SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 13, 1998
(February 9, 1998)
LIBERTY PROPERTY TRUST
LIBERTY PROPERTY LIMITED PARTNERSHIP
------------------------------------
(Exact name of registrant as specified in their governing documents)
MARYLAND 1-13130 23-7768996
PENNSYLVANIA 1-13132 23-2766549
- --------------------------- ------------- -------------------
State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
65 VALLEY STREAM PARKWAY, SUITE 100
MALVERN, PENNSYLVANIA 19355
- --------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (610) 648-1700
<PAGE>
ITEM 5: OTHER EVENTS
- ---------------------
Liberty Property Limited Partnership is a Pennsylvania limited
partnership (the "Operating Partnership"). Liberty Property Trust, a
Maryland real estate investment trust (the "Trust"), owns an approximate
90.11% interest in the Operating Partnership (as of September 30, 1997)
(the Trust and the Operating Partnership are collectively referred to as
the "Company"):
On February 9, 1998, the Company acquired title to eleven industrial
properties, comprising 623,718 leaseable square feet, located in Ft.
Lauderdale and Pompano Beach, Florida, (the "Pompano/Cypress Parks
Properties"). The Company's total investment in these properties is
anticipated to be approximately $26.8 million. The "total investment"
for a property is defined as the property's purchase price plus closing
costs and management's estimate, as determined at the time of
acquisition, of the cost of necessary building improvements in the case
of acquisitions, or land costs and land and building improvement costs
in the case of development projects, and where appropriate, other
development costs and carrying costs required to reach rent
commencement(the "Total Investment").
Pursuant to Rule 3-14 of Regulation S-X, audited historical financial
information concerning the Pompano/Cypress Parks Properties, is provided
in Item 7 of this Current Report on Form 8-K. Additionally, certain pro
forma information is provided in Item 7.
Factors considered by the Company in determining the price to be paid
for the Pompano/Cypress Parks Properties, included their historical and
expected cash flow, the nature of tenants and terms of leases in place,
occupancy rates, opportunities for alternative and new tenancies,
current operating costs and real estate taxes on the properties and
anticipated changes therein under Company ownership, physical condition
and locations of the properties, the anticipated effect to the Company's
financial results (particularly funds from operations), the ability to
sustain and potentially increase its distributions to Company
shareholders, and other factors. The Company took into consideration
the capitalization rates at which it believed other comparable buildings
were recently sold, but determined the price it was willing to pay
primarily on factors discussed above relating to the properties
themselves and their fit into the Company's operations. The Company,
after investigation of the properties, is not aware of any material
fact, other than those enumerated above, that would cause the financial
information reported not to be necessarily indicative of future
operating results.
- -------------------------------
Statements contained in this report contain forward-looking statements
with respect to estimates of Total Investment, pro forma financial
information and their underlying assumptions. As such, these statements
involve risks and uncertainties that could affect future results, and
accordingly, such results may differ from those expressed herein. These
risks and uncertainties include, but are not limited to, uncertainties
affecting real estate businesses generally, risks relating to
acquisition activities and risks relating to leasing and releasing
activities and rates.
