty Property Limited Partnership. 16-17
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 17-23
Part II. Other Information 24-25
- ---------------------------
Signatures 26
-2-
<PAGE>
- -----------------------------
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included in
this Quarterly Report on Form 10-Q contain statements that are or will be
forward-looking, such as statements relating to acquisitions and other
business development activities, future capital expenditures, financing
sources and availability, and the effects of regulation (including
environmental regulation) and competition. Such forward-looking
information involves important risks and uncertainties that could
significantly affect anticipated results in the future and, accordingly,
such results may differ from those expressed in any forward-looking
statements made by, or on behalf of, the Company. These risks and
uncertainties include, but are not limited to, uncertainties affecting
real estate businesses generally (such as entry into new leases, renewals
of leases and dependence on tenants' business operations), risks relating
to acquisition, construction and development activities, possible
environmental liabilities, risks relating to leverage and debt service
(including availability of financing terms acceptable to the Company and
sensitivity of the Company's operations to fluctuations in interest
rates), the potential for the use of borrowings to make distributions
necessary to qualify as a REIT, dependence on the primary markets in
which the Company's properties are located, the existence of complex
regulations relating to status as a REIT and the adverse consequences of
the failure to qualify as a REIT and the potential adverse impact of
market interest rates on the market price for the Company's securities.
-3-
<PAGE>
CONSOLIDATED BALANCE SHEETS OF LIBERTY PROPERTY TRUST
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
JUNE 30, 1998 DECEMBER 31, 1997
------------------ -----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Real estate:
Land and land improvements $ 316,249 $ 238,519
Buildings and improvements 2,084,431 1,649,512
Less accumulated depreciation (174,742) (149,311)
---------- ----------
Operating real estate 2,225,938 1,738,720
Development in progress 241,951 156,093
Land held for development 62,112 61,904
---------- ----------
Net real estate 2,530,001 l,956,717
Cash and cash equivalents 40,342 55,079
Accounts receivable 7,533 6,517
Deferred financing and leasing costs,
net of accumulated amortization (1998,
$44,832; 1997, $40,560) 34,418 32,536
Prepaid expenses and other assets 44,710 43,488
---------- ----------
Total assets $2,657,004 $2,094,337
========== ==========
LIABILITIES
Mortgage loans $ 416,004 $ 363,591
Unsecured notes 625,000 350,000
Credit facility 133,000 135,000
Convertible debentures 107,580 111,543
Accounts payable 21,200 14,544
Accrued interest 16,660 10,960
Dividend payable 29,520 25,927
Other liabilities 51,777 42,499
---------- ----------
Total liabilities 1,400,741 1,054,064
Minority interest 102,134 84,678
SHAREHOLDERS' EQUITY
8.80% Series A cumulative redeemable preferred
shares, $.001 par value, 5,000,000 shares
authorized; 5,000,000 shares issued and
outstanding as of June 30, 1998 and
December 31, 1997 120,814 120,814
Common shares of beneficial interest, $.001
par value, 200,000,000 shares authorized,
60,686,996 and 52,692,940 shares issued
and outstanding as of June 30, 1998
and December 31, 1997, respectively 61 53
Additional paid-in capital 1,049,351 846,949
Unearned compensation (773) (985)
Dividends in excess of net income (15,324) (11,236)
---------- -----------
Total shareholders' equity 1,154,129 955,595
---------- -----------
Total liabilities and shareholders' equity $2,657,004 $2,094,337
========== ===========
</TABLE>
See accompanying notes.
-4-
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS OF LIBERTY PROPERTY TRUST
(UNAUDITED AND IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE THREE
MONTHS ENDED MONTHS ENDED
JUNE 30, 1998 JUNE 30, 1997
----------------- ---------------
<S> <C> <C>
REVENUE
Rental $ 68,018 $ 39,341
Operating expense reimbursement 23,124 11,941
Management fees 150 158
Interest and other 116 (249)
--------- ---------
Total revenue 91,408 51,191
--------- ---------
OPERATING EXPENSES
Rental property expenses 16,723 9,276
Real estate taxes 7,518 4,202
General and administrative 3,697 2,295
Depreciation and amortization 16,520 9,318
--------- ---------
Total operating expenses 44,458 25,091
--------- ---------
Operating income 46,950 26,100
Write off of deferred financing costs - 2,566
Interest expense 18,853 11,329
--------- ---------
Income before minority interest 28,097 12,205
Minority interest 2,061 1,250
--------- ---------
Net income 26,036 10,955
Preferred dividend 2,750 -
--------- ---------
Income available to common shareholders $ 23,286 $ 10,955
========= =========
Income per common share - basic $ 0.39 $ 0.27
========= =========
Income per common share - diluted $ 0.39 $ 0.27
========= =========
Dividends declared per common share $ 0.42 $ 0.41
========= =========
Weighted average number of common shares
outstanding - basic 59,715 40,863
========= =========
Weighted average number of common shares
outstanding - diluted 60,049 41,116
========= =========
</TABLE>
See accompanying notes.
-5-
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS OF LIBERTY PROPERTY TRUST
(UNAUDITED AND IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX SIX
MONTHS ENDED MONTHS ENDED
JUNE 30, 1998 JUNE 30, 1997
-------------- --------------
<S> <C> <C>
REVENUE
Rental $129,033 $73,982
Operating expense reimbursement 43,374 22,790
Management fees 297 311
Interest and other 1,323 590
-------- -------
Total revenue 174,027 97,673
-------- -------
OPERATING EXPENSES
Rental property expenses 31,639 17,915
Real estate taxes 14,537 7,482
General and administrative 7,047 4,782
Depreciation and amortization 30,739 17,288
-------- -------
Total operating expenses 83,962 47,467
-------- -------
Operating income 90,065 50,206
Write off of deferred financing costs - 2,566
Interest expense 35,419 23,911
-------- -------
Income before minority interest 54,646 23,729
Minority interest 3,870 2,225
-------- -------
Net income 50,776 21,504
Preferred dividend 5,500 -
-------- -------
Income available to common shareholders $ 45,276 $21,504
======== =======
Income per common share - basic $ 0.79 $ 0.59
======== =======
Income per common share - diluted $ 0.78 $ 0.58
======== =======
Dividends declared per common share $ 0.84 $ 0.82
======== =======
Weighted average number of common shares
outstanding - basic 57,509 36,703
======== =======
Weighted average number of common shares
outstanding - diluted 57,870 36,972
======== =======
</TABLE>
See accompanying notes.
-6-
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS OF LIBERTY PROPERTY TRUST
(UNAUDITED AND IN THOUSANDS)
SIX SIX
MONTHS ENDED MONTHS ENDED
JUNE 30, 1998 JUNE 30, 1997
---------------- ---------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 50,776 $ 21,504
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 30,739 17,288
Amortization of deferred financing costs 2,193 4,951
Minority interest in net income 3,870 2,225
Loss on sale 1,048 1,143
Noncash compensation 211 211
Changes in operating assets and liabilities:
Accounts receivable (1,016) (3,011)
Prepaid expenses and other assets (1,645) (4,729)
Accounts payable 6,656 2,918
Accrued interest 5,700 (510)
Other liabilities 10,063 6,461
---------- ---------
Net cash provided by operating activities 108,595 48,451
---------- ---------
INVESTING ACTIVITIES
Investment in properties (389,112) (264,744)
Disposition of properties 11,115 24,970
Investment in development in progress (141,995) (92,089)
Investment in land held for development (208) (4,865)
Increase in deferred leasing costs (6,023) (3,421)
---------- ---------
Net cash used in investing activities (526,223) (340,149)
---------- ---------
FINANCING ACTIVITIES
Net proceeds from issuance of common shares 197,616 191,713
Proceeds from issuance of unsecured notes 275,000 -
Proceeds from mortgage loans - 120,473
Repayments of mortgage loans (11,505) (6,538)
Proceeds from lines of credit 421,000 442,018
Repayments on lines of credit (423,000) (412,710)
Increase in deposits on pending acquisitions (37) (214)
Increase deferred financing costs (530) (4,945)
Common dividends (46,008) (29,602)
Preferred dividends (5,500) -
Distributions to partners (4,145) (3,059)
---------- ---------
Net cash provided by financing activities 402,891 297,136
(Decrease) increase in cash and cash equivalents (14,737) 5,438
Cash and cash equivalents at beginning of period 55,079 19,612
---------- ---------
Cash and cash equivalents at end of period $ 40,342 $ 25,050
========== =========
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS
Write-off of fully depreciated property and
deferred costs $ 2,768 $ 6,228
Acquisition of properties (82,064) (62,084)
Assumption of mortgage loans 63,918 33,292
Issuance of operating partnership units 18,146 28,792
Noncash compensation 785 673
Conversion of convertible debentures 3,831 23,226
========== =========
</TABLE>
See accompanying notes.