- -2-
<PAGE>
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
- ------------------------------------------
PAGE
----
(a) Financial Statements of Businesses Acquired
(1) Statement of Operating Revenues and Certain
Operating Expenses for the Pompano/Cypress
Parks Properties
Report of Independent Auditors........................ 4
Statement of Operating Revenues and Certain
Operating Expenses for the Pompano/Cypress Parks
Properties for the nine months ended September
30, 1997 (unaudited) and for the year ended
December 31, 1996.................................. 5
Notes to the Statement of Operating Revenues and
Certain Operating Expenses for the Pompano/Cypress Parks
Properties for the nine months ended September 30,
1997 (unaudited) and for the year December 31,
1996............................................... 6
(b) Pro Forma Financial Information (unaudited)
Liberty Property Trust...................................... 8
Pro Forma Condensed Consolidated Balance Sheet as of
September 30, 1997................................. 9
Pro Forma Consolidated Statement of Operations for
the nine months ended September 30, 1997........... 10
Notes to Pro Forma Condensed Consolidated Financial
Statements as of and for the nine months ended
September 30, 1997................................. 11
Pro Forma Consolidated Statement of Operations for
the year ended December 31, 1996................... 12
Notes to Pro Forma Consolidated Statement of
Operations for the year ended December 31, 1996.... 13
Liberty Property Limited Partnership......................... 14
Pro Forma Condensed Consolidated Balance Sheet as of
September 30, 1997................................. 15
Pro Forma Consolidated Statement of Operations for
the nine months ended September 30, 1997........... 16
Notes to Pro Forma Condensed Consolidated Financial
Statements as of and for the nine months ended
September 30, 1997.................................. 17
Pro Forma Consolidated Statement of Operations for
the year ended December 31, 1996................... 18
Notes to Pro Forma Consolidated Statement of
Operations for the year ended December 31, 1996.... 19
Signatures......................................................... 20
(c) Exhibits
23 Consent of Fegley & Associates...................... 21
- -3-
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To The Board of Trustees and Shareholders
Liberty Property Trust
We have audited the accompanying Statement of Operating Revenues and
Certain Operating Expenses of the Pompano/Cypress Parks Properties, as
defined in Note 1, for the year ended December 31, 1996. This financial
statement is the responsibility of the management of the Pompano/Cypress
Parks Properties. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statement is
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting principles
used and significant estimates made by management as well as evaluating
the overall presentation of the financial statement. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying Statement of Operating Revenues and Certain Operating
Expenses was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission (for inclusion in
the Current Report on Form 8-K of Liberty Property Trust and Liberty
Property Limited Partnership) and, as described in Note 1, is not
intended to be a complete presentation of the Pompano/Cypress Parks
Properties' revenues and expenses.
In our opinion, the Statement of Operating Revenues and Certain
Operating Expenses referred to above presents fairly, in all material
respects, the Operating Revenues and Certain Operating Expenses
described in Note 1 for the year ended December 31, 1996, in conformity
with generally accepted accounting principles.
/s/ FEGLEY & ASSOCIATES
Plymouth Meeting, Pennsylvania FEGLEY & ASSOCIATES
February 13, 1998
- -4-
<PAGE>
STATEMENT OF OPERATING REVENUES AND CERTAIN OPERATING EXPENSES
FOR THE POMPANO/CYPRESS PARKS PROPERTIES FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1997 (UNAUDITED) AND THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
NINE
MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
Operating revenues:
Rental $ 1,815 $ 2,522
Operating expense
reimbursement 783 941
------- -------
Total operating
revenues 2,598 3,463
------- -------
Certain operating
expenses:
Rental property
expenses 588 759
Real estate taxes 374 508
------- -------
Total certain
operating expenses 962 1,267
------- -------
Operating revenues in
excess of certain
operating expenses $ 1,636 $ 2,196
======= =======
The accompanying notes are an integral part of this statement.
- -5-
<PAGE>
NOTES TO THE STATEMENT OF OPERATING REVENUES AND
CERTAIN OPERATING EXPENSES FOR THE POMPANO/CYPRESS PARKS PROPERTIES
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED) AND THE YEAR ENDED DECEMBER 31, 1996
1. Summary of Significant Accounting Policies
- ----------------------------------------------
The Statement of Operating Revenues and Certain Operating Expenses (see
"Basis of Presentation" below) includes the operations of the
Pompano/Cypress Parks Properties. Liberty Property Trust (the "Company")
owns an approximate 90.11% partners' interest in the Operating
Partnership (as of September 30, 1997) (the Trust and the Operating
Partnership are collectively referred to as the "Company").
PROPERTY NAME LOCATION DESCRIPTION
- -------------------------- -------------------- --------------------
6500 NW 12th Avenue Ft. Lauderdale, FL Multi-story indus-
trial building
66,000 square feet
6600 NW 12th Avenue Ft. Lauderdale, FL Multi-story indus-
trial building
66,025 square feet
1500 SW 5th Court Pompano Beach, FL Single story indus-
trial building
120,544 square feet
1651 SW 5th Court Pompano Beach, FL Single-story indus-
trial building
25,200 square feet
1601 SW 5th Court Pompano Beach, FL Single-story indus-
trial building
25,200 square feet
1501 SW 5th Court Pompano Beach, FL Single-story indus-
trial building
25,200 square feet
1400 SW 6th Court Pompano Beach, FL Single-story indus-
trial building
143,459 square feet
1405 SW 6th Court Pompano Beach, FL Single-story flex
building
48,620 square feet
595 SW 13th Terrace Pompano Beach, FL Single-story indus-
trial building
44,627 square feet
601 SW 13th Terrace Pompano Beach, FL Single-story indus-
trial building
20,385 square feet
605 SW 16th Terrace Pompano Beach, FL Single-story indus-
trial building
38,458 square feet
- -6-
<PAGE>
USE OF ESTIMATES
- ----------------
Generally accepted accounting principles required management to make
estimates and assumptions in preparing financial statements. Those
estimates and assumptions affect the reported revenues and expenses.