-7-
<PAGE>
LIBERTY PROPERTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1998
NOTE 1 - BASIS OF PRESENTATION
- ------------------------------
The accompanying unaudited consolidated financial statements of Liberty
Property Trust (the "Trust") and its subsidiaries, including Liberty
Property Limited Partnership (the "Operating Partnership") (the Trust,
Operating Partnership and their respective subsidiaries referred to
collectively as the "Company"), have been prepared in accordance with
generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements and should be read in conjunction with the
consolidated financial statements and notes thereto included in the
Annual Report on Form 10-K of the Trust and the Operating Partnership for
the year ended December 31, 1997. In the opinion of management, all
adjustments (consisting solely of normal recurring adjustments) necessary
for a fair presentation of the financial statements for these interim
periods have been included. The results of interim periods are not
necessarily indicative of the results to be obtained for a full fiscal
year. Certain amounts from prior periods have been restated to conform
to current period presentation.
In the fourth quarter of 1997, the Company adopted Statement of Financial
Accounting Standards No. 128, "Earnings per Share", which replaced the
calculation of primary and fully diluted income per common share with
basic and diluted income per common share. Unlike primary income per
common share, basic income per common share excludes any dilutive effects
of options. Diluted income per common share generally includes the
weighted average common shares, the effect of the outstanding options,
and the conversion of the units of limited partnership interest in the
Operating Partnership and Convertible Debentures into common shares,
unless the inclusion of such common share equivalents are antidilutive
for the period(s) presented.
-8-
<PAGE>
The following tables set forth the computation of basic and diluted
income per common share for the three and six month periods ended June
30, 1998 and 1997:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE THREE MONTHS
ENDED JUNE 30, 1998 ENDED JUNE 30, 1997
------------------------------------- -------------------------------------
INCOME SHARES PER SHARE INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT (NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- --------- ----------- ------------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
Net income $ 26,036 $ 10,955
Less: Preferred
dividends 2,750 -
-------- --------
Basic income per
common share
Income available
to common share-
holders 23,286 59,715 $ 0.39 10,955 40,863 $ 0.27
======= =======
Effect of dilutive
securities
Options - 334 - 253
-------- ------- -------- -------
Diluted income per
common share
Income available
to common share-
holders and assumed
conversions $ 23,286 60,049 $ 0.39 $ 10,955 41,116 $ 0.27
======== ======= ======= ======== ======= =======
</TABLE>
<TABLE>
<CAPTION>
FOR THE SIX MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, 1998 ENDED JUNE 30, 1997
------------------------------------- -------------------------------------
INCOME SHARES PER SHARE INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT (NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- --------- ----------- ------------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
Net income $ 50,776 $ 21,504
Less: Preferred
dividends 5,500 -
-------- --------
Basic income per
common share
Income available
to common share-
holders 45,276 57,509 $ 0.79 21,504 36,703 $ 0.59
======= =======
Effect of dilutive
securities
Options - 361 - 269
-------- ------- -------- -------
Diluted income per
common share
Income available
to common share-
holders and assumed
conversions $ 45,276 57,870 $ 0.78 $ 21,504 36,972 $ 0.58
======== ======= ======= ======== ======= =======
</TABLE>
The EITF 97-11 ruling "Accounting for Internal Costs Relating to Real
Estate Property Acquisitions", effective March 19, 1998, requires the
expensing of internal acquisition costs. The Company has adopted this
release as of January 1, 1998 and accordingly, the results of operations
for the quarter and six months ended June 30, 1998 reflect the expensing
of internal acquisition costs. The adoption of the ruling did not have a
material effect on the results of operations for the quarter or the six
months ended June 30, 1998, and it is not anticipated that it will have a
material effect on the Company's results of operations for future
periods.
-9-
<PAGE>
NOTE 2 - ORGANIZATION
- ---------------------
Liberty Property Trust (the "Trust") is a self-administered and self-
managed Maryland real estate investment trust (a "REIT"). Substantially
all of the Trust's assets are owned directly or indirectly, and
substantially all of the Trust's operations are conducted directly or
indirectly, by its subsidiary, Liberty Property Limited Partnership, a
Pennsylvania limited partnership (the "Operating Partnership" and,
together with the Trust, the "Company"). At June 30, 1998, the Trust
owned a 91.85% interest in the Operating Partnership as the sole general
partner and a 0.02% interest as a limited partner. The Company provides
leasing, property management, acquisition, development, construction
management and design management for a portfolio of industrial and office
properties which are located principally within the Southeastern, Mid-
Atlantic and Midwestern United States.
On January 22, 1998, the Company sold $75 million principal amount of
6.375% notes due 2013. Such notes are subject to mandatory repayment of
principal to the holders thereof in 2003 pursuant to a call/put option
relating to such notes. On January 23, 1998, the Company sold $100
million principal amount of 7.50% notes due 2018. On June 5, 1998, the
Company sold $100 million principal amount of 6.6% notes due 2002. The
aggregate net proceeds to the Company from such offerings were
approximately $272.7 million.
On January 21, 1998, the Company consummated a public offering of
2,300,000 common shares. The aggregate net proceeds to the Company from
such offering were approximately $60.4 million.
On February 23, 1998, the Company consummated a public offering of
1,702,128 common shares. The aggregate net proceeds to the Company from
such offering were approximately $42.7 million.
On April 24, 1998, the Company consummated a public offering of 3,750,000
common shares. The aggregate net proceeds to the Company from such
offering were approximately $94.1 million.
On August 4, 1998, the Company consummated a public offering of 3,960,820
common shares. The aggregate net proceeds to the Company from such
offering were approximately $99.2 million.
NOTE 3 - PRO FORMA INFORMATION
- ------------------------------
The following unaudited pro forma information has been prepared assuming
the common and preferred shares offerings which were consummated in 1997
and the first six months of 1998 and the acquisitions of 170 properties
acquired in 1997 and 83 properties acquired during the first six months
of 1998, had occurred at January 1, 1997. The 1997 acquisitions were
-10-
<PAGE>
acquired for a total investment of $727.9 million and the 1998
acquisitions were acquired for a total investment of $431.9 million.
SIX MONTHS ENDED
----------------------------------------
JUNE 30, 1998 JUNE 30, 1997
------------------- ------------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Total revenue $184,213 $163,736
Income available to common
shareholders 47,583 39,741
Income per share - basic (1) $ 0.78 $ 0.65
Income per share - diluted (1) $ 0.78 $ 0.65
(1) Income in the per share calculations has been computed after a
deduction for minority interest.
This pro forma information is not necessarily indicative of what the
actual results of operations of the Company would have been, assuming the
Company had completed the common and preferred shares offerings and the
acquisitions of 1997 and the first six months of 1998 as of January 1,
1997, nor does it purport to represent the results of operations of the
Company for future periods.
-11-
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS OF LIBERTY PROPERTY LIMITED PARTNERSHIP
(IN THOUSANDS)
JUNE 30, 1998 DECEMBER 31, 1997
---------------- -----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Real estate:
Land and land improvements $ 316,249 $ 238,519
Buildings and improvements 2,084,431 1,649,512
Less accumulated depreciation (174,742) (149,311)
---------- ----------
Operating real estate 2,225,938 1,738,720
Development in progress 241,951 156,093
Land held for development 62,112 61,904
---------- ----------
Net real estate 2,530,001 l,956,717
Cash and cash equivalents 40,342 55,079
Accounts receivable 7,533 6,517
Deferred financing and leasing costs,
net of accumulated amortization
(1998, $44,832; 1997, $40,560) 34,418 32,536
Prepaid expenses and other assets 44,710 43,488
---------- ----------
Total assets $2,657,004 $2,094,337
========== ==========
LIABILITIES
Mortgage loans $ 416,004 $ 363,591
Unsecured notes 625,000 350,000
Credit facility 133,000 135,000
Convertible debentures 107,580 111,543
Accounts payable 21,200 14,544
Accrued interest 16,660 10,960
Dividend payable 29,520 25,927
Other liabilities 51,777 42,499
---------- ----------
Total liabilities 1,400,741 1,054,064
OWNERS' EQUITY
General partner's equity 1,154,129 955,595
Limited partners' equity 102,134 84,678
---------- ----------
Total owners' equity 1,256,263 1,040,273
---------- ----------
Total liabilities and owners' equity $2,657,004 $2,094,337
========== ==========
</TABLE>
See accompanying notes.
-12-
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS OF LIBERTY PROPERTY LIMITED PARTNERSHIP
(UNAUDITED AND IN THOUSANDS)
THREE THREE
MONTHS ENDED MONTHS ENDED
JUNE 30, 1998 JUNE 30, 1997
----------------- ------------------
<S> <C> <C>
REVENUE
Rental $ 68,018 $ 39,341
Operating expense reimbursement 23,124 11,941
Management fees 150 158
Interest and other 116 (249)
--------- ---------
Total revenue 91,408 51,191
--------- ---------
OPERATING EXPENSES
Rental property expenses 16,723 9,276
Real estate taxes 7,518 4,202
General and administrative 3,697 2,295
Depreciation and amortization 16,520 9,318
--------- ---------
Total operating expenses 44,458 25,091
--------- ---------
Operating income 46,950 26,100
Write off of deferred financing costs - 2,566
Interest expense 18,853 11,329
--------- ---------
Net income $ 28,097 $ 12,205
========= =========
Net income allocated to general partner $ 26,036 $ 10,955
Net income allocated to limited partners 2,061 1,250
========= =========
</TABLE>
See accompanying notes.
-13-
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS OF LIBERTY PROPERTY LIMITED PARTNERSHIP
(UNAUDITED AND IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
SIX SIX
MONTHS ENDED MONTHS ENDED
JUNE 30, 1998 JUNE 30, 1997
-------------- --------------
<S> <C> <C>
REVENUE
Rental $129,033 $73,982
Operating expense reimbursement 43,374 22,790
Management fees 297 311
Interest and other 1,323 590
-------- -------
Total revenue 174,027 97,673
-------- -------
OPERATING EXPENSES
Rental property expenses 31,639 17,915
Real estate taxes 14,537 7,482
General and administrative 7,047 4,782
Depreciation and amortization 30,739 17,288
-------- -------
Total operating expenses 83,962 47,467
-------- -------
Operating income 90,065 50,206
Write off of deferred financing costs - 2,566
Interest expense 35,419 23,911
-------- -------
Net income $ 54,646 $23,729
======== =======
Net income allocated to general partner $ 50,776 $21,504
Net income allocated to limited partner 3,870 2,225
======== =======
-14-
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS OF LIBERTY PROPERTY LIMITED PARTNERSHIP
(UNAUDITED AND IN THOUSANDS)
SIX SIX
MONTHS ENDED MONTHS ENDED
JUNE 30, 1998 JUNE 30, 1997
---------------- ----------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 54,646 $ 23,729
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 30,739 17,288
Amortization of deferred financing costs 2,193 4,951
Loss on sale 1,048 1,143
Noncash compensation 211 211
Changes in operating assets and liabilities:
Accounts receivable (1,016) (3,011)
Prepaid expenses and other assets (1,645) (4,729)
Accounts payable 6,656 2,918
Accrued interest 5,700 (510)
Other liabilities 10,063 6,461
---------- ---------
Net cash provided by operating activities 108,595 48,451
---------- ---------
INVESTING ACTIVITIES
Investment in properties (389,112) (264,744)
Disposition of properties 11,115 24,970
Investment in development in progress (141,995) (92,089)
Investment in land held for development (208) (4,865)
Increase in deferred leasing costs (6,023) (3,421)
---------- ---------
Net cash used in investing activities (526,223) (340,149)
---------- ---------
FINANCING ACTIVITIES
Proceeds from issuance of unsecured notes 275,000 -
Proceeds from mortgage loans - 120,473
Repayments of mortgage loans (11,505) (6,538)
Proceeds from lines of credit 421,000 442,018
Repayments on lines of credit (423,000) (412,710)
Increase in deposits on pending acquisitions (37) (214)
Increase in deferred financing costs (530) (4,945)
Capital contributions 197,616 191,713
Distributions to partners (55,653) (32,661)
---------- ---------
Net cash provided by financing activities 402,891 297,136
(Decrease) increase in cash and cash equivalents (14,737) 5,438
Cash and cash equivalents at beginning of period 55,079 19,612
---------- ---------
Cash and cash equivalents at end of period $ 40,342 $ 25,050
========== =========
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS
Write-off of fully depreciated property and
deferred costs $ 2,768 $ 6,228
Acquisition of properties (82,064) (62,084)
Assumption of mortgage loans 63,918 33,292
Issuance of operating partnership units 18,146 28,792
Noncash compensation 785 673
Conversion of convertible debentures 3,831 23,226
========== ==========
</TABLE>
See accompanying notes.
-15-
<PAGE>
LIBERTY PROPERTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1998
NOTE 1 - BASIS OF PRESENTATION
- ------------------------------
The accompanying unaudited consolidated financial statements of Liberty
Property Limited Partnership (the "Operating Partnership") and its direct
and indirect subsidiaries have been prepared in accordance with generally
accepted accounting principles for interim financial information and with
the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements and should be read in conjunction with the
consolidated financial statements and notes thereto included in the
Annual Report on Form 10-K of the Trust and the Operating Partnership for
the year ended December 31, 1997. In the opinion of management, all
adjustments (consisting solely of normal recurring adjustments) necessary
for a fair presentation of the financial statements for these interim
periods have been included. The results of interim periods are not
necessarily indicative of the results to be obtained for a full fiscal
year. Certain amounts from prior periods have been restated to conform
to current period presentations.
The EITF 97-11 ruling "Accounting for Internal Costs Relating to Real
Estate Property Acquisitions", effective March 19, 1998, requires the
expensing of internal acquisition costs. The Company has adopted this
release as of January 1, 1998 and accordingly, the results of operations
for the quarter and six months ended June 30, 1998 reflect the expensing
of internal acquisition costs. The adoption of the ruling did not have a
material effect on the results of operations for the quarter or the six
months ended June 30, 1998 and it is not anticipated that it will have a
material effect on the Company's results of operations for future
periods.
NOTE 2 - ORGANIZATION
- ---------------------
Liberty Property Trust (the "Trust") is a self-administered and self-
managed Maryland real estate investment trust (a "REIT"). Substantially
all of the Trust's assets are owned directly or indirectly, and
substantially all of the Trust's operations are conducted directly or
indirectly, by its subsidiary, Liberty Property Limited Partnership, a
Pennsylvania limited partnership (the "Operating Partnership" and,
together with the Trust, the "Company"). At June 30, 1998, the Trust
owned a 91.85% interest in the Operating Partnership as the sole general
partner and a 0.02% interest as a limited partner. The Company provides
leasing, property management, acquisition, development, construction
management and design management for a portfolio of industrial and office
properties which are located principally within the Southeastern, Mid-
Atlantic and Midwestern United States.
On January 22, 1998, the Company sold $75 million principal amount of
6.375% notes due 2013. Such notes are subject to mandatory repayment of
principal to the holders thereof in 2003 pursuant to a call/put option
relating to such notes. On January 23, 1998, the Company sold $100
million principal amount of 7.50% notes due 2018. On June 5, 1998, the
-16-
<PAGE>
Company sold $100 million principal amount of 6.60% notes due 2002. The
aggregate net proceeds to the Company from such offerings were
approximately $272.7 million.
On January 21, 1998, the Company consummated a public offering of
2,300,000 common shares. The aggregate net proceeds to the Company from
such offering were approximately $60.4 million.
On February 23, 1998, the Company consummated a public offering of
1,702,128 common shares. The aggregate net proceeds to the Company from
such offering were approximately $42.7 million.
On April 24, 1998, the Company consummated a public offering of 3,750,000
common shares. The aggregate net proceeds to the Company from such
offering were approximately $94.1 million.
On August 4, 1998, the Company consummated a public offering of 3,960,820
common shares. The aggregate net proceeds to the Company from such
offering were approximately $99.2 million.
NOTE 3 - PRO FORMA INFORMATION
- ------------------------------
The following unaudited pro forma information has been prepared assuming
the common and preferred shares offerings which were consummated in 1997
and the first six months of 1998 and the acquisitions of 170 properties
acquired in 1997 and 83 properties acquired during the first six months
of 1998, had occurred at January 1, 1997. The 1997 acquisitions were
acquired for a total investment of $727.9 million and the 1998
acquisitions were acquired for a total investment of $431.9 million.
SIX MONTHS ENDED
---------------------------------------
JUNE 30, 1998 JUNE 30, 1997
------------------ ------------------
(IN THOUSANDS)
Total revenue $184,213 $163,736
Net income 57,294 48,758
This pro forma information is not necessarily indicative of what the
actual results of operations of the Company would have been, assuming the
Company had completed the common and preferred shares offerings and the
acquisitions of 1997 and the six months of 1998 as of January 1, 1997,
nor does it purport to represent the results of operations of the Company
for future periods.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- -----------------------------------------------------------------------
The following discussion compares the activities of the Company for the
three and six months ended June 30, 1998 (unaudited) with the activities
of the Company for the three and six months ended June 30, 1997
(unaudited). As a result of the significant level of acquisition and
development activities by the Company in 1998 and 1997, the overall
operating results of the Company during such periods are not directly
comparable. However, certain data, including the "Same Store"
comparison, do lend themselves to direct comparison. As used herein, the
term "Company" includes the Trust, the Operating Partnership and their
subsidiaries.
-17-
<PAGE>
This information should be read in conjunction with the accompanying
consolidated financial statements and notes included elsewhere in this
report.