BASIS OF PRESENTATION
- ---------------------
The Statement of Operating Revenues and Certain Operating Expenses is
presented in conformity with Rule 3-14 of the Securities and Exchange
Commission. Accordingly, depreciation, interest and income taxes are
not presented. The Company is not aware of any factors relating to the
Pompano/Cypress Parks Properties that would cause the reported financial
information not to be indicative of future operating results. General
company overhead has not been allocated to the Pompano/Cypress Parks
Properties.
The financial information presented for the nine months ended September
30, 1997 is unaudited. In the opinion of management, the unaudited
financial information contains all adjustments, consisting of normal
recurring accruals, necessary for a fair presentation of the Statement
of Revenues and Certain Operating Expenses for the Pompano/Cypress Parks
Properties.
The properties consist of commercial industrial and flex space leased to
tenants under leases with varying terms. Tenant renewal options are
available.
REVENUE RECOGNITION
- -------------------
Base rental income attributable to leases is recorded on a straight-line
basis over the applicable lease term. The leases also typically provide
for tenant reimbursement of common area maintenance and other operating
expenses which are included in the accompanying Statement of Operating
Revenue and Certain Operating Expenses as operating expense
reimbursements.
2. MINIMUM FUTURE RENTALS
- ---------------------------
Future minimum rental payments due from tenants of the Pompano/Cypress
Parks Properties under non-cancellable operating leases as of December
31, 1996 are as follows (in thousands):
1997 $ 2,193
1998 1,947
1999 1,664
2000 1,147
2001 478
Thereafter 64
-------
Total $ 7,493
=======
- -7-
<PAGE>
LIBERTY PROPERTY TRUST
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The unaudited, pro forma condensed consolidated balance sheet as of
September 30, 1997 reflects the incremental effect of the
Pompano/Cypress Parks Properties described in Item 5 as if the
acquisitions had occurred on September 30, 1997. The accompanying
unaudited, pro forma consolidated statement of operations for the nine
months ended September 30, 1997 and the year ended December 31, 1996
reflect the incremental effect of the Pompano/Cypress Parks Properties,
as if such acquisitions had occurred on January 1, 1996. These
statements should be read in conjunction with respective consolidated
financial statements and notes thereto included in the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1997
and its Annual Report on Form 10-K for the year ended December 31, 1996.
In the opinion of management, the unaudited, pro forma consolidated
financial information provides for all adjustments necessary to reflect
the effects of the Pompano/Cypress Parks Properties.
These pro forma statements may not necessarily be indicative of the
results that would have actually occurred if the acquisition of the
Pompano/Cypress Parks Properties had been in effect on the dates
indicated, nor does it purport to represent the financial position,
results of operations or cash flows for future periods.
- -8-
<PAGE>
LIBERTY PROPERTY TRUST
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1997
(UNAUDITED, IN THOUSANDS)
LIBERTY
POMPANO/ PROPERTY
HISTORICAL CYPRESS PARKS TRUST
<F1> PROPERTIES CONSOLIDATED
---------- ------------- ------------
ASSETS:
Investment in real estate, net $1,625,549 $ 26,819 <F2> $1,652,368
Cash and cash equivalents 24,097 - 24,097
Deferred financing and
leasing costs, net 29,439 - 29,439
Other assets 56,114 - 56,114
---------- ----------- -----------
Total assets $1,735,199 $ 26,819 $1,762,018
========== =========== ===========
LIABILITIES:
Mortgage loans $ 391,055 $ - $ 391,055
Unsecured notes 200,000 - 200,000
Subordinated debentures 114,820 - 114,820
Line of credit 146,000 26,819 <F3> 172,819
Other liabilities 86,633 - 86,633
---------- ----------- -----------
Total liabilities 938,508 26,819 965,327
---------- ----------- -----------
MINORITY INTEREST 66,430 - 66,430
SHAREHOLDERS' EQUITY:
Series A preferred shares 125,000 - 125,000
Common shares 43 - 43
Additional paid-in capital 606,309 - 606,309
Unearned compensation (1,091) - (1,091)
Retained earnings - - -
---------- ----------- -----------
Total shareholders' equity 730,261 - 730,261
---------- ----------- -----------
Total liabilities and
shareholders' equity $1,735,199 $ 26,819 $1,762,018
========== =========== ===========
The accompanying notes are an integral part of this unaudited, pro forma
condensed consolidated financial statement.