The composition of the Company's in-service portfolio of rental
properties as of June 30, 1998 and 1997 is as follows (in thousands):
<TABLE>
<CAPTION>
TOTAL PERCENT OF TOTAL
SQUARE FEET SQUARE FEET PERCENT OCCUPIED
----------------- ---------------- -----------------
JUNE 30, JUNE 30, JUNE 30,
TYPE 1998 1997 1998 1997 1998 1997
- ------------------------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Industrial - Distribution 17,556 13,455 44.5% 50.9% 95.2% 95.4%
Industrial - Flex 10,934 6,285 27.7% 23.7% 93.5% 91.9%
Office 10,990 6,707 27.8% 25.4% 96.3% 89.8%
------ ------ ------- ------- ------- -------
Total 39,480 26,447 100.0% 100.0% 95.0% 93.2%
====== ====== ====== ====== ====== ======
</TABLE>
The expiring square feet and annual base rent by year for the above in-
service portfolio of rental properties as of June 30, 1998 are as follows
(in thousands):
<TABLE>
<CAPTION>
INDUSTRIAL-
DISTRIBUTION INDUSTRIAL-FLEX OFFICE TOTAL
------------------ ------------------ ------------------ ------------------
SQUARE ANNUAL SQUARE ANNUAL SQUARE ANNUAL SQUARE ANNUAL
YEAR FEET BASE RENT FEET BASE RENT FEET BASE RENT FEET BASE RENT
- ---------- ------ --------- ------ --------- ------ --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1998 1,257 $ 4,582 1,153 $ 7,870 970 $ 10,186 3,380 $ 22,638
1999 2,221 10,028 1,881 13,589 1,656 17,297 5,758 40,914
2000 2,029 9,212 1,867 13,603 2,161 28,811 6,057 51,626
2001 2,543 12,161 1,928 14,080 1,424 17,576 5,895 43,817
2002 2,396 10,121 999 8,214 1,024 12,316 4,419 30,651
2003 1,299 6,486 843 7,096 767 9,756 2,909 23,338
Thereafter 4,961 24,656 1,555 15,773 2,587 36,124 9,103 76,553
------ -------- ------ -------- ------ -------- ------ --------
Total 16,706 $77,246 10,226 $80,225 10,589 $132,066 37,521 $289,537
====== ======== ====== ======== ====== ======== ====== ========
</TABLE>
The scheduled deliveries of the 5.0 million square feet of properties
under development as of June 30, 1998 are as follows (in thousands):
<TABLE>
<CAPTION>
SQUARE FEET
-----------------------------
SCHEDULED IND- IND- PERCENT LEASED
IN-SERVICE DATE DIST. FLEX OFFICE TOTAL JUNE 30, 1998 TOTAL INVESTMENT
- ---------------- ----- ----- ------ ----- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
3rd Quarter 1998 69 219 449 737 81.0% $ 65,916
4th Quarter 1998 887 132 407 1,426 82.4% 84,811
1st Quarter 1999 152 215 75 442 5.2% 27,473
2nd Quarter 1999 133 378 75 586 57.9% 29,755
Thereafter 566 156 1,108 1,830 34.1% 199,417
----- ----- ------ ----- ------ ---------
Total 1,807 1,100 2,114 5,021 54.9% $407,372
===== ===== ====== ===== ====== =========
</TABLE>
-18-
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
For the three and six months ended June 30, 1998 compared to the three
and six months ended June 30, 1997.
- -----------------------------------------------------------------------
Rental revenues increased from $39.3 million to $68.0 million, or by 73%,
for the three months ended June 30, 1997 to 1998 and increased from $74.0
million to $129.0 million, or by 74%, for the six months ended June 30,
1997 to 1998. These increases are primarily due to the increase in the
number of properties in operation ("Operating Properties") during the
respective periods. As of June 30, 1997, the Company had 326 Operating
Properties and, as of June 30, 1998, the Company had 540 Operating
Properties. From January 1, 1997 through March 31, 1997, and from April
1, 1997 through June 30, 1997, the Company acquired or completed the
development on 26 properties and 46 properties, respectively, for Total
Investments (as defined below) of approximately $158.9 million and $259.5
million, respectively. From January 1, 1998 through March 31, 1998, and
from April 1, 1998 through June 30, 1998, the Company acquired or
completed the development on 55 properties and 48 properties,
respectively, for Total Investments of approximately $301.6 million and
$224.8 million, respectively. 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.
Operating expense reimbursement increased from $11.9 million to $23.1
million for the three months ended June 30, 1997 to 1998 and from $22.8
million to $43.4 million for the six months ended June 30, 1997 to 1998.
These increases are 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 88.6% for the three months ended June 30, 1997 to 95.4%
for the three months ended June 30, 1998, and from 89.7% for the six
months ended June 30, 1997 to 93.9% for the six months ended June 30,
1998, due to the increase in occupancy.
Rental property and real estate tax expenses increased from $13.5 million
to $24.2 million for the three months ended June 30, 1997 to 1998 and
from $25.4 million to $46.2 million for the six months ended June 30,
1997 to 1998. These increases are due to the increase in the number of
properties owned during the respective periods.
Property level operating income for the "Same Store" properties
(properties owned as of January 1, 1997) increased from $61.5 million to
$64.7 million for the six months ended June 30, 1997 to 1998, an increase
of 5.2%. This increase is due to increases in the rental rates for the
properties and increases in occupancy.
-19-
<PAGE>
Set forth below is a schedule comparing the property level operating
income for the Same Store properties for the six month periods ended June
30, 1998 and 1997.
SIX MONTHS ENDED
(IN THOUSANDS)
-------------------------------------
JUNE 30, 1998 JUNE 30, 1997
---------------- -----------------
Rental revenue $ 65,909 $ 63,676
Operating expense reimbursement 19,511 19,683
-------- --------
85,420 83,359
Rental property expenses 14,649 15,998
Real estate taxes 6,066 5,869
-------- --------
Property level operating income $ 64,705 $ 61,492
======== ========
General and administrative expenses increased from $2.3 million for the
three months ended June 30, 1997 to $3.7 million for the three months
ended June 30, 1998, and from $4.8 million for the six months ended June
30, 1997 to $7.0 million for the six months ended June 30, 1998, 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. Additionally, the three and six month periods ended June 30,
1998 reflect the expensing of internal acquisition costs as of January 1,
1998 in compliance with EITF 97-11, whereas these costs were previously
capitalized. These increases are somewhat mitigated by the benefit of
certain economies of scale experienced by the Company in owning and
operating the increased number of properties.
Depreciation and amortization expense increased from $9.3 million for the
three months ended June 30, 1997 to $16.5 million for the three months
ended June 30, 1998, and from $17.3 million for the six months ended June
30, 1997 to $30.7 million for the six months ended June 30, 1998. These
increases are due to an increase in the number of properties owned during
the respective periods.
Interest expense increased from $11.3 million for the three months ended
June 30, 1997 to $18.9 million for the three months ended June 30, 1998,
and from $23.9 million for the six months ended June 30, 1997 to $35.4
million for the six months ended June 30, 1998. These increases are due
to increases in the average debt outstanding for the second quarter of
1997 compared to the second quarter of 1998, from $723.8 million to
$1,220.3 million, and for the six months ended June 30, 1997 to June 30,
1998, from $708.8 million to $1,133.6 million. Such increases were
partially offset by reduced interest rates. The reduction in interest
rates was partially the result of the Company receiving investment grade
ratings from both Standard & Poor's Ratings Group ("S&P") and Moody's
Investors Service, Inc. ("Moody's") during mid-1997 which enabled the
Company to access public debt markets and other borrowings more
economically. Further, the increase in interest expense was partially
offset by the approximately $2.6 million in deferred financing costs
which were written off in the three months ended June 30, 1997, as a
result of the termination of the secured Lines of Credit.
As a result of the foregoing, the Company's operating income increased
from $26.1 million for the three months ended June 30, 1997 to $47.0
million for the three months ended June 30, 1998, and from $50.2 million
for the six months ended June 30, 1997 to $90.1 million for the six
-20-
<PAGE>
months ended June 30, 1998. In addition, income before minority interest
for the three months increased from $12.2 million for the three months
ended June 30, 1997 to $28.1 million for the three months ended June 30,
1998, and from $23.7 million for the six months ended June 30, 1997 to
$54.6 million for the six months ended June 30, 1998.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1998, the Company had cash and cash equivalents of $40.3
million.
Net cash flow provided by operating activities increased from $48.5
million for the six months ended June 30, 1997 to $108.6 million for the
six months ended June 30, 1998. This $60.1 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 $340.1 million for
the six months ended June 30, 1997 to $526.2 million for the six months
ended June 30, 1998. This increase primarily resulted from increased
acquisition activity in the first six months of 1998 as compared to the
first six months of 1997.
Net cash provided by financing activities increased from $297.1 million
for the six months ended June 30, 1997 to $402.9 million for the six
months ended June 30, 1998. This increase was attributable to the
issuance of $275 million principal amount of unsecured notes and the
issuance of 7,752,128 common shares which generated net proceeds of
$469.9 million during the six months ended June 30, 1998.
The Company believes that its undistributed cash flow from operations is
adequate to fund its short-term liquidity requirements.
The Company funds its long-term liquidity requirements such as property
acquisition and development activities primarily through its $325.0
million unsecured line of credit (the "Credit Facility"), which Credit
Facility matures May, 1999, and can be extended for one year. The
interest rate on borrowings under the Credit Facility fluctuates based
upon the Company's leverage levels or ratings from Moody's and S&P. On
June 23, 1997, Moody's raised its prospective senior debt rating of the
Company to Baa3 from Ba2 and on July 22, 1997, S&P 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 the Eurodollar Rate.
Periodically, the Company pays down borrowings on the Credit Facility
with funds from long-term capital sources. In the first six months of
1998, the Company used approximately $423.0 million of the proceeds from
the common share offerings and from unsecured note issuances to paydown
the Credit Facility.