- -9-
<PAGE>
LIBERTY PROPERTY TRUST
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED AND IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
<TABLE>
<CAPTION>
POMPANO/ LIBERTY
CYPRESS PARKS PRO PROPERTY
HISTORICAL PROPERTIES FORMA TRUST
<F1> <F4> ADJUSTMENTS CONSOLIDATED
---------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
REVENUE
Rental $ 119,223 $ 1,815 $121,038
Operating expense reim-
bursement 38,121 783 38,904
Management fees 516 - 516
Interest and other 2,244 - 2,244
---------- --------- -----------
Total revenue 160,104 2,598 162,702
---------- --------- -----------
OPERATING EXPENSES
Rental property expenses 29,849 588 30,437
Real estate taxes 12,297 374 12,671
General and administrative 7,602 - 7,602
Depreciation and amorti-
zation 28,787 - $ 503 <F5> 29,290
---------- --------- --------- -----------
Total operating expenses 78,535 962 503 80,000
---------- --------- --------- -----------
Operating income 81,569 1,636 (503) 82,702
Premium on debenture
conversion 98 - - 98
Write off of deferred
financing costs 2,919 - - 2,919
Interest expense 37,252 - 1,366 <F6> 38,618
---------- --------- --------- -----------
Income (loss) before
minority interest 41,300 1,636 (1,869) 41,067
Minority interest 3,815 156 (180) <F7> 3,791
---------- --------- --------- -----------
Net income (loss) 37,485 1,480 (1,689) 37,276 <F8>
Preferred dividend 1,497 - - 1,497
---------- --------- --------- -----------
Income available to
common shareholders $ 35,988 $ 1,480 $(1,689) $ 35,779
========== ========= ========== ===========
Net income per common
share - primary $ .93
===========
Weighted average number
of common shares out-
standing 38,551
===========
</TABLE>
The accompanying notes are an integral part of this unaudited, proforma
consolidated financial statement.
- -10-
<PAGE>
LIBERTY PROPERTY TRUST
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED, DOLLARS IN THOUSANDS)
<F1> Reflects historical financial information of the Company as of
September 30, 1997 and for the nine months ended September 30, 1997.
<F2> Reflects the Total Investment in the Pompano/Cypress Parks
Properties.
<F3> Reflects the use of $26,819 from the line of credit to finance the
Total Investment in the Pompano/Cypress Parks Properties.
<F4> Reflects incremental addition of revenues and certain expenses of
the Pompano/Cypress Parks Properties in order to reflect a full nine
months of operations for these acquisitions.
<F5> Reflects incremental depreciation of the Pompano/Cypress Parks
Properties based on asset lives of 40 years.
<F6> Reflects an incremental increase in interest expense from the
assumed borrowings of $26,819 on the line of credit to fund the purchase
of the Pompano/Cypress Parks Properties.
<F7> Reflects the allocation of the pro forma adjustment to minority
interest based upon pro forma minority interest in the Operating
Partnership of approximately 9.58%.
<F8> The Company's pro forma taxable income for the nine month period
ended September 30, 1997 is approximately $34,822 which has been
calculated as pro forma income from operations of approximately $37,276
plus GAAP depreciation and amortization of $29,290 less tax basis
depreciation and amortization and other tax differences of approximately
$31,744.
- -11-
<PAGE>
LIBERTY PROPERTY TRUST
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED AND IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
<TABLE>
<CAPTION>
POMPANO/ LIBERTY
CYPRESS PARKS PRO PROPERTY
HISTORICAL PROPERTIES FORMA TRUST
<F1> <F2> ADJUSTMENTS CONSOLIDATED
---------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
REVENUE
Rental $ 112,841 $ 2,522 $ 115,363
Operating expense reim-
bursement 35,886 941 36,827
Management fees 1,340 - 1,340
Interest and other 4,198 - 4,198
---------- -------- ---------
Total revenue 154,265 3,463 157,728
---------- -------- ---------
OPERATING EXPENSES
Rental property expenses 29,624 759 30,383
Real estate taxes 11,229 508 11,737
General and administrative 8,023 - 8,023
Depreciation and amorti-
zation 28,203 - $ 670 <F3> 28,873
---------- -------- -------- ---------
Total operating expenses 77,079 1,267 670 79,016
---------- -------- --------- ---------
Operating income 77,186 2,196 (670) 78,712
Premium on debenture con-
version 1,027 - - 1,027
Interest expense 38,528 - 1,821 <F4> 40,349
---------- -------- -------- ---------
Income (loss) before
minority interest 37,631 2,196 (2,491) 37,336
Minority interest 3,891 227 (257) <F5> 3,861
---------- -------- -------- ----------
Net income (loss) $ 33,740 $ 1,969 $(2,234) $ 33,475 <F6>
========== ======== ======== ==========
Net income per common
share - primary $ 1.13
==========
Weighted average number
of common shares out-
standing 29,678
==========
</TABLE>
The accompanying notes are an integral part of this unaudited, proforma
consolidated financial statement.
- -12-
<PAGE>
LIBERTY PROPERTY TRUST
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED, DOLLARS IN THOUSANDS)
<F1> Reflects historical operations of the Company for the year ended
December 31, 1996.
<F2> Reflects the incremental addition of revenues and certain expenses
of the Pompano/Cypress Parks Properties in order to reflect a full
twelve months of operations for these acquisitions.
<F3> Reflects incremental depreciation of the Pompano/Cypress Parks
Properties based on asset lives of 40 years.
<F4> Reflects an incremental increase in interest expense from the
assumed borrowings of $26,819 on the line of credit to fund the purchase
of the Pompano/Cypress Parks Properties.
<F5> Reflects the allocation of the pro forma adjustment to minority
interest based upon pro forma minority interest in the Operating
Partnership of approximately 10.34%.
<F6> The Company's pro forma taxable income for the year ended December
31, 1996 is approximately $32,144 which has been calculated as pro forma
income from operations of approximately $33,475 plus GAAP depreciation
and amortization of $28,873 less tax basis depreciation and amortization
and other tax differences of approximately $30,204.
- -13-
<PAGE>
LIBERTY PROPERTY LIMITED PARTNERSHIP
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The unaudited, pro forma condensed consolidated balance sheet as of
September 30, 1997 reflects the incremental effect of the
Pompano/Cypress Parks Properties described in Item 5 as if the
acquisitions had occurred on September 30, 1997. The accompanying
unaudited, pro forma consolidated statement of operations for the nine
months ended September 30, 1997 and the year ended December 31, 1996
reflects the incremental effect of the Pompano/Cypress Parks Properties,
as if such acquisitions had occurred on January 1, 1996. These
statements should be read in conjunction with respective consolidated
financial statements and notes thereto included in the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1997
and its Annual Report on Form 10-K for the year ended December 31, 1996.
In the opinion of management, the unaudited, pro forma consolidated
financial information provides for all adjustments necessary to reflect
the effects of the Pompano/Cypress Parks Properties.
These pro forma statements may not necessarily be indicative of the
results that would have actually occurred if the acquisition of the
Pompano/Cypress Parks Properties had been in effect on the dates
indicated, nor does it purport to represent the financial position,
results of operations or cash flows for future periods.