As of June 30, 1998, $416.0 million in mortgage loans were outstanding
with maturities ranging from 1998 to 2013. The interest rates on $390.3
million of mortgage loans are fixed and range from 6.0% to 9.1%. Interest
rates on $25.7 million of mortgage loans float with LIBOR or prime, of
which $19.1 million is subject to certain caps. The weighted average
interest rate for the mortgage loans is 7.6%, and the weighted average
remaining term is 7.7 years.
-21-
<PAGE>
General
The Company expects to incur variable rate debt, including borrowings
under the Credit Facility, from time to time. The Company believes that
its existing sources of capital, including public debt and equity
markets, 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 shares of
beneficial interest, preferred shares of beneficial interest and debt
(the "Initial Shelf Registration").
On February 21, 1997, the Company filed a shelf registration with the
Securities and Exchange Commission that enabled the Company to offer up
to an aggregate of $850.0 million of securities, including common shares
of beneficial interest, preferred shares of beneficial interest and debt
(the "Second Shelf Registration").
On December 24, 1997 the Company filed a shelf registration statement
with the Securities and Exchange Commission that enables the Company to
offer up to an aggregate of $1.5 billion of securities, including common
shares of beneficial interest, preferred shares of beneficial interest
and debt (the "Third Shelf Registration"). The Third Shelf Registration
Statement became effective on January 4, 1998. Collectively, the Initial
Shelf Registration, the Second Shelf Registration and the Third Shelf
Registration are referred to as the "Shelf Registration Statement."
On January 12, 1998, the Company augmented its medium-term note program
to enable the Company to offer, in the aggregate, up to $450 million of
the Operating Partnership's medium-term notes. Under the program, on
January 22, 1998, the Company sold $75 million principal amount of 6.375%
notes due 2013. Such notes are subject to mandatory repayment of
principal to the holders thereof in 2003 pursuant to a call/put option
relating to such notes. Also under the program, on January 23, 1998, the
Company sold $100 million principal amount of 7.50% notes due 2018. On
June 5, 1998, the Company sold $100 million principal amount of 6.6%
notes due 2002. The aggregate net proceeds to the Company from such
offerings were approximately $272.7 million.
On January 21, 1998, the Company consummated a public offering of
2,300,000 Common Shares. The aggregate net proceeds to the Company from
such offering were approximately $60.4 million.
On February 23, 1998, the Company consummated a public offering of
1,702,128 Common Shares. The aggregate net proceeds to the Company from
such offering were approximately $42.7 million.
On April 24, 1998, the Company consummated a public offering of 3,750,000
common shares. The aggregate net proceeds to the Company from such
offering were approximately $94.1 million.
On August 4, 1998, the Company consummated a public offering of 3,960,820
common shares. The aggregate net proceeds to the Company from such
offering were approximately $99.2 million.
Presently, the Company has the capacity pursuant to the Shelf
Registration Statement to issue $696.8 million in equity securities and
-22-
<PAGE>
the Operating Partnership has the capacity to issue $375.7 million in
debt securities (including the $175.5 million of medium-term notes
available under the medium-term note program).
Calculation of Funds from Operations
Management generally considers Funds from Operations (as defined below) a
useful financial performance measure of the operating performance of an
equity REIT, because, together with net income and cash flows, Funds from
Operations provides investors with an additional basis to evaluate the
ability of a REIT to incur and service debt and to fund acquisitions and
capital expenditures. Funds from Operations is defined by NAREIT as net
income or loss after preferred dividends (computed in accordance with
generally accepted accounting principals ("GAAP")), excluding gains (or
losses) from debt restructuring and sales of property, plus real-estate
related depreciation and amortization and minority interest and excluding
significant non-recurring events that materially distort the comparative
measurement of the Company's performance over time. Funds from
Operations does not represent net income or cash flows from operations as
defined by GAAP and does not necessarily indicate that cash flows will be
sufficient to fund cash needs. It should not be considered as an
alternative to net income as an indicator of the Company's operating
performance or to cash flows as a measure of liquidity. Funds from
Operations also does not represent cash flows generated from operating,
investing or financing activities as defined by GAAP. Funds from
Operations for the three and six months ended June 30, 1998 and June 30,
1997 are as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
(IN THOUSANDS) (IN THOUSANDS)
---------------------- ---------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1998 1997 1998 1997
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Income available to common
shareholders $ 23,286 $ 10,955 $ 45,276 $ 21,504
Addback:
Minority interest 2,061 1,250 3,870 2,225
Depreciation and amortization 16,199 9,209 30,279 17,068
Loss on sale 1,048 1,143 1,048 1,143
Write off of deferred
financing costs - 2,566 - 2,566
======== ======== ========= =========
Funds from operations $ 42,594 $ 25,123 $ 80,473 $ 44,506
======== ======== ========= =========
</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.
-23-
<PAGE>
PART II: OTHER INFORMATION
- --------------------------
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
The 1998 Annual Meeting of Shareholders of the Trust was held on
May 20, 1998.
At the meeting, management's nominees, Willard G. Rouse III, M.
Leanne Lachman and J. Anthony Hayden, were elected to fill the three
available positions as Class I trustees. Voting (expressed in number of
shares) was as follows: Mr. Rouse: 45,994,826 for, 4,799,069 against or
withheld and no abstentions or broker non-votes; Ms. Lachman: 46,001,634
for, 4,792,261 against or withheld and no abstentions or broker non-
votes; and Mr. Hayden: 45,998,524 for, 4,795,371 against or withheld and
no abstentions or broker non-votes.
Trustees whose terms of office as trustee continued after the
meeting were Frederick F. Buchholz and Stephen B. Siegel, whose terms
expire in 1999, and Joseph P. Denny, David L. Lingerfelt and John A.
Miller, CLU, whose terms expire in 2000.
Item 5. Other Information
A shareholder of the Company may wish to have a proposal
presented at the Annual Meeting of Shareholders in 1999, but not to have
such proposal included in the Company's Proxy Statement and form of proxy
relating to that Meeting. Pursuant to Section 12(b) of the Company's By-
laws, notice of any such proposal must be received by the Company between
February 19, 1999 and March 21, 1999. If it is not received during this
time, such proposal shall be deemed "untimely" for purposes of Securities
and Exchange Commission Rule 14A-4(c), and, therefore, the Company will
have the right to exercise discretionary voting authority with respect to
such proposal. Any such notice should be directed to the Company at 65
Valley Stream Parkway, Malvern, Pennsylvania 19355, attention: James J.
Bowes, Secretary and General Counsel.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
4 Note, Relating to the Issuance by the Operating
Partnership, on June 5, 1998, of $100 Million Principal Amount of its
6.60% Medium-Term Notes due 2002.
27 Financial Data Schedule (EDGAR VERSION ONLY)
-24-
<PAGE>
b. Reports on Form 8-K
During the quarter ended June 30, 1998, the Registrants
filed three current reports on Form 8-K:
(i) report dated April 16, 1998 reporting Items 5 and 7
and containing the Statement of Operating Revenues and Certain Operating
Expenses for the Pureland Properties (as defined therein) and certain
pro forma financial information;
(ii) report dated June 11, 1998 reporting Items 5 and 7
and containing the Statement of Operating Revenues and Certain Operating
Expenses for 2800 Northwest Boulevard (as defined therein) and certain
pro forma financial information;
(iii) report dated June 24, 1998 reporting Items 5 and 7
and containing the Statement of Operating Revenues and Certain Operating
Expenses for Boca Colonnade (as defined therein) and certain pro forma
financial information.
-25-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LIBERTY PROPERTY TRUST
/s/ JOSEPH P. DENNY August 7, 1998
- ------------------------------ --------------------------------
Joseph P. Denny Date
President
/s/ GEORGE J. ALBURGER, JR. August 7, 1998
- ------------------------------ --------------------------------
George J. Alburger, Jr. Date
Chief Financial Officer
LIBERTY PROPERTY LIMITED PARTNERSHIP
By: LIBERTY PROPERTY TRUST, GENERAL PARTNER
/s/ JOSEPH P. DENNY August 7, 1998
- ------------------------------ --------------------------------
Joseph P. Denny Date
President
/s/ GEORGE J. ALBURGER, JR. August 7, 1998
- ------------------------------ --------------------------------
George J. Alburger, Jr. Date
Chief Financial Officer
-26-
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- ------------------------------------------------------
4 Note, Relating to the Issuance by the Operating
Partnership, on June 5, 1998, of $100 Million
Principal Amount of its 6.60% Medium-Term Notes due
2002.