- -14-
<PAGE>
LIBERTY PROPERTY LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1997
(UNAUDITED, IN THOUSANDS)
LIBERTY
PROPERTY
POMPANO/ LIMITED
HISTORICAL CYPRESS PARKS PARTNERSHIP
<F1> PROPERTIES CONSOLIDATED
---------- ------------- ------------
ASSETS:
Investment in real estate, net $1,625,549 $ 26,819 <F2> $1,652,368
Cash and cash equivalents 24,097 - 24,097
Deferred financing and
leasing costs, net 29,439 - 29,439
Other assets 56,114 - 56,114
---------- ----------- -----------
Total assets $1,735,199 $ 26,819 $1,762,018
========== =========== ===========
LIABILITIES:
Mortgage loans $ 391,055 $ - $ 391,055
Unsecured notes 200,000 - 200,000
Subordinated debentures 114,820 - 114,820
Line of credit 146,000 26,819 <F3> 172,819
Other liabilities 86,633 - 86,633
---------- ----------- -----------
Total liabilities 938,508 26,819 965,327
---------- ----------- -----------
OWNERS' EQUITY:
General partner's equity 730,261 - 730,261
Limited partners' equity 66,430 - 66,430
---------- ----------- -----------
Total owners' equity 796,691 - 796,691
---------- ----------- -----------
Total liabilities and
owners' equity $1,735,199 $ 26,819 $1,762,018
========== =========== ===========
- -15-
<PAGE>
LIBERTY PROPERTY LIMITED PARTNERSHIP
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED AND IN THOUSANDS)
<TABLE>
<CAPTION>
LIBERTY
POMPANO/ PROPERTY
CYPRESS PARKS PRO LIMITED
HISTORICAL PROPERTIES FORMA PARTNERSHIP
<F1> <F4> ADJUSTMENTS CONSOLIDATED
---------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUE
Rental $ 119,223 $ 1,815 $ 121,038
Operating expense reim-
bursement 38,121 783 38,904
Management fees 516 - 516
Interest and other 2,244 - 2,244
---------- --------- ------------
Total revenue 160,104 2,598 162,702
---------- --------- ------------
OPERATING EXPENSES
Rental property expenses 29,849 588 30,437
Real estate taxes 12,297 374 12,671
General and administrative 7,602 - 7,602
Depreciation and amorti-
zation 28,787 - $ 503 <F5> 29,290
---------- --------- ---------- ------------
Total operating expenses 78,535 962 503 80,000
---------- --------- ---------- ------------
Operating income 81,569 1,636 (503) 82,702
Premium on debenture
conversion 98 - - 98
Write off of deferred
financing costs 2,919 - - 2,919
Interest expense 37,252 - 1,366 <F6> 38,618
---------- --------- ---------- ------------
Net income (loss) $ 41,300 $ 1,636 $ (1,869) $ 41,067
========== ========= ========== ============
Net income (loss)
allocated to general
partner $ 37,485 $ 1,480 $ (1,689) $ 37,276
Net income (loss)
allocated to limited
partners 3,815 156 (180) <F7> 3,791
========== ========= ========== ============
</TABLE>
The accompanying notes are an integral part of this unaudited, proforma
consolidated financial statement.
- -16-
<PAGE>
LIBERTY PROPERTY LIMITED PARTNERSHIP
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED, DOLLARS IN THOUSANDS)
<F1> Reflects historical financial information of the Company as of
September 30, 1997 and for the nine months ended September 30, 1997.
<F2> Reflects the Total Investment in the Pompano/Cypress Parks
Properties.
<F3> Reflects the use of $26,819 from the line of credit to finance the
Total Investment in the Pompano/Cypress Parks Properties.
<F4> Reflects the incremental addition of revenues and certain expenses
of the Pompano/Cypress Parks Properties in order to reflect a full nine
months of operations for these acquisitions.
<F5> Reflects incremental depreciation of the Pompano/Cypress Parks
Properties based on asset lives of 40 years.
<F6> Reflects an incremental increase in interest expense from the
assumed borrowings of $26,819 on the line of credit to fund the purchase
of the Pompano/Cypress Parks Properties.
<F7> Reflects the allocation of the pro forma adjustment to the net
income allocated to the limited partners based upon pro forma ownership
in the Operating Partnership of approximately 9.58%.