27 Financial Data Schedule (EDGAR VERSION ONLY)
-27-
EXHIBIT 4
[FACE OF NOTE]
THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR
A NOMINEE THEREOF. THIS NOTE MAY NOT BE TRANSFERRED TO, OR REGISTERED
OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY PERSON OTHER
THAN THE DEPOSITORY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE
REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE. EVERY SECURITY AUTHENTICATED AND DELIVERED UPON REGISTRATION
OF TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.*
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
COMPANY (AS DEFINED BELOW) OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.*
LIBERTY PROPERTY LIMITED PARTNERSHIP
MEDIUM-TERM NOTE
(Fixed Rate)
REGISTERED CUSIP No.: PRINCIPAL AMOUNT: $
No. FXR- 5 53117EAE8 100,000,000
ORIGINAL ISSUE DATE: INTEREST RATE: % 6.60 STATED MATURITY DATE:
6/5/98 6/5/2002
INTEREST PAYMENT DATE(S): DEFAULT RATE: %
[X] Mar. 15 and Sep. 15
[ ] Other:
INITIAL REDEMPTION INITIAL REDEMPTION ANNUAL
REDEMPTION
DATE: PERCENTAGE: % PERCENTAGE
REDUCTION: %
OPTIONAL REPAYMENT REPAYMENT PRICE: % [ ] CHECK IF A DISCOUNT
DATE(S): 100 NOTE
Issue Price: %
SPECIFIED CURRENCY: AUTHORIZED DENOMINATION:
[X] United States dollars [X] $1,000 and integral
[ ] Other: multiples thereof
[ ] Other:
EXCHANGE RATE EXCHANGE RATE:
AGENT: U.S. $1.00 =
ADDENDUM ATTACHED: OTHER/ADDITIONAL PROVISIONS:
[X] Yes
[ ] No
* This paragraph applies to global Notes only.
Liberty Property Limited Partnership, a Pennsylvania limited partnership
(the "Company," which term includes any successor entity under the
Indenture hereinafter referred to), for value received, hereby promises
to pay to CEDE & CO.
, or registered assigns, upon presentation, the principal sum of $
100,000,000 (One Hundred Million)
, on the Stated Maturity Date specified above (or any Redemption Date or
Repayment Date, each as defined on the reverse hereof) (each such Stated
Maturity Date, Redemption Date or Repayment Date being hereinafter
referred to as the "Maturity Date" with respect to the principal
repayable on such date) and to pay interest thereon, at the Interest
Rate per annum specified above, until the principal hereof is paid or
duly made available for payment, and (to the extent that the payment of
such interest shall be legally enforceable) at the Default Rate per
annum specified above on any overdue principal, premium and/or interest.
The Company will pay interest in arrears on each Interest Payment Date,
if any, specified above (each, an "Interest Payment Date"), commencing
with the first Interest Payment Date next succeeding the Original Issue
Date specified above, and on the Maturity Date; provided, however, that
if the Original Issue Date occurs between a Record Date (as defined
below) and the next succeeding Interest Payment Date, interest payments
will commence on the second Interest Payment Date next succeeding the
Original Issue Date to the holder of this Note on the Record Date with
respect to such second Interest Payment Date. Interest on this Note
will be computed on the basis of a 360-day year of twelve 30-day months.
Interest on this Note will accrue from, and including, the immediately
preceding Interest Payment Date to which interest has been paid or duly
provided for (or from, and including, the Original Issue Date if no
interest has been paid or duly provided for) to, but excluding, the
applicable Interest Payment Date or the Maturity Date, as the case may
be (each, an "Interest Period"). The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will,
subject to certain exceptions described herein, be paid to the person in
whose name this Note (or one or more predecessor Notes) is registered at
the close of business on the fifteenth calendar day (whether or not a
Business Day, as defined below) immediately preceding such Interest
Payment Date (the "Record Date"); provided, however, that interest
payable on the Maturity Date will be payable to the person to whom the
principal hereof and premium, if any, hereon shall be payable. Any such
interest not so punctually paid or duly provided for ("Defaulted
Interest") will forthwith cease to be payable to the holder on any
Record Date, and shall be paid to the person in whose name this 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 hereinafter referred to, notice whereof shall be
given to the holder of this Note by the Trustee not less than 10 days
prior to such Special Record Date or may be paid at any time in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which this Note may be listed, and upon such
notice as may be required by such exchange, all as more fully provided
for in the Indenture.
Payment of principal, premium, if any, and interest in respect of this
Note due on the Maturity Date will be made in immediately available
funds upon presentation and surrender of this Note (and, with respect to
any applicable repayment of this Note, upon presentation and surrender
of this Note and a duly completed election form as contemplated on the
reverse hereof) at the office or agency maintained by the Company for
that purpose in the Borough of Manhattan, The City of New York,
currently the office of the Trustee located at First National Bank of
Chicago, c/o First Chicago Trust Company of New York, 14 Wall Street,
8th Floor, New York, New York 10005, or at such other paying agency in
the Borough of Manhattan, The City of New York, as the Company may
determine; provided, however, that if the Specified Currency specified
above is other than United States dollars and such payment is to be made
in the Specified Currency in accordance with the provisions set forth
below, such payment will be made by wire transfer of immediately
available funds to an account with a bank designated by the holder
hereof at least 15 calendar days prior to the Maturity Date, provided
that such bank has appropriate facilities therefor and that this Note
(and, if applicable, a duly completed repayment election form) is
presented and surrendered at the aforementioned office or agency
maintained by the Company in time for the Trustee to make such payment
in such funds in accordance with its normal procedures. Payment of
interest due on any Interest Payment Date other than the Maturity Date
will be made at the aforementioned office or agency maintained by the
Company or, at the option of the Company, by check mailed to the address
of the person entitled thereto as such address shall appear in the
Security Register maintained by the Trustee; provided, however, that a
holder of U.S. $10,000,000 (or, if the Specified Currency is other than
United States dollars, the equivalent thereof in the Specified Currency)
or more in aggregate principal amount of Notes (whether having identical
or different terms and provisions) will be entitled to receive interest
payments on any Interest Payment Date other than the Maturity Date by
wire transfer of immediately available funds if appropriate wire
transfer instructions have been received in writing by the Trustee not
less than 15 calendar days prior to such Interest Payment Date. Any
such wire transfer instructions received by the Trustee shall remain in
effect until revoked by such holder.
If any Interest Payment Date or the Maturity Date falls on a day that is
not a Business Day, the required payment of principal, premium, if any,
and/or interest shall be made on the next succeeding Business Day with
the same force and effect as if made on the date such payment was due,
and no interest shall accrue with respect to such payment for the period
from and after such Interest Payment Date or the Maturity Date, as the
case may be, to the date of such payment on the next succeeding Business
Day.
As used herein, "Business Day" means any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking
institutions are authorized or required by law, regulation or executive
order to close in The City of New York or Chicago, Illinois; provided,
however, that if the Specified Currency is other than United States
dollars, such day is also not a day on which banking institutions are
authorized or required by law, regulation or executive order to close in
the Principal Financial Center (as defined below) of the country issuing
the Specified Currency (unless the Specified Currency is European
Currency Units ("ECU"), in which case such day is also not a day that
appears as an ECU non-settlement day on the display designated as "ISDE"
on the Reuter Monitor Money Rates Service (or a day so designated by the
ECU Banking Association) or, if ECU non-settlement days do not appear on
that page (and are not so designated), a day that is not a day on which
payments in ECU cannot be settled in the international interbank
market); provided that, with respect to Notes as to which LIBOR is an
applicable Interest Rate Basis, such day is also a London Business Day
(as defined below). "London Business Day" means any day on which
dealings in the Designated LIBOR Currency (as defined below) are
transacted in the London interbank market. "Principal Financial Center"
means (i) the capital city of the country issuing the Specified Currency
(except as described in the immediately preceding sentence with respect
to ECU) or (ii) the capital city of the country which the Designated
LIBOR Currency, if applicable, relates (or, in the case of ECU,
Luxembourg), except, in each case, that with respect to United States
dollars, Australian dollars, Canadian dollars, Deutsche marks, Dutch
guilders, Italian lire, Swiss francs and ECUs, the "Principal Financial
Center" shall be The City of New York, Sydney, Toronto, Frankfurt,
Amsterdam, Milan (solely in the case of clause (i) above), Zurich and
Luxembourg, respectively.
The Company is obligated to make payments of principal, premium, if any,
and interest in respect of this Note in the Specified Currency (or, if
the Specified Currency is not at the time of such payment legal tender
for the payment of public and private debts, in such other coin or
currency of the country which issued the Specified Currency as at the
time of such payment is legal tender for the payment of such debts). If
the Specified Currency is other than United States dollars, except as
provided below, any such amounts so payable by the Company will be
converted by the Exchange Rate Agent specified above into United States
dollars for payment to the holder of this Note.
If the Specified Currency is other than United States dollars, the
holder of this Note may elect to receive such amounts in such Specified
Currency. If the holder of this Note shall not have duly made an
election to receive all or a specified portion of any payment of
principal, premium, if any, and/or interest in respect of this Note in
the Specified Currency, any United States dollar amount to be received
by the holder of this Note will be based on the highest bid quotation in
The City of New York received by the Exchange Rate Agent at
approximately 11:00 A.M., New York City time, on the second Business Day
preceding the applicable payment date from three recognized foreign
exchange dealers (one of whom may be the Exchange Rate Agent) selected
by the Exchange Rate Agent and approved by the Company for the purchase
by the quoting dealer of the Specified Currency for United States
dollars for settlement on such payment date in the aggregate amount of
the Specified Currency payable to all holders of Notes payable in the
Specified Currency who are scheduled to receive United States dollar
payments and at which the applicable dealer commits to execute a
contract. All currency exchange costs will be borne by the holder of
this Note by deductions from such payments. If three such bid
quotations are not available, payments on this Note will be made in the
Specified Currency unless the Specified Currency is not available due to
the imposition of exchange controls or other circumstances beyond the
control of the Company.