- -17-
<PAGE>
LIBERTY PROPERTY LIMITED PARTNERSHIP
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED AND IN THOUSANDS)
<TABLE>
<CAPTION>
LIBERTY
POMPANO/ PROPERTY
CYPRESS PARKS PRO LIMITED
HISTORICAL PROPERTIES FORMA PARTNERSHIP
<F1> <F2> ADJUSTMENTS CONSOLIDATED
---------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUE
Rental $ 112,841 $ 2,522 $ 115,363
Operating expense reim-
bursement 35,886 941 36,827
Management fees 1,340 - 1,340
Interest and other 4,198 - 4,198
---------- ---------- ---------
Total revenue 154,265 3,463 157,728
---------- ---------- ---------
OPERATING EXPENSES
Rental property expenses 29,624 759 30,383
Real estate taxes 11,229 508 11,737
General and administrative 8,023 - 8,023
Depreciation and amorti-
zation 28,203 - $ 670 <F3> 28,873
---------- ---------- ---------- ---------
Total operating expenses 77,079 1,267 670 79,016
---------- ---------- ---------- ---------
Operating income 77,186 2,196 (670) 78,712
Premium on debenture con-
version 1,027 - - 1,027
Interest expense 38,528 - 1,821 <F4> 40,349
---------- ---------- ---------- ---------
Net income (loss) $ 37,631 $ 2,196 $ (2,491) $ 37,336
========== ========== ========== =========
Net income (loss)
allocated to general
partner $ 33,740 $ 1,969 $ (2,234) $ 33,475
Net income (loss)
allocated to limited
partners 3,891 227 (257) <F5> 3,861
========== ========== ========== =========
</TABLE>
The accompanying notes are an integral part of this unaudited, proforma
consolidated financial statement.
- -18-
<PAGE>
LIBERTY PROPERTY LIMITED PARTNERSHIP
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED, DOLLARS IN THOUSANDS)
<F1> Reflects historical financial information of the Company for the
year ended December 31, 1996.
<F2> Reflects the incremental addition of revenue and certain expenses
of the Pompano/Cypress Parks Properties in order to reflect a full
twelve months of operations for these acquisitions.
<F3> Reflects incremental depreciation of the Pompano/Cypress Parks
Properties based on asset lives of 40 years.
<F4> Reflects an incremental increase in interest expense from the
assumed borrowings of $26,819 on the line of credit to fund the purchase
of the Pompano/Cypress Parks Properties.
<F5> Reflects the allocation of the pro forma adjustment to the net
income allocated to the limited partners based upon pro forma ownership
in the Operating Partnership of approximately 10.34%.
- -19-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
each Registrant has duly caused this Report to be signed on its behalf
by the undersigned hereunto duly authorized.
LIBERTY PROPERTY TRUST
Dated: February 13, 1998 BY: /s/ WILLARD G. ROUSE, III
----------------------------------------
NAME: Willard G. Rouse, III
TITLE: Chief Executive Officer
LIBERTY PROPERTY LIMITED PARTNERSHIP
BY: LIBERTY PROPERTY TRUST,
SOLE GENERAL PARTNER
Dated: February 13, 1998 BY: /s/ WILLARD G. ROUSE, III
----------------------------------------
NAME: Willard G. Rouse, III
TITLE: Chief Executive Officer
- -20-
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and
to the incorporation by reference in the Registration Statement (Form S-
3 No. 333-43267) and related Prospectus of Liberty Property Trust and
Liberty Property Limited Partnership, to the incorporation by reference
in the Registration Statement (Form S-3 No. 33-94782) and related
Prospectus of Liberty Property Trust and Liberty Property Limited
Partnership, to the incorporation by reference in the Registration
Statement (Form S-3 No. 333-14139) and related Prospectus of Liberty
Property Trust, to the incorporation by reference in the Registration
Statement (Form S-3 No. 333-22211) and related Prospectus of Liberty
Property Trust and Liberty Property Limited Partnership, to the
incorporation by reference in the Registration Statement (Form S-8 No.
33-94036) and related Prospectus of Liberty Property Trust, to the
incorporation by reference in the Registration Statement (Form S-8 No.
333-44149) and related Prospectus of Liberty Property Trust of our
report dated February 13, 1998, with respect to the Statement of
Operating Revenues and Certain Operating Expenses for the
Pompano/Cypress Parks Properties included in the Current Report on Form
8-K of Liberty Property Trust and Liberty Property Limited Partnership
dated February 13, 1998, filed with the Securities and Exchange
Commission.
/s/ FEGLEY & ASSOCIATES
Fegley & Associates
Plymouth Meeting, PA
February 13, 1998
- -21-