If the Specified Currency is other than United States dollars, the
holder of this Note may elect to receive all or a specified portion of
any payment of principal, premium, if any, and/or interest in respect of
this Note in the Specified Currency by submitting a written request for
such payment to the Trustee at its corporate trust office in The City of
New York on or prior to the applicable Record Date or at least 15
calendar days prior to the Maturity Date, as the case may be. Such
written request may be mailed or hand delivered or sent by cable, telex
or other form of facsimile transmission. The holder of this Note may
elect to receive all or a specified portion of all future payments in
the Specified Currency in respect of such principal, premium, if any,
and/or interest and need not file a separate election for each payment.
Such election will remain in effect until revoked by written notice to
the Trustee, but written notice of any such revocation must be received
by the Trustee on or prior to the applicable Record Date or at least 15
calendar days prior to the Maturity Date, as the case may be.
If the Specified Currency is other than United States dollars or a
composite currency and the holder of this Note shall have duly made an
election to receive all or a specified portion of any payment of
principal, premium, if any, and/or interest in respect of this Note in
the Specified Currency and if the Specified Currency is not available
due to the imposition of exchange controls or other circumstances beyond
the control of the Company, the Company will be entitled to satisfy its
obligations to the holder of this Note by making such payment in United
States dollars on the basis of the Market Exchange Rate (as defined
below), computed by the Exchange Rate Agent, on the second Business Day
prior to such payment date or, if such Market Exchange Rate is not then
available, on the basis of the most recently available Market Exchange
Rate, or as otherwise specified on the face hereof. The "Market
Exchange Rate" for the Specified Currency means the noon dollar buying
rate in The City of New York for cable transfers for the Specified
Currency as certified for customs purposes by (or, if not so certified,
as otherwise determined by) the Federal Reserve Bank of New York. Any
payment made under such circumstances in United States dollars will not
constitute an Event of Default (as defined in the Indenture) with
respect to this Note.
If the Specified Currency is a composite currency and the holder of this
Note shall have duly made an election to receive all or a specified
portion of any payment of principal, premium, if any, and/or interest in
respect of this Note in the Specified Currency and if such composite
currency is unavailable due to the imposition of exchange controls or
other circumstances beyond the control of the Company, then the Company
will be entitled to satisfy its obligations to the holder of this Note
by making such payment in United States dollars on the basis of the
equivalent of the composite currency in United States dollars. The
component currencies of the composite currency for this purpose
(collectively, the "Component Currencies" and each, a "Component
Currency") shall be the currency amounts that were components of the
composite currency as of the last day on which the composite currency
was used. The equivalent of the composite currency in United States
dollars shall be calculated by aggregating the United States dollar
equivalents of the Component Currencies. The United States dollar
equivalent of each of the Component Currencies shall be determined by
the Exchange Rate Agent on the basis of the Market Exchange Rate on the
second Business Day prior to the required payment, or, if such Market
Exchange Rate is not then available, on the basis of the most recently
available Market Exchange Rate for each such Component Currency, or as
otherwise specified on the face hereof.
If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of the currency as a
Component Currency shall be divided or multiplied in the same
proportion. If two or more Component Currencies are consolidated into a
single currency, the amounts of those currencies as Component Currencies
shall be replaced by an amount in such single currency equal to the sum
of the amounts of the consolidated Component Currencies expressed in
such single currency. If any Component Currency is divided into two or
more currencies, the amount of the original Component Currency shall be
replaced by the amounts of such two or more currencies, the sum of which
shall be equal to the amount of the original Component Currency.
All determinations referred to above made by the Exchange Rate Agent
shall be at its sole discretion and shall, in the absence of manifest
error, be conclusive for all purposes and binding on the holder of this
Note.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof and, if so specified above on the face
hereof, in the Addendum hereto, which further provisions shall have the
same force and effect as if set forth on the face hereof.
Notwithstanding any provisions to the contrary contained herein, if the
face of this Note specifies that an Addendum is attached hereto or that
"Other/Additional Provisions" apply to this Note, this Note shall be
subject to the terms set forth in such Addendum or such
"Other/Additional Provisions."
Unless the Certificate of Authentication hereon has been executed by or
on behalf of the Trustee by manual signature, this Note shall not be
entitled to any benefit under the Indenture or be valid or obligatory
for any purpose.
IN WITNESS WHEREOF, Liberty Property Limited Partnership has caused this
Note to be duly executed by one of its duly authorized officers.
LIBERTY PROPERTY LIMITED PARTNERSHIP
By: Liberty Property Trust, its sole general partner
By: /s/ Joseph P. Denny
- ------------------------------------------
Name: Joseph P. Denny
Title: President, Chief Operating Officer
Dated: 10/24 , 1997
ATTEST:
By: /s/ James J. Bowes
- -------------------------
Name: James J. Bowes
Title: Secretary
[Seal]
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By /s/ Mark J. Frye Date: Oct. 24 , 1997
- --------------------------------------- -----------------
Authorized Signatory
[REVERSE OF NOTE]
LIBERTY PROPERTY LIMITED PARTNERSHIP
MEDIUM-TERM NOTE
(Fixed Rate)
This Note is one of a duly authorized series of Securities (the
"Securities") of the Company issued and to be issued under an Indenture,
dated as of October 24, 1997, as amended, modified or supplemented from
time to time (the "Indenture"), between the Company and The First
National Bank of Chicago, as Trustee (the "Trustee," which term includes
any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement
of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee and the holders of the
Securities, and of the terms upon which the Securities are, and are to
be, authenticated and delivered. This Note is one of the series of
Securities designated as "Medium-Term Notes Due Nine Months or More from
Date of Issue" (the "Notes"). All terms used but not defined in this
Note or in an Addendum hereto shall have the meanings assigned to such
terms in the Indenture or on the face hereof, as the case may be.
This Note is issuable only in registered form without coupons in minimum
denominations of U.S. $1,000 and integral multiples thereof or the
minimum Authorized Denomination specified on the face hereof.
This Note will not be subject to any sinking fund and, unless otherwise
specified on the face hereof in accordance with the provisions of the
following two paragraphs, will not be redeemable or repayable prior to
the Stated Maturity Date.
This Note will be subject to redemption at the option of the Company on
any date on or after the Initial Redemption Date, if any, specified on
the face hereof, in whole or from time to time in part in increments of
U.S. $1,000 or the minimum Authorized Denomination (provided that any
remaining principal amount hereof shall be at least U.S. $1,000 or such
minimum Authorized Denomination), at the Redemption Price (as defined
below), together with unpaid interest accrued thereon to the date fixed
for redemption (each, a "Redemption Date"), on written notice given to
the holder hereof not more than 60 nor less than 30 calendar days prior
to the Redemption Date and in accordance with the provisions of the
Indenture. The "Redemption Price," if any, shall initially be the
Initial Redemption Percentage specified on the face hereof multiplied by
the unpaid principal amount of this Note to be redeemed. The Initial
Redemption Percentage, if any, shall decline at each anniversary of the
Initial Redemption Date by the Annual Redemption Percentage Reduction,
if any, specified on the face hereof until the Redemption Price is 100%
of the unpaid principal amount to be redeemed. In the event of
redemption of this Note in part only, a new Note of like tenor for the
unredeemed portion hereof and otherwise having the same terms as this
Note shall be issued in the name of the holder hereof upon the
presentation and surrender hereof.
This Note will be subject to repayment by the Company at the option of
the holder hereof on the Optional Repayment Date(s), if any, specified
on the face hereof, in whole or in part in increments of U.S. $1,000 or
the minimum Authorized Denomination (provided that any remaining
principal amount hereof shall be at least U.S. $1,000 or such minimum
Authorized Denomination), at a repayment price equal to 100% of the
unpaid principal amount to be repaid, together with unpaid interest
accrued thereon to the date fixed for repayment (each, a "Repayment
Date"). If an Optional Repayment Date is not set forth on the face
hereof, this Note will not be repayable at the option of the holder
hereof prior to Maturity. For this Note to be repaid, the Trustee must
receive at its office in the Borough of Manhattan, The City of New York,
referred to on the face hereof, at least 30 days but not more than 60
days prior to the Repayment Date this Note and the form hereon entitled
"Option to Elect Repayment" duly completed. Exercise of such repayment
option by the holder hereof will be irrevocable. In the event of
repayment of this Note in part only, a new Note of like tenor for the
unrepaid portion hereof and otherwise having the same terms as this Note
shall be issued in the name of the holder hereof upon the presentation
and surrender hereof.
If this Note is a Discount Note as specified on the face hereof, the
amount payable to the holder of this Note in the event of redemption,
repayment or acceleration of maturity of this Note will be equal to the
sum of (i) the Issue Price specified on the face hereof (increased by
any accruals of the Discount, as defined below) and, in the event of any
redemption of this Note (if applicable), multiplied by the Initial
Redemption Percentage (as adjusted by the Annual Redemption Percentage
Reduction, if applicable) and (ii) any unpaid interest on this Note
accrued from the Original Issue Date to the Redemption Date, Repayment
Date or date of acceleration of maturity, as the case may be. The
difference between the Issue Price and 100% of the principal amount of
this Note is referred to herein as the "Discount."
For purposes of determining the amount of Discount that has accrued as
of any Redemption Date, Repayment Date or date of acceleration of
maturity of this Note, such Discount will be accrued so as to cause the
yield on the Note to be constant. The constant yield will be calculated
using a 30-day month, 360-day year convention, a compounding period
that, except for the Initial Period (as defined below), corresponds to
the shortest period between Interest Payment Dates (with ratable
accruals within a compounding period), and an assumption that the
maturity of this Note will not be accelerated. If the period from the
Original Issue Date to the initial Interest Payment Date (the "Initial
Period") is shorter than the compounding period for this Note, a
proportionate amount of the yield for an entire compounding period will
be accrued. If the Initial Period is longer than the compounding
period, then such period will be divided into a regular compounding
period and a short period, with the short period being treated as
provided in the preceding sentence.
If an Event of Default, as defined in the Indenture, shall occur and be
continuing, the principal of and premium (if any) and interest on the
Notes either shall automatically become or may be declared due and
payable in the manner and with the effect provided in the Indenture.
The Indenture contains provisions for defeasance at any time of (a) the
entire indebtedness of the Company on this Note and (b) certain
restrictive covenants and the related defaults and Events of Default
applicable to the Company, in each case, upon compliance by the Company
with certain conditions set forth in the Indenture, which provisions
apply to this Note.
As provided in and subject to the provisions of the Indenture, the
holder of this Note shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or
trustee or for any other remedy hereunder, unless (i) such holder shall
have previously given written notice to the Trustee of a continuing
Event of Default with respect to the Securities of this series, (ii) the
holders of not less than 25% in principal amount of the Securities of
this series at the time Outstanding shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee, (iii) such holder or holders have offered
reasonable indemnity satisfactory to the Trustee against the costs,
expenses and liabilities to be incurred in compliance with such request,
(iv) the Trustee shall have failed to institute any such proceeding for
60 days after its receipt of such notice, request and offer of
indemnity, and (v) the Trustee shall not have received, during the 60-
day period referenced in clause (iv) above, from the holders of a
majority in principal amount of Securities of this series at the time
Outstanding in a direction inconsistent with such request; provided
that, no one or more holder shall have any right in any manner whatever
by virtue of, or by availing of, any provision of the Indenture to
affect, disturb or prejudice the rights of any other holder, or to
obtain or to seek to obtain priority or preference over any other holder
or to enforce any right under the Indenture, except in the manner
therein provided and for the equal and ratable benefit of all holders.
The foregoing shall not apply to any suit instituted by the holder of
this Note for the enforcement of any payment of principal hereof (and
premium or Make-Whole Amount, if any) or any interest thereon on or
after the respective due dates expressed herein.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of
the Company and the rights of the holders of the Securities at any time
by the Company and the Trustee with the consent of the holders of not
less than a majority of the aggregate principal amount of all Securities
at the time outstanding and affected thereby. The Indenture also
contains provisions permitting the holders of not less than a majority
of the aggregate principal amount of the outstanding Securities of any
series, on behalf of the holders of all such Securities, to waive
compliance by the Company with certain provisions of the Indenture.
Furthermore, provisions in the Indenture permit the holders of not less
than a majority of the aggregate principal amount of the outstanding
Securities of any series, in certain instances, to waive, on behalf of
all of the holders of Securities of such series, certain past defaults
under the Indenture and their consequences. Any such consent or waiver
by the holder of this Note shall be conclusive and binding upon such
holder and upon all future holders of this Note and other Notes issued
upon the registration of transfer hereof or in exchange heretofore or in
lieu hereof, whether or not notation of such consent or waiver is made
upon this Note.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay principal, premium, if any, and
interest in respect of this Note at the times, places and rate or
formula, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
and herein set forth, the transfer of this Note is registrable in the
Security Register of the Company upon surrender of this Note for
registration of transfer at the office or agency of the Company in any
place where the principal hereof and any premium or interest hereon are
payable, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar
duly executed by, the holder hereof or by his attorney duly authorized
in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
As provided in the Indenture and subject to certain limitations therein
and herein set forth, this Note is exchangeable for a like aggregate
principal amount of Notes of different authorized denominations but
otherwise having the same terms and conditions, as requested by the
holder hereof surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection
therewith.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may
treat the holder in whose name this Note is registered as the owner
thereof for all purposes, whether or not this Note be overdue, and
neither the Company, the Trustee nor any such agent shall be affected by
notice to the contrary.
No recourse under or upon any obligation, covenant or agreement
contained in the Indenture or in this Note, or because of any
indebtedness evidenced thereby or hereby, (including without limitation,
any obligation or indebtedness relating to the principal of, or premium
or Make-Whole Amount, if any, interest or any other amounts due, or
claimed to be due, on this Security), or for any claim based thereon or
otherwise in respect thereof, shall be had (i) against Liberty Property
Trust or any other partner of the Company, (ii) against any person which
owns an interest, directly or indirectly, in any partner in the Company,
or (iii) against any promoter, as such or, against any past, present or
future stockholder, partner, officer or director, as such, of the
Company or of any successor, either directly or through the Company or
any successor, under any rule of law, statue or constitutional provision
or by the enforcement of any assessment or by any legal or equitable
proceeding or otherwise, all such liability being expressly waived and
released by the acceptance of this Note by the holder thereof and as
part of the consideration for the issue of the Securities of this
series. The holder of this Security acknowledges by acceptance of this
Security that its sole remedies under the Indenture for any Default by
the Company in the payment of principal of, or any premium or Make-Whole
Amount, if any, interest or any amounts due, or claimed to be due, on
this Security, or otherwise, are limited to claims against the property
of the Company as provided in Sections 111 and 503 of the Indenture.
THE INDENTURE AND THE SECURITIES, INCLUDING THIS NOTE, SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused "CUSIP"
numbers to be printed on the Securities of this series as a convenience
to the holders of such Securities. No representation is made as to the
correctness or accuracy of such CUSIP numbers as printed on the
Securities, and reliance may be placed only on the other identification
numbers printed hereon.
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COMM - as tenants in common
TEN ENT - as tenants by the entities
JT TEN - as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT -
Custodian
- -------- --------
(Cust) Minor)
Under Uniform Gifts to Minors Act
------------------------------
(State)
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
Please insert social security or other identifying number of assignee.
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
(Please print or typewrite name and address including postal zip code of
assignee)
the within Note and all rights thereunder hereby irrevocably
constituting and appointing
, attorney to transfer said Note on the
books of the Trustee, with full power of substitution in the premises.
Dated: , 199
Notice: The signature(s) on this Assignment must correspond with the
name(s) as written upon the face of this Note in every particular,
without alteration or enlargement or any change whatsoever.
Signature must be guaranteed by an "eligible guarantor institution,"
that is, a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the Registrar, which requirements
include membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934,
as amended.
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the
Company to repay this Note (or portion hereof specified below) pursuant
to its terms at a price equal to 100% of the principal amount to be
repaid, together with unpaid interest accrued hereon to the Repayment
Date, to the undersigned, at
(Please print or typewrite name and address of the undersigned)
For this Note to be repaid, the Trustee must receive at its corporate
trust office in the Borough of Manhattan, The City of New York, not more
than 60 nor less than 30 calendar days prior to the Repayment Date, this
Note with this "Option to Elect Repayment" form duly completed.
If less than the entire principal amount of this Note is to be repaid,
specify the portion hereof (which shall be increments of U.S. $1,000
(or, if the Specified Currency is other than United States dollars, the
minimum Authorized Denomination specified on the face hereof)) which the
holder elects to have repaid and specify the denomination or
denominations (which shall be an Authorized Denomination) of the Notes
to be issued to the holder for the portion of this Note not being repaid
(in the absence of any such specification, one such Note will be issued
for the portion not being repaid).
Principal Amount to be Repaid: $
Date:
Notice: The signature(s) on this Option to Elect Repayment must
correspond with the name(s) as written upon the face of this Note in
every particular, without alteration or enlargement or any change
whatsoever.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet at June 30, 1998 (unaudited) and the Consolidated
Statement of Operations for the Six Months Ended June 30, 1998 (unaudited)
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000921112
<NAME> LIBERTY PROPERTY TRUST
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 40,342
<SECURITIES> 0
<RECEIVABLES> 7,533
<ALLOWANCES> 2,057
<INVENTORY> 0
<CURRENT-ASSETS> 47,875
<PP&E> 2,710,615
<DEPRECIATION> 178,258
<TOTAL-ASSETS> 2,657,004
<CURRENT-LIABILITIES> 37,860
<BONDS> 1,281,584
0
120,814
<COMMON> 61
<OTHER-SE> 1,033,254
<TOTAL-LIABILITY-AND-EQUITY> 2,657,004
<SALES> 0
<TOTAL-REVENUES> 174,027
<CGS> 0
<TOTAL-COSTS> 46,176
<OTHER-EXPENSES> 37,786
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42,466
<INCOME-PRETAX> 54,646
<INCOME-TAX> 0
<INCOME-CONTINUING> 54,646
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 45,276
<EPS-PRIMARY> 0.79
<EPS-DILUTED> 0.78
</TABLE>
